Bank of Commerce v. Clark

• Citation: 114 Miss. 850,75 So. 595
• Decision Date: 04 June 1917
• Docket Number: 19680
• Court: United States State Supreme Court of Mississippi
• Parties: BANK OF COMMERCE ET AL. v. CLARK, SHERIFF AND TAX COLLECTOR

75 So. 595

114 Miss. 850

BANK OF COMMERCE ET AL. v. CLARK, SHERIFF AND TAX COLLECTOR

No. 19680

Supreme Court of Mississippi

June 4, 1917

Division A

APPEAL from the chancery court of Harrison county, HON. W. M. DENNY Jr., Chancellor.

Suit by John B. Clark as sheriff and tax collector of Harrison county against the Bank of Commerce and others. From a decree overruling a demurrer to the bill, defendants appeal.

The facts are fully stated in the opinion of the court.

Decree affirmed and cause remanded.

N. C. &amp C. E. Hill, for appellants.

The appellants in this cause take the position that section 3485 of the Code of 1906, is necessarily repealed by chapter 124 of the Laws of 1914, and that said provision of the Code is no longer in force and effect, because the subject-matter embraced in said section of the Code has been treated of by said two acts of the legislature, and that the provisions of said Acts of 1914 and 1916 are not in harmony with section 3485 of the Code in this, that section 39 of chapter 124 of the Laws of 1914, in treating upon the payment of claims against said bank and as to how they shall be paid, provides as follows:

"All deposits not otherwise secured shall be guaranteed by this act. The guaranty provided for in this act shall not apply to a bank's obligations as endorser upon bills re-discounted, nor to bills payable nor to money borrowed from its correspondents or others, nor to deposits bearing a greater rate of interest than four per cent per annum. Each guaranteed bank shall certify under oath to the Board of Bank Examiners at the date of each called statement the amount of money it has on deposit not eligible to guaranty under the provisions of this act, and in assessing such bank this amount shall be deducted from the total deposits." Section 38 as amended by chapter 207 of the Laws of 1916, so as to read as follows:

"All deposits not otherwise secured, and all cashier's checks certified checks, or sight exchange, issued by banks operating under this law shall be guaranteed by this act. The guaranty as provided for in this act shall not apply to a bank's obligations as endorser upon bills rediscounted nor to bills payable, nor to money borrowed from its correspondents or others, nor to deposits bearing a greater rate of interest than four per cent per annum. Each guaranteed bank shall certify under oath to the board of bank examiners at the date of each called statement the amount of money it has on deposit not eligible to guaranty under the provisions of this act, and in assessing such bank this amount shall be deducted from the total deposits," and it will be observed that by the original enactment of the new banking law of 1914, and by the amendment thereto in 1916, it is provided that all deposits "not otherwise secured," shall be paid out of the guaranty fund of the state and are thereby made preference claims over the ordinary creditors of said bank. The court will observe that in the original Act of 1914 and amendment of 1916 that no provision is made in either act for the payment of any "trust fund," and that no reference is made to a "trust fund," but in the amendment of 1916 cashiers checks, certified checks or sight exchange issued by banks operating under the guaranty clause are added to the character of claims that are designated by Act of 1914 as preference claims, and surely if the legislature had intended that section 3485 of the Code should still remain in force and effect that sort of claim would most certainly have been included in The Acts of 1914 and in the Act of 1916, and inasmuch as both legislatures had the subject-matter before them in legislating upon the payment of claims owing by insolvent banks never included in either of them a provision for the payment of what appellee contends is a "trust fund" and it is provided by said Act of 1914 that all laws in conflict with said act are repealed, assuredly we submit that the present plan of liquidating banks and taking security on deposits is in conflict with said section of the Code. That was held in the case of Potter v. Fidelity and Deposit Company, 58 So. 713, 103 Miss. 91, that "A deposit of state funds in a bank made pursuant to chapter 96, page 77, Laws of 1908, were not trust funds under section 3485 of the Code of 1906, and that the Code had no application to public funds deposited in a bank where said deposits were made according to the Depository Law of 1908." The Depository Law was enacted long after the Code of 1906 was enacted, and likewise the chapter on the government of the liquidation of state banks was enacted long after the depository law was made, and provides a complete remedy for the liquidation of banks and for the payment of claims against it. One of the provisions of said act is that all deposits "not otherwise secured" shall be paid in full out of the assets of the bank if sufficient, and if not, then out of the state guaranty fund. And when said provision was amended by a subsequent legislature in 1916, and other and a different character of claims added there to that were to be paid in full, no mention whatever was made in either act to "a trust fund."

