Farish v. State Banking Board of the State of Oklahoma No 446 State Banking Board of the State of Oklahoma v. Farish No 447
| Decision Date | 05 January 1915 |
| Docket Number | Nos. 446 and 447,s. 446 and 447 |
| Citation | 59 L.Ed. 330,35 S.Ct. 185,235 U.S. 498 |
| Parties | W. S. FARISH, Appt., v. STATE BANKING BOARD OF THE STATE OF OKLAHOMA, the Bank Commissioner of the State of Oklahoma, and the Union State Bank, a Corporation. NO 446. STATE BANKING BOARD OF THE STATE OF OKLAHOMA, the Bank Commissioner of the State of Oklahoma, and the Union State Bank, a Corporation, Appts., v. W. S. FARISH. NO 447 |
| Court | U.S. Supreme Court |
Mr. Amos L. Beaty for W. S. Farish.
[Argument of Counsel from page 499 intentionally omitted] Mr. Charles West, Attorney General of Oklahoma, and Messrs. Walter A. Ledbetter, Joseph L. Hull, Harry L. Stuart, and Robert R. Bell for the state banking board et al.
[Argument of Counsel from page 500 intentionally omitted] Mr. Justice McKenna delivered the opinion of the court:
Suit in equity brought by appellant against the state banking board and the bank commissioner of the state of Oklahoma, the Oklahoma Trust Company, the Alamo State Bank, the McNerney Company, corporations, and one P. J. McNerney. Later the Union State Bank, another corporation, was made a defendant. The object of the suit was to compel the banking board to pay appellant, as an equitable depositor of the Oklahoma Trust Company, a failed banking institution, the sum of $25,351.63. Another object was subrogation to and the establishment and enforcement of liens in the amount of $61,252.40 upon certain funds and impounded securities with a decree against the banking board for any final deficiency or unpaid balances.
The banking board demurred to the bill on the ground, stated with much circumstance, (1) that the suit was in effect against the state of Oklahoma; and (2) for want of equity. The demurrer was overruled. The banking board and the Union State Bank filed answers admitting some of the allegations of the bill and denying others, to which there were replications. A decree pro confesso was taken against the other defendants, which was subsequently made final.
On final hearing the court decreed subrogation and established and foreclosed a lien on certain of the securities in controversy and rendered a money decree against the Union State Bank for $18,018.58.
The court reversed its ruling on demurrer of the banking board, holding that 'because it is the opinion of the court that said state banking board represents the state, and is not suable on such account, said complainant shall take nothing as against said banking board, and in that behalf the latter shall go hence without day.'
Farish then prayed for an order allowing appeal from that part of the decree which denied him relief against the state banking board on the ground that it was one in effect against the state, and that the question of the jurisdiction of the court be certified to this court. The appeal was allowed and the certificate made.
The Union State Bank and the state banking board also prayed an appeal from that part of the decree which adjudged that judgment be rendered against the Union State Bank for the sum of $18,018.58 with interest, being the amount of a certain deposit alleged to have been transferred from the Alamo State Bank to it, and that the state banking board and the state bank commissioner did not have a first and prior lien as against complainant for the reimbursement of the amount of money taken by the board and commissioner from the depositors' guaranty fund to pay off and discharge the deposits of the Alamo State Bank and the Oklahoma Trust Company, and a first lien on the same account and for the same purpose on certain other securities.
There was an order of severance, and the case is here on these appeals and the certificate of jurisdiction made by the district court.
The pleadings are very long and set forth the grounds of suit with circumstantial detail. A repetition of them is not necessary. The appellant's case depends upon two propositions: (1) Whether he was an equitable depositor of the Oklahoma Trust Company. (2) This established, whether the banking board is subject to be sued by him.
His rights have their origin in an assignment to him by a corporation called the Texas Company.
