Bank of Cent. Florida v. Department of Banking and Finance

• Decision Date: 24 May 1985
• Docket Number: No. AW-168,AW-168
• Citation: 10 Fla. L. Weekly 1313,470 So.2d 742
• Parties: 10 Fla. L. Weekly 1313 BANK OF CENTRAL FLORIDA, Appellant, v. DEPARTMENT OF BANKING AND FINANCE, State of Florida, L. Justin Jackman, and Herman R. Staudt, Appellees.
• Court: Florida District Court of Appeals

Page 742

470 So.2d 742

10 Fla. L. Weekly 1313

BANK OF CENTRAL FLORIDA, Appellant, v. DEPARTMENT OF BANKING AND FINANCE, State of Florida, L. Justin Jackman, and Herman R. Staudt, Appellees.

No. AW-168.

District Court of Appeal of Florida,

First District.

May 24, 1985.

Rehearing Denied July 2, 1985.

Robert D. Gatton of Broad & Cassel, Winter Park, for appellant.

Eli H. Subin of Subin, Shams, Rosebluth & Moran, Orlando, for appellees.

NIMMONS, Judge.

The Bank of Central Florida ("Bank"), a state chartered commercial bank with principal offices in Orlando, appeals from a final order of the Comptroller of the State of Florida, as head of the appellee, Department of Banking and Finance ("Department"). The order determined the value of Jackman's and Staudt's dissenting shares of stock in the Bank of Central Florida in connection with the latter's merger with another bank. The Department, Jackman and Staudt are appellees herein. ¹ We affirm.

In October, 1981, a plan of merger for the Bank was approved by the Department. Under the plan, Jackman and Staudt, who owned approximately nine percent of the Bank's outstanding shares, would be entitled to receive shares of stock in the successor bank, or be paid $25 for each share of stock held. Because they disagreed with these options, Jackman and Staudt elected to pursue the remedies available under Section 658.44(5), Florida Statutes (1981). Since the Bank and Jackman and Staudt had not, within ninety days of the merger, agreed upon the voluntary appraisal procedure afforded by the statute, the Department, in September, 1982, ordered an appraisal of the value of the dissenting shareholders' stock. The Department advised the parties that the value of the dissenting shares would be determined pursuant to an appraisal to be performed by Blackstock and Co., Inc. ("Blackstock"), an investment banking firm, commissioned by the Department pursuant to Section 658.44(5), Florida Statutes (1981), which provides:

(5) The value of dissenting shares of each constituent state bank or state trust company, the owners of which have not accepted an offer for such shares made pursuant to subsection (3), shall be determined as of the effective date of the merger by three appraisers, one to be selected by the owners of at least two-thirds of such dissenting shares, one to be selected by the board of directors of the resulting state bank, and the third to be selected by the two so chosen. The value agreed upon by any two of the appraisers shall control and be final and binding on all parties. If, within 90 days from the effective date of the merger, for any reason one or more of the appraisers is not selected as herein provided or the appraisers fail to determine the value of such dissenting shares, the department shall cause an appraisal of such dissenting shares to be made which shall be final and binding on all parties. The expenses of appraisal shall be paid by the resulting state bank or trust company.

In September, 1982, Jackman and Staudt filed a circuit court suit in Leon County against the Bank and the Department alleging the unconstitutionality of Section 658.44(5) regarding the procedure for the determination of the value of dissenting shares. That suit culminated in a final judgment in which the circuit court construed the statute in such a way as to sustain it against constitutional attack. Essentially, the final judgment construed the statute so as to authorize the Department to reach a final determination of the value of the shares of stock only after affording the shareholders and the Bank, at the request of either, a formal Section 120.57(1), Florida Statutes, hearing before an independent hearing officer. No appeal was taken from such final judgment and the parties hereto have not sought to question the correctness of the above construction of the statute by the circuit court. ² We therefore, at least for purposes of consideration of the instant administrative appeal, assume the correctness of the circuit court's construction of Section 658.44(5).

