Nw. Nat. Bank of Superior v. City of Superior

• Decision Date: 25 April 1899
• Citation: 103 Wis. 43,79 N.W. 54
• Parties: NORTHWESTERN NAT. BANK OF SUPERIOR v. CITY OF SUPERIOR ET AL.
• Court: Wisconsin Supreme Court

103 Wis. 43

79 N.W. 54

NORTHWESTERN NAT. BANK OF SUPERIOR

v.CITY OF SUPERIOR ET AL.

Supreme Court of Wisconsin.

April 25, 1899.

Appeal from superior court, Douglas county; A. J. Vinje, Judge.

Action by the Northwestern National Bank of Superior against the State Trust & Savings Bank for the appointment of a receiver to wind it up and distribute its assets. From a judgment declaring the city of Superior a preferred creditor and ordering its claim paid in full, plaintiff appeals. Affirmed.Ross, Dwyer & Hanitch, for appellant.

Titus & McIntosh and R. I. Tipton, for respondents.

DODGE, J.

In settling the affairs of the State Trust & Savings Bank, a banking corporation organized under the laws of Wisconsin, the receiver was adjudged to give preference to the claim of the city of Superior, which was a creditor for a deposit account to a considerable share of the total indebtedness. The Northwestern National Bank of Superior, also a large creditor, appeals.

The only question presented is whether the provisions of section 3245, Rev. St., in directing a preference to the United States, the state, and any county, city, town, or village therein, out of the assets of an insolvent corporation in process of being closed up under the statutes, is, as applied to banks, constitutional. Two rules have become general as a guide when the decision of the legislature as to its own powers is reviewed by the judiciary: First. That, while the congress has only such powers as are affirmatively given to it, the legislature of a state has all powers of legislation from which it is not prohibited by express words of the constitution, or by necessary implication therefrom. 6 Am. & Eng. Enc. Law (2d Ed.) pp. 933, 934; Bushnell v. Beloit, 10 Wis. 195, 221. Second. The unconstitutionality of a statute must be clear and manifest before a court should declare it, and, if there be any reasonable doubt as to its constitutionality, it should be upheld. 3 Am. & Eng. Enc. Law (2d Ed.) p. 1085, 3 Am. & Eng. Enc. Law (1st Ed.) p. 673 et seq.; Dickson v. State, 1 Wis. 122, 126;State v. Abert, 33 Wis. 403. Applying these rules and keeping in mind that a co-ordinate branch of the government, much better constituted to understand and effectuate the will of the people, has deliberately enacted the statute in question, that it has passed substantially without change through two revisions of the general statute law, and that for more than 25 years full faith has been accorded it, and rights of great magnitude, both public and private, have been rested upon it, without substantial dissent, we approach the question whether, by any affirmative provision of the constitution or necessary implication therefrom, the legislature was prohibited from enacting as law this provision which they have deemed wise and for the public welfare. The only express limitation upon the power of the legislature over banking corporations, as distinguished from others, is found in Const. art. 11, § 4, which declares that the legislature “shall not have power to create, authorize or incorporate, by any general or special law, any bank, or banking power or privilege whatever, except as provided in this article.” Section 5 provides that the legislature may submit to the people the question of “bank” or “no bank”; and, in the event of an affirmative vote, it shall have power to grant bank charters, and to pass a general banking law, with such restrictions and under such regulations as it may deem expedient for the security of the bill holders; provided, that no such grant or law shall have any force or effect until the same shall have been submitted to a vote of the electors of the state and approved. After a preliminary affirmative vote, the banking law (chapter 479, Laws 1852) was enacted by the legislature and submitted to the people, and by them adopted. That act, among other things, contained section 48: “This act may be amended by any future legislature, but no amendment thereto shall take effect or be in force until it shall have been submitted to a vote of the electors of the state,” etc. It will thus be seen that the only express prohibitions upon the legislature are against “creating, authorizing or incorporating any bank, or banking power or privilege, or any institution or corporation having any banking power or privilege”; and, secondly, the amending of the banking act adopted in 1852.

