Department of Financial Institutions v. Wayne Bank and Trust Co.

• Decision Date: 08 November 1978
• Docket Number: No. 1-1277A303,1-1277A303
• Citation: 178 Ind.App. 265,381 N.E.2d 1100
• Parties: DEPARTMENT OF FINANCIAL INSTITUTIONS, Defendant-Appellant, v. WAYNE BANK AND TRUST COMPANY, Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 1100

381 N.E.2d 1100

178 Ind.App. 265

DEPARTMENT OF FINANCIAL INSTITUTIONS, Defendant-Appellant, v. WAYNE BANK AND TRUST COMPANY, Plaintiff-Appellee.

No. 1-1277A303.

Court of Appeals of Indiana, First District.

Nov. 8, 1978.

Theo. L. Sendak, Atty. Gen., Terry G. Duga, Deputy Atty. Gen., Indianapolis, for defendant-appellant

Randolph P. Wilson, Donald K. Densborn of Krieg, DeVault & Alexander, Indianapolis, for plaintiff-appellee.

LOWDERMILK, Judge.

STATEMENT OF THE CASE

Defendant-appellant Department of Financial Institutions (Department) appeals from a judgment in favor of plaintiff-appellee Wayne Bank and Trust Company (Wayne Bank), wherein the trial court reversed the determination and order of the Department which held that the establishment of a branch bank in Spring Grove, Indiana by Wayne Bank would not be convenient or advantageous for the public.

STATEMENT OF FACTS

On December 17, 1975 Wayne Bank submitted to the Department its application to establish a branch bank in Spring Grove, Indiana, a small suburb of the city of Richmond which is located in eastern Wayne County. Spring Grove was incorporated in 1885 and has retained its corporate and political identity from that date to the present. The population of Spring Grove is approximately 475, whereas the population of Richmond is approximately 45,000 persons.

The main and only office of Wayne Bank is located 16 miles to the west of its proposed Spring Grove branch site in the small western Wayne County community of Cambridge City, Indiana, which has a population of approximately 2,400. There are presently two banks located in Cambridge City, Wayne Bank and Peoples State Bank. Wayne Bank has total deposits of 13 million dollars. It has at least 164 loan customers with $950,000 in existing loans and 264 depositors with $850,000 in existing deposits located in eastern Wayne County with Richmond mailing addresses. Based upon the present number of depositors and conservative future projections the proposed branch in Spring Grove would become profitable within four years. The parties stipulated as to the adequacy of Wayne Bank's capitalization and as to the sufficiency of the investment in real estate with respect to the proposed branch.

The evidence shows that the proposed branch site lies entirely within the incorporated town of Spring Grove. However, one of the exits from the proposed branch site leads directly into a street which lies in the city of Richmond. The only businesses in Spring Grove are a religious bookstore and some doctors' offices.

There are presently two banks with home offices in the city of Richmond, the Second National Bank and the First National Bank. The Second National Bank, with total deposits in excess of 138 million dollars, did not protest Wayne Bank's application. First National appeared at the hearing before the Department and presented evidence as to why the proposed branch in Spring Grove was not needed.

First National presented census figures which showed that between the years 1960 and 1970 neither the population of Richmond, nor that of Spring Grove, had increased. First National also presented evidence which showed that for the year 1974 Wayne County had the highest unemployment rate in the state. First National pointed out that Wayne Bank's low loan-deposit ratio was an indicator that Wayne Bank was either a "smart lender" or an "ultra conservative lender." It was First National's opinion that since the area which was to be served by Wayne Bank's proposed Spring Grove branch already was being serviced by a branch of First National and a branch of Second National, no new branch was needed in that area.

The evidence presented by Wayne Bank showed that it had a substantial number of banking customers in the Richmond area whose needs were not being serviced. Also, Wayne Bank offered 5% Interest on its regular savings plan; both Richmond banks paid only 4%. Wayne Bank proposed to offer longer banking hours throughout the week than the Richmond banks and to offer full banking services for a half-day on Saturday. Neither Richmond bank offered full-service banking on Saturday. There is also evidence that the Wayne Bank would offer lower interest rates on certain kinds of loans than the Richmond banks.

From the evidence the Department determined that the "public convenience and advantage would not be served" by permitting Wayne Bank to build its proposed branch in Spring Grove. Wayne Bank appealed the Department's decision to the Randolph Circuit Court, which, in turn, reviewed the decision of the Department and held that the Department's decision was contrary to law. The Department now brings this appeal from the trial court's denial of the Department's motion to correct errors.

