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; -i- . 728 X-U1S2 To the Honorable Judge of the Eighteenth J u d i c i a l D i s t r i c t Court, in and f o r the Parish of Acndia t ; State of Louisiana. - The p e t i t i o n of James Pousson, Bertrind Pousson, J e s s i e Ni Reed, Je^n Gay, Jernzime Pousson, Maxila Pousson, Edgar LeJeune, Honore Pousson, and Dr, L. A. Clark, r e s i d e n t s of the Parish of Ac-dia, Louisiana, with respect r e p r e s e n t s | ~ -Paragraph 1 That the Bank of I o t a , a banking corporation, organized under the la\vs of the S t a t e of Louisiana and domiciled in the Parish of Acadia, Louisiana, having been found i n an insolvent condition by the State Bank Commissioner, was closed on the f t h , day of July 1Q2U, and t h a t i t i s now being l i q u i d a t e d under Act 300 of 1910, under the management of and control said of t h e / S t a t e Bank Commissioner. -Paragraph 2That your p e t i t i o n e r s were depositors and c r e d i t o r s of the said Bank of I o t a , a t the time same w.<?s closed by the said S t a t e Bank Commissioner, in the following amounts, t o - w i t ; James Pousson $219.00 more or l e s s Bertrand Pousson 821.96 " " « J e s s i e N. Reed 1193.32 11 " " Jean Gay 5166,76 " " " 12288.17 " " " Maxila Pousson l6U2.6l " " " Edgar LsJ euna 151.35 » « « 253U.73 " " « 7.77 « « « Jerazime Pousson Ponora Pousson ———-—„ Dr. L. A. Clerk - — - — -a- x-4i82 ' and that they appear herein not only in t h e i r own b e h a l f , but in behalf of a l l the depositors and unsecured c r e d i t o r s of the said Bank of Iotas -Paragraph 3Your p e t i t i o n e r s f u r t h e r represent that in the Spring of 1923 > the Bank of I o t a was t o t a l l y insolvent; t h a t i t was a member of the Federal Reserve System, and that the New Orleans Branch of the Federal Reserve Bank of Atlanta* domiciled in Orleans Parish, La. had f u l l knowledge thereof; that the State Bank Commissioner or his r e p r e s e n t a t i v e came to the Parish of Acadia f o r the purpose of closing the said bank on account of said insolvency a t that time and that t h e said New Orleans Branch of the Federal Reserve Bank of Atlanta having f u l l knowledge of the insolvency of said bank agreed to advance and did advance the said Bank of I o t a during the year a lar £ .e sum of money for the purpose of keeping said bank open. That in accordance with oome agreement, e i t h e r verbal or w r i t t e n , the said New Orleans Branch of the Federal Reserve Bank of Atlanta ( h e r e i n a f t e r r e f e r r e d to as the Federal Reserve Ba .k') on learning of said insolvency in the Spring of 1923, p r a c t i c a l l y took charge of the s a i d Bank of I o t a , placing a large sum of money in said bank, d i c t a t i n g to the Board of Directors of the said I o t a Bank in what manner the a f f a i r s of the bank should be conducted, uaming Mr. Joseph A. Sab&tier to look a f t e r i t s i n t e r e s t in handling and passing on a l l loans of said Bank of I o t a and that the Board of Directors of the said Bank of I o t a thereupon by reason of the insistence of the Federal Reserve Bank, appointed Mr. Joaaph A. Sabatier, ©n March 19th, 1923 Manager of the said Bank of I o t a , giving him f u l l control over the bank's a f f a i r s with f u l l power to pass on a l l loans or advances made by the bank and f u l l power to V29 -3- X-U182 ' administer g i l the a f f a i r s of the Bank, and that t h i s r e s o l u t i o n of. the Board of Directors was passed in order to comply with the demands of the Federal Reserve Bank as s^own in a l a t t e r of date March 18th, 1923. -Paragraph UThat in accordance therewith the said Federal Reserve Bank advanced to the Bank of Iota a large sum of money f o r the purpose of caring f o r and taking off the crop of 1923, and placing i t in an apparently solvent condition, t h e said Joseph A. Sabatier being in p r a c t i c a l charge and cont r o l of the said bank under the said resolution of the beard and as a d i r e c t r e p r e s e n t a t i v e and agent of the f e d e r a l Reserve Bank. Upon «the completion of t h i s transaction as above s t a t e d , the said Federal Reserve Bank p r a c t i c a l l y controlled,,operated and beeame respons i b l e to a l l of the c r e d i t o r s and espeei&lly the depositors of the B&nk of Iota, by reason of the f a c t that i t held i t s e l f out to the world as the governing authority and owner of said