by Paul R. Spitzzeri
With the revenue derived from the oil wells developed from mid-1917 onward at the family’s ranch near Montebello, Walter P. Temple embarked on a career as a real estate and oil developer through greater Los Angeles and, with respect to the latter, beyond. His real estate work was largely concentrated in the San Gabriel Valley, although he owned property in what is now Canoga Park and was part of a syndicate that built two commercial buildings in downtown Los Angeles.
In the valley, his projects included efforts in San Gabriel, El Monte and Alhambra, and, in spring 1923, he launched his biggest effort, creating the Town of Temple (renamed Temple City five years later). During the same period, he expended significant sums on improvements at the Workman Homestead, which Temple purchased in late 1917 and, after the expiration of lease at the end of the following year, engaged in the remodeling of the Workman House, the reconstruction of most of El Campo Santo Cemetery, the renovation and addition of many outbuildings and, finally, the long construction of La Casa Nueva.
In spring 1926, it was decided to issue bonds to pay for much of the real estate work that the Temple Estate Company, which was recently formed to handle the development projects outside of Temple City (which had its own firm, the Temple Townsite Company). Of course, bonds have interest payments due on a regular schedule, so, provided that Temple’s investments brought in enough revenue, along with oil royalties, to handle the obligations, the plan was obviously considered a reasonable course to take.
The problem, however, was the the wells at Montebello, which formed the lion’s share of income, proved to be rather shallow and production declined dramatically by the mid-1920s. Unfortunately, as oil revenue dropped, real estate expenses rose (along with the expensive building of La Casa Nueva) and, as is often the case during boom periods, Temple plowed into commercial building projects so rapidly that revenue from leases and rentals was not keeping up with expenditures.
La Casa Nueva was finally completed by the end of 1927, several months after the Temple Estate Company’s final building project, the Edison Building in Alhambra, was finished. By early 1928, it was clear that there were significant issues at the newly renamed Temple City, mainly that speculators bought most of the lots hoping to “flip” them for a quick profit and that a well-intended infrastructure law, the Mattoon Act, which applied to unincorporated communities like Temple City, required neighbors of a defaulter on property taxes to pay the late assessments–this quickly killed new sales in town!
So, on this day ninety years ago, Temple’s attorney and business partner, George H. Woodruff sent a letter informing Temple that a separate missive, a copy of which was attached, was presented to another partner and business manager, Milton Kauffman, explaining “the situation in which the Temple Estate Company now finds itself as I see it, and making certain recommendations of what I think ought to be done in the interests of the estate and yourself and family.”
The letters were preparatory to a company board meeting to be held in a few days at the office in the Edison Building. Woodruff added in his correspondence with Temple that “the situation is very serious and requires not only immediate but drastic action” and the attorney concluded “I cannot impress too strongly upon you the necessity for thoughtful consideration of this whole matter.”
In the eight-page letter to Kauffman, Woodruff laid out his thoughts in great detail and started with the idea he’d had “to get Mr. Temple to agree to turn over all of the property of the Temple Estate Company to the Temple Holding Company.” This latter would have been comprised of a board of directors “of disinterested parties” who would come up with the funds to finance the company’s business obligations so that it would “prevent the estate from suffered inordinate sacrifices and losses.” This, obviously, did not happen.
Instead, Woodruff warned,
We are now approaching the precipice in the affairs of the Temple Estate Company, and the only way I can see to save the company from a complete financial wreck, or at least to avert what appears to me to be a very serious and dangerous situation involving the possible loss of the bulk of the property of the estate, is to do something now which may at first thought seem to be a very drastic course to take.
The attorney based his recommendations on “a long and careful study” and “a close analysis” of the firm’s financial position and the need for further financing or some kind of relief with the idea of providing “the most [that] might be realized and saved out of the assets of the company for Mr. Temple and the family.” Woodruff outlined some of the biggest debts facing the firm, including recent loan from an oil company using the Temple lease property at Montebello as collateral, a move the lawyer referred to as “borrowing money from Peter to pay Paul.”
It was then decided “that the only way to save the estate was to proceed immediately to sell practically all of its assets except the Montebello oil property and the Workman Homestead ranch.” The concept was to get Temple to establish sale prices and list the properties through Davis-Baker Company, a realty firm in Pasadena, recently hired to market and sell the Temple City project. This was done and six months was given to handle the publicizing and sale of the estate company’s holdings, except for the oil property and the Homestead, “to enable the company to meet obligations which were then due.”
A significant amount of detail was added by Woodruff about how much money was owed to which creditors, which was followed by some alternatives to how to deal with the issue of paying these liabilities before matters got so bad that it would lead to disaster for the company. Two of these involved selling oil property in Ventura or commercial buildings in Alhambra.
In any case, Woodruff’s judgment was that selling off these properties might reduce significant amounts of debt, but still leave the matter on a reliance upon the Workman Homestead as an income-producing entity, through walnut raising, that had to generate enough funds to pay off other debt. This also presumed that oil revenue at Montebello would be sufficient to help with liabilities, but the lawyer questioned whether this would be the case.
To Woodruff, “the most practical and satisfactory” solution was to get a group to underwrite the debt of the company in return for a half-interest in the Montebello oil property and the Workman Homestead with no compensation otherwise involved. If this were done, it would mean that “Mr. Temple be allowed and paid $1500 per month for carrying on the Homestead ranch and for his living expenses” until debt on the Montebello oil property was paid off and, beyond that, he’d receive half of the returns on oil generated. If Montebello revenue fell below $5,000 per month, the royalties would be forfeited but the underwriters would still guarantee Temple’s household expense amount.
Meanwhile, other Estate Company property, such as at Alhambra, and the liquidation of Temple Townsite Company holdings and the land at Owensmouth (Canoga Park), could generate a half million dollars to apply toward indebtedness. The idea would allow Temple to keep his interests in Ventura, where active oil drilling was ongoing with the expectation of significant returns in the area north of the city on the road to Ojai, as well as assist business partner Sylvester DuPuy, an investor in Temple City, to keep his thirty-acre ranch where his large mansion (recently known as the home where music titan Phil Spector killed a woman, for which crime he is in state prison) was located in Alhambra.
Now Milton I want you to think this all over very carefully and weigh and consider the various suggestions made in the light of the best interests of the Temple Estate Company and Mr. Temple and his family, and let me know very promptly what your advice and recommendations are.
He went to conclude that “it is extremely important that we agree upon a course of action with as little a delay as possible” because time was running out “in order to provide money for protecting the assets of the estate and conserving such credit as the estate now has.”
Despite Woodruff’s detailed missive and his carefully constructed plan, it was not carried out and other measures were enacted. We don’t have responses from Kauffman or Temple, but it is clear that a different course was adopted and future posts will look into what happened as the principals in the Temple Estate and Temple Townsite companies grappled with the problems that eventually engulfed both, as Woodruff pointed out in his letter.