Ottaway Newspapers, Inc. v. Appeals Court

• Decision Date: 11 May 1977
• Citation: 362 N.E.2d 1189,372 Mass. 539
• Parties: OTTAWAY NEWSPAPERS, INC. v. APPEALS COURT et al., 1 Bass River Savings Bank, Intervener.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1189

362 N.E.2d 1189

372 Mass. 539

OTTAWAY NEWSPAPERS, INC. v. APPEALS COURT et al., ¹ Bass River Savings

Bank, Intervener.

Supreme Judicial Court of Massachusetts, Suffolk.

Argued Sept. 17, 1976.

Decided May 11, 1977.

William H. Carey, New Bedford, for plaintiff.

Thomas R. Kiley, Asst. Atty. Gen. (Louis A. Rizoli, Asst. Atty. Gen., with him), for the Appeals Court and another.

Peter M. Lauriat, Boston (James Roosevelt, Jr., Boston, with him), for Bass River Savings Bank, intervener.

Thomas H. Walsh, Jr., and James F. McHugh, Boston, for The Reporters Committee for Freedom of the Press, amicus curiae, submitted a brief.

James C. Heigham, Boston, for Massachusetts Newspaper Publishers Ass'n, amicus curiae, submitted a brief.

Before HENNESSEY, C.J., and BRAUCHER, KAPLAN and WILKINS, JJ.

KAPLAN, Justice.

This was an action under the 'superintendency' statute, G.L. c. 211, § 3, ² brought in the Supreme Judicial Court for the Suffolk County by Ottaway Newspapers, Inc., publisher of the Cape Cod Times (newspaper), against the Appeals Court and its clerk, in which Bass River Savings Bank (bank) was admitted as an intervener. The newspaper sought a judgment vacating an impoundment order that had been granted by a single justice of the Appeals Court in the course of a separate litigation originating in the Superior Court between the bank and the Commissioner of Banks of the Commonwealth (commissioner). ³ A single justice of our court, after considering in camera the pleadings supplemented by a statement of agreed facts incorporating the record in the separate action, and after hearing the parties and the intervener, granted motions to dismiss the action, thus refusing to lift the impoundment. The newspaper takes the present appeal to the full court from the judgment of dismissal.

1. For an understanding of the appeal a brief description is needed of the origin and nature of the separate but related litigation. In our recital we shall touch glancingly on the contents of papers still nominally impounded, but that will be where the information is now bland, or has become naturally available notwithstanding the impoundment order.

Some time before April 1, 1976, the commissioner reached the conclusion in her own mind that the bank, despite warnings, had engaged in unsound practices in respect to its commercial loans. (There was no claim that the management was otherwise improvident or that the bank was of dubious solvency or liquidity.) The remedy the commissioner sought was to displace the president and members of the board of investment of the bank, and to that end she commenced on April 1 to take the steps, looking to possible eventual removal of bank officers, prescribed by G.L. c. 167, § 5 (to be dealt with below in this opinion). The bank had some informal advance notice of what the commissioner intended to do. To halt the § 5 proceeding, the bank on the same day, April 1, filed an action against the commissioner in the Superior Court for Barnstable County. The papers filed in the action recounted the dealings between the bank and the commissioner over a period of time, exemplified by copies of pertinent parts of reports of examination of the bank by the commissioner's staff. As a basis for relief the bank asserted that the procedures provided by § 5 were invalid as applied because insufficiently protective of the bank officers charged with misjudgment, and thus unjustifiably harmful to the interests of the bank itself; there was a further claim that the commissioner had shown bias against the accused officers and the bank. An injunction was prayed against the commissioner's pursuit of the § 5 remedy. The bank's complaint was accompanied by its motion to impound the papers in the action; this the judge granted without objection on the part of the commissioner. Also granted was a temporary restraining order against the commissioner which on April 22 was continued as a preminiary injunction.

