I have known Mr. Sobeloff and have had professional and personal contacts with him rather continuously over that period of time. I want to say to you that, in my opinion, Mr. Sobeloff has been one of the outstanding members of the Baltimore bar, a man of very high ability, unusually high ability and integrity.

His work as chief judge of the Court of Appeals of Maryland was outstanding. He brought an efficiency to the operation of that court which it had not enjoyed for some time.

In my opinion, Mr. Sobeloff is well qualified for the position as judge of the Federal Court of Appeals for the Fourth Circuit, United States Court of Appeals for the Fourth Circuit. I know of no reason why he should not be confirmed but, on the contrary, every reason why, in my opinion, he should be.

Some comment has been made or questions asked with respect to a possible conflict of interest. I happen to know something about that, because back at the time of the bank holiday I represented another bank in Baltimore which was going through the throes of reorganization, and I quite naturally kept a fairly close eye on what was done with other institutions in order that I might not either make any mistakes or that I might take advantage of any new developments that came along.

Senator O'MAHONEY. Mr. Stockbridge, since some 24 years have passed since this event which you call a bank holiday took place, I think perhaps, for the record, it ought to be made clear that it was no celebration. [Laughter.]

Mr. STOCKBRIDGE. I reckon not. It was a great relief when it was over, which is not true of a vacation.

I would like, if I might, Senator, to state very briefly what the situation was in that Baltimore Trust reorganization.

Mr. Sobeloff represented a group of stockholders. There were many groups, and Mr. Sobeloff happened to represent one. The bank commissioner of Maryland, under the Maryland law, became the receiver for the Baltimore Trust Co. and, after a preliminary examination by him, he filed a proceeding to enforce stockholders' liability.

Mr. Sobeloff and other counsel representing other groups of stockholders took that case to the court of appeals, and the name of that case was, I think, Robinson v. Hospelhorn, and I think it is reported in about volume 196, Maryland.

In that case the court of appeals said that until the fact of the necessity for the enforcement of stockholders' liability had been established-in other words, there was nothing in the petition of the bank commissioner except the bald statement that it was necessary to enforce that liability, to meet the demands of creditors.

So that the case came back from the court of appeals for the lower court to determine that as a fact, whether or not the demands of creditors could only be met by enforcement of stockholders' liability.

The court, Judge O'Dunne, whom, incidentally, I have known for many years, too, long before he was a judge, asked Mr. Sobeloff to make that investigation and determination.

It was not an easy job. As has been said here before, it involved many of the leading business and financial men of the city. It was not only an arduous job, but one calling for a great deal of judgment.

Following that, the report of Mr. Sobeloff, a settlement was reached between the banking commissioner, with the approval of the court, the

banking commissioner, and the various groups of stockholders, so that that matter was disposed of.

There was nothing in that situation which could by any stretch of the imagination create a situation of conflict of interest.

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.

I know of no ground on which it could be successfully contended that there was any conflict of interest involved in that situation whatsoever. Senator O'MAHONEY. And you were a participant?

Mr. STOCKBRIDGE. I was not a participant, but I was an extremely interested observer.

Senator O'MAHONEY. But in the sense that you were at that time associated with another bank

Mr. STOCHBRIDGE. That is correct, representing another bank.
Senator O'MAHONEY (continuing). You were

Mr. STOCKBRIDGE. That is right.

Senator O'MAHONEY (continuing). So associated with this affair that you are reasonably familiar with the facts?

Mr. STOCKBRIDGE. Well, as a matter of fact, I owed the Baltimore Trust Co. money at the time, so I was interested. I was not a stockholder, but I did owe it money.

But my primary interest was whether they were adopting any methods in that situation which would be of help to me or warning to me not to go into certain situations in a bank I represented.

Senator O'MAHONEY. I assume you paid your debts.

Mr. STOCKBRIDGE. Yes, sir; they urged me to settle, and I refused. It took me a couple of years to do it, but I did it.

Senator O'MAHONEY. Any questions?

Senator WATKINS. No questions.

Mr. STOCKBRIDGE. Thank you, Senator.

Senator O'MAHONEY. Thank you very much, Mr. Stockbridge. Senator Beall, have you any other witnesses you would like to call? Senator BEALL. We have Mr. Harry Baetjer, a member of the Baltimore, Md., bar. I would like to have Mr. Baetjer testify, please, a member of the very distinguished firm in Maryland of Baetjer & Howard.

