4633. Phillips State Bank (Chicago, IL)

Bank Information

Episode Type
Run → Suspension → Closure
Bank Type
state
Start Date
June 1, 1932*
Location
Chicago, Illinois (41.850, -87.650)

Metadata

Model
gpt-5-mini
Short Digest
e2190c2f

Response Measures

Full suspension

Other: Receivership appointment subsequently litigated and ruled invalid by a Cook County judge; many articles discuss appeal.

Description

The June 22, 1932 Tribune item reports heavy withdrawals in recent weeks and that the Phillips State Bank and Trust Company was closed by the auditor at the request of the board (deposits $2.1M). This indicates a run leading to closure and receivership. Subsequent Feb–Mar 1933 articles discuss litigation challenging the legality of the receiver appointed for the closed Phillips State Bank. OCR variants in some articles show Phillip (one L); corrected to Phillips in bank_name.

Events (3)
1. June 1, 1932* Run
Cause
Bank Specific Adverse Info
Cause Details
Heavy withdrawals followed the bank's assumption of liabilities of the Illinois State Bank (closed owing $385,000) and recent acquisition of Cook County Trust (purchase of preferred stock); these adverse bank-specific actions undermined confidence.
Measures
None reported other than later closure; heavy withdrawals preceded closing.
Newspaper Excerpt
There had been heavy withdrawals in recent weeks.
Source
newspapers
2. June 22, 1932 Receivership
Newspaper Excerpt
The far reaching decision grows out of a bill filed by the Auto Rebuilding company, a small depositor of the Phillip State Bank and Trust company which closed in June, 1932. State Auditor Nelson appointed as receiver Charles H. Albers who began liquidating the assets.
Source
newspapers
3. June 22, 1932 Suspension
Cause
Government Action
Cause Details
Bank was closed by the state auditor at the request of the board of directors (formal suspension/closing of operations).
Newspaper Excerpt
The Phillip State Bank and Trust company, 7001 North Clark street, was closed by the auditor yesterday at the request of the board of directors.
Source
newspapers

Newspaper Articles (14)
1. June 22, 1932 Chicago Tribune Chicago, IL
Article from Chicago Tribune, June 22, 1932

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Article Text

PHILLIP STATE BANK IN ROGERS PARK IS CLOSED Two National Banks of Chicago Shut Doors. The Phillip State Bank and Trust company, 7001 North Clark street, was closed by the auditor yesterday at the request of the board of directors. The bank was capitalized at $500,000 and its surplus and un. divided profit account was carried $285,000. Its deposits at the time of closing were $2,100,000. There had been heavy withdrawals in recent weeks. Trust Company Taken Over. The bank on June 2 acquired the Cook County Trust from Moe Rosenberg, side Democrat politician, through the purchase of $200,000 of preferred stock and 10,000 shares of stock. A year in July 1931, the bank assumed the liabilities of the Illinois State bank, which closed owing $385,000. The Illinois State bank was neighboring bank and the assumption of its debts was declared by Phillip bank officials to be contribution to the of Rogers Park." C. A. Beutel was president of the Phillip bank and Barnet L. Rossett was chairman of the board. Two National Banks Closed. Two national banks were closed yes. terday. One was the Peoples Bank and Trust 1542 West 47th street. The board of directors asked A. P. Leyburn, national bank examiner, to close the doors of the bank. It had deposits of $3,007,000, capital of $1,000,000, surplus of $250, 000 and undivided profits of $110,000. The bank had deposits of $12,000,000 in June, 1930. The Standard National bank of Chi. cago, 7921 South Ashland avenue, was closed. This bank had capital of $300,000, surplus of $25,000 and deposits of $300,000.

