Evening star., 1938-03-07
Bank Continued Business
Though Charter Expired,
Court Declares.
ST. 100000 INVOLVED,
ATTORNEYS DECLARE
Auditor Is Directed to Determine
Which Of 1929 Depositors Will
Be Benefited.

NufSn, 40oO, utH LULQk tLQOuILtCS
OF ouer 100000. Vice President
Robert S. Stunz committed suicide.
Depositors haze received dividend
OF 20 per cent plus S per cent made
available before bank closed.
Litigation brought by deposttors
resulted in seperal suits.
The % directors Of the defunct
Park Savings Bank were held TODAY
by the United States Court of Appeals
to be personally liable for all deposits
IN the bank on August 30 1929, which
were not withdrawn subsequent to
that date.
The amount of the liability has not
been ascertained, but was estimated by
attorneys representing depositors to
exceed 100000.
The opinion of the court, written by
Chief Justice D. Lawrence Groner. is
the elimination of some four years of
continuous litigation and followed q
Court OF Appeals decision in 1895 that
the directors were not liable for money
deposited in the bank after August
30, 1929, which was the date on which
the institutions charter, issued by the
State of Alabama. expiredS
Continued Active Business.
Notwithstanding the expiration of
the charter, and apparently without
actual knowledge of its expiration,
ofncials of the bank continued an
active banking business up to March 6,
1888, when the Park Savings was
closed. along with all other banks In
the city. by order of the President. At
the time Of the closing, the bank was
hopelessly insolvent, the court said.
the greater part of its assets having
been embezzled by its principal officer
(Robert F. Stunz). who shortly after
the closing committed suicide"
Under the statutes of Alabama,
which apply to the present case since
the bank was incorporated there, the
directors automatically become "liqui-
dating trustees" upon expiration of
the charter, and personally liable for
all assets which come into their hands
from the banks officers at that time.
These assets form trust fund for the
benefit of creditors, the court said.
In its 1885 opinion. regarding liza
bility for deposits after the expiration
of the charter. the Court of Appeals
said depositors after that date were
assumed to have constructive notice
of the expiration Of the charter and
hence were estopped from proceeding
against the directors for post-charter
deposits
Sent Back for Trial.
At that time the Court of Appeals
sent the case back to the District
Court for trial of the question whether
the directors were liable for deposits
in the bank on August 80. 1929.
The trial court held that they were
not, saying that the depositors and
other creditors were estopped to as
sert such liability on the part of the
directors since they left their funds IN
the bank, thereby recognizing the bank
as a continuing institution.
The Court of Appeals, however. re-
versed this holding It said that al
though the directors were wholly
lacking in any element of bad faith"
they could not escape their liability
as trustees, at the expiration of the
charter. by claiming that the deposit
tors had waived their rights to proceed
against them.
Such a waiver would have had to be
given with a full knowledge by the
depositers Of their legal rights, the
court declared
The case was referred to the District
Court auditor to determine which de.
positors Of the bank. as of August 30,
1929, allowed their money to remain
there. This problem is more COM
plicated than it first appears, since 1t
may be held that the liability extends
only to the actual money on deposit on
that date and not to subsequent
replenishments Of the same account.
The depositors were represented by
E. Hilton Jackson, William E. Richard
son and Ward B. Mccarthy, who filed
the original bill. Later they were
Joined in the same contention by the
receiver Of the bank, John F. Moran,
represented by Attorneys ]. Bruce
Kremer. George B. Sprirgston and
Herbert M. Bingham. The receiver
originally opposed the plea Of the de-
positors, but later withdrew this op-
position and filed q cross bill, joining
forces with the Depositors' Committee.
The directors upon whom the IL
ability will fall are: Frank E. Altemus,
Wade H. Atkinson, Charles w. Bolg-
iano, L. T. Breuninger, Justice Joseph
w. Cox, H. F. Dismer, Peter M.
Dorsch, G. w. Forsberg, J. o. Gheen,
E. T. Goodman, John H. Holmead,
C. F. jenkins, A. F. Jorse, E. 8.
Kennedy, N. Mountford, c. M. Murray,
Claude w. Owen, Robert L. w. Owens,
Norman o. Oyster, H. A. Polkinhorn,
(see PARK SAVINGS, Page A-6.)