North Carolina Savings & Loan League v. North Carolina Credit Union Commission ( 1981 )

Justice EXUM

dissenting.

I agree with the majority that the dispositive question on this appeal is whether municipal and county employees, whom I will refer to as local government employees, share with state government employees a “common bond,” as that term is used in G.S. 54-109.26 (Cum. Supp. 1979), so that all can belong to the same credit union. Being satisfied that there is the necessary common bond between the two groups of governmental employees, I respectfully dissent from the majority’s conclusion to the contrary and vote to affirm the decision of the Court of Appeals.

It takes little more than common sense and some familiarity with the world around us to know that local government employees and state government employees share a common bond of “similar occupation, association or interest” as those terms are used in the statute. Judge Hedrick made the point nicely when, for a unanimous Court of Appeals panel, he. wrote:

“In our opinion public employees are united by the common bond of similar occupation for the simple reason that they are all employed in the service of the community, whether that community be narrowly defined as is the case with local public employees, or broadly delineated as in the case of State public employees. They all occupy positions in public service. Moeover, such employees are all paid from public funds generated by taxing the citizenry. They serve the public; the public pays their salaries. Thesetwo characteristics are common to the membership as envisaged by the amendment to the bylaw in question here. We hold that these factors in particular provide sufficient similarity of occupation, despite the individual place and position of the employee, to meet the ‘common bond’ requirement of G.S. Sec. 54-109.26.”

45 N.C. App. 19,23,262 S.E. 2d 361,364 (1980). Surely these factors give local and state government employees sufficient similarity of “association” and “interest,” if not “occupation,” under the majority’s unrealistic, restrictive view of what similar occupation means — a view which I reject.

Similar occupation does not mean identical occupation in the sense that all workers must perform identical work-related functions in order to be in the same credit union. The majority correctly asserts, for example, that all workers in the textile industry, or all persons involved in law enforcement, could form “their own separate credit union.” Yet workers engaged in the textile industry do a multitude of different functions and have a number of different occupations in the majority’s narrow view of that term. They include weavers, dyers, mechanics, engineers, chemists, and even physicians. Yet all are workers in the textile industry and all contribute to the making of the ultimate product, textile goods. The same may be said of those engaged in law enforcement. Their varying occupations include traffic patrolmen, detectives, administrators, chemists, ballistics experts, crime scene reconstruction experts, etc. Yet all could, the majority concedes, join a “law enforcement” credit union because they are all engaged in law enforcement activity.

So it is with those who work for local and state government. Although they perform different functions and may be said to have different occupations, they are joined by the common bond of being public servants. They all contribute together producing essentially the same product, i.e., those and only those governmental services which are demanded by the people through the constitution and statutes of this state. They work in the same industry — the industry of government.

Nor, as I think the above discussion demonstrates, are governmental employees and private sector employees on different sides of the same “common bond” coin. Contrary to the majority’s assertion, it does not follow that if local and state government employees are permitted to form a credit union under the common bond of “similar occupation, association or interest,” then a “private sector” credit union must also be permitted. The private sector consists of a multitude of different industries, composed in turn of many different privately-owned for-profit business organizations, which make countless different products and provide a variety of different services and which run on capital voluntarily and privately supplied from countless investors.

The acid test, as the majority correctly notes, is whether the common bond is sufficient “to promote the financial stability of credit unions by requiring that the members possess substantial unity of character and interest. Only with some assurance of stability can the purpose of credit unions be achieved.” The common bond requirement is for the protection of the credit union itself not, as the majority seems to imply, for the purpose of restricting the size or operation of any given credit union in order to protect private for-profit financial institutions with whom credit unions may compete. The common bond of those employees engaged in providing governmental services to our people at both state and local levels meets this test. A purported private sector “common bond” would surely not.

The tax advantages given to credit unions organized under Chapter 54 of the General Statutes are not provided, as the majority suggests, because their size and operations are restricted by the common bond requirement. The tax advantages are provided because these credit unions are non-profit associations operated and controlled by their own members. They provide credit to people whose only collateral is often the income they derive from a steady job. They provide credit, in other words, to people who would not be able to obtain it at privately-owned for-profit financial institutions. The majority seems to view the common bond requirement as a method for restricting the growth and operational potential of membership owned, nonprofit, credit unions so that they will not unduly compete with privately-owned for-profit financial institutions. This mistaken view of the reason for the common bond requirement has, I fear, led the majority to an unduly restrictive view of what constitutes the common bond of similar occupation, association or interest, a restrictive view never intended by the legislature.

The majority, for example, speaks at length in note 1 of the size of the North Carolina State Employees’ Credit Union and seems concerned because it might compete unfairly with for-profit financial institutions in the private sector. While the State Employees’ Credit Union may be large when compared with other credit unions, its size and operational potential even if expanded to include local government employees is quite small when compared to the size and operational potential of private for-profit financial institutions. According to the majority’s figures the Credit Union’s assets in 1977 were $270,000,000 with some $223,000,000 in loans. As I read the record, if local government employees are added to the membership there would be approximately 250,000 eligible members in North Carolina. Without this addition there are approximately 200,000 eligible members. Yet all North Carolina credit unions, including the State Employees’ Credit Union, have only 4.5% of total consumer savings in the state.

The record shows on the other hand that the total assets of the 186 savings and loan associations which comprise the North Carolina Savings & Loan League have assets approaching ten billion dollars. The total assets of all banks in North Carolina (both state and national), according to figures obtained from the Commissioner of Banks, was more than twenty-two billion dollars as of 30 September 1980. The record shows, further, that the total North Carolina work force numbers approximately 2,600,000 persons. Therefore only 9.5% of the total work force would be eligible for membership in the State Employees’ Credit Union if it is expanded to include local government employees who themselves comprise only 2% of that work force. It is estimated that only 5% of credit union members save exclusively at their unions. The rest save also at banks and savings and loan associations. The expansion of the Credit Union to include local government employees would seem to constitute little, if any, economic threat to private for-profit financial institutions.

The really sad aspect of the majority’s opinion is that thousands of local government employees who are not eligible for credit at private for-profit financial institutions simply cannot obtain the credit needed “to improve their economic and social conditions.” The statute entitles them to membership in the State Employees’ Credit Union where such credit would be available. The majority erroneously denies them this privilege.

Justice COPELAND joins in the dissent.