a settlement of a fixed liability for the miserly sum of $205,500, especially against defendants whose financial ability was beyond question as being competent to respond in a larger sum? Mr. Sobeloff's judgment is festered in either his (a) reports or (b) his settlement without dissent of a $56 million liability for $205,500.

I submit the above and the other 14 cases reveal that Mr. Sobeloff knowingly represented interests that were in conflict. His conduct is well within the condemnation of the Department of Justice in the case recently reported in the press against the firm of Sullivan & Cromwell.

On page 47, line 14, of the transcript of hearing, Mr. Enos S. Stockbridge made the astounding and conflicting statement:

"There was nothing in the situation which could by any stretch of the imagination create a situation of conflict of interest." In other words, Mr. Stockbridge contends that Sobeloff's resistance in a court case against the receiver to a stockholders liability does not conflict with the duties assumed by him and as shown in his reports as an officer of the court representing the receiver in recommending the officers', stockholders', and directors' fixed liabilities. Patently, Mr. Stockbridge is in error in his conclusion for he later admits in his next paragraph:

"Mr. Sobeloff was acting as a representative of the court to perform a duty assigned to him. As a matter of fact the settlement which resulted was of benefit to the stockholders, in that it was something less than the full statutory liability."

In other words, Mr. Stockbridge approves Mr. Sobeloff's failure as a representative of the court to secure a full assessment of stock liability helpful to the stockholders in an amount of over $1.2 million and to that very extent harmful to the depositors and creditors. Was he representing the court correctly and properly in reducing the stockholders' losses and thereby increasing the creditors' losses? The contradiction of interests and results are patent to the discerning and inquiring mind. Double talk is no excuse for this.

Former Senator Radcliffe, on page 60, at line 17 of the transcript, says: "There was no criticism from any member of the committee of Mr. Sobeloff at any time but on the contrary, the members of the committee felt that in a very trying situation he had handled himself entirely with propriety."

On page 61 of the transcript, at line 6, Senator O'Mahoney asked, "What was the official relationship between the committee and the nominee?" Senator Radcliffe answered, "None," and later Senator Radcliffe said, at line 22, on page 61, "No; none whatever."

What then becomes of the former Senator's praise? The fact of the matter was that the committee there referred to acted before the date of the receivership and before Mr. Sobeloff's connection with the receivership. See Hospel

horn's testimony on page 67 of the transcript, at lines 21 and 22. Mr. Hospelhorn in his testimony, at page 65, line 7, says he was the former receiver of the Baltimore Trust Co. He is still the receiver, for the case is still open, pending and not closed.

Mr. Hospelhorn, on page 68, line 7, of the transcript, says he paid 70.34 percent on the dollar. This, believe, was the refund to the depositors only. The record will show that the stockholders, officers and directors, and guarantee fund contributors losses exceeded $50 million. (See court records.)

Mr. Hospelhorn again, on page 69 of transcript, says that Mr. Sobeloff had no connection with the Baltimore Trust Co. Building. That statement is not true. Mr. Sobeloff made an elaborate report on the building showing it had been devalued to $1 subject to a trust note of $5 million. Rigger, a straw man, figured in several deals for the building and in other deals of the trust company. The committee will wish to know whether Mr. Sobeloff represented, directly or indirectly, Mr. Funkhouser or his affiliates. On this point the further testimony of Mr. Sobeloff is necessary and the testimony of Mr. Funkhouser is essential. The sale in 1941 of the stock representing the ownership of the Baltimore Trust Building was part of a conspiracy by Rigger, Funkhouser, Hospelhorn, and others to cheat and defraud the depositors and creditors of the Baltimore Trust Co. The transaction was not several or three steps removed as Mr. Hospelhorn (at p. 70, line 15, of the transcript) testified and before Mr. Sobeloff got into the picture with Mr. Funkhouser. This testimony is incorrect because the court record contains a letter from Mr. Hospelhorn dated in November 1942, that Mr. Funkhouser bought the stock and the $5 million note. Then, in 1942, Mr. Donald Symington (see his estate papers in probate court of Harford County, Md.) bought the remaining assets of the Baltimore Trust Co. through the Colonial Mortgage Co. which included the note of $5 million and other notes for $160,000. Mr. Symington, at the same time, acquired all the assets which the Colonial

Mortgage Co. had bought which also included his own personal note of $700,000 for a consideration of about $300,000.

