Decision in San Francisco

Many a San Franciscan last week learned for the first time that one of his city's most famed financiers and business men, President Herbert Fleishhacker of Anglo California National Bank, had been sued by stockholders of the bank "to obtain an accounting and recover secret profits on behalf of said bank." When his case went to trial in San Francisco's post-office building last summer (TIME, Sept. 6), no San Francisco newspaper cared to mention the fact. Last week, however, when Federal Judge Adolphus Frederick St. Sure finally handed down his decision, local papers could no longer ignore the matter. For mild Judge St. Sure found "that Herbert Fleishhacker violated his trust to the Anglo Bank and its stockholders."

The case involved transactions dating back to 1919, in which M. Barde & Sons of Seattle and Portland was engaged in the resale of Government steel left over from the War. According to their testimony, three years ago certain Anglo Bank stockholders, mostly members of the great French banking group Lazard Freres, discovered that Banker Fleishhacker had the Anglo Bank lend the Bardes $325,000 to finance the deal but had kept for himself some $300,000 other monies which the Bardes gave him after they had traded the steel.

Holding that "the law will not permit an officer of a corporation to make a private profit for himself in the discharge of his official duties," Judge St. Sure ordered Banker Fleishhacker to give an accounting to the Anglo stockholders. Heavy-jowled Herbert Fleishhacker retorted: "We'll appeal and win." His lawyer, quick-tongued John Francis Neylan, sniffed: "I view the matter as a rather interesting development in an episode that is far from ended."

That Banker Fleishhacker's suits are not ended was evident also in another quarter, Los Angeles, where the same group of angry Lazard Freres heirs is suing Banker Fleishhacker. the Anglo Bank and others for $1,250,000 damages from the sale in 1915-17 of the Lazard oil lands in Kern County, Calif. Banker Fleishhacker stoutly maintains that he was ill at the time and therefore had nothing to do with details of the sale except that he approved it. Asked on the stand if he had ever conspired to defraud Lazard Freres, Herbert Fleish-hacker declared: "Never in any manner, shape or form--everything I did for them was gratis and in their own interest."*

*Another famed California case decided last week was the dispute over reorganizing Pacific Mutual Life Insurance Co., largest on the West Coast, which became technically if not commercially insolvent last year when reserve requirements were upped $23,000,000 (TIME. Aug. 24). Last week the California Supreme Court upheld the reorganization plan of California Insurance Commissioner Samuel Carpenter Jr.

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