76 N.W.2d 722 (S.D. 1956), 9540, Wall v. Fenner

CourtSupreme Court of South Dakota
Writing for the CourtRENTTO, Judge.
Citation76 N.W.2d 722,76 S.D. 252
Date04 May 1956
Docket Number9540.
PartiesMelvin WALL et al., Plaintiffs, v. Roy H. FENNER, as Superintendent of Banks of the State of South Dakota, et al., Defendants.

Page 722

76 N.W.2d 722 (S.D. 1956)

76 S.D. 252

Melvin WALL et al., Plaintiffs,


Roy H. FENNER, as Superintendent of Banks of the State of

South Dakota, et al., Defendants.

No. 9540.

Supreme Court of South Dakota.

May 4, 1956

Rehearing Denied June 15, 1956.

Page 723

[76 S.D. 254] Phil Saunders, Atty. Gen., Benjamin D. Mintener and W. O. Knight, Asst. Attys. Gen., for defendants and appellants. Karl Goldsmith, Pierre, of counsel.

[76 S.D. 255] Frank R. McKenna and Milton Cameron, Sisseton, for plaintiffs and respondents.

RENTTO, Judge.

Plaintiffs and three other incorporators filed Articles of Incorporation for the Sisseton State Bank in the office of the Superintendent of Banks, together with an application for the approval thereof. The defendants, who constitute the State Banking Commission, denied the application for the 'reason that it appears the public convenience and necessity do not justify the organization

Page 724

of said new bank and that the said city of Sissetion and adjacent territory are now provided with adequate banking facilities'. In this proceeding for mandamus the action of the Commission was reviewed by the trial court and a judgment entered commanding the defendants to approve the proposed Articles of Incorporation. This appeal by the Commission is grounded on the claim that the trial court did not confine its review to the question of whether the Commission had abused its discretion in denying the incorporators' application for approval, but went further and substituted its determinator for that of the Commission.

State banks are engaged in a business subject to legislative control under the police power. Shaw v. Brisbine, 63 S.D. 470, 260 N.W. 710. That control extends to their inception as well as their subsequent operation. Floyd v. Thornton, 220 S.C. 414, 68 S.E.2d 334. In this day and age the chief function of commercial banks is the furnishing of bank credit which is the circulating medium of exchange by means of which most of the business transactions of this country are conducted. Because of this the stability of bank credit is a matter which concerns not only the stockholders and depositors of a bank, but also most of the other members of the community to the extent that it may be said to be 'affected with a public interest'. In the exercise of the police power for the public welfare the legislature may adopt such measures as it deems necessary and adapted to the stabilization of such credit. State ex rel. Sharpe v. Smith, 58 S.D. 22, 234 N.W. 764. It is generally recognized that too many banks in one locality are a source of financial weakness. Zollmann Banks & Banking, Vol. 9, Sec. 6092. Our legislature has sought to avoid this evil by providing in SDC [76 S.D. 256] 6.0304 that the application for a proposed bank shall not be approved 'if the public convenience and necessity do not justify the organization of such bank'. This it could properly do. 111 A.L.R. 143.

The legislature could have retained in itself the authority to make this fact determination. The impracticability of such retention is obvious. As an alternative it could properly create an administrative, investigatory, fact finding agency to perform this function, administrative and not judicial in nature. Weer v. Page, 155 Md. 86, 141 A. 518; Pue v. Hood, 222 N.C. 310, 22 S.E.2d 896. That is what our legislature did. SDC 6.0304 makes it the duty of the Commission to determine whether the Articles of Incorporation of a state bank shall be approved or denied. It further provides that 'Such application shall not be approved if the provisions of law relating to banks have not been complied with, or if the corporation has been organized for malicious or speculative purposes, or for any purpose other than the legitimate business of banking; or if the public convenience and necessity do not justify the organization of such bank, or if the organizers thereof do not possess the adequate and necessary qualifications and fitness to manage the business of banking'. When the Commission acts on an application it must, in carrying out this legislative mandate, determine questions of fact. In making such determination the Commission of necessity exercises a discretion. However this statute does not give to the Commission an unlimited or absolute discretion. Its action must be based on determinations of facts. Du Bose v. Gormley, 189 Ga. 321, 5 S.E.2d 909. It requires the Commission to inquire into specified factual areas thus limiting the Commission's concern to the areas enumerated. These are sufficiently definite standards for the administrative action which the statute authorizes. Weer v. Page, supra.

While the statutes under consideration do not provide for an appeal to the courts from the decision of the Commission a judicial review of its proceedings may be had by mandamus. However when the action under judicial scrutiny involves the exercise of discretion by an administrative officer or agency, the judicial review is limited to [76 S.D. 257] ascertaining whether that discretion had been abused. State ex rel. Cook v. Richards, 61 S.D. 28, 245 N.W. 901, 905. That case enumerates the deviations from proper action which are included in the

Page 725

phrase 'abuse of discretion'. In Farmers' Loan & Trust Co. v. Hirning, 42 S.D. 52, 172 N.W. 931, 933, this court said: 'Where the law requires an administrative officer to make a quasi judicial decision, viz. the determination of a question of fact, mandamus will not lie to control that decision, nor will it reverse such decision, unless it clearly appears that it was so plainly without support in the evidence as to amount to an arbitrary abuse of such quasi judicial authority'. This right to attack the decision of the Commission on the ground of an abuse of discretion is available even though the legislature has declared in SDC 6.0205(4) and SDC 6.0304 that the action of the Commission shall be final. State ex rel. White v. Industrial Commission, Ohio App., 40 N.E.2d 453.

Responsibility for the findings of fact rests on the Commission. The function and inquiry of the Court are limited, in respect of factual findings, to ascertaining whether the findings are supported by competent evidence. It is the function of the Commission and not of the court on review to weigh the evidence and to draw the inferences therefrom. Craig v. Jensen, 66 S.D. 93, 278 N.W. 545; 42 Am.Jur., p. 644, Sec. 217; 73 C.J.S., Public Administrative Bodies and Procedure, Sec. 225, p. 594; State ex rel. Sarri v. State Securities Commission, 149 Minn. 101, 182 N.W. 910; State ex rel. Duluth Clearing House Ass'n v. Department of Commerce, Minn., 73 N.W.2d 790. The court in reviewing such findings may not interfere with the administrative judgment merely because there is ground for a difference of opinion, even though the court may reach a different conclusion. State ex rel. Dybdal v. State...

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