Appeal of Concerned Corporators of the Portsmouth Savings Bank

Per curiam. This appeal is brought by twelve corporators of the Portsmouth Savings Bank (Portsmouth or Bank) pursuant to RSA chapter 541. They seek an order vacating a decision of the board of trust company incorporation (board or BTCI) granting Portsmouth’s application for conversion from a mutual savings bank to a guaranty (stock) form of organization and for its simultaneous acquisition by Amoskeag Bank Shares, Inc. (Amoskeag), a bank holding company. We hold that, as a matter of law, the Bank trustees’ plan of conversion-acquisition is unfair to the depositors of the Bank. Accordingly, we vacate the board’s order. I. The Application and The Board’s Decision Because this case is complex, it will be helpful to discuss its development in some detail. A. The Proposed Transaction The Bank is at present a mutual savings bank and, as such, has no capital stock. It is not a member of the Federal Reserve System, but its deposits are insured by the. Federal Deposit Insurance Corporation (FDIC). Upon conversion to a guaranty form of organization, it will issue one class of capital stock; that is, common stock with a par value of one dollar per share. In total, 100,000 shares will be issued. — 186 — All of these shares ultimately will be purchased by Amoskeag. Further, Amoskeag will offer shares of its common stock in a two-phased offering: first, a subscription offering to eligible depositors of the Bank and to its corporators, trustees, officers and employees; and second, a public offering. Eighty percent of the proceeds of the sale of Amoskeag stock will then be used to purchase all of the authorized capital stock of the Bank. The rest of the proceeds will be retained by Amoskeag for its general corporate purposes. The resulting corporate relationship will be that of a wholly-owned subsidiary and its holding company parent. B. The Board of Trust Company Incorporation’s Decision In its opinion issued on March 31, 1986, the board found that the application complied with all applicable statutes and regulations, and further specifically found that the conversion plan was fair to Portsmouth’s depositors, see N.H. Admin. Code Tru 505.03 (hereafter the board’s regulations will be styled Tru _), in that it complied with the following legal requirements: “[I]t protects depositors’ accounts, establishes a liquidation account, and provides priority subscription rights in the stock of the acquiring holding company.” One member of the board, the State treasurer, agreed that the plan conformed to the regulations. However, in a separate concurrence, she expressed concern regarding whether the plan was substantively fair to Portsmouth’s depositors. The chairman of the board, Bank Commissioner A. Roland Roberge, dissented from the majority’s position, expressing his belief that the board had erred in a number of ways in finding that the plan of conversion was fair to the depositors. The central thesis of Chairman Roberge’s dissent was that the majority “limit[ed] the concept of fairness to merely the rigid application of the technical and legal requirements of the regulations.” According to the chairman, “[t]hat is a mechanical interpretation of fairness that can only be applied without an analysis of the facts and knowledge of the banking industry.” The dissent then pointed out four areas of unfairness the majority had overlooked. Stated briefly, Chairman Roberge believed the majority erred by: (1) “refusing to find that trustees of a mutual savings bank owe a fiduciary duty to the depositors[;]” (2) not considering the feasibility of a simple “stand-alone” conversion, without subsequent acquisition by Amoskeag; (3) allowing a conversion-acquisition which did not satisfy statutory obligations to depositors by “issuing voting trust certificates, shares of common stock, or any other value equivalent to their respective share of the Portsmouth surplus and net worth[;]” and (4) approving — 187 — a conversion of the depositors’ interest in the Bank’s surplus into an interest in a liquidation account, which, according to the chairman, was a diminution of the depositors’ rights. The chairman also pointed out that the Bank is now empowered to pay a percentage of profits to its depositors and that the conversion-acquisition frustrates the depositors’ reasonable anticipation of such payments. Pursuant to the provisions of RSA 541:3, the dissident corporators filed a motion for rehearing which was denied by order dated April 22, 1986. See RSA 541:5. In denying the corporators’ motion for rehearing, the board made the following points, inter alia: (1) Nothing in the charter requires the trustees to distribute profits; the discretion of the trustees to distribute profits has been limited by RSA 386:9, RSA 386-A:23, and Tru 502.06; and (2) the board’s rules do not require it to inquire into the existence of a fiduciary duty. On appeal, the petitioners raise two general issues. First, they argue that the board does not have jurisdiction to approve the proposed conversion-acquisition transaction. Second, they contend that the proposed plan is not fair to Portsmouth’s depositors. This general contention is then broken down into several separate arguments, more or less echoing the points discussed by Chairman Roberge’s dissent. In addition, they argue that implementation of the plan would result in a violation of the Bank’s charter. Put most simply, the thrust of the appellants’ argument is that, if the Bank is to convert, it should transact a stand-alone conversion. In response, Amoskeag and Portsmouth collectively argue that, because the petitioners have no concrete interest in the outcome of this litigation, they lack standing to maintain the action at all. On the merits, they argue that the board acted within the scope of its jurisdiction in approving the plan, that the board could not evaluate fiduciary obligations of the trustees, and that the plan is substantively fair to depositors because it preserves, through the setting up of a liquidation account, the interests of the depositors in Portsmouth’s net worth. They further contend that Portsmouth’s charter would not be violated by implementation of the plan and that failure to provide Portsmouth’s depositors with subscription rights in the pre-acquisition issuance of stock by Portsmouth does not render the proposed transaction unfair. The defendants argue also that, in any event, the charter has been superseded by modern statutory and regulatory law. We will consider each of these issues in the following order: first, whether the corporators have standing to conduct this litigation; second, whether the board had jurisdiction to approve the proposed — 188 — transaction; and, finally, if the board properly exercised jurisdiction over the matter, whether the plan is fair to depositors. II. Procedural Issues A. Standing to Sue Portsmouth and Amoskeag maintain as a procedural matter that the corporators lack standing to conduct this litigation because they have no stake in its outcome, citing Blanchard