Lewis v. Gonzales County Savings and Loan Ass'n

• Decision Date: 08 December 1971
• Docket Number: No. B--2536,B--2536
• Parties: W. Sale LEWIS, Savings and Loan Commissioner, et al., Petitioners, v. GONZALES COUNTY SAVINGS AND LOAN ASSOCIATION et al., Respondents.
• Court: Texas Supreme Court

Page 453

474 S.W.2d 453

W. Sale LEWIS, Savings and Loan Commissioner, et al., Petitioners, v. GONZALES COUNTY SAVINGS AND LOAN ASSOCIATION et al., Respondents.

No. B--2536.

Supreme Court of Texas.

Dec. 8, 1971.

Rehearing Denied Jan. 19, 1972.

Crawford C. Martin, Atty. Gen., Heath, Davis & McCalla, Dudley D. McCalla, Austin, Fly, Cory & Moeller, Victoria, for petitioner.

James E. Cross, Yoakum, Jacobsen & Long, Joe R. Long and Gary Evatt, Austin, for respondent.

DENTON, Justice.

This is a suit by Gonzales County Savings and Loan Association and Yoakum Federal Savings and Loan Association to set aside an order of the Savings and Loan Commissioner granting the application of South Texas Savings and Loan Association of Victoria to establish a branch office in Hallettsville, Texas. The trial court upheld the commissioner's order and its judgment was reversed and the cause remanded to the commissioner for further proceedings by the court of civil appeals. 461 S.W.2d 215. We affirm the judgment of the court of civil appeals.

Since the court of civil appeals in Bay City Federal Savings and Loan Association v. Lewis, 463 S.W.2d 268, seemed to have placed a different construction upon Sec. 11.11(4), Article 852a, Vernon's Tex.Ann.Civ.Stat and its application upon the commissioner's orders we granted writs of error in both cases. After having heard argument in both cases and considered the briefs of the parties, the Court has reached the conclusion the two decisions are in conflict. Bay City involved an order of the Savings and Loan Commissioner granting a new charter application as authorized by Sec. 2.08 of Article 852a, V.A.C.S. The case at bar has to do with the commissioner's order granting an application to establish a branch office of an existing savings and loan association under the provisions of Sec. 2.4 of Rules and Regulations for Savings and Loan Associations. South Texas Savings and Loan Association of Victoria and the Savings and Loan Commissioner are petitioners here.

The respondents contend here, as in the court of civil appeals, that the order granting the application to establish the branch office was invalid on two grounds: (1) the order did not contain a concise and explicit statement of the underlying facts supporting the findings in the order as required by Art. 852a, § 11.11(4) Vernon's Tex.Ann.Civ.Stat., and (2) the order was not supported by substantial evidence. The court of civil appeals sustained respondents' first contention and held the order invalid, but did not pass on the contention that the order was not supported by substantial evidence.

The Rules and Regulations for Savings and Loan Associations governing branch offices are set forth below. ¹ The respondents do not challenge the validity of the rules promulgated by the commissioner, nor do they question the fact the commissioner made all findings required by the rules. The contention is the order is invalid for the reason it does not contain a 'concise and explicit' statement of the underlying facts supporting the findings. ² In the instant order the findings which are said not to comply with the statutory requirement read:

'The Commissioner further finds the following: that the aggregate amount of the loss reserves, surplus and Permanent Reserve Fund stock of the applying association is equal to at least three per cent (3%) of its savings liabilities; that the applying association has had a profitable operation for the three-year period next preceding the filing of such application after paying operating expense, making statutory allocations to loss reserves and paying dividends on savings accounts out of its earnings during such period; that the applying association has had no serious supervisory problems which would affect its ability to properly operate such office; . . . that the proposed branch office will be supervised by qualified full-time management; and that the character, responsibility, and general fitness of the management of the branch applicant are such as to command confidence and warrant belief that the business of the proposed branch office will be honestly and efficiently conducted in accordance with the intent and purpose of the Savings and Loan Act.'