The foregoing proves lack of diligence on the part of Mr. Sobeloff in protecting one of the principal assets of the Baltimore Trust Co. for the benefit of the depositors and creditors.

The testimony of Sobeloff in quoting from a letter from Mr. James Bruce, at page 160, line 15, etc., requires examination. Mr. Sobeloff found dishonesty. He found fraud in his reports. He found criminal and civil negligence. These findings were against the officers and directors. The fact of the matter is that Director James Bruce-newphew of Howard Bruce, formerly chairman of the board of the Baltimore Trust Co.-returned $50,000 in securities which one Handley (a director) had wrongfully given to the guarantee fund of $7,500,000 in 1931. This $50,000 was returned by Director James Bruce to its rightful owner (a foreign depositor) through Handley. Handley became pressed and committed suicide. Director James Bruce, through his attorney Mr. Levey threatened to go into bankruptcy if he (Bruce) were forced to pay the $50,000. How such commendation from Bruce can help Sobeloff in face of Bruce's obvious falsehoods and conduct is beyond comprehension. When he (Bruce) says "He had nothing to do with the acts complained of" he obviously lies. (See correspondence in the court records.) Where Mr. Sobeloff says at page 157 of the transcript that Mr. James Bruce contributed $50,000 to the settlement fund, he is incorrect, for James Bruce threatened personal bankruptcy when called upon to pay for his wrongful act, and his uncle Howard Bruce gave $50,000 to make up for the $50,000 James Bruce required to be returned through Handley to the foreign depositor. The letters from Mr. James Bruce by his attorney, Mr. Levey, in elucidation of this circuitous transaction reflect no credit either on Mr. Bruce or Mr. Sobeloff's veracity or the propriety of their official conduct. This is so notwithstanding the fact that Mr. Sobeloff is Solicitor General and Mr. Bruce was formerly an Ambassador.

Another thing that requires further examination and exploration is the fact that notwithstanding Mr. Sobeloff's official duty as an officer of the court to aid in the collection and preservation of the assets of the Baltimore Trust Co. for the benefit of the receiver and ultimately for the benefit of the depositors and creditors of the trust company, he sought for other clients to diminish those assets for the benefit of his other clients. He sought to increase the receiver's obligations. He sought rent from the receiver for the Funkhouser interests (O'Sullivan Building, Inc., being in reality Raymond J. Funkhouser, the real owner in the transactions of the Baltimore Trust Building) although the receiver had a rent-free agreement to occupy space in the building for the receivership. (See petition filed October 21, 1943, signed by Simon E. Sobeloff in file No. 1117 in case No. 2043a in said receivership proceedings and also see answer of the receiver under file No. 1118, together with attached correspondence filed November 16, 1943.)

The undersigned will assist anyone designated by the committee to study the records on file in the clerk's offices in Baltimore, or in any other proper manner assist the committee in determining the truth of the foregoing. I am familiar with the details in the record and have made copious notes from them. The undertaking is not an easy one. A competent analysis now may prevent the 'confirmation of an improper nominee to a lifetime position of power, trust, and influence.

Respectfully submitted.

CHARLES SHANKROFF.

IN THE CIRCUIT COURT NO 2 OF BALTIMORE CITY JOHN D. HOSPELHORN, RECEIVER OF THE BALTIMORE TRUST COMPANY, A BODY CORPORATE v. HOWARD BAETJER, JAMES BRUCE, ALLAN L. CARTER, WILLIAM A. DIXON, A. E. DUNCAN, E. EVERETT GIBBS, P. L. GOLDSBOROUGH, JOHN HINKLEY, ALBERT D. HUTZLER, WILLIAM H. MATTHAI, GLENN L. MARTIN, JOHN O. MUTH, I. MANNING CARSONS, DONALD SYMINGTON, HENRY E. TREIDE, HERBERT A. WAGNER, LLOYD B. WILSON, FRANK NEWCOMER, AND SAFE DEPOSIT & TRUST COMPANY EXECUTORS OF THE LAST WILL AND TESTAMENT OF WALDO NEWCOMER, DECEASED; AND CLARENCE A. TUCKER, EXECUTOR OF THE LAST WILL AND TESTAMENT OF CHARLES H. KNAPP, DECEASED

