Court Opinion

ID: 9570922
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:27:35.308407+00
Date Added: 2024-06-11T12:23:27.781375
License: Public Domain

Kelly, Justice
(dissenting).
The effect of the affirming opinion is to vest in the Commerce Commission the power to adopt rules and regulations governing the relocation of banks within the same municipality without any statutory authority for doing so. Indeed, that opinion would in effect permit the commission to adopt rules and regulations contrary to the statutes governing administrative procedures on an appeal from the consent of the commissioner of banks to the relocation of West within the same city for which it was chartered.
*135The Minnesota Legislature has enacted a whole network of statutes pertaining to the creation and regulation of banks and other financial institutions. Minn. St. c. 45 established the Commerce Commission composed of the commissioner of banks, the commissioner of insurance, and the commissioner of securities, and § 45.03 states that one of the powers and duties of the commission is to act upon “applications for the organization and establishment of new financial institutions under sections 45.04 to 45.08.” (Italics supplied.) Sections 45.04 to 45.08 set forth the procedures for the application for and issuance of new bank charters. Section 45.07 sets out the criteria for issuing a new bank charter and reads in part:
“If the applicants are of good moral character and financial integrity, if there is a reasonable public demand for this bank in this location, if the organization expenses being paid by the subscribing shareholders do not exceed the necessary legal expenses incurred in drawing incorporation papers and the publication and the recording thereof, as required by law, if the probable volume of business in this location is sufficient to insure and maintain the solvency of the new bank and the solvency of the then existing bank or banks in the locality without endangering the safety of any bank in the locality as a place of deposit of public and private money, and if the department of commerce is satisfied that the proposed bank will be properly and safely managed, the application shall be granted otherwise it shall be denied.”
Chapter 47 consists of a number of statutes which pertain to financial corporations in general. The term “financial corporations” includes banks, savings banks, trust companies, and building and loan associations. See, § 47.01.
The key statute to be construed here is Minn. St. 47.10, which reads:
“Save as otherwise specially provided, the net book value of *136land and buildings for the transaction of the business of such corporation, including parking lots and premises leased to others, shall not be more than as follows, assets other than cash being taken at cash market value; for a bank or a trust company 40 percent of its existing capital and surplus; and upon written approval of the commissioner of banks, 60 percent of its existing capital and surplus; for a savings bank, 50 percent of its net surplus; for a building and loan association, five percent of its net assets. Any such corporation may change its location, dispose of its place of business, and acquire another, upon the written approval of the commissioner of banks. With the exception of annual amortization charges which are made in accordance with such rules and regulations as the commissioner may prescribe, no state bank or trust company shall decrease the actual cost of such investment as shown on its books by a charge to any of its capital accounts unless approved by the commissioner.”
A fair reading of that statute gives any bank the right to relocate within the same municipality where it was chartered provided the net book value of its land and buildings is within the 40 percent requirement or 60 percent if approved by the commissioner. Because of the placement in § 47.10 of the requirement of obtaining written approval of the relocation by the commissioner of banks, it seems that the only purpose for obtaining consent was to assure compliance with the requirements of the statute, particularly where assets other than cash were to be taken at market value. Obviously, the market value of such assets might be different than book value.
West contends that this latter section should be controlling in this case, while respondent Signal claims that this case should have originally been brought before the Commerce Commission under the sections regulating the issuance of new bank charters. Minn. St. 45.07. The words of the statutes themselves indicate that West is correct. It is merely changing its location within the confines of a municipality for which it was granted a charter, not establishing a pew bank nor changing its location to another *137municipality. Furthermore, the original 1923 charter for West and a replacement charter in 1964 named the city of West St. Paul as the bank’s place of business but did not include a street address. This was characteristic of all bank charters issued. The word “location” as used in Minn. St. 45.07 then had to mean the municipality rather than a specific street address because “existing bank or banks” referred to could not have been in the “locality” if that meant the same specific address. Thus, from a reading of the statute itself, bank charters were not limited to a specific street address but rather to localities such as municipalities.
The administrative history of the statutes and practices throws some light on the issues. During the administrative hearing of this case, the commissioner of banks took notice of the “longstanding practice of the Commissioner of Banks and his predecessors to hear applications under Minnesota Statutes, Section 47.10, by banks to relocate within the same municipal district in which they are chartered to do business” and that this practice has predated and continued after the 1955 and 1957 amendments to § 47.10. This administrative practice had its origin in two opinions of the attorney general issued in the early part of this century. In Report Attorney General, 1920, No. 8, it was stated that a bank may not change its place of business to another municipality by amending its certificate of incorporation. Rather, it had to follow the procedures for obtaining a new bank charter. In Opinion Attorney General, No. 29-A-22, Oct. 12, 1923, the attorney general stated.that, in the case of a bank changing its place of business from one municipality to another, “[t]he same proceeding should be taken as in the case of an original application [for a new charter].” We should agree with this proposition because charters are granted for cities or other definite geographical areas, not specific street addresses. Thus, it became standard administrative practice for changes of location within the same municipality to be approved by the commissioner of banks and changes from one municipality to another *138to be approved by the Commerce Commission.1 In the case of Plunkett v. First Nat. Bank of Austin, 262 Minn. 231, 115 N. W. 2d 235 (1962), although the case was ultimately decided upon other grounds, this court did cite the Attorney General opinions discussed above and recognized the administrative practice that they had created.
