*1
joint
lay
concerned,
as
active,
tortfeasors are
positive
negligence
part
acts of
on the
of the other
original
tortfeasor, in which the
defendant did not in
any way participate,
exception
general
then an
to rule would exist. Central
Ga. R. Co. v.
R.
Macon &c.
(1) (78
931).
Co.,
Judgment appeals. on both All the Justices affirmed
concur. Argued 8, 1973— 12, 1972 December March — Decided Rehearing 29, 22 1973. denied March March Ringel,
Smith, Cohen, Kohler, Lowe, Martin & William Awtrey Awtrey, Grant, G. Edwards, Parker, Jr., & L. M. for Standard Oil. Beauchamp Peyton Hawes, Jr.,
Cofer, Hawes, & S. Peter Glass, B. for Sherrell. appellee. Howard,
G. Robert 27611. INDEPENDENT BANKERS ASSOCIATION OF
GEORGIA, INC. v. et DUNN al. compel Justice. This suit seeks Undercofler, (now Superintendent Georgia of Banks of the State (Ga. Banking p. Commissioner of and Finance L. 1198)) against to institute civil action Citizens Southern National Bank and the Citizens & Southern Holding enjoin allegedly them from violating provisions Georgia Law of ownership which restrict the stock or control other brought by Independent banks. The suit was Georgia, Inc., Bankers Association whose independent membership composed banks. is of 209 are the in the instant action as defendants Joined National Bank and the Citizens & Southern joined Company. Also & Southern following are the banks which defendants alleged National Bank that the Citizens & Southern *2 Holding Company either the & Southern Citizens separately jointly than own control more the Bank of limit & Southern allowable of stock: Citizens County, & Bank of Citizens Southern Thomas Milledgeville, & Southern Bank of Hart
Citizens County, Dalton, Citizens & Southern Bank of Citizens DeKalb, & & Southern Bank of South Citizens County, ScSouthern Bank of Cobb Citizens Southern Colquitt Tifton, Bank of Bank Citizens & Southern of County, Jackson, of Citizens & Southern Bank (Bainbridge). Bank First State National The evidence shows:
(1) all Southern National Bank owns of Citizens & Holding capital the stock of Citizens & Southern Company. All of the Citizens & Southern officers Company paid by Holding Southern are Citizens & Bank. The Citizens Sc Southern National National Holding money Bank to the Citizens & Southern lends hearing Company At the time of this without interest. $10,000,000. Lane, was B. President amount Mills & Southern National Bank Citizens Holding & President of the Citizens Southern years and now Vice President Board of Citizens & Southern National of Directors testified, difference, is the it is all owned Bank "What . Southern & Southern . . when Citizens & Citizens $10,000,000 to Citizens & Southern lends Company, lending money .” . itself. (2) Holding Company owns a & Southern Citizens per in each of the ten five cent banks stock interest 5% complaint. named
(3) stipulated, Counsel for Citizens & Southern officers, "Various directors and shareholders of the acquired & Citizens Southern National Bank stock per six of the ten five thirty days subsequent cent defendant banks within
to the & Citizens Southern Holding Company’s acquiring five cent stock ownership being banks, in said six banks County, Citizens & Southern Bank of Thomas Citizens County, & Southern Bank of Hart First State National (Bainbridge), Bank Citizens & Southern Bank of Dalton, DeKalb, Citizens & Southern Bank South & Second, Citizens Southern Jackson. majority purchasers of such six those banks through was funded loans made Citizens & throughout Georgia, Southern banks the State including correspondent other associate banks.” (4) stipulated by It that, was counsel "The officers and directors Southern National Bank acquired who stock in the ten five cent defendant *3 banks also were in shareholders the Citizens & Southern National Bank.” (5) stipulated by that,
It was counsel "The President of per each of the ten five cent defendant banks was formerly either an officer of the Citizens Southern National Bank or an officer of another bank in the system Citizens & Southern of banks.” Other than qualifying shares to become a member of the board president purchased directors, stock, each additional generally per posted cent, about five which was collateral for loans from the Citizens & Southern correspondent National Bank or associate banks. For part the most these loans were substantial loans on principal notes, demand of which has not been substantially stipulated It reduced was reduced. also per each ten five cent defendant banks has one director who is an executive officer of the Citizens & Southern Bank. B. "Q. National Mills Lane testified: president banks, these of one of that no
You do know your per without would be elected cent banks these five approval? Up so.” A. now this has been (6) participate per with the banks ten five cent following & Southern National (a) (b) sharing profit plan, employee pension programs: (e) (d) (c) plan, group facilities, insurance, educational (f) personnel, (g)trust facilities, transfer recreational department (h) counseling, joint investment and (i) per "anything printing, that a five cent else provide for itself.” cannot bank (7) Holding Company requires & Southern The Citizens percent president banks to the ten five each coming goals objectives each fall for the establish president performance year. evaluated of each year salary are recommended based increases each upon this evaluation.
