## Facts

- Abilene, Kansas had three operating banks (two national and one state).
- On May 20, 1911, incorporators applied to the State Charter Board to charter a new bank (Commercial State Bank).
- On May 25, 1911, five days later, plaintiffs applied to charter another new bank (Central State Bank).
- A 1911 statute required the State Charter Board to examine “public necessity” before approving a bank charter.
- The Board approved the first application and denied plaintiffs’ later application, finding Abilene lacked sufficient business to support five banks and that public necessity did not justify a fifth bank.
- Plaintiffs claimed the denial unlawfully restricted their right to engage in banking and sought to compel issuance of the charter.

## Issues

1. Whether the legislature may, under the police power, condition approval of a bank charter on an administrative finding of public necessity.
2. Whether denying a bank charter based on lack of public necessity violates constitutional protections of liberty or property.
3. When competing applications are equally qualified but public necessity supports only one new bank, whether the Board may approve the application filed first.

## Decision

- The Kansas Supreme Court denied mandamus and sustained the Board’s denial of plaintiffs’ charter.
- The court held the public-necessity requirement for bank charters was a valid exercise of the state’s police power.
- The court rejected the claim that applicants had a constitutional entitlement to a bank charter free from such regulation.
- When applications are equally meritorious and only one additional bank is justified, the Board may grant the charter to the first application presented.

## Legal Principles

- Banking is sufficiently connected to the public welfare to permit stringent regulation under the state’s police power.
- A statute authorizing denial of a bank charter upon an administrative determination that public necessity does not warrant another bank is constitutionally valid.
- If multiple equally meritorious bank applications are pending in the same community and only one is needed, priority may be given to the first-filed application.
- Mandamus requires a clear legal right and a corresponding clear duty; it will not issue to compel a discretionary administrative act performed under a valid statute.

## Conclusion

Kansas may restrict entry into the banking business by requiring an administrative finding of public necessity, and when only one new bank is warranted, the state may approve the first-filed qualified application without violating constitutional guarantees; therefore, mandamus to compel issuance of a later-filed charter was denied.


Schaake v. Dolley, 118 P. 80 (Kan. 1911)