Appeal from order of Department of Banking, entered September 20, 1966, in case of Cement National Bank, Merchants National Bank of Allentown, and Walnutport State Bank v. Department of Banking, G. Allen Patterson, Secretary of Banking and Tri-County State Bank.
Francis B. Haas, Jr., with him Rod J. Pera, and McNees, Wallace & Nurick, for appellants.
Frederic G. Antoun, Deputy Attorney General, with him William M. Steinbach, Assistant Attorney General, and Edward Friedman, Attorney General, for Department of Banking, appellees.
Robert L. Rubendall, with him Martin H. Philip, and Metzger, Hafer, Keefer, Thomas and Wood, for appellee.
Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Chief Justice Bell. Mr. Justice Cohen concurs in the result. Dissenting Opinion by Mr. Justice Roberts. Mr. Justice Jones and Mr. Justice Eagen join in this dissenting opinion.
This is an appeal from the Order of the Department of Banking authorizing Tri-County State Bank of Bowmanstown,
whose principal office is in Carbon County, to establish a branch bank at 1840 Main Street in the Borough of Northampton, Pennsylvania.
On July 25, 1966, Tri-County State Bank (hereinafter referred to as Tri-County) filed an application with the Department of Banking in accordance with the new Pennsylvania Banking Code of 1965 (Act of November 30, 1965, P. L. 847, 7 P.S. § 904(b) (iv)), seeking authority to establish a branch bank at 1840 Main Street, Northampton, Northampton County. At that time, Tri-County did not have any offices in Northampton County.
On August 19, 1966, Cement National Bank and Merchants National Bank of Allentown notified the Department of Banking of their opposition to the proposed branch.
Norman E. Oelschlegel, an examiner for the Department of Banking, made an exhaustive investigation of the merits of the application and in particular the need for a branch bank at the proposed location. In the course of his investigation Oelschlegel interviewed officers of the banks which he believed were in the banking area from which the proposed branch would draw its depositors, customers and business, including particularly those of the appellant banks. Officers of these banks were given an opportunity to state their reasons for opposing the proposed branch. Thereafter, on August 26, 1966, Oelschlegel submitted to the Secretary of Banking a detailed and exhaustive report supported by voluminous data of the investigation and examination he, together with an examiner representing the Federal Deposit Insurance Corporation, had conducted into this matter. Therein Oelschlegel recommended that the Department approve the application for the branch.
On September 9, 1966, Cement National Bank, Merchants National Bank of Allentown, and Walnutport
State Bank filed an official letter of protest and in support thereof submitted a large amount of detailed documentary material.
On September 20, 1966, the Department of Banking, after studying all the evidence pro and con, approved the application of Tri-County and issued a letter of authority authorizing it to establish a branch bank at 1840 Main Street, Northampton, Northampton County, Pennsylvania. It is worthy of note that the Federal Deposit Insurance Corporation, after careful investigation, also approved this branch.
Thereafter, the aforesaid competing banks filed a petition for allowance of appeal under Supreme Court Rule 68 1/2*fn1 and a petition for a writ of supersedeas. Both of these petitions were granted on November 4, 1966.
Appellants raise three questions. They first contend that the statutes of Pennsylvania do not authorize the Department of Banking to deny to banks protesting branch applications the right to inspect such applications and the supporting material submitted therewith. We shall consider this in inverse order.
Appellants further contend that the Department of Banking, in refusing to hold a hearing at the department level and in failing or refusing to make findings of fact, or to set forth and inform all parties of its reasons for approving the branch bank application, has violated appellants' (a) procedural rights, and (b) their property rights and (c) other (unspecified) Constitutional
rights.*fn2 All of these contentions are, as we shall see, devoid of merit.
Section 905 of the Banking Code of 1965 pertinently provides: " Approval of branch by department*fn3 (a) Investigation and discretionary hearings -- Upon receipt of an application for approval of a branch which satisfies the requirements of this Act, the department shall conduct such investigation as it may deem necessary and, in its discretion, may hold hearings before the department or before the Banking Board."
The comment of the Banking Commission is as follows:*fn4 " Subsection (a) does not require hearings in connection with branch applications but permits the department to hold such hearings in its discretion either before the department or before the banking board."
Appellants contend that under the Banking Code (1) hearings are necessary, and the only discretion which the Department has is whether to hold a hearing before the Department or before the Banking Board, and (2) the Department must give detailed reasons for its decision. This interpretation of the Code and these contentions are devoid of merit.
Section 905 further provides: "(c) Action by department -- Within sixty days after receipt of the application . . . the department shall . . . approve the application if it finds that there is a need for banking services or facilities such as are contemplated by the establishment of the proposed branch and that the requirements of this act ...