Bank of Hamilton v. State Banking Bd., 9131

Citation236 N.W.2d 921
Decision Date17 December 1975
Docket NumberNo. 9131,9131
CourtNorth Dakota Supreme Court
PartiesThe BANK OF HAMILTON, Petitioner and Appellant, v. The STATE BANKING BOARD, Appellee, and The Bank of Neche, Intervenor and Appellant, and The Bank of Cavalier, Intervenor. Civ.

Syllabus by the Court

1. The State Banking Board acts as an administrative agency when it hears and determines an application of a bank to relocate its corporate headquarters and to change its corporate name pursuant to Section 6--03--13, N.D.C.C.

2. Judicial review of an administrative agency decision is pursuant to the North Dakota Administrative Agencies Practice Act. Chapter 28--32, N.D.C.C.

3. Judicial review of the factual basis of administrative agency decisions involves three steps: (a) Are the findings of fact supported by substantial evidence? (b) Are the conclusions of law sustained by the findings of fact? (c) Is the agency decision supported by the conclusions of law?

4. Where an issue involving the application of expertise is entrusted to an agency composed of experts in that subject matter, this court is reluctant to substitute its own judgment for that of the agency.

5. There is substantial evidence to support a finding by the State Banking Board that there will not be sufficient business for the profitable conduct of the bank on whose behalf an application to relocate was made where the following evidence was adduced at hearing: the population and school enrollment in the community of the bank is declining; the retail sales in the community of the bank are declining; the number of accounts at the bank from persons residing closer to the bank's present location are declining, while the number from those persons residing closer to its proposed location are increasing; another bank sought to move to the same city as proposed by the applicant; the other application was at the time of the hearing likely to be granted and was granted on the same date as the instant application; and the allowance of the other application would adversely affect the accounts of the bank unless it were also allowed to move.

Raymond A. Lamb, Moorhead, Minn., and Wesley Argue, Hamilton, for the Bank of Hamilton, applicant and appellee; argued by Raymond A. Lamb, Moorhead, Minn.

Vogel, Vogel, Brantner & Kelly, Fargo, for Citizens State Bank of Neche, protestant and appellant; argued by Kermit Bye, Fargo.

Allen I. Olson, Atty. Gen., and David O. Lee, Special Asst. Atty. Gen., for State Banking Board; argued by David O. Lee, Bismarck.

ERICKSTAD, Chief Justice.

In early 1974 the Bank of Hamilton applied to the State Banking Board (hereinafter called Board) to move to Cavalier, to change its name, and to establish a paying and receiving station at its old location at Hamilton. Pursuant to notice, the Board on April 19, 1974, heard the matter. Two parties protested the application: First State Bank of Cavalier (hereinafter called Bank of Cavalier) and Citizens State Bank of Neche (hereinafter called Bank of Neche).

Evidence adduced at hearing included testimony and exhibits relating to, among other facts, population and school enrollment decline in and the physical deterioration of Hamilton, taxable valuation and retail sales in Pembina County and the cities of Cavalier and Hamilton, as well as statements of condition of the three banks involved in the hearing.

On August 14, 1974, the Board entered its findings of fact, conclusions of law, and decision, whereby the Bank of Hamilton was granted approval to move to Cavalier, to change its name to First Dakota State Bank, and to establish a paying and receiving station in Hamilton, all subject to certain conditions.

Only the Bank of Neche appealed to the Burleigh County District Court which on April 16, 1975, affirmed the Board's decision. Thereafter, the Bank of Neche filed its Notice of Appeal and its Undertaking on Appeal with this court.

In its brief, the Board asserts that:

'* * * (A)ll that is required to support the decision of the State Banking Board in this matter is that its decision be supported by its findings of fact and conclusions of law, that its conclusions of law be supported by its findings of fact, and that its findings of fact be supported by substantial evidence. * * *'

The Bank of Neche denies that there is substantial evidence to support the Board's decision to allow relocation of the Bank of Hamilton under Section 6--03--13, N.D.C.C., which reads as follows:

'6--03--13. Conversion to national bank--Sale of bank--Removal to new location.--An association organized to do business in any city in this state, and which has sold or converted its business to a national bank or to any other banking association which is continued at the same place, shall not use its charter to recommence business at another place without first obtaining the consent of the state banking board. When a banking association which has not so converted or sold its business is located at a place where there is not, or Can reasonably project that there will not be, sufficient business for the profitable conduct of a bank, such association may apply to the state banking board for authority to remove its business to some other place within the state and to change its name if desired, and upon the approval of such application, by the board and the proper amendment of the articles of incorporation, the board may issue authority for such removal and change. No such association, however, shall be permitted to remove its business to any city unless it has the full amount of capital stock and surplus required by this title for a new organization in such city.' N.D.C.C. (Emphasis added.)

In Application of Bank of Rhame, 231 N.W.2d 801 (N.D.1975), we held that the Board, in determining whether to allow relocation, acts as an administrative agency; that a protester has standing to appeal the administrative order if it actively participates in the proceeding before the Board and claims to be factually aggrieved by the decision; and that evidence relating to population decline, loss of business, gross sales in the city of Rhame, customers' use of the bank, and the area from which the bank drew its customers was relevant to and supportive of the Board's order granting authority to the Bank of Rhame to move to Bowman.

We noted that Section 6--03--13, N.D.C.C., had been amended in 1969 to allow the Board to consider 'future developments,' which we believe would include prospects for making a profit in the future, in determining whether to grant a bank authority to relocate. S.L.1969, Ch. 104, § 1. 'It is readily observed that the statutory provision now is not confined to clearly showing that the banking association is at a place where there is not sufficient business, but also permits the Board to take into account evidence from which it can be reasonably projected whether or not there will be sufficient business for a profitable operation of a bank. But we do not believe that the term 'profit' is limited to a mere addition of funds acquired from business transactions and the deduction of ordinary expenses. We can well appreciate that the term 'profit' has a different meaning from one business to another, and furthermore we recognize that the term 'profit' can mean different things depending on the bookkeeping and accounting methods employed. We are, however, satisfied that the amendments made in 1969 gave the Board greater latitude and will permit the Board to take into account future developments.' Application of Bank of Rhame, supra, 231 N.W.2d at 810--811.

In the instant case, the Bank of Neche asserts that there has been an inadequate showing that the Bank of Hamilton will not be profitable at its present location. Considering the record of increasing profitability of the Bank of Hamilton at its Hamilton location until December 31, 1973, Bank of Neche argues, 'The premise that the Bank's profits after December 31, 1973, will decline because of a declining community is not only unsupported--it is disproved by the Bank's own expert witness and the hard cold facts in the record.'

The Bank of Hamilton attributes its past history of profitability to the economic boom that occurred in North Dakota and to its own competent management and contends that past profit is only one factor in projecting the future of a business. Additionally, the Bank of Hamilton asserts that the relocation of Bank of Neche from Neche to Cavalier will further affect the profitability of its operation by drawing Cavalier customers, who for their own reasons may be dissatisfied with the Bank of Cavalier, away from the Bank of Hamilton, which is seven miles east of Cavalier.

Except for the interposition of the Bank of Neche, the facts in this case are similar to those in Application of Bank of Rhame. The...

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