Case Name: Dan. E. Lydick, Trustee v. State Banking Board
Court: Supreme Court of Texas
Jurisdiction: Texas
Decision Date: 1929-01-23
Citations: 118 Tex. 168
Docket Number: No. 5016
Parties: Dan. E. Lydick, Trustee v. State Banking Board.
Judges: 
Reporter: Texas Reports
Volume: 118
Pages: 168–173

Head Matter:
Dan. E. Lydick, Trustee v. State Banking Board.
No. 5016.
Decided December 12, 1928. January 23, 1929.
(11 S. W., 2d Series, 505; 12 S. W., 2d Series, 954.)
Spencer, Rogers & Lewis, Cockrell, McBride, O’Donnell & Hamilton, and Black Sr Graves, for relator.
In the event of the voluntary liquidation of a State Bank, operating under the provisions of the depositors guaranty fund when it shall be made to appear to the State Banking Board that all depositors of the liquidated bank have been paid in full, the Board shall return to such bank the pro rata part paid by it into such fund when unused. Rev. Stats., 1925, Art. 445.
Upon the withdrawal of a state bank from the guaranty fund plan its interest in the guaranty fund must, under the provisions of Art. 445, Rev. Civ. Statutes of 1925, be returned to it and no part of the withdrawing bank’s interest in the fund can be used to discharge all or any part of the liability accruing against the fund subsequent to the time of such withdrawal.
It is only a bank of which the Banking Commissioner has “taken possession”, the depositors of which are entitled to share in the depositors’ guaranty fund, and it is the act of the Commissioner in thus taking charge which constitutes a declaration of the right to such depositors to so share in said fund, and the courts will not be authorized to conduct an inquiry as to whether such failing bank may theretofore have actually been insolvent, such inquiry being wholly immaterial in the determination of the question as to the depositors who shall share in the fund, the statute thus having fixed it.
It may be true, as ruled by the Honorable Commission of Appeals, that where the claim of a creditor against the Depositor’s Guaranty Fund is presented for allowance and payment and for some reason, payment is delayed, the creditor must then participate equally with all later creditors whose claims may have intervened.
But this does not mean that a cotitributing bank who claims a “return” of its “pro rata part” of the Depositor’s Guaranty Fund after it has satisfied all of its depositors and withdrawn from the Plan, is the claim of a creditor.
We submit that where a bank, acting under Article 445 of the Revised,Statutes of 1925, liquidates its affairs, satisfies its depositors and furnishes proper evidence thereof to the State Banking Board, it then becomes legally and equitably entitled to a “return”— a re-delivery — of its “pro rata part” of the Depositor’s Guaranty Fund. Its right to such refund is the right of an owner of property; it is not the right of a creditor. When such bank complies with the law and demands a return of its “pro rata part” of the Fund and such demand is unlawfully refused, such “pro rata part” is not thereby made a part of the Depositor’s Guaranty Fund.
Certainly it was never intended that the State Banking Board should have the power to compel a liquidated State Bank to remain a member of the Guaranty Fund System. And yet, such is the effect of the ruling of the Commission of Appeals. The Commission has ruled that the State Banking Board may refuse to return to a liquidated bank its “pro rata part” of the Guaranty Fund and that as a result of such refusal, though unlawful, the liquidated bank in effect remains a member of the System, because the Commission has held the liquidated Bank liable for its proportionate part of the future liabilities of the Fund.
When a bank liquidates its affairs in accordance with the provisions of law governing liquidation and discontinues the business directly conducted by it, then it, also as a matter of law discontinues its connection, as a member of the Guaranty Fund System, with all other banks remaining in business as members of such System, and no authority of law exists under which banks remaining in business can make contracts and create liabilities binding the property of a liquidated bank.
For a period of more than ten years prior to September 29, 1926, the State Banking Board had been administering the Guaranty Fund according to a uniform departmental practice at variance with the decision of the Court in this case, but founded upon opinions of the Attorney General’s Department delivered in August 1915. Opinions of Attorney-General: No. 66, Aug. 15, 1915; No. 68, Aug. 20, 1915; No. 2460, Oct. 17, 1922.
The action of a ministerial officer in refusing to perform a plain ministerial duty affecting the property rights of others, is absolutely devoid of legal effect.- Where the party is entitled to have the duty performed, the law will deal with his rights exactly as if the duty had been performed. Jumbo Cattle Co. v. Bacon, 79 Texas, 5-12; Metzler v. Johnson, 20 S. W., 1116-1117; Pohle v. Robison, 102 Texas, 274-277.
Claude Pollard, Attorney-General, C. W. Truehart, Assistant, L. C. Sutton and Jno. W. Goodwin, for respondent.
Butts & Wright, representing depositors in the insolvent Commercial State Bank of Cisco, and /. F. Hair and Marcus W. Davis, representing depositors in the insolvent First State Bank of Belton, presented motions for rehearing as amici curiae, claiming for such depositors preference in the distribution.of the Guaranty Fund over the right of relator Lydick to a refund therefrom. Their motions for leave to file were overruled.

Opinion:
Mr. Presiding Judge HARVEY
delivered the opinion of the Commission of Appeals, Section A.
The Supreme Court has this day adopted the opinion of Section B of the Commission, in the case of Edwin Lacy, et al. v. State Banking Board. The holdings in that opinion require the same disposition of this case that is made of that case.
We recommend that the mandamus sought herein be refused.
Opinion of the Commission of Appeals adopted, and mandamus refused.
Thos. B. Greenwood, Associate Justice.
William Pierson, Associate Justice.