Court Opinion

ID: 6739384
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:48.93111+00
Date Added: 2024-06-11T16:01:54.753231
License: Public Domain

Bronson, J.
Proceedings.—This is an original application to prohibit and restrain the respondents from interfering with the duties of the state examiner, and from continuing their alleged wrongful acts in determining the Scandinavian American Bank of Fargo to be insolvent, and in appointing thereover, a receiver.
On October 2, 1919, this court issued its preliminary order, temporarily restraining the respondents and placing in charge of such bank the state examiner upon petition, which alleges, among other things, that the respondents are usurping the powers and duties of the state examiner; that arbitrarily, illegally, and wrongfully they had occasioned advance information to be given that such bank was to be closed and had caused a run to be made on such bank; that illegally and wrongfully, without the consent of the state examiner, they caused such bank to be closed and a temporary receiver to be appointed; that such respondents are attempting arbitrarily to invalidate large amounts of col*466lateral of súcli bank, are failing to make due collections thereof, and are about to sell great quantities thereof; that their arbitrary and illegal action, unless restrained, will financially wreck such institution; that public moneys are on deposit in such bank and the state bank guaranty fund are involved, as well as the powers and duties of the state examiner. Such petition seeks to invoke the exercise of the original jurisdiction of this court.
On the return day, October 15, 1919, the respondents filed a motion to dismiss upon jurisdictional grounds, and also their return and answer. On this day, the cause was orally argued and submitted! Pursuant to the order of this court, the parties have been granted until October 23,-1919, to make up and complete the record in this matter.
Record Facts.—Substantially, the facts, as disclosed by the record, are as follows:
For many years, the relator bank has been engaged in the general banking business as a state bank at Fargo, North Dakota. On September 1Y, 1919, this bank was examined by department of the state examiner through one of its deputies, the respondent Halldorson, and report thereof filed with the department. This report had been considered by the state examiner, conferences were held with the officers of the bank, and the recommendations made by the state examiner were being carried out as the evidence of the state examiner discloses.
On September 25, 1919, the state banking board, of which the respondents Danger and Hall constitute a majority, passed a resolution which reads as follows:
Resolution.
“Whereas, an investigation of one of the banks or associations doing business in the city of Fargo, under the supervision of the state banking board, leads the banking board to believe that an attempt is being made to defraud some of the stockholders, and
“Whereas, this institution is in close relation to the other banking institutions in Fargo,
“Be it resolved, that the attorney general or his assistants, together with one or more bank examiners he may choose, proceed to Fargo immediately and conduct a thorough examination of any and all banking institutions doing business in the city of Fargo, North Dakota, un«er *467the laws of this state; that said examination, shall disclose the value of all stock of every nature and description, the amount of good and bad notes, together with all collateral, and any or all other things which, in the judgment of the attorney general, his assistants, or the men making the investigation, may be necessary to give the board complete information as to the value of the notes, the value of the loans, the value of the stock, and the value of the collateral within these various institutions, and that particular investigation be made to determine whether or not any crime has been committed on the part of any officers of the banks or institutions, and that the attorney general be given full power to act to protect any depositor, any stockholder, or the guarantee fund of the state.”
The state examiner certifies to this resolution as secretary of the state banking board. On the same date he issued a letter to the respondent Halldorson, one of his deputy examiners, which reads as follows.
Mr. P. E. Halldorson, Deputy Examiner,
Eargo, North Dakota.
Dear Mr. Halldorson:—
You are hereby authorized to act under the direction of Attorney General William Danger in the examination of the Northwestern Savings & Loan Association of Eargo, and such other institutions in Eargo as he may deem necessary, with a view to ascertaining the truth of the charges made that this concern is attempting to freeze out some of its stockholders. You may also select any deputy examiner or examiners that you desire to assist you in this examination. Yours truly,
O. E. Lofthus, State Examiner.
On September 26, 1919, the respondent Sheets proceeded to Fargo, under the direction of the attorney general, possessed of the records and reports of the Northwestern Mutual Savings & Loan Association, a letter of authority to him and Attorney Lauder to fully act in the place and stead of said attorney general (which letters of instruction did not state upon what matter they should possess such authority), together with the letter from the state examiner to said Halldorson.
On September 21, 1919, Sheets in company with Attorney Lauder went to the bank, and, in accordance with the testimony of Sheets, *468proceeded to go over the loans of the bank and check them. Attorney Lauder, in his affidavit, states that he is not a bookkeeper or accountant, and that he was not there for the purpose of making an examination himself, but to give advice upon any question of law that might arise. On September 28, 1919, the respondent Ilalldorson started to examino the bank, and on September 29, 1919, another deputy named Engemoen started to assist him.
Pursuant to this examination, Sheets, Halldorson, and Engemoen made and signed a report on October 1, 1919, covering a period of examination from September 27, 1919, to October 1, 1919, at 5 p.-m., wherein they list various loans aggregating something over $734,000 "as excessive loans, stating their general character to be extremely unsatisfactory, and the security- in almost every case entirely inadequate. For many of these so-termed excessive loans the collateral or security is stated- to the farmers’ liabilities, represented by notes and postdated checks. For instance, there are four different loans described in such excessive loans list; namely: the Consumers United Stores Company, the National Nonpartisan League, the League Exchange, and the Publishers National Service Bureau list. These aggregate in round numbers, $443,000. The farmers’ paper, which stands as collateral for such loans, amounts to over $970,000; there being some additional security amounting to over $29,000. The report estimates such farmers’ notes to be not worth in excess of 50 per cent of their par value. As to the postdated checks it is their opinion that they are not collateral at all. That they are without validity or substantial value. There was also listed an itemized statement of bad debts amounting, in round figures, to $46,500, reported as of no value whatever. This report lists the resources and liabilities of such bank, showing that it had in loans and discounts (round figures given) $1,203,486; in deposits, private, $869,855; due to banks, $616,565, total deposits, $1,486,420; its capital, $50,000; surplus, $10,000; its cash on hand, $26,249; its amount due from banks, including collections in transit, $227,275; its excess expenses over undivided profits, $3,114. There is listed $169,973 past-due paper. The conclusion is reached that the bank is heavily over-loaned, that its reserve is below the requirements of law, and, if figured in strict accordance with law, would be several hundred thousand dollars less than no reserve, and finally, somewhat rhetorically, it is stated *469that this bank presents a vast unwieldly $1,500,000 financial monstrosity, unable to take care of its obligations. Tho recommendation is that the bank’s door be closed to protect the interests of the bank and its patrons.
