The herald and news. (Newberry S.C.) 1903-1937, October 14, 1910, Image 1
.A1
VOLUMXE XLTULI NUTMBER S*2. NEWBERRY, SOUTH CAROLINA, FRIDAY, OCTOBER 14,91910.TWCA.EE,$50AYER
. A. CARLSLE CASE
IN FEDERAL COURT
SETTLEMENT MADE AND ACCEPT
ED BY BANK.
Tresident B. C. Matthews Testifies as
to Agreement Between Bank
and Carlisle.
Greenville News, Oct. 12.
That Milton A. Carlisle, former
president of the Newberry National
bank, now on trial on the charge of
'misapplication of the funds of the
bank, in the special term of the United
States district court here, made an
-assignment of a considerable amount
-of personal property for the benefit
of his personal indebtedness to the
-bank, developed. yesterday afternoon
during the cross-examination of B.
C. Matthews, present president of the
'bank.
The personal property included cer
tain life insurance policies, to the
extent of about ten thousand dollars,
.face value, which are now the prop
,erty of the bank, and are enumerated
among the assets of the same, accord
ing to evidence brought out yesterday
afternoon. The case was gotten well
into yesterday, but it is probable that
at least another day will be consum
ed in taking of evidence, and another
in the arguments, and present indica
tions do not point to the rendering of
-the verdict before Friday, at the ear
liest.
Sometime was consumed yesterday
morning by the court, which was
called by Judge Brawley about 10
o'clock, in the drawing of the jury.
When the panel had been completed,
the defendant was asked to enter his
plea, but his attorneys asked that the
indictment be read. After some ar
-gument on this point, Judge Brawley
ordered the indictment read. The
-document is quite lengthy, containing
-over three hundred pages of type
-written matter, in which are set forth
'162 separate counts. It was at first
supposed that it would take the re
mainder of the day to get through
*this, but District Attorney Cochrane
stated that all the counts could be
-embraced under eight or nine sep
arate heads, and that it would be nec
essary to read only the first of each
division, the others being different
-only in details of figures, name, etc.
'Counts 1 to 75 inclusive, pertained
to misapplication of the funds of the
'bank with regard to the personal ac
-count of Mr. Carlisle, and alleged that
,during the years of 1907 and 1908, for
the most part, he overdrew his ac
-count, and made the overdrafts good
~by his personal notes, unsecured, this
being done, it is alleged, without the
-consent or approval of the directors,
or officers of the National Bank asso
ciation. Count 74 related to the plan
-tation account of Mr. Carlisle, against
which the allegations were of th.e
same nature. as also were counts 75
'and 146, which related to the account
of the Cold Point Granite company, a
-corporation alleged to have been in
solvent from its incipiency, and of
which Mr. Carlisle was president and
treasurer. The remainder of th.e
counts related to accounts of indivi
duals, and to loans which had been
made, it was alleged, upon drafts up
on cities, etc.. which were refused
payment upon presentation.
After the reading of the indictment
M.Carlisle entered his plea of not
'guilty to the entire indictment, in
-cluding all counts. Mr. Cochrane, the
district attorney, then read laws num
ber 5,209, and 5,208, a violation of
which former composes the bulk of
the indictment. He then mad. a state
ment of what the government would
endeavor to prove in the case.
The government would offer to
prove. stated Mr. Cochrane, that the
National Bank of Newberry was an or
ganized national bank, that Mr. Car
lisle was president, and that during
the year 1908, he was insolvent. or
hopelessly involved, and that he
-should have known that any money
drawn by him would not or could not
have been paid back by him.
That all that time, he was over
drawing his account, and that the
government would also offer evidence
that he had previously overdrawn his
account, and was drawing notes
against these overdrafts, and that he
had done this without the authority
of 'be board of directors. His in
debtenes to the bank, under these
circumstances, would be shown to be
about $19,000. The government
would also show, according to Mr.
Cochrane, that the directors had pass
ed resolutions and taken other steps
to prevent this misapplication of the
funds. Also, that the Cold Point
Granite company, was an insolvent
corporation from its incipiency, and
that no money had actually beeen paid
out by the incorporators. That Mr.
Carlisle during 1908, was an officer
and stockholder of the Cold Point
Granite company, and its president,
secretary and treasurer, and that as
an officer, he had made overdrafts on
the deposits in the National Bank of
Newberry, and knew, or should hav3
known that by his action of permit
ting overdrafts from time to time, the
association would be cheated, and
that the board of directors did not au
thorize this, but tried to check it. The
government would show that the total
amoun of the overdrafts on the ac
count of this company, was about $15,
000, and that this amount was lost to
the association.
