Court Opinion

ID: 3682230
Source: CourtListenerOpinion
Date Created: 2016-07-06 06:27:42.127586+00
Date Added: 2024-06-11T14:45:42.062583
License: Public Domain

I am in entire accord with the holding in the principal opinion herein that there has not been conferred upon banking corporations in this state either express or implied power to pledge their assets as collateral security for deposits. It seems to me that this results necessarily from the application of elementary principles. No such power is expressly conferred and, as pointed out in the principal opinion, it may not be held to have been conferred by implication unless it may be said to be an incidental power which is necessary to the carrying on of the business of banking. It is a matter of common knowledge that a banking institution subserves the public convenience as a place for the depositing of money by those who have sufficient confidence in its stability to depend upon its general credit for repayment. The depositors in a bank as a whole are made up of those who thus deposit their money, and the situation is exceptional *Page 66 
where one contemplating a deposit exacts collateral security as a condition of making it. While the soliciting of deposits may be in furtherance of the business of banking, the solicitation of a particular deposit, accompanied by a proffer of collateral, is, so far from being a step necessary to the carrying on of the banking business, a harbinger of approaching insolvency. If known to the depositors generally, it would result in withdrawals or requests for similar security. Instead of being an incidental power necessary to the carrying on of the banking business, it is rather a power which, if known to have been exercised in particular cases, would speedily result in loss of public confidence to an extent that would spell certain disaster to the enterprise. I am clearly of the opinion that, in the absence of express power to pledge assets as security for a general deposit, it may not be said to exist as an incidental power necessary to the carrying on of the business of banking.
While agreeing that the judgment appealed from should be reversed, the record here is in such shape that I have some doubt as to whether the judgment should be entered in the form directed in the principal opinion. The pleadings and the findings are in such shape as to raise a strong inference that the securities are held by the county in lieu of money illegally deposited or loaned for a particular purpose. While I agree that there should be no decree authorizing the foreclosure of the pledge as a regular transaction, the denial of such relief, being favorable to the defendant, might well be upon terms which would require the defendant to do equity. As indicated in the principal opinion, what the rights of the county are cannot be determined from the record, and equally it may be said the record is silent as to the terms upon which equity should protect the defendant against a foreclosure of the pledge or compel a surrender of the securities.