v. Railroad, 86 N.H. 263, 167 A. 158 (1933). Counsel for Portsmouth purported to waive the issue at oral argument, stating that he preferred that the court not decide this case on that basis, as he believed that the petitioners would simply commence suit again with depositors as parties. However, we observe that the transcript of the October 1, 1985 hearing before the board reveals that at least two of the corporators who testified at that hearing were also depositors of the Bank. Thus, at least some of the dissident corporators have a concrete interest in the outcome of this litigation within the meaning of RSA chapter 541, and therefore have standing to appeal. B. Jurisdiction The petitioners argue that the board had no jurisdiction to approve this proposed transaction because RSA 386:10, II limits the board’s authority to the evaluation of conversions only. Thus, authority to approve a conversion-acquisition is outside the scope of the board’s power. Further, it is argued, since the board can adopt rules regarding conversions only to the same extent as conversions are permitted by federal law, and since federal law requires bank members, including depositors, to approve a conversion-acquisition, then Portsmouth’s depositors must approve this plan also. The petitioners accordingly argue that because Tru 506.02 purports to allow conversion-acquisitions without depositor approval, it is in conflict with federal law and therefore invalid. The final jurisdictional argument raised by the petitioners involves RSA chapter 388, which deals with bank unions and consolidations. Under that statutory scheme, the board is excluded from reviewing such unions, and jurisdiction over them is vested in the banking commissioner and the superior court. Petitioners, therefore, argue that RSA chapter 388 governs this transaction. Portsmouth and Amoskeag argue, to the contrary, that the corporators’ reading of RSA 386:10, II is both too narrow and inconsistent with the legislative intent expressed in RSA 394-A:l to avoid disadvantaging State-chartered banks vis-a-vis their federal counterparts. They further argue that RSA chapter 388 applies only to — 189 — mergers and consolidations, not acquisitions, and is therefore irrelevant to this transaction. In addition, they argue that the board’s rules need not track the Federal Home Loan Bank Board’s (FHLBB) rules, but need only be comparable. In this instance, they claim, the conversion rules are substantially similar. Finally, the fact that, at the time of the proposal, the legislature had not responded to recent conversions by changing the statutory process for conversion indicates to Portsmouth and Amoskeag that their actions conform to the legislature’s intent. The 1986 revision of RSA 386:10, II that requires depositor approval of a conversion with simultaneous acquisition by an existing holding company does not apply to applications filed with the BTCI before July 19, 1986; that is, the application before us was “grandfathered.” We begin by setting forth the relevant enabling statute under which the contested rules were promulgated. RSA 386:10, II provides that “[notwithstanding any other provision of law to the contrary, the board of trust company incorporation may adopt rules pursuant to RSA 541-A permitting any mutual savings bank to convert to stock form in the same manner, to the same extent and with comparable limitations as federal savings and loan associations operating within this state are permitted under rules of the Federal Home Loan Bank Board.” The relevant State administrative rules are contained in Tru chapter 500, and we describe them briefly. The regulatory scheme adopted by the board sets out four general requirements governing conversion applications: First, a conversion plan must comply with the board’s rules; second, the conversion must not result in a diminution of reserves and net worth; third, the conversion must not trigger a taxable reorganization; and, finally, accounts in the converted bank must be insured by the FDIC. See Tru 502.01. The next two rules, Tru 502.02 and 502.03, set out required and optional provisions, respectively, of a conversion plan. Tru 502.05 mandates the creation of a liquidation account “in an amount equal to the net worth of the converting savings bank set forth in its latest statement of financial condition contained in the final prospectus or offering circular[,]” for the benefit of eligible account holders, who are defined to include any person who holds a qualifying deposit under Tru 502.04, and supplemental eligible account holders, as defined in Tru 502.01(y). The interest of each such account holder is styled an “inchoate interest.” Tru 502.05(b). — 190 — The liquidation account rule gives these account holders an interest superior to the holders of capital stock. Tru 505.01 describes the required contents of the application for conversion. After an application is filed and public notice thereof is given, see Tru 505.02, the board reviews the complete application and, if the plan is found to be fair to the depositors and if deposits will remain insured after the conversion, approves the application. See Tru 505.03. Then, the approved plan must be submitted to a special meeting of the bank’s corporators, after due notice is given to them. Approval requires “a majority vote of the total number of votes eligible to be cast by the corporators on the matter.” Tru 505.04(d). When the resulting affirmative resolution is submitted to the bank commissioner, the board certifies the amended articles of agreement or charter, after which a certified copy is filed with the secretary of state, who records them and issues a certificate of amended incorporation. Tru 506.02 sets out the requirements for the conversion and acquisition of a savings bank by an existing holding company: “In such a transaction the eligible account holders, supplemental eligible account holders and other persons having subscription rights, with respect to the capital stock of the converting savings bank shall receive, without payment, subscription rights under Tru 502.02(d) and (f) and Tru 502.03(c) and (d) from the holding company to purchase its equity securities in lieu of all the capital stock of the converting savings bank, and all of the equity securities of the holding company not purchased by holders of subscription rights shall be offered and sold in a public offering or a direct community offering as provided in Tru 502.02(g). The total price at which the securities of the holding company shall be sold shall be based on an independent valuation, as provided in Tru 504.06. Unless clearly inapplicable, all of the requirements of chapter 500 shall apply to a conversion under Tru 506.02.” The corresponding rules promulgated by the FHLBB appear at 12 C.F.R. § 563b (1986). Those rules include a provision governing conversions involving an acquisition by an existing bank holding company. See 12 C.F.R. § 563b. 10(a) (1986). The parallel board regulation, Tru 506.02, is not exactly identical to the federal rule, but closely tracks it. In