(8) purchase of the stock In at least some instances per was handled in defendant five cent banks Bank and of the Citizens & Southern National officers Peyton Anderson, a to selected individuals. resold & Southern stockholder of the Citizens substantial the Citizens & Bank and a former director of National & Southern National Bank and the Citizens Southern Holding Company that 2428 shares of stock testified registered Milledgeville once happened was his name werehandledasfollows:"What interest I Mr. if he would sell me some this. asked Lane money I some of these 5 cent banks. had some they had done under C & S to invest. I had seen what management an investor I wanted some stock and as banks. He came back to me in these five cent sign a note that of the banks were asked if I would some *4 being, coming process into the five cent give family I him note for a million seven and would a fifty used for the hundred thousand dollars purchase he, turn, would let of these banks and then Ralph the whole account be handled Eubanks. I signed Ralph authorized, note, I and I authorized complete Eubanks to handle transaction which I get mentioned, was to these stocks that I that I have bought. by Ralph The entire transaction was handled only thing Eubanks I and the have seen in connection with it this letter Bill Green from with things you got the list of have and I there have never any papers you for, looked at though of these other asked even opened office, I have them in the I have never only thing it looked for it. The I that was concerned by signing about was to do a favor to Mills Lane a note three-quarters, get myself million, turn, for a and in minority stock in these banks and not let it cost me anything. happened That’s has what that’s all I any know. I haven’t seen I haven’t certificates. looked Ralph at and I certificates authorized Eubanks to everything handle it.” connection with explanation B. Mills Lane of this testified ar- rangement, "The Federal Reserve Board asked us buy any Lane, not to more stock in the of Mills B. name agent, Robinson-Humphrey Jr., and we asked to take price Robinson-Humphrey said, this 'We will do Exchange this,’ and because of certain New Stock York requirements Peyton I asked Anderson if he would warehousing accommodate me stock. Q.You told sign $1,750,000? him to him, a note for A. I asked I anything. couldn’t tell him Q. And that wouldn’t cost anything. him a dime? A. I tell him Q. didn’t You didn’t tell him that it cost him A. wouldn’t a dime? We would give him an interest-free loan to warehouse the stock opportunity buy and an Q. it. Arid it some sign Right. wouldn’t cost him dime note? A. Q. Robinson-Humphrey You had stock from issued to Peyton Anderson and had Mr. E. William Green or sign Rountree Youmans for it? A. I don’t think I had done, transaction, I was eliminated from the after *5 that it would Q. this in it. You knew I wasn’t involved you Mr. handled, it over to Mr. Youmans and be turned to Mr. Green.” Green? A. I turned it over ley IV, the Board of Chairman of Alexander Year Company Robinson-Humphrey which is of Directors selling buying securities, testified of and business purchased July 15, of that 1969 it shares after Milledgeville at stock per $230 of upon of Mills B. Lane. the recommendation share July 24,1969, 500 were sold to on shares Thereafter Holding Company and 2318 to & Southern Citizens Peyton Yearley all, stated, ". . . of Anderson. Mr. First engaged in this a the first time which we ever is kind. The York—we are transaction this New Exchange. of the York Stock Stock members Exchange New regulations require you buy and that when case, own we in this were the sole stock as did we segregate part your you it, to owners of capital that have purchase. to offset that In normal transactions you involving capital stock, amount of which must thirty segregate In is cent of the value of stock. particular brought instance, this we it to the attention Exchange they this of the Stock said that since quoted you market, no it stock had which didn’t— Milledgeville Banking Company quoted find couldn’t any paper you required segregate to would be —that charge a hundred cent of the value of the stock and against your capital. that We in the are business buying selling capital securities. We use our stage rapidly, turn it over and we felt that this —at this game particularly this was not a that purchase might advantageous us, for it some period time C before it could be sold. We called the going & S Bank and immediately begin told them that we were they If to distribute the stock. had people delighted they’d offered, to whom like we’d be them, it to Mr. offer resulted sale to Anderson. But this what led us to take action quickly Now, two, move stock. number get we did indeed very a small commission from the C & S Bank our efforts. In connection with this transaction and the Hartwell, Citizens Bank of got we commission $5,000, which is about a fourth what the Stock Exchange commission would have been on the transaction.” The stock was later transferred from Peyton Anderson to others. *6 Green,
William E. Secretary-Treasurer of the Citizens & Southern testified that receipted he in the name of Peyton Anderson for 2428 shares of $985,000. stock worth approximately Mr, Green "It stated: would have been a easy thing for a very bank our size to have floated among this amount the officers until we could have somebody else to warehouse the stock, to find somebody to it sell but we didn’t want to this, do this would abe violation of the law and we are extremely careful to not violate the law and we went to Mr. Anderson and asked him temporarily to hold the stock until we could find someone who would make Peyton distribution.” Anderson stated that he never certificate, saw the stock signed never the stock transfer or assignment, never issued a for check it and never receipt authorized Green it. to The record acquisitions shows other stock and sales during July August, 1969 the Peyton name of Anderson Hartwell, the Citizens Banking Company, Georgia and the Citizens & Southern Bank of Thomas County involving $1,000,000. over
(9) William E. Green also testified that acquired he shares stock in the Citizens & Southern Bank agent of Jackson as on September about 1965. He borrowed to money pay purchase price the from the Citizens & Southern Holding Company. He held the agent stock as until February about 1968 and voted it during the years three he held it before was sold and February In 1968 he purchasers. to other
