Evening star., 1936-01-20
DISTRICT NATIONAL
PACT Of 1928 HELD
At COST OF PUBLIC
Col. Harper Loses Suit to
Make Fellow Directors
Help Him Pay Debt.
CONTRACT WAS MEANT
TO PEG STOCK PRICE
Thus. Court Finds, It Is Unen-
forceable Because Contrary to
Peoples Welfare.

An agreement among directors Of
the closed District National Bank In
1928 for controlling the fiuctuating
market price Of the banks stocA was
designed for their own profit at the
expense of the public, the United
States Court Of Appeals held today.
The ruling was on suit brought by
Col. Robert N. Harper to compel MS
fellow directors to help him pay debt
incurred pursuant to the agreement
and secured by his personal oilaterai'
Holding that the agreement was
against public policy. the court SAID
Col. Harper cannot enforce his claim.
The ruling was made in an appeal oy
Col. Harper from similar decision
hv Justice F. Dickinson Let's Of Dis
trict Supreme Court.
Pact Held ut Public Expepse.
The purpose of the agreement
among the directors. the court said
was "the fixing of fictitious price
for the stock on the Washington
Stock Exchange, thereby misleading
the public. This arrangement the
court stated. "was designed to profit
the parties to it at the expense OF
the public"
"A contract having such purpose
is against public policy and cannot
be enforced in equity" concluded
Chief Justice George E. Martin. who
spoke for the majority of the court.
Two of the five justices, D. Law
renee Groner and Harold Stephens
dissented, basing their disagreement
on the contention that the only show
ing before the court was that the
agreement was for the protection OF
the stockholders and depositors oil
the bank.
Original Suit Decided on Motion.
Justice Let's decided the original
suit in District Supreme Court on
motion to dismiss brought by George
c. Gertman, attorney for three OF the
defendants. There was no trial OF
the case.
Col. Harper's suit asked that the
directors involved be required to assist
him in the payment of note for ST..
500 held by the receiver OF the Com
mercial National Bank As collateral
for this note Col. Harper had de-
posted 80 shares Of stock Of the Dis
trict National Bank and other securi.
ties, which he said. the Commercial
National Bank receiver was threaten
ing to sell and apply the proceeds TO
payment Of the note.
Col. Harper stated in his suit that
he and II other directors Of the bank,
perturbed by the sale Of blocks OF
bank stock with little or no regard to
price, entered into verbal agree
ment for the purchase and sale OF
capital stock.
Pursuant to this agreement each
paid $3.50 to provide margins neces-
sary in stock purchases. The parties
to the agreement were to share
equally In the profits and to bear
equally any losses which might be
suffered, the court related.
From time to time it became nee
essary to raise additional funds and
on November II. 1928. $l7,600 was
borrowed from the Commercial Ma
tional Bank. COL Harper pledging his
own securities as collateral.
The appellate court found that no
part Of the principal Of the note has
been paid.
Directors Of the bank involved In
the venture were said to have been
Augustus P. Crenshaw. William P.
Lipscomb, Charles W. Darr, Ralph p.
Barnard, Joshua Evans. jr.; Atwood
M. Fisher, Eugene c. Gott, w. Charles
Heitmuller, Christian Gockeler. John
F. Maury, Robert Lee O'Brien. Hilleary
L. Offutt, jr.; Charles c. Rogers, He
ber L. Thornton, Leon S. Ullman,
Chester Wells and Edward G. Yonkers.