Planters Bank v. Garrott, 41557

• Decision Date: 11 July 1960
• Docket Number: No. 41557,41557
• Parties: PLANTERS BANK v. T. M. GARROTT, Jr., et al.
• Court: Mississippi Supreme Court

Page 256

122 So.2d 256

239 Miss. 248

PLANTERS BANK v. T. M. GARROTT, Jr., et al.

No. 41557.

Supreme Court of Mississippi.

July 11, 1960.

Fred B. Smith, Ripley, Dulaney & Dulaney, Tunica, for appellant.

McClure, Fant & McClure, Sardis, for appellees.

KYLE, Justice.

This case is before us on appeal by the appellant, the Planters Bank of Tunica, Mississippi, contestant, from a decree of the Chancery Court of Tunica County, affirming the decision and order of the State Banking Board directing the Comptroller of banks to issue to the appellees, T. M. Garrott, Jr., G. D. Perry, S. W. Owen, J. W. Caperton and Henry G. Lee, prospective incorporators, a certificate authorizing them to incorporate and organize a new bank in Tunica County, to be known as the Tunica County Bank, as prayed for in the application filed by said prospective incorporators with the Comptroller.

The record shows that the above named appellees on July 28, 1958, gave notice to the State Comptroller of the department of bank supervision of their desire to engage in banking and filed their application for a certificate of authority to incorporate under applicable laws of the state, as provided for in Section 5160, Mississippi Code of 1942, Recompiled. The applicants also filed with the State Comptroller a copy of the proposed articles of incorporation, duly sworn to by one of the prospective incorporators. The State Comptroller promptly gave consideration to said application, and made an examination of the proposed articles of incorporation to determine if they met all requirements of law. The State Comptroller then made an investigation of the several matters which he was required to investigate by Code Section 5160, supra, to determine whether the public necessity required that the proposed new bank should be chartered and permitted to operate. When he had completed his investigation, he recorded his findings in writing, and drew up his recommendations to the State Banking Board, and set a date for the hearing of said application by the State Banking Board and called a meeting of said Board. The State Comptroller gave due notice of said meeting to the prospective incorporators of the proposed new bank and all other interested persons and extended to them an invitation to be heard in writing or in person by the Banking Board. Notice of said meeting was given to the appellant and to all banks in all counties adjoining Tunica County.

The meeting of the State Banking Board for the purpose of considering said application was begun and held on January 27, 1959. The appellant Planters Bank appeared, by its attorneys on that date, and stated that it desired to contest the appellees' application, and asked to be admitted as a party to the hearing. The appellant's request was granted. Four and one-half days were consumed in the taking of testimony, and at the conclusion of the hearing, on February 25, 1959, the Board rendered an opinion and decision in favor of the prospective incorporators. The Board found that public necessity required that the new bank be chartered and permitted to operate, and an order was duly entered directing that a charter be issued. From that decision and order the appellant prosecuted an appeal to the Chancery Court of Tunica County, and on October 8, 1959, the chancellor rendered his opinion and entered a decree affirming the order of the State Board. The chancellor found that the finding of the State Board that public necessity required that the proposed new bank be chartered and be permitted to operate was supported by substantial evidence and was not arbitrary or capricious, and that no prejudicial error had been committed by the Board in the proceedings before it or in the rendition of its decision and order.

The appellant's attorneys have assigned and argued four points as grounds for reversal of the decree of the lower court:

(1) That the appellant was denied the right to a fair hearing and due process of law by the action of the State Banking Board in withholding from the record at the time of the hearing and treating as confidential the findings of the State Comptroller showing the results of the investigation which he had made pursuant to the requirements of Section 5160, Code of 1942, Recompiled, prior to the meeting of the State Banking Board, to determine whether the public necessity required that the proposed bank be chartered.

(2) That the court erred in refusing to compel certain of the appellees' witnesses to answer questions on cross-examination as to the source of their alleged information that the appellant's officers had the reputation of using the bank to promote their political ambitions and their personal business enterprises.

