Rowley v. Pogue, 25994.

• Docket Nº: No. 25994.
• Citation: 203 Ind. 655, 185 N.E. 273
• Case Date: March 28, 1933
• Court: Supreme Court of Indiana

203 Ind. 655
185 N.E. 273

ROWLEY
v.
POGUE.

No. 25994.

Supreme Court of Indiana.

March 28, 1933.

Appeal from Steuben Circuit Court; Wm. P. Endicott, Judge.

Dissenting opinion.

*273For majority opinion, see 181 N. E. 589.

Atkinson & Husselman, of Auburn, and H. W. Mountz, of Garrett, for appellant.

Wood & Wood, of Angola, for appellee.

William W. Hammond, C. Sevein Buschmann, Leo M. Gardner, Homer Elliott, Noel, Hickam, Boyd & Armstrong, Pickens, Davidson, Gause, Gilliom & Pickens, Fesler, Elam & Young, Irving M. Fauvre, Linton A. Cox, Harold K. Bachelder, Theodore Dann, Linn D. Hay, Jackiel Joseph, Korbly & McNutt, Hiram D. Keehn, Donald F. Lafuze, and Robinson, Symmes & Melson, all of Indianapolis, amici curiæ.

MYERS, Judge (dissenting).

I do not approve the prevailing opinion in this case.

The important and major questions in the instant case were made to rest upon the reasoning and conclusions reached in the case of Gaiser v. Buck, 203 Ind. -, 179 N. E. 1, 3, 82 A. L. R. 1348. The complaint in that case proceeded upon the theory of a double liability of a stockholder in a bank of discount and deposit, under the mandate of the Constitution of Indiana, article 11, § 6, and also pursuant to the statute, section 3858, Burns' 1926. The language of that opinion, when read in connection with the allegations of the complaint by a creditor to enforce payment by a shareholder of his proportion of the “debts or liabilities” of a bank of discount and deposit, leads to the inevitable result of declaring a “responsibility” of 100 per cent. under the Constitution, and a “liability” of 100 per cent. imposed by statute. The opinion in the instant case refers to the trust company statute (section 3944, Burns' 1926), which defines the shareholder's stock liability, the legal effect of which is the same as section 3858, supra, which applies to banks of discount and deposit. The rule announced in the case of Gaiser v. Buck is followed in the present case, and its meaning clarified by the statement that the Constitution, article 11, § 6, is the authority for enforcing double liability for the payment of “debts or liabilities” of a bank or banking company, and the statute alone creates the liability and furnishes the remedy for the collection of an assessment for the restoration of the capital stock. The sole premise for declaring liability under the Constitution is the flat statement that section 6, art. 11, is self-executing. I take the position, first, that section 6 is only self-executing when applied to the systems of banking described in the Constitution, or, if section 2 may be so construed as not to be controlled by section 3 as to what the general banking law shall contain, then section 6 is an inhibition on the General Assembly limiting its power over shareholders of banks or banking companies engaged in a different system to the responsibility restricted by this section; second, the General Assembly having passed a general banking law under which banks and trust companies have been established, and a new class of banks thereby authorized, we must look to the general law for determining the rights and liabilities of the shareholders in such new institutions and enforce*274them accordingly, unless they are violative of some provision of the Federal or State Constitutions.

In passing, I may say the prevailing opinion seems to derive comfort and consider important the statement that “the subject of article 11 is corporations.” It will be observed that article 11 consists of fourteen sections, twelve of which have to do with two systems of banking, and the other two sections, 13 and 14, together consisting of nearly five lines, are devoted to corporations other than banking. I will not take the space for further comment.

Article 11, supra, includes all of the constitutional provisions in this state on the subject of banking. They express the powers as well as the inhibitions, within their limits, on the General Assembly when engaged in establishing and incorporating banks or banking companies. None of these provisions refers to banks of discount and deposit, although the words “discount and deposit” then in use must have been known to the framers of the Constitution. They must have been cognizant of article 10, Constitution of 1816, wherein the General Assembly was prohibited from establishing or incorporating “in this State, any bank or banking company, or monied institution for the purpose of issuing bills of credit, or bills payable to order or bearer.” “A state bank and branches,” however, was permitted. This article, under certain conditions and limitations, was practically readopted in article 11, §§ 1 and 3, of the new Constitution. In January, 1834 (Acts 1834, c. 7, p. 12), a state bank with ten branches was established. It was a bank of issue and circulation, and was to continue in existence until January 1, 1859. A bank of this character was also permitted under the new Constitution. The last legislation on this subject, prior to the Constitutional Convention of 1851, was in January, 1849 (Acts 1849, c. 14, p. 18), wherein it was provided that no branch banks were to be established after the expiration of the year 1851. The words “discount and deposit,” as I am at present advised, came into use in February, 1837 (Local Laws 1837, c. 72, p. 169), when the General Assembly established or chartered the Evansville Trust Company, with authority to engage in many activities. It was “made an office of discount and deposit,” with permission to receive cash and other valuable things upon deposit, make loans, discount promissory notes, etc., but it was denied the right to “ engage in the business of banking otherwise than in the purchase and sale of bank stock,” and providing that all deposits received by it “shall be refunded on demand in specie, or its equivalent,” except special deposits. Again, in January, 1849 (Local Laws 1849, c. 290, p. 439), the Ohio Insurance Company, located in the city of New Albany, was made “an office of discount and deposit,” and given a wide business range, including the right to receive cash on deposit and to loan the same, but it was required to refund such deposits on demand in specie or its equivalent, except special deposits. In compliance with the Constitution of 1816, art. 10, supra, both of the above companies were forbidden to issue bills of credit or bills payable as a circulation medium.

With the foregoing state of facts present, with knowledge of the common law, the mischief to be remedied, and like matters, the Constitution was adopted February 10, 1851, and took effect November 1, 1851. Its provisions with reference to “banks or banking companies” were evidently, from the debates, the decided limit of constitutional control of that subject, and were deemed sufficient to meet contingencies that might thereafter arise justifying constitutional restraint. It will hardly be denied that self-executing provisions of Constitutions are the exception and not the rule. At that time the state had two systems of banking-one requiring collateral security for the redemption of its issue, and the other, a bank with branches without collateral security. Wright v. Defrees, 8 Ind. 298, 305.

Conceding that Constitutions, federal or state, are adopted for future uses based upon past experiences, then we must assume that our Constitution makers, in 1851, in the preparation of our present Constitution pertaining to the subject of banking, had in mind the banking history as also the banking systems in this state then in operation, as well as the service they were furnishing, their probable success or failure, as considerations for their final action. Their final conclusion on the subject, at present important, may be epitomized as follows: Section 1. The General Assembly is prohibited from incorporating a bank or banking company or moneyed institution of issue and circulation. Section 2. “No bank shall be established otherwise than under a general banking law, except as provided in the fourth section of this article.” Section 3. “If the General Assembly shall enact a general banking law, such law shall provide” that certain things shall be done and the procedure to be followed essential to a bank of issue. Aside from the general banking law to which the General Assembly is limited by sections 2 and 3, it may charter a bank with branches (section 4), which branches, under section 5, are made mutually responsible for each other's liabilities on all paper credit issued as money. Section 6. “The stockholders in every bank, or banking company, shall be individually responsible to an amount over and above their stock, equal to their respective shares of stock, for all debts or liabilities of said bank or banking company.” Section 10. “Every bank, or banking company, shall be required to cease all banking operations within twenty years from the time of its organization, and promptly thereafter to close its business.” And section 12 *275prohibits the state...