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X-6855

IN THE

DISTRICT COURT

OF THE

UNITED STATES

FOB THE EASTEHbT DISTRICT OF NORTH CAROLINA

W. I .

Skinner

&

Company, In co rp or at ed

v s

Federal Reserve Bank of Richmond,

Virginia, National Bank

of

Greenvil le,

and F . Wright, Receiver of National

Bank

of

Greenvi l le .

Defendant Federal Reserve Bank

of

Richmond answering

t h e

b i l l

of

complaint

i n

th i s cause f i l ed

or so

much thereof

a s i t i s

advised that

i t

i s mater ia l that i t should answer says:

1 . Defendant Fede ra l Reserve Bank of Richmond admits t h e a l l e g a -

t ions o f t he f i r s t pa r ag raph o f t he b i l l of complaint.

2 .

Defendant Fe de ra l Reserve Bank

of

Richmond admits

t h e

a l l e g a -

t ions

o f t he

second paragraph

o f t he

b i l l

of

complaint.

3«

Defendant Fe de ra l Reserve Bank

of

Richmond admits

t h e

a l l e g a -

t ions

o f t h e

thi rd paragraph

of the

b i l l

of

complaint, except that

i t

says

•i

tha t t h e name of of t h e Receiver o f t he National Bank of Greenvi l le i s no t

W. P. Wright bu t V . P . f r i g h t .

4 .

Defen dant Fe de ra l Reserve Bank

of

Richmond

i s

without knowl-

edge

o r

informat ion suf f ic ien t

t o

form

a

be li ef concerning

t h e

a l l ega t ions

of the

fourth paragraph

o f t he

b i l l

of

complaint,

an d

therefore denies

t h e

same*

5 . Defendant Fede ral Reserve Bank of Richmond admits that on De-

cember

8 , 1930 , i t

received from

t h e

F i r s t

and

Merchants National Bank

of

Richmond certain checks drawn on t he National Bank of Greenvil le, North

I n Equity

No.

ANSWER

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3

Carol ina, a s h e r e a f t e r s e t fo r th} b u t defendant Federal Reserve Bank of

Richmond

has no

knowledge

o r

informat ion suf f ic ien t

t o

form

a

belief

concerning t h e other matters and things al leged i n t h e f i f t h pa rag raph

of the

bill

of

complaint ,

and

therefore denies

a l l

al legat ions thereof

except i n so f a r a s they a r e here inaf te r admi t ted , and especial ly denies

tha t

i t h a s

received

th e

check

i n t h e

b i l l

of

complaint mentioned

as ar-

gent f o r t h e p l a i n t i f f , and says that a l l checks which i t received from

t h e

F r i s t

and


of

Richmond were received

by i t a s

agent f o r that bank only.

6*

Defendant Fed era l Reserve Bank

of

Richmond admits that

on

December

8 , 1 9 3 0 , i t

sent d i rec t ly

t o t h e

National Bank

of

Greenvi l le

c e r -

tain checks a s h e r e i n a f t e r s e t forth upon t h e terms and condi t ions herein-

a f t e r

s e t

f o r t h . Inasmuch

a s

p l a i n t i f f s h a v e f a i l e d

t o

fu l l y desc r i be

o r

t o s t a t e t h e amount of the check mentioned i n t h e b i l l of complaint , d e -

fendant Federal Reserve Bank

of

Richmond

i s

unable

t o s a y

whether

or not

that check was ever received or handled b y i t , a n d therefore denies that i t

was

received

o r

handled

b y i t , a nd

defendant especially denies that

any

check handled by i t was handled careless ly o r neg l i gen t l y , and says that i t

i s a

general

and

u n ive r sa l custom among banks

i n t h e

Sta tes

of

Vi rg in ia

and

North Carolina

an d

elsewhere

t o

send checks which they have received

on

deposi t

o r f o r

c o l l e c t i o n d i r e c t l y

t o t h e

banks

on

which such checks

a r e

drawn

i f

such banks have acco unts with

t h e

col lect ing banks,

an d t o

allow

such banks t o remit o r p a y f o r such checks i n cash , bank d ra f t s , t r a nsf ers

