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O'Keefe v. Equitable Trust Co.

April 13, 1939

O'KEEFE
v.
EQUITABLE TRUST CO.; SAME V. GUARANTEE TRUST CO.



Appeals from the District Court of the United States for the District of New Jersey; John Boyd Avis, Judge.

Author: Clark

Before BIGGS and CLARK, Circuit Judges, and KALODNER, District Judge.

CLARK, Circuit Judge.

This is one of several cases in this court disclosing the banking practices prevalent in Atlantic City during the golden (calf) era. We are in sympathy with the learned District Court in its effort to unravel equitably the tangled skeins following upon the premature departure of the hose. We cannot, however, give our approval to its sanction of the particular method employed in locking this barn or bank. On Saturday morning, January 28, 1933, the Atlantic City National Bank was the victim of a "run". The difference between a bank and a stocking being, by definition, one of liquidity, no bank can be or is expected to meet its deposits on instant demand. Their payment becomes then a race between time and confidence. In the principal case, the former seemed to be winning and confidence to require corresponding stimulus. The adrenalin was furnished as a result of some previous but undisclosed "arrangement" with the Atlantic City clearing house. In material form, it consisted of a canvas sack containing fifty thousand dollars in Federal Reserve notes. Twenty thousand dollars of this amount, a transfer of funds from another account of the City of Atlantic City to an account in the troubled bank, is not in litigation. Thirty thousand dollars belonged in equal part to the two plaintiff-appellees and is the subject matter of the present suit.

The testimony is pleasing in its narrow compass and in its absence of controversy. It becomes possible, therefore, to let the purposes of the parties appear from the mouths of their human agents. In quoting, we add only what we deem to be appropriate headings and references to the findings of fact of the learned trial judge.

A. Disposition of the Notes

1. Physical.

"Q. Where was the money placed that was brought into the bank? A. He was told to give it to the tellers. I don't know whether he did so, or not. I was in the back room the whole day." Record, p. 36.

"There is nothing in the testimony with relation to how the advanced money was to be handled, and there was no agreement as to segregation of said moneys, except as stated in Findings (2) and (3)." Record, p. 47, Findings of Fact No. 4.

"Mr. McMullin, the vice-president and solicitor of Bank, and apparently authorized so to do, directed that the money be given to the tellers of Bank." Record, p. 48, Findings of Fact No. 7.

2. Accounting.

"A. Local banks, due local banks fifty thousand dollars, and an entry of fifty thousand dollars, Guarantee Trust Company." Record, p. 28.

"The ledger of Bank contained two entries with relation to the transaction: One entry charged the $50,000 in the account under the heading 'Due Local Banks' and another entry was a credit to Guarantee of $50,000. These entries were made under date of January 28, 1933. The receiver substituted for these entries a deposit credit to the credit of the City of Atlantic City in the amount of $20,000 and $30,000 as amount due guarantee." Record, pp. 48, 49, Findings of Fact No. 11.

B. Use of the ...


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