Schaake v. Dolley

• Decision Date: 07 October 1911
• Docket Number: 17,703
• Citation: 85 Kan. 598,118 P. 80
• Parties: H. W. SCHAAKE et al., Plaintiffs, v. JOSEPH N. DOLLEY et al., as the State Charter Board, etc., Defendants
• Court: Kansas Supreme Court

118 P. 80

85 Kan. 598

H. W. SCHAAKE et al., Plaintiffs, v. JOSEPH N. DOLLEY et al., as the State Charter Board, etc., Defendants

No. 17,703

Supreme Court of Kansas

October 7, 1911

Decided July, 1911.

Original proceeding in mandamus.

Writ denied.

SYLLABUS

SYLLABUS BY THE COURT.

1. BANKS--Subject to Police Power. The business of banking is so intimately related to the public welfare that it properly falls within the scope of the police power of the state exercisable by the legislature.

2. BANKS--Statute Authorizing Charter Board to Refuse Charter Valid. Section 2 of chapter 125 of the Laws of 1911, relating to the formation of private corporations and providing that the charter board shall refuse a bank charter if upon examination it shall make a determination against the public necessity of the business in the community in which it is sought to establish the bank, is a valid enactment under the police power of the state.

3. BANKS--Charter to First Applicant. Where equally meritorious applications for charters for several banks in the same community are pending before the charter board at the same time, and the charter board determines against the necessity for more than one bank, the application first presented should be granted.

C. S Crawford, and Frank Doster, for the plaintiffs.

J. W. Gleed, and J. L. Hunt, for the defendants; Gleed, Hunt, Palmer & Gleed, of counsel.

OPINION

BURCH, J.:

In May, 1911, there were three banks in the city of Abilene, two national banks and one state bank, all actively engaged in business. On May 20 an application was made to the state charter board for the incorporation of a fourth bank, to be known as the Commercial State Bank, and on May 25 an application was made for the incorporation of still another bank, to be known as the Central State Bank. The application first presented was approved and the second one was rejected. The incorporators of the Central State Bank ask for a writ of mandamus to compel the charter board to approve its application and allow it a charter.

Section 2 of chapter 125 of the Laws of 1911, relating to the formation of private corporations, provides as follows:

"The charter board shall make a careful investigation of each application, and shall inquire especially with reference to the character of the business in which the proposed incorporation is to engage, and if the board shall determine that the business or undertaking is one for which a corporation may lawfully be formed, and that the applicants are acting in good faith, the application shall be granted, and a certificate setting forth that the application has been approved shall be indorsed upon the application and signed by the members of the charter board approving the same; provided, that when the application is for a bank charter the charter board shall also make a careful examination as to the financial standing and character of the incorporators, also of the public necessity of the business in the community in which it is sought to establish the same, and shall determine whether the capital for which said company is sought to be capitalized is commensurate with the requirements of law, and if the board shall determine either of said questions unfavorably to said corporation, it shall refuse said charter."

Pursuant to this statute the charter board made a careful examination of the public necessity for a fifth bank at Abilene and found that there was not more than enough business in that community to support four banks, and that the public necessity did not justify the establishment of a fifth bank. Having so determined, the charter board regarded the statute as mandatory.

The plaintiffs say that the right to engage in banking is a common-law right, pertaining equally to every citizen, which the legislature can not, under the state constitution, take away, and that they have been denied the equal protection of the laws guaranteed by the federal constitution, and have been deprived of property without due process of law, in violation of that instrument.

What the common-law rights of the plaintiffs may have been is not very material. That body of legal principles has been adopted in this state only so far as it is compatible with the wants and conditions of the people, and it is one of the functions of the legislature to ordain and establish, from time to time, such new rules and ordinances subversive of the common law as it may deem to be for the welfare of society under the changed and continually changing states of its composition, organization, development and progress.

The law in question does not contravene the fourteenth amendment to the constitution of the United States if it was enacted pursuant to the police power of the state, and it is justifiable as an exercise of that power if it responds directly to some demand of the public welfare and does not fall within some limitation upon legislative action expressed in the state constitution.

The article of the state constitution devoted to the subject of banking relates to banks of issue, and the only provision of that instrument pertinent to the present discussion is section 1 of the bill of rights, which reads as follows:

"All men are possessed of equal and inalienable natural rights, among which are life, liberty, and the pursuit of happiness."

The right to liberty and the pursuit of happiness includes the right to employ one's faculties and property in a gainful occupation of his own choosing. This right, however, has never been regarded as absolute by either the English or the American law. While it is properly spoken of as fundamental and inalienable, it is nevertheless qualified to the extent that the sovereign power may interfere with its enjoyment through regulations necessary or proper for the mutual good of all the members of the social whole. One of the highest ends of civil government is the protection of the individual in the enjoyment of the fundamental rights enumerated in the bill of rights. The idea of those rights should be pervasive in civil institutions or government is likely to become a nuisance and a scourge. But if the individual insist upon them to the detriment of other individuals possessing the same rights, or to the detriment of the security, good order, common good and general welfare of the entire social body of which he is a member, he is likely to become a nuisance. Therefore it is a principle of undisputed validity that a person's right to devote his property to a selected employment must be subordinated to such reasonable restrictions and limitations as are necessary to prevent the exercise of the right from becoming harmful to others. If the benefits of organized society are to be enjoyed at all authority must reside somewhere to consider the conflicting claims and interests of the individual and of the community to which he belongs and prescribe the rules of good neighborhood. The power to do this is legislative power, and it must necessarily be adequate to meet the need for which it is instituted. The result is that the declaration of the bill of rights quoted above is not a prohibition against just restrictions upon the enjoyment of liberty and the pursuit of happiness, in the interest of the public good. It is a political maxim addressed to the wisdom of the legislature and not a limitation upon its power. It is not a mere "glittering generality" and can not be entirely disregarded in any valid enactment (see Atchison Street Rly. Co. v. Mo. P. Rly. Co., 31 Kan. 660, 665, 3 P. 284), but it lacks the definiteness, certainty and precision of a rule, like the command of the bill of rights respecting slavery, or religious freedom, or bail, or trial by jury, and consequently can not, as those provisions do, furnish a basis for the judicial determination of specific controversies.

"Many things, indeed, which are contained in the bill of rights, to be found in the American constitutions, are not, and from the very nature of the case can not be, so certain and definite in character as to form rules for judicial decisions; and they are declared rather as guides to the legislative judgment than as marking an absolute limitation of power. The nature of the declaration will generally enable us to determine without difficulty whether it is the one thing or the other. If it is declared that all men are free and no man can be slave to another, a definite and certain rule of action is laid down, which the courts can administer; but if it be said that 'the blessings of a free government can only be maintained by a firm adherence to justice, moderation, temperance, frugality and virtue' we should not be likely to commit the mistake of supposing that this declaration would authorize the courts to substitute their own view of justice for that which may have impelled the legislature to pass a particular law, or to inquire into the moderation, temperance, frugality and virtue of its members, with a view to set aside their action, if it should appear to have been influenced by the opposite qualities. It is plain that what in the one case is a rule, in the other is an admonition addressed to the judgment and the conscience of all persons in authority, as well as of the people themselves." (Cooley, Const. Lim., 7th ed., p. 245.)

To decide that the act in question violates the quoted section of the bill of rights would be merely to substitute the court's opinion as to the manner in which a recognized doctrine of political science should be given practical effect for the deliberate judgment of the legislature upon the subject. This the court is not authorized to do.

Ordinarily a court is not at liberty to declare a statute unconstitutional on the ground that it violates natural, social or...