The Washington times., 1931-01-31
BANKRUPTCY
REPORT IS
DUESOON
SwartzeII, Rheem and HenSey
Note Holders Are Advised to
Keep Paper Pending Action

Keep Paper Pending Action
Belief is growing that losses
to investors through the failure
of Swartzell, Rheem and Hensey
Company, mortgage bankers, will
not be as heavy as was at first
feared.
Definite knowledge of the sit
uation will not be available, how
ever, until accountants and inVes-
tigators of the Department Of
Justice have completed their
check of the firms records and
until the receivers have prepared
a statement of the assets and
liabilities of the bankrupt firm.
This SCHEDULE of assets and liza
bilities, will probably not be made
before the middle of the coming
week, the receivers says.
Holders of notes against the
firm are being advised to keep
them.
Hotel Work Resumed
Investigation of the company
records to date has disclosed that
there are a number of unsecured
mortg age notes outstanding.
Trust deeds against property
which was originally used as
security for notes issued have
been released in some instances
and other notes issued.
Projects listed with the receiv-
erS as being properties against
which unsecured notes are held
include the Shoreham Building.
Broadmoor. Ponce de Leon and
Westchester apartments. The
LaSalle apartments was mis-
takenly included in this list yes
terday.
Work on the Shoreham Hotel
for which receivers were appoint
ed yesterday by Justice William
Hitz of the District Supreme
Court, has been resumed. The
project is 95 per cent completed
The Shoreham Hotel was ori9i-
nally financed b. the SWartzeIl,
Rheem & HenSey Co. The re-
ceivership action, filed Thursday
against the hotel was agreed to
by the officials.
Receivers Meet
Following Il meeting at the
hotel this morning of the receiv-
ers, Francis H. Dueay, John E.
Laskey and Spencer Gordon, Mr..
Laskey stated that the receivers
will meet daily at the hotel which
will be operated under their su-
perviSion.
Major Julius I. Peyser, vho
with Henry P. Blair is receiver
for the defunct mortgage firm,
announced that they had taken
over management of the Hay
Adams House which was also fl.
nanced by the concern. This &C
ton was taken in the interest of
note holders and will not inter
fere with the hotel operation.
The financial difficulties of
Harry Wardman, father-in-laW of
Edmund Rheem, vice president
and active head of SWartzell,
Rheem and Hensey Company, are
linked with those of the bank
rupt firm. The Shoreham
Building, construction of which
Wardman was forced to aban-
don when the structure was half
completed, is one of the projects
against which unsecured notes
are in existence.
Inquiry Ordered
The litigation which appears
certain to follow in the wake of
the Swartzell, Rheem and Hensey
bankruptcy will subject local
realty practices relating to deeds
of trust in first mortgage notes
to the sharpest scrutiny they
have ever received.
The probe into the affairs Of
the defunCt investment company
has disclosed that the firm had
been in the habit of releasing
deeds of trust on property. upon
which mortgages had been issued.
considerably in advance Of the
date of maturity of these mort
gage notes.
Legal Cover" Kept
This equivocal practice. about
the propriety of which a fierce
controversy already is raging in
realty circles, had legal cover
in a clause inserted in all the
note issues, which reads:
ut is mutually agreed and
cOvenanted between the re-
spective parties hereto that the
full payment of principal and
interest, at the office of Swart-
zeIl, Rheem and Hensey, shall
constitute paymen of the
mortgage notes, and the par
ties of the second part, OF the
trustees acting in the execu-
tiOn of the trust, shall there
upon have power to release and
recOnvey the land or premises
wit hOut the presentation of