Wisconsin Bankers Ass'n (Inc.) v. Mutual Sav. and Loan Ass'n of Wisconsin
| Decision Date | 27 June 1980 |
| Docket Number | No. 77-347,77-347 |
| Citation | 96 Wis.2d 438,291 N.W.2d 869 |
| Parties | WISCONSIN BANKERS ASSOCIATION (INCORPORATED), a Wisconsin Nonstock Corporation, on Behalf of its Members, and Kilbourn State Bank, a Wisconsin Banking Association, and Grafton State Bank, a Wisconsin Banking Association, on Behalf of all State or Federally Chartered Banks in Wisconsin, Plaintiffs-Appellants-Petitioners, v. MUTUAL SAVINGS AND LOAN ASSOCIATION of WISCONSIN, a Wisconsin Savings and LoanAssociation, Defendant-Respondent. |
| Court | Wisconsin Supreme Court |
James P. Brody, Milwaukee, argued, for plaintiffs-appellants-petitioners; Lawrence J. Bugge, Thomas L. Shriner, Jr., and Foley & Lardner, Milwaukee, on brief.
Edward A. Dudek, Milwaukee, for defendant-respondent; James D. Friedman and Frisch, Dudek & Slattery, Ltd., Milwaukee.
Bronson C. La Follette, Atty. Gen., John E. Armstrong, Asst. Atty. Gen., and William R. Hotz, Madison, of counsel, amicus curiae, for Wisconsin Commissioner of Savings and Loan.
John K. MacIver, W. Charles Jackson and Michael, Best & Friedrich, Milwaukee, amicus curiae, for Savings League of Wisconsin.
On this review, we consider the legality of Mutual Savings and Loan Association's Supreme Account II.
Mutual Savings and Loan Association of Wisconsin (Mutual) is a state chartered savings and loan association. It is the third largest savings and loan in the state. In September of 1974, Mutual wrote to the Wisconsin Commissioner of Savings and Loan advising him that it was considering offering, at some future date, a service called Supreme Account II. As characterized by the court of appeals, this account is "a service by which a savings and loan depositor can authorize payment from his savings account directly to a third party by issuing a negotiable sight draft drawn on his account and payable to the named payee." On April 9, 1976, Mutual notified the Commissioner it was proceeding to implement the account. The letter outlined the legal support for the service and requested an opinion of the Commissioner with regard to its legality. On April 16, 1976, the Commissioner responded by a letter in which he concluded that there was an "absence of any prohibition (in the governing statutes) against the form of withdrawal you have proposed" and that the account was therefore legal. Mutual offered Supreme Account II to the public on May 14, 1976, becoming the first savings and loan association in Wisconsin to offer this service.
Each Mutual customer desiring a Supreme Account II makes an initial deposit of $100, executes a signature card and an account rules agreement, and then receives a supply of sight drafts or payment orders which may be drawn on the association and against the customer's funds. The sight drafts provide spaces for the date, name of the payee, amount of the draft, and the depositor's signature as drawer. Once the sight drafts are issued, they are collected by presentation to Mutual through the Milwaukee office of the Federal Reserve Bank of Chicago, with the aid of First Bank-Midland. The items are presented daily with a cash letter summary, and Mutual has until midnight of the day following presentment to advise the Federal Reserve of any items which are not properly payable.
Mutual's customers who have opened such an account can fill in the drafts, sign, and deliver them to a payee in return for goods or services, to obtain cash, or otherwise negotiate them. The payee can negotiate the item or deposit it with his own financial institution so that the draft may be collected from Mutual. Withdrawals from a Supreme Account II are posted to the account as a cash withdrawal in the same fashion as they would be if the customer had personally come into a Mutual office. To accommodate the provisions of sec. 215.17, Stats., Mutual reserves, in the account rules agreement, the right to require thirty days' notice prior to payment of the sight draft; in practice, this requirement is waived. The customer receives a monthly statement listing all account deposit and withdrawal transactions (whether accomplished by draft or otherwise) occurring during the statement period. The rate of earnings payable on funds held in a Supreme Account II was established by Mutual's board of directors as zero percent.
Plaintiff Wisconsin Bankers Association (WBA) had discovered only a day or two before Mutual's announcement and offering of Supreme Account II what Mutual was planning to do. It had heard that the Commissioner of Savings and Loan had authorized Mutual to offer the account. The WBA wrote the Commissioner on May 13, 1976, arguing that "any attempted action . . . by a savings and loan association (to offer negotiable orders of withdrawal would be) ultra vires in nature." (Emphasis in original.) The Deputy Commissioner replied that Mutual was not acting on the Commissioner's authority but was merely taking advantage of the "broad statutory power to offer savings accounts without any statutory or administrative restrictions governing the form that those withdrawals may take" and "the absence of such restrictions on the use of (negotiable orders of withdrawal) in connection with savings accounts."
