Hubbell Bank v. Bryan
| Decision Date | 10 November 1932 |
| Docket Number | 28303 |
| Citation | 245 N.W. 20,124 Neb. 51 |
| Parties | HUBBELL BANK ET AL., APPELLANTS, v. CHARLES W. BRYAN, GOVERNOR, ET AL., APPELLEES |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Lancaster county: ELWOOD B CHAPPELL, JUDGE. Reversed, with directions.
REVERSED.
Syllabus by the Court.
1. Legislative act to provide for guaranty fund by assessments levied against state banks under the police power must be related to some public purpose and must not be arbitrary and unreasonable.
2. Depositors' Final Settlement Fund Act lacked the public purpose necessary to support such legislation as an exercise of the police power.
3. Such an act, which provides that solvent banks shall be assessed in the future, to pay the losses of depositors in banks which had failed prior to its enactment, is invalid for that it takes the property of one and gives it to another, depriving the one of his property without due process of law.
4. Public purpose sufficient to support an exercise of the police power of the state is not imparted into a legislative act, merely because it supersedes and replaces a statutory enactment which did have such public purpose.
5. Provision expressing legislative intent as to the separability of the various parts of a statute is an aid merely to judicial interpretation.
6. " The legislative intent is the cardinal rule in the construction of statutes." King of Trails Bridge Co. v. Plattsmouth Auto & Wagon Bridge Co., 114 Neb. 734, 209 N.W. 497.
7. Police regulation, although valid when made, may become, by reason of later events, arbitrary and confiscatory in operation.
8. " A decision of the supreme court of the United States in a suit brought immediately upon the enactment of a bank guaranty law, holding such law to be constitutional, does not preclude a subsequent suit for the purpose of testing, in the light of later actual experience, the validity of assessments made thereunder, alleged to be unreasonable and confiscatory, and hence repugnant to the due process clause of the Fourteenth Amendment." Abie State Bank v. Bryan, 282 U.S. 765, 51 S.Ct. 252, 75 L.Ed. 690.
9. When conditions change so that what was once an insignificant taking of private property for an ulterior public advantage under Depositors' Guaranty Fund Law becomes a taking of private property exclusively for private purpose confiscatory in its application, the law cannot be sustained as a constitutional exercise of the police power of the state.
10. It is established in this case that conditions have so changed that the Depositors' Guaranty Fund Act is deprived of its public purpose; that the assessments thereunder are now confiscatory; and that it now takes private property exclusively for a private purpose. In such a case, one is deprived of his property without due process of law, in violation of the Fourteenth Amendment to Federal Constitution and section 3, art. 1 of the Constitution of the state of Nebraska.
Appeal from District Court, Lancaster County; Chappell, Judge.
Suit by the Hubbell Bank of Hubbell and others against Charles W. Bryan, as Governor and ex officio Secretary of the Department of Trade and Commerce of Nebraska, and others. Judgment in favor of the defendants, and the plaintiffs appeal.
Reversed, and the cause remanded, with directions.
Peterson & Devoe, for appellants.
C. A. Sorensen, Attorney General, and L. Ross Newkirk, contra.
F. C. Radke and Barlow Nye, for E. H. Luikart, receiver.
Heard before GOSS, C. J., ROSE, DEAN, GOOD, EBERLY, DAY and PAINE, JJ.
This is a suit in equity brought by the state banks of Nebraska to enjoin the collection of the regular and special assessments levied for the use of the depositors' guaranty fund and the assessments levied and to be levied for the benefit of the depositors' final settlement fund under the provisions of legislation which became effective March 18, 1930. This suit was brought against the department of trade and commerce and governor of the state, as exofficio head of the department. The defendants filed a counterclaim in which they sought to recover a judgment against the banks for the amount of the assessments which had been levied under both statutory provisions. The case was decided upon a demurrer which resulted in the banks being denied relief and a judgment being entered against the banks individually for the amount of assessments levied under both the old and the new law. This suit was determined by the lower court upon a demurrer to the pleadings, so that there is no issue of fact in controversy.