After completion of the Blackstock appraisal, which valued the stock shares at $27.63 per share, the Department issued its notice of intent to adopt such appraisal as evidence of the value of the dissenting shares. Upon notification thereof, Jackman and Staudt requested a formal hearing pursuant to Section 120.57(1). The hearing was held before a hearing officer of the Division of Administrative Hearings. The Bank intervened and participated in such hearing.

At the hearing, evidence was received regarding three different valuations: (1) $27.63 per share by Blackstock; (2) $27.34 per share by Ronald W. Goff; and (3) $46.59 per share by Marc I. Perkins. In his recommended order, the hearing officer recommended the Perkins valuation of $46.59.

In its 29 page final order, in which it accepted the hearing officer's recommendation of a valuation of $46.59 per share based upon the Perkins valuation, the Department rejected some of the hearing officers' detailed findings which were supportive of the Perkins report. The Bank says that the Department's final order shows that the Department erroneously felt that it was legally obligated to accept the hearing officer's selection of the Perkins valuation notwithstanding the Department's proper exercise of its authority in rejecting some of the factual findings underpinning the hearing officer's recommendation of the Perkins valuation over the other appraisals.

Our review of the Department's final order and the recommended order has convinced us that the Department was indeed acting within the bounds of its authority, under the principles enunciated in McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977), ³ in rejecting some of the hearing officer's factual findings. However, the final order, fairly read, indicates the Department's own preference for the Perkins valuation even without some of its factual underpinnings which had been rejected by the Department, and there was competent substantial evidence still remaining to support the final order's selection of the Perkins valuation.

Although portions of the Department's lengthy final order recite in various ways the legal principle requiring the agency to accept findings of fact which are supported by competent substantial evidence, and which portions of the order, without more, might be construed to suggest that the Department was laboring under the erroneous assumption that it was still bound to accept the Perkins valuation notwithstanding its justified rejection of some of its underpinnings, it is apparent from the entirety of the final order that the Department itself concurred in the selection of the valuation recommended by Perkins. ⁴ We, therefore, affirm the final order's determination of the value of the dissenting shares.

On cross-appeal, Jackman and Staudt claim that the Department erred in not awarding: (1) "prejudgment interest" from December 31, 1981, the date of the bank merger, to the date of the Department's final order; (2) "postjudgment interest" from and after the date of the final order; and (3) costs of the proceedings. The Department's denial thereof, which was consistent with the hearing officer's recommendations, is affirmed.

The administrative proceeding which is the subject of this case is a creature of statute designed to provide a method by which the value of the shares of dissenting stockholders may be determined where there is disagreement as to such value. Although Section 654.44 provides that the resulting bank in a merger situation shall bear the costs of an appraisal requested by the dissenting shareholders, no mention is made of costs generally or of interest, and we decline to construe the statute to so provide.

Jackman and Staudt rely, in part, upon U.S. Parts, Inc. v. Tillis, 432 So.2d 674 (Fla. 5th DCA 1983), for the recovery of prejudgment interest. Tillis involved a minority shareholder's lawsuit to compel the corporation to purchase a proportionate number of their shares as were purchased from majority shareholders. Unlike the instant proceeding, interest was awarded the minority shareholders only because of a legal wrong committed by the majority shareholders. This result is consistent with the weight of authority that, in the absence of specific statutory authority, interest is awarded only in those cases where some legal wrong (such as breach of contract or conversion) has been committed. Meade v. Pacific Gamble Robinson Co., 58 A.2d 415 (Del.1948); In Re Janssen Dairy Corp., 2 N.J.Super. 580, 64 A.2d 652 (1949); Pittston Co. v. O'Hara, 191 Va. 886, 63 S.E.2d 34 (1951); American General Corp. v. Camp, 171 Md. 629, 190 A. 225 (1937); but cf. Southdown, Inc. v. McGinnis, 89 Nev. 184, 510 P.2d 636 (1973). In the case at bar, the action of merging the two banks did not constitute a legal wrong to the dissenting shareholders and Section 658.44 governing such mergers makes no provision for the payment of interest on the valuation ultimately determined.

The shareholders/appellees also rely upon...