State v. First State Bank of Jud

• Decision Date: 20 January 1925
• Citation: 52 N.D. 231,202 N.W. 391
• Parties: STATE v. FIRST STATE BANK OF JUD et al.
• Court: North Dakota Supreme Court

52 N.D. 231

202 N.W. 391

STATE

v.FIRST STATE BANK OF JUD et al.

Supreme Court of North Dakota.

Dec. 31, 1924.

Rehearing Denied Jan. 20, 1925.

Syllabus by the Court.

Under the Constitution of this state all governmental power is vested in the Legislature, except such as is granted to the other departments of government, or expressly withheld from the Legislature by constitutional restrictions.

The only test of the validity of an act regularly passed by the Legislature is whether it violates any of the express or implied restrictions of the state or federal Constitution.

If the end be legitimate, all means which are appropriate, which are plainly adapted to that end, and which are not prohibited, may constitutionally be employed to carry it into effect.

A litigant can be heard to question the validity of a statute only when, and in so far as, it is applied to his disadvantage.

For reasons stated in the opinion it is held that chapter 137, Laws 1923, is constitutional; that the Legislature in the exercise of its constitutional powers as the law-making body of the state may prescribe the conditions under which a banking corporation organized under the laws of this state shall be deemed insolvent; authorize the Attorney General of the state to bring an action in the name of the state for the liquidation of such bank, or banks; vest the district court of Burleigh county with jurisdiction of such action, and require the Supreme Court, in the exercise of its supervisory jurisdiction over inferior courts, to designate a district judge to hear and determine such action and appoint a receiver of the bank, or banks, involved in such action.

Additional Syllabus by Editorial Staff.

Under Const. § 211, requiring judge to take official oath to support federal and state Constitutions, and Const. U. S. art. 6, where there is repugnance between provision of statute and of Constitution, court must enforce Constitution.

Within purview of Const. § 69, subds. 5, 8, prohibiting local or special laws regulating practice of courts, and providing for changes of venue, “special law” means one relating only to particular persons or things of class, as distinguished from “general law,” which applies to all things or persons of a class; and “local law” means one which applies to special locality or spot as distinguished from law which operates generally throughout the entire state, and within meaning of such definitions Laws 1923, c. 137, relating to liquidation of insolvent banks, is neither “special” nor “local,” but “general.”

Transmissal of papers by Supreme Court to district court of Burleigh county in suit to liquidate insolvent banks, in pursuance of Laws 1923, c. 137, is not an assumption of “jurisdiction” which means the power to hear and determine a controversy.

Appeal from District Court, Burleigh County; Cooley, Special Judge.

Suit by the State of North Dakota, for itself and on behalf of all creditors of defendant banks, against the First State Bank of Jud and others. From an order sustaining a demurrer to the answer, defendants appeal. Affirmed.

Francis J. Murphy, of Fargo, for appellants.

Geo. F. Shafer, Atty. Gen., and J. C. Thorpe, Asst. Atty. Gen., for respondent.

CHRISTIANSON, J.

This action was instituted by the Attorney General under chapter 137, Laws 1923, to liquidate and wind up the affairs of the Mohall State Bank. The complaint in the action is in form and substance as prescribed by said chapter 137, and alleges that said Mohall State Bank closed voluntarily on November 24, 1920, and that one W. H. McIntosh is the receiver in charge of such bank. Said McIntosh appeared and interposed an answer to the complaint. In such answer he admitted that the bank had been closed as alleged in the complaint, and that he was the receiver in charge. He further alleged that he had been appointed such receiver in an action theretofore commenced in the district court of Renville county in this state, and was duly qualified and acting as receiver pursuant to such appointment. In such answer he further asserted that the law under which the Attorney General brought this action, viz. chapter 137, Laws 1923, is unconstitutional and void. The plaintiff interposed a general demurrer to this answer. The demurrer was sustained, and said McIntosh has appealed.

The sole question presented and argued on the appeal is, “Is chapter 137, Laws 1923, unconstitutional?” Appellant contends this question should be answered in the affirmative, and the action ordered dismissed.

