State Ex. Rel. Dakota Trust Company v. Stutsman

• Decision Date: 23 November 1912
• Citation: 139 N.W. 83,24 N.D. 68
• Court: North Dakota Supreme Court

139 N.W. 83

24 N.D. 68

STATE EX. REL. DAKOTA TRUST COMPANY v. STUTSMAN et al

Supreme Court of North Dakota

November 23, 1912

Appeal by defendants from a judgment of the District Court for Burleigh County, Winchester, J., awarding a writ of prohibition enjoining them from an alleged abuse of discretion in the matter of bonds furnished by public warehousemen in support of elevator licenses.

Modified.

Cause remanded with directions. No costs or disbursements allowed to either party.

Engerud Holt & Frame, for respondent.

Andrew Miller, Attorney General, and W. H. Stutsman, for appellants.

BRUCE J. BURKE, J., SPAULDING, Ch. J., concurring. GOSS, J Justice FISK (concurring in part and dissenting in part).

OPINION

Statement

BRUCE J.

This action was originally brought in the form of a petition for a writ of prohibition against the board of railroad commissioners of the state of North Dakota to prohibit them from exercising what is claimed to be usurped and unwarranted powers. The petition alleged, among other things, that the plaintiff was a corporation duly authorized to carry on the business of a surety company in the state of North Dakota; that one Samuel Kittler was from on or about the 17th day of September, 1909, continuously until on or about the 20th day of December, 1910, engaged in the business of operating a public grain warehouse at Turtle Lake, in the county of McLean; that in order to comply with the laws of said state he had procured the petitioner to execute and deliver to the board of railroad commissioners a bond which in all things complied with the laws of this state; that while said Kittler was engaged in conducting said business he issued sundry storage tickets to divers persons; that on or about the 20th day of December, 1910, he became insolvent; that thereupon the petitioner bond company, with the utmost diligence and good faith, sought to ascertain the persons to whom it had become liable on its bond before mentioned and the amount of its liability to such persons; and that upon obtaining such information it immediately set about to adjust its liability, and "promptly paid to each of said claimants the amount or sum of money which each of said claimants agreed to accept in satisfaction of his or her claim, save two claims, both of which are still in dispute; and that it stands ready at all times, and is able and willing, to pay the holders of said unsatisfied claims whatever amount may be found to be justly due; that in the course of its investigation it discovered that many of the storage tickets were false, and that said warehousemen had falsely and fraudulently, and with the intent to cheat and defraud said petitioner, misstated the quality of the grain received by him; that by reason of the frauds aforesaid, such petitioner had disputed its liability for the face value of such false and fraudulent storage tickets, and had compromised the respective claims, with the exception of the two before mentioned, for less than their face value; that on or about the 3d day of May, 1911, the defendant board of railroad commissioners, without any authority or jurisdiction, served upon said petitioner a writing and purported order in words and figures as follows, to wit: "In the matter of the claims of holders of storage tickets against Samuel Kittler, of Turtle Lake: The Commission, having investigated the same, finds that all tickets owned by the petitioners are valid, and should be paid in full without discounting or scaling; it is further found that the Dakota Trust Company, the sureties on the elevator bond of the said Samuel Kittler, has, without just cause, compromised many of the claims of said ticket holders at 50 cents on the dollar. It is therefore ordered that the said Dakota Trust Company do and is hereby directed to pay said claims in full to the holders of said storage tickets within thirty days from the date of this notice." That said petitioner ignored and refused to obey said order, and that theretofore and on the 13th day of June said board of railroad commissioners served upon said petitioner a notice or citation and copy of resolution in words and figures as follows, to wit:

In compliance with a resolution adopted by the commission on Saturday the 10th inst., a copy of which I am sending you, I am writing you, giving notice that your company will be required to appear before the commission on Saturday, June 24th, to show cause why all the bonds issued by your company in support of elevator licenses shall not be canceled.

Please acknowledge receipt of this letter and the copy of the resolution and oblige.

