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to just quote a few sentences from a speech that was made by the Attorney General in November of 1955 on the occasion of an award that was given to the Solicitor General. And among other things, the Attorney General said this:
The administration of Government would surely be impaired if composed solely of "yes" men.
The Department of Justice might just as well close up shop if its lawyers felt that they had to pull their punches in their discussion with me on any issue. Simon Sobeloff and I have always dealt with each other on this frank and sensible basis.
Unless we want responsible officials in Government to abdicate their functions, we must expect that they will have reasonable disagreements and exercise independent judgment. This should not be a matter of concern to the people or the basis of suspicion or unfair rumor. Rather it should be welcomed by everyone as the rational process in our way of life by which conflicting views are fully aired and ironed out. For free exchange of views is an indspensable condition for informed and intelligent judgment within the Government as it is so widely acknowledged to be outside the Government.
And in closing the Attorney General said this:
We in Government service must never cease striving to meet the grave challenge of public responsibility. We need the help, the continuing cooperation, and enlightened opinion of all the people. By these means we may mobilize and unite our strength, resources, and understanding in protecting the foundations of our great Republic, in safeguarding the cherished liberties of the people, and in preserving the inalienable rights of man.
One of the most effective ways of checking abuse of public responsibility is to establish and maintain loftiest standards in the administration of justice throughout the land. This objective President Eisenhower is constantly seeking to achieve in recommending outstanding and qualified persons as Federal jurists. In nominating Simon Sobeloff as a judge of the Court of Appeals for the Fourth Circuit the President has selected a man who fulfills these qualifications. In his hands liberty and law will be-as they must be in any ordered society-one and inseparable.
I should like to say this, speaking personally, and also in my office as executive assistant to the Attorney General, that I have had occasion to deal every day with every corner of the Department of Justice, with the assistant attorneys general as well as with the Attorney General, and with the Solicitor General, and down in the various divisions, the section chiefs, with all of the lawyers I have in some degree, directly or indirectly, contact. And I should like to say this: That there isn't a man in the building who does not have the highest regard and respect and admiration for the Solicitor General as a lawyer, and as an advocate and as a member of the Department of Justice. And we shall all miss him when he is confirmed.
Senator O'MAHONEY. Mr. Lindsay, may I ask you if, in accordance with the regulatory procedure of the Department of Justice, the name of Mr. Sobeloff was not given to the FBI for the usual examination before the nomination was sent to the Senate?
Mr. LINDSAY. Well, I am not sure of the procedures that are followed, but I do know, of course, the Solicitor General received, or I assume he did, as all public officials do, a full field check when he was made Solicitor General.
Senator O'MAHONEY. That is what I wanted to find out.
Mr. LINDSAY. I do not think that they repeat that when a man goes to a different office.
Senator O'MAHONEY. That is before he was nominated for the judgeship, the field check of which you speak, the FBI examination, was made?
Mr. LINDSAY. That is correct, when he became Solicitor General. Senator O'MAHONEY. And you think none was made after that? Mr. LINDSAY. I don't know whether one was made or not. It was brought up to date, Mr. Seaver advises me.
Mr. ROBERT SEAVER (Assistant to the Deputy Attorney General). My name is Robert Seaver, Assistant to the Deputy Attorney General. A full field investigation was conducted by the FBI.
Senator O'MAHONEY. Yes. It is my understanding, as chairman of the subcommittee, that we have had that. I have not personally examined it, because the time has not come for that. But I want the record to show that the FBI investigation has been made in this case, as in all other cases.
Mr. SEAVER. Yes, Mr. Chairman, it has been.
Senator O'MAHONEY. Thank you.
Senator Watkins, any questions?
Senator O'MAHONEY. Thank you very much, Mr. Lindsay. We appreciate your statement.
Senator Beall, did you have anybody else?
Senator BEALL. Nobody else. Thank you, Mr. Chairman.
I want to thank you for the very courteous way you have conducted this hearing.
Senator O'MAHONEY. You are very kind, I am sure.
Mr. Sobeloff, it is my understanding, in the presentation of your case, you would like to be placed under oath.
Do you solemnly swear that the testimony you are about to give in this proceeding will be the truth, the whole truth, and nothing but the truth, so help you God?
Mr. SOBELOFF. I do, sir.
TESTIMONY OF SIMON E. SOBELOFF, SOLICITOR GENERAL OF THE UNITED STATES, NOMINATED TO BE UNITED STATES CIRCUIT JUDGE FOR THE FOURTH CIRCUIT
Senator O'MAHONEY. Mr. Sobeloff, you have heard the testimony which has been produced at this hearing.
