Lovett v. Lankford

• Decision Date: 29 September 1914
• Docket Number: Case Number: 6059
• Citation: 1914 OK 458,47 Okla. 12,145 P. 767
• Parties: LOVETT et al., Creek County Com'rs, v. LANKFORD et al.
• Court: Oklahoma Supreme Court

1914 OK 458

145 P. 767

47 Okla. 12

LOVETT et al., Creek County Com'rs, v. LANKFORD et al.

Case Number: 6059

Supreme Court of Oklahoma

Decided: September 29, 1914

Syllabus

¶0 1. STATES--Banks and Banking-- "Suit Against the State"--Right to Maintain. Plaintiffs in error presented their claim to the bank commissioner and the banking board, demanding payment out of the depositors' guaranty fund. Payment was denied, upon the ground that such deposit was not protected by said fund. Thereupon petition for writ of mandamus was filed in the district court of Oklahoma county. Alternative writ was issued, which, on final hearing, was discharged, and error is prosecuted to this court. Held, that the bank commissioner and the banking board are a part of the executive branch of the state government, and a suit in mandamus, seeking to compel said officers in their official capacity to allow and pay said claim out of the depositors' guaranty fund, is a suit in effect against the state, and cannot be maintained without the consent of the state.

2. MANDAMUS--Official Acts--Exercise of Discretion--Banks and Banking. The bank commissioner and the banking board constitute a part of the executive branch of the state government, and the duties devolving upon said officials require the exercise of judgment and discretion. Held, in the absence of allegation and proof of fraud, or arbitrary action, their decision in a matter within their jurisdiction will not be reviewed or controlled by a writ of mandamus.

3. BANKS AND BANKING--Guaranty Fund-- County Deposits. The facts in this case examined, and held to bring the case within the rule announced by this court in the case of Columbia Bank & Trust Co. v. United States Fidelity & Guaranty Company, 33 Okla. 535, 126 P. 556.

4. SAME--"General Deposit." Deposits of a county, made pursuant to Rev. Laws 1910, section 1540, providing for ample security and directing them to be made under strict legislative safeguards, do not come within the meaning of a "general deposit," protected by the depositors' guaranty fund, created pursuant to section 298 et seq.

V. S. Decker, Co. Atty., Dale & Bierer, Wm. T. Hutchings, and Ledbetter, Stuart & Bell, for plaintiffs in error

Charles West, Atty. Gen., and Jos. L. Hull, Asst. Atty. Gen., for defendants in error

RIDDLE, J.

¶1 This proceeding in error is prosecuted from a judgment of the district court of Oklahoma county in favor of defendants. Plaintiffs, as commissioners of Creek county, filed their petition in the district court against the State Banking Board and the Farmers' & Merchants' Bank of Sapulpa, praying for a writ of mandamus. Defendants filed their answer to the alternative writ of mandamus, and upon the issues thus made the court rendered judgment in favor of defendants, discharging the alternative writ. It is alleged in the petition that the county treasurer of Creek county, on the 10th day of September, 1912, had on deposit in the Farmers' & Merchants' Bank the sum of $ 106,258.26, $ 77,435.01 being deposited to the credit of the treasurer of Creek county, and $ 28,823.25 deposited in the name of the treasurer, as a special deposit; that said bank was at the time subject to the provisions of the bank guaranty law of the state of Oklahoma; that said bank failed on the 10th day of September, 1912, while said funds of said county were on deposit; that defendant Lankford, as State Bank Commissioner, took charge of said bank and its assets; that plaintiffs demanded payment of said deposit from said banking board out of the depositors' guaranty fund, and that, in the event there was not sufficient funds to pay same, the board issue a certificate of indebtedness covering same; that the banking board refused to pay same, or to issue a certificate of indebtedness. They prayed for a peremptory writ of mandamus, requiring said board to pay the amount of said deposit, or to issue a certificate of indebtedness for same. An alternative writ of mandamus was allowed, setting out the foregoing state of facts. Defendants (1) deny the jurisdiction of the court, and (2) aver that the alternative writ did not state facts sufficient to entitle plaintiffs to the relief prayed. The second ground in the answer was sustained by the court, and judgment rendered, discharging said alternative writ. Plaintiffs in error allege: First, that the court erred in refusing the peremptory writ of mandamus; second, in overruling motion for a new trial. Several other errors are alleged, but they all relate to one proposition. The questions presented for our determination are: (1) Is this suit, in effect, a suit against the state? (2) If such deposit was protected by the depositors' guaranty fund, is a writ of mandamus a proper remedy to secure the relief sought by plaintiffs? (3) Was the deposit in the name of the treasurer of Creek county in the Farmers' & Merchants' Bank of Sapulpa at the time it failed protected by the depositors' guaranty fund? It is contended by counsel for plaintiffs that the last two questions must be answered in the affirmative, and the first in the negative; while counsel for defendants in error contend that the first must be answered in the affirmative, and the last two in the negative. Counsel for the respective parties have filed elaborate and able briefs in support of their contentions. These questions require the construction of the section of the statute relating to the deposits protected by the depositors' guaranty fund, and the authority conferred upon the banking board, and the character of duties required to be performed by them. The first question is: Is this suit, in effect, a suit against the state? If this question may be answered in the affirmative, it will be conceded, we presume, that it cannot be maintained without the consent of the state. If defendants in error may be considered executive officers of the state, and in performing their duties in administering the law under consideration do so as such officers, and the property intrusted to their control and management by the law is property owned by the state, or property in which the state has a substantial interest, then it can hardly be questioned that this suit, in effect, is against the state. It was said by this court, in the case of State ex rel. v. Cockrell, 27 Okla. 630, 112 P. 1000:

