Bank of Commerce v. Board of Governors of Federal Reserve System

• Decision Date: 01 May 1975
• Docket Number: No. 74-1264,74-1264
• Citation: 513 F.2d 164
• Parties: BANK OF COMMERCE and First National Bank of Sheridan, Petitioners, v. BOARD OF GOVERNORS OF the FEDERAL RESERVE SYSTEM and Wyoming Bancorporation, Respondents.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 164

513 F.2d 164

BANK OF COMMERCE and First National Bank of Sheridan, Petitioners, v. BOARD OF GOVERNORS OF the FEDERAL RESERVE SYSTEM and Wyoming Bancorporation, Respondents.

No. 74-1264.

United States Court of Appeals Tenth Circuit.

Argued Jan. 21, 1975.

Decided March 21, 1975.

Rehearing Denied May 1, 1975.

Richard L. Eason, Simon, Eason, Hoyt & Malone, P. C., Englewood, Colo. (Henry A. Burgess, Sheridan, Wyo., and D. Monte Pascoe, Ireland, Stapleton, Pryor & Holmes, P. C., Denver, Colo. on the brief), for First Nat. Bank of Sheridan.

Donald Etra, Atty., Dept. of Justice (Carla A. Hills, Asst. Atty. Gen., and Leonard Schaitman, Atty., Dept. of Justice on the brief), for Bd. of Governors of the Federal Reserve System.

William P. Johnson, Rothgerber, Appel & Powers, Denver, Colo. (Hanes, Carmichael, Johnson, Gage & Speight, P. C., Cheyenne, Wyo., on the brief), for Wyoming Bancorporation.

Before SETH, BARRETT and DOYLE, Circuit Judges.

WILLIAM E. DOYLE, Circuit Judge.

The matter presented is a petition on behalf of Bank of Commerce and First National Bank of Sheridan, Wyoming seeking review of the order of the Board of Governors of the Federal Reserve System granting its approval of the application of Wyoming Bancorporation to acquire 95% of the voting shares of the Bank of Wyoming, Sheridan, Wyoming, a proposed new bank. The Bank of Commerce is a state chartered bank. The Bank of Wyoming would compete with it and with the First National Bank of Sheridan. The facts are uncomplicated:

On April 28, 1972 the Bank of Commerce applied for a new state bank in Sheridan, Wyoming. Some months after that, on July 18, 1972, the organizers of the Bank of Wyoming applied to the Comptroller of Currency for a charter. The latter application disclosed that the Bank of Wyoming would be a subsidiary of Wyoming Bancorporation, a holding company, and would be located at 1963 North Main Street in Sheridan, some 20 blocks away from the Bank of Commerce and the First National Bank of Sheridan. The Bank of Commerce and the First National Bank objected to the issuance of the charter and requested a hearing.

On September 26, 1972 the hearing was held and subsequently the State of Wyoming held a hearing on the application of the Bank of Commerce for a state charter. On July 5, 1973 the Comptroller gave preliminary approval on the condition that Wyoming Bancorporation hold all of the stock except directors' qualifying shares, and on July 31, 1973, approval was given to the application for the Bank of Commerce state charter.

On August 1 Wyoming Bancorporation sought approval from the Federal Reserve Board for its acquisition of the Bank of Wyoming, and on August 13, 1973 Bancorporation sought to stay the order of the state examiner granting the Bank of Commerce a state charter.

Inquiries were made on August 31 by the Federal Reserve Bank of Kansas City to Bancorporation asking (1) the definite location of the new bank; (2) whether the new bank would compete with the Ranchester State Bank (which is 15 miles from Sheridan); and (3) information as to the effect, if any, the state application would have on the financial status of the Bank of Wyoming.

In response to the inquiry of the Federal Reserve Bank as to definite location, Bancorporation said it intended to transfer its location to downtown Sheridan instead of 1963 North Main. The Federal Reserve Bank then formally accepted the application and a notice of the application was published in the Federal Register on September 28, 1973. It called for comments on or before October 16.

The Bank of Commerce was fully aware of the proceedings. For example, it appeared in opposition to the application of the Bank of Wyoming to the Comptroller. The Comptroller gave preliminary approval to the application on July 5, 1973. Following that, an action was filed in the United States District Court for the District of Wyoming to review that approval. The district court dismissed the Bank of Commerce complaint and that matter is now before this court on appeal, Bank of Commerce v. Smith, etc., et al., No. 74-1185. ¹

On February 11, 1974, the Comptroller recommended to the Board that it approve the holding company application. The Board gave its approval to the application on May 3, 1974.

The instant review is pursuant to 12 U.S.C. § 1848 which allows any party aggrieved to seek review in the United States Court of Appeals. Petitioners say that they are aggrieved in accordance with 12 U.S.C. § 1850 which gives a party who will become a competitor of the applicant the right to become an adversary before the Board and to appeal an adverse order.

The doctrine of Whitney National Bank v. Bank of New Orleans and Trust Co., 379 U.S. 411, 85 S.Ct. 551, 13 L.Ed.2d 386 (1965) requires that an opponent of acquisition of a new bank by a bank holding company must first attack the proposed arrangement before the Federal Reserve Board. In a more recent case, First National Bank of St. Charles v. Board of Governors of the Fed. Res. System, 509 F.2d 1004 (8th Cir. 1975), the petitioners, as in this case, took no action until after Board approval. The appeal was dismissed by the Eighth Circuit because of failure to exhaust administrative remedies. As a result, they were held not to have been aggrieved parties under § 1848.

Petitioners here contend that the notice given in the Federal Register was legally inadequate and thus they were not required to participate in the administrative proceeding, and can suffer no legal disability on that account.

There were two notices given in the Federal Register, one on September 28, 1973 and one on March 5, 1974. Admittedly, no notice was mailed to or served on the petitioners. On the other hand, petitioners had actual knowledge that an application was to be filed. Whether they had actual notice of the filing is another matter which is not now before us. This could become an issue of fact if the publication in the Federal Register were to be held insufficient. Undoubtedly petitioners are entitled to participate by filing objections and the Board may, in its discretion, grant a hearing. In this instance the action of the Board was taken on the basis of documentary information. Petitioners say that inasmuch as they have a right to participate under the statute, § 1850, it follows that they are entitled to actual notice of the pendency of the proceedings under the due process clause of the Constitution and that notice through the Federal Register violates procedural due process. They rely on Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950) and the cases which follow it. Mullane holds that due process requires notice which is calculated to apprise interested parties of the pendency of the action and to afford them an opportunity to present their objections. This was publication in a local newspaper of a notice to settle accounts in an estate matter. Other cases are cited by appellants, but none of these are in point either ² since they do not involve publication in the Federal Register and are not concerned with...