State ex rel. City Bank & Trust Co. v. Marshall & Ilsley Bank

• Decision Date: 03 June 1958
• Citation: 4 Wis.2d 315,90 N.W.2d 556
• Parties: STATE ex rel. CITY BANK AND TRUST CO. et al., Appellants, v. MARSHALL & ILSLEY BANK, a Wis. corporation, Respondent.
• Court: Wisconsin Supreme Court

Page 556

90 N.W.2d 556

4 Wis.2d 315

STATE ex rel. CITY BANK AND TRUST CO. et al., Appellants, v. MARSHALL & ILSLEY BANK, a Wis. corporation, Respondent.

Supreme Court of Wisconsin.

June 3, 1958.

A. W. Schutz, Milwaukee, for appellants.

Quarles, Herriott & Clemons, Milwaukee, Maxwell H. Herriott, William K. McKibbage, and Churchill, Duback & Churchill, Milwaukee, of counsel, for respondent.

WINGERT, Justice.

The court is of opinion that the demurrer should have been overruled, and that therefore the judgment dismissing the action must be reversed.

1. Propriety of remedy in quo warranto.

Sec. 294.04 authorizes an action of quo warranto 'when any person shall usurp, intrude into or unlawfully hold or exercise * * * any franchise within this state.' In the present action no attack is made upon the defendant's right to exist as a corporation and conduct its banking business at its main office on North Water Street. The contention is rather that the operation of the branch in the new location will, pro tanto, usurp or unlawfully exercise a franchise; in other words, that the corporation will be unlawfully exercising its banking franchise beyond its terms, and thus usurping the excess. Only this excess operation, over and above what is said to be the limit imposed by statute, is sought to be prevented.

Quo warranto is proper in such a case and lies to exclude the defendant from the exercise of its banking business beyond the limit imposed by law. Thus one authorized to maintain a dam at a certain height may be stopped in quo warranto from keeping the dam at a higher level. State ex rel. Attorney General v. Norcross, 132 Wis. 534, 547-549, 112 N.W. 40. This rule appears to accord with that prevailing in other states. See Commonwealth ex rel. Woodruff v. American Baseball Club, 290 Pa. 136, 138 A. 497, 53 A.L.R. 1027, and Annotation 53 A.L.R. 1038.

2. Quo warranto vs. scire facias. Out of abundance of caution plaintiff pleaded causes of action in both quo warranto and scire facias, having in mind an old common law distinction according to which scire facias was proper where there was a legally existing corporation which had abused its powers, while quo warranto was appropriate where there was a body de facto, but not de jure. Under the present statute, secs. 294.01-294.04, which substitutes a civil action for the old writs, the distinction is no longer important. For convenience we refer to the action as quo warranto, and that terminology appears to be in general use, even where the action recognizes de jure corporate existence and attacks only abuse of power. See 13 Am.Jur. 1181-1182.

3. Action not premature. Defendant cites Attorney General v. Superior & St. Croix R. Co., 93 Wis. 604, 614-615, 67 N.W. 1138, to the point that quo warranto cannot be maintained against a corporation for what it may intend or threaten to do, but lies only to challenge usurpations already committed. The amended complaint does not allege that the defendant is already operating a branch in the new location, but only that it 'has now leased premises for the purpose of maintaining a branch office in the Bockl Building * * * in lieu of its branch office at 414 W. National Avenue.' Attached to the complaint as an exhibit is a copy of a newspaper report of an announcement by the defendant that it plans to close its old office on West National Avenue and reopen it in the new location with May 1, 1957, as the target date for opening. The present action was commenced March 21, 1957.

We do not consider the action premature. The complaint discloses that the defendant had leased quarters for the purpose of operating a new branch office, and that it had publicly announced its intention to make the move on a date only a little over a month after the commencement of the action. In such a situation it was not necessary for the relators to wait for the new office to open its doors to the public. The lease of space and the public announcement took the matter out of the category of mere general intention. The process of shifting to a new location was already underway; the matter had become imminent; overt acts had taken place. 'Like injunction, quo warranto is to a large extent a preventive remedy.' 44 Am.Jur. 98. See State ex rel. Vilter Mfg. Co. v. Milwaukee B. & L. G. R. Co., 116 Wis. 142, 92 N.W. 546, where written acceptance of a franchise to operate a street railroad was held sufficient to warrant quo warranto to challenge the right to exercise the franchise, although no steps to build or operate the railroad had been taken.

4. Action not barred by failure to proceed in the department of banking. Defendant contends that the commissioner of banks has exclusive jurisdiction of the subject matter of this action, subject to review by the banking review board whose decision is in turn reviewable by the courts under sec. 227.15 of the administrative procedure act; and that relators having failed to avail themselves of the remedies thus afforded them, cannot maintain quo warranto under sec. 294.04.

It is true that the banking department 'shall have charge of the execution of the laws relating to banks' (sec. 220.01) and that the commissioner of banks is vested by law with the duty and authority to 'enforce all laws relating to banks' (sec. 220.02(3)), and 'to enforce and carry out all laws relating to banks' (sec. 220.02(4)) and to 'ascertain whether such bank transacts its business at the place designated in the articles of incorporation, and whether its business is conducted in the manner prescribed by law' (sec. 220.04(2)), and that if a bank violates any provision of ch. 221 Stats., with the knowledge of its directors and after a warning from the commissioner continues such conduct, it may become the duty of the commissioner to institute proceedings to forfeit the charter of the bank and wind up its affairs (sec. 221.41). Thus the commissioner of banks has authority to make an administrative determination as to whether the change in location of defendant's branch office will violate the statute invoked by the relators, and if he considers that the move is prohibited by the statute, to order the bank not to make the move, and to take appropriate action if it persists in doing so.

In the present case, however, the amended complaint alleges that the commissioner of banks was timely requested by one of the relators, on behalf of all of them, to enforce the provisions of sec. 221.04(1)(f) against the defendant in respect to the removal of its branch office, but the commissioner declined to take action, being of the considered opinion that the question is for the courts; and it is further alleged that any further demands on him would be futile. This in our opinion was as far as the relators were required to go in seeking relief from the banking department. When the commissioner of banks refused to act, and when the attorney general in his turn declined to commence an action under sec. 294.04(1), relators were in position to proceed in the name of the state under sec. 294.04(2).

The commissioner of banks, like any law-enforcing official, has substantial discretion in determining whether or not to take action against suspected violators, particularly where it is doubtful whether the act complained of is a violation of the law. Here the commissioner, being in doubt on that point, exercised discretion and declined to act. His refusal was not directly subject to judicial review under the administrative procedure act. (sec. 227.15.)

We do not think relators were obliged to appeal to the banking review board before proceeding in quo warranto. That board has jurisdiction 'to review the acts and decisions of the commissioner' (sec. 220.035(2)(a)), if a petition for review is...