Apparently, without any delay after the receipt of this report, the state banking board, though the respondents Hall and Longer, took action; for at 11:20 a. m. on the next day, October 2, 1919, a telegram was sent to respondent Halldorson by the attorney general, to the effect that the banking board had adopted a resolution that the bank was insolvent to their satisfaction, and advising said Halldorson that he had been appointed a temporary receiver by such board, with power and authority to take charge of sueh bank.
In the meantime, on this day, something like a run was in course of progress against this bank. A depositor in the bank testifies that at 10 a. m. of that day he was advised to get his money out of the bank, as it would be closed. In St. Paul it was known at 10 a. m. that the bank was going to be closed. The clearing house in Fargo refused to clear the items of such bank in the morning; all tho banks in Fargo demanded cash for their items. Such • evidence is in the record not disputed. Upon receipt of the telegram, Halldorson secured a bond in the siun of $100,000, and thereupon took charge of said bank on that day about noon, and closed its doors.
The state examiner, who was absent from the state during this course of procedure by the respondents, as well as his chief deputy, Semmingson, who was the acting state examiner during his absence, both testify that the closing of such bank was without their knowledge or consent.
On October 4, 1919, Sheets, Halldorson, and Engemoen made a report to the attorney general supplementary to their original report, previously mentioned, wherein they refer to a “Kiting” arrangement with the Bank of Commerce and Savings, in Duluth, by which such Duluth bank would accept discounted paper indorsed without recourse by the relator bank as though it were purchased by them outright, and without any contingent or other liability, with the understanding that the amount carried should remain intact and on deposit with the Duluth bank for purposes of assisting the bank’s financial status when a “call” or an examination was expected.
That in this regard in September, 1919, when Halldorson made his *470regular examination, it was found that some $81,500 of paper had been charged to the Duluth- bank and about the same time also some $14,000 more was so charged. Further, that the furniture and fixtures account which was carried on the books of the bank at $20,644, being as to that amount $2,000 in excess of that permitted by law, was, in fact, worth only $6,266.50 as determined by an appraisal made by one O’Shea, an architect. The conclusion is thereupon reached in this report that, by a consideration of the excess of expense over earnings, and the loss of the furniture and fixtures account, the capital is impaired to the extent of $7,402.77. The ultimate conclusion is then stated that this item, together with the past-due paper listed in the former report as bad debts and paper, which will result in a total loss, represent the facts upon which they have come to the conclusion that the bank is hopelessly insolvent without any reference to the condition of the excess loans. In this regard it may be noted here that the state examiner, in his evidence, however, states that this Duluth item was in fact charged back to the relator bank on September 17th, while Halldorson himself was there examining the bank for the reason that the Duluth bank wanted to hold such item as a credit not subject to check, and this arrangement was not' satisfactory to the relator bank. Concerning the furniture and fixtures account, the state examiner states that the state architect has made an appraisal, and that the same justifies carrying such item within the legal limit $18,000, to which it has been reduced.
On October 6, 1919, application was made to this court by the relators. On October 8, 1919, this court issued its order herein pursuant to which the state examiner took charge of such bank until the further order of this court on October 8, 1919.
At the time of this hearing on October 15, 1919, he reports to this court that on the excessive loan list reported by Ilalldorson et al., $108,000 have been paid. That in many instances the amounts listed are incorrect, one credit item of $8,000 alone being noted in one instance. That he sees no apparent loss in the rest of the loans. That the total collateral securing the loans is $2,477,251.12. That the loans in the past few days have been reduced $169,000. That the legal reserve to-day (October 14th) is about $85,000 over besides $50,000 of Liberty bonds on hand. That he is satisfied the bank is not only solvent, but also retains its surplus and some undivided profits. He further finds *471that said Ilalldorson’s report is inaccurate, misleading and unjustifiable. He further states that the postdated checks of the National Nonpartisan League are desirable collateral, because they are in small amounts and spread over wide territory, and the history of their payment shows a wide margin of safety. The Equitable Audit Company of Minneapolis, a corporation chartered under the laws of Minnesota, in the accountant business, was employed by the relator bank to make an investigation and report on the condition of the bank. Such company made such investigation from October fth to October 14th, 1919. Its report is in evidence before this court. It characterizes the report of Halldorson et al. in many respects to be incorrect and false. It reports that a thorough investigation has been made of the bank, and, in conclusion, states that the correct statement of the net worth of the bank is over $10,000, as follows: Capital stock, $50,000; surplus, $10,000; accrued profits, $10,000.
Halldorson has submitted no report to this court of his actions as temporary receiver. The state examiner testifies that Halldorson has refused to be checked out and be relieved of his responsibility. Remarkable as it may seem, Halldorson issued a signed letter to the state examiner that he was unable to identify or inform him as to the nature or quantity of the files and records removed from relator bank by Sheets during the time he assumed charge thereof. Deputy Examiner Engemoen, who signed the report with Halldorson, submits a sworn affidavit that his work in investigating the loans consisted of totaling up approximately $90,000 of loans. That about $1,113,000 of loans were not seen by him. That he did not investigate such loans and does not know anything of their value; that his conehisions were drawn mostly on statements made by Sheets and Halldorson, and that Sheets dictated the report. There are numerous affidavits concerning the specific loans questioned. They cannot be considered at length in this opinion. One illustration may be given. The Halldorson report lists loans to one Miller, aggregating $26,861.50, secured by a chattel mortgage on certain sheep and a second mortgage on a section of land in Olay County, Minnesota. This is listed as a dangerous loan, with security entirely inadequate, subject to a first mortgage for $15,000. There is evidence in the record, however, that this security is valued at $103,000, and that said Miller’s personal net worth is over $201,000.
