Heritage Bank and Trust Co. v. Harris

• Decision Date: 29 April 1985
• Docket Number: No. 84-3110,84-3110
• Citation: 478 N.E.2d 526,88 Ill.Dec. 211,132 Ill.App.3d 969
• Parties: , 88 Ill.Dec. 211 HERITAGE BANK AND TRUST COMPANY, Plaintiff-Appellant, v. William C. HARRIS, Illinois Commissioner of Banks and Trust Companies, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 526

478 N.E.2d 526

132 Ill.App.3d 969, 88 Ill.Dec. 211

HERITAGE BANK AND TRUST COMPANY, Plaintiff-Appellant, v. William C. HARRIS, Illinois Commissioner of Banks and Trust Companies, Defendant-Appellee.

No. 84-3110.

Appellate Court of Illinois First District, First Division.

April 29, 1985.

Adams, Fox, Adelstein & Rosen, Chicago, for plaintiff-appellant; Randall L. Mitchell, Joel S. Corwin, Philip Fertik, Chicago, of counsel.

Neil F. Hartigan, Atty. Gen., Chicago, for defendant-appellee; Jill Wine-Banks, Sol. Gen., Patricia Rosen, Chicago, of counsel.

O'CONNOR, Justice:

Plaintiff Heritage Bank and Trust Company (Heritage), is an Illinois State Bank. It desires to sell its assets, subject to its liabilities, to Joliet Federal Savings and Loan Association (Joliet Federal), a federally-chartered mutual savings and loan association, doing business in Illinois. The sale is subject to the approval of the defendant William C. Harris, Illinois Commissioner of Banks and Trust Companies (Commissioner). He will not approve the sale unless Joliet Federal is "doing a banking business" within the meaning of the Illinois Banking Act (the Act) and is a "bank" within the meaning of section 68 of the Act. To secure such a judicial determination, Heritage filed a declaratory judgment proceeding. The parties filed cross-motions for summary judgment. After argument, the trial court granted summary judgment for the Commissioner. Plaintiff appeals.

Sections 2 and 68 of the Illinois Banking Act provide in pertinent part (Ill.Rev.Stat.1983, ch. 17, pars. 302, 380):

§ 2. General definitions. In this Act, unless the context otherwise requires,

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"Bank" means any person doing a banking business whether subject to the laws of this or any other jurisdiction.

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"National Bank" means a national banking association located in this State.

"Person" means an individual, corporation, partnership, joint venture, trust estate or unincorporated association.

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"State Bank" means any banking corporation organized under or subject to this Act.

§ 68. Voluntary Dissolution. A state bank may elect to dissolve voluntarily and wind up its affairs by the act of the bank in the following manner:

(1) The board of directors shall adopt a resolution recommending that the bank be dissolved voluntarily and directing that the question of such dissolution be submitted to a vote at a meeting of stockholders ...

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(3) At such a meeting a vote of the stockholders entitled to vote thereat shall be taken on a resolution to dissolve voluntarily the bank, which shall require for its adoption the affirmative vote of the holders of at least two-thirds of the outstanding shares entitled to vote at such meeting, * * *

(4) Upon the adoption of such resolution, a statement of intent to dissolve shall be executed in duplicate by the bank by its president or a vice-president, and verified by him, and the corporate seal shall be thereto affixed, attested by its secretary or cashier which shall set forth:

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(h) An executed copy of the contract, if any there be, with another bank, or with the Federal Deposit Insurance Corporation or with both by which another bank assumes all the liabilities of the dissolving state bank.

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(6) Duplicate originals of the statement of intent to dissolve * * * shall be delivered to the Commissioner for his approval. If the Commissioner disapproves the dissolution, he shall state his objections and give an opportunity to the dissolving bank to amend its statements of intent to dissolve to obviate such objections.

(7) If the Commissioner finds that the statement of intent to dissolve conforms to the provisions of this Act when all fees and charges have been paid as in this Act prescribed, and * * * if there is a contract pursuant to subsection (4)(h), when the Commissioner has approved such contract as being in compliance with the provisions of this Act and not prejudicial to creditors, the Commissioner shall indorse upon each of such duplicate originals the word "Approved" and the month, day and year of his approval thereof.

