Case Name: STATE EX. REL. DAKOTA TRUST COMPANY v. STUTSMAN et al.
Court: North Dakota Supreme Court
Jurisdiction: North Dakota
Decision Date: 1912-11-23
Citations: 24 N.D. 68
Docket Number: 
Parties: STATE EX. REL. DAKOTA TRUST COMPANY v. STUTSMAN et al.
Judges: BuRke, J., concurs.
Reporter: North Dakota Reports
Volume: 24
Pages: 68–109

Head Matter:
STATE EX. REL. DAKOTA TRUST COMPANY v. STUTSMAN et al.
(139 N. W. 83.)
Prohibition to board of railroad commissioners — appeal — moot question.
1. Where prohibition proceedings are brought to restrain the board of railroad commissioners, created by the statute of this state, from acting in alleged usurpation of powers in questioning the sufficiency of bonds given by the grain elevators under § 2247, Rev. Codes 1905, for the protection of the patrons of such warehouses, and from inquiring into the settlements made by the surety or bonding company with the creditors of an insolvent warehouse, and such bonds have expired by lapse of time before the appeal is heard, such appeal will not be ignored as a moot question, the matter being one of public interest and the real matter in controversy being the authority and power of said commission.
Board of railroad commissioners — investigation of complaints against grain elevators — power to compel attendance of witnesses.
2. Under § 2247, Rev. Codes 1905, which requires operators of grain elevators to file with the board of railroad commissioners a bond running to the state with good and sufficient sureties to be approved by such commissioners and conditioned for the faithful performance of tlieir duties as public warehouse-men, and under § 2242, Rev. Codes 1905, as amended by chapter 230 of the Laws of 1909, and which, among other things, gives to the board of railroad commissioners the power "to investigate all complaints of fraud or oppression in the grain trade of this state and correct the same,” such board may examine into the sufficiency of such bonds, both as to the form and the general business, conduct, and reliability of the sureties, and for such purpose may summon any witnesses before them that they, please. Whether they can, in such eases, by court procedure or otherwise, compel the attendance of such witnesses and require testimony under oath is a matter not here determined.
Note. — The writ of prohibition is the subject of an extensive note in 111 Am. St. Rep. 929.
Jurisdiction of board of railroad commissioners — over sureties on bond of elevator company.
3. In passing upon the sufficiency of bonds furnished by the elevator companies, or the necessity of requiring new bonds, the jurisdiction of the board is over the elevator companies rather than over the bonding companies or sureties. It has therefore no right in case of a controversy between the ticket holders of an insolvent elevator company and a surety or bonding company, to summon the said bonding company before it and threaten to cancel its bonds unless it so appears and makes satisfactory settlement with the said ticket holders. It may not seek by such means to force a settlement. It may, however, inquire into the transaction for the purpose of satisfying itself as to the business reliability of said bonding company, and if dissatisfied with the good faith or business methods of said surety, require other bonds to be given by the elevator companies.
Mandamus or prohibition to board of railroad commissioners.
4. While passing upon such bonds and performing such duties, such board is acting in a quasi judicial capacity, and cannot be controlled in the exercise ■of its discretion by mandamus or prohibition.
Board of railroad commissioners,— approval of bonds of surety company.
5. The mere fact that a surety company has been licensed by the insurance commissioners to do business within the state of North Dakota does not authorize such company to compel the approval of its bonds by the board of railroad commissioners if sufficient as to form and amount, if such commissioners are dissatisfied with the business habits or conduct of the surety, or, for any other similar reason, believes the bonds to be insufficient.
Mandamus — prohibition — who may apply for writ.
6. Mandamus cannot be brought by the surety on a bond to compel the acceptance or continued approval of such instrument. If proper at all the proceeding should be brought by the principal, and not by the surety. The same is true of the writ of prohibition when sought to be obtained to prevent a board which is vested with the power of approval, from disapproving its said bonds.
Opinion filed November 23, .1912.
Appeal by defendants from a judgment of tbe District Court for Burleigh County, Winchester, J., awarding a writ of prohibition enjoining them from an alleged abuse of discretion in the matter of bonds furnished by public warehousemen in support of elevator licenses.
Modified.
