Source: https://m.openjurist.org/426/us/148
Timestamp: 2019-12-15 16:49:11
Document Index: 703353548

Matched Legal Cases: ['§ 94', '§ 27', '§ 27', '§ 78', '§ 5198', '§ 94', '§ 94', '§ 94', '§ 94', '§ 94', '§ 27', '§ 94', '§ 94', '§ 94', '§ 94', '§ 94', '§ 94', '§ 1391', '§ 77', '§ 78', '§ 3', '§ 78', '§ 77', '§ 78']

426 US 148 Radzanower v. Touche Ross & Co | OpenJurist
426 U.S. 148 - Radzanower v. Touche Ross & Co
426 US 148 Radzanower v. Touche Ross & Co
96 S.Ct. 1989
48 L.Ed.2d 540
Hyman RADZANOWER, Petitioner,
TOUCHE ROSS & CO. et al.
Venue in a suit against a national banking association charged with violating the Securities Exchange Act of 1934 Held to be governed by the venue provision of the National Bank Act, 12 U.S.C. § 94, which provides that an action against a national banking association may be had in any federal district court within the district in which such association may be established, rather than by § 27 of the Securities Exchange Act, which provides that any action to enforce any liability or duty under that Act may be brought in any district where the violation occurred or in the district wherein the defendant is found or transacts business. Pp. 153-154.
The petitioner, Hyman Radzanower, instituted a class action in the District Court for the Southern District of New York alleging, Inter alia, that the respondent, First National Bank of Boston, a national banking association with its principal office in Boston, Mass., had violated the federal securities laws by failing to disclose to the Securities and Exchange Commission and the investing public its knowledge of certain adverse financial information about one of its customers, the TelePrompter Corporation, and of securities laws violations by that company. The complaint alleged that venue was proper under § 27 of the Securities Exchange Act of 1934, 48 Stat. 902, 15 U.S.C. § 78aa, which provides that "(a)ny suit or action to enforce any liability or duty created (by or under the Securities Exchange Act) . . . may be brought in any such district (wherein any act or transaction constituting the violation occurred) or in the district wherein the defendant is found or is an inhabitant or transacts business. . . ." The bank moved to dismiss the complaint as to it, asserting that venue as to it lay only under the venue provision of the National Bank Act, Rev.Stat. § 5198 (1878), 12 U.S.C. § 94. That section provides that "(a)ctions and proceedings against any (national banking) association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established. . . ."1
Following the settled law of the Second Circuit, the District Court granted the bank's motion to dismiss. It held that "(a)bsent waiver or consent, a national bank may be sued only in the district in which it is established. 12 U.S.C. Section 94." The court noted that the bank was established in Boston "because its charter specifies Boston as its principal place of business,"2 and it rejected the petitioner's claim that the bank had waived the provisions of § 94.3 The Court of Appeals affirmed without opinion.4 Because of differing views in the Circuits as to the statutory venue question presented,5 we granted the petition for certiorari. 423 U.S. 911, 96 S.Ct. 213, 46 L.Ed.2d 139.
Section 94 provides that suits against a national banking association "may be had" in the federal district court for the district where such association is established. The Court has held that this grant of venue is mandatory and exclusive: "The phrase 'suits . . . may be had' was, in every respect, appropriate language for the purpose of specifying the precise courts in which Congress consented to have national banks subject to suit and we believe Congress intended that in those courts alone could a national bank be sued against its will." Mercantile Nat. Bank v. Langdeau, 371 U.S. 555, 560, 83 S.Ct. 520, 523, 9 L.Ed.2d 523, 527. Accord, Michigan Nat. Bank v. Robertson, 372 U.S. 591, 83 S.Ct. 914, 9 L.Ed.2d 961; National Bank v. Associates of Obstetrics,6 425 U.S. 460, 96 S.Ct. 1632, 48 L.Ed.2d 92. The venue provision of the Securities Exchange Act, by contrast, allows suits under that Act to be brought anywhere that the Act is violated or a defendant does business or can otherwise be found. It is the petitioner's contention that when a national bank is named as a defendant in a suit brought under the Securities Exchange Act, it loses the protection of the venue provisions of § 94 and may be sued in any federal judicial district where that Act was violated or where it does business or can be found. For the reasons that follow, we cannot accept that contention.
