Gibraltar Sav. Ass'n v. Franklin Sav. Ass'n

• Decision Date: 20 May 1981
• Docket Number: No. 13378,13378
• Citation: 617 S.W.2d 322
• Parties: GIBRALTAR SAVINGS ASSOCIATION, et al., Appellants, v. FRANKLIN SAVINGS ASSOCIATION, et al., Appellees.
• Court: Texas Court of Appeals

Page 322

617 S.W.2d 322

GIBRALTAR SAVINGS ASSOCIATION, et al., Appellants, v. FRANKLIN SAVINGS ASSOCIATION, et al., Appellees.

No. 13378.

Court of Civil Appeals of Texas, Austin.

May 20, 1981.

Rehearing Denied June 17, 1981.

Larry Temple, Austin, for Gibraltar Savings Association.

Mark White, Atty. Gen., Nancy O. Ricketts, Asst. Atty. Gen., Austin, for L. Alvis Vandygriff.

Thomas A. Rutledge, Sneed, Vine, Wilkerson, Selman & Perry, Austin (on appeal only), for appellees.

POWERS, Justice.

This appeal is taken from a final judgment of the 200th Judicial District Court of Travis County, Texas, entered in its judicial review of a final order of the Savings and Loan Commissioner of The State of Texas.

Franklin Savings Association and Southside Savings and Loan Association sued the Commissioner to set aside his order approving a branch office application made by Gibraltar Savings Association. Gibraltar intervened in the suit. The district court's judgment set aside the Commissioner's order and from that judgment the Commissioner and Gibraltar appeal. Appellees, Franklin and Southside, bring a cross-appeal in the particulars set out below.

The dispute arises from the following events. Lockhart Savings and Loan Association (not a party to this appeal) filed an application with the Commissioner seeking permission to establish and operate a branch office to be located at Hamilton Road and Highway 183 in the city of Austin, Travis County, Texas. A preliminary hearing on the application was held on July 2, 1979. Franklin protested the application and the application was set for hearing on October 30, 1979.

On October 16, 1979, Gibraltar, having previously filed an application for a branch office in Tarrant County, Texas, filed an amendment thereof requesting permission to establish a branch office in Travis County. Without notice and hearing, the Commissioner ordered that Gibraltar's application be heard on October 30, 1979, consolidating for hearing the applications filed by Gibraltar and Lockhart.

The Commissioner purported to act under the provisions of several regulations established by the Savings and Loan Department. Regulation 1.3 pertains to applications for new charters and provides as follows:

"Within ten (10) days after the filing of a proper application, the Commissioner shall set a date for a hearing on the application, which date shall not be more than ninety (90) days after the application is filed.

"If an application for charter is filed at least ten (10) days before the date set for hearing of a pending charter application, for a location which, in the opinion of the Commissioner, is for the same community as the pending application, such application shall be heard in one hearing to be held upon the date set for the pending application. In such cases, the (second filed application) shall cause the first two paragraphs of the notice required by section 1.4 of these Rules to be published at least five (5) days before the date of such hearing, and shall file proof of such publication at the hearing. In addition, the Commissioner shall mail notice of such joint hearing to the parties set out in section 1.5 of these Rules."

Regulation 1.4 sets out the form of notice that must be published. Regulation 1.5 requires the Commissioner to mail notice of the hearing to all savings and loan associations having "offices in the county of the proposed location or in any adjoining or adjacent counties within a proximity that might be serviced or affected by the proposed application." Regulation 2.3 pertains to branch office applications filed by established savings and loan associations and provides as follows:

"Each application for a branch office shall be set for a hearing, notice given, hearing held, and decision reached in the same manner and within the same time as hearing provided for new charter applications ..."

Regulation 2.3 thus incorporates the provisions of Regulation 1.3 which directs consolidated hearings when the Commissioner is of the opinion that two applications seek to establish new institutions "for the same community."

The provisions of these regulations as to notice and consolidation were followed in the present case, with the result, however, that the parties to the consolidated proceedings were afforded only eleven days actual notice that Gibraltar's amended application would be heard on October 30, 1979.