In 1909 the Nebraska legislature enacted a statute (Laws 1909, ch. 10) establishing a depositors' guaranty fund which was created and replenished from the proceeds of assessments based upon average daily deposits levied upon all state banks. The claims of all depositors in failed state banks were to be paid, first, from the assets in the hands of the receivers thereof, and, secondly, if said fund was insufficient, the deficit was to be paid from the depositors' guaranty fund. The statutory provisions creating and regulating the depositors' guaranty fund are found in sections 8024 to 8028, and 8033, Comp. St. 1922, with some amendment thereafter which however did not change the general structure of the depositors' guaranty fund.
There is no necessity to delineate in this opinion the unhappy history of the banking business in Nebraska and particularly those dark pages from 1920 until 1930. It is sufficient for the purpose of this opinion to state that in 1930 the condition was such that the governor called a special session of the legislature primarily to consider the banking situation. This special session (46th Extraordinary) enacted chapter 6, Laws 1930, Special, which is commonly known as the depositors' final settlement fund law, which became effective March 18, 1930. Among other things it provided for the transfer of assets from the depositors' guaranty fund to the depositors' final settlement fund, including certain assessments against the banks which had not been paid, accruing under the old law, and provided for an assessment to be levied upon the state banks for a period of ten years, based upon their average daily deposits. It provided that those who had claims as depositors in banks which had failed prior to March 18, 1930, under the old guaranty fund law should be paid from this new fund pro rata. It repealed the old guaranty fund law, not only by a specific repealing clause, but also by changing the provisions by almost every section of the new law. Consequently, it marked the end, from a legislative standpoint, of the depositors' guaranty fund.
The assessment of state banks for the payment of claims of depositors in failed state banks has from the time of the inception of such legislation been sustained as constitutional as an exercise of the police power of the state. We quote from the opinion of Mr. Justice Holmes in Noble State Bank v. Haskell, 219 U.S. 104, 55 L.Ed. 112, 31 S.Ct. 186 (1911), in which he stated this principle as follows:
The Nebraska statute establishing the depositors' guaranty fund was argued before the supreme court of the United States at the same time as the Haskell case ( Shallenberger v. First State Bank of Holstein, 219 U.S. 114, 55 L.Ed. 117, 31 S.Ct. 189), and the judgment in the Haskell case was decisive in the latter. From the date of this decision of the supreme court of the United States to the present, there has never been any deviation in any judicial expression from the principle that a depositors' guaranty fund law must rest for constitutional support on the exercise of the police power of the state by its legislature. Further it is held, also, that such an exercise of the police power must not be arbitrary and that its exercise must be related to some public purpose. This view has been recently reiterated by this court. Abie State Bank v. Weaver, 119 Neb. 153, 227 N.W. 922, and also in Weaver v. Koehn, 120 Neb. 114, 231 N.W. 703. To the same effect is the opinion in Abie State Bank v. Bryan, 282 U.S. 765, 75 L.Ed. 690, 51 S.Ct. 252, The depositors' final settlement fund act provides for a fund to pay partially and pro rata the claims for depositors in state banks closed prior to March 18, 1930, by transferring the assets of the old guaranty fund and the levying of a new assessment upon every state bank. The claims of depositors in banks failing after March 18, 1930, were not protected in any manner by this fund.
The public purpose sufficient to support the constitutionality of the depositors' guaranty fund was the stabilization of commerce and the creation of public confidence in the banks. It had a public purpose. It was within the reasonable exercise of the police power, but the situation with respect to the depositors' final settlement fund is radically different. It had for its sole and only purpose the payment of the claims of depositors in banks which had failed prior to its enactment by levying assessments upon solvent state banks whose depositors did not come within the purview of the act. In practical effect, this new act destroyed the confidence in the state banks. It does not stabilize commerce but tends to disrupt it. In...
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Neb. Const. art. I § I-3 Due Process of Law; Equal Protection
...payment of losses in banks closed is invalid for the reason one is deprived of his property without due process. Hubbell Bank v. Bryan, 124 Neb. 51, 245 N.W. 20 (1932), certiorari denied 289 U.S. 753 (1933). Water right acquired prior to 1895 is a vested property right not to be taken away ......