The Bankers Deposit Guaranty and Surety Company v. Barnes
| Decision Date | 11 December 1909 |
| Docket Number | 16,629 |
| Citation | 105 P. 697,81 Kan. 422 |
| Parties | THE BANKERS DEPOSIT GUARANTY AND SURETY COMPANY, Plaintiff, v. CHARLES W. BARNES, as Superintendent of Insurance of the State of Kansas, Defendant. THE STATE OF KANSAS, ex rel. Fred S. Jackson, as Attorney-general, Intervenor |
| Court | Kansas Supreme Court |
Decided July, 1909.
Original proceeding in mandamus.
SYLLABUS BY THE COURT.
1. CORPORATIONS--Guaranteeing Payment of Bank Deposits. The provisions of section 1 of chapter 159 of the Laws of 1905, relating to the incorporation of surety, fidelity and guaranty companies, is by necessary inference applicable to the incorporation of companies organized in this state for the purpose of guaranteeing the payment of deposits in state and national banks.
2. CORPORATIONS--Certificate of Authority to do Business from the Superintendent of Insurance. All of the steps to be taken and all the requirements to be met to entitle a company which has been granted a charter by the charter board of the state for such purpose to obtain a certificate of authority to do business in this state are prescribed in section 3 of the above act, and in sections 3419, 3420, 3421 and 3422 of the General Statutes of 1901, which by reference in the act of 1905 are applicable in connection therewith.
3. CORPORATIONS--Discretion of Superintendent to Impose other than Statutory Requirements. When the corporation organized for such purpose has complied with all the prerequisite statutory requirements it is the duty of the superintendent of insurance to furnish the company with a certificate of authority for it to commence the business proposed in the charter (Gen. Stat. 1901, § 3422), and such superintendent has no discretion to impose any other requirement as a condition precedent to the issuance of such certificate.
John E Hessin, and J. W. Gleed, for the plaintiff.
Fred S. Jackson, attorney-general, for the defendant and the intervenor.
The plaintiff procured from the state charter board a charter which specified, among other purposes of the corporation, the following:
After obtaining such charter the company applied to the superintendent of insurance for a certificate of authority to do business in the state. The superintendent refused the application and assigned several reasons therefor. On the filing of the application by the company in this court for a writ of mandamus to compel the issuance of the certificate an alternative writ was allowed, and the superintendent thereafter filed his answer, in which he admits that the objections which he made in refusing to allow the application had been removed, except one, namely, that the laws do not permit the incorporation of a company for the purposes for which the plaintiff was incorporated. In his answer he makes the further objection, in substance, that in the charter there is no limit to the rate of interest which may be charged by the banks the payment of whose deposits are to be guaranteed; that he believes that much harm might result to the persons participating therein, either as insured or insurer, and to the people of the state, unless such business is carefully and strictly regulated and the risks undertaken by the insurer are carefully selected under reasonable regulations strictly enforced; that he believes he has authority as such superintendent, in the exercise of his discretion, to provide rules forbidding the company to accept risks and insure the deposits of any bank which accepts deposits bearing a greater rate of interest than three per cent per annum; that he believes it to be his duty to impose such a regulation upon the plaintiff or any other company transacting such business within the state. The superintendent further asks that he be not required to furnish the plaintiff with the certificate of authority prayed for if the court shall find that the plaintiff is legally incorporated, unless he further be allowed to prescribe as a condition precedent to the issuance of such writ of authority such regulation in regard to the rate of interest to be charged by banks accepted as risks.
The attorney-general intervenes on behalf of the state and objects to the allowance of a peremptory writ of mandamus on substantially the same grounds as are urged by the superintendent of insurance.
To determine whether the plaintiff was entitled to the charter issued to it we are referred to chapter 159 of the Laws of 1905, section 1 of which reads as follows:
"That in addition to the purposes for which corporations may be formed under existing laws of this state, private corporations may also be formed for the purpose of guaranteeing the fidelity of persons holding offices of public or private trust, to execute and guarantee bonds and undertakings in judicial proceedings, and to guarantee the faithful performance of any and all public, official or private duties."
On reading this section it will be observed that it authorizes the formation of private corporations for three separate and distinct purposes other than the purposes for which corporations may be formed under the then existing laws of the state, namely: First, "for the purpose of guaranteeing the fidelity of persons holding offices of public or private trust." This clause relates exclusively to persons holding offices of public or private trust. Second, "to execute and guarantee bonds and undertakings in judicial proceedings." Under this clause the bond or undertaking in a judicial proceeding of a person copartnership or corporation might be guaranteed. Third, "and to guarantee the faithful performance of any and all public, official or private duties." This provision is very broad. It is difficult to conceive of a breach of duty which might result in a monetary loss which may not be insured under this provision, whether the duty rested upon individuals or associations. The word "duty" is thus defined in volume 3 of Words and Phrases Judicially Defined, at page 2284: "One's duty is what one is bound or under obligation to do." Accepting this as a correct definition, and applying it to the third clause, it seems to authorize the formation of a corporation to guarantee the performance by any person, corporation or association of persons of any and all public, official or private obligations which are legally assumed or imposed by law upon such person, corporation or association and the breach of which may result in a monetary loss. One of the principal purposes of a bank, either state or national, is to receive deposits of money from persons, corporations or associations and to repay such deposits on demand or at such time as may be agreed upon. This is unquestionably a private duty of the bank, and we think that the section of...
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