The government Would also show,
said Mr. Cochrane, that Mr. Carlisle
as president of the Cold Point Gran
ite company, drew three separate
drafts in favor of the Cold Point
Granite company, and obtained the
actual cash. These drafts were re
fused payment, and when the persons
upon whom drawn did not pay the
money, the amount was not turned
over to the bank. The government
would also show, stated Mr. Cochrane,
that one J. J. Lane was Indebted to
the bank at the time Mr. Carlisle was
president, and was willing to pay to
Mr. Carlisle $400 for the extension of
this indebtedness, this money was not
paid to the bank.
Mr. B. C. Matthews, present presi
dent of the Newberry National bank,
was the first witness placed upon the
stand, after the attorney had finish
ed his statement of the case. He re
mained there only a short time, the
only matters brought up at this time
being the identification of the records
which had been brought up from New
berry, for the case. Mr. J. H. Hunter
was also placed on the stand, to testi
fy that he had been secretary of the
directors for a time, and that the
minutes as kept by him were correct
to the best of his knowledge. The
same evidence was obtained from Mr.
F. N. Martin. at one time secretary for
the directors' meeting.
While Mr. Hunter was on the stand,
however, a number of extracts from
the minutes were read, showing the
action of the directors to prevent Mr.
Carlisle from making these alleged
loans and discounts in violation of
the banking laws. The minutes con
tained resolutions, adopted to prevent
any officer from making loans, ex
ceeding certain minimums, without
the consent and approval of certain
committees, the finance committee, at
one time, and the discount committee
at another, the wording, figures, etc.,
of the resolution being amended from
time to time, but appearing to all
intents to preventing an officer from
making loans without the knowledge
and approval of a certain number of
the directors. These excerpts from
the minutes began with September,
1901, and continued through April 6,
1908.
Mr. Matthews was then again put
on the stand. After a number of
checks, notes, etc., bearing on the
case, had been identified, intended to
be put in evidence later, stated that
he had been put on the discount com
mittee, mentioned above, during 1908.
by the president. He was given the
minute book of this commitstee, which
at that time had the task of approving
the loans, etc., of the president, as
mentioned, and was asked by the dis
trict attorney if there was any au
thorization for overdrafts on the per
sonal account of Mr. Carlisle. Mr.
Matthews stated that he had recently
looked through the book hnd eould
find none. There was none, it was
also brought out, for those on thLe
account of the Cold Point Granite
company, and no authoriaton~ of the
taking up of the overdrafts by person
al notes. There was some discussion
as to the Cold Point overdrafts, but
nothing definite was brought out as
to any action of the committee.
Court adjourned at one-thirty for
the dinner recess, and the sessIon re
sumed at 4 o'clock. Mr. Matthews
was again placed on the stand, and
his testimony was continued.
mittee in regard to these overdrafts
was investigated farther, but among
the principal important points brought
out were that the committee had de
manded the payment of certain over
drafts of Mr. Carlisle by the first of
December, 1908, the date of this or
der being fixed at about a month
prior to this time. From the loose
leaves from the bank books, brought
to the court, a list of the checks
drawn by Mr. Carlisle after he had
been asked to make good the over
drafts wps read. Letters were also
offered in evidence, from Mr. Mat
thews, after he b,,! been made presi
dent, from Mr. Carlisle, authorizing
a transfer of bank stock.
In reply to questions of Mr. Coch
rane, Mr. Matthews stated that the
capital of the bank was $150,000, and
that its surplus, at the time in ques
tion, was about $35,000. This in
cluded the "bad debts" besides the
indebtedness of Mr. Carlisle, amount
ed to about $10,000, and that includ
ing all these debts, the surplus was
Impaired to such an extent that it
would not have brought par.
Mr. Dominick, of the firm of Blease
& Dominick, representing Mr. Carlisle,
asked Mr. Matthews to name the de
posits made by Mr. Carlisle during
the last two months in 1908, and to
compute the amount of the checks
drawn by him. The evidence obtained
in this way appeared to show that
Mr. Carlisle had reduced his over
drafts to a considerable extent, after
he had been notified by the committee
to make good the overdraft by the first
of December. The deposits made, it
was brought out, were the salary of
the defendant.
In answer to questions of Mr.
