Source: http://nj.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19720426_0040340.C03.htm/qx
Timestamp: 2016-10-25 15:57:06
Document Index: 707565594

Matched Legal Cases: ['§ 36', '§ 36', '§ 36', '§ 36', '§ 7', '§ 36', '§ 36']

| Springfield State Bank v. National State Bank of Elizabeth
Springfield State Bank v. National State Bank of Elizabeth
decided as amended may 2 1972.: April 26, 1972.
SPRINGFIELD STATE BANK, A BANKING CORPORATION OF NEW JERSEY, APPELLANT,v.THE NATIONAL STATE BANK OF ELIZABETH, A NATIONAL BANKING CORPORATION, ET AL.
The plaintiff, Springfield State Bank, herein called "Springfield Bank", a banking corporation of the State of New Jersey, brought this suit in the District Court for the District of New Jersey on July 22, 1969 against the National State Bank of Elizabeth, herein called "National State", and the Union Center National Bank, herein called "Union Center", two national banking corporations, and William B. Camp, Comptroller of the Currency of the United States. In its complaint Springfield Bank alleged that since February 20, 1969 it has enjoyed the right of so-called "home office protection" conferred by N.J.S.A. 17:9A-19; that the defendants have violated that right, contrary to the New Jersey statute and 12 U.S.C.A. § 36 in that the Comptroller had granted or was about to grant approvals to National State and Union Center to establish branches in the Township of Springfield, Union County, New Jersey, plaintiff Springfield Bank's home office municipality, and National State and Union Center are wrongfully operating branches in that municipality. The complaint sought, inter alia, to restrain the implementation of the approvals thus granted by the Comptroller to National State and Union Center for the establishment of branches by each in the Township of Springfield; to enjoin National State and Union Center from acting pursuant to those approvals and from commencing construction of branch bank facilities in the township; and to adjudicate that the approvals in question were illegal.
Following the filing of the complaint, the district court denied a temporary restraining order sought by Springfield Bank and thereafter on July 30, 1969, after hearing, denied its application for a preliminary injunction. Thereafter the parties filed cross motions for summary judgment accompanied by affidavits. The facts were undisputed. The district court on July 10, 1970 filed an opinion holding that, under the law of New Jersey, Springfield Bank was not entitled to home office protection from February 20, 1969, the date it received approval from the Commissioner of Banking and Insurance of New Jersey of its application for a charter for a new bank in the Township of Springfield, but only from January 31, 1970, the date on which, after litigation, it actually opened its principal office in the township. Since National State and Union Center had actually opened their branch offices in the township prior to the latter date, namely, on July 18, 1969, the district court concluded that Springfield Bank was not entitled to home office protection against those branch offices and that the defendants' motions for summary judgment should be granted. Four days later and prior to the actual entry of the summary judgment the Appellate Division of the Superior Court of New Jersey decided an appeal from the Commissioner of Banking and Insurance entitled In re The Summit and Elizabeth Trust Co., App. Div.1970, 111 N.J.Super. 154, 268 A.2d 21, which involved the right of the Summit and Elizabeth Trust Company, herein called "Summit", to establish a branch bank in the Township of Springfield as against the objections of Springfield Bank and National State.*fn1 The court held that Springfield Bank was entitled to home office protection from February 20, 1969, the date its charter was approved rather than only from January 31, 1970, the later date on which it actually opened for banking business after receiving its certificate of authority to do so. Since Summit's application for branch banking authority was filed on May 5, 1969 and approved on January 20, 1970, all of which was subsequent to February 20, 1969 although prior to January 31, 1970, the court held that it was not entitled to open its proposed branch in view of the protection accorded Springfield Bank by the New Jersey statute, N.J.S.A. 17:9A-19. Springfield Bank promptly asked the district court to amend its conclusions of law filed July 10, 1970 to accord with the decision of the New Jersey court in the Summit case, but the court on December 7, 1970 filed a second opinion adhering to the conclusions reached in its first opinion, and on December 23, 1970 summary judgment in favor of the defendants was entered. From that judgment Springfield took the appeal now before us.
Section 5155 of the Revised Statutes of the United States, as amended by the Banking Act of 1933, 12 U.S.C.A. § 36, in pertinent part provides:
The district court in its first opinion in the present case took the home office protection provisions of the New Jersey statute to mean that such protection did not attach to a newly incorporated bank until its home office had actually been opened for business. It appears that up to the time the opinion was filed the New Jersey courts had not dealt with the effect of this provision of the statute and the district court relied upon its own prior opinion in Suburban Trust Company v. The National Bank of Westfield, D.C.N.J.1963, 222 F. Supp. 269, in which it had held that branch office protection under the statute did not attach until the branch office of the bank invoking it had actually opened for business. The branch office protection involved in that case was regarded by the court as closely analogous to the home office protection involved in this case. However, as we have seen, the Appellate Division of the Superior Court of New Jersey, only four days later, held in the Summit case that the very same home office of the very same bank, Springfield Bank, which is involved in this case, was entitled under the statute to home office protection from February 20, 1969, the date its charter was approved. Although this New Jersey decision of the precise question involved in the present case was promptly called to the attention of the district court by Springfield Bank in support of its motion to amend the court's conclusions of law, the court declined to follow or apply it, reaffirmed its original conclusions and entered judgment for the defendants. In so doing we think the district court erred.
