Trumer v. South Side State Bank

Bunn, J. Defendant is a banking corporation organized and existing under the laws of this state. Plaintiff, a stockholder, brings this action to compel defendant to sell an amount of bonds of the United States purchased by it sufficient to reduce the amount retained to 15 per cent of its combined capital actually paid in and surplus. The trial court granted judgment for the defendant and plaintiff appeals. Plaintiff contends that a loan by a state bank to the United States in an amount in excess of 15 per cent of the combined capital and surplus ^of the bank is forbidden by G. S. 1913, § 6358, which, as far as material, reads as follows: “ 6358. Loans, how limited. — The total liabilities to it (the bank), as principal, surety or indorser, of any person, corporation, or copartnership, including the liabilities of the several members thereof, shall never exceed fifteen (15) per cent of its capital actually paid in cash and of its actual surplus fund.” etc. etc. Counsel for plaintiff, in an able argument, presented the view that the Federal government is a “corporation” within the meaning of that term as used in the above statute. Manifestly the question is not whether the United States may, as stated by Chief Justice Marshall in Chisholm v. Georgia, 2 Dallas (2 U. S.) 419, 446, 1 L. ed. 440, “without impropriety, be termed” a corporation. It is rather this: Did the legislature intend, when it limited the total liabilities to a state bank, as principal, surety or indorser, of any person, corporation or copartnership, to forbid the bank to purchase the bonds of the United States in an amount in excess of' 15 per cent of the bank’s capital and surplus? We answer this question in the negative. The purpose of the limitation of the statute is clear. It is well known that many banks have met disaster through large loans to a single individual, copartnership', or corporation, whose business officers of the bank were often closely connected with. The object of the legislature plainly was to prevent disaster to or embarrassment of the bank by loaning a large portion of its funds to any one business [226] concern, whether an individual, corporation or copartnership. The suggestion that the provision of the statute was also designed to prevent a monopoly of the credit facilities of rural banks, thus insuring extension of credit to as large a number as possible, is answered by other provisions of the statute. Except the reserve the bank is required to keep on hand, there is absolutely no limitation on the amount it may loan to any particular class of borrowers, or on any particular class of securities. When we consider the evil which it was the object of the legislature to remedy, and the fact that bonds of the United States are recognized by our statutes and by everybody as the very safest investments, we have no hesitation whatever in deciding that the legislature did not intend by the provisions quoted to- limit the amount of the United States bonds that a state bank might purchase or hold. We do not consider the point doubtful enough to demand further discussion or to require reference to the decided cases. They are readily available, and are all in accord with the view we take. It is unnecessary to consider any other question. Judgment affirmed.