Plaintiff's complaint in pertinent part alleged, and defendant admitted by answer:

As of March 31, 1984, Joliet Federal had total assets exceeding $500,000,000 and a ratio of capital to total assets of over 6.30%. It offers to consumers interest-bearing negotiable order of withdrawal ("NOW") accounts and to commercial customers non-interest-bearing NOW accounts. These are the functional equivalents of personal and commercial checking accounts. It also offers savings accounts, takes other time deposits and buys and sells commercial paper and bills of exchange. It makes loans of money on collateral security, negotiates loans and is authorized to make secured and unsecured loans for commercial, corporate, business or agricultural purposes to the extent of 10% of its assets. It buys and sells negotiable securities issued by the government, state, national and municipal, and by other corporations. It is also authorized to perform trust services.

On February 23, 1984, plaintiff agreed to sell substantially all its assets, subject to substantially all its liabilities, to Joliet Federal. The acquisition is expressly subject to state and federal regulatory approvals. Joliet Federal and Heritage intend to accomplish the acquisition through the voluntary dissolution of Heritage, the selling bank, under section 68 of the Illinois Banking Act. Section 68(4)(h) provides for the acquisition of the assets of a dissolving "state bank" and the assumption of its liabilities, by "another bank." Section 2 defines the term "bank" as "any person doing a banking business whether subject to the laws of this or any other jurisdiction."

The defendant Commissioner is charged with administering the provisions of the Act. Section 68 requires the Commissioner's approval of the transaction here sought. The Commissioner refuses to approve the transaction. He does not deny that Joliet Federal meets all the definitional requirements of the term "bank" in section 2 of the Act and is "doing a banking business"; but believes, however, that the Illinois legislature, in drafting the Act, did not contemplate the assumption of a dissolving state bank's liabilities by a savings and loan association. This belief is the sole basis on which the Commissioner refuses to approve the transaction.

Without a judicial declaration that Joliet Federal is a "bank" within the meaning of section 68(4)(h), the Commissioner will not approve Heritage's statement of intent, the transaction with Joliet Federal will not be consummated, and Heritage and its shareholders will lose profits and other substantial benefits from the sale.

Because there were no genuine issues of material fact, the parties filed cross-motions for summary judgment. On December 11, 1984, the trial court found that Joliet Federal meets all the definitional requirements of the term "bank" and is "doing a banking business" within the meaning of section 2, but, that Joliet Federal is not a "bank" within the meaning of section 68. Accordingly it granted the Commissioner's motion for summary judgment, denied Heritage's motion and certified the issue as "a question of importance requiring immediate decision by the appellate court."

The sole question before this court is whether the trial court erroneously concluded as a matter of law that Joliet Federal was not a "bank" within the meaning of section 68 of the Act. We hold that the trial court was in error.

Where an act defines its terms, those terms must be construed according to the definitions in the act. In People ex rel. Scott v. Schwulst Building Center, Inc. (1982), 89 Ill.2d 365, 59 Ill.Dec. 911, 432 N.E.2d 855, the court said (89 Ill.2d at 371, 59 Ill.Dec. 911, 432 N.E.2d 855):

Legislative intent is to be derived primarily from a consideration of the legislative language itself. "There is no rule of construction which authorizes a court to declare that the legislature did not mean what the plain language of the statute imports." (Western National Bank v. Village of Kildeer (1960), 19 Ill.2d 342, 350, .) Moreover, when an act defines its terms, those terms must be construed according to the definitions contained in the act. (Krebs v. Thompson (1944), 387 Ill. 471, 478 .) Thus, the term "commodity" as used in the Illinois Antitrust Act should be construed according to its definition in section 4.

So here, "bank" as used in section 68 should be construed according to its definition in section 2.

In section 2, the term "bank" was given a broad, functional definition:

"Bank" means any person doing a banking business whether subject to the laws of this or any other jurisdiction.

In Knass v. The Madison and Kedzie State Bank (1933), 354 Ill. 554, 188 N.E. 836, dismissed, 292 U.S. 599, 54 S.Ct. 632, 78 L.Ed. 1463 (1934), the court considered the meaning of "doing a general banking business" saying (354 Ill. at 563, 188 N.E. 836):

* * * The language "doing a general banking business" may not by construction be extended beyond the meaning of like words used in the constitution of the State authorizing the creation of corporations "with banking powers." The words "banking powers", as used in the constitution, were in Reed v. People [ (1888) ], 125 Ill. 592 , construed to mean such powers as are ordinarily conferred upon and used by the various banks doing business in the country. The words "general banking powers" are to be used in their common and ordinary sense. The ordinary and usual powers exercised by banks in doing general banking business are to loan money, to discount notes, receive deposits and deal in commercial exchange. They possess other powers, some of which are specifically conferred by statute, but these are the usual powers exercised in doing a general banking business. (Wedesweiler v. Brundage, [ (1921) ], 297 Ill. 228 ; People v. Doty [ (1880) ], 80...