Vandiver v. Fidelity Savings Bank

In April, 1889, the Lonaconing Savings Bank was incorporated under the general law, as a stock company, for the conduct of a savings bank in Allegany county. By Chapter 297 of the Acts of 1898 the charter was amended and the powers of the bank enlarged so as to authorize it to conduct a general banking business. By section 2 of the Act it was provided, "that said corporation shall be subject to the provisions of Chapter 109 of the Acts of 1892 as amended by Chapter 160 of the Acts of 1896 and to all general laws applicable to companies or associations of a character similar to that named in this Act."

In 1902 the Fidelity Savings Bank of Frostburg was incorporated as a stock company under the general law, for the conduct of a savings bank in the town of Frostburg, in Allegany county. By Chapter 268 of the Acts of 1904 the charter of this bank was also amended and its powers enlarged so as to enable it to conduct a general banking business. Section 2 of the Act was, totidemverbis, section 2 of the Act relating to the Lonaconing Savings Bank, supra.

In 1906 the Commercial Savings Bank of Cumberland was incorporated, as a stock company, under the general law, for the conduct of a savings bank in Cumberland. By Chapter 304 of the Acts of 1908, the charter of this bank also was amended and its powers enlarged, so as to enable it to conduct a general banking business, and section 2 of the Act was a repetition of section 2 as incorporated in the Acts relating to the Lonaconing Savings Bank and the Fidelity Savings Bank of Frostburg.

The provisions of the Act of 1896 referred to in each of these Acts, and which lie at the base of the present case were in substance as follows: Each one of these banks was required to deposit with the State Treasurer, bonds to the amount of 15 per cent. of the paid up capital stock, * * * but not less in any case than the sum of $30,000 which stocks or bonds were required to be registered in the name of the State Treasurer, officially, and held as a trust under and pursuant to the Act, "and the same shall be held by the said treasurer in trust as security for the depositors," * * * the Act further provided that the stocks and bonds so deposited should be held by the treasurer subject to sale and transfer only on the order of a Court of competent jurisdiction.

After the passage of the Acts before mentioned, amending the said several charters, deposits of bonds in varying sums were made with the State Treasurer in compliance, or part compliance with the provisions of the Act of 1896.

In 1912 the General Assembly passed three Acts, all in identical language, one relating to each of the banks above mentioned. The Act intended to affect the Fidelity Savings Bank of Frostburg (Ch. 828, Acts of 1912), which may be taken as an example reads as follows:

"Be It Enacted By The General Assembly of Maryland, That section 2 of Chapter 268 of the Acts of 1904 of the General Assembly of Maryland, by which the Charter of the Fidelity Savings Bank of Frostburg, Maryland, was amended, be and the same is hereby repealed; provided, that nothing in this Act shall be construed as relieving the said corporation from the provisions of Chapter 219 of the Acts of 1910, entitled `Banks and Trust Companies,' or of any other General Laws applicable to corporations similar to that named in this Act."

Upon the passage of these Acts the three banks in this case made application to the State Treasurer for the return to them respectively of the bonds which had been deposited with him, and upon his refusal to deliver the bonds filed a petition for a mandamus to compel him to return them. The writ was granted by the Circuit Court for Anne Arundel County, and it is from the order granting the writ that the present appeal was taken.

