Clearfield State Bank v. Brimhall , 24 Utah 2d 339 ( 1970 )

HENRIOD, Justice:

Appeal from a judgment of the lower court, affirming, on review,¹ an order of the Financial Institutions Commissioner, approving the proposed establishment of a “unit” bank in Clearfield, Utah. Affirmed.

The proposed Bank of Northern Utah applied for authority to operate a unit bank² in Clearfield, Utah. The plaintiff here, Clearfield State Bank, is an operator of an existing bank in Clearfield, and protestant here.

Plaintiff says that 1) the applicant, by indirection and subterfuge, is seeking a branch bank for the Bank of Utah in violation of Title 7-3-6, U.C.A.1953, having to do with branch, not unit banks; that 2) the Commissioner capriciously considered evidence and denied appellant’s right to see it or test its probative value; 3) that applicant did not possess the necessary capital statutorily required; 4) that applicant’s proposed facility was in such close proximity to appellant’s as to make improbable a successful operation; and 5) that applicant has shown no demand for the proposed services.

As to 3, 4 and 5 above, an examination of the record reflects that with respect to these points the findings and conclusions based thereon were supported by believable, substantial, competent, — and perhaps by some questionable, but nonprejudicial evidence, most of which was controversial.

Points 1 and 2 supra, do merit our attention, since it seems elementary that if privileges under a statute are sought, a protest is lodged thereto, and a contention is made of nondisclosure and employment of a subterfuge by him seeking the favor, he whose interests are to be invaded should not be denied the right to see and probe the fides or fiction of the claim; and that a full airing of such contention should be an order of the day, since evasion of corporate identity is suspect.³

Appellant claims that the Bank of Utah, an existing bank, not a party to this litigation, is the real party in interest, and that the applicant, Bank of Northern Utah, is but its alter ego or at least its controlled illegitimate offspring. It says that controlling stock ownership will reside with identical individuals as to both banks.⁴ Plaintiff also points out that both banks will have the same Cashier⁵ who will work without compensation for the new bank if authorized to operate. Also, the architecture and name of the proposed bank are so similar as to suggest operation by the Bank of Utah, not by a new, different and independent banking facility. There is no question but that the Commissioner received evidence of stock ownership and control of the Bank of Utah and the Bank of Ben Lomond, neither a litigant here, which admittedly would show at least similar ownership and control by certain individuals of the applicant here.

Plaintiff urges and the record reveals that circumstances concerning such ownership and control were admitted in confidence, without opportunity to test it on cross-examination. Plaintiff contends that, given the opportunity, it could demonstrate a subterfuge for statutory evasion. Without such evidence, we are compelled to affirm in toto. A majority of the court is of the opinion that irrespective of the evidence mentioned, apparently having to do with stock ownership in other banks, and being of a type that would not be disposi-tive here, the trial court should be affirmed without qualification, and it is so ordered.⁶

CROCKETT, C. J., and TUCKETT, J. concur. CALLISTER, J., concurs in the opinion of HENRIOD, J., and in the views expressed in footnote 6.

1 . Title 7-1-26, U.O.A.1953 (as amended, 7-1-26(4), Pocket Supp. Vol. I, pp. 279-80).

2 . Title 7-1-26, U.O.A.1953, as amended.

3 . 1 Fletcher, Cyc. Corp. 240-41, “ * * * courts will disregard the corporation or its entity and look at the substance and reality of the matter.”

4 . This circumstance in and of itself is not controlling. Our statutes do not prohibit such an arrangement. Braeburn Securities Corporation v. Smith, 15 Ill.2d 55, 153 N.E.2d 806 (1958), cited by appellant, is not in point, since a statute there interdicted certain interlocking banking corporation stock ownership.

5 . 4 Miehie, Banks & Banking, pp. 96-7: “The powers and duties of a cashier, in virtue of his office, are much greater than the president’s, etc. * * * ”

6 .Without soliciting any support for my position, I am inclined to the view that the protestant should have the right, on cross-examination, to test the evidence admitted in confidence, irrespective of what we think it was and no matter how trivial it might appear, else the door is opened for an administrative agency to be selective in admitting evidence without a correlative right of confrontation. If the evidence is trivial or thought not to be dispositive or substantial, it should not be received at all. If received at all, it should be subject to the same rule that I always have thought universally applied to admitted evidence: a right to test its probative value on cross-examination. Anent this observation, see the language of Atchison T. & S. F. Ry. v. Commerce Comm., 335 Ill. 624, 167 N.E. 831, 837, quoted with approval in our own decision in Los Angeles & S. L. R. v. P. U. C., 81 Utah 286, at 297, 17 P.2d 287, at 291 (1932), as follows: “The commissioners cannot act on their own information. Their findings must be based on evidence presented in the ease, with an opportunity to all parties to know of the evidence to be submitted or considered, to cross-examine witnesses, to inspect documents and to offer evidence in explanation or rebuttal, and nothing can be treated as evidence which is not introduced as such.”