North Carolina Newspapers

STATE HAS PRESENTED VAST AMOUNT QF EVIDENCE IN TRIAL OF FORMER COUNTY OFFICIALS AND BANKERS DURING HEARING (Continued from page one) Bagwell was asked to whom he tohl what McNeely had said. Bagwell said he had told Felix Alley, J. Wtll Pies?, and, he believed, he told Mayor f- W. Whitmire. Jones then brought ironi Bagwell admission that Bagwell him self had been in trouble years ago, ho said. Arrested once for driving stock across the state line, in violation 01 the law. Another time, .witness said, some man left some liquor at his house and the officers arrested Bag welC He served three months for this, witness admitted. Thursday Afternoon. Mr. Woodley told of making inves tigation of the assets of the bank, and stated chat he had searched the re cords of the office of register of deeds for prior mortgages on real estate upon which bank loans were secured by deed in trust, and had also used the tax books in his investigations. Asked if his fifteen years in the banking business had enabled him to appraise real estate, Mr. Woodley said there was difference in real estate values in Eastern Carolina and in th-i section. Said he had made such in estimations since coming here as wo. Id enable him to place fair valu at.v.n upon property in Transylvania county. At this point Solicitor Pless offer ed Woodlev as an expert on real es tate values', and defense objected, the court sustaining the objection. Wit ness said that his experience in bank ing business had been of advantage to hi- in his work as liquidating agent. "From experience you have had have you an opinion as to whether or not the Brevard bank was insolvent'. Witness was asked. Objection by de fense. sustained by the court. Solicitor Pless asked witness what he had done to collect notes held bv the bank, and Woodley said he had written two and three letters to each one whose notes are held by the bank and by other banks where such notes are put up as collateral. At this point the court stopped this line of evidence declaring it took in too much terri tory. Then Woodley was asked what investigation he had made oi finan cial worth ot' those whose notes art held by the bank, and he said he had consulted with business men, lawyers doctors, and in every way h?' knew how to get a line o.n note makers. Question of solvency of the bank again came up, the jury was sent from the room, and the question ar gued. Defense counsel asserted that there is no charge or intimation of charge in the bill of indictment thai the commissioners knew the bank was insolvent, and that the matter had nc fce-.'.rinjr upon the ease at all. Almost half aii hour was consumed in dis usslon of case and its many points while jury was absent, during which time Judge Sink declared that if ths commissioners even borrowed mone> when they did not need it, they were violating th" law. Solicitor remarket that the chief finance officer of the county had said the county needed money when they had money in the bank, and read "items from the budget of 1'JiiO for various funds, showing amounts already in these funds. Aftei a while the discussion led back tc Woodley and the bank records, and Woodley was offered as an expert or securities and their values. Judge Sink ruled that witness could testify as to his investigations of collateral security or endorsements. Mr. Smath ers, of counsel for defense, expressed the opinion that Woodley, having come here in January, this year, could not properly place valuations upon securities and endorsements that were accepted by the bank a year ago. as conditions have so .adically chang ed. Soys Hank Wu Insolvent. Upon return of jury and resump tion of evidence, in reply to a ques tion from solicitor, Wo-jdley declared in his opinion that the Brevard Bank ing company was insolvent in Septem ber, when the hundred thousand dol lar note was issued. He asserted thai a large number of people who owe the bank have given every indication that they never intend to pay their notes. Woodley stated that fully one-half of the money loaned out by the bank was secured by real estate. Cross Examination. i. Bat Smathers, counsel for Ship man, conducted the cross examination of Woodley, whd, in reply to ques tions by Smathers, said he was 31 years old, starting in banking busi ness fifteen years ago, first as mes senger, then collection teller, and gradually advanced to the position of cashier, serving ten years of the., fif teen as teller. .Woodley admitted that fee had no experience in real estate; that real estate transactions in the Elizabeth City bank where he worked was handled by lawyers and superior bank officials. Witness was asked if he could come into Transylvania coun ty, and in six or seven months learn the value of real estate under mort gage to the bank. Witness declared he was able to value it as to whether his notes were properly secured. Wit ness admitted that he had spent fully half the time he has been here in the bank, and Smathers drew the time down to half time since January 13 that witness had been devoting to ap praising property over the county un der mortgage to the bank. "How much assets did the bank have?" Smathers asked. "One and a quarter million dollars," Woodfey said. "How much of that amount was secured by real estate?" 