INDEPENDENT TRUST v. STATE BANKING COM'N, No. 23357.

CourtSupreme Court of South Dakota
Writing for the CourtTIEDE, Circuit.
Citation696 N.W.2d 539,2005 SD 52
PartiesINDEPENDENT TRUST COMPANY, LLC, Appellant, v. SOUTH DAKOTA STATE BANKING COMMISSION, Department of Commerce and Regulation, Division of Banking, Appellees, and Security National Bank, Intervenor and Appellee.
Decision Date27 April 2005
Docket NumberNo. 23357.

696 N.W.2d 539
2005 SD 52

INDEPENDENT TRUST COMPANY, LLC, Appellant,
v.
SOUTH DAKOTA STATE BANKING COMMISSION, Department of Commerce and Regulation, Division of Banking, Appellees, and
Security National Bank, Intervenor and Appellee

No. 23357.

Supreme Court of South Dakota.

Argued February 17, 2005.

Decided April 27, 2005.


696 N.W.2d 540
Charles M. Thompson of May, Adam, Gerdes & Thompson, Pierre, South Dakota, Attorneys for appellant Independent Trust Company

Roberto A. Lange of Davenport, Evans, Hurwitz & Smith, Sioux Falls, South Dakota Attorneys for intervenor and appellee Security National Bank.

TIEDE, Circuit Judge.

[¶ 1.] Independent Trust Company, LLC (ITC) appeals the South Dakota Banking Commission's (Commission) denial of its application to organize and operate a trust company in Dakota Dunes, South Dakota. We affirm.

FACTS AND PROCEDURE

[¶ 2.] ITC is a limited liability company organized by five partners of an accounting firm, King, Reinsch, Prosser, & Co., LLP (KRP), and Christian Holman (Holman), an attorney employed by KRP Financial Services. ITC filed an application with the South Dakota Division of Banking to form a trust company in Dakota Dunes, South Dakota under SDCL ch 51A-6A.

696 N.W.2d 541
Security National Bank (Security) intervened in opposition to the application

[¶ 3.] The Director of Banking issued a memorandum to the Commission regarding his examination and investigation pursuant to SDCL 51A-6A-5. A contested hearing was held before the Commission on October 9, 2003. Several witnesses for both ITC and Security testified and were cross-examined. The Commission received post-hearing briefs from both ITC and Security. The Commission denied ITC's application on January 9, 2004. ITC appealed to the circuit court and the court held a hearing on July 21, 2004. Following the arguments of counsel, the court affirmed the Commission's decision. ITC appeals.

ISSUE

[¶ 4.] Whether the circuit court erred in affirming the Commission's denial of ITC's application to operate a trust company.

STANDARD OF REVIEW

[¶ 5.] In deciding whether to grant an application, the Commission is bound by the Administrative Procedure Act, SDCL ch 1-26. Application of American State Bank, 254 N.W.2d 151, 152 (S.D.1977) (citation omitted); SDCL 51A-6A-4. The Commission's findings of fact are reviewed under the clearly erroneous standard. Application of Dorsey & Whitney Trust Co., 2001 SD 35, ¶ 5, 623 N.W.2d 468, 471 (citing Permann v. Dept. of Labor, 411 N.W.2d 113, 115-17 (S.D.1987)). Questions of law are reviewed de novo. Id. "When presented with a mixed question, courts apply the clearly erroneous standard if the `analysis is essentially factual, and thus is better decided by the agency or lower court . . .,' and the de novo standard when the `resolution requires consideration of underlying principles behind a rule of law....'" Dorsey & Whitney, 2001 SD 35, ¶ 5, 623 N.W.2d at 471 (quoting Rios v. Dept. of Soc. Servs., 420 N.W.2d 757, 759 (S.D.1988)). "Where the analysis turns on the fact finder's `experience with the mainsprings of human conduct,' it is essentially a factual question to which we apply the clearly erroneous standard." Dorsey & Whitney, 2001 SD 35, ¶ 6, 623 N.W.2d at 471 (quoting Permann, 411 N.W.2d at 119 (other citations omitted)). "Considering the factual nature of the inquiry made by the Commission and the factual nature of the arguments in the briefs, we determine this mixed question is essentially factual in nature." Dorsey & Whitney, 2001 SD 35, ¶ 6, 623 N.W.2d at 471. "Accordingly, the clearly erroneous standard is appropriate, meaning this Court will not reverse unless `we are definitely and firmly convinced a mistake has been made.'" Id. (citations omitted).