*472Various loans to Danielson brothers, aggregating $33,088, are likewise criticized as unjustified for the collateral behind the same. There is evidence in the record that Danielson has assets aggregating $199,000.
The officers of the bank have submitted a statement to the court bearing date October 14, 1919, and sworn to, concerning the list'of bad debts classed as worthless by ITalldorson and totaling the sum of some $48,000, as listed by him. Dp to such date they show that six of such debts have either been paid in full or reduced. . That much of such debts have either been removed or paid, the total amount thereof so removed or paid being $35,555.92.
The depositor’s guaranty fund commission have submitted a statement to this court bearing date October 14, 1919, commending the state examiner, upon his report and that of the Equitable Audit Company, for the manner in which he has handled the affairs of the bank since he has been in charge.
On October 6th, before the district court of Oass county, North Dakota, an order to show cause was issued by the judge thereof in an action by the state on the relation of the respondent Danger, as Attorney General (leave to commence such action being granted), upon a complaint seeking to dissolve the relator bank as a corporation and to forfeit its corporate rights, privileges, and franchises, and to prohibit it from further carrying on the business of banking in this state. The complaint alleges as grounds simply that the liabilities of such bank are in excess of its assets, and that it is insolvent, and upon the further ground that it has made outstanding loans in excess of 15 per cent of its capital stock and surplus, setting forth a list aggregating $734,000, and that such bank has failed and refused to reduce such loans as requested by the banking board. The order to show cause was returnable October 13, 1919. The district court has proceeded no further in such action since the issuance of the original order of this court.
Bearing date of October 22, 1919, the state examiner and the president of the Equitable Audit Company have submitted an addendum statement concerning the relator bank, wherein there is shown as of date October 22, 1919, the not worth of such bank to be $71,284.71, being $11,284.71 over its capital stock and .surplus. Also that the bank’s reserve on that day was the sum of $372,661.91 or over $142,590 above the requirements of the state examiner’s office. The state examiner re*473ports that of the amount due the banks, $572,902.10, each bank has stated its anxiety to co-operate, and will not withdraw its funds. That the Sisal Trust Loan, mentioned as an excessive loan in the JIalldorson report, has been paid in full, being paid later than the compilation of the report. That the liquidation of notes, overdrafts, cash items, etc., aggregate $240,000; that the bank is in a good liquid condition. lie requests that an order for reopening be given, the date thereof to be left to his discretion.
Since the oral argument the respondents have filed no additional evidence.
Jurisdiction.—Upon very technical grounds, the respondents assert that the preliminary order of the proceeding is neither process nor a writ, and that the court therefore acquired no jurisdiction. It is sufficient answer, without further consideration, to state that this court, in the exercise of its original jurisdiction, may frame its process as the exigencies require. State ex rel. Moore v. Archibald, 5 N. D. 359, 362, 66 N. W. 234. In matter of .this kind it may issue an order to show cause as it has customarily done in a great number of cases for years.
The respondents further object to the jurisdiction upon the ground that no application was made to the attorney general to institute this proceeding. This technical objection is also without merit. It is true that ordinarily the consent or refusal of the attorney general should be secured in initiating the exercise of the original jurisdiction of this court, for the reason that ordinarily the attorney general is the legal representative of the interests of the state, its sovereignty, franchise, and liberties of the people. However, the contention is absurd that an application shoxxld be made to that officer in an action in which he is in fact one of the parties defendant, and which concerns his alleged wrongful acts, and seeks to restrain them. The law does not require futile acts. The original jurisdiction of this court is not to be denied merely because the attorney general happens to be one of the respondents. This court has heretofore held that it may exercise its original jurisdiction upon the petition of a private relator even though the attorney general expressly disapproves of the proceeding. See State ex rel. Moore v. Archibald, 5 N. D. 359, 376, 66 N. W. 234; State ex rel. Erickson v. Burr, 16 N. D. 581-586, 113 N. W. 705; State ex rel. Byrne v. Wilcox, 11 N. D. 329, 335, 91 N. W. 955; State ex rel. Shaw v. Har*474mon, 23 N. D. 513, 514, 137 N. W. 427; State ex rel. McArthur v. McLean, 35 N. D. 203, 212, 159 N. W. 847; State ex rel. Byerley v. State Canvassers, 44 N. D. 126, 172 N. W. 90.
Again the respondents further contend that this cause does not present a case requiring the exercise of its original jurisdiction in that it does not involve the sovereignty of the state, its franchises, or prerogatives, or liberties of its people; that the action is not of public concern, involving merely private rights on the relation of private parties.
Upon this record this contention is wholly without merit. This court has exercised its original jurisdiction in many other cases for years, upon much more remote grounds than those plainly evidenced herein.
