Earl Warren: Mercantile National Bank at Dallas, Appellant, versus C. H. Langdeau, Receiver and Number 91, Republic National Bank of Dallas, versus C. H. Langdeau, Receiver. Mr. Keith, you may continue your argument.
Quentin Keith: Mr. Chief Justice, and may it please the Court. Upon adjournment yesterday afternoon, I have words about to pass to another phase of the matter. That is to say, I do not dispute the fact that this Court can always determine the finality of a state court judgment and the determination of the finality of a state court judgment as a matter for this Court to determine. So, our Texas practice will not control, of course and I so hope can see, with Your Honors' permission I'll now pass on to the -- the matters involved in this lawsuit as -- if it reaches the merits, the Court reaches the merits of the consideration of this suit originated with Mr. Langdeau as the receiver appointed of an insolvent insurance company. He was appointed a receiver under our Liquidation Code or under our Insurance Code. This is a lawsuit that was brought under the provisions of a particular Texas statute which says in substance and it is quoted in our brief “that the Court of competent jurisdiction of the county in which delinquency proceedings are pending, under this Act shall have venue to hear and determine all actions and proceedings et cetera instituted by the receiver”. That is followed by another provision of the code which says a court, unless the same clearly appears to the contrary from the text, means that court in which the delinquency proceedings are pending. Now, I say to you, Your Honor, that this is the type of a case that the Supreme Court mentioned and had in mind when they brought upon the decision in Casey against Adams. It was your -- with the Court's permission, I would like to quote very briefly from Casey against Adams. That is the case Mr. Johnson alluded to very briefly yesterday. That is the only case by this Court which squarely presents a question involved in this case. That is to say whether or not this particular -- peculiar federal statute relating to national banks must be observed in every instance and that there are no exceptions. Casey --
Felix Frankfurter: I don't -- Mr. Keith --
Quentin Keith: Yes, sir.
Felix Frankfurter: I fully understand what was decided in Morgan but I do not quite see why you say it wasn't presented there.
Quentin Keith: I've -- I had not alluded to Morgan if -- if Your Honor please. I was speaking --
Felix Frankfurter: But you just said, the only -- you just said that Casey was the only case in which that issue would (Voice Overlap).
Quentin Keith: The Morgan case, sir, if I may allude to it. The Morgan case held that the bank had waived this right.
Felix Frankfurter: I understand that.
Quentin Keith: Yes, sir.
Felix Frankfurter: I fully understand that.
Quentin Keith: Now --
Felix Frankfurter: I understand that. All I'm saying is that before they got to waive, they considered -- the Court considered quite extensively, what it is that required waiver or what -- what is -- what's involved in the waiver.
Quentin Keith: Correct, sir.
Felix Frankfurter: I fully understand that you can say technically that was a -- that was a dictum. And if the Court had written an opinion in which it said in fact, whatever may be the requirement of the statute in this case, you're not called upon to decide it because even if it was waived, but there was no even if talking in the Morgan opinion, was there?
Quentin Keith: No, sir -- no, sir. I concede sir, that there is some language in the Morgan case that is adverse. But I say to Your Honor and I say again that Casey against Adams is the only case in which this Court has squarely faced and where it was not over to dictum.
Felix Frankfurter: You said -- I followed you yesterday. I thought your argument yesterday was, and I don't see why you shouldn't have a greater wisdom overnight. But your argument -- your argument yesterday was that the impact of national banks or the role of national banks in the economy in -- in the banking scheme of the country as a matter of fact has considerably changed since the Morgan case in that knowledge, whatever may numerical number of national banks in Texas, their power unrelated to the unit of banks, their power is far greater than the larger number of state banks, that's what your oral argument yesterday, isn't it?
Quentin Keith: There is no question -- there is no question about that. It does not appear in the record but it --
Felix Frankfurter: Well, I understood to say that you wanted us in effect understanding these words. You properly, to my point of view, you said that what was said in Morgan should be reconsidered because the underlying circumstances were different.
