County Federal Savings & Loan Ass'n v. Equitable Savings & Loan Ass'n

Finan, J., delivered the opinion of the Court. This case involves the application for a Maryland charter (Maryland Code (1966 Repl. Vol.), Art. 23, § 161M) by Equitable Savings and Loan Association, an unincorporated voluntary association (Old Equitable) with its main office and a branch in the District of Columbia, and a branch office already in existence in Wheaton, Montgomery County, Maryland. The application contemplated a plan whereby the savings and loan business (all assets and liabilities) of Old Equitable would be transferred to a new corporation which would be granted the charter and which would be known as Equitable Savings and Loan Association, Inc., a Maryland corporation (New Equitable).

Both Old Equitable and New Equitable are appellees and we shall refer to them hereafter in the opinion as Equitable. They proposed to establish the Wheaton office as their principal office and to retain the two District of Columbia offices as branches. A hearing on the charter application was held before the Board of Building, Savings and Loan Commissioners (Board). Code, Art. 23, § 161M (e).

Several associations intervened in the proceedings before the Board in opposition to the granting of the charter and extensive written and oral testimony was taken on two separate days. On March 6, 1969, the Board issued an “Opinion and Order” in which it recognized that the following issues were before it: “* * * first, whether the application for a Maryland Charter will be approved by this Board, second, whether the proposed transfer of assets and assumption of liabilities by the New Equitable from the Old Equitable will be permitted, and, third, if so, under what conditions, and, especially whether the New Equitable will be permitted to retain and to continue the two branches within the District of Columbia.” The Board found, as to the first question, that the “pub- ²⁴⁹ lie interest, convenience and advantage” would be served by permitting Equitable to obtain a Maryland charter. (Code, Art. 23, § 161M.) This was based upon a finding that Equitable is “fundamentally a Maryland organization seeking a Maryland charter and as such its savings and loan activity in Maryland should be subject to Maryland law.” The facts noted in the opinion as supporting this conclusion were that mortgage loans made by Equitable are being made almost exclusively on Maryland property, and that the Wheaton branch was growing rapidly in deposits while the main office in the District of Columbia was markedly declining and the Friendship office was remaining stable. These facts were developed during the hearing by Equitable to show the decline in Washington, D. C. operations and the growth of the association in Maryland and its increasing orientation towards Maryland.

On the second question as to whether the proposed transfer of assets to, and assumption of liabilities by, the Maryland chartered association would be approved, the Board held that this would be allowed if the newly formed association complied with Departmental requirements predicated on a complete examination of the operations of Equitable both in Maryland and Washington, D. C. The third question, regarding the continuation of the two branches within the District of Columbia, is the subject of this appeal. Applying the test set forth in Code, Art. 23, § 161V, with regard to the establishment of “Branch Offices',” the Board found “there has not been a showing that the public interest, convenience and advantage will be served by permitting the new association to continue indefinitely either its F Street office or its Friendship office. We do find that the evidence compels a continuance on a temporary basis.” (The office on F Street in the District of Columbia had been the principal office and the Friendship branch is also in the District, near the Maryland boundary line.) The conditions imposed upon Equitable by the Board as a prerequisite to the granting of the charter were: ²⁵⁰ compliance with the Maryland requirements as might be proposed after examination by the Maryland Department of Building, Savings and Loan Association prior to transfer of assets; the obtaining of insurance for accounts; retention of a general reserve fund; and the submission of a program satisfactory to the Board for phasing out its F Street and Friendship offices in the District of Columbia by July 1, 1972. After a re-hearing, and the presentation of additional testimony, the Board extended the time for phasing out the District of Columbia offices for an additional two years.

At the hearing before the Board the County Federal Savings and Loan Association, Citizens Building and Loan Association, Metropolitan Federal Savings and Loan Association, Laurel Building Association and Montgomery Federal Savings and Loan Association had all intervened and participated in the hearing. All of these associations, with the exception of Montgomery Federal, are parties to this appeal. It is of significance that, following the Board’s final order on June 12, 1969, no appeal was taken by the Intervenors. Equitable, however, waited until the last possible moment in which an appeal could be timely filed, and on the 32nd day following the order of the Board noted an appeal to the circuit court, still within the limit prescribed by the Rules, as the 30th day fell upon a Saturday.

