Source: https://supreme.justia.com/cases/federal/us/385/252/
Timestamp: 2019-04-21 02:14:14+00:00

Document:
First National Bank of Logan v. Walker Bank & Trust Co.
The provisions of the National Bank Act, 12 U.S.C. § 36(c), which authorize a national banking association, with the Comptroller of the Currency's approval, to establish and operate branch banks if such operation is "at the time expressly authorized to State banks by the law of the State in question," place national and state banks on a basis of "competitive equality" as far as branch banking is concerned, and national banks may establish branches only in accordance with all requirements and conditions applicable to state banks by state law. Pp. 385 U. S. 256-262.
No. 51, 352 F.2d 90, and Nos. 73 and 88, affirmed.
First National Bank of Logan v. Walker Bank & Trust Co., the petitioner seeks to establish a new branch in Logan, where its principal banking house is located, without taking over an established bank. The District Court approved its doing so, but the Court of Appeals reversed. 352 F.2d 90 (C.A.10th Cir.), sub nom. Walker Bank & Trust Co. v. Saxon. In No. 73, First Security Bank of Utah, N.A. v. Commercial Security Bank, and No. 88, Saxon v. Commercial Security Bank, First Security seeks to establish a new branch in Ogden, in which its home office is situated, without taking over an established bank. The District Court held that state law must be complied with, 236 F.Supp. 457, and the Court of Appeals affirmed in a judgment, without opinion, citing Walker Bank & Trust Co., supra. In view of a conflict between these holdings and the decision in First National Bank of Smithfield v. Saxon, 352 F.2d 267 (C.A.4th Cir.), we granted certiorari, and consolidated the three cases for argument. 384 U.S. 925. We affirm the judgments.
"change the 'express authority' into a lack of authority on the part of State banks or a lack of a statutory expression of such authority, and [did] not add to the Federal statute a requirement that compliance be made by National banks with all State conditions."
234 F.Supp. 74, 78, n. 8. The Court of Appeals reversed, holding that the Congress, in enacting § 36(c)(1), acceded to state law and created "a competitive equality between state and national banks." Finding that the trial court's interpretation was to the contrary, it declared "the proper approach is for the Comptroller to look at all the State law on branch banking, not just part of it." 352 F.2d 90, 94.
In Nos. 73 and 88, the First Security Bank of Utah, a national bank, applied for a certificate from the Comptroller to establish a branch bank in Ogden, where it maintained its principal banking house. Its proposal was to open a new branch, and not to take over an existing bank in Ogden. Under Utah law, Ogden is also a second class city, and the "take over" provision of § 7-3-6, supra, was therefore applicable. Two other banks have their main offices in Ogden. After the Comptroller approved the issuance of the certificate, respondent filed suit in the District Court of the United States for the District of Columbia asking for injunctive and other relief. The District Court imposed all of the restrictions of § 7-3-6 of Utah law on the establishment of national banks, and the Court of Appeals for the District of Columbia Circuit affirmed, by a judgment without opinion, but cited the opinion of the 10th Circuit, Walker Bank & Trust Co., supra.
2. The National Banking Act: Its Background.
There has long been opposition to the exercise of federal power in the banking field. Indeed, President Jefferson was opposed to the creation of the first Bank of the United States, and President Jackson vetoed the Act of Congress extending the charter of the second Bank of the United States. However, the authority of Congress to act in the field was resolved in the landmark case of M'Culloch v. Maryland, 4 Wheat. 316 (1819). There, Chief Justice Marshall, while admitting that it does not appear that a bank was in the contemplation of the Framers of the Constitution, held that a national bank could be chartered under the implied powers of the Congress as an instrumentality of the Federal Government to implement its fiscal powers. The paramount power of the Congress over national banks has, therefore, been settled for almost a century and a half.
"The bill recognizes the absolute necessity of taking legislative action with reference to the branch banking controversy. The present situation is intolerable to the national banking system. The bill proposes the only practicable solution by stopping the further extension of statewide branch banking in the federal reserve system by State member banks, and by permitting national banks to have branches in those cities where State banks are allowed to have them under State laws."
"As a result of the passage of this act, the national bank act has been so amended that national banks are able to meet the needs of modern industry and commerce, and competitive equality has been established among all member banks of the Federal reserve system."