Dominick, Mr. Matthews stated that
he had been connected with the bank
since 1906, that in 1907 he was elect
ed a director, and in 1909 president;
that it was on the 30th of March that
he had been appointed on the dis
count committee. It was brought
out that the duty of the directors was
to keep a supervision of the affairs
of the bank, and Mr. Dominick at
tempted to have Mr. Matthews show
the number of directors meetings that
bad been held since the establish
ment of the bank, but on account of
the time which would be consumed,
this was passed over until a I later
time, though the attorney stated that
it was very material to the case.
Mr. Matthews stated that he did
not know anything at all about in
debtedness of Mr. Carlisle until he
became a director, and then did not
learn the details until 1908. An ex
amination of the books was made by
Mr. Matthews to show the overdrafts,
indebtedness, etc., of Mr. Carlisle on
his personal account, during 1907.
These figures were given, and it was
stated that on the 24th of December
the ainount of these overdrafts was
$3,318.85, aind Mr. Matthews stated
that he did not know of any security.
At that time, .stated Mr. Matthews, in
aniswer to questions tending to find
out why the directors did not take
some steps to investigate the mat
ter, he did not know of the over
drafts of Mr. Carlisle, being under
the information that' a director had
no right to look over the books of
the bank, but that he knew that Mr.
Carlisle had overdrawn.
A reference to the books was made
to get the amount due the bank, in
the way of notes, during 1907, and
the list of these was read, most of
them being signed only by Mr. Car
lisle. These totalled $14,717.15, and
together with the overdraft, made a
rough total indebtedness of about
$14,000 during 1907.
"Yet during 1907, while you were
a director, having charge of looking
into this matter, this was allowed to
go on?" asked Mr. Dominick, and Mr.
Matthews answered "Yes." When ask
ed 'what was done in regard to these
accounts, by the board of directors
through the time that he was on the
board, from 1907 to 1910, Mr. - Mat
thew stated that nothing was done
in 1907, and nothing in 1908, except
what appeared on the minute book, re
ferTing to the action demanding the
payment of the overdraft by Decem
ber 1, etc.
When asked if any report was made
on notes, Mr. Matthews found the muin
utes of February 21, 1907, at which
the finance committee reported that
it had examined and approved the,
loans up to January 22 of that year.
as per the certifieste attached. which
ws e ad. A reot of the finance
committee, also on loans up to Feb
ruary 8, of that year, was found, but
it does not appear to have been
brought out satisfactorily that this
was entirely adopted by the directors.
A note, however, of the Cold Point
Granite company, made on December
29, 1906, was located, which had been
put on the books on January 24, 1907,
and Mr. Dominick attempted to show
that this fell within the term covered
by the committee's approval, but does
not appear to have been entirely suc
cessful. An examination into the J.
J. Lane account was postponed until
certain records can be obtained from
Newbirry, which are promised the
court this morning.
Another examination into the min
utes, however, showed a report from
the finance committee, under date of
April 18, 1907, stating that all loans
had been examined by the committee
and found in good shape. In Mr. Hun
ter's handwriting was found written
here the letters "Appr" signifying that
thd report had been approved by the
directors.
Mr. Matthews was asked what ac
tion had been taken in regard to Mr.
Carlisle's indebtediness after Mr.
Matthews became president of the
bank. A letter was read from Mr.
Carlisle to Mr. Matthews, making an
offer to make an assignment, and
offered to the bank a list of life in
surance policies, alggregating about
ten thousand dollars, face value, ten
shares of stock in the B. F. Johnson
Publishing company, and $1,875 in
cash, in settlement of his Indebted
ness to the National bank. This prop
osition was made with the statement
that all the personal obligations of
Mr. Carlisle was to be marked off, and
he be sent a receipt in full.
The minutes of the directors' meet
ing following this were put in evi
dence. At that meeting, the offer was
considered, there being fi-ve out of
seven directors present, and a resolu
tion adopted "that the president is
hereby authorized to make a settle
ment with M. A. Carlisle of his per
sonal obligations with the National
bank, with full power to act, in the
premises." When asked what action
was taken by him, Mr. Matthews stat
ed that he had sent Mr. Carlisle a re
ceipt for them, which was read some
what as follows:
"I hereby acknowledge receipt of
policies to be applied to the personal
obligations of M. A. Carlisle, and also
ten shares of the B. F. Johnson Pub
lishing company stock, and $1,873 In
cash, to be applied in above agree
ment. When policies are properly
signed personal obligations will be
marked paid and delivered." These
obligations were stated to amount to
about $19,000. This receipt made men
tion of a note of $300, of J. A. Black
welder, which had been mentioned in'
the list of property by Mr. Carlisle
together with the policies, but which
had not so far received the indorse
ment to transfer it.
