Citizens State Bank of Marshfield, Mo. v. Federal Deposit Ins. Corp., No. 82-1776

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Writing for the CourtBefore LAY, Chief Judge, JOHN R. GIBSON; JOHN R. GIBSON
Citation751 F.2d 209
Decision Date12 December 1984
Docket NumberNo. 82-1776
PartiesCITIZENS STATE BANK OF MARSHFIELD, MISSOURI and William G. Magers, John W. Greer, Paul Beckerdite, Calvin Burchfield, Wayne Jones, Wallace R. McFaddin, and C. Virgil Vernon, as the Board of Directors of Citizens State Bank, Marshfield, Missouri, Petitioners-Appellants, v. FEDERAL DEPOSIT INSURANCE CORPORATION, Respondent-Appellee.

Page 209

751 F.2d 209
CITIZENS STATE BANK OF MARSHFIELD, MISSOURI and William G.
Magers, John W. Greer, Paul Beckerdite, Calvin Burchfield,
Wayne Jones, Wallace R. McFaddin, and C. Virgil Vernon, as
the Board of Directors of Citizens State Bank, Marshfield,
Missouri, Petitioners-Appellants,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, Respondent-Appellee.
No. 82-1776.
United States Court of Appeals,
Eighth Circuit.
Submitted June 14, 1984.
Decided Dec. 12, 1984.

Page 210

Donald W. Jones, Springfield, Mo., for petitioners-appellants.

Page 211

MaryBeth Triano, Washington, D.C., for respondent-appellee.

Before LAY, Chief Judge, JOHN R. GIBSON, Circuit Judge, and HANSON, * Senior District Judge.

JOHN R. GIBSON, Circuit Judge.

The Federal Deposit Insurance Corporation Board (FDIC) has filed an amended decision finding numerous violations by the Citizens State Bank of Marshfield, Missouri, of the Truth in Lending Act, 15 U.S.C. Secs. 1601-1667 (1982), and of Regulation Z (12 C.F.R. Sec. 226.1 et seq. (1984)) thereunder. This decision supports the FDIC's order requiring that Citizens Bank cease and desist certain improper disclosure practices and search its records back to January 1, 1977, and reimburse consumers for overcharges said to arise from such violations. Citizens Bank attacks the order as not supported by substantial evidence when certain transactions are excluded from consideration and as arbitrary and unfair in the light of changes in truth-in-lending legislation. The Bank further asserts that the FDIC has no authority to require reimbursement. We uphold portions of the cease and desist order but vacate the remainder and reverse with respect to reimbursement.

This case arises from the FDIC practice of periodically examining banks for compliance with truth-in-lending and other consumer legislation. The Citizens Bank was subject to such examinations in October 1977 and again in January 1980. The charges here were filed pursuant to this latter examination and were supplemented, by order of the administrative law judge, by a more definite statement specifying the loans on which the FDIC intended to rely. Following a three-day hearing, the administrative law judge characterized the evidence as to Regulation Z violations "unconvincing" and recommended against sanctions. 1

The FDIC, however, entered the order described above, which is now before us for the second time. On the first appeal we concluded that the FDIC had failed to sufficiently articulate the reasons and basis for its action, and we remanded with directions that it provide a full and particular statement of the facts and the reasons bearing on its decision. Citizens State Bank v. FDIC, 718 F.2d 1440 (8th Cir.1983). 2 The amended decision repeats the original findings, adding references to the record and exhibits to identify the specific transactions as to which violations were found. 3 These references show that the

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FDIC relied on loans not asserted for the given violations in the more definite statement and on loans which had been made before the 1977 compliance examination such that any violations should have turned up at that time. The amended decision also discusses in detail the findings of the administrative law judge and articulates the FDIC's reasons for either agreeing or differing. It concludes:

The restoration of the improperly excluded transactions to the sample provides a much wider spectrum of violations than that considered by the ALJ. When all these transactions are considered, the record is replete with unrebutted evidence of repeated violations. The violations justify the issuance of a cease-and-desist order. To the extent that a pattern or practice must be established as a prerequisite to ordering reimbursement, a clear and consistent pattern or practice has been established. It is evident from the record that the violations of the finance charge and annual percentage rate provisions were not isolated or accidental or peculiar departures from otherwise correct practices.

