State v. Barboglio

• Decision Date: 03 May 1924
• Docket Number: 4104
• Citation: 226 P. 904,63 Utah 432
• Court: Utah Supreme Court
• Parties: STATE ex rel. WHITMORE v. BARBOGLIO et al

226 P. 904

63 Utah 432

STATE ex rel. WHITMORE v. BARBOGLIO et al

No. 4104

Supreme Court of Utah

May 3, 1924

Proceeding on information in the nature of a quo warranto, by the State, on the relation of L. E. Whitmore, against Joseph Barboglio and others.

ACTION DISMISSED.

Harvey H. Cluff, Atty. Gen., Marshall Macmillan & Crow, of Salt Lake City, and M. P. Braffet, of Price, for plaintiff.

L. A McGee, of Price, and Dey, Hoppaugh & Mark, of Salt Lake City for defendants.

THURMAN J. GIDEON, FRICK, and CHERRY, JJ., concur. WEBER, C. J., did not participate.

OPINION

THURMAN, J.

This is a proceeding on information in the nature of a quo warranto to determine title to the office of director of the First National Bank of Price, Utah, a corporation organized and existing under the laws of the United States. It is made to appear from the complaint that plaintiff and two others were duly elected to the office of directors at an election held in pursuance of the articles and by-laws of the corporation, but that the judges of election unlawfully rejected legal votes cast for plaintiff and said other persons, thereby causing it to appear that defendants had received a majority of the votes cast. Defendants were thereupon declared elected, and it is alleged they now hold and exercise the functions of said office without authority of law and exclude plaintiff and said other persons therefrom. Plaintiff prays that defendants be ousted; that plaintiff and said other persons be inducted into said office; and that each of the defendants be fined in accordance with the statute in a sum not exceeding $ 5,000. The particular details constituting the grievance complained of by plaintiff are not before us in this proceeding.

Defendants move to dismiss the action for want of jurisdiction. They also demur to the complaint for the same reason. This is the only question before the court.

It is contended by defendants: First, that the court is without jurisdiction because it is attempted by this action to interfere with officers of a federal corporation and subject an instrumentality of the government to the supervision, control, and visitorial powers of the state of Utah, through this court, and to determine the regularity of the election of the officers of said bank; that the suit can only be brought in the name of the United States, and the question presented tested only in the federal court; second, that defendants are not charged with usurping or unlawfully holding an office in a corporation created by authority of the state of Utah, but that the offices involved are created by the authority of the United States.

The questions will be considered in the order above stated. Under the first ground stated it is contended by defendants that this court has no jurisdiction to regulate or control the internal affairs of a national bank. Their contention seems to be that in no form of action can a state court exercise jurisdiction concerning the internal affairs of a national bank, except that it may proceed in quo warranto to inquire whether or not the bank is violating a state law which is not in conflict with the federal law. As suggested in their brief, the Supreme Court of the United States has consistently held that state legislation or judicial action in conflict with the powers conferred upon a national bank is void. The cases cited in support of this proposition are in point: Easton v. State of Iowa 188 U.S. 220, 23 S.Ct. 288, 47 L.Ed. 452; Davis v. Elmira Sav. Bank, 161 U.S. 275, 16 S.Ct. 502, 40 L.Ed. 700; First National Bank of San Jose v. California, 262 U.S. 366, 43 S.Ct. 602, 67 L.Ed. 1030; Van Reed v. People's National Bank, 198 U.S. 554, 25 S.Ct. 775, 49 L.Ed. 1161, 3 Ann. Cas. 1154.

The proposition is uncontrovertible that neither state legislation nor state courts can interfere with the powers conferred upon national banks as instruments of the government, nor with such powers as are necessary to carry on the business for which they were organized under the laws of the United States. The cases last cited are all cases in which there was an interference with the powers conferred, and for that reason the proceedings were held to be void. The vital question here, however, under this subhead of the argument, is, What feature of the Currency Act--what power conferred upon the National Bank of Price--is being interfered with, or in what manner do the proceedings instituted here impair the efficiency or utility of the bank as an instrumentality of the government?

The National Currency Act has been greatly modified since the early cases to which defendants have referred, so much so that the instances are now comparatively few in which the federal courts have exclusive jurisdiction. The district courts have original jurisdiction, as stated in volume 4, Federal Statutes, annotated, p. 1054, § 24, par. 16 (U. S. Comp. St. § 991):

"Of all cases commenced by the United States, or by direction of any officer thereof, against any national banking association, and cases for winding up the affairs of any such bank; and of all suits brought by any banking association established in the district, for which the court is held, under the provisions of title 'National Banks,' Revised Statutes, to enjoin the comptroller of the currency, or any receiver acting under his direction, as provided by said title. And all national banking associations established under the laws of the United States shall, for the purposes of all other actions by or against them, real, personal, or mixed, and all suits in equity, be deemed citizens of the states in which they are respectively located."

