"Almost Criminal"

For whosoever hath, to him shall be given . . . but whosoever hath not, from him shall be taken away. . . .

When a corporation "hath not" it goes into bankruptcy and a judge puts it into the hands of a receiver. The receiver and receiver's attorney take away pay for their services from the bankrupt corporation. They may, if judges let them, take so much that there is scandalously little left for creditors. Last week Congress was stirred again by the administration of the U. S. bankruptcy laws.

A subcommittee of the House Judiciary Committee after nearly a year's investigation made a report on four Federal judges in Chicago. Of one judge, John Peter Barnes, the Committee declared it had no criticism to make. Of three others its criticisms were pungent.

It accused Judge Charles Edgar Woodward of repeatedly naming as attorney to receivers the law firm of Loucks, Eckert & Peterson by which the judge's son Harold Woodward was employed. The Committee found that in December 1930 Son

Woodward's salary was jumped from $3,000 to $13,000 and he was paid a 40% commission ($5,200) on business he brought in. In 1932 Son Woodward was able to build a $20,000 home.

It accused Judge Walter C. Lindley of having been virtually summoned to Chicago in 1932 by Samuel Insull's personal attorney to handle the receivership of Insull's Utility Investments, Inc. On the day the receivership was filed Insull's attorney telephoned Attorney Lawrence Allen at Danville, Ill. Mr. Allen telephoned Judge Lindley who was then sitting in that town. Next day Judge Lindley appeared in Chicago, sat in the absence of Judge Wilkerson, and appointed Lawyer Allen as attorney to the Utility Investments, Inc. receivers.

It accused Judge James Herbert Wilkerson of allowing fees of $2,400,000 to receivers and attorneys of the Chicago, Milwaukee & St. Paul R. R.; of allowing receivership fees up to $60,000 per year to officers of Chicago Railways Co. (streetcar lines), thus doubling their salaries by paying them once as officers and again as receivers.

This was not the first time that Congress had heard charges against Judge Wilkerson, who won great public acclaim in 1931 by sentencing Al Capone to jail for eleven years. A short time after President Harding made him a Federal judge in 1922, he issued a drastic injunction which broke the railway shop strike and earned him the undying enmity of Labor. Two years ago, President Hoover tried to appoint Judge Wilkerson to the Circuit Court of Appeals. Railway labor promptly sent a representative to protest to the Senate against confirmation of the nomination. The nomination was never confirmed. Labor's emissary was a young Chicago lawyer named Donald B. Richberg. Today Mr. Richberg is NRA's chief counsel.

Last week the House subcommittee which made the Chicago investigation failed to recommend impeachment of the three judges. It accused them of being guilty of "almost criminal negligence," left impeachment to others to decide. Of the many who did not relish making such a decision one was Representative Everett Dirksen. Said this Illinois Republican:

"One of the most squeamish situations in which one can find oneself is to be compelled to pass judgment on public officials who are members of one's own party, on the basis of a record which is none too glorious."

While Congress was thus worrying over "almost criminal" receiverships in Chicago, it was doing nothing to help Federal judges in New York keep bankruptcies clean and honest. Last week in conference, awaiting final passage by both Houses, was a new corporate bankruptcy act, seeded with possible scandal.

Five years ago the Federal judges of the southern district of New York, anxious to stop greedy Manhattan lawyers from bleeding bankrupt firms, decided to make Manhattan's Irving Trust Co. receiver in all bankruptcy cases. So well did the trust company handle this new business that it won nothing but praise from the Federal court and the public--and nothing but bitter condemnation from local attorneys who had lost a lucrative practice. Twice they carried a fight to the State Legislature to forbid Irving Trust acting as receiver; twice bills to that effect were passed and twice vetoed by the State Governor. Last week New York's lawyers, fresh from their second defeat in Albany (TIME, April 2), were pleased to have inserted in the new corporate bankruptcy bill in Washington this provision: "The District Court or any judge thereof shall, in its or his discretion, apportion appointments as receiver equitably among all persons, firms, or corporations within the district eligible thereto. . . ."

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