Omaha daily bee. (Omaha [Neb.]) 187?-1922, 1909-10-17
Injunction Restraining Governor and
Board is Permanent.
STATUTE VOID ON TWO POINTS
Cannot Prohibit Private Banks from
Conducting Business.
FUND IS ILLEGAL
COntravencs Consultation In TakInE
Property without Owners Com
sent and without just
Compensation.
Crrom a sad correspondentO

CFrom staff Correspondent)
LINCOLN, Oct. 16.-CSpecial)- THE fed
eral court has made perpetual the tenn
porary restraining order against Governor
Shalenberger and members OF the State
Banking board. preventing them from en-
forcing the provisions OF the guaranty
banking law enacted by the recent legis-
lature at the urgent request Of Mr.. Bryan.
Circuit Judge Willis VanDevanter and
District Judge Thomas c. Munger filed
the decree late this afternoon, holding the
law unconstitutional, being in violation
| OF the constitution Of the United States
and OF the state OF Nebraska.
The court holds the provisions which for
bid an Individual from engaging IN the
/ state banking business without inoorpo-
| rating is In violation OF the fourteenth
amendment to the federal constitution, and
section g. article /, of the Nebraska con-
stitution as Is the enforced contributions
| to the guaranty fund.
| Inasmuch as these two features OF the
law were inducements to the. passage OF
the act, the court held the entire act is
! invalid
The decree makes the temporary injunc-
! tion perpetual and taxes the costs of the
case to the defendants, Governor shallen-
berger and the members Of the state Bank
ing board and the secretary to the bank
ing board appointed by the governor, Sam
uel Patterson, who never served.
syllabus of the Case.
The syllabus in the case is as follows:
! l. Constitutional Law. Due Process OF
Law Banking. Restricting Business TO
Corporations. Guaranty Fund.
The Nebraska act OF March Is. 1909 Q4aws
| Neb., 1903, CHI 10, D. 6S), which prohibits
,,i,ySn individuals from from engaging in the banking
agency Of a corporation, and which also
conditions the right TO engage In that busl-
ness in that form upon ne making Of
forced contributions from time time to
depositors guaranty funu 10 be employed
! of any bank which shall become insoivent
! is in conflict with section / OF the four
teenth amendment to the constitution OF the
! United states, which provides:
NO state shall make or enforce any law
| which shall abridge the privileges or Inn
nor shall any state deprlEe any. person OF
! life, liberty or property without due process
Of law and Is In conflict with. section
which declares. mo person shall be de-
prived Of life, liberty or property without
! q Same. Void provision, when Induce
ment TO passage OF act. renders entire act
! The provisions of the Nebraska act OF
dlvlduals from engaging In the banking
agency Of corporation and also condition
/ the right to engage In that business In that
tions from time to time to a depositors'
guaranty fund TO be employed I'm the pay
ment Of the claims OF depositors OF any
| bank which shall become insolvent. were
the inducement to the passage of that act
and as those provisions, so coupled to-
rendered invalid
Law Drawn by Albert.
The act guarantylng bank deposits, which
has just been held void was the work OF
| the late democratic Legislature and II was
! the real feature OF the Bryan campaign
| in Nebraska When the legislature con-
vened It was soon discovered that the
members realized their inability to framo
a law which would stand the test OF the
coturts and Mr.. Bryan was called upon
| for assistance He filed with the governor
his ideas OF what should be embodied in
the bill and then left the state.
The legislature finally employed Judge
/. l.. Albert of Columbus at a cost to the
state OF $500 to draft the bill. When Judge
Albert had done the work banking com
mittee Of the house and senate proceeded
to make several changes in the measure
over the objection Of Judge Albert, who,
it " as said at the time had remarked:
Il have stretched the constitution as far
as dared already"
1t was only by making a compromise
I
| OF the senate. in which the stock yards
was left out Of the physical valuation bill,
that the democratic bosses were able to
whip the bill through the upper branch
Of the legislature.
1t finally received the signature OF
| Governor Shallenberger who appointed
his bank examiners and a new secretary
10 the board When the time arrived,
however. for these officials 10 take their
I aHaw.
stein and others secured a temporary in
junction 10 prevent the enforcement OF the
law
! While a demurrer was filed 20 the pc
tuon Of the plaintiffs the court heard
| the case on its merits. John L. Webster
/ and William V. Allen. former populist
/ United states senator. opposing the law
/ and /. L. Albert and C. o. Whedon de-
Tending. these attorneys having been
employed by some OF the bankers who de-
sired the law upheld. Attorney General
Thompson assisted the defense
No Extra Session.
! Governor shallenberger after reading the
decision. said he saw no recourse except
/ to appeal the case to the supreme court OF
| the United States. Under the decision, he
said, the Legislature could not pass a guar
anty bill which would meet the test and
therefore there was nothing to be gained
| by calling an extra session.
When tho case was under consideration
the governor said II the opinion set out the
weak spots in the law providing Il was held
/ unconstitutional, In such way they could
| be corrected in new act, he would call
/ an extra session. Since then the demo-
cratic state convention recommended the
/ calling OF extra session for the ratif-
cation Of the income tax amendment to
/ the federal constitution.
| WEBsTER DIsCISSES DuCIs1o,y