transferred of this stock the last shares transferred trustee under Citizens & Southern National Bank as Waring B. Ann agreements with Mills Lane for three Lane, Lane, Jr. W. Lane. B. and Anita Mills (10) for charter of original application M. rejected by Dalton was W. & Southern Bank of Jackson, of Banks for the State Superintendent officers had Georgia, because Citizens Southern in it. Mr. Jackson stated: subscribed to too much stock point. The "Let’s slow down a little bit on this by people for charter application was filed examiner investigation Dalton and an was made our involving report was turned in to me when his I what ownership of the stock is when first knew After I percentage group the C & S had. reviewed the examiner, I his showed findings of the believe record stock, fifty about cent of the group sixty had Yes, S A. say fifty sixty. Q. group? I can’t C & sir, Fuller group, I contacted Homer selected so up he there head the bank as and I president was I not granting informed Mr. Fuller would consider bank, holdings charter until he revised the stock *7 representative to of the ownership list show more community. per local He asked me cent would he what & S and I required group holdings to reduce the C cent, thirty including per told him to the five cent per I to Holding Company told him submit a did, showing list and he revised stockholders when ownership, stock had transferred into local I been It approved Q. ownership it on that basis. shows stock bought eight that had been C & S with checks from five shares, approximately? hundred to thirteen hundred you. A. at time? it came back to Q. You mean When A. Approximately, they people. were local The Court. a up point, Let me clear this was little different Yes, sir, Milledgeville from the situation? The witness. charter, of a new that is correct. acquisition this was an it, have no you you The Court. And as consider to let the permit you discretion that would stock? The per own more than five cent of the Company prohibiting witness. There is a law that. The Court. The witness. You would have no discretion about that? But it right. acquiring That’s The Court. when came to a charter considered that had discretion and you you your judgment were to decide on overall of what was best for the The witness. That is correct. community? I That gathered. The Court. That is what The witness. this, too, I as I exactly might long is correct. add was superintendent eight years of banks for and a half granted I never one charter where the concentration than, I cent say thirty-five stock was more would cent, however, approximately, granted fifty never The Court. illegal. I don’t think that would have been The witness. That your It was a matter of discretion? correct, Let me community. say in the interest of the this, S Holding not C & please, anybody, just I holding company, treated I Q. like I did else. What Holding Company anybody is, Mr. Mills B. Lane want to ask now did tell you you Mr. Lane that it would be all or Homer Fuller to tell in those right to show hundred shares sixty-four all transfer that stock right directors and would be A. the charter? you approve to Mrs. Lane and would No, I think language, I don’t know that I recall that Fuller about him there was discussion with of the directors’ transferring something into some people, it out to local they names and would farm it, anybody Lane or I don’t recall Mrs. was size attention that brought your else. If it had been Q. hundred sixty-four had had Mr. Fuller or Mr. Lane paid or Mr. Lane had shares in their name and Mrs. transfer, would $160,000 you and had taken blanket *8 within A. I think that would have been approved? have thirty it, if it within the I on was the limitation set right percent YouQ. all to do this. it would been have you Well, that, A. I’m know it? about don’t recall did any inquiry you to see make Q. certain I did. Did complied A. The with? the directive had been whether appeared writing, in it to be new was submitted list accepted an Q. it. didn’t send we You order and suppose anymore? Q. A. I we did. out don’t examiner sixty-four had been in Mrs. shares hundred which per stock, sixteen cent Lane’s name constituted you? this A. I think it was all included didn’t interest per thirty cent, I limitation and it stated the Mrs. Mr. Lane’s or made no difference whether was anybody Q. else’s. You didn’t make Lane’s or inquiry cent was on the to see whether sixteen adjustment A. The made list that was submitted? was thirty accepted it. And it then about Q. and I showed officers, C & cent of stock was owned Holding Company? A. is S That officers that Lane the Su- correct.” Mills B. testified perintendent that "he not stated could Banks happened it was control what to stock after sold—for saving purpose of face that other names —but appear granted if a were to would have charter if the stock sold to someone else transferred banking nothing department else someone has personal that —this is I made a do with where judgment my banking career, that is a on I took blot suggestion, appeared names on the list I other prepared. bought I the stock or rather than those people.” Eight applicants the charter local represented they had for 1300 shares subscribed they each when fact intended to subscribe for 6,400 each. The shares later transferred to shares were officers stockholders Southern persons. National and other selected Superintendent Jackson, William M. former of Banks *9 opinion Georgia Banking that in his testified Law any buying did not restrict individuals from stock of banks amount. He was aware of the stock ownership in the different banks.
(11) following B.Mills Lane further testified that the you an accurate statement. "That wouldn’t have bought banks, five cent of the stock of those that is here, the ten banks we have named without anticipating hoping acquire more stock of those you banks for the officers and friends as call it of the C & S Bank.”
(12) believe, Lane, B.Mills Lane also testified: I Mr. "Q. you you testified, it, it is a fact that isn’t that have never been faced with a situation a where stockholder percent in one of these five banks who also was an officer or director of the bank tried to undermine a by decision which was made an executive of the Holding Company? might say A. I never faced You open that, sir, that I not know of. We have discussion among they yes they express ourselves, men, are not opinions group everybody. their but a decision holds for By group you and Mr. Q. decision this means when Glenn and Mr. Hall and Mr. Youmans reach a decision you expect respect everybody by it? A. to abide it and you run How could a business otherwise.” (13) purchase of stock the Citizens & Southern County Well, "A. Bank of Thomas was as follows: way put deposit, & we handled this one was we the C put deposit County S a purchases with the bank in Thomas certificates, cover of these so that when anybody they pay wanted to sell stock for it out could of the account and could advise us so that we could then up money in turn collect the from in Atlanta from buy whoever wanted to it.”
