Department of Banking v. Hedges
| Decision Date | 02 June 1939 |
| Docket Number | 30575. |
| Citation | 286 N.W. 277,136 Neb. 382 |
| Parties | DEPARTMENT OF BANKING v. HEDGES ET AL. |
| Court | Nebraska Supreme Court |
[Copyrighted Material Omitted]
Syllabus by the Court.
1. The department of banking, created by legislative enactment (Laws 1933, ch. 18; Laws 1935, ch. 16), is a legal entity, and by section 8-1,130, Comp.St.Supp.1937, as receiver and liquidating agent of an insolvent bank, has full right and lawful authority forthwith, by a proceeding in court, to prosecute an action to collect constitutional stockholders' liability for benefit of creditors.
2. " The words and terms of a constitutional provision are to be interpreted and understood in their most natural and obvious meaning, unless the subject indicates or the text suggests that they have been used in a technical sense, and while the Constitution, as amended, must be construed as a whole, still where the words employed in a constitutional provision are plain, direct, and unambiguous, no interpretation is necessary to ascertain their meaning, for courts may not supply what they deem unwise omissions, or add words which substantially add to or take from the Constitution as framed." Elmen v. State Board of Equalization and Assessment, 120 Neb. 141, 231 N.W. 772.
3. The term " adjudged," as used in section 7, art. XII of the Constitution, as amended in 1930, in part as follows " The stockholder shall become individually responsible for the liability hereby imposed, immediately after any such banking corporation, or banking institution shall be adjudged insolvent," is not conclusive in that a judicial adjudication of insolvency is required, but also includes the right of the superintendent of banks to declare a banking corporation or banking institution insolvent (Comp.St.Supp.1937, sec. 8-190), especially so in the absence of language in the constitutional amendment requiring a judicial adjudication.
4. The term " receiver," as used in section 7, art. XII of the Constitution, as amended in 1930, in part as follows: " The receiver of said corporation or institution shall have full right and lawful authority, as such receiver, forthwith to proceed by action in court to collect such liabilities," is not conclusive in that it means only a judicial receiver appointed by the court, but includes the department of banking as receiver and liquidating agent of an insolvent banking corporation or institution.
5. Section 8-1,130, Comp.St.Supp.1937, using the same language as appearing in section 7, art. XII of the Constitution of Nebraska, as amended in 1930, except that, in place of the word " adjudged" the word " declared" is used, and in place of the word " Receiver" the words " Department of Banking as Receiver and Liquidating Agent" are used, provides for an expedient means to enforce collection of stockholders' liability, and is remedial and procedural only, not affecting the substantial rights of the parties and always within the control of the state.
6. Article 1, ch. 8, Comp.St.Supp.1937, does not change the liability nor affect the substantial rights of stockholders in banking corporations in this state. The changes occurring therein since defendants acquired their stock relate merely to procedure or remedy, and such methods of procedure, which do not affect the substantial rights of the parties, are within the control of the legislature and are not violative of section 10, art. I of the Constitution of the United States, U.S.C.A.
7. No vested rights are impaired by statutory provision which creates a remedy for an existing right.
8. Article 1, ch. 8, Comp.St.Supp.1937, creating the department of banking and granting to it supervision and control of banking, is not unconstitutional as an attempt to delegate judicial power to such department, and does not confer such power.
9. Statutes conferring upon the department of banking and superintendent thereof quasi-judicial powers and duties are not unconstitutional as an encroachment upon the judicial branch of the government, where such powers and duties relate to matters which are peculiarly affected with public interest, or are subject to regulation under police powers, and where provision is made for appeal from the decisions of such agencies to the courts.
10. Sections 8-190, 8-192, 8-199, 8-1,131, 8-1,133, 8-1,132, Comp.St.Supp.1937, set out in the opinion, analyzed and examined, and held not to constitute a delegation of judicial power to the executive department or provide for executive adjudication of controversies, but specifically provide that, when exercise of judicial power is required to effectuate performance of various administrative functions necessary to liquidation, the judicial power is invoked and the statutes so require.
11. The creation of an administrative receivership of insolvent banks by legislative enactment (Laws 1933, ch. 18) does not interfere with or take from the court supervision of the administration of trusts or the exercise of equity powers of the court in this respect, especially so when the statute provides for judicial administration and supervision as a matter of public policy; and such provisions of the statute do not constitute an encroachment upon judicial power, in violation of section 1, art. II of the Constitution of Nebraska.
