State ex rel. Lofthus v. Langer

CourtNorth Dakota Supreme Court
Writing for the CourtBRONSON
Citation177 N.W. 408,46 N.D. 462
Decision Date06 December 1919
PartiesSTATE ex rel. LOFTHUS, State Bank Examiner, et al. v. LANGER, Atty. Gen., et al.

46 N.D. 462
177 N.W. 408

STATE ex rel.
LOFTHUS, State Bank Examiner, et al.
v.
LANGER, Atty. Gen., et al.

Supreme Court of North Dakota.

Oct. 24 and 31, Nov. 22 and 25, and Dec. 5 and 6, 1919.


[177 N.W. 408]


Syllabus by the Court.

In the exercise of its original jurisdiction, the Supreme Court may frame its process as the exigencies require.

Where an original application is made which seeks to restrain and prohibit the further continuance of alleged wrongful acts, by the Attorney General, the Supreme Court may exercise its original jurisdiction independent of any application to, or the consent of, such Attorney General.

Where the state examiner and a bank chartered by the state make an original application which seeks to restrain and prohibit the Attorney General and members of the state banking board, and parties acting under their orders, from exercising unlawful powers and usurping the powers and duties of the state examiner in attempting to declare a state bank insolvent, and to conduct a receivership thereover, and where it appears from the record that the prerogatives of such examiner, the state guaranty funds, and public depositors, are directly involved, and that the rights of such bank as well as a large number of other banks concerning their rights to do business are concerned, and that there exists a widespread and unprecedented public interest and concern with regard to the solvency of such banks, and the operation of the banking laws of this state in regard thereto, it is held, that such circumstances give rise to the exercise of the original jurisdiction of this court pursuant to its constitutional powers.

Upon such application, where it is deemed necessary in order to preserve the rights of the parties, to safeguard the public interests, and to prevent the issue presented in the application from becoming moot by a continuance of the alleged wrongful act, the Supreme Court may issue its temporary restraining order and place in charge of the institution affected the state officer ordinarily charged with the duty in such cases.

It is a well-settled rule of law, where two legislative acts are repugnant to, or in conflict, with each other, that the latest expression of the legislative will must control, even though it contains no repealing clause.

Pursuant to chapter 53, Laws 1915, the state examiner is granted the specific power, with the approval of the state banking board, to appoint a receiver for a banking corporation; no receiver shall be appointed for such reasonable time as he may require for an examination of a bank. Before the appointment of a receiver, he may take charge of a bank and thereafter release the possession of such bank to its officers, without the appointment of a receiver.

Since the enactment of chapter 53, Laws 1915, the state banking board does not possess the power of appointing a receiver for a bank, independent of the initiative action or without the knowledge or consent of the state examiner.

Where the state banking board, during the absence of the state examiner from the state, and without his initiative action, knowledge, or consent, or that of the acting state examiner, determined a bank to be insolvent and caused the bank to be closed and placed its temporary receiver in charge thereof, it is held, that such action is illegal and beyond their powers.

Where the state banking board, and the Attorney General acting pursuant to its orders, during the absence of the state examiner from the state, and without his initiative action, knowledge, or consent, or that of the acting state examiner, caused an examination of the Scandinavian-American Bank at Fargo to be made, and immediately upon the reception of the report of its examiners declared such bank to be insolvent, caused the bank to be closed, and its temporary receiver to be placed in charge thereof, arbitrarily and without any warning or opportunity given to the bank officials or stockholders to comply with its demands or findings, and without notifying or consulting the state examiner or the acting state examiner, it is held, that such action was unwarranted, illegal, and neither within the spirit or letter of the legal powers conferred upon such board.

Where examiners, in their report upon which the banking board determined the bank to be insolvent, lists, as excessive and inadequately secured loans, a number of loans aggregating

[177 N.W. 409]

$743,000 secured largely by farmers' notes and farmers' postdated checks, in the proportion of about two to one, and where such examiners have by arbitrary action and without specification concluded that such farmers' notes are not worth over 50 per cent. of their total amounts, and that the postdated checks are not collateral at all and of no substantial value, it is held, that such determination is wholly arbitrary and without foundation in fact.