view of the express intent of the legislature to allow conversions to the extent allowed by federal law, we hold that — 191 — insofar as petitioners rely on any inherent limitation in RSA 386:10, II, their argument is without merit. The second jurisdictional argument presented by the petitioners is based on a mistaken view of the implications of federal law. It is true that 12 C.F.R. § 563b.6(a) (1986) requires submission of a plan of conversion to the members of the converting bank, who must approve it by a majority vote. The petitioners assert that federal law defines members to include depositors and that, since Tru 505.04 does not require depositor approval, it is contrary to federal law and therefore invalid. However, the incorrectness of this view of the law becomes evident upon a reading of 12 C.F.R. § 563b.2(a)(21) (1986), which defines member as “any person qualifying as a member of an insured institution pursuant to its charter or bylaws[,]” and see also 12 C.F.R. § 563b.2(a)(5) (1986) (defining association members as those eligible to vote at the meeting at which the conversion will be voted upon). Portsmouth’s charter contemplates that the members of the Bank are its corporators, and not its depositors. See Charter of Portsmouth Savings Bank § 5, Laws 1823, 27:5. Article VII of the Revised By-Laws states that: “[t]he powers of the Corporation are vested, by statute, in the Board of Corporators and their duties and responsibilities are more specifically set forth in these By-Laws. The management of the Corporation is vested in the Board of Trustees and the day-to-day operations are delegated to the duly elected Officers of the Bank, subject however, to the direction and control of The Full Board of Trustees, as provided in these By-Laws.” Revised By-Laws of the Portsmouth Savings Bank art. VII (February 1, 1984); see also id., at art. I. Thus, since federal law refers one back to the Bank’s charter and by-laws, and since in this case those documents do not appear to include depositors as members of the Bank, then the lack of a requirement of depositor approval in this instance does not render the procedure inconsistent with federal law. RSA chapter 388 refers to “consolidation” or “union” of banks. The petitioners argue that conversion-acquisition plans should be governed by that chapter. However, Portsmouth and Amoskeag maintain that RSA 386:10, II and regulations promulgated thereunder govern this transaction. We agree with the latter assertion. Consolidations are not identical to acquisitions. In a consolidation under RSA chapter 388, one of the institutions may not survive, whereas in an acquisition both entities generally continue to — 192 — exist. In this instance, Portsmouth will remain in existence as, essentially, a wholly-owned subsidiary of Amoskeag, a bank holding company organized under RSA chapter 293-A (Supp. 1985). See 15 W. Fletcher, Cyclopedia of the Law of Private Corporations § 7046, at 31 (1983 rev. ed.). Therefore, RSA 386:10, II governs this transaction, and the conversion-acquisition rules were validly promulgated thereunder by the board. III. Fairness The focal dispute in this case is whether the conversion-acquisition is fair to the depositors. Portsmouth’s trustees contend that the board correctly ruled that the plan is fair if it conforms to the prescriptions of Tru 506.02 and Tru 502.05. The corporators appeal on the ground that substantive fairness is an additional, independent requirement of the board’s rules. The appellants argue that fairness in the present case cannot exist apart from Portsmouth’s charter and the fiduciary duty of the trustees to Portsmouth’s depositors. The trustees believe the depositors’ rights are limited to their deposits and an inchoate interest in the Bank’s surplus, with that interest vesting only in the event of a complete solvent liquidation of the Bank. On the other hand, the petitioners base their claim on section 2 of the charter, which' states in pertinent part that “the net income and profits of all deposits of money received by [Portsmouth] shall be paid out and distributed in just proportions, among the several persons by or for whom the said deposits shall have been made . . . .” Laws 1823, 27:2. We will return to this text for a much closer scrutiny, but for now it suffices to say that the petitioners interpret it to mean the depositors have a vested right to distributions from surplus at the time of the conversion. If the petitioners are correct, then the proposed conversion-acquisition unfairly reduces the depositors’ rights. Before we address these arguments, we emphasize that the reach of this case is narrowly limited by two unusual circumstances. First, the legislature has recently amended RSA 386:10, II, so that all conversion-acquisitions of the type before us that are filed on or after July 19, 1986, require ratification by the depositors of the converting bank. Secondly, other than Portsmouth Savings Bank there are only two remaining mutual savings banks in New Hampshire chartered prior to 1842, when the legislature enacted a general incorporation law reserving to the State the power to alter or repeal corporate charters. RS 146:26 (1842). See Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518, 712 (1819) (Story, J., concurring). — 193 — The antiquity of a party’s rights cannot diminish their strength, but the overlays of history may obscure their ancient foundations. In the present case, Portsmouth’s charter of 1823, which was a special act of incorporation by the legislature, Laws 1823, ch. 27, lies beneath a complex structure of twentieth century State and federal banking regulation. For the reasons which follow, we conclude that the depositors’ rights are supported by the nineteenth century foundation rather than encompassed by the twentieth century superstructure. We hold that the trustees’ plan of conversion-acquisition is unfair to the depositors, as a matter of law. The petitioners argued below that the depositors are entitled to subscription rights in Portsmouth stock as part of a stand-alone conversion. We, however, do not specify what course the Bank’s trustees may, or even must, take in the event of a stand-alone conversion; rather, we merely vacate the board’s approval of the conversion-acquisition, as particularly requested by the petitioners. A. The Depositors’ Charter Rights To The Surplus Three analytical theorems underlay the board’s decision. In its Memorandum Opinion and Order of March 31, 1986, the board posited first that its rules “protect the interests of depositors in a manner consistent with judicial decisions [and] RSA 386-B:l, III[.]” Thus, secondly, the board limited its analysis of fairness solely to a review of the application for conformity to the board’s own rules. The opinion states, at page 8: ' “For the foregoing reasons, the board decides, as a matter of law, that a plan of conversion is fair to depositors if it protects depositors’ accounts, establishes a liquidation account, and provides priority subscription rights in the stock of the acquiring holding