State ex rel. Bauer v. Nestos

187 N.W. 233, 48 N.D. 894, 1922 N.D. LEXIS 112
CourtNorth Dakota Supreme Court
DecidedFebruary 11, 1922
StatusPublished
Cited by10 cases

This text of 187 N.W. 233 (State ex rel. Bauer v. Nestos) is published on Counsel Stack Legal Research, covering North Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Bauer v. Nestos, 187 N.W. 233, 48 N.D. 894, 1922 N.D. LEXIS 112 (N.D. 1922).

Opinions

Christianson, J.

This is an original proceeding in this court against the members of the State Industrial Commission (the Governor, Attorney General, and the Commissioner of Agriculture and Labor), the State Treasurer, the Insurance Commissioner, and the manager of the State Hail Insurance Department, to enjoin them from carrying out a certain contract between the Industrial Commission and the Minnesota-Loan & Trust Company and Lane, Piper & Jaffray, Inc., relating to the sale of certain warrants issued by the State Hail Insurance Department. The jurisdiction of the court has not been challenged. The Attorney General of the state, who appears as one of the respondents, as well as attorney for all the respondents, while denying the merits of the cause, joins in the application that this court assume original jurisdiction. On the return day the respondents interposed a general demurrer to the petition of the relator, so the question before this court is whether the petition sets forth a cause of action, and entitles the plaintiff to any relief.

In order to intelligently consider the questions raised by the relator, it is essential to allude to the law's of this state establishing and providing for the operation of the State Hail Insurance Department. By constitutional amendment adopted at the general election held in November, 1918, the Legislature was authorized to.levy a tax for the purpose of indemnifying the owners of crops against damage by hail. See article 24, Amendments to State Constitution. See, also, article 30 of such Amendments. Pursuant to the constitutional authority so granted, the legislative ássembly in 1919 enacted a law, commonly known as the State Hail Insurance Act, establishing the State Hail Insurance Department, and providing for the operation thereof. Chap. 160, Laws 1919. The department was established in the office, and placed under the management, supervision, and control of the Commissioner of Insurance. Id. § 2.

The act provided that—

“All moneys collected under the provisions of this act shall be deposited with the State Treasurer and shall be kept in a separate fund to be designáted ‘state hail insurance fund.’ ” Id. § 23.

The act further provided:

“Whenever the Commissioner of Insurance shall furnish to the State [897]*897Auditor a certified list giving the losses sustained, together with the names and addresses, and a written acceptance of the amount allowed any claimant under the provisions of this act, it shall be the duty of the State Auditor with the consent and approval of the Governor, in anticipation of the payment of the taxes provided therefor, to draw warrants upon the State Treasurer for said amounts in favor of such persons, which amounts shall be charged to the state hail insurance fund. Such warrants to be mailed to the persons entitled thereto as shown by the certified list of the Commissioner of Insurance. All such warrants to be paid from the state hail insurance fund, and shall draw' interest from date of issue at the rate of six per cent, per annum until due and payable. Such warrants shall become due and payable on the call of the State Treasurer.” Id. § 21

The Hail Insurance Act carried an emergency clause, and became effective March 1, 1919. In 1921 the statute was re-enacted with certain amendments. Chap. 77, Laws 1921. Among other changes made in the law was one providing for a manager of the department. Section 23 of the act relating to the hail insurance fund was amended by adding thereto, among others, the following provision:

“Provided, that the Commissioner of Insurance, with the approval and assistance of the Industrial Commission, shall have the authority to negotiate or float a loan, if found to be advisable, whereby the state hail insurance fund could pay its obligations in cash upon certification of the Commissioner of Insurance to the State Auditor as provided in § 21 of this act.” Chap. 77, Laws 1921, § 23.

It is obvious that the legislature had a purpose in view in adding this provision. Under the original act the warrants drawn could be paid only when the taxes levied had been collected. And it is a matter of common knowledge that many of the hail warrants issued during the years 1919 and 1920 were not paid for some period of time, and that many of the holders of such warrants, in order to obtain cash, were requited to discount them at high rates. It was doubtless this condition that the legislature sought to remedy when it authorized the Commissioner of Insurance, with the approval and assistance of the Industrial Commission, to obtain a loan to pay the obligations of the hail insurance department. The contract, the performance of which it is sought to have enjoined by this proceeding, is one purporting to have been made by the Commissioner of Insurance by and with approval and assistance of the [898]*898Industrial Commission under the provision of law last quoted. In general the plan or arrangement as provided in the contract is as follows: The Minnesota Loan & Trust Company, Lane, Piper & Jaffray, Inc., agree to purchase any and all warrants issued for 1921 hail losses that may be offered to them by any person at the following rates: All warrants offered and purchased during February, 1922, at 98 per cent., during March, 1922, at 983/2 per cent., during April, 1922, at 99 per cent., during May, 1922, at 993/2 per cent., and during June, 1922, at 100 per cent, of the principal or face amount of such warrants. The Industrial Commission agrees to repurchase from the Minnesota Loan & Trust Company and Lane, Piper & Jaffray, Inc., at par and accrued interest, all hail warrants which they have so purchased from the holders thereof, and to issue in payment thereof the notes of the Industrial Commission dated December 1, 1921, and bearing interest at the rate of 6 per cent, per annum from the date thereof. Such notes to be issued in denomination of $1,000, and to mature as follows: 20 per cent, thereof on December 1, 1922; 25 per cent, thereof on February 1, 1923; 20 per cent, thereof on April 1, 1923; and 35 per cent, thereof on June 1, 1923. The avowed purpose of the arrangement is to enable the holders of hail warlants to realize thereon in cash the amounts which the Minnesota Loan & Trust Company and Lane, Piper & Jaffray, Inc., have agreed to purchase them for. The contract also provides that the hail warrants so repurchased by the Industrial Commission from the Minnesota Loan & Trust Company and Lane, Piper & Jaffray, Inc., shall be deposited with the State Treasurer and by him held in trust as collateral security for the payment of the notes. And the State Treasurer agrees to certify on the back of each note that hail warrants aggregating in principal amount the amount of such notes and all similar notes outstanding have been deposited with and are held by him as collateral security for the payment of such note and all other notes, and that such warrants are payable from the hail insurance fund, into which fund are paid all proceeds from the flat acreage tax on all tillable lands in the state of North Dakota, and the special indemnity tax levied pursuant to the provisions of law relating to hail insurance. It is also provided that the Insurance Commissioner shall, and he agrees to, certify upon the back of each note as to the amount of hail insurance taxes levied for the year 1921 for the purpose of paying the obligations against the hail insurance fund.

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Cite This Page — Counsel Stack

Bluebook (online)
187 N.W. 233, 48 N.D. 894, 1922 N.D. LEXIS 112, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-bauer-v-nestos-nd-1922.