Citizens State Bank of Marshfield, Missouri, FDIC 80-51b, slip op. at 17 (Dec. 19, 1983). We think it evident that this amended decision complies with the mandate of our earlier opinion and sufficiently provides the reasons and basis for the FDIC's findings and conclusions so that we may now appropriately consider the arguments raised by Citizens Bank.

The Bank first asserts that, excluding two groups of transactions that could not properly be considered--those not listed in the more definite statement and those occurring prior to the 1977 compliance examination--the findings of the FDIC are not supported by substantial evidence. The Bank also argues that the subsequent simplification of the exceedingly technical truth-in-lending regulations it was charged with violating makes imposition of a cease and desist order improper. Finally, the Bank argues that the portion of the order requiring reimbursement is unlawful as beyond the FDIC's power under 12 U.S.C. Sec. 1818(b)(1) (1982), pursuant to which the agency purports to act. 4 The American Bankers Association filed an amicus brief

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making related arguments as to reimbursement.

I.

As an initial matter, Citizens Bank alleges a lack of due process and violation of 5 U.S.C. Sec. 554(b)(3) (1982) (requiring notice of "the matters of fact and law asserted") insofar as the FDIC's conclusions are based on loans not set forth in the more definite statement ordered by the administrative law judge.

The law on this issue is clear: A respondent to an agency action is entitled to know the basis of the complaint against it but has been accorded due process if the record shows that it understood the issues and was afforded a full opportunity to meet the charges. NLRB v. MacKay Radio & Telegraph Co., 304 U.S. 333, 350, 58 S.Ct. 904, 912, 82 L.Ed. 1381 (1938). "Pleadings in administrative proceedings are not judged by the standards applied to an indictment at common law," Aloha Airlines v. Civil Aeronautics Board, 598 F.2d 250, 262 (D.C.Cir.1979), but are treated more like civil pleadings where the concern is with notice and a complaint may be deemed amended to conform to evidence introduced without objection. Kuhn v. Civil Aeronautics Board, 183 F.2d 839, 841-42 (D.C.Cir.1950); see Fed.R.Civ.P. 15(b). The Eighth Circuit has long adhered to this position. See Boyle's Famous Corned Beef Co. v. NLRB, 400 F.2d 154, 164, 165 (8th Cir.1968); Montgomery Ward & Co. v. NLRB, 385 F.2d 760, 763-64 (8th Cir.1967); American Boiler Manufacturers Association v. NLRB, 366 F.2d 815, 821 (8th Cir.1966).

Citizens Bank seems to rest its argument that the issues here were not fully and fairly litigated primarily on the alleged complexity of the proceeding with the multiple charges based on a variety of occurrences. It cites Soule Glass & Glazing Co. v. NLRB, 652 F.2d 1055, 1074-75 (1st Cir.1981), however, which involved unfair labor practices. Here the FDIC's case is based largely on documentary evidence: There is nothing complex about looking at loan papers and determining whether a finance charge and annual percentage rate are shown and calculating the correctness of the amounts, or, for that matter, in verifying the existence or correctness of other required disclosures, thus determining whether there have been truth-in-lending violations. The Bank also quotes Soule Glass to the effect that a lack of full litigation may be found if the court assesses additional penalties which, had they been raised in the complaint, could have caused a party to proceed differently. That consideration again is not present here.

