Application of Farmers State Bank of Viborg, 17092

• Citation: 466 N.W.2d 158
• Decision Date: 27 November 1990
• Docket Number: No. 17092,17092
• Parties: In the Matter of The Application of FARMERS STATE BANK OF VIBORG, South Dakota to Establish a Branch Bank in Beresford, South Dakota. . Considered on Briefs
• Court: Supreme Court of South Dakota

Page 158

466 N.W.2d 158

In the Matter of The Application of FARMERS STATE BANK OF VIBORG, South Dakota to Establish a Branch Bank in Beresford, South Dakota.

No. 17092.

Supreme Court of South Dakota.

Considered on Briefs Nov. 27, 1990.

Decided Feb. 6, 1991.

Bradley C. Grossenburg and David C. Kroon, Woods, Fuller, Shultz & Smith, P.C., Sioux Falls, for contestant and appellant.

Steven W. Sanford, Cadwell, Sanford & Seibert, Sioux Falls, for applicant and appellee.

WUEST, Justice.

First Savings Bank of Beresford, South Dakota appeals a judgment of the circuit court which affirmed the decision of the South Dakota Banking Commission to approve the application of Farmers State Bank of Viborg, South Dakota to establish a branch bank in Beresford. We affirm.

On or about January 27, 1989, Farmers State Bank of Viborg, South Dakota filed an application with the South Dakota Banking Commission (Banking Commission) to establish a branch bank in Beresford, South Dakota. Beresford is a farming community with a population of approximately 1600 people. Following notice by the Banking Commission, a hearing was held for the purpose of receiving evidence with regard to the application. First Savings Bank of Beresford, among others, ¹ intervened in opposition to the application. First Savings Bank is a federal savings bank chartered under the provisions of 12 U.S.C. Sec. 1464. Following the hearing, the Banking Commission approved the application of Farmers State Bank to establish a branch bank in Beresford. First Savings Bank appealed and the circuit court affirmed the Banking Commission's determination. First Savings Bank appeals to this court and raises four issues:

I. Whether First Savings Bank is an existing national bank regularly transacting business within the meaning of SDCL Sec. 51-20-4;

II. Whether Farmers State Bank demonstrated with substantial evidence the need for a branch bank in Beresford;

III. Whether the Banking Commission erred in denying First Savings Bank's motion for continuance of the hearing to admit rebuttal and supplemental evidence; and,

IV. Whether the Director of the Banking Commission investigated Farmers State Bank's application pursuant to SDCL Sec. 51-17-15.

We address these issues seriatim, noting additional facts where necessary.

I.

SDCL 51-20-4 ² prohibits the establishment of a branch bank in small communities where a national or state bank is already present. SDCL 51-20-4 provides:

Branch banks may be established by a bank consolidating or merging with or purchasing the assets of another bank. No branch bank shall be established in a municipality of less than three thousand population where there is an existing national or state bank regularly transacting banking business, or in any municipality of three thousand population or more and less than ten thousand population where there are two or more existing national or state banks regularly transacting banking business; provided, that a branch bank shall be allowed in such a municipality when an outside bank establishes a branch by purchasing the assets of, or by merger or consolidation with, one of the existing banks. (Emphasis added).

It is undisputed that the municipality of Beresford has a population of less than 3,000 individuals. Thus, we are presented with the issue whether First Savings Bank is a "national" bank within the meaning of SDCL 51-20-4.

The Banking Commission concluded as a matter of law that First Savings Bank was not a national bank and the circuit court affirmed. We review this determination de novo as a question of law. SDCL 1-26-36; Karras v. State, Dept. of Revenue, 441 N.W.2d 678, 679 (S.D.1989); Permann v. South Dakota Dept. of Labor, Unemployment Insurance Division, 411 N.W.2d 113, 115-17 (S.D.1987).

First Savings Bank is a federal savings bank chartered under the amended Home Owners' Loan Act of 1933, 12 U.S.C. Sec. 1461 et seq. First Savings Bank argues the term "national" in SDCL 51-20-4 refers to the government entity which charters a bank (i.e., federal as opposed to state), not the specific act under which a bank is chartered. Thus, because First Savings Bank is chartered by the federal government, it is a "national" bank for purposes of SDCL 51-20-4. Farmers State Bank argues, and both the Banking Commission and circuit court concluded, that "national" refers to the act under which a bank is charted; specifically, the National Bank Act, 12 U.S.C. Sec. 21 et seq.