Statement by Bbucb, J. This action was originally brought in the form of a petition for a writ of prohibition against the board of railroad commissioners of the state of North Dakota to prohibit them from exercising what is claimed to be usurped and unwarranted powers. The petition alleged, among other things, that the plaintiff was a corporation duly authorized to carry on the business of a surety company in the state of North Dakota; that one Samuel Kittler was from on or about the 17th day of September, 1909, continuously until on or about the 20th day of December, 1910, engaged in the business of operating a public grain warehouse at Turtle Lake, in the county of McLean; that in order to comply with the laws of said state he had procured the petitioner to execute and deliver to the board of railroad commissioners a bond which in all things complied with the laws of this state; that while said Kittler was engaged in conducting said business he issued sundry storage tickets to divers persons; that on or about the 20th day of December, 1910, he became insolvent; that thereupon the petitioner bond company, with the utmost diligence and good faith, sought to ascertain the persons to whom it had become liable on its bond before mentioned and the amount of its liability to such persons; and that upon obtaining such information it immediately set about to adjust its liability, and “promptly paid to each of said claimants the amount or sum of money which each of said claimants agreed to accept in satisfaction of his or her claim, save two claims, both of which are still in dispute; and that it stands ready at all times, and is able and willing, to pay the holders of said unsatisfied claims whatever amount may be found to be justly due; that in the course of its investigation it discovered that many of the storage tickets were false, and that said-warehousemen had falsely and fraudulently, and with the intent to cheat and defraud said petitioner, misstated the quality of the grain received by him; that by reason of the frauds aforesaid, such petitioner had disputed its liability for the face value of such false and fraudulent storage tickets, and had compromised the respective claims, with the exception of the two before mentioned, for less than their face value; that on or about the 3d day of May, 1911, the defendant board of railroad commissioners, without any authority or jurisdiction, served upon said petitioner a writing and purported order in words and figures as follows, to wit: “In the matter of the claims of holders of storage tickets against Samuel Kittler, of Turtle Lake: The Commission, having investigated the same, finds that all tickets owned by the petitioners are valid, and should be paid in full without discounting or scaling; it is further found that the Dakota Trust Company, the sureties on the elevator bond of the said Samuel Kittler, has, without just cause, compromised many of the claims of said ticket holders at 50 cents on the dollar. It is therefore ordered that the said Dakota Trust Company do and is hereby.directed to pay said claims in full to the holders of said storage tickets within thirty days from the date of' this notice.” That said petitioner ignored and refused to obey said order, and that theretofore and on the 13th day of June said board of railroad commissioners served upon said petitioner a notice or citation and copy of resolution in words and figures as follows, to wit:
In compliance with a resolution adopted by the commission on Saturday the 10th inst., a copy of which T am sending you, I am writing you, giving notice that your company will be required to appear before the commission on Saturday, June 24th, to show cause why all the bonds issued by your company in support of elevator licenses shall.not be canceled.
Please acknowledge receipt of this letter and the copy of the resolution and oblige.
(Signed) Kespeetfully yours,
The Board of Railroad Commissioners.
By Thomas Hall, Secretary.
Attached to this notice, as before stated, was a copy of tbe following resolution: “In tbe matter of tbe failure and neglect of tbe Dakota Trust Company to comply with a certain order issued by tbe board of railroad commissioners, requiring them to redeem 'certain warehouse receipts and to make settlements with tbe holders thereof; said receipts having been issued by Samuel Kittler, of Turtle Lake, doing business as a public warehouseman and whose license is supported by the bond of the said Dakota Trust Company. Be it resolved, that the secretary be instructed to notify and require the Dakota Trust Company of Fargo to appear before this commission at its office in the city of Bismarck on the 24th day of June, 1911, at 2 o’clock in the afternoon of said day, and show cause, if any there be, why the commission should not cancel the bonds of the said Dakota Trust Company, given in this state, to wit: [Here follows the names of thirty elevator companies.] Because of its failure to effect a settlement, satisfactory to this commission with the holders of certain warehouse receipts issued by Samuel Kettler, of Turtle Lake. Be it further resolved: That the secretary notify and require each of the above-named elevator companies or ware-housemen to secure and have ready on said date of June 24th, new bonds or undertakings satisfactory to this commission, to take the place of the said Dakota Trust Company’s bonds, in the event they are then ordered canceled by this commission. Done at Bismarck, North Dakota, this the Tenth day of June, 1911.”
The petition further alleged that such petitioner had in all things complied with the requirements of the law to do business in the state of North Dakota as a surety company, and was, at the present time, surety on the several warehousemen’s bonds mentioned in said notice and resolution; that such petitioner had- received and was entitled to receive large sums of money as compensation for the assumption of the several risks; that such petitioner was informed and believed that said defendants intended to, and would unless prohibited by the court, assume to exercise the pretended and unwarranted powers which they unlawfully assumed under said notices and resolutions, and, would, on the 24th day of June, 1911, assume to cancel said bonds, and require said warehousemen to procure and furnish other sureties, and refuse to accept such petitioner’s bonds for said warehousmen or other ware-housemen, and thereby deprive such petitioner of a large portion of its lawful and rightful business, and thus wantonly and unlawfully bring such petitioner into disrepute, to its great and irreparable loss. It further alleged that it had never in any manner consented or agreed to the assumption of such unwarranted power or authority of said defendants to hear, try, and determine the merit or validity of the claims before mentioned, and that the pretended findings of such board were wholly unwarranted and false. The petition then prayed for a writ of prohibition prohibiting said defendants “from further proceedings in the exercise of their usurped and unwarranted powers aforesaid, and commanding them to