State v. Richcreek

• Decision Date: 29 May 1906
• Docket Number: 20,701
• Citation: 77 N.E. 1085,167 Ind. 217
• Parties: The State v. Richcreek
• Court: Indiana Supreme Court

77 N.E. 1085

167 Ind. 217

The State v. Richcreek

No. 20,701

Supreme Court of Indiana

May 29, 1906

Rehearing Denied October 23, 1906.

From Criminal Court of Marion County (34,887); Fremont Alford Judge.

Prosecution by the State of Indiana against Seth M. Richcreek. From a judgment for defendant, the State appeals.

Reversed.

Charles W. Miller, Attorney-General, C. C. Hadley, W. C. Geake, L. G Rothschild and Rowland Evans, for the State.

D. P. Baldwin, T. E. Howard and W. W. Thornton, for appellee.

OPINION

Montgomery, J.

Appellee was charged by affidavit with having transacted a banking business on July 3, 1905, and for two days prior thereto, and with having used the words "bank," "banker," and "banking" in connection with said business without having filed with the Auditor of State a detailed statement under oath as required by the act of March 4, 1905 (Acts 1905, p. 182, §§ 2994a-2994j Burns 1905), entitled: "An act to regulate the business of banking by individuals, partnerships and unincorporated persons." The affidavit was quashed, upon appellee's motion, for the alleged reason that it did not contain facts sufficient to constitute a public offense; and from that decision the State appealed.

The first three sections of the statute upon which this prosecution was based, read as follows:

"Section 1. That every partnership, firm or individual transacting a banking business within this State or using the word bank, banker or banking in connection with his or its business shall be subject to the provisions of this act.

"Section 2. That from and after July 1, 1905, it shall be unlawful for any partnership, firm or individual to transact a banking business in this State unless such partnership, firm or individual has property of the cash value of at least $ 10,000. Such property shall be in money, bank furniture and fixtures or real estate for the conduct of the business of such bank, all to be set apart and kept good and unimpaired for the security of creditors of any such bank, and provided that the real estate, bank furniture and fixtures shall not constitute more than one-third in amount and value of the entire capital of such bank.

"Section 3. Every partnership, firm or individual now transacting or hereafter desiring to transact a banking business in this State, shall, under oath, file with the Auditor of State, a full, complete detailed statement of First. The name of the bank or proposed bank. Second. A copy of the articles of copartnership and agreement if a copartnership under which the business of the bank is being or is to be conducted, which shall be executed and acknowledged by all the parties interested therein, and at least one of whom shall be at all times a resident of the State of Indiana. If a banking business is being or is to be transacted or carried on by an individual, such individual shall at all times, while in such banking business, be a resident of the State of Indiana and the statement herein required shall so show. Third. The county and city or town in which the bank is to be located and the business carried on. Fourth. The amount of the capital paid into the business, and to be kept and maintained at all times in the business. Fifth. A statement that the responsibility and net worth of the individual members of such firm, partnership or individual is equal to an amount at least double the amount of the capital paid into such bank as herein provided. Sixth. If not disclosed in the partnership agreement, then the names of the officers, agents or employes in the active charge of and management of the business of the bank. Every partnership, firm or individual now doing a banking business in this State shall on or before July 1, 1905, file with the Auditor of State a detailed statement as provided herein."

No formal objection to the affidavit has been suggested, but the assault is directed solely against the act upon which it is founded. It is charged that the provision of section two, forbidding more than one-third of the capital of the bank to be invested in real estate, bank furniture and fixtures for the conduct of the business of such bank, and the second and fifth subdivisions of section three of the statute, are invalid and unconstitutional.

