Evening star., 1933-12-28
20 GOTHAM BANKS
SUED BY j. s. FOR
| HARTMAN VICTIMS
Se,275,0OO Sought for H.
600 Depositors on Written
Clearing House Pledge.
ACCUSED GROUP DENIES
J OBLIGATION NOW LEGAL
Says It Was Made During Crisis
Without Due Study-Case
Unusual.
NV the Associated Press

by the Associated Press.
NEW YORK, December 28.-The Fed
eral Government has filed suit against
hhe 20 banks of the New York Clearing
House Association and individuals who
&erved on the Clearing House Commit
hee during the last two years to compel
fpayment in full to depositors Of the
Glosed Hartman National Bank &
Trust Co.
The Government contends the Clear
ang House Committee, in behalf OF all
the banks, gave written guarantees OF
payment of deposits late in 1882 and
early in 1893, when the committee ar
ranged with the controller Of the cur
rency not to close the Hartman Bank
lest it precipitate a crisis for all. The
Hartman Bank failed to open after the
bank holiday last March. Approximate
ly half the claims of the depoSitors were
paid in July through an R. F. G. loan'
and it is estimated the sum OF s9,275,-
900 would be required to pay all oe-
positors in full with interest.
Legal ODuSdtAOH DchAcU'
The banks are understood to nave
taken the position that the guarantees
were given in crisis ana Wltnout eA,
tended consideration OF the tecnnical
formalitieS involved" and DO not 40"
constitute a legal obligation.
The Government, in its complaint
filed Yesterday, asks the State supreme
Court to compel the banks OF the Clear
ing House to recognize that they maoe
a binding agreement to protect the oe
nositors of the Hartman Bank, ano
Thereafter preached and repudlated H.
The Governments suit was said to be
without precedent.
The controller and receiver assert
that when the bank closed, IN acco[o-
ance with President Roosevelt procla-
nation inauguratlng the pailh Ioituay
and subsequently failed to reopen IileIt
were more than IL 900 deposit accounts
totaling in excess of S24,67O, 600 In the
bank. and that, while the assets were
insufficient to pay depositors IN 1uii
'the deficiency would not have exceed,
cd small fraction of the surplus OF
sny of the defendant banks.
Since the bank closed long teoera
investieation into its affairs has re-
suited in the indictment OF joseph W
Hartman, former president ana chan :
man of the board, and Albert Murl S d.
Austin. former vice presloenI, VI
charges Of falsifying accounts. HART
man. founder OF the bank. was als'
yolyinz 81 661 ITO of depositors' monies
Hartman Hearing Soon.
On January S Hartman is to have 9
hearing in Federal Court to determine
if he is physically able to appear tnere
for a sanity hearing which, IN turn
will be held to determine whether ne
must stand trial on the lndlctme.tSh; men 30
The New York Times says that pc
fore filing the suit the Government mac
ATTEMPTED for nine months to persuade
the 20 clearing house banks TO carry
out their alleged agreement TO take
care of the deposltors:
The banks advised by eminent coun-
sci. the Times says, came TO resi- OF
the expressed position that the allegeC
agreement had been made in a crlSE
and without extended consloeratlon % !
the technical formalities involved.
When re-examined after the crisis the
asserted agreement was found not tc
constitute a legal obligation which the
banks could recognize to the extent OF
spending their stockholders money.
Reopening Held Possible.
The failure of the Hartman Bank
to reopen after the national mora
torium of last March was declared ir
the Governments complaint to be "a
consequence Of the failure and refuSa.
of the banks of the Clearing HOUSE
to perform their agreement by advanc-
ing funds on collateral or against de-
positors' claims, by effecting a mergel
of the Hartman Bank with another
Clearing House bank or by various
other lawful and practical means"
In the discussions preliminary to the
fling of the suit. the newspaper says
is of the 20 Clearing House banks
indicated a willingness to accept the
results of an arbitration which hac
been negotiated for months. but flvt
insisted on a court determination.