Quentin Keith: I will still adhere to that statement, sir. But if I come back and I repeat sir with your permission that Casey against Adams is the only case in which this Court has squarely faced the issue of Section 94 as to whether or not it is a mandatory provision. There, if I may say so, was a case wherein a bank in New Orleans had timely claimed their privilege to be sued in New Orleans, but the land upon which the lawsuit was predicated to clear the title to it was situated in another phrase, a similar -- a similar to a county in the State of Louisiana. The court there held that -- and this is a very brief quotation that I want to present to the Court. It says this, “We think this statute, we think relates to transitory action only and not to such actions as or by law local in their nature”. And that Section 5136, that's the predecessor of the present Section 24, subjects the banks to suits at law or in equity as fully as natural persons, and we see nowhere in the banking act any evidence on the part of the Congress to exempt banks from the ordinary rules affecting the locality of actions found at all local claims.
Felix Frankfurter: I don't remember and you will tell me, the Casey case was earlier than the Morgan case.
Quentin Keith: Yes, sir. The Casey case --
Felix Frankfurter: If the Morgan case eat what you just quoted.
Quentin Keith: The Casey case was, sir, was in 19 -- in 1880 and the Morgan case 19 years later in 1899.
Felix Frankfurter: Well, now that the Morgan case --
Quentin Keith: The Morgan case --
Felix Frankfurter: -- go back on what -- what you'd find in Casey?
Quentin Keith: Sir?
Felix Frankfurter: Did the Morgan case go back on what you'd find in Casey?
Quentin Keith: I do not, sir. I do not think that the Morgan case --
Felix Frankfurter: It seems to me very strange that the Morgan case discussing, not saying we're not qualified to discuss these things for there was waiver thus, discuss it on the merits quite -- quite unreservedly that the later case after a full discussion should have overruled in effect what you say was the prior law.
Quentin Keith: If they overruled it sir, they overruled it sub silentio because it had mention it, I don't know why, but if Your Honor will study the Morgan case, Casey against Adams wasn't mentioned there. And then certainly 19 years before there was bound about an overlapping judge on that point. I didn't study the personnel.
Felix Frankfurter: No just -- no justices had few books to turn to when they --
Quentin Keith: Yes, sir but --
Felix Frankfurter: -- cases that we have.
Quentin Keith: Yes, they had few books. But I think they studied them probably as well as we do some of our myriad of books.
Felix Frankfurter: Yes. Well, that's really insignificant that they didn't mention it?
Quentin Keith: Well, I would think sir that when they once have held a case and upheld firmly and definitely on a -- on a provision that was squarely presented and where it should not be considered over detective that they meant to hold what they say. And if it is overruled, it will be overruled as a matter of fact and expressly so. Now, sir, this case presents one wherein a lawsuit could have been brought in all over the one county because this man, its property itself was in custodia legis. The receiver had the control and the custody of the property itself. He was invested by a statutory authority to bring the suit in one county and one only. He brought that suit there. And he brought it against many individuals. Let me say to Your Honors that while this case has not yet been tried, this case precedes against the banks on the theory of a conspiracy on so-called year-end transactions. For instance and I now call Your Honors attention to page 180 and 100 and -- wait a minute, it is 169 of the -- of the record, as an illustration on what we are called upon here to establish upon the trial of this Court is on a transaction, for instance, that occurred on December 31 of 1953, the insurance company promoters and their operators being desires and of decorating their year-end statement borrowed $400,000 from the Republic Bank. Taking a security therefore, a box sealed up with an affidavit on it that it contains $584,000 worth of premium load. They purported to buy $400,000 worth of bonds on the 31st of December. They earmark those bonds and on January 2, reappropriated those bonds to their own accounts, canceled out the note and collected some few dollars in interest on $88.88 interest. Now, we have a conspiracy charge out of proposition that they were bolstering, that the banks directly participate or it is in the scheme to defraud the public. Now we have, in a conspiracy action generally and touch as it is elsewhere where a person joins a conspiracy already in existence and/or he participates in that conspiracy and where you get, you then can choose your form. We chose a form here because it was a statutory choice. We now have a situation wherein a conspiracy action such as I have demonstrate. That's only one of them. There are many of them.
Hugo L. Black: What do you mean by statutory choice?
