Source: https://supreme.justia.com/cases/federal/us/546/303/
Timestamp: 2018-07-22 22:14:59
Document Index: 72680790

Matched Legal Cases: ['§1332', '§1332', '§1348', '§24', '§1348', '§22', '§21', '§21', '§5', '§36', '§11', '§7', '§7', '§23', '§7', '§101', '§4', '§1348', '§1348', 'Art. 5', '§1348', '§1332', '§1348', '§1348']

Wachovia Bank, N. A. v. Schmidt :: 546 U.S. 303 (2006) :: Justia US Supreme Court Center
Justia › US Law › US Case Law › US Supreme Court › Volume 546 › Wachovia Bank, N. A. v. Schmidt
Wachovia Bank, N. A. v. Schmidt, 546 U.S. 303 (2006)
WACHOVIA BANK, NATIONAL ASSOCIATION, PETI- TIONER v. DANIEL G. SCHMIDT, III, et al.
This case concerns the citizenship, for purposes of federal-court diversity jurisdiction, of national banks, i.e., corporate entities chartered not by any State, but by the Comptroller of the Currency of the U. S. Treasury. Congress empowered federal district courts to adjudicate civil actions between “citizens of different States” where the amount in controversy exceeds $75,000. 28 U. S. C. §1332(a)(1). A business organized as a corporation, for diversity jurisdiction purposes, is “deemed to be a citizen of any State by which it has been incorporated” and, since 1958, also “of the State where it has its principal place of business.” §1332(c)(1). State banks, usually chartered as corporate bodies by a particular State, ordinarily fit comfortably within this prescription. Federally chartered national banks do not, for they are not incorporated by “any State.” For diversity jurisdiction purposes, therefore, Congress has discretely provided that national banks “shall … be deemed citizens of the States in which they are respectively located.” §1348.
Like its 1882 predecessor, the 1887 Act “sought to limit … the access of national banks to, and their suability in, the federal courts to the same extent to which non-national banks [were] so limited.” Langdeau, 371 U. S., at 565–566.
In the Judicial Code of 1911,[Footnote 5] Congress combined two formerly discrete provisions on proceedings involving national banks, but retained without alteration the clause deeming national banks to be “citizens of the States in which they are respectively located.” Act of Mar. 3, 1911, §24 (Sixteenth), 36 Stat. 1091–1093.[Footnote 6] Finally, as part of the 1948 Judicial Code revision, Congress enacted §1348 in its current form. Act of June 25, 1948, 62 Stat. 933. The provision now reads:
A national bank, on formation, must designate, in its organization certificate and articles of association, the “place where its operations of discount and deposit are to be carried on.” 12 U. S. C. §22 (Second); see §21; Office of the Comptroller of the Currency, Instructions—Articles of Association, Specific Requirements ¶12, available at http:// www.occ.treas.gov/corpbook/forms/articles-conv.doc (All Internet materials as visited Jan. 13, 2006, and included in Clerk of Court’s case file.) The place so designated serves as the bank’s “main office.” Changes in the location of that office are effected by amendment to the bank’s articles of association. See 12 U. S. C. §§21a, 30(b); 12 CFR §5.40(d)(2)(ii) (2005). The State in which the main office is located qualifies as the bank’s “home State” under the banking laws. 12 U. S. C. §36(g)(3)(B).
National banks originally lacked authority to operate branch offices. Act of Feb. 25, 1863, §11, 12 Stat. 668. In 1865, Congress enacted an exception permitting a state bank that converted to a national bank to retain its pre-existing branches. Act of Mar. 3, 1865, §7, 13 Stat. 484. Congress authorized limited branch operations in the bank’s home State in 1927 and 1933. McFadden Act (Branch Banks), 1927, §7(c), 44 Stat. 1228; Glass-Steagall Act, 1933, §23, 48 Stat. 189–190. These Acts, like the 1865 enactment, allowed interstate branching only under narrow “grandfather” provisions. McFadden Act, §7(a)–(b), 44 Stat. 1228; see Girard Bank v. Board of Governors of Fed. Reserve System, 748 F. 2d 838, 840 (CA3 1984) (observing that only two national banks had “grandfathered” interstate branches). Not until 1994 did Congress grant national banks broad authority to establish branch offices across state lines. See Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994, §101, 108 Stat. 2339. See generally J. Macey, G. Miller, & R. Carnell, Banking Law and Regulation 18–19, 23, 32–33 (3d ed. 2001).
Wachovia unsuccessfully moved for rehearing en banc. Six judges voted to grant the rehearing petition, three voted to deny it, and four recused themselves. Thus the petition failed to garner the required majority of the Circuit’s 13 active judges. No. 03–2061 (CA4, Jan. 28, 2005), App. to Pet. for Cert. 57a–58a.
The term “established under” did appear in the 1882 and 1887 formulations, in both texts as synonymous with the term “organized under.” In neither measure is the word used in a locational sense.
Earlier, in 1888, Congress had revised the 1887 prescription by adding as a separate paragraph this caveat: “The provisions of this section shall not be held to affect the jurisdiction of the courts of the United States in cases commenced by the United States or by direction of any officer thereof, or cases for winding up the affairs of any such bank.” Act of Aug. 13, 1888, §4, 25 Stat. 436.
The Court of Appeals did not overlook these nonuniform uses of the word “located” in various provisions of the National Bank Act. See 388 F. 3d 414, 425 (CA4 2004). Nevertheless, it declared that, in §1348, “located” unambiguously means “physically present.” Ibid. (internal quotation marks omitted). The court did not say what facilities other than branch offices, for example, storage sites or even automated teller machines, would suffice to establish a bank’s physical presence. Cf. Tr. of Oral Arg. 36–37 (counsel for respondents stated that an ATM, although an arguable question, probably would suffice to locate a bank in a State for §1348 purposes).
Context also matters in assigning meaning to the word “established.” See, e.g., Convention Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital Gains, S. Treaty Doc. No. 107–19, Art. 5, pp. 8–9 (2002) (“For the purposes of this Convention, the term ‘permanent establishment’ means a fixed place of business through which the business of an enterprise is wholly or partly carried on … .”). Given the character of the proceedings covered by the first paragraph of §1348, see supra, at 7, one might read “established” as referring to the bank’s main office as set forth in its articles of association. Other readings mentioned in Court of Appeals opinions are the bank’s principal place of business and the place listed in the bank’s organization certificate. See Horton v. Bank One, N. A., 387 F. 3d 426, 434 (CA5 2004); Firstar Bank, N. A. v. Faul, 253 F. 3d 982, 992 (CA7 2001). Because this issue is not presented by the parties or necessary to today’s decision, we express no opinion on it. Cf. ibid.
To achieve complete parity with state banks and other state-incorporated entities, a national banking association would have to be deemed a citizen of both the State of its main office and the State of its principal place of business. See Horton, 387 F. 3d, at 431, and n. 26; Firstar Bank, N. A., 253 F. 3d, at 993–994. Congress has prescribed that a corporation “shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business.” 28 U. S. C. §1332(c)(1) (emphasis added). The counterpart provision for national banking associations, §1348, however, does not refer to “principal place of business”; it simply deems such associations “citizens of the States in which they are respectively located.” The absence of a “principal place of business” reference in §1348 may be of scant practical significance for, in almost every case, as in this one, the location of a national bank’s main office and of its principal place of business coincide.
546 U.S. 303