141 Wis. 577 | Wis. | 1910
Most of tbe questions raised- by tbe plaintiff in error, hereinafter called tbe defendant, are passed upon adversely to bis contention in Weed v. Bergh, ante, p. 569, 124 N. W. 664. In addition to- tbe points there raised and decided, it is urged that G-imbel Brothers, the corporation employing the defendant, was not engaged in tbe banking business, and that the legislature could not declare that tbe mere receipt of deposits constituted such business. Tbe right of tbe legislature to reasonably regulate tbe business of tbe corporation, in so far as it extended to receiving moneys on deposit, is conceded, but it is urged that secs. 2024 — 781, 2024 — 78m, and 2024 — 78% Stats. (Laws of 1909, cb. 285), ■do not constitute valid regulation, but in fact amount to prohibition.
By sec. 2024 — 781 tbe soliciting, receiving, or accepting of money on deposit as a regular business by a person or corporation is declared to be a banking business, whether such deposit is made subject to check or is evidenced by a certificate of deposit, a passbook, a note, a receipt, or other writing. Gim-bel Brothers opened a “deposit purchase department,” received moneys up to $500 from any one desiring to deposit with it, issued passbooks evidencing such deposits, paid interest on the amounts deposited, and paid tbe principal sum deposited, with interest thereon, on demand, in money or goods, at tbe election of tbe depositor. Tbe facts established satisfy ■every call of tbe statute, and the corporation was doing a banking business if the acts done in themselves constituted tbe carrying on of a banking business or if the legislature had tbe-right to say that such acts constituted a banking business.
If a bank must transact the various kinds of business enumerated in the above definition in order to be a bank at all, it is apparent that we have no such institutions as state banks in Wisconsin, because such banks are not permitted to issue paper money. But the word is popularly and correctly used in a much more.restricted sense. In modern times we have a variety of institutions that do a banking business in the popular sense, although the functions performed by them may be widely variant, and none of them may be doing all of the kinds of business included in the above definition. The business conducted by national banks differs from that done by state banks, in that the latter are not banks of issue, while the savings banks do not usually perform all of the kinds of business transacted by other banks. Trust companies that receive deposits and malee loans perform two of the most important functions that are performed by banks generally, and for obvious reasons they are subject to regulation to the same extent that banks are. Morse in his work on Banking (vol. 1, § 2, 4th ed.) says that in order to have a bank “it is essential that there should be a place where, as a regular business, the money of others is received on general deposit. There must be a combination of moneys, a joint fund, as a primary condition of the existence of a bank or banker, or the transaction of banking business.”
A bank is defined by Webster as “an establishment for the custody, loan, exchange, or issue, of money, and for facilitating the transmission of funds by drafts or bills of exchange; an institution incorporated for performing one or more of such functions.” The same authority defines a bank of deposit as one “which receives money for safe-keeping.”
“Banks 'in the commercial sense are of three kinds, to wit: (1) Of deposit; (2) of discount; (3) of circulation. Strictly speaking, the term ‘hank’ implies a place for the deposit of money, as that is the most obvious purpose of such an institution. Originally the business of banking consisted only in receiving deposits, such as bullion, plate, and the like, for safe-keeping until the depositor should see fit to draw it out for use, but the business, in the progress of events, was extended, and bankers assumed to discount bills and notes and to loan money upon mortgage, pawn, or other security, and at ■a still later period to issue notes of their own intended as a 'circulating currency and a medium of exchange 'instead of gold and silver. Modern bankers frequently exercise any two or even all three of those functions, but it is still true that an institution prohibited from exercising any more than one of those functions is a bank in the strictest commercial sense.”
“Banks are said to be of three kinds, viz., of deposit, of discount, and of circulation. They generally exercise all of these functions.” 1 Bouv. Dict. 211.
The following additional authorities hold, correctly we think, that any person or corporation engaged in the business carried on by banks of deposit or of discount or of circulation is doing a banking business, although but one of those functions may be exercised: Curtis v. Leavitt, 15 N. Y. 9, 56; Reed v. People, 125 Ill. 592, 596, 18 N. E. 295; People v. Bartow, 6 Cow. 290; Hamilton Nat. Bank v. Am. L. & T. Co. 66 Feb. 67, 92 N. W. 189.
The term “banking” is generally used in 'its enlarged sense, but it may also be used in a more narrow and restricted sense. There is no doubt as to the sense in which the legislature intended to use the term here, because it says that the receiving of deposits as a regular business shall constitute banking. Independent of any constitutional authority, there is no doubt about the right of the legislature to regulate banking, and neither is there any doubt about its right to regulate the busi
The main purpose of regulating the banking business as the-business is now carried on is to insure the safety of deposits. The calamities that befall individuals and communities as a-result of bant failures are well tnown. The necessity for the-regulation of establishments carrying on the kind of business that Gimbel Brothers carries on is just as apparent as it is in-the case of regular banting institutions. It receives deposits-to the amount of $500 from all persons desiring to leave money with it. The depositors may, if they wish, purchase goods with, the money so deposited, but they are not required to do so. It matters not that a depositor has never purchased a dollaFs worth of goods from the corporation or that he never intends to-. So long as he elects to allow his deposit to remain, he is allowed interest thereon at the rate of four percent. per annum compounded every four months, and he may withdraw his money at any time he wishes on demand and without previous notice of intention to withdraw it. "When the high financial standing of the corporation is considered, the inducement offered to depositors is not only attractive, but alluring. We think it would not be going beyond the domain of common knowledge to- say that no bant or trust company doing business in the city of Milwaukee offers so inviting a contract to the small investor in the matter of interest rates and the privilege of converting the indebtedness to the depositor into cash. It was stipulated as a fact that the “deposit purchase department” of Gimbel Brothers had been in operation upwards of a year prior to the date upon which the alleged offense was committed, and that on said date there was deposited with said corporation $115,138.10 by 5,915 different depositors. That the amount was not larger was probably due to the fact that a limit was placed upon the amount that might be deposited by a single person, and the further fact that the business of receiving deposits had not been in vogue
Conceding the entire solvency and ability of Gimbel Brothers to meet its obligations, really proves nothing. Other large or small business establishments that are doing an unprofitable business and are perilously near the verge of insolvency may reach out for deposits with the hope and expectation of arresting the inevitable, ajrticipating brighter things from the future. There are- few honest failures where the insolvent does not believe that with a little more leniency on the part of his creditors and a little greater extension of his credit he will be able to meet his obligations in full. Such a , business establishment might well increase the rates of interest to five or six per cent., and place no limit at all on the amount that would be received, or place one much higher than that fixed in the present ease. It is not difficult to surmise that, if the practice pursued by Gimbel Brothers became general with mercantile houses in a city like Milwaukee, their deposits would in no long time equal or exceed the time deposits of the banks and trust companies.
Aside from what has been said, it being conceded that the legislature might regulate such business as Gimbel Brothers was carrying on in the way of receiving deposits (admittedly one of the principal functions of a bank), it was competent for the legislature, considering the nature of the business, to define it as banking, if it were not such in fact, and to throw around it the general safeguards provided for the banking business proper. However, we do not wish to be understood as holding that Gimbel Brothers might not receive money on deposit from its patrons, where such money is deposited for the purpose of enabling the depositor to purchase goods from its store and where the money is used for that purpose. The judgment of the circuit court is correct and should be affirmed.
By the Court. — Judgment affirmed.
