Court Opinion

ID: 7819592
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:49:14.030396+00
Date Added: 2024-06-11T16:30:42.193542
License: Public Domain

JOHN A. FOGLEMAN, Justice, dissenting. This is another case in which I have a very strong feeling that this court, as well as the trial court, has erroneously enlarged the scope of judicial review by weighing the evidence before an administrative agency to determine the preponderance, rather than determining whether there was any substantial evidence to support the finding of fact made by the administrative agency. It is my fervent hope that a strict adherence to the Administrative Procedure Act in the making of findings of fact by agencies subject to that act mandated by Ark. Stat. Ann. § 5-710 (b) Supp. 1973 and Arkansas Savings and Loan Association Board v. Central Arkansas Savings and Loan Association, 256 Ark. 846, 510 S.W. 2d 872 (1974), will tend to relegate the courts to their proper role in judicial review. I find evidence in the record which seems to me to be very substantial support for the finding by the board that the volume of business in the area in which the proposed association would conduct its business is not sufficient to indicate a successful operation. As we have previously noted, there must not only be sufficient savings deposits available, but there must also be an adequate market for sound loans to insure that the association can pay its operating expenses in addition to interest at a rate sufficiently high to draw and hold deposits. Arkansas Savings and Loan Board v. Southerland, 256 Ark. 445, 508 S.W. 2d 326 (1974). The majority has chosen to ignore the latter factor. Rather, it seems to take the position that the potential for success is enhanced by an increase in the amount of deposits pledged, which according to the applicants’ certified public accountant were assured only by the signatures of the pledgors. Yet, this could be an additional burden and might tend to impede rather than hasten the success of the association if it should prove to be unable to make sufficient loans at an interest rate high enough to pay both the interest required on the deposits and the operating expenses. It seems to me that it would be at least speculative to say that there would be sufficient mortgage loan demand to insure a sufficient volume of business to the proposed Grant County Savings and Loan Association to indicate a successful operation. The applicants’ proposed budget and pro forma statement were prepared by a certified public accountant whose figures and methods had never been tested under actual operating conditions because none of the associations for whom he had prepared budgets had been in business for as long as one year. All of the figures in the budget were furnished to him by those proposed for management of the association, none of whom had any experience with a savings and loan association. In arriving at his gross operating income figure, he assumed a mortgage loan volume increasing to one million dollars by the end of the first year and no losses on mortgage loans during that time. He gave no basis for these assumptions. Mortgage loan demand for such an institution seems to hinge largely upon demands for residential houses. While impressive statistics were given to show that Grant County population and economic growth had been exceeding state averages, there was substantial evidence to indicate that projections of these trends would be highly speculative. This should cause considerable doubt about the availability of adequate amounts of mortgage loans for appellees. Part of the population increase may be attributed to the racial situation in more urban surrounding counties, and might be considered as a very unstable basis for predictions and projections or as permanent growth. It appeared that Leola and Prattsville, towns from which appellees expected to draw business, had population increases of 69 and 0 respectively, during the preceding decade, even though some residences were being built around Leola. Even though unemployment is relatively stable in the county, the average from 1960 to 1970 was 6.9% compared to a state average of 4.9% and a national average of 4.6%. In 1971 the rate was 5.8% opposed to an Arkansas average of 5.4% and in 1972 the Grant County avearge was 6.2%, slightly higher than the state average. Total employment increased by only 50 jobs during the preceding three years. Agricultural employment was declining. A principal industry in Sheridan, employing 170 people had threatened to close its plant at the time of the hearing. Had this occurred, it would have taken four or five years to increase jobs in the area sufficiently to recover from this one loss, according to an expert witness for appellees. In spite of the fact that school enrollment had increased substantially and new buildings were being added to the school system, a request for a tax increase of five mills for maintenance and operation of schools was rejected by the voters. An inordinate number of employed residents (1200 of, 3000) commute to work outside the county, most of them to Pulaski and Jefferson Counties. Windell R. Adams, the assistant director of the Southeast Arkansas Economic Development District, who prepared the economic data on the public need for the institution, would assume (rather logically) that some of these commuters do their banking business outside the county. Adams stated it was difficult to project housing demand, but he attempted to do it by projecting the same percentage gain in housing units there had been between 1960 and 1970, in spite of the fact that he said the Research Center had only projected housing demand on a statewide basis, except for two metropolitan areas where there was a valid information basis. A footnote to his statistical data contained this statement: “If one assumes that 1960-70 population trends continue and the average number in each household remains at 3.1, there will be a need for 280 additional units in Grant County by 1980, substantially less than the 773 units projected above.” Only 35 residential building permits were issued in Sheridan in 1972, one of which was for apartments. The manager of a 16-unit apartment building had virtually 100% occupancy until recently but had a few vacancies at the time of the hearing. One witness said it was more difficult to find a house to rent than to find one to buy. There was no testimony that anyone had been unable to obtain a loan for residential purposes. The Grant County Bank in Sheridan, whose deposits had increased phenomenally during the preceding five years, had started making some loans with maturities up to 20 years. Residential loan volume, other than FHA or VA loans, amounted to about 30% of its total loans. From 1969 to 1972, this bank made from 37.8% to 45.7% of the mortgage loans in Grant County. Other residential mortgages, with some exceptions, were made to savings and loan associations in Pine Bluff, Malvern, or Little Rock. Admittedly, the Grant County Bank cannot meet the total residential housing loan demand in Grant County, but there was evidence that the demands were being met. There are savings and loan associations in Pine Bluff, about 24 miles away, Malvern, about 25 miles away, Little Rock, about 33 miles away. Two builders testified on behalf of appellants. One of them stated that of 50 or 60 houses built by his concern, two-thirds were financed by loans made by Farmers Home Administration and the remaining one-third, most of which were priced above the Farmers Home Administration loan limit, were financed through loans made by the First Federal Savings and Loan Association in Pine Bluff. Each builder had one customer who financed his home by a loan from the Grant County Bank. Of course, all the savings and loan associations which held the residential mortgages in the county which were of record in 1970, 1971, 1972 and 1973 were located outside the county. There is no indication that they could not or would not compete with a local association for loans or that they would not continue to make loans in like amounts. The same may be said about Farmers Home Administration and the other lenders making residential loans. Capital Savings and Loan Association had filed an application for the establishment of a branch office in Sheridan in 1972 but had later asked that action be withheld until it made request for further action. Dr. Charles Venus, an economist testifying on behalf of the appellants, stated that there was no way to ever keep out-of-county financial institutions from competing in the Grant County market. Strangely enough, the person proposed as president of the proposed association voted, as a director of the Grant County Bank, to protest the application. I would reverse the judgment of the Circuit Court and sustain the board.