The commissioner applied to a single justice of this court on April 30 to review and vacate the preliminary injunction pursuant In the meantime the newspaper had learned, and had published, that litigation was afoot between the bank and the commissioner regarding the commissioner's proposal to cause the removal of the bank personnel already mentioned. This was newsworthy since the bank, located in South Yarmouth, was a relatively large institution well known on Cape Cod, the area served by the newspaper published in Hyannis. The newspaper had also learned, and had published, that the record in the litigation was impounded. It asked the bank and the commissioner to move voluntarily to release the impoundment order, but the request was declined by both sides. Learning that the litigation had proceeded to the Appeals Court, the newspaper wrote to the Chief Justice of that court on May 11, requesting information about the case and permission to inspect the papers on file. In reply the Chief Justice wrote the next day that the papers had been impounded by order of a single justice of the Supreme Judicial Court. He confirmed that an application was pending in the Appeals Court. In fact, on May 14 a single justice of the Appeals Court vacated the preliminary injunction with an analytic memorandum holding that the bank could not demonstrate irreparable harm because the removal procedures of c. 167, § 5, obviated such injury. Again without objection, this single justice by order continued the impoundment. (The bank made efforts, which need not be described, to stay or secure review of the vacation of the preliminary injunction.)

to G.L. c. 231, § 118 (temporary appellate relief from interlocutory orders). As the regular court of review of any final judgment to be entered in the bank's Superior Court action against the commissioner would be the Appeals Court, it was logical to transfer the § 118 application to the Appeals Court (see G.L. c. 211, § 4A), and that is what the single justice of this court did on May 3, having earlier, without objection, ordered the papers to be impounded. The application passed to a single justice of the Appeals Court and was heard by him on May 11.

With no access to the court files, the newspaper had little more than a guess about the facts underlying the controversy between the bank and the commissioner; and so, on May 24, it commenced the 'superintendency' action against the Appeals Court and its clerk, first noted in this opinion, which ended on June 21, 1976, with a judgment of dismissal from which this appeal is taken.

The single justice of this court examined in camera, as have we, the impounded papers--the subjects of the three impoundment orders--which the newspaper desired to examine with a view to publication. Without setting out the details, we can say that the heart of the papers consisted of those parts of a number of reports of examination of the bank's operations, made on behalf of the commissioner pursuant to G.L. c. 167, § 2 (further considered below), which centered on the bank's commercial loans. There were particulars as to certain loans to specific borrowers, including some appraisals of properties. The practices and policies of the bank in this field were analyzed and criticised. The several reports contained conclusions and recommendations, and the last report stated the commissioner's purpose to see to the removal of the persons whom she supposed to be responsible for the alleged misjudgments involved (venality or dishonesty was not charged).

2. The newspaper's demand for disclosure is to be considered first in the setting of the provisions of the banking law already cited. Under G.L. c. 167, § 2, the commissioner makes periodic and special examinations and audits of the condition of banks in the department's charge (there is a procedure for appraisals of real estate securing bank loans). ⁴ With certain exceptions, the reports are for the confidential use of the bank and the commissioner and are not to The procedure for removal of bank personnel is set out in G.L. c. 167, § 5. The commissioner, considering that an officer has conducted the business of the bank in an unsafe or unsound manner (among other stated causes), may send a statement of the facts to the executive officer and trustees, suggesting appropriate action by the bank. Within a period specified by the commissioner, the trustees hold a special meeting to consider the commissioner's statement. (In the instant case, such a meeting was set for April 1.) If the suggested action is not taken, the commissioner notifies the accused officer to appear and show cause why he should not be removed. A hearing is held before the commissioner, in the presence also of a board consisting of the State Treasurer, the Attorney General, and the Commissioner of Corporations and Taxation (or their representatives). On a finding that the officer is guilty of the delinquency charged, the commissioner may (in discretion) order him removed from office. This decision, however, may be reversed by the action of a majority of the board of State officials. The proceeding before the commissioner and the board is private, for it is provided that even when the officer is found guilty, the findings and order of removal shall not be disclosed beyond that officer and officials of the bank, except in a judicial proceeding, that is, an action by the officer to review the order, the standards for review being those of the State Administrative Procedure Act (G.L. c. 30A, § 14(8)). ⁶

                be shown to or inspected by others.  5  But '(n)othing herein contained shall be construed to prohibit the requiring of the production of such records, and information contained in the reports of such banks, before any court of this commonwealth . . ., in any criminal or civil proceeding therein pending, affecting such bank, its officers, directors or employees.'  G.L. c. 167, § 2, as amended through St. 1975, c. 684, § 23B
                

3. In its pleading the...