Court Opinion

ID: 7905837
Source: CourtListenerOpinion
Date Created: 2022-09-08 22:00:21.081933+00
Date Added: 2024-06-11T15:56:06.514373
License: Public Domain

Boxn, C. J\,
filed a dissenting opinion as follows, in which Urxer, J., concurred:
The attack on the legislative provision for exemption and priority of state deposits is grounded on constitutional requirements, and in this domain the law imposes on the court an attitude, or an inclination. What the state government in its lawmaking branch has duly decided and declared shall be done must be supported as law if the court can by adoption *309of any reasonable view or theory fit it within the constitutional restrictions. “The judgmeiit of the Legislature that such a regulation is proper and desirable should be respected and enforced by the courts if there is any rational theory upon which it can be supported.” Keiningham v. Blake, 135 Md. 320, 322, 109 A. 65, 66. “It is a plain and undoubted rule of construction that acts of assembly will be held to be valid and constitutional, unless so manifestly in conflict with some provision of the Constitution of the State that no discretion is left to the courts but to decide otherwise.” McCurdy v. Jessop, 126 Md. 318, 323, 95 A. 37, 38; State v. Cumberland & P. R. Co., 40 Md. 22, 53. The law demands a defensive effort by the court. And it is my belief that by adherence to the course thus prescribed all objections now raised to this provision of the statute are met, and that even without opposition to the objections the court should reach the conclusion that the provision is valid.
The available definitions and descriptions pf the common law priority of the State are brief, and rather fragmentary except in some recent studies. The result of all authorities on the subject appears to have been cast up in a study by Prof. Judson A. Crane, in 34 West Virginia Law Quarterly, 317. See also Ram, Assets, Debts and Incumbrances, 13-36 (vol. 8, Law Lib.). While it had an ancient origin during the feudal era, it was continued in the common law as an expedient to promote the public good. “It is founded,” said Justice Story in United States v. State Bank, 6 Pet. 29, 35, 8 L. Ed. 308, “not so much upon any personal advantage to the sovereign, as upon motives of public policy, in order In secure an adequate revenue to sustain the public burdens, and discharge the public debts.” “It is of the incidental prerogatives and belongs to the King, not as an individual, but parens patriae, and as universal trustee for the people. It is, in fact, a reservation or exception to the general course of law in favor of the public or for its good.” American Bonding Co. v. Reynolds (D. C.), 203 Eed. 356, 357. Such, too, is the explanation by this court in State v. Bank of *310Maryland, 6 G. & J. 205, 226, and in the other states — a large majority of all — in which the rule of priority'obtains.
There is nothing obscure or complex about the rule; it hardly admits of complication. The priority was and is simply a relative- position in respect to- other creditors in appropriation of a debtor’s assets; the State had first right when resorting to- them. In the earlier common law there were methods, even other than that of execution after judgment, by which the- assets could be resorted to and the prior right asserted before any distribution among creditors generally. That could be done by the writ of protection, or by an extent. 3 Blackstone, Comm., 289 and 420; Ram, Assets, Debts and Incumbrances, 25. But those two proceedings were not preserved in Maryland practice, and ordinarily the priority could be asserted only on a distribution among creditors generally. State v. Bank of Maryland, 6 G. & J. 205, 226. In Maryland the old processes or new ones could be made available, by legislation if not by judicial action; but the assertion must be limited to the available remedies as they may be provided. The right or priority in appropriation is here a right subject “to the same common law rule, applicable to the royal prerogative right of priority in England, of the same description.” State v. Bank of Maryland, mpra.
The right of priority is against other creditors rather than against the debtor. It does not affect the character of the debt. Against the debtor the State stands in the position of an ordinary creditor, and unless its debt has been reduced to judgment, and the debtor has lands, the right of prior application does not interfere with his commerce in any of his assets, or with the acquisition of rights in other persons; the debt does not carry a lien, any more than would a like debt to a private creditor. And as freedom of commerce and of transfer of rights to others is not interfered with, so the assets may pass out of the reach of creditors, including the State. “The Crown under its process against its debtor cannot seize the property of another. * * * When the property *311has passed from the debtor to another by contract, or a fair and bona fide transfer before the teste of the extent, or under a sale by a sheriff in virtue of a fi. fa., the extent comes too late, and the priority of the King is lost; * * * and the Crown can only take the goods subject to such liabilities, as the debtor has legally created.” Giles v. Grover, 1 Clark & F. 72; State v. Bank of Maryland, supra. Passage of title to another for the benefit of creditors is included among the transfers that take the assets beyond appropriation by action of the creditors in which the State has priority. State v. Bank of Maryland, supra; Public Indemnity Co. v. Page, 161 Md. 239, 156 A. 791. From this rule came the only restriction on allowance of priority at common law; and it was no more than the ordinary limitation on accessibility to creditors of particular assets of the debtor. So long as any given assets were liable to appropriation by creditors, the State had priority in the appropriation; when the assets under the law had passed out of the reach of such resort by the creditors, then, and then only, the right of the State of prior appropriation of them was lost. Priority is not- identified with any particular procedure or method of assertion. The procedure and methods of assertion discussed are, in fact, for enforcement of the debt against the debtor, and not for the exercise of the right of priority as against other creditors. Kor can it be said that the State’s priority is dependent upon the time of assertion of it, unless it is meant that there is no priority when, by reason of passage of title or rights in the assets in question, there is no longer any right in the State to resort to them.
