Forest City press. (Forest City, Potter County, D.T. [S.D.]) 1883-19??, 1916-01-05
SUPREME COURT SAYS
BANKS CAN TRANSACT
THEIR own BUSINESS
No Legal Warrant For Trying
to Fix Repositories Through
Arbitrary Order.

Arbitrary Order.
Pierre. :. d.. Jan. 3.-The supreme
curt, in granting the writ of prohibi-
ton. asked by the St. Charles State
oank against enforcement of the pro-
vision that so per cent of the legal re-
serve of state banks should be de
posted within out Dakota state
banks and thus wiping out that rul-
lnS, considers the case on two grounds.
one as That such Il provision is in con-
sllct with the banking statute. (~section
81, article -. and the other that part
Of the order in conflict with the con-
siltution, tsectiCn l. article 80
The court says: "A careful consid
Grafton and - lysis of the entire order
leads ur to Ill. conclusion that it is the
place of the deposit and not the amount
Oh inc reserve, which the order of the
public examiner seeks to control. Sec
ton 81 of the banking act vests in the
boards of directors of all state banks,
both reserve banks and others, the right
to determine i'm their absolute discretion
whether their legal reserves shall be
deposited, i'm whole OF i'm part, in other
banks.
THE public examiner is not given
authority to require such reserves or
any part thereof, to be kept in the
vaults of state banks, or to be deposited
III tIle DullNS, nor Toes U1e Statute
give him any authority. in case boards
of directors elect to deposit their re-
serves or some portion thereof in
other banks. to select or direct the par
ticular bank or banks in which uch
deposits shall be made Nowhere in
the act do we find anything Indicating
that the legislature intended to deprive
state banks OF the right heretofore eX-
ercised. or selecting their own banks
OF deposit. either within or without the
state. The exercise of this right is
subject by the banking act itself. to a
single limitation, namely. the power of
II public examiner to decline to APP
prove the reserve bank selected. The
statute by implication requires such
approval before reserve deposits are
made.
I'VE are clearly of the opinion that
the legislature is enacting the bank
ing act did not intend to take away or
limit the right of state banks to trans
act their business in the usual and
ordinary way. except where particular
acts or things are required to safe
guard the funds of such banks"
The court says further, in relation
to the powers conferred upon the pub
lie examiner by the banking act:
"The banking act does not provide that
when the public examiner shall 1nd
and declare certain facts OIL condi-
tions to exist, the whole or some por-
ton OF the reserves of state banks
shall be kept within the state. Neither
Ices it attempt to confer upon the
public examiner authority to ascertain
and declare facts or conditions as
to cities within the state, whereupOn
certain cities shall become reserve
cities and banks within such cities
shall become reserve banks Whether
under the state constitution, the legis-
lature itself could have declared that
certain cities should be reserve cit
les and banks in those cities should
be given rights. privileges. or immu-
mites different from those conferred
upon all other state banks. we find it
unnecessary to determine in this case.
But we are clearly of the view that
an order of the public examiner which
directly declares that bank reserves
In whole or in part, sNall be kept with
in the state. and designates certain
cities as reserve cities and confers
special rights, privileges and immuni-
ties upon banks within those cities,
does involve an exercise of legisla-
tive power and discretion which cam
not be delegated"
In conclusion the court says: I'm
holding this particular rule promul-
gated by the public examiner to be
void. we are not to be understood as
denying the public examiner full au-
thority to adopt and promulgate any
rule or regulation necessary or proper
in the discharge Of particular admin
~istrative duties imposed by the stat
ute. In all such matters he may prop
erly exercise reasonable discretion in
the adoption of administrative rules
within the purview of the particular
provision of the state which imposes
the duty. We ae forced to the con-
ciusion that the order Of the public
examiner is void. for the reason that
1t is an exercise of legislative and not
administrative discretion"