Source: https://openjurist.org/347/us/373
Timestamp: 2019-04-25 10:20:17+00:00

Document:
Argued March 9, 10, 1954.
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. State of Maryland, 4 Wheat. 316, 4 L.Ed. 579, 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 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 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.
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.
The Court's opinion permits the national banks to trade upon the good name of the savings banks to secure deposits of that type. Now they may advertise 'A Savings Bank' under their corporate name; their deposit slips may say 'Savings Account.' As no federal statute expressly authorizes the national banks to use the words 'saving' or 'savings' in their advertisements, I think they must conform to the New York law for the protection of the public from misunderstanding. I would not imply a federal privilege to use 'savings' in advertising from the fact that national banks may accept savings deposits. The cases cited by the Court in note 7 sustain that view. I know of no precedents that approve such a limitation on state power as the Court now announces.
38 Stat. 273, 44 Stat. 1232, as amended, 12 U.S.C. (1952 ed.) § 371, 12 U.S.C.A. § 371.
38 Stat. 262, 12 U.S.C. (1952 ed.) § 248(i), 12 U.S.C.A. § 248(i). See also 49 Stat. 714, 12 U.S.C. (1952 ed.) § 461, 12 U.S.C.A. § 461.
R.S. § 5136, 12 U.S.C. (1952 ed.) § 24 (seventh), 12 U.S.C.A. § 24 (seventh).
200 Misc. 557, 105 N.Y.S.2d 81, reversed, 281 App.Div. 757, 118 N.Y.S.2d 210, affirmed, 305 N.Y. 453, 113 N.E.2d 796, probable jurisdiction noted, 346 U.S. 908, 74 S.Ct. 240. 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.
E.g., R.S. § 5155, 12 U.S.C. (1952 ed.) § 36(c), 12 U.S.C.A. § 36(c) (establishment of branch banks); R.S. § 5136, 12 U.S.C. (1952 ed.) § 24 (eighth), 12 U.S.C.A. § 24 (eighth) (contributions to charitable instrumentalities); R.S. § 5153, 12 U.S.C. (1952 ed.) § 90, 12 U.S.C.A. § 90 (security for the deposit of state funds); R.S. § 5197, 12 U.S.C. (1952 ed.) § 85, 12 U.S.C.A. § 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, 12 U.S.C.A. § 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, 64 S.Ct. 599, 88 L.Ed. 692; McClellan v. Chipman, 164 U.S. 347, 17 S.Ct. 85, 41 L.Ed. 461.
Easton v. State of Iowa, 188 U.S. 220, 229—230, 23 S.Ct. 288, 290, 47 L.Ed. 452; Davis v. Elmira Savings Bank, 161 U.S. 275, 283, 16 S.Ct. 502, 503, 40 L.Ed. 700.

References: v. 
 § 371
 § 371
 § 248
 § 248
 § 461
 § 461
 § 5136
 § 24
 § 24
 § 5155
 § 36
 § 36
 § 5136
 § 24
 § 24
 § 5153
 § 90
 § 90
 § 5197
 § 85
 § 85
 § 371
 § 371
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