United States v. State of Oklahoma

• Decision Date: 19 February 1923
• Docket Number: No. 25,25
• Citation: 43 S.Ct. 295,261 U.S. 253,67 L.Ed. 638
• Parties: UNITED STATES v. STATE OF OKLAHOMA. , original
• Court: U.S. Supreme Court

261 U.S. 253

43 S.Ct. 295

67 L.Ed. 638

UNITED STATES

v STATE OF OKLAHOMA.

No. 25, original.

Argued on Motion to Dismiss Jan. 2, 1923.

Decided Feb. 19, 1923.

Mr. Assistant Attorney General Riter, for the United States.

Mr. Wm. H. Zwick, of Oklahoma City, Okl., for the State of Oklahoma.

[Argument of Counsel from pages 254-256 intentionally omitted]Mr. Justice BUTLER delivered the opinion of the Court.

This is a suit commenced in this court by the United States against the state of Oklahoma to establish priority in favor of the United States under section 3466 of the Revised Statutes(Comp. St. § 6372), and to have a debt owing by the State Bank of Guthrie, Okl., paid before any distribution of the assets of the bank.

The case was heard on the motion of the state to dismiss the complaint on the ground that the allegations thereof are not sufficient to constitute a cause of action.

The facts as set forth in the complaint are in substance the following.The bank was organized under the laws of Oklahoma, and was engaged in a general banking business at Guthrie until, October 26, 1921, it was found insolvent under the state law and unable to pay its debts and unable to continue as a going banking concern.The United States, under various acts of Congress, is guardian of certain incompetent and restricted Indians residing within Oklahoma, and as such guardian caused to be deposited in that bank certain sums of money received by the United States, through the office of the Superintendent of the Five Civilized Tribes in Oklahoma, on account of certain individual members and allottees of such tribes, who were incompetent and restricted and wards of the United States.Before such deposit was made the bank, pursuant to regulations prescribed by the Secretary of the Interior, delivered t the United States a bond with the Fidelity & Casualty Co. of New York as surety thereon to secure the payment of such funds, and that bond is in force.On October 26, 1921, the sum so deposited and due the United States amounted to not less than $42,000, with interest.October 7, 1921, a state bank examiner made an examination of the bank and found that it was insolvent under the Oklahoma law, and unable to pay its debts and to continue as a going banking concern, and so reported to the bank commissioner, who, on October 26, 1921, adjudged the bank insolvent and took charge and possession of its assets, books, and records for the purposes specified in the state depositors' guaranty fund law.The assets of the bank so taken and now in the possession of the bank commissioner are in excess of the amount claimed by the United States, and the United States claims to be entitled to have its debt first satisfied in full out of such assets, before other creditors are paid anything.Demand for such prior payment was made by the United Stated and refused by the state.

The claim of priority asserted by the United States is based upon section 3466 of the Revised Statutes of the United States (Comp. St. § 6372), which provides:

'Whenever any person indebted to the United States is insolvent, or whenever the estate of any deceased debtor, in the hands of the executors or administrators, is insufficient to pay all the debts due from the deceased, the debts due to the United States shall be first satisfied; and the priority hereby established shall extend as well to cases in which a debtor, not having sufficient property to pay all his debts, makes a voluntary assignment thereof, or in which the estate and effects of an absconding, concealed, or absent debtor are attached by process of law, as to cases in which an act of bankruptcy is committed.'

The applicable provisions of the Oklahoma statutes are found in chapter 6 of the Revised Laws of Oklahoma of 1910.A state banking board is created and given the supervision and management of depositors' guaranty fund, created by levying assessments against the capital stock of each bank and trust company.

The provision of section 302, under which possession of the bank and its assets were taken, is as follows:

'Whenever any bank or trust company organized or existing under the laws of this state shall voluntarily place itself in the hands of the bank commissioner, or whenever any judgment shall be rendered by a court of competent jurisdiction, adjudging and decreeing that such bank or trust company is insolvent, or whenever its rights or franchises to conduct a banking business under the laws of this state shall have been adjudged to be forfeited, or whenever the bank commissioner shall become satisfied of the insolvency of any such bank or trust company, he may, after due examination of its affairs, take possession of said bank or trust company and its assets, and proceed to wind up its affairs and enforce the personal liability of the stockholders, officers and directors.'

The state asserts a lien superior to the priority rights of the United States, under section 303, which is as follows:

'In the event that the bank commissioner shall take possession of any bank or trust company, which is subject to the provisions of this chapter, the depositors of said bank or trust company shall be paid in full, and when the cash available or that can be made immediately available of said bank or trust company is not sufficient to discharge its obligations to depositors, the said banking board shall draw from the depositors' guaranty fund and from additional assessments, if required, as provided in section 300, the amount necessary to make up the deficiency; and the state shall have, for the benefit of the depositors' guaranty fund, a first lien upon the assets of said bank or trust company, and all liabilities against the stockholders, officers and directors of said bank or trust company and against all other per ons, corporations or firms.Such liabilities may be enforced by the state for the benefit of the depositors' guaranty fund.'

The United States, asserting that it is not bound first to proceed on the bond of the surety company (citingLewis, Trustee, v. United States, 92 U. S. 618, 23 L. Ed. 513), invokes jurisdiction of this court on the ground that, when the bank and its assets were taken over by the state through its bank commissioner, the state acquired title to the same and is therefore the proper party to be sued.State v. Cockrell, 27 Okl. 630, 112 Pac. 1000;Lankford v. Platte Irom Works Co., 235 U. S. 461, 35 Sup. Ct. 173, 59 L. Ed. 316;American Water Co. v. Lankford, 235 U. S. 496, 35 Sup. Ct. 184, 59 L. Ed. 329;Farish v. State Banking Board, 235 U. S. 498, 35 Sup. Ct. 185, 59 L. Ed. 330.No objection to jurisdiction is made by the state, and the state does not deny that the United States is entitled to priority on account of money deposited by it as guardian of the Indians to the same extent as in the case of any other deposit.The state's contentions are that section 3466 properly construed does not give the United States priority; that the state has a lien on the bank's assets, and that the priority rights (if any) of the United States are subject thereto; and that priority rights under the act do not apply where a sovereign state has a lien against its debtor.

Section 3466, relied on by the government, is a re-enactment and extension of section 65, Act of March 2, 1799, 1 Stat. 676; and the same or equivalent language, so far as the question here involved is concerned, is found in earlier statutes.Act of March 3, 1797, § 5,1 Stat. 515; also Act of May 2, 1792, § 18,1 Stat. 263;Act ofAugust 4, 1790, § 45, 1 Stat. 169;Act ofJuly 31, 1789, § 21, 1 Stat. 42.It has been considered in a number of cases in this court.The claim of the United States to the asserted priority rests exclusively upon the statute.No lien is created by it.It does not overreach or supersede any bona fide transfer of property in the ordinary course of business.It established priority which is limited to the particular state of things specified.The meaning of the word 'insolvent,' used in the act, and of the insolvency therein referred to, is limited by the language to cases where 'a debtor not having sufficient property to pay all his debts shall make a voluntary assignment,' etc.Mere inability of the debtor to pay all his debts...