Winfield v. Ott , 7 Okla. 512 ( 1898 )

Opinion of tbe court by

McAtee, J.:

Tbe sole question in tbe case arises under sections 1 and 3 of chapter 7, (“Bank Depositors,”) of tbe Statutes of Oklahoma, which are as follows:

“Section 1: It shall be unlawful for any president, director, manager, cashier, or other officer or clerk of any banking institution, or any private banker or officer or clerk of a private bank doing business in this Territory, to receive or assist to, or permit the reception of any deposit of money or other valuable thing in such bank or banking institution; or for any such banker, officer or clerk to create or assent to or permit tbe creation of any debt or indebtedness by such bank or banking institution, in consideration or by reason of which indebtedness, any money or valuable property, shall be received into such bank or banking institution after be shall have knowledge of the fact that it is insolvent or in failing circumstances.”

“Sec. 3: It is hereby made the duty of every person or officer mentioned in section 1 of this act to know the condition of the bank or banking institution with which he is connected, as to solvency, and his failure to know its financial condition shall be no defense to any prosecution or civil action brought under the provisions of this act.”

The question is whether the legislature has the power to establish a conclusive rule of evidence which shall pre- elude a party from establishing his right in opposition to it. The contention of the plaintiff in error is that the legislature sought, by section 3 of this act, to establish a conclusive rule of evidence, which should preclude the defendant, in an action like the present, from showing his knowledge, or the want of it, concerning the condition of the' bank; and that this, if so, would be a violation of the fifth article of the amendments to the constitution of the United States, which provides that “no person shall be deprived of life, liberty or property without due process of law.”

Under this proposition it may be said that the power of the legislature over the rules of evidence is probably complete and supreme. But this is not the proposition presented by the statute before us. It is provided by the statute that it shall be the “duty of every’person or officer mentioned in section one of this act,” including directors, “to know the condition of the bank or banking institution with which he is connected, as to solvency, and his failure to know its financial condition shall be no defense to any prosecution or civil action brought under the provisions of this act.” The statute here provides a rule of duty, which shall rest upon the “person or officer” connected with the banking institution, to know of its insolvency. The law-making power of the Territory proposes an incorporation act under which banks may, by submitting to the direction of the statute with regard to certain duties, assume the rights and exercise the powers of a bank or banking institution. The citizens of the state, subject to the law-making power, and claiming the statutory privilege under it of organizing a bank or banking institution, must do so upon such terms as the statute prescribes. If they undertake the rights, they must assume and he subject to the duties, prescribed by the statute. The duties and liabilities are correlative of the rights and privileges to which they seek, by incorporating under the statute, to become entitled. They cannot exercise one without being subject to the other. It is a matter of free choice. If an individual in this Territory undertakes to join with others, and to become a director or “other person or officer” in the direction and managment of a bank or banking institution incorporated under the statute, he is subject to the duties prescribed by the statute, and must discharge them, and is responsible for their discharge, in the very terms prescribed by the statute. The statute makes it the duty of all such “persons or officers” to know the condition, and then that “the failure to know its financial condition shall be no defense to any prosecution or civil action brought under the provisions of this act.” The legislature had the power to prescribe the terms upon which banks and banking institutions should be carried on in this Territory. It saw fit to declare that all persons who are mentioned in section 1— the officers and managers and directors of such an institution — who held themselves out as the responsible and intelligent managers of it should not exploit a vain and empty credit for the purpose of getting the commercial or financial benefit of a connection with such an institution, without imposing upon such persons a correlative liability for its debts, if the institution was permitted by them to receive deposits after it had become insolvent.

It was said by Judge Cooley, in his work on Constitutional Limitations, (page 453,) that “if parties should enter into a contract in view of such a statute then exist ing, its provisions might properly be regarded as assented to and incorporated in their contract, and therefore binding upon them.”

The liability is in plain and express terms by the statute. The director, Winfield, in this case, saw fit to assume this liability, and he cannot be permitted to escape it by setting up that his failure to discharge the peremptory duty imposed by it can be protected under the proposition that this rule of duty is a rule of conclusive evidence, and that he is entitled under it to exemption from liability. The petition in error will be dismissed, and the judgment of the court below affirmed.

All of the Justices concurring.