27 October 2008

Carbon Canyon Crime Capsule #3: A. O. Birch

OK, technically this doesn't relate directly to Carbon Canyon, but Birch Street comes within a short distance of reaching the canyon and the story of its namesake Albert Otis Birch is so wild, I just had to write something about it.

I'm sure there are a lot of people thought the street was named for the tree, especially because there are many other "tree" streets throughout Brea, but some years ago when I was doing research on Walter P. Temple, an oil man and developer in the 1920s, I learned that one of his investment partners was A. Otis Birch, who also had a background in oil.

A little research has come up with the following: Birch was born 8 October 1871 (the day, incidentally, of the great Chicago fire) in a little town in western Illinois called Cuba. His father, Albert William, was a native of Vermont who went to Zanesville, Ohio as a young man before migrating to Cuba with his father, William, a New York native who was a merchant. Albert, born in 1841, enlisted, just after the breakout of the Civil War, in the Illinois Infantry Volunteers, serving in two different companies and making his way from Private to First Lieutenant, before being mustered out in Lousiana in 1866. Soon after returning home, Albert married Louisa Berry. One of their three children (the others were Henry and Emma) was the future oil magnate of Brea, who I'll refer to as Otis Birch. Albert appears to have followed his father in the mercantile trade and served as the "Worshipful Master" in the Cuba Masonic lodge. But, in the 1870 census, when he was only 29, Albert listed himself with the occupation "Merchant Ret.", evidently meaning "retired." Was he badly injured or did he contract a serious illness in the war? Had something else happened to him? In fact, his decision to relocate all the way to far-flung southern California may have been motivated by poor health, as the Los Angeles area was well-known for its healthy climate in those days (certainly not now!)

Whatever the reason, the Birch family made its way to a new Los Angeles County town called Santa Ana. Once a township composed of several Spanish and Mexican-era ranches granted to the likes of the Yorbas and Peraltas, the Santa Ana area had been largely consolidated under the ownership of Massachusetts native Abel Stearns, a late 1820s settler of Los Angeles and one of its early merchants. Stearns amassed huge landholdings by the 1860s and was the county's wealthiest person, but flood and drought and the resulting economic downturn led him into serious financial difficulties. By 1870, the "Stearns Ranchos" were subdivided and placed on the market for sale, as Los Angeles experienced its first boom. Santa Ana was created by William H. Spurgeon in 1869 from lands he bought from E. M. Ross. Within four years, the Birch family settled in the new town. Otis Birch was then two years old and was soon an orphan as his father, Albert, died in 1877. Louisa, the widow, moved in with her sister Sarah and her husband George Minter, whose 1877 house still stands today next to a park the Birch family donated to the city for its first park, still known as Birch Park today. There is also a Birch Street that runs south from downtown through Costa Mesa and into Newport Beach.

Otis took up the business of farming on his father's lands. In 1899, he married Marguerite Estelle Conaway and the two were childless, although after his sister Emma Smith died in 1906, he and Estelle (as his wife was known) raised the two daughters, Louise and Ruth. Also, in the late 1890s (soon after the 1889 creation of Orange County) oil was discovered by Edward Doheny in the Olinda area and this lured Birch and others to create the Menges Oil Company (Marion Menges, born in Indiana, was a dentist in Santa Ana and lived two households from Birch in the 1900 census) based in Santa Ana and explore the area near Olinda, specifically at the mouth of Brea Canyon. There, the Menges Oil Company obtained some land, later called Birch Hills, and drilled some wells. Success was limited, however, as the company's land was initially considered a little too far west from the better wells of Union Oil.

In 1911, however, a decade the Menges Oil Company hit it big with its well #5, which, for a time, was the biggest producing well in America and brought great wealth to Otis Birch. In fact, by 1910, even though he built a palatial house in Brea, he'd left Orange County and moved into the Highland Park neighborhood area Los Angeles. During that decade and subsequently, Birch also branched (pardon the pun) into new businesses, including the formation of the Great Republic Life Insurance Company and the Birch-Smith Furniture Company and Birch-Smith Storage Company. Birch also began to solidify a partnership with his father-in-law, Benjamin Conaway, in a large 20,000+ acre ranch in Yolo County, northwest of Sacramento. By 1920, the Birches and Conaways were living together in South Pasadena, where the Birches lived for some 50 years. Times were evidently very good during the Roaring 20s, as the value of the home the two families lived in was valued at $50,000 in the 1930 census, at a time when the average house was under $10,000. Notably, Birch did not identify himself as an oilman in this census, but rather as a furniture merchant with his Birch-Smith company in downtown Los Angeles. In the meantime, his Great Republic Life Insurance Company, of which he was President, was a great success and Birch formed a syndicate, including Walter P. Temple (founder of Temple City and descendant of early Los Angeles settlers) and others, to build a large office building in Los Angeles at Eighth and Spring streets. This structure is just now opening a new phase of its life as the "Great Republic Lofts," part of a massive conversion of old downtown commercial buildings into loft-style housing.