bank, putting in i t s money and g e t t i n g possession of p r a c t i c a l l y a l l of the a s s e t s of said bank by # reason of said advances. That the said Federal Reserve Bank placed at l e a s t F i f t y or Sixty Thousand Dollars in the said Bank of I o t a , during the year 1923, having been informed and having f u l l knowledge of i t s u t t e r insolvency, but in the Spring of 1924, a l l of the money so advanced during the year 1923 was paid, leaving the Bank of Iota in p r a c t i c a l l y the same condition as i t was in the year 1923, although as a matter of f a c t i t s old indebtedness due the Federal Reserve Bank, a r i s i n g from the slump in p r i c e s of r i c e , and other farm products in the f a l l of 1920, had been somewhat reduced and the said old indebtedness put in b e t t e r shape. r>/> 7OJL -4X-4182 -Paragraph Your p e t i t i o n e r s f u r t h e r represent that in the Spring of 1924, the said Joseph A.. S a b a t i e r , being engaged in other business, was unable to continue as Manager of the said Bank of I o t a , and that the said bank, through i t s d i r e c t o r s , then selected L. J . V. Breaux as i t s c a s h i e r , who was recommended as Manager by the said Sabatier to the Federal Reserve Bank and which bank accepted the said Breaux as i t s Manager and agent in l i e u of the said S a b a t i e r . That the said Federal Reserve Bank i n the Spring of 1924, agreed to place the necessary money a t the disposal of the Bank of Iota f o r the purpose of enabling the farmers end business i n t e r e s t s to p l a n t , c u l t i v a t e and harvest their crops for the year 1924, and that i t did advance and f u r n i s h money to the Bank of Iota up to approximately the 1 s t , day of J u l y , 1924. That a t t h i s time the crops were s t i l l immature, and that the said Federal Reserve Bank without considering the needs of the farmers or the business people of I o t a , or the needs of the bank, al though i t was the p r a c t i c a l owner of the Bank of I o t a , refused to put up any more money and in the meantime had secured p r a c t i c a l l y a l l the a s s e t s of the Bank of Iota i n the shape of notes and other negotiable s e c u r i t i e s and the said Bark ^f I o t a , being thus l e f t without any funds and being insolvent was closed by the State Bank Commissioner to the great damage and injury of your p e t i t i o n e r s , depositors t h e r e i n , and a l l those dependent upon said bank f o r c r e d i t and money. - Paragraph 6 - X-4ld2 Your p e t i t i o n e r s f u r t h e r represent that the said Bank of I o t a was doing a l l of i t s business with the Federal Reserve Bank by reason of the agreements h e r e t o f o r e r e c i t e d and i t Was c u r r e n t l y reported and u n i v e r s a l l y believed as the Federal Reserve Bank was in c o n t r o l of and backing said Bank of I o t a , that a l l those doing business with the said Bank of I o t a and p a r t i c u l a r l y t h e depositors thereof would be protected atyi absolutely secured by reason of the f a c t that the said Federal Reserve Bank had taken charge of the said Bank of I o t a as above r e c i t e d and that your p e t i t i o n e r s acting on t h i s b e l i e f and relying upon the f a c t that the Federal Reserve Bank was thoroughly solvent continued to do t h e i r business with the said Bank of I o t a during the years 1923 and 1924 and that at the time of the f a i l u r e of the s a i d Bank of I o t a , they had to t h e i r credit in t h e said bank the amounts hereinbefore s t a t e d . - Paragraph 7 Your p e t i t i o n e r s f u r t h e r represent that the Federal Reserve Bank was created by Congress f o r the purpose of aiding t h e people of the country and the farmers generally and not f o r the purpose of making an inordinate p r o f i t , and that the Federal Reserve Bank everywhere, r e a l i z i n g the c r i s i s a r i s i n g from the slump of a g r i c u l t u r a l products in the f a l l of 1920, brought about and caused, your p e t i t i o n e r s believe, by t h e d e f l a t i o n caused by the action of the governing Authorities of the Federal Reserve Bank i t s e l f , came to the aid of p r a c t i c a l l y a l l of the banks in the United States and did everything in t h e i r power to prevent them from becoming insolvent and thus causing more financial distress. That not only was t h i s p o l i c y pursued by t h e Federal Reserve