REAL-ESTATE INQUIRY

ᏢᎪᎡᎢ I

PROPERTIES OF JOSEPH SHAPIRO CO. (INC.)

THURSDAY, JULY 17, 1930

UNITED STATES SENATE,

SUBCOMMITTEE ON INSURANCE and Banks of tHE

COMMITTEE ON THE DISTRICT OF COLUMBIA, Washington, D. C. The subcommittee met, pursuant to call, at 10 o'clock a. m., in the committee room, Capitol, Senator John J. Blaine presiding. Present: Senators Blaine, Vandenberg, and Kean.

Present also: O. H. Brinkman, Esq., attorney for the committee. Leon Tobriner, Esq., attorney for the Federal American National Bank.

The subcommittee was proceeding under the terms of S. Res. 58, which is here printed in full, as follows:

[S. Res. 58, Seventy-first Congress, first session]

Resolution

Whereas it is alleged that many millions of dollars of real-estate mortgage notes and bonds, secured by trust deed or otherwise, on real estate within the District of Columbia, have been issued, in excess of the value of the properties so mortgaged, and which securities have been sold throughout the United States through alleged questionable means and methods, to innocent purchasers, and that purchasers of homes and other real estate are denied their day in court in default of their payment of principal or interest; and

Whereas the laws for the District of Columbia are either absent or ineffective for the protection of innocent purchasers of such securities and homes and real estate, in the following particulars, namely:

(a) No adequate law relating to the issuance and sale of stocks, bonds, and mortgages, and other securities, as affecting real estate or otherwise;

(b) No law inhibiting unethical, unfair, and unscrupulous real-estate and finance operators; and

(c) No law providing for an orderly foreclosure of trust deeds, mortgages, or contracts relating to the purchase and sale of real estate, through court procedure: Therefore be it

Resolved, That the Committee on the District of Columbia, or a duly authorized subcommittee thereof, is hereby authorized and directed to make a full and complete investigation in respect to the several matters hereinbefore set forth, including the issuance and methods of sale of stocks, bonds, or other securities of a different character than heretofore stated, and other relative or similar matters, and to report to the Senate as soon as practicable the result of its investigations, together with its recommendations, if any, for necessary legislation. For the purposes of this resolution the committee, or any duly authorized subcommittee thereof, is authorized to hold hearings, to sit and act at such times and places

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during the sessions and recesses of the Senate in the Seventy-first Congress until the final report is submitted, to employ such clerical and other assistants, to require by subpoena or otherwise the attendance of such witnesses and the production of such books, papers, and documents, to administer such oaths, and to take such testimony and make such expenditures as it deems advisable. The cost of stenographic services to report such hearings shall not be in excess of 25 cents per hundred words:. The expenses of the committee, which shall not exceed $2,500, shall be paid from the contingent fund of the Senate upon vouchers approved by the chairman.

Senator BLAINE. The committee will come to order.

We will take up the examination of witnesses who have been connected with this matter, not as principals but as the dictums of principals, and the subcommittee is the subcommittee of the Committee on the District of Columbia, exercising its authority under Senate Resolution 58. I need not read that resolution.

Mr. Brinkman has been designated by the committee as its attorney and will call and examine the witnesses, he being familiar with the circumstances. Mr. Brinkman, will you call your first witness? Mr. BRINKMAN. Will Mrs. Minnie W. Reed step up, please?

Thereupon,

Mrs. MINNIE W. REED, of 1734 Irving Street NW., Washington, D. C., was called as a witness, and being first duly sworn, upon examination testified as follows:

Senator BLAINE. Now, will you state your full name?

Mrs. REED. Minnie W. Reed.

Senator BLAINE. Address?

Mrs. REED. 1734 Irving Street NW.

Senator BLAINE. Washington, D. C.?

Mrs. REED. Washington, D. C.

Senator BLAINE. Are you a married woman?

Mrs. REED. Yes.

Senator BLAINE. And did you purchase some property in the District?

Mrs. REED. Yes.

Senator BLAINE. Now, Mr. Brinkman will examine you as to the details.

Mr. BRINKMAN. Mrs. Reed, did you bring any papers or contracts with you?

Mrs. REED. Yes, I brought them; everything.

