State v. Merrill

• Decision Date: 22 December 1914
• Docket Number: 12191.
• Citation: 83 Wash. 8,144 P. 925
• Parties: STATE v. MERRILL.
• Court: Washington Supreme Court

144 P. 925

83 Wash. 8

STATE v. MERRILL.

No. 12191.

Supreme Court of Washington

December 22, 1914

Department 2. Appeal from Superior Court, King County; Mitchell Gilliam Judge.

Charles Merrill was convicted of conducting as agent a savings and loan business for a foreign corporation, and he appeals. Affirmed.

John W Roberts and Philip Tworoger, both of Seattle, for appellant.

John F Murphy and H. B. Butler, both of Seattle, for the State.

MOUNT J.

The appellant was charged with a misdemeanor under an information as follows:

'He, said Charles Merrill, in the county of King, state of Washington, on the 28th day of July, 1913, being then and there the agent and employé of the National Mercantile Company, Limited, a corporation duly organized and existing under and by virtue of the laws of the Province of British Columbia, in the Dominion of Canada, did then and there willfully and unlawfully violate and fail to comply with the provisions of an act of the Legislature of the state of Washington, passed and approved February 14, 1913, and March 19, 1913, respectively, entitled 'An act relating to the organization and to the management, regulation and control of building and loan and savings and loan associations and societies,' etc. In that he did then and there willfully and unlawfully conduct a savings and loan association business, said business being in the form and of a character similar to that authorized by the foregoing act by then and there selling and knowingly causing to be sold and issued to one F. H. Lieben one certain contract and share of the National Mercantile Company, Limited, said contract and share being more particularly described as No. L. P. Issue 1 Series 5, said the National Mercantile Company, Limited, being then and there a foreign building and loan association not theretofore or at any time lawfully engaged in the state of Washington in the business of a savings and loan association.'

After a demurrer to this information was overruled, the cause was tried to the court; a jury having been waived. The defendant was found guilty as charged, and a fine of $200 was adjudged against him. This appeal followed.

It is admitted by the appellant that the National Mercantile Company, Limited, named in the information, is a corporation organized and existing under and by virtue of the laws of the Province of British Columbia, in the Dominion of Canada; that its home office is at Vancouver, B. C., and from that office it transacts all its business; that the company, as a part of its business, issues what is called a 'loan contract.'

The contention on the part of the company is, so far as the state of Washington is concerned, that it sells its contracts through certain persons whom it calls correspondents; that Merrill was its correspondent in Seattle. The contention further is that on July 28, 1913, one Lieben went to Mr. Merrill, the appellant, and made application to purchase one of the company's loan contracts; that Merrill took his application and told Mr. Lieben that he had to send to Vancouver, B. C., for the contract; that it would be executed in Vancouver within a few days and sent over to Seattle. This contract was executed and forwarded to Merrill, and was delivered by Merrill to Lieben.

It was shown at the trial that the National Mercantile Company, Limited, is not authorized under the act referred to in the information to do a savings and loan business within the state of Washington. It has, however, filed articles of incorporation with the Secretary of State under the general incorporation law. Its articles of incorporation, which are in the record, indicate that the company is authorized to do most any kind of business. So far as this record shows, it is engaged principally in the building and loan, or savings and loan, business.

It is insisted by the appellant that the information is filed under section 22 of the act in question, which section is as follows:

'Any officer, director or agent of any savings and loan association or any other person who shall sell or issue or knowingly cause to be sold or issued to any resident of this state, any stock of said association while said association does not have on deposit with the state auditor as required by this act, securities of the value and at the time herein prescribed, or while such association shall not have the certificate of the state auditor authorizing it to do business as herein prescribed shall be guilty of a gross misdemeanor.'

Counsel for the state insist that the information was filed under the next succeeding section, which provides:

'After the passage and approval of this act, it shall be unlawful for any person, association or persons or domestic associations not already organized and doing business under sections 3601 to 3638, both inclusive, of Remington & Ballinger's Annotated Codes and Statutes of Washington, to conduct a business in the form or of a character similar to that authorized by this act without first incorporating under this act. After the passage and approval of this act no foreign association not already lawfully engaged in the state of Washington in the business of a savings and loan association shall be permitted to conduct such a business in this state. * * *'

Section 27 of the act provides that every agent or other employé who shall willfully violate any provision of the act shall be guilty of a misdemeanor.

In order to hold that the information was filed under section 22, and is governed by that section, it would be necessary to hold that 'any stock of said association' means contract certificates which represent stock in the association, and does not mean capital stock of the association. We find it unnecessary to construe this section, or to hold that the information was filed under the provisions of this section, for it is clear that the information charges the defendant with conducting a savings and loan business by then and there selling and knowingly causing to be sold and issued to one F. H. Lieben one certain contract and share of the National Mercantile Company, Limited. It was not the capital stock of the association that was sold in this instance, but a contract certificate share. In other words, the defendant is charged here with conducting a savings and loan business when the company or business which he represents was not authorized to do business within this state. Clearly, it seems to us that the information was filed and intended to be filed under the provisions of section 23 and section 27.

The principal contention of the appellant is that the act named in the information is unconstitutional and void for several reasons, as follows: (1) That the act delegates both judicial and legislative power to the state auditor. (2) That it is in violation of section 8, art. 1, of the Constitution of the United States and of the Fourteenth amendment, in that it imposes a burden upon interstate commerce. (3) That it is in violation of the Fourteenth amendment to the Constitution of the United States because it abridges the privileges and immunities of citizens of the United States, and because it deprives investment companies or citizens of property without due process of law, and deprives them or other persons similarly situated of the equal protection of the law, and denies that freedom of contract guaranteed by the Constitution; and is class legislation. (4) That it is in violation of article 2, § 19, of the Constitution of this state. We shall notice these contentions briefly.

The Constitution of this state, at section 20, art. 3, provides:

'The auditor shall be auditor of public accounts, and shall have such powers and perform such duties in connection therewith as may be prescribed by law. * * *'

The appellant argues that no other duties can be imposed upon the state auditor under this constitutional provision than the duties to audit public accounts, and such other duties in connection therewith as may be prescribed by law. For the purposes of this case we shall concede that this is the plain meaning of the constitutional provision quoted. Counsel for the appellant then set out the different sections of the act under consideration and argue that the provisions of the act are contrary to the constitutional provision above quoted for the reason that it makes a judicial and executive officer of the auditor, and that his decisions are final. Many pages of th appellant's brief are taken up with this discussion. We think it is sufficient to say that these building and loan or savings and loan associations, as provided for in this act, are within the control of the Legislature of the state. They are in their nature public associations doing business with the public, as banks insurance companies, and other trust companies, and are subject to regulation on the same theory that these other trust companies are subject to lawful regulation. State Savings & C. Bank v. Anderson, 165 Cal. 437, 132 P. 755. The accounts of these savings and loan associations are therefore in their nature public. We think it is not overstating the Constitution to say that the...