The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
X-6129 COPY IN THE DISTRICT COURT OF TFE TOTTED S'TATrl? IN AND FOB THE EASTERN DISTRICT OF ILLINOIS. MAT TE3>/, 1928. J . F . JARV1S, ET AL., Complainants, I F EQUITY ! T o. 93-D vs. OTTO KEPP, ET AL. COURT'S RULING- UPON MOTION OF FEDERAL RESERVE BANK OF CHICAGO TO DISMISS COMPLAINTS' BILL. The m o t i o n of P e d e r e l R e s e r v e Bank of C h i c a g o , t o d i s m i s s t h e complainants' b i l l , as to i t , is hereby s u s t a i n e d . A f t e r a c a r e f u l s t u d y of b r i e f s of c o u n s e l and of t h e Act p r o v i d i n g f o r t h e F e d e r a l R e s e r v e System i n i t s r e l a t i o n t o t h e N a t i o n a l Banking Laws a s a w h o l e , w i t h p a r t i c u l a r a t t e n t i o n t o t h o s e s e c t i o n s of t h e law a u t h o r i z i n g t h e F e d e r a l R e s e r v e Banks t o conduct e x a m i n a t i o n s of member banfcr., I h a v e come t o t h e c o n c l u s i o n t h a t t h o s e e x a m i n a t i o n s were not i n t e n d e d by Congress a s a d i r e c t p r o t e c t i o n t o t h e d e p o s i t o r s o r o t h e r c r e d i t o r s of t h e member b a n k s , n o r a r e such e x a m i n a t i o n s c o m p u l s o r y upon t h e F e d e r a l R e s e r v e Banks e x c e p t i n so f a r a s t h e y may be found n e c e s s a r y i n o r d e r t o e n a b l e t h e F e d e r a l R e s e r v e Banks t o c a r r y out t h e p e c u l i a r p u r o o s e s of t h e Act p r o v i d i n g f o r t h e F e d e r a l R e s e r v e System. If t h i s conclusion is correct, i t i n e v i t a b l y f o l l o w s t h a t t h e f a i l u r e of t h e F e d e r a l R e s e r v e Bank of Chicago t o c o n d u c t e x a m i n a t i o n s of t h e Neoga N a t i o n a l Bank, one of i t s member b a n k s , d i d n o t and c o u l d n o t , of i t s e l f , o r b e c a u s e of t h e -2- X-6129 a l l e g e d r e s u l t s of s u c h f a i l u r e , c r e a t e any l i a b i l i t y on t h e p a r t of t h e F e d e r a l R e s e r v e Bank of C h i c a g o , t o t h e d e p o s i t o r s i n t h e Neoga N a t i o n a l Bank. I am f u r t h e r of t h e o p i n i o n t h a t t h e o n l y c a u s e of a c t i o n a g a i n s t t h e F e d e r a l R e s e r v e Bank of Chicago, i n d i c a t e d "by t h e c o m p l a i n a n t s ' bill, i s upon t h e t h e o r y t h a t t h e F e d e r a l R e s e r v e Bank by some means upon s e c u r e d an u n l a w f u l p r e f e r e n c e . Without a t t e m p t i n g t o n a s s / o r con- s i d e r w h e t h e r o r n o t a c a u s e of a c t i o n by t h e d e p o s i t o r s on t h a t t h e o r y c a n be s t a t e d , i t i s enough to s a y t h a t a s now drawn t h e a l l e g a t i o n s of t h e b i l l a r e n o t s u f f i c i e n t t o e s t a b l i s h a c a u s e of a c t i o n on t h a t ground. I am f u r t h e r of t h e o p i n i o n t h a t i t would c o n s t i t u t e an a b u s e of t h e c o u r t ' s d i s c r e t i o n u n d e r Rule 26 of t h e F e d e r a l E q u i t y R u l e s , t o p e r m i t a j o i n d e r of t h e a c t i o n a g a i n s t t h e F e d e r a l R e s e r v e Bank of Chicago and t h e a c t i o n a g a i n s t t h e d i r e c t o r s of t h e Neoga N a t i o n a l Bank, a s s t a t e d i n t h e b i l l . I c a n s e e no d e f i n i t e r e l a t i o n between a c a u s e of a c t i o n by d e p o s i t o r s a g a i n s t t h e d i r e c t o r s of t h e Neoga N a t i o n a l Bank f o r f a i l i n g t o -perform t h e i r g e n e r a l d u t i e s a s d i r e c t o r s and a s p e c i f i c c a u s e of a c t i o n a g a i n s t t h e F e d e r a l R e s e r v e Bank f o r o b t a i n i n g a p r e f e r e n t i a l payment of a s p e c i f i c i n d e b t e d n e s s , w h e t h e r by c o l l u s i o n w i t h , . t h e d i r e c t o r s and o f f i c e r s of t h e Neoga N a t i o n a l Bank or o t h e r w i s e . To t r y t h e s e c a u s e s of a c t i o n t o g e t h e r , i t seems t o me, could only produce c o n f u s i o n , without a i d i n g t h e Court or s a v i n g time and l a b o r t o t h e l i t i g a n t s . Complainants' b i l l i s ordered dismissed as to the defendant, t h e F e d e r a l R e s e r v e Bank of C h i c a g o . September 4 , 1928. FRED L. WHAM J u d g e of t h e U n i t e d S t a t e s D i s t r i c t Court, Eastern Dist r i c t of I l l i n o i s .
@FedFRASER