State ex rel. Banking Commission v. Citicorp Savings Industrial Bank

WEBB, Judge. G.S. 53-229 which became effective on 7 July 1984 while this case was on appeal to this Court provides in part: Notwithstanding any other provision of this Article or any other provision of the General Statutes of this State, no bank holding company or any other company may acquire or control any banking institution that: (1) Has offices located in this State; and (2) Is not a bank as defined in G.S. 53-226(1) of this Article. Provided, the provisions of G.S. 53-229 shall not apply to applications by any company which is chartered by the Congress of the United States and which application is pending before the Commissioner on July 7, 1984. G.S. 53-226(1) defines a bank as an institution that accepts demand deposits, which the proposed industrial bank could not do. It would be a banking institution which is not a bank as defined in G.S. 53-226(1). Citicorp’s parent corporation is not a corporation chartered by the Congress. The proviso clause does not apply to it. It is barred from owning a bank in this state if G.S. 53-229 applies to it. Citicorp argues that G.S. 53-229 applies prospectively and it is not barred from operating in this state. We do not believe the question of whether the statute applies prospectively or retroactively is determinative. Citicorp had not been given permission to operate an industrial bank at the time G.S. 53-229 became effective. Assuming the statute was intended to apply prospectively at the time of its effective date, Citicorp had the right to have the applicable law applied to it. It did not have a right that the law not be changed. When the law was changed so that Citicorp no [477] longer has the right to operate an industrial bank in this state it may not have its application approved. See Lee v. Penland-Bailey Co., 50 N.C. App. 498, 274 S.E. 2d 348 (1981) for a case which holds the prospective application of a statute can require remedial action for something that occurred before the adoption of the statute. Citicorp replies on Bolick v. American Barmag Corp., 306 N.C. 364, 293 S.E. 2d 415 (1982); Smith v. Mercer, 276 N.C. 329, 172 S.E. 2d 489 (1970) and Wilson v. Anderson, 232 N.C. 212, 59 S.E. 2d 836 (1950) and argues that at the time the application was filed it had a vested right to have the then applicable law applied which gave it the right to operate an industrial bank in this state. Wilson deals with intestate succession rights of adopted children. It holds that a change in the intestate succession act did not apply to persons adopted before the effective date of the change. We do not believe it is applicable to this case. Bolick and Smith involve tort claims. We believe there is a distinction between a vested tort claim and the right not to have a statute changed. A tort claim is a form of property right. The right to operate a bank is governed by statute. No one has the right for the General Assembly not to change a law. Citicorp did not have a vested right to operate a bank when G.S. 53-229 was adopted. Citicorp contends that if G.S. 53-229 does apply it is unconstitutional under Article I, sec. 8 of the Constitution of the United States which provides in part The congress shall have the power (3) To regulate commerce with foreign nations, and among the several states and among the indian tribes. The Commerce clause has been interpreted to limit the power of the states to erect barriers against interstate trade except as allowed by Congress. See Lewis v. BT Investment Managers, Inc., 447 U.S. 27, 64 L.Ed. 2d 702, 100 S.Ct. 2009 (1980). Citicorp, relying on Lewis, argues that although G.S. 53-229 is neutral on its face its purpose and practical effect is to keep out of state bank holding companies from acquiring or operating industrial banks in this state. Although the statute applies to [478] North Carolina bank holding companies Citicorp argues that it has no practical effect as to them because they can own full service banks. Citicorp says that for this reason the only purpose and effect of G.S. 53-229 is to exclude out of state bank holding companies from acquiring industrial banks in this state, which violates the commerce clause. We do not believe Lewis governs this case. In Lewis the State of Florida adopted a statute which prohibited out of state bank holding companies from owning or controlling a business furnishing investment advisory services to the general public. The United States Supreme Court held that any state interest that may be served was not sufficient under the commerce clause to justify prohibiting out of state bank holding companies from operating a business in Florida which an in state bank holding company is allowed to own and operate. The Court also held that Congress had not authorized the State to make this type of discrimination. In this case the General Assembly has proscribed the acquisition or control of an industrial bank by any company. This act does not discriminate against out of state bank holding companies. The General Assembly has the power to regulate the banking industry in this state. See Pue v. Hood, Com’r of Banks, 222 N.C. 310, 22 S.E. 2d 896 (1942). It has proscribed the acquisition or control of an industrial bank by any company, which it has the power to do. If out of state holding companies may be the only companies who want to own industrial banks in this state we do not believe this prevents the General Assembly from legislating as to this legitimate state interest. Nor do we believe, as Citicorp argues, that the fact that the Bankers Association may have supported the legislation makes it unconstitutional. Citicorp contends finally, based on In re Hospital, 282 N.C. 542, 193 S.E. 2d 729 (1973), that G.S. 53-229 violates Article I, Sections 19, 32, and 34 of the Constitution of North Carolina. In Hospital our Supreme Court held that those sections of the North Carolina Constitution were violated by the requirement of a certificate of need before a corporation could construct a hospital. Hospital did not mention Pue v. Hood, Com’r of Banks, supra. Whatever precedent Hospital may be for the regulation of other types of business we believe Pue is still the law as to the right of [479] the State of North Carolina to regulate the banking industry. Pue was not overruled by Hospital. We have held that Citicorp does not have the right to own or operate an industrial bank in this state. We do not pass on other assignments of error brought forward by the parties. For the reasons stated in this opinion we remand to the Superior Court for the purpose of dismissing Citicorp’s petition. Remanded. Judge Phillips concurs. Judge Parker concurs in the result.