Maryland Rule Bl, Rule B4 a and Rule 8. In the petition filed by Equitable with its appeal, as required by Rule B2 e, it cited as grounds for the appeal, “that the Board was in error in requiring the closing of the * * * two District of Columbia branch offices at a date certain and imposing other conditions in reference to the closing of said branch offices * * There having been no cross-appeal filed by the Intervenors (appellants here) before the Board, Equitable contends that the only issue preserved for review by the circuit court was that pertaining to the conditions imposed by the Board relative to the phasing out of the District of Columbia branch offices. Although an appeal from an order of the Board is heard de novo, Equitable contends that it is only a de novo ²⁵¹ review with regard to that issue or issues from which the appeal was taken. Appeals from orders of the Board to the Circuit Court of Baltimore City or a county circuit court are authorized by Code (1966 Repl.

Vol.), Art. 23, § 161H (d). Article 23, § 161H (e), entitled Judicial review, provides “The court to which the appeal is taken shall hear the matter de novo without a jury * * (Emphasis supplied.) The Intervenors before the Board, who are the appellants here, also intervened in the appeal taken from the Board to the Circuit Court for Montgomery County. They strenuously objected there, and again here on appeal, to the limitation which the lower court placed on the scope of the de novo appeal from the Board to the circuit court. It is their contention that they should have been allowed to have presented evidence and argued matters going to the merits of all issues resolved by the Board and in particular the issue regarding the granting of the Equitable charter in Maryland.

By a pre-trial order, Judge H. Ralph Miller, in the court below, limited the scope of appeal to the sole issue of the continuation of the branch offices as raised in the petition for appeal. In taking this action the lower court relied heavily upon the case of Bullitt v. Kentucky Dept. of Highways, 298 S.W.2d 290 (Ky. 1957), and Maryland Rules B1 through B12, with particular reference to Rule B2 (e) which requires every appellant, in appealing the decision of an administrative agency, to file a petition setting forth “the action appealed from, the error committed by the agency in taking such action, and the relief sought.” The Bullitt case, supra, involved a factual situation quite similar to that in the instant case. Although the Bullitt appeal arose out of eminent domain proceedings, the statutory provisions for appeal with trial de novo were similar to those in the instant case when Article 23, 161H (e) is read together with Rule B2. In both instances, the grounds for appeal are required to be specified in the petition on appeal.

The Kentucky Statute did, ²⁵² however, contain express language of limitation, limiting the appeal de novo to “questions which are raised in the original statements of the grounds of appeal * * Without regard to the statutory language, the Kentucky Court of Appeals reasoned that “[w]hile ‘trial de novo’ on appeal means a trial anew, it only requires a new trial as to the questions in issue and not a re-examination of matters concerning which there was no dispute. In re Littlefield, 61 Wash. 150 , 112 P. 234 [1910].” Bullitt, supra, at 292 . The lower court, in the case at bar, bolstered its determination that the scope of appeal would be limited to the issue raised by the petition of appeal by observing that the Maryland Legislature by Chapter 575 of the Laws of Maryland 1966 amended § 161H of Art. 23 to bring the appeal provisions into conformance with the Maryland Rules of Procedure (Rule B 2 e). The Legislature thereby removed all the procedural provisions in the statutory provision for appeal in favor of the requirements found in Rules B1 through B12.

In our opinion there is no doubt that Rules B1 through B12 are meant to control the procedure in this appeal from an administrative agency and we are satisfied that the provision in the statute authorizing the appeal from the Board (Code, Art. 23, § 161H) which provides for an appeal de novo, must be read in conjunction with Rules B1 through B12 and with particular reference to Rule B2 e, and should also be reconciled with the Administrative Procedure Act, Code (1965 Repl. Vol.), Art. 41, §§ 244 through 256. In the case of Baltimore City v. Hurlock, 113 Md. 674 , 78 A. 558 (1910), this Court recognized that the scope of a de novo appeal may be limited by a statute. Also, see Hensley v. Bethesda Metal Company, 230 Md. 556 , 188 A. 2d 290 (1963), an opinion written for the Court by Judge Hammond (now Chief Judge) regarding the exercise by the Court of Appeals of its constitutional grant of powers to “make rules and regulations to regulate and revise the practice and procedure in that Court, and in the other courts of this State which shall have the force of law until rescinded, changed or modified by the Court ²⁵³ of Appeals or otherwise by law.” Maryland Constitution, Article IY, § 18A.