2. July 20, 1932 Chicago Tribune Chicago, IL
Article from Chicago Tribune, July 20, 1932

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CASH IS READY FOR OWNERS OF CENTRAL BONDS Gilbert Keebler Lacks Bondholders' List. Bank failures and ships make for strange situations. For instance, owners bonds in the Central building. at the southwest corner of Madison street and Oak Park in Oak Park, have interest today but the Peoples National Bank and Trust which underwrote the and has been the agent for the mortgagor In paying the interest, is closed and in the hands of GILBERT naturally are wondering what to Gilbert E. Keebeler of E. F. Keebler & Co. and son of Mrs. Wilhelmine Keebler of 3300 Lake Shore drive, owner of the property which the bond yesterday notified THE TRIBUNE that cash is on hand in his office in the Otis building. 10 South La Salle street, for prompt payment of every interest coupon presented there. Lacks Bondholders' List. I'm taking this method of notify ing the bondholders because haven't any knowledge of the names or adof the of the Central building,' said Mr. Keebler. They merely have to present their at my office in the Otis building and they'll be paid." The Central owned by Mrs. Keebler. is two and stores and offices. The original bond issue was $135,000. since reduced to $109,000, bearing 6% interest. Terminal Theater. Title to the Terminal theater property at and has ben by the Sheridan corporation to William M. Richards, representing the protective No plan of reorganination has yet been upon The original bond issue for $550,000 was by H. O. Stone Co. It has since been paid down to $426,250. Interest defaulted Jan. 1, 1932. The property is improved with an shaped building ntaining a by the Ascher Brothers. It is now under to the Chi cago Fox interests. Mr. Richards. took title yesterdy, is assistant secretary to the bondholders' protective Name New Committee. The following committee has been named to service first mortgages orig inated by the Adams State bank: Henry F. Tykal, chairman; A. F. Jed licka, Norbert F. Kochka, and John been reserved for the bank who has not yet The law firm of Ring. Uhlir & Cuchna will act for the The principal loans made by the bank on and flat The date for the sale of the Roscoe at Ros coe street, has been set for Aug. 1, It was by the protective committee for the Straus Brothers In vestment company. There are 000 bonds in default on this property. new first mortgage is contemplated to care for the reorganization and other expenses. substantial amount bonds has been deposited with the Metropolitan the Aug. is announced the final date for Conveyance of the Naborhood gar age property 1509 Morse by Michael Long to the 1509 Morse Avenue Building completes the The cor poration took title for the bondholders. This was a $185,000 first mortgage bond issue underwritten by the recently closed Phillip State Bank and Trust company. It since has been reduced to $130,000. Austin L. Wyman was attorney for the bondholders. The garage accommodates 200 cars.

3. February 25, 1933 Dixon Evening Telegraph Dixon, IL
Article from Dixon Evening Telegraph, February 25, 1933

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Hold Receivers Of Banks Are Illegal Chicago, Judge Dennis ruled today that closed office violathe constitution and are void The drastic made brought closed Phillips State Bank Trust Company The charged that pointment receiver for the section Bank providing the appointments, of Illinois The defendants including Oscar Nelson then auditor, filed demurer which Superior Judge Sullivan overruled and upheld

4. February 26, 1933 The Flint Journal Flint, MI
Article from The Flint Journal, February 26, 1933

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RULES BANK RECEIVERS HOLD JOBS ILLEGALLY Chicago, AP) Judge Denis Sullivan ruled day that all receivers closed banks Illinois holding of their actions The drastic ruling made suit the closed Phillips State Bank and Chicago.

5. February 26, 1933 The Houston Chronicle Houston, TX
Article from The Houston Chronicle, February 26, 1933

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ILLINOIS Ruling Affects Total of 400; Attorney General to Appeal Immediately Judge's Decision. Associated Press. Chicago, bank receiver auditor Illinois held illegally office declared and void Judge Denis Sullivan superior Cook County. The verdict fects receiverships Cook County 400 in state. The ruling, which would confusion the closed will appealed by the attorney genJudge Sullivan founded his opinion technicality which delegated the the authority receivers amount terms of their bonds. Such legislative court ruled. adjudged unconstitutional by state supreme court invalithe been depositor closed Phillips State Bank Chicago. The validity statute asked moval Alvers resenting entered this overruled Judge and the act An official the Illinois BankAssociation, informed decision, the supreme upholds Judge order might necessary ratify the actions hitherto. defunct already uncertain transitional policy Edward Barrett, just auditor asked resignation bank receivers, purposing economies administration consolidating This principle has the support Illinois which backing before the state legislature bring all ships under of state other hand, certain circourt judges have challenged Barrett's require under Judge quite apparent that the the state auditor delegation power which void for reason that in violation the He that the tor might appoint require him such bond he deemed proper.

6. February 26, 1933 The Tampa Tribune Tampa, FL
Article from The Tampa Tribune, February 26, 1933

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Illinois Bank Receivers Ruled Illegally in Office Feb. bank receiver appointed the state auditor of Illinois held illegally office and his declared null and void today by Judge Sullivan superior court of Cook verdict affects 110 ceiverships Cook county and 400 the state. The drastic ruling. which would plunge into the liquidating scores of closed banks throughout the state, will be appealed by the attorney general. Judge Sullivan founded his opinion of the state banking act which delegated to the state auditor the authority to name receivers and fix the amount and terms of their bonds Such delegation legislative power, the court ruled, has been adjudged unconstitutional by the state supreme court and invalidates the entire section of the act. The had been brought by the Automobile Rebuilding company depositor the closed Phillips State bank Chicago. The company challenged the validity the statute and asked removal of Charles H. Alvers

