Garden Grove Bank Law Suit, 1917

STEARNS, MCFUEN, SIMS

Posted By: Sharon R Becker (email)
Date: 3/11/2015 at 03:23:08

The Leon Reporter
Leon, Decatur County, Iowa
Thursday, January 27, 1917, Page 1

HAD AN ODD COMPACT
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C.S. and F. E. Stearns Kept Profits of Garden Grove Bank in Common Fund for Many Years.
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An agreement, similar to the extraordinary Fleming Brothers' compact, was revealed in federal court today, says last Thursday's Des Moines Capital.

For eleven years two Iowa brothers, C. S. and F. E. Stearns, operated the First National Bank of Garden Grove, now out of existence, without compensation or salary. The alleged agreement provided that each partner should draw from the profits such sums of money as were needed for living expenses.

Stockholders today applied for an order of court restraining C. S. Stearns from paying himself a back salary of $2,500 a year from October 1, 1900, to April 6, 1911. According to the petition, the bank was a sort of [a] family affair.

Plaintiffs are Fred Stearns of Chicago, Ill., Mary E. Stearns of Los Angeles, Co. [Ca.?], Lena McFuen of Chicago, Ill., and Nellie Sterns Sims of Union county, New Jersey.

When one of the brothers, F. E. Stearns, died on April 6, 1911, the stockholders decided that the bank should go into voluntary liquidation. C. S. Stearns was named liquidating agent.

There was some difficulty over a settlement as a result of which Fred Stearns, as administrator of his father's estate - F. E. Stearns - brought suit for an accounting in district court. The action is still pending.

C. S. Stearns, the surviving brother, who controlled a majority of the stock, then called a meeting and voted himself a back salary of $2,500 a year and compensation as liquidating agent. The latter was to be five percent on all cash collected and all notes held by stockholders. C. S. Stearns then organized the C. S. Stearns State Bank of Garden Grove, transferring to the new institution the good will of the former one, it is claimed.

Plaintiffs contend the back salary voted Stearns is exorbitant and that the good will of the retired bank is sufficient compensation.

Transcription by Sharon R. Becker, March of 2015