Birch's rapid rise to wealth did not come without its price, though. In 1914, for example, he was sued for $1.5 million by several investors with the Menges Oil Company, who claimed that he convinced them that the company's wells were not highly productive (before #5 came in and made Birch an estimated $3.5 million) and that they should sell their stock to him. Naturally, the fabled #5 was brought into production, producing 2,600 barrels of oil a day and generating some $1.5 million of revenue per year, and the investors accused Birch of misrepresenting the status of the company. In fact, it was stated that Birch told the investors that he was planning to buy property in Bakersfield when the plaintiffs alleged he had no plans to do so. Moreover, the Menges Oil Company was dissolved and a new firm, the Birch Oil Company, created, evidently to prevent the plaintiffs from having legal recourse in the matter. Birch, however, won the suit and another 1921 lawsuit involving his Birch Oil Company.

Many years later, in the 1940s, Birch was sued by the IRS over the Yolo County land he controlled with his in-laws under the Birch Oil Company banner and that company's attempts to reclaim swamp land and develop it. Consequently, the company spent some $2 million to develop portions of the ranch and took on debt through bonds, payable to an reclamation district formed by the county. In 1926, Birch bought out his in-laws and his nieces were partners in the venture. In 1934, in the midst of the Great Depression, Birch complicated matters by forming the Birch Securities Company and Birch Holding Company, within which the bonds were placed, because they were to mature starting in 1935 and continuing to 1943. Birch's problem, however, was the norhing was paid on the principal of the $2 million indebtedness and a 6% interest rate payable twice a year was accruing. Therefore, in 1935, Birch issued new bonds as a refund on the original for the same $2 million amount with the maturation to commence in 1945. Another problem: Birch and his wife, in the early 1940s, "received back" interest on their bonds when this was paid to the county treasurer and claimed this as tax exempt and not part of their income. Hence, the interest of the IRS, which claimed that this "received back" interest was not tax exempt and that over $200,000 worth of deductions were involved. Fortunately for them, the federal Ninth Circuit Court of Appeals ruled in their favor.

In yet another example, Birch was sued in state court over the rental of the downtown Los Angeles property that housed his storage company, stemming from a 1928 agreement for a 99-year lease. After 1934, however, Birch stopped making the monthly payment and, even after he negotiated a new agreement, he discontinued payments two years later. Basically, the plaintiffs accused Birch of fraud in misrepresenting his financial status as he renegotiated his lease with Birch claiming that he owed substantial sums to his cousin, Ella Minter (recall that the Birches lived with the Minters after Albert died in 1877) and that this indebtedness compromised his ability to pay the lease. Notably, this case included the information that "up to 1930 Birch as a man of considerable wealth and was engaged in many profitable enterprises. From 1926 to 1929 his net worth was over $3,000,000, and his net income over $100,000 a year. After 130 Birch became financially involved and his assets began to shrink in value, although at no time did his status approach that of insolvency." It also developed that Birch began to borrow money from cousin Ella "to assist him in his financial difficulties" as the Great Depression worsened. Other court information showed that Otis Birch was well invested in the stock of such companies as Lyon Storage Company (still a major storage and moving business), Pacific Crest Cemetery, Citizen's National Bank, and Western State Life Insurance Company, amounting to between $60,000 and $100,000, a large sum in those days. Most telling in terms of the facts of the case is that the court majority believed that Otis Birch, his wife and his cousin conspired to create an illusion of Birch's debt to Ella Minter in order to secure more favorable terms for his renegotiated lease, which even then he defaulted on his monthly payments. In the 3-2 decision, the majority ruled that the slightly less than $10,000 judgment would go against Birch. Given Birch's several journeys through the California court system, it would appear that he had not only established a significant level of wealth, but also devised ways to try and protect himself as matters got bad during the Great Depression.

