Court Opinion

ID: 9682040
Source: CourtListenerOpinion
Date Created: 2023-08-24 08:04:11.702+00
Date Added: 2024-06-11T18:17:37.178932
License: Public Domain

SMITH, Justice
(dissenting).
I respectfully dissent. The trial court held that the order of the Savings and Loan Commissioner was not reasonably supported by substantial evidence on any ground. I have concluded that it was only necessary for the trial court to consider the grounds for denial of the application which were stated in the Commissioner’s order. Benson admits that the order of the Commissioner states just three reasons for refusing the Association’s application. These three stated grounds for refusal were: (1) want of convenience and advantage; (2) undue injury to Alamo Savings and Loan Association; and (3) adequacy of service of the proposed area. In reality the “adequacy of service” ground cannot under this record be considered a separate ground in view of the admission of the Commissioner that subsection (f) of the Rules (quoted by the Court) applies only to associations seeking a branch outside their home county. The Court of Civil Appeals unlike the trial court, judged the Commissioner’s order solely by the grounds stated in the order. I am inclined to agree with the Court of Civil Appeals on the theory that when specific grounds of dissatisfaction are stated, all other grounds must be presumed favorably found, since it must be assumed *431that the Commissioner made findings on all the statutory grounds, and stated in his order those which he found against the applicant and which were, therefore, reasons for refusal. The statute requires the Commissioner to state “the reason for such refusal.” The Commissioner has stated his reasons for denial of the application in the order under consideration. The statute does not mean that the Commission can state only a part of his unfavorable findings in the order. Article 881a-3, Vernon’s Annotated Civil Statutes says that the Commissioner, “ * * * shall endorse upon each copy of the articles of incorporation [branch application] the word ‘refused’, [in case of dissatisfaction], together with the reason for such refusal * * It seems to me it logically follows that since the order definitely states the reasons for refusal, it is reasonable to presume that the Commissioner found favorably to the Association on issues not recited in the order. This conclusion is sound for another reason. It has been held that an administrative order may not be upheld on appeal on a ground not specified in that order when there is a specific finding of fact by the administrator on another ground recited in the order as the basis for the decision. See Gulf Land Co. v. Atlantic Refining Co., 134 Tex. 59, 131 S.W.2d 73 (1939); Kerrville Bus Co. v. Continental Bus System, Tex.Civ.App. (1947), 208 S.W.2d 586, wr. ref. n. r. e.
Since Alamo did not appeal from the trial court’s judgment that there was not substantial evidence to support the Commissioner’s finding that undue injury would result to Alamo, the only issue properly before the Court of Civil Appeals was that of “public convenience and advantage.” It follows that no aspect of either the Rules or of the statute should be considered in support of the Commissioner’s order, except those bearing on that basic fact found against the Association by the Commissioner. Express findings have been made by the Commissioner. This is not a case where only general findings have been made against granting the application. In view of the specific finding on the statutory ground “public convenience and necessity,” and the absence of any finding on the issues of “reasonable promise of adequate support” and “fitness of management,” and especially in view of the statutory requirement that the Commissioner shall state the reason for his order, I conclude that this court cannot presume all ultimate statutory grounds not found by the Commissioner as though they were express findings against the Association. The Commissioner’s order cannot be sustained on reasons which he did not give in the order. Either party may introduce evidence relative to the Commissioner’s order, whether or not that evidence was introduced or considered at the administrative hearing, but the question of what evidence may be considered is not concerned with the more basic and different question of what grounds the order may be supported on.
Benson cites the case of Railroad Commission v. Magnolia Petroleum Co., 130 Tex. 484, 109 S.W.2d 967 (1937). That case was decided before the Gulf Land Company case, supra, and was specifically discussed and approved. The Magnolia case simply holds that the administrative agency will not be held to the legal reasons or theories it advances in its order in support of a particular ground or action. But the decision in Gulf Land clearly demonstrates that when there is a specific fact finding on one statutory issue, the courts will not uphold the order on the basis of some other unfound statutory ground.
For the reasons stated, the Court of Civil Appeals did not err in refusing to consider “as essential to a disposition of this appeal” phases of this case which were not found against the Association by the Commissioner.