To the honorable the Judge of said Court:

The Bill of Complaint of John D. Hospelhorn, Receiver of the Baltimore Trust Company, a body corporate, by his solicitors, Alexander Armstrong, J. Purdon Wright, and Simon E. Sobeloff, respectfully shows:

1. That the Baltimore Trust Company, a body corporate, of the State of Maryland, is a corporation organized under and by virtue of the banking laws of the State of Maryland and had its principal place of business in Baltimore City.

2. That on January 5, 1935, the said The Baltimore Trust Company was, by order of Circuit Court No. 2 of Baltimore City, declared insolvent and by the same order, John D. Hospelhorn, the Plaintiff herein, a resident of Baltimore City, State of Maryland, was appointed Receiver of the assets and property of the said The Baltimore Trust Company; that said Receiver duly qualified as such and, under direction of said Court, took possession of all of the assets and property of said Trust Company and is now acting as such Receiver; that subsequent thereto, to wit, on July 1, 1936, by order of said Court, the Plaintiff herein was authorized and directed to institute and prosecute such legal proceedings as might be necessary in order to enforce the liability of such directors and officers of the said The Baltimore Trust Company as were responsible for certain losses sustained by the said banking institution, and said Receiver, by order of said Circuit Court No. 2 of Baltimore City, passed on the day of August

1936, was further authorized and directed to institute this proceeding.

3. That at the time of the occurrence of the matters hereinafter complained of The Baltimore Trust Company had issued and outstanding 625,000 shares of capital stock, each share of the par value of Ten Dollors ($10.00).

4. That when the matters hereinafter complained of occurred, Section 70 of Article XX of Bagby's Annotated Code of Maryland provided that the Board of Directors of a bank or trust company might declare a dividend from so much of its net profits, after providing for all expenses, losses, interest and taxes accrued and due from said bank or trust company, as they should deem expedient, and provided also that before any such dividend was declared not less than onetenth of the net profits for the preceding half year or for such period as was covered by the dividenl should be carried as a surplus fund until such surplus fund should amount to 20 percent of the capital stock. If further provided that any losses sustained in excess of the undivided profits of such bank or trust company might be charged to its surplus account with the proviso that said surplus account should thereafter be reimbursed from its net earnings; it was then provided that no dividend should be declared or paid in excess of one-half of the net profits of such bank or trust company unless or until its surplus fund should be fully restored to the amount of 20 percent of its capital as required by said section of the Code.

5. That or a number of years beginning with 1925 the directors of the Baltimore Trust Company had pursued a policy of declaring regular quarterly dividends out of the balance of earnings for the quarter as reported by the officers after the payment of taxes, interest and expenses, and any and all losses which may have been sustained or ascertained during said quarter and then declaring out of the residue of said earnings, if any, such dividend as was legally justified by the amount of said residue of earnings and as to the Board seemed proper. 6. That on the 13th day of March 1931, the directors of the Baltimore Trust Company at a regular meeting of the Board declared a quarterly dividend of 25 cents per share to its stockholders, said dividend to be payable on March 31, 1931, to stockholders of record on March 20, 1931, and the dividend was in fact subsequently paid on March 31, 1931. The amount paid as dividends by The Baltimore Trust Company pursuant to said declaration was $156,250.

7. That the following duly elected and qualified directors attended the meeting of The Baltimore Trust Company and voted for the declaration of said dividend: Allan L. Carter, William A. Dixon, E. Everett Gibbs, John Hinkley, A. D. Hutzler, Charles H. Knapp, W. H. Matthai, John C. Muth, I. Manning Parsons, Henry E. Treide, P. L. Goldsborough, and Waldo Newcomer. Each of said directors served until January 5, 1935, except Waldo Newcomer, who served until his death on July 27, 1934.

