Court Opinion

ID: 6370808
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:45:49.171294+00
Date Added: 2024-06-11T15:49:27.377673
License: Public Domain

Opinion by
President Judge Crumlish, Jr.,
The Pennsylvania Association of Realtors appeals an order of the Secretary of Banking dismissing its administrative complaint.1 We reverse and remand.
The Association’s complaint challenged the validity of the Department of Banking actions approving the requests of six savings and loan service corporations to engage in third-party real estate brokerage.2 These authorizations occurred after the Department’s Savings Association Bureau decided that it would be in the public interest to permit third-party brokerage by qualified service corporations. The approvals in *579dispute were granted through an individual application process, pursuant to a Department regulation providing for case-by-case authorization of service corporation activity.3
Our scope of review of the Secretary’s decision is limited. 'We must uphold his order unless it is in violation of constitutional rights, not in accordance with the law, or a necessary finding of fact is not supported by substantial evidence. Section 704 of ;the Administrative Agency Law.4
In this appeal, the Association initially claims that the Secretary committed an error of law in concluding that the decision to authorize third-party brokerage by qualified service corporations was not a regulation which required promulgation as provided in the statute formerly known as the ‘ ‘ Commonwealth Documents Law.”5
The Association reasons that since the decision to permit third-party brokerage by suitable applicants applies to future activity and has the potential of affecting service corporations generally, it is not an individual adjudication. This argument erroneously assumes that a Department pronouncement is subject to but two characterizations: an adjudication or a regulation. However, an administrative agency may also adopt a general policy to be applied in future adjudications. Pennsylvania Human Relations Commission v. Norristown Area School District, 473 Pa. *580334, 374 A.2d 671 (1977). This is precisely what the Department did here. It decided to authorize third-party brokerage by qualified service corporations as and when they applied for authorisation of brokerage activity. In short, it approved the right to apply; it did not authorize blanket brokerage activity as of right. We therefore hold that the Secretary correctly concluded that the Department’s general policy decision need not be promulgated. Norristown Area School District.
The Association next attacks the Secretary’s legal conclusion that a specific regulation on the third-party brokerage practice is not required.
The Secretary has not erred. Section 922(n) of the Savings Association Code6 states that “the department shall have the right to define service corporations and the activities thereof.” Nothing in this provision requires that the varied activities of service corporations be defined solely by regulation. Moreover, in our view, the legislation’s intent is that the Department exercise its administrative discretion in providing flexibility and ready response to economic changes which affect the viability of savings and loan associations.7 When the Federal Home Loan Bank Board announced that it would consider applications for third-party brokerage by federal savings and loan associations,8 the Department in the prudent ex*581ercise of this discretion chose to move cautiously. Rather than to allow all service corporations to indiscriminately engage in third-party brokerage, it opted to grant authorizations on a selective, case-by-case basis. Because the legislators left this determination to the Department, we will not disturb it. See Budzinski v. Department of Public Welfare, 39 Pa. Commonwealth Ct. 176, 394 A.2d 1333 (1978).
Finally, the Association argues that the Secretary erroneously concluded that the Department correctly adjudicated the service corporations’ applications on a case-by-case basis.
The record discloses that the Secretary found that “there does not appear to have been a review of each ■applicant’s financial status and regulatory status before issuance of approvals to an association for a service corporation to engage in third party brokerage.”9 From this finding, we must reach the inescapable conclusion that the applications were not adjudicated on a case-by-case basis. The Department’s stated purpose of the adjudicatory process was to sift out those unqualified service corporations. At a minimum, therefore, the Department should have investigated each institution’s financial and regulatory records prior to granting approval for third-party brokerage service. The Department not having done this, its authorizations to the six service corporations *582are void and without legal effect. We must therefore hold that the Secretary erred in his conclusion that the requests were properly adjudicated on a case-by-case basis.
We approve of the Department’s decision to authorize third-party brokerage through individual applications. However, we reverse the Secretary’s order, due to the Department’s failure to conduct proper adjudications, and remand the case to the Department for further proceedings consistent with this opinion.
Order
The order of the Secretary of Banking, No. 82-001, dated May 4, 1983, is reversed and this case is remanded to the Department for further proceedings consistent with the foregoing opinion.
Jurisdiction relinquished.
Judge Williams, Jr., dissents.
This decision was reached prior to the resignation of Judge Williams, Jr.

 The Secretary’s order also dismissed I. Marvin Miller as a party for lack of standing. Although Miller did not appeal this part, of the order, his name still appeared as a party in the various filings with this Court. To avoid confusion, we have retained his name in the caption to this opinion and order.

 In granting these requests, the specific wording of the Department’s approval letters either empowered the service corporations to employ' licensed real estate brokers or authorized third-party brokerage subject to compliance with the Real Estate Licensing Act and the rules and regulations of the State Real Estate Commission.

 10 Pa. Code §37.5. This regulation provides that a service corporation may engage in activities beyond those generally permitted under 10 Pa. Code §37.1 “if the purpose of such additional activities is authorized ... by the Federal Home Loan Bank Board and the Department together, or authorized solely by the Department.”

 2 Pa. C. S. §704.

 Act of July 31, 1968, P.L. 769, as amended, 45 P.S. §§1102-1602.

 Act of December 14, 1967, P.L. 746, as amended, 7 P.S. §6020-162 (n).

 See Section 103(a) (S), 7 P.S. §6020-3(a) (8).

 46 Fed. Reg. 24,529 (1981). Also, several states — including Maryland, New Jersey, and Ohio — have authorized third-party real estate brokerage by their service corporations either through regulation or application. Supplemental Brief of the Department of Banking at 4. We note that Section 103(a) (5) of the Code, 7 P.S. §6020-3(a) (5), states that one of the legislature’s purposes was “to provide . . . [tjhe opportunity for associations subject to this act *581to remain competitive . . . with savings and financial organizations existing under the laws of other states [and] the United States. . . .” In light of this and the recent trend toward third-party brokerage by competing savings and loan service corporations, the Department has the statutory mandate to permit third-party brokerage by Pennsylvania service corporations.

 Report of Recommended Decision by Searing Officer Robert G. Spitzer to the Secretary of Banking, No. 82-001, at 14, as adopted by order of the Secretary dated May 4,1983.