Mr. R. O. LORD, MARCH 11, 1930. President Guardian Detroit Union Group, Detroit. DEAR MR. LORD: Your letter of March 14, suggesting that the Board of Directors of the National Bank of Commerce declare a quarterly dividend of 5 percent, at $250,000, was submitted to our Board meeting today. In view of the fact that our earnings for the present quarter, from present indications, will little more than cover our regular dividend of 4 percent, they felt that only our regular dividend should be declared for this quarter. However, if this will upset your calculation to pay the regular quarterly dividend of 80 cents a share on the Group stock, they will be glad to consider the declaration of an additional 1 percent at the next meeting of our Board, March 18th. Will you please let me have your views in the matter? Very truly yours, H. H. SANGER, President. When you received this letter from Mr. Sanger, do you recall what you did about it? Mr. LORD. No: I do not recall, Mr. Pecora. Mr. PECORA. Perhaps this letter, a photostatic copy of which I now show you, will serve to refresh your recollection. Will you please look at it and tell me if you recognize it to be a true and correct copy of a letter sent by you to Mr. Sanger in reply to his letter of March 11, 1930? Mr. LORD. I assume so. Mr. PECORA. I offer it in evidence. The CHAIRMAN. Let it be admitted. (The document referred to, letter, March 13, 1920, Lord to Sanger, was received in evidence, marked "Committee Exhibit No. 13 ", Dec. 19, 1933, and the same was subsequently read into the record by Mr. Pecora.) Mr. PECORA. The letter just received in evidence as committee's exhibit no. 13 of this date is as follows [reading]: Mr. H. H. SANGER, President, the National Bank of Commerce, Detroit, Mich. MARCH 13, 1930. DEAR MR. SANGER: I have your letter of the 11th advising me of the action of your board in declaring a regular 4 percent dividend instead of 5 percent as suggested. We are counting on the 5 percent dividend and I hope, therefore, you will have your board declare an additional one percent at the next meeting on March 18. The fact that they are declaring a dividend at this rate for the present quarter does not necessarily mean that the same rate will continue throughout the year. I think each situation will have to be studied to determine what dividend it is advisable to declare for each quarter. Trusting the suggestion is satisfactory, I am, Very truly yours, Signed by yourself as president. President. Does not the evidence an instance where you did not abide by the independent judgment of the board of directors of a unit bank with regard to the declaration of a dividend? Mr. LORD. I gather that Mr. Sanger's letter in regard to the extra dividend of the bank represented the board's decision and judgment on it, don't you? Mr. PECORA. No; so long as you ask me, I emphatically do not. Mr. LORD. Well, I do. Mr. PECORA. Let me have that letter of Mr. Sanger's, and we will analyze it a little. The letter I refer to is a letter of Mr. Sanger to you, under date of March 11, 1930, which specifically tells you this [reading]: In view of the fact that our earnings for the present quarter, from present indications, will little more than cover our regular dividend of 4 percent, they felt that only our regular dividend should be declared for this quarter. Now Mr. Lord, do you think that when Mr. Sanger wrote you to that effect, that he was telling you that his board was favorable to a 5 percent rate for the quarter? Mr. LORD. Would you please read the next sentence? Mr. PECORA. Will you answer my question based upon that part of the letter? Mr. LORD. I think you have to consider the letter as a whole. Mr. LORD. I do not recall the exact wording. You may be right. However, if this will upset your calculation to pay the regular quarterly dividend of 80 cents a share on the Group stock, they will be glad to consider the declaration of an additional 1 percent at the next meeting of our board, March 18th. Will you please let me have your views in the matter? Do you think that that represents the judgment of Mr. Sanger to you that his board was willing, on their independent judgment, to declare a quarterly dividend at the rate 5 percent, as suggested by you? Mr. LORD. I think it represents their willingness to consider the extra 1 percent at the next meeting, just as Mr. Sanger says. Mr. PECORA. It represents their willingness after having