(14) Joseph Hall, III, A. first Vice President of the & Citizens Southern National Bank President Holding Company the Citizens Southern testified & employed all the officers & Southern that the Citizens originally people & Southern Bank in the Citizens fifty per DeKalb, cent or more that over of South by inception & was held Citizens stock from its employees Holding Company officers, Southern employees & of the Citizens wives of officers operated Bank or in various trusts Southern National Bank, which some of & Southern National acquisitions the Citizens were financed virtually, that it is but Southern Bank and National actually, not a branch bank. Georgia, Independent Inc., moved Bankers Assn. of *10 jury trial court
for a trial. This was denied and the jury. heard the matter without a "(1) The trial found: The Citizens & Southern court capital of the National Bank owns all of the stock (2) Holding Company.' The Citizens & Southern Holding Company & Southern holds direct Citizens ownership voting per control cent the of five of correspondent shares of the associated of each ten (3) in this The banks named defendants action. holding acquired company defendant title to the five correspondent the of in all cent of stock the banks being by cases invited the banks owners of the after (4) ownership to participate of such in bank. Simultaneously acquisition by of with the stock holding employees, company, agents, officers, relatives and acquired of the & Bank friends Citizens Southern National varying in in amounts each of the ten (5) correspondent associated & banks. The Citizens Holding not Southern does hold direct voting ownership any indirect or control of correspondent shares of ten associated banks over (6) by the five above cent allowed law. Citizens & Southern hold National does not ownership any direct or indirect or control of correspondent shares the ten associated banks (7) except good fiduciary capacity. only in faith in a interests which Southern National Bank holds other shares of stock in the ten correspondent defendant associated are col- banks security lateral interests said obtained held regular security previously bank in the course of debts good faith, contracted none of which shares have bank; however, been transferred into the name said will court note that case of one namely, banks, associated the Citizens & Southern County, Bank of Cobb Southern Citizens & provides National Bank holds a debenture which that may the title to the stock into the transferred Citizens & Southern National Bank. The notes court illegal provision that this is an if it were to be power exercised. The court feel it does not has the suggests steps direct, but be taken the bank and that the Commissioner and Finance of Georgia steps State see that such taken are whereby the Citizens & Southern National Bank will be divested of its interests in such debenture. Also the disapproval court with *11 security
other to the Southern instruments Citizens & may National Bank which be the foreclosed whether moneys by secured said instruments are due or not. power The court notes that has never been suggests but exercised the court further to the defendant Citizens & Southern National and to Bank Banking the the Commissioner of and Finance State of Georgia provision of that this for when no foreclosure moneys are due under these instruments should from withdrawn such instruments. The court states attempt by that if there had been an to secure illegal hold such was an this court would this method voting of stock. of control the and indirect method (8) Voting ten associated shares in the each of correspondent acquired by officers, the banks employees directors, the Citizens & of shareholders Holding Company and the Citizens Southern the associated banks and Southern National Bank and acquired for and/or held wives or families of such were good as bona fide interests faith their own & Southern the Citizens investments and neither the & Southern National Bank nor Company Citizens control of such shares has direct or indirect (9) time was made or the thereof. At the demand upon Superintendent plaintiff of the the then Banking Banks, of now named Commissioner subsequent bring Finance, action, an and at all times Superintendent thereof, the and/or Commissioner of Georgia Banking and State of was either Finance the of, or to him which aware information was available foregoing he facts. The could have become aware following makes of law: The court court the conclusions Georgia Code concludes that there exists no violation of part § the of the Citizens & Southern Ann. 13-207 on Holding Company, the & Southern National correspondent the banks named ten associated concludes, as defendants herein. The court further therefore, the defendant Commissioner that Georgia (formerly and Finance of the State Banks) right Superintendent had the the plaintiffs discretion to refuse demand exercise his against he an other institute action judgment granted Wherefore, defendants herein. plaintiff, against costs to be taxed defendants plaintiff required by law.” Independent Georgia, appeal Inc., Bankers Assn. following present this court issues (1) denying judge err in decision: Did trial
359 appellant’s motion that the issues of fact in the case be (2) jury? judge submitted to a requiring Did the trial err in appellant complaint to amend its or (3) penalty having suffer it dismissed? What is directly the correct construction of the words "which indirectly power owns, controls, holds, vote, with more than five cent of the §in shares” 13- (e) (4) 201.1 defining of the Code? Do the words (b) "company” §in 13-207 of the Code "and includes the persons shareholders and those who otherwise own the ” 'company’ employees officers, include directors of the Citizens & Southern National Bank acquired who their shares in the named banks simultaneously Holding Company with the and with knowledge Holding Company acquiring that the was (5) five cent of the shares of such bank? Does the provision in the notes held the Citizens & Southern given by National Bank and its subsidiaries employees officers, officers, wives of and former officers of the Citizens & Southern National Bank to payment bought secure the reading of shares in these ten banks rights follows, "In addition to all other possessed by it, time, the holder from time to whether before or after of the liabilities shall become due (a) payable, may any part transfer all or collateral into the nominee, name of the holder or its disclosing with or without that such collateral subject security security lien, to the title and interest power hereunder,” constitute indirect control with assigned vote of the shares so to the Citizens & (6) Southern National Bank or its subsidiaries? and Does the Commissioner of and Finance have right to exercise discretion as to whether or not he bring appropriate enjoin shall an action to a violation Holding Company of the Bank Act? Held: opinion 1. In our there are no substantial issues of fact in refusing issue here. The trial court did not err jury. De- Clairmont Holt v. to a submit case (151 151). velopment Co., Ga. SE2d *13 (now Superintendent Commissioner of Banks 2. The Finance) discretion is with a broad vested supervision However, in the an action of banks. in the remedy appropriate to is an nature of mandamus compel a clear violation to action to restrain him take pp. banking pp. 1949, 1919, 135,187; L. the Ga. law. 13-1701). (Code § 309, 310 Ann. Georgia provides: pp. 1970, 954, 961, Laws "The