of funds , bank c redi t s , o r other forms of payment and remit tance as t h e

banks making such payment o r remit tance may choose; a n d i n order that t h e

banks

on

which such checks

a r e

drawn

may

have

an

opportuni ty

t o

examine

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X-6855

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such checks before pay ing

o r

remi t t ing therefor ,

i t i s a

general

a nd u n i -

versal custom

t o

send such checks

by

mail

t o t h e

banks

on

which they

a r e

drawn

and to

surrender them

t o t h e

sa id bank6 before payment

o r

remi t -

tance i n t h e manner above stated i s rec ei ve d. Defendant Fede ral Reserve

Bank of Richmond says that such custom was known t o t h e F i r s t and Mer -

chants national Bank

of

Richmond

an d t o t h e

p l a i n t i f f ;

and

defendant

Federal Reserve Bank

of

Richmond says that

t h e

F i r s t

and

Merchants National

Bank of Richmond knew that t h e National Bank of Greenvil le was a member of

t h e Federal Reserve System and kept a n account with t h e defendant Federal

Reserve Bank of Richmond and knew that a l l checks deposited b y t h e Fi rs t

and


of

Richmond with

t h e

defendant Federal Reserve

Bank

of

Richmond would

b e

handled

i n t h e

manner above s t a t e d . Defendant


of

Richmond denies

a l l of t h e

a l l ega t ions

of the

sixth paragraph

o f t h e

b i l l

of

complaint, except

i n so f a r a s

they

a r e

here-

i n

admitted.

7 . Defendant Feder al Reserve Bank of Richmond h as n o knowledge

o r in fo rmat ion su f f i c i en t t o form a be l i e f as t o whether or no t the Na-

tional Bank o f Greenvil le was insolvent on December 8 , 1930 , o r as to when

?• . .

i t became in so lv en t, and therefore den ies that i t w as insolvent when th e


of

Richmond mailed

t o i t t h e

checks received

b y t h e d e -

fendant Federal Reserve Bank

of

Richmond from

t h e

F i r s t

an d

Merchants

N a-

tional Bank of Richmond, an d defendant Federal Reserve Bank cf Richmond

denies that i t knew o r should have known that t h e said National Bank of

Greenvil le w as inso lven t a t that t ime; and denies a l l a l l e g a t i o n s of the

seventh piaragraph o f t h e b i l l of complaint except i n so f a r a s they a r e

herein admit ted.

<

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8 . Defendant Fe de ra l figtierve Bank of Richmond hae no knowledge

o r

in fo rmat ion su f f i c i en t

t o

form

a

be li ef concerning

t h e

a l l e g a t i o n s

of

t h e

eighth paragraph

o f t h e

b i l l

of

complaint

and

therefore denies

t h e

same, except i n so f a r a s they a r e here inaf ter admi t ted .

9 . Defe ndant Feder al Reserve Bank of Richmond h as n o knowledge

o r

informat ion suff ic ien t

t o

form

a

be li ef concerning

t h e


of

t h e ninth paragraph o f t h e b i l l of complaint, an d therefore den ies t h e same,

except i n s o f a r a s they a r e here inaf ter admi t ted .

1 0 .

Defendant Federa l Reserve Bank

of

Richmond admits that prior

t o

December

1 0 , 1 9 3 0 , i t h ad

rediscounted

f o r t h e

National Bank

of

Green-

v i l l e n o t e s , b i l l s o f exchange, and other obl igat ions, t h e aggregate amount

of which was one hundred twelve thousand tw o hundred eighteen dollars and

eighty-six cents ($112,218.86),

an d t h e

said National Bank

of

Greenvil le

had

endorsed

t h e

same

a n d b y i t s

said endorsement waived pr es en ta ti on , pr ot e s t ,

and

no t i ce

of

dishonor,

an d

became absolutely

and

uncondi t ional ly l iab le

f o r t h e

payment thereof,

an d t h e

said no tes , b i l l s

of

exchange,

and

other

obligations were

p o t d u e b u t

were unpaid

on

December

1 0 t h , a t t h e

time when

t h e National Bank of Greenville suspended business, and were then held by

t h e Federal Reserve Bank of Richmond a s t h e owner thereof, an d a r e s t i l l so

held by i t , except f o r a f e w which have been pa id . Defendant Fed er al R e-

serve Bask

of

Richmond denies

a l l t h e

a l l ega t ions

o f t h e

tenth paragraph

of

t h e b i l l of complaint except i n s o f a r a s they a r e herein admitted.

