219 N.W. 916 | Minn. | 1928
1. G. S. 1923, § 106, provides that the state may proceed either as a preferred creditor against the assets of the insolvent depository, or as the obligee on the bond against the surety or sureties thereon, *585 or against both, according as the state board of deposit (now the executive council) may deem advisable; but in case the state receives or recovers any amount of its claim from such surety or sureties, the latter shall not by reason thereof be subrogated to the claim of the state against the assets of the insolvent depository as a preferred creditor.
The state had the same lawful right before this act was passed to proceed either against the assets of the bank as a preferred creditor, or against the sureties on the depository bond, or against both, as it deemed advisable. In other words, the act delegates no power to the board of deposit. The act itself, not the board of deposit, declares what shall be the effect when the state recovers or receives from the sureties, instead of from the bank's funds, payment of the deposit or some part thereof. All the act does and was intended to do was to provide that, where the state receives or recovers from the sureties on a depository bond all or some part of the deposit owing by an insolvent bank, such sureties shall not be subrogated to the rights of the state as a preferred creditor as to the amount so received or recovered. We fail to find in the act any delegation of legislative power or of any power. The board had exactly the same power before the act was passed as it now has.
2. The question then is whether an act of the legislature, providing that where the state recovers of the sureties on a depository bond such sureties shall not be subrogated to the rights of the state as preferred creditors, is constitutional. Respondents contend that the act violates § 1 of the fourteenth amendment to the constitution of the United States; that it violates the guaranty of equal protection of the laws.
A brief consideration of the subject matter and situation to which the act applies may be helpful. All solvent banks and trust companies within the state which have been organized at least one year are eligible to be designated as state depositories. Each bank so designated is required to furnish a corporate or individual surety bond conditioned that there shall be paid to the state treasurer or his order, upon demand, at any place in this state designated by him, free of exchange, all of the state funds deposited in the depository *586 furnishing the bond, at any time while the bond is in effect. The bond is an absolute agreement to pay the deposit on failure or refusal of the bank to pay on demand. G. S. 1923, §§ 98, 99. It is common knowledge that a large number of banks were designated as state depositories under these laws; a number of them failed prior to 1921; the state, being a preferred creditor, received payment in full. If the state collected from the bondsmen, they became subrogated to the rights of the state and filed preferred claims and collected all they had paid. In practically every case the insolvent depository had sufficient assets to pay the state's deposit in full. This absorbed much of the funds and might leave little or nothing for the general depositors. The bondsmen escaped all liability, and the giving of such bonds became practically a mere formality. The act in question was passed for the purpose of benefiting the many innocent and often needy general depositors in these banks by giving to them equal rights with the sureties on these bonds in the assets of such banks. The matter was of public interest and concern.
The act applies only to sureties on bonds of depositories of state funds. The business of banking and the liquidation of banks are matters of vital public interest and affect the public welfare. Such business is subject to reasonable statutory regulations. Hoff v. First State Bank,
The right to equal protection of the laws is not denied when it appears that the law or course of procedure is applicable to all persons in the state under similar circumstances and conditions. *587
Walston v. Nevin,
The power to classify is a legislative power, and it is only when the classification is so manifestly arbitrary as to evince a legislative purpose to evade the constitution that the courts will declare the legislation special and void. State ex rel. Douglas v. Westfall,
3. The trial court in its memorandum held that the act in question has no application to the facts and issues presented in the case; that under G. S. 1923, § 9175, the sureties had the right to exoneration without reference to L. 1921, p. 973, c. 518. Section 9175 was enacted prior to 1866; hence the 1921 law is the later act and, if operative, must be held to modify the prior act.
If sureties on these bonds may now proceed, after the failure of the bank, to be exonerated under § 9175, then the act of 1921 becomes wholly inoperative. Instead of paying their liability under the bond and filing their claim against the bank, all such sureties will simply move the court to have the commissioner of banks pay the state's claim in full and thereby relieve the sureties from liability, as was here done. This would effectively nullify the act. It is quite clear that such was not the legislative intent. The right of sureties to exoneration is based upon the right of the surety to reimbursement from the principal debtor. 25 C.J. 169, 170; Comstock v. Corbin,
While it is true that the commissioner of banks represents the bank, its creditors, and to some extent the state, yet his liability to creditors of the bank is far different from that of the bank while a going concern. He is only obliged to pay to creditors their proper share of the assets of the bank in due course of liquidation, and in doing that he is bound by the laws of the state governing the manner of such payments. He can prefer only such claims as the law authorizes. We construe G. S. 1923, § 9175, not to authorize a suit for exoneration against the commissioner of banks or the receiver or trustee of an insolvent bank, and hold that L. 1921, p. 973, c. 518, applies and prevents exoneration of sureties in a situation of this kind.
The order appealed from is reversed.
HILTON, J. took no part. *590