Court Opinion

ID: 3499819
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:06:59.702026+00
Date Added: 2024-06-11T14:15:57.564302
License: Public Domain

Petitioner asks mandamus commanding defendants to pay him $119,007.39 and for such further order as is just. The facts sufficiently appear in the other opinions filed.
In this country, political power is inherent in the people. It is so recognized and declared by the *Page 431 
Constitution of Michigan. Article 3, section 1. This State possesses all of the powers of any other sovereign national State subject to the express limitations and prohibitions imposed by the Constitution of the United States, and the limitations impliedly resulting from the express delegation of certain sovereign powers by the Constitution of the United States to the national government.
This State can function in its governmental and administrative capacity only through officers and agents. The people, inherently jealous of the power that might be exercised by its public servants, — State officers and agents, — temporarily in office directly or indirectly through the votes of the people, placed constitutional limitations upon their power. Individuals must act for the State, the legislature may enact laws only in pursuance of and not in defiance of the will of the people as expressed in the Constitution. One of the constitutional conditions and limitations imposed by the people upon the exercise of power by the State or any and all of its officers, whether legislative, executive or judicial, is that private property shall not be taken by the public without just compensation therefor being first made or secured in such manner as shall be prescribed by law. Constitution of Michigan, art. 13, § 1. The money here in controversy was taken by the State, ordered by the State to be paid to the treasurer of the State, and if the money may not be recovered from the State or the treasurer of the State it has been taken in express violation of constitutional mandate. The governing statute should not be declared unconstitutional unless imperatively necessary, but should be so construed as to effectuate the beneficial purposes sought to be accomplished thereby. *Page 432 
The government derives its just powers from the consent of the governed. Public powers may be exercised only for the people. No public officer has any authority to exercise any power except that delegated to him by the people through the Constitution. No man in this country is above the law. No officer of the law may with impunity set the law at defiance. "All officers of the government from the highest to the lowest are creatures of the law and are bound to obey it." UnitedStates v. Lee, 106 U.S. 196 (1 Sup. Ct. 240). State banks exercise quasi-public powers. They are at all times subject to regulation by the State in the exercise of its police power founded upon the duty of the State to protect its citizens and provide for the safety and good order of society. The police power corresponds to the right of self-preservation in the individual and is an essential element of all orderly government because necessary to its proper maintenance and the welfare of society. It rests upon the power of the State to control and regulate private interests for the public welfare. The legislature of the State is the sole judge of the policy, wisdom and expediency of all statutes enacted by it in the exercise of the police power of the State.
The actual supervision and control of State banks is here vested by the State in the officers of the State who are authorized to investigate the management and conduct of their business, their solvency or insolvency, and take possession of their assets and wind up their affairs whenever it is found necessary to protect the depositors, creditors or others (3 Comp. Laws 1929, § 11898 et seq.). A bank is not deprived of title to its assets when the commissioner of banking takes possession thereof because the bank is found by the banking commissioner *Page 433 
to be in an insolvent or unsafe condition, but those who engage in the banking business as stockholders, directors or officers equally with those who do business with the bank as depositors do so with full knowledge the State may exercise its inherent power to inspect, control or close and wind up the bank, and no contract, express or implied, between depositors and the bank or between the stockholders of the bank, may interfere with or limit the State in the exercise of its public powers.
Under the banking law (3 Comp. Laws 1929, § 11959), no receiver may be appointed except with the consent and approval of the State by its banking commissioner. Under the present banking law (Act No. 32, Pub. Acts 1933) no receiver may be appointed without the consent both of the banking commissioner and of the governor. In appointing a statutory receiver for a State bank the circuit court in chancery is not exercising its ordinary inherent functions adopted from the old English practice, but is exercising an express administrative function conferred by statute upon it for the administration of the estate of insolvent banks.
Under the practice obtaining in this State, action against an insolvent bank is taken by the State. A receiver may be appointed by the State court in chancery on the recommendation or approval of the State; a receiver appointed is an officer of the State who is accountable to the State. He takes and holds possession of the assets of the defunct bank as a custodian for the State, reduces the bank's assets to possession, enforces the stockholders' statutory liability and performs such other powers and functions as are imposed upon him by the law of the State. When money comes into the hands of the receiver for the defunct bank he is directed by the *Page 434 
State to deposit it with the treasurer of the State where it is to be held until it is paid out by the State on the order of the banking commissioner, supplemented by the judicial order of the circuit court in chancery having jurisdiction of the administration of the affairs of the defunct bank, when the net assets of the insolvent bank are distributed to those whom the State says are entitled thereto.
