Love, Superintendent of Banks v. Mangum
| Decision Date | 08 June 1931 |
| Docket Number | 29399 |
| Citation | 135 So. 223,160 Miss. 590 |
| Court | Mississippi Supreme Court |
| Parties | LOVE, SUPERINTENDENT OF BANKS, v. MANGUM |
1. CONSTITUTIONAL LAW.
Duty arising by operation of law is not contract in constitutional sense (Const. Miss. 1890, section 16; Const. U.S., art. 1 section 10).
2. CONSTITUTIONAL LAW.
Generally no vested rights exist in prevailing laws which will preclude their amendment or repeal.
3. BANKS AND BANKING, CONSTITUTIONAL LAW.
State bank guaranty statute providing for issuance of noninterest-bearing guaranty certificates held not invalid as impairing obligation of contract of holder of interest-bearing certificate of deposit (Laws 1930, c. 22 section 6-B; Const. Miss. 1890, section 16; Const. U.S. art. 1, section 10).
4. CONSTITUTIONAL LAW.
State bank guaranty statute authorizing issuance of noninterest-bearing guaranty certificates held not invalid as depriving prior holder of certificate of deposit, to interest bearing guaranty certificate under earlier statute, of vested right (Laws 1930, c. 22, section 6-B; Const. Miss. 1890, section 14; Const. U.S. Amend. 14, section 1).
HON. T. P. DALE, Chancellor.
APPEAL from chancery court of Simpson county, HON. T. P. DALE, Chancellor.
Suit by Wiley P. Mangum against J. S. Love, Superintendent of Banks. Decree for the complainant, and the defendant appeals. Reversed, and judgment entered for the defendant.
Reversed and judgment here for appellant.
Butler & Snow, Flowers, Brown & Hester and Geo. T. Mitchell, all of Jackson, for appellant.
When money is deposited in bank, the contract that is made is between that bank and the depositor. Notwithstanding the provisions of the Bank Guaranty Law, there is, properly speaking, no contract between the depositor and other banks.
Butler & Snow and Flowers, Brown & Hester, all of Jackson, for appellant.
Mangum had no contract for a guaranty certificate. That there was a certificate providing for it, may have influenced him to put his money in the bank, but there was no contract with respect to it. The bank did not contract with him that he should have it. The banking department had no contract with him. The state of Mississippi did not have any. The superintendent of banks could not issue the certificate, except as he might be authorized and directed by the Legislature so to do.
Banking is recognized as a public business. To promote it is to promote the public welfare. Police power can be used for that purpose. Police regulations are changed at the will of the Legislature.
On the question as to the impairment of Mr. Mangum with D'Lo Guaranty Bank, it should be sufficient to say that Mr. Mangum had but one contract, and that was evidenced by his time certificate of deposit, a paper generally construed to operate as a promissory note. But whether it has that character or not, is not here material. There was no other party to that contract.
Advance Sheets No. 6, Vol. 234 of N.W. Rep.; Wirtz v. Nestos, 200 N.W. 524.
In the Abie State Bank case, 75 L.Ed. 420, recently decided, it was recognized that a depositor looking forward to or expecting contributions from the guaranty fund to save them from loss cannot assert a contract right to such aid or assistance.
Earle N. Floyd, of Jackson, for appellees.
The nature of appellee's contract prohibits its impairment with reference to its interest bearing provisions.
So careful was the Legislature to provide for the recognition of all interest bearing contracts when the former banking law was enacted, it provided that "any existing contract for higher rates of interest than allowed herein which might have been entered into before its effective date shall be carried out unimpaired, and shall not subject the banks to the penalties provided for a violation of the terms of the act.
Sec. 37, ch. 172, Laws of 1922.
Under section 6-b the Act of 1930, the Legislature has completely disregarded the contract entered into by the bank with the depositor for the payment of interest according to the terms of such time certificates.
The Legislature in its zeal to eliminate all interest obligations which, as pointed out by appellant in his answer in the court below, had become onerous to the scheme of liquidation, attempted to relieve every deposit of its obligation for interest, whether secured by valid contract or the former provisions of the Guaranty Law, or both.
The inducement to the depositor was, as alleged in the petition, the payment of the interest thereon and as such became a consideration and condition precedent to the issuance of the certificate of deposit, and, therefore, any legislation impairing the depositor's right thereto renders unconstitutional such legislative act.
6 R. C. L., secs. 347 and 353, et seq.; Pate v. Bank of Newton, 77 So. 601, 116 Miss. 666.
The repeal of the provision for interest was an arbitrary and unnecessary disregard of a vested right that had accrued under the former act, and was not necessarily related to the exercise of the police power necessary to effectuate the chief object of the new act.
The repeal of the guaranty feature deprives the appellee of security underlying the contract.
We have urged the unconstitutionality of the 1930 act as against the denial of interest on the time certificate in question, and we now submit that the repeal of the guaranty law, although ordinarily validly within the police power, is as to the appellee and others of like status a denial of a substantive right vouchsafed by the constitution.
There can be no reasonable classification between depositors in banks failing prior to March 11, 1930, and those who have under the provisions of the same protecting act irrevocably placed their deposits subject to the same hazards or the same protection.
We do not controvert the general protection that the guaranty law was repealed. The Legislature has a broad power to do some particular way acts that it cannot do in some other manner. A just and reasonable and indiscriminatory exercise of the police power in this respect would require the recognition by way of a saving clause of the rights of those whose funds were irrevocably held under the former law. No imperious public necessity demanded the ruthless exercise of such legislative power in effecting the instant repeal of the act in question, only to revive it in toto upon the fulfillment of certain contingencies.
It cannot be said to be predicated upon any sound public policy, nor was it a measure to preserve the health, morals or safety of the people.
To hold that the contract with the appellee in this case may be disregarded or abrogated by the repeal of the statute in question would be enunciating the same principle of law as involved in the legislative repeal of an act pertaining to insurance companies when a statute required of them the maintenance of a reserve and the re-insurance of risks over a given amount.
The police power of the state may be broad, but it cannot rise above the constitution. It cannot justify the enactment of a law which amounts to an arbitrary and unwarranted interference with the rights of the citizens which are guaranteed by the constitution.
State v. Armstead, 60 So. 778, 781, 103 Miss. 790.
The equal protection of the laws as secured by the fourteenth amendment to the Federal Constitution is denied to the appellee.
Black's Constitutional Law, p. 544.
The obligation of a contract is that duty of performing it which the law recognizes and enforces. It is the means provided by law, by which it can be enforced and by which the parties can be obligated to perform it. Whatever legislation lessens the efficiency of these means impairs the obligation.
La. v. New Orleans, 102 U.S. 203, 26 L.Ed. 132; Planters Bank v. Sharp, 6 How. 301, 327, 12 L.Ed. 447.
Appellee filed his bill in the chancery court of Simpson county against the appellant, Love, superintendent of banks, for a mandatory...
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