“Postdated checks” are negotiable instruments similar to bills of exchange payable at a future date, and may be used as collateral paper the same as any other negotiable instruments.

Where the state banking board has based its findings of insolvency upon the report and conclusions of its examiners to the effect that certain loans in such bank are excessive and inadequately secured, that certain debts listed amounting to $46,000 are worthless, that the bank has failed to maintain its legal reserve in strict accordance with the law and has over $169,000 of past-due paper, and where, in the record, it is shown that no opportunity was granted or order made permitting such bank to comply by reduction of such excessive loans, although it had the ability so to do, and that in fact such excessive so termed loans were in fact adequately secured, and that, further, the banking board or the state examiner had not theretofore required the banks of the state to maintain their legal reserves as strictly required (by keeping on hand all moneys deposited by other banks with it) and had given the bank no instructions or order so to do within a specified time, and further that since the state examiner took charge there was paid into such bank over $35,000 on such bad debts and a large amount upon the paper of such bank, it is held, that the finding of insolvency is not justified and was unreasonably so determined.


Original application by the State of North Dakota, on the relation of O. E. Lofthus, as State Bank Examiner, the Scandinavian-American Bank of Fargo, and H. J. Hagen and others, directors and stockholders thereof, and another, against William Langer, Attorney General, and as an individual and as a member of the State Banking Board, and others, to prohibit and restrain respondents from usurping the powers and duties of the State Bank Examiner, and from wrongfully continuing their appointee as receiver of the Scandinavian-American Bank of Fargo. Writ granted directing the State Bank Examiner to continue in charge of such bank with full power to release possession thereof to its officers when he deems fit, and restraining respondents from further continuance of their wrongful acts, and judgment for costs and disbursements ordered in favor of the relators and against the respondents.

Original application to prohibit and restrain the respondents from usurping the powers and duties of the state examiner and from wrongfully continuing its appointee as receiver of the Scandinavian-American Bank of Fargo.

Writ granted directing the state examiner to continue in charge of said bank with full power to release possession of such bank to its officers when he deems fit and restraining the respondents from further continuance of their wrongful acts. Judgment for costs and disbursements ordered in favor of the relators and against the respondents.

Christianson, C. J., and Birdzell, J., dissenting.

Wm. Lemke, Henry A. Paddock, and Vine A. Day, all of Fargo, for relators.

William Langer, Atty. Gen., and Albert E. Sheets, Asst. Atty. Gen. (S. L. Nuchols, of Mandan, and W. S. Lauder, of Wahpeton, of counsel), for respondents.


Proceedings.
BRONSON, J. (after stating the facts as above).

This is an original application to prohibit and restrain the respondents from interfering with the duties of the state examiner, and from continuing their alleged wrongful acts in determining the Scandinavian-American Bank of Fargo to be insolvent, and in appointing thereover a receiver.

On October 1, 1919, this court issued its preliminary order, temporarily restraining the respondents and placing in charge of such bank the state examiner upon a petition which alleges, among other things, that the respondents are usurping the powers and duties of the state examiner; that arbitrarily, illegally, and wrongfully they had occasioned advance information to be given that such bank was to be closed and had caused a run to be made on such bank; that illegally and wrongfully, without the consent of the state examiner, they caused such bank to be closed and a temporary receiver to be appointed; that such respondents are attempting arbitrarily to invalidate large amounts of collateral of such bank, are failing to make due collections thereof, and are about to sell great quantities thereof; that their arbitrary and illegal action, unless restrained, will financially wreck such institution; that public moneys are on deposit in such bank and the state bank guaranty fund is involved as well as the powers and duties of the state examiner. Such petition seeks to invoke the exercise of the original jurisdiction of this court.

