Board of Bank Control v. Thomason

• Decision Date: 22 March 1960
• Docket Number: No. 17630,17630
• Citation: 113 S.E.2d 544,236 S.C. 158
• Court: South Carolina Supreme Court
• Parties: BOARD OF BANK CONTROL of the State of South Carolina, Appellants, v. R. T. THOMASON, Jr., and W. Calvin White, for Fidelity Finance Company, Respondents.

Page 544

113 S.E.2d 544

236 S.C. 158

BOARD OF BANK CONTROL of the State of South Carolina, Appellants, v. R. T. THOMASON, Jr., and W. Calvin White, for Fidelity Finance Company, Respondents.

No. 17630.

Supreme Court of South Carolina.

March 22, 1960.

Daniel R. McLeod, Atty. Gen., William F. Austin, Asst. Atty. Gen., for appellants.

Whiteside & Smith, Spartanburg, for respondents.

OXNER, Justice.

This is an appeal from an order of the Judge of the County Court of Spartanburg County holding that the State Board of Bank Control erred in denying respondents' application for a license to conduct a small loan business in the City of Spartanburg and directing the Board to forthwith issue to respondents a license to engage in such business.

Act No. 310 of the 1957 Acts of the General Assembly, 50 St. at L. p. 339, now forming Sections 8-794 to 8-794.166 of the 1959 Cumulative Code Supplement, authorizes under certain conditions an interest rate in excess of that permitted by the general usury statute on loans of $200 or less. The supervision of this business is vested in the State Board of Bank Control. It is authorized by the Act to issue licenses to engage in the small loan business but to do so must find: '(a) that the financial responsibility, character, experience and general fitness of the applicant are such as to command the confidence of the public and to warrant belief that the business will be operated lawfully, honestly, fairly and efficiently within the purposes of this chapter, which requirements shall be maintained during the period of the license, (b) that the applicant has available adequate funds in the discretion of the Board for the operation of such business at the specified location and (c) allowing such applicant to engage in business will promote the convenience and advantage of the community in which the licensed office is to be located.' Section 8-794.40 of the 1959 Cumulative Supplement.

On January 29, 1959 the Fidelity Finance Co., a partnership composed of respondents R. T. Thomason, Jr. and W. Calvin White, applied for a license to conduct a small loan business at 129 North Spring Street in the City of Spartanburg. After due notice, a hearing was held by a director of the Board on April 14, 1959. The application was opposed by various persons. Both the applicants and objectors were represented by counsel. The major controversy was as to the need of an additional small loan business in this area. On this issue the applicants filed a number of affidavits and letters by residents of the City of Spartanburg. Also considered at the hearing were various facts set forth in the briefs of counsel and a survey made by the Board of Bank Control on December 3, 1958, showing the population of the City and County of Spartanburg, the number of colleges and industrial plants and wages paid, the agricultural production, and other statistical data relating to the economic conditions of the County and growth prospects. This survey further disclosed that as of November 30, 1958, the City of Spartanburg was served by three banks, ten unlicensed large finance companies and twenty-eight small loan companies. There was also shown the number and amount of outstanding loans by each group. It further appeared that since the survey was made, the Board on January 14, 1959 had granted an additional small loan license, making the total number of small loan companies in the City of Spartanburg at that time twenty-nine.

In an order filed on May 27, 1959, the Board of Bank Control concluded that the applicants had met the requirements as to financial responsibility, character, experience and general fitness but that the issuance of an additional license would not promote the convenience and advantage of the community. The Board said that when the 29th license was granted on January 14, 1959, it was of the opinion that there were sufficient small loan companies in the City of Spartanburg to serve the community and that there had since been no substantial change in conditions. The following was then stated in the order:

'In the State of South Carolina there are now 504 licensees under the Small Loan Act. This based on the population of the State of South Carolina shows that each licensee serves approximately 4,000 persons. Applying this formula to the City of Spartanburg, it shows that each licensee would serve 1,269 persons. This is based on the official 1950 census.