Quentin Keith: By that is to say the Insurance Code which created this man's title the “statutory liquidator”, said under our Texas practice that new lawsuits shall be -- be brought in a court of competent jurisdiction where the delinquency proceedings are pending. The delinquency proceedings which are not challenged were brought in Travis County that has receipt of Government in Texas. The -- that is the court of competent jurisdiction having custody of the property of the defunct insurance company, one of the assets which is this lawsuit, seeking to recoup the money that the -- the debtors and the stockholders and the -- the unfortunate creditors of this company were defrauded of. So we say to Your Honors that this is a suit somewhat lacked the Florida case had in the Okeechobee case wherein -- I grant you again that that is a state court case. It is not binding and may be not even persuasive upon this Court. But the Okeechobee case was a situation wherein a -- two banks in Florida had contracted with a county whereby that they were going to deposit certain securities to secure county of funds. One of the banks was located in Jacksonville and another one was located, I believe, in Lake County. But in any event in two separate counties, there was a tripartite arrangement there. The Florida Court considered the statute which we have involved here and said in substance that if -- if, and my I quote for just a moment from that, “The suit could not be maintained against the one under the allegation of this bill of complaint without the other being joined in that suit under the Florida National Bank of Jacksonville may not be sued upon its joint contract in Okeechobee County and the People's Bank of Okeechobee County cannot be sued on its joint contract in Duval County then there is no jurisdiction in which a complainant may maintain its suit. We're not quite in that position here because granted that we can try a conspiracy case in two different forms. But Your Honors well know that the difficulty appended upon that. If you try one set of co-conspirator as one place, it is the other fellow that is guilty. If you try them together, it's the only place a successful conspiracy suit can ever be prosecuted. Now, if the Court please, I know I violated one of the Court's rules so we're going to split the argument. May I submit the remainder of the time to Mr. Cureton. Thank you, sir.
William E. Cureton: Mr. Chief Justice --
Earl Warren: Mr. Cureton.
William E. Cureton: -- and if it please the Court. The first significant and most important result of construing this federal statute has -- it's urged on the Court by the appellants, is that you are going to create a substantial area, a substantial number of cases where neither a federal court nor any state court will have jurisdiction.
Hugo L. Black: Why would this follow?
William E. Cureton: That will fall up for this reason. National banks cannot be sued or sue in a federal court at this time in most instances except in the same cases in which a local state bank or for that matter, a local state corp -- corporation can sue or be sued in a federal court. There are certain exceptions when there are suits involving a co --controller but that -- that's a very limited area.
Felix Frankfurter: Would you mind repeating that? I don't think I get the force of it.
William E. Cureton: The force of it is that a national bank cannot sue in a federal court or be sued in a federal court except in the same jurisdictional circumstances in which a local state bank --
Felix Frankfurter: Is that by federal statute?
William E. Cureton: That is by federal statute.
Felix Frankfurter: What is it? Have you got the reference?
William E. Cureton: I have, sir.
Felix Frankfurter: I thought those were independent provisions?
William E. Cureton: That, Your Honor, was a -- first grew out of a statute passed on July the 12th, 1882. It's in my briefs.
Felix Frankfurter: Where is that in your briefs?
William E. Cureton: I'll have it just a second. Page 27 of the brief.
Felix Frankfurter: This is 91 you're (Inaudible)
Hugo L. Black: This was passed on after the other statute?
William E. Cureton: This was passed on July the 12th, 1882. And it grew out of Chief Justice Marshall's decision in the Osborn case in which -- in which he decided because a national bank was a creature of Congress of federal statute that thereof -- and all of it's rights, powers and privileges were the result of the act of Congress therefore, that any suit that was instituted by or against the bank on any -- even a private cause of action necessarily was a suit under the laws of the United States and therefore it was removable. The Railroad cases followed that same reasoning until -- until this statute and then a --
Felix Frankfurter: What page did you say of your brief? You said 90 --
Hugo L. Black: On page 27 at the -- near the top of the page.
Felix Frankfurter: Alright.
Earl Warren: Go right ahead, Mr. Cureton.
William E. Cureton: Now --
Felix Frankfurter: That -- is that in construed to the (Voice Overlap) means?
William E. Cureton: Yes.
Felix Frankfurter: What you said is that a suit against the national bank can only be brought in the county in which a state and all the state banks could be sued.Is that right?
