People v. Farmers' State Bank of Hooppole

• Decision Date: 05 October 1929
• Docket Number: Nos. 19375,19376.,s. 19375
• Citation: 335 Ill. 617,167 N.E. 804
• Court: Illinois Supreme Court
• Parties: PEOPLE et al. v. FARMERS' STATE BANK OF HOOPPOLE et al. SAME v. FARMERS' STATE BANK OF ANNAWAN et al.

335 Ill. 617

167 N.E. 804

PEOPLE et al.

v.FARMERS' STATE BANK OF HOOPPOLE et al.

SAME

v.FARMERS' STATE BANK OF ANNAWAN et al.

Nos. 19375, 19376.

Supreme Court of Illinois.

June 19, 1929.

As Modified, on Denial of Rehearing, Oct. 5, 1929.

Bills in equity by the People and another against the Farmers' State Bank of Hooppole and others, and by the People and another against the Farmers' State Bank of Annawan and others. From decrees dismissing bills, complainants appeal.

Reversed and remanded,Appeal from Circuit Court, Henry County; Leonard E. Telleen, judge.

Oscar E. Caristrom, Atty. Gen., M. L. Hay, of Kewanee, and Henry G. Ferncase, of Chicago, for appellants.

Martin E. O'Connor, of Kewanee, Jacob Cantlin, of Rock Falls, and Sturtz & Ewan, of Kewanee, for appellees.

DUNN, J.

Two bills filed in the circuit court of Henry county on July 25, 1927, presented for decision the question, Does the law of Illinois give to the state a right to priority of payment of its debt out of its debtor's property over his other creditors? The circuit court, holding that it did not, sustained demurrers to the bills seeking to enforce such priority. The complainants electing to stand by their bills, they were dismissed for want of equity, and they have appealed to this court; the state being interested in the cases.

The complainants in both cases were the People of the state of Illinois and Carl W. Peterson, individually and as county treasurer and ex officio county collector of Henry county. The original defendants in No. 19375 were the Farmers' State Bank of Hooppole and several individual defendants alleged to be interested in the subject-matter, and in No. 19376 were the Farmers' State Bank of Annawan and several individual defendants alleged to be interested in the subject-matter. By amended and supplemental bills Jacob H. Bennison, as receiver of the Hooppole bank, was subsequently joined as defendant in No. 19375, and William W. Calhoun, as receiver of the Annawan bank, as defendant in No. 19376. Both bills were dismissed by the complainants as to all other defendants. The facts in the two cases are identical, except names and amounts. They were argued together, and will be disposed of in one opinion.

Carl W. Peterson was the treasurer of Henry county, and, to facilitate the payment and collection of taxes, in accordance with a custom of a number of years' standing, he appointed an officer in each of the banks in the county a deputy collector, and notified taxpayers that the taxes might be paid at any bank. S. M. Sommers, the president of the Hooppole bank, was appointed a deputy collector on February 25, 1927, gave bond for the security of his principal, and collected and issued official receipts for $16,314.58 of taxes, which he deposited in the Hooppole bank in a general checking account to the credit of Carl W. Peterson, county treasurer. Joseph H. Peltier, who was cashier of the Annawan bank, was appointed a deputy collector at the same time, and gave bond to secure his principal. He collected and deposited in his bank $18,894.61 under the same circumstances as in the case of the Hooppole bank. On May 20, 1927, the banks were closed by the auditor of public accounts. About August 17, 1927, Jacob H. Bennison was appointed by the auditor receiver of the Hooppole bank and William W. Calhoun receiver of the Annawan bank, and they came into possession of the assets of the banks. About October 24, 1927, the auditor of public accounts filed bills in the circuit court praying for a dissolution of the banks, and under those bills the court appointed Bennison and Calhoun as receivers, respectively, of the Hooppole bank and the Annawan bank.

[1] There is no constitutional or statutory provision which expressly confers on the state a right to priority in the payment of debts due to it. If there is any such right, it exists as a part of the common law of England, which has been adopted by this state. There is no doubt that the common law of England recognized such right in the crown, in regard to debts of any character due it, to receive payment in preference to any creditor who had not a lien. Marshall v. New York, 254 U. S. 380, 41 S. Ct. 143, 65 L. Ed. 315;In re Carnegie Trust Co., 206 N. Y. 390, 99 N. E. 1096,46 L. R. A. (N. S.) 260;United States Fidelity & Guaranty Co. v. Bramwell, 108 Or. 261, 217 P. 332, 32 A. L. R. 829. The first session of the Legislature after Illinois became a state enacted that the common law of England, and all statutes in said of it prior to the fourth year of James the First, except three statutes not material here, which are of a general nature and not local to that kingdom, shall be the rule of decision, and be considered as of full force until repealed by legislative authority. This has continued to be the law of this state ever since, the words in the present statute, ‘so far as the same is applicable and of a general nature,’ having been added in the revision of 1845. It has not been suggested that the right in question has been repealed by legislative authority. It must therefore still be the rule of law, if it is applicable. There is no case in which the general rule has been considered by this court. Its existence has been recognized in regard to the liability for a tax, which however,is not an ordinary debt (Dunlap v. Gallatin County, 15 Ill. 7;Dennis v. Maynard, 15 Ill. 477), and in the latter case it is said: ‘All the principles applicable to the prerogative priority of the crown in this respect, equally apply to the public dues for taxes,’ thus impliedly recognizing that the priority is applicable to all debts, and its applicability to the liability for taxes is an application of the general rule of the priority of the crown. Before our statute of February 4, 1819, the prerogative of the state to priority in payment of debts owing to it had been maintained upon the common law in the state of Maryland in the case of State v. Rogers, 2 Har. & McH. (Md.) 198, in 1786, in Murray v. Ridley, 3 Har. & McH. (Md.) 171, in 1793, and in the state of Pennsylvania in Commonwealth v. Lewis, 6 Bin. 266, in 1814. In South Carolina it had been held in 1795, in the case of Commissioners of Public Accounts v. Greenwood, 1 S. C. Eq. 450, that the state had no prerogative to be paid out of the effects of its debtor in preference to any citizen who had a judgment, mortgage, or other lien. This was not a denial of the succession of the state to the prerogative of priority, for the common law itself made the same exception in the case of the crown that was made in the South Carolina decision. Thus in the United States, at the time of the act of February 4, 1819, it was understood, and so expounded by the courts...