In re Summit and Elizabeth Trust Co.
- Reporters:
- ,
- Before:
- Goldmann, Matthews, Lewis J.A.D.
Springfield State Bank (Springfield) appeals from an order of the Commissioner of Banking and Insurance (Commissioner) approving the application of the Summit and Elizabeth Trust Company (Summit) for a branch office in the Township of Springfield (township).
Springfield contends in substance that (1) Summit is prohibited from establishing a branch bank in the township by virtue of the grant of “home office protection” by
The National State Bank (National State), also an objector to the Summit application, appeals from the same order of the Commissioner, advancing in essence point (4) raised by Springfield. These appeals were consolidated for our review.
This protracted controversy focuses upon the Branch Banking Act, L. 1968, c. 415, § 1 et seq., whiсh was adopted on January 17, 1969 to take effect on July 17, 1969.
SPRINGFIELD‘S POSITION
In December 1967 Springfield (an affiliate bank with interlocking directors in common with The First State Bank of Union) applied to the Commissioner for charter approval of a home office bank in the township. Statutory hearings were held on February 1, May 2 and July 23, 1968. National State was the only objector that participated in the proceedings. The Commissioner was awarе of the imminence of probable adoption of a Branch Banking Act, which was a foreshadowed event, as indicated by letter from Summit to the Commissioner requesting that consideration of the Springfield application be deferred awaiting anticipated legislation amending the Banking Act. This request was rejected by the Commissioner, who expressed the view that a refusal to consider pending applications would be unfair.
On February 20, 1969 the Commissionеr approved a charter grant to Springfield conditioned only upon the bank‘s engaging an acceptable executive officer prior to the issuance of a certificate of authority to commence business and that the bank become a member of the Federal Deposit Insurance Corporation. In reaching his decision the Commissioner found that the trade area was in excess of 24,000 and that the proposed bank office on heavily trafficked Route 22 would “serve the public interest” and afford “reasonable promise of successful operation.”
In short, Springfield was involuntarily and effectively precluded from completing the procedures which were necessary before obtaining a certificate of authority to conduct business. At this juncture we note that under
Argument on those appeals was heard before this court on October 14, 1969 and, within a week thereafter, we affirmed the grant of the charter to Springfield, In re Springfield State Bank, 107 N.J. Super. 230 (App. Div. 1969), making this observation.
* * * the six-month delay in the effective date of the legislation could have had no other purpose than to permit the Commissioner to dispose of matters then pending, on the merits and in light of then existing law. (at 234)
The Supreme Court denied certification on January 13, 1970. In re Springfield State Bank, 55 N.J. 312 (1970). Accord, In re Peoples Bank of Montvale, 111 N.J. Super. 141 (App. Div. July 14, 1970).
SUMMIT‘S POSITION
On May 5, 1969, after the adoption of the Branch Banking Act and while the charter grant to Springfield was under
On the morning of January 20, 1970, inauguration day, Commissioner Bryant, whose term of office was about to expire, was reluctant to act on the Summit matter. Counsel for Summit personally visited and requested Commissioner-designate Clifford to advise Bryant that he had no objection to his acting on the application on his last day in office. This Clifford did by telephone, and Bryant thereupon signed an order in Summit‘s favor. The operative effect of this aggregation of maneuvering was that both the principal office of Springfield and a branch of Summit were approved by the Cоmmissioner. Springfield pursued the instant appeal on January 20.
THE COMMISSIONER‘S ACTION
Preliminarily, we dispose of the argument that Commissioner Bryant was without authority to act on January 20. The Commissioner is required to serve “at the pleasure of the Governor during the Governor‘s term of office and until the appointment and qualification of the commissioner‘s successor.”
The decision of the outgoing Commissioner was brief; he stated that he had reviewed the entire record, adopted the report and recommendations of the hearing examiner and approved the Summit application.
Although the hearing officer found from the testimony and exhibits that Summit‘s proofs sufficiently complied with
* * * Whether home-office protection attaches upon charter approval or upon the actual opening for business of a bank is a legal question difficult to answer and of potеntially far-reaching consequences. The Department‘s position is in accord with Suburban Trust Company v. The National Bank of Westfield, 222 F. Supp. 269 (D.N.J. 1963). Thus, the approval of the charter of the Springfield State Bank did not and does not bar this application. * * *
It is axiomatic that due regard must be given to the expertise of the administrative agency regarding the economic feasibility of a proposed bank. In re Kenilworth State Bank, supra, 49 N.J., at 334; In re State Bank of Plainfield, 61 N.J. Super. 150, 158 (App. Div. 1960). In general, the Commissioner‘s determination should not be upset in the absence of a showing that it was arbitrary, capricious or unreasonable, or that it lacked fair support in the evidence, or that it violated a legislative policy expressed or implied in the governing statute. In re Howard Savings Institution of Newark, 32 N.J. 29, 52 (1960); cf. Campbell v. Dept. of Civil Service, 39 N.J. 556, 562 (1963); Gloucester County v. Public Employment Relations Comm., 107 N.J. Super. 150, 156 (App. Div 1969), aff‘d 55 N.J. 333 (1970).
Our prime concern is with the latter criterion. The gist of Springfield‘s argument is that “home office protection” as contemplated by
THE HOME OFFICE PROTECTION ISSUE
Stated simply, we are confronted with the question of when home office protection becomes effective, i.e., at the time of the banks’ incorporation, the day of its charter approval, when it obtains a certificate of authority to do business, or when it actually becomes an operating bank.
