State ex rel. Short v. Norman

• Decision Date: 21 March 1922
• Docket Number: Case Number: 13023
• Citation: 86 Okla. 36,206 P. 522,1922 OK 102
• Parties: STATE ex rel. SHORT, Atty. Gen., v. NORMAN, Judge.
• Court: Oklahoma Supreme Court

1922 OK 102

206 P. 522

86 Okla. 36

STATE ex rel. SHORT, Atty. Gen., v. NORMAN, Judge.

Case Number: 13023

Supreme Court of Oklahoma

Decided: March 21, 1922

Syllabus

¶0 1. Banks and Banking--State System--Constitutional Provision.

Section 1, article 14, Williams' Constitution, is the keystone of the body of laws relating to banks and banking subsequently enacted by the Legislature in pursuance of its mandate.

2. Same-- Legislative Enactments.

This section of the Constitution charges the Legislature with the duty of enacting general laws embodying the two central and closely related ideas made prominent therein, to wit: First, control and regulation of state banks by a banking board under the control of the Bank Commissioner; and, second, protection of depositors and individual stockholders.

3. Same.

The very first session of the Legislature convening after statehood vitalized this provision of the Constitution by enacting chapter 6, Session Laws of 1907-1908, entitled "Banks and Banking."

4. Same--Banking Department--Depositors' Guaranty Fund.

This chapter contains an elaborate system of laws relating to banks and banking, which, among other things, provides as directed for the creation of a banking department to be under the control of a Bank Com- missioner with sufficient power and authority to regulate and control all state banks, and also provides for the establishment of a depositors' guaranty fund for the protection of depositors and individual stockholders.

5. Same--Construction of Statutes.

While this system of laws has been amended from time to time, it has remained substantially the same. Provisions thereof having the most direct hearing on the question involved herein as they now exist may be found in sections 276-298, 299, 300-302-304, Rev. Laws 1910, and certain provisions of the Session Laws of 1913 and 1915. These acts of the Legislature being passed in pursuance of the direct mandate of the Constitution to carry out specific objects, they must be liberally construed to put into effect the constitutional mandate.

6. Same--Special and General Provisions.

The system of laws vitalizing the Constitutional mandate being special acts applying only to banks and trust companies, they supersede the general laws relating to winding up the affairs of other corporations.

7. Same -- Insolvent State Banks -- Exclusive Jurisdiction of Bank Commissioner.

This system of laws, and particularly the section thereof specifically referred to in this opinion, confer upon the Bank Commissioner, or some person under his control and direction, the sole and exclusive jurisdiction to take possession of an insolvent bank and proceed to wind up its affairs and enforce the personal liability of the stockholders, officers, and directors.

8. Same--Operation of Bank Guaranty Law.

By this system of laws it was the intention of the Legislature that the bank guaranty law shall function in two ways, to wit First, by immediately paying the depositors of the insolvent bank in full with cash available, or that can be made immediately available from the assets of the bank, together with the money on hand in the guaranty fund, where such fund is sufficient for that purpose; and, second, where such funds are not sufficient for such purpose, by issuing certificates of indebtedness payable from year to year as money comes into the guaranty fund out of the assessments and emergency assessments levied against solvent banks as provided by law.

9. Same--Interference by District Court Through Receivers.

That the law is functioning under the one mode or the other furnishes no warrant whatever to the district court to interfere with the bank commissioner by the appointment of receivers, where he is proceeding as directed by sections 302 and 304, Rev. Laws 1910, to wind up the affairs of a failed bank and to enforce the personal liability of the stockholders, officers, and directors.

10. Same--"Winding Up Affairs of Failed Banks."

The term "wind up," when construed in connection with the context of the section in which it is found and in connection with the broad terms of section 304, supra, undoubtedly embraces the entire process of settling the accounts and liquidating the assets of insolvent banks for the purpose of distribution among creditors and dissolving the corporation.

