Court Opinion

ID: 9565904
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:29:56.932286+00
Date Added: 2024-06-11T09:17:19.055884
License: Public Domain

Weltner, Justice.
We granted certiorari to the Court of Appeals in Community Bankers Assn. v. First Nat. Bank, 193 Ga. App. 569 (388 SE2d 387) (1989).
The case arose when a bank holding company filed application with the Georgia Department of Banking and Finance, seeking approval for the proposed acquisition by its banking subsidiary of certain “branch banks” of other banking institutions, by which it sought to operate the acquired facilities as “branch banks” of that banking subsidiary. The commissioner of the department approved the application; other interests within the banking industry filed actions to prohibit the acquisitions; the trial court upheld the commissioner; and the Court of Appeals reversed.
The sole issue of the case is whether, under the provisions of OCGA § 7-1-600 (1), a “branch bank” is the equivalent of a “bank” to such extent that the acquisition of a “branch bank” of another bank *372by a bank holding company’s banking subsidiary will authorize the operation by that banking subsidiary of the acquired facility as its own “branch bank” within the county wherein the “branch bank” is located.

Statutory Provisions

1. The following statutory provisions govern the case:
(a) “Bank” shall include “bank office,” “bank facility,” “parent bank,” and “branch bank,” unless the context indicates that it does not. [OCGA § 7-1-600 (1).]
(b) “Branch bank” means any additional principal place of business of any parent bank located in a county other than in the county which is specified in the articles of the parent bank and wherein the parent bank is situated. [OCGA § 7-1-600 (5).]
(c) In the event of merger or consolidation of two or more banks . . . where all of the constituent banks shall have either a parent bank or a branch bank located in the same county, then the surviving or resulting bank . . . may retain and continue to operate any or all places of business of each constituent bank as either a branch bank, a bank office, or a bank facility, as is consistent with and may be authorized by this part. In the event of the purchase of substantially all of the assets of a bank, . . . where both the selling and the purchasing banks shall have either a parent bank or branch bank in the same county, then the purchasing bank shall be the parent bank and may retain and continue to operate any or all places of business of the selling bank as either a branch bank, a bank office, or a bank facility, as is consistent with and may be authorized by this part. [OCGA § 7-1-602 (e).]
(d) [A] bank holding company which lawfully controls a bank or has received the requisite approvals under this Code section to acquire control of a bank may, with the approval of the commissioner . . . merge or consolidate such bank with another of such bank holding company’s banking subsidiaries or have another of such bank holding company’s banking subsidiaries acquire all or substantially all of the assets of such bank and consequently operate as a branch of such other banking subsidiary. *373[OCGA § 7-1-606 (e).]
It is of critical importance to this case that the provisions contained in subparagraphs (a), (b) and (c) of Division 1 came into existence with the enactment of Ga. L. 1960, p. 67 et seq.1 It is equally important that the statute set out at subparagraph (d) was enacted by Ga. L. 1985, pp. 1506-7.

Legislative Intent

2. (a) The merger provision (subpar. (c), above) governs the continuation of banking activities when one bank acquires another, or when two banks become merged into one bank. The bank holding company provision (subpar. (d), above) controls the continuation of banking activities when a bank holding company, through its banking subsidiary, acquires another bank. The two statutes may be read together to this effect:
(i) When the corporate structures of banks are changed through merger, consolidation, or purchase, the resulting bank may continue to engage in all of the banking activities that were conducted by all of the banks before the changes in their structures.
(ii) When a bank holding company effects a change in the corporate structure of its banking subsidiaries through merger, consolidation, or purchase, the resulting bank may continue to engage in all of the banking activities that were conducted by all of the banks before the changes in their structures.
(b) The effect of the 1985 legislation is to extend to bank holding companies the same powers (as to merged, consolidated, or acquired banks) as was accorded to banks by the 1960 legislation.
3. (a) The case is distilled to this inquiry: Did the General Assembly, in enacting the 1960 Act, intend that a bank, by acquiring from another bank one of its “branch banks,” would be permitted to extend the acquiring bank’s activities into another county by operating, in that other county, the acquired “branch bank” as its own “branch bank?” If that was the intent, then a bank holding company would have similar powers under the 1985 Act — and conversely.
(b) The answer to that inquiry is found in the expressed legislative intent of the 1960 Act, as follows:
It is the intent of this Act to prevent the extension of statewide banking by any institution and to encourage the normal growth of banking units in the local communities .... *374It is the intent of this Act to restrict further the acquisition of voting shares of banks by bank holding companies. It is the intent of this Act to keep banking units from expanding into territories beyond their municipal corporate limits. [Emphasis supplied.] [Section 1 (“Legislative intent”), Ga. L. 1960 at p. 68.]
4. This expression of intent is the antithesis of the position espoused by the commissioner and the bank holding company. We hold, for the purposes of the issue before us, that a “branch bank” cannot be equated to a “bank” under the wording of OCGA § 7-1-600 (1). Hence, the acquisition of a “branch bank” by a bank holding company’s banking subsidiary cannot authorize the subsidiary to conduct banking activities in the county wherein the “branch bank” was situated.

Judgment affirmed.

