Opinion ID: 2395177
Heading Depth: 1
Heading Rank: 1

Heading: violation of constitutional and statutory provisions

Text: FNB initially contends that the Commissioner's order is in violation of constitutional and statutory provisions and made upon unlawful procedure. FNB bases this argument on the perception that its rights to due process have been denied due to the discretionary authority imbued in the Commissioner to grant or deny an application for a branch bank without an adjudicatory hearing. FNB claims that it has a franchise, by virtue of being a federally chartered bank, and that its due process rights can only be preserved and protected through a hearing at which all parties offer evidence. The pertinent legislation regarding the procedure of establishing a full service branch office is contained in Ark.Code.Ann. § 23-32-1203 (Supp.1989), which provides in pertinent part as follows: (c) Notice of the filing of the application shall be given by the commissioner to every other bank in the city or town in which the branch applicant bank is located. This notice shall be given by mail. (d)(1) Any formal protest to a branch bank application must be received in writing detailing the reasons for protest within fifteen (15) calendar days of the date the commissioner's notice of an application was mailed.       (e) An adjudicatory or administrative hearing shall not be required on a branch bank application. The first rule of construction as to a piece of legislation is to construe it just as it reads, giving the words their ordinary and usually accepted meaning in common language. Eldridge v. Board of Correction, 298 Ark. 467, 768 S.W.2d 534 (1989) (citing Bolden v. Watt, 290 Ark. 343, 719 S.W.2d 428 (1986)). In addition to the principle that statutes are presumed not to be unconstitutional, Craighead County Bd. of Educ. v. Henry, 295 Ark. 242, 748 S.W.2d 132 (1988) (citing HCA Medical Services of Midwest, Inc. v. Rodgers, 292 Ark. 359, 730 S.W.2d 229 (1987)), we have also recognized that administrative agencies are better equipped, by specialization, insight through experience, and more flexible procedures, than courts to determine and analyze underlying legal issues affecting their agencies, which accounts for the limited scope of judicial review of administrative action and the refusal of the court to substitute its judgment and discretion for that of the administrative agency. Arkansas State Hwy. Comm'n v. White Advertising Int'l, 273 Ark. 364, 620 S.W.2d 280 (1981) (citing Gordon v. Cummings, 262 Ark. 737, 561 S.W.2d 285 (1978)). Generally, the basic constitutional due process requirements of notice and a reasonable opportunity to be heard are mandatory prerequisites to divest a property owner of his interests. Wallace v. Missouri Improvement Co., 294 Ark. 99, 740 S.W.2d 920 (1987). Although we agree that FNB has a constitutionally protected right to exercise the property interest vested in its franchise free from unlawful competition and therefore has standing to challenge unlawful competition, see Frost v. Corporation Comm'n, 278 U.S. 515, 49 S.Ct. 235, 73 L.Ed. 483 (1929); Webster Groves Trust Co. v. Saxon, 370 F.2d 381 (8th Cir.1966), the pivotal question is whether due process gives FNB the right and standing to challenge lawful competition and, if so, how much due process must be afforded to this right and did FNB receive at least the minimum necessary to survive this constitutional challenge? An illustrative discussion of this issue is presented in C. Koch, Administrative Law and Practice 564-67 (1985): Indeed, over the years, the Supreme Court often has rejected the argument that trial-type procedures always are required by the Due Process Clause. [`Once it is determined that due process applies, the question remains what process is due.'] The procedural components that will satisfy the Due Process Clause's requirements will vary from situation to situation. The proper combination of procedures must reflect a practical solution sensitive to both the individual's rights and the purpose of the administrative program.       Perhaps the most influential effort to develop a technique for analysis is Justice Powell's opinion in Mathews v. Eldridge [424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). Eldridge had been receiving social security disability benefits, but a state agency terminated his eligibility. Eldridge submitted a written protest to the agency, but otherwise had no opportunity, prior to termination, to participate in the decisionmaking.]. The only issue before the Court was whether the agency had accomplished the termination of Eldridge's benefits according to due process requirements. In answering this question, Justice Powell focused on three factors critical to this analysis: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. Using this analysis, we conclude that FNB's due process rights were not violated. Under the first factor, FNB is only indirectly affected because it does not have an exclusive license to operate in the area where BNA requested to establish a branch, and approval of the branch application does not exclude FNB from operating in that area. The aspect of resulting competition was specifically addressed in the bank examiner's report: The protest lodged by FNB contends that the approval of the proposed branch will have a detrimental effect on the competition in Calico Rock. FNB has consistently reported earnings in the 90th percentile of its peer group. Capitalization is in the upper 90th percentile of its peer group. The cost of funds is well below 4.50%. The contention is perhaps well founded due to the fact that the bank [FNB] will have to meet the challenge of competition. However, there is no evidence submitted to support irreparable harm will be committed due to the introduction of competition. The approval of the applicant's request will afford the populace of the trade area a choice of banking institutions, therefore promoting public convenience. The second factor, addressing the risk of an erroneous deprivation of FNB's interest through the procedures used and the probable value, if any, of additional or substitute procedural safeguards, also favors upholding the constitutionality of the statutory provisions. Although section 23-32-1203(e) does not require a formal hearing, other provisions included in that section adequately protect FNB's rights under these circumstances. Specifically, 1) subsection (c) requires that notice of the filing of the application be given to every other bank in the city or town in which the branch applicant bank is located, 2) subsection (d) provides for the protest of a branch bank application, (3) subsection (f) states that the commissioner's decision on a branch bank application will be in the form of final findings of fact, conclusions of law, and that the order be given by the commissioner within a reasonable time period, and 4) subsection (g) allows an applicant or official protestant thirty calendar days in which to appeal the commissioner's order to the appropriate circuit court. In this case, the commissioner clearly gave FNB notice of BNA's branch bank application, which FNB protested. The commissioner issued findings of fact and conclusions of law in its order dated October 31, 1988, and FNB exercised its right to appeal the order to the Pulaski County Circuit Court. These procedural safeguards are sufficient to protect FNB's interest. The value of additional safeguards requested by FNB, in the form of discovery and a hearing, is outweighed by the resultant increase in administrative burdens, addressed in Justice Powell's third factor to be considered. Finally, FNB argues that section 25-15-208(a)(3) of the Administrative Procedure Act, providing that in every case of adjudication... [o]pportunity shall be afforded all parties to respond and present evidence and argument on all issues involved, conflicts with section 23-32-1203(e) in the branch banking subchapter, which unequivocally states that an adjudicatory or administrative hearing shall not be required on a branch bank application. Section 25-15-211, addressing licenses in administrative adjudications, provides as follows: (a) When the grant, denial, or renewal of a license is required by law to be preceded by notice and an opportunity for hearing, the provisions of this subchapter concerning cases of adjudication apply. Thus, the discretionary authority for an adjudicatory or administrative hearing contained in section 23-32-1203(e) precludes the application of section 25-15-208(a)(3) by virtue of section 25-15-211. Simply stated, in this case the Administrative Procedure Act does not apply to the activities of the Commissioner. In summary, the Commissioner's action does not affect FNB's authority or right to conduct its banking operations. The establishment of a branch bank by BNA does not constitute unlawful competition. The Commissioner complied with the statutory requirement of notice and a reasonable opportunity to be heard. Finally, neither the language nor the meaning of Ark.Code Ann. § 23-32-1201 et seq. (1987 and Supp. 1989) is ambiguous, and the Commissioner's decision not to have a hearing is within his discretion. Thus, we find the statute is not in violation of constitutional prerequisites.