pointed out to you the unwisdom of declaring a quarterly dividend of 5 percent, to yield to the command from the throne, does it not? Mr. LORD. I would not think so. Mr. PECORA. It does to me; so long as you asked me before, that is my view of it. After you were indulgent enough to respond to Mr. Sanger's suggestion for your views in the matter, did you send him your views! Or, rather, you did send him your views under date of March 13, by the letter marked in evidence as Committee's Exhibit No. 13. What did Mr. Sanger's board do? Mr. LORD. I do not recall, sir. Mr. PECORA. Will you look at this photostatic copy of what purports to be a letter sent to you by Mr. Sanger and see if that enlightens or refreshes your recollection as to what they did? Is that a true copy of a letter you received from Mr. Sanger? Mr. LORD. So far as I know, yes. Mr. PECORA, I offer it in evidence. The CHAIRMAN. Let it be admitted. (The document referred to, letter, March 18, 1930, Sanger to Lord, was received in evidence, marked "Committee's Exhibit No. 14", Dec. 19, 1933, and the same was subsequently read into the record by Mr. Pecora.) Mr. PECORA. The letter received in evidence and marked "Committee's Exhibit No. 14" of this date is on the letterhead of the National Bank of Commerce of Detroit and reads as follows [reading]: MARCH 18, 1930. Mr. R. O. LORD, President Guardian Detroit Union Group, Inc., DEAR BOB: Detroit. Before that he addressed you as "Dear Mr. Lord." [Continuing reading:] DEAR BOB: Your letter of March 13, in re extra dividend, was submitted to our directors at a meeting held today, and an extra dividend of one percent or $50,000 was declared payable March 27th, out of undivided profits. Very truly yours, H. H. SANGER, President. Mr. Lord, does this correspondence indicate that Mr. Sanger and his board of directors were exercising their free, independent, and untrammeled judgment about the dividend? Mr. LORD. I would think so, knowing that board of directors, Mr. Pecora. Mr. PECORA. Who were the members of the board, knowing them as you did? Mr. LORD. Just a minute. I will get them for you. [After examining papers.] Do you want a list of the board of directors of the National Bank of Commerce at that time? Mr. PECORA. Yes. Mr. LORD. Frank W. Blair, Harry C. Bulkley, Harry S. Covington. Harry V. Earhart, George R. Fink, Harry S. Finkenstaedt, Burch Foraker, Edsel B. Ford, John H. French, George K. Hebb, Carlton M. Higby, Charles H. Hodges, James Inglis, James B. Jones, Samuel R. Kingston, Charles A. Kinney, George H. Klein, Charles F. Lambert, Dwight B. Lee, myself, Alving Macauly, Francis C. McMath, Charles S. Mott, Edwin H. Nelson, John R. Russell, Murray W. Sayles, Henry H. Sanger, Allan Shelden, Hal H. Smith, Oscar W. Smith, John N. Stalker, John M. Toolin, Carl V. Tuttle, Charles B. Warren, L. A. Young. Mr. PECORA. How many of those directors were also directors at that time of the group-quite a few of them, weren't there? Mr. LORD. Yes; quite a few, sir. Mr. PECORA. Were all of these directors also stockholders of the group? Mr. LORD. They had to be. Mr. PECORA. Were they substantial stockholders? Mr. LORD. Some of them. Mr. PECORA. Which of them were substantial stockholders? Mr. LORD. Mr. Mott was probably the most substantial and Mr. Edsel B. Ford, both of whom were directors. Mr. PECORA, How about Mr. Blair? Mr. LORD. Mr. Blair was a fairly substantial stockholder. I do not know what holdings he had at the time. The CHAIRMAN. The committee will take a recess until 10:30 in the morning. (Whereupon, at 4:15 p.m., Tuesday, Dec. 19, 1933, an adjournment was taken until tomorrow, Wednesday, Dec. 20, 1933, at 10:30 a.m.) COMMITTEE EXHIBIT NO. 1, DECEMBER 19, 1933 ARTICLES OF ASSOCIATION OF GUARDIAN DETROIT GROUP, INC. We, the undersigned, desiring to become incorporated under the provisions of Act No. 84 of the Public Acts of 1921, entitled "An Act to provide for the organization, regulation, and classification of domestic corporations; to prescribe their rights, powers, privileges, and immunities, to prescribe the condi tions upon which corporations may exercise their franchise ", etc., do hereby make, execute, and adopt the following articles of association, to wit: ARTICLE I The name assumed by this association, and by which it shall be known in law is Guardian Detroit Group, Inc. ARTICLE II This corporation intends to proceed under Section 1, Chapter 1, Part 1 of