William E. Cureton: That is not correct, Your Honor.
Felix Frankfurter: What did you say?
William E. Cureton: Mr. Justice Frankfurter, I said that a national bank can only institute a suit in a federal court or be sued in a federal Court under the same jurisdictional circumstances that a local state bank with -- with a limited exception set out by the statute --
Felix Frankfurter: But that has nothing to do as to the venue of the county. Otherwise, this act would have repealed the earlier statute.
William E. Cureton: Mr. -- and that is exactly my contention in -- in our brief, Your Honor.
Felix Frankfurter: If you --
William E. Cureton: And I -- what I am trying to demonstrate is that that being true, and since our state venue and the counties in which suit can be brought in the states, the locality of actions in the state are governed by state law. For example, a suit involving title to the land like in the Casey versus Adams case. We can only bring that suit in our statute in Texas like most statutes and this has common law history, too, says that it must be brought in the county where the land is located.
Felix Frankfurter: But if you are right, that's an easy answer to this whole case then, all the case that I've been talking -- I've been talking irrelevances. What you're now saying is, in order to determine where a federal -- where a national bank may be sued, you go to the state -- to the state venue provision pursuing a state there?
William E. Cureton: That is correct, sir.
Felix Frankfurter: Well, if that's so, there's no problem. You've just turned 94 around instead of saying that the statute in 94 defined by Congress where a suit may be brought against the -- against the national bank even if brought in the state court. Do not make federal jurisdiction pendent on state jurisdiction.
William E. Cureton: I'm trying to say, Mr. Justice Frankfurter --
Felix Frankfurter: Is that what you're saying?
William E. Cureton: -- that we -- that there -- if you follow that construction of the statute urged by the appellant, that you have a no man's land area in which you have numerous cases that cannot be filed either in the federal court or the state court because the state statute controls the locality of actions filed in the State Court. And if it's a suit for the title of the land, it must be brought there and cannot be brought elsewhere. And if -- if it is a case in which the national bank cannot file in a federal court or cannot be sued in the federal court then there is no court anywhere in the land where that particular suit can be filed. And that was --
Felix Frankfurter: If you'll appeal at the other side because I'm trying to find out what you are saying. And if I follow you, what you are saying is, jurisdiction against the -- in a suit involving a national bank in the federal court is determined by the jurisdiction against the state bank in a state court. Is that what you're saying?
William E. Cureton: That is what I'm saying.
Felix Frankfurter: And that means that Section 94 is repealed.
William E. Cureton: That is one of the positions that we are -- have taken throughout this course and it's in our brief.
Felix Frankfurter: Okay (Voice Overlap).
William E. Cureton: That is correct, sir. Because -- I say that because this statute passed in 1882 following the difficulties that grew out of Chief Justice Marshall's opinion in the Osborn case in which they were removing every kind of case possible no matter what the amount was or the -- to the federal courts was passed in which it says provided however, that jurisdiction for suits hereafter brought by or against any association established under any law providing for national banking associations except suits between them and certain United States Government officials and the Government shall be the same as and not other than the jurisdiction for a suit by or against banks not organized under any law of the United States which do or might do banking business whereas such national banking association may be doing business. And it winds up and says, “And all laws and parts of laws of the United States inconsistent with this provision, provides all be and the same are hereby repealed”.
John M. Harlan II: What section is that? Is that in the code?
William E. Cureton: That is not in the code now. That remained in the code of the United States from July the 12th, 1882 until in 1948. Now, this is a part of the Banking Code. In July -- in 1948, when the Judiciary Act was passed, it was repealed as a part of the passing of the Judiciary Act without comment although most statutes that were repealed, there were some specific reason gave -- given for that. But in 1948, in passing Title 28, the Judiciary Code, it was repealed without comment. But what I'm saying, if this repealed Section 94 in 1882, the repealing of this statute in 1948 in no way revise or reconstitute Section 94.
John M. Harlan II: But was this argument (Inaudible)?
William E. Cureton: No, sir it did not. It's still a part of the banking provision. It was not. And the 1920 -- I'll call your attention further. The 1926 recodification did not repeal the prior existing laws but we must go back to what they were if there's any question about it.
