The Red Cloud chief., 1909-07-29
THE GUARANTY LAW.
Counsel for State Argue That II
Should Stand.

Copies Of the brief prepared by G
o. Whedon in defense of the guaran
ty banking law enacted by the late
legislature have been filed in the fed.
ieral court In resistance to the appli.
cation for permanent Injunction to
prevent the law becoming effective.
| liter a lengthy discussion of the
police powers of the state, Mr.. Whe-
don arrived at the following co1clu-
sion:
l. That no case decided by the SUI.
preme court of the United States, and
no principle of law enunciated by that
court, sustains the contention that
the Nebraska statute of 1909 deprives
| the plaintiffs or any of them, of rights
guaranteed under the constitution of
| the United States.
2. That the state may, in the legiti.
mate exercise of its legislative, or po-
lice power, prohibit individuals not
incorporated from engaging in the
banking business, within its jurisdic-
ton, and that It infringes no legal
right by so doing.
3. That as the legislative act in
question operates upon all individu.
ais alike, and does not prohibit them
from engaging in the banking bust.
ness. but merely prescribes the terms
and conditions upon which they may
engage in that business. it is valid.
4. That the right of the state to
enact such legislation Is sustained,
not only by the supreme court of the
United States. but by the clear and
undoubted weight of authority by the
courts of last resort of the states, the
one case from South Dakota being
the only one which counsel for plain.
tits have been able to find to the con.
trary.
In discussing the guaranty section
OF the law, the brief said:
1t is said that the effect of this law
is to take the money of one bank to
pay the debts Of another bank Let
1t be supposed that there are in one
county of the state five individuals
who are incapaCitated by reason Of
age from earning a living and are de-
pendent upon the public for support.
Originally each possessed $4,000. Let
1t be further supposed that in the
same county were five banks, in one
OF which these individuals deposited
the $4,000 possessed by each. The
bank holding the deposits of these in
divduals failed and the entire depos-
its were lost, and as IA consequence
these depositors became public
charges. Could any of the other four
banks in the county which did not
fail successfully resist the levy or col
lection of the poor fund tax, the pur-
pose OF which was TO support these
live individuals? | think not. And
yet this would be taking the property
of tho solvent banks to pay the result
vt the loss of the solvent one.
In conclusion the brief sets up:
First: That the statute, the consti
tutionality of which is here uues.
toned, does not deprive the unincor.
porated plaintiffs of any rights guar.
anteed to them by the constitution of
the United States. or the constitution
of the state of Nebraska.
Second: That all banks in this
state, whether incorporated or pri-
vate. may be required to comply with
the guaranty features of the law.
Third: That the state may in the
exercise of it's power of sovereignty
confine all Of the banking business of
the state to corporations.
Fourth: That the incorporated
plaintiffs have, and can have, no con-
tract with the state which prevents
the legislature from placing addi-
tional duties and requirements upon
them, even to the extent of requiring
them to set aside per cent of their
deposits for the purpose of securing
depositors.
Fifth: That the act is constitu-
tional as whole, but II unconstitl-
tional as to paying rewards out of
the guaranty fund, or in any OF its
provisions. those provisions are sep
arabic. and the other portions OF the
act are valid.
Sixth: That the temporary injunc.
ton heretofore granted should be dis.
solved, the demurrer sustained, and
the bill dismissed.