The Bondholders' Attorney

The accusation is old, and the standing claim that Tips never named the man is wrong. In his letter of 11 October 1971 he did not name him: the Reconstruction Finance Corporation had approved a hundred thousand dollars, the loan was “conditioned on getting the holders of the first mortgage note to give their loan first priority,” and “the glass trust found out about this and through a crooked attorney, Ball Brothers purchased these first mortgage notes and would not agree to the loan” [@ev-0041, p. 44]. Nineteen months later, in the speech he wrote for the dedication of the state marker in May 1973, he named him, and gave the particulars the compiled account has always credited to Smith:

“The Tulsa firm had an Attorney named William Church representing them. I went to San Antonio to see Church. He said that he could not do any thing by telephone or mail, but that if we would give him $500.00 to pay for his time and the cost of his trip, he was sure he could get them to agree. We gave him the five hundred dollars and he went to Tulsa. However, instead of getting the agreement for us, he got Ball Brothers Glass Company whom he had been dealing with to buy the notes from the bank and foreclose against us.” [@ev-0041, p. 19]

That is not the story Smith tells, and the difference is the whole question of what Church did wrong. On Tips’ own account Church represented the Tulsa firm — the lender — throughout, and Three Rivers paid his expenses to go and ask his own client for a subordination. Michael David Smith’s 1989 history has the board “enlist[ing] the services of William Church, an attorney in San Antonio who had conducted business with the Tulsa loan company,” who “requested $500.00 to cover his fee and travel expenses to Tulsa,” and who, unknown to the board, “also had another client: The Ball Brothers Glass Company of Muncie, Indiana” [@ev-0039, p. 26]. Same man, same fee, same errand; a different client list, and therefore a different offence.

The commissioned transcript of record supplies something neither of them had — Church’s own correspondence, over his own signature, produced under subpoena into a federal court file [ev-0059]. It does not read like a lawyer who took a second client by accident. It reads like a lawyer whose first client was the mortgage, which is nearer to Tips’ version than to Smith’s.

Two firm names, one address

He appears in the record twice, thirteen months apart, under two different partnerships at the same San Antonio address:

• Church & Graves, Milam Building, on a letter of 12 November 1935 [@ev-0059, part 18, fol. 64126]
• Church & Steger, rendered “Milan Building” by the OCR, on the letter of 14 September 1936 [@ev-0059, part 16, fol. 60658]

He signs the first “Wm. C. Church, of Church & Graves” and the second “Wm. C. Church of Church & Steger” [@ev-0059, part 18, fol. 64126; part 16, fol. 60658]. Arthur T. Safford Jr., asked in court who Church & Steger were, knew only that “they were attorneys for the bondholders, I believe, or represented persons who were going to purchase the bonds — I am not quite sure,” and that they were practising attorneys in San Antonio [@ev-0059, part 09, fol. 10217].

Safford’s uncertainty is the whole difficulty of this man in one sentence. Both halves of his guess were right at once.

Not Tips’ own attorney

Tips had a lawyer of his own in San Antonio and it was not this man. In the account he prepared for the marker dedication he names the friends who made up the balance of the founding $50,000: “Mr. James Capp owner of a large Furniture Store in San Antonio, Harry H. Rogers of San Antonio and Tulsa, Arthur Morton, Pat Swearingen, my attorney and some others” [@ev-0041, pp. 16, 17]. Pat Swearingen is a San Antonio attorney, a founding investor of 1922, and Tips’ own counsel. William C. Church is a San Antonio attorney who in 1935 and 1936 was acting for the mortgage against him.

Nothing held here connects the two men, and this expert makes no claim that they knew each other or that Church was ever mistaken for Swearingen at the time. The note is here because the two descriptions are one word apart — Tips’ San Antonio attorney — and a record that carries both without distinguishing them invites exactly one error.

November 1935: shopping the plant, with concealment

Ten months before the Ball disclosure, Church wrote by air mail to Owens-Illinois Glass Company at Toledo. The letter is Defendants’ Exhibit O-6082 [@ev-0059, part 18, fol. 64126]:

“As attorneys for the Bondholders’ Committee, holding $123,500.00, par value, of an outstanding issue of $124,900.00 of bonds of the Three Rivers Glass Company of Three Rivers, Texas, we would like to know whether or not you would be interested in purchasing for yourselves or joining other glass companies in the purchase of these bonds at a substantial discount in order to attempt to acquire, by purchase through the Receiver, the glass plant, rights, good will and trade territory of Three Rivers Glass Company, or to accomplish other purposes which the writer would be glad to discuss with you or your representative at some place convenient to both of us.