The Commissioner, as previously noted, relied upon Suburban Trust Company v. National Bank of Westfield, supra. We find that case plainly distinguishable. There, the litigation was between a state-chartered bank and a fedеrally-chartered bank to ascertain which of them was entitled to maintain a branch in the Borough of Mountainside. National Bank of Westfield applied to the Comptroller of Currency for branch office approval and, while its application was pending, Suburban Trust Company sought branch approval from the State Commissioner of Banking and Insurance. Pursuant to the then applicable
* * * that a bank “has” a branch in a municipality, for the purpose of determining the right of another bank to open a branch there, only when it has a branch in operation and not when it merely has the approval of the appropriate governmental authority to open a branch. [222 F. Supp., at 275]
In that case “home office protection” was not an issue, but rather “branch proteсtion.”
As stated in In re Kenilworth State Bank, supra, 49 N.J. at 336, a branch bank is not a separate corporation or legal entity but “is an office or agency operated by the legal entity which operates the main bank. It has no separate board of directors or capital structure, its deposits are pooled with those of the main bank, and its loan limits are based on the main bank‘s capital structure.” There is also a significant procedural distinction between a charter application and a branch office application. The agency inquiry as to the latter is less stringent and, indeed, a formal hearing is not a prerequisite. See First Nat. Bank of Whippany v. Trust Co. of Morris County, 76 N.J. Super. 1, 7-8 (App. Div. 1962). The Commissioner may act upon plenary and completely informative data supplied to him by the applicant and any objecting banks. Id. at 10. The crucial findings to be made are whether the interests of the public will be served and whether conditions in that locality afford reasonable promise of successful operation.
In contrast, the issuance of a bank charter must be preceded by application, hearing, notice, publication and findings, as set forth in
Significantly, in the Suburban Trust Company case the two branch bank approvals were not obtained from the same licensing authority but, rather, from respective agencies representing the federal and state governments. Compare Suburban with National Bank of Detroit v. Wayne Oakland Bank, 252 F.2d 537 (6 Cir.1958), cert. den. 358 U.S. 830, 79 S.Ct. 50, 3 L.Ed.2d 69 (1958)1; Bank of Sussex County v. Saxon, 251 F. Supp. 132 (D.N.J. 1966).2
Our statutory scheme recognizes the provisional existence of a bank, as a corporate entity, upon filing a certificate of incorporation; it is at once subject to the provisions of the Banking Act.
The Commissioner, who issued a charter to Springfield shortly after the adoption of the 1969 Branch Banking Act, is chargeable with knowledge of the legislative policies therein expressed regarding “home office protection” and the specified statutory time periods within which a charter recipient must obtain a certificate of authority and commence operating as a functioning institution. In light of such circumstances, and the appeals and stays initiated or participated in by Summit, there appears to be nothing in the record, factual or legal, to justify the Commissioner‘s interim consideration of Summit‘s application, filed May 5, 1969, the approval of which might have the effect of undercutting or circumventing protected rights under a charter he previously granted. There was no apparent public need for accelerated action.3 While absolute public necessity for
Springfield was not free to proceed with the obtaining of a certificate of authority, for which purpose, under
Admittedly, the corporate existence of Springfield was a defeasible one, since the Commissioner could, in appropriate circumstances, refuse to issue a certificate of authority or could cancel charter approval.
In the factual complex of this cаse, it would be inequitable to deny to Springfield the benefits of the Branch Banking Act while it was subject to the statutory concomitant burdens and could not obtain a certificate of authority and open for business because of the stays obtained by the objectors of its charter. See Burke v. Hoffman, 28 N.J. 467, 474-475 (1958). “Priority in time gives the better equity.” 2 Pomeroy, Equity Jurisprudence (5th ed. 1941), § 414, at 162.
We have considered Summit‘s numerous contentions addressed to the intent of the Legislature and find them interestingly argumentative, but unpersuasive. To adopt the interpretatiоn it ascribed to our statutes would permit the undermining of the legislative grant of “home office protection” by evasion and legal maneuvering. This should not be judicially condoned.
It is fundamental that statutory constructions “calling for unreasonable results will be avoided where reasonable results consistent with the indicated purpose of the act as a whole are equally possible.” Elizabeth Federal Savings & Loan Ass‘n v. Howell, 24 N.J. 488, 508 (1957); see State v. Provenzano, 34 N.J. 318, 322 (1961); In re Princeton Bank and Trust Co., 87 N.J. Super. 247, 261-262 (App. Div.), certif. den. First National Bank of Princeton v. Princeton Bank and Trust Company, 45 N.J. 32 (1965); 2 Sutherland, Statutory Construction (3d ed. 1943), § 4704, at 338. As stated in Schierstead v. Brigantine, 29 N.J. 220, 230 (1959), “statutеs are to be read sensibly rather than literally and the controlling legislative intent is to be presumed as `consonant to reason and good discretion.‘”
We hold under the circumstances of this case, particularly where the same administrative agency is involved
We note parenthetically that the interpretation here expressed was earlier espoused by Summit in its briеf filed in connection with its appeal in opposition to the charter grant to Springfield. There, arguing unsuccessfully that the better interests of the municipality would best be served by permitting more branch offices, Summit urged that “by granting this charter [to Springfield], the Commissioner in effect created home office protection in Springfield, New Jersey and thereby foreclosed that municipality from consideration for additional branch offices.”
The Commissioner‘s decision and order presently under review is in conflict with the intendment of our statutes and, accordingly, the order should not stand.
Having thus concluded, we find it unnecessary to reach the remaining issues raised by appellants; we pass them, but in so doing observe that they are not entirely without substance.
Reversed.