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Downey v. City of Yonkers and Three Other Cases .

August 3, 1939

DOWNEY
v.
CITY OF YONKERS AND THREE OTHER CASES.



Appeal from the District Court of the United States for the Southern District of New York.

Author: Hand

Before L. HAND, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

The legal principles applicable to Action No. 230 against the City of Yonkers are determinative of the issues in the other three cases which need not, therefore, be separately discussed.

This is an action by the receiver of The First National Bank & Trust Company of Yonkers (herein called the Bank) against The City of Yonkers (herein called the City) to recover fifty per cent of certain money paid out by the Bank, between March 8, 1933, and January 23, 1934, inclusive on the checks of the City. Since September 30, 1929, the Bank has been a national banking corporation organized and existing under the laws of the United States and the City a municipal corporation organized and existing by virtue of the laws of the State of New York.

On March 4, 1933 the City had funds on deposit in checking accounts in the Bank as follows:

(1) Treasurer of the City $275,105.53

(2) City of Yonkers 1,502.84

(3) Nepperham Sewer Fund of City of Yonkers 621.88

On March 4, 1933, the Governor of the State of New York proclaimed a bank holiday, and on March 6, 1933, the President of the United States proclaimed a bank holiday which was extended by further proclamation on March 9, 1933, Nos. 2039, 2040, 12 U.S.C.A. ยง 95 note, and ratified by Congress on the latter date. The Bank never reopened for regular business after March 4, 1933, but operated under restrictions imposed by the Secretary of the Treasury until a Conservator was appointed. On March 20, 1933, the Comptroller of the Currency appointed a Conservator of the Bank and on January 23, 1934, appointed a receiver in liquidation. A dividend of 40% was made available to the general depositors of the Bank on December 16, 1933, and a second dividend of 10% was made available on November 3, 1937.

On March 4, 1933, the City held various bonds having a par value of $535,000 which had been delivered to it by the Bank as security for the above three accounts, among others. These bonds, to the amount at par of $534,000, were later returned in connection with withdrawals from the accounts.

By a series of withdrawals beginning on March 8, 1933, and ending on January 23, 1934, the City withdrew almost all of the balance in each of the three accounts as follows:

1. Account with Treasurer of City ...


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