3. bring may
Superintendent an of Banks of State any provision appropriate of this civil to enforce action any Chapter by injunction, otherwise, in whether having jurisdiction superior of one or court of this state 13-208). (Code §Ann. "The more of the defendants.” may in a construction of the word true rule for the public the is, that such statute concerns statute when rights persons, then, interest, the or affects the of third ” may, or shall. shall construed mean must word be Kilgore Birdsong 88, 89; Paschall, Brooks, 7 v. Ga. v. 520). (43 416, 202 Ga. SE2d concerning conflicting philosophies the 4. There are two banking There those who believe the business. are by large interests control of additional banks financial ultimately destroy independent banks and result will persons. economy by the too few domination of larger There are those who believe that financial variety of services and can interests can offer wider capital provide needs to meet the better borrowers. legislature by and not
This conflict must be resolved authority is this court. Our limited legislative interpretation application legislative expressed determination. The clearly intent banking provide laws which Section (Ga. 68): pp. 1960, 67, L. this Act to "It is the intent of prevent banking by any the extension of statewide encourage growth institution and to the normal banking units in the local . . It is communities. acquisition intent of this Act to restrict further the holding companies. shares of banks bank It keep banking is the intent of this Act to units from expanding municipal beyond into territories their (See corporate p. limits.” Sec. 1 of Ga. L. 954: "Territorial criteria for the establishment of operation of bank offices and facilities shall bank limit.”) county territorial accomplish purposes, banking among law, To these "(a) things declares, other On and after the effective (1) any section, date of this it shall be unlawful for company action to be taken which results in a becoming holding company a bank as defined in this (2) holding company acquire Title; bank *14 ownership hold direct or indirect or control of more per voting any than 5 centum of the shares of bank.” (Code (a)). pp. 1960, 67, § Ga. L. Ann. 13-207 Holding Company The Citizens & Southern became a holding company prior bank to the date of the effective holdings 1960 Act. Its existence and its bank stock acquired prior together to said act with certain approved permitted by are accretions the Act. But acquisition holding thereafter or direct ownership per indirect or control of more than five voting any prohibited. cent of the stock of bank is Also provided holding company Act, in the a bank persons "includes the shareholders and those who 'company’.” pp. 67, otherwise own the L. Ga. (Code (b)). § Therefore, Act, Ann. 13-207 under bank acquired after the effective date Act by held such owners is attributed to the bank stock holding company. held the bank In this case the Citizens & Southern National Bank the sole owner Holding Company of the Citizens & Southern corporate and the disregarded. entities have been pierced. corporate has It follows that veil been & Southern National shareholders of the Citizens "persons otherwise own” the Citizens & Bank are who Holding Company. It that since Southern is admitted adoption of said Act certain shareholders of acquired and hold Citizens & Southern National voting per stock in the ten five cent defendant banks. per ownership their of bank stock in the ten five When defendant banks is thus attributed to the cent ownership Holding Com-
of the Citizens & Southern pany’s per stock in these ten five cent bank same per banks, defendant the five cent limitation of the banking holding company If law is exceeded. a bank company ownership does not hold direct or indirect or control of stock of the same bank as its persons shareholders or who otherwise own the banking holding company company, the attribution place interpretation apply. clause does not upon To less meaningless. this clause would render it This interpretation impair any does not constitutional prerogatives reg- of individuals. It ais reasonable banking ulation of activities and enacted legislature public interest. appellants
5. The contend that the evidence demands a finding that the Southern National Bank and the Citizens & Southern in- directly control more than cent of ten five alternative, five cent defendant banks. In the appellant contends that this is an issue of fact which jury. *15 should be submitted to a signifies "indirectly” doing by obscure, The word an something prohibited circuitous method which is from being directly doing done and includes all methods of thing prohibited except the direct one. Whether being indirectly may control of banks is exercised be many contrary difficult to resolve in instances and may validly However, conclusions reached. in view purpose banking finding of the declared law, of the of indirect control is demanded under certain cir- cumstances. egos
The officers and directors are the alter of the bank. they doing It is clear under the evidence here that are indirectly directly. that which cannot be done independence per of these ten five cent defendant banking preserve, banks, which the Act seeks to is lost. We hold that the Citizens & Southern National Bank Holding Company and the Citizens & Southern are directly indirectly holding controlling more per than five cent of the stock of the ten five cent defendant banks.
It follows that the Citizens & Southern National holding company
has become a bank under provisions banking provides: law which "The holding company’ term 'bank as used in this Title any company incorporated organized means or under doing state, the laws of this state, or business in this directly indirectly which owns, holds, controls or power vote, with to more than five centum of the voting shares of each of two or more banks.” Ga. L. (Code (e)). pp. 1963, 602, 603 §Ann. 13-201.1 argument that indirect control of bank shares "with power legally power to vote” means a enforceable legally vote such stock is without merit. A enforceable power is direct control. (Ga. 77) pp.