company. The board finds that Portsmouth Savings Bank’s plan of conversion contains such provisions. Consequently, the board determines the plan of conversion to be fair to depositors.” Finally, in denying the petitioners’ motion for rehearing, the board stated that nothing in the charter “requires the bank’s trustees to distribute profits to depositors[.]” (Emphasis in the original.) As to the board’s decision to limit its review of the application to whether the application conformed to the regulations, we start from the constitutional principle that the board may, in its wisdom, encourage conversions of mutual banks by adopting regulations such as Tru 506.02, but the regulatory scheme cannot supplant the depositors’ charter rights. U.S. Const. art. I, § 10 (“No state — 194 — shall... pass any ... law impairing the obligation of contracts....”); N.H. Const. pt. I, art. 23 (prohibiting retrospective laws). The language of part I, article 23 is crystal clear: “Retrospective laws are highly injurious, oppressive, and unjust.” We look next at the regulations, attempting to read them in a way that does not contradict constitutional principles. See White v. Lee, 124 N.H. 69, 74, 470 A.2d 849, 852 (1983). In this light, the last sentence of Tru 506.02 is striking: “Unless clearly inapplicable, all of the requirements of Chapter 500 shall apply to a conversion under Tru 506.02.” Under Tru 505.03, the board must determine whether the plan is fair to the depositors. Thus, fairness is not determined by Tru 506.02, but rather supersedes it. Put another way, the fact that Portsmouth’s plan corresponds to each of the listed requirements of Tru 506.02 does not by itself make the plan fair to the depositors. The Bank’s duties to its depositors are determined by its charter. Portsmouth’s charter does not use the words “distribution” or “surplus.” Our Brother Souter reasons from this absence of an express grant that the source of a right to distributions must be judicial interpretation. This, of course, is correct, but he overlooks that we can interpret the charter both by reference to judicial precedent and by construing the actual text of the charter. Because the board and Justice Souter have emphasized precedent so strongly, we will look there first. The board ruled that the requirements of Tru 506.02 conform to judicial decision. This ruling derived primarily from In re City Savings Bank, 113 N.H. 378, 309 A.2d 31 (1973) and York v. Federal Home Loan Bank Bd., 624 F.2d 495, 499-500 (4th Cir.), cert. denied, 449 U.S. 1043 (1980). Put simply, both of these cases hold that depositors’ ownership of mutual savings banks is only theoretical. However, York and other federal case authority prior to Paulsen v. Commissioner, 469 U.S. 131, 138 (1985), must be viewed skeptically in light of Paulsen’s statement that depositors in a federally chartered mutual savings bank are the equitable owners of the bank’s surplus, even though that equitable ownership has minimal value for tax purposes. We will return to City Savings Bank, but first we address the board’s reference to RSA 386-B:1, III (Supp. 1986). That section defines the depositors’ “proprietary interests” as “proportionate inchoate interests ... in the net worth of [the mutual savings] bank, such interests maturing and being realized upon the bank’s liquidation . . . [,]” which is analogous to Tru 502.05(b). Nonetheless, RSA chapter 386-B (Supp. 1986) concerns a different process than the — 195 — process contemplated by the plan before us; namely, reorganization of mutual savings banks into mutual holding companies. In any event, what applies to the board applies as well to the legislature: RSA 386-B:l, III (Supp. 1986) cannot extinguish charter rights. In City Savings Bank supra, Chief Justice Kenison framed the issue: “The issue presented on this appeal is whether dissenting depositors in a mutual savings bank are constitutionally entitled to a right of appraisal and cash payment option for their share of the bank’s surplus.” 113 N.H. at 379, 309 A.2d at 31. The transaction in City Savings Bank was a conversion-merger in which the mutual savings bank deposits were transferred to a newly created trust company, and each depositor received stock in the trust company proportionate to his or her share of the converting mutual’s surplus. Thus, the issue was not whether the depositors owned the bank’s surplus, for the court’s phrasing of the issue assumed they did. Instead, the issue was whether the converting bank had to treat dissenting depositors as a stock corporation would have to treat dissenting shareholders, so that dissenting depositors would have cash appraisal rights. We observed that: “the charter of City Savings provides in section 6 that ‘all profits arising from said business shall be equitably divided among the depositors at such times and in such manner as the Trustees may determine. . . .’ (emphasis added). The trustees have determined in this case to divide the profits via a distribution of stock of the new bank.” 113 N.H. at 382-83, 309 A.2d at 33. In rejecting the depositors’ argument, we discerned a historical divergence of mutual savings depositors from commercial bank stockholders. We were of the view that a depositor’s ownership of a modern mutual savings bank had diminished to a “technical fiction,” 113 N.H. at 381, 309 A.2d at 32 (quoting Kreider, Who Owns the Mutuals ? Proposals for Reform of Membership Rights in Mutual Insurance and Banking Companies, 41 U. ClN. L. Rev. 275, 276 (1972)). We held that, given the trustees’ discretion and the reduced power of the modern depositor, there was no reason why the charter should not control, as it did in other instances. See Bank Commissioners v. Banking Co., 74 N.H. 292, 67 A. 583 (1907). The Portsmouth trustees urge that City Savings Bank controls the present case. We disagree. Whether depositors are entitled to a — 196 — statutorily-created right of cash appraisal upon statutory merger or other major change in corporate identity, see RSA 293-A:81 (Supp. 1986); Perkins v. Company, 90 N.H. 534, 540, 13 A.2d 475, 477 (1940) (on rehearing), is a far different question than whether depositors are entitled to a charter-created right to distributions of surplus from a solvent, on-going bank. Indeed, City Savings Bank indicates that the depositors in that case did have a right to distribution of the surplus', but held that their right was adequately protected by the ratable stock transfer. It is clear that if depositors were entitled to a cash payment, a converting bank would risk exhaustion of its surplus. City Savings Bank noted a bank commissioner’s report to that effect. What is striking about that report is that it treats the depositor as an “owner-depositor,” 113 N.H. at 382, 309 A.2d at 33, and that the relief requested in the Portsmouth case does not involve any risk of depletion of Portsmouth’s surplus. Thus, City Savings Bank is not on point. For present purposes, the significance of City Savings Bank lies not in its holding, but in its historical analysis. The crux of the historical analysis was: “Since the capital of the bank originated with the depositors, it was only logical and equitable that surplus earnings should accrue to their benefit and be distributed to them upon the bank’s liquidation. This is a far cry from the banking situation which obtains today, where mutual savings banks are generally financially stable and deposits are federally insured. Having no voice in the management of the affairs of the bank, a depositor today in a mutual savings bank is an ‘owner’ of the bank and its surplus more in theory than in reality; in most respects, his ‘“ownership” is only a technical fiction.’ Kreider, Who Owns the Mutuals ? Proposals for Reform of Membership Rights in Mutual Insurance and Banking Companies, 41 U. Cin. L. Rev. 275, 276 (1972). As stated by the bank commissioner in his report to the superior court: ‘The depositor in the liquidation of a mutual savings bank receives a share of the surplus [which] is commonly called a “windfall.” Receiving the “windfall” is something the depositor neither earned or bargained for.’ ” 113 N.H. at 381, 309 A.2d at 32. At first glance, this historical analysis appears to bolster the trustees’ position. However, the analysis is inapplicable to the present case in several ways. Thus, without — 197 — disturbing the holding in City Savings Bank, we do not find its reasoning dispositive in the present case. It does not require an elaborate historical recitation to show that depositors in mutual savings banks are not like shareholders for the purpose of possessing appraisal rights. First, of course, by definition, mutual savings banks have no stock. Second, statutory appraisal rights recognize that minority shareholders can be oppressed by the results of a shareholder vote. Appraisal rights are tied to a management right to direct the ultimate disposition of one’s property, not just to an ownership right; but mutual savings bank depositors, prior to July 19, 1986, had no voting power to determine any of their bank’s affairs. Finally, we point out that denying that depositors are shareholders does not deny that depositors are owners. The fact that modern depositors have no voice in management is irrelevant to whether the depositors’ ownership has become a technical fiction, for depositors in mutual savings banks, including Portsmouth, never had any control over the management of the bank. See Androscoggin County Savings Bank v. Campbell, 282 A.2d 858, 860 (Me. 1971); Hannon v. Williams, 34 N.J. Eq. (7 Stew.) 255, 258, 38 Am. Rep. 378, 379-80 (1881). Second, the fact that modern deposits are federally insured has had no effect on distributions upon liquidation. Nobody disputes that the depositors would receive cash shares of the surplus if Portsmouth were to liquidate while it was still solvent. Third, as we discuss in greater detail below in the fiduciary duty section of this opinion, the fact that deposits are safer now does nothing to change the trustees’ charter obligations to pay out the profits on deposits. Historically, depositors in a mutual savings bank, like depositors in a commercial savings bank, risked losing their deposits if the bank mismanaged them. See Cogswell v. Bank, 59 N.H. 43, 44 (1879). To protect depositors, the legislature required mutual savings banks to set aside part of the profits as a guaranty fund of at least five percent of the total deposits, and permitted trustees to increase the fund as they deemed proper for the best interests of the depositors. RSA 386:9. However, with FDIC protection, a large guaranty fund is no longer necessary. The question, then, is what to do with the profit; that is, whether to reinvest it or distribute it. We take note of the historical fact that, in the nineteenth century and early twentieth century, surplus earnings of mutual savings banks did more than accrue — they were paid out to depositors. For example, the New Hampshire Savings Bank distributed a “special extra dividend” in 1929. 1929 Annual Report of the Board of Bank Commissioners 160 (hereinafter Annual Report). From 1872 to — 198 — 1909, the banking statutes required .savings banks to pay dividends from earnings. See G.L. 170:14 (1878) and P.S. 165:17 (1891); compare Laws 1909, 125:1. The 1909 statute made payment discretionary. However, savings banks continued to pay dividends from earnings. For example, in 1910, the Franklin Savings Bank paid a 3.5% dividend per the contract of deposit and a special supplementary dividend of 1.05% from earnings. 1910 Annual Report 61. The custom of paying depositors dividends from surplus also led savings banks to pay special dividends upon merging with another savings bank. See 1924 Annual Report 314 (such a dividend paid to the depositors of the Conway Savings Bank by the Carroll County Trust Company). Thus, to summarize our discussion of City Savings Bank, anything in that decision beyond the issue of cash payment.and appraisal rights is dictum. We would add that Justice Souter’s discovery that City Savings Bank concerned a liquidation and his plea for stare decisis do not change the situation. First, the fact that City Savings Bank assumed distribution on liquidation would say nothing about whether distribution is denied on other occasions. We do not lightly reject stare decisis, but that doctrine refers to the binding power of what one case says on future cases raising the same issue. Second, stare decisis does not refer to what is said in a case’s Reserved Case (now called a Notice of Appeal) or in the parties’ briefs, for few people outside the court and counsel of record read and rely on those materials. To answer, then, whether Portsmouth’s depositors own the Bank’s surplus, we need look only to the text of the charter, which defines the depositary relationship. Thus, we return to the charter. The charter has the force of a contract. See Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518, 627 (1819). The interpretation of a contract is a matter of law for this court to decide. Baker v. McCarthy, 122 N.H. 171, 174-75, 443 A.2d 138, 140 (1982). It is axiomatic that we give a contract the meaning intended by the parties when they wrote it. Thiem v. Thomas, 119 N.H. 598, 602, 406 A.2d 115, 118 (1979). Section 2 of Portsmouth’s charter provides in relevant part that “the net income and profits of all deposits of money received by said corporation shall be paid out and distributed in just proportions, among the several persons by or for whom the said deposits shall have been made Clearly this language is mandatory in nature, in view of the fact that in New Hampshire it is well established that the word “shall” acts as a command, in the absence of legislative history to the — 199 — contrary. Appeal of Concord Natural Gas Corp., 121 N.H. 685, 691, 433 A.2d 1291, 1295 (1981); cf. Gordon v. Public Service Co., 101 N.H. 372, 374-75, 143 A.2d 428, 430 (1958). Nor do we see any reason to construe this charter in favor of the Bank as against the depositors. “Ordinarily charters and agreements of association are drawn by interested persons who may be trusted to look out for themselves and there is no reason why the rules of construction should be modified in their favor.” 