Reverting now to the trial court’s judgment and its opinion in support thereof, the unusual-written opinion by the Honorable Herman Jones reflects that the trial court carefully considered whether there was *432substantial evidence to support the Commissioner’s order. The opinion reflects that the Court did not limit the trial to grounds found by the Commissioner, but, instead, covered all grounds. Obviously, the trial judge considered on their merits all grounds advanced by Benson (both stated and unstated), but concluded that the order was not supported by substantial evidence on any ground. I have reached the same conclusion and hereby incorporate the opinion of the trial court as a part of this dissent. The opinion reads:
“All parties agree that this case must be determined under the substantial evidence rule. While the statement of this rule is simple, its application to the evidence in a particular case presents great difficulty. The cardinal principle involved in the rule is believed to be that substantial evidence exists when, on the trial of the case, the evidence in support of the administrative agency is such as will convince reasonable men, that is, evidence such as a reasonable mind might accept as adequate to support a conclusion. If, on the whole record, the evidence is such that reasonable men might reasonably differ, irrespective of what the Court might think of the wisdom or justice of the administrative decision, such decision must stand, and the Court is prohibited from substituting its judgment for that of the administrative agency. It should be emphasized, however, that the authorities uniformly agree that whether or not substantial evidence exists must be determined by the Court upon a consideration of the whole record.
“In the instant case, it appears to the Court that the more specific evidence presented must be considered against the background of the following undisputed facts : the Southwestern Region of the United States, in population and economic strength, is presently developing at a considerably faster rate than the country as a whole, and the outlook for such development in the future in this region is as bright or brighter than the present; the State of Texas is developing at a faster rate than the Southwestern Region as a whole; the San Antonio metropolitan area is one of the fastest developing areas within the state; the northwestern quadrant of the City of San Antonio is one of the fastest developing sections in the metropolitan area, particularly with respect to residential growth; and, finally and probaby most important of all, (the proposed branch office is to be located in a shopping village which is far and away the largest in the metropolitan area of San Antonio and one of the largest in the entire nation.)
“Since tlie Commissioner has denied Plaintiff’s application to locate a branch savings and loan office in the above mentioned shopping village notwithstanding the undisputed facts set out, it is believed that the Court is required to examine closely the evidence presented to determine what, if any, peculiar circumstances exist here to condemn the proposed branch, when the overall picture would indicate that if the branch is not justified here there is virtually no place within the state where such a branch could be justified.
“Referring to article 881A-2, which, according to the Supreme Court, vests in the Defendant the authority to grant and deny applications for branch offices, the Legislature directs that the Defendant shall approve the application for a branch office if (1) the character, responsibility, and general fitness of the persons to operate the same are such as to command confidence and warrant belief that the business of the proposed branch will be honestly and efficiently conducted in accordance with the intent and purpose of this act, (2) the public convenience and advantage will be promoted by allowing such proposed branch to engage in business, and (3) the population in the neighborhood of such place and in the surrounding country affords a reasonable promise of adequate support for the proposed branch.
“Pursuant to this statute, the Defendant Commissioner has adopted rules and regulations, Chapter 3 of which, dealing with *433additional offices, is particularly applicable here. It is assumed that such rules and regulations must find support in the statute and that the action of the Commissioner under review here must find support in such of the rules and regulations as, in turn, are supported by the statute. Chapter 3.3 of the rules and regulations sets out the standards which must be met before the Commissioner will approve application for a branch office. Sub-paragraph (a) of Chapter 3.3 provides that the applying association must have adequate reserves and surplus to warrant the additional place of business. While the Court recognizes that the action of the Commissioner may be supported upon grounds not considered by the Commissioner if substantial evidence at the trial shows the existence of such grounds; nevertheless, the Court thinks it is relevant that the Commissioner made no finding or suggestion of inadequacy of reserves and surplus. Further, the Defendant Commissioner specifically testified that the reserves and surplus were adequate. While the evidence showed that Plaintiff’s reserves and surplus dropped from 5.49% to 5.34% between February of 1961 and March of 1962, nevertheless, the reserves and surplus are still well in excess of requirements. In view of all the record, it seems clear that there is no substantial evidence of inadequacy of reserves and surplus. What has been said with reference to reserves and surplus is thought to be applicable to the last clause of Chapter 3.3, sub-paragraph (b), that is, that there is no substantial evidence indicating that the operation of the proposed branch would impair the Plaintiff’s ability to carry on its overall operation.
“Turning to sub-paragraph (b) of Chapter 3.3, it is seen that the Commissioner must find that Plaintiff has operated its principal office for at least three years prior to the application successfully, profitably, properly and in accordance with law. It is assumed that this regulation finds support in the statute which requires the Commissioner to find that the character, responsibility and general fitness of the persons making the application are such as to command confidence and warrant belief that the business of the proposed building and loan association will be honestly and efficiently conducted in accordance with the intent and purpose of this act.
* *
“Sub-section (f) appears clearly to apply only if the proposed branch office is located in a county other than the county in which the principal office is located.