In Hensley there is a specific discussion regarding appeals from an administrative agency which illustrates that the Maryland Rules of Procedure (in this instance Rule B 2 e) would apply despite a prior statute to the contrary and until a subsequent statute would repeal or modify the Rule. Hensley, supra, at 259-262 . Subsequent to the pre-trial order in the lower court, Daihl v. County Board of Appeals, 258 Md. 157 , 265 A. 2d 227 (1970), was decided by this Court. In Daihl we were presented with the problem of construing the provision of the Baltimore County Zoning Regulations which provided that appeals from the Zoning Commissioner shall be made to the County Board of Appeals, and which further provided by Section 501.3 of the Ordinance that * * * all decisions of the County Board of Appeals shall be made after notice and opportunity for hearing de novo upon the issues before said Board * * *.” In Daihl we stated: “We think that the context in which the term de novo is used in Section 501.6 and 501.3 (both quoted above) means that on appeal there shall be a de novo hearing on those issues which have been appealed and not on every matter covered in the application.

In this sense de novo means that the Board of Appeals may hear testimony and consider additional evidence pertaining to the issue or issues presented on appeal. See Vol. 2, The Law of Zoning and Planning, Rathkoff, ch. 65-30, § 7. The original nature of a de novo hearing with its quality of newness is in contradistinction to a review upon the record as exists where matters are heard on certiorari. 73 C.J.S. Public Administrative Bodies and Procedure, § 204.” 258 Md. 162 . * $ * “* * * we think the more sensible interpreta ²⁵⁴ tion of the meaning of the scope of a de novo hearing as used in relation to an appeal heard by the County Board of Appeals, from a decision of the Zoning Commissioner, is that it is restricted to the specific issue or issues resolved by the Commissioner from which an appeal has been taken. By exclusion, this may not encompass all issues which may have been resolved by the Commissioner in his decision, when more than one issue is involved.

We think it is consonant with the concept of appeal, that it be coextensive with those issues concerning which the moving party or parties feel aggrieved. We are also buttressed in our reasoning on this matter by the knowledge that such hearings are advei’say in nature and are ofttimes complicated. Furthermore, we are of the strong belief that an orderly procedural disposition of these matters requires specificity of the adverse ruling concerning which the aggrieved party seeks review.” 258 Md. 163 -164. In Daihl we further noted that the appeal was to be “de novo upon the issues” and that Webster’s New World Dictionary, (College Edition) defined issue as: * * a point, matter or question to be disputed or decided * * In the instant case the language of the statute provides that on appeal the court “shall hear the matter de novo.” (Emphasis supplied.) We think any distinction that can be made between the language of the ordinance in Daihl and the Statute in the instant case as between the word “matter” vis a vis the term “issues” is not one of substance when we consider the context in which the terms were used in Daihl and in the instant case.

In any event, a reading of the Statute (Article 23, § 161H (e)) in conjunction with Rule B2 e, which latter delineates the manner in which an appeal shall be taken from an administrative agency, leaves no doubt in our minds but that the appeal to the circuit court was limited in scope to the ²⁵⁵ specific issue embracing the continuance of the branches in the District of Columbia. While we have been discussing the limiting of the scope of the de novo appeal to the specific issues from which the appeal was taken vis a vis a plenary hearing on all matters de novo, there is yet another facet of the de novo appeal, as provided by Article 23, § 161H (e), which must be resolved. Does the appeal de novo preclude the circuit court from considering the record made before the Board, i.e., the transcript of the testimony and exhibits presented at the hearing before the Board, and conversely restrict the court’s consideration to the testimony and exhibits presented on the appeal? Judge Miller in the court below unquestionably thought he was restricted to the consideration of the evidence presented de novo and in circumscribing his scope of review stated: “Although the trial de novo has been limited by the pre-trial order, the court in this case is not dealing with a statute which requires a certiorari type review in which it is bound by the findings of the administrative agency if the facts presented were fairly debatable unless the Board’s ruling was arbitrary and against the weight of the evidence.