Bank generally, but the New Orleans Branch of the Federal Reserve Barik of Atlanta -6- X-4182 ^ 3 3 in pursuance of t h i s policy did extend aid to many of the banks in the S t a t e of Louisiana and your p e t i t i o n e r s having been r e l i a b l y informed and so believing aver that in several instances, i t permitted the debtor banks to withdraw and s e l e c t from t h e c o l l a t e r a l notes held by the Federal Reserve Bank a s u f f i c i e n t amount thereof to p r o t e c t the depositors, and your p e t i t i o n e r s having been informed and so believing aver that t h i s course was pursued with the F i r s t National Bank of Crowley, Louisiana, and that the said Federal Reserve Bank permitted the said F i r s t National Bank of Crowley, Louisiana, or i t s depositors to select a s u f f i c i e n t amount of i t s coll a t e r a l to f u l l y protect the depositors. That, no doubt, the said Federal Reserve Bank did the same in many other instances, but although the Bank of I o t a was a member of the said Federal Reserve System, being merely a State B&nk and not a National one, the said Federal Reserve Bank refused to permit the d i r e c t o r s or depositors pf the said Bank of Iota to withdraw any of the c o l l a t e r a l held by i t to p r o t e c t the d e p o s i t o r s , thus showing gross p a r t i a l i t y and favor to one set of banks over t h e other in r e f u s i n g to extend the same aid to the said Bank of Iota, That the apparent indebtedness of the said Bank of I o t a to the said Federal Reserve Bank a t the date of i t s c l o s i n g , amounted to $237>702.61 and that the said Federal Reserve Bank held c o l l a t e r a l and other paper to the amount of $274,604.16, as shown by the statement on f i l e i n the s u i t of the S t a t e Bank Commissioner vs. The Bank of I o t a , No. 6741, on the C i v i l Docket of the D i s t r i c t Court of ..Arcadia P a r i s h , being p r a c t i c a l l y the only c r e d i t o r holding c o l l a t e r a l and other paper with the exception of one other. That the f a i l u r e of said bank was caused by and due e n t i r e l y to the 734 -7- X-4183 action of the Federal Reserve Bank and the e f f e c t thereof was t h a t the Federal Reserve Bank held p r a c t i c a l l y a l l of the a s s e t s of the Bank of Iota, while the depositors and other c r e d i t o r s of the said Bank of I o t a were l e f t without recourse or any chance of recovering t h e i r money placed in said Bank of I o t a upon the f a i t h of the Federal Reserve Bank taking charge t h e r e o f , the remaining a s s e t s of the Bank of I o t a being of comparatively l i t t l e value; that the said Federal Reserve Bank by i t s a c t s and conduct induced the Board of Directors of the Bank of I o t a to continue t o operate said bank a f t e r same was insolvent in v i o l a t i o n of the S t a t e of Louisiana, and thereby induced your p e t i t i o n e r s and others similarly s i t u a t e d to dep o s i t t h e i r money in said bank and to continue doing business with i t while same was in f a i l i n g circumstances in contravention of the laws of said State. That the said Federal Reserve Bank i s the d i r e c t cause of the loss occasioned p e t i t i o n e r s and others of t h e i r money thus deposited and should be held l i a b l e to p e t i t i o n e r s f o r such l o s s e s . - Paragraph 8 That acting thru i t s agents and managers, the said Federal Reserve Bank p r e f e r r e d i t s e l f as a c r e d i t o r by appropriating to the payment of i t s claims and as c o l l a t e r a l t h e r e f o r p r a c t i c a l l y a l l the a s s e t s of the Bank of I o t a , which should have been t r e a t e d a s a common pledge f o r a l l the c r e d i t o r s of said bank and especially of the depositors t h e r e i n . - paragraph 9 ~ Your p e t i t i o n e r s f u r t h e r represent that by reason of the a c t s of the said Federal Reserve Bank a f o r e s a i d , the said Federal Reserve Bank held i t s e l f out to t h e public as the owner of said Bank of I o t a , being in comp l e t e control thereof and t h a t thereby i t became responsible to your * 755 -S- X-U182 p e t i t i o n e r s and other depositors and c r e d i t o r s f o r any l o s s t h a t may have been incurred by them in the p l a c e and stead of the Bank of I o t a . - Paragraph 10 That the Federal Reserve Bank held most Of the a s s e t s of the Bank of I o t a a t the