“This leaves sub-sections (d) and (c). It is believed that, under all of the record here, only these two sub-sections are genuinely at issue in the case, although considerable testimony was heard which, in one way or another, was presented under other of the sub-sections. With reference to subsection (d), wherein it is provided that the Commissioner must find that the proposed branch will not unduly injure any other association operating in the neighborhood or in the surrounding country, it should be noted that there is no suggestion of this standard in the statute unless it be that undue injury to an existing association will be detrimental to ‘the public convenience and advantage.’ The Supreme Court, in Southwestern Savings and Loan Association v. Falkner, 160 Tex. 417, 331 S.W.2d 917, evidently gave the statute such construction, because it is there stated that the purpose of the statute is to protect against the evils of excessively zealous competition by conferring upon the Commissioner control of the number of building and loan associations in a specified area. Further, that case clearly holds that the Commissioner may protect against the evils of excessively zealous competition by controlling the number and location of branch offices.
“In the instant case, the Defendant Commissioner has found that Plaintiff’s proposed branch will unduly injure Alamo, the home office of which is three miles from Plaintiff’s proposed branch, reciting also that the proposed branch will be only 1.7 miles from the proposed future location *434of Alamo’s home office. The Court has considerable difficulty in following the reasoning of the Commissioner with respect to Alamo’s proposed future location. The evidence here is undisputed that, when the Commissioner acted upon Plaintiff’s application, Alamo had no application to move its home office before the Commissioner, and did not file such application until the month following the Commissioner’s denial of Plaintiff’s application, although indications are that Alamo had purchased its site and that this fact was known to the Commissioner at the time he denied Plaintiff’s application. This presents the obvious question as to whether or not the Commissioner is justified in denying Plaintiff’s application because he wishes to reserve the area in question for Alamo which, at some subsequent date, may or will file application to move its home office into the questioned area. At any rate, the Court is required to review the facts as they existed on October 26, 1961, the date of the Commissioner’s order involved in suit. As of that date, the undisputed evidence is that Alamo had purchased its new site and was planning to move its home office to that site. It does not seem, however, that these facts would give to Alamo’s future plans any preference over Plaintiff’s application which had actually been filed with the Commissioner some three and a half months before October 26, 1961. The Court does not believe that, under the law, the Commissioner was entitled to protect Alamo’s future plans against'competition by denying Plaintiff’s application which was actually before him. It would be strange indeed if the Commissioner could deny entry by one association into an area because he wished to reserve that area for another association which had plans to enter it.
“However, independently of the views expressed in the last preceding paragraph, it is the opinion of the Court that, in light of all the evidence there is not substantial ■evidence to support the contention that undue injury will result to Alamo. Alamo ■chose its present location voluntarily, and such choice was approved by the Defendant Commissioner, notwithstanding the fact that such location was somewhat surrounded by three branch offices of the Plaintiff. Its present office is considerably nearer Plaintiff’s branch #7 than to Plaintiff’s proposed branch #23. The Court believes that it would be unreasonable to hold that undue injury did not result to Plaintiff’s #7 by the location of Alamo’s home office close to it, and the evidence shows that branch #7 was not unduly injured by the location of Alamo’s home office, and to hold that Alamo’s home office operation has not been unduly injured by the proximity of Plaintiff’s branch #7, as the facts show, and, at the same time, hold that Plaintiff’s #23 would unduly injure Alamo’s operations at its present office when Plaintiff’s #23 will be much farther removed from Alamo’s home office than is Plaintiff’s #7. If we seek to protect Alamo’s proposed location from undue injury, the case becomes weaker, because Alamo proposes to locate its new home office much nearer to Plaintiff’s #7 than is presently the case, and the evidence here indicates that the Commissioner has given reasonable assurance that the move of Alamo will be approved. This is tantamount to finding that Alamo’s coming closer to Plaintiff’s #7 will neither injure Plaintiff’s #7 nor Alamo’s home office operation. The Court is unwilling to find that no undue injury is occurring to Alamo at its present location although quite near Plaintiff’s #7; that no undue injury is occurring to Plaintiff’s #7 because of Alamo’s present home office; that no undue injury will occur to Plaintiff’s #7 from the relocation of Alamo’s home office; and that no undue injury will occur to Alamo from moving its home office still nearer to Plaintiff’s #7; and then condemn Plaintiff’s #23 because of undue injury to Alamo although #23 is located much farther away, in a new and growing area, and in a virtually self-sufficient shopping city. For evidence to be substantial it must be credible and reasonable, and it appears incredible and unreasonable to the Court that Alamo is not suffering undue injury from *435Plaintiff’s branch nearby, but that it will suffer undue injury from a branch much more distant from Alamo.
