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App. Div.]

Second Department, December, 1911.

by these appeals, whether the Superintendent of Banks, under the provisions of section 8 of the Banking Law, has the power to enter upon a public investigation of the affairs of the Union Bank more than one year after the property and business of such corporation has been reduced to possession by himself under the provisions of law, and to compel witnesses to undergo an examination limited only by the will or caprice of the Superintendent of Banks or his deputies, aided by special counsel. Before entering upon an analysis of the statute under which such a power is claimed it is important to get in mind the constitutional power of the Legislature in respect to such an investigation, for it is always the duty of the court to construe statutes in such a manner as to bring them within the provisions of the Constitution, if this may be done by any reasonable interpretation of the language used, and it is always to be presumed that the Legislature has confined itself within the limits of its power. If we find that one construction of the power would violate the provisions of the Constitution, while another would obviate this difficulty, it is our duty to choose the latter. It cannot be questioned that the power asserted by the Superintendent of Banks is judicial in character; that it is an attempt to enter into a judicial inquiry into the conduct of the corporation known as the Union Bank, which necessarily involves the action of its officers, for the very power to summon witnesses and to compel them to give evidence is a judicial function. How far may the Legislature confer upon a mere administrative official judicial powers? In Kilbourn v. Thompson (192 U. S. 168) Kilbourn had refused to answer certain questions put to him as a witness by the House of Representatives concerning the business of a real estate partnership of which he was a member, and to produce certain books and papers, and was by order of the house imprisoned for forty-five days in the common jail. In an action against the sergeant-at-arms who enforced the order for false imprisonment, it was held that the House of Representatives had no general power to punish for contempt, and that its warrant could not be used as a shield for the sergeant-at-arms. In discussing the questions arising upon the appeal in that case, the United States Supreme Court, after calling attention to the undoubted power

Second Department, December, 1911.

[Vol. 147.

of Congress to compel the attendance and testimony of witnesses in matters in which it was given judicial powers, as in trials of impeachment, etc., say: "Whether the power of punishment in either House by fine or imprisonment goes beyond this or not, we are sure that no person can be punished for contumacy as a witness before either House, unless his testimony is required in a matter into which that House has jurisdiction to inquire, and we feel equally sure that neither of these bodies possesses the general power of making inquiry into the private affairs of the citizen. It is believed to be one of the chief merits of the American system of written constitutional law, that all the powers intrusted to government, whether State or national, are divided into the three grand departments, the executive, the legislative, and the judicial. That the functions appropriate to each of these branches of government shall be vested in a separate body of public servants, and that the perfection of the system requires that the lines which separate and divide these departments shall be broadly and clearly defined. It is also essential to the successful working of this system that the persons intrusted with power in any one of these branches shall not be permitted to encroach upon the powers confided to the others, but that each shall by the law of its creation be limited to the exercise of the powers appropriate to its own department and no other. *** In the main, however, that instrument [the Constitution], the model on which are constructed the fundamental laws of the States, has blocked out with singular precision, and in bold lines, in its three primary articles, the allotment of power to the executive, the legislative, and the judicial departments of the government. It also remains true, as a general rule, that the powers confided by the Constitution to one of these departments cannot be exercised by another."

It is true, of course, that Congress is authorized to exercise only delegated powers, and it may be suggested that this discussion by the United States Supreme Court is not controlling, but we have authority in our own State, where the Court of Appeals, in sustaining a proceeding punishing for contempt, where a witness had refused to testify in a legislative investigation, the constitutionality of the power in the Legislature to

App. Div.]

Second Department, December, 1911.

administer punishment for a contempt being before the court, say: "We are finally brought to the consideration of the important and more doubtful question, whether the investigation which the committee was conducting was a legislative proceeding which the house was authorized to institute. This is a jurisdictional question, for the statute applies only to such proceedings, and if the house had any authority independently of the statute, that must depend upon the question whether the testimony was sought for the purpose of aiding it in the performance of any of its constitutional functions. An investigation instituted for the mere sake of investigation, or for political purposes, not connected with intended legislation, or with any of the other matters upon which the house could act, but merely intended to subject a party or body investigated to public animadversion, or to vindicate him or it from unjust aspersions, where the Legislature had no power to put him or it on trial for the supposed offenses and no legislation was contemplated, but the proceeding must necessarily end with the investigation, would not, in our judgment, be a legislative proceeding, or give to either house jurisdiction to compel the attendance of witnesses or punish them for refusing to attend. * ** If the resolution had shown upon its face that the only purpose of the investigation was to satisfy the taxpayers of the State as to the truth of the charges, or to relieve the department of public works from reproach, and no further action was contemplated or could be had in the matter by the Legislature, the case would fall within the decision in Kilbourn v. Thompson." (People ex rel. McDonald v. Keeler, 99 N. Y. 463, 485.)