Signal cites Opinion Attorney General, No. 53-F, Dec. 17,1946, as authority for the position that the word “locality” has been substituted for the word “municipality” and argues that any change in “locality” by a bank must be treated like an application for a new charter. The 1946 opinion cited, however, deals with the construction of completely different statutes, and furthermore, there is no evidence that it in any way changed standard administrative practice.
The major thrust of Signal’s argument in this case is that administrative practice in regard to changes in bank location is no longer sound. More specifically, Signal contends that changing location from one “trade area” to another within the same municipality is the equivalent of changing from one municipality to another and, therefore, should also be treated as an application for a new bank charter. Both the commissioner of banks and the Commerce Commission have rejected this argument, and we should do the same.
This court has treated time-honored administrative practices with a great deal of respect. Where an administrative agency has interpreted a statute and the legislature has subsequently revised the statute without modifying the interpretation, this *139court has said that the administrative construction must be taken to have been approved. See, 17B Dunnell, Dig. (3 ed.) § 8952. Applying this principle to the present case, the administrative practice of processing all changes of bank location within a municipality under § 47.10 has gained legislative approval. If the rule is to be changed so that “trade areas” may be taken into consideration, it should be done by the legislature and not this court. While, it has been the standard administrative practice to allow objecting banks to appear before the commissioner to present evidence that the proposed move would adversely affect their solvency, there is nothing in the statutes or past administrative practices requiring an applicant desiring to change its location from one site to another within the municipality for which it has a charter to prove the existence of a reasonable public demand. Nor are there any rules or regulations of the commissioner of banks or of the commission that would support such a requirement. Yet, on an appeal, the commission added two new requirements — (1) that West prove the existence of a reasonable public demand and (2) that the burden of proving that the solvency of Signal would be not adversely affected is upon West. Not only are there no statutes or past administrative practices that would place such a burden on West, but the past administrative practice was to the contrary.
While broad language was used in Minn. St. 45.03 permitting the commission to review the commissioner’s decision and to reverse it, that language cannot be construed as giving the commission the power to amend the statutes or create laws. Nor does it give to the commission the power on appeal to it from decisions of the commissioner of banks to adopt rules and regulations. If the commission has the power to adopt rules and regulations embodying any additional requirements above and beyond § 47.10, they would have to be adopted in accordance with the Administrative Procedures Act (APA).
There should be little if any question but that the commission *140is one of the agencies governed by the APA. Minn. St. 15.01, 15.0411. See, Bryan v. Community State Bank, 285 Minn. 226, 172 N.W. 2d 771 (1969); In re Application of Jackson, 277 Minn. 293, 296, note 5, 152 N. W. 2d 472, 474 (1967). While the commission has authority to enact regulations with reference to the administration of the law, it does not have authority to determine what the law should be or to supply substantive provisions of law. See, Wallace v. Commissioner of Taxation, 289 Minn. 220, 184 N. W. 2d 588 (1971). Assuming arguendo that the commission had the power to adopt rules and regulations which would in effect insert into Minn. St. 47.10 requirements of a reasonable public demand and that the change in location not endanger the solvency of the Signal Hills State Bank or any other bank in the area, and that West have the burden of proof on both of those issues, how could the commission adopt such rules on an appeal without going through the explicit procedures of the APA? Under that act, an agency may promulgate reasonable substantive rules and regulations for the purpose of carrying out the duties and powers imposed upon and granted to it, but such action shall not exceed the power vested in the agency by statute. Prior to the adoption of any rule authorized by law, the agency must give notice of its intended action and afford interested persons an opportunity to submit data or. views orally or in writing. No rule shall be adopted unless a public hearing is held following the giving of at least a 30-day notice. Among other requirements, a proposed rule before being adopted must be submitted to the attorney general as to form and legality and approved by him. Minn. St. 15.0412. There is no need to go into all procedures necessary to the adoption of rules by the commission. The foregoing should show that it was not intended that rules would be adopted for the first time on an appeal to the commission.
I would reverse the commission and uphold the decision of the commissioner of banks who found:
“11. That while evidence was presented by the objectors that their rate of growth might be slowed if the move is allowed, it *141was not established that the move would affect the solvency of the Signal Hills State Bank.
“12. If the proposed change of location of the West St. Paul State Bank is allowed, its solvency will not be endangered.”
and held as a matter of law that—
“* * * the change of location of the West St. Paul State Bank would not endanger the solvency of the Signal Hills State Bank nor any other existing bank in the area.”
These findings are adequately supported in the evidence and while it appeared from finding 11 above that the burden of proof may have been placed on Signal, this obviously was done in accordance with past administrative practices.
While it might be argued that the solvency issue should not have been in the case at all, there is a sound basis for it in the past administrative practice — putting the burden of proof on the objecting bank was obviously a part of that practice and should be adhered to if solvency is an appropriate issue. Besides, why shouldn’t the objecting bank have the burden of proving matters relating to its own affairs ? Where the facts with regard to an issue lie peculiarly in the knowledge of a party, that party should have the burden of proving the issue. See, McCormick, Evidence (2 ed.) § 337, p. 787.

 The relocation of a bank from the municipality for which it was chartered to a location outside its charter involves other considerations. Despite the rather broad language in Minn. St. 47.10, it is obvious that a bank chartered, say in West St. Paul, could not move its place of business into North St. Paul solely under § 47.10, as it was not given a charter for that purpose under § 45.07 and in effect would need a new charter and the commission should require that all conditions of § 45.07 be met. Furthermore, past administrative practices support this conclusion.