On Monday, May 17, 1976, three days after Supreme Account II was announced and offered by Mutual, the WBA and two of its members as representative plaintiffs commenced this class action on behalf of all commercial banks in Wisconsin, seeking temporary and permanent injunctions to prevent Mutual from offering Supreme Account II or any similar account. The circuit court granted a temporary restraining order pending hearing on the application for a preliminary injunction. Following an evidentiary hearing, the circuit court denied the temporary injunction and dissolved the restraining order. Mutual then resumed offering the account.
The action was then advanced for trial. After four days of testimony, the circuit court filed an opinion on August 17, 1977, concluding that the Supreme Account II was a legal account and denying the requested permanent injunction. Judgment, dismissing the complaint upon its merits, was entered on October 7, 1977. 1
The court of appeals affirmed the judgment of the circuit court. Wisconsin Bankers Asso. v. Mutual Savings & Loan Asso., 87 Wis.2d 470, 275 N.W.2d 130 (Ct.App.1978). On March 26, 1979, we granted the plaintiffs' petition for review.
On review, the plaintiffs argue that the Supreme Account II is not a savings account, as required by sec. 215.13(1), Stats.; that Mutual is illegally engaged in the banking business by offering the account; and that Mutual is not paying withdrawals from the account "to the owner" and "(to) the saver," as required by sec. 215.17(1) and (4)(a), Stats. While we reject the plaintiffs' first and second contentions, we hold that Mutual's use of negotiable orders of withdrawal is inconsistent with the statutory mandate that withdrawals be paid "to the owner" and "(to) the saver." Accordingly, we reverse.
In the trial court, the plaintiffs presented extensive testimony by an expert witness regarding the meaning of the term "savings account." As explained in that testimony, the commercially accepted definition and the ordinary meaning of the term "savings account" prescribed the existence of three characteristics: (1) a savings account is interest bearing; (2) it is subject to a requirement of prior notice of withdrawal; and (3) withdrawals from it may be paid only to its owner. Because the rate of earnings payable on funds held in a Supreme Account II was established as zero percent and because, the plaintiffs allege, withdrawals from a Supreme Account II are paid to anyone who presents the account owner's draft, the plaintiffs claim the Supreme Account II is not a savings account within the meaning of sec. 215.13(1), Stats.; and Mutual is not allowed to accept payments on such an account.
We cannot agree. Rather than import the usage of the term's generally accepted meaning, the legislature chose to restrict "savings account" by definition. Sec. 215.01(24), Stats., states that " '(s)avings account' means the monetary interest of the owner thereof in the aggregate of savings accounts in the association and consists of the withdrawal value of such interest." This legal definition must be given effect. State v. Schaller, 70 Wis.2d 107, 110, 233 N.W.2d 416 (1975). "As a rule, '(a) definition which declares what a term "means" . . . excludes any meaning that is not stated.' " Colautti v. Franklin, 439 U.S. 379, 392 n. 10, 99 S.Ct. 675, 684 n. 10, 58 L.Ed.2d 596 (1979), quoting 2A Sands, Statutes and Statutory Construction, sec. 47.07 (4th ed. Supp. 1978). Thus on the issue of whether a Supreme Account II is a "savings account," as defined in sec. 215.01(24), it is of no consequence that the rate of earnings payable on Supreme Account II is zero percent or that withdrawals may be paid to someone other than the account owner; these characteristics, while perhaps features of the term's ordinary meaning, are not required by the statutory definition of the term.
The plaintiffs have never contended that the Supreme Account II does not meet the statutory definition of savings account. Nor could they successfully do so. We conclude that a Supreme Account II is a savings account as that term is employed in Chapter 215, Stats., and, consequently, that Mutual is authorized to accept deposits on such accounts, pursuant to sec. 215.13(1), Stats.
The plaintiffs also contend Mutual's offering the Supreme Account II constitutes the illegal conduct of a banking business. Sec. 224.03, Stats., makes it unlawful "for any person, copartnership, association, or corporation to do a banking business without having been regularly organized and chartered as a national bank, a state bank, a mutual savings bank, or a trust company bank." The term "banking business" is defined in sec....
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