Similarly, we note the absence of other circumstances which have led courts to find a lack of due process in an insufficient complaint. Citizens Bank made no objection on grounds of relevance to the introduction of evidence concerning loans not listed in the more definite statement, see Montgomery Ward, 385 F.2d at 764; Citizens Bank does not allege factual error as to any of the individual violations relied on by the FDIC nor does it suggest what additional exculpatory evidence it could have introduced, see Aloha, 598 F.2d at 262; Citizens Bank does not list additional defenses which it might have asserted, see NLRB v. Blake Construction Co., 663 F.2d 272, 282 n. 31 (D.C.Cir.1981); and Citizens Bank actually did offer the defense of "commercial transaction not covered by the Truth in Lending Act" as to at least three loans which were not listed in the more definite statement. See Boyle, 400 F.2d at 164. Finally, as pointed out by the administrative law judge, data in the FDIC compliance report given to Citizens Bank revealed most of the violations on which the FDIC eventually relied. While this report included many additional transactions and did not match loans perfectly as to the violations alleged, perhaps making the Bank's defense more burdensome, we cannot believe that that possibility alone gives rise to a violation of due process in the absence of any of the specific

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indications of prejudice listed above. 5 Thus, we conclude that the FDIC did not err in considering loans not specifically enumerated in the more definite statement.

Second, Citizens Bank argues that a group of nine transactions which occurred before the 1977 compliance examination should be excluded. Its protest seems directed primarily at those loans where either the finance charge and/or the annual percentage rate was improperly disclosed and on the basis of which the FDIC seeks to order restitution. The administrative law judge recommended exclusion of those prior examination transactions as the "proper" course of action without presuming to determine if a broader exercise of agency powers could be legally sustained. The FDIC rejected this limitation and considered those loans, alleging primarily its legal authority to do so. Section 1818 of title 12 of the United States Code does not deal with the timing of...

