by Paul R. Spitzzeri
1876 was a leap year, so as the month of February closed, there was an extra day, the 29th, along with the other remaining days of the month, for material on the Temple and Workman bank to appear in the editions of the three major daily Los Angeles newspapers, the Express, the Herald and the Star.
The Star, as noted here before, was much quieter in its coverage than its contemporaries in the aftermath of the bank’s collapse, though on the 26th, it had an editorial in which it stated:
We have examined a good many cases in bankruptcy lately, and find no one instance, where the circumstances are in whole or in part like those of the Temple & Workman case, in which small creditors have even got a dollar. One of the most convincing arguments with us why the suspended concern should not be thrown into bankruptcy is drawn from the fact that those who have no interest whatever in the affairs of the concern, and all enemies of the bank, are opposed to the proposed system of settlement, and favor bankruptcy.
On the 27th, the Herald asked a question concerning the questionable loaning policy of Temple and Workman: “How did Temple & Workman loan to Norman C. Jones $25,000 on property to which he not title beyond a mere agreement to convey, and upon which he had paid the petty sum of about a thousand dollars?”
It had been said that there were others who received loans from the institution who did not have sufficient collateral to cover defaults and the Jones instance involved one of the larger sums. The paper merely replied, “Let the bank and Assignees answer” before raising another question of how that transaction “is put upon collectable claims?”
The Herald on that leap year day of the 29th then published a partial list of those who had bills that were receivable by the bank for amounts under $1,000. The paper observed that the list “shows the care the managers exercised in loaning depositors’ money.” It also stated that “some of the notes are good but the bad ones would not bring much by the bushel.”
For the persons with surnames whose first letters were ranging from A-H it is striking that more than a few were directly endorsed by the bank or by its owners and to the sum of over $2,000. Thomas W. Temple, cashier and son of the institution’s president, F.P.F. Temple, and a partner had a note for $600. F.P.F. Temple and two partners had a note for $724. Longtime attorney and judge Volney E. Howard and his attorney sons had noted for almost $1,300. The aforementioned Norman Jones endorsed a note for almost $800. George A. Barter, former publisher of the Star was on the hook for $825 in notes. S.A. Cardona, publisher of La Cronica, the Spanish-language paper, had almost $1,000 in notes. Luther M. Holt, a founder of the new town of Pomona, had one of over $800.
Notably, a few days prior, on the 26th, the Herald stated that the assignees, Daniel Freeman and Edward F. Spence, hired more than just two law firms as stated in other papers. It also had J.G. Howard as one of its attorneys under retainer, though he, his brother and his father had several bills receivable yet unpaid to the institution.
As to the Express, which had been engaged in a battle with the Herald about the wisdom of continuing with the assignment as opposed to throwing the failed concern into bankruptcy, it stated, in its edition of the 29th, that it had spoken to members of the advisory committee working with Freeman and Spence and stated that “we find that their opinions are crystalizing into plans which have the appearance of practicability and the proise of bearing to a successful solution the question of making the estate fully meet the liabilities of the bank.”
There was, however, a caveat. Namely, “the great obstruction in the way of carrying out any practicable plan is admitted to be the mortgages which tie up and cover the entire estate, and until these are god rid of nothing conclusive can be effected.” Obviously, a goal was “to raise the money to release these morgages.” As was reported earlier, the paper stated that “Mr. Baldwin, who is the principal mortgagee, has assured individual members of the Committee that he would be willing, at any time, to cancel his mortgage on fair and liberal terms.”
To raise the $450,000 needed to pay off all mortgages, the idea was to sell Temple and Workman property in Los Angeles, including the Temple Block (estimated value: $250,000); the Spring Street post office building ($120,000) and other holdings at $50,000, which left just $30,000 to be “secured from moneys received from the bank assets.”
As to lands in outlying areas of the county, including Workman’s share of Rancho La Puente, as well as the ranchos La Merced, Potrero Grande and Potrero de Felipe Lugo, west of La Puente, estimated at a total value of $600,000. Alternatively, La Puente could be sold at $400,000 and then have the leftover $50,000 taken from bank assets to pay the mortgages.
If either of the options were adopted, the article went on the assignees could “pay all the expenses of the estate without adding to its indebtedness.” The Express felt that the city property would sell faster than La Puente or the other ranches. Moreover, it continued, “if the estate were disengaged from its mortgages by the sale of the city property, the assignees would be at liberty to sell the ranch property to its best advantage” and subdivide the vast acreage into farm plots.
In fact, the Express proclaimed, “there is no ranch in Southern California which possesses 18,000 acres of finer land than the Puente embraces.” Properly marketed, with comparisons of recent subdivisions at the Centinela tract near the coast and at the new town of Pomona east of La Puente, the ranch could be sold at $40 an acre, which total of $720,000 was the declared value at the time of the release of the bank’s inventory at the beginning of the month. If such an amount was realistic, “that alone would more than pay off the remaining liabilities of the estate.”
Also on the 29th was a report in the Express of the decision of District Court Judge Ygnacio Sepulveda in a case involving the bank assignees against debtors to the bank, in which “Judge Sepulveda holds that the assignment of Temple & Workman does not necessarily conflict with the bankrupt law of the United States.”
Specifically, Sepulveda ruled that the defendants’ arguments about the superiority of the federal statute over the state’s civil code on assignment “is not tenable.” The judge obserrved that state supreme courts consistently held “that the common law relating to assignments for the benefit of creditors is not a part of the State insolvent law, and is not suspended by the bankrupt act.” He cited examples in Michigan, Kentucky, and New York for his decision.
More is to come on the continuing question of how to deal with the Temple and Workman bank assignment.