Court Opinion

ID: 6662606
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:03:19.443054+00
Date Added: 2024-06-11T16:00:13.356073
License: Public Domain

Rose, J.,
dissenting.
Relators complied with the statutory provisions in regard to the incorporation of banks, and applied to the state. banking board for a charter to conduct a commercial bank at Sidney, where there are already three substantial banks with facilities sufficient for the accommodation of the entire community. A charter was refused, and to coerce the board into issuing one the district court for Lancaster county, upon motion of relators, granted a peremptory writ of mandamus. Respondents appealed. In reviewing the judgment of the trial court a majority of my associates hold that the board was without power to deny the application of relators. I *873dissent. The board' in declining to issue a charter to relators acted under a grant of power from the legislature. The majority opinion to the contrary is a departure from the doctrine of a recent decision by a unanimous court. Rev. St. 1913, secs. 284, 339; State v. Morehead, 99 Neb. 146.
The question is: Had the board discretionary power to refuse a charter? The act relating to this subject- creates a board with power to regulate banks and banking, makes provision for a guaranty fund for the protection of state bank depositors generally, and, among other things declares: “Said board shall have general supervision and control of banks and banking under the laws of this state and no person or persons shall be permitted to engage in or transact a banking business save corporations having complied. with the provisions of this article.” Rev. St. 1913, sec. 284.
“The state banking board shall prescribe all such forms as may be useful or necessary in carrying out the provisions of this article, and shall have power to make such rules and regulations, not inconsistent with the provisions of this article, as may be necessary or proper to carry it into effect according to its true intent.” Rev. St. 1913, sec. 339.
These statutory provisions grant the power exercised by the board in refusing a charter, since the action taken was not unreasonable nor arbitrary. The board's control extends to both “banks” and “banking.” The power to limit the number of competitive banks in a community is included in the power to control banks and banking. In State v. Morehead, 99 Neb. 146, it was held that the banking act should be liberally construed, that “the intention of the legislature was to vest the banking board with general control and with authority to do all things reasonably necessary for the protection of depositors throughout the state,” and that the banking board had. discretion to refuse a charter though the applicants had complied with the provisions of the *874statute. The doctrine of that case is in harmony with new conditions and modern thought. A lawyer and statesman recently said:
“There is one special field of law development which has manifestly become inevitable. We are entering upon the creation of a body of administrative law quite different in its machinery, its remedies, and its necessary safeguards from the old methods of regulation by specific statutes enforced by the courts. As any community passes from simple to complex conditions the only way in which government- can deal with the increased burdens thrown upon it is by the delegation of power to be exercised in detail by subordinate agents, subject to the control of general directions prescribed by superior authority. The necessities of our situation have already led to an extensive employment of that method. The interstate commerce commission, the state public service commissions, the federal trade commission, the powers of the federal reserve board, the health departments of the states, and many other supervisory offices and agencies are familiar illustrations. Before these agencies the old doctrine prohibiting the delegation of legislative power has virtually retired from the field and given up the fight.” 2 American Bar Ass’n Journal, 749.
Under the new banking act each state bank is assessed to create funds to protect the depositors in state banks generally. The guaranty feature of the law introduced a new element into the business of banking. Additional safeguards became imperative. Power to limit the number of banking institutions in a community has been granted to administrative boards in other states. In discussing this subject a writer on economics said:
“The guaranty of deposits is so powerful an inducement to depositors, legislators believe, that for fear of its misuse by the incompetent or unscrupulous the banking departments are empowered not only to regulate and supervise banks, but to say what rates of interest they shall pay, and whether the citizens shall establish more *875banks. In some states both these powers are exercised.” 28 Quarterly Journal of Economics, 111.
The supreme court of Kansas, in upholding the power to limit the number of banks spoke as follows:
“An unnecessary bank in a community is not a thing of passive uselessness only, and so merely of no benefit. It is an active disturber of the financial peace, to the detriment of the public welfare; and it is not very material whether we say that public harm will be prevented or that public good will be promoted by its suppression.” Schaake v. Dolley, 85 Kan. 598, 609.
The safety of banking institutions, the prevention of failures, and the protection of depositors are subjects of public interest and may be affected by an excess in the number of banks. The failure of an unnecessary bank may destroy all other banks in the vicinity. The old process of elimination through bank failures often resulted in riot and bloodshed. It produced maniacs and paupers. In addition, its fruits were suspicion, distrust and litigation. In conferring upon the state banking board power to supervise and control banks and banking, the legislature meant that a proper limitation on the number of banks should precede, and thus prevent, disaster. To that end the lawmakers authorized the state banking’' board to lay its restraining hand on applicants for charters, where a new and unnecessary bank may become a menace to the banking business. All of these subjects are fairly within the legislative grant of “general supervision and control of banks and banking.” In refusing to issue a charter the board acted under a rule which was “necessary” or “proper” for the purpose of carrying the act “into effect according to its true intent.” Rev. St. 1913, sec. 339.
The general purposes of the act should be considered in determining the meaning of the statutory terms used by the lawmakers, including the enactment that the board “shall” issue a charter, if satisfied upon investigation that the applicants are persons of integrity and responsibility *876and that they have complied with the statutory requirements in regard to the incorporation of state banks. Rev. St. 1933, sec. 295. When the general powers of the board are considered with the obvious purposes of the act, the word “shall” is consistent with discretionary power of the board to reject a charter. State v. Taylor, 208 Mo. 442; State v. Strait, 94 Minn. 384; In re O’Hara, 82 N. Y. Supp. 293.
Believing that the board acted within its powers, and that there is nothing in the record to show that its decision was unreasonable or arbitrary, I dissent from the affirmance of the judgment allowing the writ, and from the opinion of the majority.
Morrissey, C. J., concurs in this dissent.