Such was the right of priority at common law, and such was the right of priority that this court, in State v. Bank of Maryland, supra, and subsequent cases, found to have formed part of the law of Maryland. I do not see that there has been any alteration in the state right, or detraction from it, by judicial decision or otherwise, at least so far as this case is concerned with the subject. And this case, is concerned With only the one fact of its existence. The argument that *312a change, has resulted from the decision in the case of Public Indemnity Co. v. Page, supra, if tenable, seems to me beside the point here, and irrelevant, for the court is not dealing with receivership of an insolvent bank under either section 9 or section 61 of article 11 of the Code, and any change which might result from that decision would not fix the law for the present case. Sufficient for this case is the unaltered fact that priority at common law for state deposits existed up to the time of the enactment of the Emergency Banking Act (Public Indemnity Co. v. Page, supra); from that point the law now to control is given us in the emergency statute, which, so far as it goes, is an origin of law. That common law priority did exist up to the time of the passage of the act is true, I think, notwithstanding the series of bank holidays declared from day to day immediately preceding the act, for an extra holiday does not affect rights and relations any more than does a twenty-second of February or a fourth of July. All alike derive the same legal effect from the same source. Code, art. 13, secs. 9, 10, 17 and 104. And that effect is no more than to suspend activity temporarily, leaving all rights and relations as they were.
The emergency arrangement was, of course, a new, special legislative creation, and the meaning and legal effect of it are properly to be ascertained in only one place — in the statute itself. It is an act of the law-making power of the State, the power that shapes for the law any arrangement it creates, and its incidents, and the power that creates and amends for the law any practice or method. Thus it is determined for us in the enactment creating it, that this arrangement for dealing with the emergency is not one that affects state deposits — disregarding secured deposits not now in question. Fox’, axxalyzing the arrangement, so much is laid down for us explicitly, and we are not permitted to build from the custodia legis exiacted, or otherwise infer, that the ax-raxigement does affect the state deposits. The custodia legis of the emergency, the suspension of remedies, and other incidents, whatever the conditions so termed might *313be in other connections, are incidents that do not affect the freedom to withdraw state deposits because the Legislature has determined that they shall not be of that kind. According to familiar notions, this may be an altered form of custodia legis, or not a custodia legis at all; but it must remain such as the Legislature has created it, and cannot be given another character by judicial .action to conform to previous significations of the words used. The legislative design, up to this point, at least, seems indisputable.
It is true that the excepting of state deposits in this emergency arrangement and placing them in a position to be drawn upon as required, while other depositors are deferred and subordinated, would impair the obligation of the contracts of the other depositors and subject them to the unequal burden, contrary to constitutional requirements, if those other depositors were not already in that position. And it is contended that the priority for state money is not a continuation of priority of the common law, but a new priority, over and above that allowed by the common law, and derived from thei statute alone, and that as it is a new priority the incidental subordination of the other depositors is to be regarded as a new imposition, and as such open to the constitxitional objection made, equally with the priority attempted to be given to deposits of Baltimore City funds. But the statute, in directing that state deposits be set apart for withdrawal as required, appropriates so much of the funds of the common debtor to the exclusion of other similar creditors, and this is the priority that the common law gives. If there might be two identities in such like relative position in any ease, I do not see on what ground it can be said that priority under this statute is new, over and above priority already possessed, and without constitutional support from it. It seems to' me clear that the statutory provision at least can be viewed as an extension or attempt to apply existing priority, and if this construction is possible, and is one that fends to support the constitutionality of the provision, then the court is bound to adopt it. “All reasonable presumptions *314must be made iu favor of tbe validity of the provision.” Keiningham v. Blake, 135 Md. 320, 322, 109 A. 65, 66. It is “the duty of tbe Court to give such construction to Legislative Acts as will not bring tbem into conflict witb tbe Constitution.” State v. Cumberland & P. R. Co., 40 Md. 22, 54; Painter v. Mattfeldt, 119 Md. 466, 472, 87 A. 413; Fletcher v. Peck, 6 Cranch, 128, 3 L. Ed. 162; Ogden v. Saunders, 12 Wheat. 270, 6 L. Ed. 606. While priority under tbe statute is subjected to some restrictions for tbe emergency, it is in no respect enlarged beyond the limits of that already possessed, and it is hardly permissible, merely because of tbe restrictions, to describe subsequent priority as unrelated to existing priority. Ho more does it seem permissible to bold that priority subsequently is new and unrelated because tbe statute has attempted to extend it toi deposits by municipalities and other bodies and officers, for that attempt is attributable witb at least equal plausibility to an intention to extend existing priority too far. Mistaken attempts'to extend unquestioned legislative power are not so uncommon that an inference of intention to exert some other power must arise from tbem. Here, again, tbe court is bound to adopt that one of tbe possible constructions that will tend to support constitutionality. Indeed, any supposition that tbe draftsmen of this provision may have ignored existing state priority as a basis for tbe act, and contemplated resting priority on a new and unrelated basis, seems strained.