The right of banking, in all its departments, at common law belonged to the individual citizen, to be exercised at pleasure. It is conceded by counsel, and it is unquestionably settled, that the sovereign authority of the State may regulate and restrain the exercise of such right. Bank of Augusta v. Earle (1839), 13 Pet. *519, *596, 10 L.Ed. 274; Blaker v. Hood (1894), 53 Kan. 499, 36 P. 1115, 24 L. R. A. 854; State, ex rel., v. Woodmansee (1890), 1 N.D. 246, 46 N.W. 970, 11 L. R. A. 420; Curtis v. Leavitt (1857), 15 N.Y. 9, 52; Attorney-General v. Utica Ins. Co. (1817), 2 Johns. Ch. 371; People, ex rel., v. Utica Ins. Co. (1818), 15 Johns. 358, 8 Am. Dec. 243; People v. Bartow (1826), 6 Cowan (N. Y.) 290; Nance v. Hemphill (1840), 1 Ala. 551; State v. Williams (1852), 8 Tex. 255; State v. Stebbins (1828), 1 Stew. (Ala.) 299; 1 Morse, Banks and Banking (4th ed.), § 13; Zane, Banks and Banking, §§ 9, 10.

The quasi-public nature of the banking business, and the intimate relation which it bears to the fiscal affairs of the people and the revenues of the State, clearly bring it within the domain of the internal police power, and make it a proper subject for legislative control. Bankers invite general deposits primarily for their own profit, and usually obtain a measure of public patronage, and the expediency of guarding the people against imposition, extortion, and fraud, of affording efficient means of detecting irregular practices, and of learning the true financial condition of the bank, and the necessity of preserving the confidence of patrons in its solvency, and of protecting their interests in case of insolvency, justify inspection and control by the State. When the sovereign people of a state, acting through the legislature, find such police regulation necessary to protect public health, safety or morals, to prevent fraud or oppression, or to promote the general welfare, the power to act is supreme, subject only to such limitations as are imposed by the fundamental law. The question as to what regulations are proper and needful is primarily for legislative decision, yet when the police power is used to regulate a business or occupation which in itself is lawful and useful to the community, the courts, if called upon, must determine finally whether such regulations as may have been prescribed are so far just and reasonable as to be in harmony with constitutional guaranties. Republic Iron & Steel Co. v. State (1903), 160 Ind. 379, 66 N.E. 1005.

Appellee's learned counsel frankly concede that the business of banking, whether conducted by a corporation or by individuals, is a legitimate subject of inspection and regulation by law under the police power; and further, that the provisions of section two of the act under consideration, making it unlawful to transact a banking business under this act on a capital of less than $ 10,000 in money, bank furniture, fixtures and real estate, all to be set apart and kept good for the security of creditors of the bank, are wise and salutary. They earnestly contend, however, that the proviso, "that the real estate, bank furniture and fixtures shall not constitute more than one-third in amount and value of the entire capital of such bank," contravenes the constitutional guaranty that "no man's property shall be taken by law without just compensation" (Const., Art. 1, § 21), since many private bankers already in business have furniture and fixtures and real estate of more than half, and in some cases nearly equal to, the value of the whole banking capital. It is further argued that this clause violates § 23, article 1, of the state Constitution, which provides: "The General Assembly shall not grant to any citizen, or class of citizens, privileges and immunities which, upon the same terms, shall not equally belong to all citizens," inasmuch as it casts a burden of discriminating inequality upon established bankers having valuable banking houses and equipments; and finally, that it deprives such bankers of their property without due process of law, and abridges their privileges and immunities in contravention of the fourteenth amendment to the Constitution of the United States.

It was held in City of Aurora v. West (1857), 9 Ind. 74, 83, that it is only the taking of specific pieces of private property by the exercise of the power of eminent domain, without compensation, that is prohibited by § 21, article 1, of the state Constitution, and that property might be taken by taxation for public purposes, without any other compensation than the general and common benefits accruing from the expenditure of the fund thereby produced. It is equally clear that this constitutional provision was not intended to serve as a restraint upon the exercise of the police power of the state for the public welfare, by which a particular use of property once lawful and unobjectionable, may be forbidden, or property be wholly destroyed, without compensation and without the fault of the owner.

The insistence that the act grants special privileges and immunities is equally untenable. It is manifest that in every regulating statute the precise terms prescribed must be to some extent arbitrary, depending upon the exercise of a sound legislative judgment. The constitutional mandate is satisfied if there be no manifest intent to discriminate in favor of a particular class of citizens to the exclusion of others similarly circumstanced, and the provisions of the restrictive act be in fact open alike to all citizens...