frsbog_mim_v33_0354.pdf
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354
X-6743
FEDERAL RES3RVE BANK
OF RICHMOND
October 25, 1930.
Federal Reserve Board,
Washington, D. C.
Atten t ion
M r.
Walter l y a t t , General Counsel
My dear M r. Wyatt:
I
received your l e t t e r
of
October 22nd upon
t h e
subject
of the
employment
of
Honorable Newton
D.
Baker
t o
a s s i s t
i n t h e
case
of the
Federal Reserve Bank
of
Richmond
v .
Attmore
an d
r e l a t e d l i t i g a t i o n s .
.
I have discussed this matter with t h e o f f i c e r s of this bank and
a l l of u s
agree that these cases
may
well present questions which will
make them matters
of
i n t e r e s t
to the
entire Federal Reserve System,
so
that i t w i l l be highly desirable to bring M r. Baker into consultation.
Mr, Seay h a s , therefore, asked me to request th e Federal Reserve Board t o
make with
M r.
Baker such
a n
arrangement
a s i s
usually made
i n
such cases.
As you
know
I
have never
had any
experience
i n
such arrangements; conse-
quently i f t h e request should come from M r. Seay to t he Federal Reserve
Board,
l e t m e
know,
b u t
otherwise
you may
t r e a t t h i s l e t t e r
a s a
request
t o t he
Federal Reserve Board
to
r e t a i n
M r.
Baker
f o r
consultation*
I am enclos ing you herewith a memorandum f i l e d i n t h e t r i a l
cour t . The docket i n t h e court of Craven County, N. C. , is so congested
that
t h e
t r ia l judge
h a s
l i t t l e time
f o r
thorough study.
The
memorandum
which
I
enclose,
Was
intended merely
as an
ou t l ine
of my
views
f o r t h e
b en e f i t of my a s s o c i a t e , bu t he t e l l s me that he del ivered i t t o t he t r i a l
judge supplemented only by a few c i t a t i o n s of Noi*th Carolina cases relating
t o t he
general subject
of
s t r i k in g
o u t
i r r e l ev an t
o r
immaterial allegations*
I
have writ ten
to my
assoc ia te
to ask
what will
be the
time
allowed
us t o
p e r f e c t
an
appeal.
I
took depositions
i n
five other cases pending
i n New
Bern,
brought
to
recover upon notes held
a s
marg ina l co l la te ra l .
The
examination
of the witnesses made by the a t to rneys f o r t h e defendants i n those cases,
show that they expect t o p ress on the court th e question of our r igh t to
receive
an d
hold marginal co l la tera l ,
an d
also
I
think showed their
d e -
terminat ion
t o
hinder
a n d
delay
th e
progress
of
case
a s
much
a s
poss ib le .
They made no s ec r e t of t he fact that th e docket i n their county was so
congested that a t r ia l cou ld no t be obtained f o r a t l e a s t a year on any
ques tio n re qu i ri ng j ur y tr i a l . They al so made demands during
t h e
progress
of the
tak ing
of t he
deposi t ions
f o r t h e
production
a n d
exh ib i t ion
of
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Mr.
Wal ter Wyatt, General Counsel, X-6743
Federal Reserve Board
- 2 - October 23, 1930.
numerous records a n d ac cou nt s. Some were produced a n d exhib i ted . The
witnesses under my advice refused many others upon th e ground that i t
would tak e seve ra l days
o r
several weeks
to
f i n d
th e
documents
a n d
that
they were e nt i r e ly immaterial
t o t h e
issue
of the
case .
• I am
ce rt ai n that
my
opponents
1
object
i s t o
r a i s e
a s
many questions
a s
possible, hoping
that
th e
court
may
exclude
th e
deposi t ions
a t t he
t r i a l
or
else permit
them
t o
have
a
continuance upon
th e
ground that
th e
documents should have
been produced.
I
have mentioned
th e
general conditions because
I
think
that
we a re in
r e a l i t y c a l l i n g
M r.
Baker
in to
consult about matters when
our opponents a r e much more anxious to avoid a decision than they a r e to
obtain on e . I n other words they a r e r a i s i n g th e quest ions a s a means of
creat ing delays and wi th some hope , of course, that by some accident a
decision wil l be rendered i n thei r favor .
