State, ex rel. Chamberlin v. Morehead

• Decision Date: 23 December 1915
• Docket Number: 19406
• Citation: 155 N.W. 879,99 Neb. 146
• Parties: STATE, EX REL. WALTER CHAMBERLIN ET AL., APPELLEES, v. JOHN H. MOREHEAD ET AL., APPELLANTS
• Court: Nebraska Supreme Court

155 N.W. 879

99 Neb. 146

STATE, EX REL. WALTER CHAMBERLIN ET AL., APPELLEES, v. JOHN H. MOREHEAD ET AL., APPELLANTS

No. 19406

Supreme Court of Nebraska

December 23, 1915

APPEAL from the district court for Lancaster county: ALBERT J CORNISH, JUDGE. Reversed and dismissed.

Judgment of the district court reversed and cause dismissed.

Willis E. Reed, Attorney General, and Charles S. Roe, for appellants.

W. T Thompson, contra.

MORRISSEY C. J. ROSE, J., not sitting.

OPINION

MORRISSEY, C. J.

Relators made application to the state banking board for a charter for a savings bank, to be known as the State Savings Bank of Clarks, Nebraska. The preliminary steps provided by the statute were taken in due form, and no objection was raised as to the character of the parties, their financial ability, or the form of the application, but the banking board ascertained that, if the charter were granted the relators intended to conduct the business of the state savings bank in the same room, or in a room immediately adjacent to the room, occupied by the First National Bank of Clarks, and that the officers and directors of the two banks would be the same persons, or practically so. Some time preceding this application, the banking board had before it a similar application, which it rejected, after adopting a resolution declaring it unwise, unsafe, and against public policy to permit the operation of banks as relators proposed, and declaring it the fixed policy of the board that, in the future, charters under such circumstances would not be granted. On consideration of relators' application the board adhered to its policy theretofore announced and refused to issue a charter.

This action was then commenced in the district court for Lancaster county, and, on hearing, a writ of mandamus issued directing respondents to forthwith convene, approve the articles of incorporation, and issue the charter as prayed. Respondents have appealed. No question of fact is in dispute. But we are called upon to determine whether the board had discretionary power to refuse to grant the charter under the provisions of the banking act.

By the Nebraska banking act, article I, ch. 6, Rev. St. 1913, banking is declared to be a quasi-public business, subject to regulation and control by the state, and it is made unlawful to engage in this business, except by means of a corporation duly organized for that purpose. The act creates a banking board, giving it general supervision and control of all banks coming within its provisions. It is made the duty of the governor to appoint a secretary for the board, and examiners, who are empowered "to make a thorough examination into all the books, papers and affairs of any corporation transacting a banking business in this state." Section 8. These examiners are empowered to summon witnesses and administer oaths, and it is made their duty to make a detailed report to the banking board. If, upon examination, a bank is found to be insolvent, "or is conducting its business in an unsafe or unauthorized manner, or is endangering the interest of its depositors, then such examiner shall have full power and authority to hold and retain possession of all the money, rights, credits, assets, and property of every description belonging to such bank, * * * until the state banking board can receive and act on the report made by the examiner of said bank, and have a receiver appointed as hereinafter provided." Section 10. There is further provision for the issuance of a certificate stating that the banking corporation has complied with the laws of this state for the protection of bank depositors, and that the depositors are protected by the depositors' guarantee fund, and that every banking corporation receiving such certificate shall conspicuously display the same in its place of business, and "may print or engrave upon its stationery words to the effect that its depositors are protected by the depositors' guarantee fund of the state of Nebraska." Section 16 provides that, after the parties have taken the preliminary steps which relators took in this case, "then the state banking board, if, upon investigation, it shall be satisfied that the parties requesting said charters are parties of integrity and responsibility, shall * * * issue to said corporation the certificate provided for in section 14 and a charter to transact the business provided for in its articles of incorporation."

Relators contend that this provision is mandatory; that, it being admitted that the parties had complied with all the terms of the act and are men of integrity and responsibility, the board has no power to inquire further into the manner or method of doing business. This is evidently the view taken by the district court, and the section, standing alone, may bear that construction. But the statute on banking is a complete and comprehensive act. It was enacted by the legislature of 1909 after it had been drafted by able lawyers, selected specially for that purpose, and after the fullest discussion and most careful research. Its purpose cannot be questioned. It aimed to take the banking business out of private hands and place it under state control, to the end that failure might be made unlikely and a general panic almost impossible. And its right to do so under the police power has been upheld by the supreme court of the United States. Shallenberger v. First State Bank of Holstein, 219 U.S. 114, 55 L.Ed. 117, 31 S.Ct. 189. The act provides not alone for the investigation that is to be made under section 16, before the issuance of a charter, but for a continuing supervision. Banks operated under the provisions of the act are required to carry a certain reserve, and it is provided that no part of said reserve fund shall be kept in any depository which, in the opinion of the state banking board, would not be a proper and safe custodian thereof. The board is authorized to call upon the bank, in case its reserve falls below the proper amount, to make good the deficiency, and its failure is made cause for the appointment of a receiver. The act fixed a maximum rate of interest; two or...