majority control of the Exeter Bank stock. (N.T. pp. 34, 35.)
15. The Comptroller was not satisfied with the Lippi group management and constantly requested them to get off the Board and divest themselves of their stock, but they refused. (N.T. pp. 34, 54).
16. In addition to August Lippi, his son, Ettore Lippi, was a Director and President of the Bank, and his son, John Lippi, was a Director. (N.T. p. 28.)
17. On February 26, 1962, the financial picture of the First National Bank of Exeter was as follows: Assets - capital stock $75,000.00, surplus $225,000.00, undivided profits $51,000.00, Fidelity Bonds $200,000.00, making a total of $551,000.00. The known defalcation was $460,000.00 and in addition, there were savings accounts not insured by the Federal Deposit Insurance Corporation in the amount of $170,000.00 and there were numerous doubtful and substandard loans.
18. On February 19, 1962, the Comptroller appointed a conservator for the bank. (N.T. p. 41 of Hearing of June 24, 1963.)
19. By letters dated February 19, 1962, the Bonding Company notified the Exeter Bank that it disclaimed liability on the excess bond and that it was seeking information as to the person to whom it should return the purported premium payments. (Defendants' Exhibits Nos. 1 and 2.)
20. It was impossible for anyone to determine what amount the ultimate shortage would reach. (N.T. pp. 21, 22 and N.T. pp. 77, 78 of Hearing of June 24, 1963.)
21. The shortage continued to grow after the conservatorship was terminated. (N.T. p. 39.)
22. During this period, the shortage was not being stated on the bank's books of condition and did not have any effect on the bank's published condition. (N.T. p. 44.)
23. Deposit accounts in excess of $10,000.00 totaled approximately $170,000.00 which were not protected by Federal Deposit Insurance. (N.T. pp. 35, 36.)
24. Marshall Abrahamson, the Chief National Bank Examiner in charge of the investigation of the Exeter Bank, reported to the Comptroller of the Currency that there only remained slightly less than $100,000.00 in capital funds in the Exeter Bank, that the shortage was continuing to grow, that he was fearful the bank might become insolvent, and that in his opinion, an emergency existed.
(N.T. pp. 29-32, 36-38, 51.)
Having in mind the observation of the Court of Appeals that "All matter relevant to a proper consideration of this question [whether a reasonable man on the basis of facts of which he was aware or should have been aware could have reasonably concluded that an emergency existed] will be of course admissible into evidence", the utmost freedom was accorded the parties in presenting their views. Plaintiffs offered no testimony but introduced a few exhibits and the record of the hearing of June 24, 1963. The defendants produced the Chief National Bank Examiner who was appointed by the Comptroller to conduct the examination of the bank.
The following excerpt from letter of April 11, 1962, (plaintiffs' Exhibit No. 18) from the Comptroller to the Chairman of the Committee on Banking and Currency, House of Representatives, Washington, D.C., is here quoted to indicate the thinking of the Comptroller during the developments herein set forth for what light it may throw on the question as to whether a reasonable man could be justified in concluding that an emergency existed at the Exeter Bank:
"As an audit of the bank progressed the amount of the defalcation continued to rise to the point where it was obvious that the bank could not be permitted to continue operating although there was doubt as to whether it could be held to be technically insolvent. In light of these facts, plus the failure of the persons involved to work out a satisfactory sale or reorganization of the bank, a serious question as to the liability by the insurer on the bank's umbrella bond, the fact that a receiver may be appointed by the Comptroller only if he is satisfied that the bank is insolvent, etc., there was no alternative but to seek some satisfactory means of conserving the assets of the bank until the full amount of defalcation could be ascertained, the liability or lack of liability of the bonding company could be better established, and there could be determined whether a prompt sale or reorganization of the bank could be accomplished.