As to items raised in the petition for appeal this is a de novo trial, and while the court is cognizant of the decision of the Board this opinion and order is based on the evidence before the court and the stipulations of the parties contained in the pre-trial order.” We think Judge Miller was wrong in so restricting his range of deliberation, although, under the facts of this case, we believe it amounted to harmless error, as we shall hereafter explain. We have already stated that we are of the opinion that the provision for a de novo appeal found in Article 23, § 161H (e) should be read in conjunction with Maryland Rules B1 through B12, which Rules are grouped under the subtitle “Administrative ²⁵⁶ Agencies — Appeal From,” and the Administrative Procedure Act, Article 41, § 244 et seq. Certainly, Rule B7 which provides for the transmission of the record (which includes the transcript of the testimony before the agency) to the circuit court, is suggestive that a certiorari type of review is contemplated, nonetheless, it should be noted that Rule BIO provides that: “Additional evidence may be allowed when permitted by law.” Likewise, we observe that the Administrative Procedure Act, Article 41, § 255 (g) (6) and (7) provides that the lower court should reverse the agency or board if it finds that the decision of the agency or board was “against the weight of competent, material and substantial evidence in view of the entire record, as submitted by the agency and inchiding de novo evidence taken in open court; or unsupported by the entire record, as submitted by the agency and including de novo evidence taken in open court;* * *.” (Emphasis supplied.) The wording found in the Rules (B1 through B12) and in the Administrative Procedure Act (Section 255 (g) (6) and (7)) persuades us that the circuit court on appeal should, in reaching its judgment, take into consideration the evidence (the record) before the Board, together with the evidence presented at the de novo hearing. We think such a conclusion is also consonant with the legislative intent behind the enactment of the provision for a de novo appeal pursuant to Article 23, § 161H (e).

Certainly, such a holding may be harmonized with Rules B7 and BIO, and the Administrative Procedure Act, Article 41, § 255 (g) (6) and (7). 1 ²⁵⁷ We cannot accept the proposition that the appeal de novo contemplated by Article 23, § 161H (e), is to be considered in the sense of a new proceeding, which we believe to be the purest form of a de novo appeal. In this regard, we learn something from a comparison of the instant case with our opinion in Volz v. State Roads Commission, 221 Md. 209, 156 A. 2d 671 (1959), in which Judge Horney, writing for the Court discussed the meaning of a de novo hearing in an appeal taken from an award of the Board of Property Review, stating: “[Code (1957 Ed.) Art. 89B, § 18, provides in part] In cases where the appeal is sought by the property owner he shall so notify the [State Roads] Commission in writing and it shall be the duty of the Commission to prepare and file the condemnation case in the proper court, * * * and the case shall be heard de novo and as if there had been no healing before the board of property review. (Emphasis added.) “It is clear that this section provides in terms for a court proceeding de novo, and it is equally clear that it does not provide for a review by the court, whether by way of affirmance, reversal or modification, of the award of the review board. The complete absence of any such provisions shows, we think, that the ‘appeal’ under Section 18 [Code (1957 Ed.) Art. 89B] is not an appeal in the usual sense of the term, but is the institution of a new proceeding.” 2 221 Md. 212 -213.

The difference in the wording of Article 89B, § 18, as ²⁵⁸ contrasted with Article 23, § 161H (e) is immediately apparent, as language similar to the wording, “as if there had been no hearing before the board of property review,” found in Article 89B, § 18 is completely absent from Article 23, § 161H (e). Certainly by the wording used in Article 23, § 161H (e) the Legislature did not contemplate any new proceeding in providing for a de novo appeal from a decision of the Board of Building, Savings and Loan Commissioners. We think an appeal providing for new evidence on the issues appealed from as well as a consideration of the record before the Board, is what was intended. We cannot discount the fact that the Legislature by Chapter 575 of the Acts of 1966 amended Article 23, § 161H to bring the appeal provisions generally in conformity with Rule B2 (e).

It would, therefore, seem to be a logical extension of the legislative intent to give as full interplay among the