'Smathers asked. "Four hun dred thousand dollars," witness re plied. "or about that much, I esti mate." Smathers then asked: "How many pieces of property are there under mortgage to the bank?" "From 125 to 150 pieces," Woodley said. "Have you been on and inspected all ' this property ?" Smathers a3ked the J witness. Woodley said he had been on i about half of them, snd had had the' assistance of C. Y. rattan in making investigations of all PrQpe,rtJha?tw^ outright by the bank, and that Fa^ Kinuey had been with him on some of :i>?. trips of inspection. Wood Mr S'mathers insisted that Wood ley tell exact number of pieces of pro perty on which bank held deed 1 o trust, and by referring to bank books, this information was given, the num ber being 121 pieces of property un der deed of trust to the bank. Then Smathlvs insisted that Woodleyg.ve names of men whose property he ha J bee no nand the valuations placed up on each piece. The following proper ty, swere" named by Mr. Woodley, tn the name of their owners. \ V. Aiken, James Bostic, W. A. Bracken, Mrs A. A. Bridges Camp Transylvania, Mrs H. C. Glaike, I English, W. McK. Fetzer, R. L. Gash, J. L. Gillespie, ^w.s Gravely, W H. Grogan, Jr., J. C. Hendiix, r . E.'b. Jenkins, Miss Florence Kern C. C. Kilpatrick, Judith King, E. W. Ly day, Judson McC.ary, Sam McCul lough, Hinton McLeod, J. A. Miller, M A. Mull, C. K. Osborne, J. W, Smith, Hoy Whiteside, J. R. Whit mire J. P- Whitnure, Mis. Young, Thus, Mr. W oodley showed itht he had been on 29 pieces of prop. ertv out of the 121 on which the bank i holds deeds' of tryst. Witness could nut tell number ot acres in the at, ? .ate "or the per centage of acres ' inspected by him in making apprais als Under further questioning Wood ?fev admitted that he had not posed a. ?hi expert on real estate values, an listed that he had satisfied himseli only as to the value of each piece o property in connection with th( amount of the loan so secured. Friday Morning W oodley was again on the stanc Friday morning, with Smathers oi th- cross examining end of the line Witness admitted under fast question w uness -u he was ina(]( cishier of the Elizabeth City bankoi ihf Sth dav of November, and tha Ltk SA th. 18th it, ? fcer, and that Wbodley^came to Bre vard to take chaige oi h-nk's liquidation on the l >th day o January, this year. Woodley, in rep . : to another question, said he knew tha many bank.' failed, throughout th country and especially in Wcstei North 'Carolina, during the past win Mr. Smathers asked Woodley <? read from the bank ret-ords and te: ; the jury what the assets ot the ban ? werj on Sept. 1. 1930, at the time M . Woodley had declared on the da> be ' f,ne that the bank was insolvent. Th : report, according to the witness as h i read from bank records, showed as ' sc. < of $1,600,250,41. and liabilities o : $1,404 ,'257. 13, leaving ^w'ng $195,993.28 more as. . cs than us I blllt'"3' The ?100,000 .Vote i Under cross examination Woodie I stated that first' time there is indica ' ition of placement of the famous $10 I mo note was shown on certificate o ? -'eposit ledger of November 24, whe a certificate of deposit in the sum o ! <101,G'25 was issued to W. - -oUt : county treasurer. This would be th : amount of note, plus the . nterest fior ' July 30 to that date. The > course the certificate should take ! the witness said, was cashing of tn > certificate, which was done on N ' vomhr'i- 29 when another >um o : $70.55 interest from 24th to 29th. wa I added thereto. Witness said the tour jty had several different accounts, at L cording to law, handled in the usua banking manner. 1 "How much money did the coun-, i draw out of the bank from Sept. 1 . to Nov 24th? ' witness was asktc , ' State objected to question, and eour ? overruled objection. ; It was shown that the county check I. h1 out of the bank the sum of $218, ? 000 from Sept. 17 date of. note salt ? to Nov. 24, date of depositing note 1 The defense accepted this showing a ? splendid evidence in refusing th ?, charge that the commissioners ha. ? borrowed $100,000 to help the bank : while the county had withdrawn Iror i the bank the sum of $218,000. Junes Takes Witness . G. Lyle Jones, of counsel for th ; commissioners and Fisher, then tool : the witness on cross examination ! Woodley stated to Mr. Jones in repl; [to the latter's questions that tn ? Elizabeth City bank where Woodie. was an officer closed because o ? : heavy withdrawals, and declared to believed his bank there was solven ! when it closed, but the officers an. directors knew that it could not stani the heavy ..withdrawals any longer Jones asked witness if that