Farish v. State Banking Bd. of Okla.

Background

W. S. Farish sued the State Banking Board, the State Bank Commissioner, and several banks after the Oklahoma Trust Company sold paving bonds and used the proceeds to pay depositors. Farish says he had rights to those bond proceeds through an assignment from the Texas Company and became, in effect, a depositor or was subrogated to depositors’ rights when the trust funds were used. The Alamo State Bank acquired the Trust Company’s assets, the Banking Board later took control of the Alamo bank and sold its assets to the Union State Bank, and Farish pursued recovery through an earlier suit and the present equity action.

Reasoning

The core question was whether Farish, as an equitable depositor or subrogee, could force the State Banking Board to pay him from the state guaranty arrangements. The court found that Farish had been a depositor and was subrogated to depositors’ rights for certain sums and liens against specified securities. But the court also held that the State Banking Board represents the State and is not subject to suit by depositors, so Farish cannot recover directly from the Board. The opinion follows earlier decisions treating the Board and Bank Commissioner as immune from depositor suits while permitting enforcement against private banks and impounded collateral.

Real world impact

Practically, the ruling lets a claimant enforce liens and obtain money judgments against private banks and seized securities, but it prevents forcing payment from the State Banking Board or using the Board as a defendant to collect on state-guaranteed deposits. Claimants may recover from banks or collateral but cannot sue the Board for the balance or force assessments from the Board by this suit.

Dissents or concurrances

A dissenting Justice (Pitney) said the decree in Farish’s appeal should have been reversed, aligning with a view in a companion dissent that the Board’s immunity should not bar this recovery.