219 U.S.

Argument for Appellees.

bank to its depositors is not the taking of money for a private use, is untenable. The relation between the bank and the depositor is that of debtor and creditor. Dartmouth College v. Woodward, 4 Wheat. 518; Bank of the United States v. Planters' Bank, 9 Wheat. 904, 907; Briscoe v. Bank of Kentucky, 11 Pet. 257, 324; Bolton v. White, 2 Cr. C. C. 426; Rundle v. Del. & R. Canal, 1 Wall. 275; State Bank v. Knoop, 16 How. 369.

Taking the money from the banks by the process of the Guaranty Fund to pay the depositors of another bank is an appropriation of the money to a private use and not for a public use. Loan Assn. v. Topeka, 20 Wall, 655; Reagan v. Farmers' L. & T. Co., 154 U. S. 362, 399; Cotting v. Kansas City Stock Yards Co., 183 U. S. 79, 87.

The guaranty provision of the new banking act is not within the scope of the police powers of the State. The police power has its limitations. The police power cannot justify the invasion of any property or contract right of the citizen granted to him under the Constitution. Connolly v. Union Sewer Pipe Co., 184 U. S. 540; Dobbins v. Los Angeles, 195 U. S. 223, 237; Gulf, Colo. & S. F. Ry. Co. v. Ellis, 165 U. S. 150; Minnesota v. Barber, 136 U. S. 313; Lake Shore Ry. Co. v. Smith, 173 U. S. 684; Colon v. Lisk, 153 N. Y. 188.

The police power is the law of necessity, which means more than expediency, and no necessity exists for the Nebraska Bank Guaranty Law. The exercise of the police power must stop short of infringing constitutional rights. Cases cited supra, and Central of Georgia Ry. Co. v. Murphey, 196 U. S. 194, 206; Richey v. People, 155 Illinois, 98, 110; People v. Gillson, 109 N. Y. 389, 398; Fisher v. Wood, 187 N. Y. 90, 94; State v. Goodwill, 33 W. Va. 179.

Whether a statute is within or without a proper exercise of the police power is a question always subject to final determination by the courts. Cases supra and Jew Ho v. Williamson, 103 Fed. Rep. 10, 17; Ex parte Whit

well, 98 California, 73; Hume v. Laurel Hill Cemetery, 142 Fed. Rep. 552; Rushtrat v. People, 185 Illinois, 133; Chy Lung v. Freeman, 92 U. S. 275; Railroad Co. v. Husen, 95 U. S. 465; Bryan v. City of Chester, 212 Pa. St. 259; Passaic v. Patterson Co., 72 N. J. Law, 285; People v. Murphy, 195 N. Y. 126; State v. Redmond, 134 Wisconsin, 89, 110; City of Belleville v. Turnpike Co., 234 Illinois, 428, 437; Sayre Borough v. Phillips, 148 Pa. St. 482.

The principle which underlies the bank guaranty deposit laws, when carried to its ultimate legitimate result, means unrestrained socialism in state government.

MR. JUSTICE HOLMES delivered the opinion of the court.

This is a suit by many banks to prevent the Banking Board of Nebraska from carrying out and enforcing an act similar to the Oklahoma statute just passed upon. It forbids banking except by a corporation formed under the act and provides for a guaranty fund. The Circuit Court held the statute unconstitutional and issued an injunction against the enforcement of it. 172 Fed. Rep. 999. For the reasons given in the foregoing case the decree of the Circuit Court must be reversed.

Decree reversed.

219 U.S.

Argument for Appellants.

ASSARIA STATE BANK v. DOLLEY, BANK COMMISSIONER OF THE STATE OF KANSAS.

APPEAL FROM THE CIRCUIT COURT OF THE UNITED STATES FOR THE DISTRICT OF KANSAS.

No. 617. Argued December 8, 1910.-Decided January 3, 1911.

Noble State Bank v. Haskell, ante, p. 104, followed to effect that a state statute establishing a Bank Depositors' Guaranty Fund and requiring banks to contribute thereto is not unconstitutional as depriving the banks of their property without due process of law or denying them the equal protection of the law.

A state law which affects the needed charges to cure an existing evil by creating motives for voluntary action instead of by compulsion, may still be a police regulation.

One who can avail of benefits given by a state statute cannot object to the statute as denying him equal protection of the law because he does not choose to put himself in the class obtaining such benefits. The Bank Depositors' Guaranty Fund of 1907, of Kansas, is not unconstitutional as denying equal protection of the law because it applies only to banks which contribute to the fund, or on account of preferences between classes of depositors, or because incorporated banks with a surplus of ten per cent have privileges over unincorporated banks.

