Weed v. Bergh

• Decision Date: 01 February 1910
• Parties: WEED ET AL. v. BERGH ET AL.
• Court: Wisconsin Supreme Court

141 Wis. 569

124 N.W. 664

WEED ET AL.

v.BERGH ET AL.

Supreme Court of Wisconsin.

Feb. 1, 1910.

Appeal from Circuit Court, Waupaca County; Charles M. Webb, Judge.

Action by W. H. Weed and others against Marcus C. Bergh, as commissioner of banking, and others. From an order sustaining a demurrer to plaintiffs' complaint, they appeal. Affirmed.

This is an action in equity brought by a private banking partnership against the banking commissioner and the district attorney of Waupaca county to restrain those officials from enforcing chapter 285, Laws 1909, requiring all private banking concerns to incorporate on the ground that the law is unconstitutional. The plaintiffs appeal from an order sustaining a general demurrer to the complaint. By the complaint it is alleged that the plaintiffs are copartners, and have been such for many years, engaged in the lumber, farming, and milling business at Weyauwega, Wis., and since 1870 have also been doing a banking business at Weyauwega, consisting of receiving deposits, discounting and negotiating notes, buying and selling exchange, etc.; that in 1873 they organized a corporation with a capital stock of $30,000, called the Weed & Gumaer Manufacturing Company, to carry on their general business, which corporation keeps separate books of account and has assets consisting of unincumbered real estate, mills, and other property in and about Weyauwega worth $160,000; that the copartnership has now on deposit with it as private bankers upwards of $250,000, and has loaned out over $200,000 on first-class securities, many of which will not come due till after September 1, 1909; that they passed successfully through the panics of 1893 and 1907, and have the confidence and respect of the community; that the defendant Bergh, as state banking commissioner, and the defendant Severson, as district attorney, threatened that, unless the plaintiffs incorporate or go out of the banking business, they will cause criminal warrants to be issued and prosecute the plaintiffs under chapter 285, Laws 1909; that, in order to comply with that law, it would be necessary for plaintiffs to incorporate in a sum in excess of $150,000 or to immediately convert their real estate and chattel holdings into personal property; and that to attempt such a thing would result in forced sales at inadequate prices, confiscation of their property, destruction of their business and irreparable damage; that the law violates the following provisions of the Constitution of Wisconsin, viz.: Article 1, § 1: “All men are born equally free and independent and have certain inherent rights, among these are life, liberty, and the pursuit of happiness.” Article 1, § 8: “No person shall be held to answer for criminal offense without due process of law.” Article 1, § 13: “The property of no person shall be taken for public use without just compensation therefor.” Article 1, § 22: “The blessings of a free government can only be maintained by a firm adherence to justice, moderation, temperance, frugality and virtue, and by frequent recurrence to fundamental principles.” The law also violates the fourteenth amendment to the Constitution of the United States, which inhibits any state from depriving any person of life, liberty, or property without due process of law, and from denying to any person the equal protection of the laws.Kronshage, McGovern, Goff, Fritz & Hannan and Byron B. Park, for appellants.

F. L. Gilbert, Atty. Gen., and Russell Jackson, Deputy Atty. Gen., for respondents.

WINSLOW, C. J. (after stating the facts as above).

Chapter 285 of the Laws of 1909 adds three sections to the general banking laws of the state, numbered, respectively, 2024--78 l, 2024--78m, 2024--78n.

The first of these sections provides that “the soliciting, receiving, or accepting of money, or its equivalent, on deposit as a regular business by any person, copartnership, association, or corporation shall be deemed to be doing a banking business, whether such deposit is made subject to check or is evidenced by a certificate of deposit, a pass book, a note, a receipt, or other writing, provided that nothing herein shall apply to or include money left with an agent pending investment in real estate or securities for, or on account of, his principal.” The second of the sections named makes it unlawful for any person, copartnership, association, or corporation to do a banking business without being incorporated as either a national, state, mutual savings, or trust company bank, and makes a violation of the provision a misdemeanor punishable by fine or imprisonment, or both. The third of the sections provides that any person, copartnership, association, or corporation doing business in the state as defined in the act may incorporate as a state bank on or before September 1, 1909, as provided in section 2024--55 of the Statutes. The act was approved June 3, 1909, and published on the following day. The general banking law of the state (section 2015 to section 2024--81, Sanborn's St. Supp. 1906) was passed as chapter 234, Laws 1903, and was amended by chapter 109, Laws 1905, and these laws, as well as the amendment now under consideration, were passed supposedly pursuant to the terms of the amendment to section 4, article 11, of the Constitution adopted at the general election of 1902, authorizing the Legislature by two-thirds vote of the members elect of each house to enact a general banking law “for the creation of banks and for the regulation and supervision of the banking business.”

The plaintiffs claim that the act of 1909 is unconstitutional on two general grounds: First, because every citizen has a common-law right to transact a banking business, and the law in question amounts to a prohibition of that right; second, because the law in question fixes so short a time within which the plaintiffs must convert their private institution into an incorporated institution that it cannot be obeyed without a ruinous sacrifice of property amounting to practical confiscation.

1. There are some fundamental propositions so well settled that it is only necessary to state them. Among these are the following: First, banking is a common-law right pertaining equally to every member of the community; second, being a common-law right, it cannot be prohibited under a Constitution like ours, which recognizes the right and grants power to the Legislature to regulate and supervise it; third, under such a Constitution as ours, banking may be regulated so far as may be reasonably necessary to secure the public welfare and safety, but it must be true regulation, not prohibition under the guise of regulation. 1 Morse on Banks and Banking, § 13.

With these principles in mind, it seems evident that the ultimate question under this head is whether the requirement that all who wish to enter into the...