Click image to open full size in new tab
Article Text
# SUPREME COURT
From Divide County
County of Divide, a municipal corporation, Plaintiff and Respondent,
vs.
L. R. Baird, as receiver of the First State Bank of Wildrose, (substituted for said bank as a defendant), Defendant and Appellant, and
C. A. Christianson, et al, Defendants and Respondents.
Syllabus:
1. The business of banking is affected with a public interest and the legislature may prohibit it altogether, or may prescribe the conditions under which it may be conducted.
2. A bank has such powers as are expressly given it; these are express powers. In addition, it may exercise certain powers which are incidental to those expressly given; but the incidental powers are such only as are necessary to carry on the business of banking, that is, such as are incidental to the powers expressly enumerated.
3. A banking corporation is created for a more limited and special purpose than is a corporation organized under the general statutory charter, for the purpose of conducting ordinary business; it is the grantee of the exclusive privilege to do a specified business in a manner circumstanced by definite restrictions. It is wholly the creature of statute; and it does business by legislative grace.
4. The pledging of assets to secure a general deposit cannot be sustained as the exercise of an incidental power, necessary to carry on the business of banking. An attempt to pledge goes beyond the charter powers of the corporation and is not an incident to the privilege to receive general deposits.
5. The legislature has prescribed the mode in which a bank may receive and a public corporation make a deposit of public funds. That mode is by a personal or surety bond as security. This statute is a part of the corporate charter, insofar as it relates to the exercise of power by a bank. The power is express, not incidental or implied; and when a legislative enactment prescribes one mode of exercising an express power or privilege, it implies an inhibition to exercise the given power in any other way.
6. When a pledge of a bank's bills receivable is wholly gratuitous, one which the public board could not require or the bank make, even had the latter been authorized by the directors, such pledge is no part of the contract of deposit; nor is it in any legal sense a part of the consideration therefor.
7. The legislature has at all times since statehood recognized a distinction between a loan and deposit of money; and in the case of the funds of public corporation loans have been prohibited while deposits thereof have been sanctioned by law. From the fact that a bank may secure a loan, by pledging its bills receivable, the inference is not warranted that the legislature intended to give the banks the power to pledge their assets to secure either a public or a private deposit.
8. The general creditors of a bank are innocent parties and have equities which are superior to those of a county seeking to enforce a pledge of assets to secure a public deposit when the defense of ultra vires is interposed against the public corporation. As between the creditors and depositors of an insolvent bank whose contractual relation with the corporation was created lawfully intra vires—and the plaintiff, whose contract of pledge was ultra vires of the bank, the former must be preferred, and they are not estopped to assert the want of power.
9. A county is a political subdivision of the state; and it may speak and act only in the manner and in the matters prescribed by the legislature in statutes enacted pursuant to constitutional authority.