Felix Frankfurter: But you're also saying, if you're right, that when this Court discussed Section 94 in 18 -- in the Morgan case, it discussed the Section that has been repealed and assumed that this was in existence.
William E. Cureton: In the Morgan case, the Court expressly said, “This case is not determined on the basis of the Act of July the 12th, 1882 because it was passed subject -- subsequent to the filing of this suit and by its own terms has no application to it.
Felix Frankfurter: Yes, I know that.
William E. Cureton: And if it had no application to that case, the Court has --
Felix Frankfurter: But, you --
William E. Cureton: -- except for saying that the Court had no reason to further discuss it.
Felix Frankfurter: And what -- and you are saying now that, impliedly, the 1882 Act repealed 94 and therefore in 1882 was repealed by 18 -- 1948. There was nothing left.
William E. Cureton: That is correct, sir.
Felix Frankfurter: That's what you're saying?
William E. Cureton: And I -- I particularly -- I want to come back to the question that if -- the importance of our position because you're going to have a no man's land area in Casey versus --
Felix Frankfurter: Only if you are right, only if you are right. You're assuming that you are right. Otherwise, it wouldn't be true.
William E. Cureton: Well, if -- if a national bank can always sue or be sued in a federal court, then I am wrong. But If I am correct in saying that a national bank except in certain exceptional instances cannot sue or be sued in a federal court. And I feel personally quite sure that I am correct in that except under the same jurisdictional circumstances that a local national bank or a local corporation, then you have a land title suit in Texas. But you don't have a diversity of parties. You don't have one of these peculiar or one of those federal parties in there, that suit cannot be filed in the federal courts. It cannot be tried in the state courts in Dallas County in this instance. It must be tried where the land is located. Therefore, no court has jurisdiction. That's the significance of Casey versus Adams. The Court there solved this. It solved that in suits when they're talking about a local suit. It solve that under state practice, that suit must be where the raise was in that instance. And that if they should give 94 the full literal significance that is urged on this Court, that there would be no court that had jurisdiction. And therefore they said --
Felix Frankfurter: Unless 94 has superiority over your state law restriction.
William E. Cureton: Mr. Justice Frankfurter, if the suit cannot be filed in a federal court because there's no diversity of parties or it has no jurisdiction, and it cannot be filed in the county in the state court where the banks are located because it's a land suit for example, there is no court, federal or state that has jurisdiction of that course of action.
Felix Frankfurter: But you're assuming that Congress cannot pass a venue statute that should control and put to one side a restrictive state venue statute relating to federal national bank.
William E. Cureton: Each one of these federal statutes have recognized that the Congress cannot give or take away or affect the jurisdiction of the state court insofar as it's -- the causes of action that it will entertain.
Felix Frankfurter: But the whole -- I'd like to be clarified about this. The whole power to sue a national bank in a state court is federally granted. The Congress may take it all away and restrict for the whole jurisdiction to the federal court.
William E. Cureton: Mr. Justice Frankfurter, may, if I -- if I may, let me grasp just a moment on that question. In trying to -- to establish what Section 94 mean, I've gone clear back to the creation of the First Bank of the United States. And I did that because I find that the author of the first National Banking Act of 1863, apparently from reading the Acts, had decided on the previous charters. The first national -- the first national bank was created in 18 -- 1791 and its charter provided that the bank was empowered to sue and be sued, defend, complain and answer in any court of record or anywhere else. Now, the first case that came up under that Act was the Deveaux case, which was simply a suit for conversion by some Georgia citizens against a branch of that bank situated in Georgia, there was not a diversity of citizenship nor was there any other jurisdictional reason why it could be filed in a federal court.
Felix Frankfurter: That isn't so, I'm sorry to say. National banks from the beginning, I happen to be familiar with the history of what you are now reading, national banks from the constitutional power to create them, rested on the power of the Federal Government to create federal agents, national banks of federal agencies and therefore it's within the power of Congress to restrict suit, the Court through which suits may be brought against federal agencies.
William E. Cureton: Mr. Justice Frankfurter, I do not deny that in the least. But Chief Justice Marshall in that case held that the Court did not have jurisdiction. And he -- since corporations where quite new in the United States that --
Felix Frankfurter: But that would be for a different --
William E. Cureton: Alright.
