The citizen-Republican. (Scotland, Bon Homme County, S.D.) 1???-19??, 1916-01-06
SUPREME COURT SAYS
BANKS CAN TRANSACT
THEIR own BUSINESS
No Legal Warrant For Trying
to Fix Repositories Through
Arbitrary Order.

Pierre. S. D., Jan. 3.@The supreme
court, in granting the writ of prohibit
ton, asked by the ST. Charles State
bank against enforcement of the pro-
vision that SO per cent of the legal re-
serve of state banks should be de-
posted within South Dakota state
banks, and thus wiping out that rul-
ing, considers the case on two grounds.
One is that such a provision is in con-
flict with the banking statute, (section
81, article %. and the other that part
stltut1on, (section /, article 3D.
The court says: "a careful consid-
GRAFTON and analysis Of the entire order
leads US to the conclusion that it is the
place of the deposit and not the amount
of the reserve, which the order of the
public examiner seeks to control. g
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 in their absolute discretion
whether their legal reserves shall be
deposited, in whole or in 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
in other banks, nor does the statute
give him any authority, in case boards
" IN " oSPoSAS N3A~t
serves or some portion thereof in
other banks. to select or direct the par
ticular bank or banks in which such
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
the public examiner to decline to p
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 enactlng 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 n
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 find
and declare certain facts or condi-
ions to exist, h whole or some por-
ton of the reserves Of state n
shall be kept within the state. Neither
does it attempt to confer upon the
public examiner authority to ascertain
and declare facts Oh 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 nave 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 a
But we are clearly of the view that
an order of the public examiner which
directly declares hat bank reserves
in whole or in part, shall 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 can
not be delegated"
In conclusion the court says: TN
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
ate. 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-
clusion that the order of the public
examiner is void for the reason that
it Is an exercise of legislative and not
administrative discretion"
tNI-E. -A--