State v. Grissom
| Decision Date | 22 September 1987 |
| Docket Number | 9562 and 9573,Nos. 9552,s. 9552 |
| Citation | 746 P.2d 661,1987 NMCA 123,106 N.M. 555 |
| Parties | STATE of New Mexico, Plaintiff-Appellant, v. Hollis GRISSOM, W.W. Taylor, a/k/a "Doc" Taylor, Joe T. Boyd, a/k/a "Doc" Boyd, Defendants-Appellees. |
| Court | Court of Appeals of New Mexico |
The state appeals from three separate orders of the trial court dismissing criminal charges against defendants W.W. Taylor and Joe T. Boyd for alleged fraudulent practices, conspiracy and racketeering, and dismissing charges against defendant Hollis Grissom for alleged fraudulent practices. Because the appeals involve common issues, they have been consolidated for hearing before this court.
Two issues are presented on appeal: (1) whether the trial court erred in dismissing criminal charges arising out of the alleged violation of an emergency regulation promulgated by the New Mexico Savings and Loan supervisor; and (2) whether the trial court erred in dismissing a criminal information based upon a determination that defendants' rights to a speedy trial and due process of law were violated. We reverse.
Although this case has not yet reached trial, the appellate record is voluminous, exceeding 150 tape recordings of hearings and 17 volumes of transcript.
On November 2, 1983, the Curry County grand jury filed a criminal indictment against defendants Taylor and Boyd, charging them with fraud in excess of $20,000, embezzlement, securities fraud, conspiracy, and racketeering. Thereafter, on motion of defendants, on October 30, 1984, the trial court dismissed the charges, without prejudice, due to grand jury irregularities. A new complaint was filed on May 2, 1985 in the Curry County District Court, and by consent of the parties, venue was changed to Bernalillo County. Charges in the new complaint were similar to those contained in the prior indictment, but substituted Hollis Grissom for other named defendants and added charges of fraud involving State Savings and Loan Association of Clovis (State S & L). After a preliminary hearing, a criminal information was filed on March 26, 1986.
The charges against defendants involving State S & L arose out of the transfer to the institution of approximately $28 million dollars of negotiable instruments from Boyd, Taylor, and several corporate entities in which Boyd and Taylor were officers. Defendant Hollis Grissom was a former president of State S & L.
In late 1982, Snider Campbell, the New Mexico Savings and Loan supervisor, determined that State S & L was experiencing financial problems due in part to loans made by it and secured by collateral taken on timeshare investments. Campbell learned from a Federal Home Loan Bank Board audit of State S & L that approximately $1 million of the collateral held by State S & L on timeshares had become delinquent.
On May 16, 1983, acting under his emergency powers specified in NMSA 1978, Section 58-10-83, Campbell promulgated Emergency Regulation 83-3 (Regl. 83-3). The regulation became effective immediately and restricted the authority of state chartered savings and loan associations to purchase interests in timeshares or to fund loans secured by collateral in timeshares. Defendants Hollis Grissom and W.W. Taylor were charged in Count 6 of the criminal information with violating Regl. 83-3 with intent to defraud, a felony under NMSA 1978, Section 58-10-95(B), between the dates of May 17 and October 13, 1983, and at a time when the investments were prohibited. State S & L subsequently became insolvent and was placed in receivership.
Grissom and Taylor filed a motion to dismiss Count 6, asserting that Regl. 83-3 was improperly promulgated and invalid. Taylor and Boyd also moved to dismiss the entire criminal information, arguing that delay in the prosecution violated their rights of due process and rights to a speedy trial.
After a hearing on the motions, the trial court dismissed Count 6 against Grissom and Taylor, finding that Regl. 83-3 was invalid. The trial court also dismissed with prejudice the criminal information against Boyd and Taylor, for violation of defendants' rights to a speedy trial and due process of law.
The trial court dismissed the charges against defendants Grissom and Taylor arising out of their alleged violation of Emergency Regulation 83-3. The court's dismissal was premised upon the alleged invalidity of the regulation and the supervisor's failure to specifically articulate in the regulation the factual basis for its promulgation.
