Dolley v. Abilene Nat. Bank of Abilene, Kan.
| Decision Date | 20 May 1910 |
| Docket Number | 3,331. |
| Citation | 179 F. 461 |
| Parties | DOLLEY, State Bank Com'r of Kansas, et al. v. ABILENE NAT. BANK, OF ABILENE, KAN., et al. [1] |
| Court | U.S. Court of Appeals — Eighth Circuit |
A. C Mitchell, G. H. Buckman, and Fred S. Jackson, for appellants.
John L Webster and Chester I. Long (B. P. Waggener, J. W. Gleed, and John L. Hunt, on the brief), for appellees.
Before VAN DEVANTER, HOOK, and ADAMS, Circuit Judges.
One hundred and fifty national banks domiciled and doing business in Kansas sued the Bank Commissioner and the Treasurer of that state to enjoin them from carrying into effect a Kansas statute, approved March 6, 1909, known as the 'Bank Depositors' Guaranty Act' (Laws 1909, c. 61). At the instance of the banks the Circuit Court granted a temporary injunction, and the state officers took this appeal.
The questions before us require no more than a brief outline of the provisions of the statute. There are many details of the guaranty scheme of which much complaint is made; but we think they are so clearly matters with which the national banks have no legal concern, or are so manifestly within the legislative province of the state, it is unnecessary to mention them. The statute authorizes banks incorporated under the laws of the state and possessing prescribed qualifications to join in contributing to and maintaining a fund for securing certain classes of their depositors against loss. The administration of the law is committed to the Bank Commissioner; the custody of the fund to the State Treasurer. Whether a bank shall become a party to the scheme is optional, not compulsory. Its desire to join is signified by a resolution of its board of directors, authorized by its stockholders. If upon an examination of its affairs by the Bank Commissioner it is found to be qualified, it then contributes to the permanent guaranty fund a sum in bonds or cash proportioned to the deposits to be guaranteed, and receives a certificate that it has complied with the provisions of the act and 'that its depositors are guaranteed by the bank depositors' guaranty fund of the state of Kansas. ' The permanent fund is raised to a fixed amount by the initial payments, and, if necessary, by annual assessments of one-twentieth of 1 per cent. of the guaranteed deposits in each bank, less capital and surplus and any depletion of the fund caused by payments to depositors in insolvent banks is cared for by like assessments, not exceeding five in any calendar year. When a guaranteed bank, so called, becomes insolvent, the Bank Commissioner takes charge, winds up its affairs, and applies its assets and the moneys realized from the liability of its stockholders.
When these are exhausted, balances still due guaranteed depositors are paid in full from the guaranty fund, if it is sufficient, and, if not, then by continued assessments, not exceeding five annually, as above stated, upon all banks which are parties to the plan. It is also provided that national banks may avail themselves of the act upon compliance with the prescribed conditions.
The visitorial power of the State Bank Commissioner over the guaranteed banks, and his control of their liquidation in case of insolvency, including the authority to appoint receivers, are radically inconsistent with the jurisdiction of the Comptroller of the Currency conferred by Congress over national banks. There are other points of conflict in the operation of the Kansas statute and the national banking laws, and it is obvious that the national banks cannot lawfully avail themselves of the provisions of the state enactment. Without further and appropriate legislation by Congress, they cannot throw off the duties and obligations prescribed by the law of their creation, or enter into engagements that will subject their corporate affairs to the supervision and control of another sovereignty. This view was expressed by the Attorney General of the United States in an opinion delivered April 6, 1909. The Kansas statute should, therefore, be regarded as though it related exclusively to banks incorporated under the laws of the state.
In their final analysis the objections of the national banks to the Kansas statute are reduced to two propositions: First, that, since they cannot avail themselves of the provisions of the statute, it operates to deny them the equal protection of the laws contrary to the fourteenth amendment to the Constitution; and, second, that the effect of the guaranty plan will be to attract depositors from the national banks to the guaranteed state banks, and will therefore impair the efficiency of the former as instrumentalities of the national government. Counsel admit this to be their position. The federal questions presented by these propositions constitute the ground of jurisdiction of the Circuit Court, and upon their soundness rests the temporary injunction it granted.
The national banks owe their existence to the laws of the United States, and in respect of the things which pertain to supervision and control by the sovereignty which created them they are as much beyond the jurisdiction of Kansas as though they were domiciled in Maine or California. Their exclusion from the operation of the statute in question is not from any design on the part of the state to discriminate against them, but results from the limitation of governmental powers. Because of their origin and the paramount authority of Congress, they are not, in matters inhering in the character of their corporate structures, within the legislative province of the state. The state can neither take away the essential powers granted them by Congress nor confer others that are inconsistent. Its legislation is necessarily limited to objects within its jurisdiction. The fourteenth amendment provides that no state shall 'deny to any person within its jurisdiction the equal protection of the laws. ' A conclusive answer to the objection to the Kansas statute now being considered would seem clearly to appear from the face of the amendment itself. A most extraordinary condition would exist if the legislation of the states properly confined within its appropriate sphere were to be held invalid because it does not extend to and embrace objects beyond their jurisdiction.
A legislative impasse would be created. Neither the nation nor the states could move forward; the former because power over matters purely of state concern is not conferred by the Constitution, and the latter because, under the construction now urged upon us, they can affect none if they cannot affect equally all within and without their jurisdiction. Of course such a construction is inadmissible. As Mr. Justice Field observed in Missouri Railway Co. v....
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