People ex rel. Barrett v. First State Bank & Trust Co. of Canton

• Decision Date: 14 October 1936
• Docket Number: No. 23328.,23328.
• Citation: 364 Ill. 294,4 N.E.2d 385
• Parties: PEOPLE ex rel. BARRETT, Auditor, v. FIRST STATE BANK & TRUST CO. OF CANTON.
• Court: Illinois Supreme Court

364 Ill. 294

4 N.E.2d 385

PEOPLE ex rel. BARRETT, Auditor,

v.FIRST STATE BANK & TRUST CO. OF CANTON.

No. 23328.

Supreme Court of Illinois.

Oct. 14, 1936.

Proceeding by the People, on the relation of Edward J. Barrett, Auditor of Public Accounts, against the First State Bank & Trust Company of Canton, wherein U. G. Orendorff filed a claim against William L. O'Connell, as receiver of the First State Bank & Trust Company of Canton. From an order dismissing the claim, U. G. Orendorff appeals.

Order affirmed.Appeal from Circuit Court, Fulton County; Loren E. Murphy, judge.

McCulloch, McCulloch & McLaren, of Chicago, for appellant.

Glenn Ratcliff, of Lewistown, and Scott W. Lucas, of Havana, for appellee.

STONE, Justice.

Appellant seeks by direct appeal a reversal of the order of the circuit court of Fulton county dismissing his claim against appellee as receiver of the First State Bank & Trust Company of Canton, Ill. His claim arises out of two contracts entered into between him and the bank while it was being operated, by which he purchased from the bank certain securities owned by it on the promise of the latter to repurchase the same at a fixed price on his demand, or, in any event, as to one purchase not later than January 1, 1935, and as to the other not later than January 1, 1936. These contracts were authorized by the board of directors of the bank, the first on January 1, 1932, authorizing the sale of securities in the sum of $84,987.61, and also authorized the vice president of the bank to execute the agreement to repurchase. On August 20, 1932, the board of directors adopted another resolution similar in effect, arranging for the sale to appellant of securities in the sum of $50,672.50, with a similar agreement to repurchase them. These were to be repurchased not later than January 1, 1936. From the date of the last agreement the bank carried an item of $135,660.11 as contingent liability. This item related to the securities sold to appellant. In sent copies of both repurchase agreements to the auditorof public accounts, and no objection was made to them.

The bank was closed under the general moratorium of March 3, 1933, and was not reopened. A receiver was appointed for it on October 8, 1933. Appellant filed his claim with the receiver on December 29, 1933, and made demand that he carry out the contracts of the bank to repurchase these securities. Later, appellant sold the securities purchased from the bank for $25,802.50, and at the time of the hearing claimed $116,289.03 was due him under the repurchase contracts. His claim was dismissed by the circuit court on the ground that the contracts were ultra vires and contrary to section 4 of the act of 1879 for the protection of bank depositors. Smith-Hurd Stat.1935, c. 38, § 64. Appellant contends here that section 4 of the Banking Depositors' Protection Act is invalid, and also that the contracts in this case were not ultra vires the bank, and that in any event he is entitled to recover.

In support of appellant's claim of invalidity of section 4 of the Bank Depositors' Protection Act, it is urged here that section 4 is an amendment to the statute in relation to banks and banking and is invalid because never submitted to a vote of the people, as required by section 5 of article 11 of the Constitution. That constitutional provision is: ‘No act of the general assembly authorizing or creating corporations or associations with banking powers, whether of issue, deposit or discount, nor amendments thereto, shall go into effect or in any manner be enforced unless the same shall be submitted to a vote of the people at the general election next succeeding the passage of the same, and be approved by a majority of all the votes cast at such election for or against such law.’ This section of the act has nothing to do with the organization of corporations or associations...