For instance, in State ex rel. Birdzell v. Jorgenson, 25 N. D. 539, 49 L.R.A.(N.S.) 67, 142 N. W. 450, the relator formerly a tax commissioner, now a member of this court, invoiced the original jurisdiction of this court to compel the state auditor to make payment of his salary as a member of the tax commission. In the recent action of State ex rel. Wallace v. Kositzky, 44 N. D. 291, 175 N. W. 207, the original jurisdiction of this court was exercised for a like purpose. In the very recent case of State ex rel. Amerland v. Hagan, 44 N. D. 306, 175 N. W. 372, on the relation of' a private individual, this court invoked its original jurisdiction to consider the provisions of the Compensation Act as they affected the rights' of such private relator. In the recent action of State ex rel. Stearns v. Olson, 43 N. D. 619, 175 N. W. 714, upon the application of a private relator, this court exercised its original jurisdiction to consider the right of sudd private relator to receive the payment of a voucher issued to him by the Workmen’s Compensation Bureau from the state treasurer. In other actions now pending before this court (State ex rel. Farwell, O. K. & Co. v. Wallace, 45 N. D. 181, 177 N. W. 106, and State ex rel. Capital Trust & Sav. Bank v. Wallace, 45 N. D. 209, 177 N. W. 451) the original jurisdiction of this court is being exercised for the consideration of the rights of private relators to be exempt from taxation under the moneys and Credits Act enacted by the last legislature. See State ex rel. Granvold v. Porter, 11 N. D. 309, 91 N. W. 944; State ex rel. Buttz v. Lindahl, 11 N. D. 320, 91 N. W. 950; State ex rel. Mitchell v. Larson, 13 N. D. 420, 101 N. W. 315; State ex rel. Baker v. Hanna, 31 N. D. 570, 154 N. W. 704; State ex *475rel. Linde v. Packard, 32 N. D. 301, 155 N. W. 666; State ex rel. Linde v. Taylor, 33 N. D. 76, L.R.A.1918B, 156, 156 N. W. 561, Ann. Cas. 1918A, 583; State ex rel. Linde v. Hall, 35 N. D. 34, 159 N. W. 281; Estate ex rel. Linde v. Packard, 35 N. D. 298, 160 N. W. 150; State ex rel. Langer v. Packard, 40 N. D. 182, 168 N. W. 673; State ex rel. Twichell v. Hall, 44 N. D. 459, 171 N. W. 213. In a large number of cases since statehood this court has defined and exercised its original jurisdiction. It not only has determined that it does possess an original jurisdiction, in addition to its appellate jurisdiction and superintending control over inferior courts, but that the question of whether the original jurisdiction of this court so concerns the sovereignty of the states, its franchises, or prerogatives, or the liberties of its people, and is a matter of such public concern as demands the attention of this court, is peculiarly a matter addressed to the discretion and determination of this court. State ex rel. Byrne v. Wilcox, 11 N. D. 329, 91 N. W. 955; State ex rel. Erickson v. Burr, 16 N. D. 581, 586, 113 N. W. 705.
The relator bank is a large banking institution in this state; it has on deposit moneys of many other banks. There are also on deposit public funds of the state deposited through the Bank of North Dakota to the credit of the Agricultural College. The depositors’ guaranty fund, enacted to protect bank depositors in 1918, is directly involved in its administration, and affects in a manner every state bank in this state. The powers and duties of the state examiner, and the authority of the state banking board under the laws of this state, are directly concerned.
Further, the acts of the respondents in suddenly closing this bank practically without warning, and installing a temporary receiver in charge thereof, without the knowledge or consent of the state examiner, and in suddenly causing telegrams to be sent to so-termed associated banks of such bank throughout the state, and in determining that certain forms of collateral held in this bank, as well as in many other banks of this state, is improper collateral and of doubtful value, have occasioned unprecedented public interest and public concern not only in this bank, but in the banks of this state concerning their solvency, concerning the operation of the banking laws of the state, and even the credit of the state. Upon this record it is indeed an idle assumption for the respondents to contend or assert that this cause involved merely *476the private rights of the relator. It not only concerns the prerogatives of the state government and the liberties of its people, but it concerns in a very large manner the sovereign powers of the officers concerned and the rights of numberless depositors. It is of considerable importance, in view of the widespread consequences that might ensue from the action taken by the respondents, that this court should exercise, as it did exercise, its original jurisdiction in this matter.
The respondents further object, upon jurisdictional grounds, to the order of this court which placed in charge of the relator bank the state examiner of this state until the further order of this court. It is contended that the principle of law applies, that a preliminary injunction will not be granted to take property out of the possession of one party and transfer it to the possession of another. This general proposition of law has no application. At the time when the respondents acted and placed Ilalldorson in charge of such bank as temporary receiver, the bank was a going concern, operating under its own officials as a public bank. This court, by its temporary order, did not restore this bank to its bank officials. It indeed was necessary, upon the face of the petition as presented, to see that no further proceedings be taken through the acts of the respondents, so that the questions presented in the petition might become moot before this court was able to hear and determine the issues. This court might properly have appointed some third party to take charge of this bank. It saw fit to place in charge thereof the state examiner, the official ordinarily charged with that duty. The respondents contend, and thereby admit, that the state examiner as a relator is a total stranger, without any interest in the rights of such bank. They make no contention that he has not properly performed his duties while in charge of such bank, under the orders of this court. Indeed it amply appears from this record that this court very properly and timely placed in charge of such bank the state examiner in view of the admission in the record of said Ilalldorson, the temporary receiver of the respondents, that he did not know, during the time he was in charge, just what papers had been taken from such bank, by reason whereof he could not check out with his successor the state examiner.
Extent of original jurisdiction.—When this court takes cognizance of a cause in the exercise of its original jurisdiction, it has the authority *477to determine every issue of the law and of fact that arises in the' record, if deemed necessary for a consideration of the issues presented.
It may act as a court of equity; it may take testimony (Re Sidle, 31 N. D. 405, 154 N. W. 277); it may issue all necessary writs and all necessary orders to effectuate its jurisdiction as assumed (State ex rel. Moore v. Archibald, 5 N. D. 355, 60 N. W. 234; State ex rel. Poole v. Nuchols, 18 N. D. 233, 20 L.R.A.(N.S.) 413, 119 N. W. 632; State ex rel. Red River Brick Corp. v. District Ct. 24 N. D. 28, 32, 138 N. W. 988).
Accordingly this court may consider and determine fully the cause of the parties presented upon the record pursuant to legal or equitable principles of law that apply.
- The merits.—In addition to the contentions concerning the jurisdiction of this court the respondents assert:
1. That the state banking board have the authority to appoint a receiver, upon being satisfied of the insolvency of a bank, without the knowledge or consent of the state examiner.