Appeal from District Court, Red Willow County; Eldred Judge.
Action by the Department of Banking of the state of Nebraska, receiver and liquidating agent of the Indianola State Bank, Indianola, Neb., against Ralph Hedges, impleaded with Isaac Kurtz and M. C. Lord, to determine the liability of the defendants Kurtz and Lord, as stockholders, and the amount to be contributed by them to the unpaid liabilities of the bank. From a judgment sustaining a demurrer to the amended petition, and dismissing the action, the plaintiff appeals.
Judgment reversed and cause remanded.
Vested rights are not impaired by statutory or constitutional provision creating remedy for existing right.
Robert H. Downing and Harold Johnson, both of Lincoln, for appellant.
Perry, Van Pelt & Marti, of Lincoln, and Butler & James, of McCook, for appellees.
Heard before SIMMONS, C. J., and ROSE, EBERLY, PAINE, CARTER, MESSMORE, and JOHNSEN, JJ.
The department of banking of the state of Nebraska, statutory receiver and liquidating agent of the Indianola State Bank, insolvent, brought this action in equity in the district court for Red Willow county, Nebraska, and by amendment to its petition filed April 21, 1938, alleged full right and authority to bring and maintain the suit. The action proceeds against defendants Kurtz and Lord, to determine the liability of each defendant and the amount to be contributed by him to the unpaid liabilities of the bank and for judgment to be entered against them for such amounts. The amended petition sets forth the liabilities of the bank and contains the following allegations: That the assets will be insufficient to pay the liabilities; that the bank was insolvent in January, 1934, which fact was admitted by the officers thereof who failed to restore solvency; that the bank was adjudged insolvent by the superintendent of banks January 15, 1934; that defendants, having full knowledge thereof, made no objection thereto; that the receiver then proceeded to liquidate the affairs of the bank under article 1, ch. 8, Comp.St.1929, as amended in 1933; that creditors' claims were filed, classified and allowed, including claims of defendants Kurtz and Lord; that dividends were ordered withheld on defendants' claims pending payment of their stockholders' liability; that defendants filed a petition in the district court, demanding payment of their dividends, and, pursuant to a stipulation of the parties and order of the court, furnished bonds, conditioned for the payment of their liabilities as such stockholders when determined, and dividends were paid to defendants; that the district court approved compromise settlements of doubtful assets of the bank, sales of real and personal property, and settlement of superadded liability of its stockholders, and made distribution of four dividends to its creditors.
The trial court sustained a demurrer to plaintiff's amended petition on several grounds. Plaintiff elected to stand upon its amended petition and not to plead further, resulting in a dismissal of the action, from which plaintiff appeals.
The first ground of the demurrer attacks the capacity of the plaintiff to bring and maintain this action. Plaintiff cites and relies on article 1, ch. 8, Comp.St.Supp.1937, incorporating Senate File No. 263, passed by the 1933 session of the legislature (Laws 1933, ch. 18)--a comprehensive banking act, creating a department of banking, superseding the department of trade and commerce, and providing for the regulation, supervison and control of going banks and the liquidation of insolvent banks, with resort to the judicial arm of government, as provided by the act.
State ex rel. Sorensen v. Hoskins State Bank, 132 Neb. 878, 273 N.W. 834, filed June 11, 1937, is cited by the defendants on the proposition: " The Department of Banking has no legal existence and therefore no capacity to prosecute this action." In the cited case the then attorney general applied to the district court to discharge a judicial receiver, appointed as such, and to substitute in such receiver's place a statutory receiver, as evidenced by article 1, ch. 8, Comp.St.Supp.1937. Under the act there was no statutory authority for such receiver to act or accept an appointment as judicial receiver. The opinion stated (132 Neb. page 881, 273 N.W. page 835):" It would seem that to make valid the appointment of an entity other than a natural person as a judicial receiver, such entity must be legally...
To continue reading
Request your trial
-
Neb. Const. art. II § II-1 Legislative, Executive, Judicial
...Department of Banking is not unconstitutional as attempt to delegate judicial powers to the department. Department of Banking v. Hedges, 136 Neb. 382, 286 N.W. 277 The right to define and regulate the practice of law belongs to the judicial department of government. In re Integration of the......