7A W. Fletcher, Cyclopedia of the Law of Private Corporations § 3645, at 281 (1978 rev. ed.). Furthermore, in 1823, when the legislature chartered the Portsmouth Savings Bank, the third person auxiliary usage of “shall” was a mandatory directive. At that time, the word “will,” except when used in the first person, merely implied futurity, rather than promise, determination, or threat. R. Nutting, A Practical Grammar of the English Language 52-53 (1828); W. Ske'at, An Etymological Dictionary of the English Language 544 (1882). The current popular usage of “shall” as a slightly affected expression of futurity, or as an exhortation rather than a command, with “will” used customarily to denote both futurity and volition, is a recent development. Compare The American Heritage Dictionary of the English Language 1189-90 (1969) with The New Century Dictionary 1682-83 (1943), which still retains the old definition. What then is the charter’s mandate? “The net income and profits . .. shall be paid out” (emphasis added). To whom shall it be paid? Here the charter says the “persons by or for whom the said deposits shall have been made.” What does this mean? We construe the terms of a contract according to the usage of its writers under the circumstances surrounding the formation of the contract. In 1823, mutual savings banks in New Hampshire and elsewhere existed by definition solely for the benefit of their depositors. If the depositors were not to receive reasonable payments from surplus, then someone else would, which of course contradicts the definitional premise. Therefore, we conclude that “income and profits” includes “surplus.” Justice Souter urges a distinction between current and past depositors. He believes that the charter refers only to persons by or for whom current deposits shall have been made. If we apply this interpretation literally, the Bank would have to maintain separate investments for each depositor, else each depositor would receive income derived from other deposits. That practice would be absurd. Investments are made on aggregate deposits. The only sensible way to read “persons by or for whom the said deposits shall have been — 200 — made” is that it means depositors as a group of record at any given time. The only logical alternative is that a withdrawing depositor may claim his or her share of the surplus, but this apparently has never been the practice of any mutual savings bank. In this light, the usage of the industry determines the meaning of the contract. In the absence of any contractual specification of when payments are to be made, we infer payment in reasonable amounts at reasonable intervals. The proposed plan does not preserve these charter rights. The plan transfers Portsmouth’s net worth, including the value of its surplus, to Amoskeag. The surplus is put into a liquidation account for the Portsmouth depositors. However the liquidation account is controlled by Amoskeag and will be distributed only upon liquidation. Thus, a vested right to distributions during the solvency of the Bank becomes an inchoate right that vests upon an unlikely contingency. Furthermore, the liquidation account is depletable. The experience of Amoskeag Savings Bank shows how drastically such an account can dissipate. Upon conversion, Amoskeag Savings Bank established a liquidation account equal to its depositors’ net worth of $54,680,000 as of November 30, 1982. However, twenty-five months later, on December 31, 1984, the liquidation account was only $27,116,000. See Amoskeag Registration Statement Form S-l, 8/16/85, at F-13. The subscription rights to Amoskeag stock, proposed pursuant to Tru 506.02, also fail to preserve the depositors’ rights in the surplus. The surplus is acquired by Amoskeag. If the Portsmouth depositors wish to retain their equity in it, they must purchase Amoskeag stock. The only right given by Tru 506.02 is a subscription right to purchase Amoskeag stock before it is offered to the public. The defendants have advanced two arguments against the continued force of the charter. First, they argue that, in actual modern banking custom, the depositor in a mutual savings bank is no different than the depositor in a commercial bank. They point out that State and federal statutes and regulations have blurred the difference between the various types of savings banks. Their second argument is that, even if the charter is constitutionally protected against subsequent State law, Portsmouth has brought itself under the legislature’s power by accepting the benefits of various general banking laws. We are not persuaded by either argument. The State law claims regarding interest payments of savings banks and regarding the authorization of the BTCI to adopt conversion policies modeled after the Federal Home Loan Bank Board regulations depend upon the success of the claim that Portsmouth — 201 — has informally surrendered its charter. Thus, we treat the surrender argument first. At the outset, we note that there is no statement in the Bank’s brief of what statutory benefits Portsmouth has accepted which were beyond the scope of its charter powers. We echo the sentiments of Hammons v. Watkins, 33 Ariz. 76, 85-86, 262 P. 616, 619 (1927), that merely continuing to do business as a Bank cannot constitute acceptance. However, the record shows two amendments to the charter, one expanding the power of the Bank to own real property necessary for the conduct of its affairs, and the other enabling it to pay its officers and employees. Neither of these in any way relates to the nature of the Bank’s relationship with its depositors. Without a clearer, stronger record or without persuasive authority, we will not tamper with section 2 of the charter on the basis of unrelated, isolated changes. As authority for the rule that a corporation surrenders its charter when it later accepts the benefits of general legislation, we are referred only to 7A W. Fletcher, Cyclopedia of the Law of Private Corporations § 3677 (1978 rev. ed.). Fletcher cites several cases, only two of which concern corporations chartered in a State that had no constitutional or statutory reserved power at the time the charter was granted: Golconda Mining Corp. v. Hecla Mining Co., 80 Wash. 2d 372, 494 P.2d 1365 (1972), and Louisville & Nashville Railroad Co. v. State ex rel. Gray, 154 Ala. 156, 45 So. 296 (1907). On this point, Golconda in turn cites a previous edition of Fletcher. More importantly, Golconda dealt with a corporation whose charter would have expired, but was given new life by the legislature which granted its application under a new general statute bestowing corporate immortality. Further, the company had metamorphosed into a new entity by merging with another company under the new corporations statute. The court’s holding was that “the renewal of the corporate existence constituted a new contract with the state and subjected the corporation to the laws in effect at the time of renewal.” Golconda, supra