Birch, however, seems to have stayed out of the public eye for about fifteen years after the 1951 IRS case, when he was, by the way, already 80 years old. In 1965, however, everything changed. By then, Otis and Estelle Birch were in their mid-90s and in failing health. The two still lived in South Pasadena, but were unable to care for themselves, while their nieces assumed control of their maintenance and support. Consequently, a nursing service was contacted and a woman named Pearl Choate hired to care for the Birches. Choate, by any reasonable modern standard, would not be allowed anywhere near the Birches or anyone else in a nursing capacity, for that matter. She was born in Texas in 1907, had been married six times (all to well-off older men), and had served prison time in the shooting death of one of them. Incidentally, Pearl, who stood 6 feet tall and weighed 250 pounds, claimed self-defense in the killing of this aged husband. Despite her claim, she was convicted of murder and sent to prison, earning her release in 1963.

Very shortly after Pearl began working for the Birches, she and the couple vanished in June 1966. When the nieces investigated, relatives found that the three had been in Mexico before surfacing in Pearl's home state of Texas and her hometown of Odessa. Shortly afterward, Marguerite Estelle Birch died at age 93 in October 1966. Three weeks later, Pearl Choate took Otis Birch to Altus, Oklahoma and the two were married in a car parked outside a Justice's Court. Birch was laying on a mattress because he was too weak to walk into the court. Still, Birch's nieces and others secured a hearing to determine whether the aged capitalist was being coerced by Pearl. Because he was totally deaf, Birch had to be asked the salient question by having it written down for him to read through a large magnifying glass. The question was "Is Peal Birch holding you against your will?" His answer, "No, she's not."

With that, the two were released and went on to live in a trailer in Odessa and then another in Dallas, which is where Albert Otis Birch died in March 1967 at the age of 95. Later that year, Pearl was arrested on a charge of intent to commit murder in a rent dispute with a tenant in an apartment building she owned (presumably paid for from the Birch estate, which a late filed will provided for almost all of Birch's money to go to Pearl.) Subsequent civil litigation ensued as the nieces, the ones raised by the Birches 60 years before, sought to challenge the will. In 1970, however, the court ruled in Pearl Choate's favor.

Although it had been stated in the press that Otis Burch was worth some $200 million, though it was not stated what the basis for the estimate was, it turned out that there wasn't even enough money left to pay a $4,666 funeral bill for Birch. What is unknown is just how much money or property was left to Choate. There are many who think that Pearl was a classic serial killer, a woman who married older men when they were vulnerable, gained control of their finances, and then killed them off. According to the coroner, however, Otis Birch died from natural causes (circulatory collapse and chronic ingestive heart failure "brought on by old age.") Still, it is obviously strange that Pearl ran off with the Birches and in quick order secured control of whatever Otis's financial situation, which was not explained, consisted of.

It was a strange ending to a long and eventful life for a man who was one of Brea's big success stories in the oil industry. How many drivers use Birch Street from Valencia Avenue on the east to just past Brea Boulevard in the new downtown area and know anything at all about the thoroughfare's namesake and his fascinating life story?

Added, 17 June 2013:  here's a link (click here) to a fascinating investigative article in the Saturday Evening Post  from about 1967 that gives great detail of the Pearl Choate/Otis and Estelle Birch story.


Erin Marie said...

Do you know whatever became of Pearl?

prs said...

Hi Erin Marie, she was convicted of assaulting the tenant, as was mentioned in the article, and served 20 months in prison from 1968-1970 before her release. As to what happened to her after, nothing was located. I've added to the post a link, though, to a "Saturday Evening Post" article from the 1960s that is really interesting. Thanks for stopping by!

Anonymous said...

I have a bookcase with a Birch-Smith Furniture Company label. Thanks for the story. It was fascinating and helped to date the piece of furniture.

prs said...

Hi Anonymous, thanks for the comment and glad the post helped date the bookcase, which must be really cool!

Larry (Steve) and Daphne said...

I also appreciate this bit of history, as I have a sterling silver automatic pencil I was looking for history on - it was a premium produced for the Birch-Smith furniture company. As a previous commenter noted, your blog has been invaluable in not only dating, but adding value to the piece. Thank you!

prs said...

Hello, Larry (Steve) and Daphne, it's always great to know that something posted here is useful and helpful to someone. Appreciate the comment!

Anonymous said...

I am writing a book about J.O.Smith. He was the partner of Mr. Birch and the furniture company. He founded Los Angeles Boy Scout Troop 121 in 1917. I am the current Scoutmaster. I am Looking for a photograph of J.O. Smith. Perhaps he and Mr. Birch took a photo together. Thanks for posting your research on Mr. Birch.

Ruben Hueso

prs said...

Hello, Ruben, sorry I have not seen a photo of Smith. Good luck on finding one.