"Have you received the Insurance
policies that are set out here?" asked
Mr. Dominick. "Yes."
"Where are these policies?" "Here."
"In whose possession?" "The
bank."
"To whom do they belong?" "We
think the National Bank of New
berry."
"You had possession of them from
the date they were turned over to
you until this time?" "Yes."
When asked if the bank used them
and treated them as its own property,
Mr. Matthews stated that it did, and
further cross-examination brought
out that the bank paid the premiums
on them, and carried them on the
books as a portion of the assets, to
the amount of about $6,000, the face
value being about $10,000. Mr. Mat
thews stated that he had raeelved
everything mentioned by Mr. Carlisle
in the letter with the exception of the
note referred to; that the cash was
in the form of checks, which were
cashed after being kept for av time.
When asked it the bank had ever re
turned to Mr. Carlisle his notea,
marked paid, according f.o the agree
ment, Mr. Matthews stated that these
had not been returned. A letter to Mr.
Matthews, from Blease & Dominick,
attorneys for Carlisle, at that tine,
demanding either the return of the
securities, or the receipts, notes, etc ,
reaked paid, in cancellation of Mr
Calisle's personal indebtedness, was
read. and Mr. Matthews adi l t'1 N
At this point the court adjourned
until this morning at 10 o'clock, when
the examination of Mr. Matthews will
probably be resumed. The case has
aroused considerable interest through
out this section, and quite a number
heard the testimony yesterday.
The following is the jury which his
charge of the case:
J. A. Brock, J. F. Atkins, Mr. Law
son Thompson, W. C. Watson, E. D.
Bowers, Will Reid, F. J. Alverson,
W. 0. Johnson, Jno. S. Harmon, W.
M. Stowe. J. H. Paris, E. R. Goodwin.
Case Started Monday.
Greenville News, 11th.
For the purpose of hearing the case
of the United States against Milton A.
Carlisle, former president of the New
berry National bank, of Newberry, S.
C., charged with violation of the bank
ing laws, a special term of the United
States District court convened yester
day morning in the federal building,
Judge William H. Brawley presiding.
After a session of about two hours,
the court adjourned to give the attor
neys for the defense the opportunity
to make an inspection of records of
The only matter of importance
the bank, bearing on the case.
transacted was the overruling of a
motion by the attorneys for the de
fense to quash the indictment against
Mr. Carlisle. Court will convene this
morning at 9 o'clock.
A true bill was returned against Mr.
Carlisle by the grand jury at the Oc
tober session of the federal court in
this city last October. The indict
ment is quite lengthy, containing 342
pages of typewriter copy, in which
are contained 162 separate counts.
These charge, for the most part, mis
application of the funds of the bank
to the extent of about $15,000, together
with other violations of the banking
laws. Mr. Carlisle is represented by
Blease and Dominick, of Newberry.
The case is being prosecuted by Dis
trict Attorney Ernest F. Cochrane.
Among the witnesses in the case is
Mr. .B. C. Matthews, present president
of the Newberry National bank. It
appears likely that the case will con
tinue several days, and possibly
throughout the entire week.
Judge Brawley convened the court
yesterday morning at 10 o'clock, and
after the roll of jurors had been call
ed, the case was at once gone into.
When asked if they were ready for
trial, Mr. Dominick, representing the
defense wished to know if all the rec
ords from the bank, which he had
subpoenaed Mr. Matthews to bring.
had been brought to the city. The
list was gone over, and it was found
that with a few exceptions, practical
ly all these were in the court room.
Nearly an hour was taken up hearing
arguments for opportunity on the part
of the defense's attorney to examine
these records of the bank.
Mr. Dominick made a statement
of the difficulty that had been ex
perienced in getting at these records,
which was for the most part corro
borated by Mr. Cochrane, who stat
ed! the position of the bank to be that
the bank officials would not allow a
general inspection of all the books
by any one, and asked that those
records be specified which the attor
neys desired. Mr. Dominick stated
that this could not be done, since
they could not decide without first
looking through the books, what
would be relevant to the defense, and
what otherwise. Judge Brawley de
cided that the attorneys should have
the opportunity of examining the
books, and designated Mr. Mower, one
of the directors of the bank, to be
present with the attorneys, during
the examination, cautioning them
that they were to examine into only
that which they thought to bear cn
the case. The attorneys stated that
they would require all the aftarnoon
to make the inspection, and coaut vas
adjourned until this morning.