Smith, P. J., Weltner, Bell, JJ., Judge William M. Towson and Judge Don A. Langham concur; Hunt and Fletcher, JJ., dissent; Benham, J., not participating. Clarke, C. J., disqualified.

Appendix.
We have concluded that OCGA § 7-1-600 (1) cannot have the meaning that the commissioner and the bank holding company ascribe to it. What, then, does it mean? The answer possibly may be found in a review of its legislative history.
1. (a) The term “branch” first was used in an 1807 Act incorporating the Planter’s Bank of the State of Georgia. The bank was located in Savannah, and was permitted to operate a branch in Augusta under certain restrictions.2 Thereafter, other banks were chartered by several Acts of the General Assembly, each Act bestowing powers and *375imposing limitations.
(b) The Code of Georgia of 1861 first undertook the general regulation of banking. It provided:
The term bank includes the parent bank, its branches, if any, and agencies, its officers of every description, and agents, in construing the violation of an obligation or the imposing a penalty for the acts of whom the bank or branches, as the case may be, is bound. [§ 1433, Code of Georgia, 1861.]3
(c) In 1919, the “obligation” and “penalty” language of the 1861 Act was removed from the definition of “bank,” so that the definition as amended read: “The term ‘bank’ shall include a branch bank unless the context indicates that it does not.” Ga. L. 1919, p. 135 et seq. The 1919 Act placed banks under a state regulatory agency for the first time. Additionally, it provided:
At the time of the establishment of any branch the Board of Directors of the parent bank shall set aside for the exclusive use of said branch such proportion of its capital as may be required by the Superintendent of Banks; in no event less than is required for the organization of a bank in the city, town, or village in which the branch shall be located. [Id. p. 136.]
(d) The 1960 Act, Ga. L. 1960, pp. 70-71, enlarged the 1919 definition of “bank” to include “parent bank,” “branch bank,” “bank office,” “bank facility,” and “bank holding company,” and remains unchanged in its codified form, OCGA § 7-1-600 (1). The 1960 Act eliminated the provisions of the 1919 Act requiring the allocation of a proportion of a bank’s capital for the use of its “branch bank.”
2. The thread between the 1807 Act and the 1960 Act may be traced in this manner:
(a) The 1807 Act required a separate governance for the branch bank that it authorized, but pointed out that the branch bank must abide by the “bye-laws” of the parent bank.
(b) The 1861 Act stated that the term bank includes, inter alia, the term branch bank “in construing the violation of an obligation or the imposing of a penalty for the acts of whom the bank or branches, as the case may be, is bound.”
(c) The 1919 Act broadened the definition of the 1861 Act by eliminating the “penalty” and “obligation” modification, but placed *376banks under a state agency and required specific capital allocation for branch banks.
(d) The 1960 Act eliminated the capital allocation required by the 1919 Act, and modified the “branch bank” definition to its present form.
3. It is not inconsistent with this legislative history to suggest that the existence of OCGA § 7-1-600 (1) may be but a vestigial remainder, devoid of substantive content. It is likely that the General Assembly was anxious to affirm that its earlier requirements of separate governance and capital allocation for branch banks would not relieve parent banks of responsibility for the conduct of their branch banks, nor free branch banks from the strictures of their parent banks. That affirmation was hardly necessary, however, as parent and branch are a single entity,4 and the doctrine of respondeat superior has been established firmly throughout the legal history of our state.
In fine, the equation of branch banks to banks in the present statute appears as little more than a truism.

 See pp. 70, 71, 74-6.

 The Act provided in section 8:
That a branch of the aforesaid bank shall be extended to the city of Augusta, under the superintendence of eight directors, one of whom shall be president, to be appointed by the legislature, whose seats shall be vacated and filled up at the same times and in the same manner, as the president and directors of the bank in Savannah; and the said branch at Augusta, shall go into operation at the same period with the bank in Savannah. [Clayton’s Digest of the Laws of Georgia, 1812, pp. 374, 377.]
The General Assembly required a local board of directors controlling each separate branch of the bank. Section 9 of the Act provided:
That the said branch shall at all times be amenable to the “bye-laws,” rules and regulations, that may be adopted by the corporation of the Planter’s Bank of the State of Georgia. [Clayton’s Digest of the Laws of Georgia, 1812, pp. 374, 377.]
This latter provision made it clear that, notwithstanding its separate group of directors, the branch bank was to be subject to the same limitations as the parent bank.

 Each successive Code of Georgia (i.e., those of 1866, 1868, 1873, 1882, 1895, and 1910), included the same definition.

 This observation points up another reason why OCGA § 7-1-600 (1) cannot authorize the acquisitions at issue. The agreements between the bank holding company and the sellers of “branch banks” provide for the transfer of real estate, furniture, fixtures and equipment; the acquisition of deposit accounts and assumption of liability for such accounts; and for the prohibition of competition. These do not make up “all or substantially all of the assets of such bank” (OCGA § 7-1-606 (e)), but are only a portion of its assets that the selling bank had devoted to its branch operation. A “branch bank,” of course, has no assets, as it is but another operation of the bank itself. Hence, it has nothing to sell. Because only the “bank” is the owner of bank assets, in no manner may it be said that the bank holding company in this case is acquiring “all or substantially all of the assets of such bank[s].”