"That the bank commissioner is a state officer has not been and cannot be questioned. That the depositors' guaranty fund, and the funds of a failed bank in the hands of a bank commissioner for the purpose of reimbursing the depositors' guaranty fund, is as much a fund of the state as the common school fund, is also true. The depositors' guaranty fund act was sustained by this court on the theory of the reserved power of the state to alter and amend charters of state banking corporations for the public welfare [citing authorities]. This power, exercised for the public welfare by the legislative act which causes to be levied the assessment 'against the capital stock of each and every bank or trust company organized or existing under the laws of this state * * * equal to five per centum of its average daily deposits during its continuance in business as a banking corporation,' for the purpose of protecting the depositors of such banks, * * * is the same as that which levies or causes to be levied a tax upon the people and property within the state for the maintenance and support of the common schools and educational institutions. The title of such depositors' guaranty fund vests in the state, just as much so as the common school lands, or the proceeds of the sale of them, and the taxes levied and collected for the maintenance and support of said schools, all of which are held in trust by the state for a specific purpose."

¶2 In addition to the act of the Legislature creating the banking board and prescribing its duties, it is specifically provided that the state shall have a first lien upon all the assets of the bank, including liability of the individual stockholders. In the case of Pennoyer v. McConnaughy, 140 U.S. 1, 11 S. Ct. 699, 35 L. Ed. 363, the court states the rule as follows:

"The principle stated by Chief Justice Marshall [in that case], that 'in all cases where jurisdiction depends on the party, it is the party named in the record,' and that 'the eleventh amendment is limited to those suits in which the state is a party to the record,' has been qualified to a certain degree in some of the subsequent decisions of this court, and now it is the settled doctrine of this court that the question whether a suit is within the prohibition of the eleventh amendment is not always determined by reference to the nominal parties on the record, as the court will look behind and through the nominal parties on the record to ascertain who are the real parties to the suit. * * * 'The objections to proceeding against state officers by mandamus or injunction are: First, that it is, in effect, proceeding against the state itself; and, secondly, that it interferes with the official discretion vested in the officers. It is conceded that neither of these things can be done. A state, without its consent, cannot be sued by an individual; and a court cannot substitute its own discretion for that of executive officers in matters belonging to the proper jurisdiction of the latter.'" See Louisiana v. Jumel, 107 U.S. 711, 2 S. Ct. 128, 27 L. Ed. 448; Miller v. Raum, 135 U.S. 200, 10 S. Ct. 820, 34 L. Ed. 105; Smith v. Reeves, 178 U.S. 436, 20 S. Ct. 919, 44 L. Ed. 1140; 36 Cyc. 915.

¶3 It cannot be questioned that a judgment in this case in favor of plaintiffs in error would directly affect the state, and would, in effect, be a judgment against the state, and would require the subjection of state funds to satisfy said judgment. Therefore it cannot be maintained. That this is a sound and just doctrine is clearly to be seen. If plaintiffs in this case can control the action of the bank commissioner and banking board...