2. That the matter of determining a bank to be insolvent is within the discretion of such banking board, and that the act of the board so determining is not subject to review in this court, no matter whether the bank was in fact solvent or insolvent.
3. That the question of solvency or insolvency of such bank is not before this court, but only the question of the power of such banking board.
4. That postdated checks, constituting a large line of collateral in such bank, are not collateral at all, and of no substantial value.
5. That, in computing the legal reserve of banks under the law, there must first be deducted amounts of deposits due to banks.
6. That in any event, upon the report submitted, the relator bank is hopelessly insolvent.
In respect to the power of the state banking board to appoint a receiver of its own volition without the suggestion, consent, or knowledge of the state examiner, it is contended that this power is specifically granted in.§ 5146, Comp. Laws 1913, which is not in any manner repealed by chapter 53 of the Laws of 1915, which grants to the state examiner the power to appoint a receiver with the approval of the state banking board.
*478In order to- understand the construction to be placed upon the existing provisions of law concerning the powers of the state examiner and the state banking board, it is quite proper to review briefly the legislation in this state in that regard.
In 1890 (Laws 1890, chap. 23) the public examiner was made ex officio superintendent of banks, with the power of examining banks. It was further provided that any bank refusing to comply with any lawful order of the examiner for a period of ninety days after demand in writing should be deemed to forfeit its franchise.
In 1893 (Laws 1893, chap. 27) it was provided that the public examiner, upon being satisfied of the insolvency of any bank after examination of the same, and, after having consulted with the board of directors, might forthwith apply to the district court for the appointment of a receiver.
In 1897 (Laws 1897, chap. 31) it was enacted that the state examiner, on becoming satisfied of the insolvency of a bank, after making an examination of the same, should forthwith take charge of such bank pending action of the coiirt, and should immediately submit a statement to the attorney general, who should institute action in court against such bank.
In 1905 (Laws 1905, chap. 165) the state banking board was created. It became the duty of such board to examine all reports of banks which should be filed with it by the state examiner. It further provided that orders made by such board should be operative and remain in force until modified, amended, or annulled by the court of jurisdiction. It further provided (§ 29 which is now § 5176, Comp. Laws 1913) that any bank which refused to comply with any requirement lawfully made by the state banking board or by the state examiner, for a period of ninety days or for a lesser period as specified in the order after demand in-writing by such board of examiner, shall be deemed to have forfeited its franchise, and failure to comply shall Work forfeiture of its franchise. That in either case, the attorney general, upon demand of such examiner or board, must commence action for the purpose of annulling the existence of such bank. It further provided (§ 34 now § 5183, Comp. Laws 1913) that the state banking board, on being satisfied of the insolvency of any bank or of the violation of any provisions of such laws of 1905 by such bank, after examination of the same, shall forth*479with take charge of such insolvent bank pending action of the court. For that purpose it was made the duty of the board to appoint a temporary receiver, and such receiver, upon taking charge, is required to prepare and-submit a statement to the state banking board, who should thereupon institute an action against such bank. It is further provided (§ 40, which is now § 5189, Comp. Laws 1913) that a bank shall be deemed insolvent in the following cases:
1. When the actual cash market value of its assets is insufficient to pay its liabilities.
2. When it is unable to meet the demands of its creditors in the usual and customary manner.
3. When it shall fail to make good its reserve as required by law.
4. When it shall fail to comply with any lawful order of the state banking board within any time specified therein.
In 1911 (Laws 1911, chap. 55) § 1 of chap. 165 of said Laws 1905, § 4635, Code 1905, was amended, in a respect material to this controversy, by providing, in addition to the authority theretofore granted and possessed by the banking board, that it was vested with the power and authority to appoint, by its own order, receivers for an insolvent corporation, with the same power as if appointed by the district court, but that nothing therein stated should be construed so as to take away from the court the power to appoint receivership of such institution of such bank at any stage of the proceedings. The board also were granted the power to make rules and regulations for the government of banking corporation. This is now § 5146, Comp. Laws 1913. This act in 1911 did mot effect the other provisions of said Act of 1905, which have been carried into the 1913 Compiled Laws, as hereinbefore stated.
In 1915 (Laws 1915, chap. 53) § 5189, Comp. Laws 1913, which was § 40, chap. 165, Laws 1905, was amended and re-enacted. It provides, in addition to the instances when a bank is deemed to be insolvent, as follows.
1. That the property of a bank is not subject to attachment or levy, nor shall a receiver be appointed during such reasonable time as the state examiner may require for examination.
2. After such examination, if the state examiner shall deem best, he shall, with the approval of the state banking board, appoint a receiver who shall take possession under the direction of the state examiner of *480books, records, and other property, collect the debts, sell or compound bad or doubtful ones, and sell all corporate property on such terms as the state examiner shall direct, etc.
3. He, the receiver, shall pay over all the moneys received by him, and make report of his doings to. the examiner, at such times and in such manner as he may prescribe.
4. Whenever, after report by such officers and before the appointment of a receiver, said examiner shall find the bank in such condition that all creditors aside from stockholders can be paid in full from its assets, he may relinquish possession of its property to its proper officers, provided, however, that the bank shall pay the state'examiner a fee of $10 per day and the hotel and traveling expenses of the state examiner or deputy state examiner who shall have been in charge of the bank during this period, and such bank may, with the consent of the state examiner, resume business upon such conditions as may be approved by him.
5. Upon taking possession of the property and business of such bank, the state examiner is authorized to collect moneys due to such bank and to do such other acts as are necessary to conserve its assets and business, and shall proceed to liquidate the affairs thereof.
These provisions of chapter 53, Laws 1915, granting new and specific powers to the state examiner, are set forth fully for the reason that they have a material bearing concerning the powers of the state banking board, and the construction to be placed thereupon after the passage of said chapter 53.
