#### Edgar C. Lawson, *Auditor, etc. v.*L. R. Charter, *Com. of Banking, etc.*

(No. 7289)

Submitted March 31, 1932.

Decided April 12, 1932.

*109*H. B. Lee,*Attorney General, and *Hummel, Blagg & Stone,*for relator.

*I. M. Underwood*and *Vinson, Thompson, Meek <& Scherr,*for respondents.

HATCHER, PRESIDENT:

Tbe New Martinsville Bank closed its doors, insolvent, on tbe morning of January 28, 1931, with funds of tbe state on deposit. Tbis is a proceeding in mandamus to compel tbe receiver of tbe bank, in settling its affairs, to prefer tbe state over all other depositors.

8 Bacon’s Abridgment, 91, states that under tbe common law “where tbe king’s right and that of a subject meet at one and tbe same time, tbe king’s shall be preferred.” While this right was accorded to tbe king personally, nevertheless it was conceived to be “for tbe benefit.of tbe whole nation.” Tbe state having acquired tbe sovereignty which was formerly tbe king’s, acquired also tbe right of preference over tbe individual which was incident to royalty under tbe common law. See *Woodyard*v. *Sayre,*90 W. Va. 295, 110 S. E. 689; 1 Blackstone 237; 14 R. C. L., 662. Tbe respondent concedes that tbe state bad tbis right prior to January 1, 1931, but relies on Code 1931, 12-4-10, as abrogating that right. Section 10 follows: “Tbe State shall not, by virtue of prerogative or any other right, have any priority or preference of any claim or demand in its favor which is not made a lien and given such priority and preference by statute, over any other unsecured or common creditor of any person, firm or corporation against tbe property or assets or any part thereof of tbe debtor.” Incidentally, on tbe afternoon of January 28, 1931, tbe legislature postponed tbe further operation of tbe above statute until February 1, 1933, by an enactment in effect from passage.

Tbe petitioner says that as far as tbe statute would affect tbe deposit in question, tbe statute is violative of Constitution, Article X, section 6, which provides in part: “Tbe credit of tbe State shall not be granted to, or in aid of any county, city, township, corporation or person.” With a *110constitutional provision comparable to ours, the legislature of Idaho attempted by statute to place public deposits in banks on a parity with other deposits. The supreme court of Idaho held the statute unconstitutional in *White*v. *Banking & Trust Co.,*50 Idaho 589, 595-6, 298 Pac. 933, 935-6, saying:

> *“To*have such funds placed on general deposit and payable pro rata out of whatever assets of the bank remained after its affairs were wound up subsequent to its being closed for insolvency, and use of such funds in payment of the debts of the insolvent bank, would be pledging the faith and credit 'of the county to which the funds belonged, in aid of appellant banking corporation, in derogation of the provisions of article 8, sec. 4, and article 12, sec. 4, of the State Constitution. * * * As against the disability of such constitutional prohibitions there is no difference between voluntary and compulsory obligations — ‘the legislature could no more impose it than the county could voluntarily assume it. ’ Board of Lake County Commissioners v. Rollins, 130 U. S. 662, 9 S. Ct. 651, 653, 32 L. Ed. 1060; Eaton v. Mimnaugh, 43 Or. 465, 73 P. 754.”

There can be no doubt that the ratable payment of the state’s funds would be granting the credit of the state in aid of both the bank and the other depositors. The logic of the Idaho court leaves nothing to be added. We apply it fully to our own statute, which we hold to be inoperative as to the banking deposits of the state’s funds.

The writ will issue.

*Writ issued.*