Court Opinion

ID: 6739573
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:20:54.819753+00
Date Added: 2024-06-11T16:01:54.601874
License: Public Domain

Bronson, J.
The defendant has -filed a petition for rehearing, wherein it is contended again that the Bank of North Dakota is the state, and as such is not subject to garnishment, and, further, that this-court judicially legislated in holding to the contrary. The petition presents no legal issues that have not been fully considered by the court. It presents no legal determinative issues other than those considered and determined by the majority opinion. It reasserts many of the contentions made by Justice Grace in his dissenting opinion. Both the petition and the dissenting opinion, therefore, merit consideration not only by reason of the importance of the case, but also because of an interpretation attempted to be placed upon the majority opinion and the presentation of issues thereby, that lead far afield from the determinative issues in this case. To state that a court is judicially legislating concerning, or judicially destroying, a state enterprise or industry, is perhaps easy in bald assertion, but difficult in demonstration. Upon this court is imposed the sworn duty to uphold the Constitution of this state, as well as its laws; not one constitutional provision, not one law, but all of them. The same sovereign power, the people,' that have sanctioned the Constitution, and the law's thereunder, imposed this duty -upon the court. Amidst the turmoil *618and strife of partisan controversy in this state, the noise and rumble of which are heard within and without the state, the judiciary, if it shall perform its sworn duty fearlessly and independently, must determine legal controversies upon the law and legal issues. The law is the Constitution, paramount, the statute, subordinate: All, the law when harmonious and consistent. The latter must be upheld when, upon interpretation, it may be rendered harmonious and consistent with the Constitution. Otherwise, it must yield to the paramount law. This law, the whole law as prescribed, must be upheld, as it is written, by the judiciary, pursuant to its imposed duty, disregarding and unmindful of the partisan clamor of approval or disapproval resulting. Mortal men err; judges err; mortal men differ; so do judges; but upon questions of law, upon legal issues, must judges, upon their conscience and sworn duties, differ. Thus, discrediting neither the sincerity of purpose of the attorney general in his petition, nor the vigorous dissenting opinion of our Honorable Associate Justice, the pertinent legal questions are to be approached and considered.
All of the assertions made in the extended dissenting opinion, and in the petition, to the effect that the state of North Dakota, in its sovereign capacity, is engaged in the banking business, and that the Hank of North Dakota is not a private bank, appear to be the violent threshing of a pseudo issue, and far distant from the legal issues involved. This court, in the majority opinion, has stated that it may not be denied that the state has engaged in the business or enterprise of banking; that the question was not whether the sovereign power of the state is engaged in the banking business, but rather concerns the question of the status of a sovereign agency when exercised in an engagement of a business or enterprise. Attention is thus called to the opinion of the court, so that the false bottom created for the contentions and arguments made that the Bank of North Dakota is held to be a private corporation may bo seen. What application, therefore, has § 185 of the Constitution relating to the loaning of the state’s credit to a private corporation?
So, reversion occurs to the real legal issues, (1) Is the Bank of North Dakota, the state; and (2) Is it subject to garnishment?
Hirst. It is asserted that the status of the state of North Dakota is *619the only question concerned. What is that status ? Is it not a status subject to all constitutional and statutory provisions applicable to the state as such? But it is requested that a finger be placed on the statute, stating that anyone but the state of North Dakota may be sued with reference to transactions with the Bank of North Dakota. The statute says that actions may be maintained in the name of the State of North Dakota, Doing Business as the Bank of North Dakota. ■Why, the need of any pan handle to the name of the state, if the bank is the state? Why is it that the statute provides that all business of the bank may be conducted under the name “The Bank of North Dakota ? Laws 1919, § 21, chap. 147. Is it the status of the state of North Dakota or the status of the State.of North Dakota, Doing Business as the Bank of North Dakota, that is being considered ? Is it not possible for the state to create an agency of the sovereign power and give to such the status of an agency of the sovereign power ? When the state engaged in the bonding business, and created the state bonding fund under the management, control, and supervision of the Commissioner of Insurance (Laws 1915, chap. 62), were the fund, and the Commissioner while acting in the duties thereof, the state, or an agency thereof with a separate status. The Commissioners may bo sued; judgments may be rendered against the fund; the moneys therein are not state funds. Laws 1915, chap. 62. State ex rel. Linde v. Taylor, 33 N. D. 109, L.R.A.1918B, 156, 156 N. W. 561, Ann. Cas. 1918A, 583. So when the state established the hail insurance fund (Laws 1911, chap. 23; Laws 1919, chap. 160; see State ex rel. Olson v. Jorgenson, 29 N. D. 173, 150 N. W. 565) state fire insurance (Laws 1919, chap. 159) and teachers’ pension fund (Laws 1915, chap. 251), and the workmen’s compensation bureau (Laws 1919, chap. 258), were not agencies of the sovereign power created?
