Farmers' Loan & Trust Bank v. Hirning

• Decision Date: 17 June 1919
• Docket Number: 4568.
• Citation: 172 N.W. 931,42 S.D. 52
• Parties: FARMERS' LOAN & TRUST BANK v. HIRNING.
• Court: South Dakota Supreme Court

172 N.W. 931

42 S.D. 52

FARMERS' LOAN & TRUST BANK v. HIRNING.

No. 4568.

Supreme Court of South Dakota

June 17, 1919

Original proceeding in mandamus by the Farmers' Loan & Trust Bank against John Hirning, as Public Examiner and ex officio Superintendent of Banks and Trust Companies. Application denied.

Frank R. Aikens and Kirby, Kirby & Kirby, all of Sioux Falls, for plaintiff.

Byron S. Payne, Atty. Gen., and V. R. Sickel, Asst. Atty. Gen., for defendant.

SMITH P. J.

This is an original proceeding by mandamus to compel the defendant as public examiner and ex officio superintendent of banks and trust companies, to issue to plaintiff corporation a certificate authorizing it to commence business at the city of Sioux Falls as a banking and trust company.

The petition for the writ alleges that since the month of November, 1918, plaintiff has been a corporation duly organized and existing under chapter 255, Laws of 1911, and acts amendatory thereof, with its principal place of business at the city of Sioux Falls; that the capital stock of said corporation consists of 5,000 shares, of the par value of $100 each; that upon the formation of the corporation all its said stock was subscribed for at the par value of $100 per share, and $500,000 from the sale of said stock was paid into and is now in the treasury of said corporation, and held by it for the purpose of transacting business under the authority of its articles of incorporation as a trust company; that plaintiff has done everything required to be done under the laws of this state to entitle it to open its doors and engage in said business, and is prepared to do everything which may be required of it by order of said public examiner under the laws of the state; that the said public examiner, after making a full investigation and examination of all the proceedings referred to, claims without right, reason, or authority that he has reason to believe, and does believe, after such examination, that the stockholders have formed said corporation for other than the legitimate business contemplated by the act authorizing its organization; and that, with the advice and consent of the Attorney General, he has announced that he will not issue to this plaintiff a certificate showing that it is lawfully entitled to commence business, and will not authorize or allow said corporation to engage in said business.

The questions involved are submitted to the court upon objections to the answer and return, and which are in effect a demurrer thereto on the ground that the facts stated in the return do not constitute a defense. The answer admits the corporate organization and existence of plaintiff, and that defendant as superintendent of banks and trust companies, was called upon to, and did, ] make an examination into all matters pertaining to the organization and condition of said corporation, and admits its compliance with all the formal provisions of the law entitling it to become a corporation and to engage in the business contemplated by the act authorizing the incorporation of trust companies. It is somewhat voluminous, and we shall refer only to matters contained therein which we deem decisive of the right to the relief demanded.

The answer alleges that the certificate demanded was withheld by defendant because, at all times since his examination of the affairs of said corporation, and now, he has reason to believe that the stockholders of such corporation organized it for purposes other than the legitimate business contemplated by the laws of this state authorizing the organization of such corporations, and that such certificate was and still is withheld with the advice and consent of the Attorney General; that his investigation and examination disclose that said corporation was organized and promoted for the purpose of enabling its incorporators to engage in an extensive and profitable stock-selling enterprise, the principle purpose being to obtain for the original stockholders enormous profits and commissions from the sale of their original stock, especially to farmers, and that such enterprise was being carried out at the time of his refusal to grant the certificate demanded; that such conclusions are based upon the following facts ascertained and disclosed by...