The following duly elected and qualified directors failed to attend said meeting but had knowledge in advance that the question of dividends would be acted upon at said meeting, and learned of the action taken by their fellow directors, but failed to protest or disapprove said action, ratified the same and accepted the dividend which was, pursuant to said declaration, paid on March 31, 1931, on the shared of stock of the Baltimore Trust Company held by them respectively;

Howard Baetjer, James Bruch, A. E. Duncan, Glenn L. Martin, Donald Symington, Herbert A. Wagner, and Lloyd B. Wilson. Each of said directors served until January 5, 1935, except Donald Symington who served until January 9, 1933, James Bruce who served until September 29, 1933, and Lloyd Wilson who served till January 8, 1934.

8. That the said directors of The Baltimore Trust Company did not declare said dividend from the net profits of the said Trust Company earned by said institution during the then current quarter of 1931, after providing for all expenses, loans interest and taxes accrued or due from said bank or trust company; that many losses which had thereto fore been suffered by the said Trust Company had not been written off or otherwise provided for,and there were not at the time of the declaration of said dividend any net profits from which the said dividend could legally be declared. That the said directors, in violation of the aforementioned provision of law, declared said dividend at a time when the surplus fund of said institution had previously been depleted, as a result of losses, below 20 percent of the capital of said institution and had not been fully restored to the amount of 20 percent of said capital, as required by law. That the monies which were subsequently paid to stockholders on March 31, 1931, as a result of the declaration of said dividend on March 13, 1931, were negligently and illegally withdrawn from the funds of the said Trust Company, which were required at the time to pay the losses already sustained by said Trust Company, and the Plaintiff charges that the directors who were present at said meeting and voted for said dividend, and each of them, were guilty of negligence in voting illegally for said dividend.

9. That the aforesaid Defendants, and each of them, who were not present at the meeting when said dividends were declared, are equally responsible and liable together with those of the directors who were present and voted in favor of the same, for the improper and illegal action in declaring and paying said dividend, inasmuch as the said Defendants who were absent from said meeting, and each of the, were under a legal duty to attend the said meeting of March 13, 1931, and if for any reason they were unable to attend, it became their respective duty, upon learning of the declaration of the said dividend, to protest the action of their fellow directors and to demand recovery of the payments when made, inasmuch as the said Trust Company had derived no net profits whatsoever during the quarter of the year for which said dividend was declared, after providing for all expenses, losses, interest, and taxes accrued or due from said bank or trust company, and on the date of the declaration of said dividend had no net surplus fund of said institution had prior to the date of said declaration of dividend been depleted, by losses actually sustained, below 20 percent of the capital of the institution, and said surplus fund had not at that time been fully restored to the amount of 20 percent of said capital. In disregard of the duty resting upon them, none of the Defendants who was absent from the said meeting of March 13, 1931, took any action whatsoever to protest, disaffirm, or rescind the declaration of said dividend or to recover the sums paid out in pursuance of the action of their fellow directors, but acquiesced in and ratified the declaration and payment of said dividend, and accepted the dividend paid on the stock owned by each of them respectively.

10. That Waldo Newcomer, one of the directors who was present at the meeting of March 13, 1931, and voted for said dividend. died on the 29th day of July 1934, leaving a substantial estate and a Last Will and Testament in which Frank Newcomer and the Safe Deposit & Trust Company were named as executors; that said executors have now duly qualified as such in the Orphans Court of Baltimore City and are administering said estate.

That Charles H. Knapp, another of the directors who was present at the meeting of March 13, 1931, and voted for the declaration of said dividend, died on the 27th day of July 1936, leaving a substantial estate and a Last Will and Testament in which Clarence A. Tucker was named as executor, and the said executor has now qualified as such in the Orphans Court of Baltimore City and is duly administering said estate.