I
think, however,
a s I
s t a t e d
i n t h e
beginning, that
th e
s i t u a -
t ion
i s
such
as to
suggest retaining
M r.
Baker,
I
also agree with
you
that
i t i s
advisable
to
appeal from
any
adverse ruling
to the
motion
to
s t r ike
ou t the
answer
i n t h e
Attmore case,
but of
course,
i f Mr .
Baker
i s r e -
t a ined
h e
should have
t h e
deciding voice
on
that question.
As I have never been involved i n a System case since we adopted
t h e p lan f o r jo in t ac t ion , I do no t know just how I should proceed i n
placing these matters before M r. Baker. My suggestion would be that when
h e h a s been retained, I should send him copies o f a l l papers i n t h e Attmore
case
a n d
copies
of the
deposi t ions
t o
which
I
have refer red ,
and
that af ter
he has had an opportuni ty t o read th e papers we should have a conference.
I t would b e very helpfu l , I think, to have you a t that conference, and i f
i t
s u i t s
M r.
Baker's convenience,
we
could have
i t a t
your o f f i c e . When
you
have made arrangements with
Mr.
Baker,
you can
communicate with
me.
Of
course,
I
could
go to
Cleveland
to
consult
him
there ,
i f
more convenient
to h im.
Very truly yours,
(S ) Me G.
Wallace,
Counsel,
MGrW/mm
enc*
P . S . I should like very much to have a memorandum by you concerning
t h e dut ies of the Federal Reserve Agent a n d h i s r e l a t i o n s to the Bank
and to the
Board;
and Mr .
Hoxton ad vis es th at
he
would like
t o
have
such
a
memorandum
i n h i s
f i l e s
f o r h i s own
guidance.
M G r W e
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X-6743-a
MEMORANDUM
OF
MOTION
TO
STRIKE
OUT
ANSWER
OF
DBFEBHANT
IN
ACTION
OF
FEDERAL RESERVE SANK
OF
RICHMOND
v G. S .
ATTMORE
PARAGRAPH 1 OF THE ANSWER: :
Paragraph one of the answer i s no t a s p e c i f i c or genera l denia l of the
corresponding al legation of the complaint as reouired by Section 519 of the Code
of North Carolina. I n this paragraph th e defendant apparently concedes that -the
p l a i n t i f f
h a s
organized under
th e
ac t s
of
Congress relative
t o
Federal reserve
banks
h u t
denie s th at Federal re se rv e banks
a r e
banking co rp or at io ns .
• The
powers
of the
p l a i n t i f f
a r e
presc r ibed
by law (see
Section
4 of the
Federal Reserve
Ac t ;
U. S .
Code, Title
12 ,
Section
5 4 1 , e t s e q . )
This paragraph, the re fo re , pres ents
a question of law and not an issue of f a c t , (s ee 108 N. C. 14 7. 12 S. 2 . 896)
The l a st sentence i s p la in ly ne i the r a s p e c i f i c o r general denial of the
a l l e g a t i o n
of the
complaint
nor a
statement
of new
matter
i n
ordinary concise
language
a s
required
by
Section
896 of the
Code
of
North Carolina,
and can
have
been inserted
f o r n o
purpose except
to
attempt
t o
arouse passion
and
pre jud ice
on
th e
p a r t
of the
jury.
