The parties concede and it must be borne in mind that in disposing of this appeal the allegations of appellants' petition must be taken as true.
Many irregularities regarding the proceedings in which the American Savings and Loan Association, an appellee, was granted a charter, franchise and certificate of authority to do business by the State Banking Commissioner are alleged. I will, however, quote only the allegations which relate to the duty of the Commissioner under Art. 881a-2, V.A.C.S., to ascertain 'whether the public convenience and advantage will be promoted by allowing such proposed building and loan association to be incorporated and engaged in business, and whether the population in the neighborhood of such place and in the surrounding country affords a reasonable promise of adequate support for the proposed building and loan association' for if these allegations do not entitle appellants access to the courts then the other alleged irregularities could not possibly do so.
*Page 574"Plaintiff, Brazosport Savings and Loan Association is duly chartered under the
laws of the State of Texas as a savings and loan association, and has its principal place of business at Freeport, Brazoria County, Texas, with W. C. McLendon as its president; plaintiff, Fort Bend Savings and Loan Association is duly chartered under the laws of the State of Texas as a savings and loan association, and has its principal place of business at Rosenberg, Fort Bend County, Texas, with R. J. Davis as its executive vice-president; plaintiff, Gulf Coast Savings and Loan Association is duly chartered under the laws of the State of Texas as a savings and loan association, and has its principal place of business at Richmond, Fort Bend County, Texas, with Glenn Birdwell as its president; * * **Page 575"Plaintiffs and each of them are possessed of charters, permits to do business and franchise rights to engage in and operate savings and loan (or building and loan) associations which charters, permits and franchises have been heretofore lawfully granted to them. Plaintiffs, pursuant to their authority so to do, have heretofore at all material times, and are now operating and doing business by virtue of their charter and franchise rights, and have and hold valuable property rights, interests and investments in their respective businesses.
"Plaintiffs actively engage in the savings and loan business within the territory and area authorized by law, soliciting business, and holding themselves out to serve, and serving the public. Plaintiffs are, and at all times material hereto have been ready, willing and able to serve the public, meeting all public needs, and so operating as to fully meet and satisfy any and all reasonable requirements of public convenience and advantage insofar as savings and loan or building and loan associations are concerned in the area here involved. Plaintiffs' businesses are affected by public use, being of public interest, and conducted for the public welfare and benefit.
"Plaintiffs, as lawful owners and holders of such charters and franchises, have invested large sums of money in their businesses, their plants and facilities, all of which as well as their charters and franchises, constitute valuable property rights and rights to property, of value in excess of many thousands of dollars and are entitled to hold and operate such free of the unlawful and illegal competition and action hereinafter set forth, which illegal competition will result in irreparable injury and damage to plaintiffs and to the general public, unless the relief herein prayed for be granted. * * *
"Defendants, Jimmy Phillips, et al., unknown to plaintiffs, caused to be prepared and filed with the Commissioner, on or about September 26, 1958, certain Articles of Association and Application for Charter for American Savings and Loan Association-Lake Jackson, Texas, which was received by the Commissioner and held by him without fixing a hearing thereon within ten days, as required by Rule 2.1 of the Rules and Regulations for Building and Loan Associations, promulgated by the Building and Loan Section of the Finance Commission of Texas and the Banking Commissioner of Texas, which at all material times were in force and effect. Thereafter defendants Phillips et al. superseded and amended their Articles and Application by instruments dated October 27, 1958, and filed these instruments with the Commissioner on or about October 31st, 1958.
"(2) By virtue of such application the defendant directors and applicant proposed to seek authority to operate a savings and loan association business with main offices at Lake Jackson in Brazoria County, Texas, doing business within a 50-mile radius of that place, in competition with plaintiffs, each of whom is entitled to operate and serve that same area and territory in whole or in part, it being the specific plan and proposal of defendant directors and the applicant to cause plaintiffs to lose their proportionate share of savings and loan business done by them, defendants
proposing to appropriate the same to their own use and benefit. * * **Page 576"The applicant and defendants completely failed to submit and present, at such hearing, substantial evidence from which the Commissioner could make the determinations required by law and such Rule 2.11 and from which he could lawfully find and conclude that such application and evidence satisfied the elements required by such Rule 2.1 and Art. 881a-2, V.A.C.S. of Texas.