The responsibilities of the Comptroller of the Currency in dealing with an application for the establishment of a branch office under the national banking law, 12 U.S.C.A. § 36(c), are twofold. In the first place, he may grant the application only if the statutory law of the state in which the national bank is situated authorizes state banks to establish and operate branches "by language specifically granting such authority affirmatively and not merely by implication or recognition." This, as we pointed out in Howell v. Citizens First National Bank of Ridgewood, 3 Cir., 1967, 385 F.2d 528, 530, involves a federal question "to be decided by reading the state statute through lenses prescribed by the Congress." But, in addition to determining this question, the Comptroller must apply to the application "the restrictions as to location imposed by the law of the State on State banks." The latter involves no federal question. On the contrary, after having found that the statutes of the state, read through the Congressionally prescribed spectacles, authorize branch banking, it becomes the duty of the Comptroller, in determining whether a national bank may establish a branch at a particular location in the state, to follow and apply the whole relevant statutory and decisional law of the state as interpreted by its courts and applied to its state banks. We think it is clear from the way in which the federal statute is written that when the Comptroller comes to act upon the application of a national bank for a branch in a state which he finds specifically authorizes branch banking he is to apply the state restrictions upon its location in exactly the same way as the state banking authorities would be required to do with respect to an application by a state bank for a branch at the same location. First Nat. Bank of Logan, Utah v. Walker Bank, 1966, 385 U.S. 252, 87 S. Ct. 492, 17 L. Ed. 2d 343; First National Bank in Plant City, Florida v. Dickinson, 1969, 396 U.S. 122, 90 S. Ct. 337, 24 L. Ed. 2d 312.
In First Nat. Bank v. Walker Bank, 1966, 385 U.S. 252, 261, 87 S. Ct. 492, 497, 17 L. Ed. 2d 343, the Supreme Court said:
"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 Acts, 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. . . ."
This rule was reaffirmed in First National Bank v. Dickinson, 1969, 396 U.S. 122, 90 S. Ct. 337, 24 L. Ed. 2d 312, the Court stating:
"The conditions under which national banks may establish branches are embodied in § 7 of the McFadden Act, 44 Stat. 1228, as amended, codified in 12 U.S.C. § 36. One such condition is that a 'branch' may be established only when, where and how state law would authorize a state bank to establish and operate such a branch, 12 U.S.C. § 36 (c) . . .
"We need not review the legislative history of the McFadden Act and prior national bank legislation as it relates to this problem; that task was performed by Mr. Justice Clark in Walker Bank, supra, where a unanimous Court noted that the McFadden Act was a response to the competitive tensions inherent in a dual banking structure where state and national banks coexist in the same area. That Act reflects the congressional concern that neither system have advantages over the other in the use of branch banking. . . ." [396 U.S. at pp. 130, 131, 90 S. Ct. at p. 342]
Here the Appellate Division of the Superior Court of New Jersey has applied the restrictions on location of branch banks imposed by the law of New Jersey to prohibit the establishment of a branch bank in the Township of Springfield by reason of the home office protection which the Appellate Division held the Springfield Bank has enjoyed under the law since its incorporation on February 20, 1969. Since this determination by the state court was made before the entry of final judgment by the district court, it was the duty of the latter court to follow it as the current determination of the applicable state law in framing the judgment subsequently entered. Vandenbark v. Owens-Illinois Glass Co., 1941, 311 U.S. 538, 61 S. Ct. 347, 85 L. Ed. 327; Ziffrin v. United States, 1943, 318 U.S. 73, 63 S. Ct. 465, 87 L. Ed. 621.
The Comptroller argues, however, that the district court was right in continuing to rely upon Suburban Trust Co. v. National Bank of Westfield, D.C.N.J.1963, 222 F. Supp. 269, and that it was not required to follow the intermediate state court decision in the Summit Bank case, citing in support of this contention Commissioner of Internal Revenue v. Estate of Bosch, 1967, 387 U.S. 456, 87 S. Ct. 1776, 18 L. Ed. 2d 886. That case involved federal estate tax liability and presented a federal question which makes it wholly distinguishable from the present case. It is well settled that where, as here, state law governs, a federal court may not decline to accept a rule announced by a court of intermediate appeal deciding a state question. Fidelity Union Trust Co. v. Field, 1940, 311 U.S. 169, 61 S. Ct. 176, 85 L. Ed. 109; Six Companies v. Joint Highway Dist. No. 13, 1940, 311 U.S. 180, 61 S. Ct. 186, 85 L. Ed. 114; West v. A.T.&T. Co., 1940, 311 U.S. 223, 61 S. Ct. 179, 85 L. Ed. 139; McLouth Steel Corp. v. Mesta Machine Co., 3 Cir. 1954, 214 F.2d 608, 610, cert. den. 348 U.S. 873, 75 S. Ct. 109, 99 L. Ed. 687.
The defendants in the present case argue that the cases of Suburban Trust Company v. National Bank of Westfield, D.C.N.J.1963, 222 F. Supp. 269, and In re Application of Montclair Savings Bank, App.Div.1971, 114 N.J.Super. 196, 275 A.2d 746, are controlling here. We cannot agree. For the Appellate Division in the Summit case found the Suburban Trust Company case "plainly distinguishable" because it involved the branch office protection which was given by the New Jersey law prior to 1969, not the home office protection involved here. The Appellate Division pointed out that there are a number of significant differences between the incorporating and establishing of a new bank and the mere opening of a branch office by an existing bank. The procedure required to accomplish the one may take weeks or even months while the other may be accomplished much more quickly. Thus the considerations for determining when home office protection should attach in the one case and branch office protection in the other may be quite different. The Montclair Savings Bank case involved a factual situation quite different from that involved in the Summit case and the present case. The equities which the Appellate Division in the Summit case found to weigh in favor of Springfield Bank's claim for home office protection were not there present.