Summary
holding that res adjudicata does not apply to decision to deny bank charter where agency is required to consider "public need and advantage"
Summary of this case from Johnston Ambulatory Surgical Asso., Ltd. v. NolanOpinion
No. 75-054
Decided November 20, 1975. Rehearing denied December 18, 1975. Certiorari denied March 15, 1976.
Banking Board granted charter to bank upon bank's second application, which was filed shortly after its first application had been denied, and a competitor bank petitioned for review.
Order Affirmed
1. BANKS AND BANKING — Application for Charter — Second Application — Identical to First — New Evidence — Development of Service Area — Grant of Charter — Justified. Where bank which had been denied a charter on its first application submitted a second almost identical application to the Banking Board, but presented evidence at the hearing on the second application of the progress of the commercial and residential development of the proposed service area and of the public's belief in the need for the bank, the Banking Board was justified in granting the second application for the bank charter.
2. Banking Board — Statutory Duty — Consideration Of Applications — Re-evaluation — Unchanged Facts — Public Interest — Res Judicata Inapplicable. Banking Board has a statutory duty to consider each application for a banking charter as an original proceeding, and the need to re-evaluate the public interest even when the facts remain unchanged renders the doctrine of res judicata inapplicable thereto.
Review of an Order of the Banking Board of the State of Colorado
Simon, Eason, Hoyt Malone, P.C., Richard L. Eason, for petitioner.
J. D. MacFarlane, Attorney General, Jean E. Dubofsky, Deputy Attorney General, Edward Donovan, Solicitor General, Tennyson W. Grebenar, Assistant Attorney General, for respondents Banking Board of the State of Colorado and Harry Bloom, State Bank Commissioner.
Rothgerber, Appel Powers, A. Frank Vic, Jr., for respondents J. Tully Weiss, Max Morris, R. Kenneth Sparks, Katherine Farrar, Kenneth W. Geddes and Joseph Rustin. Division II.
This is a proceeding to review an order by the State Banking Board granting an application for a charter to operate the "Garden of the Gods Bank" in Colorado Springs. The first application, filed with the State Bank Commissioner on June 30, 1972, proposed that the bank be located near the intersection of Garden of the Gods Road and Interstate Highway 25 and described as the primary service area a large area of land north and south of Garden of the Gods Road and west of the Interstate. At a public hearing on the application, Northern National Bank, the petitioner here, protested issuance of the charter, arguing that the proposed bank would not serve a public need or advantage in the proposed service area and that a profitable operation of the bank could not reasonably be projected. See § 11-3-110(3), C.R.S. 1973.
In an order issued July 5, 1973, the Board denied the application. In doing so, the Board stated that the proposed location of the bank was isolated and that there was "little or nothing" to attract customers to the bank, and it concluded that many residents of the proposed service area would find the location to be inconvenient and that they would not do business there. The Board also found that there was no persuasive evidence that persons working in the area would rely on the proposed bank. Finally, the Board described the applicants' projections of both commercial and personal deposits as unrealistic and unduly optimistic. No appeal was taken from this order, and it became final in August of 1973.
On August 31, 1973, the applicants filed a second application. This application was identical to the first, except for certain modifications and additions intended to meet the objections relied upon by the Board in its order of July 5. On June 20 and 21, 1974, the Board conducted a public hearing on the second application; once again Northern National objected to the issuance of a charter. It again challenged the public need for and prospective profitability of the proposed bank and argued that the new application was barred by virtue of the Board's initial decision. The Board rejected both arguments and on December 20, 1974, filed an order granting the application. Northern appeals this order, renewing the arguments that it presented to the Board. We affirm the decision of the Board.
In a hearing on an application for the issuance of a bank charter the applicants have the burden of proving:
"(a) That the proposed bank will serve a public need and advantage in the community or area of the community which the bank will serve; and
"(b) That the volume of business in the community or area of the community which the proposed bank will serve is such that profitable operation of the bank may be reasonably projected." Section 11-3-110(3), C.R.S. 1973.
To satisfy this obligation, the applicants at the second hearing introduced evidence showing the progress of commercial and residential development of the proposed service area, surveys testing the extent to which employees and businesses within the area believed there to be a need for a new bank at the proposed location, projections of commercial and personal deposits and of income and expense statements, testimony dealing with those parts of the application that were intended to meet the objections of the Board's order of July 5, and expert opinion that there was a need for the bank at the proposed location. In opposition to the application, Northern National offered testimony to the effect that the economic conditions in the Colorado Springs area were depressed and that the banking needs of the proposed service area were adequately satisfied by existing banks.
[1] The strengths and weaknesses of the applicants' evidence were thoroughly covered at the hearing. Although the testimony offered by Northern National conflicted in certain respects with this evidence, there was substantial evidence upon which the Board could base the findings which it ultimately made. Weighing and evaluating the testimony and other evidence is a statutorily delegated responsibility of the Board, and it is beyond the power of a reviewing court to substitute its judgment for that of the Board when substantial evidence in support of the Board's determination appears on the record. Goldy v. Henry, 166 Colo. 401, 443 P.2d 994; Academy Boulevard Bank v. Banking Board, 30 Colo. App. 331, 492 P.2d 76.
In its order granting the charter, the Board specifically addressed Northern National's argument that res judicata precluded approval of the application and concluded that sufficient changes had been made from the first application that the doctrine was inapplicable. Northern National argues, however, that as a matter of law the changes were so unimportant that the second application should be regarded as identical to the first. This court is not in a position to review the significance of the modifications appearing in the second application. Goldy v. Henry, supra; Academy Boulevard Bank v. Banking Board, supra. However, even assuming that the second application differed in no respect from the first, we conclude that the doctrine is inapplicable here.
The statute requiring the State Banking Board to consider properly filed applications is phrased in mandatory terms: "The banking board . . . shall hold a public hearing to consider the application." Section 11-3-110(3), C.R.S. 1973. A literal reading of the statute would prevent the Board from using res judicata to deprive an applicant of his right to a hearing and would impose on it a statutory duty to examine each application for a license as an original proceeding. See Churchill Tabernacle v. Federal Communications Commission, 160 F.2d 244 (D.C. Cir.).
[2] In examining the applications for charter the Board is obliged to considered the "public need and advantage." Section 11-3-110(3), C.R.S. 1973. If the doctrine of res judicata were applied in this situation, the Board would be prevented, where the facts remained unchanged, from ever re-evaluating the public interest when considering an applicant's second try for a charter. In this context, the normal justification for res judicata, that is, the prevention of an endless relitigation of claims by parties who have already had a fair trial, see Umberfield v. School District No. 11. 185 Colo. 165, 522 P.2d 730, would appear to miss the point. Reconsideration of the public need and advantage, in circumstances such as those at issue here, should never be foreclosed by res judicata. Panhandle Eastern Pipe Line Co. v. Federal Power Commission, 236 F.2d 289 (3rd Cir.). Accordingly, the applicants need not allege a substantial change of fact in filing a second application for a charter. Mulcahy v. Public Service Commission, 101 Utah 245, 117 P.2d 298. See People v. Haring, 286 App. Div. 676, 146 N.Y.S.2d 151.
We have considered the other arguments raised by petitioner and have found them to be without merit. The order of the State Banking Board is, therefore, affirmed.
JUDGE COYTE and JUDGE RULAND concur.