at 380, 494 P.2d at 1370. The Alabama case and a similar case in Utah, Brewer v. Pleasant Creek Irrigation Company, 18 Utah 2d 192, 417 P.2d 970 (1966), are based on State constitutional provisions conditioning the availability of statutory benefits to corporations chartered prior to the State’s reservation of power to amend or repeal corporate charters on the acceptance by those corporations of the State’s reserved power. Thus, Golconda is based on circumstances categorically different from ours, and Louisville & Nashville Railroad Co. is based on State — 202 — law which has no counterpart in New Hampshire. We have found no other authority on this point. Thus we come to the question of how federal regulation of banking affects the charter. Unlike State law, federal law is not affected by the Contract Clause. U.S. Const. art. I, § 10. The Supremacy Clause, U.S. Const. art. VI, makes it clear that federal law preempts the charter if the two are in conflict. Thus, if federal law prohibits mutual savings banks from paying their depositors dividends from surplus beyond a fixed interest rate ceiling applicable to all mutual savings banks, then the only rights Portsmouth depositors may enforce are the inchoate rights defined in the BTCI rules. Until 1966, the Federal Deposit Insurance Corporation was authorized to regulate the rates of interest or dividends payable on time and savings deposits by insured banks that were not members of the Federal Reserve System. However, those regulations were to “be consistent with the contractual obligations of such banks to their depositors.” See 12 U.S.C. § 264(v)(8) (1940), retained by 64 Stat. 893 (1950). No statute authorized the Federal Reserve Board to set interest rates on nonmember banks. In 1950, the FDIC promulgated interest rate ceilings for savings banks, but specifically exempted mutual savings banks. 12 C.F.R. § 329.0 (1950), see 15 Fed. Reg. 8,640 (Dec. 6, 1950). The first congressional authorization to regulate mutual savings bank dividends was enacted by section 3 of Pub. L. No. 89-597, 80 Stat. 824 (1966), now codified at 12 U.S.C. § 1828(g)(1) (1982). The FDIC’s power was not limited by contractual obligations of the mutual savings banks. Five days after the passage of Pub. L. No. 89-597, the FDIC added 12 C.F.R. § 329.7 (1966), limiting dividend rates payable by mutual savings banks, and compelling all insured nonmember mutual savings banks to modify their deposit contracts to conform to § 329.7. See 12 C.F.R. § 329.3(b) (1966). Thus, at the time Portsmouth applied for approval of its conversion-acquisition plan, its depositors’ contractual right to a direct distribution of surplus was preempted by federal regulation. Nonetheless, on March 31, 1980, Congress enacted the Depository Institutions Deregulation Act of 1980, codified at 12 U.S.C. §§ 3501-3524 (1982), which fixed an expiration date of March 31,1986, upon the authority of both the Federal Reserve Board and the FDIC to regulate interest rates and dividends. See 12 U.S.C. § 3506(b)(2), (3), (4), (5) (1982). Of course, with the federal law withdrawn, State law reemerges. The charter controls once again. In any event, RSA — 203 — 386:10, I, authorized savings banks to pay dividends, although, along with RSA 386:9, it limits the ability of banks to imperil the depositor by paying dividends which are not supported by an adequate guaranty fund. The trustees applied to the board on July 18, 1985. The board issued its opinion on March 31, 1986, the very day when 12 C.F.R. § 329.7 (1986) expired. The question for the board, then, was whether a right to participate in an inchoate liquidation account, even assuming that account to be non-depletable, is fair to depositors who are on the very cusp of regaining the enjoyment of contractual rights to distributions from surplus during the solvency of the Bank. We believe this can only be answered by stating that the plan was unfair. The foregoing analysis is sufficient basis to reverse the board. However, the depth of the plan’s unfairness is even more apparent upon consideration of the trustees’ fiduciary duty. We turn now to that issue. B. Fiduciary Duty The board believed the existence of a fiduciary duty was irrelevant “to the review criteria established by Tru 505.03, 502.01, and the remainder of Tru 500.” Memorandum Opinion and Order, appendix A. This analysis is too narrow because the question of fairness under Tru 505.03 depends by definition on the relationship between the parties. What fairness demands of a person charged with an ordinary duty of care is less than what fairness demands of one in whom a fiduciary trust has been reposed. A fiduciary has a “duty, created by his undertaking, to act primarily for another’s benefit in matters connected with such undertaking.” Black’s Law Dictionary 563 (fifth ed. 1979) (emphasis added). Black’s goes on to say that a fiduciary may not “prejudice the other except in the exercise of the utmost good faith and with the full knowledge and consent of that other, . . .” Id. at 564. It is not enough for one vested with such a duty merely to avoid fraud, or to protect the interests of his beneficiaries adequately within the technical letter of the law. The standard of care is a high one indeed, as Chief Judge Cardozo wrote: “Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the marketplace. Not honesty alone, but the punctilio of an honor the most sensitive, is — 204 — then the standard of behavior. As to this there has developed a tradition that is unbending and inveterate. Uncompromising rigidity has been the attitude of courts of equity when petitioned to undermine the rule of undivided loyalty by the ‘disintegrating erosion’ of particular exceptions. Only thus has the level of conduct for fiduciaries been kept at a level higher than that trodden by the crowd. It will not consciously be lowered by any judgment of this court.” Meinhard v. Salmon, 249 N.Y. 458, 464, 164 N.E. 545, 546 (1928) (quoting Wendt v. Fisher, 243 N.Y. 439, 444, 154 N.E. 303, 304 (1926)). We find a fiduciary relationship is required by the charter when the charter is read in light of Lash v. Cheshire County Savings Bank, Inc., 124 N.H. 435, 474 A.2d 980 (1984). In Lash we adopted a rule that “[a] fiduciary relation does not depend upon some technical relation created by, or defined in, law. It may exist under a variety of circumstances, and does exist in cases where there has been a special confidence reposed in one who, in equity and good conscience, is bound to act in good faith and with due regard to the interests of the one reposing the confidence.” Id. at 439, 474 A.2d at 982 (quoting Ford v. Guarantee Abstract & Title Co., 220 Kan. 244, 261, 553 P.2d 254, 267-68 (1976) (quoting Lindholm v. Nelson, 125 Kan. 223, 264 P. 50 (1928))). Section 2 of the Portsmouth charter reads in pertinent part: “And be it further enacted that the said corporation shall be capable of receiving from any person or persons disposed to enjoy the advantages of said Savings’ Bank any deposit, or deposits of money or other personal property, and to use, manage, and improve the same for the benefit and advantage of the person or persons by, or for whom the same shall be deposited respectively;....” This charter typifies the relationship between a depositor and the trustees of a mutual savings bank in the absence of 12 C.F.R. § 329.7 (1986). The depositor entrusts funds to the bank. The bank does not invest them for its own profit, but for the depositor’s benefit. See State v. National Banks, 75 N.H. 27, 30, 70 A. 542, 544 (1907). Currently, this relationship is embodied in the federal law definition of mutual savings banks: “a bank without capital stock transacting a — 205 — savings bank business, the net earnings of which inure wholly to the benefit of its depositors . . . .” 