Appeal of Portsmouth Trust Co.

• Citation: 120 N.H. 753,423 A.2d 603
• Decision Date: 26 November 1980
• Docket Number: 80-184,80-182,80-183,Nos. 80-181,80-185,s. 80-181
• Parties: Appeal of the PORTSMOUTH TRUST COMPANY. Appeal of the PISCATAQUA SAVINGS BANK. Appeal of the FIRST NATIONAL BANK OF PORTSMOUTH. Appeal of the PORTSMOUTH COOPERATIVE BANK. Appeal of the PORTSMOUTH SAVINGS BANK. (Board of Trust Company Incorporation).
• Court: Supreme Court of New Hampshire

Page 603

423 A.2d 603

120 N.H. 753

Appeal of the PORTSMOUTH TRUST COMPANY.

Appeal of the PISCATAQUA SAVINGS BANK.

Appeal of the FIRST NATIONAL BANK OF PORTSMOUTH.

Appeal of the PORTSMOUTH COOPERATIVE BANK.

Appeal of the PORTSMOUTH SAVINGS BANK. (Board of Trust Company Incorporation).

Nos. 80-181, 80-182, 80-183, 80-184, 80-185.

Supreme Court of New Hampshire.

Nov. 26, 1980.

Griffin, Harrington, Brigham & Ritzo, Portsmouth (William F. Harrington, Portsmouth, orally), for Portsmouth Trust Company.

Griffin, Harrington, Brigham & Ritzo, Portsmouth (Charles J. Griffin, Portsmouth, orally), for Piscataqua Savings Bank.

Boynton, Waldron, Dill, Aeschliman, Doleac & Woodman, Portsmouth (Jeremy R. Waldron, Portsmouth, orally), for First National Bank of Portsmouth.

Boynton, Waldron, Dill, Aeschliman, Doleac & Woodman, Portsmouth (Wyman P. Boynton, Portsmouth, orally), for Portsmouth Cooperative Bank.

Maurice J. Murphy, Jr., Portsmouth, by brief and orally, for Portsmouth Savings Bank.

Gregory H. Smith, Acting Atty. Gen., James E. Townsend, Asst. Atty. Gen., orally), for Board of Trust Company Incorporation.

Gallagher, Callahan & Gartrell, Concord (W. John Funk, Asst. Atty. Gen., orally), for New Hampshire Savings Bank.

KING, Justice.

The central issue in this case is whether the proceedings of the Board of Trust Company Incorporation concerning the application of the New Hampshire Savings Bank to open a branch office in Portsmouth violated the due process rights of the plaintiff banks in that the board denied these plaintiffs banks access to the confidential report of a bank examiner. A second issue is whether the board's refusal to make certain findings of fact and rulings of law, as the plaintiffs requested, violated the provisions of RSA 384-B:2 IV. We hold that the board's refusal to allow the plaintiffs access to the bank examiner's report denied them due process of law and that the board's refusal to make specific findings violated RSA 384-B:2 IV.

On July 2, 1979, the New Hampshire Savings Bank filed with the New Hampshire Banking Department an application to establish a branch office at 767 Islington Street in Portsmouth, New Hampshire, pursuant to RSA ch. 384-B. The Portsmouth Trust Company, the Piscataqua Savings Bank, The Portsmouth Cooperative Bank, The First National Bank of Portsmouth, The Portsmouth Savings Bank and The Indian Head National Bank all filed objections to the application. An examiner for the department conducted an investigation of the application during the period of August 9, 1979 to September 1, 1979, and filed a confidential report with the department on September 28, 1979. The department referred the application and report to the board pursuant to RSA 384-B:2 III (Supp. 1979).

The board held public hearings concerning the application on December 13, 1979 and January 8, 1980. Both the New Hampshire Savings Bank and the protesting banks introduced testimony and exhibits at these hearings. The board, however, denied the protesting banks' motion to examine the confidential report of the examiner and the confidential portion of the application. On February 27, 1980, the board granted the application of the New Hampshire Savings Bank and denied the motion of the protesting banks for specific findings of fact and rulings of law.