wasn t th; ease in the forced closing of practi ; cally fell hanks, and witness said It was. Witness said records showei heavy withdrawals from the Brevar< bank iust prior to its closing, anc that deposits fell off. Witness said hi was not here prior to January 13, an< didn't know how real estate condi tions looked before that date, but thai 'they look bad now. Taking the witness back to- the property which he had visited and valued, as testified on th? previous day, Mr. Jones asked Wood J ley what the Aiken property was worth, in his estimation. Woodley saic 'he had no idea what it is worth, noi ihad he any idea what the Baldwin (-property at Penrose is -worth, saying .that he was convinced that it was : worth the amount of indebtedness 'which the bank holds on it Mr. Jones ?then called over the other pieces of I nroperty which the witness had testi 'fied that he examined, and he admit ted to Jones that he had no idea of | the worth of many pieces of the i property. Woodley said the Fe^er farm is worth $12,000. "Why, Mr. 1 Woodley," Jones said, "do you not I know that the Fetzer place is listed Ion the tax books at $16,000, and you say it is worth no more than $12,000 . Woodley held out that in his opinion the place was worth no more than $12,000. Asked about the J. R. Wlut mire farm, witness paid It was worth ; $15,000 to $20,000? not more than ] 1 $20,000." Jones asked him how many : houses there are on the place, and ; ! witness did not know. Mr. Jones ask- ? ed witness if he did not know that the J. R. Whitmire farm is one of "the best farms in the county, comprising re alt . | ly three ' farms, three houses ahd all barns and necessary outhouses. Ask- , I ed then how long he spent on the farm ] 'oil his trip of inspection, Mr. Woodley ' said he was on the place for about | one-half ^o three-quarters of an hour. ] "Is that the way you have valued j all the property upon which the bank ( holds mortgages?" Mr. Jones asked. The witness insisted that he had ; .looked at property with but one pur-, 'pose, and that was to. .see if it was worth the amount of the note secured by the property, and had satisfied | himself on this point. Mr. Jones asked, witness about) 'note* that were secured by stock in j [various companies and if he had ex- , amined the market price or cash vai- ! jue of such stocks, and witness said he ; 'had. "Did you go into the audits of | Jsuch companies where the bank holds; [stock as collateral?" Witness said he: had not, but had made other inquir- 1 jics and examinations. "Did the commissioners of Tran- . ?sylvania county pay off a note in. September of $75,000?" Jones asked. | "Yes, they paid $79,530.82, from the, debt service fund. "In whose name were the county de posits on December 15, when the bank closed?" Jones asked the witness. | 'j "In the name of G. M. Justus, ' county treasurer," was the reply, j | Taking up the several funds of the [county, Mr. Jones asked witness to . ' refer to bank's records and see if these funds were transferred from | the old county treasurer. to the new ' 'county treasurer about the first of j December, 1930. Witness testified 1 that bank records showed that each f fund had been transferred on Decem , iber 2 from W. L. Couch, to G. M. ' [Justus. The same was true of all cer tificates of deposit. , j "Mr. Woodley, was all the $101, >625, proceeds from this note in ques 1 tion, put to the credit of the county?" ' [ "Yes, and on Nov. 29, and the ad "'ditional interest also; the county got ' 'credit for all of it." t ' "Mr. Woodley, have you found any record of any county money in the ".bank that went to any one except to j the credit of Transylvania county?" - Mr, Jones asked. : "I have not," the witness replied. y' ! Mr. Jones then asked witness how ? much money was turned over to Mr. ' \ Couch, as county treasurer, on the 1 1 first Monday of December in 1929. 'j "T. E. Patton, Jr., treasurer, De cember 3, 1928. turned over $265, 0 875.86." was the answer. Mr. Jones " ! wanted the amount of all the county k funds that were turned over, and all '? the records were not on hand, anil ?' this question was ieft open. e It was shown by the witness that c the county treasurer, W. L. Couch, " turned over to G. M. Justus, present f county treasurer, the sum of $580. <"'464.28 on the first day of December, - 1930. Plexit Takes Witness. "Mr. Woodley, did any money pass >' from the former county treasurer to l* the present county treasurer on De '- cumber first?" Defense counself en f tered vigorous objection to this propo n. !sition, asserting that a bank is re 1 quired to keep only 15 per cent cash '? j reserve and five per cent on time de e posits, and records of the bank would ".show the amount of cash reported on hand. Then Pless asked witness if there was more money or less money e . on deposit in the bank when the bank failed than there was when Couch ' turned over the county funds to s Treasurer Justus. Again defense l* counsel