Will you please identify yourself for the record, please?

STATEMENT OF HARRY N. BAETJER, MEMBER OF THE FIRM OF BAETJER & HOWARD, BALTIMORE, MD.

Mr. BAETJER. My name is Harry N. Baetjer. I am a member of the bar of the State of Maryland, practicing in Baltimore City.

I have known Judge Sobeloff for probably 35 years, and since the early thirties I have on many occasions been associated with him professionally. Only in one instance were we on the same side. We have always been on different sides except once, as far as I remember.

I knew him both in connection with the Baltimore Trust Co. litigation, and I saw a great deal of him and dealt with him very largely for 5 or 6 years when he was representing the city and I was representing the transit company, involving the changeover in buses, and

the change in the taxes, and the change in the operating requirements of the city from time to time.

In all of those contacts with the transit company, of course, we were on different sides, and in all the other contacts that I have had, the same is true.

I have seen in the papers that one of the complaints that has been lodged with your committee is that there was a conflict of interest between Judge Sobeloff's duties as special counsel to the receivers of the Baltimore Trust Co. and his duties to the stockholders of the company whom he represented.

I am very familiar with that whole situation. I represented, in the Baltimore Trust Co. litigation, many of the directors, and I effected the final settlements of most of the suits against the directors in collaboration with Judge O'Dunne and Mr. Sobeloff.

Now, the suggestion that Mr. Sobeloff was unfair to his clients, stockholders of the company, in accepting the appointment of Judge O'Dunne to make a report on the affairs of the Baltimore Trust Co., is just as unfair as anything could be. He was representing stockholders; and when the receivership intervened at the time of the bank holiday, a suggestion was made that there ought to be a stockholders' liability asserted.

Mr. Sobeloff represented a lot of stockholders, and pretty much every member of the bar of Baltimore City represented some of them, and it got to be so that we would have to have a hall in order to argue out the questions of stockholders' liability.

Finally, Judge O'Dunne said he wanted to have pointed out to him just what were the limits of his authority with respect to stockholders' liability, and the matter was taken to the court of appeals, and the court of appeals handed down its decision. And it became essential then that some independent examination be made of the affairs of the Baltimore Trust Co. in order to establish what its financial condition was, and whether there was a stockholders' liability and, if so, what was the amount of that liability.

At that time, counsel for the receivers of the Baltimore Trust Co. were 3 most eminent members of the Baltimore bar, and in his statement at the the time the appointment was made, as I recall it, Judge O'Dunne said he did not think it was important for those 3 men to give the time that was necessary to be given to really investigate the affairs of the Baltimore Trust Co. It was an enormous concern, and a dreadful failure, and those three counsel for the receivers were concerned day in and day out in trying the various questions that arise through a receivership, preference of questions, dozens of questions of all kinds.

They were going to the court of appeals all the time. And he said: This tremendous agitation in the newspapers about the Baltimore Trust Co. and the suggestion of carelessness and bad loans are such that this thing ought to be settled once and for all, and it ought to be settled now, and I don't really believe that the counsel for the receivers can throw aside what they are doing and make this investigation, and I am going to have it made independently, and I am going to appoint Simon Sobeloff to make it.

When he was making an investigation of the Baltimore Trust Co. affairs to try to find out what the facts were in the face of a suggested assessment of the maximum amount, nothing that he could do could hurt his clients, but was bound to help his clients; so the suggestion

that accepting this appointment was unfair to his original clients is just as foolish as anything can be. He couldn't possibly do anything but help his clients when he accepted that appointment.

So I thought that seemed to me to be most unfair.

Now, apparently there is a suggestion that seems to linger always, and never really is brought out so much, and that is that the suits against the directors and officers of the Baltimore Trust Co. that was accepted by Mr. Sobeloff in his report, that there was something that wasn't right about that.

Well, I represented more directors than anybody else, I am sure, and I dealt with them probably more than anybody else did; and while I wouldn't have brought the suits, I don't think, certainly not all of them, it is a question of judgment.

What is negligence? "Negligence" is a relative term, and what is culpable negligence is even more relative.

