Marvin v. Kentucky Title Trust Company
| Decision Date | 08 February 1927 |
| Parties | Marvin, Banking Commissioner v. Kentucky Title Trust Company. |
| Court | United States State Supreme Court — District of Kentucky |
1. Banks and Banking — Bank May Not Establish Branch Bank. — A bank organized under laws of state has no right to establish branch banks.
2. Banks and Banking — Business of "Banking" is Having Place where Deposits are Received and Paid Out and Money Loaned on Security. — Having a place of business where deposits are received and paid out on checks and where money is loaned on security is substance of "business of banking."
3. Banks and Banking — Bank and Trust Company May Establish Additional Offices in Same City, where Deposits May be Made, Checks Cashed — "Banking" (Ky. Stats., Section 579). — Bank and trust company may establish additional offices in same city for convenience of its patrons, where deposits may be made, checks cashed, and records kept thereof, since such transaction does not constitute "business of banking" within Ky. Stats., section 579, and is clearly incidental to bank's business.
Appeal from Franklin Circuit Court.
FRANK E. DAUGHERTY, Attorney General, and GARDNER K. BYERS, Assistant Attorney General, for appellant.
HELM BRUCE and BRUCE & BULLITT for appellee.
Affirming.
In this proceeding for an injunction, it is substantially alleged in the petition that the plaintiff was organized under the state law, with authority to conduct a combined bank and trust company, its office being at 5th and Court place in the city of Louisville. In accordance with a plan adopted and followed by rival institutions, its directors decided to establish one or more bank offices in different parts of the city where deposits might be made, checks cashed and records kept of such transactions without conducting any other character of business thereat, this being done for the mutual convenience of the bank and its patrons. It applied to the state banking commissioner for his approval, but he refused to approve the plan and threatened in the event that it was put into operation to visit the bank with the penalties prescribed in section 165a-16, Ky. Statutes, on the ground that it has no legal authority so to act, the prayer being for a perpetual injunction restraining that officer from taking any steps to prevent it from carrying out the plan mentioned. A demurrer to the petition was filed and overruled, and without further pleading the case was finally submitted and the court granted the relief sought, subject to the following qualification: "But this judgment shall not be considered as recognizing any right in plaintiff to lend money at such office or offices other than its main office, nor as enjoining the banking commissioner from taking steps to prevent the lending of money at such office or offices away from the main office, if plaintiff should attempt to do so." Defendant appeals.
We have held that a bank organized under the laws of this state has no right to establish a branch bank. Bruner v. Citizens' Bank of Shelbyville, 134 Ky. 283. Both parties concede the binding force of this opinion, the controverted question being as to whether appellees plan to open offices for the receipt of deposits and payment of checks will constitute the establishment of branch bank; so the case may be said to turn upon the definition of banking. Originally banking seems to have been restricted to the receiving of deposits. With the development of the business came the discounting of paper, the loaning of money and the other varied activities in which modern banks engage, the enumerated powers which may be exercised by a bank under our statute, section 579, being quite extensive. In view of this evolution of the business and of the further fact that in many states the business is defined by statute, uniformity of definition cannot be expected, and it will be found that in many of the older authorities, and in the states in which the business is defined by statute, that it is laid down that an institution that merely receives deposits is in the strictest commercial sense a bank. Bouvier's Dictionary; Oulton v. Savings Institution, 17 Wall. 117; McLaren v. State, 141 Wis. 577; Curtis v. Levitt, 15 N.Y. 9; Reed v. People, 125 Ill. 592.
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