On certification on our own motion from the Appellate Division.
For remandment -- Chief Justice Vanderbilt, and Justices Oliphant, Jacobs and Weintraub. For affirmance -- Justices Heher and Wachenfeld. For reversal -- Justice Burling. The opinion of the court was delivered by Vanderbilt, C.J. Burling, J. (dissenting).
[24 NJ Page 492] The case before us involves the application of sub-section B of section 21 of the "Savings and Loan Act," L. 1946, c. 56 (N.J.S.A. 17:12 A -1 et seq.) as amended by L. 1952, c. 204. Under the authority of that subsection the Commissioner of Banking and Insurance granted permission to the Colonial Savings and Loan Association of Roselle Park to establish a branch office in the City of Elizabeth through the purchase of the Excelsior Building and Loan Association in Elizabeth and move it to a substitute location. The appellants -- a savings bank,
two trust companies with savings departments, two saving and loan associations chartered under federal law, and one similar association organized under the state banking laws -- objected to any such approval and by these proceedings seek to review the Commissioner's determination.
The Colonial Savings and Loan Association has its principal office in Roselle Park, N.J. where it has done business since 1904. At the end of 1955 it had 3,139 savings members and 1,029 borrowing members. About three miles away in the City of Elizabeth, the Excelsior Building and Loan Association maintained its office at No. 715 Elizabeth Avenue. It has been in business since 1887 and at its present location, an upper floor in an office building, for upwards of 25 years. It has about 358 savings members and 54 borrowers. These associations entered into an agreement, providing in essence for the purchase by Colonial of all of the assets of Excelsior and for a transfer of the principal office of Excelsior, presumably under N.J.S.A. 17:12 A -24, to a new location to be selected by Colonial, or for an application by Colonial to the Commissioner of Banking and Insurance for permission to change the location of the office of Excelsior to a "suitable substitute" to be selected by Colonial and to maintain that new office as a branch office of Colonial, under N.J.S.A. 17:12 A -21, subd. B. The agreement was made contingent upon the approval by the Commissioner of the changed location. Colonial chose the second alternative and applied to the Commissioner for permission to establish a branch office at 29 Broad Street, Elizabeth, as a "suitable substitute" for the office of Excelsior at No. 715 Elizabeth Avenue. The proposed location is about 8/10ths of a mile away from Excelsior's principal office and in the midst of the establishments maintained by Elizabeth Federal Savings and Loan Association, Emerald Savings and Loan Association, Union County Savings Bank, Central Home Trust Company, City Federal Savings and Loan
Association and Union County Trust Company, the appellants herein.
No notice of Colonial's application was given to any of the appellants. When they learned of it, however, they wrote to the Commissioner indicating their objections to the proposed action and asked to be heard. The Commissioner took the position that nothing in subsection B of section 21 of the act, N.J.S.A. 17:12 A -21, required that notice of an application for approval of a branch office in connection with a merger or bulk purchase of assets be given to any other institutions, and that there was no statutory basis for a formal hearing. Nevertheless, without recognizing them as "parties," he afforded the objectants an opportunity to present whatever evidence and argument they had in opposition to the application of Colonial. These proceedings, however, could by no means be characterized as a full hearing in the true sense of the word. While the objectants were given every opportunity to present their own evidence, they were in substantial respects denied the opportunity to meet the evidence on the other side of the case and that relied upon by the Commissioner. Some of the evidence was furnished ex parte by Colonial to the Commissioner and not made available to the objectants. The Commissioner in reaching his conclusion also considered data available in the files of the Department of Banking and Insurance and furnished by a departmental investigation of Colonial's application and by a survey of the territory in question, but not made part of the hearing record.
In granting the application by Colonial the Commissioner found:
"* * * that the maintenance by 'Colonial' of a branch at 29 Broad Street, Elizabeth, will be in the public interest; that it will be of benefit to the area to be served, and that it will be beneficial to the members of both 'Colonial' and 'Excelsior,' and permission is hereby given to the establishment and maintenance of said branch by the 'Colonial.'"
The objecting institutions, asserting a right to a review of the Commissioner's determination on the ground that
they were aggrieved parties, since the determination made it possible for Colonial to compete directly with them for savings and thrift deposits in their area, appealed under R.R. 4:88-8 to the Appellate Division of the Superior Court in three separate groups. Colonial then moved to dismiss all the proceedings on the ground that the appellants had no standing to appeal. Decision on that question was reserved until final argument and the appeals were consolidated. We then certified the matters on our own motion pursuant to R.R. 1:10-1(a), and the argument of all the parties and of all issues has been conducted before this court.
