Pierre weekly free press. (Pierre, S.D.) 1889-19??, 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 prohibi-
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
inks, and thus wiping out that rul-
ing, considers the case OF two grounds
one is that such a provision Is In con-
81, article q, and the other that part
Of the order In conflict with h con-
stitution, (section /, article 80
The court says: "A careful consid-
GRAFTON and analysis of the entire order
leads s to the conclusion that it is the
place of the deposit n not the amount
OF the 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 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
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 such
deposits hall be mad Nowhere in
the act do we find anything indicating
that the legislature intended to deprive
state banks Of the right heretofore x,
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 APP
prove the reserve bank selected. The
statute by implication requires such
approval before reserve deposits are
made.
w 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 mi to trans,
act their business In the usua 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.
1.-THE banking act does not provide that
when the public examiner shall find
ions to exist, the whole or some por-
ton Of the reserves OF state banks
shall be kept within the state. Neither
does 1t attempt to confer upon the
public examiner authority to ascertain
and declare facts or conditions as
to cities within the state, w%hereupon
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, OF im.nu-N
mites different from those conferred
Upon all other state banks, we find it
unnecessary 10 determine in this case.
Blu we are clearly OF the view that
an order OF the public examiner which
directly declares that 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 ar exercise of legisla-
tive power and discretion which can
not be delegated"
In conclusion the our says: I'm
holding this particular rule promul-
gated by the public examiner to be
denying the public examinSf full au-
thority to adopt and ~promulgate any
rule or regulation necessary or proper
iii 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
clusion that the order of the public
examiner is void for the reason that
1t is an exercise of legislative and not
administrative discretion"