Court Opinion

ID: 8035264
Source: CourtListenerOpinion
Date Created: 2022-09-09 03:20:04.7466+00
Date Added: 2024-06-11T16:37:06.585369
License: Public Domain

Paine, J.,
dissenting.
I cannot agree with the majority opinion in this case. To go back to the old custom of each district judge appointing independent receivers in each county for failed banks will, in my opinion, defeat the whole plan worked out so carefully by the legislature.
From the first, our guaranty plan has been approved by the United States supreme court. In deciding the case of Noble State Bank v. Haskell, 219 U. S. 104, 55 L. Ed. 112, and its companion case of Shallenberger v. First State *116Bank, 219 U. S. 114, Justice Holmes said: “If then the legislature of the state thinks that the public welfare requires the measure under consideration, analogy and principle are in favor of the power to enact it”' — and decided that the guaranty fund law was well within the state’s constitutional power.
That banking is a quasi public business, which the state, in the exercise of its police power, may take under its control to the extent of prohibiting the business of banking entirely except upon such conditions as it may prescribe, was held in effect in Noble State Bank v. Haskell, supra, and again approved by Chief Justice Hughes in Abie State Bank v. Bryan, 282 U. S. 765, 75 L. Ed. 690.
In Iowa, by section 9242 of the 1927 Code, it was provided that “the superintendent of banking henceforth shall be the sole and only receiver or liquidating officer for state incorporated banks and trust companies.” It was held by the Iowa Code that “henceforth” meant the same as “hereafter,” and that this section did not thereby oust those receivers who had been legally appointed and acting-prior to the passage of the law.
In the case of State v. First State Bank, 52 N. Dak. 231, in holding the laws relating to the liquidation of insolvent banks to be constitutional, it was held in the first paragraph of the syllabus: “Under the Constitution of this state all governmental power is vested in the legislature except such as is granted to the other' departments of government, or expressly withheld from the legislature by constitutional restrictions.” And in the text thereunder, it states: “It is well settled that the legislature is vested with constitutional authority to regulate the business of banking; and * * * clearly had power to say when and under what conditions banking corporations should be-deemed insolvent and subject to liquidation; and als.o had power to prescribe any mode or manner for the liquidation of such insolvent banking corporations, not expressly forbidden by the Constitution.”
The great number of failures of state banks threatened the very existence of the remaining banks, and the legis*117lature in 1929 decided upon a more efficient administration of the affairs of the closed banks, cutting down expenses in every possible way, to the end that the depositors might receive a greater percentage upon their deposits than under the old plan. Among the sections of the new law to carry this out was one designed to cut out receiver’s fees, and place all of them under one responsible head, so in section 8-192, Comp. St. 1929, it provides: “The secretary of the department of trade and commerce shall be the sole and only receiver of failed or insolvent banks, and shall serve as such without compensation other than his compensation as secretary of said department.”
It is claimed that, when Mr. Bliss was succeeded in office of the department of trade and commerce, there were in the neighborhood of 190 receiverships pending, and that similar applications were made and the same constitutional objections advanced, supported by the same authorities .now cited to this court, in every district court in the state in which these receiverships were pending, and that in each of these cases the district judges, after listening to these arguments, have appointed E. H. Luikart, the secretary of the department of trade and commerce, as receiver of the liquidated banks in their districts, as clearly provided in this law, with the single exception of the cases now pending before us. It occurs to the writer of this dissent that, if the same question has been presented to many of the judges of the district courts, and the same arguments advanced, and they have each decided that the liquidation of banks was an executive function, to be exercised under the direction of the governor by the secretary of the department of trade and commerce, such rulings of district judges cannot be entirely overlooked.
In Leach v. Exchange State Bank, 203 N. W. 31 (200 Ia. 185) it was held: “The propriety of enlarging the power of superintendent of banking, under Acts 40th Gen. Assem. c. 189, which amended Code 1897, sec. 1877, to include liquidation and distribution of assets of an insolvent bank, without his being appointed receiver, is matter for legislative rather than judicial concern.”
*118In In re Citizens Exchange Bank, 140 S. Car. 471, it was held: “In proceeding to .liquidate bank by directors, judge on application for appointment of receiver must act under laws as to receivers.” And in the same case it was held that, while the power of the court of equity to appoint receivers in numerous instances has been upheld by this court, it has also been repeatedly decided that this great power should be exercised with caution.
In times past the liquidation of insolvent banks was handled by the district court in the county where the bank was located, but when banks were failing by the hundreds, the legislature, because of the controlling importance of the situation, decided to place the administration of failed banks in the power of the executive, and yet, in so doing, used the office of the clerk of the district court in each county as the place where duplicate copies of the orders made could be found by any interested depositor, and to give the procedure the stamp of local authority, provided that the district court should name the secretary of the department of trade and commerce as receiver of all failed banks. This plan has brought order out of chaos, and tends for a speedy and economical administration of insolvent banks.
The writer of this dissent believes that the legislature has entire power to dictate under what conditions the banks may be allowed to do business and under what conditions they shall be liquidated, and in passing an act placing this in charge of the executive branch of the government, it in no way reflects upon the judiciary of the state in not being allowed to exercise the judgment of each individual district judge in appointing a local receiver of his own choice. There is abundant authority for approving the course taken by the legislature in the enactment of this law. The old plan of individual receiverships under individual district judges having been tried and found wanting, the new plan promises a great improvement, and should not, in these times of distress, be hampered by any undue jealousy on the part of the judiciary for fear its rights may be infringed upon.
*119This court has held in State v. Exchange Bank, 114 Neb. 664: “The department of trade and commerce is vested with general supervision and control of state banks with authority to do all things reasonably necessary for the protection of depositors therein throughout the state. It also stands in the nature of a trustee for the state bank guaranty fund, and it is its duty as such to take such precautions as may be reasonably necessary to conserve and protect this fund.”
It .may be admitted that a receiver, in the ordinary use of that term, is an officer of the court, and that his duties and powers are entirely limited by the court which appoints him, but does not the secretary of the department of trade and commerce have powers, duties, rights and obligations given him by the legislature, to be exercised by him subject only to the approval of the governor of the state, by whom he is appointed? Is he not much more than a receiver? See American Southern Nat. Bank v. Smith, 170 Ky. 512, Ann. Cas. 1918B, 959. In this connection we find that in Tennessee a receiver of a railroad may be appointed by the governor under the internal improvement act. Newman v. Davenport, 9 Baxt. (Tenn.) 538.
Doubtless our legislature had in mind the secretary of the department of trade and commerce as a “receiver” who should not be under the control of the district court, the same as receivers of national banks, who are appointed by the comptroller of the currency, and not in any sense officers of any court, but simply the agents and officers of the United States government. In re Chetwood, 165 U. S. 443; United States v. Weitzel, 246 U. S. 533. And was it not the intention of the legislature, in providing that the secretary of the department of trade and commerce should be the sole and only receiver, to make him thereby the liquidating agent of every insolvent bank? This provision for his appointment as receiver of each bank by the district judge is simply one of those instances of overlapping power which may arise in the twilight zone between the legislative, the judicial, and the executive de*120partments of our government. Justice Holmes once said: “Delusive exactness is a source of fallacy throughout the law.” In this instance, should not the judiciary cheerfully cooperate in this appointment, clearly the will of the legislature, to the great end that the depositors may receive the largest possible sum from a prompt, vigorous, and efficient liquidation of banks by one responsible person, to wit, the secretary of the department of trade and commerce?