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# DEPOSITORS IN # ALL OF CLOSED # BANKS TO SHARE (Continued from page one.) state. The Tolley State Bank had closed before this time, but was lat- er reopened and closed again. Wirtz declared depositors of the Security Bank, since it was the first closed, should be paid in full first. John Watson, depositor in the Tolley Bank, intervened and held that if it were decided depositors should be paid in order of the banks' closing, his bank should be first. Attorneys for the Guaranty Fund Commission held depositors of all closed banks should be treated alike, and if the fund was not sufficient to pay all, it should be pro rated. At the time the suit was started, the allegations said, the Guaranty Fund was about $400,000 and the total liabilities to lepositors $8,000,000. ### Purpose of Legislature "The legislature of 1923, when chapter 200 of the laws of that session was enacted," says the majority opinion, "had before it a serious condition, caused by the closing of a large number of banks, the first of which went down in 1920, with large claims, actual and potential, against the Guaranty Fund. The situation, contrary to that which was before the legislature in 1917, clearly disclosed that it would be possible to pay immediately or within a reasonable time, from assessments levied against functioning banks, only a comparatively small number of the depositors in the banks then closed, without imposing burdens on open banks that would lead to general insolvency and collapse of the state banking system. Whether the power existed to impose such a burden, we need not decide. "It was also evident from the extent of the liabilities of closed banks to depositors and consequent potential and probable liability of the Guaranty Fund to such depositors, that if the depositors were paid in full by levying assessments to the maximum legally permissable, as well as practicably possible, under the law, in the order in which banks closed, the result would be that depositors in banks which closed last, or even a few months after those which first suspended, could not be paid any portion of their claims for a long period. Consequently, and doubtless in the interest of justice, as it seemed to the legislature, the provision for payment to depositors under the law of 1917, as made in section 15 thereof, was fundamentally changed. It is provided in section 21, chapter 200, S. L. 1923, that if the Guaranty Fund be insufficient to pay the claims of depositors duly allowed, the Commission may pro rate payments upon certificates of indebtedness from the fund on hand. That is, the legislature decided that instead of exhausting the Fund in paying depositors in banks that first closed and leaving others to wait for an indefinite period, it would be more just and equitable to provide that as many claimants as possible should receive a dividend upon their claims within a reasonable time." The court's opinion discusses the question as to whether Wirtz and other depositors similarly situated, had acquired a "vested right" in the Guaranty Fund on hand, which entitled him to payment in full as a depositor of one of the first banks closed, while depositors of banks closed later would get nothing. The law of 1917 contemplated payment on the priority basis; the law of 1923 changed it to the pro rata basis. The court's opinion reads: ### Plaintiff's Right "If the plaintiff acquired a vested right in that portion of the Guaranty Fund which had been collected at the time the bank closed merely because he was a depositor therein, then all depositors in banks that closed before the law of 1923 went into effect acquired a similar vested right to payment in full from that part of the Fund which had been accumulated through assessments made prior to July 1, 1923, in the order in which the banks closed. If that were the correct construction of the statute, it would operate to deprive the overwhelming majority of the depositors in closed banks of any payment whatever on their claims from the existing, altogether inadequate Guaranty Fund. Payment as to them would necessarily be postponed to such remote period as would be required to replenish the fund. The result would be that a plan obviously devised to protect all depositors equally would, through judicial construction, be made to give full protection to some and practically no protection to others. The difficulties, complications and injustice that would arise from such a construction of the law would render its administration cumbersome and costly, would to a great extent defeat the legislative purpose common to the act of 1917 and to that of 1923. These considerations doubtless influenced the legislature to enact chapter 200, S. L. 1923. Whether approval of a claim as guaranteed by the State Examiner would have created a vested right which the legislature could not have disturbed by subsequent legislation, is not decided." ### Many Closings The court, continuing the discussion of the abnormal situation as affecting the Guaranty Fund which rose from the large number of bank closings, held: "We are, therefore, of the opinion that the depositors in closed banks, who had taken no steps to have their claims determined, liquidated, and allowed in the manner provided by the act of 1917, or concerning which facts had not been certified to the Commission, as provided in that law, prior to July 1, 1923, had no such voated right or interest in the continuance of the plan of payment from
