Howard Sav. Bank, Newark, Essex County, Application of

• Decision Date: 28 June 1976
• Citation: 143 N.J.Super. 1,362 A.2d 592
• Parties: Application of the HOWARD SAVINGS BANK, NEWARK, ESSEX COUNTY, for a Branch Office to be Located at the Southwest Corner of Haddon Avenue and Ogden Avenue, Collingswood, Camden County, New Jersey.
• Court: New Jersey Superior Court — Appellate Division

Page 1

143 N.J.Super. 1

362 A.2d 592

Application of the HOWARD SAVINGS BANK, NEWARK, ESSEX

COUNTY, for a Branch Office to be Located at the

Southwest Corner of Haddon Avenue and

Ogden Avenue, Collingswood,

Camden County, New Jersey.

Superior Court of New Jersey Appellate Division.

Argued June 15, 1976.

Decided June 28, 1976.

Michael D. Varbalow, Camden, for appellant Fidelity Mut. Sav. and Loan Ass'n (Jubanyik & Varbalow, Camden, attorneys).

John V. Field, Collingswood, for appellant South Jersey Sav. and Loan Ass'n (Field & Field, Collingswood, attorneys).

Frank J. Miele, Newark, for respondent The Howard Sav. Bank (Riker, Danzig, Scherer & Debevoise, Newark, attorneys; Thomas C. C. Humick, Newark, on the brief).

Michael E. Goldman, Deputy Atty., Gen., submitted a Statement in Lieu of Brief on behalf of respondent Richard F. Schaub, Comm'r of Banking (William F. Hyland, Atty. Gen., attorney).

Before Judges LYNCH, LARNER and HORN.

PER CURIAM.

This is an appeal challenging a determination of the Commissioner of Banking approving the application of the Howard Savings Bank, Newark, Essex County (Howard), to establish and operate a branch office to be located at the southwest corner of Haddon Avenue and Ogden Avenue, Collingswood, Camden County, New Jersey. The objectors-appellants are Fidelity Mutual Savings and Loan Association and South Jersey Savings and Loan Association, whose standing to oppose the action taken by the Commissioner is not questioned.

Following written objections to the grant of the application, hearings were held before a Department of Banking hearing officer over an interval of four days. The hearing officer filed a report and recommendation that the application be granted. Appellants thereafter filed exceptions to the hearing officer's report and recommendation. Nevertheless the Commissioner adopted In toto the findings of fact and conclusions of law of the hearing officer favorable to applicant.

The first two contentions of appellants are: (1) the hearing officer's report and recommendation was grounded on unsupported data contained in Application Form M--115, and (2) appellants were denied a full and fair hearing inasmuch as they were not provided the right to cross-examine the authors of the information contained in said form. These two contentions are essentially the same. M--115 is an application form which has been developed by the Department of Banking to facilitate branch-bank applications. These forms provide the Department with pertinent financial information. At the outset of the administrative hearing the application as completed by Howard was marked into evidence without objection as a departmental exhibit. Appellants assert that this form contains much hearsay evidence and that notwithstanding that Howard was told of the objectors' refusal to accept the truth of the contents of the application, it failed to produce as witnesses the persons who supplied the information. These persons consisted of its own officers, employees or independent contractors.

However, at the commencement of the hearing counsel for appellants requested a list of the expert witnesses who would testify for Howard. He was told that only one witness would testify, namely Allen M. Heaslip. Counsel then indicated he desired to cross-examine the party who prepared certain of the data contained in the application form. The hearing officer ruled that he would not direct Howard to produce these people as its own witnesses. He also ruled that if the objectors wanted to call said persons he would direct that their names be furnished to the objectors.