Mr. BRINKMAN. May I have them?

Mrs. REED. Yes.

Mr. BRINKMAN. I would like to explain to the committee that I have not examined these witnesses in detail myself. I have talked with them in a rather superficial manner, but I have not examined their documents yet.

Mrs. Reed, on May 1, 1928, did you enter into a contract with the Joseph Shapiro Co. (Inc.), which I hand to you, for the purchase of a home?

Mrs. REED. I did.

Mr. BRINKMAN. Is that your signature, and the signature of the other parties to the contract?

Mrs. REED. Yes, this is the paper.

Senator BLAINE. Would you like to have that offered in evidence, Mr. Brinkman?

Mr. BRINKMAN. Yes.

Senator BLAINE. Mrs. Reed may want to examine it. Do you want to read it to her?

Mrs. REED. I have examined it.

Senator BLAINE. All right.

Mr. BRINKMAN. Now, will the reporter identify it, then, as "Exhibit No. 1?"

Senator BLAINE. Let the reporter identify it as "Exhibit No. 1," and we will have it copied in the record, and it will be returned-the instrument will be returned to the clerk of the committee, who will deliver it back to Mrs. Reed.

(Thereupon, the document above referred to was marked "Mrs. Reed Exhibit No. 1," and is copied in the record in full as follows:)

THE JOSEPH SHAPIRO Co. (Inc.), Realtors, 1416 EYE STREET NW.-Sales, RENTS, INSURANCE, LOANS $100.

WASHINGTON, D. C., May 1, 1928. Received from Minnie W. Reed, a deposit of the sum of one hundred dollars, to be applied as part payment of purchase of lot in square with improvements thereon known as 1734 Irving Street, NW., in the District of Columbia, upon the following terms of sale: Price of property, thirteen thousand nine hundred and fifty dollars ($13,950.)

The purchaser agrees to pay two hundred dollars ($200) cash at the date of conveyance, of which sum this deposit shall be part.

The purchaser is to assume, give, place, take title subject to, a first deed of trust secured on said premises, of $8,750 due about one and one-half years, and bearing interest at the rate of 61⁄2 per cent per annum, payable (see below).

The balance of deferred purchase money is to be secured by a second deed of trust on said premises, to be paid in monthly installments of (see below) or more, including interest at the rate of 7 per cent per annum, each installment when so paid to be applied, first, to the payment of interest on the amount of principal remaining unpaid and the balance thereof credited to principal.

Vendor agrees to erect a 1-car stucco garage at no cost to purchaser in the event purchaser pays an additional $300 on or before December 31, 1928, said $300 to be applied to reduction of the second trust.

Purchaser agrees to make monthly payment of $100 to cover the aforesaid payments under said second trust and interest on the first trust.

Where trustees are to be named in a deed or deeds of trusts, they are to be named by the party secured thereby.

The title is to be good of record except as to covenants, conditions, and restrictions of record, if any, and the property is sold subject to existing tenancies therein and free of encumbrance except as aforesaid; otherwise said deposit is to be returned and sale declared off, at option of purchaser; but the seller and agent are hereby expressly released from all liability for damages by reason of any defect in title. In case legal steps are necessary to perfect title, such action must be taken by the seller promptly at his own expense, whereupon the time herein specified for full settlement by purchaser will thereby be executed for the period necessary for such prompt action.

Rents, taxes, water rent, insurance, and interest on existing encumbrances, if any, are to be adjusted to date of transfer. Taxes, general and special, are to be adjusted according to certificate of taxes as issued by the collector of taxes of the District of Columbia, except that special assessments for improvements completed prior to date hereof, whether assessment therefor has been levied or not, shall be paid or proper allowance made therefor by the vendor at the time of settlement.

Examination of title, conveyancing, notary fees, and all recording charges, including those for purchase money trust, if any, are to be at the cost of the purchaser, except in case of defective title, when seller shall pay the cost of examination of title. Vendor shall execute to the purchaser the usual special warranty deed.

The purchaser agrees to comply with the aforesaid terms of sale within 30 days from the date of acceptance hereof by the owner, or as soon thereafter as report on title can be secured, if promptly ordered; otherwise the aforesaid deposit may