466 N.W.2d 158 (S.D. 1991), 17092, Application of Farmers State Bank of Viborg

CourtSupreme Court of South Dakota
Writing for the CourtThe opinion of the court was delivered by: Wuest
Citation466 N.W.2d 158
PartiesIn the Matter of The Application of FARMERS STATE BANK OF VIBORG, South Dakota to Establish a Branch Bank in Beresford, South Dakota.
Date06 February 1991
Docket Number17092.

Page 158

466 N.W.2d 158 (S.D. 1991)

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.

February 6, 1991

Considered on Briefs Nov. 27, 1990.

Page 159

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

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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

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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...

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