(Signed) Respectfully yours,

The Board of Railroad Commissioners.

By Thomas Hall, Secretary.

Attached to this notice, as before stated, was a copy of the following resolution: "In the matter of the failure and neglect of the Dakota Trust Company to comply with a certain order issued by the board of railroad commissioners, requiring them to redeem certain warehouse receipts and to make settlements with the holders thereof; said receipts having been issued by Samuel Kittler, of Turtle Lake, doing business as a public warehouseman and whose license is supported by the bond of the said Dakota Trust Company. Be it resolved, that the secretary be instructed to notify and require the Dakota Trust Company of Fargo to appear before this commission at its office in the city of Bismarck on the 24th day of June, 1911, at 2 o'clock in the afternoon of said day, and show cause, if any there be, why the commission should not cancel the bonds of the said Dakota Trust Company, given in this state, to wit: [Here follows the names of thirty elevator companies.] Because of its failure to effect a settlement satisfactory to this commission with the holders of certain warehouse receipts issued by Samuel Kettler, of Turtle Lake. Be it further resolved: That the secretary notify and require each of the above-named elevator companies or warehousemen to secure and have ready on said date of June 24th, new bonds or undertakings satisfactory to this commission, to take the place of the said Dakota Trust Company's bonds, in the event they are then ordered canceled by this commission. Done at Bismarck, North Dakota, this the Tenth day of June, 1911."

The petition further alleged that such petitioner had in all things complied with the requirements of the law to do business in the state of North Dakota as a surety company, and was, at the present time, surety on the several warehousemen's bonds mentioned in said notice and resolution; that such petitioner had received and was entitled to receive large sums of money as compensation for the assumption of the several risks; that such petitioner was informed and believed that said defendants intended to, and would unless prohibited by the court, assume to exercise the pretended and unwarranted powers which they unlawfully assumed under said notices and resolutions, and would, on the 24th day of June, 1911, assume to cancel said bonds, and require said warehousemen to procure and furnish other sureties, and refuse to accept such petitioner's bonds for said warehousemen or other warehousemen, and thereby deprive such petitioner of a large portion of its lawful and rightful business, and thus wantonly and unlawfully bring such petitioner into disrepute, to its great and irreparable loss. It further alleged that it had never in any manner consented or agreed to the assumption of such unwarranted power or authority of said defendants to hear, try, and determine the merit or validity of the claims before mentioned, and that the pretended findings of such board were wholly unwarranted and false. The petition then prayed for a writ of prohibition prohibiting said defendants "from further proceedings in the exercise of their usurped and unwarranted powers aforesaid, and commanding them to forthwith cease and refrain from their unlawful acts and conduct aforesaid, and that this court thereupon render judgment that all the acts and proceedings of said defendants in the premises are null and should be held for naught, and for such other and further relief as to the court may seem just." To this petition a return or answer was filed, which admitted the giving of the notices and the passage of the resolution, and a part payment of the claims by the petitioner. It, however, denied that the storage tickets or any of them were falsely and fraudulently issued, and on the contrary claimed that the amount of grain therein receipted for and stated to have been received was of the grade and quality and quantity as alleged, and further stated that at the time of the insolvency of the said Samuel Kittler the said petitioner requested the said board to desist from taking any action to enforce its liability under its bond to the state of North Dakota, or to the holders of the said storage tickets, and that upon the making of such request said petitioner represented that the outstanding claims represented by said storage tickets were to be fully paid and satisfied; that thereafter the said trust company falsely and fraudulently represented "to each and all of the said several ticket holders that said Samuel Kittler, while engaged in his business as a public warehouseman, at the village of Turtle Lake, had engaged in irregular and illegal practices of such character that the said Kittler could be successfully prosecuted criminally for the crime of embezzlement, or some kindred crime, and that the charges for which he could be prosecuted were of such a nature and of such a number that if he were arrested, prosecuted, convicted, and sentenced for each and all of the crimes of which, according to said false and fraudulent representation, he, the said Samuel Kittler, was...