forthwith cease and refrain from their unlawful acts and conduct aforesaid, and that this court thereupon render judgment that all the acts and proceedings of said defendants in the premises are null and should be held for naught, and for such other and further relief as to the court may seem just.” To this petition a return or answer was filed, which admitted the giving of the notices and the passage of the resolution, and a part payment of the claims by the petitioner. It, however, denied that the storage tickets or any of them were falsely and fraudulently issued, and on the contrary claimed that the amount of grain therein receipted for and stated to have been received was of the grade and quality and quantity as alleged, and further stated that at the time of the insolvency of the said Samuel Kittler the said petitioner requested the said board to desist from taking any action to enforce its liability under its bond to the state of North Dakota, or to the holders of the said storage tickets, and that upon the niaking of such request said petitioner represented that the outstanding claims represented by said storage tickets were to be fully paid and satisfied; that thereafter the said trust company falsely and fraudulently represented “to each and all of the said several ticket holders that said Samuel Kittler, while engaged in his business as a public warehouseman, at the village of Turtle Lake, had engaged in irregular and illegal practices of such character that the said Kittler could be successfully prosecuted criminally for the crime of embezzlement, or some kindred crime, and that the charges for which he could be prosecuted were of such a nature and of such a number that if he were arrested, prosecuted, convicted, and sentenced for each and all of the crimes of which, according to said false and fraudulent representation, he, the said Samuel Kittler, was guilty, he would be sentenced to the state penitentiary for a term of seventy-seven years; that said relator, by its agents and servants, further represented to the holders of said storage tickets, with intent to deceive and coerce and take unfair advantage of the said ticket holders, that unless each of them should accept 50 per cent of his claim under his storage ticket against the said Samuel Kittler, as payment in full by relator, and a discharge of its liability under its said warehouse bond, that said relator would cause the arrest of the said Kittler for each and all of the said alleged criminal offenses, and would cause his prosecution and conviction; that all of said ticket holders, save two, believing said false and fraudulent representations, so made by this relator, its agents and servants, desiring to protect the said Samuel Kittler against the humiliation and disgrace that would necessarily attend his conviction for said several ■criminal offenses, accepted 50 per cent of their several claims against relator, and discharged it from further liability therefor.” The answer further alleges that the board of railroad commissioners were.by law given full supervisory power and control over the ware housemen of the state, and that they had' full power and authority to approve, reject, or cancel any and all bonds furnished or submitted by said public warehousemen. It further claimed that, in assuming to conduct the hearing before mentioned, it did not exceed the jurisdiction conferred upon it, and properly and lawfully took cognizance of the complaints of said ticket holders. To this answer a demurrer was interposed, alleging that said return did not “show any defense or any ground or reason for the withholding of the peremptory writ prayed for in the petition,” and moving the court for an order directing the issuance of such writ.
On the 10th day of July, 1911, the trial judge entered an order to the effect that “a peremptory writ of prohibition be issued herein as prayed for in the petition, and the plaintiff have and recover its taxable costs and disbursements,” and on the 19th day of July, 1911, a judgment was entered to the effect that “it is hereby adjudged and ■determined that the defendants, commissioners of railroads of the state ■of North Dakota and board of railroad commissioners of the state of North Dakota, be, and they are perpetually and peremptorily, prohibited and enjoined from in any manner attempting to execute or enforce the orders or resolutions or any part thereof made and adopted iby said defendant board of railroad commissioners on tbe 10th day of June, 1911, set forth in the petition and alternative writ herein as Exhibit D, same being in substance and to the effect that the relator herein show cause before said defendant board why its bonds or insurance ■contracts of and for certain public warehousemen should not be canceled in the event of the failure of said relator to comply with the orders and resolutions of said board theretofore made with respect to certain payments, settlements, and obligations of said relator as a surety on the public warehouseman bond of one Samuel Kittler; and said orders and resolutions were and are without the jurisdiction of said defendant board, and null and void; and that a peremptory writ of prohibition •shall be issued by this court as prayed for in the petition herein.” Erom this order an appeal was taken. Prior to the argument on the appeal, however, the bonds lapsed and expired. Counsel for the respective parties, however, entered into a stipulation, which, however, was not filed in the trial court or in this court, and which merely appears in the brief of counsel, to the effect that: “Whereas sundry elevator companies and grain warehouses have made application to the board of railroad commissioners for licenses, and have tendered warehouseman’s bonds with the Dakota Trust Company as surety; and whereas, there is a difference of opinion between the said Dakota Trust Company and said board with respect to the power and jurisdiction of said board to disapprove, except as to form, a warehouseman’s bond upon which a trust or surety corporation duly organized and authorized to make such bond is a surety; and,
“Whereas, it is desirous and important in the public interest that licenses should be issued forthwith to the applicants therefor above mentioned.
“Now therefore, it is hereby agreed between the said board of railroad commissioners and Dakota Trust Company that the board of railroad commissioners may tentatively approve the warehousemens’ bonds of the Dakota Trust Company tendered with said application for licenses, and that such approval shall be understood and deemed to be only tentative; and if it shall hereafter be finally determined by the supreme court of the state of North Dakota that said board of railroad commissioners has the power and jurisdiction to disapprove or refuse to accept such authorized trust or surety corporation as a surety on such bonds, then it is agreed that the board of railroad commissioners may, notwithstanding the tentative approval of the above-mentioned bonds, revoke such approval, and cancel and reject said bonds the same as if said bonds had never been accepted or approved.
