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Security Sav. v. Comm'r of Sav. & Loan Ass'ns





APPEAL from the Circuit Court of Warren County; the Hon. SCOTT I. KLUKOS, Judge, presiding.


Rehearing denied November 26, 1979.

Plaintiff, Security Savings and Loan Association (hereinafter Security), commenced this action by filing a complaint in the circuit court of Warren County against defendants, Commissioner of Savings and Loan Association for the State of Illinois (hereinafter Commissioner) and Home Savings and Loan Association (hereinafter Home), seeking judicial review under the Administrative Review Act (Ill. Rev. Stat. 1977, ch. 110, par. 264 et seq.) of the Commissioner's approval of Home's application to change the location of its business office to Monmouth and maintain a facility in Galesburg. After briefing and argument, the trial court filed a memorandum opinion and order upholding the Commissioner's decision. On appeal, Security contends the decision of the court should be reversed as contrary to the manifest weight of the evidence and violative of the provisions against branching in the Illinois Savings and Loan Act (Ill. Rev. Stat. 1977, ch. 32, par. 709(b), (c)).

On June 3, 1977, Home filed with the Commissioner an application to relocate its business office to 122 West Boston Avenue, Monmouth, Illinois, and to maintain an existing facility at its present business office location at 50 East Main Street, Galesburg, Illinois. Objections to these applications were filed by Security on July 18, 1977, and on August 29, 1977, the Commissioner appointed a hearing officer and notified all parties of a hearing date for the purpose of receiving evidence as to the merits of the objections. On August 31, 1977, Security requested permission of the hearing officer to take the discovery deposition of Home's president, Richard Johnson, and the deposition was subsequently taken on September 17, 1977.

At the hearing of October 5, 1977, Security presented its objections. In broad outline, it contended that Home's proposed relocation was a "sham and a subterfuge" not based upon any actual intent to relocate, that no need could be demonstrated for another thrift institution in Monmouth, and that it would be unduly injured if Home's application were approved. As evidence of its first contention, our only concern in this appeal, Security offered excerpts from the deposition of Richard Johnson into evidence as party admissions. Home objected to their admission on the grounds that the offered statements did not constitute admissions and that the deponent's availability as a witness precluded their use. The hearing officer accepted a transcript of the testimony but reserved his ruling on the admissibility of the offered excerpts. Although requested to do so at the conclusion of the hearing, he did not rule on the admissibility question at that time.

On November 10, 1977, the hearing officer submitted his report to the Commissioner, recommending that Home's application be approved. In that report he found that the excerpts from the deposition were inadmissible into evidence. In his discussion of the issue he stated this procedure would be "unfair" and that the "proper procedure of questioning the witness at the hearing would have provided fairness while affording all parties due process." As the excluded excerpts contained the only evidence relating to the subterfuge issue, no evidence whatsoever was admitted in support of Security's contention and the hearing officer found that the relocation application was "not a subterfuge to avoid the anti-branch banking laws." At the conclusion of his discussion of this issue, he noted:

"The Commissioner is well aware of what transactions are transpiring here, and has thus seen fit to authorize and approve publication of notice of the relocation on March 31, 1977. This procedure is within the purview of Section 1-9(b) of the Illinois Savings and Loan Act."

On November 28, 1977, the Commissioner approved the applications.

Security thereafter noticed its intent to seek review under the Administrative Review Act and on December 28, 1977, filed its complaint. Pursuant to section 9(b) of the Act (Ill. Rev. Stat. 1977, ch. 110, par. 272(b)), the Commissioner filed the record of proceedings under review as his answer but did not include the excerpts of the Johnson discovery deposition as it was not admitted into evidence at the administrative hearing. Security thereafter attached and referred to the excerpts to its circuit court brief, and Home moved to strike these inclusions. The trial court granted Home's motion and denied Security's subsequent motion to vacate the denial on the grounds that the hearing officer's ruling of inadmissibility was procedurally and legally correct and therefore the inclusion of the excerpts as part of the record "is of no consequence." Accordingly, the court found no proof of irregularity or branch banking and upheld the Commissioner's decision.

Under the Illinois Savings and Loan Act, the Commissioner is empowered to "establish such regulations as may be reasonable or necessary to accomplish the purposes of this Act." (Ill. Rev. Stat. 1977, ch. 32, par. 841.2(b)(2).) Pursuant to this authority, the Commissioner has adopted a set of rules and regulations, article XIV of which details administrative hearing procedures. Section 16(d) of that article provides:

"All depositions and interrogatories taken pursuant to this Rule shall be for purposes of discovery only, except as herein provided. Such depositions and interrogatories may be used for purposes of impeachment and as admissions of the deposed or interrogated party. Upon application to the Hearing Officer either before or after the taking of such deposition or interrogatories and upon a showing that at the time of the hearing, the party deposed or interrogated will not be available to participate in the hearing because of death, age, sickness, infirmity, absence from the country or other exceptional circumstances, the Hearing Officer may order that the deposition or interrogatories be used as evidence in the hearing."

Under section 16(d) it is clear that depositions may be used as admissions of the deposed party. At issue is the manner in which they may be used. Section 20 of article XIV of the Commission's rules and regulations provide in pertinent part:

"(a) The Hearing Officer shall receive evidence which is admissible under the law of the rules of evidence of Illinois pertaining to civil actions. In addition, the Hearing Officer may receive material, relevant evidence, which would be relied upon by a reasonably prudent person in the conduct of serious affairs, which is reasonably reliable and reasonably necessary to resolution of the issue for which it is offered; provided that the rules relating to privileged communications and privileged topics shall be observed.

(c) When the admissibility of disputed evidence depends upon an arguable interpretation of substantive law, the Hearing ...

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