Was the United States Shipping Board Emergency Fleet Corporation created by the United States, with a capital stock of $50,000,-' 000, all owned by the United States, and stated by congressional act to be considered a government establishment, the United States, or an agency thereof ? In United States v. Strang, 254 U. S. 491, 65 L. ed. 368, 41 Sup. Ct. Rep. 165, it is held, citing the United States decisions quoted in the majority opinion herein, that it must be regarded as an entity separate from the United States.
*620Was not an agency created when the legislative act established the Bank of North Dakota? Does this agency function the same as the state ? Why does this agency do a business under a distinct name and all of its dealings under the head Bank of North Dakota ? Are its funds public funds? Are its obligations and indebtedness created direot indebtedness of the state, its parent? Is a deposit made by Jones, a private person, made a public fund, subject to disbursement by the state in payment of governmental expenses of the state? When a million dollars was borrowed in Chicago and a note given therefor, was such note a direct indebtedness of the state or of the bank? Were the millions of dollars on deposit in this bank in July, 1919, deposited by municipal subdivisions, private banks, and private individuals, state public funds, and funds for which the state was directly obligated as such?
The banking act provides that this bank may do the business that any bank may lawfully do, except as specifically restricted in the act. § 2. It provides that this bank may act as a clearing house, § 11. It particularly specifies for it the functions of a bank; it provides that funds may be deposited to the credit of the bank, or that the bank may deposit funds in any bank or banking association. §§ 9, 14:. It further specifically provides that this bank may make loans to an individual, association, or private corporation secured by duly recorded first mortgages on real estate. § 15. It further provides that such mortgages shall run to the manager of the Bank of North Dakota. § 18. It further provides that such mortgage, together with the note, may be assigned to the state treasurer of the State of North Dakota, as security for bonds issued by the state. § 20. It further provides that the business of the bank may be conducted under tho name of the Bank of North Dakota, § 21. Do those provisions of the act, and functions assigned to this bank, create directly the engagement of the state as such, or does it rather show the creation of an agency, a sovereign agency, for the performance of the functions assigned ?
The dissenting justice refers to § 185 of the Constitution, which provides that the state may not loan or give its credit in aid of any individual, association, or corporation. The Bank Act, however (§15) states that the Bank of North Dakota may make loans to an in*621dividual, association, or private corporation. Is this section of the act unconstitutional because the bank is the state, or rather is it to be said that this agency, as an agency, possesses the function so to make loans. Article 81, Amend. Const., provides that no future indebtedness shall be incurred by the state unless evidenced by a bond issue which shall be authorized by law for certain purposes to be clearly defined, and no debt in excess of the limit named therein (relating to the issuance of the bonds) shall be incurred, except for the purpose of repelling invasion, suppressing insurrection, defending the state in time of war, or to provide for the public defense in cases of threatened hostilities. This constitutional amendment was adopted at the same time that the constitutional amendment which provides that the state may engage in enterprise and industry. Do these constitutional provisions place any limitation upon indebtedness for the state as such?
In State ex rel. Danger v. Hall, 44 N. D. 536, 173 N. W. 765, Judge Grace, in the opinion of the court, stated that the main question to be determined in the ease was, “What is the debt limit under § 182 of the Constitution as amended? The state contends that it is $2,000,000, in addition to the existing bonded indebtedness. The defendant contends that it is $2,000,000 less $412,000 of existing bonds of indebtedness. After a careful and painstaking examination of the whole subject-matter of the controversy, we are firmly convinced that the contention of the state must be sustained.” It is apparent that his holding in that case was that there was a constitutional debt limit, and, in direct terms, stated what it was. Furthermore, in this same case, concerning the Bank of North Dakota, he further stated:
“It will thus be seen that the state is establishing the Bank of North Dakota as a fiscal agency for the transaction of its own business and as a fiscal agent for other purposes. It becomes, therefore, an important agency and means of properly carrying out the economic program which has been authorized by the people, and is a means to safeguard the interest of the people, and provides a safe depository for the funds in question, and one from which strict accountability may be required, as its accounts will be subject to the same examination as any other private banking institution of this state, by public examiner” (543).'