But if priority under tbe statute must be regarded as new and distinct in any degree, tbe fact still does not support tbe objection that it impairs tbe obligation of contracts,of other depositors or deprives tbem of existing rights. So long as other depositors are continued in tbe same relative position, or a better one, so long as no’ existing contract obligation or property rights are tbe worse for tbe new priority, bow can it be said that those depositors have been subjected to an impairment or deprivation? Starting witb tbe possession of priority by the State, at common law, tbe Legislature was free to create and arrange as it might deem fit within tbe *315limits of that priority already possessed. Violation of the Constitution could come only from a change of position and rights. A mere change in theoretical legal basis of the same situation would be something with which the Constitution would have no concern. Compare Smith v. Kansas City Title & Trust Co., 255 U. S. 180, 210, 41 S. Ct. 243, 65 L. Ed. 577; Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U. S. 146, 161, 40 S. Ct. 106, 64 L. Ed. 194.
As to the contention that priority under the statute is invalid, or extended beyond existing priority, because not asserted in a lawful, effective manner, or in time, the answer seems again to lie in the fact that we are dealing with an act that makes the law, and makes practice, superseding, so far as it goes, previous law and practice. That it does assert priority for state deposits seems to’ me beyond debate, for in so many words it provides that under the scheme constructed for the emergency there shall be freedom and priority for state deposits. Given the fact that the State possessed priority, it would hardly be questioned that the Legislature might provide new or old methods of prior appropriation of debtors’ assets. It might restore the writ of protection, or the remedy by extent, or similar remedies, or it might provide new ones. Remedies are at the disposal of the Legislature, so long as it does not impair existing rights. Bronsom v. Kinzie, 1 How. 311, 11 L. Ed. 143; Balto. & O. R. Co. v. Maughlin, 153 Md. 367, 377, 138 A. 334; Cummings v. Wildman, 116 Md. 307, 316, 81 A. 610; Safe Deposit & Trust Co. v. Marburg, 110 Md. 410, 72 A. 839; Miners’ & Merchants’ Bank v. Snyder, 100 Md. 57, 59 A. 707; Turnpike Co. v. Startzman, 86 Md. 363, 38 A. 777. If the Legislature declares that appropriation shall be made, or that it is made, by statute, that necessarily becomes a legal method so far as it will serve. Eor settlement of controversies which may arise in enforcement in particular instances, such as a controversy on the existence of the- debt or ownership of the assets, some further proceeding would be needed; a mere statute would not serve; but there seems to be no legal obstacle to a general statutory provision that where there may *316be found assets subject to appropriation, such as bank deposits, the State shall still have priority, and that is the nature and effect of the present provision. The deposits are not withdrawn from the depository for redeposit elsewhere, but placed in the same depository in a position for withdrawal as required, but there is no substantial difference between the two processes; by either the State takes priority. Priority to the fullest possible extent is not asserted; during the emergency only unsecured deposits are to be given the preference; but the right is one which can be asserted to any minor extent that the Legislature finds desirable without causing the abandonment or loss of the whole.
The contention that, if assertion by the statute was intended, the effort came too late, seems answered by the fact that the emergency arrangemeiit, however it may be analyzed, did not come into being before the assertion of the right. Nothing occurred before the assertion to interfere with it, or to change the conditions under which the right could be asserted. By the creating statute, indeed, it was declared that the arrangement should come into effect only subject to priority in the State, and the statutory creation could not have an effect beyond the limits of its being.