by Paul R. Spitzzeri
Continuing from yesterday’s post about a meeting of some 125 persons comprising creditors of the failed Temple and Workman bank at the Los Angeles County Courthouse on 4 February 1876, we pick up the coverage of the Los Angeles Herald as published in that paper the following day.
Judge S.S. Thompson was in the midst of discussing details of the lands held by bank owners F.P.F. Temple and William Workman and subject to mortgages held by Elias J. “Lucky” Baldwin from loans he made to the bank. Thompson expressed the view that the Baldwin mortgages were frauds, especially in respect to the compelling of Juan Matias Sanchez, a long-time friend of Temple and Workman, to subject his share of Rancho La Merced in the area of modern Montebello to the loan, when he was interrupted by assignee Daniel Freeman, who stated “that the transactions which the Judge especially referred were actual purchases [by Baldwin] from Mr. Temple,” though there was no furthe explanation.
Thompson continued by dismissing Freeman’s comment as “a little improvement in appearances, but there are many things remaining to be explained.” He claimed that, although the Baldwin loan was to be in two installments of $310,000 and $30,000, “Temple only received $250,000,” even though the inventory listed Baldwin’s mortgages at $340,225.
Thompson argued that the means of compounding interest in the loan “was ruinous and oppressive; it exacted a sort of double compound interest upon interest.” This was because the interest was to be 2% per month, “but they did not like the draw the paper at this rate and so they computed one-half of the interest and added it to the principal, and the notes at one per cent a month.” This made the $250,000 that he said Temple received, jump to $310,000 in short order. The Judge felt “a Court of bankruptcy could set aside all preferred claims” and that “he was decidedly in favor of having the estate thrown into bankruptcy.”
Lawyer John G. Eastman responded that he was in opposition to everything Thompson stated “except in calling the Baldwin transaction a fraud.” The Herald then reported that attorney and future Los Angeles mayor Henry T. Hazard, lawyer Will Gould and others engaged in “a lengthy and rambling discussion. After this, Eastman’s resolution that the bank not be thrown into bankruptcy was “unanimously carried.” Hazard then followed and “moved that the advisory committee [of seven–see part one of this post] confer with creditors and obtain the agreement of a sufficient number to secure the estate from bankruptcy.” This was also approved unanimously and the meeting ended.
The report of the meeting in the Los Angeles Star varied in a few particulars from that of the Herald. For example, a lengthy speech attributed by the latter to assignee Freeman was stated, in the former, to have been by attorney Eastman “as counsel of Temple & Workman.” Also, whereas the Herald reported on the exchanges between Thompson and Eastman from a factual standpoint, the Star noted that Eastman’s argument against bankruptcy was “it seems to us . . . very conclusive.”
The Star also reported that Hazard spoke of his opposition to bankruptcy and that Domingo Rivara, one of the seven committee members appointed to work with the assignees, “stated that Mr. Baldwin said to him that he would accept his money at any time,” a contradiction of what Thompson said when he claimed Baldwin would not accept payment of the loan until the term of the loan was completed and the maximum amount of interest accumulated.
However, George E. Long, who was the overall creditors’ committee chair and who opened the meeting, said that “Mr. Rivara was not quite right” and that what Baldwin said was “he would take his money with one year’s interest added” and “take off a good deal,” presumably of the total funds owed to him. After Gould and others also stated their opposition to bankruptcy, the Star account concluded, Hazard’s motion to have creditors go to the Los Angeles Commercial Bank, of which Spence was a cashier, or the office of Henry C. Wiley, another creditor and one of the three advisory committee members, “and sign a paper” that they opposed bankruptcy was passed and the gathering adjourned.
As the evening daily paper in town, the Express published its version of the meeting the same day and it gave a larger attendance of 150 persons. It was Long who recommended the assignees give a report, at which time Spence stepped forward and said that there was no formal report to give, but that “he held in his hand a copy of the inventory of Temple & Workman” and that law mandated that the owners were required to provide a report. Spence stated that, if confirmed as assignees, he and Freeman “would be pleased to have an advisory committee of three” to help them in their work.
Once the motion to have three men appointed was carried and the process of deciding who the trio was to be began, it was then that Hazard protested that the creditors should discuss “the merits of the different individuals named” first. After this, Eastman proposed having a seven-person committee named to come up with the three advisors. But, “the hour at which the meeting was called being incompatible with an evening paper” and the paper’s impression that “harmony was likely to prevail,” its representative left the meeting.
On the 5th, the Express resumed its coverage and it agreed with the Herald that it was Freeman, not Eastman, who spoke after the committee issue was settled and was then followed by Henry Barrows’s suggestion of a vote “to ascertain the sense” of whether the bank should be thrown into bankruptcy.” It was only after this that Eastman made his commentary, as reported in the Star, and suggested the resolution that the creditors vote to deny bankruptcy for the failed institution, a measure supported by Barrows.
The Express then covered Judge Thompson’s long address in support of putting the bank into bankruptcy proceedings, Eastman’s responses and then the remaining discussions by Rivara, Long, Hazard, Gould and others. Then, Eastman’s resolution and Hazard’s motion were voted upon and an ad taken in the papers asking creditors to go to the Commercial Bank and the office of Henry Wiley to register their view on bankruptcy or continuing with assignment.
As to the matter of Sanchez and his putting up his share of Rancho La Merced for the Baldwin loan, merchant Harris Newmark recounted four decades later in his 1916 memoir Sixty Years in Southern California that Sanchez approached him about Baldwin’s demand and told Newmark “no morir de hambre“ (“I don’t want to die of hunger”). Newmark said he counseled Sanchez to reject the overture, although it is almost certain that Sanchez did not tell the prominent merchant one important detail.
When William Workman, in late 1850, obtained the Rancho La Merced by foreclosure (a bit of an irony given what Baldwin was to do to the Workman estate and the Temples in 1879), he deeded the ranch to Sanchez, who was previously the foreman on Workman’s share of Rancho La Puente, and to F.P.F. Temple.
However, those deeds were never recorded and were, instead, held by Workman. It was not until Baldwin made his loan to the bank late in 1875 that this was revealed and, from a legal standpoint, put Sanchez into a difficult position with his long-time compadres. He did, indeed, have his share of La Merced included in the loan, subject to mortgage, and included in Baldwin’s eventual foreclosure!
We’ll continue with more Temple and Workman bank assignment posts in upcoming days, so check back later this week!