The case presents these questions: (1) whether the appellants have any standing to seek judicial review of the action of the Commissioner; (2) whether the objecting institutions were entitled to notice and a full hearing on Colonial's application for the Commissioner's approval, and if so, whether the hearing afforded was sufficient in the circumstances; and (3) whether the Commissioner properly discharged the power delegated to him.
Savings and loan associations and building and loan associations organized under the laws of this State are now controlled by the "Savings and Loan Act," supra, N.J.S.A. 17:12 A -1 et seq. Subsection A of section 21 of that act, N.J.S.A. 17:12 A -21, provides that if the capital, reserve and undivided profit requirements therein set forth are met, an association may establish a branch office in the municipality in which it has its main or principal office, or it may establish a branch office in any other municipality in the county of its principal office, but that no such branch office may be established in another municipality if any other state or federal association has its principal office or a branch office in operation there. Application to and approval by the Commissioner of Banking and Insurance is made a requirement of such action by subsection A(4) of section 21:
"Before any branch office shall be established, the association shall file written application with the commissioner for his approval.
Before approving such application, the commissioner shall determine that the maintenance of such branch office is in the public interest and will be of benefit to the area served by such branch office, and that it may be established without undue injury to any other association or Federal association in the area in which it is proposed to locate such branch office and that conditions in the area to be served, afford reasonable promise of successful operation.
Within ten days after the submission of any such application to the commissioner, the applying association shall give notice by mail of such application to all associations and Federal associations, having offices within the municipality in which it is proposed to locate the branch office and outside of such municipality if within five miles of the place where it is proposed to locate such branch office. The notice shall be in a form approved by the commissioner, and shall include the name of the applying association and the street address and municipality where such branch office is to be located. Upon the request of the applying association, the commissioner shall furnish a written list showing the names and street addresses of all State chartered associations to which such notice must be sent. The commissioner shall conduct such investigation or hearing or both, as he may deem to be advisable.
Not less than thirty days after mailing of the aforementioned notice and within ninety days thereafter, the commissioner shall announce his decision upon such application and file in his office, a written memorandum stating the reasons therefore, which shall be open to public inspection." (Emphasis supplied.)
The absence from subsection B of section 21 of any express reference to a hearing or to notice on an application for approval of the establishment of a branch office through purchase of another association or merger, particularly since express provisions for notice or hearing are made with respect to applications for approval in related cases under subsections A and C, gives rise to the conflict in this case. Subsection B provides:
"B. Notwithstanding any of the other provisions or limitations of this section, any association into which another association has been merged or which has acquired, by purchase, reorganization, or in any other manner, all or a substantial portion of the assets of another association, may, with the permission of the commissioner, and under such terms and conditions as he may prescribe, maintain the office previously maintained by such other association, or a suitable substitute therefor, as a branch office; provided, however, that the commissioner shall first determine that the maintenance of such branch is in the public interest and will be of benefit to the area served by such branch and to the members of the association."
"C. A branch office may be removed from one location to another upon application to, and approval by the commissioner, provided that the proposed new location is within the area prescribed for a new branch office. Within ten days after filing such application, the association shall give the same notice as that required in connection with an application for a new branch office and the commissioner shall render his decision within the time limits prescribed in connection with the application for a new branch office." (Emphasis supplied.)
Closely related to the problem presented by the instant case are the provisions of section 24 of the act, as amended by L. 1953, c. 136, N.J.S.A. 17:12 A -24. That section provides that:
"Any association may change the location of its principal office to a new location but, where the office is to be removed from one municipality to another, such change shall take place only after application to and the written approval of the commissioner of such change of location. Within ten days after the submission of any such application, the commissioner shall give written notice by mail to the association of a time and place designated by him for a hearing on such application. The time designated for such hearing shall be not less than six weeks nor more than eight weeks after the date upon which the commissioner mails such notice. The association shall thereupon give notice by mail of such application and of the time and place designated by the commissioner for a hearing thereon at least three weeks prior to the date of such hearing to all associations located within the municipality in which it is proposed to locate the office of the association.
Upon the request of the association, the commissioner shall furnish a written list showing the names and street addresses of all associations to which such notice must be sent.
The notice shall set forth the name of the association, the street address and municipality from which its location is to be changed and the street address and municipality to which its location is to be changed. Within thirty days after the close of the hearing, the commissioner shall announce his decision upon such application and file in his office a written memorandum stating the reasons therefor, which shall be open to public inspection.
If the commissioner shall find that --
(a) the proposed change of location is in the public interest, and
(b) will be of benefit to the area to which it is proposed to ...