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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 31/2 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 112 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 recollection overnight on these things?
Mr. VERHELLE. I will try to do that.
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 312 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 312 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.
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 pay off 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.
(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 ASSOCIATIOX
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 iminunities; 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:
The name assumed by this association, and by which it shall be known in law is
Detroit Bankers Company.
This corporation intends to proceed under Sec. I, Chapter 1, part I, of the above act.
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.
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.
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 roting 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 directors 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 institutions: 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 Sbares 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 rested 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 corporation owned and possessed at the time of executing these articles is One Thousand Two Hundred ($1,200,00) Dollars.
The term of this corporation is fixed at thirty (30) years
Names of stockholders, their residences and shares subscribed by each, are:
The names and addresses of officers and directors for the first year of the corporation's existence, are as follows:
Julius H. Haass. 75 Cloverly, Grosse Pointe Farms, Mich.
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 uf 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 yote 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.
(D) No substantial part of the shares of the capital stock at any time owned by this corporation in any of the following named institutions
Peoples Wayne County Bank
Peninsular State Bank shall be mortgaged, pledged or sold, nor shall consent be given to the mortgage. pledge or sale of the property or business of any of said institutions except by and with the vote of at least two-thirds of all of the outstanding shares of the Common Stock and--until December 31, 1934—of a like proportion of the Trustee Stock, except
(1) The Board of Directors may vote to consolidate or merge any one or more of said institutions with any one or more of the others of said institutions or with any one or more other institutions provided a like proportion of the shares of the capital stock of the resulting or continuing institution shall be acquired and owned by this corporation as were owned and held of the capital stock of said institution above named being a party to such consolidation or merger and the capital stock of said resulting or continuing institution so acquired shall likewise be subject to the limitations aforesaid ; and
(2) The Board of Directors in order to qualify persons to act as directors or officers of any of the institutions aforesaid may sell to each such person the minimum number of shares required to so qualify such person but shall take back from each such person an appropriate and adequate option or agreement whereby this corporation shall have the absolute right to re-acquire said shares at any time when such person shall cease to be such director or officer.
Subject only to the limitations aforesaid the Board of Directors shall have full power and authority to mortgage, pledge, sell or otherwise deal with or dispose of any of the corporate property without action by or reference to the stockholders or any of them.
(E) The Board of Directors shall consist of twelve directors each of whom shall be-until December 31, 1934—the holder in his name as Trustee of ten shares of Trustee Stock, and thereafter shall be the owner in his own right of ten shares of the Common Stock of this corporation. The President shall be but no other officer need be a member of the Board of Directors or a stockholder.
IN WITNESS WHEREOF, We, the parties associating as shown under Article VII. of these articles, hereunto sign our names this 9th day of October A.D. 1929.
JULIUS H. HAASS.
County of Wayne, ex: On this 31st day of December, A.D. 1929, before me, a Notary Public in and for said County, personally appeared Julius H. Haass, John R. Bodde, Emory W. Clark, D. Dwight Douglas, Ralph Stone, McPherson Browning, John Ballantyne, T. W. P. Livingstone, Herbert L. Chittenden, Fred J. Fisher, William T. Barbour, Wesson Seyburn, 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.
ELLA K. WINTER,
Notary Public, Wayne County, Michigan. My commission expires Dec, 12, 1932. Received Jan. 8, 1930, Department of State. Filed Jan. 8, 1930.
Certified Copy filed in Office of Wayne County Clerk Jan. 9. 1930. F. J. Gagniani, Deputy Clerk.