time of i t s l i q u i d a t i o n ; that i t protected i t s e l f a t the expense of a l l the depositors, who continued to place t h e i r money in said bank on the f a i t h of the control of the said Bank of Iota by the Federal Reserve Bank and t h a t the said Federal Reserve Bank being in complete cont r o l of the said Bank of I o t a cannot take advantage of the s i t u a t i o n to pay i t s e l f i t s own indebtedness claimed to be due i t by the Bank of I o t a a t the expense of a l l the other c r e d i t o r s and depositors of the Bank of Iota. - Paragraph 11 <& P e t i t i o n e r s f u r t h e r aver that the Bank of I o t a acting thru i t s Dir e c t o r s and the Federal Reserve Bank of New Orleans acting through i t s o f f i c e r s or o f f i c e r , unlawfully conspired and agreed to keep the Bank of I o t a open, and by the subsequent delivery of the assets of s a i d Bank of I o t a to the Federal Reserve Bank as security f o r i t s claims and in payment thereof are j o i n t l y , severally, and in solido l i a b l e to p e t i t i o n e r s and other similarly s i t u a t e d and said Federal Reserve Bank should b e compelled to r e s t o r e the s a i d a s s e t s thus unlawfully appropriated by i t f o r the b e n e f i t of p e t i t i o n e r s and others similarly s i t u a t e d as above set f o r t h . - Paragraph 12 Your p e t i t i o n e r s f u r t h e r represent that the said Federal Reserve Bank has a large number of notes and c o l l a t e r a l held by i t , obtained from the Bank of I o t a to secure i t f o r t%e presumed advances made by i t to the Bank -9- X-4182 736 of Iota, and by reason of a l l the f a c t s r e c i t e d above, a l l the said a s s e t s should be declared the a s s e t s of the said Bank of I o t a and When collected should be d i s t r i b u t e d pro r a t a among a l l the depositors of the said Bank of I o t a . That a l l the said a s s e t s now in the hands of the Federal Reserve Bank should be j u d i c i a l l y sequestered, brought into court and there held u n t i l the f i n a l termination of t h i s s u i t and be f i n a l l y decreed to be the property of the Bank of I o t a and subject to i t s indebtedness, and p a r t i c u l a r l y that of your p e t i t i o n e r s and other depositors. - Paragraph 13 Your p e t i t i o n e r s f u r t h e r represent t h a t the said Federal Reserve Bank has c o l l e c t e d large sums of money, the exact amount of which i s unknown from notes held by i t and unlawfully obtained from the Bank of I o t a as aforesaid and t h a t i t should be compelled to acceunt to the Bank of I o t a , through the S t a t e Bank Commissioner f o r said sums, and be ordered to pay over same to the said State Bank Commissioner f o r d i s t r i b u t i o n among the depositors #f said Bank ef I o t a , f r e e from any claim of the Federal Reserve Bank and i t i s a l s o proceeding to c o l l e c t ether notes held by i t to the great damage and prejudice of your p e t i t i o n e r s and w i l l convert the proceeds thereof to i t s own use and b e n e f i t . Your p e t i t i o n e r s f u r t h e r represent that a large nujpber of these notes and other a s s e t s held by the Federal Reserve Bank and obtained by i t from t h e Bank of I o t a a r e now in t h e hands of Mr. George T. Rives, an enployee and r e p r e s e n t a t i v e of said Federal Reserve Bank and W. J . Carmouche, an attorney f o r said Federal Reserve Bank, both r e s i d e n t s of Acadia P a r i s h , Louisiana, and same should be j u d i c i a l l y sequestered in the hands of said parties. $ it -10* X-4152 7 3 7 '1'hey f u r t h e r represent that the New Orleans Branch of the Federal Reserve Bank of Atlanta has likewise in i t s possession and under i t s control a large number of notes and c o l l a t e r a l obtained by i t from the Bank of Iota and that these notes and c r e d i t s should also be j u d i c i a l l y sequestered. Wherefor#, they pray that w r i t s of j u d i c i a l sequestration issue 1 h e r e i n , directed to the Sheriff of Acadia Pariah end the Civil Sheriff of the Parish of Orleans, commanding them or either of them to j u d i c i a l l y sequester and in t h e i r possession safely keep u n t i l the f u r t h e r orders of t h i s Honorable Court a l l the notes and other evidences of indebtedness held by the said New Orleans Branch of the Federal Reserve Bank of Atlanta, i t s agents, a t t o r n e y s , end employees, and obtained from the Bank of Iota by the said Federal Reserve Bank, vfoPther the said notes be located i n Acadia, Orleans or other parishes of the State of Louisiana; that the said Bank of I o t a , thru i t s proper e f f i c e r s , the State Bank Commissioner, J * S« Brock, as l i q u i d a t o r of said Bank of Iota end the New Orleans Branch of the Federal Reserve Bank of A t l a n t a , through i t s proper o f f i c e r s , be duly cited to appear and answer t h i s demand, and served with a c e r t i f i e d copy hereof end that a f t e r due and legal proceedings had , your p e t i t i o n e r s do have judgment fof themselves and a l l other similarly s i t u a t e d , against the Bank of I o t a , S. Brock, State Bank Commissioner, end the New Orleans Branch of the Federal Reserve Bank of Atlanta, decreeing that the #aid Federal Reserve Bank was in complete control of the Bank of I o t a ; that i t held i t s e l f responsible for a l l the debts of said bank; that a l l the a s s e t s obtained by the Federal Reserve Bank from the Bank of Iota be decreed to be the property #f the x-uiffi 7 3 8 Bank of l o t s , f r e e from a l l pretended l i e n s , p r i v i l e g e s or claims against them by tne New Orleans Branch of the Federal Reserve Bank of Atlanta, and that the said a s s e t s be decreed subject to the claims of p e t i t i o o v r s and others of l i k e i n t e r e s t , end that the same be ordered restored to the Bank of I o t a , thru the State Bank Commissioner end be collected by him and d i s t r i b u t e d ' pro r a t a according to law among a l l the depositors of said bank; that there be f u r t h e r judgment decreeing that the Directors of the said Bank of Iota and the Federal Reserve Bank were g u i l t y of an unlawful conspiracy in keeping said Bank of Iota open contrary to law; that the said Federal Reserve Bank be ordered to r e s t o r e to the Bank of Iota a l l moneys collected by i t since the c l o s i n g thereof, from notes unlawfully obtained by i t from the said Bank of I o t a ; that the pledging or discounting of said notes and s e c u r i t i e s to the Federal Reserve Bank by the Bank of Iota be declared i l l e g a l , n u l l and void, and d i r e c t i n g that the said s e c u r i t i e s thus unlawfully pledged or discounted to said Federal Reserve Bank be restored to the custody of said Bank of Iota and delivered to i t t h r u the State Bank Commissioner for c o l l e c t i o n by said o f f i c e r and that the proceeds of said s e c u r i t i e s when collected be d i s t r i b u t e d pro r a t a «mong your p e t i t o n e r s and other c r e d i t o r s having a l i k e i n t e r e s t according to law. They f u r t h e r pray that the w r i t s of J u d i c i a l sequestration h e r e i n issued be maintained and perpetuated and they f u r t h e r pray f o r a l l orders necessary and #11 general and equitable r e l i e f . By t h e i r attorney, (Sgd.) J . Matt Buatt. Jesse N. Reed sworn s a y s : That he has read the foregoing p e t i t i o n ; t h a t he i s one of the petloners t h e r e i n ; t h a t a l l the a l l e g a t i o n s of f a c t therein contained are t r u e and : -12- 739 X-Ul?$ c o r r e c t , except as to those a l l e g a t i o n s expressly made on information and b e l i e f end that as to these the a f f i a n t believes them to be true* (Sgd.) Jesse N. Heed/ Sworn to and subscribed, before me, a t Crowley, La. t h i s 18th, day of October, 1924. (Sgd.) C. W. Breaux Notary P u b l i c . ORDER. Considering the foregoing p e t i t i o n , a f f i d a v i t and the law, l e t writs of j u d i c i a l sequestration issue h e r e i n as prayed f o r , directed to the Sheriff of Acedia Parish and the Civil Sheriff of Orleans P a r i s h , commanding them or e i t h e r of them to s e i z e , sequester and in t h e i r possession s a f e l y keep u n t i l the f u r t h e r orders of t h i s court a l l of the n o t e s , c r e d i t s and other a s s e t s held by the New Orleans Branch of the Federal Reserve Bank of A t l a n t a , whether in the hands of George T. Rives or W. J . Cermouche of Acadia Parish or by the New Orleans Branch of the Federal Reserve Bank of Atlanta p e r s o n a l l y . Done and granted, at Chambers, a t Lafayette, Louisiana, t h i s 15th day of October, 1924. (Sgd.) Wm. Campbell, Judge Eighteenth J u d i c i a l D i s t r i c t of Louisiana. Filed 10/20/1924. F. M. Fontenot, Dy. Clk.
@FedFRASER