objected, stating that these " clients are not responsible for what 1 the county had -on December 15, that all funds had been turned over to the y jnew officials,' and that the question ? had nothing to do with the trial of '? these men now being tried. ' Then Pless asked from what fund jthe $75,000 note had been paid in " | September, and witness said it was '? paid from the debt service fund. He 'also testified that there was the sum '? of $60,842.93 left in the debt service s fund after the note had been paid. e j Solicitor Pless then brought, from J witness information as to the amount j of money in the bank when the bank n 'closed December 15. Witness said there was shown on the books to be a cash balance of $18,654.05, in two e, items. In banks, $17,283.33, and cash k.on hand $1,371.72. On December 2, '?jwhen transfers were made from old y ! board to present board, witness said. 6 j the records showed cash balance of f i $105,552.55, and Smathers asked 'j Woodley what the legal reserve for e | that day would have been, and wit t ness answered that, according to the 1 books, the necessary amount of mon i ey would have been $104,000. ? : It was established through testi s ; mony of witness that the bank had - ! $50,000 njore legal reserve in Septem ber than required minimum; and it 1 was established that all of the pro 1 ceeds from the sale of the $100,000 I note was allocated to the several dif s ferent funds. 1 j Mr. Woodley said the deposits in - ithe bank on Sept. 24 were $1,287, 1 1 109.93, 'and that between fthat date s and December 15, when the bank I [closed, these deposits had fallen off ! in the sum of $365,801.26. | -| Court adjourned until Saturday i morning, with defense feeling that it I I had won about every round in the j ' day's battle. Saturday Morning James F. Barrett, editor of The i Brevard News, was first witness Sat- 1 i urday morning. Was asked by stats attorneys if a letter was published in Brevard News bearing signature of Thos. H. Shipman and Jos. S. Sil versteen, about first of Septem.-^r. Witness said such letter was pubhsh-i ed. Asked who brought letter to '< le I News office and witness asserted he j could not recall the instance. Wit- J ness explained that hundreds and hundreds of pieces of copy came in to ths office for publication; tl:at he did most of the work solicit!'.!^ ads i and other outside; that ofter people^ left copy with some, one in the of-,' fice in his absence, and there was no way remembering a Particular i piece of copy that far back. He testi- 1 | tied that he was thoroughly satisfied at the time of the authority for pub lishing the letter otherwise it would not have been in the paper. Only tnci dent in connection with nublicationot . the letter was reference made by Ship- i man in conversation later ' that l?e ; (Shipman) said he did not know why . Fisher was so insistent upon having ; a letter from them. Jury was sent , from room, while counsel argued points in the case, and the solicitor called upon the service to serve no tice upon defendants to produce the original letter. , Ira Galloway on. Stand Ira D Galloway, register of deeds r from 1920 to 1930, was next witness. Identified certain county records, and told of resolution being prepared and presented to board to be acted upon authorizing the issue of the ^OO^OO note. Statement from McNeelj, who was chief finance officer of the coun ty, was introduced, setting forth ne cessity for issuance of the note and borrowing the money. Resolution was adopted at the commissioners meeting Sept. 3, and 1 notice of sale of note ordered published in The Brt vard News, The Asheville Times and The New York Bond Buyer. Bids were to be opened at the m< ? the board on September 13. Mr. Gal loway indentified statements and cancelled checks of the county, en dowed by Ralph Wsher. Statement was bill from Mr Fisher as county attorney for partial payment oi legal expense in connection with handhng tax foreclosure sales for the year 1922- to 27, total payments being about $8,000. It was shown that there were about 350 such tax litems handled by the county attorney, 'and that Fisher had several cerks working on the preparation of these cases. . Mr. Galloway indentified the signa ture of J. H. Pickelsimer to a lette. 1 rpad to the jury purporting to be ' from Mr. Pickelsimer as retiring 'chairman, to O. L. Erwin, the mco - ing chairman. Mr. Galloway also te tilied that he saw the original lettu that was published in The News on Sept. 3, signed by Shipman and Silversteen, lauding the com missioners for decision to sell the county note, and said Mr. PickelM mer showed him the letter. Extract from the minutes of the meeting ot the commissioners held on Sept. i were read setting forth that all mem bers of board were present, .leetint, was called for the purpose ofreceiv ! jng bids for the note. No bids were submitted, and motion was made t<> recess to Sept. 17. At this advertised recess meeting on the 17th, wltne^ testified, a bid was received from _tne Brevard Banking company, signed D> T. H. Shipman as president, that bank would buy the note at par, ?