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Heritage Bank & Trust Co. v. Harris

OPINION FILED APRIL 29, 1985.

HERITAGE BANK AND TRUST COMPANY, PLAINTIFF-APPELLANT,

v.

WILLIAM C. HARRIS, ILLINOIS COMMISSIONER OF BANKS AND TRUST COMPANIES, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding.

JUSTICE O'CONNOR DELIVERED THE OPINION OF THE COURT:

Plaintiff Heritage Bank and Trust Company (Heritage), is an Illinois State Bank. It desires to sell its assets, subject to its liabilities, to Joliet Federal Savings and Loan Association (Joliet Federal), a federally chartered mutual savings and loan association, doing business in Illinois. The sale is subject to the approval of the defendant William C. Harris, Illinois Commissioner of Banks and Trust Companies (Commissioner). He will not approve the sale unless Joliet Federal is "doing a banking business" within the meaning of the Illinois Banking Act (the Act) and is a "bank" within the meaning of section 68 of the Act (Ill. Rev. Stat. 1983, ch. 17, par. 380). To secure such a judicial determination, Heritage filed a declaratory judgment proceeding. The parties filed cross-motions for summary judgment. After argument, the trial court granted summary judgment for the Commissioner. Plaintiff appeals.

Sections 2 and 68 of the Illinois Banking Act provide in pertinent part (Ill. Rev. Stat. 1983, ch. 17, pars. 302, 380):

"Sec. 2. General definitions. In this Act, unless the context otherwise requires,

`Bank' means any person doing a banking business whether subject to the laws of this or any other jurisdiction.

`National Bank' means a national banking association located in this State.

`Person' means an individual, corporation, partnership, joint venture, trust estate or unincorporated association.

`State Bank' means any banking corporation organized under or subject to this Act."

"Sec. 68. Voluntary Dissolution. A state bank may elect to dissolve voluntarily and wind up its affairs by the act of the bank in the following manner:

(1) The board of directors shall adopt a resolution recommending that the bank be dissolved voluntarily and directing that the question of such dissolution be submitted to a vote at a meeting of stockholders * * *.

(3) At such a meeting a vote of the stockholders entitled to vote thereat shall be taken on a resolution to dissolve voluntarily the bank, which shall require for its adoption the affirmative vote of the holders of at least two-thirds of the outstanding shares entitled to vote at such meeting, * * *.

(4) Upon the adoption of such resolution, a statement of intent to dissolve shall be executed in duplicate by the bank, by its president or a vice-president, and verified by him, and the corporate seal shall be thereto affixed, attested by its secretary or cashier which shall set forth:

(h) An executed copy of the contract, if any there be, with another bank, or with the Federal Deposit Insurance Corporation or with both by which another bank assumes all the liabilities of the dissolving state bank.

(6) Duplicate originals of the statement of intent to dissolve * * * shall be delivered to the Commissioner for his approval. If the Commissioner disapproves the dissolution, he shall state his objections and give an opportunity to the dissolving bank to amend its statements of intent to dissolve to obviate such objections.

(7) If the Commissioner finds that the statement of intent to dissolve conforms to the provisions of this Act when all fees and charges have been paid as in this Act prescribed, and * * * if there is a contract pursuant to subsection (4)(h), when the Commissioner has approved such contract as being in compliance with the provisions of this Act and not prejudicial to creditors, the Commissioner shall indorse upon each of such duplicate originals the word `Approved' and the month, day and year of his approval thereof."

Plaintiff's complaint in pertinent part alleged, and defendant admitted by answer:

As of March 31, 1984, Joliet Federal had total assets exceeding $500,000,000 and a ratio of capital to total assets of over 6.30%. It offers to consumers interest-bearing negotiable order-of-withdrawal (NOW) accounts and to commercial customers non-interest-bearing NOW accounts. These are the functional equivalents of personal and commercial checking accounts. It also offers savings accounts, takes other time deposits and buys and sells commercial paper and bills of exchange. It makes loans of money on collateral security, negotiates loans and is authorized to make secured and unsecured loans for commercial, corporate, business or agricultural purposes to the extent of 10% of its assets. It buys and sells negotiable securities issued by the government, State, national and municipal, and by other corporations. It is also authorized to perform trust services.

On February 23, 1984, plaintiff agreed to sell substantially all its assets, subject to substantially all its liabilities, to Joliet Federal. The acquisition is expressly subject to State and Federal regulatory approvals. Joliet Federal and Heritage intend to accomplish the acquisition through the voluntary dissolution of Heritage, the selling bank, under section 68 of the Illinois Banking Act. Section 68(4)(h) provides for the acquisition of the assets of a dissolving "state bank" and the assumption of its liabilities, by "another bank." Section 2 defines the term "bank" as "any person doing a banking business whether subject to the laws of this or any other jurisdiction."

The defendant Commissioner is charged with administering the provisions of the Act. Section 68 requires the Commissioner's approval of the transaction here sought. The Commissioner refuses to approve the transaction. He does not deny that Joliet Federal meets all the definitional requirements of the term "bank" in section 2 of the Act and is "doing a banking business," but believes, however, that the Illinois legislature, in drafting the Act, did not contemplate the assumption of a dissolving State bank's ...


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