On the return day, October 15, 1919, the respondents filed a motion to dismiss upon jurisdictional grounds and also their return and answer. On this day, the cause was orally

[177 N.W. 410]

argued and submitted. Pursuant to the order of this court, the parties have been granted until October 23, 1919, to make up and complete the record in this matter.

Record Facts.

Substantially, the facts as disclosed by the record are as follows:

For many years, the relator bank has...

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19 practice notes
  • State ex rel. Lesmeister v. Olson, No. 10719
    • United States
    • United States State Supreme Court of North Dakota
    • 16 August 1984
    ...is one of the parties defendant, and which concerns his alleged wrongful acts and seeks to restrain them. See, e.g., State v. Langer, 46 N.D. 462, 177 N.W. 408 2 Although we have cited with approval the Montana Supreme Court in its disposition of the jurisdictional issues in Grossman, we do......
  • State ex rel. Peterson v. Olson, No. 9999
    • United States
    • United States State Supreme Court of North Dakota
    • 25 June 1981
    ...This court, in the exercise of its original jurisdiction, may frame its process as the exigencies require. State ex rel. Loftus v. Langer, 46 N.D. 462, 177 N.W. 408 (1919). A writ of injunction is the correlative of the writ of mandamus. The former issues to restrain action while the latter......
  • State ex rel. Link v. Olson, No. 9673
    • United States
    • United States State Supreme Court of North Dakota
    • 6 November 1979
    ...action in which he is one of the parties defendant, and which concerns his alleged wrongful act and seeks to restrain it. State v. Langer, 46 N.D. 462, 177 N.W. 408 In this case the governor contends that the legislative branch has infringed upon the authority granted to him by the North Da......
  • State ex rel. Mason v. Baker, No. 6618.
    • United States
    • United States State Supreme Court of North Dakota
    • 25 October 1939
    ...and the court deems the matter of sufficient importance to warrant its assuming original jurisdiction. State ex rel. Lofthus v. Langer, 46 N.D. 462, 177 N.W. 408;State ex rel. Wallace v. Kositzky, 44 N.D. 291, 175 N.W. 207. The law in question provides that the Supreme Court is authorized a......
  • Request a trial to view additional results
19 cases
  • State ex rel. Lesmeister v. Olson, No. 10719
    • United States
    • United States State Supreme Court of North Dakota
    • 16 August 1984
    ...is one of the parties defendant, and which concerns his alleged wrongful acts and seeks to restrain them. See, e.g., State v. Langer, 46 N.D. 462, 177 N.W. 408 2 Although we have cited with approval the Montana Supreme Court in its disposition of the jurisdictional issues in Grossman, we do......
  • State ex rel. Peterson v. Olson, No. 9999
    • United States
    • United States State Supreme Court of North Dakota
    • 25 June 1981
    ...This court, in the exercise of its original jurisdiction, may frame its process as the exigencies require. State ex rel. Loftus v. Langer, 46 N.D. 462, 177 N.W. 408 (1919). A writ of injunction is the correlative of the writ of mandamus. The former issues to restrain action while the latter......
  • State ex rel. Link v. Olson, No. 9673
    • United States
    • United States State Supreme Court of North Dakota
    • 6 November 1979
    ...action in which he is one of the parties defendant, and which concerns his alleged wrongful act and seeks to restrain it. State v. Langer, 46 N.D. 462, 177 N.W. 408 In this case the governor contends that the legislative branch has infringed upon the authority granted to him by the North Da......
  • State ex rel. Mason v. Baker, No. 6618.
    • United States
    • United States State Supreme Court of North Dakota
    • 25 October 1939
    ...and the court deems the matter of sufficient importance to warrant its assuming original jurisdiction. State ex rel. Lofthus v. Langer, 46 N.D. 462, 177 N.W. 408;State ex rel. Wallace v. Kositzky, 44 N.D. 291, 175 N.W. 207. The law in question provides that the Supreme Court is authorized a......
  • Request a trial to view additional results

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