In 1917 the Depositors Guaranty Act (Laws 1917, chap. 125) was enacted. It provides for a depositors guaranty fund commission, composed of the governor, the state examiner, and three members to be appointed by the governor. Such appointees to be members of the North Dakota Bankers Association. The act makes it the specific duty of such commission to pass upon the qualifications of every bank for admission under such fund. It provides that every bank in the state shall be subject to the provisions of such act. It further provides that, when the condition of any bank under such act becomes such as to cause the state examiner to doubt the advisability of permitting it to continue in business, it shall be within his power to require the advice and opinion of the commission thereupon. It is not denied nor doubted in this *481proceeding that the relator bank becomes subject to the provisions of this act, and that its qualifications were passed upon by the commission, nor that this right to so be subject to the terms of such act has been either questioned or revoked by such commission.
A simple consideration of these provisions of the existing statutory laws, as enacted by the legislature (not as stated in the Compiled Laws), makes the rules of construction applicable so plain almost that “he who runs, may read.”
The respondents contend that said chapter 53, Laws 1915, purported only to mean § 5189, Comp. Laws 1913, and that, therefore, it did not repeal § 5146, Comp. Laws 1913.
The Compiled Laws of 1913 are merely a compilation. They are neither a code nor a revision. It is plain to see that these provisions, as stated in chapter 28, Comp. Laws 1913 (§ 5146 to § 5191), are merely a restatement of the law as enacted in 1905 pursuant to chapter 165 thereof, excepting as they have been amended as to the provisions herein stated by chapter 55, Laws 1911.
Accordingly the provisions of the Laws of 1905 as amended in 1911 have been again amended by the Act of 1915, chapter 53. The power granted to the state examiner pursuant to the Act of 1915 is plain and definite. There is no difficulty in construing this power to be exactly as stated, to wit, that the state examiner, after he has made an examination, shall, if he deems best, with the approval of the state banking board, appoint a receiver, who shall take possession not under the direction of the banking board, but under the direction of the state examiner. In part this Act of 1915 was enacted through the litigation had and .the legal situations resulting in the well-known case of Youmans v. Hanna, which finally found its way to this court, and was decided in 35 N. D. 479, 160 N. W. 705, 161 N. W. 797, Ann. Cas. 1917E, 263. In that case a bank at Minot was closed through the action of the state banking board.
It is a well-settled rule of law, whore two legislative acts are repugnant to or in conflict with each other, that the latest expression of the legislative will must control, even though it contains no repealing clause. 36 Cyc. 1073, chapter 53, Laws 1915, gave to the state examiner di*482rectly the power to appoint a receiver to take charge of insolvent bank, to investigate concerning insolvency, and to have charge of such bank during the process of a receivership.
Theretofore this power was possessed pursuant to § 5146, Comp. Laws, 1913, by the state banking board. The legislative intent in this act is clear. In the bill as first introduced in the legislature (House Bill No. 344) the act provided that the state examiner, alone, shall appoint a receiver. There was also a fifth provision, providing for a bank being deemed insolvent when its books of account are falsely or fraudulently kept. In the passage of the bill in the house, the provisions concerning keeping books falsely or fraudulently was stricken out. In the senate, the bill was amended by inserting, concerning the power of the state examiner to appoint a receiver, the words, “with the approval of the state banking board.” This discloses clearly that the legislature had in mind the granting of this power expressly to the state examiner.
Under the law as now existing the state examiner is neither a puppet nor a figurehead. The law does not contemplate the banking board performing the duties of the state examiner. There is no difficulty in apprehending and making harmonious the duties of the state banking board. They have the power of regulating and providing rules for banking corporations in this state. They have the right to prescribe orders with which the banks must comply in this state. But the initiative action in securing compliance, in determining insolvency, in protecting through executive action the state depositors and stockholders, lies through the state examiner.
It is further to be noted under the now existing law (Laws 1915, chap. 53) it is specifically enacted that no receiver shall be appointed during such reasonable time as the state examiner may require for examination. Further, that even before a receiver is appointed, the state examiner may take possession, and thereafter release such.possession to the bank officials, without the necessity of any receiver at all. The legislative idea and intent is plain and clear that there should not be a financial wrecking of banks in this state (for a receivership is ordinarily a financial wrecking of a bank as an institution), if otherwise, the best interests of the public of depositors, and of the bank itself, can best be subserved by the action of the state examiner himself. Indeed the act must have plainly intended to guard against the situation *483ereated in tbe closing of tbe Minot Bank and suck arbitrary action without warning as has been taken by the respondents herein.
The record discloses neither knowledge nor any initiative action by the state examiner in the proceedings which lead up to the receivership ¿f the respondents. The first resolution passed by the banking board concerning the investigation of banks in Fargo gave no information to the state examiner that the relator bank was the bank against whom action was to be taken. The letter of the state examiner to his deputy, Halldorson, concerned not the relator bank, but another bank in Fargo; in fact, this resolution and this letter would appear on its face as an attempt indirectly and by subterfuge to secure the consent of the state examiner to examine all the banks in Fargo so that thereby initiative action might be taken against the relator bank as it was taken. It therefore follows that the action of the state banking board, through the respondents, who constitute a majority thereof, was illegal and unauthorized. Even though it should be conceded that the state banking board did possess the power to close such bank and appoint a temporary-receiver thereover, nevertheless, the action as taken by such banking-board was unreasonable, arbitrary, unjust, and cannot be upheld. It seems strange indeed that the respondents, who have constituted members of such banking board ever since January 1, 1917, and who by law are charged with the bounden duty of examining reports of banks, and who were therefore presumed to be familiar with the condition of this bank from that time, should act with such seeming haste, without the consent, knowledge, or action of the state examiner, at a time when he is out of the state, and in a manner so as to grant to such relator bank no time whatsoever to comply with any of its orders or demands. The closing of a bank, a large institution like this bank, is not a matter of idle concern, either public or private.