We note that 1960, 67, 1960 Act L. (Ga. repealed following provision of the 1956 L. Act 310): pp. company 309, "A will be considered to power own, hold, vote, control or with indirectly any whenever officer or shareholders of such company any person natural included with the (b) of'company’ definition subsection of this Act or family member of the immediate of such officer or person, shareholder own, or of such natural shall power vote, control or hold with such stock. *16 spouse, family children, mother, a Immediate includes provision father, was brother and sister.” This and not with concerned with indirect control by provision repeal the We of attribution. conclude ownership by officer, an director that the of bank company family or or shareholder of a members not in itself indirect as stated therein does constitute preclude by company. However, not control the it does finding when, here, such a of indirect control is ownership by of than mere shown evidence other parties. relationship stock and of concerned, In so far as the are a mandamus to courts compel Banking of and Finance to the Commissioner a will not issue unless there is clear violation act by This law shown the record before the court. rule Banking does not inhibit the Commissioner proceeding investigation Finance from with his own banking if determine taking law has been violated and any action such violation. to restrain argument 6. The the deletion of the word "bank” "company” from the in the 1960 act shows definition an intention to include banks therein is without not (b) describing "company” § merit. Code Ann. 13-207 comprehensive includes banks. expressly 7. The Citizens Southern National Bank has repudiated following provision of its notes secured by bank stock in said ten five cent defendant banks: rights possessed it, "In addition all other time, Holder, after from time to whether before or (a) payable, may due of the liabilities shall become any part into the transfer all collateral name disclosing, nominee, with of the Holder its or without subject security lien, that such title collateral is security hereunder.” interest argument rulings 8. The that the herein could cause a holding company guilty a criminal bank to be act acquired single if a to it shareholder unknownst additional bank stock is without merit. See Code Ann. (Ga. 77) pp. § imposes 1960, 13-9938 L. which penalties only upon failure to cease and desist within days after notice of such violation the Com- missioner of and Finance. involving
9. The test as to whether bank trusts shares *17 banking just other banks violate the law is not whether good fiduciary such trusts are held in faith in a capacity. provides: § Code Ann. 13-207 ". . .these .(B) prohibitions apply: acquired shall not . . to shares (i) good fiduciary capacity, a bank faith in a except acquired when such shares after the effective date of this section are held for the benefit of the shareholders of such bank.” issuing
10. The trial court erred in not a mandamus as prayed compel Banking the Commissioner of and against Finance to take action the Citizens & Southern Holding National Bank and the Citizens & Southern banking to enforce the law of this state. Judgment Mobley, J., Grice, reversed. J., C. P. and Judges
Jordan, J., Whalen, Jr., Andrew J. and W. Hawkins, Hawes, Colbert J., concur. dissents. Nichols disqualified. Gunter, JJ., Argued — 12, 1972 5, 1973 December March — Decided Rehearing denied and March March 1973. Napier, Stapleton,
Martin, Snow, Grant & Charles M. appellant. for Hodgson, Harris,
J. Robin Reid, B. Daniel Ronald L. Philip Johnson, III, F. Alston, Gaines, Ben Miller & H. Attorney Alston, Jr., Bolton, General, Arthur K. Harold Attorney Hill, Jr., N. General, Executive Assistant Robert Attorney appellees. Castellani, J. General, Assistant Dorsey, McChesney Harwell, Post, Brandon H. amicus Jeffries, curiae. dissenting. Justice, outset, At would like
Hawes, I majority opinion say that I that am accord with proper remedy for clear violations mandamus is the upon by Holding Law not acted the Bank Finance, Commissioner appellant Independent not otherwise Bankers were appearing by jury, no essential entitled to a trial there dispute. remarks, I confine these issue of fact question therefore, of whether the Bank Law has been violated. Holding Company
The Citizens and Southern wholly-owned subsidiary and Southern Holding Company as a National Bank. The Bank corporate entity stock shares not in excess owns per centum in various affiliate or associate five correspondent appeal, purposes
banks. For of this corporate entity parent National Bank does not own as a banks, the trial stock interest in the various affiliate having single court ordered revision of the debenture capital affiliate convertible to the stock of one of the Bank, banks and held the National and the National *18 having expressly repudiated provisions Bank the transfer of certain demand notes with affiliate bank stock as in collateral received the National Bank return for Any loans to individual stock subscribers. other affiliate holdings bank stock of the National Bank are those held fiduciary capacity. in trust or in a The trial court has parent determined a fact that shareholders of the Bank their National obtained stock interests good correspondent affiliate banks in faith as fide bona personal gain. investments for their own There was no showing any in the trial court of the existence of conspiracy Holding Bank, between the National its Company, voting and its shareholders to control the by way such stock interests in the affiliate banks either voting proxy, agreement trust, shareholder or the like. question presented by facts, In view of these the essential appeal Georgia narrows to whether Bank 67) (Ga. Holding p. Law, § 1960, Code Ann. 13-207 L. is percent voting violated when in addition to the five wholly-owned holding subsidiary interest a bank has voting ownership banks, various affiliate there is also stock interest in such banks individual shareholders of parent national bank. majority of this court has determined that Holding infringed Bank Law has been under such upon reasoning circumstances there is no separate corporate identity Holding between the Bank parent by process and the National Bank and Holding Law, attribution under the § Bank Code Ann. (b), by way pass-through, 13-207 the individual parent stock interests of the shareholders of the National among Bank in the affiliate banks must be included holdings Holding Company of the Bank so that it has ownership "direct or indirect or control of more than five percent of the shares of bank” in violation of reading the statute. I believe this is an incorrect of the Holding legislative history Bank Law view of the statute and in view of other considerations hereinafter noted. Georgia Law of 1960 was the result process legislative experiment,