In State v. Hastings, 12 Wis. 47, it was said (page 51): “This was a substantial reservation to the people themselves of all legislative power upon the subject of banks and banking.” This was said, however, merely with reference to the provision specifying the method of taxation, to emphasize the fact that such provision emanated from the people and not from the legislature, so that constitutional restrictions upon the legislature would not invalidate that particular act; the people not being restrained by any constitutional provision. The question of the scope of the banking act was not before the court. At a very early day it was pointed out and distinctly held that the constitutional restriction now urged was not universal, and did not preclude the legislature from passing some general laws which might affect banks in common with other individuals or corporations. In Bank v. Sherwood, 10 Wis. 230, the general legislation of 1856, providing, as a penalty for the taking of usury, the forfeiture of all interest, was held applicable to a state bank and within the constitutional power of the legislature, for the reason that the banking act made no provision with reference to penalty, although it did fix the rate of interest to be charged by banks. That case was followed and supplemented by Brower v. Haight, 18 Wis. 102, wherein the penalty of the then existing usury law of 1859, which forfeited the entire debt, was applied. The objection was distinctly made, and based on State v. Hastings, supra, that such legislation could not be constitutional, as applied to banks, but was overruled; the court, by Paine, J., saying: “Here there is no question about invalidating or affecting any provision of the banking law. The respondent's counsel is undoubtedly right in assuming, as a necessary consequence of the decision in the Hastings Case, that a mere act of the legislature is not capable of changing or amending the banking law, and we have so decided in Van Steenwyck v. Sackett, 17 Wis. 645. But there is no such question presented here, and it by no means follows that, because that law cannot be amended by the legislature, the banks existing under it cannot be affected by, or subject to, any other law. On the contrary, it is very obvious that they may be and are. Thus the mode and measure of redress for most wrongs that may be committed by banks in common with other persons are not provided for in the banking law, but are to be looked for in the general legislation concerning remedies. And they are changed, as against banks, whenever that general legislation is changed. Thus, if a bank leases premises and refuses to deliver possession on the expiration of the lease, it is not in the banking law that the remedy is to be found, but in the statute concerning unlawful detainer. And if that statute should be changed and rendered more stringent, imposing new penalties on the lessee for the wrong, banks would be subjected to the new statute like all other persons. And it would not do for them to say that no such liabilities were imposed by the banking law, and the legislature could not amend that law, and therefore they were not subject to the new statute. The obvious answer would be that such a statute was no attempt to amend the banking law, no attempt to change or impair any of its provisions or interfere with any rights conferred by it, no attempt to legislate upon a matter which that law had attempted to regulate. That law provided the terms and conditions on which the business of banking might be carried on. It did not attempt to provide a special, separate system of remedies against banks for wrongs which they might commit against others. It is designed to leave them subject, like all other persons, to the general laws upon those questions.” In Rockwell v. Bank, 13 Wis. 653, it was held that the general law, statute or common, regulated the dealings of banks with commercial paper and making contracts with reference thereto, and that the banking act shall be deemed restricted in its application to the particular classes of contract specified therein, and would not be construed as extending beyond its exact terms. In Rusk v. Van Norstrand, 21 Wis. 161, Mr. Justice Cole, delivering the opinion of the court, discusses at length the intended limitations resulting from the statutory prohibitions above mentioned, and, while holding an act invalid which changed the duty imposed on the comptroller by the banking act itself with reference to surrender and substitution of bonds, proceeded to say, apparently for himself, and not for the court: “It is sufficient to say that I have thought the legislature might pass such laws as experience might prove necessary and essential to carry out the principles of the original banking law, and which should more effectually guard the public against a system of unsound and wildcat banking. I do not think it could pass any law which would injuriously affect the securities given by the banking law. But while it could not impair any provisions of that law, intended to protect the public against an unsound system, it might remedy defects in the law. It might pass laws to support and enforce the banking law,” etc. In Van Steenwyck v. Sackett, 17 Wis. 645, above referred to by Mr. Justice Paine, a law of 1855, which directly amended the banking act by requiring a warrant of attorney to be attached to the stockholder's bond required by that act, was held unconstitutional as a direct amendment. The court said: “We do not say that it is impossible for the...