Appellees argue that the procedure followed in this case, though technically permitted by the regulations of the Savings and Loan Department, resulted in their being denied the reasonable notice to which they are entitled as a matter of statutory and constitutional right. They point to the "due process" clause of the 14th Amendment to the United States Constitution and to the provisions of the Texas Administrative Procedure and Texas Register Act (TAPTRA), Tex.Rev.Civ.Stat.Ann. art. 6252-13a. Section 13(a) of that statute provides that "(i)n a contested case, all parties must be afforded an opportunity for hearing after reasonable notice of not less than 10 days." (Emphasis added). We believe appellants correctly interpret this notice requirement when they say it always requires reasonable notice, which may never be less than ten days.

Seven days after receiving actual notice of the hearing, Southside filed with the Commissioner two documents, one entitled "Plea in Abatement," the other entitled "Motion for Continuance." Both pleadings were for the purpose of obtaining a delay in the hearing and the issue of whether the notice of hearing was reasonable was adjudicated in the context of these two motions.

The Plea in Abatement claimed that there was "no rule specifically providing for branch applications to be consolidated ..." as the Commissioner had ordered. Regulation 2.3, quoted above, expressly and specifically authorized the Commissioner to order the two applications consolidated for hearing in this case if he was of the opinion that they sought branch offices "for the same community." His final order states that he had formed the opinion that the branch offices were "for the same community" and we find substantial evidence in the agency record to support his opinion. The claimed basis for abatement of the hearing was therefore erroneous.

In addition, the Plea in Abatement averred as a ground for abatement the following:

"(I)t would be physically impossible for Southside Savings and Loan Association to prepare for the hearing on such short notice when expert testimony is needed to defend the position of Southside Savings and Loan Association. That to conduct the hearing without proper notice under the statute and rules would be a violation of procedural due process, which is guaranteed under the Constitution of the State of Texas and the United States of America."

The Motion for Continuance requested that the Commissioner grant the continuance, and set a future date for hearing, on the following ground only:

"That Southside Savings and Loan Association proposes to prove that there is no public need for a branch office of Gibraltar Savings Association ... (and) if same is granted it will cause undue harm to Southside Savings which is a newly chartered association not yet open for business; that in order to prove such facts it will be necessary to retain a competent and qualified Economist to make a study and prepare the demographics for a presentation to the Commissioner, to support the contentions of Southside Savings; that it will be physically impossible to retain such an expert and carry out the necessary study for the October 30th hearing."

In substance then, appellee alleged that it had inadequate time to prepare for the hearing on October 30. ¹ The hearing officer overruled both the Plea in Abatement and the Motion for Continuance.

The district court agreed with appellees' contention that they were not furnished reasonable notice in the circumstances created by the consolidation. In its conclusions of law, the district court ruled that the lack of reasonable notice deprived Southside of a meaningful opportunity to prepare and present the merits of its case and to meet and test the merits of Gibraltar's case. The court concluded further that the action of the Commissioner, in ordering the consolidation, resulted in an unwarranted, arbitrary and capricious exercise of his discretion, made upon unlawful procedure, in excess of his statutory authority, and in violation of unspecified constitutional and statutory provisions, all to the prejudice of Southside's unspecified statutory and constitutional rights, but including its right to procedural due process of law.

Our attention has not been invited to any statutory provision or regulation which governs applications for continuances in the administrative-agency setting. We believe that the statutes which require that hearings be held by the Commissioner, directed at whether to issue branch office applications, vest in him and his hearing officer the implied power to consider and determine requests for postponements of those hearings in the interest of fairness. Tex.Rev.Civ.Stat.Ann. art. 852a, §§ 2.07, 2.13; TAPTRA Section 13. See also Gerst v. Jefferson County Savings & Loan Association, 390 S.W.2d 318 (Tex.Civ.App. Austin 1965, writ ref'd n. r. e.). This power is analogous to the inherent...