“It is further stipulated and agreed that the Dakota Trust Company expressly concedes and admits, and will expressly concede and admit in any proceeding now pending or hereafter commenced to test in court the above-mentioned question of the extent of the board’s discretionary power and jurisdiction, with respect to the disapproval of such bonds, that if the board has power or jurisdiction in the first instance to reject, disapprove, or refuse to accept as a surety on such warehouseman bond, a duly authorized trust or surety company which has authority to give such bond, then said board also has like power to withdraw its approval, and cancel and reject such a bond at any time after and notwithstanding such approval of the bond in the first instance; and such revocation of approval or cancelation may be made for the same reasons, and on the same grounds or evidence as would be sufficient reasons, grounds, or evidence to warrant the disapproval of it in the first instance.
“Dated at Grand Forks, North Dakota, this 25th day of October, 1911.”
In the briefs of counsel, also, and upon the argument in the supreme court, it was also agreed that the case could proceed as if it were a petition for a writ of mandamus compelling the board of railroad commissioners to approve new bonds to take the place of those which had expired, and it was also conceded that the same rule of law would apply in the case of a mandamus to compel the acceptance of new bonds and a writ of prohibition to restrain the cancelation of those already given.
Hngerud, Holt & Frame, for respondent.
Andrew Miller, Attorney General, and W. H. Stutsman, for appellants.

Opinion:
Bruce, J.
(after stating the facts as above). The stipulation entered into by the parties cannot be carried out by this court. The original proceeding was a proceeding for a writ of prohibition. No petition for mandamus was presented to the trial court, and to allow the proceeding to be converted into a proceeding for mandamus in this court would be for us to assert an original jurisdiction, which the Constitution has not granted to us. As far, too, as the writ of prohibition is concerned, the question is now largely a moot question, the original bonds having expired. The questions involved, however, are of so great public interest, and the real merits of the controversy are still so unsettled, that we can and will consider the questions involved. Boise City Irrig. & Land Co. v. Clark, 65 C. C. A. 399, 131 Fed. 415; Be Morgan, 114 App. Div. 45, 99 N. Y. Supp. 775; Re Kaeppler, 7 N. D. 307, 75 N. W. 253; People ex rel. Spire v. General Committee, 25 App. Div. 339, 49 N. Y. Supp. 725; Coleman v. MacLennan, 78 Kan. 711, 20 L.R.A.(N.S.) 361, 130 Am. St. Rep. 390, 98 Pac. 283. We cannot, however, order the entry of any judgment on the theory of a mandamus proceeding, but on that of a proceeding for a writ of prohibition alone.
In considering this case we must bear in mind that it is presented by demurrer to the return or answer, and that, such being the case, the allegations of the answer must be accepted as true, no matter what the real facts may be, and no matter what merit there might be in the petition if it were considered alone. The arguments and briefs of counsel, however, so confuse the issues raised by mandamus and prohibition that we will discuss this case more or less from the standpoints of both proceedings.
This is not a case where the board of railroad commissioners has refused to approve bonds, and, in refusing to do so, has relied upon its belief that its exercise of discretion need not be accounted for, and that no reason need be given therefor, but a case in which the commissioners have justified their refusal in their answer, and have given reasons therefor. The petitioner trust company contends that the power and duty of the board of railroad commissioners are limited and confined by the language of § 2247 of the Bevised Codes of 1905, which requires the warehousemen to file with the board a bond running to the state, "with good and sufficient sureties to be approved by such commissioners in the penal sum of not less than $5,000, nor more than $75,000 in the discretion of the commissioners, conditioned for the faithful performance of their duty as public warehousemen, and compliance with the laws of this state. . . . Such bond . . . shall be in a sufficient amount to protect the holders of outstanding tickets." It con tends that tbis statute makes it tbe duty of tbe board to examine and determine tbe sufficiency of tbe bond with respect to amount and form alone, and not with respect to tbe moral or other qualifications of tbe bondsmen. It further claims that since § 4455 and 4456 of tbe Revised Codes of 1905 permit trust companies to be sole sureties where tbe law would require two or more personal sureties, and § 4679 of tbe Revised Codes of 1905 requires certain deposits to be made by such corporations with tbe state treasurer, and that when the deposits have been made the state treasurer shall so certify, and § 4682, Rev. Codes 1905, provides that tbe state treasurer's certificate provided for in § 4679 "shall, until revoked, be conclusive evidence of the qualification of such corporation and of its authority to become and be accepted as such surety," and § 4459 of tbe Revised Codes of 1905 provides that tbe above-mentioned state treasurer's certificate shall be filed with tbe insurance commissioner, and that thereupon tbe insurance commissioner issues bis certificate of authority to do business, and § 469C> and 4692 provide for supervision and examination of such