The act of the respondents, as initiated, and consummated, irrespective of the question of intent, accompanied with widespread publicity and specific notice to other banks in this state of their action, could not do otherwise than occasion alarm and doubt in the minds of the public and of depositors in the soundness of the banking institutions affected, as well as in all banking institutions in the state. Banking institutions, for their immediate solvency, depend upon the public confidence. No bank is immediately solvent if this public confidence is destroyed and it *484cannot secure the aid of other banks to help in restoring this confidence. The acts of the respondents, as disclosed in this record, jeopardized this solvency of the relator bank as well as other banks.
From statehood to the present, the statutory provisions concerning the examination and regulation of banks have contemplated a course of conduct by state officials in enforcing the banking laws which would not create public alarm and distrust in banking institutions of this state, but which, by constant examination, supervision, and regulation would secure compliance with the laws. Throughout the statutes there ■ is shown an intent to give time to a banking institution within which it may make compliance with any order or regulation of the authorities, if there is an ability on the part of the bank to so comply. No time whatever was granted by the respondents. The report of the state examiner while he has been in charge, the acts of the bank officials and stockholders, show that there was and is an ability and a ^readiness to comply with any lawful order that the respondents might have prescribed.
It is to be noted that the acts of the respondents, from the beginning up to the time this court interposed its original jurisdiction, disclose no desire and evidence no attempt to protect the public moneys, the guaranty fund, the moneys of depositors, or the property of the stockholders, by granting to the bank any chance or opportunity to comply with tho findings of the banking board, or to rehabilitate itself in accordance with the board’s determinations. No one of the respondents even suggests to this court that, if the receivership is continued under their supervision, the bank might or could restore itself as a solvent bank. On the contrary it is the contention of the respondents that this bank is hopelessly insolvent, which simply means that public moneys, the guaranty fund, and the moneys of depositors are imperiled. This contention was reenforced by the action which they instituted in the distinct court, seeking to dissolve the bank corporation and forfeit its franchise.
There is no other manner in which this procedure can be characterized other than arbitrary, and contrary to both the spirit and letter of the law. It both merits and receives the condemnation of this court.
The question of whether this bank is insolvent is before this court. If this relator bank at the time of its close had assets of actual cash ■market value sufficient to pay its liabilities; if it was able to meet the *485demands of its creditors in the nsnal and customary manner; if it was able to make good its reserve as required by law; if it was able, within a time specified, to comply with the lawful orders of the state banking board, it was not insolvent, and the action of the respondents declaring it so to be was merely arbitrary and without justification. The record discloses no specific order of the banking board that this relator bank has not complied with, or was not able to comply with in a specific time. The record does not disclose inability of the relator bank to make good its reserve fund as required, in accordance with the contention of the respondents.
The record does not disclose that, on the day this bank was closed, it was unable to meet the demands of its creditors in the usual and customary manner. On the contrary, it is shown that it was able to and did do so. The only remaining ground is whether its assets are of sufficient actual cash market value to pay its liabilities. If they are not, and the capital and surplus are thereby impaired, the statute specifically provides for a method of rehabilitation of such capital and surplus. Comp. Laws 1913, '§ 5186. Neither demand was made nor time given by the respondents for restoration of the capital and surplus which, under, the contentions of the respondents, were impaired. The facts that under the charge of the state examiner, this bank, in the space of a few short days, has been able to collect on paper that was deemed worthless by the examiner Halldorson; that he has been able to cause payment upon, or a reduction of, many of the so-termed excessive loan3; that he has been otherwise able to collect a large amount of money on paper due the bank,—justly throw discredit upon the report and conclusion adopted by Halldorson and his associates. The fact that there are excessive loans carried, or that improper banking methods have been carried out, does not itself prove insolvency of the bank. The very fact that upon the loans listed as worthless debts, something like $10,000 of debts were paid by the persons themselves and some $25,000 by the directors or stockholders of the bank, shows an ability to respond to the demands of the banking authorities. These facts, indeed, do not indicate lack of assets or of ability on the part of the bank to pay its liabilities. Instead of indicating a state of insolvency, they rather demonstrate, on the contrary, solvency.
The respondents finally resort to the contention that the legal reserve *486of the bank, at the time of the closing of such bank, was not, ancl for a long period of time had not been, maintained as required by law. In support of this contention they quote the statutory provisions which require a bank, in computing its legal reserve, to deduct therefrom deposits of banks owing by it.
No order is disclosed to this court that the banking board have so required the state banks in this state. On the contrary the practice customarily shown and necessarily known to the respondents has been to treat such deposits of banks as demand deposits. The reserve required by the laws of this state for state banks is high. It is known to be higher than that required of Federal banks. Section 51Y0, Comp. Laws 1913, does require that the legal reserve of a state bank be computed by deducting therefrom the amount due other banks.
Judge Engerud, in his legal opinions for bankers of the North Dakota Bankers Association (1909—1916) p. 32, states as follows:
“The above provisions of law to which you call my attention is certainly a very peculiar one. It is apparently a discrimination against state banks in favor of national banks. The language of the provision literally construed indicates that the amoimt due to other banks from a state bank must be constantly kept on hand, and that such fund must be deducted from the available funds in computing the reserve required by law. I can think of no good reason for such a provision, unless it was intentionally put in as a discrimination against state banks.
• “I might suggest, however, that in actual practice in the administration of national banks, it is the practice in commuting the reserve required by law to distinguish between individual deposits and bank deposits. In the administration of the National Bank Act the amount due to other banks, not reserve agents, is taken to be the difference between the total amount due to other banks and the total amount due from other banks. This difference is added to the total individual deposits, and the lawful money reserve computed on that sum.”
The respondents, however, assert that such is the law. That the statute (Comp. Laws 1913, § 5189) states the failure to maintain its legal reserve is a ground of insolvency. That, therefore, the insufficiency of such legal-reserve of the bank formed a ground for the action of the respondents declaring such bank to be insolvent even though their own receiver Halldorson, the state examiner, and banking board itself, *487had not theretofore required the banks of this state to so conform to the strict requirements of the statute.