Savings and loan associations chartered under New Mexico law are subject to regulation under the Savings and Loan Act. See NMSA 1978, Secs. 58-10-1 to -111. Under the Act, the state savings and loan supervisor is empowered to adopt and enforce regulations governing the operation of saving and loan associations in order to maintain and preserve the solvency of the institutions. Sec. 58-10-73.
Section 58-10-83 authorizes the issuance of emergency regulations, and provides in part:
Notwithstanding the procedures set forth in Sections * * * [58-10-72, 58-10-80 and 58-10-81 NMSA 1978] of this act, should the supervisor determine that an emergency exists which requires him to exercise, without delay, any of his powers granted under Sections [58-10-72, -80, and -81], he may issue, without notice, hearing or delay, any regulations or orders authorized by said sections * * * and require immediate compliance therewith.
Campbell testified that he learned in late 1982 that State S & L was experiencing extreme financial difficulties and the institution had made a large number of loans to Taylor secured by timeshare investments. Campbell stated that in March and April 1983, he learned from an audit of State S & L that an estimated $1 million of its $3 million timeshare securities was delinquent. Campbell stated that he also determined that some savings and loan associations in other states were experiencing serious financial problems with loans secured by timeshare collateral.
On May 16, 1983, Campbell, acting under his emergency powers, issued emergency Regl. 83-3, effective immediately, providing in part that:
(b) No [state savings & loan] association shall make, purchase or otherwise invest in any individual timeshare loan or contract.
(c) No association shall make, purchase or otherwise acquire an interest in any loan or evidence of indebtedness collateralized or secured by individual timeshare loans or contracts.
Campbell held a hearing on the regulation within the ten-day period required under Section 58-10-83. After the hearing, he ordered that the prohibition against timeshare investments be continued pending the issuance of a permanent regulation. On October 13, 1983, Campbell adopted Regl. 83-8, which contained findings of fact and conclusions of law. This regulation also established criteria upon which state chartered savings and loan associations could make loans secured by interests in timeshares.
Following a hearing on defendants' motion to dismiss Count 6, the trial court held that Regl. 83-3 was void, finding that it precluded associations from making loans secured by an interest in real estate contrary to authority given to such institutions by the legislature, and because Campbell failed to adequately state the factual basis for the issuance of the regulation.
Statutes providing for regulation and supervision of savings and loan associations have been upheld under the state's general police powers. Mechanic's Bldg. & Loan Ass'n v. Coffman, 110 Ark. 269, 162 S.W. 1090 (1913); Richardson v. Superior Court, 138 Cal.App. 389, 32 P.2d 405 (1934); Krimke v. Guarantee Bldg. & Loan Ass'n, 112 N.J.L. 317, 170 A. 637 (1934); Jefco, Inc. v. Lewis, 520 S.W.2d 915 (Tex.1975). Savings and loan associations are closely affected with the public interest. Brazosport Sav. & Loan Ass'n v. American Sav. & Loan Ass'n., 161 Tex. 543, 342 S.W.2d 747 (1961). The statutory powers authorizing a state to regulate state chartered banks and savings and loan associations are similar in nature. See North Am. Bldg. & Loan Ass'n v. Richardson, 6 Cal.2d 90, 56 P.2d 1221 (1936); State v. Merrill, 83 Wash. 8, 144 P. 925 (1914). Because savings and loan associations are closely affected with the public interest, the state, under its police power, may assert supervisory and regulatory authority beyond that generally applicable to corporations. See Union Sav. & Inv. Co. v. District Court, 44 Utah 397, 140 P. 221 (1914).
Defendants do not challenge the authority of the supervisor to issue emergency regulations, but contend that an emergency did not actually exist at the time Regl. 83-3 was adopted, that the justification contained in the regulation was in part unsubstantiated, and that the basis for the issuance of the regulation was not adequately set forth in the regulation. We disagree.
Section 58-10-83 authorizes the supervisor to issue an emergency regulation upon determination that an emergency exists. As required by statute a hearing was held within ten days from the issuance of the regulation and findings of fact were subsequently adopted, determining that Sec. 58-10-83.
Defendants contend that the provisions of the Administrative Procedures Act, NMSA 1978, Sec. 12-8-4(B), require that the basis for the agency action be set forth in writing prior to the promulgation of an emergency rule. The Administrative Procedures Act does not apply to the Savings...
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