Chicopee Co-op. Bank v. Board of Bank Incorporation

• Decision Date: 02 July 1964
• Docket Number: CO-OPERATIVE
• Citation: 200 N.E.2d 284,347 Mass. 744
• Parties: CHICOPEEBANK et al. v. BOARD OF BANK INCORPORATION.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 284

200 N.E.2d 284

347 Mass. 744

CHICOPEE CO-OPERATIVE BANK et al. v. BOARD OF BANK INCORPORATION.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Feb. 4, 1964.

Decided July 2, 1964.

Lawrence A. Sullivan, Boston (Henry P. Monaghan, Holyoke, with him), for Savings Banks Association of Massachusetts.

Timothy J. Donovan, Boston, for Chicopee Coperative Bank and others.

Frederick D. Bonner, Boston, for Massachusetts Coperative Bank League.

David W. Hays, Asst. Atty. Gen., for Board of Bank Incorporation.

J. Joseph Maloney, Jr., Boston, for Chicopee Falls Coperative Bank.

Before WILKINS, C. J., and SPALDING, WHITTEMORE, CUTTER, KIRK, SPIEGEL, and REARDON, JJ.

KIRK, Justice.

This is a petition by three banks ¹ (the petitioners) in the city of Chicopee for review under G.L. c. 170, § 49; c. 30A, § 14, of the decision of the respondent Board of Bank Incorporation ² (the board), purportedly made under G.L. c. 170, § 49, relative to the application of the Chicopee Falls Co-operative Bank (the applicant bank) to convert to a Federal savings and loan association. The Massachusetts Co-operative Bank League and the Savings Banks Association of Massachusetts have intervened in support of the petitioners under G.L. c. 30A, § 14(2). The applicant bank has intervened in support of the board. The single justice before whom the case was brought granted a stay of the enforcement of the board's decision (G.L. c. 30A, § 14) and, at the request of all the parties, reported the case without decision to the full court upon the pleadings, the orders of the single justice, and the transcript of the proceedings before and exhibits submitted to the board. G.L. c. 211, § 6. No question has been raised as to the standing of any party to participate in the litigation. All parties in their respective briefs have expressly conceded that original jurisdiction rests in this court and that the standards of review provided in the administrative procedure act are applicable. We note, nevertheless, in summary, that since the petitioners are persons aggrieved (see SHAKER COMMUNITY, INC. V. STATE RACING COMN., MASS., 190 N.E.2D 897,^A by a final decision of the board, which is an agency of the Commonwealth (G.L. c. 30A, § 1; G.L. c. 26, § 5), required by G.L. c. 170, § 49, to conduct an adjudicatory proceeding (G.L. c. 30A, § 1), judicial review of which is not expressly precluded, but rather is expressly given to this court by G.L. c. 170, § 49, consideration of the case is to be governed by the standards of review set out in paragraph (8) of G.L. c. 30A, § 14. Compare Natick Trust Co. v. Board of Bank Incorporation, 337 Mass. 615, 151 N.E.2d 70.

The decision of the board was not unanimous. The majority, consisting of the State Treasurer and the Commissioner of Corporations and Taxation, favored the applicant bank. The Commissioner of Banks filed a dissent. We summarize the facts as found by the majority of the board, and supplement them with admitted or undisputed facts from the record which serve to clarify the findings and delineate the issues raised before us.