*622Does not this opinion both recognize a constitutional debt limit and the Bank of North Dakota as an agency? If every act of the Bank of North Dakota is the act of the state itself, if every obligation and indebtedness created is the obligation and indebtedness of the state itself, how can there be any escapé from the conclusion that the Bank Act must necessarily operate contrary to the Constitution of this state, both with reference to indebtedness created or to be created not warranted by the constitutional provisions, and with reference to loans to private individuals or private corporations.
Concerning state bonds issued for the purpose of providing capital for the Bank of North Dakota, it is specifically provided in the act authorizing such bonds, that nothing shall be construed to prevent the purchase of any of such bonds with any funds in the Bank of North Dakota. Laws 1919, § 4, chap. 148. When the Bank of North Dakota bought these state bonds from the state, and credited to itself the amount in money of such bonds, as its capital, what funds were used in payment of such bonds ? Manifestly, the payment came from funds in the Bank of North Dakota, from deposits made by municipal subdivisions, private banks, or private individuals. Who, then, became indebted for the funds so used, the state or the bank? When a portion of. these bonds so bought, and held by the bank, were pledged as collateral for a loan of $1,000,000, was the indebtedness of the- state then extended so as to comprehend an obligation on the million dollars borrowed, as well as upon the bonds pledged ? If the bank, pursuant to its powers, operates as a reserve bank, or a bank of rediscount, and it becomes necessary for it to borrow money, shall its obligation upon boney so borrowed, whether $1,000,000 or $10,000,000, be deemed the direct obligation of the state? So construed, what test is to be applied in determining the constitutionality of a legislative act ? In State ex rel. Frich v. Stark County, 14 N. D. 368, 373, 103 N. W. 913, it is stated that its validity must be tested by what might be done, not by what has been done. What may be said of a judicial promulgation which would state to the people of this state that indebtedness without limit, or to any extent, might be incurred by the Bank of North Dakota, as the direct obligation of the state, in defiance of such constitutional provisions? Can the Bank of North Dakota, representing the state, as such, engage in contracts, create indebted*623ness, make loans, and do things that the state itself cannot do directly by reason of constitutional inhibitions? Complaint is made that the majority opinion has quoted decisions concerning state banks of the South, which concern corporations created as such. Do not these decisions demonstrate that the sovereign power may create an agency, a sovereign agency, and give to such agency a status, and that it is not necessary that it he termed a corporation in order that it do have the status of an agency? Docs it not sufficiently appear that, necessarily, the Bank Act does create an agency of the sovereign power engaged in an enterprise with a distinct status as such, necessarily so to be regarded, in order that the constitutional provisions and the will of the people expressed in the legislative act may function in the enterprise designated ? '
Second. Is the Bank of North Dakota subject to garnishment? It is contended that garnishment is an attachment. That § 5188, Comp. Laws 1913, provides that every banking association in this state shall' be exempt from the legal process of attachment and execution. That § 7583, Comp. Laws 1913, relating to the liability of a garnishee, expressly provides that property exempt from execution is not subject to garnishment. That the statute (Laws 1919, § 22, chap. 1-17, of the Bank Act) does not permit a garnishment action; that it refers to a civil action, and that garnishment is a provisional remedy.
The answer to these contentions must he made upon the Bank Act itself, the correlative statutes, and the decisions of this court applicable.
The statute provides that civil actions may he brought upon transactions connected with the operation of the Bank of North Dakota; that such actions may be brought in the same manner and shall he subject to the same provisions of law as other civil actions brought .pursuant to the provisions of the Code of Civil Procedure.
Section 7581, Comp. Laws 1913, provides that the proceedings against a garnishee shall he deemed an action by the plaintiff against the garnishee and defendant as parties defendant, and that all proceedings of law relating to proceedings in civil actions at issue, including examination of the. parties, amendments, and relief from default or proceedings taken, and appeals and all provisions for enforcing judgments, shall be applicable thereto. In F. B. Scott Co. v. Scheidt, 35 *624N. D. 433, 434, 160 N. W. 502, this court held that a garnishment proceeding is deemed an action, and that the provisions of law relating to civil actions are applicable.
