Anderson v. Seymour
| Decision Date | 08 December 1897 |
| Docket Number | 10,772--(168) |
| Citation | 73 N.W. 171,70 Minn. 358 |
| Parties | JOHANNA ANDERSON v. FRANK A. SEYMOUR and Another |
| Court | Minnesota Supreme Court |
Action in the district court for Ramsey county by a creditor of the insolvent Bank of Minnesota in her own behalf and in behalf of the other creditors who should join in the action against the receivers of that bank appointed upon the petition of the bank examiner of Minnesota, and against the stockholders of the bank, to enforce the constitutional liability of the stockholders. Certain defendant stockholders demurred to the complaint. From an order sustaining the demurrers, Otis, J plaintiff appealed. Affirmed.
The order sustaining the demurrers stands affirmed.
Enoch Johnson and W. S. Dwinnell, for appellant.
Laws 1895, c. 145, is unconstitutional because it does not contain the requirements of Const. art. 9, § 13. At the time of the adoption of the constitution the people of Minnesota territory were just emerging from a disastrous financial panic, caused largely by the use of inflated currency by private banks. It was natural then that state banks should be demanded by the people. But their benefits would not be secured unless the constitution compelled the enactment of such safeguards as would protect their currency. The constitutional convention decided to permit state banks, but to place certain limitations upon the power of the legislature to create them. The constitution of Wisconsin compelled any general banking law to be submitted to a general vote of the people, but the constitution of Minnesota in effect prohibited the legislature from passing any other than a general banking law. Such law must regulate bank issues and be adopted by a two-thirds vote of the legislature. This in effect prohibited the passage of any other than a general banking law which must regulate bank issues and must be passed by a two-thirds vote. Were the banks to be established under the general law to be passed to have the right to issue or only the right to discount and receive deposits, or were they to be banks having all these rights? If the last then the limitations on the legislature applied to laws enacted for banks of discount and deposit, as well as to laws enacted for banks of issue. Any law regarding banks of discount and deposit must conform to the requirements of Const. art. 9, § 13. If the constitution did not contemplate that banks organized under a law embodying its restrictions should be banks of issue, why did section 13 prohibit the suspension of specie payments or require provision to be made for the security of bill holders?
If a constitutional bank may be a bank of issue, does it possess the other functions of banking as well? Suppose there were no other restrictions than those contained in the first line of section 13, art. 9, supra. The plain meaning of that line would be that a general banking law must be passed by a two-thirds vote. The word "general" must refer either to the character of the bank or the character of the law to be passed. If the word refer to the character of the bank, there can be no question as to the scope of the bank to be organized; that it must be a bank of three functions. If the word refer to the character of the law, then any banking law which is not general is prohibited by the constitution.
Is the law of 1895 a special law? If the legislature were compelled by the constitution to enact a general law along certain lines providing for banks of discount, deposit and circulation, would not a law providing for banks of discount along entirely different lines be a special act? When the nature of a subject to be legislated upon possesses three attributes, a general law pertaining thereto must make provision for all those attributes. A law which endeavors to segregate one of those attributes and make provision therefor is a special law. The only exception to this rule is where there is a reason suggesting the necessity of different legislation. State v. Cooley, 56 Minn. 540, 551. What necessity requires the classification of banks into banks of deposit and discount and banks of issue, discount and deposit? Moreover the constitution by giving to the legislature the right to pass a general law thereby prohibited it from enacting any but a general law.
