Opinion of the Justices

• Decision Date: 21 May 1959
• Docket Number: No. 4751,4751
• Citation: 151 A.2d 236,102 N.H. 106
• Parties: OPINION OF THE JUSTICES.
• Court: New Hampshire Supreme Court

Page 236

151 A.2d 236

102 N.H. 106

OPINION OF THE JUSTICES.

No. 4751.

Supreme Court of New Hampshire.

May 21, 1959.

Sullivan & Gregg and Sherman D. Horton, Jr., Nashua, for New Hampshire Bank Shares, Inc. in favor of affirmative answers.

Sulloway, Hollis, Godfrey & Soden, Concord, for New Hampshire Bankers Association in favor of negative answers.

Upton, Sanders & Upton, Concord, for New Hampshire Association of Savings Banks, also for negative answers.

PER CURIAM.

The following resolution adopted by the House of Representatives on April 29, 1959, was filed in this Court on the same date:

'Whereas, House Bill No. 272, An act relating to bank holding companies is now pending in the House of Representatives,

'Whereas, questions have been raised concerning the constitutionality of the provisions of said bill, now therefore

'Resolved, that the Justices of the Supreme Court be respectfully requested to give their opinion on the following questions of law:

'1. Do the provisions of House Bill No. 272, An Act relating to bank holding companies violate the Constitution of The State of New Hampshire, the Constitution of the United States or any federal statutes relative to bank holding companies?

'2. Would a regulatory bill providing for the approval or disapproval by a bank holding company commission of the acquisition of the stock of a bank by a bank holding company conflict with or violate the Constitution of the state or the Constitution of the United States or any federal statute?

'3. Would a bill limiting the total deposits or resources, expressed in terms of percentage of total bank deposits or resources in the state, which a bank holding company could acquire through acquisition of stock of other banks conflict with or violate the Constitution of this state or the Constitution of the United States or any federal statute?'

The following answers were returned:

To the House of Representatives.

The undersigned Justices of the Supreme Court make the following answers to the inquiries contained in your resolution with reference to House Bill No. 272, entitled 'An Act relating to bank holding companies.'

The bill would amend the Revised Statutes Annotated by inserting a new chapter 294-A. It includes in its definition of a 'Bank', state and national banks authorized to do business and located in this state. S. 1 I. It defines a 'Company' as 'any bank, corporation, partnership, business trust, voting trust, unincorporated association, joint stock association or similar organization organized under the laws of this state or doing business in this state.' S. 1 II. A 'Bank holding company' is 'any company which directly or indirectly (1) owns, controls, or holds with power to vote fifteen percentum or more of the voting stock of each of two or more banks; or (2) controls the election of a majority of the directors of any two banks.' S. 1 III.

Section 2 thereof provides that 'No company shall become a bank holding company' but this prohibition shall not apply in certain specified cases. S. 3. 'Any company which on the effective date of this act is a bank holding company shall not be required to divest itself of the voting stock of a bank held on said date and such company may acquire additional stock in any bank in which on said date it owns more than fifty per centum of the voting stock.' S. 4.

Section 5 provides that 'No bank holding company shall directly or indirectly (1) acquire ownership or control of any voting stock in any other bank if after such acquisition it would directly or indirectly own or control more than five per centum of the voting stock thereof except as permitted under section 4; (2) acquire all or substantially all of the assets of any bank; or (3) merge or consolidate with any other bank holding company.'

Your first inquiry is whether the provisions of House Bill No. 272 violate the Constitution of the State of New Hampshire, the Constitution of the United States or any federal statutes relative to bank holding companies.

The business of banking bears such a relation to the economic security of the public that it is a proper subject of regulation by the State in the exercise of its police power. Opinion of the Justices, 278 Mass. 607, 181 N.E. 833, 82 A.L.R. 1021; Kirkwood v. Provident Savings Bank, 205 Md. 48, 106 A.2d 103; 1 Michie, Banks and Banking, p. 1; 1 Zollman, Banks and Banking, p. 7. Many phases of banking are already regulated in this state. RSA chs. 383-397. The proposed bill seeks to regulate multiple banking conducted by means of bank holding companies. The wisdom or desirability of such regulation is the concern of the Legislature. Petition of White Mountain Power Co., 96 N.H. 144, 151, 71 A.2d 496; Opinion of the Justices, 101 N.H. 549, 553, 137 A.2d 726.

The argument is made that House Bill No. 272 would impair or destroy private rights guaranteed by Article 2, Part I, and Article 5, Part II of our Constitution and by the Fourteenth Amendment to the Federal Constitution. When the Legislature seeks to act in the exercise of its police power, as it does here, the constitutionality of the proposed legislation depends upon whether the curtailment of the rights of those to be affected thereby can be justified as a reasonable measure in furtherance of the public interest or the general welfare. Woolf v. Fuller, 87 N.H. 64, 68, 69, 174 A. 193, 94 A.L.R. 1067; Allen v. Manchester, 99 N.H. 388, 390, 111 A.2d 817.

Although all of the other New England states have laws authorizing branch banking in some form (see New England Business Review, Federal Reserve Bank of Boston, April 1959) New Hampshire has never enacted such a law. If the Legislature is of the opinion that unit banking better serves the public interest of the citizens of New Hampshire and that any further expansion of multiple banking should be curtailed we are of the opinion that it can properly do so in the exercise of the police power even though the rights of those regulated would be restricted thereby. Braeburn Securities Corporation v Smith, 15 Ill.2d 55, 153 N.E.2d 806 (appeal to U.S.Sup.Ct. dismissed, 79 S.Ct. 876).

The fact that the proposed bill permits existing bank holding companies to continue in their present situation but curtails their expansion and prohibits the formation of any new company does not render it invalid. Stone v. Cray, 89 N.H. 483, 485, 200 A. 517; Opinion of the Justices, 99 N.H. 505, 507, 105 A.2d 924; Sperry & Hutchinson Co. v. Rhodes, 220 U.S. 502, 31 S.Ct. 490, 55 L.Ed. 561; Braeburn Securities Corporation v. Smith, supra. We cannot say that the fact that the proposed bill does not seek to regulate the participation of individuals in multiple banking constitutes such a capricious or arbitrary classification as to render it unconstitutional. Allen v. Manchester, 99 N.H. 388, 390, 391, 111 A.2d 817; Rockingham Hotel Co. v. North Hampton, 101 N.H. 441, 444, 146 A.2d 253; Thillens, Inc. v. Morey, 11 Ill.2d 579, 144 N.E.2d 735.

House Bill No. 272 would apply to national banks doing business in this state. These banks are instrumentalities of the Federal Government created for a public purpose and as such are necessarily subject to the paramount authority of the United States. M'Culloch v. State of Maryland, 4 Wheat. 316, 17 U.S. 316, 4 L.Ed. 579; Davis v. Elmira Sav. Bank, 161 U.S. 275, 283, 16 S.Ct. 502, 40 L.Ed. 700; Henrys v. Raboin, 395 Ill. 118, 69 N.E.2d 491, 169 A.L.R. 927; Zarbell v. Bank of America Nat. Trust & Sav. Ass'n, Wash., 327 P.2d 436. However...