Chase Manhattan Corp. has withdrawn its lawsuit alleging Dime Bancorp illegally hired away dozens of Chase mortgage employees.

The companies said they reached a settlement but terms were confidential.

Chase had been seeking an end to the recruiting and hiring of Chase Manhattan Mortgage employees by Richard A. Mirro, a former chief executive officer of the Chase unit.

Chase had also asked the Florida court for unspecified monetary damages. Observers said that as part of the settlement, Dime probably agreed to stop targeting Chase employees as aggressively as it had been.

"The matter has been resolved to the mutual satisfaction of both parties," a Dime spokesman said.

A spokesman for Chase said a notice of discontinuance was filed last week. Chase had filed the lawsuit in May.

The settlement ends what could have been a bitter court battle involving several former Chase Manhattan Mortgage employees.

One executive recruiter who does searches for mortgage lenders said a quick resolution was no surprise, because it is easier to settle out of court than to go through costly litigation.

In its lawsuit, Chase alleged that Mr. Mirro violated the terms of his severance agreement with Chase by recruiting Chase employees for Dime.

When Mr. Mirro left Chase last year he had agreed not to solicit Chase Manhattan Mortgage employees for a year. Chase's lawsuit alleged that Mr. Mirro actively participated in the recruitment of several employees he had worked with at Chase.

The executive recruiter said that as mortgage executives jump from one firm to another, nonsolicitation agreements have proliferated, and that has led to an unusual degree of caution on the part of firms hiring for mid- and lower-level positions.

Another former Chase Manhattan Mortgage employee who now works for Dime, Thomas Glenn, was also named as a defendant.

The lawsuit alleged that Mr. Glenn and other Dime executives made false statements about Chase's business plans to Chase Manhattan Mortgage employees and customers.

When the suit was filed, Dime was aware of Mr. Mirro's nonsolicitation agreement, said a Dime spokesman; he denied that Mr. Mirro had violated that agreement.

The spokesman also said that much of Chase's lawsuit was "factually incomplete."

Fred B. Koons, who was hired as chief executive officer of Tampa-based Dime Mortgage in December, was not named in the suit. Mr. Koons is also a former chief executive officer of Chase Manhattan Mortgage.

Mr. Mirro left Chase last June. After a short stint as chief executive officer of Fleet Mortgage Group, Mr. Mirro was hired by Mr. Koons as Dime Mortgage's chief operating officer.

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