Court Opinion

ID: 9740352
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:33:00.880695+00
Date Added: 2024-06-11T07:24:17.601018
License: Public Domain

Borradaile, J.
(dissenting). First Michigan Bank & Trust Company, a Michigan banking corporation with its principal offices at Zeeland, Ottawa *91County, Michigan, filed an application, as amended, with the Michigan Department of Commerce, Financial Institutions Bureau, requesting permission to establish a branch bank in Georgetown Township, Ottawa County, Michigan.
Objections to the proposed branch were received from the Union Bank and Trust Company of Grand Rapids and The State Bank of Michigan at Coopersville. A hearing was held before the Commissioner of the Michigan Financial Institutions Bureau. The commissioner in a written opinion approved applicant’s request to operate a branch bank. Union Bank filed a petition for review of the commissioner’s decision in the Kent County Circuit Court. The circuit court judge in a written opinion reversed the commissioner’s decision. Applicant appeals as of right from the judgment of the circuit court.
Applicant defined the unincorporated village within which it proposed to locate as an area in Georgetown Township bounded on the west by 12th Avenue extended north, bounded on the south by the C & O Railroad, bounded on the east by School Street, and bounded on the north by Cottonwood Drive. Georgetown Township, located in the easterly part of Ottawa County, lies approximately six miles southwest of the City of Grand Rapids and is adjacent to the Cities of Grandville and Wyoming, which lie generally to the east.
Applicant proposed to locate its branch in a regional shopping center which lies just west of School Street. The "village” applicant proposed to serve consists of a residential area west of the shopping center.
Union Bank presently operates a branch at 7451 Union Street in Georgetown Township. This branch is approximately six-tenths of a mile east *92of applicant’s proposed location. Union Bank presented evidence which indicated that the "village” applicant’s bank would serve is a part of the same economic community which is now served by Union Bank. Applicant maintained that the area was distinct from that serviced by Union Bank. Old Kent Bank and Trust Company had also attempted to establish a branch bank 1.8 miles west of applicant’s proposed location in order to service this same area. The Commissioner of Financial Institutions had approved Old Kent’s request prior to approval of applicant’s request. However, because of an injunction issued by a Federal court, the branch bank was not in operation at the time of this hearing before the commissioner.
In his written opinion approving applicant’s request for a branch bank, the commissioner determined that the requirement of MCLA 487.471(1); MSA 23.710(171)(1), had been met in that:
"(1) The proposed branch site is within a village within 25 miles of applicant’s parent bank in which no other state or national bank or branch thereof, is in operation; and
"(2) He is satisfied as to the sufficiency of capital and surplus of the First Michigan Bank & Trust Company and as to the necessity for the establishment of such branch and the prospects of successful operation if established.”
In reversing the commissioner, the Kent County Circuit Court found that:
"[t]he applicant has not shown that there is a separate village dividing its area from that being served by Union Bank and Trust Company.”
The judicial review of administrative decisions is constitutionally delineated by Const 1963, art 6, § 28, as follows:
*93"All final decisions, findings, rulings and orders of any administrative officer or agency existing under the Constitution or by law, which are judicial or quasi-judicial and affect private rights or licenses, shall be subject to direct review by the courts as provided by law. This review shall include, as a minimum, the determination whether such final decisions, findings, rtxlings and orders are authorized by law; and, in cases in which a hearing is required, whether the same are supported by competent, material and substantial evidence on the whole record.” (Emphasis supplied.)
The specific section of the Banking Code of 1969 which controls the case is § 171(1) (MCLA 487.471[1]; MSA 23.710[171][1]), which provides as follows:
"With the written approval of the commissioner, any bank may establish and operate a branch or branches within a village or city other than that in which it was originally chartered if the village or city in which it is proposed to establish and operate a branch is located in the same county in which the parent bank has its principal office , or, if not in the county, then within 25 miles of the parent bank or in a contiguous county at a point more than 25 miles from the parent bank, if the county has no bank. A branch shall not be established in a city or village in which a state or national bank or branch thereof is then in operation. The commissioner shall not grant such approval unless he is satisfied as to the sufficiency of the capital and surplus of the bank, the necessity for the establishment of such branch or branches and the prospects of successful operation if established.” (Emphasis supplied.)
Though the briefs raise other questions and testimony covered other areas, the emphasis of counsel for applicant and the objectors was as to whether a "village” existed in which no other state or national bank or branch thereof is located.
Counsel for applicant during examination of its witness Den Herder said that objector Union Bank *94was not in applicant’s village but where its village was located they didn’t know. Witness Den Herder said a bank at 20th and Baldwin, the pending branch for Old Kent, was not considered in determining deposit growth.
Applicant’s witness Fendt said that the areas east and west of the east boundary line of applicant’s "village” could be divided into planning units but that would not mean that each of them was economically independent or governmentally independent from each other.
Fendt, who had been director of the Kent-Ottawa Regional Planning Commission, on cross-examination further testified that:
"We talk about shopping centers as well as specialized strip commercial areas. I think we have a strip commercial area of free-standing uses along M-21, Chicago Drive, and we have an identifiable shopping center in terms of the Meijers Thrifty Acres complex [where applicant’s branch was proposed], and those uses adjacent to this, right around this intersection. I think there are both of the kind that we talk about present at this location.
”Q. And are you saying that together, collectively, they are intended to serve this community; they complement each other?