"(c) Based upon the evidence adduced at such hearing and there presented to the Commissioner, defendants Jimmy Phillips, et al., and the applicant, wholly failed to meet and satisfy the proof required by law as to the several elements and considerations governing the grant of a charter to do a savings and loan association business, and the action of the Commissioner in approving said application and granting such charter, as he did do on January 23, 1959 was arbitrary, capricious, unreasonable and unlawful.
"At all material times, the credible evidence is that the public convenience and advantage will not be promoted by the granting of a charter for this association, and, on the contrary, public convenience and advantage will be prejudiced and harmed. Further, and in this regard, plaintiffs say that during the past twelve (12) months the defendant Commissioner has now granted a total of three new savings and loan association charters for Brazoria County, Texas. This action is wholly unjustified, has never been practiced in any other comparable county in the State, and, as regards the chartering of the defendant association, this has been done at a time when two others have been so recently chartered as to permit of no reasonable opportunity for them to enter business, or for any fair appraisal of the public interests to be had or evaluation of public convenience and advantage to be made as regards a third such association — namely that of defendants. * * *
"Plaintiffs and many other associations and lending and fiscal agencies and concerns fully and amply serve the area involved, and while they have at all times been ready, willing and able to open any branches, agencies or suboffices which might be of convenience to the public, the Commissioner has discouraged them in this, and in fact has disputed the right of Brazosport Savings and Loan Association to open a facility at Lake Jackson or elsewhere in the county, following which action he has nevertheless elected to charter the defendant association, which plaintiffs say is arbitrary and unreasonable conduct as regards them.
"(5) The population of the neighborhood of Lake Jackson and in the surrounding
country does not and cannot afford a reasonable promise of adequate support for the proposed association. In no other comparable area in the state is the population served by so many savings and loan, mortgage and fiscal concerns. The number of associations on a per capita basis is not only already greater in this area than elsewhere, but the facts are that the population is decreasing. In this connection the Commissioner has necessarily acted without knowing whether the population in this area affords a reasonable promise of adequate support for the defendant association, because he has acted to grant this charter to defendants at a time when three other associations in the county had already been so recently chartered that the force and effect of their support by the population in the area, not yet being known or reasonably ascertainable, makes it impossible to reach a rational favorable determination in behalf of defendants as to this element."(6) All credible evidence was and is that existing associations needed any and all business which they could obtain, and were ready, willing and able to serve the area proposed to be served by defendants, and were serving such area; further, the credible evidence was to the effect that the chartering of this association would prejudice and harm other newly created associations, with resulting injury to the public.
"(7) Not only is there no need for the proposed association, but in truth, existing associations furnish all services necessary for the area, and, because of decreases in population, local economic conditions and the keen competition existing in the area, existing associations are in need of deposits and additional business in the area to maintain their own stability; the Commissioner's action was taken without regard to these facts, and contrary to the public welfare.'
I agree with the majority that Art. 881a-3, V.A.C.S., does not authorize appellants to appeal from the action of the Banking Commissioner in approving the articles of incorporation of American Savings and Loan Association. This article provides recourse against the arbitrary action of the Banking Commissioner to those who desire to enter this business field but ignores the rights of those already in the field to protection against such arbitrary action.
I also agree with the majority and the Banking Commissioner when they say that appellants do not have a vested property right in the charter and certificate granted by the Commissioner to appellee American Savings and Loan Association. They claim no such right. The rights which they do claim and which they seek to protect are in their own corporate beings. These and their franchises are vested property rights. Lindsley v. Dallas Consol. St. Ry. Co., Tex.Civ.App., Dallas,200 S.W. 207; City of Atlanta v. First Federal Sav. Loan Ass'n, 209 Ga. 517, 74 S.E.2d 243.2
I recognize and fully approve of our constitutional antipathy towards monopolies. Art. 1, Sec. 26, Texas Constitution. If appellants were ordinary business corporations they would not be properly entitled to receive legislative protection against competition. 43 Am.Jur. p. 585. They are, however, 'quasi public financial institutions,' and 'like banks, trust companies, insurance companies, and railroads are quasi public corporations as to which the state may exercise its police power and may assert its sovereign rights of regulation and *Page 577 control in the preservation and furtherance of public well-being.' State ex rel. Wagner v. Farm Home Savings Loan Ass'n, 338 Mo. 313, 90 S.W.2d 93, 96. See also 9 Am.Jur. p. 100; Hopkins Federal Savings Loan Ass'n v. Cleary,296 U.S. 315, 316, 56 S.Ct. 235, 80 L.Ed. 251; Treigle v. Acme Homestead Association, 297 U.S. 189, 56 S.Ct. 408, 80 L.Ed. 575; Veix v. Sixth Ward Bldg. Loan Ass'n of Newark, 310 U.S. 32,60 S.Ct. 792, 84 L.Ed. 1061, 1065.
