First Thrift & Loan Ass'n v. State ex rel. Robinson

• Decision Date: 08 October 1956
• Docket Number: No. 6091,6091
• Citation: 62 N.M. 61,304 P.2d 582,1956 NMSC 99
• Parties: FIRST THRIFT and LOAN ASSOCIATION, a corporation, Plaintiff-Error, v. STATE of New Mexico, on the relation of Richard H. ROBINSON, Attorney General for the State of New Mexico, Defendant-in-Error.
• Court: New Mexico Supreme Court

Page 582

304 P.2d 582

62 N.M. 61

FIRST THRIFT and LOAN ASSOCIATION, a corporation, Plaintiff-Error, v. STATE of New Mexico, on the relation of Richard H. ROBINSON,

Attorney General for the State of New Mexico,

Defendant-in-Error.

No. 6091.

Supreme Court of New Mexico.

Oct. 8, 1956.

Rehearing Denied Dec. 28, 1956.

Wilson & Whitehouse, Albuquerque, Harry L. Bigbee, Santa Fe, for plaintiff in error.

Richard H. Robinson, Atty. Gen., Fred M. Standley, Asst. Atty. Gen., John D. Murphy, William A. Sloan, Sp. Assts. Atty. Gen., for defendant in error.

SADLER, Justice.

The defendant below, appearing in this Court as a plaintiff in error, seeks review of a judgment of the district court of Bernalillo County in a proceeding by quo warranto ousting, enjoining and restraining it from exercising its purported corporate powers to transact a banking business within the state of New Mexico and to desist from soliciting, receiving or accepting deposits of money, or lending money so deposited. In other words, the judgment complained of barred plaintiff in error from thereafter acting as if a bank.

No single way of bringing out quickly the issues in the case and the trial court's rulings suggests itself than to copy the trial judge's findings of facts and conclusions of law. They read:

'Findings of Fact

'1. The relator is Attorney General of New Mexico and the respondent is a New Mexico corporation with its principal office in Albuquerque.

'2. The respondent was on February 25, 1954 incorporated under the general incorporation statutes of New Mexico, now N.M.S. (1953 Comp.) c. 51, art. 2; and has not been incorporated in accordance with the banking incorporation statutes of this state (N.M.S.1953 Comp.) c. 48, art. 2.

'3. The respondent's Articles of Incorporation and the amendment thereto are exhibit A of the Petition and Exhibit A of the Answer respectively.

'4. Since approximately June 1954 the respondent has engaged in the banking business as that is defined in N.M.S. (1953 Comp.) c. 48, art. 1 and Sec. 48-8-8 and has advertised itself as being authorized to do acts which comprise banking as so defined, specifically accepting deposits from customers and loaning said deposited money.

'5. The petitioner, State of New Mexico, is not estopped nor guilty of laches with respect to the present proceeding by reason of (a) the opinion of the Attorney General dated June 7, 1954 referred to in the evidence in this cause (b) by the enactment of L. '55, c. 98.

'Conclusions of Law

'1. The respondent has not been granted the power to engage in the banking business nor to do the acts which comprise banking nor to advertise itself as being authorized to do so.

'2. That a corporation must be incorporated under N.M.S. (1953 Comp.) chapter 48, article 2, in order to transact a banking business.

'3. The respondent has since approximately June 1954 usurped, intruded into and unlawfully exercised the purported franchise power and function of a corporation licensed to transact banking business in the State of New Mexico.

'4. The court has jurisdiction to enter a judgment herein ousting the respondent from such unlawful exercise of a purported power to do a banking business.

'5. The petitioner, State of New Mexico, is not estopped nor guilty of laches with respect to the present proceeding by reason of (a) the opinion of the Attorney General dated June 7, 1954 referred to in the evidence in this cause, (b) by the enactment of L. '55, c. 98.

'6. N.M.S. (1953 Comp.) c. 48, art. 2 is not unconstitutional as violative of N.M.Const. Art. 11, Sec. 6; nor of N.M.Const. Art. 2, Sec. 18, as asserted by the respondent in its answer.

'7. A judgment should be entered herein in accordance with the prayers of the Petition.

's/ John B. McManus, Jr.

District Judge'.

The plaintiff in error has in its Point 1 gone right into the merits of this case by contending that where corporations divide their business operation into two departments and properly segregate their capital and records they may engage in a phase or phases of the banking business when permitted so to do by their charter issued under the general incorporation laws of the state of New Mexico, subject to the regulatory provisions of the banking act and supervision of State Bank Examiner as provided in 1953 Comp. Sec. 48-2-15.