Subsequently, and after Heaslip was cross-examined in minute detail by the objectors, not only with respect to his testimony but also with respect to the data contained in the documentary submissions of Howard, counsel for the objectors again requested the opportunity to cross-examine the individuals who authorized various parts of said form. The objectors declined to call said persons, although their names had been furnished to them. The hearing officer again refused to compel Howard to produce said witnesses for cross-examination. The only other witness called at the hearing was one Ian Liddell, on behalf of the objectors, the Director of Research of Stephen P. Radics & Co., a certified public accounting firm.

N.J.S.A. 52:14B--10 expressly adopts the universally recognized doctrine that in administrative agency hearings the parties shall not be bound by rules of evidence, whether statutory, common-law or adopted by rules of court. See Weston v. State, 60 N.J. 36, 286 A.2d 43 (1972); D'Amico v. Blanck, 85 N.J.Super. 297, 204 A.2d 609 (App.Div.1964). Although common-law rules of evidence do not apply strictly to administrative tribunals, the fundamentals of fair and adequate procedure constituting due process must be observed, and cross-examination and rebuttal have been held to be basic elements of an administrative hearing essential to due process. Application of Plainfield-Union Water Co., 11 N.J. 382, 94 A.2d 673 (1953).

It plainly appears that the objectors not alone had advance notice of the documentary evidence that applicant was to submit but were, at the hearing, afforded the names of the individuals who prepared the application form. These facts demonstrate that objectors had ample opportunity to test the disclosed evidence for trustworthiness and accuracy, but failed to do so. Their voluntary failure to avail themselves of existing avenues of inquiry cannot serve as a ground for claiming a violation of procedural due process. Moreover, it cannot be said that Howard failed to disclose the requisite support for its application when the parties had been told in advance by the Department not to spend time on direct examination with matters contained in documentary form.

The hearing officer's report and recommendation properly notes that objectors merely wanted to go on a 'fishing expedition' in insisting on cross-examining the parties who supplied the information in the application form, without substantively indicating in what respects said application might be deficient or inaccurate. It must be remembered that the objectors are banking instructions with peculiar knowledge of the esoteric data contained in branch-office applications, Pro forma statements and economic feasibility studies such as those submitted by Howard. Had there been an inaccuracy or misstatement in these documents, objectors would have been obliged to submit direct evidence to refute or discredit same.

Objectors are operating under a misconception with respect to their right to have compelled Howard to produce witnesses. It is now recognized that broad latitude may be allowed in examining a hostile witness. State v. Rajnai, 132 N.J.Super. 530, 541, 334 A.2d 364 (App.Div.1975). We know of no reason why the objectors should have expected the hearing officer to require Howard to call the persons who supplied the information. Moreover, the objectors pragmatically had no basis for believing that their answers to questions would differ because of the identity of the interrogators.

Weston v. State, supra, relied upon by appellants, enunciates (60 N.J. at 50--51, 286 A.2d 43) the oft-cited 'residuum rule' of administrative law--that hearsay may be employed to corroborate competent proof or competent proof may be supported or given added probative force by hearsay testimony, but an administrative decision must be based on a residuum of legal and competent evidence, and not hearsay alone. However, that case involved the denial of a firearms purchaser's identification card, N.J.S.A. 2A:151--33, due solely to reliance on the police chief's recital of reports collected by investigators. Under such circumstances the court held that naked hearsay could not support the administrative (police chief's) determination since it was impossible for the applicant to cross-examine the damaging hearsay testimony. He could thus not have been reasonably expected to overcome such 'faceless' opposition, particularly 'since the identity of those whose adverse views formed the foundation of the judgment against him was not disclosed.' 60 N.J. at 52, 286 A.2d at 51. The court further stated that:

It is not possible to state a hard and fast rule as to the extent hearsay may be utilized in evaluating the sufficientcy of the evidentiary basis of a particular administrative determination. Suffice it to say that much may be left to the discretion of the administrative official who should be aware of the principle which warrants reception of hearsay, as well as the qualification thereon that the decision should not be predicated on hearsay alone. On judicial review, in deciding whether the evidence is its totality sustained the administrative conclusion, naturally the same rule of admissibility...