Source: https://www.legalcrystal.com/case/93833/farmers-merchants-bank-vs-federal-res
Timestamp: 2019-04-25 04:21:18+00:00

Document:
(a) That the North Carolina Act does not violate the provision of the federal Constitution, Art. I, § 10, cl. 1, which prohibits a state from making anything except gold and silver coin a tender in payment of debts. P. 262 U. S. 659 .
(b) That it does not deprive the respondent Federal Reserve Bank, without due process of law, of its right to engage in the business of collecting checks payable on presentation within its district (which it claims it may make a source of revenue), nor of its liberty of contract, by compelling it to accept payment in drafts, good or bad, and so driving it from that branch of business. The statute is not to be construed as authorizing payment in bad drafts, and is an exercise of police power not offensive to the due process clause. P. 262 U. S. 660 .
(c) That it does not deprive the Federal Reserve Bank of equal protection of the laws by obliging it to accept payment in drafts while leaving other banks free to demand cash, since it was reasonable classification for the legislature to limit the regulation to the particular existing condition sought to be remedied. P. 262 U. S. 661 .
(d) That it does not conflict with duties imposed by Congress on the Federal Reserve Board and the federal reserve banks. P. 262 U. S. 662 .
2. Neither § 13 nor any other provision of the Federal Reserve Act imposes on reserve banks any obligation to receive for collection checks for which it is impossible to obtain payment except by incurring serious expense, as by presenting them by special messenger at a distant place. P. 262 U. S. 662 .
3. In declaring that reserve banks may receive checks on nonmember banks "payable on presentation," the Federal Reserve Act, § 13, as amended, would seem to imply that the checks must be payable in cash or in such funds as are deemed by the reserve bank an equivalent. P. 262 U. S. 663 .
4. The federal reserve legislation does not impose on the Federal Reserve Board or the federal reserve banks a duty to establish in the United States a universal system of par clearance and collection of checks. P. 262 U. S. 664 .
5. The contention that Congress imposed this duty is irreconcilable with the provision of the Hardwick Amendment to § 13 (Act of June 21, 1917, c. 32, § 4, 40 Stat. 232) allowing members and affiliated nonmembers to make a limited charge (except to federal reserve banks) for "payment of checks and . . . remission therefor by exchange or otherwise." P. 262 U. S. 666 .
6. The Hardwick Amendment in no way interferes with the right of a depositor in a nonaffiliated state bank to agree with his bank that his checks in certain cases (unless otherwise indicated on their face) should be payable, at its option, by exchange. P. 262 U. S. 667 .
dissent, consent shall be presumed. Laws which subsist at the time and place of the making of a contract and where it is to be performed enter into and form a part of it as fully as if they had been expressly referred to or incorporated in its terms. This principle embraces alike those laws which affect its construction and those which affect its enforcement or discharge. See Ogden v. Saunders, 12 Wheat. 213, 231 [argument of counsel -- omitted]; Von Hoffman v. Quincy, 4 Wall. 535, 71 U. S. 550 . If therefore the provision of § 2 authorizing payment by exchange draft is otherwise valid, it is binding upon the drawer of the check. Since it binds the drawer, it binds the payee and every subsequent holder, whether he be a citizen of North Carolina or of some other state, and wherever the transfer of the check was made. Brabston v. Gibson, 9 How. 263. For the holder of a check has, in the absence of acceptance by the drawee bank, no independent right to require payment under the general law. Bank of the Republic v. Millard, 10 Wall. 152. He takes it subject to the construction and with rights conferred by the laws of North Carolina, the place of the bank's contract and of performance. Pierce v. Indseth, 106 U. S. 546 . Compare Rouquette v. Overmann, L.R. 10 Q.B. 525.
of its business, since that of collecting checks cannot be conducted under such limitations. To this argument the answer is clear. The purpose of the statute, as its title declares, was to promote the solvency of state banks. We should, in the absence of controlling decision of the highest court of the state to the contrary, construe the statute not as authorizing payment in a "bad" draft, but as authorizing payment in such exchange drafts only as had customarily been used in remitting for checks. So construed the statute is merely an exercise of the police power, by which the banking business is regulated for the purpose of protecting the public, and promoting the general welfare. Noble State Bank v. Haskell, 219 U. S. 104 , 219 U. S. 575 . The regulation here attempted is not so extreme as inherently to deny rights protected by the due process clause. Compare Chicago, Burlington & Quincy R. Co. v. McGuire, 219 U. S. 549 , 219 U. S. 567 -568; Central Lumber Co. v. South Dakota, 226 U. S. 157 , 226 U. S. 162 . If the regulation exceeds the state's power to protect the public, it must be because some other provision of the federal Constitution is violated by the means adopted or by the manner in which they are applied.
against a policy which it deems wise to adopt, it may direct its legislation specifically and solely against that instrument. Central Lumber Co. v. South Dakota, supra, p. 226 U. S. 160 . If it finds that the instrument is used only under certain conditions or by a particular class of concerns, it may limit its prohibition to the conditions and the concerns which it concludes alone menace what it deems the public welfare. The facts recited above disclose ample ground for the classification made by the legislature. Hence, there was no denial of equal protection of the law. There remains to consider whether § 2 exceeds the state's power because Congress has imposed specifically upon federal reserve banks duties the performance of which § 2 obstructs, and that in this way it conflicts with the Federal Reserve Act. This is the ground on which the invalidity of the North Carolina act has been most strongly assailed.

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