7. February 26, 1933 The Roanoke Times Roanoke, VA
Article from The Roanoke Times, February 26, 1933

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RULES RECEIVERS ILLEGALLY NAMED Illinois Judge Declares Acts of State Auditor Null and Void Chicago, Feb. bank receiver the Illinois, was be illegally office his acts were declared null void today by Judge Denis superior of Cook county 400 The drastic ruling, which would plunge the liquidating banks throughout the state, be appealed the attorney general. Judge Sullivan founded his opinion technicality the state banking delegated the authority fix and terms their bonds. delegation legislative the court has adjudged by the supreme court and invalidates the enThe case been brought by the positor Phillips Bank lenged the the statute and asked removal of Charles H. Alvers receiver The attorney general, resenting the auditor, entered demurrer was overruled by Judge Sullivan and the act held unofficial the Illinois Bankers the decision, said that the supreme court upholds Judge Sullivan order legislative act might the actions of the bank receivers taken hitherto.

8. February 27, 1933 Reno Gazette-Journal Reno, NV
Article from Reno Gazette-Journal, February 27, 1933

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Sullivan ruled Saturday that all receivers of closed banks in Illinois holding office of the state constitution and their actions The drastic ruling was made in brought by depositor of the closed Phillips State Bank Trust Company of Chicago. The depositor charged that appointment of receiver the bank was void section 11 of the act, providing for such appointments, contravenes the fundamental Illinois. The defendants, including Oscar Nelson then state auditor, filed demurrer which Superior Judge overruled and upheld the plainant.

9. February 27, 1933 Freeport Journal-Standard Freeport, IL
Article from Freeport Journal-Standard, February 27, 1933

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WILL TAKE APPEAL FROM JUDGE SULLIVAN'S DRASTIC BANK RULING General Otto announced day he will appeal direct to the preme court Illinois the ruling Superior Judge Denis Sullivan Saturday that bank receivers pointed by the state auditor are holding office illegally. The ruling made in complaint brought depositor in closed Phillips State bank of Chicago. plan to test this ruling in the high Kerner said, "because Judge Sullivan held the section the banking unconstitutional. That section dealing with the pointment of receivers was declared unconstitutional because delegated to the state auditor certain that only the legislature can hold.

10. February 27, 1933 The Rock Island Argus Rock Island, IL
Article from The Rock Island Argus, February 27, 1933

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(Continued on Page Eight.) WILL APPEAL RULING ON BANK RECEIVERS Attorney General to Ask Supreme Court Review of Decision. Chicago, Feb. the Assoclated General Otto Kerner announced today he appeal direct to the supreme court the ruling perior Judge Denis Sullivan Saturday that all bank receivers pointed state auditor holding office illegally. The ruling made in complaint brought by the closed Phillips State Bank of Chiplan test this ruling high said, Judge Sullivan held section the That section dealing with the appointment of receivers was clared because delegated the state auditor that only legislajudiciary hold.

11. February 27, 1933 Anderson Daily Bulletin Anderson, IN
Article from Anderson Daily Bulletin, February 27, 1933

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Actions Of Illinois Bank Are Ruled Void In Case Chicago, Denis Sullivan ruled Saturday that all receivers closed banks in Illinois were holding office in viola tion of the state constitution and their actions The drastic ruling was made in suit brought depositor of closed Phillips State Bank and Trust Company of

12. February 28, 1933 Dixon Evening Telegraph Dixon, IL
Article from Dixon Evening Telegraph, February 28, 1933

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Bank Receivers Will Keep Posts Chicago, Feb. 27-(AP) -Attorney General Otto Kerner announced today he will appeal direct to the Supreme Court Illinois the ruling of Superior Judge Denis E. Sullivan Saturday that all bank receivers appointed by the State Auditor are holding office illegally The ruling was made in a complaint brought by depositor in the closed Phillips State Bank of Chicago We plan to test this ruling in the high court Kerner said, because Judge Sullivan held the section of the Banking Act unconstiThat section dealing with the appointment of receivers was declared unconstitutional because it delegated to the State Auditor certain powers that only the legislature or judiciary can hold