"A. Right, they complement each other in that one serves this free-standing function, the other one is more the integrated shopping center type of development.”
Applicant’s witness Bajema, a sociologist, said that the Jenison area, since it has no legal entity in the sense of an incorporated area, is referred to by some as the area covered by the post office while others would consider it as the area covered by the Jenison public school system.
It might be noted that proofs showed both the outline of the post office area and the public school *95area as much larger than the area submitted by applicant as its "village”.
Applicant’s attorney during cross-examination of witness Rusk, a research director for a Detroit bank, argued that the witness presented by applicant was unable to define the primary service area of Union Bank. The witness in answer to a cross-examination question as to the service area of objector Union Bank said:
"I would say it would have to encompass a broader area, a — in the secondary area, we have three branch offices. This is where we’re going to generate our deposits from, a total area. We have a primary and a secondary service area. All three banks, four banks, are included in that secondary service area, so they’re all drawing from that same area.
”Q. In other words, it’s your testimony that the Union Bank located right here is drawing from the same service area that is the primary service area of the applicant bank?
"A. That’s true.”
Applicant’s Dr. Lanzillotti, evidently well known nationally as an author and expert on branch banking, said that if applicant were permitted to establish a branch at its proposed location, it would compete with other banks in the area for the same customers.
He further said:
"I would have said that their [Union Bank] primary service area would probably have been the area immediately to the south of the proposed location and probably east, because that is the area where you had the developed population, and not to the west. As of today, they are servicing this area, of this I am confident, but I would make the distinction between the primary service area as of the time of application and the areas that they are now serving.”
*96The Commissioner of the Financial Institutions Bureau in his finding of facts found that west of the shopping center in which applicant was to locate residential development is in evidence. He noted that because the Jenison area was unincorporated its residents looked to the township for community services. He also noted that a school district incorporates an area much in excess of that delineated by applicant in the development of its village concept.
In his conclusions of law, the commissioner cited Wyandotte Savings Bank v State Banking Commissioner, 347 Mich 33 (1956), and Bank of Dearborn v State Banking Commissioner, 365 Mich 567 (1962), for construction of the term "village”, correctly quoting Wyandotte Savings Bank, supra, in defining an unincorporated village as:
"an assembly or community of people, a nucleus or cluster for residential and business purposes, a collective body of inhabitants gathering together in one group.”
He further correctly quotes Bank of Dearborn, supra, in defining "village” as:
"a settlement, a centralized populace area having a general common residential and business activity serving the particular area or district. It does not have to be a separate political entity or corporation. It is a 'locality’ or 'area to be served’. It has been analyzed as a 'trading area’ distinct from that assigned to 'municipality’.”
The commissioner found that the facts in the instant case placed the matter between the factual and legal considerations applied in the Dearborn case, supra, and American Bank & Trust Co v *97Saxon, 373 F2d 283 (CA 6, 1967), a case in which the Federal Court found that an applicant’s proposal would split the village of Holt down the middle. The hearing commissioner concludes that the record supports the finding of a "village” as that statutory term has been defined by the courts.
I cannot conclude that the commissioner applied the proper law in making his findings of law. Though the 1969 Banking Code has not been previously applied, the statutory language applicable in this case is identical to language already interpreted by the courts which was contained in the preceding statute, the Financial Institutions Act.
In the Bank of Dearborn case, supra, p 572, the Supreme Court dealt with a case where both branch banks were at major intersections. The Court said that "economic rather than governmental, or geographical or physical boundaries are the controlling factor” in determining whether an area constitutes a village. The Court concluded that each branch constituted a separate trading area and each had its own potential for growth.
Nowhere does the commissioner apply the rule required by the Bank of Dearborn case, supra, in determining whether the "villages” of the applicant and objecting banks were the same "villages”. In his findings of facts, he deals solely with the area that applicant delineated in its amended application. Objectors submitted much testimony relative to "villages” as served by Union Bank and to be served by Old Kent Bank, whose application had been previously approved by the Financial Institutions Bureau.
As indicated in Const 1963, art 6, § 28, the "review [by the courts] shall include, as a minimum, the determination whether such final deci*98sions, findings, rulings and orders are authorized by law”.
Review of administrative-agency actions is not the "clearly erroneous” test applied to review of lower-court decisions, Diepenhorst v General Electric Co, 29 Mich App 651 (1971), but rather whether an agency has abused its discretion by arbitrary action. Caddell v Ecorse Board of Education, 17 Mich App 632 (1969). However, both cases dealt with the next clause of the constitutional provision relating to whether the decisions, findings, rulings, and orders are supported, if a hearing is required, by "competent, material and substantial evidence on the whole record”.
I do not believe the "competent, material, and substantial evidence” cases are applicable in this case, because the administrative agency has not been authorized by law to determine whether a "village” exists without specifically determining if other branches are in operation in "villages” which in any way surround or infringe upon the "village” proposed by an applicant desiring to establish a branch bank.
No matter how much professors of banking may testify that competition in banking is good for the customers, the Legislature has said that "[no other] state or national bank or branch thereof” may be in operation in the same "village” where an applicant seeks to open a branch.
Though counsel briefed the questions of sufficiency of capital and surplus of applicant bank and the prospects of successful operation of a branch if established, I deem the question of finding of "village” to be controlling.
I would affirm the judgment of the circuit court reversing the decision of the Financial Institutions Bureau hearing commissioner.