The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1924-09-22
DEPOSITORS IN
ALL OF CLOSED
BANKS TO SHARE

~ reopened and closed again Writ
declared depositors of the Security
Bank, since it was the first closed,
should be paid in full first John
Watson, depositor in the Tolley
Bank, interviewed and held that if it
we're decided depositors should be
paid in order of the banks closing,
his bank should be first. Attorneys
.or the Guaranty Fund Commission
held depOsitors of all closed banks
should be treated alike, and if the
fund was not sufficient to pay all.
It should be pro rated. At the time
The suit was started, the allegations
said the Guaranty Fund was about
100000 and the total liabilities to
.lcpositors S8,00O,00O.
Purpose of Legislature
1.-THE legislature of 1929. when
HAPPIER 260 Of the laws of that SEES
opinion, chad before it a serious con-
ition, caused by the closing of 4
arye number of banks, the first OF
yhich went down in 1920, with large
lains, ACTUAL and potential, against
he Guaranty Fund. The situation,
contrary to that which was before
he legislature in 1917, clearly dis
,losed that it would be possible to
pay Immediately or within reason
able time, from assessments levied
against functioning banks, only
comparatively small number of the
Iepositors in the banks then closed,
without imposing burdens on open
banks that would lead to general in
5o!vency and collapse of the state
banking system. Whether the power
existed to impose such a burden, we
need not decide
at was also evident from the ex
.cnt Of the liabilities of closed
banks to depositors and consequent
potential and probable liability of
the Guaranty Fund to such deposit
.ors, that if the depositors were paid
in full by levying assessments to the
maximum legally permissible, as
we'll as practically possible, under
the law, in the order in which banks
closed the result would be that de-
or even few months after those
which first suspended, could not be
paid any portion Of their claims for
= lone period. Consequently, and
doubtless in the interest Of justice,
us it seemed to the legislature, the
provision for payment to depositors
under the law of 1917, as made in
section Is thereof, was fundamental
ly changed 1t is provided in sec
ton 81, chapter 200, S. L. 1928, that
if the Guaranty Fund be insufficient
to pay the claims Of depositors duly
allowed, the Commission may pro
rate payments upon certificates of
That is, the legislature decided that
instead of exhausting the Fund in
laying depositOrs in banks that first
closed and leaving others to wait for
an indefinite period, it would be
more. just and equitable to provide
that as many claimants as possible
should receive dividend upon their
claims within a reasonable time"
The courts opinion discusses the
question as to whether Writ and
other depositors similarly situated,
had acquired a "vested right" in the
Guaranty Fund on hand, which en-
titled him to payment in full as a
depositor of one of the first banks
closed, while depositors of banks
closed later would get nothing. The
law Of 1917 contemplated payment
on the priority basis; the law of
1898 changed it to the pro rata basis.
The courts opinion reads:
Plaintiffs Right
"If the plaintiff acquired 4 vested
right in that portion of the Guaranty
Fund which had been collected at the
time the bank closed merely because
he was depositor therein, then all
depositors in banks that closed be-
fore the law of 1923 went into effect
acquired a similar vested right to
payment in full from that part of
the Fund which had been accumu-
lated through assessments made
prior to July /, 1923, in the order in
which the banks closed If that were
the correct construction Of the sta
tute, it would operate to deprive the
overwhelming majority of the deposi-
tors in closed banks of any payment
whatever on their claims from the
existing, altogether inadequate Guar
anty Fund. Payment as to them
would necessarily be postponed to
such remote period as would be re-
quired to replenish the fund. The
result would be that plan obvious
ly devised to protect all depositors
equally would, through judicial con-
struction, be made to give full pro-
lection to some and practically no
protection to others. The difficult
ties, complications and injustice that
would arise from such construction
Of the law would render its admins
tration cumbersome and costly
would to great extent defeat the
Legislative purpose common to the
act of 1917 and to that of 1928: These
considerations doubtless influenced
the legislature to enact chapter 200
S. l.. 1928. Whether approval of a
claim as guaranteed by the State Ex.
aminer would have created a vested
right which the legislature could not
have disturbed by subsequent legis-
lation, is not decided"
Many ClOsings
The court, continuing the discus.
sion of the abnormal situation as af-
fecting the Guaranty Fund which
rose from the large number of bank
cloainGs, held:
sWe are, therefore, Of the opinion
that the depositors in closed banks
who had taken no steps to have their
claims determined, liquidated, and
allowed in the manner provided by
the, act Of lott, or concerning which
facts had not been certified to the
G ommissiep, ~ provided in that law
prior ID July 4, 1928, had no such
vasted right or interest in the con-
= AZ. - ESnv