Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1921-04-05
RULING
DEPOSES OF
LEAGUE CLAIM.
Liability of State Limited to
Amount Of Capital a
Authorized.
GARNISHMENT HELD y
TO BE PERMITTED
Banks Status Practically
Private Enterprise Own
ed by State.

Bismarck, n. D., April 5.-The Bank
OF North Dakota may hazard the
In whatever way may be deemed ex-
pedient and within the law in order
to make the banking business suc-
cess, but it can not involve the state
by attempting to pledge its credit in
transactions the state is expressly pro-
hibited from entering into" declares
Justice L. e. Birdzell of the supreme
court in delivering the majority opin-
ion Of the court in declining to grant
a rehearing in the Sargent county
garnishment case.
Further supporting the majority
opinion of the court that the Bank Of
100000 capital the state has sup
piled. Justice Birdzell. holds the bank.
although owned by the state, is not
in fact the state.
Status Settled.
The status OF the Bank of North Da-
kota is closed by the supreme court
in it's action. Justices Robinson and
Christianson sign Justice Birdzelfs
opinion, Justice Bronson holds against
a rehearing in long opinion. and JUS
tice Grace, who dissented in the first
decision. also dissents on the matter
of rehearing.
Would Violate Constitution.
Were the Bank Of North Dakota
and the state one and the same 1t
would be subject to many limitations,
Justice Birdzell says, referring to the
constitution, which prohibits the state
from loaning or giving it's credit or
making donations in aid of individu-
a mo-
court says: I'VE are clearly Of the
opinion that the violation of the pro-
hibition against lending public credit
in aid of corporations, etc. is openly
countenanced by considering the state
and the bank as the same entity, as
is done by the petitioners"
The majority of the court reaffirms
its decision that the Bank of North
Dakota is subject TO garnishment and
is in fact separate or private insti-
tuition, a view which Justice Grace
declared in his first dissenting opinion
would strike down the state industries.
Knocks Out League Fable.
Ono of the important pillars OF
confidence of the Bank of North
Dakota has been that IL has the
entire credit of the state behind
it. according to its proponents.
This contention is disposed of by
the court, with the declaration
that the state in not involved
beyond its 100000 capital.
Further emphasizing this view.
Justice Birdzell says:
'"TheSc limita tiOns, for the rea-
son hereinbeforc stated, are such
that the judgment obtained is
only binding upon the state to the
extent of the capital it has put
into the bank. For the purpose
of determining this liability the
bank Is in legal effect an entity,
for it is legally incapable Of bind
ing the state beyond its interest
in its capital funds"
Constitution Plain
Referring to the constitutional pro-
vision authorizing the state to engage
in industries. Justice Birdzell says that
in the very provision relied upon By
Attorney General Iemke to support
his argument that the Bank of North
Dakota is the state of North Dakota.
we find that the section relied upon
prohibits the state from doing the very
thing that the legislature has ex-
pressy authorized :he bank to do and
which it has done, namely, loan it's
credit to individuals. associations or
corporations" He continues:
If the Bank of North Dakota is
the state of North Dakota it could not.
therefore. possess any such authority
as the legislature has expressly con-
ierred in section Is tof the bank act).
1t surely would not be contended that
the state, when acting as the Bank
of North Dakota, can do the things
which the constitution says the state
cannot do at all. The state, when
functioning as a bank. is still subject
to the express limitations of the con-
stitution. The creation OF this agency
Of the sovereign power can not result
in super-state-a government func-
tioning without constitutional re-
straint. 1t tthe bank) may hazard
the capital it has been authorized to
use in whatever way may be deemed
expedient and within the law in order
to make the banking business a sue:
cess, but it can not involve the state
by attempting to pledge its credit in
transactions the state is expressly pro-
hibited from entering into.
Bond Purchascs.
when we extend the examination
of statutory and constitutional pro-
visions with a view to determining the
character OF the agency of the bank.
additional provisions are found which
demonstrate that the bank. though
owned by the state, is not in fact the
state. Turning now to chapter 143 q
the Session Laws of 1919, which pros
vides for the issuing Of the bank series
Of bonds. After prescribing the for-
maltties for preparation and issuance
the law provides in section II
+ Nothing in this act. howevee,
shall be construed to prevent the :
purchase OF any of said bonds
with any funds Ia the Bank Of q
North Dakota
Similar provisions are found IN thS
acts authorizing the issuance X. ~
$5,000.O00 OF bonds OF the mill ana
elevator series (chapter 16S, sepEaeS