Simpson, Bank Commissioner v. Monette State Bank, 238 Ark. 314

Arthur G. Frankel, Special Associate Justice. The appellee, Monette State Bank, a domestic banking corporation, instituted suit for declaratory judgment to interpret Acts 190 of 1961 and 544 of 1963. The appellants are the State Bank Commissioner and the State Banking Board. Briefs were filed by the parties and amicus curiae and the case heard orally. The facts are clear and undisputed. During 1937, appellee was granted a domestic banking charter and commenced business in Monette.

Appellee was then given permission by the State Banking Board to open a teller’s window in Caraway under the authority of Act 191 of 1935 [Ark. Stat. Ann. § 67-319 (Repl. 1957)]. That Act contained the provision that “* * * No office shall be continued at any place after a legally chartered bank has actually commenced business at that place.” The General Assembly enacted Act 190 of 1961, now codified as Ark. Stat.

Ann. § 67-340, et seq, (Supp. 1963) for the expressed and obvious purpose of clarifying the legal status of a large number of teller’s windows that had been created and to furnish a comprehensive guide for the establishment of future windows and repealed Act 191 of. 1935.. In 1961 appellants issued a charter to the Caraway Bank authorizing the commencement of a new banking business in Caraway. After this litigation had been instituted the- General Assembly, in 1963, passed Act 544 which amended Sections 4 and 5 of Act 190 of 1961.

The question presented in this appeal is whether the teller’s window operated by appellee in Caraway can be required to close and terminate business. Relying on

Section 4 of Act 190 of 1961, appellee earnestly argues in its excellent brief that its Caraway window was ‘ ‘ grandfathered” from the closing requirement. This proposition cannot be sustained by that

Section [now § 67-343 (Supp. 1963)] which reads as follows: ‘ ‘ Every legally chartered banking instituiton, which, on or before the effective date of this act [§§ 67-340— 67-352], was engaged in operating, or had obtained a permit to operate, any banking facility, may continue to retain and operate same under the general banking laws of the State of Arkansas, except as provided in

section 8 [§ 67-348] hereof; and the requirements and restrictions set forth in this act, except as provided in said

section 8 [§ 67-347], shall not apply to any such banking facility which, on or before the effective date of this act, was established, engaged in operating, or had obtained permit to operate; but the provisions and restrictions set forth in this act, except as provided in said

section 8 [§ 67-347] shall be applicable only to those tellers windows which shall henceforth be established pursuant to the provisions of this act;”. Moreover, history of the legislation confirms a consistent attitude of the legislature to encourage organization and ownership of local banks by requiring a teller’s window to close when a bank is chartered in the community where only window services are furnished. Next, appellee forcefully contends that it possesses a vested right to continue the operation of its facility in Caraway.

To subcribe to such a theory, Act 191 of 1935 which initially permitted the opening of the window must be ignored. Of greater consequence, the fundamental rule of this jurisdiction that banking by corporation is only a privilege would necessarily be overruled. Appellee has failed to furnish any authority or reason to alter our many decisions. State Use Crawfordsville Special School District v. Huxtable, 191 Ark. 10, 12 S. W. 2d 1; Holland v. Nakdimen, 177 Ark. 920, 9 S. W. 2d 307. Appellee never possessed more than a conditional privilege which was constantly susceptible to immediate revocation.

Such legislation was within the proper sphere of inherent police power. As asserted by appellants, a conditional privilege cannot produce a vested right. Appellee also advanced the argument that the Acts in controversy are discriminatory since windows located in the same municipality as the parent bank (such as Little Bock banks) are not required to close when a new bank is chartered in the city. There is no merit in this. The Acts apply uniformly to all banking institutions.

The fact that the legislature makes a distinction between a locality that does not have full banking services and teller’s windows located within the municipality is not discriminatory but rather reasonable and necessary. It is proper to add that there is no question but that appellee has faithfully served its customers, but this fact is not material or decisive since the business that a window may transact is severely restricted. Ark. Stat. Ann. § 67-342 (Supp. 1963). This only points up the prefer-ability of encouragement of new local full service banks for vigorous and vital communities.

However, we construe Act 190 of 1961 to contain the same provision as Act 191 of 1935 pertaining to closing of a teller’s window. On this issue, Act 190 of 1961 is constitutional in all respects, and Act 544 of 1963 which only clarifies certain language is held to be constitutional and valid. There is no question but what the General Assembly could retroactively alter that provision by Act 544 of 1963, and so logically no detriment accrued by the subsequent passage of Act 544. In Holland v. Nakdimen, supra, it was stated: * * When Mrs.

Scott and-the bank made this contract they-"knew that the regulation and control of banks came under the internal police power of the State and that this contract must be subject to all laws then in force or which might thereafter be passed.” See, also, Leep v. St. Louis, IM&S Railway Company, 58 Ark. 407, 25 S. W. 75; Dover v. State, 165 Ark. 496, 265 S. W. 76; Shields v. Ohio, 95 U.S. 319. It is deemed imperative to note that the legislature by the Acts considered here have not set standards to close a bank, but merely to terminate the operation' of a teller’s window.

As noted previously, appellee has not suffered any inequity since the window from its inception ivas subject to closing. In vieAV of this decision, it becomes unnecessary to discuss or determine the admissibility of the testimony offered by appellants as to the intent of the legislature by enacting Act 190 to 1961. The permanent injunction is dissolved and the cause dismissed at the cost of appellee. George Rose Smith, J., concurs. Johnson, J, dissents. Holt, J, not participating.