1 1 . Defendant Fe de ra l Reserve Bank of Richmond admits that b e -

fore December

1 0 , 1 9 3 0 , t h e

National Bank

of

Greenvil le

h a d

t r a n s f e r r e d

t o

i t

cer ta in o ther no tes , b i l l s

of

exchange,

and

other obl igat ions, having

a

face value of thirty-eight thousand nine hundred an d f i f t y - f i v e d o l la r s

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X-6855

L

($38,955.00)

t o b e

held

b y t h e

defendant federal Reserve Bank

of

Richmond

a s

s e c u r i t y

f o r t h e

l i a b i l i t y

of the

National Bank

of

Greenvil le

a s e n -

dorser on the n o t e s , b i l l s of exchange, and other obligations rediscounted

a s

above. Defendant Fe de ra l Reserve Bank

of

Richmond

h a s

co l lec ted cer ta in

of the

n o t e s , b i l l s

of

exchange,

and

other obl igat ions

so

t r a n s f e r r e d

t o i t

a s secu r i ty a n d t h e res idue a r e s t i l l h e l d b y i t ; b u t Federal Reserve Bank

of

Richmond

h a s n o t

col lected upon said notes, b i l ls

of

exchange,

and

other

obl igat ions held

b y i t a s

securi ty , such

sum as

wi l l , wi th

t h e

amount

of

t h e reserve balance o f the National Bank of Greenvil le hereinafter mentioned

a n d a l l

o ther cred i t s

due

from defendant Federal Reserve Bank

of

Richmond

t o t h e

National Bank

of

Greenvi l le ,

b e

s u f f i c i e n t

t o

discharge

and

s a t i s f y

t h e l i a b i l i t y o f the National Bank of Greenvil le t o t h e defendant Federal

Reserve Bank

of

Richmond upon

t h e


of

exchange,

and

other

obl igat ions discounted b y t h e defendant Federal Reserve Bank of Richmond on

t h e

endorsement

of the

National Bank

of

Greenvi l le ,

and

which

a r e

unpaid.

Defendant Federal Reserve Bank

of

Richmond denies

a l l


of the

eleventh paragraph o f the b i l l of complaint, except i n so f a r a s they a r e

herein admitted*

Defendant Federal Reserve Bank of Richmond admits that t h e Receiver

of the National Bank of Greenville, whose true name, i s V . F . Wright and not

W.P.

Wright, claims some interest

i n t h e


of

exchange,

and

other

ob l iga t ions t r ans fe r red b y t h e National Bank of Greenvil le t o t h e Federal

Reserve Bank

of

Richmond

a s

a f o r e s a i d ,

and

defendant Federal Reserve Bank

of

Richmond

i s

advised

and

therefore a l leges that

t h e

said Receiver

i s

en t i t l ed

t o rece ive a l l of sa id no tes , b i l l s of exchange, and other obligations when-

ever a l l l i a b i l i t i e s o f t h e said National Bank of Greenvi l le t o defendant


of

Richmond

a r e

fu l ly pa id

and

s a t i s f i e d .

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X-6855

FtiMBft life AltlmTIVE DEFENSE.