Of necessity Texas recognizes this nature of a building and loan association because one may only be created upon a proper showing of 'public convenience and advantage.' Art. 881a-2.
This simply means that too many of these institutions, just as too many buses on the highways, are inimical to the public welfare.
Do appellants have no right to seek judicial relief in order to protect their vested property rights merely because the Legislature has not provided that they may seek it?
The courts affirm this right. English Freight Co. v. Knox, Tex.Civ.App., Austin, 180 S.W.2d 633, writ ref. w. m.; Fire Department of City of Fort Worth v. City of Fort Worth, 147 Tex. 505,217 S.W.2d 664; City of Amarillo v. Hancock, 150 Tex. 231,239 S.W.2d 788; Board of Insurance Com'rs v. Title Ins. Ass'n, 153 Tex. 574, 272 S.W.2d 95, 97.
In the case last cited the court stated: 'The property rights of parties cannot be determined by orders of an administrative agency, without a right of judicial review of such orders.'
Should appellants be denied access to the courts merely because the appellee institution is a body corporate?
The Banking Commissioner citing State v. Dyer, 145 Tex. 586,200 S.W.2d 813; Art. IV, Sec. 22, Texas Constitution, and other authorities so contends. The Dyer case holds that there is a valid distinction between the cessation of a corporation doing business and dissolution of its charter and states that the power to compel the latter belongs exclusively to the State. A corporation was there held liable for franchise taxes even though the Secretary of State had forfeited its right to do business and the corporation had been placed in the hands of a receiver.
The primary objective sought by appellants in this case is the protection of their businesses against unlawful competition. This, in my opinion, it has the right to obtain upon establishing arbitrary action by the Banking Commissioner in approving the articles of incorporation of appellee American in violation of the provisions of Art. 881a-2, supra, under the opinion of the Supreme Court in the previously cited Title Ins. Ass'n case. That case affirmed the opinion of this Court found in 264 S.W.2d 129.
The following is from the Supreme Court opinion [153 Tex. 574,272 S.W.2d 96]:
*Page 578"The respondents, Title Insurance Association of Texas and numerous title insurance and abstract companies, brought this action against the Board of Insurance Commissioners of Texas, hereinafter called the Board, the Southwestern Title and Guaranty Company, and the Austin Title Company, Inc., for an order enjoining the Board from approving an agency contract between the corporate defendants and to enjoin such defendants from illegally transacting a title guaranty business in Travis County. * * *
"There is no provision in the statute for an appeal from an order of the Board approving a contract of the nature of the one under review, but the right of proper parties to subject such an order to judicial review must be implied. The property rights of parties cannot be determined by orders of an administrative agency, without a right of judicial review of such orders. City of Amarillo v. Hancock, 150 Tex. 231,
239 S.W.2d 788; English Freight Co. v. Knox, Tex.Civ.App., 180 S.W.2d 633; White v. Bolner, Tex.Civ.App., 223 S.W.2d 686, error refused."It is argued that respondents have no right to prevent competition in their business. That would be a correct proposition in the transaction of ordinary business enterprises if the competition is not illegal, but, as well stated in the opinion of the Court of Civil Appeals * * *:
"The business of title insurance is one affected by public use, is of public interest and is subject to reasonable legislative control. Daniel v. Tyrrell Garth Inv. Co., 127 Tex. 213, 93 S.W.2d 372. "
I revert now to the Court of Civil Appeals' opinion because it more fully discusses the authorities approved by the Supreme Court in its opinion and quote [264 S.W.2d 131]:
* * * * * *"This then relegates us to general law to determine whether or not appellants have a justiciable interest sufficient to maintain their suit against the corporate appellees. * * *
"We consider the case of Featherstone v. Independent Service Station Ass'n of Texas, Tex.Civ.App., 10 S.W.2d 124, 128, also by the Dallas Court, to be based upon sounder reasoning and more solid authority than the two cases above noted. In that case the Court reversed the trial court and granted an injunction enjoining a competitor of plaintiff (service stations) from enticing away his customers through the use of a lottery, the Court saying:
"We are of the opinion that plaintiff's business and his right to conduct the same constitute property that a court of equity will protect from unlawful interference or injury. The correctness of this proposition has been announced so often and by so many courts that it ought not now to be considered an open question. While it is true a dealer has no such interest in the future trade, that is, in possible customers, as would justify an appeal to a court of equity, to restrain a competitor from doing what is perfectly legal, to advertise and attract customers to his own business, although such conduct may result in a corresponding loss to one engaged in a similar business, yet a competitor may ask for the restraint of acts and conduct prohibited by law, that unreasonably interfere with, divert patrons from, and injure his business."
