THE SUPREME COURT OF THE
FEDERATED STATES OF MICRONESIA
Cite as Bank of FSM v. FSM,
6 FSM Intrm. 5 (Pohnpei 1993)

[6 FSM Intrm. 5]

BANK OF THE
FEDERATED STATES OF MICRONESIA,
Plaintiff,

vs.

NATIONAL GOVERNMENT OF THE
FEDERATED STATES OF MICRONESIA,
Defendant.

CIVIL ACTION NO. 1991-092

OPINION
Andon L. Amaraich
Associate Justice

Hearing:  September 18, 1992
Decided:  January 18, 1993

APPEARANCES:
For the Plaintiff:          R. Barrie Michelsen, Esq.
                                     Law Offices of R. Barrie Michelsen
                                     P.O. Box 1450
                                     Kolonia, Pohnpei FM 96941

For the Defendant:     Douglas J. Juergens, Esq.
                                     Chief of Litigation
                                     Office of the FSM Attorney General
                                     P.O. Box PS-105
                                     Palikir, Pohnpei FM 96941

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HEADNOTES
Statutes ) Construction
     When the language in the Code is ambiguous, other sources such as congressional journals may be consulted.  Bank of the FSM v. FSM, 6 FSM Intrm. 5, 7 (Pon. 1993).

Statutes ) Construction
     Statutes should be interpreted so that they are internally consistent. Provisions should be considered against the background of the entire act so as to arrive at a reasonable interpretation consistent with other specific provisions and the general design of the act.  Bank of the FSM v. FSM, 6 FSM Intrm. 5, 8 (Pon. 1993).

[6 FSM Intrm. 6]

Banking; Statutes ) Construction
     Where licenses are to be issued to each bank branch, and each bank branch must be scrutinized as to its qualifications for a license, it is a reasonable statutory interpretation that the regulatory license fee must be paid for each bank branch.  Bank of the FSM v. FSM, 6 FSM Intrm. 5, 8 (Pon. 1993).

Banking
     The context of Chapter 5 of Title 29 requires that the term "bank" be understood to mean bank branch when used in 29 F.S.M.C. 502 and 504. Therefore scrutiny for license qualifications and payment of license fees are to be on a per branch basis.  Bank of the FSM v. FSM, 6 FSM Intrm. 5, 8 (Pon. 1993).

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COURT'S OPINION
ANDON L. AMARAICH, Associate Justice:
     This is an action for a declaratory judgment.  The plaintiff, Bank of the Federated States of Micronesia, is a domestic bank established under the provisions of 29 F.S.M.C. ch. 3.  It has a total of four branches.  It seeks a declaration that the $1,000 annual renewal banking license fee required by 29 F.S.M.C. 502 is to be assessed on a per bank rather than a per branch basis. Before 1992 the plaintiff had paid this fee on a per bank basis.  The government contends that the fee should be paid on a per branch basis.  The plaintiff has deposited the contested $3,000 difference with the Court for its banking license fee(s) for 1992.  The plaintiff has not raised any due process claims.  Thus the sole issue before the Court is one of statutory interpretation.

     The statute in question provides that "renewal licenses shall be issued upon payment of the corresponding fees, as follows: . . . (2) Banks with a paid-in capital, surplus, and undivided profits aggregating over $1,000,000 shall pay the sum of $1,000."  29 F.S.M.C. 502.  The plaintiff's position is that the word "Banks" in this provision means bank corporation.  The government would have it read as bank branch.  These terms are defined in Title 29.

     As used in this title, unless it is otherwise provided or the context requires a different construction, application, or meaning:

     (1)  "Bank" means a stock or mutual corporation or unincorporated association with sufficient capital, authorized by law to receive deposits of money or securities, to open credits, checking accounts, and savings accounts, to make loans, and in general to engage in all kinds of banking transactions, but does not mean a National banking association established by the Federated States of Micronesia. "Bank" includes a savings and loan association but does not include a credit union.
. . . .

     (3)  "Branch" means an office of a bank at which deposits  are received or checks paid or money lent.
. . . .

     (6)  "Domestic bank" means a bank organized under the provisions of chapter 3 of this title.

[6 FSM Intrm. 7]

29 F.S.M.C. 102.

     It is clear from this that "bank" in 29 F.S.M.C. 502 should mean bank corporation unless "the context requires a different construction, application, or meaning."   The context within which this provision appears is chapter 5 of Title 29 which pertains to the licensing of banks.

