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United States Supreme Court


No. 617

Decided: January 03, 1911

Messrs. John Lee Webster, Chester I. Long, James Willis Gleed, John L. Hunt, and B. P. Waggener for appellants.[ Assaria State Bank of Assaria, Kan. v. Dolley 219 U.S. 121 (1911) ]

[219 U.S. 121, 124]   Messrs. Fred S. Jackson, A. C. Mitchell, G. H. Buckman, and John Marshall for appellees.

[219 U.S. 121, 125]  

Mr. Justice Holmes delivered the opinion of the court:

This is a bill in equity brought by many state banks of Kansas to prevent the enforcement of the Kansas law [219 U.S. 121, 126]   providing for a bank depositors' guaranty fund. The defendants demurred. The circuit court, while holding the act unconstitutional, dismissed the bill on the ground that the appellants did not show that their rights under the Constitution were infringed, and therefore did not state a case within the jurisdiction of the court. 175 Fed. 365, 375, 381, 382. The ground of complaint was that the law imposed certain conditions upon sharing the benefits and burdens of contributors to the guaranty fund, that the appellants would not or could not contribute, and that unless they did, the effect of the law would be to drive them out of business. It was complained also that whereas theretofore the plaintiffs would have been entitled to share pro rata in the assets of an insolvent bank to which they had given credit, now depositors with such of their debtors as should go into the guaranty system would be preferred. Again, various conditions of the scheme not affecting the plaintiffs were pointed out as unreasonable and arbitrary, and the whole act was alleged to be unconstitutional and void. There was added a charge that the act required taxation to meet the expenses of carrying out the scheme. To all this the court replied that so far as the plaintiffs were concerned, it did not appear that they could not change their condition so as to enable themselves to contribute, and that the possible preference of other creditors was put as a pure speculation, it not being averred that any guaranteed bank indebted to any of the plaintiffs had failed, to which it might be added that the plaintiffs are free to withdraw their credits and collect their debts now. The charge as to taxation did not state a case under the Constitution, and violation of constitutional rights was the only ground for coming into the circuit court.

The case of Noble State Bank v. Haskell, just decided [ 219 U.S. 104 , 55 L. ed. --, 31 Sup. Ct. Rep. 186] cuts the root of the plaintiffs' case, except so far as the Kansas law shows certain minor differences from [219 U.S. 121, 127]   that of Oklahoma. The most important of these is that contribution to the fund is not absolutely required. On this ground it is said, and was thought by the circuit judge, that the law could not be justified under the police power. We cannot agree to such a limitation. If, as we have decided, the law might compel the contribution on the grounds that we have stated, it may try to bring about the same result by the creation of motives less compulsory than command and of disadvantages in holding aloof less peremptory than an immediate stop. We shall not go through the details of minute criticism urged by the appellants, in most if not all of which they are in no way concerned. Perhaps the most striking of these subordinate matters is the preference of ordinary depositors over other creditors,-a preference that seems to be overstated by the appellants. This, obviously, is in aid of what we have assumed to be the one of the chief objects and justifications of such laws,-securing the currency of checks. The ordinary deposits are those that are drawn against in that way. Another discrimination complained of is that against unincorporated banks and banks not having a surplus of 10 per cent. But if the state might require incorporation, it may give advantages to incorporated companies. It might provide that no banking business should be done except by corporations, and that corporations should not be formed or continue with less than a surplus of 10 per cent, both provisions being for the purpose of assuring safety. If, instead of that, it allows the plaintiffs to keep on without incorporation, and with a smaller surplus, they cannot complain that the safer banks will outstrip them as the result of the law. We think it unnecessary to discuss the case more at length.

Decree affirmed.

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Citation: 219 U.S. 121

Docket No: No. 617

Decided: January 03, 1911

Court: United States Supreme Court

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