Independent Ins. Agents of Georgia v. Department of Banking & Finance of Georgia
| Citation | 285 S.E.2d 535,248 Ga. 787 |
| Decision Date | 05 January 1982 |
| Docket Number | No. 37708,37708 |
| Court | Supreme Court of Georgia |
| Parties | INDEPENDENT INSURANCE AGENTS OF GEORGIA v. DEPARTMENT OF BANKING & FINANCE OF GEORGIA. |
Wilbur T. Fitzgerald, Atlanta, for Independent Ins. Agents of Georgia, Inc., et al.
Arthur K. Bolton, Atty. Gen., Kathryn Allen, Asst. Atty. Gen., W. Stell Huie, C. Wilson Dubose, Atlanta, for Dept. of Banking and Finance of the State of Ga.
This appeal presents the question of whether a state bank may operate a general insurance agency in a town with a population of less than 5,000.
The Citizens and Southern Bank of Cobb County, a state bank, began this action by applying to the Department of Banking and Finance (The Department) for approval of a purchase of 100% of the stock of a general insurance agency in Austell, a municipality of less than 5,000 in population. The Department suggested that C & S amend its application to request approval to operate the agency through a new corporation to be wholly owned by C & S.
In May of 1979, the Department approved the amended application, and C & S formed the subsidiary. This subsidiary then purchased the assets of the insurance agency and began operation.
The individual appellants operate general insurance agencies in Cobb County, and the corporate appellant, Independent Insurance Agents of Georgia, is an association of agencies and persons licensed as insurance agents in Georgia. These parties brought suit in Cobb Superior Court claiming that C & S was not empowered under the laws of Georgia to operate a general insurance agency, and that consequently, the Department could not authorize such an activity. The trial court agreed, and the Department sought and obtained a review in the Court of Appeals. The Court of Appeals reversed, holding that the Department's action was proper in that state banks have the incidental power pursuant to Code Ann. § 41A-1202(j) to engage in the business of insurance in towns with populations less than 5,000. This Court granted certiorari to review the permissible scope of the statutory powers of state banks in this area. We reverse.
State banks have only the powers granted to them by the General Assembly. These banks have been provided certain express and incidental powers by the Financial Institutions Code of Georgia. See Code Ann. §§ 41A-12 and 13 et seq. It is undisputed that state banks do not have the express power to operate a general insurance agency; therefore, if there is any statutory authority for local banks to engage in the insurance agency business it is to be found under the "incidental powers" clause of Code Ann. § 41A-1202(j).
In construing what constitutes an "incidental power", the statutory language is of prime importance. The words by which the legislature chooses to give expression to its wishes are persuasive evidence of legislative meaning. Code Ann. § 41A-1202(j) provides that "Banks and trust companies shall, in addition, have the power ... to exercise all incidental powers as shall be necessary to carry on the banking or trust business...."
We must decide whether the operation of a general insurance agency is "necessary" in order to carry on "the banking business" To resolve this issue we must make two determinations: (1) what constitutes "the banking business," and (2) what is meant by "necessary." This language has yet to be construed by the courts of this state; however, similar language has been interpreted by the federal courts. See, 12 U.S.C.A. 24(7), and Arnold Tours, Inc. v. Camp, 338 F.Supp. 721, aff'd, 472 F.2d 427 (1st Cir. 1972); American Society of Travel Agents v. Bank of America, 385 F.Supp. 1084 (1974); M & M Leasing Corp. v. Seattle First Nat. Bank, 563 F.2d 1377 (9th Cir.), cert. denied, 436 U.S. 956, 98 S.Ct. 3069, 57 L.Ed.2d 1121 (1977); National Retailers Corp. v. Valley Nat. Bank, 411 F.Supp. 308, aff'd in pt., dismissed in pt., 604 F.2d 32 (9th Cir. 1979).
12 U.S.C.A. § 24(7) () provides that national banks "shall have power ... to exercise ... all such incidental powers as shall be necessary to carry on the business of banking...." In Arnold Tours, Inc. v. Camp supra, p. 432, the First Circuit held that an activity is necessary to the business of banking if it is "convenient or useful in connection with the performance of one of the banks established activities pursuant to its express powers under the National Bank Act."
The court, recognizing the flexible meaning of the word necessary, adopted the "useful or convenient" interpretation in order not to strictly confine...
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