Wirtz v. Nestos

• Decision Date: 20 September 1924
• Citation: Wirtz v. Nestos, 51 N. D. 603, 200 N. W. 524 (N.D. 1924)
• Court: North Dakota Supreme Court

200 N.W. 524

51 N.D. 603

A. J. WIRTZ in Behalf of Himself and All Other Depositors of the Security State Bank of New England, an Insolvent Banking Corporation, Appellant, v. R. A. NESTOS, Governor of the State of North Dakota, Gilbert Semingson, State Bank Examiner of Said State, M. R. Porter, C. B. McMillan and S. G. Severtson, Constituting the Depositors Guaranty Fund Commission of Said State, Respondents and John Watson, a Depositor in the Tolley State Bank of Tolley, North Dakota, an Insolvent Banking Corporation, in Behalf of Himself and All Other Depositors of Said Bank Similarly Situated, Intervener

Supreme Court of North Dakota

September 20, 1924

Appeal from the District Court of Burleigh County, North Dakota Pugh, J.

Affirmed.

Charles Simon and Harvey Miller, and Crawford & Burnett, for appellant.

The term public funds means taxes, customs, etc. appropriated by the government to the discharge of its obligations. Ayers v. Lawrence, 59 N.Y. 198.

A public fund within the rule of law which excused a trustee for liability for the trust fund, if invested in public funds, means government stocks or security depending for credit and security on the faith, solvency and stability of the government. 6 Words & Phrases, p. 5788.

The moneys of the state bonding fund do not belong to the state but are deposited in and held by the state treasurer in trust for the benefit and protection of those who under the terms of act may become claimants against such fund. In no event do such moneys become funds of the state. State ex rel Lande v. Taylor, 33 N.D. 76, L.R.A. 1918B, 156.

That such fund is a special and not a public fund. State ex rel. Sterns v. Olson, 43 N.D. 619, 175 N.W. 714.

That the Bank Commissioner is a state officer has not been and cannot be questioned. That the depositors guaranty fund and the funds of a failed bank in the hands of a bank commissioner for the purpose of reimbursing the depositor's guaranty fund is as much a fund of the state as the common school fund is also true. State ex rel Taylor v. Cockrell, 112 P. 1000.

It cannot be questioned that a judgment in the case in favor of the plaintiff in error would directly affect the state and would in effect be a judgment against the state and would require the subjection of state funds to satisfy said judgment, therefore it cannot be maintained. Lovett v. Langford, 145 P. 767.

The title of such depositors' guaranty fund vests in the state just as much so as common school lands or the proceeds of the sale of the same and the taxes levied and collected for the maintenance and support of said schools, all of which are held in trust by the State for a specific purpose.

Diret, Holt, Frame & Thorp and John Thorpe, Assistant Attorney General, for respondents.

The money referred to in said section is money belonging to the state which has been accumulated in the treasury as public funds, which are to be used in carrying on the state government. It means such money as is raised by taxation, or which has accumulated in the treasury by the payment of fees authorized by law to be charged for various purposes, or in any manner which would constitute such money a public fund of the state. The auditor's duties relate to the public funds of the state. State ex rel. v. Olson, 43 N.D. 619.

The case, it is true, has some differences from that at bar and the state was the owner of the property committed to the commissioners for disposition and was also the original debtor. Here the property is that of the contributing banks and is accumulated in the fund for the security of their respective depositors. These are differences, but there are substantial resemblances. Lankford v. Platte Iron Works (U.S.) 59 L.Ed. 316.

It is left wholly with the commissioner of insurance to be paid only out of the bonding fund, and mandamus will not lie against the commissioner because the settlement of losses and liabilities involves, as we have shown, acts of judicial discretion and judgment not ministerial, and an action cannot be maintained against the bonding department for that is not an entity, and has only agreed to pay in case the commissioner says payment shall be made. State ex rel. v. Taylor, 27 N.D. 77.

It will be seen that the law has specifically confided to the banking board and the bank commissioner the duty and authority to determine the validity of claims against the depositors' guaranty fund. By this section it is not only their duty to determine when a claim is valid against the bank, but they must further determine whether such claim is protected and required to be paid from the depositors' guaranty fund. Lovett v. Lankford, 145 P. 770.

