State v. People's Nat. Bank

• Court: New Hampshire Supreme Court
• Writing for the Court: WALKER, J.
• Citation: State v. People's Nat. Bank, 70 A. 542, 21 Ann.Cas. 1204, 76 N.H. 27 (N.H. 1908)
• Decision Date: 27 June 1908
• Parties: STATE v. PEOPLE'S NAT. BANK. SAME v. CLAREMONT NAT. BANK. SAME v. KEENE NAT. BANK.

70 A. 542

76 N.H. 27

STATE

v. PEOPLE'S NAT. BANK.

SAME

v. CLAREMONT NAT. BANK.

SAME

v. KEENE NAT. BANK.

Supreme Court of New Hampshire. Sullivan.

June 27, 1908.

Transferred from Superior Court.

Informations by the state charging the People's National Bank, the Claremont National Bank, and the Keene National Bank with violating Laws 1907, p. 111, c. 112. The demurrers to the informations on the ground that the statute did not apply to national banks were overruled, subject to exception, and each bank filed an answer to which the state demurred, and the demurrers were sustained and defendants excepted. Exception to the orders overruling the demurrers to the informations overruled, and exception to the orders sustaining demurrers to the answers sustained.

Informations alleging that the defendants are violating the provisions of chapter 112, p. Ill, Laws 1907. Transferred from the November term, 1907, of the superior court, by Chamberlin, J. The cases are substantially alike, and the facts stated in the first case may be deemed to apply to the others. The defendant's demurrer to the information, on the ground that the statute did not apply to national banks, was overruled, subject to exception. Thereupon the bank filed an answer, alleging as follows: "The defendant says: That it is a national banking association, duly organized and established under the laws of the United States. * * * That its place of business is in Claremont * * * That in the conduct of its lawful business it did," ou November 1, 1907, "receive deposits of money upon which it agreed to pay interest to the depositors. That upon receiving said deposits, it issued to each depositor a pass book, bearing upon its cover the following words: 'Interest-bearing deposits People's National Bank, Claremont, N. H. In account with John Doe.' That said book contained, among others, the following regulations: '(1) Deposits or withdrawals may be made at any time. (2) Interest at the rate of 3 per cent. per annum will be credited to depositors January 1st and July 1st, and this interest will be at once added to the principal, and will draw interest same as other deposits; the interest thus being compounded twice a year. * * * (9) The bank shall have the right to return any or all deposits in whole or in part, or to decline to receive deposits in its savings department, whenever it may deem proper.' That the form suggested in said book for the withdrawal of money upon an order contains the following words: 'People's National Bank, interest-bearing deposits.' That on said 1st day of November, 1907, it caused to be printed in the National Eagle, a newspaper published and circulated in said Claremont, an advertisement containing the following words: 'A general banking business transacted. Three per cent. interest on all time deposits.' And the defendant, further answering, denies each and every allegation in said information, except as the same are herein admitted, and says that the business transacted as above set forth in this answer was done in accordance with and under authority of the laws of the United States, * * * and specifically denies that its said business carried on as aforesaid was in violation of any valid law or statute of the state of New Hampshire." To this answer the state demurred. The demurrer was sustained, and the defendant excepted.

Edwin G. Eastman, Atty. Gen., for the State.

Streeter & Hollis, for defendants.

WALKER, J. The statute (Laws 1907, p. Ill, e. 112) under which the prosecution was brought is as follows:

"Section 1. The words savings bank as used in this act shall include only institutions for savings incorporated as such in this state.

"Sec. 2. No person, copartnership, incorporation, or association, except savings banks incorporated in this state, and trust companies, loan and trust companies, loan and banking companies thereto empowered by their charters granted by this state, shall hereafter make use of any sign at the place where its business is transacted having thereon any name, or other word or words indicating that such place or office is the place or office of a savings bank. Nor shall such corporation, person, copartnership or association make use of or circulate any written or printed or partly written and partly printed paper whatever, having thereon any name, or other word or words, indicating that such business is the business of a savings bank; nor shall any such person, copartnership, association, or incorporation receive deposits and transact business in the way or manner of a savings bank, or in such a way or manner as to lead the public to believe, or, in the opinion of the bank commissioners, might lead the public to believe, that its business is that of a savings bank.

"Sec. 3. The bank commissioners shall have the authority to examine the accounts, books, and papers of any corporation, person, copartnership, or association which makes a business of receiving money on deposit, in order to ascertain whether such person, copartnership, corporation, or association has violated any provision of this act; and any person, copartnership, incorporation, or association violating any provision of this act shall forfeit to this state one hundred dollars a day for every day or part thereof during which such violation continues. Any violation of the provisions of this act shall forthwith be reported by the bank commissioners to the Attorney General. The said forfeiture may be recovered by an information or other appropriate proceeding brought in the superior court in the name of the Attorney General. Upon such information or other proceeding the court may issue an injunction restraining such person, copartnership, incorporation, or association from further prosecution of its business within this state during the pendency of such proceeding or for all time, and may make such other order or decree as equity and justice may require."

It is claimed that the statute prohibits the defendants from doing the kind of business partially described in the answers, because, it is urged, they "receive deposits and transact business in the way or manner of a savings bank." This contention makes it necessary to give a construction to the language of the statute. Evidently, the phrase quoted cannot be given a literal meaning. As a national bank is not a savings bank, it cannot transact the same kind of business that a savings bank is incorporated to do. If it has a savings department, it does not receive deposits to be invested in specified securities under the supervision of the bank commissioners. It does not hold the deposits upon a trust creating the relation of trustee and cestui que trust, but upon a contract creating the relation of debtor and creditor. "Although a bank may be called a savings bank, if it. is really a stockholders' bank, where the capital is owned by the shareholders, the name will amount to nothing (unless it produces actual harm to a depositor by misleading him without his fault), and in such a bank a deposit creates the relation of debtor and creditor, and the depositor has no lien or trust in the bonds in which the money he deposits is invested, as is the case in a savings bank, even though the bank officers promise to hold the bonds for his benefit. Such a lien can only be created by mortgage or pledge." 2 Morse, Banks, § 618. To give this clause a literal meaning would make it inoperative and senseless, and the fact that it would thus become absurd makes it necessary to seek the legislative intention embodied in the words used, by adopting a more liberal interpretation.

The claim of the state is that this language was inserted in the statute to prevent corporations, not specially authorized by the Legislature, from doing a savings bank business or an investment business substantially similar to the business of a savings bank, and that the receiving of money by a national bank from its customers for investment, upon which it...