Source: https://supreme.justia.com/cases/federal/us/347/373/
Timestamp: 2019-04-25 21:57:20+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. 347 U. S. 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. 347 U. S. 377.
(b) Nor are national banks precluded from advertising for the savings deposits which they are expressly authorized to accept. Pp. 347 U. S. 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. 347 U. S. 378.
305 N.Y. 453, 113 N.E.2d 796, reversed.
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.
organized under the laws of the State in which such association is located. [Footnote 2]"
"all such incidental powers as shall be necessary to carry on the business of banking; by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits; by buying and selling exchange, coin, and bullion; by loaning money on personal security; and by obtaining, issuing, and circulating notes according to the provisions of this chapter. [Footnote 5]"
Appellant, believing it was authorized by the Federal Government to do so, used the words "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.
bank to engage in a business but gave no right to let the public know about it.
compact between the states creating the Federal Government resolves them as a matter of supremacy. [Footnote 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.
"No bank trust company, national bank, individual, partnership, unincorporated association or corporation other than a savings bank or 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."
38 Stat. 273, 44 Stat. 1232, as amended, 12 U.S.C. (1952 ed.) § 371.
38 Stat. 262, 12 U.S.C. (1952 ed.) § 248(i). See also 49 Stat. 714, 12 U.S.C. (1952 ed.) § 461.
12 CFR §§ 204.1, 217.1.
R.S. § 5136, 12 U.S.C. (1952 ed.) § 24 (seventh).
200 Misc. 557, 105 N.Y.S.2d 81, reversed, 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.
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.
Easton v. Iowa, 188 U. S. 220, 188 U. S. 229-230; Davis v. Elmira Savings Bank, 161 U. S. 275, 161 U. S. 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.
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.

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