companies by tbe insurance commissioner, and § 4464 of the Revised Codes of 1905 provides that such company shall be conclusively presumed to be sufficient surety on any risk within tbe limit of 10 per cent of their capital; in tbe case of a surety bond tbe only duty left for tbe board of railroad commissioners is to inquire into tbe form and amount of the bond, and whether or not tbe surety is authorized to do business, and whether or not the risk is within its limit, and that the financial and moral responsibility of the company within that limit is conclusively presumed. It claims that the board has no right to inquire into the moral character or the past dealings of the surety company, and that that matter is for the insurance commissioner alone, and that until he revokes the license of such company, the company must be conclusively presumed to have a good business character and to be abundantly responsible, and that its bond must be accepted by the board. It further contends that the board is expressly limited by § 2242, as amended by chap. 230, p. 333, Laws of 1909, which grants it the following powersr (a) To supervise the handling, weighing, and storing of grain and' seed; (b) to establish rules and regulations (1) for weighing, (2) for management of warehouses; (c) to investigate complaints of fraud and oppression in the grain trade; (d) to correct such frauds or op pression so far as may be in tbeir power; (e) to revoke warehouse licenses for cause upon notice and bearing. The board of railroad commissioners, however, contend that § 2247, Eev. Codes, 1905, requires the warehousemen to file with the board a bond running to the state, "with good and sufficient sureties to be approved by such commissioners" and that it is their duty to ascertain whether the bond is good and sufficient, and that a good and sufficient bond means a bond which is both given by a surety which is financially responsible and reliable, and which is accustomed to fair dealing, and that such bond must be sufficient to cover all losses. They claim that if the capital of the trust company is limited to $100,000, as it is in this case, they are justified in holding, or, at any rate, have the right to hold, that such surety is by no means sufficient if the company has issued bonds within the state, or to the commission, amounting to many hundreds of thousands of dollars; and that it is for them to inquire into such sufficiency. They also insist that they have the right to inquire into the previous dealings and business methods of the surety. Counsel for the trust company insists that when the board seeks to inquire into the past or the previous transactions of the bondsmen, it is seeking to hear and determine the merits of the bondsmen's controversies with the beneficiaries under previous bonds, and the extent of its liability or the validity of its settlements with them, and in such case is assuming judicial functions which have not been intrusted to it, and which, by § 85 of the Constitution, belong exclusively to the courts. The board of commissioners in answer contend that it is in no way seeking to determine any rights or obligations, or to announce any judgment, but is merely seeking to ascertain whether the bond is good and sufficient ,or not, and that in such investigation it has the right to inquire into the past transactions of the surety and into their fairness. It also claims that § 2242, as amended by chap. 230, p. 333, of the Laws of 1909, vests in the board the power to investigate the complaints of fraud or oppression in the grain trade, and to correct such frauds or oppression so far as may be in their power; and that, in furtherance of such duties, it is not only their duty, but their power, to see that the bondsmen are reliable, both in financial sufficiency and in business integrity. Counsel for the bond company in reply insists that the approval of the bonds or the investigation of the sufficiency of the surety company or the business customs of sucb surety, in no way refer to tHe grain trade, and are matters entirely apart from tbe same.
Tbe powers wbieb bave been by statute conferred upon tbe board of railroad commissioners of North Dakota are quasi judicial. They belong to tbat twilight zone which lies between tbe ministerial or judicial, and tbe legislative, which it is so difficult to bound and define, but which it is nevertheless so necessary to recognize. Its recognition, indeed, is necessary to all scientific, social, and legal development. Such acts and duties are, it is true, often spoken of as being "ministerial," but this is only for the purpose of distinguishing them from the actions and duties which belong solely to the courts, and which cannot be either delegated by or taken from them. See State ex rel. Gale v. Ueland, 30 Minn. 29, 14 N. W. 58; Wilkins v. State, 113 Ind. 514, 16 N. E. 192; State v. Hathaway, 115 Mo. 36, 21 S. W. 1081. The term "ministerial," indeed, is generic rather than specific, and ministerial acts may be divided into two classes: (1) Those which are ministerial solely, and involve no judgment or discretion; and (2) those which are quasi judicial. To this latter class those now sought to be exercised by the board of railroad commissioners belong. Hartford F. Ins. Co. v. Raymond, 70 Mich. 485, 38 N. W. 474; Ramagnano v. Crook, 85 Ala. 226, 3 So. 845. That such powers may be delegated to such board is now well established. State v. Hathaway, 115 Mo. 36, 21 S. W. 1081; Wilkins v. State, 113 Ind. 514, 16 N. E. 192; Burke v. Collins, 18 S. D. 190, 99 N. W. 1113; Re Hoover (D. C.) 30 Fed. 51.