The act in question reads as follows:

“Whereas, there are a large number of insolvent banks in this state, located in many different communities with thousands of depositors and other creditors, within and without the state, the obligations of which banks have remained for a long period of time unpaid, and by reason thereof the credit of the state is being injured, and hardship and injury being inflicted upon thousands of its citizens and citizens of other states, and

Whereas, in the judgment of the legislative assembly the ordinary judicial and administrative machinery of the state is insufficient and illy adapted to the successful and expeditious administration of the affairs of such insolvent banks, and their assets are being absorbed and depleted by expenses of administration, without corresponding liquidation of their obligations, and by reason of lack of sufficient legal authority to deal with their assets and administer their affairs, such assets are being appropriated by secured creditors in large amounts beyond the indebtedness secured, and the ordinary creditors are being thereby injured, and the depositors guaranty fund is being depleted and overwhelmed with liabilities which it is liable to be unable to discharge, and

Whereas, by reason of the facts a situation of great public interest and concern has been created affecting the people of the state, as a whole, which cannot be properly and sufficiently protected according to the ordinary course of legal proceedings, and the Legislature deems it proper for the Supreme Court to assume and exercise its original jurisdiction upon the ground that it is necessary for the protection of public interests, it is hereby enacted as follows:

Section 1. The Supreme Court of the state of North Dakota is hereby given, and requested to exercise, original jurisdiction of the insolvency proceedings to liquidate and wind up the affairs of all insolvent state banks within the state, at the time of the taking effect of this act, and all such as may become insolvent during its continuance.

Sec. 2. Immediately upon the taking effect of this act the state examiner shall certify to the Attorney General a list of all state banks in the state now closed as insolvent, whether in the hands of receivers, the state examiner's office, or other trustees or agents of the state, together with a concise statement, showing the time of insolvency, the name of the receiver in charge, and such other information as the state examiner believes will be of importance to the Attorney General.

Sec. 3. Immediately upon receiving such certificate the Attorney General shall institute a proceeding in the Supreme Court entitled in the name of the state of North Dakota, for itself, and on behalf of all creditors of such banks, as plaintiffs, against all of said insolvent banks as defendants, for the purpose of declaring them insolvent and winding up their affairs as insolvent banking associations. Such proceedings shall be brought by the filing in the office of the clerk of the Supreme Court of a complaint reciting briefly the facts as to the insolvency of each of such banks, and the name of the receiver or other officer in charge.

Upon the filing of such complaint the Attorney General shall issue a summons in the usual form of summons issued in actions in the district court of the state, and containing an additional statement to the effect that a petition charging the bank in question with being insolvent is on file in the office of the clerk of the Supreme Court, and that unless answer is made thereto within fifteen days from such service such complaint will be taken as confessed. Such summons, however, as prepared for service on individual banks need only name as a defendant the particular bank upon which service thereof is to be made, and such service may be made upon any officer of such bank.

Service of such summons may be made in the same manner as the service of summons in ordinary civil actions is made, and the sheriff of the county in which the bank to be served is located shall upon request of the Attorney General immediately make service, or cause service thereof to be made, as in ordinary actions, but he shall not be entitled to collect any fees or expenses for making such service, and he shall make return thereof when served to the Attorney General.

Sec. 4. Upon the service of the summons as aforesaid the defendant bank shall have fifteen days within which to serve and file an answer denying insolvency, or any other material fact stated in the petition and unless within such fifteen days such answer is served and filed the insolvency of such defendant shall be deemed confessed.

Sec. 5. Upon the taking effect of this act the Supreme Court shall appoint a court commissioner who shall have all the qualifications prescribed by law for a Judge of the Supreme Court to whom it may refer any matters committed to the jurisdiction of the court by this act, who shall act for and on behalf of the Supreme Court in hearing evidence, finding facts and making orders in any matter arising in connection with the action or actions instituted in such court under the provisions of this act.

Such commissioner may sit for hearing and determination of any question of law or fact that may arise in such action or actions at any place within the state, and any such hearing may be brought on upon reasonable notice given by the commissioner to the party in interest...