11. Same -- Status of Guaranty Fund and Failed Bank-- Distribution of Assets.

The guaranty fund is created by assessments and replenished by emergency assessments levied against solvent banks, and it becomes a creditor of the insolvent bank whenever it pays the depositors of such bank, and in that event its status is just the same as that of any other creditor, except the state has a first lien upon the assets of the bank to secure the payment to the guaranty fund of such sum or sums as it has actually paid out to the depositors of such bank. If the guaranty fund does not become a creditor of the failed bank; that is, if there is no money paid out of the fund to the depositors of such failed bank, the assets of the bank are distributed among the depositors and other creditors in the process of winding up the affairs of such bank pursuant to the general directions to the Bank Commissioner contained in the general statute hereinbefore referred to.

12. Same--Constitutionality of Bank Guaranty Law.

As thus administered, the guaranty feature of the law can never result in the taking of anything of value from the depositors of failed banks, and it is, therefore, impervious to the charge of unconstitutionality made against it.

Original Proceeding for Writ of Prohibition.

Proceeding by the State, on the relation of George F. Short, Attorney General, against John Norman, Judge of the

Twenty Second Judicial District. Writ granted.

Miller, Elting, and Kennamer, JJ., dissenting.

George F. Short, Atty. Gen., Wm. H. Zwick, Asst. Atty. Gen., and M. M. Thomas (for Banking Department), for plaintiff in error.

Geo. S. Ramsey, Fred M. Carter, and A. L. Beckett, for defendant in error.

KANE, J.

¶1 This is an original proceeding commenced in this court by the state, on the relation of the Attorney General, against John Norman, judge of the district court of the Twenty-Second judicial district, for the purpose of procuring a writ of prohibition. It appears from the record before us that the Bank of Commerce of Okmulgee, Okla., through its board of directors, voluntarily placed said bank, together with all of its assets, in the hands of the State Bank Commissioner; that subsequently the Bank Commissioner, after an examination into the affairs and condition of said bank, found and so declared it to be insolvent, and proceeded to take possession thereof, together with all its assets, for the purpose of winding up its affairs and to enforce the personal liability of its stockholders, officers, and directors. In pursuance of this purpose, the Bank Commissioner, through the Attorney General, instituted approximately 100 suits against the stockholders and debtors of said bank, for the purpose of reducing their liabilities to cash, and paying the unsecured depositors as provided by law; that in one of these actions, styled The State of Oklahoma ex rel. Attorney General v. W. J. Harmon, the defendant, who was sued as a stockholder to recover the double liability prescribed by statute, filed an application for the appointment of a receiver upon various grounds; that subsequently the plaintiff filed its motion to strike the application for the appointment of a receiver from the files, and also filed a demurrer to the petition for a receiver which motion and demurrer were overruled by the court. That thereupon the district court appointed two receivers for the Bank of Commerce and issued an order requiring the Bank Commissioner forthwith to deliver all of the books, records, moneys, and assets of the failed bank to the receivers thus appointed and restraining the Bank Commissioner from further proceeding in the matter of winding up the affairs of the bank. Thereafter, upon application of the Attorney General setting up these facts in detail, this court issued an alternative writ prohibiting the district court from further proceedings under the petition and application for the appointment of receivers, and ordered that a return and answer to such alternative writ be filed on a day certain.

¶2 The cause now comes on for hearing upon the application of the Attorney General to make the alternative writ permanent and the petition filed by the plaintiff and the return thereto filed by the defendant. In the brief filed by the Attorney General in this particular proceeding two or three preliminary questions of practice and procedure are presented for consideration, which it will not be necessary to notice, for the reason that the power of the district court to appoint a receiver is now directly presented for review by a proper proceeding in error in the case in which the original order was made. This proceeding in error is No. 13038, entitled State of Oklahoma ex rel. Attorney General v. W. J. Harmon, and it is stipulated that this proceeding in error shall be submitted for consideration with this original proceeding.

¶3 In these circumstances there is but one question presented for our consideration, which is succinctly stated by the Attorney General in his brief as follows: "Is the jurisdiction of the Bank Commissioner and the Banking Board in the liquidation of an insolvent bank under the Constitution and laws of this state, original, sole, and exclusive, or can their jurisdiction be interfered with and superseded by a court of equity, in the appointment of receivers to liquidate insolvent banks?" While counsel for the defendant in their application for the appointment of receivers in the district and in their return to the alternative writ in this court charge various state officers, and particularly the Bank Commissioner, with many acts of maladministration in office in the matter of executing the...