The Texas Company furnished material to the contractors for certain paving work in the city of Muskogee, Oklahoma, for which bonds were issued and upon which, by agreement between the parties and the Oklahoma Trust Company, the Texas Company was given a first lien. Bonds to the amount of $154,035.92 were issued and delivered to the Oklahoma Trust Company, and disposed of by it or carried as a deposit to the credit of itself as trustee, and of which there remained to its credit as trustee on January 3, 1910, the sum of $25,351.63. It paid to the Texas Company only $27,906.57 of the proceeds of the sale of the bonds. The balance of the sum was used by the Oklahoma Trust Company in various ways which are detailed at length in the bill of complaint and traced to the possession of the Alamo State Bank, and through that bank to the banking board, the banking board having taken possession under the banking laws of the state of the Alamo State Bank upon its becoming insolvent. The Alamo State Bank obtained the assets of the Oklahoma Trust Company through a sale by the latter company to it on January 3, 1910. Composing these assets was the sum of $25,351.63, carried as a deposit by the Oklahoma Trust Company, and other sums, being credit balances of the Oklahoma Trust Company in other banks, cash paid to the Alamo State Bank and used by it to pay the indebtedness of the Oklahoma Trust Company or its depositors.
The assets of the Alamo State Bank were sold to the Union State Bank by the banking board, acting under the authority of an order of the district court of Muskogee county. The Union State Bank assumed in consideration thereof the payment of the depositors of the Alamo State Bank.
On December 18, 1909, the complainant herein brought suit against the Oklahoma Trust Company and others to establish his right to the paving bonds or their proceeds. The suit was numbered 1239. A receiver was appointed who was directed to demand and receive from the Oklahoma Trust Company the proceeds of the paving bonds and from all persons who might have them. The receiver duly qualified. On the 6th of August, 1910, subsequent to the sale by the Oklahoma Trust Company of its assets to the Alamo State Bank, the complainant filed a motion against the latter bank for the purpose of obtaining an order for contempt, and peremptorily requiring it to immediately pay and turn over to the receiver the proceeds of the bonds received by it.
The banking board subsequently appointed counsel to appear in that suit for the purpose of defeating the recovery by the complainant. In that suit all of the defenses herein pleaded were set up. The Union State Bank also appeared in that suit and aided in its defense. The final decree in that case adjudged, among other things, that the complainant became entitled to the proceeds of the paving bonds, and the Oklahoma Trust Com- pany was ordered forthwith to deliver their proceeds to him.
The Oklahoma Trust Company and the Alamo State Bank were banking institutions under the laws of the state, and subject to the banking laws, and paid in accordance with such laws assessments to the banking board, including certain emergency assessments for the purpose of creating and maintaining a depositors' guaranty fund as provided by law. And it is alleged that the depositors of the Oklahoma Trust Company, except complainant, were paid or caused to be paid by the Alamo State Bank, and that this was accomplished by the use of the proceeds of the paving bonds obtained by the Alamo State Bank. That the latter bank received not less than $65,000 of the proceeds of the bonds as a part of the consideration of the assumption of the payment of the depositors of the Oklahoma Trust Company: 'that the state, and, through it, said depositors, had a lien on all of the assets of said Oklahoma Trust Company to secure the payment of said depositors; and that, to the extent that the proceeds of said paving bonds were so used, your orator is subrogated to said lien, and, moreover, since said depositors were entitled to resort to the depositors' guaranty fund in the hands of the state banking board, and this was averted by said use of the proceeds of said paving bonds, a trust fund to which your orator was entitled, he is subrogated to that extent to the rights of said depositors against said guaranty fund, as it exists and shall exist, and against said state banking board.'
The facts of the case are set out in the opinion of the court, and need not be further stated, and the grounds of decision and the relief granted are expressed in the decree hereinafter set out.
The case of complainant is, indeed, sufficiently though generally stated in a letter which his counsel addressed to the banking board. It is as follows Dallas, Texas, July 26, 1910.
State Banking Board, Guthrie, Oklahoma.
State Banking Board, Oklahoma City, Oklahoma.
Gentlemen:——
Under contracts of January 5 and June 14, 1909, and transfer of December 9, 1909, my client, W. S. Farish, had a lien for more than $180,000 on certain paving bonds issued to P. J. McNerney and the McNerney Company, of Muskogee, and on the proceeds of such paving bonds, when sold. In the latter part of the year a considerable amount of such bonds were turned over to the Oklahoma Trust Company, which was engaged in the banking business at Muskogee, with its depositors guaranteed under your state law, and that company afterwards sold these bonds and used the proceeds in paying its depositors. The amount thus used, and to which my client was entitled, was $88,002.31.
Of the amount stated, $63,117.85, or about that amount, was thus misapplied in defiance of an injunction of the United States circuit court for the eastern district of Oklahoma, made in cause Eq. No. 1239, W. S. Farish v. P. J....
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