Recent amendments to Title 51 Banks and Banking are a clear indication of the legislature's intention as to this issue. Under the amended Title the term "national bank" is defined as: "any corporation organized pursuant to 12 U.S.C. Sec. 21, as amended as of January 1, 1990." SDCL 51-15-1(16). ³ SDCL 51-20-4 has been amended and includes the term "national bank":

Branch banks may be established by a bank consolidating or merging with or purchasing the assets of another state bank, national bank or savings and loan association organized pursuant to Title 52 or 12 U.S.C. Sec. 1464, as amended as of January 1, 1990. No branch bank may be established in a municipality of less than three thousand population where there is an existing national or state bank regularly transacting banking business, or in any municipality of three thousand population or more and less than ten thousand population where there are two or more existing national or state banks regularly transacting banking business. However, a branch bank shall be allowed in such a municipality if an outside state or national bank establishes a branch by purchasing the assets of, or by merger or consolidation with, one of the existing state banks, national banks or savings and loan associations organized pursuant to Title 52 or 12 U.S.C. Sec. 1464, as amended as of January 1, 1990. (Emphasis added).

We may consider the subsequent amendment of a statute in gleaning the legislative intendment of the law. Hot Springs Indep. School Dist. No. 10 v. Fall River Land Owners Assoc, 262 N.W.2d 33 (S.D.1978). See Karlen v. Janklow, 339 N.W.2d 322 (S.D.1983). When considering a subsequent amendment, we must decide whether the purpose of the amendment was to clarify or alter the law. Hot Springs, 262 N.W.2d at 39. If the amendment was intended to clarify the law, we may look to it in order to determine rights under the original act. Olson v. Pulaski Common School Dist., 92 N.W.2d 678, 680 (S.D.1958). In making this determination, we consider the time and circumstances surrounding the enactment of the amendment. Id.

First Savings Bank acknowledges in its brief the enactment of SDCL 51-15-1(16) defining "national bank" was probably in response to this litigation. We agree, and also find the amendment of SDCL 51-20-4 a relevant circumstance in gleaning legislative intent with respect to branch banking limitations. When the legislature amended SDCL 51-20-4 they specified with greater detail that branch banks may be established by consolidating or merging with another "state bank, national bank or savings and loan association organized pursuant to Title 52 or 12 U.S.C. Sec. 1464, as amended as of January 1, 1990." However, with respect to establishing branch banks in municipalities with less than 3,000 population, the legislature did not specify savings and loan associations organized pursuant to Title 52 or 12 U.S.C. Sec. 1464. Rather, no branch bank may be established where there is an existing national or state bank. Had the legislature intended this restriction to include banks chartered under Title 52 or 12 U.S.C. Sec. 1464, they would have so provided. As previously mentioned, First Savings Bank is charted under 12 U.S.C. Sec. 1464.

We believe the purpose for these amendments was to clarify SDCL 51-20-4, and thus we may consider them in determining the rights under existing law. Under our analysis, we hold that "national" in SDCL 51-20-4 refers to the act under which a bank is chartered. Therefore, Farmers State Bank was not prohibited from establishing a branch operation in Beresford. We affirm the circuit court on this issue.

II.

In Finding of Fact XIX, the Banking Commission found adequate evidence of need for an additional financial institution in Beresford. First Savings Bank takes issue with this finding and we review the record to determine whether the agency's finding of fact is clearly erroneous in light of all the evidence in the record. SDCL 1-26-36; Karras, 441 N.W.2d at 679; Sharp v. Sharp, 422 N.W.2d 443, 447 (S.D.1988) (Morgan, J., concurring specially; Henderson, J., dissenting); Permann, 411 N.W.2d at 115-17.

There is ample evidence in the record to support the Commission's finding of need for a new banking institution in Beresford. The economy of Beresford is based upon agriculture and agri-business. The present Beresford banking institutions maintain low loan-to-deposit ratios and a low agricultural loan volume. Indeed, the charters of the present Beresford banking institutions place significant limits upon agricultural and commercial lending. ⁴ Consequently, a significant proportion of agricultural lending to Beresford-area farmers is done by banking institutions in other towns and many Beresford retailers secure financing out of Beresford. It is perceived by those involved in agriculture in and around Beresford that the present Beresford banking institutions are not interested in making agricultural loans. As a result, people are taking their banking business to other towns. Local merchants have suffered because people patron the shops and markets of other communities when they travel to do their banking. The Banking Commission's finding of need for an additional banking institution was, therefore, not clearly erroneous. Cf. In re Application of Southern Hills Bank of Edgemont, 339 N.W.2d 310, 312-14 (S.D.1983) (similar circumstances justified granting application to move main bank office). We affirm the Banking Commission on this issue.

III.

The Banking...