PARAGRAPHS
5 and 8 OF THE
ANSWER:
These paragraphs
a r e
p l a i n l y
n o t
proper pl ea di ng . That po rt io n which
d e -
mands t h e production of documents i s ne i the r an admission or denial o f matters
a l leged i n t h e complaint, nor a statement of new mat te r , f o r t h e defendant i s a p -
parent ly unwil l ing t o commit himself to the a l lega t ion tha t any such documents
e x i s t ,
b u t
leaves this
to
inf eren ce. Section
899 , e t seq . o f the
Code
of
North
Carolina provides means
f o r
compelling
the
production
of
documents
and
fu r the r
provides that
t h e
method therein prescribed
i s an
ex cl us iv e method. Doubtless
one of the
objec ts
of
such
a
provis ion
was to
permit
th e
court
to
determine
the
p ro p r i e t y o f requir ing t h e production of the documents and the a d mi s s i b i l i t y of
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X-6743~a
their contents ; t o determine on matte rs re l a t ive t o t he production of documents
without permitt ing t h e j u ry to be misled or confused by the irregular presentat ion
of matters which a r e wi thin th e province of the judge. The defendant has no t seen
f i t t o
avail himself
of the
remedy provided
by
s t a t u t e
and the
inc lus ion
of a
re ference
t o
such
a
remedy
i n t he
answer
i s
obviously
an
e f f o r t
t o
employ
the
answer
a s a
s u b s t i t u t e
f o r a
b i l l
of
discovery, which latter remedy
h a s
been
e x -
press ly abol ished,
and t he
reading
t o t he
jury
of
th is sec t ion
of the
answer
can
serve
no
purpose except
t o
convey
by
suggestion
th e
idea that
the
p l a i n t i f f
has in
i t s
possession secret documents which
i t h a s
wrongful ly fa i led
to
produce, when
th e f a c t i s tha t i f t h e production of the documents i s proper th e court may in
th e manner prescribed b y s ta tu te require th e production.
PARAGRAPH ONE OF THE FURTHER DEFENSE:
This i s a res ta tement of the posit ion taken by the defendant i n para-
graph one of the answer and as such i s open t o t he objections stated above.
PARAGRAPH
TWO OF THE
FURTHER DEFENSE:
The
matters herein alleged
a r e
abso lu te ly i r re levan t
t o t he
issues
of
t h e
case, which
a r e
simply
- 1+ I s th e
defendant liable upon
th e
notes sued
on?
2 .
Were these notes transferred
t o t h e
p l a i n t i f f
so
tha t
i t
became
th e
holder
of
them?
3 . I s t he
alleged balance
due by the
First National Bank
of New
Bern
to
t h e
defendant available
a s
defense
i n
ac t ion
by the
p l a i n t i f f ?
PARAGRAPH THREE OF THE FURTHER DEFENSE:
These al legations relate t o matters occurring eight years before t he exe -
cution of the notes i n t h e s u i t and a re therefore wholly immaterial to any con-
troversy between
th e
p a r t i e s
to
this action*
I n
add i t ion ,
th e
a l lega t ion tha t
The
Peoples Bank becajne unable
to
function because
of the
requirements
of the
p l a i n t i f f
i s a
mere conclusion
of the
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p leader . He should specif ical ly a l lege t h e requirements to which h e r e f e r s i n
order that th e court may he able t o determine whether o r n o t such requirements
were lawful
o r
unlawful.
The
a l lega t ion tha t
th e
plaintiff causedthe National Bank
of Mew
Berne
to
absorb
t h e
said Peoples Bank
i s
also
a
conclusion,
and
furthermore
a
conclusion
impossible
a s a
matter
of law
since
t h e
proceedings
i n t h e
consol idat ion
o f Na t -
ional banks
a r e
sub jec t
t o t he
control
of the
Comptroller
of the
Currency
(see U.
S .
Code, Title
12 ,
Sections
33 and 35) so
that
t h e
pl a i nt i f f could have
no
power
t o require o r compel a National tank t o consolidate with a state bank.
PARAGRAPH FOUR OF THE FJRTHER DEFENSE:
This a l legat ion i s i r r e l ev an t t o t he controversy between t h e p a r t i e s , and
i n addi t ion i t ap Dears to be held i n North Carolina, a s elsewhere, that a n a l lega-
tion that an ac t was done fraudulently i s a mere conclusion. Tne pleader should
allege,
th e
action which constituted
t h e
fraud
i n
order that
th e
court
may
draw
i t s
own
inf ere nce from
t h e
a l lega t ion .
PARAGRAPH FIVE
OF THE
IURTH3R DEFENSE:
The
a l l eg a t io n s
o f
this paragraph
a r e
i r r e l e v a n t ,
a s t h e
insolvency
of
t h e
National Bank
of New
Berne would
n o t
debar
i t
f rom tra nsf er r ing
i t s
asse t s
f o r
value.