This simply serves to emphasize the nature of the discrimination sought to be applied to this bank in order that it may be deemed insolvent.
Upon this record the respondents are not in a position to justify their •action in declaring the bank to be insolvent, upon the grounds of its failure to maintain its legal reserve. Not in this manner may be banking board play fast and loose with its powers. The statute (Comp. Laws 1913, § 5170) specifically prescribes that the banking board shall give notice to a bank, when its legal reserve is not as required by law, to make good such'reserve; that if, within a period of thirty days after such notice, it shall fail to so restore its reserve, the banking board may impose a penalty as prescribed in the statute. No notice order of proceeding of this kind by the banking board has been disclosed in this record.
The respondents must now resort, for purposes of establishing insolvency, to the list of loans mentioned in their report consisting of about $740,000, which they assert to be secured by insufficient and improper collateral, consisting largely of farmers’ notes and farmers’ postdated checks, the amount of which aggregates over $1,400,000. The ■contention is made that a postdated check is not collateral, that farmers’ notes should not be estimated over 50 per cent of their value. That, therefore, this large list of notes owing to the bank are without sufficient security and should be removed or discounted accordingly. To support a conclusion in this regard they have simply a hearsay statement that large amounts of such farmers’ paper did not pay out or paid up poorly. This hearsay statement contained in the record is denied by the persons whom they state were the authors thereof. There is much evidence in the record, as well as the report of the state examiner that this farmers’ paper is good collateral; that there is a good margin of .safety on the security offered, and that uniformly it has paid out well, in percentages from 75 per cent to 85 per cent. There is neither reason nor justification for declaring farmers’ paper to be worth only 50 per cent of its value; on this record there is not presumption, and certainly should not be in this state dependent on agriculture and owing its prosperity to the farmers of this state, that farmers’ paper is any worse or poorer than any other paper of private individuals.
*488There is more reason for declaring farmers’ paper to be of a certain percentage of value than there is for declaring lawyers’, doctors’, or merchants’ paper to be of a certain percentage value. In all instances it is a question of the financial worth and integrity of the individual whose paper is pledged.
The respondents, however, contend that a postdated check is a bill of exchange payable on demand. That when accepted by the payee it ceased to be a check, and becomes a bill of exchange, and that the maker and indorsers are relieved from all responsibility, and if matured it becomes a certified check. That a bill of exchange is like a postdated check in that, until it has been accepted by the .payee or accepted in writing, all legal defenses attached thereto; that it is not a negotiable bill of exchange, and any bank taking the same as collateral is securing not collateral, but the probability of a lawsuit. This is indeed a novel exposition for a legal argument, and far from the law. A check is a negotiable instrument. Comp. Laws 1913, §§ 7069, 7171. It is true that it is defined that a bill of exchange drawn on a bank is payable on demand. The maker and indorser of a postdated check are liable in accordance with the same rules that- apply to negotiable paper. The indorser, as well as the drawer, engages that upon due presentment it will be accepted or paid or both according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder or to any subsequent indorser who may be held to pay it. Comp. Laws 1913, §§ 6951, 6946. The fact that a postdated check is negotiable prior to the day of its date does not put purchasers, upon inquiry by reason of that fact. See notes in 29 L.R.A. (N.S.) 375, and 44 L.R.A.(N.S.) 405. A postdated check, by its very terms, is not due or payable on demand at the date thereof. Payment cannot .be legally taken from the drawee bank prior to that time. Prior to that time the drawee bank ordinarily has no right to certify concerning the same. L.R.A.1917F, 1099. Judge Engerud, a former member of this court, has well stated the principle of law applicable in his book “Legal Opinions for the North Dakota Bankers Assoc. (1909-1916) p. 167, as follows:
“A postdated check would be analogous to an ordinary bill of exchange' payable at a future time, the time of payment being the date of the check; and can consequently be negotiated like any other bill of *489exchange, and every party through whose hands it passes who indorses it becomes liable as an indorser. When you receive such a check you would take it the same as any bill of exchange payable in the future, and on the due date present for payment, and if dishonored give the proper notice of dishonor. All prior indorsers would then be liable to you for the amount of the check and the protest fee.”
It is apparent, therefore, that the acts and contentions of the respondents in attempting to establish by presumptive fiat that postdated checks are of no substantial value, and thereby, at one fell sweep to render ■practically valueless or insufficient all paper for which such postdated checks, as well as other farmer notes, stand as security, are not only presumptious, but without foundation in law.
What was the intention of the respondents herein in the acts performed, this court does not deem necessary to determine.
The acts themselves, however, are judged by this court. It is determined that there is such a thing as a public conscience, and that these acts, upon the record submitted to this court, were unwarranted, unreasonable, and without foundation of law. The record in this case discloses that the state examiner placed in charge by this court has been diligent in performing his duties, that he has made every effort to conserve both public and private interests, that by his energies the bank,, through the co-operation of its officials, his disclosed an ability to comply with all of the lawful orders of the banking authorities of this state; that, in accordance with his report, such bank is not only solvent, but retains both its original capital and surplus unimpaired, as well as some undivided profits. The interests of this state and the credits of its financial institutions' at hand and abroad have been needlessly jeopardized, and public alarm has been likewise needlessly created. It is therefore ordered that the order of this court placing the state examiner in charge of the relator bank be made permanent, with full right to such state examiner to grant permission to such relator bank to resume business whenever he deems it proper for them so to do; and it is further ordered that the temporary restraining order issued against the respondents herein be made permanent as to such respondents and all agents and employees of such respondents. It is ferther ordered that all costs of the relators' herein be taxed against the respondents before the clerk of this court, and that the relators have judgment and execu*490tion therefore as provided by law. Let judgment be entered pursuant to this oi’der.
Robinson and Grace, JJ., concur.