HomeMy WebLinkAbout06-11-82
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CLECKN ER AND FEAREN
ATTORN EYS AT LAW
31 NORTH SECOND STREET
RICHARD W. CLECKNER
WI LLlAM FEAREN
KENT H. PATTERSON
MICHAEL IRA LEVIN
P. DANIEL ALTLAND
DENNIS J. SHATTO
HARRISBURG. PENNSYLVANIA 17101
AREA CODE 717
238~r73f
June 11, 1982
Honorable Dale F. Shughart
Cumberland County Court House
Carlisle, PA 17013
Re: Roland Estate
Dear Judge Shughart:
I am enclosing copy of letter dated May.17, 1982 from
Attorney Robert Spitzer to the Commonwealth National Bank relating
to the matters which you and I discussed.
If additional data is required in order for you to enter
an Order as requested, please advise me.
Very truly yours,
c~
Richard W. Cleckner
RWC:skb
Enclosure
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LAW OFFICES
CAMPBELL, SPITZER, DAVIS & TURGEON
130 STATE STREET
P. O. BOX 1000
BARRISBUBG. PENNSYLVANIA 17108
JAMES D. CAMPBELL. JR.
ROBERT C. SPITZER
MICHAEL Q. DAVIS
JEANNINE TURGEON
May 17, 1982
TJOLJU'KO"
232.1876
AmI", COD. 717
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Harry M. K. Johnston, Executive
Banking Division
The Commonwealth National Bank
10 South Market Square
Harrisburg, Pennsylvania 17101
Vice President
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Re:
Roland Estate
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Dear Mr. Johnston:
It is my understanding that The Commonwealth National
Bank has agreed to loan the Roland Estate certain funds subject
to Messrs. Cleckner and Knupp guarantying interest payments on
that loan, and with collateral for the loan being a second mort-
gage on the real estate owned by the estate, where the children
reside. Still, another contingency was my opinion that the estate
is qualified to borrow.
To fulfill that final contingency, I submit 'this letter.
First, as you are aware, Mr. Cleckner has advised that
he would petition the Court for approval of any such loan trans-
action.
Assuming that the petition accurately states the
arrangements made in connection with the loan, the issues of the
authority of the estate to borrow and pledge the real estate as
security therefor seem to be resolved satisfactorily by entry of
such court approval of the petition. Likewise, issues under
state law of conflict of interest in the bank as personal represen-
tative/administrator borrowing from the bank as lender would seem
to be resolved by proper disclosure of these relationships in the
petition.
Likewise, it would seem that, so long as the petition
to the Court makes clear the necessity of proceeding in this
way, as what appears to be the sole method of protecting the
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Harry M. K. Johnston
Executive Vice President
May 17, 1982
Page 2
substantial asset -- the verdict -- mortgaging the real estate
is within the authority of 20 Pa. C.S.A. Section 3353, authori-
zing a personal representative to mortgage real estate with
court approval.
Still another issue which must be addressed in connec-
t~on with this proposed transaction is the issue of self-dealing,
as governed by the regulations of the Comptroller of the Cur-
rency.
At 12 CFR Section 9.l2(b), the Comptroller has ruled that
"property held by a national bank as fiduciary shall not be
sold or transferred, by loan or otherwise, to the bank . . .
except: (1) where lawfully authorized . . . by Court order
"
Accordingly, in my opinion, the Court order to be entered
on the petition of the Bank as Administrator requesting approval
of the transaction will fulfill and satisfy this self-dealing
requirement and prohibition.
Also, I understand that value of the premises is $39,500,
and the premises are subject to an existing $10,000 mortgage.
This loan-to-va1ue ratio, therefore, is less than 90% fulfilling
the requirements of 12 U.S.C.A. Section 371, and l2_CFR Section
7.2010(d).
Because the primar.y security for this loan appears to be
the security interest in the litigation, the loan does not
appear to bea real estate loan requiring amortization under
12 U.S.C.A. Section 371 and 12 CFR Paragraph 7.2700.
Please advise if there are any other issues requiring
atten"tion to this rna tter.
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Robert C. Spitzer
RCS:jai