Bank of Washington v. McAuliffe

• Decision Date: 11 September 1984
• Docket Number: No. 65613,65613
• Citation: 676 S.W.2d 483
• Parties: BANK OF WASHINGTON, Appellant, v. Daniel J. McAULIFFE, William F. Enright, Jr., Don C. Redding, Michael J. Kuklenski, Thomas C. Hullverson, as members of the Banking Board, Respondents, and First Missouri Bank of Washington, Intervenor.
• Court: Missouri Supreme Court

Page 483

676 S.W.2d 483

BANK OF WASHINGTON, Appellant, v. Daniel J. McAULIFFE, William F. Enright, Jr., Don C.

Redding, Michael J. Kuklenski, Thomas C.

Hullverson, as members of the Banking

Board, Respondents,

and

First Missouri Bank of Washington, Intervenor.

No. 65613.

Supreme Court of Missouri,

En Banc.

Sept. 11, 1984.

L.B. Eckelkamp, Jr., William W. Eckelkamp, Washington, for appellant.

Irven L. Friedhoff, John Ashcroft, Atty. Gen., Patricia D. Perkins, Asst. Atty. Gen., Jefferson City, for respondents.

James F. Gunn, Donald Gunn, Jr., St. Louis, for intervenor.

William G. Guerri, St. Louis, for amicus curiae.

HIGGINS, Judge.

The Bank of Washington appeals from affirmance of the grant of a certificate of incorporation to the First Missouri Bank of Washington. The Acting Director of Finance granted the certificate; the Bank of Washington appealed and after de novo review, the State Banking Board affirmed the charter grant. § 361.094, RSMo 1978. The circuit court affirmed the Board's order. The Court of Appeals, Eastern District, reversed, finding that a bank holding company was in fact the alter ego for persons listed as incorporators of the proposed bank, and that a bank holding company could not qualify as an incorporator under section 362.015, RSMo 1978. This Court granted transfer to examine whether a bank holding company not listed as an incorporator under section 362.015, RSMo 1978, can act through natural persons otherwise in compliance with that statute to associate for the incorporation of a bank. The grant of the certificate of incorporation is affirmed.

On May 21, 1980, five individuals associated for the incorporation of a bank to be called "The First Missouri Bank of Washington." These persons intended to sell nearly all of their stock in the proposed bank to a bank holding company, First Missouri Banks, Inc. On September 19, 1980, the Acting Director of Finance issued the bank charter, aware that the incorporators desired to effect a sale to the holding company.

The Bank of Washington asserts now, as it has on each previous appeal, that the charter granted to First Missouri Bank of Washington was void ab initio because the Acting Director of Finance was without legal authority to grant that charter; that a bank holding company was the "true incorporator" of the proposed bank, and was therefore not qualified to associate for the incorporation of a bank under section 362.015, RSMo 1978; that the charter should not have been granted because the application was in fact an application for a branch bank, in violation of chapter 362; and that the charter should not have been granted because the name "First Missouri Bank of Washington" violates section 362.020(1), RSMo 1978, which requires that a corporate name not duplicate or imitate a name previously used within the last fifty years as the title of a bank or trust company incorporated in Missouri. Respondents and intervenor counter that the Acting Director was properly authorized to issue a charter; that the State Banking Board's review superseded the Acting Director's and renders a challenge to the Acting Director's authority irrelevant; that bank holding companies may obtain charters; that the issuance of a charter did not create a branch bank; and that the name given to the new bank was not violative of section 362.020, RSMo 1978.

Several developments taking place between the time of appeal and argument before this Court affect the disposition of certain issues in this case. On May 15, 1984, the day before oral argument in this Court, the governor signed into law H.B. 1373, an act of the Eighty-Second General Assembly that repealed sections 362.015 and 362.030, RSMo, and enacted provisions that permit incorporators of a proposed bank to act on behalf of a bank holding company. The language in the new section 362.015.2 is explicit:

2. When authorized by the finance director as provided in section 362.035 any five or more persons who shall have associated themselves by articles of agreement, in writing, as provided by law, for the purpose of establishing a bank or trust company may be incorporated under any name or title designating such business. Such persons may act on behalf of a bank holding company.