It is claimed there is no appropriation by the State authorizing the payment of the money in question out of the treasury of the State. If this contention were sound and the identical currency paid to the State treasurer was on hand, it could not be paid out on the order of the commissioner of banking and the order of the circuit court in chancery having jurisdiction of the administration of the bank. The argument proves too much. It hoists its advocates on their own petard. The State treasurer was authorized to receive the money by State law. If there is no appropriation of the money, there was no authority for the State treasurer to receive it. The State treasurer acts in his official capacity. He received the money of the insolvent bank for the State. It makes no difference whether the State directed the money to be deposited with the treasurer of the State of Michigan, or whether the State directed the money to be deposited with the State or with the State treasurer. In any event, the money landed in the State treasury by reason of State action, State authority and State direction. The creditor of a defunct State bank does not keep the books of the treasurer of the State. He has nothing to say about where the money shall be deposited. He has no control over the place of deposit, the liability of sureties or the security taken to insure the repayment to the State treasurer of State money deposited by the State treasurer. *Page 435 
In this case the money was by order of the State, in an action instituted by the State, deposited with the treasurer of the State. The State, by its proper officer, the commissioner of banking, has ordered such money paid out by the State and this executive order has been supplemented by an order and decree of the court having jurisdiction of the administration of the estate of the defunct bank.
Petitioners are entitled to mandamus. The State acted, collected the money from debtors of the bank and perhaps from stockholders of the bank. The State has said the creditors of the bank are now entitled to be paid with the money which the State said should be deposited with the State, held by the State and be paid out by the State on the order of the commissioner of banking.
So far as this case is concerned, the State acts through the State treasurer, the commissioner of banking and the circuit judge. The State treasurer received in his official capacity the money in question. Common honesty dictates he should pay it back on the order of the State by whose order he received it. He who acts for the State in receiving money for the State, to be paid out on the order of the proper officers of the State, cannot refuse to pay out the money upon the orders of the proper State officers without arrogating power to himself superior to that of the State from which he derives all his power and authority.
The State treasurer has no prescribed constitutional duties. His duties are fixed by statute. The moneys in controversy paid to him are public moneys. 1 Comp. Laws 1929, § 358. No treasurer of the State, "shall under any pretext use nor allow to be used any such moneys for any purpose other than in accordance with the provisions of law." 1 Comp. Laws 1929, § 360. *Page 436 
There was no duty resting upon the State treasurer to deposit funds in any depository. He had a right to keep all public moneys in the State treasury. People v. Glazier, 159 Mich. 528. The Constitution regulates to some extent the deposit by the State treasurer of State moneys and requires an accurate statement of receipts and expenditures of public moneys to be published. Article 10, §§ 15, 17. The creation by the State treasurer of special funds is a matter of convenience in accounting, but these moneys so received are public moneys received by the State treasurer. Money received by the receivers of insolvent banks has been required to be paid to the State treasurer since Act No. 205, Pub. Acts 1887; 2 Comp. Laws 1915, § 8023; 3 Comp. Laws 1929, § 11959. Notwithstanding for more than 40 years the statute has required such money to be so paid, not, so far as I can learn, until the present case, has it ever been even contended a specific legislative appropriation was required to authorize the public moneys so received by the State treasurer to be paid out under the order of the court having jurisdiction of the receiver, when approved and authorized by the commissioner of banking, in accordance with statute.
Section 8026, 2 Comp. Laws 1915, required the receiver of an insolvent bank from time to time to make ratable dividends "under the direction of the commissioner of the banking department." This provision is continued by section 65 of the present banking act. 3 Comp. Laws 1929, § 11962. These statutes should not be technically, but liberally, construed to protect the interests of depositors and creditors. Stone v. Dodge,96 Mich. 514 (21 L.R.A. 280). The same statute which empowers the State to receive the money, directs how it shall be paid out *Page 437 
for dividends. To contend that under such circumstances a specific legislative appropriation is necessary for the State to pay out the money which the State received by reason of this statute and is directed by the same statute to pay out upon the order of the proper officer of the State, is equivalent to saying if the State does not pay the money received for a specific purpose and to be paid out for such purpose by the proper officer of the State a statute should be passed to compel it to do so, and, if that statute is disobeyed, the State should pass another statute directing it to comply with the law and so on ad infinitum. The order and direction for the paying out of money by the State was made by the proper officer designated by law by the State. This constitutes an appropriation by the State of money in question for a specific purpose. When, as, and if money comes into the treasury of the State, the money due, appropriated by law, and ordered paid by the lawful officer of the State should be paid. This is not a suit against the State but to compel the performance of a statutory duty by the treasurer of the State.
The writ of mandamus should issue, but without costs, the matter being one of public interest.
BUTZEL, J., concurred with POWER, J. *Page 438