Felix Frankfurter: -- reason because of the whole conception of corporations in those areas --
William E. Cureton: Alright.
Felix Frankfurter: -- and incorporated would deem to thee --
William E. Cureton: Yes, sir.
Felix Frankfurter: -- individual citizens of the place where the thing was incorporated.
William E. Cureton: That is true sir. But when we pass on -- when that charter to that bank expired and it was recreated during the war of 1812. And the Osborn case came up subsequently in the early 1820's. That particular provision of the charter had been modified to say that state courts of competent jurisdiction and the Federal Circuit Courts would have jurisdiction. And Chief Justice Marshall in the Osborn case held to the Court in that particular instance had jurisdiction and quotes the new language in the second national bank charter and sustained it. Now, that charter expired during the Jackson Administration and there were no national banks until the National Banking Act of 1863. Since Chief Justice Marshall, we might not then viewing it from this 1960 have the same view but since he had placed significance on the mentioning of the federal courts by name, I say that it was a natural thing to do for the author of the bill in 1863 to have said the same thing in which in 1863, they did with no mention of state courts at that time, but where the extra language for the first time may be sued in the district in which they are located. In 1864, that whole National Banking Act was repealed and a new one passed which included state courts and had the reference to the county and in the city in which the suits were filed, which I say, it was an attempt to grant affirmatively, not a restriction but an affirmative grant growing out of the history in the Deveaux and the Osborn cases and not an attempt to restrict it. As a matter of fact, Chief Justice Marshall himself in the Osborn's case has this to say about the Deveaux case, whether this decision be right or wrong, he had rejected in the Deveaux case, this language that it could be sue or be sued in any court of record, whether this decision be right or wrong, it amounts only to a declaration that a general capacity of the bank to sue without mentioning the courts of the United States may not give a right to sue in those courts.There -- it -- with that language, there is no -- there's -- it -- it seems to me to follow plainly that the offer of the banks of the Act in 1863 and 1864, thought it necessary to mention the courts and that it was attempt to grant jurisdiction which were in reality this other language was amply brought to have permitted such suits. And if I may, in the -- this Supreme Court subsequently speaking through Mr. Justice Bradley said that the result of the Deveaux case was to leave the banks open to be sued entirely and only in state courts. And that case is cited in our brief and Mr. -- Mr. Bradley's language is quoted there. He says that the result of the Deveaux case was not to leave the banks where they couldn't sue or be sued in any court. But it left them solely to be sued and sue in state courts because the language of the act of Congress that says that they can sue and be sued in any court of record and that is in substance still a part of the National Banking Act to this day is broad enough. And there's no reason on Earth as we look -- as we view it now why that shouldn't be interpreted to give them broad powers. And if this other Act is an attempt to grant affirmatively power and not a restriction where you have another part of the statute that grants broader authority, then I say that it's not controlled. And if -- if we examine the terms of the statute, it doesn't say, may only be brought in the county where -- where the bank is brought. It doesn't say shall be brought. It doesn't say must be brought. It says maybe brought, which would indicate that the author means that he thinks he is granting something and that if he doesn't grant more, there is no more wherein in fact as a part of the banking -- Banking Act in 1863 and to the present day is this provision that they can be sued in any court.
Speaker: Perhaps there's more permissive, what purpose does it serve? What good is it?
William E. Cureton: I do not think at this time, Your Honor. It is our position that it is -- serves no purpose. But it's -- I -- I think it necessary that I undertake to explain the existence of the statute and why it exist. And I believe that the language of the Deveaux case and the Osborn case in the history of suits are examined carefully. And when Just -- Chief Justice Marshall says that naming the federal courts was important and necessary, I think it not surprising that in 1863, when the National Banking Act was passed, that they again named the federal courts at that time the District Courts and Circuit Courts and territorial courts. And again, and then of course there was doubt -- necessarily doubt with reference to state courts, name state courts.
Felix Frankfurter: Why should there be doubt about state court, if you are right?
William E. Cureton: I don't -- I don't think there is.
Felix Frankfurter: You just said that if there was doubt about a state court, that's why I'm asking you why there should be doubt about state courts. You're accounted for their references to state courts that were doubts. What doubt was it?