Before adjournment, however, Mr.
Blease made a motion to quasf1 the
ndictment. for' which, haweTe?,
Judge Brawley decided that thre was
not sufficient legal reason. and se
eordingly oxerruled. Mr. Blesse's
grounds for the motion were that the
indictment was too cumbersome, and
that the grand jury could not possi
bly have gone over satisfactorily the
entire matter, in one day as the dates
showed they did, rendering a true
bill. The Indictment contained 162
counrts, as stated by Mr. Blease, who
hha* J a o"ni monstrosity," and
the petit jury to render a sweeping
verdict one way or the other on the
whole, without rendering a separate
verdict for each count. In response
to this Mr. Cochrane put forth argu
ment to show that the number of
counts have been grouped under eight
or nine separate divisions, making it
easy for the jury to classify the evi
dence, and render the verdict accordr;
ingly, and hence that the grand jury
could easily have rendered its verdict'
of true bill in one day.
Court will convene this morning
about 9 o'clock, and it is probable that
the case will be gone into immediate
ly, all preliminary motions and objec-.
tions having been disposed of yester
day. Only twenty-seven of the venire
of jurors answered to their names
yesterday, but it is expected that all
will be present today. Before dis
missing the jury for the day, Judge
Brawley gave any who thought he
would be liable to break down during
the case, which would be along and
difficult one, to state this fact in or
der that he might be excuesd. One
man was excused under this condition
President Matthews Still Testifes.
Augusta Chronicle.
Greenville, S. C., Oct. 12.-Efforts to
prove the continued Insolvency of
Milton A. Carlisle during the years
1907 and 1908, characterized the testi
mony put up by the government today
in the case against the former presi
dent of the Newberry National bank,
on trial here in the district court,
charged with misapplication of the
funds of the bank.
The defense endeavored to show
that the affairs of the bank had not
been properly looked after by the di
rectors and many details In regard to
the compromise offered by Mr. Car
lisle in tansferring certain life insur
ance policies and other securities to
the bank in settlement of his Indebted
ness were brought out by both sides.
The examination of B. C. .Matthows
present president of the bank, occu
pied the greater part of the day, but
a number of bankers from whom Mr.
Carlisle had borrowed money were
put up by the prosecution.
It is probable that the trial will con
tinue through the remainder of the
week.
THE NEWS OF PROSPERITY.
Improvements at Farmers' Bank
Missionary Society Meeting
Personal Mention.
Prosperity. Oct. 13.-Mrs. Lewis
Scatt, who has been visting Mrs. 3.
B. T. Scott, left Wednesday for her
home in Pacolet.
President 7W. W. Wheeler, of the
Peoples' National bank, is attending
court in Greenville this week.
Mr. D. W. Waters, of Atlanta, was in
town yesterday.
Mrs. Lizzie Boinest is visiting her
daughter, Mrs. E. 0. Counts.
Mrs. F. R. Hunter, of Newberry, is
visiting Mrs. G. Y. Hunter.
The young people's society will
meet Friday night in Grace Lutheran
church.
The Woman's Missionary society
will meet in Grace Lutheran church
Friday afternoon at 4 o'clock.
Mrs. B. B. Hair went to Newberry
Wednesday to see her mother, who is
very ill.
We see the Farmers' bank building
has on a new coat of paint, which
adds greatly to its appearance.
Mrs. C. M. Harmon entertained the
Literary Sorosis Thursday afternoon.
Mr. B. B. Hair has moved his store
from his old stand, over on Main street
in the S. S. Birge building.
Mrs. L. M. Calhoun, of Columbia,
was the guest Monday of Mrs. C. M.
Harmon.
Miss Kate Thompson is spending
several days in Newberry.
Mr. and Mrs. W. B. Havird and chil
dren have returned to Saluda after a
visit to Mrs. Havird's father, Mr. B. B.
Hair.
Mrs. R. E. Shea.ly is visiting rela
tfres in Pomtaria.
Mrs. Mary Rawl, of Lexington. and~
Miss Salle Barre, of Newberry, are
the guests of Mrs. J. A. Simpson.
Mrs. Rosa Suddath, of Saluda, is
visiting Mrs. L. L. Dominick, on Route
No. 4. She attended services at St.
Lukes last Sunday, there being a
lapse of over 40 years since she was
there before.
.Subscribe now for The Herald and