(Emphasis added.) 68 Cong.Rec. 5815 (1927).
"required that the establishment of branch banks by national banks in States which by law permit branch banking should be under the regulations required by State law of State banks."
"that the branch banking privilege so far as national banks are concerned shall follow the status established by State law in respect to the State privilege."
"In the controversy over the respective merits of what are known as 'unit banking' and 'branch banking systems,' a controversy that has been alive and sharp for years, branch banking has been steadily gaining in favor. It is not, however, here proposed to give the advocates of branch banking any advantage. We do not go an inch beyond saying that the two ideas shall compete on equal terms and only where the States make the competition possible by letting their own institutions have branches."
As finally passed, the Act permitted national banks to establish outside branches if such branches could be established by state banks under state law. It is well to note that the same Act also removed the restriction on outside branch banking by state member banks previously imposed by the McFadden Act.
3. The Policy of Competitive Equality.
It appears clear from this resume of the legislative history of § 36(c)(1) and (2) that Congress intended to place national and state banks on a basis of "competitive equality" insofar as branch banking was concerned. Both sponsors of the applicable banking Act, Representative McFadden and Senator Glass, so characterized the legislation. It is not for us to so construe the Acts as to frustrate this clear-cut purpose so forcefully expressed by both friend and foe of the legislation at the time of its adoption. To us, it appears beyond question that the Congress was continuing its policy of equalization first adopted in the National Bank Act of 1864. See Lewis v.Fidelity & Deposit Co., 292 U. S. 559, 292 U. S. 565-566 (1934); McClellan v. Chipman, 164 U. S. 347 (1896); Chase Securities Corp. v. Husband, 302 U.S. 660 (1938); Anderson Nat. Bank v. Luckett, 321 U. S. 233 (1944).
The Comptroller argues that Utah's statute "expressly authorizes" state banks to have branches in their home municipalities. He maintains that the restriction, in the subsequent paragraph of the statute limiting branching solely to the taking over of an existing bank, is not applicable to national banks. It is a strange argument that permits one to pick and choose what portion of the law binds him. Indeed, it would fly in the face of the legislative history not to hold that national branch banking is limited to those States the laws of which permit it, and even there "only to the extent that the State laws permit branch banking." Utah clearly permits it "only to the extent" that the proposed branch takes over an existing bank.
The Comptroller also contends that the Act supersedes state law only as to "whether" and "where" branches may be located, and not the "method" by which this is effected.
We believe that, where a State allows branching only by taking over an existing bank, it expresses as much "whether" and "where" a branch may be located as does a prohibition or a limitation to the home office municipality. As to the restriction being a "method," we have concluded that, since it is part and parcel of Utah's policy, it was absorbed by the provisions of §§ 36(c)(1) and (2), regardless of the tag placed upon it.
* Together with No. 72, First Security Bank of Utah, N.A. v. Commercial Security Bank, and No. 88, Saxon, Comptroller of the Currency v. Commercial Security Bank, on certiorari to the United States Court of Appeals for the District of Columbia Circuit.
"(c) A national banking association may, with the approval of the Comptroller of the Currency, establish and operate new branches: (1) Within the limits of the city, town or village in which said association is situated, if such establishment and operation are at the time expressly authorized to State banks by the law of the State in question; and (2) at any point within the State in which said association is situated, if such establishment and operation are at the time authorized to State banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition, and subject to the restrictions as to location imposed by the law of the State on State banks."
"7-3-6. Business conducted at banking house -- Branching of offices -- Violation of section a misdemeanor. -- The business of every bank shall be conducted only at its banking house and every bank shall receive deposits and pay checks only at its banking house except as hereinafter provided."
"Except in cities of the first class, or within unincorporated areas of a county in which a city of the first class is located, no branch bank shall be established in any city or town in which is located a bank or banks, state or national, regularly transacting a customary banking business, unless the bank seeking to establish such branch shall take over an existing bank. No unit bank organized and operating at a point where there are other operating banks, state or national, shall be permitted to be acquired by another bank for the purpose of establishing a branch until such bank shall have been in operation as such for a period of five years."
Board of Governors of the Federal Reserve System, Banking Studies 15, 428 (1941).

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