This statute superseded a statute of 1888 relating to the same subject. The two statutes are quoted and compared in Herrmann v. Edwards, 238 U.S. 107, 35 S.Ct. 839, 59 L.Ed. 1224. In that case a stockholder of a national bank brought suit against directors of the bank alleging that defendants had large interests in another national bank and had devised a scheme by which the first bank would purchase the second bank for a sum utterly disproportionate to its value, thus despoiling the first bank and its stockholders, and wrongfully enriching the second bank and its stockholders, to the extent of the inordinate price which was paid. The prayer was for an accounting and for a decree in favor of complainant and his co-stockholders for whose benefit the action was brought. The action was instituted in the federal District Court, and was dismissed for want of jurisdiction. There was no diversity of citizenship and no federal question involved. On appeal to the Supreme Court of the United States the judgment was affirmed. The opinion cites the case of Whittemore v. Amoskeag Bank, 134 U.S. 527, 10 S.Ct. 592, 33 L.Ed. 1002, which was a suit in a circuit court of the United States by a stockholder for himself and others against the bank and its directors for alleged maladministration. The prayer was that the directors be decreed to pay back to the bank for the benefit of the stockholders the amount of money lost by their misconduct. The circuit court dismissed the bill for noncompliance with equity rule-94. On appeal to the Supreme Court the decision was reversed as to the grounds upon which it was decided and the case remanded, with directions to dismiss the bill for want of jurisdiction as a federal court. The court, in Herrmann v. Edwards, supra, in commenting on the decision in the Wittemore Case, at page 113 of 238 U.S. (35 S.Ct. 840), says:

"This ruling during the many years which have elapsed has never been questioned and the fundamental principle upon which it rested has been applied in various aspects."

In the same connection and in support of its views the court cites Petri v. Commercial Bank, 142 U.S. 644, 12 S.Ct. 325, 35 L.Ed. 1144; Ex parte Jones, 164 U.S. 691, 17 S.Ct. 222, 41 L.Ed. 601; Continental Nat. Bank v. Buford, 191 U.S. 119, 24 S.Ct. 54, 48 L.Ed. 119; Yates v. Jones Nat. Bank, 206 U.S. 158, 27 S.Ct. 638, 51 L.Ed. 1002; Thomas v. Taylor, 224 U.S. 73, 32 S.Ct. 403, 56 L.Ed. 673.

Respecting the purpose, nature, and status of a national bank plaintiff's counsel in the case at bar, quote the following pertinent excerpt from 7 C. J. at page 758:

"A national bank is a corporation, the powers of which are defined and limited by the acts of Congress authorizing the creation of such institutions. Although created to aid the government and regarded as agencies or instruments of the national government for the purpose of providing the national currency secured by a pledge of United States bonds, national banks are private institutions, and do not constitute part of any branch of the national government. National banks are deemed citizens of the states in which they are respectively located and a national bank located in one state is a foreign corporation with respect to another state."

They also cite the following cases wherein state courts have entertained jurisdiction in matters in which national banks, or their officers, were involved. In re Braden's Estate, 165 Pa. 184, 30 A. 746; Winter v. Baldwin, 89 Ala. 483, 7 So. 734; McCormick v. Smith, 23 Idaho 487, 130 P. 999; Grout v. First National Bank, 48 Colo. 557, 111 P. 556, 21 Ann. Cas. 418; Woodworth v. Old Second Nat. Bank, 154 Mich. 459, 117 N.W. 893, 118 N.W. 581; Patek v. Patek, 166 Mich. 443, 131 N.W. 1103; Farmers' Nat. Bank v. McCoy, 42 Okla. 420, 141 P. 791, Ann. Cas. 1916D, 1243; State v. First Nat. Bank, 297 Mo. 397, 249 S.W. 619; First Nat. Bank v. Commonwealth, 143 Ky. 816, 137 S.W. 518, 34 L.R.A. (N. S.) 54, Ann. Cas. 1912D, 378; Harkness v. Guthrie, 27 Utah 248, 75 P. 624, 107 Am. St. Rep. 664, 1 Ann. Cas. 129.

The last case cited was a decision by this court in which it was...