The State on the relation of Richard H. Robinson as Attorney General, appearing before us as defendant in error, flatly rejects the contentions of plaintiff in error in this behalf and puts forward in its answer brief as its Point 1 a direct challenge to the correctness of its adversary's Point 1 in a very succinct proposition reading, as follows:

'A corporation cannot organize under the general corporation laws and thereafter conduct a banking business whether or not said corporation has two departments.'

With the issue thus joined, the position of the one party in diametrical opposition to that of the other, there should be no confusion or uncertainty about where the parties stand. We sense none. Before launching into a discussion of this prime issue in the case, a decision of which is of such vital importance, we may as well state now that in our further treatment of this and other issues raised, we shall refer to the parties as they were aligned and designated below, the defendant in error have as petitioner in moving for a writ of quo warranto, and the plaintiff in error here, as respondent against whom the writ was directed.

Three pertinent statutes suggest themselves with a definite bearing on the question at issue. Indeed, they appear to be the only statutes having an easily recognized relevancy in the matter. The first is 1953 Comp. Sec. 51-2-6, L.1905, c. 79, Sec. 5, as amended by L.1917, c. 112, Sec. 1, which, so far as material, reads:

'Purposes for which corporations may be formed.--Upon executing, filing and recording a certificate pursuant to all the provisions of this article, three (3) or more persons may become a corporation for any lawful purpose or purposes whatever, except corporations for the construction and operation of railroads, telegraph lines, express companies, savings banks, commercial banks, trust companies, building and loan associations, insurance, surety, and irrigation companies * * *.' (Emphasis ours.)

The significant thing about the quoted portion of the section mentioned, being a part of our general incorporation statute, is that it excludes 'savings banks' from its purview. In other words, if the purpose, or one of the purposes of incorporating, is to operate a savings bank, this statute is not available.

We turn next to another pertinent statute, 1953 Comp. Sec. 48-14-1, L.1903, c. 109, Sec. 1, as amended by L.1929, c. 131, Sec. 1, which, so far as at present material, reads:

'Mercantile companies--Banking business--Paid-in capital stock-Certificate.--Any number of persons, not less than three (3), may associate to establish mercantile companies and companies for trade and business, which corporation or association may in addition to the things now allowed by the laws of this state transact a general banking business, upon the terms and conditions and subject to the liabilities now prescribed by the laws of this state, relating to corporations and associations in towns and cities, having a population according to the last United States census, of less than fifteen hundred (1,500) inhabitants, and the aggregate amount of the capital stock of such corporation or association shall not be less than thirty thousand dollars ($30,000.00) * * *.'

It will be observed that this section applies only to companies, doing business in towns and cities, having a population of less than 1500 inhabitants, according to the last United States census. The City of Albuquerque, where respondent was organized and has its principal place of business and carries on the banking phase of its business is, of course, a city almost 100 times larger than the maximum allowed as the site for the banking business contemplated by this statute.

The third statutory provision relating to the incorporation of companies to engage in the banking business will be found in 1953 Comp. Sec. 48-2-1 through 48-2-5. In as much as the respondent disclaims having been organized under these sections, it would seem unnecessary to quote them. It is worthy of mention, however, that these sections represent the only statutory authority in New Mexico for forming a corporation to conduct a banking business in cities and towns having more than 1500 population. Why do we say that? Because the legislature itself has said so in plain and unmistakable language. Let us confirm the accuracy of this statement.

It is provided by 1953 Comp. Sec. 48-1-3, as follows:

'Formation of corporation.--Corporations may be formed under the laws of this state to conduct, as provided in this act, and not otherwise, any one or all of the businesses mentioned in divisions a, b and c of section 2 (48-1-2) of this act and as defined in sections 4, 5 and 6 (48-1-4 to 48-1-6) of this act.'

The other sections and subsections mentioned in the section just quoted, supra, read as follows:

'48-1-2. 'Bank' defined.--The word 'bank' as used in this act includes every person, firm company, copartnership or corporation, except national banks, engaged in the business of banking in the state of New Mexico. Banks are divided into the following classes:

'(a) Commercial banks:

(b) Savings banks; and

(c) Trust companies.'

'48-1-4. 'Commercial bank' defined.--The term 'commercial bank,' when used in this act means any bank authorized by law to receive deposits of money, deal in commercial paper or to make loans thereon, and to lend money on real or personal property, and to discount bills, notes, or other commercial paper, and to buy and sell securities, gold and silver bullion, or foreign coins or bills of exchange.'

'48-1-5. 'Savings bank' defined.--The term 'savings bank,' when used in this act, means a bank...