Brief for the Respondents in Opposition — Security Mutual Casualty Co. v. First National Bank of Cushing

Bowermen'v. Hamner, 250 US. S04, 39 Sup. Cx $0,

_ 3 LBA. 1083 (0909) . a : a

Contain thiteasd Gusts v. Stason, 208 US. o, ae

Supt. 62, 64 L.Ed. 161 (2999) - 4

First Nations! Bent: of Cushing: Cushing, Gkishaima, v.

Security Mutual Casualty Company v. Robert W. Go take

eiaaines, ot: aA, 431 F224 WOES (80th Cie: 1970) 2,6

Guarunase Company’ of ‘fieith ‘dapesied v. Mechanies |

| Step Gah 6 San Oe, OUR Et: Hp

Ct. 126, 46 L.Ed. 253 (1907) | :

Cetintner s. Gitad Gus mai ©. Ginieny Go.

S¢ 2d 1022 (4th Cir. 1933)

| Suiagle v. Unined Sates, 399 F.2d 220 (N0th Cie 1958) .

Note: 3" eoferenien to Gls thd safer to eggs

ei

No. 1172

©

SECURITY MUTUAL CASUALTY COMPANY,

Petitioner,

vs.

THE FIRST NATIONAL BANK OF CUSHING, CUSHING,

- QKLAHOMA, a National Banking Association;

ROBERT W. ADAMS; ROBERT W. ADAMS, Executor of

the Will of Alma M. Blank; FRANK G. BERRY AND

GEORGE M. BERRY, Executors of the Will of

James E. Berry, deceased; LEVI SWINGLE;

ARTHUR BLAINE IMEL; E. L. ROBERTS; D. A. GRIFFIN;

AND GEORGE M. BERRY,

| Respondents,

y

BRIEF OF RESPONDENTS, ROBERT W. ADAMS;

Robert W. Adams, Executor of the Will of ALMA M. BLANK,

deceased; Frank G. Berry and George M. Berry, Executors

of the Will of JAMES E. BERRY, deceased;

ARTHUR BLAINE IMEL; D. A. GRIFFIN and

GEORGE M. BERRY IN OPPOSITION TO PETITION

FOR A WRIT OF CERTIORARI

TO THE HONORABLE CHIEF JUSTICE AND

ASSOCIATE JUSTICES OF THE SUPREME COURT OF

THE UNITED STATES:

The respondents, ROBERT W. ADAMS; Robert W.

Adams, Executor of the Will of ALMA M. BLANK, de

ceased; Frank G. Berry and George M. Berry, Executors

of the Will of James E. Berry, deceased; ARTHUR BLAINE

IMEL; D. A. GRIFFIN and GEORGE M. BERRY pray that

a writ of certiorari be denied to review the judgment of

the United States Court of Appeals for the Tenth Circuit

entered in the above entitled cause on August 20, 1970.

On behalf of the six respondent directors, ROBERT

W. ADAMS; Robert W. Adams, Executor of the Will of

ALMA M. BLANK, deceased; Frank G. Berry and George

M. Berry, Executors of the Will of JAMES E. BERRY,

deceased; ARTHUR BLAINE IMEL;,D. A. GRIFFIN and

GEORGE M. BERRY, (hereinafter called respondent di-

rectors), all who the trial court found free from negli-

gence (A. 41-42), the following arguments and reasons

are submitted in support of denying the writ.

First, there are no special or important reasons re

quiring or necessitating review. In affirming this case the

Tenth Circuit concluded it was primarily a “substantial

evidence case.” First National Bank of Cushing, Cushing,

Oklahoma v. Security Mutual Casualty Company v. Robert

W. Adams, et al, 431 F.2d 1025 (10th Cir. 1970). In the

Cushing case the circuit court stated at page 1027:

4

anit

i

ui ij

Heit

1

Te

say! |

257

|

i

:

hi!

ne

Hf

3°

hia

Hatt

st

iit

|

:

4

a

«cnt ead ange a

ais

eb: sa

24%.

ap |

i}

F

i

3

pd lps i:

violation of Title 18, U.S.C

States, 389 F.2d 220 (10th Cir. hr

indicated

True, there was some difference of viewpoint betweén

counsel as to the inferences to be drawn from the evi-

dence, but of the six respondent directors found free from

negligence, the records show that they attended meetings

regularly and took an active interest in the affairs of the

bank. (A. 41-45). Bowerman v. Hamner, 250 U.S. 504, 39

Supt.Ct. 549, 63 L.Ed. 1113 (1919). The directors’ examina-

tion committee conducted periodic examinations of the

bank and did not find the scheme; the national bank ex-

amiers made three examinations during the period of the

scheme and did not uncover the criminal fraud. (A. 43-45).

The findings reflected that any comments or criticisms

during the examinations were either cleared up or acted

upon by the directors. There were comments in certain

of the bank examiners’ reports concerning various cus-

tomer checks that were held back pending a compensating

deposit, but findings determined that by the time these

reports reached the respondent directors, those items had

been cleared out of the bank. (A. 42-45). Further, the

national bank examiner who supervised the examinations

check cycling episode did not intend for any

reports to inform or alert the directors

to Swingle’s fraudulent check scheme. (A. 44-45).

Petitioner suggests that this case contradicts the hold-

ing in Corsicana National Bank v. Johnson, 251 U.S. 68,

87, 40 Sep.Ct. 82, 64 L.Ed. 141 (1919). We submit the

Corsicana case rather than being in conflict, concerns a

different matter. In Corsicana the defendant, a bank

officer, “knowingly” approved excessive loans and was

dominant in the affairs of the bank. The lower court had

a verdict for the defendant and the circuit court

affirmed. Corsicana was reversed on the legal premise

!

Ne Mle ES ng

—

In Picklesimer v. United States Fidelity & Guaranty

Co., 54 F.2d 1022 (4th Cir. 1932) cited ‘by petitioner, it

again involves an untrue application filed by the bank

with the bonding company with knowledge of an unreli-

able, dishonest employee which bars recovery on an action

involving that employee. In the instant case, there was

ro showing of a false application to the bonding ‘coth-

pay, further the trial court found Swingle to have full

confidence of the directors. (A. 28, 43). There was no

showing in the instant case that the bank or six respondent

directors had knowledge of wrongdoing by Swingle until

he confessed on October 13, 1964 and the gourt so found.

(A. 27-29). The trial court found that Swingle had con-

cealed the true facts about the cycled checks from the

directors and the bank examiners. (A. 41-42).

We submit the other cases cited by petitioner stand

for irrelevant propositions to this issue.

¢ t ME

que

Hf die

i

bili)

te

Tete

441]!

in

it

1]

Me

1