the above act. ARTICLE III The purpose or purposes of this corporation are as follows: To acquire, own, hold, dispose of, and deal in stocks, bonds, and other evidences of indebted ness and securities including those issued by any corporation, domestic or foreign, and to possess and exercise in respect thereto all the rights. powers, and privileges of individual owners thereof including the right to vote the same and to execute proxies therefor. ARTICLE IV Principal place where company will operate is Detroit, in the County of Wayne, State of Michigan. Address of main office in Michigan is Penobscot Building, Detroit. ARTICLE V The total capital stock authorized is Seven Million Five Hundred Thousand Dollars. The amount subscribed is One Thousand Dollars. The amount paid in is One Thousand Dollars. The number of shares of common stock is 150,000 of the par value of Fifty Dollars each, Amount of common stock, paid for in cash is One Thousand Dollars. The amount of actual capital, in cash or property or both, which this corporation owned and possessed at the time of executing these articles is One Thousand Dollars. ARTICLE VI The term of this corporation is fixed at Thirty years. ARTICLE VII Names of stockholders, their residences, and shares subscribed by each are: Henry E. Bodman, 20 McKinley Place, Grosse Pte. Farms, Mich__ Edsel B. Ford, 100 Lake Shore Road, Grosse Pte. Shores, Mich. John C. Grier, Jr., 8100 East Jefferson Avenue, Detroit, Mich. Sherwin A. Hill, Northville, Mich 1 1 1 1 Ernest Kanzler, 2501 Iroquois Avenue, Detroit, Mich. 1 Robert O. Lord, 17 McKinley Place, Grosse Pte. Farms, Mich. 12 1 1 1 ARTICLE VIII The officers and directors for the first year of the corporation's existence are as follows: DIRECTORS Henry E. Bodman, Penobscot Building, Detroit, Mich. OFFICERS Henry E. Bodman, chairman of the board, Penobscot Building, Detroit, Mich. John C. Grier, Jr., vice president, Penobscot Building, Detroit, Mich. Phelps Newberry, vice president and treasurer, Penobscot Building, Detroit, Lewis K. Walker, secretary, Penobscot Building, Detroit, Mich. Arthur H. Vogt, assistant treasurer, Penobscot Building, Detroit, Mich. Robert C. Lehman, assistant secretary, Penobscot Building, Detroit, Mich. ARTICLE LX The holders of the stock of this corporation shall be individually and severally liable (in proportion to the number of shares of its stock held by them respectively) for any statutory liability imposed upon this corporation by reason of its ownership of shares of the capital stock of any bank or trust company. This corporation reserves and shall have the right from time to time upon the affirmative vote of three fourths of its directors to issue and dispose of all or any of its unissued or increased stock for the purpose of acquiring stock of banks or trust companies, without offering to the stockholders of this corporation for subscription any of the stock so to be disposed of. In witness whereof we, the parties designated as provided by law by the parties associating, as shown under article VII of these articles, for the purpose of giving legal effect to these articles, hereunto sign our names this 9th day of May, A.D. 1929. HENRY E. BODMAN, STATE OF MICHIGAN, County of Wayne, 88: On this 9th day of May, A. D. 1929, before me, a Notary Public in and for said County personally appeared Henry E. Bodman, John C. Grier, Jr., and Robert O. Lord known to me to be the persons named in, and who executed the foregoing instrument, and severally acknowledged that they executed the same freely and for the intents and purposes therein mentioned. JOSEPH F. WEBB, Jr., Notary Public, Wayne County, Michigan. My commission expires November 19, 1929. This is to certify that at the organization meeting of the incorporators of Guardian Detroit Group, Inc., a corporation to be formed under Act 84, Public Acts of 1921, of the State of Michigan, as amended, held this 9th day of May, 1929, the following resolution was unanimously adopted and that the undersigned was elected to act and did act as Secretary of said meeting: "Resolved, That Henry E. Bodman, John C. Grier, Jr., and Robert O. Lord be, and they are hereby, designated to sign and acknowledge the Articles of Association of Guardian Detroit Group, Inc., for themselves and for the remainder of the incorporators of said corporation. "JOHN C. GRIER, Jr., "Secretary of the Organization Meeting of Guardian Detroit Group, Inc." |