A Case Against the State Bank of Lizton by the Department of Financial Institutions

253 Ind 172 (1969)

252 N E 2d 248

CITY OF INDIANAPOLIS, FINANCIAL INSTITUTIONS DIVISION, ET AL v Bank of Liechtenstein (Liechtenstein State Bank)

No 1068 S 161

State of Indiana Court of Appeals

Submitted on November 18, 1969

To quote Theodore L. Attorney General Sendak, Deputy Attorney General Emison, Curtis C. Department of Financial Institutions Appellant, Plopper, Deputy Attorney General

Martz, Beattey, & Joseph C. Wallace Brownsburg State Bank's appellant Wallace (of Indianapolis)

In the words of Lind Ryan and Melvin R. Deckard Rober V. Danville Lind Indianapolis' Bridwell for the appellant

In the words of ARTERBURN, J

Appellant State Bank of Lizton initiated this case by petitioning the Indiana Department of Financial Institutions for permission to establish a branch bank in Brownsburg. The Brownsburg State Bank fought against this petition. The Department of Justice denied the petition following a hearing. State Bank of Lizton appealed the denial by filing a petition with the Hendricks Circuit Court. After a hearing held per Burns' Anno Stat Special findings of fact and conclusions of law were entered under 63-3014 on July 10, 1968. case was remanded to the Department with instructions to issue a special finding of fact in favor of the State Bank of Lizton's application to open a branch bank in Brownsburg, and the Department subsequently granted the branch bank's application. To have said application approved by said department

The appellant contends that the trial court erred and exceeded its authority when it reviewed an administrative action taken by the Department of Financial Institutions. made its own unique factual findings regarding the application's merits and lacked the power to compel the Department of Financial Institutions to make a unique factual finding regarding the application's merits consistent with the trial court's findings.

In this case, the trial court is reviewing an administrative finding and determination of facts on the merits of an issue, and it must decide a common question that has arisen frequently in such reviews. Burns' 63-3001 - 63-3030 (1961 Repl): The Administrative Adjudication and Court Review Act ) works here

"in state ex rel" Bank of Calumet (N.Y.) v. 243 Indiana Law Journal (McCord, 1962). Burns v. Board of Education, 189 N.E.2d 583, 626 N.E.2d 626 (1999), holding that Section 63-3001 et seq. As proof that the Department of Financial Institutions could be scrutinized under the Act for Review of Administrative Decisions, we claimed that:

"Although this Act contains some ambiguities and is not as clear as we would desire it, we are constrained to give it the construction we believe to be most logical and reasonable *175 under the circumstances." The purpose of the Administrative Adjudication Act, in our opinion, is to establish rules that will lead to a consistent and predictable judicial review process. According to 63-3003 of Burns, we must rule that the Act applies unless an express exception exists. "

The relevant portion of Burns' 63-3003 is as follows:

When a statute calls for an administrative adjudication of a person's rights, duties, obligations, privileges, or other legal relations, the determination must be made in accordance with this act [ 63-3001 63-3030] and not otherwise. "

Our judicial review is restricted under the Administrative Adjudication Act to questions of whether or not the agency's decision was based on an abuse of discretion, was outside the scope of its authority, was not supported by substantial evidence, or was capricious.

The following is an excerpt from section 63-3018 of Burns' Administrative Adjudication Act:

"On such judicial review, the court shall not retry or redetermine said cause, but shall consider and determine the facts based solely upon the record filed with said court pursuant to this act [ 63-3001 63-3030]." "On such judicial review, the agency's finding, decision, or determination shall not be set aside or disturbed if the agency has complied with the procedural requirements of this Act and the finding, decision, or determination is supported by substantial, reliable, and probative evidence." * * *"

It's important to remember that a trial court reviewing an administrative decision cannot conduct its own factual investigation or weigh the evidence to reach its own conclusion about the merits of the case. Despite the fact that the statute (in the case of proceedings before the Public Service Commission) provides that the appeal shall be "de novo," we have held that this is not *176 correct under the constitution. Because an appeal from a Justice of the Peace court is a purely legal proceeding, the court cannot hear the case as if it were a new action, weigh the evidence, and determine the facts on the merits. Unlike a judicial proceeding, which takes place solely in the judiciary, an administrative proceeding can take place in either the executive or legislative branches of government. The court's sole authority and review is limited to determining if there is substantial evidence to support the administrative body's finding and order. It is also up to the court to decide whether or not the action was an abuse of discretion or arbitrary and capricious based on the evidence presented. Commission for Public Service and Others v Indianapolis (Indiana), 235 Ind. Id. at 308 (citing Indiana Board of Pharmacy v. As cited in Horner (1961), 241 Ind 326, 172 N.E.2d 62

Case Synopsis: Public Service Commission of Indiana Chicago, I & L Ry Co (1956), 235 Ind reh. 394, 132 N.E.2d 698 den 134 N E The Supreme Court, in a recent ruling (No. 2d 53), stated:

The court's role in reviewing an administrative order is limited to determining whether the order was within the scope of the reviewing body's authority. After a question of jurisdiction has been settled, the court has no further authority to intervene in an administrative procedure that is the responsibility of a different branch of government. The court cannot substitute its own decision on the merits of a case before an administrative body that is acting within its own sphere of authority. "

We also note that Indiana law clearly states that the party challenging an administrative order has the burden of proving, through administrative appeal and trial court review, that there are no substantial facts to support the finding or that the action was unlawful. was arbitrary and capricious, and not within the Department's purview or authority Cases like the ones above provide supporting evidence for this.