The powers of officers are classified as discretionary or ministerial. Over the former the courts have no control except when the discretion has been abused. Thus, if the power has been given to an officer to determine a question of fact his determination is final in the absence of any controlling provision of statute, provided he has not been guilty of an abuse of discretion. Such a determination is not ordinarily open to collateral attack in a court . . . but the exercise of ministerial powers is subject to the control of the courts, which may enforce their exercise through the right of mandamus. 29 Cyc. 1432.

Upon an investigation of the above matters this Board approves or disapproves the sale and on the approval depends the sale. If the board should have full control given it by statute certainly its approval should not be controlled by the courts. It is the approval of the board not of the courts upon which the question of the alienation of the state's property depends. The very act of approval, unless limited by the context of the statute providing therefor, imports the act of passing judgment, the use of discretion, and the determination as a deduction therefrom. Fuller v. University & School Lands, 21 N.D. 212.

It is not at all improbable that the proper location of the bank line of this grant may hereafter become the subject of judicial inquiry but at present while the matter is still pending before the land department and the officers are bringing to bear upon it their own judgment and discretion we have no right to interfere with their action by injunction. New Orleans v. Paine, 37 L.Ed. 162; United States v. Black, 32 L.Ed. 355, 357; Lankford v. State, 147 P. 1050, Action at law giving Keim v. United States, 44 L.Ed. 774.

It must be kept in mind that the whole subject of guaranty deposits the very right to affect charters by casting the compulsory burden upon banks and to collect assessments and thus actually deprive parties of their property, is based upon the police power, and the right to legislate in regard to the subject must be tested by the limitations of that power. Noble St. Bank v. Haskell, 97 P. 590; Noble St. Bank v. Haskell (U. S.) 55 L.Ed. 112.

To assume to vest judicial functions elsewhere than in the tribunal established by the Constitution is clearly without the sphere of legislative action, and statutes which attempt to confer judicial power upon the executive or ministerial officers are void. State v. Fisk, 15 N.D. 236; Bergen v. Nelson, 156 N.W. 559; Erickson v. Cass Co. 11 N.D. 495.

The general rule being that the right of a citizen to sue the state is a matter of grace that may be revoked by subsequent legislation. 36 Cyc. 915; Re Hoople, 179 N.Y. 308; Ex parte Alabama, 23 Am. St. Rep. 567; Owen v. Branch Bank, 3 Ala. 258; Darrington v. Branch Bank, 13 How. 12, 14 L.Ed. 30, 32; State v. Murray, 60 S.E. 935.

Fisk, Murphy & Nash, for interveners.

JOHNSON, J. BIRDZELL, NUESSLE, and CHRISTIANSON, JJ. concur. BRONSON, Ch. J. (dissenting).

OPINION

JOHNSON, J.

This is a proceeding in equity by the plaintiff in his own behalf and in behalf of all others similarly situated as depositors in banks that have become insolvent and have closed, against the Depositors Guaranty Fund Commission, created pursuant to chapter 217, Session Laws, 1917 and chapter 200, Session Laws, 1923.

After alleging the membership of the Guaranty Fund Commission and the insolvency and closing of the Security State Bank of New England on November 17, 1920, the plaintiff, in substance alleges the following matters: That the Guaranty Fund Commission was created to administer the Depositors Guaranty Fund Law, with power to make rules and regulations and with control of the fund collected for the purpose of paying depositors in insolvent banks; that, at the time when the Security State Bank of New England closed, the plaintiff had a deposit in the bank of $ 8059.00 and that he brings this action for himself and in behalf of all other depositors in that bank similarly situated, who have a common interest in the question and are too numerous to be brought in as parties plaintiff; that on the 17th of November, 1920, the said bank was declared insolvent and a receiver was put in charge of its affairs, with the usual powers with respect to the managing of its assets; "that the plaintiff duly presented his claim as an unsecured depositor to the receiver of said bank for the amount of $ 8059.00, the amount which he had on deposit at the time said bank was closed; which amount was duly allowed by said receiver as an unsecured deposit, and the same was certified to the Depositors Guaranty Fund Commission for payment out of the funds collected by said Commission and then held for payment of said deposits by law;" that the Commission refused and neglected to pay the amount of the deposit or to issue certificates of indebtedness against the Depositors Guaranty Fund in favor of the failed bank for the payment of the claim of this plaintiff and other depositors similarly situated, altho the Commission had sufficient funds on hand...