ISSUES

The issues which have been presented to this court for review are as follows:

1. Whether the trial court erred by denying the Department's motion to dismiss, which was based upon Wayne Bank's failure to join the First National Bank of Richmond as a party in the appeal to the trial court.

2. Whether the judgment of the trial court was contrary to law in that the trial court utilized an improper standard of review.

3. Whether the trial court erred by holding that the words "city or town," contained in the "home office protection" provisions of IC 1971, 28-1-17-1 (Burns Code Ed.), should be strictly construed.

4. Whether the trial court erred by holding that banks have no right to be free of competition, except as provided by statute.

DISCUSSION AND DECISION

Issue One

The Department contends that the trial court erred by denying the Department's motion to dismiss, which was based upon Wayne Bank's failure to join First National as a party in the appeal to the trial court. The Department contends that First National, as a protestant, was a party in the proceedings before the Department and was, therefore, automatically a party to the appeal before the trial court. ¹

Wayne Bank contends, however, that First National was not a party to the administrative proceedings before the Department, but was in reality merely an interested person. IC 1971, 4-22-1-4 (Burns Code Ed.) states:

"Duty of agency to afford opportunity for adjustment of claims. The agency shall afford all interested persons or parties the right and opportunity for the settlement or adjustment of all claims, controversies and issues, when such persons or parties desire such opportunity."

IC 1971, 4-1-22-4, Supra, affords interested persons, as well as parties, the opportunity to participate in administrative proceedings. Therefore, the fact that First National appeared as a protestant in the proceedings before the Department does not conclusively show that First National was a party to those proceedings.

In Insurance Commissioners of Indiana v. Mutual Medical Insurance, Inc., et al. (1968), 251 Ind. 296, 241 N.E.2d 56, the Indiana Podiatrists' Association filed a complaint with the Insurance Commissioners alleging that certain policies issued by certain insurance companies illegally excluded compensation for scheduled services, when such services were performed by podiatrists. The Insurance Commissioners held that, if services, which are scheduled on a policy for compensation by the insurance company, are rendered by a licensed practitioner, including such services as rendered by a podiatrist, such services should be paid for by the insurance company and that any attempt to exclude podiatrists from compensation for rendering the same scheduled services for which physicians are compensated is illegal.

The trial court held that the Insurance Commissioners misinterpreted the meaning of the applicable statutes and that their decision was contrary to law. The Insurance Commissioners and the Podiatrists' Association appealed the decision of the trial court. The appellee insurance companies argued that the Podiatrists' Association had no justiciable interest in the controversy, had no legal standing as a party, and had no right to assert errors on review.

This court in Insurance Commissioners of Ind. v. Mutual Medical Insurance, Inc., et al., supra, at pages 299-301 of 251 Ind., at pages 58-61 of 241 N.E.2d states:

"It is clear that the Indiana Podiatrists Association, Inc., would have no legal standing to sue on the legality of the restrictive provisions of the appellees' insurance contracts in a court of law. It asserted no other justiciable legally protected right under the insurance policy provisions. Therefore, appellees filed a motion to dismiss in response to the Commissioner's show cause order, alleging that the complainant-appellant was not the real party in interest. We resolve, however, that the Commissioner properly overruled the motion to dismiss the complaint.

The Insurance Law and the Administrative Adjudication Act do not contemplate the proposition that a complaint must be filed by a party with legal standing to invoke the jurisdiction of the Insurance Commissioner to review the legality of insurance policy provisions. Burns' Indiana Statutes, Anno., (1965 Repl.), § 39-4251, and Burns' Indiana Statutes, Anno., (1961 Repl.), § 63-3006. The personal merit, standing or legal interests and motives of a private complainant under these statutory provisions, are immaterial to the jurisdiction of the Insurance Commissioner, if the practice complained of is one in which the public generally has an interest. As a consequence, where a complaint is found to be of public interest generally, the nature of the interest of the complainant is insignificant and the hearing on the issues may stand as if brought by the Commissioner on his own motion.

While the administrative agency has jurisdiction to conduct a hearing on the practices complained of, it does not follow that the complainant becomes a party to the action. The Administrative Adjudication Act, Burns' Indiana Statutes, Anno., (1961 Repl.), § 63-3001, Et seq., makes no explicit explanation of who...