I have handed you personally the entire file which was presented to the committee by Senator Olin Johnston of South Carolina. You are aware of the nature of the protests which have been made against you.
Do you care to testify with respect to that?
Mr. SOBELOFF. Yes, sir.
Senator O'MAHONEY. We shall ask you questions later.
Mr. SOBELOFF. Senator Johnston wrote a letter to the chairman of the Judiciary Committee in January which embodied charges of unprofessional conduct in connection with the Baltimore Trust matter, in that I had represented conflicting interests. So I was in a general way familiar with what he had in mind.
On February 17, 1956, I addressed a letter to Senator O'Mahoney
Senator O'MAHONEY. I have it here.
Mr. SOBELOFF (continuing). As chairman of this subcommittee, in which I deal in detail with these charges. I will not take your time to go into full detail here, but I will say by way of summary that I represented, as has been amply proven here this morning, I represented the receiver in only one matter, following an investigation which I was directed to make by the court. I represented the receiver as 1 of 3 lawyers in a suit against directors. I did not represent the receiver in any other matter.
I had no connection at all with the receivership, its administration, or the settlement of claims, or in any other way.
My representation of stockholders was no secret. It was, indeed, the reason for my selection to make this investigation, because it was, as you know as lawyers, a very natural and normal practice for a court to appoint one of the lawyers representing clients who will benefit by a contemplated step, to conduct the proceedings.
Any amount that was recovered as a result of my efforts inured to the benefit of the clients who brought me into court. That was a matter of record. I was in the courtroom when the announcement was made.
Nothing that Judge O'Dunne did was done secretly. There was never any objection. It wasn't until 20 years later, here, that any suggestion was made that there was any impropriety in my having represented stockholders and conducting the investigation.
Now, in the last few days, I learned that summonses has been issued, at Senator Johnston's request, for the bank commissioner, Mr. Hospelhorn, and for Mr. Funkhouser.
At first I didn't recall who Mr. Funkhouser was or that I had ever handled any matter for him. But fortunately I was able to discover the old file and, boiled down, it is simply this:
Seven years after I had performed my service and been discharged and, indeed, after the receivership was terminated and all the assets had been distributed, the attorney for Funkhouser came to me and said that the receiver was still maintaining a lot of files in the office in the building which Mr. Funkhouser had, through various transfers, become the owner of.
It had been formerly the building of the bank, and he thought that he wasn't bound by the arrangement that was made at the time of the sale of the building, giving the receiver the right to continue to keep the files there for a time.
I said, "I don't know whether you are bound or not, but I am sure that we can work out some arrangement whereby, since the receivership is over and distribution of all the assets has been made, for them to consolidate these files into smaller space. Would that be satisfactory?"
He said, "Well, see what you can work out. Or perhaps they could put it in dead storage instead of using valuable office space."
I went to see the receiver and the attorney. They said they were holding it under an order of court. They didn't feel free to relinquish their rights, but if I would prepare a petition, they would promptly prepare an answer, and they would let Judge Ŏ'Dunne decide it.
And, as often happens when litigation gets underway and before it is disposed of, both sides became more reasonable, and the receiver
found that he could get along with less space, and my client found that it wasn't too burdensome to let them use that space. And I was instructed to dismiss the petition.
That is the whole story. I at no time had anything to do with the sale of that building. I didn't represent either party in the purchase of the building.
My file shows that I had never met Mr. Funkhouser until 1943, and then only briefly to shake his hand. The negotiation was with Mr. Ingraham, his lawyer, in 1943.
I don't feel that there is any impropriety or any conflict of interest, and I think what has been testified this morning here amply established that.
I would like for the record, however, to make a few comments about the allegations contained in this statement which you handed me this morning.
Senator Johnston's statement quotes the receiver as having protested the amount of my fee as being exorbitant. I shouldn't think that after years, the amount of fee awarded me in that case is subject to review by a Senate committee, but I wouldn't want it to be misunderstood. The fact is that the fee, the amount of which I did not suggest, was paid me after a hearing, after a nisi order, and the receiver was specifically invited to comment on the proposed amount; and he wrote back that he had no comment.
And the judge wrote a letter, which is in the files of the Baltimore Trust proceedings, saying that he thought it was his duty, if he had any objection, to say so. And he said he had no objection to the amount or any comment about it, but that he thought perhaps the award ought to await the termination of the litigation.
