172 N.W. 931 | S.D. | 1919
This is an original proceeding by mandamus to compel the defendant, as public examiner and ex officio superintendent of banks and trust companies, to issue to plaintiff corporation a certificate authorizing it to commence business at the city of- Sioux Falls as a 'banking and trust company.
The petition for the writ alleges that since the month of November, 1918, plaintiff has been a corporation duly organized and existing under chapter 255, Daws of 1911, and acts amendatory thereof, with its principal place of business at the city of Sioux Falls; that the capital stock of said corporation consists of 5,000 shares, of the par value of $100 each; that upon the formation of the corporation all its said stock was subscribed for at the par value of $100 per share, and $500,000 from the sale of said stock was paid into- and is now in the treasury of said corporation, and held by it 'for the purpose of .transacting business under the authority of its articles of incorporation as a trust company; that plaintiff has done everything required to be done under the laws of this state to entitle it to open its doors and engage in said business, and is prepared to do everything which may be required of it by order of said public examiner under the laws of the state; that the said public examiner, after making a full investigation and examination of all the proceedings referred to, claims without right, reason, or authority that he has reason to believe, and does believe, after such examination, that the stockholders have formed said corporation for other than the legitimate business contemplated by the act authorizing its organization; and that, with the advice and consent of the Attorney General, he has announced that he will not issue to this plaintiff a certificate showing that it is lawfully entitled to commence business, and will not authorize or allow said corporation to engage in said business.
The questions involved are submitted to the court upon objections to the answer and return, and which are in effect a demurrer thereto on the ground that the facts stated in the.-return do not constitute a defense. The answer admits the corporate organization and existence of plaintiff, and that defendant, as superintendent of banks and trust companies, was called upon' to,
■The answer alleges that the certificate demanded was withheld by defendant because, at all times since his examination of the affairs of said corporation, and now, he has reason to believe that the stockholders of such corporation organized it for purposes other than the legitimate business contemplated by the laws of this state authorizing the organization of such corporations, and that such certificate was and still is withheld with the advice and consent of the Attorney General; that his investigation and examination disclose that said corporation was organized- and promoted for the purpose of enabling its incorporators to engage in an extensive and profitable stock-selling enterprise, the principle purpose being to obtain for the original stockholders enormous profits and commissions from the sale of their original stock, especially to farmers, and that such enterprise was being carried out at the time of his refusal to grant the certificate demanded; that such conclusions are based upon the following facts ascertained and disclosed by his investigation, viz.:
That the plaintiff corporation was organized with a capital stock of $500,000, par value; that its entire capital stock, immediately upon organization of the company, was taken over and became the exclusive property of the officers of said corporation, being the same persons who originally promoted its organization; that the promoter named as president of the corporation took over to Himself 4,850 shares of stock, the person named as vice president 10 shares, the person named as -cashier 100 shares, the person named as assistant cashier 10 shares, and other persons named as directors of the corporation took over the remaining shares; that the shares so purchased by the incorporators and promoters of said corporation were not delivered to them at the time of sale, but,'with the exception of 70 or 80 shares retained by persons who were to become directors,'all of said stock was deposited
The authority under which the public examiner acts in such cases is found in that portion of section 9, c. 255, Laws of 1911 (section 9039, Rev. Code 1919), which reads as follows:
“If, upon- examination,, it appears that such trust company is lawfully entitled to commence business, the public examiner shall forthwith give to such trust company a certificate under his hand and official seal. If the said public examiner has reason to be*58 Heve that the stockholders have formed the corporation for any other than the legitimate business contemplated by this act, he may with the advice and consent of the Attorney General, withhold the certificate herein mentioned.”
In that case the auditor found that a banking corporation legally organized to entitle it to engage in the banking business, and whose incorporators themselves intended to engage in that business in a suburban village about to be annexed and become a part of a larger city, in which the statute required a different capitalization, was organized for the purpose of evading the statute. Mandamus was refused; the court holding that the auditor was justified, under the statute, in refusing the certificate of authority. In defining the powers of the auditor under this statute, however, the court said:
“It is true that arbitrary power, to be exercised according to the whim or caprice of public officers, is inconsistent with our form of government, and any law which vests the enforcement or nonenforcement of the law in the particular case in the discretion of a public officer, unregulated by any rules or conditions, is arbitrary and invalid. Sheldon v. Ployne, 26I 111. 222 [103 Ni E. 1021.]'. The discretion vested in the auditor by the language quoted is not, however, such. arbitrary power. He is authorized to withhold the certificate only in case he_is not satisfied as to the personal character and standing of the officers or directors elected or appointed or when he has reason to believe that the bank is organized for a purpose other than that contemplated by the act. He may not arbitrarily withhold the certificate, alleging such a reason where it does not, in fact, exist. Such a withholding would be an act of the will, .only, and not of*59 the judgment, and would be such a palpable abuse of discretion as could be controlled by mandamus.”
The finding and determination of the public examiner that the promoters of the plaintiff corporation did in fact form such- corporation for a purpose other than that contemplated by the statute is not without support from the facts and circumstances recited in the answer to the writ, and which stand conceded upon the record before us.
The application' for the writ must therefore be denied; and it will be so ordered.