Evening star., 1937-09-19
BY WILLIAM S. TARVER.

CUUSI pufk VI SeCHYeu uSpOSItS
paid In tul.
BY WILLIAM S. TARvER.
DEGREES holding the Secretary Of
War and the United States Shipping
Board Merchant Fleet Corp. liable to
the receiver of the insolvent Com
mercial National Bank for almost
81 200, 900 representing collateral given
by the bank to secure large Govern
ment deposits, are expected to be
signed before the end of the week by
Justice Oscar R. Luhring of District
Court.
The 2 claims are among 10
brought In local courts by the Com
mercial and District National Bank
receivers and national bank receivers
elsewhere to recover some $6,356,0 900
in Government deposits which were
paid in full when the financial tnsti-
tutions failed to reopen after the 1888
crash.
The accounts were in the names of
the Secretary of War as trustee for
Philippine Islands funds and for Pan
anna Canal Zone revenues, the United
States Shipping Board Merchant Fleet
Corp, the Inland Waterways Corp.
and the alien property custodian.
Reclaimed 100 Cents On Dollar.
Although general depositors re-
ceived only portion of their savings,
the Government officials and agencies
sold the ample collateral they had re-
quired the banks to give them and re-
imbursed themselves 100 cents on tho
dollar.
The receivers, some Of whom had
consented to payment Of the govern
mental accounts, now claim the banks
had no right under the Federal bank
ing laws to post the collateral, and,
therefore, the pledged securities never
ceased to be the property Of the
banks.
Two claims, totaling $7is,00o, BY
the Commercial and District National
Bank receivers already have been al
lowed, and additional claims by the
two banks amounting to slightly more
than $1,9l7,000 still are pending be-
fore the court.
Depositors Of the two defunct in
stitutions, hundreds OF whom almost
have abandoned hope of recovering
any more Of their savings, will receive
substantial dividends should the re-
ceivers' legal battle be brought to q
successful conclusion, since . total Of
more than 1881 900 is involved.
An additional $2,524,oO Is claimed
by the Bank Of Pittsburgh, National
Association, the Guardian National
Bank Of Commerce Of Detroit and the
Commercial National Bank Of Phila-
delphia.
Claim Interest From Sale Date.
From all these claims, however,
must be deducted dividends already
paid by the banks to general creditors.
which in the case Of the District Ma
tional Bank amount to rs per cent,
and so per cent in the case OF the
Commercial. On the other hand, the
receivers contend they are entitled to
interest from the date of conversion
OF the collateral, taking into consid-
GRAFTON deductions in principal re-
sulting from dividend payments.
Thus, the two claims covered In the
DEGREES expected this week are for
S791, 600 against Secretary of War
Woodring and about $409, 900 against
the Merchant Fleet Corp, but deduc-
tions because OF dividend payments
will reduce them to 1854 900 and $685.
600, respectively, or total balance
of approximately $527,0O0. To this,
however, must be added interest.
Rhodes Initiated Contests.
The battle on behalf Of the general
depositors against the preferred Gov
ernment creditors was first taken up
by Thomas E. Rhodes, who had an
account in the Commercial when it
closed February ~, 1893. Through
Attorney Hugh Obear, he brought suit
IN District Court to recover approxi-
mately $1,500,000 improperly paid to
the Merchant Fleet Corp, the Attor-
ney General as successor to the Alien
Property Custodian, and the controller
of currency.
Taken into the United States Court
OF Appeals on a motion to dismiss.
Rhodes continued his fight. The ap-
pellate court held the bank had acted
in pledging assets to secure
deposits by the controller, but that
the collateral given to secure Mer-
chant Fleet and Alien Property Gus
todian deposits was without author
ity of law.
The question then was raised
whether the depositor had a right To
bring the suit without first making de-
nand on the controller to take such
action. The Court of Appeals held
ne had.
The case ultimately was taken to
ne Supreme Court, which affirmed
he Court of Appeals.
How much time will be required To
dispose finally of all the cases cannot
'e estimated with any assurance.
lawyers for the receivers say, however.
hey hope to be out Of the District
Court in another year. Then they
must wait for the appellate court
o act, with the probability that the
;ases ultimately will reach the su-
,reme Court.