Senator O'MAHONEY. You are speaking of negligence on the part of the directors?

Mr. BAETJER. Yes, on making loans or making investments or holding onto investments they shouldn't have made, or making settlements that they shouldn't have made, or were ill-advised.

Senator O'MAHONEY. And I to understand that Mr. Sobeloff brought suits alleging negligence against directors which you would not have brought were you in that position?

Mr. BAETJER. I wouldn't have brought them all, but I don't know what I would have brought if I had been introduced in the first instance as he was introduced to it. I wouldn't have brought all the suits.

But certainly no one would have said the bringing of those suits represented anything but a difference in judgment.

Senator O'MAHONEY. What did all of those suits mean?

Mr. BAETJER. Oh, probably 19 of them.

Senator O'MAHONEY. Does that mean he sued all of them?

Mr. BAETJER. I think all. I am not sure. There may have been 1 or 2 left out.

Senator WATKINS. Did I understand you to say you represented the directors in that suit?

Mr. BAETJER. I represented a great deal of them. Every lawyer in Baltimore represented them.

Senator WATKINS. I am talking about directors. How many did they have?

Mr. BAETJER. Twenty or twenty-five.

Senator WATKINS. That was one of the largest banks in this area? Mr. BAETJER. The third largest, I think.

Senator WATKINS. With assets of about $100 million?

Mr. BAETJER. I would have thought so, yes. I think it was second only possibly to the First National Bank, or maybe Union Trust Co. Senator O'MAHONEY. How many suits did you win?

Mr. BAETJER. Two suits were tried, and the bank commissioner lost those suits. All the other suits were settled.

Senator WATKINS. Do I understand what you are saying is that we are to believe that Mr. Sobeloff brought those suits in the name of the receiver?

Mr. BAETJER. Yes, sir, under the direction of the court.

Senator WATKINS. Under the direction of the court.

I note in some of the charges that have been filed here by Senator Johnston, there is a reference to a 34-story building, now known as the Mathieson Building. There was some irregularity with regard to that building.

Was that one of the assets that was taken over by the Bank Commissioner?

Mr. BAETJER. I think it was, yes. I think it was still in the Baltimore Trust at the time. I think it was still there at the time.

Senator WATKINS. Since this statement has been filed and is a part of the record, I am going to call your attention to No. (3) on page 6 of that statement filed by Senator Johnston. It reads as follows: His responsibility

referring to Judge Sobeloff—

as an officer of the court was to conserve and protect the assets involved in the liquidation of the Baltimore Trust Co. wherein many depositors and clients suffered heavy losses. Instead, under a judicial masquerade, through a series of legal manipulations, he obtained control for a subsequent client one of the most valuable assets, namely, the 34-story office building now known as the Mathieson Building, in total disregard of the agreement of transfer by the receiver, John D. Hospelhorn, in July 1941, and approved by the court.

What have you to say as to that?

Mr. BAETJER. I never heard that until this moment.
Senator WATKINS. You never heard of that charge?

Mr. BAETJER. Never, until this moment.

Senator WATKINS. That is a rather well-known building in the city, I assume.

Mr. BAETJER. Yes. It was sold to a man who owns it now, but it was sold a couple of times.

Senator WATKINS. And you think that situation could not have existed without your knowing about it?

Mr. BAETJER. I don't think it could, no, sir. Baltimore is a right small place.

Senator WATKINS. Of course, I haven't read this statement in its entirety, but it seemed to me that that charge, if there had been anything that had existed or even indicated it, you would have heard about it; is that true?

Mr. BAETJER. I certainly think I would.

Senator WATKINS. Especially in view of the fact that you represented the directors, many of the directors of that bank.

Mr. BAETJER. Many of them.

Senator WATKINS. There is some more here.

No. (2) of the charges, on page 3:

That he did use the confidences and information obtained from these former employers to his subsequent advantage to such an extent that he sought to force through court action enforcement of agreements concerning property that he caused to be obtained through his former position to his personal advantage.

It is rather vague and somewhat involved.

Mr. BAETJER. I never heard of that, either.

Senator WATKINS. You never heard any rumors or charges to that effect at all?

Mr. BAETJER. Never.

Senator WATKINS. Since and during the time of the bank receivership, or since that time?