13. March 1, 1933 The Times Streator, IL
Article from The Times, March 1, 1933

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MAY HAVE TO RECEIVERSHIPS Here Essington Recent receiver appointed by Every the state auditor of Illinois illegally in office and held be null and void acts Denis Sullivan in by Judge perior court of Cook county. which would The drastic into confusion the process plunge scores closed liquidating the state, will banks throughout appealed by the attorney general. Streator there is but one bank In charge of receiver, the People's Trust and Savings. Weston Essington receiver of the closed institution. Based On Technicality. Judge Sullivan founded his opinof the state banking act delegated to the state auditor the authority to name receivers and fix the amount and terms of Such delelegislative power, the gation court ruled, has been adjudged unconstitutional by the state supreme court and invalidates the entire section of the act. The verdict affects 110 receiverships In Cook county and 400 in the entire state, The has been brought by the Automobile depositor in the closed Phillips State bank of Chicago. The company challenged the validity of the statute and asked removal of Charles T. Alverse receiver. The attorney general, representing the state auditor, entered demurrer but this was overruled by Judge Sullivan and the act held unconstitutional. An official of the Illinois Bankers of the decision, said that if the court upholds Judge Sullivan court order or act might be necessáry to ratify the actions of the bank receivers taken hitherto. New Policy Undertaken. The liquidation of defunct banks already in an uncertain and transitional state because of polIcy undertaken by Edward Bar. rett, who has just become state auditor. Barrett has asked the resignation of bank purposing to effect economies adby liquidation under one receiver. This principle has the support of the Illinois Bankers association which backing bill before the state legislature to bring all receiverships under the direct control of single superintendent. On other hand. certain court Judges challenged Barrett's authority require resignations of receivers serving under circuit court appointment.

14. March 3, 1933 Bureau County Tribune Princeton, IL
Article from Bureau County Tribune, March 3, 1933

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DENIES AUDITOR RIGHT TO NAME BANK RECEIVER Court Holds That Auditor Has No Right To Appoint Receivers Under The Law. Superior Judge Denis E. Sullivan of Chicago Saturday declared unconstitutional section 11 of the Illinois Banking Act which gives the state auditor the power to appoint receivors to take charge of the assets of closed banks. His ruling involves more than 500 such appointments made in Illinois by Oscar Nelson. former auditor, and his successor State Auditor Barrett. It invalidates the acts of these receivers in dealing with cash and securities which are estimated to exceed 150 million dollars in aggregate Holds Power Is Judicial The eternal conflict between the three divisions of government legislative, executive and judicialformed the basis for the attack upthe banking act. Judge Sullivan's opinion asserts that Fection 11 constitutes an "unconstitutional delegation of judicial power to the state auditor and is invalid. "The far reaching decision grows out of a bill filed by the Auto Rebuilding company, a small depositor of the Phillip State Bank and Trust company which closed in June, 1932. State Auditor Nelson appointed as receiver. Charles H. Albers who be gan liquidating the assets. The receiver's appointment was affirmed by Superior Judge William J. Lindsay and attorneys for the receiver then appointed. Following this action the Auto Rebuilding company. through its attorneys, Aaron Soble and Harold O. Mulks. started suit, alleging that the banking act was unconstitutional and asking for the appointment of a new receiver by Judge Sullivan Tells How Ruling Applies In this new suit the bank. the auditor. and Albers, who were named codefendants filed general demurrers. asking dismissal on the grounds that the case was pending before Judge Lindsay Judge Sullivan's ppinion yesterday was on those demurJudge Sullivan explained to reporters that all banks in the state which have been closed by the state audifor will be affected by the ruling. He shid appointments of receivers would be invalidated in all cases where such appointments made by the auditor were merely approved by courts. "No court can approve an invalid appointment, such as made by the state auditor." said Judge Sullivan. "However, where judges actually set aside the appointments of the auditor and entered their own appointments independently, my ruling would not apply. It would not matter whether the receiver appointed by the judge was the one who formerly had been appointed by the Majority May Lose Jobs Under Judge Sullivan's ruling, the majority of all bank receivers will lose their jobs. Judge Sullivan stated in his opinion: "Before we get very far in construing Section 11 of the banking act we are met by that part which provides as follows: 'If the auditor determines that the bank cannot be reorganized and that the same should be liquidated through receivership. he should appoint a receiver and require of him such bond security as he deems proper. "Upon reading this section it must at once become apparent that the provision which states, He (the andftor) shall appoint a receiver and require of him such bond and security as he deems proper,' is one that preseribes no rules and imposes no standards by which the auditor is to determine the amount of the bond or the conditions which it should contain. its purposes, or any instruetions by which the auditor may be guided. and therefore the statute delegates legislative power to an exofficer. Decision to Be Appealed "All such conditions are left i) the uncontrolled discretion of the executive officer. Everything is left wide open. In short the terms of the bond may vary as the caprice of the executive officer may determine. Because the appointment by the state auditor of the receiver of any closed bank is unconstitutional, the judge ruled. the bonds which such receivers post to protect the creditors of the banks also are unconstitutional. Judge Sullivan stated that surety companies which furnished such bonds can refuse to supply protection for which they contracted. Assistant Attorney General Clausen stated that he was uncertain of the course which would be pursued in appealing the decision. He said that all receivers of closed banks would remain in charge until the case was passed upon by the Supreme court. He said that he would confer with Attorney General Otto Kerner to decide on the method of appeal.