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SWANK v. MYERS (09/24/56)

September 24, 1956

SWANK, APPELLANT,
v.
MYERS, SECRETARY OF BANKING.



Appeals, in nature of certioraris, Nos. 5 and 6, May T., 1956, from order and adjudication of Banking Board of Pennsylvania, dated May 25, 1955, and from actions of Secretary of Banking and the resolution of the Board of Directors of the Vandergrift Savings and Trust Company. Appeal at No. 5 dismissed; appeal at No. 6 quashed; reargument refused November 17, 1956.

COUNSEL

E. O. Golden and Edward J. Steiner, for appellant.

Edward L. Springer, Deputy Attorney General, and Robert W. Smith, Jr., with them Herbert B. Cohen, Attorney General, and Smith, Best & Horn, for Secretary of Banking and Banking Board, appellees.

Robert W. Smith, Jr., with him Smith, Best & Horn, for bank directors and officers.

Before Stern, C.j., Jones, Bell, Chidsey, Musmanno and Arnold, JJ.

Author: Jones

[ 386 Pa. Page 333]

OPINION BY MR. JUSTICE JONES

These appeals, in the nature of certiorari, seek review of successive steps taken by the Secretary of Banking and the Banking Board of Pennsylvania in the exercise of prescribed administrative process for the disciplining of a bank official deemed to be guilty of violations of the State Banking Code.

The appellant, Boyd M. Swank, was president and director of the Vandergrift Savings and Trust Company. The action taken against him by the Secretary of Banking, whereof he complains, resulted from his conduct in entering into a written agreement with C. E. Palmer, president and principal stockholder of the Peoples Union Bank of McKeesport, Pennsylvania. By the agreement which Palmer drafted in Swank's presence, the latter agreed, in consideration of a secret fee of

[ 386 Pa. Page 334]

$100,000.00 to be paid him by Palmer, to use his influence in obtaining for Palmer shares of the capital stock of the Vandergrift Savings and Trust Company from holders thereof at a price of $500 per share and to sell his own holdings of 810 shares of such stock to Palmer (and any additional shares he might acquire within ninety days of the date of the agreement) for $600 per share.

The agreement was entered into and signed by Palmer and Swank on November 23, 1954. It emanated from Palmer's desire to constitute the Vandergrift Savings and Trust Company a branch of the People Union Bank of McKeesport. Swank succeeded in persuading the holders of 208 shares of the Trust Company stock to sell it to him at $500 per share. Shortly thereafter (circa mid-January, 1955), the agreement between Swank and Palmer, supposedly known to them only, in some manner became public information. The animosity toward Swank, which knowledge of the agreement at once engendered in the Trust Company's stockholders caused him to withhold further activity in pursuance of the agreement, and he induced the shareholders who had sold their stock to him at $500 per share, instituted a suit against him in Westmoreland County in an effort to obtain $100 per share more for the stock they had sold him.

On February 14, 1955, Palmer exercised his option under the agreement to buy Swank's 810 shares of the Trust Company stock at $600 per share. Swank refused to perform, but, after the draft of a bill in equity for specific performance had been exhibited to him, he complied. Thenceforth, Palmer dealt directly with the shareholders of the Trust Company, offering them $600 per ...


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