If the Legislature cannot assume judicial functions, except as an incident to the discharge of its legislative powers, it would seem to follow that the Legislature cannot create an officer of the State and invest him with judicial powers beyond those which are necessary in the performance of the duties. prescribed for him by law; it cannot empower him to intrude upon the legitimate domain of the courts and authorize investigations of a general character, whatever may be its powers in equipping him with the powers necessary to the performance App. Div.— VOL. CXLVII. 39

Second Department, December, 1911.

[Vol. 147.

of his duties. I believe that it is a proper rule, within the authorities above cited, and those relied upon by the court in the discussions, that neither legislative bodies nor administrative officers can be invested with judicial functions beyond those expressly provided for by the Constitution, or to cases where the power is necessarily implied from those constitutional or statutory functions and duties to the proper performance of which it is essential. (Burnham v. Morrisey, 14 Gray, 226.) There is no power in the Legislature to provide for general investigations into the conduct of individuals. It may properly provide for investigation into the affairs of corporations of its own creation for the purpose of determining whether they are being conducted in accord with the letter and spirit of the law of their being, but it is quite another thing to carry on an inquisition after the corporation has been turned over to an officer of the State, and when there can be no question arising which is not within the jurisdiction of the Supreme Court.

I believe the Banking Law, properly construed, merely authorizes an investigation of a going concern for the purpose of enabling the Superintendent of Banks to discharge the duties prescribed by statute, and that the proceeding now under consideration is an unauthorized attempt to usurp powers belonging exclusively to the judicial department of the State. Having in mind the proper limitations upon the legis lative power, let us examine the statute, giving consideration to all parts of it, and determine, if we may, what the Legislature intended to provide for in section 8 of the Banking Law. We will assume that the statute, compiled and re-enacted in 1909, is to be construed as of that date; that section 8 is to have the same force and effect as though it had been enacted simultaneously with section 19 and other portions of the statute, and tried by this test I am persuaded that the contention of the appellant is sound.

Section 8 of the Banking Law, under which the Superintendent of Banks claims the power to examine Mr. Grout upon the alleged falsity of the reports made to the Banking Department during the time that Mr. Grout was president of the Union Bank, provides that "Every corporation and individual

App. Div.]

Second Department, December, 1911.

banker specified in section two of this chapter shall be subject to the inspection and supervision of the Superintendent of Banks. He shall, either personally or by some competent person or persons to be appointed by him, to be known as examiners, visit and examine every bank, trust company and individual banker at least twice in each year," etc. "On every such examination inquiry shall be made as to the condition and resources of the corporation, the mode of conducting and managing its affairs, the action of its directors, the investment of its funds, the safety and prudence of its management, the security afforded to those by whom its engagements are held, and whether the requirements of its charter and of law have been complied with in the administration of its affairs, and as to such other matters as the Superintendent may prescribe. He shall have power in like manner to examine every corporation and individual banker specified in section two, whenever, in his judgment, its condition and management is such as to render an examination of its affairs necessary and expedient."

Obviously the last clause above quoted can have no reference to a bank which has been taken over by the Superintendent of Banks, for it is only when "in his judgment, its condition and management is such as to render an examination of its affairs necessary and expedient," that he is authorized to act. Certainly there can be no question of "condition and management" where the condition must have been known before the Superintendent of Banks was authorized to take over the property and business (Banking Law, § 19), and the management, by any one other than the Superintendent of Banks or his deputies, was suspended in the very act of taking possession. It is equally clear that there could be no conjunction of necessity and expediency, for the necessity of examining the bank must have been determined before there could be any justification for the Superintendent of Banks to take possession of the property, and the examination having taken place, there was an end of the necessity, and the question of expediency was determined when the Superintendent elected to take possession. There can be no question about this proposition; it were idle to argue it. The whole reading of the

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