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AMERICAN SUR. CO. v. SIEBRECHT

March 18, 1935

AMERICAN SURETY CO. OF NEW YORK
v.
SIEBRECHT et al.



The opinion of the court was delivered by: BYERS

BYERS, District Judge.

This is a motion to dismiss, for lack of jurisdiction, bill of complaint in equity in which an accounting is sought from thirteen individuals constituting the officers, directors and members of the executive committee of the Long Island National Bank, now defunct.

The case has been at issue since December of 1930, and has now emerged to this extent from an unexplained coma.

 The material paragraphs of the challenged pleading are the following:

 Fourth: Alleges in substance that the action is brought by the plaintiff as assignee of the bank to compel the defendants to account for sums of money taken and appropriated by the officers and directors from the funds of the bank by reason of their misconduct, and to hold them accountable for losses sustained by the bank so caused "under the provisions of the National Bank Laws and of the Revised Statutes of the United States."

 The amount involved is said to be $41,452.44.

 Seventh: Alleges misapplication and misappropriation of the following items: $38,490.50, $1,229.94, and $1,732.00, making a total of $41,452.44.

 These losses are said to have been "caused by the negligence of the above named directors and officers and each of them and by the neglect of their duties," in that:

 Cashier's checks were issued by two of the defendants, the cashier and assistant cashier, in the name of the bank without the latter's having received equivalent, values; this is said to have been directed, aided and abetted by the members of the executive committee and directors; also that the directors "knowingly permitted, assented and approved of the acts and actions of the said officers and of the executive committee."

 The foregoing seem to point to a larceny.

 Eighth: Alleges in substance that stock trading accounts in fictitious names were opened with stock brokerage concerns in the city of New York by the cashier, assistant cashier and members of the executive committee through which accounts personal transactions were conducted "in violation of the provisions of the Revised Statutes of the United States relating to national banks."

 Payments for stock and securities purchased and sold in said accounts were made by the issuance of cashier's checks which were issued, delivered and paid without receipt of funds or credits from the individuals involved, and "that by said transactions debit balances were unlawfully created in the cashier's check account and which balances, at times, totaled more than $146,241.08, all of which operations and transactions were knowingly permitted by the members of the board of directors of the said banking association in violation of the statutes as aforesaid."

 Ninth: This alleges borrowings by the officers and members of the executive committee from the bank in their own names and in the names of their relatives and in fictitious names "and in many instances and on many occasions causing the amount of their loans to be in excess of the lawful limit, and in addition thereto committing forgeries of the names of the makers of the notes and causing falsification of the bank's records and reports, and all of which transactions were knowingly permitted, assented and approved by the other members of the board of directors in flagrant and wilful violation of the Revised Statutes of the United States."

 Tenth: This alleges in substance the falsification of the bank's books and the transfer in and out of the suspense account of debit balances created as stated; also the issuance of a series of spurious promissory notes for the purpose of discounting the same and applying the credit therefor in liquidation of the suspense account; that these notes were approved by the executive committee and entered upon the discount register with the approval of the directors; that there was falsification of the books in reference to these transactions ...


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