First Nat. Bank of Worland v. Financial Institutions Bd., 5258

• Decision Date: 15 September 1980
• Docket Number: No. 5258,5258
• Citation: First Nat. Bank of Worland v. Financial Institutions Bd., 616 P.2d 787 (Wyo. 1980)
• Parties: FIRST NATIONAL BANK OF WORLAND, a federal chartered banking institution, and Stockgrowers State Bank, a state chartered banking institution, Appellants (Protestants), v. FINANCIAL INSTITUTIONS BOARD of the State of Wyoming; all of said Board, namely, Arthur R. Piz, G. W. McIlvaine, Harry Geldien, James A. Zaring, Dwight D. Bonham, W. D. Townsend, Jr., Virginia S. Purdy and Stanley R. Hunt; and Dwight D. Bonham, State Examiner, Wyoming; and Robert T. Noel, Arthur A. Abbey, Sol W. Bernstein, K. L. McShane, and Gordon A. Williams, individually and as organizers of the proposed First Wyoming Bank-Worland, Appellees (Applicants).
• Court: Wyoming Supreme Court

Page 787

616 P.2d 787

FIRST NATIONAL BANK OF WORLAND, a federal chartered banking institution, and Stockgrowers State Bank, a state chartered banking institution, Appellants (Protestants), v. FINANCIAL INSTITUTIONS BOARD of the State of Wyoming; all of said Board, namely, Arthur R. Piz, G. W. McIlvaine, Harry Geldien, James A. Zaring, Dwight D. Bonham, W. D. Townsend, Jr., Virginia S. Purdy and Stanley R. Hunt; and Dwight D. Bonham, State Examiner, Wyoming; and Robert T. Noel, Arthur A. Abbey, Sol W. Bernstein, K. L. McShane, and Gordon A. Williams, individually and as organizers of the proposed First Wyoming Bank-Worland, Appellees (Applicants).

No. 5258.

Supreme Court of Wyoming.

Sept. 15, 1980.

Elmer J. Scott of Scott, Shelledy & Berryman, John W. Davis of Davis, Donnell & Worrall, Worland, and I. Thomas Bieging of Morrato, Gueck & Colantuno, P.C., Denver, Colo., an attorney in good standing of the State of Colorado admitted specially for the purposes of this case, with oral argument presented by Bieging, for appellants. Edwin H. Whitehead, Cheyenne, introduced Bieging to the court.

John D. Troughton, Atty. Gen., Peter J. Mulvaney, Deputy Atty. Gen., Richard

Scott Rideout, Asst. Atty. Gen., Cheyenne, and Blair J. Trautwein (argued) of Hathaway, Speight & Kunz, Cheyenne, signed the briefs for appellees.

Before RAPER, C. J., and McCLINTOCK, THOMAS, ROSE and ROONEY, JJ.

ROONEY, Justice.

Appellants-protestants appeal from an order of the district court affirming the Financial Institutions Board's (hereinafter referred to as Board) approval of a new state bank in Worland.

We affirm.

Appellants word the issues presented for review as follows:

"A. Whether the Financial Institutions Board was properly constituted in that George W. McIlvaine and Arthur R. Piz were both directly or indirectly connected with Wyoming Bancorporation.

"B. Whether § 13-2-211 and § 13-2-212, W.S.Rep.Ed., 1977, are internally inconsistent and fail to place the parties on notice of the standards to be used for approval of a bank charter.

"C. Whether the Board acted improperly in failing to grant the Appellants' Motion for Continuance of the hearing.

"D. Whether the Board erred in finding that the applicants had complied with all the provisions of law in seeking a bank charter.

"E. Whether the Findings of Fact of the Board with respect to projected deposits, potential profit, reputation of the Directors in the community and compliance by the applicants with all the provisions of law were supported by substantial evidence.

"F. Whether the decision of the Board failed to set forth basic facts necessary to support the conclusion that a public need or convenience would be served by the proposed bank, that conditions within the community would support a successful operation of the Bank, and whether the capital was adequate.

"G. Whether the decision of the Board was arbitrary, capricious, and characterized by an abuse of discretion.

"H. Whether the applicants failed to comply with the provisions of § 13-2-212(a)(iv), W.S.Rep.Ed., 1977.

"I. Whether the granting of the charter subject to the approval by the Federal Reserve Board, constitutes a redelegation of legislative authority not permitted under the Wyoming constitution."

We will set forth the facts pertinent to each issue in the discussion thereof.