1 . Defendant Fe de ra l Reserv e Bank of Richmond further answering

t h e

bill

o f

complaint

i n

this cause fi led says:

That

by

reason

o f t he

f a i l u r e

o f t he

p l a i n t i f f

t o

describe with

c e r t a i n t y

t h e

check drawn

by

Pe rs on -G ar re tt Company

t o t h e

order

of the

p l a i n t i f f

or to

a l l e g e

o r

s t a t e

t h e

amount

f o r

which such check

w as

drawn,

defendant

h a s

been un ab le

t o

ascertain whether

o r n o t i t

ever recei ved

o r

handled such a check, and therefore denies that i t ever received o r handled

t h e

said check,

2 Defendant Federal Reserve Bank of Richmond says that prior t o

September 2 , 1930 , t he Federal Reserve Board h ad duly adopted and promulgated

a certain regulation known a s Regulation J , which became e f f e c t i v e September

2 , 1930 , de f in ing t h e terms and condi t ions on which a l l Federal reserve banks

were authorized t o accept checks on deposi t o r f o r col lect ion, which regula-

t i o n

was in

f u l l f o r c e

and

e f f e c t

on

December

8 , 1 9 3 0 , a n d a t a l l

times

hereaf ter ment ioned,

a n d t h e

terms

and

condi t ions

of

which were known

t o

t h e

F i r s t

and


a nd t o t h e

National Bank

of

Greenvil le.

A

copy

of the

sa id regula t ion

i s

hereto attached, marked Exhibit

A# and

made

a

par t hereof ,

a s

thougfc

i t

were here

s e t

f o r t h

i n

f u l l .

3 , I n

pursuance

of

said regulation defendant Federal Reserve Bank

of

Richmond

ha d

i ssued

a

ce r t a in c i r cu l a r

o r

c i r c u l a r l e t t e r s t a t i n g

t h e

terms and condi t ions on which i t w a s authorized t o accept checks on deposit

o r f o r co l l ec t i on a n d t h e manner i n which t h e said checks would b e handled

an d col lec ted o r re turned b y i t . A copy of the sa id c i rcu la r I s hereto

attached, marked Exhibit B, and made a part hereof a s though i t were here s e t

f o r t h

i n

f u l l .

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X-6855

4 . Defendant Federa l Reserve Bank of Richmond h ad del ivered

copies

of the

sa id c i r cu la r

t o a l l

member banks

i n t h e

Fi f th Federal

R e-

se rve Di s t r i c t ,

and

espec ia l ly

t o t h e

F i r s t

and


of

Richmond

an d t h e

National Bank

of

Greenvil le ,

and the

rece ip t

of

said

c i r c u l a r

h ad

been acknowledged

and the

terms thereof accepted

by the two

member banks mentioned

b y

written acknowledgements duly signed

by the two

banks mentioned^ which were

i n

words

and

f i g u r e s

a s

fo l lows, to -wi t :

FEDERAL RESERVE BA H

01

RICHMOND,

RICHMOND, VA.

Gentlemen:

The undersigned member bank hereby acknowledges receipt

of Circu lar No. 166, of the Federal Reserve Bank of Richmond,

regarding

t h e

Collect ion

of

Cash Ite ms, e f f e c t i v e September

2,

1 9 3 0 ,

which circular supersedes Circular

No. 158 of

February

1 ,

1 9 2 9 .

Yours very truly,

F i r s t & Merchants Nat iona l Bank

Bank

Richmond Virginia

Location

S e p ' t . 6 - 1930 By 0 . C. White

Date As st . Cas hie r.

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FEDERAL RESERVE BANK OF RICHMOHD,

RICHMOND,

VA.

Gentlemen:

The undersigned, member bank hereby acknowledges r e -

ce ip t of Circu lar Ho. 166, of the Federal Reserve Bank of Rich-

mond, regarding

t h e

Collect ion

of

Cash Item s, ef fe ct iv e Septem-

b er 2 , 1 9 3 0 ,

which circular supersedes Circular

No. 158 of

February

1 , 1929 .

Tours very truly,

HATIOmL BAH OF GREENVILLE

GREENVILLE. N . C . -

SEP 6 - 1930 By James L . L i t t l e . P r e s t .