     Chapter 5 sets forth the factors that must be considered by the regulatory body, the Banking Board, before a banking license may be renewed.  29 F.S.M.C. 504. Chapter 5 further provides that if the Banking Board determines that the bank has served the needs of the community then a renewal license may be issued upon the payment of the corresponding fees.  Section 502 sets out the amount of the corresponding fees.

     The subsection immediately preceding section 502 provides that:

     Every domestic or foreign bank at present operating a branch or office in the Federated States of Micronesia, or that may hereafter do so, shall obtain on or before the 31st day of December of each calendar year a renewal  license for each office or branch to be operated in the Federated States of Micronesia during the succeeding  calendar year.

29 F.S.M.C. 501(3).  It appears clear that each separate branch or office is required to have its own license.  It remains ambiguous as to whether the word "bank" as used throughout the rest of Chapter 5 refers to the bank corporation or to a bank branch.  "[O]ther sources such as congressional journals and even the original version of the statute might be consulted to indicate legislative intent, when the language in the Code is ambiguous."  FSM v. George, 2 FSM Intrm. 88, 92 (Kos. 1985).

     Title 29 was originally enacted by Pub. L. No. 1-94 (1st Cong., 2nd Spec. Sess. 1980).  Chapter 5 was reenacted shortly thereafter by Pub. L. No. 1-155 (1st Cong., 3rd Spec. Sess. 1981).  SCREP No. 1-345 explained the reason for reenacting and amending Chapter 5.  That report states that:

             the bill removes the ambiguity in Section 501(2) of Public Law No. 1-94
             by providing that each office or branch in the FSM must secure a
             separate license. The amendment will also require that the scrutiny
             required by Section 501(4) be given to each separate branch or office
             of the bank.  

SCREP No. 1-345, J. of 1st Cong. 3rd Spec. Sess. 159 (1981).

     Section 501(2), as enacted by Pub. L. No. 1-155, combined the present sections 501(2) and (3) and section 502.  The phrase "Initial and renewal licenses shall be issued upon payment of the corresponding fees . . . ." came directly after, without break, the sentence requiring a renewal license for each office or branch.  Section 501(4) in Pub. L. No. 1-155 is the current 29 F.S.M.C. 504 (as amended by Pub. L. No. 6-411 ).  Throughout section 504  the term "bank" is used when

[6 FSM Intrm. 8]

setting out the factors to be considered in determining whether the license should be renewed.  SCREP No. 1-345 makes clear "that the scrutiny . . . be given to each separate branch or office."  Nevertheless the term "bank" is used throughout section 504, and the term "branch" is never used.  Obviously, in section 504 the context requires a different construction, application, or meaning for the term "bank" than that given in 29 F.S.M.C. 102.  "Bank" in section 504 must mean bank branch.

     Thus to be read consistently with the rest of Chapter 5 the term "bank" in section 502 should be read as bank branch.  This is in harmony with the canons of statutory construction.  Statutes should be interpreted so that they are internally consistent.  Michelsen v. FSM, 3 FSM Intrm. 416, 424-26 (Pon. 1988).

     Furthermore, a "provision . . . must be considered against the background of the entire Act in an effort to arrive at reasonable interpretation consistent with other specific provisions and the general design of the Act."  Id. at 421-22.  The general design of Title 29 is to regulate banking.  The general design of Chapter 5 is to make the renewal of a banking license for each separate branch dependent upon whether that branch has served the needs of the community. Only then will the license be renewed upon payment of the licensing fee.  It is entirely reasonable that since the scrutiny must be applied to, and the license issued for, each separate branch, the license fee should be paid for each branch as well.  It is common that license fees assessed in the course of regulatory activity should be commensurate with the regulatory expenses.  See, e.g., 51 Am. Jur. 2d  Licenses and Permits 40, at 48 (1970).  In this case since four branches have to be scrutinized and issued licenses, four branches should have to pay license fees.

     Therefore I conclude that in Chapter 5 the context requires a different construction, application, or meaning for the term "bank" than the meaning provided in 29 F.S.M.C. 102.  In Chapter 5 the context requires that the term "bank" should be understood to be bank branch.  Therefore an annual renewal license fee should be paid for each branch.  Plaintiff's motion for summary judgment is accordingly denied and judgment is entered for the national government.  The contested sum deposited with the Court shall, with accrued interest, be paid to the national government.

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Footnote:

1.  This amendment altered the factors to be considered in determining whether the needs of the community had been served.  Section 501 was also amended by this public law to allow banking licenses to be issued for less than a full calendar year.  Pub. L. No. 6-41 (6th Cong., 2nd Sess. 1989).  This amendment does not alter the analysis.