IMPROPERLY CONSTITUTED BOARD (ISSUE A)

The application to organize the bank was made by Robert T. Noel, Arthur A. Abbey, Sol W. Bernstein, K. L. McShane and Gordon A. Williams. However, they were actually acting on behalf of Wyoming Bancorporation, and Wyoming Bancorporation was to purchase all of the stock of the proposed bank except for the qualifying shares. The Financial Institutions Board consists of seven members appointed by the governor and with the state examiner as an ex officio member. Section 13-2-204(a), W.S.1977. Subsection (b) of § 13-2-204 provides:

"(b) The governor shall appoint the members of the board from the following professions: two (2) members shall be officers of a state or national bank; one (1) member shall be an officer of a state or federal savings and loan association; and four (4) members shall be from the public at large and shall not be directors, officers or employees of any financial institution. Two (2) or more members of the Board may not be connected, directly or indirectly, with the same financial institution or holding company, and no member may participate in any proceeding involving any institution with which he is connected or with which he has a conflict of interest." (Emphasis supplied.)

At the time of the hearing on this matter, Board member, Arthur R. Piz, was director of the First Wyoming Bank, N.A., Kemmerer, an affiliate of Wyoming Bancorporation, and Board member, G. W. McIlvaine, owned 50 shares of Wyoming Bancorporation stock. ¹

The proper and exclusive method of challenging the right of a board member to hold office is a quo warranto proceeding. Board of Trustees of School District No. 3 v. District Boundary Board of Natrona County, Wyo., 489 P.2d 413 (1971), supplemented by 489 P.2d 1393 (1971); Dickerson v. City Council of City of Buffalo, Wyo., 582 P.2d 80 (1978). Appellants' challenge of the constituency of this Board cannot be made in the fashion here attempted. The actions taken by the Board, even if improperly constituted, are actions of a de facto board and, therefore, valid and binding. Ex Parte Ward, 173 U.S. 452, 19 S.Ct. 459, 43 L.Ed. 765 (1899); May v. City of Laramie, 58 Wyo. 240, 131 P.2d 300 (1942); See State v. London, 194 Wash. 458, 78 P.2d 548 (1938).

CONSISTENCY OF § 13-2-211, W.S.1977 WITH § 13-2-212, W.S.1977 (ISSUE B)

Appellants contend that they were not placed on notice of the standards to be used in approving the application because §§ 13-2-211 and 13-2-212, W.S.1977 are "internally inconsistent."

Section 13-2-211, W.S.1977 provides:

"(a) Upon receiving the articles of incorporation, application and other information required, the state examiner shall make a careful investigation and examination of the following:

"(i) The character, reputation, financial standing and ability of the organizers;

"(ii) The character, financial responsibility, banking or savings and loan or other financial experience and business qualifications of those proposed as officers;

"(iii) The character and standing in the community and state of those proposed as directors, stockholders or owners;

"(iv) The need in the community where the institution would be located giving particular consideration to the adequacy of existing financial facilities and the effect that the purposed institution would have upon existing financial institutions in the community;

"(v) The ability of the community to support the proposed institution, including existing competition, the economic history of the community and the opportunity for profitable employment of financial institution funds; and

"(vi) Such other facts and circumstances bearing on the proposed financial institution as the state examiner may deem relevant.

"(b) The state examiner shall submit his findings verbally and in writing at the public hearing on the application and shall be subject to cross-examination by any interested party. No relevant information shall be excluded by the board as hearsay."

Section 13-2-212, W.S.1977 provides:

"(a) * * * the board shall in its discretion approve or disapprove the application, but it shall not approve the application until it has ascertained to its satisfaction :

"(i) The public need and convenience will be promoted by the establishment of the proposed financial institution;

"(ii) Conditions in the community in which the proposed financial institution would transact business afford reasonable promise of successful operation;

"(iii) The financial institution is being formed for no other purpose than the legitimate objects comtemplated (sic) by the laws of the state;

"(iv) The proposed capital and surplus are not less than the required minimum and are adequate in light of current and prospective conditions;

"(v) The proposed officers and directors have sufficient experience, ability and standing to afford reasonable promise of successful operation "(vi) The name of the proposed financial institution does not resemble so closely as to cause confusion the name of any other financial institution transacting business in the county; and

"(vii) The applicants have complied with all applicable provisions of law.

"(b) The board shall take action upon the application by stating its findings of fact and conclusions of law. If the board approves the application, the state examiner shall endorse upon the articles of incorporation the approval and shall file one (1) copy with the secretary of state, retain one (1) copy in his files and return one (1) copy to the applicants within twenty (20) days after the date of the decision of the board approving the application. If the board disapproves the application, the state examiner shall mail notice of the disapproval to the applicants within twenty (20) days after the board's negative action."

We fail to see any inconsistency in the two sections. The investigative results from compliance with § 13-2-211 are made available to the board for use in making the determinations required by § 13-2-212. The investigation made pursuant to § 13-2-211 can be of real assistance to the board when the application is not contested. It is likewise valuable in gauging the evidence presented in a contested case. Applicants and protestants have notice of the required qualifications as set forth in § 13-2-212 and of the scope of the investigation conducted pursuant to § 13-2-211. The two statutes speak to two different aspects of the procedure and are not inconsistent.

MOTION FOR CONTINUANCE (ISSUE C)

The State Bank Examiner, by letter dated March 27, 1979, refused appellants' request that they be furnished all financial and biographical information on the organizers, the...