The protesting banks filed motions for rehearing pursuant to RSA 541:3, which the board denied. The plaintiffs then filed their appeals with this court pursuant to RSA 541:6. Of the six protesting banks only The Indian Head National Bank has not joined in this appeal.

Before proceeding to an examination of the plaintiffs' due process claims, we must consider whether the bank commissioner had authority to make the examiner's report confidential in the first place. The plaintiffs properly note that, although the statute regulating the branch bank application process does authorize the commissioner to investigate applications it does not vest the commissioner with the authority to make the results of such investigations confidential. RSA 384-B:2 III (Supp. 1979). This omission is not crucial, however, because RSA 383:10-b provides that "(a)ll records of investigations and reports of examinations" shall be confidential unless the commissioner, in his discretion, determines that "the ends of justice and the public advantage" require otherwise. Because RSA ch. 383 relates to the powers and duties of the commissioner generally, other chapters of the State's banking laws must be construed consistently with its provisions whenever it is possible and reasonable to do so. Accordingly, we hold that RSA 383:10-b empowers the commissioner to make reports of the bank examiner confidential and now turn to a consideration of the constitutionality of that statute.

The State Constitution provides that no person shall be deprived of his life, liberty or property except in accordance with the "law of the land." N.H.Const. pt. I, art. 15. "Law of the land" has been consistently construed to mean due process of law. Petition of Harvey, 108 N.H. 196, 198, 230 A.2d 757, 758 (1967); Opinion of the Justices, 66 N.H. 629, 633, 33 A. 1076, 1078 (1891). Whether particular government procedures are sufficient to satisfy the requirements of due process involves a bifurcated analysis. First, it must be determined whether the challenged procedures concern a legally protected interest. Board of Curators, Univ. of Mo. v. Horowitz, 435 U.S. 78, 82, 98 S.Ct. 948, 951 (1978). Second, it must be determined whether the procedures afford the appropriate procedural safeguards. See id. at 84-85, 98 S.Ct. at 952; Royer v. State Dep't of Empl. Security, 118 N.H. 673, 677, 394 A.2d 828, 830 (1978).

The plaintiffs, as validly chartered banks, have a legally protected right to engage in the business of banking. See Frost v. Corporation Commission, 278 U.S. 515, 521, 49 S.Ct. 235, 237, 73 L.Ed. 483 (1929). While it is of course true that a bank charter does not entitle the plaintiffs to a right to be free from competition, see Appeal of the Incorporators of the Manchester Savings Bank, 120 N.H. ---, ---, 412 A.2d 421, 426 (1980); Valley Bank v. State, 115 N.H. 151, 154, 335 A.2d 652, 653 (1975), a bank charter does create a right to be free from unlawful competition, see Frost v. Corporation Commission, supra at 521; Webster Groves Trust Company v. Saxon, 370 F.2d 381, 388 (8th Cir. 1966); National Bank of Detroit v. Wayne Oakland Bank, 252 F.2d 537, 544 (6th Cir.), cert. denied, 358 U.S. 830, 79 S.Ct. 50, 3 L.Ed.2d 69 (1958). It follows that the Board of Trust Company Incorporation may not grant an application to open a branch bank without affording due process to affected banks that may wish to challenge the application. Cf. Union Fidelity Life Ins. Co. v. Whaland, 114 N.H. 832, 834, 330 A.2d 782, 783 (1974).

In considering the procedural components of due process required in a particular case, the United States Supreme Court has considered the following three factors:

"First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail."

Mathews v. Eldridge, 424 U.S. 319, 335, 96 S.Ct. 893, 903, 47 L.Ed.2d 18 (1976).

The private interest involved here is substantial. The evidence submitted to the board clearly demonstrates that the Portsmouth area already supports a number of banks. There were claims that at least one bank faced a very serious threat of financial difficulty if the New Hampshire Savings Bank established a branch office in Portsmouth. All of the banks stand to lose a substantial amount of business should the branch be opened.

The procedures set forth in RSA 384-B:2 III (Supp. 1979) are inherently risky. The decision of whether to grant a branch bank application is left to a board consisting of three members who must rely upon the applicant and the bank examiner's report for much of its information. Although the board is empowered to grant a hearing, the decision to hold a hearing in a particular case...