Evening star., 1934-07-09
OFFSETS BARRED
ON BANK LIABILITY
Stockholders Not Allowed
to Subtract Unpaid De-
posit Accounts.
BY HAROLD b. ROGERS,


Stockholders In the five insoivent
banks Of the District Of Columbia
against whom stock assessments Of
100 per cent have been levied by the
controller Of the currency, cannot
take offsets TO reduce the amount OF
their double liability
This was learned officially at the
Treasury Department today in an
sweT % much con lecture among stock
holders as 70 the possibility Of such
offsets.
In the case Of a depositor who owes
the bank, and has unpaid deposits
and there Is mutually" Of obliga-
tion. receivers are allowing offsets
But stockholders cannot expect TO re-
duce their obligation under assessment
by subtracting the deposits which
they have in the bank. and which are
still unpaid.
These rules arc laid down in q long
series OF court decisions which have
been upheld in principle by the Su-
preme Court Of the United States.
Principle Clearly Stated.
The principle involved is clearly
stated in the syllabus Of one of these
key cases in New Jersey, as follows:
"A stockholder OF a national bank
was not entitled to set of against his
double stock liability the amount Of
his unpaid deposit account in the
bank at the time OF its failure; such
stock liability being for the
express purpose Of making good the
contracts, debts and engagements Of
the bank, and being trust fund in
which all creditors were entitled to
share pro rata"
In deciding this case. Circuit Judge
Hunt said: My view is that a stock
holder is not entitled to set off against
an assessment made against him pur-
suant TO the revised statutes OF the
United States, where a bank has be-
come insolvent, the amount of his tn
dividual claim against the bank"
Judge Hunt quoted in support Of
this decision a circuit court of ap-
peals. THE court there put its de-
cision upon the ground said Judge
Hunt, that the fund provided for
under the revised statutes (assess-
ments) was not intended for any par
ticular creditor, but to make good all
debts equally and without any prefer
ence, and that in the event of the
winding up of the affairs OF national
bank, the fund provided (by law was
for the express purpose Of making
good the contracts, debts and engage
ments, and is manifestly trust fund,
to a pro rata share of which all cred
itors are equally and equitably
entitled"
Used Methods Before.
Many stockholders in the five as
sessed banks had previously benefited
substantially by using the Offset
method to reduce their debts to the
bank. But, it was explained, they
will not be able to reduce their as
seSsment debt by the same method.
Figures from Controller of the Cur
rency ]. F. T. O'Connor published
elsewhere in The Star today, show
that the 16 banks in receivership so
far have paid out $l9,909,46 out of
their total deposit liability as of their
date of closing of $40 1856, Gal,
In addition to these 10 banks in
receivership, there are three more
banks with some unpaid deposits: The
Mount Vernon Savings Bank and
Franklin National Bank, which
merged into the new City Bank of
Washington, and the Industrial Saw
tngs Bank, still trying to reopen.
The remaining assets of the Mount
Vernon and Franklin, which were not
used to pay depositors the first divi-
dends of 40 and IS per cent, respec-
lively. are in the hands of liquidating
trusts.
Remington Rand, which is con-
structing a new building in downtown
Washington at Thirteenth and F
streets, is reported by the Wall Street
Journal TO have resumed operations
at its typewriter plants following
settlement of labor dispute. There
is no likelihood however of an early
resumption of dividend payments on
the company's preferred shares, des-
pite continued showing of earnings
both here and abroad. In the first
place there is a deficit of around
S700,00 in the company's surplus
account and even if there is no falling
off in Office appliance sales during
the Summer months, it is predicted
that it will be we'll along in the Fall
before this deficit can be made up.
Remington Rand's earnings, both
here and abroad, in May were cut
temporarily about so per cent, il is
estimated, by the labor strike at its
typewriter and adding machine fac
tories. But as the company was able
to hold its orders. the temporary de-
crease will reappear in increased earn
ings of later months while its deliv-
cries on these orders are being made.
Remington Rand is behind in its
deliveries on machine orders and the
company has not noticed as yet any
falling of in demand for its products.
Judging from the way that orders are
continuing to come in, it will be
August before there is any noticeable
decline in buying.
Attend Insurance Session.
F. V. McNair and J. c. Hopkins,
Washington representatives of the
Lincoln National Life Insurance Co..
heard g bright future for the life
insurance business proclaimed today
at the company's Eastern division con-
Vention at ASheville. n. Q.
Success of the company and the
industry in weathering the depres-
sion and their ability TO progress
with the new opportunities which
have come with general business I'M
provement we're stressed by the speak
ers, who included A L. Dern, A J
McAndleSs and E. c. Wightman, vice
presidents; F. J, TraverS. financial
secretary. and Dr. w. E, Thornton,
medical director
At the fifteenth annual cost con-
ference OF the National Association OF
Cast Arrn,,rAarnHs hnlH ~, rln,-nlnr,I u