(3) That the Board failed to render such opinion at the conclusion of the hearing as the statute required, in that the opinion rendered contained no findings of fact and gave no reasons for the Board's decision, but merely stated a conclusion.

(4) That the order of the Board finding that a public necessity existed which required that the proposed new bank be chartered and permitted to operate, was not supported by substantial evidence, but was manifestly erroneous, arbitrary and capricious.

The record in this case consists of two volumes of pleadings, affidavits and exhibits, and six volumes of testimony taken during the hearing before the State Banking Board. It would serve no useful purpose for us to undertake to incorporate in this opinion a detailed analysis of the exhibits or a digest of the testimony of the witnesses. But, before proceeding to a consideration of the above mentioned assignments of error, it is necessary that we make a brief statement concerning the nature of the testimony offered on behalf of the respective parties.

The record in this case shows the following facts concerning the area in which the proposed bank is to be located: Tunica County has an area of 458 square miles lying wholly within the Mississippi Delta. The population of the county according to the 1950 census was 21,658, the white population being 3,939, and the Negro population being 17,719. The total assessed valuation of taxable property in the county at the time of the hearing was $11,231,374. There is only one bank in the county, the appellant Planters Bank, which was chartered in 1912 and is domiciled in the Town of Tunica. The county is traversed from north to south by U. S. Highway No. 61, which is a heavily traveled paved highway, and by two lines of railroad, and three gas transmission lines. The chief source of income for the people of the county is agriculture. The value of the agricultural products produced and marketed during the year 1958 was approximately eleven million dollars. There are 26 cotton gins, two fertilizer distributing plants, one oil mill, five grain elevators, one cotton compress, two sawmills and one manufacturing plant in the county. There are two new automobile sales agencies, and several used car sales agencies, also the usual number of mercantile establishments, gasoline, and oil distribution agencies and service stations. The record shows that there have been three bank failures in the county during the last 50 years. The Bank of Tunica, which was founded about 1888, became insolvent and was forced to close in June 1913. The Citizens Bank of Tunica was chartered in 1916 and became insolvent ten years later. The Bank of Dundee, located in the Town of Dundee, was organized in 1919, but was liquidated three years later. There has been only one bank located in the county since 1926, the Planters Bank, which has been operated under capable management and has grown steadily during the last 40 years. Its original charter provided for the issuance of capital stock in the amount of $20,000. That amount has been increased by charter amendments three times, and at the close of business on December 31, 1958, the bank had outstanding capital stock of the par value of $105,000. The bank's surplus at that time amounted to $315,000; its undivided profits, $24,972.03; and reserves, $45,719.81. The bank's deposits amounted to $5,448,548.46. The loans and discounts amounted to $1,477,514.08.

The appellees' evidence showed that the five prospective incorporators were men of good morals and sound business character, having a financial worth of $3,250,000; that there were 153 subscribers for stock in the new bank, which was to have a capital structure of $150,000, to be credited as follows: $100,000 to capital account, $25,000 to a paid-in surplus account, and $25,000 to an undivided profit and loss account. The appellees' evidence also showed that the subscribers of stock had agreed to the organization of a realty company, with a capital stock of $50,000, which was to erect and equip a bank building on a suitable lot to be leased by the realty company to the new bank for a nominal consideration and later conveyed to the banking corporation for a nominal consideration. It was the opinion of the appellees' witnesses that there was a real public need in the county for the establishment of a new bank which would bring additional bank deposits into the county and help create new wealth. The prospective incorporators testified that, in their opinion, the new bank would bring into the county as much as one million dollars in deposits from out of state banks; that they had been assured of sufficient deposits to maintain a successful banking operation; that the county could support two banks; and that the new bank would not weaken the appellant bank.

T. M. Garrott testified that he knew that many residents of Tunica County carried sizeable bank deposits in Memphis banks, and some of that money would be deposited in the new bank if such bank were organized; that most of the deposits which he and the other incorporators expected to get for the new bank would come from banks outside of Tunica County. G. D. Perry testified that, in his opinion, another bank was...