ANALYSIS AND DECISION

[¶ 6.] ITC had the burden of proving by a preponderance of the evidence that it satisfied the four conditions contained in SDCL 51A-6A-5, which provides:

Upon the filing of an application with the commission, the director shall make a careful examination and investigation concerning the following conditions:
(1) The financial standing, general business experience, and character of the organizers and incorporators;
(2) The character, qualifications, and experience of the officers of the proposed trust company;
(3) The public need for the proposed trust company in the community where the trust company has proposed to locate and whether existing banks or trust companies are meeting the need; and
696 N.W.2d 542
(4) The prospects for success of the proposed trust company.
If the commission determines any of these conditions unfavorable to the applicants, the application shall be disapproved, but if not, then the application shall be approved.

[¶ 7.] While the Banking Director indicated in his memorandum that the conditions of SDCL 51A-6A-5 were satisfied, the Commission, not the Director, is statutorily charged with the final authority to determine whether the conditions have been met.1 There was information presented at the hearing that was not known to the Director when he reviewed the application. "Our legislature purposefully gave the South Dakota Banking Commission a great deal of discretion in deciding factual questions because the commissioners are individuals with specialized knowledge of the banking and trust industries whose judgment and insight in these specialized fields facilitate the admittance and overall regulation of these industries." Dorsey & Whitney, 2001 SD 35 at ¶ 9, 623 N.W.2d at 472 (citing Valley State Bank v. Farmers State Bank, 87 S.D. 614, 625, 213 N.W.2d 459, 465 (1973) (other citations omitted)). This does not mean that the Commission's discretion is absolute. Dorsey & Whitney, 2001 SD 35 at ¶ 9, 623 N.W.2d at 472 (citing Wall v. Fenner, 76 S.D. 252, 256, 76 N.W.2d 722, 724 (1956)). "It must base its actions on factual determinations limited to the factors enumerated in the statute." Id.

[¶ 8.] The Commission found that ITC failed to satisfy any of the four conditions of SDCL 51A-6A-5. In its brief, ITC cites to the evidence that it believes supports findings contrary to those reached by the Commission. However, the question is not whether there is any evidence to support contrary findings, but whether the Commission's findings are clearly erroneous.

(1) The financial standing, general business experience, and character of the organizers and incorporators

[¶...

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1 practice notes
  • First National Bank v. South Dakota State Banking Commission, No. 24911.
    • United States
    • Supreme Court of South Dakota
    • July 15, 2009
    ...reviewed under the clearly erroneous standard, and questions of law are reviewed de novo. Indep. Trust Co., LLC v. SD State Banking Comm'n, 2005 SD 52, ¶ 5, 696 N.W.2d 539, 541 (citations omitted). "[T]he question is not whether there is any evidence to support contrary findings, but whethe......
1 cases
  • First National Bank v. South Dakota State Banking Commission, No. 24911.
    • United States
    • Supreme Court of South Dakota
    • July 15, 2009
    ...reviewed under the clearly erroneous standard, and questions of law are reviewed de novo. Indep. Trust Co., LLC v. SD State Banking Comm'n, 2005 SD 52, ¶ 5, 696 N.W.2d 539, 541 (citations omitted). "[T]he question is not whether there is any evidence to support contrary findings, but whethe......

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