Williams v. Cumberland Valley Nat. Bank
| Decision Date | 11 August 1978 |
| Parties | John L. WILLIAMS, Commissioner, Department of Banking & Securities, et al., Appellants, v. CUMBERLAND VALLEY NATIONAL BANK, London, Kentucky, et al., Appellees. James E. BROCK et al., Appellants, v. CUMBERLAND VALLEY NATIONAL BANK, London, Kentucky, et al., Appellees. |
| Court | Kentucky Court of Appeals |
Bert T. Combs, Tarrant, Combs & Bullitt, Louisville, Robert E. Rawlins, Lexington, G. Lee Langston, Peter R. Held, Frankfort, Edwin F. Schaeffer, Jr., Kincaid, Wilson, Schaeffer & Hembree, Lexington, for appellants.
Edward F. Prichard, Jr., William L. Graham, Frankfort, Larry C. Allen, C. R. Luker, Luker, Luker & Roberts, London, for appellees.
Before MARTIN, Chief Judge, and COOPER and HOWARD, JJ.
This is a consolidated appeal from a Franklin Circuit Court judgment denying the issuance of a bank charter to the London Bank and Trust Company. That judgment was entered on August 14, 1975, and provided:
The order entered by the defendant Sallee on May 20, 1975, purporting to issue a bank charter, or to approve the articles of incorporation, or to issue, a certificate of authority to the other defendants in this action to-wit, James E. Brock, Luke Keith, Jr., Charles F. Young, James A. Lewis, James C. Philpot, Don Young and Paul R. Smith, to engage in general banking business at London, Kentucky, is null, void and of no effect and is hereby set aside, reversed and held for naught and the defendants have no legal right or authority to engage in the operation of a bank thereunder.
During oral argument counsel for both appellants and appellees acknowledged that the Commissioner of Banking had in fact issued a charter and that the bank was presently operating in London, Kentucky.
These proceedings began on May 5, 1972, when six businessmen from London and one from Lexington filed an application pursuant to KRS 287.050 with the Department of Banking and Securities for approval of a new bank ("The London Bank"). The Second National Bank of London (since renamed the Cumberland Valley National Bank) protested the application. After a hearing on October 3, the Commissioner of Banking entered findings of fact, conclusions of law, and an order denying the application.
On August 3, 1973, six of the same individuals plus another businessman from London filed a new application to form a bank to be named "The London Bank and Trust Company." The appellees, both of which are local banks, protested, and the Department held a hearing on December 14. On March 19, 1974, the Department's hearing officer rendered a report favorable to the applicants. On the following day, Mr. Sallee, the new Commissioner, entered an order approving the application. The protestants then filed an appeal with the Franklin Circuit Court. Apparently, the charter was issued without the court's knowledge, and the bank began operations on June 3 while the court was considering the case. This appeal followed the circuit court's reversal of the Commissioner's decision.
The issue before this court is whether the Franklin Circuit Court was correct in its determination that Commissioner Sallee acted contrary to his statutory responsibility under KRS 287.050 in recommending that a charter be issued. The circuit court held that the Commissioner violated KRS 287.050 because a similar application had been made and denied by a previous banking commissioner, and the hearing on the second application was not confined to the issue of changed conditions. The circuit court also reasoned that the applicants' proof at the second hearing was substantially the same as at the first. The court found further error in that both the hearing examiner and the Commissioner did not address the issue of changed conditions in their decisions.
Any question concerning the validity of a bank charter is influenced by the decision of the Kentucky Supreme Court in Bank of Shelbyville v. Peoples Bank of Bagdad, Ky., 551 S.W.2d 234 (1977). A further problem is whether a different standard applies to original bank charters under KRS 287.050 compared with licenses for branch banks under KRS 287.180(2). The Bank of Shelbyville case was a branch bank case, yet the court used an original bank charter case to support its holding. Therefore, we must conclude that the Commissioner's duties under the statutes are the same.
Though the court in the Bank of Shelbyville case recognized the bearing of the doctrine of res judicata on the administrative process of issuing bank...
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