The applicant bank is located in Chicopee Falls, one of the several villages or communities of the city of Chicopee. The population of the city is approximately 60,000. Although the applicant bank has been in existence for more than forty years, it is the smallest coperative bank in the Commonwealth, having assets of only $413,000. At the time of the hearing it was open for business only three days a week from 9 A.M. to 1 P.M. and prior to that time open only one day a month and by appointment. The only 'full-time' employee is the treasurer who is in semi-retirement and whose salary is so meager that it would not attract a successor should he retire completely, as he plans to do. The directors have been relatively inactive for a decade and have made no real effort to rehabilitate the bank or to merge it, as permitted by law (G.L. c. 170, § 48), with another coperative bank in the area. On December 13, 1962, the applicant bank entered into a written agreement to merge with the Union Federal Savings and Loan Association (Union Federal) whose home office is in Pittsfield. By letter of December 21, 1962, the applicant bank gave notice of its intention, and applied to the board for approval, pursuant to the provisions of G.L. c. 170, § 49(1), to convert to a Federal savings and loan association under the name of The Chicopee Falls Federal Savings and Loan Association with a place of business at 4 Broadway, Chicopee Falls. Following this application to convert, the Chicopee Co-operative Bank (one of the petitioners) offered to discuss merger with the applicant bank, but indicated that, if they merged, the Chicopee Co-operative Bank would not operate the applicant bank's place of business as a branch of its own. The merger of these two coperative banks, even if effected, would result in a coperative bank with only $3,000,000 in assets, in the closing of the applicant bank's office, and in diminished public service. In compliance with G.L. c. 170, § 49(1), notice of a public hearing was published on a form provided by the board giving, as stated above, the name [and location] of the applicant bank and its proposed name and location after conversion. At the hearing, held and completed on February 28, 1963, there was no evidence that the public convenience and advantage would be promoted by the conversion, per se, that is, by the surrender of the State charter and the granting of a Federal charter. All of the witnesses favoring the application for conversion testified that the whole purpose of the application was to accomplish the merger, to which the conversion was an indispensable preliminary step. All of them were agreed that the public convenience and advantage which they foresaw could not be realized unless and until the merger took place. The merger agreement expressly provided that the applicant bank 'is hereby merged with and becomes a part of * * * [Union Federal] which shall be the resulting association * * * and * * * shall be deemed to be and shall be a continuation of the entity and identity of * * * [Union Federal whose] rights and obligations * * * shall remain unimpaired.' The agreement also provided that the office of the applicant bank at 4 Broadway, Chicopee Falls (Hampden County), should become a branch of Union Federal of Pittsfield (Berkshire County), which already had a branch bank in Springfield (Hampden County). Toward the close of the hearing the attorney for the applicant bank informed the board, that, during a recess taken a few minutes before, he had learned, 'that on this type of conversion, there will be no Federal charter issued to the Chicopee Falls Co-Operative Bank, but [there] will be an approval of conversion and merger simultaneously, so there never will be a Chicopee Falls Federal [Savings] & Loan Association charter issued, it will be done in one package: conversion and merger.'

In its decision filed April 26, 1963, the board referred to the agreement of the applicant bank to merge with Union Federal, 'subject to the approval of this Board of its conversion to a Federal charter and the approval of the Home Loan Bank Board of this issuance of such a charter and of the merger.' The decision continued: 'Union Federal has assets of almost $100,000,000, offers full banking services, and is possessed of efficient and aggressive management. We find that if this merger become effective, public convenience and advantage would be promoted. We find that those residents of the area who are now potential customers of the Chicopee Falls Co-operative Bank would be adequately served after the merger for the following reasons: (1) The character of the management of the merged bank would be far superior to that of the present management; (2) The banking facilities made available to the public would be far more extensive than those facilities which are presently being offered by the Chicopee Falls Co-operative Bank. The funds available for real estate borrowing would be more than adequate after the merger whereas at the present time they are woefully inadequate. For the above reasons we find in favor of the applicant that public convenience and advantage will be promoted, and we approve such conversion' (emphasis supplied).

The board concluded with the comment that its decision was not an invitation to other coperative banks to apply for conversion but was an effort to find a practical solution for a 'tiny, pitifully inadequate bank * * * in danger of closing its doors,' and that each application thereafter would be decided on its merits.

The petitioners ask us to set aside the decision on the grounds that it (a) is beyond the statutory authority given to the board by G.L. c. 170, § 49; (b) is contrary to declared legislative policy; (c) is unsupported by substantial evidence; and (b) was reached in violation of the adjudicatory hearing requirements of G.L. c. 30A, § 11(1). Any one of the stated grounds, if made out, would be sufficient to set aside the decision. We approach our consideration of the case mindful of the admonition that the reviewing 'court shall give due weight to the experience, technical competence, and specialized knowledge of the agency, as well as to the discretionary authority conferred upon it.' G.L. c. 30A, § 14(8). It is our duty, nevertheless, to ensure that the board exercise only those powers given to it and that it adequately consider and apply the legislative policies entrusted to it.

The authority of the board to deal with the subject matter is found in the relevant part of G.L. c. 170, § 49, which reads, 'Any (coperative banking) corporation may convert itself into a federal savings and loan association * * * subject to the following conditions:--(1) Such corporation shall give notice to the board of bank incorporation of its intention to so convert and shall apply to said board for its approval of such...