Bank of Oxford v. Love

• Decision Date: 19 June 1916
• Citation: 72 So. 133,111 Miss. 699
• Court: Mississippi Supreme Court
• Parties: BANK OF OXFORD v. LOVE et al

72 So. 133

111 Miss. 699

BANK OF OXFORD v. LOVE et al

Supreme Court of Mississippi

June 19, 1916

March 1916

APPEAL from the chancery court of Hinds county, HON. O. B. TAYLOR Chancellor.

Bill by Bank of Oxford against J. S. Love and other state bank examiners. From a decree dismissing the bill, complainants appeal.

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

Judgment affirmed.

Mayes & Mayes, for appellant.

Geo. H Ethridge, Assitant Attorney-General, for appellees.

OPINION

HOLDEN, J.

The appellant, Bank of Oxford, filed its bill in the chancery court of Lafayette county, seeking to enjoin the state bank examiners, J. S. Love et al., appellees, from interfering, under the state banking, law enacted in 1914, with its stockholders and directors in the administration of its internal affairs, and to recover the money paid by it under protest under the state banking law for the support of the said bank examiners. From a decree denying the relief sought by the Bank of Oxford, it appeals here.

Briefly stated, the allegations of the bill are that the Bank of Oxford was organized under and incorporated by a special act of the Mississippi legislature approved in March, 1872; that said incorporating act was promptly accepted by appellant, the requisite amount of capital stock paid in, and that the corporation duly organized and commenced its banking business under such charter, and has conducted its business as such continuously from the date of its organization up to the date of the filing of this bill; that, in and by said charter, it was provided, amongst other things, that the bank shall have the right and exercise the privileges appertaining to a general banking, exchange, and brokerage business, with all the powers of a body corporate; that section 4 of said bank charter provides:

"That the business of said bank shall be confided to and controlled by its stockholders under such rules of laws and regulations as said company may see fit to adopt, provided that the same be not in conflict with the Constitution of the United States or of this state."

The bill then sets forth the enactment by the Mississippi legislature on the 9th day of March, 1914, of the act establishing a banking department, and that by section 10 of such act it is provided that the bank examiners thereby created should examine twice a year, and oftener if necessary, at irregular intervals and without prior notice, the banks organized under the laws of the state; that section 11 of said act provides that at such examinations the examiners should have the power and duty to examine the cash, bills, collaterals, securities, books of account, the condition of affairs at the bank, the mode of conducting and managing the affairs of the bank, the actions of its directors, and the investment of the funds of the bank; that section 21 of said act provides that if any bank examiner should from any such examination be of opinion that any bank is insolvent, or that its condition is such that a further continuance of its business is hazardous to its creditors, depositors, or the public, or that the bank has failed to comply with any rules or instructions provided by law, he should forthwith call a meeting of the board of examiners and report the facts to such meeting; that section 20 of said act provides that if the said board should find any bank is attempting to do business with less than the minimum capital required by law, or without having its full capital stock paid in, or that any bank is insolvent, or that any bank has for any reason failed, it shall be the duty of the board of examiners forthwith to liquidate the said bank as provided in such statute; that such board should proceed to liquidate the business if the bank has made a payment of dividends contrary to law, or made any charges against the surplus account contrary to law, or suffered its capital to remain impaired after a thirty days' notice, or allowed its reserve fund to remain below the minimum after thirty days' notice, or for persistent violation of any other provisions of the law. The bill then sets up the guaranty clause of the United States Constitution (article 1, section 10), and alleges that because of such charter and such constitutional provision the state legislature had no power to subject the affairs of the appellant bank to the inspection, examination, decision, and control of said board of examiners, or to give the board of examiners any power in connection with or over the management of the bank's affairs, or to order or superintend any liquidation thereof. The bill then sets forth that the bank examiners, J. S. Love et al., appellees, were threatening to interfere with the affairs of said bank and to exercise the power provided for by said act of the state legislature, applying the same to said bank; and it invoked its immunity and exemption from such supervision and control under said contract clause of the Constitution of the United States. The prayer of the bill asks for an injunction against the bank examiners from interfering with its affairs, and also for a return of the tax so paid by it under such protest. To this bill bank examiner J. S. Love, et al., demurred; which demurrer was sustained by the chancellor, and the bill was dismissed.

The question presented to us here for decision is whether or not the Bank of Oxford, holding a legislative charter of date March , 1872, which provides, "that the business of said bank shall be confided to and controlled by its stockholders under such rules of laws and regulations as said company may see fit to adopt, provided that the same be not in conflict with the Constitution of the United States or of this State," is exempt from the operation of the state banking law enacted by the legislature in 1914; in other words, whether or not said bank, by its charter, is immune from the supervision and regulation provided for by the said Act of 1914. It will be observed that the appellant bank does not contend that the supervision and regulation of state banks imposed by said Act of 1914 is unreasonable, but appellant's contention here is based solely upon the ground that the act of the legislature of 1914 is not to be applied to it, as this would be an impairment of its charter rights of contract with the state, and therefore violative of its constitutional right of contract under the guaranty clause of the federal Constitution (article 1, section 10), that on account of the contract with the state as evidenced by its charter granted in 1872, the legislature now has no power to subject the affairs of the bank to the rules and regulations as provided in the said banking law of 1914.

It is not clear to us that the operation of the state banking Act of 1914 conflicts with or interferes with the substantial rights of the appellant bank under its charter. The law undertakes to reasonably supervise and regulate the affairs of the bank with reference to its solvency and safety as to the public use, and public welfare; but we will concede, for the purposes of the discussion, that the Act of 1914 contravenes and interferes with the charter rights of the appellant bank, as granted to it by the legislature in 1872 in the management of its internal affairs. This raises the question of whether or not such rights of exemption, as claimed by the appellant bank under its charter, could be lawfully granted to it by an act of the...