In Park, Grant & Morris v. Nordale, 41 N. D. 351, 170 N. W. 555, this court specifically hold that a garnishment proceeding in this state is entirely separate and' distinct from either attachment or execution. These statutes and decisions were in force, and these decisions had been rendered when the legislative assembly had under consideration, and thereafter enacted, the Bank of North Dakota Act. Is it not to be presumed that they had notice of the statutory provisions concerning garnishment, and the construction placed upon the same by the uecisions of this court? The legislature could easily have provided for exemption as to a garnishment proceeding. If it had intended so to do, is it not to be presumed that it would doubtless have said so ? See Bovey-Shute Lumber Co. v. Erickson, 41 N. D. 365, 170 N. W. 630; Ruddy v. Rossi, 248 U. S. 104, 63 L. ed. 148, 8 A.L.R. 843, 39 Sup. Ct. Rep. 46.
Concerning the hail insurance fund (Laws 1919, chap. 160), there is a specific provision exempting a garnishment proceeding. Likewise, concerning the teacher’s pension fund (Laws 1915, chap. 251). Do not the statutes and the decision of this court quoted therefore consider and treat a garnishment as an action, and subject to the provisions of law applicable to civil actions? Does not, further, the Bank Act by its plain terms, recognize the right to maintain such action, including a garnishment proceeding which is deemed an action ?
Section 7567, Comp. Laws 1913, further provides that any creditor shall be entitled to proceed by garnishment in any court having jurisdiction of the subject to the action, against any person including a public corporation, etc. Bnder this statute may not a county, a city, a township, although agencies of the sovereign power, be made a garnishee defendant? If such agencies may be made garnishee defendants, what becomes of the assertion- that garnishment process will not lie against sovereignty? The only apparent way to make such position unassailable is to declare the statute unconstitutional. In this case Sargent county, claiming $125,000 to be owing by the Bank of North Dakota, seeks to impose a personal liability upon the garnishee defendant for that amount. This garnishment proceeding against the *625private banks does not ask for one dollar that the Bank of North Dakota has in its possession. It seeks to have the private banks, through a personal judgment against them, pay to Sargent county the amount which those banks owe the Bank of North Dakota, which amount, in turn, the Bank of North Dakota owes to Sargent county. Section 5188, Comp. Laws 1913, is contained in chap. 28, relating to private banking corporations. It provides that banking associations shall be exempt from the legal processes of attachment and execution. It does not provide that such banking association shall be exempt from the legal process of garnishment. It further provides that if any such bank fails to pay any final judgment, the State Banking Board shall declare such bank insolvent and cause a receiver to be appointed to wind up its affairs. The contentions made do not assert or maintain that the Bank of North Dakota is a private banking corporation. How, therefore, may they assert, or even contend, that such § 5188, Comp. Laws 1913, is to be applied?
But, if applied, the construction, for which contention is made by the defendant, would not permit a private bank to be a garnishee defendant. Upon such construction the deposit of a private individual in a private bank might not be subject to garnishment, for a private bank is not liable to the process of execution. Upon such construction, therefore, such private bank could not be made liable, because the personal judgment in garnishment was not subject to the process of execution. The answer to any streh contention is that the legislature did not exempt, by the statute, the process of garnishment. Section 7583, Comp. Laws 1913, provides that the garnishee shall be liable to the plaintiff for property, money, credits, and effects, .and all debts due or to become due to the defendant, except such as may be by law exempt from execution. What property, money, and debts are by law exempt from execution? Sections 7729 to 7713, Comp. Laws 1913, mentions the property that is exempt to the head of a family. It provides a method for claiming exemptions when property is so exempted by law. This statute plainly relates only to such property and debts as ai’e by law exempt. It plainly has reference to property and debts that are both exempt and not exempt' under the law. It has no refer*626ence to any' exemption from the legal process of attachment or execution.
The statute in its plain terms permits an action to be maintained. It is plain to see that an action includes a garnishment proceeding. The statute by its terms does not include a garnishment proceeding. No specious reasoning nor arguments concerning sovereignty can overrule these plain provisions contained in the statute. The court cannot do otherwise than uphold such plain statutory provisions. . It may wéll be repeated that if constitutional provisions are to be set aside, and if the plain mandates of the statutes are to be wiped out, let it be done by those who created and enacted such constitutional and statutory provisions, the people. The petition for rehearing is denied.