THE facts are stated in the opinion.

Mr. John L. Webster, Mr. Chester I. Long and Mr. J. W. Gleed, with whom Mr. B. P. Waggener and Mr. John L. Hunt were on the brief, for appellants: 1

1

The so-called Bank Guaranty Law is not a regulation of either banks or banking. It is a law creating an insur

1 See also arguments in support of, and against, the constitutionality of the Depositors' Guaranty Fund Acts of Oklahoma in Noble State Bank v. Haskell, ante, p. 105, and of Nebraska in Shallenberger v. First State Bank, ante, p. 114.

Argument for Appellants.

219 U. S.

ance scheme to be conducted by the State, and the expenses raised by general taxation. 27 Opin. Attorney General, 272. The insurer is the State.

The fund for the payment of losses is derived from premiums paid by banks and the fund for the payment of expenses from general taxation. These expenses will exceed the amount of annual premiums paid by all banks. Session Laws of Kansas, 1909, 18, 48.

The assured are the depositors. Nothing in which the banks have any beneficial interest is insured. The risk is the obligation of the bank to certain depositors. The loss is the amount of deposits which the assets of the banks and the double liability of their stockholders is insufficient to pay.

The premium-payers are banks (voluntarily) and taxpayers (compulsory).

Taxation for a private purpose is a taking of property without due process of law. Brannon, Fourteenth Amendment, 160; Cole v. LaGrange, 113 U. S. 1; Loan Assn. v. Topeka, 20 Wall. 655; Cooley, Taxation, 67; Sharpless v. Mayor, 59 Am. Dec. 759.

A statute to compel payment of debts is not a police regulation. Gulf &c. Ry. Co. v. Ellis, 165 U. S. 150. This law acts by way of gift-by taking the property of one and giving it to another. Police power is simply the enforcement of the maxim, Sic utere tuo ut alienum non ladas, and acts by way of restraint. Tiedeman, Police Power, § 1; Freund, Police Power, §§ 3, 8, 22.

An exercise of the police power can be justified only by the necessity of the public generally. This law benefits only a limited class of bank depositors. Lawton v. Steele, 152 U. S. 133; Hume v. Laurel Cemetery, 142 Fed. Rep. 553; Colon v. Lusk, 153 N. Y. 188; State v. Redmon, 134 Wisconsin, 89; Fisher v. Woods, 187 N. Y. 90.

This law does not depend upon the necessity of those benefited-the depositors-for its existence, because it may

219 U. S.

Argument for Appellants.

be put in action only by the voluntary act of private banking corporations. Larabee v. Dolley, 175 Fed. Rep. 365; Tiedeman, Police Power, § 1; Freund, Police Power, §§ 3, 8, 22; Lochner v. New York, 198 U. S. 45; Chicago Ry. Co. v. Drainage Com'rs, 200 U. S. 561; Reduction Co. v. Sanitary Works, 199 U. S. 306; Gardner v. Michigan, 199 U. S. 325; Ritchie v. People, 155 Illinois, 98; People v. Stede, 231 Illinois, 340.

The law is therefore not an exercise of the police power. No other public purpose justifies it. A public purpose is a governmental purpose. Dodge v. Mission Twp., 107 Fed. Rep. 827, 830.

A governmental purpose is one for the accomplishment of which, as shown by history, governments were instituted. Loan Assn. v. Topeka, 20 Wall. 655; Opinion of Justices, 30 N. E. Rep. (Mass.) 1142.

Governments were not instituted for the purpose of insuring deposits or any other property interests.

Considered as an act for the relief of sufferers from bank failures or as an act to pay the debts of banks, the purpose of the act is private and not public. Baltimore Ry. Co. v. Spring, 89 Maryland, 510; State v. Township of Osawkee, 14 Kansas, 418; Lowell v. Boston, 111 Massachusetts, 454; Loan Assn. v. Topeka, 20 Wall. 655.

The classification under the law is arbitrary and not reasonable as to banks not having ten per cent surplus. Classification must rest upon some difference which bears a reasonable and just relation to the act in relation to which the classification is proposed. Gulf &c. Ry. Co. v. Ellis, 165 U. S. 150, and cases cited; Atchison &c. Ry. Co. v. Matthews, 174 U. S. 96.

The act is for the benefit of depositors. Depositors in banks which have no surplus and which are therefore presumably the weaker banks, need the benefits of the law more than depositors in stronger banks. A classification which deprives them of the benefits of the law has an