11. The Plaintiff avers that the above named directors, and each of them, were guilty of negligence either in voting illegally for the declaration of said dividend on March 13, 1931, or in subsequently acquiescing in said declaration, and became liable to the said Trust Company for said negligent and illegal act, and the Plaintiff further says that the Defendants are now jointly and severally liable to him for the amount paid out on March 31, 1931, as a result of the improper, negligent, and illegal declaration of said dividend on March 13, 1931.

12. That the Plaintiff avers that the interposition of this Court of Equity in the premises is proper and necessary as an accounting of the financial condition of The Baltimore Trust Company, as of the date of payment of said dividend, to-wit, March 31, 1931, is required to establish the claim of the Plaintiff.

TO THE END THEREOF:

(A) That this Honorable Court may order an accounting of the financial condition of The Baltimore Trust Company as of March 31, 1931.

(B) That this Honorable Court may decree that the defendants, and each of the, are liable to the Plaintiff, as Receiver of The Baltimore Trust Company, for the amount of the said dividend negligently and illegally declared or acquiesced in by them or by their respective testators as aforesaid, and that judgment for such sum as shall be found to be the loss which has been sustained be rendered against the said Defendants, and each of them, for the respective amounts for which they shall be found to be respectively liable.

(C) That the Plaintiff may have such other and further relief as the nature of his case may require.

MAY IT PLEASE YOUR HONOR to grant unto the Plaintiff the Writ of Subpœna, directed to Howard Baetjer, Allen L. Carter, William A. Dixon, A. E. Duncan, E. Everett Gibbs, P. L. Goldsborough, John Hinkley, Albert D. Hutzler, William H. Matthai, Glenn L. Martin, John C. Muth, I. Manning Parsons, Donald Symington, Henry E. Treide, Herbert A. Wagner, Lloyd B. Wilson; and Frank Newcomer and Safe Deposit & Trust Company, Executors of the Last Will and Testament of Waldo Newcomer, deceased, and Clarence A. Tucker, Executor of Charles H. Knapp, deceased; all residing in Baltimore City and James Bruce residing in Baltimore County, State of Maryland, commanding them and each of them to appear in this Honorable Court on some certain day to be named therein, to answer the premises and abide by and perform such decree as may be passed therein. And as in duty bound, etc.

/s/ JOHN D. HOSPELHORN, Receiver of The Baltimore Trust Company, a body corporate.

/s/ J. PURDON WRIGHT,
/s/ ALEXANDER ARMSTRONG,
/s/ SIMON E. SOBELOFF,

Solicitors for Plaintiff.

State of Maryland, city of Baltimore, to wit:

I HEREBY CERTIFY that on this 4th day of August 1936 before me, the subscriber, a Notary Public of the State of Maryland, in and for Baltimore City aforesaid, personally appeared John D. Hospelhorn, Receiver of The Baltimore Trust Company, and made oath in due form of law that the matters and facts set forth in the aforegoing Bill of Complaint are true to the best of his knowledge, information, and belief.

AS WITNESS my hand and notarial seal.

/s/ ANNA MAE COOKE, Notary Public. Senator O'MAHONEY. After the receipt of this, I received the following letter from Julius A. Victor, Jr., of the firm of Harley, Wheltle & Victor, attorneys at law, Baltimore, Md., suite 309, Title Building, Courthouse Plaza, and it is dated May 18, 1956:

Hon. JOSEPH C. O'MAHONEY,

United States Senate, Washington, D. C.

DEAR SIR: This letter is addressed to your attention, as a member of the committee considering the nomination for appointment of the Honorable Simon E. Sobeloff to the vacancy on the bench of the Fourth Circuit Court of Appeals. Several members of this firm have known Mr. Sobeloff for at least a quarter of a century, and without detailing our reasons therefor, all of us are most happy in recommending his appointment to the United States appeal bench. Knowing that his supporters are most numerous, we would deem this letter merely supporting his appointment as unnecessary. However, we note by the public press that a certain Charles Shankroff has appeared opposing Mr. Sobeloff and, having had an experience with a person by the same name, we feel the information which we can furnish concerning him may aid in evaluating the weight, if any, given to his objections.

On September 29, 1955, a meeting of distributees in the matter of the estate of Nicholas Hall, deceased, was had in the Orphans' Court of Baltimore City, for