of a error and revision. representative throughout It of a movement the nation recognized to curb what was as an evolution toward the power large banking concentration of financial in a few institutions. This movement came to fruition in 1956 passage legislation with the of national which included Holding Company Act, the Bank §§ 12 U. S. 1841-1849 C. (1964), passage legislation and with the of state as an adjunct monopolistic to retard at the state tendencies Georgia adopted level. In the State of also similar legislation purpose whose was to set an absolute limit *19 upon holding the amount of stock a interests bank company might and its shareholders have in other (Ga. 309-312). pp. 1956, affiliate banks. L. At that time the 368
holding company, together shareholders, with its could percent voting no or control more own than of banks, of or stock each two more the shareholder being stock interests in the affiliate banks specifically holding company.1 attributed to the Holding Law of 1956 was concerned
Because the Bank banking of not with the concentration wealth and with practices such, it turned out not to be a workable as problem resulting solution to the because of adverse upon competition upon bank and bank and effects growth relating thereby state, financial to the question general expansion particularly in economic regional legislation issue, so far as areas.2 was Act read the 1956 attribution clause
1The own, control, or company construed will be "A follows: any indirectly power vote, whenever hold, with any company natural such or shareholder officer 'company’ in person the definition within included (b) immediate member this Act or Section family natural or of such shareholder officer or of such power vote, person, hold, own, with control shall spouse, children, family includes Immediate such stock. pp. 309, 1956, L. mother, father, Ga. brother and sister.” 310. merger, banking, controversy and over branch present up holding company until the has continued laws Mergers, Help Myers, Banks Small time: see Affiliations, 19, Big-Time Journal, Business, Jan. Wall Street Cut Atlanta Walker, Starve Laws Capital? The Atlanta Journal The Atlanta regard, page 10,1972, In this see Constitution, Dec. at 1-E. Greenspun, generally Limitations Structural Smith and Contemp. Competition, Prob. 635 32 Law & Bank on (1967), Branching, Holding Charter, Note, Competition Merger Frustrated, 71 Laws: (1962). L. J. 502 Yale
369 concerned, the evolution toward was how best retard large banking concerns while at power concentrated and to meet adapt the same time to institutions laws further, to retain well the economic how as reality, of values of laissez faire human-economic the result the reduction of individualism. The was holding company a bank voting amount stock interest the banks, percent, 15 to 5 but at acquire could in affiliate time of the former complete same the elimination Holding Act.3 The attribution clause of the 1956 Bank between Law represented compromise of 1960 con- the hand and individual one on enterprise centrated combined By the on the other. initiative shareholder its company holding voting power of as a result not precluded shareholders would such though even affiliate banks ownership interest. voting stock percent the 5 ownership exceeded its ac- restricted holding would be company bring in its ability to interests cumulation of stock over power concerted entity its corporate as a to bear interest, such but by represented banks affiliate they interests left to vote their were shareholders those of with willed, they conjoined or not whether holding company.
3 Report Bank Holding Company Study Committee, pursuant House 358, Resolution No. dated 1970, January makes it clear beyond doubt Bank Holding Law of contains no attribution clause. Evidence of this fact is supported 396, further H. B. introduced in the current legislative session of the General an Assembly, effort to revert verbatim to the provisions attribution Holding Law of 1956. I note here that similar bills have been introduced in previous Compare sessions. 165, H. B. No. Georgia General Assembly, Session. its Act of as well as
The Bank predecessor, when, however, envisioned the occasion infringed, ownership though provisions as to were not might holding company come and its shareholders the together directly indirectly over and exercise control way affiliates stock of various bank voting power agreement, association, like, or the so that dispersed effectively would not be but would be again sought prevent. It what the Act concentrated — on such an occasion that the shareholder interests was *21 among holding included those of the bank would be present company, definition of and this accounts for the meaning "company” is, Act; that in such within the of the holding company "the the bank would include instances persons and who otherwise own the shareholders 'company! those ” (b). meaning Any §Ann. 13-207 other Code provision for this would be inconsistent with legislative history purpose.4 its of the act and with overall summary, Georgia
In Holding Bank Law of 1960 through operative provisions sought its regulate to "company” persons defined the Act and not individual company shareholders acting of such independently; sought prevent company’s to a direct ownership voting banks, of in other stock interests not to Report Holding Company Study See of (b), supra, Committee, at 3. § Note Code Ann. 13-207 appeared provides Acts, which in both the 1956 and 1960 'company’ in full: "The term as used in this section and (e) any corporation, in section 13-201.1 partnership, means joint company, foundation, stock business or voting similarly organized group trust, association or persons, incorporated not, whether and includes the persons shareholders and those who otherwise own the 'company’ including any foreign corporation and or other organization doing Georgia.” or association business cent; sought prevent exceed five and it to a company’s to otherwise control stock interests in ability voting other banks in ceiling. excess the five cent Under Act, provisions company’s control of excessive voting concentrations stock in other banks related to the exclusively ability power command "with vote” the Ann. 13- such interests. Code § (e). 201.1 present
Treating con- realistically, case I am strained agree with the majority court look corporate should behind the of the entity Southern Bank which would Company, prerogative duty the Commissioner of Finance, and to inquire into the nature of the overall banking said, structure. Judge As Cardozo has wisely "The problem whole parent relation between subsidiary corporations enveloped is one that is still the mists of metaphor. Metaphors law are to be watched, narrowly starting as devices to liberate thought, end it. . . they by enslaving logical often consistency juridical of a will conception indeed be times, at sacrificed when the sacrifice is essential to the end that accepted public some be defended or policy may (155 *22 upheld.” R., v. Third Avenue 244 Y. 95 Berkey N. 58) (1926). Here, NE we are dealing with what is essentially corporate division rather than a subsidiary meaning in the usual of that Murphy, term. See Subsidiaries, Corporate Divisions v. Rev. Harv. Bus. (1956). 84-85 parent The National Bank owns all of the Decisions Holding stock Bank Company. of the Bank Holding not Company independently are made of the parent commingling National Bank. There is a of officers and in the parent subsidiary, directors and the Bank Holding is reimbursed the National Company parent Bank for the salaries of its National parent officers. Bank has Holding made interest-free loans to the Bank including for ten million on one occasion one Additionally, indicates, the the evidence dollars. as parent report admits of no the National Bank annual Holding corporate separation:"... the the bank owns Company, at The bank and carries its investment $1. Holding Company.” upon I that this is believe itself the equitable principles upon court rendition of facts separate concluding justified no in that there is would be identity parent corporate Bank between National Holding Holding Company, that Bank Bank Company the parent, they in that are a division of the is fact one. separate corporate identity, the