It is a basic principle of statutory construction that a statute dealing with a narrow, precise, and specific subject is not submerged by a later enacted statute covering a more generalized spectrum. "Where there is no clear intention otherwise, a specific statute will not be controlled or nullified by a general one, regardless of the priority of enactment." Morton v. Mancari, 417 U.S. 535, 550-551, 94 S.Ct. 2474, 2482, 41 L.Ed.2d 290, 301.7 "The reason and philosophy of the rule is, that when the mind of the legislator has been turned to the details of a subject, and he has acted upon it, a subsequent statute in general terms, or treating the subject in a general manner, and not expressly contradicting the original act, shall not be considered as intended to affect the more particular or positive previous provisions, unless it is absolutely necessary to give the latter act such a construction, in order that its words shall have any meaning at all." T. Sedgwick, The Interpretation and Construction of Statutory and Constitutional Law 98 (2d ed. 1874).8
The issue thus boils down to whether a "clear intention otherwise" can be discovered whether, in short, it can be fairly concluded that the venue provision of the Securities Exchange Act operated as a Pro tanto repeal of § 94. "It is, of course, a cardinal principle of statutory construction that repeals by implication are not favored." United States v. United Continental Tuna Corp., 425 U.S. 164, 168, 96 S.Ct. 1319, 1323, 47 L.Ed.2d 653, 658.9 There are, however,
The statutory provisions at issue here cannot be said to be in "irreconcilable conflict" in the sense that there is a positive repugnancy between them or that they cannot mutually coexist. It is not enough to show that the two statutes produce differing results when applied to the same factual situation, for that no more than states the problem. Rather, "when two statutes are capable of co-existence, it is the duty of the courts . . . to regard each as effective." Morton v. Mancari, supra, 417 U.S., at 551, 94 S.Ct. at 2483, 41 L.Ed.2d at 301. As the Court put the matter in discussing the interrelationship of the antitrust laws and the securities laws: "Repeal is to be regarded as implied only if necessary to make the (later enacted law) work, and even then only to the minimum extent necessary. This is the guiding principle to reconciliation of the two statutory schemes." Silver v. New York Stock Exchange, 373 U.S. 341, 357, 83 S.Ct. 1246, 1257, 10 L.Ed.2d 389, 400.10
Here the basic purposes of the Securities Exchange Act can be fairly served by giving full effect to the provisions of 12 U.S.C. § 94. The primary purpose of the Securities Exchange Act was not to regulate the activities of national banks as such but "(t)o provide fair and honest mechanisms for the pricing of securities (and) to assure that dealing in securities is fair and without undue preferences or advantages among investors . . . ." H.R.Rep. No. 94-229, p. 91 (1975).11 I venue provision, § 27, was intended to facilitate that goal by enabling suits to enforce rights created by the Act to be brought wherever a defendant could be found. The venue provision of the National Bank Act, § 94, was intended, on the other hand, "for the convenience of those (banking) institutions, and to prevent interruption in their business that might result from their books being sent to distant counties . . . ." Charlotte Nat. Bank v. Morgan, 132 U.S. 141, 145, 10 S.Ct. 37, 38, 33 L.Ed. 282, 284, quoted in Mercantile Nat. Bank v. Langdeau, 371 U.S., at 561-562, n. 12, 83 S.Ct., at 524, 9 L.Ed.2d, at 528.