PARAGRAPH
SIX OF THE
FURTHER DEFENSE:
The a l l eg a t io n s of this paragraph a r e i r r e l e v a n t , and in addi t ion the
a l l eg a t io n
as to the
amalgamation
of the two
banks
i s a s a
matter
of law
inpossi-.
b l e f o r t h e
reasons
s e t o u t
above.
The
a l l eg a t io n
as to the use of the
funds
of
Craven County
i s
wholly i r re levant ,
and i n
addi t ion
i s a
mere conclusion,
a s
there
i s no
a l l eg a t io n
as to why or by
what means
th e
funds
of
Craven County came into
t h e
hands
of the
National Bank
of New
Berne,
and i n any
event
t he u s e o r
misuse
of
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t h e
funds
o f
Craven County
by th e
National Bank
of Hew
Berne must
be
i r re levan t
to any controversy between t h e Federal Reserve Bank of Richmond and G*. S. Attmore.
The
inc lus ion
o f
th i s a l l ega t ion
can
have been intended only
t o
arouse passion
o r
pre judice
on the
p a r t
of the
jury
by
ins inuat ing tha t
i n
matters wholly uncon-
nected with th e present case th e p l a i n t i f f has connived a t i r r e g u l a r i t i e s on th e
p a r t
of
National banks.
PARAGRAPH SEVEN 0? THE FURTHER DEFENSE:
This paragraph appears
t o b e
i r r e l e v a n t ,
a s t h e
defendant does
n o t
allege
tha t h i s notes a r e held a s c o l l a t e r a l by the Federal Reserve Bank of Richmond,
a nd the
t i t l e
of the
Federal Reserve Bank
of
Richmond
t o
notes
of
other persons
t r a n s f e r r e d t o i t b y t h e First National Bank of New Bern cannot be mater ia l in a
controversy concerning i t s t i t l e to the notes of the defendant. The a l lega t ion
that other notes were taken
i n
pursuance
of an
u l t r a v i res contrac t
i s a
mere
c on-
clusion
of the
pleader
or an
a l l ega t ion
of a
matter
of la w . The
p l a i n t i f f
ha s
general power
to
lend money
and
rediscount notes
f o r
member banks
and to
make
advances t o them secured by the pledging of notes o r bills made by customers of
member banks
(U. S .
Code, Title
12 ,
Sections 343-7)
and
p l a i n t i f f
i s
likewise
authorized t o exercise such incidental powers as may be necessary to carry on the
business
of
banking within
th e
l i m i t a t i o n s
o f the a c t
crea t ing
th e
p l a i n t i f f
(U.
S . Code, Title 1 2 , Sect ion s 34- 7). There i s no def in i te l imi ta t ion upon the
amount
of the
notes which plaint iff
may
discount
f o r a
member bank
n o r t h e
amount
of advances which may be made to a member bank. The taking of s e c u r i t y i s obvious-
l y
inc iden ta l
t o t h e
lending
of
money.
I f t h e
defendant contends that
a n y p a r -
t i c u l a r ac t of the p l a i n t i f f i s u l t r a v i r e s , he should allege that a c t with such
p a r t i c u l a r i t y t h a t
t h e
court
may
determine whether
or no t i t was
author ized
o r
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proh ib i ted
by the
Federal Reserve
A c t . I n
addi t ion
i t h a s
been decided that title
t o assets acquired f o r value by banks organized under
t
the law of the United States
i n
u l t r a v i r es t r ansac t ions
i s
voidable only,
and the
question
of
u l t r a vi r e s
may
be
raised only
i n a
direct proceeding
by the
United States.
(See
Union National
v
Matthews, 98 U. S . 521; National Bank v Whitney 103 U. S . 99; Swope v Leffingwell
105 U. S . 3;
Reynolds
v
First National Bank,
112 U. S . 405 ;
Kerfoot
v
Farmers
&
Merchants Bank, 218 U. S . 281; also Crowell v Federal Reserve Bank, 12 Fed. 2nd
259)
This paragraph al so cont ains
a
p rayer tha t p l a i n t i f f
be
required
t o
account
t o
Craven County
and *?. W.