Date

5. On

December

8 , 1930 , def

endant Federal Rese rve Bank

of

Rich-

mond received from various member banks

or

other Federal reserve banks

on

deposi t o r f o r c o l l e c t i o n i n accordance with t h e terms of said c i rcu lar

checks drawn o n t h e Rational Bank of Greenville amounting t o twenty-seven

thousand

tw o

hundred eighty-nine dollars

and one

cent ($27,289,01), which

said checks were on tha t d ay sent by mail b y defendant Federal Reserve Bank

of Richmond t o t h e National Bank of Greenvil le f o r payment o r remi t tance i n

t h e

manner prescribed

i n

said c i rcu lar ,

6 ,

Several

of the

said checks

so

sent

t o t h e

National Bank

of

Greenville were received

b y


of

Richmond from

t h e F i r s t and Merchants National Bank of Richmond; b u t because o f t h e reasons

t

s e t forth above defendant Federal Reserve Bank of Richmond i s n o t ab le t o d e -

termine whether o r n o t t h e check of Person-Garrett Company t o t h e order of

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•»9-

t h e

p l a i n t i f f

was

among them,

Wit

defendant federal Reserve Baric

of

Richmond alleges that a l l o f said checks received frcm t h e F i r s t and

Merchants national Bank of Richmond were sent t o i t f o r deposi t o r c o l -

l e c t i o n i n accordance with t h e terms of the sa id c i r cu l a r , and tha t t h e

F i r s t and Merchants Rational Bank of Richmond knew an d intended that such

checks would h e handled by defendant Federal Reserve Bank of Richmond i n

t h e manner prescribed i n said circular- and in accordance with t h e terms

t h e r e o f . I n accordance with t h e time schedu les mentioned i n said ci rcular

t h e amount o f a l l checks o n t h e National Bank of Greenville received from

t h e F i r s t and Merchants National Bank of Richmond were credited t o

t h e reserve account of the F i r s t and Merchants National Bank of Richmond

two days a f te r rece ip t , h u t such cr ed it was subjec t t o final payment a s

4

s e t f o r t h i n t h e said ci r c u l a r . Defendant Fed eral Reserve Bank of Richmond

d id n o t know that any of the said checks sent to i t by th e F i r s t and Mer-

chants National Bank of Richmond were n o t owned by that bank an d accepted

a l l checks from i t a s agent f o r that bank alone and no t as agent f o r an y

other person.

7. On December 1 0 , 1 9 3 0 , defendant Federal Reserve Bank of Rich-

mond, received from t h e National B#nk of Greenville certain checks which had

been sent to i t o n December 8 , 1930 , amounting t o s ix ty - four do l l a r s and

seventy-three cents ($64.73), which checks were returned

b y t h e

National Bank

of Greenvil le unpaid; an d a t t h e same time Fede ra l Reserve Bank of Richmond

received from

t h e

National Bank

of

Greenvi l le

a

r emi t t ance l e t t e r

and a

charge t icket

o r

order which were

i n t h e

following words

and

f i g u r e s :

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4 1 3

- 1 0 -

REMITTA2TCE LETTER

Use

this form

i n

remit t ing

t o


of

Richmond

f o r

cash l e t t e r de scribed below. (REMIT SEPARATELY

FOR

COLLECTION ITEMS)

From

National Bank

of

Greenville,

Greenville# ' DEC. 8 , 1930

66-153

N.Ct

(Date of Remittance)

To FEDERAL RESERVE BAKE OF RICHMOND*

RICHMOND,

VA.

We are

remit t ing

a s

indicated below

f o r

your cash letter

of

da te shown above ..$27,289<01

Le ss : To ta l amount of unpaid items and protes t fees & 64.73

NET

AMOUNT

DUB.

. . . . . . . . . . . . .. 2 7,2 24 .2 8

REMITTANCE

AS

FOLLOWS:

Draf t

on

Currency shipment tgday

a s p e r

advice mailed under separ-

.

t e cover

.........................

FOR USE OF

MEMBER. BANKS des i r ing reserve account

t o be

charged.

Be

sure

t o

i n s e r t

n e t

amount

to be

charged

CHARGE

OUR

RESERVE ACCOUNT. $27.224.28

i n settlement of cash l e t t e r of date shown below. (Net Amount)

National Bank of Greenvil le ,

Greenvi l le ,

DEC. 8 , 1930

N.C.

