Mr. VERHELLE. The Chase National Bank was paid up, according to the records. Mr. PECORA. And that completed the remainder of the $4,000,000 indebtedness which the Detroit Bankers Co. owed to the Chase National Bank? Mr. VERHELLE. If the records so indicate I would take it for granted that that is so, sir. Mr. PECORA. Would it refresh your recollection if I read to you a letter addressed to Mr. Charles S. McCain, chairman of the board of the Chase National Bank, New York City, dated December 26, 1931, in reference to this loan? Mr. VERHELLE. Very likely it would, sir. DEAR CHARLIE: Enclosed you will find a letter of authority from the First National Bank in Detroit signed by F. Howard Rust, vice president, authorizing you to charge the account of the First National Bank with $4,011,277.78 in payment in full of the loan of the Detroit Bankers Co. with you, due December 29. This pays up this loan as I have advised you was being arranged. Many thanks for your courtesies, which we all appreciate. Sincerely yours. Senator COUZENS. By whom is it signed? Mr. PECORA. It is signed by one of the vice presidents. Mr. VERHELLE. That closed it up. Quite naturally I have not seen that letter, and quite naturally I would not know the specific amount outstanding. Mr. PECORA. With regard to the borrowing of the $2,000,000 from the Continental Illinois Bank & Trust Co., see if this will refresh your recollection. It is on the letterhead of the Continental Illinois Bank & Trust Co. of Chicago, dated December 24, 1931, addressed to Mr. Mark A. Wilson, vice president, Detroit Bankers Co., Detroit, Mich. [reading]: DEAR MARK: I have your letter of December 22, enclosing resolution of your board of directors authorizing borrowing of $2,000,000 which we propose to loan you. As requested I am enclosing herewith some blank note forms for your use in borrowing this money. You ask as to what the rate will be. I want to meet your views in this connection and would like to have an expression from you as to what you think you should pay, giving consideration to the changed conditions since the time you renewed the note. Very truly yours. It is signed by Stirling V. Cramer, vice president. Mr. VERHELLE. I recall that loan being made, not the specific letter, of course. Mr. PECORA. Does the reading of these two letters refresh your recollection concerning the fact that the $4,000,000 indebtedness which the Detroit Bankers Co. owed the Chase National Bank in December 1931 was entirely paid off? Mr. VERHELLE. I would say it does; yes. Mr. PECORA. Does it refresh your recollection to the effect that the $4,000,000 was obtained by the Detroit Bankers Co. in the following fashion: $2,000,000 of it by a loan of that amount from the Continental Illinois Trust Co. of Chicago; $2,000,000 of it through the surrender and cancelation of 20,000 of the 30,000 shares of the capital stock of the First Detroit Co.? Mr. VERHELLE. No, sir. Mr. PECORA. You are still puzzled about what was done with the $2,000,000 that the Detroit Bankers Co. got for those 20,000 shares of stock? Mr. VERHELLE. I am puzzled about the commingling, if any took place. I am not sure that there did. Whether that is the $2,000,000 or whether it is the million and a half or which moneys it was that were used for that purpose. Mr. PECORA. Mr. Verhelle, I am surprised that you say you are puzzled as to whether or not the $1,500,000 was used to pay back the Chase National Bank part of this indebtedness, in view of what you have told us here as to the use of at least $750,000 of that million and a half to go to the relief of the bank at Pontiac. Mr. VERHELLE. That $750.000 was not necessarily out of that million and a half. It was out of that 3% millions. Mr. PECORA. Mr. Ballantyne has been testifying here this afternoon, and within the last few minutes, that $750,000 of that special dividend of 12 million went to the bank at Pontiac. Have you not heard his testimony? Mr. VERHELLE. You may have him confused on that. Mr. Ballantyne did not put through those entries. Mr. PECORA. I do not want anybody to be confused, nor do I want to be confused as to the facts. Will you brush up your lection overnight on these things? Mr. VERHELLE. I will try to do that. recol Senator COUZENS. I am confused also, because this letter to Mr. McCain of the Chase National Bank is dated December 26, 1931, and at the time this dividend was declared, a million dollars of it was in the Detroit Trust Co., and the other half million was put back in the First National, and