William E. Cureton: Mr. Justice Frankfurter, I don't believe that in -- in reading the Deveaux case --
Felix Frankfurter: But --
William E. Cureton: -- and --
Felix Frankfurter: you --
William E. Cureton: -- the Osborn case that -- that -- that a person can say parti -- not -- of course, not viewing it from our standpoint at this time but at that time, that there were not many grave doubts because the -- just -- Chief Justice Marshall for example says that a corporation couldn't be a citizen of a state. And therefore, there wouldn't be any diversity jurisdiction. Now, well, that's changed of course. There are many doubts that are cast on the subject.
Felix Frankfurter: In the (Inaudible) case in 309 U.S. this Court pointed out that the whole concept, the whole climate of opinion, the whole way of looking at things about corporation in the days of the Deveaux case were wholly different from our conception regarding a corporation as a legal personnel, and that's at the bottom of the Deveaux case, not the relation between state and federal courts.
William E. Cureton: He (Voice Overlap)
Felix Frankfurter: They didn't conceive of a corporation as being a legal person suing and suable, they thought a corporation with a collection, was a company of adventurer as they call it.
William E. Cureton: That -- if they talk, he discuss this whether or not if all of the stockholders lived in a certain county, venue or state, then that might create diversity of citizens.
Felix Frankfurter: By the time they got around to -- by the time they got around to the -- at the time of the Casey case and the Morgan case, that motion of a corporation have long since gone by way of the Bank of Augusta against Earle and all the other decisions when Chief Justice Stone is gone.
William E. Cureton: Let me come back if I may to this proposition. I have searched through the library here in the Supreme Court as well as our own and I find no congressional committee reports and no debates on the intent or purpose of this section. I think in the Morgan case, you may well -- the Court is in there in discussing the -- he speculates on possible purposes that it might have. Since it had not been properly raised in the lower case and the Morgan case, it was waived and the Court, technically, did not have to reach the question and did -- it didn't cite or mention Casey versus Adams which was the only Supreme Court case in existence that time which had held local actions both by common law and by statute. That's the language of Casey versus Adams. Local actions both by common law as that distinction is made between local and transitory actions and by statute. And the Court was saying that because the Court realize what my first premise here, that the locality of actions in state courts is fixed by state law, either common law or statute and that there's a broad area where no court would have jurisdiction. If this statute has given an absolute literal, unbendable interpretation and that if you file a suit -- if you had a suit involving the title of land, I use that, there are many other cases in some county where the bank wasn't located and the federal court didn't have jurisdiction by reason of diversity and the state court in the county where the bank was located doesn't have jurisdiction by reason of its own local laws governing the locality of action. No court has jurisdictions. No court has jurisdiction anywhere. Casey versus Adams is founded on that principle. The Morgan case never reached it. It was a waiver case. The bank tried its case, it didn't raise the question, only raised it on appeal. And the only actual decision in the Morgan case is that of waiver.
Hugo L. Black: Was this argument (Voice Overlap)
Speaker: (Inaudible)
William E. Cureton: I have cited in the brief a case from Connecticut and another case which specifically and expressly say that when a statute fixes the county in which the court had venue, that a common law distinction of local and transitory no longer upholds and that it is a local action by state statute. We do have a Texas case that holds that -- our venue is entirely regulated by statute that the common law distinction between transitory and local action no longer holds and that they're entirely governed by statute. And in the Court in Casey versus Adams not only says the common law distinction but by statute recognizing that in many states that the venue is controlled or the locality of the action is controlled by a statute.
Potter Stewart: On this case, the Texas Court explicitly refrained from deciding whether or not this was a local action, am I right?
William E. Cureton: That is, they decided without it.
Potter Stewart: So, if -- if you're right as to the Casey case that carved out of its -- at least carved out on the exception that 94 would respect the local actions and if this Court should decide that that's all it did, then would it be your view that it would be our duty to remand it to the Texas Court to decide whether or not this was a local action under local law?
William E. Cureton: It would be, sir.
Potter Stewart: Rather than for us to determine that it was a local action. This certainly isn't the kind of traditional interim action about the -- about the --
William E. