Weer v. Page

• Decision Date: 11 April 1928
• Docket Number: 47.
• Citation: 141 A. 518,155 Md. 86
• Parties: WEER ET AL. v. PAGE, BANK COM'R.
• Court: Maryland Court of Appeals

141 A. 518

155 Md. 86

WEER ET AL. v. PAGE, BANK COM'R.

No. 47.

Court of Appeals of Maryland

April 11, 1928

Dissenting Opinion May 4, 1928.

Appeal from Circuit Court No. 2 of Baltimore City; Robert F Stanton, Judge.

"To be officially reported."

Suit by James R. Weer and others against George W. Page, Bank Commissioner. From a decree dismissing the bill, plaintiffs appeal. Reversed and remanded.

Parke J., and Bond, C.J., dissenting.

Argued before BOND, C.J., and PATTISON, URNER, ADKINS, OFFUTT DIGGES, PARKE, and SLOAN, JJ.

William M. Maloy, of Baltimore (Maloy, Brady & Yost, of Baltimore, on the brief), for appellants.

Herbert Levy, Asst. Atty. Gen. (Thomas H. Robinson, Atty. Gen., on the brief), for appellee.

URNER J.

In order to form a banking corporation to be known as the "State Bank of Sykesville," the appellants, as required by law, presented articles of incorporation to the State Bank Commissioner with a view to obtaining his prerequisite approval. The Commissioner declined to approve the incorporation for reasons to be presently stated. In this injunction suit redress is sought on the alternative grounds that the statute, investing the Bank Commissioner with authority to forbid a proposed incorporation, is unconstitutional if construed as justifying his action in this case for the reasons which he assigned, or that his decision was invalid as being beyond the scope of the power intended to be conferred.

In regard to the incorporation of banks and trust companies it is provided by section 22 of article 11 of the Code, in part, as follows:

"The articles of incorporation shall be executed in triplicate by the persons joining therein before any officer authorized to take acknowledgments, and then filed with the Bank Commissioner for examination. The Bank Commissioner shall thereupon ascertain from the best sources of information at his command, and by such investigation as he may deem necessary, whether the character, responsibility and general fitness of the person or persons, named in such certificate, are such as to command confidence and warrant belief that the business of the proposed corporation will be honestly and efficiently conducted in accordance with the intent and purposes of this Article, and whether the public convenience and advantage will be promoted by allowing such proposed corporation to engage or continue in business. After the Bank Commissioner shall have satisfied himself by such investigation whether it is expedient, and desirable to permit such proposed corporation to engage or continue in business, he shall have power to require such changes in said certificate as he may deem necessary. He shall within sixty days after the date of the filing of such certificate for examination, indorse upon each of the triplicates thereof over his official signature, the word 'approved' or the word 'refused' with the date of such indorsement. In case of refusal he shall return one of the triplicates so indorsed to the proposed incorporators."

The refusal of the Bank Commissioner to approve the articles of incorporation, for a bank in Sykesville, submitted by the appellants, was explained by the following statement in the Commissioner's letter returning one of the copies:

"After a very careful investigation I can only reach the conclusion that it would not be expedient to grant the charter, as in my opinion, there is no need for the bank there, and it would not have a reasonable chance for success."

The charter had been sent to the Commissioner with a letter of transmittal from which we quote as follows:

"Accompanying the charter are letters to you from a number of leading citizens of Sykesville and vicinity which can be added to should you decide that further expression of public opinion is necessary. Sykesville is an incorporated town, in the southern part of Carroll county, about 18 miles south of Westminster, 14 miles northwest of Ellicott City, 15 miles east of Mt. Airy, and 12 miles west of Randallstown. It is the banking and business center of a section of Howard as well as of a part of Carroll county. The capital stock of $25,000 has been subscribed for by 160 persons. Of a total number of 30 business houses in Sykesville, the proprietors of 19 establishments are among the subscribers. Taneytown, Union Bridge, Hampstead, and Mt. Airy, each has two banks, and Sykesville desires to have and requests that you permit it to have the same advantages and privileges enjoyed by these other communities in Carroll county."

The amended bill alleges that the charter was refused by the Commissioner without opportunity being given to the proponents to be heard, that the public convenience requires a State Bank in Sykesville in addition to the National Bank already in operation there, that the adverse action of the Commissioner was based on reasons not recognized by the law, and that his conclusions were contrary to the facts and could not fairly be reached upon the "open and ascertainable evidence." There was, however, a disavowal in the bill of any intention to charge that the Commissioner had "acted corruptly or fraudulently or from bias or prejudice."

A demurrer to the bill was sustained, and, the plaintiffs declining to amend further, the bill was dismissed by the decree which is the occasion of this appeal.

The business of banking bears such a relation to the economic security of the public as to be a legitimate subject of regulation by the state in the exercise of its police power. This proposition is not here disputed. It is supported by ample authority. Noble State Bank v. Haskell, 219 U.S. 104, 31 S.Ct. 186, 55 L.Ed. 112, 32 L. R. A. (N. S.) 1062, Ann. Cas. 1912A, 487; Shallenburger v. First State Bank, 219 U.S. 114, 31 S.Ct. 189, 55 L.Ed. 117; Engel v. O'Malley, 219 U.S. 128, 31 S.Ct. 190, 55 L.Ed. 128; Merchants' Bank v. Federal Reserve Bank, 262 U.S. 649, 43 S.Ct. 651, 67 L.Ed. 1157, 30 A. L. R. 635; Dillingham v. McLaughlin, 264 U.S. 370, 44 S.Ct. 362, 68 L.Ed. 742; Schaake v. Dolley, 85 Kan. 598, 118 P. 80, 37 L. R. A. (N. S.) 877; Saari v. State Securities Com., 149 Minn. 102, 182 N.W. 910; Dodd v. Hill, 84 W.Va. 468, 100 S.E. 286; Mulkey v. Bennett, 95 Or. 70, 186 P. 1115. In Noble State Bank v. Haskell, supra, the Supreme Court, in an opinion, by Mr. Justice Holmes, said that the question "whether the right to engage in banking is or can be made a franchise," "is not answered by citing authorities for the existence of the right at common law."

The opinion said:

"There are many things that a man might do at common law that the states may forbid. He might embezzle until the statute cut down his liberty. We cannot say that the public interests to which we have adverted, and others, are not sufficient to warrant the state in taking the whole business of banking under its control. On the contrary, we are of opinion that it may go on from regulation to prohibition except upon such conditions as it may prescribe. In short, when the Oklahoma Legislature declares by implication that free banking is a public danger, and that incorporation, inspection and the above-described co-operation are necessary safeguards, this court certainly cannot say that it is wrong."

The fact that the statute quoted has no application to private bankers, or to the establishment of branch banks by existing corporations, does not render it invalid. The purpose of the statute is to regulate the exercise of the state's authority in conferring corporate power and privileges for the prosecution of banking enterprises. It is not essential to such a policy that similar restrictions shall be imposed upon private bankers, or upon banking corporations in existence when the statute was enacted. In the exercise of its police powers the Legislature may classify, upon grounds not plainly unreasonable and arbitrary, the persons to whom its regulations shall apply. Ruggles v. State, 120 Md. 553, 87 A. 1080; American Coal Co. v. Allegany County, 128 Md. 564, 98 A. 143; State v. Seney Co., 134 Md. 437, 107 A. 189. There is no valid objection, in our opinion, to the classification involved in the statute under discussion.

It is competent for the state to impose upon administrative officers the duty of ascertaining speciflc facts upon which a prescribed application of the police power is made to depend. Tighe v. Osborne, 150 Md. 452, 133 A. 465, 46 A. L. R. 80; Baltimore v. Bloecher, 149 Md. 648, 132 A. 160; Smith v. Standard Oil Co., 149 Md. 61, 130 A. 181; Creaghan v. Baltimore, 132 Md. 442, 104 A. 180; State v. Hyman, 98 Md. 596, 57 A. 6, 64 L. R. A. 637, 1 Ann. Cas. 742; Osborne v. Grauel, 136 Md. 88, 110 A. 199; Boehm v. Baltimore, 61 Md. 259; Downs v. Swann, 111 Md. 53, 73 A. 653, 23 L. R. A. (N. S.) 739, 134 Am. St. Rep. 586; State v. Loden, 117 Md. 384, 83 A. 564, 40 L. R. A. (N. S.) 193, Ann. Cas. 1913E, 1300; State v. Broadbelt, 89 Md. 565, 43 A. 771, 45 L. R. A. 433, 73 Am. St. Rep. 201; Deems v. Baltimore, 80 Md. 164, 30 A. 648, 26 L. R. A. 541, 45 Am. St. Rep. 339; Scholle v. State, 90 Md. 729, 46 A. 326, 50 L. R. A. 411. No question is raised as to the right of the Legislature thus to avoid the inconvenience of determining, from its own investigations, the results in particular instances of the application of its statutory rules in reference to the incorporation of banks. The contention is, that it could not constitutionally confer upon the Bank Commissioner authority to reject a charter in his unrestricted discretion or upon such grounds as those on which his action in this case was based.

The statute does not commit to the Bank Commissioner an unlimited discretion. It directs him to ascertain, "whether the character, responsibility and general fitness" of the incorporators "are such as to command...