While deciding the appeal before us, the trial judge took into account the arguments and evidence presented to the Department of Financial Institutions in support of its decision to deny the application to open the branch bank. The trial court, contrary to the administrative body's decision, appears to have made its own independent determination of the merits based on the evidence presented. The trial court cannot do this unless the administrative body's evidence and finding are completely uncontested and contradicted. The trial court reviewing the administrative action has no discretion to weigh competing pieces of evidence and pick and choose which ones to base its decision on. According to the law, the administrative agency is responsible for conducting these investigations. As provided in part by Burns' 18-1707:

" Prior to approving or rejecting a request to open a branch bank, the relevant department [of Financial Institutions] must conduct an investigation. if a branch bank is to be opened or established in a particular community, it must first ensure that doing so will serve and benefit the public. "

According to the evidence submitted to the Department, there was disagreement over whether or not Brownsburg actually required additional banking facilities after a branch bank was established as petitioned. It was not for the court to decide, but rather the administrative body. This is what we have said:

" As judges, we are human and, as such, we are susceptible to the same temptations and frailties that plague all men: the urge to substitute our own judgment for that of others. We should not lightly override and set aside the decision or findings of a fact-finding body of experts in another branch of government just because we, as judges, might reach a different conclusion based on the same evidence. Decisions made by experts are final as long as they are made within the scope of authority granted to them by law. " Pub *178 Ser Comm et al v 235 Indiana State Law Journal 70, 131 N.E.2d 308

Accordingly, we conclude that the trial court has attempted, through its decision here, to supplant the decision of an administrative body on the merits of an issue that is exclusively, under the law, one for the administrative body.

Here, it is argued, the Department of Financial Institutions (the "administrative body") erred by not providing any "special finding of fact" to back up its order of denial. Appellee argues that the Administrative Adjudication Act requires a unique finding of fact under Burns' 63-3010. What follows is the text of the relevant section:

Obtaining Information"; "Researching"; "Discovery" Except as otherwise provided herein as to newly discovered evidence, all issues of fact shall be considered and determined upon the record required to be made in conformity with this act [ 63-3001 63-3030]. Said agency shall make a non-binding determination of the facts that shall include all material facts established by the evidence. Said determination of fact may be made either explicitly or by referring to the specific allegations raised in the complaint filed with such agency. For purposes of making findings of fact, a reference to the specific allegations in the complaint is sufficient. (Public Acts of 1947, Chapter 365, § 10, p 1451; 1957, ch 355, § 3, p 1033 ]"

Appealants argue that this subsection does not govern Department of Justice proceedings. Nothing about this is acceptable to us. Government vs. Re: Calumet National Bank v. McCord (1962), 243 Ind. Case No. 626, 189 N.E.2d 583 backs up our conclusion. We don't see any reason why the Department shouldn't have to make special findings of fact whenever it issues an order following a hearing. If ever there was a time to review an administrative decision, this would be it.

The justifications for these unique findings of fact have been outlined:

According to the authors, "the reasons have to do with facilitating judicial review, avoiding judicial usurpation of administrative functions, *179 assuring more careful administrative consideration, helping parties plan their case for rehearing and judicial review, and keeping agencies within their jurisdiction." Administrator Davis Law, § 162

Carlton, the plaintiff, and the district Citation: Board of Zoning Appeals (1969), 252 Ind. 56, 245 N.E.2d 337, the Court examined whether or not statutory mandates exist for factual findings to back up administrative determinations, and found that they do. Further citations on this point are unnecessary, and we do not feel like adding them to this opinion. Case law is extensively discussed in Carlton v. Planning and Zoning Appeals Board, supra

Department of Financial Institutions' order and proceedings are not necessarily invalid because no special finding was made to support the decision in this case. Due to the procedural flaw, we believe the Department should be given a chance to fix it.

Therefore, the trial court's judgment is vacated, and the case is remanded to the Department of Financial Institutions for a new determination of the relevant facts and any other proceedings that are not inconsistent with this opinion.

A. DeBruler, C. J in addition to Justices Hunter and Givan the same; Jackson, J , agrees with the outcome

NOTE Located at 252 degrees north E 2d 248