There was never any opinion expressed by Mr. Hospelhorn that the fee was excessive.
Now, in the next paragraph I see that Senator Johnston's memorandum quotes Mr. Hospelhorn as saying, or quoting others as saying, that the suits were nothing but a "bite." There is no evidence of that. I want to deny that for the record, and I have here a letter which is addressed to you, Senator, and was sent me by Mr. James Bruce, and I offer it for the record.
Mr. Bruce is the former Ambassador to Argentina. He had been vice president of the Chase National Bank. For a time he was president of the Baltimore Trust Co., and he was one of the defendants whom I sued. He had no reason to love me for that. He contributed $50,000 to the settlement fund.
If anyone had a right to complain of any unfairness or harshness or lack of consideration, it would be he. However, he writes you this letter, which I won't stop to read, but in which he recites how he came to be sued and contribute to the settlement fund, and that he felt that I was most fair and just in the circumstances, and that I did nothing that he wouldn't have done under similar circumstances.
I offer this for the record.
Senator O'MAHONEY. Pardon me just a minute, Mr. Sobeloff.
Mr. SOBELOFF. This past week, this week.
Senator O'MAHONEY. Yes. It is on the letterhead of James Bruce, Suite 1900, 260 Madison Avenue, New York, N. Y., and
Mr. SOBELOFF. He is now, I think, a vice president of the National Dairy Products Co.
Senator O'MAHONEY. Since I have not seen it until you now offer it, I think I will read it into the record.
DEAR SENATOR: I should be pleased to attend the meeting of your committee on May 3, but as I am due at the annual meeting of the Fruehauf Trailer Co. in Detroit that noon, I cannot get to Washington on time. Hence I resort to this letter.
I am both amazed and shocked that anyone should impugn the motives, even in the slightest degree, of either Judge O'Dunne or Mr. Sobeloff in regard to the investigation of the Baltimore Trust Co.
There were rumblings of trouble in the spring of 1931, and I resigned as a vice president of the Chase National Bank of New York and a member of its governing board in June of 1931 to come to Baltimore and become president of the Baltimore Trust Co.
I found an extremely critical situation. In the first place, a new building had been erected and it has been mortgaged to the Metropolitan Life Insurance Co. of New York on a very substantial first mortgage which, as I remember, was $3,750,000. The equity remaining, which was completely nonliquid, was about half the capital and surplus of the bank.
In September 1931, England went off the gold standard and runs began to be be made on a great many banks in the United States, and the Baltimore Trust Co. unfortunately was no exception.
It was a difficult period, and the citizens and business interests of Baltimore raised a guaranty fund which was subordinate to the deposits but senior to the stockholders. This provided a cushion and enabled the management to keep the bank going until the bank holiday in March of 1933. At that time it was reorganized and resumed business as the Baltimore National Bank, subsequently merging with the Fidelity Trust Co., and being in business today as the FidelityBaltimore National Bank & Trust Co.
It was at this time that Judge Eugene O'Dunne appointed Mr. Sobeloff to investigate the situation and the causes and effects thereof. He made a most detailed study over a very lengthy period of time of virtually every business transaction that the Baltimore Trust Co. had entered into. The report was a complete document, covering many hundreds of pages and went into the whole situation thoroughly.
In a general way his conclusions were that there had been on dishonesty involved in the sense that no one had stolen any money, or in any way defrauded the bank, that that in his opinion many acts of the management and failures to act had been due to negligence and failure to supervise.
I was one of the directors myself, and although I didn't relish the investigation, I did recognize that it was not without foundation. From my own standpoint, I had nothing to do with the acts complained of and brought out in the suit, but when I left Baltimore to come to New York some 6 years before I remained a director of the bank, but wasn't able to get down to many of the meetings.
I suggested resigning several times, but the management asked me to stay and help them with their New York accounts which I did. However, I did recognize that I myself may have been less than careful in not attending more meetings. I am writing this to tell you that I think Mr. Sobeloff was most fair and just in the circumstances and that he did nothing I wouldn't have done under similar conditions.
Furthermore, I would have no reason for shielding him, because having been the greatest sufferer, I was in a better position to judge it than anyone else. Sincerely yours,
Addressed to: "Senator Joseph C. O'Mahoney, chairman, Special Committee on Nomination of Simon E. Sobeloff to Circuit Court of Appeals, United States Senate, Washington, D. C."
We will insert in the record at this point the letter from Mr. Sobeloff dated February 17, 1956, addressed to me.