66-153

F . J . Forbes

Cashier

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; 4 1 4

- 1 1 -

d* the

National Bank

of

Greenvil le

was a

member

o f t h e

Federal

Reserve System and maintained a reserve account with t h e defendant Federal

Reserve Sank

of

Richmond,

an d a t t h e

opening

of

business

on

December

10 ,

1 9 3 0 , t h e avai lable balance on deposi t i n said reserve account t o t h e credi t

of the

National Bank

of

Greenvi l le

w as th e sum of

seventeen thousand nine

hundred three dollars and ninety-s ix cents ($17,903.96) , and on the said

d ay th e


of

Richmond received

f o r t h e

credi t

of the National Bank of Greenville other sums amounting i n t h e aggregate t o

eight thousand eight hundred twenty dollars

and

for ty- three cents ($8,820.43)

and credited such sums t o t h e reserve account of the National Bank of

Greenvi l l e ,

and

charged

i t s

account

th e sum of

twenty-nine cents ($0,29)

due

and payable on tha t day by the National Bank of Greenvi l le t o defendant


of

Richmond,

so

tha t

a t t h e

c lose

of

business

on

Decem-

b er 1 0 , 1 9 3 0 , defe nda nt Fed era l Reserve Bank of Richmond h ad t o t h e credi t

of the National Bank of Greenville th e sum of twenty-six thousand seven

hundred twenty-four dollars

a nd t e n

cents ($26,724.10),

and at no

time

on

tha t d ay d id i t have t o t h e credi t of the National Bank of Greenvi l l e a a

amount equal

t o t h e

amount

of the

order

s e t

forth above.

* •

9 . At or* about 1:16 P.M. on December 1 0 , 1 9 3 0 , t h e Federal Reserve

Bank

of

Richmond

was

no t i f i ed t ha t

t h e

National Bank

o f

Greenvi l le

h a d s u s -

pended o r closed. A t that t ime t h e Federal Reserve Bank of Richmond had no t

paid, acted upon,

o r

honored

t h e

order above

s e t

fo r t h i s sued

b y t h e

National

Bank of Greenvi l l e , a n d defendant Federal Reserve Bank of Richmond thereafter

charged t h e amount o f a l l checks which i t h a d received a s above stated from

t h e F i r s t and Merchants National Bank of Richmond t o t h e account of that bank

and

n o t i f i e d

i t

tha t

i t h ad n o t

received actual

and

final payment

f o r

said

7/17/2019 frsbog_mim_v34_0404.pdf


X-6855 4 1 5

- 1 2 -

checks.

And not having fTilly answered., defendant Federal Reserve Bank

of

Richmond prays th at p l a i n t i f f

may

take nothing

b y i t s

b i l l ,

and

that


of

Richmond

may he

hence dismissed

a n d r e -

cover judgment against t h e p l a i n t i f f f o r a l l costs by defendant Federal

Reserve Bank

of

Richmond

i n

this suit expended.

And


of

Richmond will ever pray,

e t c .

S o l i c i t o r s

f o r

Defendant

F e d -

eral Reserve Bank of Richmond.

STATE

OF

VIRGINIA

)

)

to-wit .

CITY OF RICHMOND )

George

H<

Keesee, being duly sworn, deposes

and

says that

t he

Federal Reserve Bank of Richmond, a defendant i n t h i s s u i t , i s a corpora-

t i o n ,

and

that

he i s an

o f f ice r thereo f , to -wi t :

i t s

Cashier,

and

tha t

h e

h a s

read

t h e

foregoing answer

and

that

th e

matters

and

th ings therein

a l -

leged a r e true, except i n s o f a r a s they a r e therein stated upon information

and

b e l i e f ,

and i n so f a r a s

they

a r e s o

s ta ted

h e

believes them

t o be

true .

Subscribed

and

sworn

t o

before

me\

t h i s

day of t . 19 30 ,

Notary Public.

Documents

frsbog_mim_v34_0404.pdf