12 U.S.C. § 1813(f) (1982). It is also recognized by current encyclopedists: “[mutual savings bank] depositors are both creditors with respect .to their investments and owners with respect to all distributed earnings on investments. . ..” J. Norton and S. Whitley, Banking Law Manual § 1.03[3][b] (1986). This relationship does not depend on the size of the deposit. The greater wealth of modern depositors is irrelevant. Neither does it depend on the financial naiveté of the depositor. Although some mutual savings banks were started expressly for nineteenth-century widows, orphans, and others deemed incapable of managing their own finances, the duty of the trustees to improve the deposit need not arise from the depositor’s necessity. In any event, Portsmouth’s charter entitles any person to be a depositor. Furthermore, the duty to improve does not arise from the need to protect the deposit, so FDIC and statutory guaranty funds are also irrelevant. In short, the economic changes of this century do not affect the fundamental nature of the depositary relationship in a mutual savings bank. This is the conclusion reached by the Supreme Judicial Court of Maine in Androscoggin Savings Bank v. Campbell, 282 A.2d 858, 860-61 (Me. 1971); see also In re Dissolution of Springfield Savings Society, 12 Ohio App. 2d 120, 126, 231 N.E.2d 314, 318 (1966); Application of Howard Savings Institution of Newark, 32 N.J. 29, 39, 159 A.2d 113, 118-19 (1960); People v. Franklin Nat. Bank of Franklin Square, 305 N.Y. 453, 461, 113 N.E.2d 796, 799 (1953), rev’d on other grounds, 347 U.S. 373 (1954). That the trustees and officers of a savings bank owe fiduciary duties to depositors is beyond question. See RSA 384:5 (officers, directors, and trustees to take oath of good faith); State ex rel. Moore v. State Bank of Hallsville, 561 S.W.2d 722, 724-25 (Mo. Ct. App. 1978) (directors of a bank have a fiduciary relationship with depositors, for whom they are trustees and agents). Prior to the federal intervention into banking, our law was that mutual savings bank trustees owed a fiduciary duty. See, e.g., Cogswell v. Bank, 59 N.H. 43, 44 (1879); see also Alexiou v. Bridgeport-Peoples’ Savings Bank, 110 Conn. 397, 401, 148 A. 374, 375-76 (1930); In re Wilkins’ Will, 131 Misc. 188, 226 N.Y.S. 415 (1928); Barrett v. Bloomfield Savings Institution, 64 N.J. Eq. (19 Dick.) 425, 433, 54 A. 543, 546 (1903), aff’d, 66 N.J. Eq. (21 Dick.) 431, 57 A. 1131 (1904); Savings Institution v. Makin, 23 Me. 360 (1844). In the modern era of banking, too, this court has found a fiduciary relationship, albeit in a context different from that of our present case. Peterborough Sav — 206 — ings Bank v. King, 103 N.H. 206, 208, 168 A.2d 116, 117 (1961) (“directors of savings banks stand in the position of trustees as to their depositors . . .”). See also Devane v. Troy Savings Bank, 101 A.D.2d 634, 635, 475 N.Y.S.2d 540, 542 (1984) (in context of self-dealing, trustees of a savings bank are “bound by a high fiduciary duty”); Selective Builders v. Hudson City Savings Bank, 137 N.J. Super. 500, 509, 349 A.2d 564, 569 (1975); State v. Vars, 154 Conn. 255, 262-63, 224 A.2d 744, 748 (1966). Our discussion of the trustees’ fiduciary duty has been based on the charter, because the petitioners have built their case on the charter. However, we believe RSA 386:10, I, compels the same result. The statute has resurfaced with the repeal of federal regulation. It permits the trustees of mutual savings banks to pay dividends to their depositors and places no maximum on the dividends payable by mutual savings banks, such as Portsmouth, both that have a guaranty fund greater than five percent of their total deposits and whose total assets exceed their total deposits by at least five percent. The question, then, is whether the trustees of a financially healthy bank violate their fiduciary duty to the depositors when they permanently foreclose a new statutory right to dividends by transacting a conversion-acquisition in accordance with Tru 506.02. The prescribed manner of transacting conversion-acquisitions is in tension with the fiduciary obligation to protect the statutory rights to dividends in the reasonable exercise of the trustees’ discretion as fiduciaries. This tension, however, is resolved by the requirement in Tru 506.02 that the conversion conform to all the requirements of Tru chapter 500. Thus, the transaction must be fair to the depositors as per Tru 505.03. The fiduciary duty to protect statutory rights supersedes the prescribed manner of conversion. This statutory right undercuts the objection that our opinion exposes mutual savings banks — or at least the three chartered before 1842 — to crippling demands for the payment of dividends. The present State statutory scheme grants that right to depositors of every mutual savings bank far more effectively than anything in our reading of the charter does. We presume that if the legislature fears that the present statute unduly jeopardizes the financial health of mutual savings banks’ surpluses, it can revise RSA 386:10,1. Thus, in summary, even if we accept the applicants’ argument in their brief that the proposed plan protected the interests of depositors in a manner- consistent with the law, the plan nevertheless does not discharge the fiduciary duty of care owed by the trust — 207 — ees to their depositors. If mere compliance with the technical letter of the law were enough, fiduciary law would be just so much empty doctrine, devoid of any substance. It might be economically efficient for the bank to convert as planned, and in general it might be economically efficient for the BTCI to encourage such conversions. Nonetheless, the conversion violates the rights of Portsmouth depositors under their charter, which predates the State’s reservation of power to alter it, and which has survived the two decade interlude of federal regulation. Only by vacating the board’s order does this court discharge its traditional equitable obligation to maintain the conduct of those bound by fiduciary ties “at a level higher than that trodden by the crowd.” Meinhard v. Salmon, 249 N.Y. at 464, 164 N.E. at 546. Reversed. Thayer, J., did not sit; Nadeau, J., superior court justice, sat by special designation pursuant to RSA 490:3, and concurred specially; Brock, C.J., and Souter, J., dissented.