Massachusetts Co-op. Bank League v. Board of Bank Incorporation
| Decision Date | 01 December 1964 |
| Docket Number | CO-OPERATIVE |
| Citation | 348 Mass. 134,202 N.E.2d 598 |
| Parties | MASSACHUSETTSBANK LEAGUE v. BOARD OF BANK INCORPORATION. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Frederick D. Bonner, Boston (John J. McCarthy, Boston, with him), for petitioner.
Matthew R. McCann, Worcester, for intervener, Home Co-operative Bank.
David W. Hays, Asst. Atty. Gen., for respondent.
Before WILKINS, C. J., and SPALDING, WHITTEMORE, CUTTER and KIRK, JJ.
On June 3, 1963, Home Co-operative Bank (Home) of Worcester filed an application seekign the board's approval of its conversion under G.L. c. 170, § 49 (), 1 into a Federal savings and loan association. The Massachusetts Co-operative Bank League (the league) was 'admitted * * * as a party to the proceeding' before the board. The board, in a majority decision, approved the application. The league then filed in the county court a petition for review of the board's decision. Home was permitted to intervene. A single justice, without decision, reserved the case for the full court upon the pleadings and transcript and exhibits before the board.
1. This review of the board's decision takes place under G.L. c. 170, § 49 (see fn. 1), in accordance with standards of review set out in G.L. c. 30A, § 14(8). See Chicopee Co-op. Bank v. Board of Bank Incorporation, 347 Mass. ----, ----, 200 N.E.2d 284. a The league contends (a) that the board committed error of law by applying incorrectly the standard (see § 49, fn. 1) of 'public convenience and advantage,' and (b) that the board's decision was not supported by substantial evidence.
2. The Chicopee Co-op. Bank decision does not directly govern the present case. That decision (see 347 Mass. at p. ___, 200 N.E.2d at p. 291 b,), upon somewhat unusual facts, was that 'the board's approval of the [Chicopee Co-operative Bank's] application to convert [was] in fact an approval' of that bank's merger, at once after conversion, with another Federal savings and loan association. 2 We held (at p. ___, 200 N.E.2d at p. 291 c) that this virtual approval of a merger was 'in excess of the board's authority,' noting, however, that '[t]he board's power to approve a true conversion is not curtailed by [the Chicopee Co-op. Bank] decision.' The present case involves no problems of merger in the guise of conversion.
In the course of the Chicopee Co-op. Bank case, the court discussed (at pp. ___-___, 200 N.E.2d at p. 290 d) the standard of approval set out in § 49, viz. that 'public convenience and advantage will be promoted.' We said that consideration must be given (a) 'to the convenience and advantage of a particular bank and its shareholders,' (b) to the people in the 'community who do business with it,' and (c) to the effect of the proposed conversion 'upon the banking system as a whole and upon the public * * *.' The burden is upon the applicant to show that the standard has been satisfied and that the conversion will promote the public interest.
3. The board in its decision found that Home 'is the only state-chartered cooperative bank in Worcester,' which is 'also served by one federal * * * association, five mutual savings banks, and five commercial banks.' Home's 1962 assets (roughly $7,000,000) 3 'amounted to less than one per cent of the total deposits of $734,000,000 in the seven savings institutions' just mentioned. The board referred to various disadvantages encountered by the bank because of limitations upon it by its 'co-operative charter' (see G.L. c. 170) which prevented it from providing facilities and services sought by the public and available in other banking systems. Mentioned by the board was Home's inability (a) to offer attractive savings plans; (b) to take 'deposits in substantial amounts' which other types of banks could take; (c) to 'keep pace with * * * demands * * * for mortgage loans' 4 because 'as a co-operative bank it is basically restricted to single family homes whereas the * * * trend in * * * Worcester has been toward multiple family dwellings' and because Home's 'borrowing capacity as a co-operative bank is not sufficiently great or elastic'; and (d) to make certain 'special type loans, such as educational loans.' Reference was made to further limitations upon Home's ability to compete for business with other banking institutions. The board stated that, 'while there is no present prospect that the [b]ank is in [financial] danger, unless it can overcome * * * the disabilities of its charter, its future prospects for normal growth and continued service to the public are not encouraging.'
The board expressed the view (1) that under 'a federal charter' Home would be able to give improved and more varied banking services, offer 'more convenient savings plans,' and 'pursue more advantageous dividend policies,' and (2) that it would 'have greater flexibility in mortgage lending policies * * * [and] strengthen itself through an increased borrowing capacity.' The board also said that it did 'not consider that the departure of one nine million-dollar bank' could 'in and of itself either weaken the co-operative banking system * * * or have such an adverse effect' as to justify disapproval of the application. It concluded 'that public convenience and advantage will be promoted by' the conversion.
The board's conclusions are based on subsidiary findings, which in turn are supported by substantial evidence. Home's president testified at length concerning Home's financial affairs, the competitive situation among the savings institutions in Worcester, and the difficulties which Home encountered in competing with other types of institutions 5 for deposits and loans, in the light of building practices and the present savings and loan needs of the Worcester community.
The board was warranted in concluding that the conversion would be of advantage to Home and to its customers and to potential borrowers among the general public. The evidence revealed a demand in Worcester for broader services than Home was able to offer. The board could reasonably conclude from the evidence, reflected adequately in its findings, that Home's assets would be employed to greater public advantage, in the circumstances currently prevailing in the Worcester community, if Home should become a Federal savings and loan institution with more flexible powers. It was open to the board to take the view that, although Home was not in danger of financial collapse, the conversion would tend to accelerate its growth and make it stronger, to the general advantage of the banking structure as a whole. There was no evidence of any likely injury to the banking structure (either of all Massachusetts banks or of all coperative banks in the State) if the application should be granted.
4. The league argues that Home's application for conversion is based (a) upon its desire 'to compete in the area of 'big banking" and (b) upon the limitations imposed on Home, a part of the coperative banking system established by G.L. c. 170. The league then argues that Home cannot be heard to contend that it should be allowed to convert to a different type of savings institution merely 'because legislatively imposed charter provisions do what they are intended to do: preserve the distinctive character of co-operative banking institutions, thereby necessarily fixing outer limits of * * * the co-operatives' competitive activity.'
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