Thus, if this Court were to hold that a bank holding company could not have acted "through" individual incorporators, a new application for charter under the new statute but otherwise under the same circumstances would be valid as to the issue of the holding company's alleged affiliation with the incorporators. This situation, while not rendering the entire cause moot, results in greater significance accorded to the other issues raised in the case. If the decisions on these issues below withstand scrutiny, reversal on the issue of the holding company's actions alone would be judicially inefficient and would ignore an expressed intent of the legislature to clarify the process of bank incorporation in Missouri.

To similar effect, the Court notes that the First Missouri Bank of Washington has merged into the First Missouri Bank of Franklin County. Of course, the validity of the original incorporation is the sine qua non in determining whether the merger is possible: one corporation cannot merge with another if it never existed in a legal sense. But, if the validity of the charter is established, the issue concerning the new bank's choice of name is of questionable vitality, given the merger.

Thus, intervening events have affected the need to address each issue in this case in the context in which such issues originally arose; notions of mootness suggest that aspects of this case are no longer of general interest or importance. Such events have altered the nature of the Court's review to the extent that the controversy may be settled by addressing the Acting Director's authority to grant the bank its charter. If the Acting Director was legally entitled to act as he did, dependent issues may resolve themselves.

On August 31, 1979, Governor Joseph Teasdale accepted the resignation of Edgar H. Crist from the position of Commissioner of Finance. On September 5, 1979, the Governor appointed Earl Manning to serve as "Acting Director of Finance" until a permanent director of finance could be appointed and qualified. Mr. Manning's name was never submitted to the senate. On September 19, 1980, Mr. Manning approved the grant of a bank charter to the proposed incorporators. Appellant challenges Mr. Manning's authority to grant that charter.

Section 361.040, RSMo 1978, provides that the governor shall appoint a director of finance by and with the advice and consent of the senate who shall hold his office at the pleasure of the governor. Article IV, section 51, of the Missouri Constitution provides in pertinent part:

All members of administrative boards and commissions, all department and division heads and all other officials appointed by the governor shall be made only by and with the advice and consent of the senate. The authority to act of any person whose appointment requires the advice and consent of the senate shall commence, if the senate is in session, upon receiving the advice and consent of the senate. If the senate is not in session, the authority to act shall commence immediately upon appointment by the governor but shall terminate if the advice and consent of the senate is not given within thirty days after the senate has convened in regular or special session.

These provisions read in conjunction establish that one appointed by the governor to serve as Director of Finance must be confirmed by the senate. Article IV, section 4, of the constitution provides as follows, however: "The governor shall fill all vacancies in public offices unless otherwise provided by law, and his appointees shall serve until their successors are duly elected or appointed and qualified." The Bank of Washington asserts that article IV, section 51, required Mr. Manning's appointment to be confirmed by the senate, and that because it was not, Mr. Manning's grant of the charter of incorporation was without effect. Respondents and intervenor counter that article IV, section 4, directs the governor to fill vacancies by appointment, and that Mr. Manning's position was expressly a temporary one not requiring the advice and consent of the senate.

Construction of article IV, section 51, without reference to other provisions could lead to the conclusion that an Acting Director of Finance or one filling a vacancy in public office must be confirmed by the senate. Should the senate not be in session at the time of appointment, that appointment would be operative only until such time as the senate, within thirty days of convening anew, failed to consent to the appointment.

Such a construction appears to conflict with article IV, section 4, which requires only that an appointee's successors be "appointed and qualified." No mention is made of the need to qualify an appointee.

Constitutional provisions must be construed as a whole so as not to destroy the general intent and purpose of the framers. State at inf. Martin v. City of Independence, 518 S.W.2d 63, 66 (Mo.1974). Where constitutional provisions conflict, a construction that brings conflicts into harmony is of particular importance. Id. A construction that accommodates both section 51 and section 4 of article IV permits the governor to appoint a person to fill a vacancy in office without the senate's advice and consent so long as that appointment is expressed in terms of a temporary position. Such an appointee may serve until a permanent successor is selected by the governor and consented to by the senate. Art. IV, § 4. The temporary appointee cannot serve beyond the unexpired term of the original appointee whom he replaces, unless at the completion of that term his name is submitted to the senate for advice and consent. See, e.g., State ex rel. Satterthwaite v. Stover, 35 Del. 85, 159 A. 239 (1932). Other...