“In his findings, the Defendant Commissioner finds that the proposed area is being adequately served. Since this standard is found neither in the statute nor the Commissioner’s regulations, it is assumed that it is another way of saying that public convenience and advantage in the neighborhood proposed to be served and in the surrounding country will not be promoted by the proposed branch. This gets us to subsection (c) of the regulations dealing with public convenience and advantage in the neighborhood and in the surrounding country. The Commissioner finds that public convenience and advantage will not be promoted by the proposed branch because ‘the proposed location of said additional office is only 2.1 miles from the applicant’s service center #7.’ It is assumed that this means that Plaintiff’s #7 is meeting the needs and convenience of the same public as would be served by Plaintiff’s proposed #23.
“While 2.1 miles is regarded by the Court as a considerable distance in the congested traffic of a modern city and the traversing of such distance is thought to entail substantial inconvenience to the public, we cannot look to distance only and close our eyes to the numerous other factors presented in the area here involved. Obviously, it is impossible precisely to delineate the trade area of Wonderland Shopping City; nevertheless, it must be admitted that the drawing power of such a commercial center will be far-reaching. The center is designed to meet virtually all the shopping requirements of the public. The testimony shows that the retail floor space in the center is comparable to that to be found in a city the size of New Braun-fels; that the total cost of this center, including land, was some seven million dollars. Hundreds of thousands of people will be attracted to the center each year. Many of these are presently savings customers of Plaintiff; many more are potential customers. That the needs and convenience of these people will be served by the proposed branch office is self evident. It is assumed that the savings and loan industry is grounded in part at least upon the proposition that saving is a virtue and that the public advantage will be promoted by nurturing and encouraging that virtue. The location of a savings and loan office in this center where it is conveniently accessible to the public and where it is constantly before the eyes of countless thousands inevitably will encourage saving and thereby promote the public advantage. The Court suggests that a commercial center of this magnitude is unbalanced if it shows its patrons only easy and attractive ways of spending while providing them no facility which will afford security against the crises of the future. The needs of the ‘grasshoppers’ must be met, but the public advantage is heavily dependent upon the ‘ants’ of our society; and their needs, convenience, and encouragement cannot be ignored.
“It is the opinion of the Court that the record here shows no substantial evidence that public convenience and advantage will not be promoted by the operation of Plaintiff’s #23.
“Finally, sub-section (c), Chapter 3, of the regulations provides that the Commissioner shall withhold approval of a branch application in an area unless he finds that ‘the volume of business there is such as to indicate that a profitable operation is probable within a reasonable period of time.’ The statute directs that the Commissioner shall approve the application if the population in the neighborhood of such place and in the surrounding country affords a reasonable promise of adequate support for the proposed branch.
“What has been said above is believed to be sufficient to establish the probable profitable operation of the proposed branch. However, the present and anticipated growth of the area cannot be overlooked. The evidence shows that the rate of resi*436dential growth in the area is unexcelled elsewhere in the city and that most of this growth is occurring north and northwest of the proposed location, that is, so that the proposed branch office will lie far nearer to the most rapidly developing part of the area than any other existing savings and loan office.
“It is not possible to detail the evidence which the Court believes establishes beyond reasonable doubt that a profitable operation of the proposed branch is probable within a reasonable time, but it seems sufficient to mention: (1) the exceptional number of new residences recently constructed and presently being constructed and, more important, the residential subdivisions being actively developed which indicate an even more rapid growth in the years ahead; (2) the magnitude of the commercial area of which the proposed branch will be a part; (3) the opening in the near future of The University of Texas Medical Branch and the hospital and other developments which are certain to come with the school; and (4) the accessibility of the proposed branch office because of its location on vital traffic arteries of the city.
“In view of all the evidence presented in this case, it is believed that there is no location in the entire city of San Antonio with brighter prospects for the profitable operation of a branch savings and loan office than the one under review here, and it is, therefore, the judgment of the Court that there is no substantial evidence in this record to support a finding that a profitable operation of the branch is not probable within a reasonable time.
“ * * *
“Believing that on the whole record the order of the Defendant is not supported by substantial evidence, judgment is for the Plaintiff as prayed for.”
I think the trial court’s opinion is a sufficient answer to the Court’s holding that the Commissioner’s order is supported by substantial evidence. If this court upholds the denial of San Antonio Savings Association’s application, it will simply mean that no savings and loan association could go into the shopping center involved. Certainly there is a justification for a branch office in the center, and it should not be denied merely because it will be located in a grocery store and has been dubbed a “grocery branch.” The order of the Commissioner is arbitrary under the whole record in this case. The order, if allowed to stand, could be used as authority for denying any application regardless of whether or not the association applicant had other branches in the area.
The judgments of the courts below should be affirmed.
GREENHILL, J., joins in this dissent.