that was done in February. So how could any of that be used to pay off a debt on December 26, 1931? Mr. VERHELLE. The entire 32 million dollars, to my way of thinking just at the present time and I do not believe that you want me to state anything except that which I know-I am not clear as to the disposition of the actual dollars as they resulted from the $2,000,000 and the million and a half dividends, as to their appli cation. I can account for the reception of 32 millions; I can account for the disbursement of 31⁄2 millions, but which dollars were which I am not certain of at this particular moment. off Senator COUZENS. I asked you, if you placed a million dollars, out of that million and a half dividend, in the Detroit Trust Co., and a half million in the First National Bank, which was apparently there in February when you came to the relief of the First National Bank in Pontiac, how could you have used any of that to the loans of the Chase National Bank in December 1931? Mr. VERHELLE. We could not have done precisely that. Senator COUZENS. We will adjourn until 10 o'clock tomorrow morning. pay (Whereupon, at 4:24 p.m., the subcommittee adjourned until tomorrow, Thursday, Jan. 25, 1934, at 10 a.m.) COMMITTEE EXHIBIT NO. 1, JANUARY 24, 1934. (Corporation for Pecuniary Profit) ARTICLES OF ASSOCIATION OF DETROIT BANKERS COMPANY 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 conditions upon which corporations may exercise their franchises," 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 Detroit Bankers Company. ARTICLE II. This corporation intends to proceed under Sec. I, Chapter I, part I, of the above act. ARTICLE III. The purpose or purposes of this corporation are as follows: To acquire, own, hold, vote and exercise all rights of ownership of and to sell and dispose of shares of the capital stock of banks and trust companies and of other corporations or associations engaged in purchasing, selling on their own account or as agents of others, underwriting or dealing in corporate and other securities, or of any other corporation engaged in any business or activity incidental to or related to or of assistance in the conduct of any such business aforesaid. ARTICLE IV. Principal place where company will operate is City of Detroit, in the County of Wayne, State of Michigan. Address of main office in Michigan is Detroit, Michigan, at northeast corner of Michigan Avenue and Griswold Street. Address of main office outside of Michigan is-none. ARTICLE V. The total capital stock authorized is Fifty Million ($50,000,000.00) Dollars and one hundred and twenty (120) shares of no par value. The amount subscribed is one hundred and twenty (120) shares of no par value. The amount paid in is One thousand two hundred ($1,200.00) Dollars. The number of shares of Common Stock is two million five hundred thousand (2,500,000) of the par value of Twenty ($20.00) Dollars each. The number of shares of Non-Par Value Stock is one hundred and twenty (120); the price of each and at which they have been or it is proposed they shall be sold is Ten ($10.00) Dollars. The classification of the capital stock and the privileges, rights, voting powers and restrictions thereof are as follows: The par value shares shall be known as Common Stock. The non par value shares shall be all of one class and shall be known as Trustee Shares. Said Trustee Shares shall not participate in dividends, assets or subscription rights. Until December 31, 1934, the Trustee Shares shall have exclusive voting power in the election and in the removal of Directors, and all other voting power shall be vested in the Common Stock, except that no increase or decrease of the capital stock or change in the number or qualification of di rectors shall be authorized or other class of stock created or the sale of all of the property or business of this corporation, or the sale of any substantial part of the shares of capital stock or property or business of the following institu tions: the Peoples Wayne County Bank, the First National Bank in Detroit, the Detroit and Security Trust Company, the Bank of Michigan, or the Peninsular State Bank, shall be authorized except by and with the vote of at least two-thirds of all of the outstanding shares of the Common Stock and of a like proportion of the Trustee Stock. Upon December 31, 1934, said Trustee Shares shall be redeemed and cancelled on payment of Ten ($10.00) Dollars per share On and after January 1, 1935, all of the voting power of the stockholders shall be vested in the Common Stock. During the time the voting powers in the election of directors shall be vested in the Trustee Shares the right to vote the same cumulatively shall obtain. The right of holders of Common Stock to vote cumulatively for directors from and after the date the voting powers in the election of Directors shall be vested in the Common Stock shall be and the same is waived, and the Directors of this corporation shall be elected by the affirmative vote of a majority of the stock then entitled to vote present in person or by proxy at any meeting of such stockholders called for that purpose. The amount of Common Stock paid for in cash is No Dollars and No Dollars have been paid in in property. The amount of No Par Value Stock paid for in cash is One Thousand Two Hundred ($1,200.00) Dollars. The amount of actual capital in cash or property, or both, which this corpora tion owned and possessed at the time of executing these articles is One Thousand Two Hundred ($1,200.00) Dollars. ARTICLE VI. The term of this corporation is fixed at thirty (30) years. ARTICLE VII. Names of stockholders, their residences and shares subscribed by each, are: ARTICLE VIII. The names and addresses of officers and directors for the first year of the corporation's existence, are as follows: Names Julius H. Haass... John Ballantyne... Herbert L. Chittenden. Fred J. Fisher. William T. Barbour Residences 75 Cloverly, Grosse Pointe Farms, Mich.. 1570 Balmoral, Detroit, Mich.. 394 Rivard Blvd., Grosse Pointe, Michigan....... 1011 Buckingham, Grosse Pointe Park, Mich. 54 Arden Park, Detroit, Mich. 2931 E. Jefferson, Detroit, Mich. 16850 E. Jefferson, Grosse Pointe, Michigan.. E. R. Lewright.......... 15 E. Kirby, Detroit, Mich.. ARTICLE IX. The following special statements pertaining to the primary organization of this corporation and not included in the foregoing requirements are set forth under this article. (A) The holder of each share of Common Stock of this corporation shall be individually and severally liable for such stockholder's ratable and proportionate part (determined on the basis of their respective stockholdings of the total issued and outstanding stock of this corporation) 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, and the stockholders of this company-by the acceptance of their certificates of stock of this companyseverally agree that such liability may be enforced in the same manner and to the same extent as statutory liability may now or hereafter be enforceable against stockholders of banks or trust companies under the laws under which said banks or trust companies are organized or operate. A list of the stockholders of this company shall be filed with the Banking Commissioner of Michigan or the Comptroller of the Currency, whenever requested by either of those officers. (B) The stock of the corporation authorized by these articles and any stock of this corporation authorized by any certificate of increase of the capital stock may be issued and disposed of by the Board of Directors to such persons, firms, corporations or associations in exchange for capital stock and/or assets of banks, trust companies or other corporations or associations included within the provisions of Article III. and upon such terms as the Board of Directors in their discretion may determine. In any of such instances no holder of any stock of this corporation shall be entitled, as of right, to subscribe for, purchase or receive any proportionate or other share of stock so to be issued. In case, however, the Board of Directors shall determine to issue any stock of the corporation created by these articles or by any certificate of increase of the capital thereof, for any other purpose than exchange as aforesaid, the holders of Common Stock of this corporation shall first be entitled to subscribe for, purchase and receive such stock to be issued, ratably and at such price and upon such terms as may be fixed from time to time by the Board of Directors. (C) No contract or other transaction with any other corporation, association or firm shall be in any way affected or invalidated by the fact that any of the Directors of this corporation are Directors of or otherwise interested in such other corporation, association or firm. Any Director of this corporation may vote upon any contract or other transaction between this corporation and any subsidiary or affiliated corporation, without regard to the fact that he is also a Director of such subsidiary or affiliated corporation. |