Strain v. Lewis
| Decision Date | 13 January 1971 |
| Docket Number | No. 11776,11776 |
| Citation | 461 S.W.2d 498 |
| Parties | Norman T. STRAIN et al., Appellants, v. W. Sale LEWIS, Savings and Loan Commissioner et al., Appellees. |
| Court | Texas Court of Appeals |
Cofer & Cofer, G. Hume Cofer, Austin, for appellants.
Crawford C. Martin, Atty.Gen., Ray McGregor, Asst.Atty.Gen., Jacobsen & Long, Joe R. Long, Gary Evatt, Austin, for appellees.
O'QUINN, Justice.
This is an appeal from judgment of the district court sustaining an order of the Savings and Loan Commissioner approving a branch office to be located in Granbury, in Hood County, Texas, and denying a charter for an association also proposed to be established in Granbury.
Stephenville Savings and Loan Association, located in Stephenville, Erath County, filed application for a branch office to be operated in Granbury, Hood County, September 30, 1968. About three months later, on December 20, 1968, eight residents of Hood County, one resident of Somervell County, and one of Tarrant County filed application for a charter to operate a new association, Granbury Savings and Loan Association, in Granbury.
The application of Stephenville Savings and Loan came up for hearing before the Commissioner January 14, 1969, and the hearing was recessed until March 21, 1969. The Granbury application for a charter was heard by the Commissioner February 13, 1969, and the following month, on March 21, the Commissioner heard to its conclusion the Stephenville application for a branch office.
In a consolidated order entered April 22, 1969, the Commissioner approved the Stephenville application for a branch office and denied the Granbury application for a charter.
Appeal to the district court resulted in judgment, entered March 11, 1970, sustaining the order of the Commissioner. The Granbury group, seeking a charter for a new association, has appealed from that judgment and brings eleven points of error.
In the trial court four savings and loan associations intervened and aligned themselves with the Commissioner. The intervenors were Stephenville Savings and Loan Association, Cleburne Savings and Loan Association, Mineral Wells Savings and Loan Association, and Mutual Building and Loan Association of Weatherford, and all are appellees with the Commissioner in this appeal.
We affirm the judgment of the district court approving the order of the Commissioner.
Applicants for the charter, who were petitioners in district court and are appellants before this Court, are identified as Norman T. Strain, Jimmie C. Dixon, Albert Porter, Sam B. Grisson, Jolly Myers, Dr. R. N. Rawls, S. G. Payte, Mrs. Billie Brock, Cecil A. Thomas and Joe L. Nutt, all residents of Hood County, except Myers, a resident of Somervell County, and Payte, resident of Tarrant County.
The main attack appellants make on the Commissioner's order is that the Commissioner acted without authority in distinguishing between the two applicants on the basis of statutory standards of public need and profitable operation. Appellants argue that the controlling difference between the applicants is the preference to local control. It is uncontradicted that the Granbury charter, if granted, would be controlled locally, by residents of Hood County, and that none of the Stephenville association directors resides in Hood County and less than ten percent of the association's stock is held by residents of Hood County.
Review of the action of the Commissioner must be based on facts found in the records made at the hearings before the Commissioner in 1969, and if there is substantial evidence supporting the order of the Commissioner, the judgment exercised by him in his discretion must stand. Gerst v. Nixon, 411 S.W.2d 350 (Tex.Sup.Ct., 1966); Phillips v. Brazosport Savings and Loan Association, 366 S.W.2d 929 (Tex.Sup.Ct., 1963).
The Commissioner had no difficulty in finding that both the Stephenville branch applicant and the Granbury charter applicant complied with the several basic requirements for the respective types of applications. We hold that these findings of the Commissioner are supported by substantial evidence. Such findings of the Commissioner are not challenged, and are not in issue, except as we shall indicate hereafter.
The group seeking the Granbury charter proposed to serve Hood and Somervell Counties, and the Stephenville branch applicant specified Hood County as its proposed service area. The Commissioner concluded from the evidence adduced at the two hearings, that Hood County would be 'the logical and practical service area' for either proposed operation, but noted that there would not be a sufficient volume of business in Hood County alone, or in the area of Hood and Somervell combined, to indicate a profitable operation for the proposed charter association.
It is settled that the same basic standards governing the approval or disapproval of an application for a saving and loan charter are applicable to the granting or denying of proposals for branch offices. Southwestern Savings and Loan Association of Houston v. Falkner, 160 Tex. 417, 331 S.W.2d 917; Benson v. San Antonio Savings Association, 374 S.W.2d 423 (Tex.Sup.Ct., 1963); Gerst v. Jefferson County Savings and Loan Association, 390 S.W.2d 318 (Tex.Civ.App., Austin, 1965, writ ref., n.r.e.).
The Commissioner found that a public need existed for the proposed branch of Stephenville Savings and Loan and that the branch could operate profitably. The Commissioner also found that no public need existed for the proposed new association and that the volume of business in the community was not sufficient to indicate a profitable operation for the proposed new association. The Granbury charter group attacks these findings and argues that no basis exists for so differentiating between the charter applicant and the branch applicant.
An applicant for a charter is required to show a public need for the proposed association. Art. 852a, sec. 2.08(3), Vernon's Ann.Civ .Sts. The applicant for a branch office must show a public need for the branch the association proposes to operate. Rules and Regulations, sec. 2.4(h). The public need to be shown by the respective applicants of necessity must be related to the specific proposals made in each application, the first for a complete new association and the other for a branch office to be operated by an existing association. Proof of public need for a branch office obviously need not be as comprehensive as proof of public need for a new association engaged, at one location, in a full savings and loan service.
In like manner, proof that a profitable operation is indicated for a new association is, by the very nature of the operation, different from the proof needed to show that a branch office will be profitable for an association. The charter applicant, by statute, is required to prove that the volume of business in the community where the association will carry on its business 'is such as to indicate profitable operation.' Art. 852a, sec. 2.08(3). In seeking a branch office, the applicant must demonstrate that the volume of business in the community where the branch will operate 'is such as to indicate a profitable operation to the association within a reasonable time.' Rules and Regulations, sec. 2.4(h).
We have concluded that the Rules, in prescribing a standard for branch offices that is less exacting than the standard set by statute for association charters, are in harmony with the general objective of the savings and loan Act and within the discretion of the Building and Loan Section of the Finance Commission. Gerst v Oak Cliff Savings and Loan Association, 432 S.W.2d 702 (Tex.Sup.Ct., 1968).
Testimony before the Commissioner supports the view that branch offices may be operated with considerably less expense than home offices. Branch offices were shown to reach the 'break even' point sooner than home offices because of the obvious and inherent differences in expense for the two types of offices. Because a branch office can be operated with greater economy than the home office of an association, the business available in some communities may justify a branch operation but not warrant a new institution rendering complete service and having a more onerous expense load. Furthermore, a branch office, operating ancillary to the home office, can be profitable to the association if it has savings that can be used elsewhere in loans made by the institution.
Granbury, the county seat of Hood County, is the largest community in the county and in 1967 had a population estimated at less than 2,400. Hood County has experienced a slow growth in population. In eighteen years the county's population increased...
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