> per cent interest, accrued from Ju-> :;0. Note was ordered sold. Mr. Pless had introduced the note, it being in denominations of $10,000 and there being ten notes, after Mr. Gallowav had identified signatures of J. H. Pickelsimer, C, K. McNeely. Rplph R. Fisher and his own, as ottic ials of the county upon the note. Gal loway had testified that he had -sen the bank officials in conference *itn McNeely in McNeely's office a day or two prior to adoption of the resolu tion ordering sale of note. Mr. Pless after introducing le-.tei from Pickelsimer to O. L. Erwin, read its contents, which >et forth the amount of money the c. unty had on deposit; the amount of security which the bank had up to guarantee safet> of these deposits, and suggested that the new board increase this security as rapidly as possible. The letter told the ncjv board of work done by tni retiring board in connection with ob jecting to the United States govern ment buying 2000 acres of land from Jos. S. Silversteen, as the sale of th s land would remove that much taxable property from the county lists, mak nir the tax burden that much heav ier upon the rest of the tax payers, as the government pays no taxes up on its property. _ Cross Examination J Bat Smathers opened cross ex amination of the witness, who stated in reply to questions that there was nothing unusual in the fact that cit izens called at the office of Mr. Mc Neely, who was county accountant and "had the back tax books in his office; that he had heard no reference made by Shipman or Silversteen con cerning the sale of the note; -hat he knew of no combination nor conspir acy on the part of anybody in the I sale of the note or any other matter in connection with the county. Gal loway stated that the bankers were not present at the board meeting when the resolution was adopted and the note sold; that Ralph Fisher had 'nothing to do with the preparation of the resolution or the sale of the note, that A. F. Mitchell, bond attorney, ! prepared the papers, all of which were legally prepared and in regular form. Galloway admitted that he did not compare the original which he saw with tb? letter that was pub lished in The Brevard News, He could not be certain, he swore on cross ex 'amination, that the letters were the Isame. Galloway told of extension of (time that year for payment of taxes; that no taxes were being paid ana school was to start on first Monday in September, and no fuadi were available for this work. Witness said Mr. Fisher was sent to Washington to protest against the government purchase of the 2000 acres of land from Silversteen on behalf ' of the commissioners. Jury was sent from the court room while arguments were ^Mr. Breese wanted to bring from witness the existing feelings of ani mosity between Fisher on the one hand and Silversteen and Shipman on the other. Galloway testified to his belief of this state of feelings; had never seen Silversteen and Fisher to gether, but had often heard Fisher cussing Silversteen "behind his back. Jury brought back and G. Lyle Jones conducted cross examination for Fisher and the board. Mr. Jones had Galloway to identify county rec ord book which had been introduced and which Jess A. Galloway had pre viously swore contained several blank pages between recordings of regular | ijiinutes of the board meetings and the minutes ordering sale,.of the note. Ira Galloway assumed full responsi bility for the -condition -of the. book, 1 testifying that he arranged it in that manner so as to keep the record* dealing with notes and bonds in one section and record* of ordinary and . regular meetings in sequence in the j other part of the book. Swore that( commissioners did not. even know that, the book was planned that way.; that . he did it on hip own accord and fori bis own convenience. Galloway told of ' the aet-"V?f "thS- leg which authorized tl refunding bonds to nwneroiM 'Outstandlr. ?< falling due and about i K told of two. $75,000 not r during the yearv and sai p the not? iale'-inoney n these note*. He teatiflf Northrup, consulting i Charlotte., asfleted Mitch jng at^t^aentg and reap 4 J'/'AContinued on page * EVENT The Lowest Price for the Most Wear "OXHIDE" BRAND ? . ]| BOYS' OVERALLS -U jb 1 <;rs MJN, ; Son. Brcv .'crs, ;Avort cf aldi Wort aub I wort Uapli oinir ' ?'ort jres K 1 '-fain 1 1 veil. Made for rough-and-ready youngsters. Theve. find it hard to wear out these overalls. Trvdl. stitched in all seams. Two-seam legs. High style. They come in sizes 4-16. ?" enc Sensationally Low Priced! PRINTED COTTON WASH DRESSES Absolutely Fast Color Batistes . . . Voiles . . . Sheer and Cool , EACH Fascinating Patterns and the New J Style Details BATH TOWELS Double Thread Terry Soft, Absorbent 10 for 49c A Big Value! ? J. ? > <? 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