Even where the duty to be performed is quasi jxidicial and involves the exercise of discretion on the part of the tribunal or officer, it is well established that mandamus will lie to compel such tribunal to take some action in the premises, and to exercise its judgment or discretion. In such cases, however, the function of the writ is merely to set in motion. It cannot be used to direct how the duty shall be performed or the discretion exercised, as such a use would amount to substituting the judgment or discretion of the court issuing the mandamus for that of the court or officer to whom it was committed by law. See 19 Am. & Eng. Enc. Law, 732 and cases cited: 26 Cyc. 158; High, Extr. Legal Rem. § 24; Broaddus v. Essex County, 99 Va. 370, 38 S. E. 177; American Casualty Ins. & Secur. Co. v. Fyler, 60 Conn. 448, 22 Atl. 494, 25 Am. St. Rep. 337, and notes thereto, and the notes to Dane v. Derby, 89 Am. Dec. 728, 742; Decatur v. Paulding, 14 Pet. 497, 10 L. ed. 559. It seems, however, to be fairly well established that where it is clear that such judgment or discretion is abused and exercised arbitrarily or in a capricious manner, as where the discretion is made to turn upon matters which, under the law, should not he considered, mandamus will lie. (See 26 Cyc. 161 and cases cited; 19 Am. & Eng. Enc. Law, 737). There are, however, many dissenting decisions even upon this proposition, and many courts hold that mandamus will not lie to review such discretion no matter how unjustly or arbitrarily it may have been exercised. Shotwell v. Covington, 69 Miss. 735, 12 So. 260, and cases cited; Ramagnano v. Crook, 85 Ala. 226, 3 So. 845. A distinction, also, is quite generally made between those cases where the board relies, in its answer, upon the general presumption that it has properly exercised its discretion and those in which it seeks to justify its action and gives reasons therefor. The question for us to determine in this case is not whether, if the board had refused to give the reasons for its refusal to approve the bonds, this court would have interferred, but whether the reasons given for the refusal in the return to the writ show an arbitrary caprice and an abuse of discretion. We are inclined to believe that no abuse of discretion has been shown. The board was not, as counsel for the respondent suggests, trying merely a former dispute or seeking to put the appellant on trial for an alleged offense. They went, it is true, a little too far and had no right to attempt to force a settlement of prior claims. They were exercising in.the main, however, their discretion merely, and giving reasons therefor. They were seeking both to have the claims of the depositors settled, and to ascertain whether the bonds offered were good and sufficient; and we believe that the inquiry in regard to this matter should involve the question -of business custom and integrity as well as of financial responsibility, and that though it was for the insurance commissioner to say whether the trust company should do business within the state and could act as a bondsman at all, it was for the board of railroad commissioners who were intrusted by the statute with the duty of supervising the grain trade and protecting the ticket holders in the elevators, to exercise their •discretion as to what bondsmen they should accept, and reject any or all if they either disliked their business methods or thought that they had written more bonds than their capital would warrant. Surely this duty would be tbe duty expected of the directors of any corporation, and it would seem that the same duty and responsibility was placed upon,, and should be intrusted to, the board of railroad commissioners. The respondents have, and had, the right to do business in North Dakota. They have no vested right, however, to do any particular kind of business with any particular person. Section 4455, Rev. Codes 1905, indeed, clearly intimates that no such corporation has, even though approved by the insurance commissioner, any inalienable right to do business within the state, but that its bonds must be first accepted and approved by the officers or boards to whom they are presented. Nor have they, or any other person, or corporation, by virtue of their permission to do business within the state, a vested right to recognition by the railroad commissioners, or by any other state board. That board can exercise its honest discretion, and it is responsible for the same solely to the people who have created it, provided that it does not interfere with any vested rights, which it has not in this case. The duties which under the statute are to be performed by the board while approving bonds are, as we before stated, quasi judicial and discretionary, and would not in any view of the law be subject to review by the writ of mandamus, except on a showing of a clear abuse of discretion. A purely ministerial act, indeed, is one which "a person performs in a given state of facts in a prescribed manner, in obedience to the mandate of legal authority, without regard to or the exercise of his own judgment upon the propriety of the act being done." Flournoy v. Jeffersonville, 17 Ind. 169, 79 Am. Dec. 468. We know that there are cases in which it is held that the mere approving and accepting bail after it has been fixed by competent authority is a ministerial act solely (Ray v. Doughty, 4 Blackf. 115) ; but in these cases the question whether the act could be delegated was considered, rather than the question as to whether it could be compelled. So, too, there is a wide difference between an individual, such as a clerk of a court with no supervisory power and no quasi governmental responsibility, and that of a railroad commission such as the one before us. There is little difference, indeed, between the powers and responsibilities of the railroad commission of North Dakota and those of the board of commissioners in the case of State ex rel. Reynolds v. Tippecanoe County, 45 Ind. 501, and in which the court held that mandamus would not lie to compel the granting of a liquor license even tbougb tbe statute prescribed the form of the application, and there was but little, if anything, for the commissioners to decide. ' Nor is there any material difference between the case at bar and the case of Shotwell v. Covington, 69 Miss. 735, 12 So. 260, where the court held that mandamus would not lie to compel the president of a board of supervisors to approve the bond of the clerk of the court.