If there be no parent said of the National Bank would be shareholders Holding Company. However, I have own Bank as to voting previously, these interests of indicated stock correspondent would shareholders in the affiliate banks Company, Holding so that not be to the Bank attributed inquiry whether the shareholders the essential becomes Holding Company may and the be said otherwise percent than 5 stock of the control more Holding Law, Under the Bank this would affiliate banks. may as in fact not mean control be exercised independent voting and the Bank shareholders may Company, but control be exercised such brought voting power that is in concert so concentrated derogation of shareholder to bear prerogative. individual Although indicates that evidence parent some individual shareholders instances have influenced affairs of the National Bank nothing banks, there that affiliate show this was voting power. conspired result and concentrated found, I bound some trial court has and believe we are parent result, extent the shareholders of the as a National Bank obtained their interests in the good affiliate faith as bona fide investments for banks gain, indicating personal their own there was no initial
373 assert in the together as such to come intendment voting their stock interests. evidence aggregate agreement or existing further discloses no presently parent of the subterfuge the shareholders between Holding the Bank Bank and National this end.5 accomplish
It should noted that of Banking Commissioner Finance, as well as a predecessors, number of his with the General,6 concurrence of the Attorney has not able has noted in com appellees counsel As menting evidence, on the trial court "The found no control of voting shares. How could he have found control? There were no stock powers. There were no irrevocable proxies. There were no voting trusts. There no agreements. were shareholders There was not a scintilla of evidence indicating any power legally right enforceable over these except shares individual owners. All of after full a year’s discovery.” Brief 47. Appellees’ at p. Questioned by both counsel for the appellees and the Attorney assistant General, all parent shareholders National Bank influence, before the trial court denied knowledge influence, of any having been exerted over them in the voting of their stock interests in the affiliate banks. Jackson, Superintendent M.
6William of Banks from long until with career in the De partment Finance, before the testified trial court he predecessor, Trippe, and his W. D. now Chairman of the Board the Commercial National Bank Cedartown, had given specific approval present bank holding company practices with the advice of Attorney Mr. Mr. Georgia. Both Jackson and General Trippe appeared as witnesses the Bank before Company Study Assembly Committee of the General from which it may be inferred the Committee concluded *24 practices bring question under the into need felt the period acquiesced a having for in discussion, been past years. It has been approaching thirteen some construing a statute practice when this of court Act, contemporaneous construction administrative inactivity, legislative raise coupled would with legislation had presumption under consideration that the rule is this of affirmation The latest not violated. been in opinion Grice Mr. Justice of in able found (147 SE2d Airlines, 221 824 Ga. v. Eastern Undercofler second-guess 436) (1966). not should court This regulation practices by of such Commissioner of Finance, lie, in whom some discretion must showing in the absence of a clear of in the trial abuse problem directly court. The of control bears on the duties holding companies of the commissioner to oversee bank regulations particularly and to issue in cases where brought question. here, is It control into rather than ownership, primary with mechanical tests that his duties under the lie. I Act would him as much allow possible. latitude as
Finally,
concluding,
in
I
refer
old
need
to the
Latin
"argumentum
maxim,
ab inconvenienti.” This maxim
taking
calls
into consideration
proposed
inconvenience which the
construction of the
law would create. As Chief
Justice Lochrane said
7
(1871),
Gormley Taylor,
yet
v.
of the these will bank requiring face the alternative of all of its shareholders to in divest themselves of all stock interests all affiliate being holding banks, such interests attributable to the give company, up or if the shareholders decide not to holding banks, their stock interests in other the companies will have themselves —at the to dissolve minimum, to divest themselves of all in interests the cent affiliates. Such divestment of holding company shareholder interests or of bank upon viability interests would have an effect banking Georgia growth too difficult to finance impact here determine. Its on the 5 cent banks through regional and local areas as translated decreased large stock values alone could be indeed. consequences way
It must be stressed these are in no they disruptive directly ones; small are affect the well-being state, economic and I would not be one give sanction to them without a clear mandate from Assembly. the General I find mandate in the no such Holding presently Law as it is written. easy reasons, For the above to understand how the they may appellees been feel have and their counsel judicially ambushed. judgment preparing below, its which is
The court opinion, majority quoted a meticulous in full in wrote correctly applying decision, as it had been law Department and Finance administered of this to the facts case. interpretation strongly object of the Bank
I given majority. my court, in trial Law opinion, eminently correct, and affirm its I would was judgment. v.
27609. SHAPIRO AULT. remanding appellant err in trial court did not custody. Judgment concur. All the Justices affirmed. 4, 1973. January Decided *26 Shapiro, pro M. se. David Attorney General, Hill, Jr., Bolton, HaroldN.
ArthurK. Courtney Attorney General, Wilder Assistant Executive Attorneys Palmour, General, Stanton, M. Frank Assistant appellee. 27615. CARTER v. CALDWELL. appellant remanding The trial court did not err in custody. notes the fact that in all of the banks, defendant associated stocks such have banks pledged been as collateral to the Southern Citizens & payment many thereof, National Bank and that in given the subscribers to such stocks have notes and