G r i f f i n
and to R. E.
Schumacher, Rece iv er . None
of
these persons
a r e
p a r t i e s
to
this action
and
consequently
any
a l l eg a t io n
as to
the i r r igh ts i s immaterial.
PARAGRAPH EIGHT OF THE FURTI-Mt DEFENSE:
This paragraph alleges that
t h e
note
f o r
$5,000.00
was
without
con -
s id e r a t io n and was wholly an accommodation obligation.
The Supreme Court of North Carolina, i n Merchants National Bank v Andrews,
102 S. E . 5 00, 179 N. C. 34 1,
held that allegation that
a
note
was wi
thout
con -
s idera t ion was a mere conclusion of the pleader . I t seems that a good pleading
should allege
t h e
conditions
and
circumstances under which
th e
note
was
executed
i n
order that
th e
court
may
determine whether
or no t i t was
supported
by
good
consideration.
I n
add i t ion
i t i s
provided
by
Section 3009
of th e
Code
of
North Carolina
that knowledge by the transferee that a negotiable note was given f o r accommoda-
t ion
has no
defense
to
action upon
i t ,
hence
th e
matters
and
things alleged
i n
this paragraph a r e immaterial to the action.
PARAGRAPH NINE
OF THE
FURTHER DEFENSE:
This paragraph appears
to be a
mere conclusion.
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X-5743-a
PARAGRAPH
TEN OF THE
HJRTH3R DEFENSE:
This paragraph, appears open t o t h e same objections a s those made to
paragraph eight.
PARAGRAPH ELEVEN OF THE FURTHER DEFENSE:
There appears
to be no
ground
f o r
object ion
t o t he
a l l eg a t io n
of
this
paragraph except that
th e
statement th at th is defendant
i s
e n t i t l e d
to
apply
the
said deposit
as an
o f f s e t
i s a
mere conclusion
of l aw and ,
furthermore,
a n e r -
roneous conclusion
( s e e
Sowell
v
Federal Reserve Bank
286 , U. S . 4 4 9 ) . The
statement that
th e
note
i s i n t he
hands
of R. E.
Schumacher
i s
immaterial.
PARAGRAPH TWELVE
OF THE
FURTHER DEFENSE:
There appears to be no good objection to this paragraph. I t i s a mere
r e p e t i t i o n
of a
por t ion
of the
denial
of
paragraph eight
of the
answer.
PARAGRAPH THIRTEEN OF THE FURTHER DEFENSE:
That portion
of
this paragraph that demands
t h e
production
of
writ ten
instruments
i s
open
t o t he
obj ect ion s mentioned under dis cu ssi on
of
paragraphs
f ive and e igh t of the answer. Furthermor e
v
th e court may take judicial notice
of the
fact that repor ts
of
examinations
of
National banks
a r e
made
by the
Examiners t o t h e Comptroller of the Currency, who i s an o f f i c e r of the United
States acting under
t h e
d i r ec t io n
of the
Secretary
of the
Treasury
(U. S .
Code,
T i t l e
1 2 ,
Sections
1 , 9 and 481) so
that such reports could
no t be
exhib i ted
by
th e
p l a i n t i f f .
PARAGRAPH FOURTEEN OF THE FURTHER DEFENSE:
This paragraph
i s no t an
a l l eg a t io n
of any
f ac t
bu t an
irregular prayer
f o r
r e l i e f
and
should
be
s t r i ck en ,
as t he
relief obviously cannot
b e
granted.
The re l i ef asked i n t he f i r s t paragraph i s f o r t h e b en e f i t of persons no t
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— *7 *•* X-674o)-a
p a r t i e s t o t he su i t f o r whose benefit he has no r ig h t t o prosecute an act ion , and
i n
addi t ion
th e
appointment
of a
rece iver
t o
take charge
of the
a s s e t s
and
administer them
f o r t h e
benefit
of
cred i to r s
of
national banks would
be in con-
t ravent ion
of the
laws
of the
United States which provide that
th e
rece iver s
of
National banks shall a c t under t h e d i rec t ion of the Comptroller o f t he Currency.