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FDIC v. ALTER

July 31, 1952

FEDERAL DEPOSIT INS. CORP.
v.
ALTER et al.



The opinion of the court was delivered by: GOURLEY

This is a motion to overrule an objection and compel a party to answer oral interrogatories on deposition.

 The Complaint also alleges that defendant Charles R. Alter entered into an agreement with one H. A. Westerman whereunder Charles R. Alter agreed to sell and H. A. Westerman, as agent for undisclosed principals, agreed to purchase 545 shares of the capital stock of said bank for $ 254,500, that the said sale was consummated and the net proceeds thereof ($ 246,865) paid to Charles R. Alter and by him deposited to his personal checking account in said bank; and that the said $ 246,865 received by Charles R. Alter as aforesaid had been abstracted and embezzled from the very bank of which Charles R. Alter was then president and whose depositors he was duty-bound to protect.

 The Complaint further alleges that the defendants knowingly permitted Charles R. Alter to wholly dominate the affairs of the bank, permitted him to fix the number of directors thereof and to name the persons who should serve as directors, and thus permitted him to dominate the Board of Directors of the bank as well.

 The Complaint prays that the sale of the 545 shares of stock in the bank be vacated and set aside; that defendants Charles R. Alter and Mary B. Alter be required to pay to plaintiff as purchaser of the bank's rights therein the sum of $ 254,500 embezzled from the bank in exchange for said shares of stock; and that judgment be rendered against each of the defendants for such los-es as have been occasioned by their illegal or negligent acts (alleged to be $ 600,000).

 By reason of a most serious physical ailment from which defendant Charles R. Alter suffers, which may render his appearance for trial somewhat dubious if not impossible, the Federal Deposit Insurance Corporation sought to proceed by way of deposition.

 Upon such examination Charles R. Alter testified that he was one of the defendants in the subject proceedings, that he was the husband of Mary B. Alter, a co-defendant in the same proceedings, and that he was not employed at the present time. Thereupon, and before examination could continue further, defendant's counsel, who were also counsel for his wife, Mary B. Alter, for and on behalf of Charles R. Alter and Mary B. Alter, husband and wife and co-defendants in this case, objected to the said Charles R. Alter being called to testify in a proceeding against his wife. Defendant's counsel also instructed defendant not to answer any further questions propounded to him at that time.

 Defendants Charles R. Alter and Mary B. Alter contend that that provision of the Pennsylvania Code which renders a husband and wife incompetent to testify against each other is applicable, and serves as a bar to further interrogation of either defendant upon oral deposition or otherwise. 28 Pa.P.S. § 317.

 Undoubtedly, the common law principle that husband and wife are incompetent to testify against each other is the rule of general application. This rule has never been relaxed. On the contrary, it has been re-enforced and guarded from invasion by statutory enactment. Canole v. Allen, 222 Pa. 156, 70 A. 1053; Callendar v. Kelly, 190 Pa. 455, 42 A. 957; Novic v. Fenics, 337 Pa. 529, 11 A.2d 871.

 More particularly, in criminal proceedings the courts have meticulously and zealously adhered rigidly to this rule. Brunner v. United States, 6 Cir., 168 F.2d 281.

 It is my firm belief that the allegations of the complaint together with the inferences to be drawn from them constitute the essential requisites of fraud. Fraud, in its general sense, comprises all acts, omissions, and concealments involving a breach of legal or equitable duty, trust, or confidence and resulting in damage to another. Connolly v. Gishwiller, 7 Cir., 162 F.2d 428; Moore V. Crawford, 130 U.S. 122, 9 S. Ct. 447, 32 L. Ed. 878.

 I do not intend, however, to premise my ruling upon the inferences which I have gleaned from the pleadings, especially when the allegation of fraud is not directly and categorically presented.

 The cloak of immunity surrounding the husband and wife relationship, rooted as it is, in the ground of sound public policy, ...


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