The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1924-09-22
DEP0SIT0RSI IN
ALL OF CLOSED
BANKST0SHARE
Guaranty Fund to be Pro-
Rated, Supreme Court De-
cides in Law Suit Here
PURPOSE OF THE LAW
Court Finds Legislature Saw
No Gain in Paying Them
Off as They Closed

The legislature, in rewriting the
Guaranty Fund Commission Law in
1923, and providing that funds on
hand for the reimbursement to de.
positors who lost in closed banks
was moved by desire to provide as
wide distribution of the funds
available to all depositors, the 81.
preme court held here in deciding
that the law provides that funds
should be pro rated among all de-
positors, rather than to pay deposi-
tors of closed banks in the order of
their closing.
This, the most debated point settl-
ed by the supreme court in its deci-
sion in the case of A. J. Wirtz, a de-
positor in the Security State Bank
of New England, against the Guaran-
ty Fund Commission, had to be de-
cided, in the opinion Of members of
the commission, before it could make
any move toward disbursement Of
funds accruing to it.
Just when the commission will at.
tempt to pro rate funds on hand, un.
derstood to be something more than
million dollars, is regarded as
uncertain. The question probably
will be taken up when members of
the Commission come to the city for
their next meeting. The amount of
money in the Guaranty Fund is SO
small as compared to the total
amount Of deposits lost in closed
banks, however, that it is not regard.
ed Us likely that any attempt would
be made for months to pro rate the
funds.
The high court, in it's. decision
holds that the Guaranty Fund Com
mission cannot be compelled to exer-
else its discretion in the matter of
making payments. 1t also holds that
the Commission can be sued when il
arbitrarily refuses to perform it's
duty. Under the present circum-
stances, no early distribution Of the
fund is likely.
Affirms Judge Pugh
The supreme court, affirming Dis
trict Judge Thomas II. Pugh of Dick
inson, in the suit, found that the
Guaranty Fund Commission, being an
arm and part Of the police power
of the state, could not he sued in an
effort to compel it to exercise its
discretion. 1t found that under the
act of 1917, the original Guaranty
Fund Law, it was contemplated that
depositors of closed banks should be
paid in the order of closing, but that
q situation arose where the fund was
so small in relation to the banks
closed, that the legislature changed
the law to provide for pro rata dis
tribution. Since the state examiner
had not taken steps to certify claims
Of depositors for payment in order Of
the priority of bank closing prior to
the taking effect Of the new act on
July l, 1913, the depositors of the
first few banks which closed had not
acquired a "vested" interest in the
fund, and therefore it was legal for
the legislature of 1928 to provide
for the pro rata payment.
Must Obey Law
The supreme court decision, writ
ten by Justice Sveinbjorn Johnson,
to which Chief Justice H. A. Bron-
son dissented, while holding that the
Guaranty Fund Commission as an
agency of the state cannot be sued
to affect it's discretion, makes it
plain that the Commission is not
above the law. The majority deci-
sion says:
I'm order to guard against miscon-
ception or misunderstanding as to
the legal effect of our conclusions, it
should be reiterated that the Guar
anty Fund Commission is not, by
this decision, put beyond or above the
law and the constitution. The rights
of the citizen to due process, to the
maintenance Of the legal sanctity of
the obligation of contract, to the
equal protection of the law, and to
the enjoyment Of the rights guaran-
teed by the constitution of the state
and of the nation, will be open to
vindication and their violation to
redress against the Commission, no
less than against an persona, natur-
al or artificial. Neither the Guar
anty Fund Commission nor any Off
Ger may, under our legal system set
the Constitution at defiance; Off
GERS and private individuals alike
must obey it and respect the rights
of persons hereunder. No such
rights are in jeopardy in the case ut
bar, and if any such rights be en-
dangered by the Commission in the
future, no injured person will be de-
MED the redress or the remedies to
. which he is entitled under the fun
damental law Of the land"
Mr.. Wirtz had deposited money in
the Security State Bank of New Eng.
land which closed No. II, 1920, simul-
taneously with the Farmers State
Bank Of Havelock, the first of many
banks which closed during the per-
iod of financial depression in the
L