Opinion ID: 6260241
Heading Depth: 1
Heading Rank: 1

Heading: Due Pbocess

Text: The contentions made by the Protesting Banks of lack of Due Process were extensively considered and conclusively decided by this Court only three years ago in Cement National Bank v. Department of Banking, 425 Pa. 554, 230 A. 2d 209. We concluded there that these contentions were devoid of merit.
Section 905 of the Banking Code of 1965 pertinently provides: “Approval of branch by department  (a) Investigation and discretionary hearings—Upon receipt of an application for approval of a branch which satisfies the requirements of this Act, the department shall conduct such investigation as it may deem necessary and, in its discretion, may hold hearings before the department or before the Banking Board. The comment of the Banking Commission is as follows:  “Subsection (a) does not require hearings in connection with branch bank applications but permits the department to hold such hearings in its discretion either before the department or before the banking board.” Section 905 further provides: “(c) Action by depart ment—Within sixty days after receipt of the application ... the department shall . . . approve the application if it finds that there is a need for banking services or facilities such as are contemplated by the establishment of the proposed branch and that the requirements of this act have been complied with. ... If the department approves the application, it shall issue to the institution a letter of authority to establish the branch. If the department disapproves the application, it shall give the institution written notice of its disapproval and a statement in detail of the reasons for its decision. The decision of the department shall be final and shall not be subject to review except by the Supreme Court upon broad certiorari.” I need only reiterate what we so pertinently said in Cement National Bank v. Department of Banking, 425 Pa., supra (page 559) : “It is clear from the above quoted provisions of the Code that neither an adversary hearing nor any other kind of hearing is required  before the Secretary of Banldng or at the Department level. This nonrequirement of a hearing is because both the Banking Department and the Legislature have recognized the delicate and sensitive nature of banldng and of the banking information in the possession of the Banldng Department, which in some matters should remain confidential, and the disastrous effects which divulgence of this information might have on all banks in that community.” Appellants correctly state that in Cement National Bank v. Department of Banking, 425 Pa., supra, it was noted that under the Federal system the Comptroller of the Currency was not then required to conduct hearings on the establishment of a branch bank. They point out that since that time the Comptroller’s Office changed this procedure to provide for hearings when requested by any party concerned. Even if we were to consider this a wise procedure, it is not the procedure provided under Pennsylvania law. The Banking Code, we repeat, provides hearings only in the discretion of the Department. We have hereinabove stated the reasons why the Legislature wisely did not make such hearings mandatory. In the present case, the Department, in the exercise of its discretion, refused to grant a hearing. We believe that the Protesting Banks were given ample opportunity to fully present their position, claims and contentions, and consequently we believe that the Department did not abuse its discretion by refusing to grant a hearing.
The Protesting Banks further contend that the Department of Banking deprived them of Due Process when it failed to grant them access to American’s Application and the information filed in support of its Application. As we said in Cement National Bank v. Department of Banking, 425 Pa., supra (page 559) : “. . . both the Banking Department and the Legislature have recognized the delicate and sensitive nature of banking and of the banking information in the possession of the Banking Department, which in some matters should remain confidential, and the disastrous effects which divulgence of this information might have on all banks in that community. This is further confirmed (1) by Article III, §302, of the Department of Banking Code [footnote omitted] which makes the divulgence of information by the Secretary or by any officer or employee of the Department of Banking, with certain enumerated exceptions, a misdemeanor. . . .” As the Protesting Banks have made clear in their contentions and arguments both to the Department and to this Court, they are fully aware of the factual and legal issues to be resolved by the Department in deciding whether or not an Application for a branch should be granted. They submitted detailed protests, with extensive data to support their views. We do not feel that they were handicapped by the refusal of the Department to permit access to American’s Application. When we further consider the strong public and legislative policy against such disclosure, as emphasized by the statute making such disclosure a misdemeanor, we must conclude that they have no absolute right of access to the confidential material of American’s Application. As we further said in Cement National Bank v. Department of Banking, 425 Pa., supra (page 562) : “Banks often forget that they are merely creatures of a Legislature or of Congress, and have only such rights as are granted by Statute or by Congressional Act, as the case may be. The Legislature can grant such powers and impose such conditions and limitations as it desires on all banks and other bodies it creates, provided the same are not unlawful or unconstitutional; and in particular, the Legislature is not required to provide for hearings before its created bodies such as are constitutionally required in judicial proceedings. Moreover, in this case, as we have seen, the Legislature is not required to provide, nor has it provided for hearings at the Department level. The denial of a Judicial or a public or adversary hearing before the Department of Banking or even before a Banking Board is not a violation of procedural due process or of any other Constitutional right; nor is the refusal to permit (a) the inspection of applications and supporting material, or (b) the divulging of information [footnote omitted] by the Secretary of Banking or by any officer or employee of the Department, a violation of any Constitutional right which is possessed by a bank.”