As we have just been placed in a position to accomplish this purpose, and time is an essential element, we would appreciate a reply by air mail or telegram.

Please hold this matter in strict confidence and do not, in any manner, let the inquiry be conveyed to the Three Rivers Glass Company or its receiver.”

Four things are in that letter, and each of them is new here.

Church’s clients were the bondholders, and they held 98.9 per cent of the issue — $123,500 of $124,900 [@ev-0059, part 18, fol. 64126]. The bonds were the first mortgage: the same instrument Tips needed subordinated, and the same instrument he said Ball bought [@ev-0041, p. 44].

He was soliciting glass manufacturers generally, not serving one. He invites Owens-Illinois to buy “for yourselves or [by] joining other glass companies,” which is an offer to assemble a consortium against a competitor’s plant.

The concealment was his own standing practice and not an instruction from Ball. The request that the inquiry be kept from the company and its receiver is in Church’s own words in 1935, before George Ball is anywhere in this story.

And “as we have just been placed in a position to accomplish this purpose” dates his control of the bonds to shortly before 12 November 1935.

Owens-Illinois refused, comprehensively. The reply of 14 November 1935, over the signature of C. B. Belknap, Vice President in Charge of the Legal Department, says the company “is not interested now or at any other time in purchasing, either indi[vidually] or in conjunction with anyone else, the Three Rivers Glass C[ompany] or any other glass bottle company or the bonds or other [i]nterest in such glass company” [@ev-0059, part 18, Defs. Ex. O-6083, fols. 64127-64195]. It is the flattest refusal in this expert’s holdings, and it came from a company the Government’s own charge in the same transcript names as holding, with Ball Brothers and Hazel-Atlas, “a virtual monopoly in the manufacture, distribution and sale of fruit jars” [@ev-0059, part 18, from derivative line 98674].

Whatever the glass trust was, it did not act as one here.

September 1936: both hats, in one document

Church’s circular to the creditors of the receiver, dated 12 September 1936, is in the record as Defendants’ Exhibit H-5743 [@ev-0059, Defs. Ex. H-5743, part 18, fol. 63510]. It is the document Tips never saw, and it says more against Church than Tips ever managed to.

He opens as the purchaser’s agent: “We represent a party interested in purchasing the plant of the Three Rivers Glass Company, held by the Receiver” [@ev-0059, part 18, fol. 63510]. He does not name the party. Two days later he names it privately to the largest creditor’s lawyer.

Then, in the same letter, he claims the other side of the table:

“The creditors of the Receiver, other than the First Mortgage Noteholders, have never attempted to organize to protect their interests. We have been successful in organizing and recovering for the original First Mortgage Noteholders more than they could have ordinarily expected.”

[@ev-0059, part 18, fol. 63510]

And later:

“We represent the largest single creditor of the Receiver in the form of the First Mortgage Gold Notes, and the lien securing the same, and have made arrangements for the adjustment of that claim.”

[@ev-0059, part 18, line 66509]

Between those two sentences he inserts a disclaimer that is difficult to read alongside Smith’s account of a $500 retainer: “Let it be understood that we do not solicit any professional employment whatsoever, but are representing the prospective purchaser of the properties of the Receivership” [@ev-0059, part 18, fol. 63510].

The circular also shows how much he knew about the inside of the receivership. He tells the creditors that “the books of the Receiver do not truly reflect all of his liabilities and over-estimate his assets”; that the receiver had used “$8,984.91 of creditor’s money which cannot be replaced”; that a tank rebuild at an estimated $14,000 was days away and would leave the receiver “without operating capital”; and that one lehr belonged outright to Simplex Engineering and the other two lehrs and all the feeders to Hartford-Empire, “and the Receiver has no interest therein” [@ev-0059, part 18, fol. 63510].

He also names his opposition without naming them: “other persons, and more particularly former officers of the Three Rivers Glass Company, have and will attempt to thwart this or any other plan by which you can recover any amount upon your debt” [@ev-0059, part 18, line 66509]. The former officer in question was writing letters about a crooked attorney thirty-five years later [@ev-0041, p. 44].

Claims had to be deposited with the trustee by 26 September 1936, against payment of forty per cent [@ev-0059, part 18, line 66509].