The findings which are attacked include those required by (a), (b), (c) and (g) of Rule 2.4, dealing with the amount of loss, reserves, surplus and permanent reserve fund stock to equal 3% Of its savings liability; that the applying association has had a profitable operation for the preceding three-year period; that the applying association has had no serious supervisory problems; and the proposed branch office will be supervised by qualified full-time management. The same attack is also made on the commissioner's findings, that the character, responsibility and general fitness of the applicant are such as to command confidence and warrant belief that the business of the proposed branch office will be honestly and efficiently conducted in accordance with the intent of the Savings and Loan Act. Those rules were promulgated by the Savings and Loan Commissioner to establish standards to govern the establishment of branch offices by existing associations. The authority to promulgate these rules and regulations has been upheld. Gibraltar Savings & Loan Association v. Falkner, 371 S.W.2d 548 (Tex.Sup.1963). It is settled that the same basic standards governing applications for a savings and loan charter are applicable to proposals for branch offices. Southwestern Savings and Loan Ass'n of Houston v. Falkner,160 Tex. 417, 331 S.W.2d 917; Benson v. San Antonio Savings and Loan Ass'n,374 S.W.2d 423 (Tex.Sup.1963). However, it has been held proof of public need for a branch office obviously need not be as comprehensive as proof of public need for a new association engaged, at one location, in a full savings and loan service. In like manner, proof that a profitable operation is indicated for a new association is, by the very nature of the operation, different from the proof needed to show that a branch office will be profitable for an association. Strain v. Lewis, 461 S.W.2d 498 (Tex.Civ.App., Writ Ref'd N.R.E.). The Rules in prescribing a standard for branch offices that is less exacting than the standard set by statute for association charters, are in harmony with the general objectives of the Savings and Loan Act. Gerst v. Oak Cliff Savings and Loan Assoc., 432 S.W.2d 702 (Tex.Sup.1968). Rule 2.4 requires the commissioner to affirmatively find compliance with each requirement as prerequisite to approval of an application for an additional office. Gibraltar v. Falkner, supra. As noted above, Rule 2.4 provides: 'The Commissioner shall approve an application for a branch office if he shall have affirmatively found from the data furnished with the application, the evidence adduced at the hearing and his official records that . . .' (Followed by eight requirements.) The respondents do not contend the commissioner failed to make every finding required by subparagraphs (a) through (h) of Sec. 2.4 of the Rules and Regulations. They do contend the order granting the application to establish a branch office must comply with the requirement of Sec. 11.11(4), Art. 852a; i.e., '. . . Findings of fact, if set forth in statutory language, shall be accompanied by a concise and explicit statement of the underlying facts supporting the findings.' We are of the view this requirement applies only to findings of fact in the commissioner's orders which are 'set forth in statutory language.' ³ When findings are made in the language of the Rules and Regulations that do not embody statutory language, they need not be accompanied by a concise and explicit statement of the underlying facts.

The instant order contained all eight findings required by Rule 2.4 in addition to the finding concerning the 'character, responsibility, and general fitness' of the management of the branch office which is a required finding for the approval of a charter by Art. 852a, Sec. 2.08(2).

Four of the commissioner's findings are set forth in statutory language. They include Rule 2.4(d) that the proposed operation will not 'unduly harm any other association' operating in the vicinity; Rule 2.4(g) requiring supervision of the proposed branch by 'qualified full-time management;' Rule 2.4(h) that 'there is a public need' for the proposed branch and the volume of business in the proposed community is such as to indicate a profitable operation;' and Art. 852a, Sec. 2.08(2) concerning the 'character, responsibility, and general fitness' of the management of the branch applicant. Under the clear language of Art. 11.11(4) these findings, being set forth in statutory language, must be accompanied by a concise and explicit statement of the underlying facts supporting the findings. The commissioner's order contains no statement of underlying facts to support these required findings.

The...