Source: https://caselaw.findlaw.com/us-supreme-court/347/373.html
Timestamp: 2019-04-24 06:44:53+00:00

Document:
Insofar as it forbids national banks to use the word "saving" or "savings" in their business or advertising, the New York statute here involved is invalid, because it conflicts with federal laws expressly authorizing national banks to receive savings deposits and to exercise incidental powers. Pp. 374-379.
(a) The provision of 24 of the Federal Reserve Act authorizing national banks to "continue hereafter as heretofore to receive time and savings deposits" is declaratory of the right of national banks to enter into or remain in that type of business, and their authority to receive savings deposits is not limited or qualified by the expression "continue hereafter as heretofore." P. 377.
(b) Nor are national banks precluded from advertising for the savings deposits which they are expressly authorized to accept. Pp. 377-378.
(c) Congress did not intend to make this phase of national banking subject to local restrictions because of the special significance attached to the word "savings" in some states. P. 378.
305 N. Y. 453, 113 N. E. 2d 796, reversed.
Samuel O. Clark, Jr. argued the cause for appellant. With him on the brief were F. Gloyd Awalt, W. V. T. Justis, Keith Kelly and Sidney Friedman.
By special leave of Court, Solicitor General Sobeloff argued the cause for the United States, as amicus curiae, urging reversal. With him on the brief were Assistant Attorney General Burger, Marvin E. Frankel and Melvin Richter.
Daniel M. Cohen, Assistant Attorney General of New York, argued the cause for appellee. With him on the brief were Nathaniel L. Goldstein, Attorney General, and Wendell P. Brown, Solicitor General.
Fred N. Oliver and Michael F. McCarthy filed a brief for the Savings Banks Association of the State of New York, as amicus curiae, supporting appellee.
This appeal from the Court of Appeals of New York presents the narrow question whether federal statutes which authorize national banks to receive savings deposits conflict with New York legislation which prohibits them from using the word "saving" or "savings" in their advertising or business. We think the federal and state statutes are incompatible, and in such circumstances the policy of the State must yield.
However, the Federal Government is a rival chartering authority for banks. Since McCulloch v. Maryland, 4 Wheat. 316, it has not been open to question that the Federal Government may constitutionally create and govern such institutions within the states. The United States has set up a system of national banks as federal instrumentalities to perform various functions such as providing circulating medium and government credit, as well as financing commerce and acting as private depositaries. Some of their functions, especially as a source for federal credit, depend upon their success in attracting private deposits. That these federal institutions may be at no disadvantage in competition with state-created institutions, the Federal Government has frequently expanded their functions and authority. Of such nature are the measures now before us.
Appellant, believing it was authorized by the Federal Government to do so, used the word "saving" and "savings" in advertising, in signs displayed in the bank, on its deposit and withdrawal slips, and in its annual reports. It is beyond question that appellant violated the State's prohibition if it is a valid one.
We are unable to support the contention that the authorization for national banks to receive savings deposits is limited or qualified because of the expression that they may "continue hereafter as heretofore" to do so. It appears that previous to the enactment, acceptance of such accounts by national banks had been usual but was not expressly authorized. We do not think the Federal Reserve Act should be construed to freeze individual banks or those located within any state to the customs and practices preceding the statute. We read the Act as declaratory of the right of a national bank to enter into or remain in that type of business. That has been the administrative construction, and we think it is correct.
Nor can we construe the two Federal Acts as permitting only a passive acceptance of deposits thrust upon them. Modern competition for business finds advertising one of the most usual and useful of weapons. We cannot believe that the incidental powers granted to national banks should be construed so narrowly as to preclude the use of advertising in any branch of their authorized business. It would require some affirmative indication to justify an interpretation that would permit a national [347 U.S. 373, 378] bank to engage in a business but gave no right to let the public know about it.
There appears to be a clear conflict between the law of New York and the law of the Federal Government. We cannot resolve conflicts of authority by our judgment as to the wisdom or need of either conflicting policy. The [347 U.S. 373, 379] compact between the states creating the Federal Government resolves them as a matter of supremacy. 8 However wise or needful New York's policy, a matter as to which we express no judgment, it must give way to the contrary federal policy.