A very suggestive case is that of State ex rel. State Pub. Co. v. Smith, 23 Mont. 44, 57 Pac. 449. 'In this ease the statute provided for the letting of state printing contracts by the state board of examiners, of which the governor was a member. The act also provided that all contracts made by the board should be approved by the govern- or and state treasurer. The court held that the duty of such officers to approve a contract let by the board was not solely ministerial, but involved judicial discretion, and could not be controlled by mandamus. "The word 'approve/ " the court in its opinion says, "means 'to pronounce good; think or judge well of; admit the propriety or excellence of; be pleased with; commend.' (Century Diet, title 'Approve.') The Constitution does not define the extent to which they must go in the investigation of the action of the board, nor does it require that they must act together or state any reason for their actions. Yet from the very fact that their approval is indispensable, under the Constitution, the conclusion is irrestistible that their action is designed to be a check upon the action of the board. This is the implication from the terms used and the rule of construction, that every word of the instrument should be rendered operative. . If this he true, in the discharge of their duty they must use their judgment and discretion as to all matters into which the hoard could or should inquire. This includes not only the pecuniary responsibility of the bidder, but his judgment, skill, ability, capacity, and integrity as well. . . . The governor having a general knowledge of the affiairs of the state, and presumptively being fitted by his superior qualifications to pass judgment upon the action of the board, it was thought proper by the constitutional convention that he should give the taxpayers the benefit of his judgment and discretion. The treasurer being in a position in which he is presumed to be especially informed as to the condition of the state's finances, it was thought proper to require the exercise of his judgment and discretion also; the ultimate purpose was by this system of counterchecks to secure economy and prevent favoritism. It is not for us to say whether the provision is a wise one or not. These officers, acting within the sphere of their constitutional duties, are accountable under their oaths to the people only, just as are the individual members of this court, and it is no part of our duties to inquire into their motives in withholding their approval from the contract let by the board to the relator. If they have acted arbitrarily, if they have chosen to pervert the functions of their high offices to vile, partisan uses, or to the purposes of favoritism as is suggested by the allegations of the affidavit ; we have no power to restore their consciences and to bring them to a sense of duty. The form in which they are to be judged is the minds and consciences of the people, whose servants they are and who alone can hold them responsible for the manner in which they perform their duties." See also Oliver v. Wilson, 8 N. D. 590, 73 Am. St. Rep. 784, 80 N. W. 757; Ramagnano v. Crook, 85 Ala. 226, 3 So. 845; Swan v. Gray, 44 Miss. 393; State ex rel. Eaves v. Rickards, 16 Mont. 145, 28 L.R.A. 298, 50 Am. St. Rep. 476, 40 Rac. 210.
We have examined the statutes relating to the duties of the insurance commissioner and of the board of railroad commissioners with some care, but we cannot agree with counsel for respondent that the duties of the latter board are confined merely to the ministerial act of seeing that the bond is sufficient in form, and that the action of the insurance commissioner, in admitting the companies to do business within the state, is conclusive as to their financial responsibility and business integrity, so that the railroad commissioners, and, on the same reasoning, every other state officer and board, will be compelled to accept them as bondsmen, no matter what their dealings in the past may have been, or no matter how much in excess of their capital stock and of their deposit with, the state their obligations may be.
We believe, in short, that the appellants' contentions as to the power and prerogative of the board are in the main correct, but, as we have before stated, no mandamus proceeding is technically before us.
When we come to consider the question from the standpoint of a petition for a writ of prohibition, we must take as established the above propositions as to the general power of the board in approving and canceling bonds, but we are constrained to hold that in the case at bar it exceeded its powers. We believe that the board of railroad com- inissioners bad no power to attempt to force the surety company to make a settlement with its creditors, nor to assume to itself the power of adjudicating what the amounts of those settlements should be. We believe, however, that the commissioners had the right, if they thought the bonds furnished by the elevators were insufficient for any reason, whether on account of the financial responsibility of the bondsmen or their lack of business reliability, to require new ones.
We also believe that under § 2247, Rev. Codes 1905, which requires operators of grain elevators to file with the board of railroad commissioners a bond running to the state, with good and sufficient sureties, to be approved by .the commissioners and conditioned for the faithful performance of their duties as public warehousemen, and under § 2242, Rev. Codes 1905, as amended by chapter 230, Laws of 1909, and which, among other things, gives to the board of railroad commissioners the power "to investigate all complaints of fraud or oppression in the grain trade of this state and correct the same," such board could examine into the sufficiency of the bonds, both as to form and general business conduct and reliability of the sureties, and for such purpose might summon any witnesses before them, and make any reasonable investigations that they pleased. Whether they could, in such a case, by court procedure or otherwise, compel the attendance of such witnesses and require testimony under oath, is a matter not here determined. A surety or bonding company can, at any rate, hardly complain because, when complaints are made of its business dealings, and objection made to its further retention as a bondsman, it is given an opportunity to appear and to be heard.