By allowing suits against national banks to be brought only pursuant to § 94, the purposes of that section will obviously be served. Yet application of § 94 will not "unduly interfere" with the operation of the Securities Exchange Act. See Gordon v. New York Stock Exchange, 422 U.S. 659, 686, 95 S.Ct. 2598, 2613, 45 L.Ed.2d 463, 481. Section 94 will have no impact whatever upon the vast majority of lawsuits brought under that Act. In the tiny fraction of litigation where its effect will be felt, it will foreclose nobody from invoking the Act's provisions. Members of the investing public will still be free to bring actions against national banks under the Act. While suits against this narrow and infrequent category of defendants will have to be brought where the defendant is established, that is hardly an insurmountable burden in this day of easy and rapid transportation.12 Since it is possible for the statutes to coexist in this manner, they are not so repugnant to each other as to justify a finding of an implied repeal by this Court. It is simply not necessary" that § 94 be repealed in part in order "to make the Securities Exchange Act work." See Silver v. New York Stock Exchange, supra, 373 U.S., at 357, 83 S.Ct. at 1257, 10 L.Ed.2d at 400.
Moreover, it cannot be said either that "the later act covers the whole subject of the earlier one and is clearly intended as a substitute," or that "the intention of the legislature to repeal (is) clear and manifest." 296 U.S., at 503, 56 S.Ct., at 352, 80 L.Ed., at 355. The Securities Exchange Act of 1934 covers a "subject" quite different from the National Bank Act. The 1934 Act was enacted primarily to halt securities fraud, not to regulate banks. Indeed, banks were specifically exempted from many provisions of the securities laws,13 and Congress almost contemporaneously enacted other specific legislation dealing with the problems arising from banks' involvement in the securities business.14 The passage of that legislation and the exemption of national banks from important provisions of the securities laws suggest, if anything, that Congress was reaffirming its view that national banks should be regulated separately by specific legislation applying only to them.15 And there is nothing in the legislative history of the Securities Exchange Act to support the view that Congress in enacting it gave the slightest consideration to the Pro tanto repeal of § 94, let alone to indicate "that Congress consciously abandoned its (prior) policy," Morton v. Mancari, 417 U.S., at 551, 94 S.Ct. at 2483, 41 L.Ed.2d at 301, or that its intent to repeal § 94 Pro tanto was " 'clear and manifest,' " United States v. Borden Co., 308 U.S. 188, 198, 60 S.Ct. 182, 188, 84 L.Ed. 181, 190, quoting Red Rock v. Henry,16106 U.S. 596, 602, 1 S.Ct. 434, 439, 27 L.Ed. 251, 253.
In my judgment a brief reference to the history, purpose, and language of these two special venue statutes will provide a better guide to their meaning than the exposition of the doctrine of implied repeal found in the treatise on statutory construction written by Sedgwick in 1874. Indeed, if Sedgwick were to be our guide, I would heed this advice: "When acts can be harmonized by a fair and liberal construction it must be done."1
It is worth repeating that both of these statutes are special venue statutes. Neither party relies on the general venue provision in 28 U.S.C. § 1391. One relies on a special statute for one kind of litigant national banks; the other relies on a special statute for one kind of litigation cases arising under the Securities Exchange Act of 1934. The precise issue before us involves only a tiny fraction of the cases in either special category: Most litigation against national banks does not arise under the Securities Exchange Act; and most litigation arising under the Securities Exchange Act does not involve national banks. Thus, with equal logic we might describe either statute as creating an exception from the somewhat more general provisions of the other.
The rule that the legislature presumably intended to give effect to the more specific statute could therefore be applied to support the petitioner, as well as the respondent bank, in this case.2 Similarly, without pausing to consider the reason why each statute was enacted, we might simply apply the rule that the more recent of two conflicting statutes shall prevail,3 rather than the rule that the special statute takes precedence over the general. But such abstract reasoning is less instructive than a consideration of the source and the need for the alleged conflict. Of special importance is an evaluation of the intent of Congress when it enacted these statutes.