With the propriety of the action of the General Assembly in imposing the condition which it did, when the several Acts were passed enlarging the powers of these banks, this Court has nothing whatever to do. The function of this Court is to determine the legal results produced by the enactments which the General Assembly adopted. At the time when the several acts amending the charters were passed each of these banks was conducting the business of a savings bank only. In enlarging the powers of the banks the Legislature saw fit to impose what it deemed a condition for the better security of those depositing moneys in these banks, by which condition a certain sum was directed to be set aside and placed in the hands of a designated official as trustee, the same to constitute a trust fund for the benefit of a specified class of persons easily ascertainable. Upon the acceptance by the banks of the condition named, which they did when they made the first deposit of bonds in accordance with the provisions of the Act, each one of the then depositors in the banks acquired an interest in the fund thus set apart, similar to that of a cestui qui trust, and so did each subsequent depositor who placed his money in the bank so long as this provision remained unaltered. The situation was therefore precisely that which existed in the case of Vandiver v. Poe et als., Receivers, 119 Md. 348, and what was there said is controlling of the present case unless a different situation has been created by the passage of the Acts of 1912. The lower Court took the view that as the original condition had been imposed by the General Assembly, it was competent for the General Assembly to repeal it, and that such repeal would operate, not merely to remove the intended protection in the case of those who might thereafter become depositors in either of the banks, but also with respect to those who had deposited their moneys in reliance upon, or during the time when the condition was in force. In so far as depositors can be affected who have become such since the passage of the Act of 1912, the view of the lower Court was undoubtedly correct, but it by no means follows that there is the same result to those who were depositors at the time of the enactment of the laws which imposed the condition, or who became such between the time of the passage of those Acts and the passage of the Act of 1912. To give the Act the effect for which the appellees contend would be to make it retroactive, and the general principle is well stated in Southerland on StatutoryConstruction, section 463, when he says: "Statutes, not remedial, will not be construed to act retrospectively, even where they are not obnoxious to any constitutional objection, unless the intent that they shall do so is plainly expressed or made to appear. Where the intent as to being retrospective is doubtful, the statute will be construed as prospective only." The same rule has been adopted in this State. Thus in App. Tax Court v.W.M.R.R., 50 Md. 274, it is said: "Before a statute can be allowed to have a retroactive operation the Court must see that the words are so clear, strong and imperative in their retrospective expression that no other meaning can be attached to them, or that the plain intention of the Legislature could not be otherwise gratified * * * The statute must be taken to refer to and speak exclusively of future proceedings under it, leaving acts and proceedings done under prior legislation to stand as they were at the time of the repealing statute." And in Swan v.Kemp, 97 Md. 686, it was said: "Where rights are acquired under a statute, a repeal of the statute will not divest the right or interest acquired, or annul acts done under it." And to the same effect are, Williams' Adx. v. Johnsons' Adx., 30 Md. 508;New Cent. Coal Co. v. George's Creek Coal Co., 37 Md. 557;Herbert v. Gray, 38 Md. 529, and Johnson v. Johnson,52 Md. 668.

The Act of 1912 contains no language of any description which either in terms or by necessary implication indicates that it was the purpose of the General Assembly that the repealing act should be retroactive, and its prospective operation will give it full effect without in any manner interfering with any interests which existed at the time of its passage. The order appealed from must therefore be reversed and the petition dismissed.

But in passing the order it seems proper that some indication should be given, how to relieve the anomalous situation arising from a portion of the depositors of a bank having their deposits protected by a deposit of securities with the State Treasurer, and a portion not so protected. As already stated depositors who have become such since the passage of the Acts of 1912, have no ground to claim any protection through or under the deposit of stocks or bonds with the State Treasurer. The records of the banks will disclose who were depositors therein prior to the passage of these acts. Some of those accounts have undoubtedly been closed and the deposits withdrawn. If now the still existing depositors of those who were such prior to the passage of the Acts of 1912, shall assent in writing to the release of the security for their deposits afforded by the deposit of the stocks and bonds with the State Treasurer, or close their accounts by a withdrawal or withdrawal and redeposit of their moneys, so that there no longer exists a class for which the Legislature had provided the measure of protection, the reason for the further preservation of the fund will be at an end.

Under the statute the stocks and bonds in the hands of the State Treasurer constitute a trust fund, any disposition of which must be by the direction of a Court of competent jurisdiction. The recognized tribunal in this State for the administration of a trust is a Court of Equity. When therefore these banks shall, as indicated, have closed the accounts of all of those standing in the position of cestui qui trustent, or received their assent to the release of the security now in the hands of the State Treasurer, and shall make these facts satisfactorily appear to a Court of Equity, that Court may by its order authorize and approve the release of the securities now held by the designated trustee, and their retransfer to the banks severally depositing them.

Order appealed from reversed, and petition for mandamusdismissed, costs to be paid by the appellees.

BOYD, C.J., and BURKE dissented.