Jefferies v. Wasson , 187 Ark. 519 ( 1933 )

Article 12, 6, of the Constitution provides: "Corporations may be formed under general laws, which laws may, from time to time, be altered or repealed. The General Assembly shall have the power to alter, revoke or annul any charter of incorporation now existing and revocable at the adoption of this Constitution, or any that may hereafter be created, whenever, in their opinion, it may be injurious to the citizens of this State, in such manner, however, that no injustice shall be done to the corporators."

Under the above provisions, ample authority is found for the action of the Legislature in passing the banking act (act No. 113 of the Acts of 1913) and subsequent statutes amendatory thereof. The argument is made that the statute, in attempting to authorize the Bank Commissioner to take charge of insolvent banks, is an invasion of the ancient jurisdiction of courts of chancery and therefore invalid. The answer to that is the section of the Constitution quoted above, and this court, in the case of Greer v. Merchants' Planters' Bank,114 Ark. 212, in answering a similar contention, said: "We think that the original jurisdiction of the chancery court as preserved by our Constitution does not prevent the Legislature from entering upon the supervision of any matters which fall within the police power. This act does not attempt redistribution of judicial power, but it provides for a system of supervision which has nothing to do with the judicial function.

In the case of State, etc., v. Huxtable, 178 Ark. 367,12 S.W.2d 1, we said: "The police power of the State extends to the regulation of banking business and even to its prohibition except on such conditions as the State may prescribe." This doctrine was recognized in Noble State Bank v. Haskell, 219 U.S. 104, 31 S. Ct. 186. Continuing in the Huxtable case, we said: "The business of banking is of a public nature and therefore is subject to statutory regulation for the protection of the public. The power to regulate the business necessarily carries with it the power to provide adequate machinery for winding up its affairs when insolvent."

It is clear, from the authorities referred to, that the Legislature had the power to provide for the organization and functioning of banks and for the method of their liquidation when insolvent without any reference to courts of equity or any other court, and the Legislature might provide an agency for the supervision of banks and banking and the liquidation of insolvent banks to act wholly independent of the courts.

Davis v. Moore, 130 Ark. 129, 197 S.W. 295, was a case construing our banking act, and in that this court held that language of the particular section under consideration as well as many other provisions were copied from the National Banking Act, and under settled rules of construction we adopted the statute with the interpretation placed upon it by the Federal courts. The section involved in that case was the one authorizing the assessment of the statutory liability on the stockholders of an insolvent bank and to bring suit to enforce the same; the claim being made that the commissioner could only bring such suit when ordered by the chancery court. This claim was by the court denied, which held that, under the construction placed upon similar provisions in National Banking Act, the enforcement of the stockholders double liability was not dependent on the orders of the court. Continuing in that case, we said: "The further question is raised whether or not the action of the Bank Commissioner in levying the assessments for the stockholders is conclusive as to the necessity for the call and the amount thereof. * * * That question is, we think, concluded under the doctrine of the effect of borrowing a statute, with its interpretation, from another jurisdiction. The provisions of our statute are almost identical with the National Banking Act with regard to the enforcement by the Bank Commissioner of the double liability of the stockholders. Neither of the statutes provides in detail how the liability shall be enforced but each of them do provide that it shall be enforced, under our statute by the Bank Commissioner and under the National Banking Law by the receiver appointed by the Comptroller."

In Easton v. Iowa, 188 U.S. 238, 23 S. Ct. 288, the court said: "Our conclusions, upon principal and authority, are that Congress, having power to create a system of national banks, is the judge as to the extent of the powers that should be conferred upon said banks, and has the sole power to control and regulate the exercise of their operations; that Congress has directly dealt with the subject of the insolvency of such banks by giving control to the Secretary of the Treasury and the Comptroller of the Currency, who are authorized to suspend the operations of the banks and appoint receivers thereof when they become insolvent, or when they fail to make good any impairment of capital."

In Hulse v. Argetsinger, 18 F.2d 944, the court said: "The receiver of a national bank, appointed by the Comptroller, is his officer, not an officer of the court. Nor are its assets while in his hands in custodia legis; they do not become such by an order confirming a composition of debts made by him. Such an order is merely a condition upon the receiver's power to compound the debt; it is not made in any suit, nor does it adjudicate any rights inter partes. * * * It is the exercise of the visitational power, given to the court by the statute and limited to that function. It is an administrative check upon the otherwise unconditional powers of the Comptroller."

In the case of Liberty National Bank v. McIntosh,16 F.2d 906, the court said: "Ample authority will be found to make clear the purposes of the National Banking Act, and to fully and clearly show the power and authority of those charged with its administration. His jurisdiction with respect to all matters properly within his discretion is exclusive, and he is in respect thereto in no manner amenable to any court, nor is his action subject to review therein."

The effect of these decisions is that the Comptroller of the Currency, acting through his receivers, has complete and exclusive direction of the liquidation of the assets of insolvent banks, subject only to the limitations placed upon his authority by the statute itself. He is not an officer of the court, nor are the assets of insolvent banks while in his hands in custodia legis. The entire proceedings are administrative in their nature and not judicial, including the duties imposed by the statute on the chancery court. Applying the same rule as the Federal courts, this court in White v. Taylor, ante p. 1, held in effect that the courts had no power to intervene where the Bank Commissioner had determined that it was necessary to levy an assessment on the stockholders of insolvent banks, and that the chancery court would have no jurisdiction.

In order to escape the effect of these decisions, it is necessary for the court in the case at bar to hold that the sections of our act involved and of the National Banking Act on the same subject are unlike, and therefore to that extent our statute is not a "borrowed one." These sections are set out in the opinion of the court. I believe that to all eyes except those of a casuist they are alike in all substantial particulars. Both provide that the officer named in the statute shall take charge of the insolvent institution, and both provide for sale by him of the assets under the supervision of the courts. It seems to me that under any just and reasonable interpretation that the powers of the Commissioner and of the Comptroller are for all practical purposes identical as to the disposition of the assets of insolvent banks, and that the rules declared by the Federal courts and stated above, under the decision in Davis v. Moore, supra, govern in this case, and justify the conclusion reached by the chancellor.

I therefore respectfully dissent.