The source of the special venue statute for national banks is the Act to Provide a National Currency enacted in 18634 and amended in 1864.5 When these statutes were enacted, Congress apparently assumed that the newly authorized national banks would not be subject to suit in state courts unless Congress gave its express consent.6 The fact that the statute was phrased in permissive language suggests that Congress' primary purpose was to give such consent. The mandatory construction given to that language a century later when the Court decided Mercantile Nat. Bank v. Langdeau,7 371 U.S. 555, 83 S.Ct. 520, 9 L.Ed.2d 523, is consistent with that purpose because it is unlikely that the Civil War Congress intended to authorize the several States to subject national banks to the potential harassment of defending litigation in places other than the county or city where the bank was located. This reason for placing a mandatory limiting construction on the authorization for suit in the state courts is not applicable to the separately enacted federal venue provision; for in any event the federal courts could only entertain such litigation against national banks as Congress might authorize.
On the other hand, the special venue section included in the Securities Acts was specifically designed to implement an important legislative objective. Indeed, in construing the comparable provision in the 1933 statute, the Court held that its benefits are so crucial to the legislative purpose that they cannot be waived.8 In contrast, it is well settled that a national bank's special venue privilege is waivable.9 Manifestly, there is a difference between the importance of the policies underlying the two statutes.
But there is no necessary conflict. Since the two Acts can be harmonized by a fair and liberal construction, if we heed Sedgwick's counsel, that "must be done." As already noted, the actual wording of the earlier statute, which used the words "may be had" provides no conflict with a literal reading of the later Act. The conflict is created solely by this Court's interpretation of those words as, in effect, meaning that the trial of a case against a national bank "must be had" in the place specified by Congress rather than the place specified by a state legislature. If we so read the statute, we need only conclude that any later enacted special venue statute which, by its own terms, applies to national banks should be read to mean what it says. Preoccupation with the ancient doctrine of implied repeal should not foreclose this simple construction of the plain language of the 1934 Act.10
The rule that repeals by implication is not favored, like all other canons of statutory construction, is merely one of the guidelines to observe in the search for a construction which will best reflect the real intent of the legislature. When we are dealing with a well-established and clearly defined old rule, it is usually reasonable to suppose that the legislative intent to change such a rule would be unambiguously expressed. Or if we are dealing with an old rule that is an established and important part of our national policy, we must be sure that it is not changed simply by inadvertent use of broad statutory language. Thus, if Congress intended to modify the long-settled practice of preferential hiring of Indians on Indian reservations,11 or to limit the coverage of a statute as important as the Sherman Act,12 a court would require an unambiguous expression of intent to make such a change; without such an expression it is reasonable to believe that inadvertence, rather than an intent to repeal, is the actual explanation for the broad language that arguably changes the old rule.13 But if neither the existence of, nor the reason for, the old rule is clear at the time of the later enactment, there is no special reason for questioning the legislative intent to have the later statute mean exactly what it says. Specifically, in this case, since it is clear that Congress intended national banks to be covered by some sections of the Securities Exchange Act, but not others,14 and since the purpose of authorizing a broader venue in this type of litigation applies with equal force to national banks and other defendants, the canon of construction strikes me as an unreliable guide for ascertaining the true intent of Congress.
See 15 U.S.C. §§ 77c(a)(2), 77L (2); cf. 15 U.S.C. § 78c(a)(6).
This intention was expressly stated by Congress when it exempted bank securities from the registration statements requirements of the Securities Act of 1933: "(A)dequate supervision over the issuance of securities of a national bank is exercised by the Comptroller of the Currency." H.R.Rep. No. 85, 73d Cong., 1st Sess., 14 (1933). Subsequent Congresses have continued to follow this policy. For example, while national banks are subject to the registration, reporting, and proxy requirements of the Securities Exchange Act, in 1964 Congress amended the Act so that the administration of those parts of the Act with respect to banks was transferred from the SEC to the various federal banking authorities. See § 3(e), 78 Stat. 568, 15 U.S.C. § 78L (i).
The Securities Act of 1933 contains explicit exemptions for national banks at 15 U.S.C. §§ 77c(a)(2), 77L (2), as does the Securities Exchange Act at 15 U.S.C. § 78L (i).