But even if there is such a thing now as a "trust fund" under section 3485 of the Code, still we submit that when the tax collector took and required the execution of a bond to him for the repayment of said funds then said deposit is "otherwise secured," and therefore is not embraced within the meaning of the Law of 1914, and the amendment thereto in 1916.

We submit that the court below was in error in overruling the demurrer of appellants in holding that section 3485 of the Code was not replaced, and in holding further that said deposit was a trust fund and that appellee was entitled to proceed against the assets of said bank to the exclusion of all other creditors in the collection of his claim in full, and was in further error in holding that appellee should not have made said bond and bondsmen parties to said suit, so that the representatives of said bank and the banking department could have filed a cross action against said bondsmen for the recovery of said money, in the event the court should hold that appellee was entitled to go directly against the bank's funds for the recovery of his said deposit before exhausting his remedy against said bond.

Dodds & Montgomery and V. A. Griffith, for appellee.

In the first and second assignment of error, which were presented in the court below as the third ground of demurrer, appellants attack section 3485 of the Code of 1906, and say that this section has been superseded and replaced by the state banking law contained in chapter 124 of the Laws of 1914, and the amendment to same contained in chapter 207 of the Laws of 1916. It is contended that section 38 of chapter 124 of the Laws of 1914 and the amendment of the same section in chapter 207, Laws of 1916, expressly provides what deposits are guaranteed and that the public funds in this case do not fall within said section. It is contended that said section mentions all deposits which are to be guaranteed and by the affirmative enumeration of same does not include public moneys and not only by an affirmative enumeration does it fail to include public moneys, but by positive expulsion excepts from the guaranty provision all deposits "otherwise secured." It is very evident that section 38 does not mention public moneys. It is further very evident that the state banking law of 1914 and 1916 does not deal with public moneys or trust funds. It is evident that the banking law does not deal with the same subject covered by section 3485 of the Code of 1906, to wit; public money as trust funds. Public moneys deposited by tax collectors in public depositories had been amply taken care of by numerous provisions made by practically every legislature since 1908.

There was no necessity for protecting public moneys on deposit with public depositories. Section 3485 of the Code covered all public moneys wheresoever deposited and expressly constituted them trust funds. This section had performed great service for the public in many cases and had been liberally construed many times by this court. It afforded ample security and our legislature evidently believed that public moneys with the protection thrown around public depositories, and with the protection afforded by section 3485 of the Code of 1906, were amply and thoroughly safe-guarded. For this reason our recent banking law extends its strong arm to the ordinary depositor, who heretofore had suffered by unexpected failures. The evil existing at the time the banking law was passed did not affect public moneys. The remedy afforded by said law did not deal therefore with public moneys; the law was passe to cure a well known evil. Ordinary depositors with astonishing frequency were suffering total or partial loss of their deposits, and the business of our state was being visibly affected by ruinous losses caused by frequent bank failures. With the liberal construction of the recent banking law, which it now seems that this court is adopting, the evil sought to be cured will soon be a thing of the past in our state.

But our legislature did not leave the repeal of section 3485 open to argument. While repeal by implication is not favored in law and all construction is against repeal by implication, still our legislature by section 45 of the state banking act provides: "Section 45. How conflicting acts to be construed: All acts and parts of acts in conflict with this act are hereby repealed in so far as they so conflict, but no provision of any banking law or other statute of this state shall be construed to be amended, modified or repealed except in so far as necessary to permit the unrestricted...