State Board of Control v. Banski

276 N.W. 626, 226 Wis. 361, 1937 Wisc. LEXIS 314
CourtWisconsin Supreme Court
DecidedDecember 7, 1937
StatusPublished
Cited by2 cases

This text of 276 N.W. 626 (State Board of Control v. Banski) is published on Counsel Stack Legal Research, covering Wisconsin Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Board of Control v. Banski, 276 N.W. 626, 226 Wis. 361, 1937 Wisc. LEXIS 314 (Wis. 1937).

Opinion

Nelson, J.

The State Board of Control first contends that the court erred in not adjudging its claim to be a preferred claim which must be paid first out of the incompetent's estate, and that, in any event, so much of its claim as relates to the maintenance of the incompetent, subsequent to August 9, 1935, when ch. 336, Laws of 1935, went into effect, should be allowed as a preferred claim.

So much of said ch. 336 (now sec. 46.10 (7) Stats.), as requires present consideration, is as follows :

“The actual per capita cost, as defined by rule of the state board of control, of maintenance furnished an inmate of ány state institution, or any county institution in which the state is chargeable with all or a part of the inmate’s maintenance, may be recovered by the state board of control. ... In all claims of the state board of control . . . for support of an inmate or upon moneys or property held by said inmate or held by someone in his behalf, the state board of control . . . shall be deemed a preferred creditor. . . . ’’

Prior to the enactment of that law the claim of John Banski had fully accrued and was a valid and existing debt.

The claimant, John Banski, contended in the county court, and now contends in support of the judgment entered, that ch. 336, if given a retroactive effect so as to subordinate his claim to that of the board, violates his constitutional rights [364]*364guaranteed by sec. 10, art. I, of the constitution of the United States, which provides:

“No state shall . . . pass any . . . law impairing the obligation of contracts. . . . ”

The first question for determination therefore is whether ch. 336, which provides that all claims of the board for support of an inmate in any state institution shall be preferred, violates the constitutional rights of one who had a valid claim against the incompetent at the time of its enactment. A consideration of the statutes which were in force prior to the enactment of ch. 336, and which authorized the board to recover from the incompetent or his estate for the maintenance furnished him in a state institution, did not give to any such recovery a preferred status. During the years 1930, 1931, 1932, and 1933, when the claimant, John Banski, furnished board and room to his brother, Frank Banski, pursuant to an express agreement, sec. 49.10, Stats. 1929, 1931, and 1,933, so far as here material, provided:

“If any person at the time of receiving any relief, support or maintenance at public charge, under this chapter or as an inmate of any state or municipal institution, or at any time thereafter, is the owner of property, the authorities charged with the care of the poor of the municipality, or the board in charge of the institution, chargeable with such relief, support or maintenance may sue for and collect the value of the same against such person and against his estate.”

Clearly no preferred status was accorded to a claim of the board by that language which gave to the board the right to “sue for and collect” the value of the support and maintenance furnished an inmate in a state institution. So that at the time the debt due the claimant, John Banski, accrued pursuant to the contract, he had the right to recover the amount thereof, employing any remedy afforded by law.

No case has been called to our attention, and we have found none, in which a court of last resort has determined [365]*365the precise question here raised. One court has held that one of its former decisions which overruled a prior decision in which it was held that a deficiency on a mortgage had a secured claim status when filed against an estate did not impair the mortgagee’s contract. McLure v. Melton, 24 S. C. 559. In another case it was held that a statute which gave to claims of the state a preference over other claims did not impair a debt secured by a chattel mortgáge, which had been given before the enactment of such statute. State v. Dickson, 38 Ga. 171. Those cases, however, run contra to the great weight of authority. Similar questions have often arisen with respect to changes in state insolvency laws regarding priorities and preferences, and generally the courts have held that, where such a law operates to destroy a contract right, it cannot be sustained. In two of our cases where the statute considered did not destroy the contract right but only affected the remedy, it was held that the statutes violated sec. 10, art. I, of the constitution of the United States, because the statute so altered the remedy as to materially impair the value of the contracts. Peninsular Lead & Color Works v. Union Oil & Paint Co. 100 Wis. 488, 76 N. W. 359; Second Ward Savings Bank of Milwaukee v. Schranck, 97 Wis. 250, 73 N. W. 31.

If a statute which materially affects the remedy alone be unconstitutional, it is clear that a statute which destroys a contract right or materially affects its value should for like reasons be condemned. In Curran v. State of Arkansas, 15 How. 304, and Baring v. Dabney, 19 Wall. 1, the supreme court of the United States held that state statutes which sought to prefer the states themselves in the distribution of the assets of banks owned by them violated sec. 10, art. I, U. S. Const., in that such statutes clearly impaired the obligation of the contracts of other creditors of the bank whose claims existed at the time of such enactments. In 12 C. J. p. 1075, the holdings of the courts on the question whether [366]*366one class of existing debts may be given a preference by the legislature over other existing debts are summarized. • After listing a few authorities which in effect hold that the state may regulate priorities as between creditors whose debts were contracted prior to the passage of the statute, it is stated:

“But the weight of authority and reason is in favor of the rule that in its application to prior contracts such a statute or constitutional provision is unconstitutional as impairing their obligation.” (Sun Mut. Ins. Co. v. Board of Liquidation, 24 Fed. 4; Harris v. Walker, 199 Ala. 51, 74 So. 40; Kimball v. Jenkins, 11 Fla. 111, 89 Am. Dec. 237; Atchafalaya R., etc., Co. v. Bean, 3 Rob. (La.) 414.)

It is, of course, competent for a state to regulate priorities as between creditors whose debts are contracted after the passage of the statute. Abilene Nat. Bank v. Dolley, 228 U. S. 1, 33 Sup. Ct. 409.

It is our opinion that ch. 336, if given a retroactive effect, as the board contends should be given it, violates the constitutional rights of the claimant, John Banski, and that the county court was correct in so concluding. This being true, it was proper to adjudge that the moneys belonging to the estate be divided between the claimants on a pro rata basis.

It is further argued that under our decisions the board had a lien upon the estate of the incompetent for the support and maintenance furnished him prior to the enactment of ch. 336, and that therefore John Banski’s claim was not affected in any material way by ch. 336. The argument runs thus : The board had a lien for the amount of its claim; John Banski had no lien; therefore, John Banski’s claim must be considered as subordinate to the claim of the board which had a lien status.

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Bluebook (online)
276 N.W. 626, 226 Wis. 361, 1937 Wisc. LEXIS 314, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-board-of-control-v-banski-wis-1937.