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26 practice notes
  • U.S. v. Northeastern Pharmaceutical & Chemical Co., Inc., Nos. 84-1837
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • April 8, 1987
    ...court has also recently acknowledged the dubious value of subsequent legislative history. See Citizens State Bank of Marshfield v. FDIC, 751 F.2d 209, 217 (8th Cir.1984). Applying these principles to the district court's interpretation of the RCRA and its legislative history, I would affirm......
  • City of Tucson, Ariz. v. C.I.R., No. 82-2187
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • September 24, 1987
    ...68 L.Ed.2d 612, 623-624 (1981); AFL-CIO v. Donovan, 244 U.S.App.D.C. 255, 275, 757 F.2d 330, 350 (1985); Citizen State Bank v. FDIC, 751 F.2d 209, 217 (8th Cir.1984); West v. Bergland, 611 F.2d 710 (8th Moreover, while the City has not yet issued the bonds precipitating this litigation, the......
  • Larimore v. Comptroller of Currency, Nos. 84-1971
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • May 5, 1986
    ...Security Board v. Nierotko, 327 U.S. 358, 369, 66 S.Ct. 637, 643, 90 L.Ed. 718 (1946); Citizens State Bank of Marshfield, Mo. v. FDIC, 751 F.2d 209, 217 (7th Cir.1984); see also Board of Governors of Federal Reserve System v. Dimension Financial Corp., --- U.S. ---, ---, 106 S.Ct. 681, 685,......
  • At&T Communications v. Southwestern Bell Tele., No. 97-1573-CV-W-5.
    • United States
    • United States District Courts. 8th Circuit. Western District of Missouri
    • August 31, 1999
    ...230 (8th Cir.1995) (due process challenge to deportation hearing); Citizens State Bank of Marshfield, Mo. v. Federal Deposit Ins. Corp., 751 F.2d 209, 213-14 (8th Cir.1984) (due process challenge to FDIC adjudication). In the absence of a specific allegation of prejudice, a litigant making ......
  • Request a trial to view additional results
21 cases
  • U.S. v. Northeastern Pharmaceutical & Chemical Co., Inc., Nos. 84-1837
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • April 8, 1987
    ...court has also recently acknowledged the dubious value of subsequent legislative history. See Citizens State Bank of Marshfield v. FDIC, 751 F.2d 209, 217 (8th Cir.1984). Applying these principles to the district court's interpretation of the RCRA and its legislative history, I would affirm......
  • City of Tucson, Ariz. v. C.I.R., No. 82-2187
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • September 24, 1987
    ...68 L.Ed.2d 612, 623-624 (1981); AFL-CIO v. Donovan, 244 U.S.App.D.C. 255, 275, 757 F.2d 330, 350 (1985); Citizen State Bank v. FDIC, 751 F.2d 209, 217 (8th Cir.1984); West v. Bergland, 611 F.2d 710 (8th Moreover, while the City has not yet issued the bonds precipitating this litigation, the......
  • Larimore v. Comptroller of Currency, Nos. 84-1971
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • May 5, 1986
    ...Security Board v. Nierotko, 327 U.S. 358, 369, 66 S.Ct. 637, 643, 90 L.Ed. 718 (1946); Citizens State Bank of Marshfield, Mo. v. FDIC, 751 F.2d 209, 217 (7th Cir.1984); see also Board of Governors of Federal Reserve System v. Dimension Financial Corp., --- U.S. ---, ---, 106 S.Ct. 681, 685,......
  • At&T Communications v. Southwestern Bell Tele., No. 97-1573-CV-W-5.
    • United States
    • United States District Courts. 8th Circuit. Western District of Missouri
    • August 31, 1999
    ...230 (8th Cir.1995) (due process challenge to deportation hearing); Citizens State Bank of Marshfield, Mo. v. Federal Deposit Ins. Corp., 751 F.2d 209, 213-14 (8th Cir.1984) (due process challenge to FDIC adjudication). In the absence of a specific allegation of prejudice, a litigant making ......
  • Request a trial to view additional results
5 provisions
  • Denials of Applications:
    • United States
    • Federal Register October 27, 2010
    • October 27, 2010
    ...proceedings are not judged by the standards applied to an indictment at common law.' '' Citizens State Bank of Marshfield v. FDIC, 751 F.2d 209, 213 Cir. 1984) (quoting Aloha Airlines v. Civil Aeronautics Bd., 598 F.2d 250, 262 (DC Cir. 1979)). See also Boston Carrier, Inc. v. ICC, 746 F.2d......
  • Grant of Renewal Application and Dismissal of Proceeding: CBS Wholesale Distributors
    • United States
    • Federal Register July 24, 2009
    • July 24, 2009
    ...proceedings are not judged by the standards applied to an indictment at common law.' '' Citizens State Bank of Marshfield v. FDIC, 751 F.2d 209, 213 (8th Cir. 1984) (quoting Aloha Airlines v. Civil Aeronautics Bd., 598 F.2d 250, 262 (D.C. Cir. 1979)). Page 36750 Thus, the failure of the Gov......
  • Decisions and Orders:
    • United States
    • Federal Register October 28, 2011
    • October 28, 2011
    ...proceedings are not judged by the standards applied to an indictment at common law.'' Citizens State Bank of Marshfield v. FDIC, 751 F.2d 209, 213 (8th Cir. 1984) (quoting Aloha Airlines v. Civil Aeronautics Bd., 598 F.2d 250, 262 (DC Cir. 1979), cited Liddy's Pharmacy, L.L.C., 76 FR 48887,......
  • Revocation of Registration: Berkowitz, Roy, E., M.D.
    • United States
    • Federal Register July 24, 2009
    • July 24, 2009
    ...proceedings are not judged by the standards applied to an indictment at common law.''' Citizens State Bank of Marshfield v. FDIC, 751 F.2d 209, 213 (8th Cir. 1984) Aloha Airlines, Inc., v. CAB, 598 F.2d 250, 262 (DC Cir. 1979)). An agency is not required ``to give every [Respondent] a compl......
  • Request a trial to view additional results

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