Court Opinion

ID: 5004959
Source: CourtListenerOpinion
Date Created: 2021-10-01 01:51:44.328428+00
Date Added: 2024-06-11T08:17:14.323091
License: Public Domain

On Rehearing.
BLAIR, Justice.
On motion for rehearing, the banking commissioner presents but the single question that in adopting the depository statutes the Legislature by necessary implication intended to include or enact the English chancery rule as a part of such statutes. In support of the proposition, it is argued that the depository statutes authorize the selection of either a state or a national bank as county depository; that they were enacted after the federal courts had definitely adopted the chancery rule as to insolvent national banks, which rule the Texas Legislature was impotent to alter; and that, if the bankruptcy rule should be adopted as to insolvent state banks, they would be placed at a decided disadvantage in competing with national banks for depository ■ contracts, in that the county officials would necessarily select a national bank as the county depository, because, in the event of insolvency, the application of the chancery rule would prove more beneficial to the county. It is further argued from these facts that the Legislature could not have intended to adopt the bankruptcy rule as a part of the depository laws, because it would not be presumed to have thus deliberately and intentionally discriminated against state banks ■ in favor of national banks seeking depository contracts; but that the Legislature by necessary implication intended to adopt or enact the chancery rule as a part of the depository statutes.
The depository statutes require the commissioners’ court to select as county depository the bank “offering to pay the largest rate of interest.” Article 2546, R. S. 1925. The court is given no discretionary power in the matter; but must give the depository contract to the bank, state or national, offering to pay the “largest” rate of interest. It is manifest that, if the county officials must select as depository the bank offering to pay the largest rate of interest, no possible discrimination as between such competing banks can ever arise. The bank selected as the county depository, state or national, is required by the statutes to give the same amount and character of bond or security for the deposits, and no chance for discrimination as between such competing banks can ever arise in that regard. It is also manifest that, if the depository laws are strictly complied with by the depository bank and the county officials, no loss need ever be suffered by the county in the event of the insolvency of the depository bank, because the county officials are given full and plenary power at all times to require a solvent bond, or a pledge of sufficient securities to cover the entire amount of the county funds in the depository. Nor is there any reason why a county should suffer more from the selection of a state bank than from the selection of a national bank, if the depository laws are complied with as to solvent and sufficient security.
 It is true that unforeseen circumstances may arise, such as unknown insolvency of the sureties on the depository bond, or the fluctuation downward in the value of the pledged securities, at a time when the county officials are unable before the insolvency of *348the depository bank to require a new bond or additional securities, in which the county would be benefited by the application of the chancery rule to an insolvent state bank depository. But these are mere contingencies which may never happen, and the statutes do not authorize the county officials to take them into consideration in the selection of the county depository, and manifestly no chance for discrimination can ever arise in that regard as between a state and a national bank competing for the depository contract. That such possible contingencies may arise merely presents the original question in the ease of whether it is better to adopt the inequitable chancery rule or the equitable bankruptcy rule for the distribution of the assets of an insolvent state bank. The mere possibility that such contingencies may arise should not require the adoption of the inequitable chancery rule, because, if it should be adopted and the county officials and depository bank fail to comply with the statutes with regard to requiring at all times a solvent and sufficient bond or a pledge of sufficient securities, then it is the individual depositor who must suffer. He is given no power under the law to inquire into the solvency of the bank, or to require or demand security for his deposit. On the other hand, the county officials have the power and authority at all times to inquire into the solvency and sufficiency of the depository bond or the sufficiency of the pledged securities, and may, at any time they deem the county funds insecure, demand a new bond or additional securities of the depository bank. The possibility of the happening of the contingencies aforementioned is so remote and uncertain that courts should not adopt the inequitable chancery rule as to insolvent state banks, because it prefers the secured creditor over the unsecured creditor. The spirit of our banking statutes is to prohibit the preference of one creditor of an insolvent state bank over another creditor. Our decisions are uniform in holding that a bank may not pledge its securities or assets so as to prefer one creditor over another creditor; and’ that a state or county has no right to a preference over ány other general creditor of the insolvent state bank. Austin, Banking Com’r, v. Lamar County (Tex. Com. App.) 26 S.W. (2d) 1062; Foster v. City of Longview (Tex. Com. App.) 26 S.W.(2d) 1059; Shaw, Banking Com’r, v. U. S. F. & G. Co. (Tex. Com. App.) 48 S.W.(2d) 974, 83 A. L. R. 1113. We therefore conclude that the more equitable bankruptcy rule of distribution should be adopted as to insolvent state banks of this state.
The motion for rehearing is overruled.
Overruled.
McClendon, o. j., not sitting.