The judgment of the New York Court of Appeals is reversed and the case is remanded for further proceedings not inconsistent with this opinion.
[ Footnote 1 ] McKinney's N. Y. Laws, Banking Law, 258 (1), reads: "No bank, trust company, national bank, individual, partnership, unincorporated association or corporation other than a savings bank or [347 U.S. 373, 375] a savings and loan association shall make use of the word `saving' or `savings' or their equivalent in its banking or financial business, or use any advertisement containing the word `saving' or `savings,' or their equivalent in relation to its banking or financial business, nor shall any individual or corporation other than a savings bank in any way solicit or receive deposits as a savings bank; but nothing herein shall be construed to prohibit the use of the word `savings' in the name of the Savings and Loan Bank of the State of New York or in the name of a trust company all of the stock of which is owned by not less than twenty savings banks. Any bank, trust company, national bank, individual, partnership, unincorporated association or corporation violating this provision shall forfeit to the people of the state for every offense the sum of one hundred dollars for every day such offense shall be continued."
[ Footnote 2 ] 38 Stat. 273, 44 Stat. 1232, as amended, 12 U.S.C. (1952 ed.) 371.
[ Footnote 3 ] 38 Stat. 262, 12 U.S.C. (1952 ed.) 248 (i). See also 49 Stat. 714, 12 U.S.C. (1952 ed.) 461.
[ Footnote 4 ] 12 CFR 204.1, 217.1.
[ Footnote 5 ] R. S. 5136, 12 U.S.C. (1952 ed.) 24 (seventh).
[ Footnote 6 ] 200 Misc. 557, 105 N. Y. S. 2d 81, rev'd, 281 App. Div. 757, 118 N. Y. S. 2d 210, aff'd, 305 N. Y. 453, 113 N. E. 2d 796, probable jurisdiction noted, 346 U.S. 908 . Appellee included in its complaint a charge that appellant solicited business as a "savings bank." However, the New York Court of Appeals held that there was no evidence of such practice. Therefore, the sole question before this Court relates to appellant's other use of the prohibited words in its advertising or business.
[ Footnote 7 ] E. g., R. S. 5155, 12 U.S.C. (1952 ed.) 36 (c) (establishment of branch banks); R. S. 5136, 12 U.S.C. (1952 ed.) 24 (eighth) (contributions to charitable instrumentalities); R. S. 5153, 12 U.S.C. (1952 ed.) 90 (security for the deposit of state funds); R. S. 5197, 12 U.S.C. (1952 ed.) 85, and part of the section involved in this case, 38 Stat. 273, 44 Stat. 1232, as amended, 12 U.S.C. (1952 ed.) 371 (interest rates). Even in the absence of such express language, national banks may be subject to some state laws in the normal course of business if there is no conflict with federal law. Cf. Anderson National Bank v. Luckett, 321 U.S. 233 ; McClellan v. Chipman, 164 U.S. 347 .
[ Footnote 8 ] Easton v. Iowa, 188 U.S. 220, 229 -230; Davis v. Elmira Savings Bank, 161 U.S. 275, 283 .
I dissent. It should be noted that the New York statute, note 1 of the Court's opinion, limits the use of the words "saving" or "savings" in relation to their banking business to certain types of New York financial institutions. These are those that are mutual in character as distinguished from stockholder-owned. Such mutual institutions can and do pay larger returns on deposits in New York than the commercial stock-type banks, state or national, both of which are barred by the New York statute from using the word "savings" "in relation to banking or financial business." The mutual banks have been successful in attracting a large proportion of savings deposits for over a century. They have a remarkable record for soundness in finance and profitable operation for the benefit of the depositors. The purpose of the New York law is to reserve the use of the word "savings" to identify the mutual type of bank operation for the public, just as the federal banking laws reserve the name "national" for a certain type of bank organized under federal law.

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