'It would, therefore, appear that the Spartanburg City proper is adequately served by the licensees that are now operating within the City. It is conceded that all of the County population partronize the business establishments of the City of Spartanburg. As hereinabove pointed out, there are 29 licensees presently engaged in the business of small loans in the City of Spartanburg. Excluding these 29 licensees, there are 11 small loan companies doing business in other parts of Spartanburg County. It is the opinion of the Board that the existing small loan licensees within the City of Spartanburg have sufficient working capital and credit to meet the demands for services in Spartanburg. There is competition now between the licensees. The granting of a license to the applicant to engage in this business would not promote the convenience and advantage of the community in which the business is proposed to be conducted.'

In reversing the order of the Board of Bank Control and directing that a license be issued to respondents, the County Judge in an order filed on July 25, 1959, held that the decision of the Board was based on a formula which was erroneously applied to the facts presented. He said this formula was applied to the population of the City of Spartanburg according to the 1950 census when it should have been applied to the entire County of Spartanburg according to its population in 1958, as estimated in the survey of December 3, 1958, and on this basis an additional license was clearly justified.

Our first inquiry is the scope of judicial review permitted in a matter of this kind. The Act authorizes the Court, on petition by any person aggrieved, to review any order or decision made by the Board of Bank Control. Section 8-794.161. On such appeal, the Act states: 'The court shall have jurisdiction to review the facts and the law and to affirm, modify, or set aside the order or decision of the Board and restrain the enforcement thereof.' Section 8-794.163.

Taken literally, the foregoing language is perhaps broad enough to provide for unlimited review by the courts and the exercise of independent judgment. But as pointed out in Chicago & Southern Air Lines v. Waterman Steamship Corporation, 333 U.S. 103, 68 S.Ct. 431, 433, 92 L.Ed. 568, 'statutes which employ broad terms to confer power of judicial review are not always to be read literally.' In ascertaining the legislative intent, it is necessary to keep in mind the functions which under our Constitution can properly be vested in the courts in a matter of this nature. The basic proposition that a constitutional court should not be required to perform non-judicial functions is probably beyond challenge. The perplexing problem is the determination of what is non-judicial. Some administrative bodies perform functions which are judicial or quasi-judicial while other agencies perform essentially legislative or quasi-legislative or administrative functions. Floyd v. Department of Labor and Industries, 44 Wash.2d 560, 269 P.2d 563. Ordinarily, as pointed out in State Board of Medical Registration and Examination v. Scherer, 221 Ind. 92, 46 N.E.2d 602, 603, the granting of a license to engage in a trade, business or profession is a ministerial function. As there said, 'Ministerial boards act as fact-finding bodies to ascertain whether applicants conform to a legislative formula by which the right to a license is fixed.' It was held in Pue v. Hood, 222 N.C. 310, 22 S.E.2d 896, that the regulation of the conditions under which banking corporations may be organized is essentially legislative and administrative and not judicial. In Household Finance Corporation v. State, 40 Wash.2d 451, 244 P.2d 260, 263, it is said: 'Tha licensing and regulation of small loan companies (which are permitted make loans at rates which had been theretofore unlawful and which are still unlawful when made by anyone except such a licensee) is an exercise of the police power and essentially a legislative and administrative function.'

In order not to offend the constitutional requirement as to separation of powers, statutes undertaking to give the courts de novo review of orders of administrative bodies exercising non-judicial functions are generally construed as providing for only a limited review. State Board of Medical Registration and Examination v. Scherer, supra, 221 Ind. 92, 46 N.E.2d 602; California Company v. State Oil & Gas Board, 200 Miss. 824, 27 So.2d 542, 28 So.2d 120; Jones v. Marsh, 148 Tex. 362, 224 S.W.2d 198; De Mond v. Liquor Control Commission, 129 Conn. 642, 30 A.2d 547.

It is our view that the function vested by the Act in the State Board of Bank Control of determining whether a license should be issued to an applicant is non-judicial in nature. In line with the rule above mentioned, we think Section 8-794.163 should be construed as providing for only a limited review. The decision of the Board of Bank Control should not be given the effect of a mere initial recommendation so as to permit the court to substitute its judgment for that of the Board as to whether a license should be issued. Any other construction of Section 8-794.163 might render it unconstitutional. Household Finance Corporation v. State, supra, 40 Wash.2d 451, 244 P.2d 260. Of course, the courts can set aside any decision which is illegal, arbitrary or unsupported by any substantial evidence.

The foregoing construction is in harmony with our practice in reviewing actions of other administrative agencies. We have held that...