Tcherepnin v. Franz

BAUER, Circuit Judge. This appeal represents the latest stage in the complex and protracted litigation spawned by the 1964 collapse of the City Savings Association, a Chicago-based savings and loan institution. Styled by the district court as a ""chronicle of political intrigue and corruption perhaps unmatched in Illinois history,"" the failure of City Savings was in no small measure the handiwork of its president and director, C. Oran Mensik, who milked the association of millions of dollars through inflated mortgage loans and other fraudulent schemes. The central figure in this case, however, is Joseph Knight, Director of the Illinois Department of Financial Institutions from 1962 to 1968. More specifically, in this appeal, the Estate of Knight challenges the district court's finding that Knight was liable to the depositors of City Savings for his official conduct in connection with the association's demise. Before turning to a consideration of the appellant's arguments, however, we must first review the factual and statutory background of the proceedings below.