"We believe the case of Frost v. Corporation Commission, 278 U.S. 515, 49 S.Ct. 235, 237, 73 L.Ed. 483, to present a close analogy. In that case the Court was considering an Oklahoma statute which declared cotton gins to be a public utility and required a showing of public necessity in order to obtain an operating permit, 47 U.S. 1951, Sec. 41 et seq. The State Corporation Commission granted a permit for a gin in Durant without regard to public necessity and a Durant operator of another gin, under proper permit, sued to enjoin operation of the gin under the illegal permit. The Court in holding that the injunction should have been granted said, in part:*Page 579"Appellant, having complied with all the provisions of the statute, acquired a right to operate a gin in the city of Durant by valid grant from the state acting through the corporation commission. While the right thus acquired does not preclude the state from making similar valid grants to others, it is, nevertheless, exclusive against any person attempting to operate a gin without obtaining a permit or, what amounts to the same thing, against one who attempts to do so under a void permit; in either of which event the owner may resort to a court of equity to restrain the illegal operation
upon the ground that such operation is an injurious invasion of his property rights. * * *"The injury threatened by such an invasion is the impairment of the owner's business, for which there is no adequate remedy at law."
"* * * the Legislature had provided that a title company representative in a county must own and operate an abstract plant in such county. Any representative lacking this qualification is an illegal representative and any permit authorizing such illegal representative to act for his principal and to divide premiums is invalid and operation thereunder is, in our opinion, an unlawful invasion of a competitor's property rights. Frost, supra.
"We believe appellants are entitled to an opportunity to prove their allegations and to appropriate relief if they are proved."
The Legislature having provided that a building and loan association should not be incorporated unless it shows that the public convenience and advantage will be thereby promoted I believe that if the Banking Commissioner arbitrarily violates this legislative command and approves a charter for such association and authorizes it to engage in such business then the conduct of such business is an unlawful invasion of appellants' (competitors') property rights. In such cases the courts are open to the aggrieved parties for, as stated by Associate Justice Simpson in Fire Department of City of Fort Worth v. City of Fort Worth, supra [147 Tex. 505, 217 S.W.2d 666] :
"An administrative agency, though vested with discretion in its acts, must not exercise its powers arbitrarily or capriciously, and the reasonableness of its orders is, and under our system of government must be, subject to judicial review."
I respectfully dissent.
"2.1 When articles of incorporation of a new association are presented to the Banking Commissioner for his approval, such articles shall be accompanied by the proposed By-Laws of the association and statements, exhibits, maps and other data, properly verified, which shall be sufficiently detailed and comprehensive to enable the Commissioner to pass upon the proposed charter as to (1) the character, responsibility and general fitness of the persons named in the articles; (2) whether the public convenience and advantage will be promoted by allowing such proposed association to be incorporated and engage in business, taking into consideration (a) that insurance of the accounts of the proposed association has been applied for and that such insurance will probably not be refused by the Federal Savings and Loan Insurance Corporation, (b) that such proposed association will have and maintain independent quarters with a groundfloor location or its equivalent, (c) that such proposed association will have qualified, full-time management, and (d) the adequacy of the initial capital and surplus of the proposed association; and (3) whether the population of the neighborhood of such place and in the surrounding country affords a reasonable promise of adequate support for the proposed association.'
The Banking Commissioner unequivocally states that '. . . the right and privilege of American (appellee American Savings and Loan Association) to operate as a building and loan association is a vested property right . . .' Certainly if American's right to operate is a vested property right the rights which appellants seek to protect here are of the same nature.