Immediately after the adoption of the constitution the legislature enacted a law complying with its provisions and providing for banks of a general character and having the right of discount and deposit. Laws 1858, c. 32. A bank organized under chapter 33 of the General Statutes possesses the three functions of a bank. Dana v. Bank, 4 Minn. 293 (385). Hence the law imposed by the constitution was one authorizing banks of discount, deposit and circulation. And the restrictions of the constitution cannot be avoided simply by enacting a law failing to provide for one of the three functions. Therefore Laws 1895, c. 145, is unconstitutional. Every institution incorporated for the primary purpose of receiving deposits and discounting paper possesses the incidental power to issue, and therefore must be within the restrictions of the constitution. At the time of the adoption of the constitution bank-paper was not a legal tender, it was merely their due bill or promise to pay. In many places on the frontier especially at that time, the circulating medium was furnished by the due bills of some lumber, iron or other company. The right to issue a due bill or demand note is no special privilege, but is inherent in every natural person. If express authority is necessary to warrant the issue of notes as a medium of exchange, then there never was a note legally issued by any state bank in Minnesota. No law authorizing such issue has ever been enacted in Minnesota. For nearly ten years after the law of 1858 banks in this state issued bank notes. If that was a lawful exercise of power, then it should be the same now, for the same powers are conferred on banks of discount and deposit by Laws 1895, c. 145, § 3, subd 7, as were conferred on banks by the law of 1858. Subdivision 3 of section 13 of art. 9 of the constitution also clearly implies that all banks have the right to issue notes. The language clearly declares that all banks possess the power to issue and the liability should attach to those which avail themselves of the power.
But if this court is to adhere to its decision in International v. American, 62 Minn. 501, then we contend that if the law of 1895 is to be held applicable to the Bank of Minnesota, the law is unconstitutional. Chapter 33 of the General Statutes was originally enacted in 1858, Laws 1858 c. 32. The title of the act was "An act to authorize and regulate the business of banking." Thirty of its forty-five sections pertain directly to the issue of circulating notes, and the powers given in the original act were identical with the powers given to the bank in question save that in 1876 the power was given to traffic in promissory notes, etc. The power to issue circulating notes is given by section 4 (G. S. 1894, § 2484). All banks then organized under chapter 33 have the power to issue notes, and the grant of such power constitutes a contract between the state and the stockholders of such bank which cannot be impaired by legislation. But if the law of 1895 is to be held applicable to all banks doing business in the state, then the right to issue circulating notes has been taken away, if not expressly then by necessary implication. See section 29. But if this right has been taken away, under the Dartmouth College case the contract obligation with the state has been impaired and such an act transcends the power of the legislature. To contend that this privilege has been practically taken away by the federal bank tax is to invoke the doctrine of non-user. But a statute cannot be repealed by mere failure to operate under it. Nothing short of a statute can repeal a statute. Potter's Dwarris, St., 154; White v. Boot, 2 T. R. 274. If the federal tax were removed the right of issue becomes valuable and the legislature has no power to take it away. If the legislature can provide for banks of a kind not intended by the constitution, it cannot take away such privilege from existing banks. State v. Knoop, 16 How. 369; Planters v. Sharp, 6 How. 301. Section 5 of the act of 1895 provides for but a single liability of stockholders. As to creditors of the bank who were such prior to that act the law of 1895 is invalid. Hawthorne v. Calef, 2 Wall. 10, 22, 23; 3 Thompson, Corp. § 3040.
The authority given to the superintendent of banks by section 20 of the act of 1895 to take summary proceedings against banks is clearly in violation of Const. art. 1, §§ 2, 7. In the national bank act similar authority given to the comptroller of the currency is carefully guarded. See R. S. (U. S.) §§ 5226, et seq. The act of 1895 is a menace to rights guarantied by the constitution. State v. Billings, 55 Minn. 467, 473; Bardwell v. Collins, 44 Minn. 97; Wilson v. Red Wing, 22 Minn. 488; Baker v. Kelley, 11 Minn. 358 (480).
The act of 1895 is unconstitutional because the subject of the act is not embraced in the title. By prior decisions of the court the right to issue is a special privilege or artificial right which must be expressly conferred upon banks and was conferred by chapter 33 of the General Statutes, while the right to receive deposits and to discount is a natural right. A statute then which by its title aims to regulate institutions exercising only the natural right to discount and to receive deposits would give no information that it was likewise intended to diminish the liability of stockholders in banks having the right to issue. Mississippi v. Prince, 34 Minn. 79.
The act of 1895 is inapplicable to the Bank of Minnesota and...
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