Clearing House Cleared

A banking decision handed down by a New York court last week gave pause to eleven Manhattan banks not involved in the litigation at all. Case was the suit brought by the U. S. Comptroller of the Currency to compel the members of the New York Clearing House to make good the losses of a fallen member, Harriman National Bank & Trust Co., which went under in 1933 as a result of the finagling of Joseph Wright Harriman (TIME, May 4). According to the Comptroller, the Clearing House banks had agreed the previous year to keep Harriman National afloat. Eleven Clearing House members, including such institutions as Chase National, National City and Irving Trust, settled out of court for some $3,600,000. But the court held last week that the other nine members were quite within their rights in refusing to pay a penny. Read the decision:

"The clearing house committee of the New York Clearing House, or its chairman, as such, has no power to bind member banks to a guaranty of the deposits of an unsound member. Such authority is not conferred expressly or implied by membership in the association."

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