The Berkey & Gay Litigation of 1933-1934: The Furniture City’s Struggle Against a Wall Street Raider

by Patrick E. Mears

On September 19, 1933, downtown Grand Rapids was the scene of a gala parade in support of the NRA, the National Recovery Administration, one of FDR’s newly created, “alphabet soup” federal agencies and its codes of conduct for participating businesses. The NRA’s symbol, the Blue Eagle, was paraded through the downtown streets in front of 75,000 spectators, accompanied by 75 elaborate floats, the Furniture City Bank and a drum and bugle corps. Many of these floats were sponsored by well-known, local businesses such as American Seating, Corduroy Tire & Rubber Company, Wurzburg Dry Goods and Voigt Milling Company. Notwithstanding its federal theme, the “Blue Eagle March” was a local extravaganza celebrating Grand Rapids manufacturing and commerce.

The next day, the power of these local businesses, especially the furniture companies that made Grand Rapids famous in the previous century, was arrayed against the Simmons

Company and its Wall Street allies in the United States District Court for the Western District of Michigan for the first day of trial in an action for an accounting and the recovery of monies alleged by the court-appointed receiver to have been looted from the Berkey & Gay Furniture Company by its corporate owner, the Simmons Company. In September, 1929, just one month before the Stock Market Crash and the onset of the Great Depression, Simmons acquired Berkey & Gay and, in the first dark years of the economic collapse, allegedly liquidated assets for Simmons’ exclusive benefit to the detriment of Berkey & Gay’s creditors, especially its bondholders, who were in large part local Grand Rapids citizens and businesses. The trial was to last for 20 days, staggered over many months. The trial saw local business magnates testify against Simmons. Leading the legal teams of the corporate receiver, the Michigan Trust Company, and Simmons, were perhaps the two brightest

stars on the West Michigan legal firmament, Julius H. Amberg and Stuart E. Knappen. While Amberg produced testimony and other evidence on the predatory takeover and buccaneer-type behavior of Simmons, Knappen countered with arguments that, due to Berkey & Gay’s troubled financial condition and the impact of the Great Depression, it had no chance of surviving the harsh economic gales.

At the close of the trial, Federal District Judge Fred M. Raymond entered judgment against Simmons and awarded the receiver a sum in excess of $2,365,000 plus costs and interest calculated at 5% per annum. Both parties then appealed to the Sixth Circuit Court of Appeals from this judgment and, during the appeals pendency, both the receiver and Simmons settled the case. The furniture companies and local citizenry of Grand Rapids looked back with pride upon the stellar performance of Julius Amberg at trial and with scorn on the predatory practices of Simmons, which was given its just deserts by Judge Raymond.

“The Berkey & Gay Litigation of 1933-1934:The Furniture City’s Struggle Against a Wall Street Raider”, Thursday, May 14, 2015, 7:00 p.m.Reception: 6:00 p.m.Dinner: 6:45 p.m.Program followsLocation: Women’s City Club, presented by Patrick E. Mears.