HIGH COURT DECIDES FOR 1ST WISCONSIN
High Court Decides For 1st Wisconsin Justices Unanimous I n Dismissing Bank Commission Suit The 5-year old fight of the state banking commission to recover approximately $580,000 which it...
...lit the transactions were illegal In purpose, mere Unowlecig...
...Assets Were Liquidated Immediately following the closing . of the Liberty, the banking commission recognized the validity of the First National's claim and the First National liquidated assets of Liberty which it held, retained $583,300 and returned surplus collateral...
...In 1935, however, the commission decided it had been premature in approving the loan transactions between the Liberty and the First National bank...
...Rosenberg...
...penalty is based...
...In the unanimous opinion of the supreme court, Wickhem said that Rosenberg's testimony upon which the commission based its claims for the most part, had been repudiated by all parties, including the commission...
...It is our conclusion that even had the National known of the purpose to issue false statements as a resu t of the loans in question that would constitute no defense to Liberty in this transaction...
...59 page decision...
...Wickhem said: "With the elimination of Rosenberg's testimony, there drops from the case all evidence that National was the initiator or moving spirit in his scheme t» keep Liberty open for its own benefit either by exorbitant but genuine loans, or by ostensible loans designed so to manipulate the assets and liabilities as to deceive the commissioner, creditors and depositors by false statements ot condition based thereon...
...The commission claimed that It was entitled to all the moneys collected by the national bank through liquidation of the $1,136,753 assets of Liberty held by the First National...
...Justice John D. Wickhem affirmed a decision by Circuit Judge John C. Kleczka, Milwaukee, dismissing the suit of the banking commission...
...That this unlawful purpose formed no part of the inducement or consideration for these loans and was not a condition of them...
...The commission maintains the loans or transactions were illegal and thus National should return the $853,300 to the" commission for payment to dpositors and creditors of Liberty...
...cf that purpose wou d not pveciuSs a recovery by National if the proceeds were weed by Liberty in its business because knowledge of the illegal purpose would not constitute participation...
...And even if participation had been found, it is open to lerious question whether, In view of the fact that securities have been liquidated and the debt paid with full consent of all the parties, including the commission, the transaction is not eo fully executed as to be beyond the reach of any person standing in the shoes of the Liberty bank...
...To cover this amount, the First National held assets of the Liberty with a facs value of $1,136,753...
...In...
...When the Liberty bank closed on July 18, 1932 and liquidation proceedings were taken over by the commission, the Liberty owed the First National $583,300 for money which the Liberty had borrowed from the First National...
...That National had no knowledge cf any purt.jse by 1,'bcrty to predlcats false statements of condition upon the transactions or to publish these statements...
...o* £;c;trliie:i a|« ¦ to the payment of its <4 cpn/itilute the jmposl-•,-iit.v vhrilly fipert from it the !:'v.va:'ti'.(H,i upon...
...On July 18, 1938, Judge Kleczka, after a trial which had lasted 73 days, and during which more than 10,000 pages of testimony had been taken, dismissed the suit of the commission...
...High Court Decides For 1st Wisconsin Justices Unanimous I n Dismissing Bank Commission Suit The 5-year old fight of the state banking commission to recover approximately $580,000 which it maintains the First Wisconsin National bank of Milwaukee owed the defunct Liberty State bank of Milwaukee was lost last week when the state supreme, court affirmed a lower court decision dismissing the commission's suit...
...It must be concluded that the scheme, whatever its scope, was initiated by Mr...
...The entire case revolves around five transactions between National and Liberty through which Liberty borrowed amounts totalling $5583,300 from National...
...That National did not initiate, sujgest or instigr.te the transactions or in fact have any concern c'.hcr than making a. provident loan...
...Discussing testimony by officials of the National that they were unaware of the real purposes for which Rosenberg was using the loan transactions, the opinion said: "The testimony of members of the directors and the financial committees of National consists of flat denials that they had the slightest notion what the transactions were about...
...That the transactions were not .'ormal or colorable from the standpoint cf National but were in fact genuine Io<:ns...
...If treated ks a genuine and lawful transaction, no part of the noies in National hands at the time Liberty closed are tainted with illegality...
...The commission alleged that I. J. Rosenberg, president of the Liberty, had entered into collusion with officers of the First National to hide the true financial status of the Liberty bank...
...No matter how the metter is put, the fact is inescanub'" that Liberty had u.-ed *nd never rcpa'd- $533,300 of the funds of National and that National has collected this arr.ouH by liquidation of collateral deposited to secure its claims...
...Trial Court Warranted "Considering the evidence as a whole, we conclude that the trial court was warranted in holding: "1...
...Debts Still Unimpaired" "If the transactions bs hold colorable, the clearly valid debts remain unimpaired...
...A holding that N: Herri muct sur-;irocee:l...
...There is no reason to conclude that the trial court could not accept this testimony at its face value in view of the volume of business transacted and the fact that none of the committee was personally involved in any of the negotiations...
Vol. 10 • March 1940 • No. 12
