188 U.S. 220 (1903), 92, Easton v. Iowa

Docket Nº:No. 92
Citation:188 U.S. 220, 23 S.Ct. 288, 47 L.Ed. 452
Party Name:Easton v. Iowa
Case Date:February 02, 1903
Court:United States Supreme Court

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188 U.S. 220 (1903)

23 S.Ct. 288, 47 L.Ed. 452




No. 92

United States Supreme Court

February 2, 1903

Argued January 14-15, 1903




Congress, having power to create a system of national banks, is the judge as to the extent of the powers which should be conferred upon such banks, and has the sole power to regulate and control the exercise of their operations. Congress having dealt directly with the insolvency of national banks by giving control to the Secretary of the Treasury and the Comptroller of the Currency, who are authorized to suspend the operations of the banks and appoint receivers thereof when they become insolvent or when they fail to make good any impairment of capital, and full and adequate provision having been made for the protection of creditors of national banks by requiring frequent reports to be made of their condition, and by the power of visitation of federal officers, it is not competent for state legislatures to interfere, whether with hostile or friendly intentions, with national banks or their officers in the exercise of the powers bestowed upon them by the general government.

While a state has the legitimate power to define and punish crimes by general laws applicable to all persons within its jurisdiction, and it may declare, by special laws, certain acts to be criminal offences when committed by officers and agents of its own banks and institutions, it is without lawful power to make such special laws applicable to banks organized and operated under the laws of the United States.

In 1898, in the District Court of Winneshiek County, State of Iowa, James H. Easton was indicted,

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tried, and found guilty, and sentenced to imprisonment in the Penitentiary of Iowa at hard labor for a term of five years under the provisions of a statute of that state for the offense of having received, as president of the First National Bank of Decorah, Iowa, a deposit of one hundred dollars in money in said bank at a time when the bank was insolvent, and when such insolvency was known to the defendant.

At the trial, it was contended on behalf of the defendant that the statute of Iowa upon which the indictment was found did not, and was not intended to, apply to national banks organized and doing business under the National Bank Acts of the United States, or to the officers and agents of such banks, and that, if the state statute should be construed and held to apply to national banks and their officers, the statute was void insofar as made applicable to national banks and their officers. Both these contentions were overruled by the trial court, and thereupon an appeal was taken to the Supreme Court of the State of Iowa, and by that court, on April 12, 1901, the judgment of the district court was affirmed. The cause was then brought to this Court by a writ of error allowed by the Chief Justice of the Supreme Court of Iowa.

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SHIRAS, J., lead opinion

MR. JUSTICE Shiras delivered the opinion of the Court.

Those portions of the Iowa statute whose validity is the question in this case consist of sections 1884 and 1885 of the code of that state, and are in the following terms:

SEC. 1884. No bank, banking house, exchange broker, deposit office, firm, company, corporation, or person engaged in the banking, brokerage, exchange, or deposit business shall, when insolvent, accept or receive on deposit, with or without interest, any money, bank bills or notes, United States Treasury notes or currency, or other notes, bills, checks, or drafts, or renew any certificate of deposit.

SEC. 1885. If any such bank, banking house, exchange broker, deposit office, firm, company, corporation, or person shall receive or accept on deposit any such deposits as aforesaid when insolvent, any owner, officer, director, cashier, manager, member, or person knowing of such insolvency, who shall knowingly receive or accept, be accessory, or permit, or connive at receiving or accepting on deposit therein, or thereby, any such deposits, or renew any certificate of deposit, as aforesaid, shall be guilty of a felony, and, upon conviction, shall be punished by a fine not exceeding ten thousand dollars, or by imprisonment in the penitentiary for a term of not more than ten years, or by imprisonment in the county jail not more than one year, or by both fine and imprisonment.

At the trial, evidence was adduced tending to show, and the jury found, that the defendant, being engaged in the banking business as an officer, to-wit, president of the First National Bank of Decorah, on the 21st day of August, A.D. 1896, did, as president of said bank, receive and accept on deposit in said

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bank the sum of $100 in lawful paper money and of the value of $100, from one John French, the bank being then and there insolvent, and the defendant then and there well knowing that the said bank was insolvent.

It will be observed that national banks or banking associations are not specifically named in the statute, and it was, hence, argued on behalf of the defendant that such institutions are not within the enactment. As, however, the state courts, following a previous decision of the Supreme Court of Iowa in the case of State v. Field, 98 Ia. 748, held that the statute was applicable to all banks, whether organized under the laws of the state or the acts of Congress, we must accept that construction as correct, and confine our consideration to the question whether, as so construed, the act is within the jurisdiction of the state.

It is obvious that the two sections of the statute above quoted must be read together as one enactment. If section 1884, regarded as applicable to national banks, is a valid exercise of power by the state, then the penalties declared in section 1885 can be properly enforced; but if section 1884 must be held invalid as an attempt to control and regulate the business operations of national banks, then the penal provisions of section 1885 cannot be enforced against their officers. In other words, the validity of the mandatory and of the penal parts of the statute must stand or fall together.

What, then, is the character of a state law which forbids national banks, when insolvent, from accepting or receiving on deposit, with or without interest, any money, bank bills or notes, United States Treasury notes or currency, or other notes, bills, checks, or drafts, or renewing any certificate of deposit?

[23 S.Ct. 290] The answer given by the Supreme Court of Iowa to this question is as follows:

The acts of Congress provide no penalty for the fraudulent receiving of deposits, and the statute under consideration operates upon the person who commits the crime. And it is not a material question to determine whether it will be necessary to investigate the financial condition of the bank to prove that the bank was insolvent when the deposit was received. This

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statute is in the nature of a police regulation, having for its object the protection of the public from the fraudulent acts of bank officers. The mere fact that, in violating the law of...

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