The disclosure

On 14 September 1936, two days after the circular went out, Church wrote privately to S. S. Searcy — Hartford-Empire’s Texas attorney, and so the lawyer for the largest creditor whose consent the plan required — and told him what the circular had not told anyone [@ev-0059, part 16, fol. 60658]:

“While we do not want it generally known, and ask that you and your clients keep the information confidential, the prospective purchaser that we represent is Mr. George A. Ball of Muncie, Indiana. He has asked us to get you and the Hartford Empire Company to assist him in purchasing the Three Rivers plant, and not doing anything about the new licensing agreement should he become the purchaser, until after he has obtained the plant and continues the operation.”

Searcy forwarded it to Hartford the next day but one [@ev-0059, part 09, fol. 10266]. The plant was sold on 27 November 1936 to Guardian Loan Company, Trustee [@ev-0059, part 09, fol. 10219].

What the record does to the old story

It confirms the shape of Tips’ accusation and removes his best excuse for imprecision. Tips said the attorney was the channel through which the first mortgage notes reached Ball [@ev-0041, p. 44]. The record shows the attorney who delivered the plant to Ball was the noteholders’ own counsel, who had been trying to sell those notes to a glass manufacturer since at least November 1935 [@ev-0059, part 18, fol. 64126].

It moves the betrayal a year earlier than anyone has placed it. The story as compiled begins in 1936 with an RFC condition and a trip to Tulsa. Church was canvassing the industry in November 1935, and asking that the company not be told [@ev-0059, part 18, fol. 64126].

It settles which of the two compiled versions was closer. Smith has Church acting for the Three Rivers board and secretly for Ball [@ev-0039, p. 26]. Tips has him acting for the lender all along, with Three Rivers merely paying his expenses [@ev-0041, p. 19]. What his own circular shows is a lawyer acting for the first mortgage noteholders and for the purchaser at the same time, and saying so in one paragraph [@ev-0059, part 18, line 66509]. That is Tips’ structure, not Smith’s. Whether the board also paid him — the $500 — is the part the record does not touch, and it is the only part of Tips’ account that Smith adds nothing to and no document reaches.

It does not establish that he was Ball Brothers’ counsel before this transaction. Smith says Ball was an existing client [@ev-0039, p. 26]. The letters show Church looking for a buyer in 1935 and having found one by September 1936, which is consistent with Smith and does not confirm him. Hartford’s own secretary, who was in the middle of the transaction, did not know who Church was [@ev-0059, part 09, fol. 10217].

What this expert does not hold

• Any Three Rivers-side engagement of Church. No fee record, no board minute, no letter. The $500 and the errand to get the mortgage subordinated are testimony: Tips’ own, in the 1973 dedication speech [@ev-0041, p. 19], and Smith’s after him [@ev-0039, p. 26]. Those are not two witnesses — Smith’s material on this company is Tips-derived — and on the question that matters they disagree, because Tips has Church acting for the lender and Smith has him engaged by the board. No document held here shows Three Rivers retaining him.
• Where the Bondholders’ Committee sat. A Tulsa lender is attested in the trial record independently of Tips: a telegram of 14 April 1933 reports that a third party was “not in position to trade with Three Rivers as long as it is going concern because same bank at Tulsa financing him and Three Rivers” [@ev-0059, Gov. Ex. 479, part 16, side fol. 59557]. That is a bank in 1933, three years before this transaction, and nothing held places the Bondholders’ Committee in Tulsa or connects the two. That the Tulsa lender and the Committee were the same interest is a reading that fits both accounts; it is not established here.
• The Reconstruction Finance Corporation file. Nothing held shows the loan application, its conditions, or its refusal from the agency’s side. Hartford was asked in court whether it had anything to do with the R.F.C. refusing the loan and answered “No” [@ev-0059, part 09, at fol. 10207].
• The 5 December 1936 announcement in the San Antonio evening press, in which Church was reported announcing the reorganization under the Ball Glass Corporation name after conferring with a Bracken of the Ball company, and which gave a purchase price of $130,000. That item was compiled from an unadmitted research note; it is not held and is withdrawn. The record here does name an A. M. Bracken as assistant treasurer of Ball Brothers Company [@ev-0059, part 16, fol. 60668], which is not the same as confirming the report.
• Church’s given name in full, his firm’s history, his bar admission, or anything about him outside these letters. Two partnership names thirteen months apart is the whole of what is known about his practice [@ev-0059, part 18, fol. 64126; part 16, fol. 60658].
• The other fifty-four parts of the transcript, unsearched, and the page images, unmatched. Every quotation above is OCR and provisional in wording.