PETITION FOR REVIEW (DEPARTMENT OF BANKING).
Timothy F. Malloy, Alan J. Davis, Wolf, Block, Schorr & Solis-Cohen, Philadelphia, for petitioner.
Paul S. Diamond, David H. Pittinsky, Douglas M. Lurio, Richard J. Bortnick, Dilworth, Paxson, Kalish & Kauffman, Philadelphia, for intervenor, Samuel Rappaport.
Hugh A. Benson, Chief Counsel, David E. Shakespeare, Asst. Counsel, Harrisburg, for respondent.
Barry, Colins and Smith, JJ. Kalish, J., did not participate in the decision in this case.
Home Unity Savings and Loan Association (Home Unity) appeals from an order of the Deputy Secretary of Banking (Deputy Secretary) approving the proposal of Samuel H. Rappaport (Rappaport) to acquire up to 25% of the outstanding shares of Home Unity's common stock.
Home Unity is a permanent reserve fund stock savings association. Rappaport was the beneficial owner of slightly less than 10% of its outstanding shares of common stock and wanted to increase his ownership. In compliance with Section 212(c) of the Savings Association Code (Code), Act of December 14, 1967, P.L. 746, as amended, added by the Act of April 9, 1982, P.L. 334 § 4, 7 P.S. § 6020-32(c), he filed an application with the Savings Association Bureau (Bureau) of the Department of Banking (Department) to acquire its written approval of his acquisition of up to 25% of the outstanding shares of Home Unity's common stock.*fn1 The Director of the Bureau, pursuant to Section 212(d) of the Code, 7 P.S. § 6020-32(d), gave Home Unity's board of directors a copy of the application and the documentation that accompanied it and invited it to submit any written comments or objections to the application.*fn2
In response to Rappaport's application, Home Unity initially mailed to the Director of the Bureau, inter alia, clippings of newspaper and magazine articles concerning Rappaport and copies of court documents relating to litigation in which he had been involved. Later, it submitted a
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written response to the application.*fn3 In that document, Home Unity asserted that Rappaport did not meet the standards of character and fitness established by Section 206(a)(4) of the Code, 7 P.S. § 6020-26(a)(4), and urged the Department to disapprove Rappaport's proposed acquisition.*fn4
After reviewing the materials submitted by Rappaport and Home Unity, the staff of the Bureau recommended to the Deputy Secretary that Rappaport's proposed acquisition be disapproved. They concluded that Rappaport's reputation in the community -- albeit one that was created by the media -- did not justify the conclusion that he had the character and fitness to either command confidence of the community or warrant the belief that the business of Home Unity would be honestly and efficiently conducted. The Deputy Secretary, however, rejected this recommendation and approved the proposed acquisition subject to certain conditions which were designed to insure that Rappaport would be only a passive investor in Home Unity. Both Rappaport and Home Unity were notified of this decision by a letter dated January 22, 1988. This appeal by Home Unity followed.
In this appeal, Home Unity raises two issues for our consideration: (1) Did the Deputy Secretary make findings of fact and conclusions of law that would enable this Court to exercise our appellate review power; and (2) Is there substantial evidence on the record to establish that Rappaport's character and fitness command the confidence of the community and warrant the belief that the business of Home Unity will be honestly and efficiently conducted. Before, however, we can address these issues, we must first address challenges by the Department and/or Rappaport to
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this Court's ability to review the Deputy Secretary's decision and to Home Unity's ability to challenge that decision.
The Department argues that the Deputy Secretary's order approving Rappaport's proposed acquisition is not an "adjudication", as defined in Section 101 of the Administrative Agency Law, 2 Pa.C.S. § 101. Accordingly, it contends that the order is not subject to judicial review. Under Section 702 of the Law, 2 Pa. C.S. § 702, a right of appeal is conferred on "[a]ny person aggrieved ...