Evening star., 1935-06-03
COURT DECLARES
POTOMAC SAVINGS
LIABILITY LIMITED
Chartered in Virginia, So
Double Assessment on
Stock Fails.
DISSENTING OPINION
| PRESENTED BY HITz
Decision Opens Way to 45 Differ
ent Standards, He De-
clares.

Stockholders IN the Potomac Savings
Bank were held not liable to double
assessment under the District laws
by the United States Court Of Appeals
today in an opinion described by
Associate Justice HitZ, who dlssented,
as demonstrating that a foreign
charter for a local bank is a source
of danger in the community"
The majority opinion. written BY
Associate Justice Groner. affirmed a
decision by the District Supreme Court
in a suit brought by Norman r. Hamil-
ton. the banks receiver. TO collect a
double assessment on 2044 shares of
stock in the estate OF the late George
W. Offutt.
The bank was incorporated in Viz
ginia. whose laws do not provide for
a double assessment. and Attorneys
Charles V. Inlay and Ross H. Snyder,
representing the trustees of the es-
tate. contended this fact relieved the
stockholders Of such an assessment,
even though the bank did business
exclusively IN the District.
Controller Can Take Charge.
II was pointed out the District CodN
authorizes the controller of the cur
rency, in event of insolvency, TO take
possession of any bank doing business
in Washington. From this il was
argued that the laws of the United
States. providing for a double assess
ment in certain cases. should be eX-
tended to cover a bank incorporated
in Virginia and doing business here
In refusing 10 accept this view. the
ma aority opinion pointed out it IS
fundamental that the liability of
stockholder is determined by the
charter of incorporation and the laws
Of the State in which it was incor-
porated. The court. therefore held
that since the Virginia law did not
provide for a double assessment, the
receiver could not enforce his claim
against the Offutt estate.
In disagreeing, Justice Hitz said he
thought the opinion proceeded upon
a meager and narrow construction OF
statutory provisions TO a conclusion
contrary to their purpose and de-
feating their object.
ID. c. Law Held Accepted.
when this group of Washington
business men brought their Virginia
charter across the Potomac River and
set up in the City of Washington the
banks only place of business. it neces-
sarily accepted and adopted all pro-
visions of local law governing local
banks. including the acts of Congress
intended in general terms TO place
banks created outside of the national
banking system on the same footing
as national banks doing business in
the District of Columbia he con-
tinued.
4 read these statutes as intending
not only TO give the national banking
authorities certain powers of vista
ton and inspection, and 10 define
how and why and when the controll-
er may take control, but as imposing
the same liabilities and regulations
upon State banks as upon national
banks doing business here. both in
respect of report and condition. and
in respect of protecting depositors
and other creditors as against the
owners of the bank by the same la-
bility upon stockholders for the debts
of the bank.
as Kinds of Liability Seen.
Under the judgment of the court
IN this case. 48 State banks engaged
here in the same business at the same
time could have 48 separate measures
of liability of their stockholders to
their creditors, all differing from each
other and all differing from the liza
bility of national banks in the same
respect, yet all operating within the
legislation of Congress intended to
make sucn liability uniform and equal
While this construction of the
statutes is legally possible, it is neither
reasonable nor necessary. and I can
not accept the judgment as a sound
conclusion. though recognizing its
value as a demonstration that a for
eien charter for a local bank is
source OF danger in the community"