It may be, in a clear case of fraud or collusion, that the bonding company would, in a proper proceeding, have some measure of relief, and that the courts would be willing to protect its rights under the contracts already entered into. A clear distinction, however, must be. made betweeq the bonding company and the elevator companies. The bonds were required by the statute to be furnished by the elevator owners, and not by the bonding company. The bonding company was a. surety only. The elevator companies were required to furnish the' bonds, and it was for them to make their own contracts. The board! of railroad commissioners has, under the statute (§§ 2241 and 2247,, Rev. Codes 1905) the power to require good and sufficient bonds, and to pass upon the sufficiency of the bonds furnished to them by the elevator companies, no matter hy what sureties signed, and, as a necessary incident to such power, to demand new and additional bonds if they become dissatisfied with those already given. We believe that they have these powers not only under the clause of the statute which imposes upon them the duty of approving the bonds, but also under the clause which gives them the power to prevent fraud in the grain trade. We certainly believe that under the latter clause they have the power to investigate all such matters. They may not, it is true, be able to compel the bonding companies to appear before them, but they have the right to make the inquiries. The dealings of the board are with, and their jurisdiction is over, the elevator companies, .rather than over the bonding company. No one, we believe, would contend that a surety on an appeal bond or bail bond would have reason or right to object if a clerk of a court or a judge were to refuse to accept a bond on which he was a surety. The controversy would be between the appellant or offerer of the bond and the clerk, and not between the clerk and the surety. We believe that the board had no power to compel the appearance of the bondsman before it for the purpose of forcing a settlement with its creditors before a legal adjudication of its liability. It certainly had no power to threaten to cancel the bonds if it did not appear or settle with the ticket holders, on the basis that it, the commission, thought just. It had the power, however, to make reasonable injuries to satisfy itself as to the sufficiency of the bonds furnished by the company, and fair play would require the giving of an opportunity to the trust company to explain its past dealings. The power of the commission extended at the most to insisting that the elevator companies should furnish new and additional bonds, and if such companies should refuse so to do, to revoke their licenses. We believe they had the power to investigate into the business methods as well as the financial responsibility of the surety, and that their reason for seeking to cancel the bonds which is given in the answer is a reason that the courts cannot declare to be without merit. Of course, if the petition is true, another aspect is put upon the case; but we must remember that it is the answer or return that we are considering, and that all of the allegations of the answer are admitted by the demurrer. The answer, in short, charges the surety company not only with bad faith, but with seeking to compound numerous felonies. We can bardly say that sucb charges, if sustained, against the surety, would not justify the requirement of new bonds. We do not say that the surety company is guilty of the felonies charged. We merely say that the answer so charges, and that the truth of the answer is admitted by the demurrer.
We resolve the main and real question in controversy in favor of the appellants, and hold that the board of railroad commissioners has the power and authority to examine into the sufficiency of bonds issued by the elevator companies, as to form, as to amount, and as to the general reliability and business methods and previous good faith of the bondsmen. In the exercise of their legitimate discretion in these matters, they cannot be controlled by mandamus, prohibition, or any other proceeding; nor can they be compelled to accept and approve as sureties persons or corporations of whom they disapprove. For good faith in such matters they are responsible to the public, and not to the sureties.
Such being our conclusion, it follows that the judgment of the district court should be modified. That judgment was as follows: "Is is hereby adjudged and determined that the defendants, commissioners of railroads of the state of North Dakota and the board of railroad commissioners of the state of North Dakota, be,, and they are, perpetually and peremptorily prohibited and enjoined from in any manner attempting to execute or enforce the orders or resolutions, or any part thereof, made and adopted by said defendant board of railroad commissioners on the 10th day of June, 1911, set forth in the petition and alternative writ herein as Exhibit D, the same being in substance and to the effect that the relator herein show cause before said defendant board why its bonds or insurance contracts of and for certain public warehousemen should' not be canceled in the event of the failure of said relator to comply with the orders and resolutions of said board theretofore made with respect to certain payments, settlements, and obligations of said relator as surety on the public warehouseman bond of one Samuel Kittler; and said orders and resolutions were and are without the jurisdiction of said defendant board, and null and void; and that a peremptory writ of prohibition shall be issued by this court as prayed for in the petition herein." The resolutions of the board spoken of as Exhibit D in such judgment contain two parts. The first was an order and resolution directing that the Dakota Trust Company appear before said hoard and show cause why the commission should not cancel the bonds of said trust company because of its failure to effect a settlement satisfactory to the commission with the holders of the warehouse receipts issued by said Samuel Kittler. This part of Exhibit D was beyond the power of the commission. In other words, the commission had no power to direct, or by threats or otherwise to force, a settlement between the trust company and the creditors of Samuel Kittler. The commission, on the other hand, had a perfect right, if they saw fit, and on account of their dissatisfaction with the business methods of the surety, to require the elevators to furnish new bonds, and the trial court should not have enjoined the board from carrying out that part of the order or resolution which was as follows: "Be it further resolved that the secretary notify and require each of the above-named elevator companies and warehousemen to secure and have ready on said date of June 2Jth new bonds or undertakings, satisfactory to this commission, to take the place of the said Dakota Trust Company's bonds, in the event they are then ordered canceled by this commission." The words, "ordered canceled," are, perhaps, unfortunate; and the words used should have been "in the event that new bonds are required by this commission." The substance of the resolution, however, was beyond criticism, and its real meaning is quite evident.
The cause, therefore, will be remanded to the district court with directions to enter an order prohibiting the board of railroad commissioners from ordering the Dakota Trust Company to appear before it, and show cause why the commission should not cancel the bonds of said trust company because of its failure to effect a settlement satisfactory to the commission with the holders of the warehouse receipts issued by said Samuel Kittler. Such order or judgment, however, is to contain no other provision or prohibition.
Ko costs or disbursements will be allowed to either party.
BuRke, J., concurs.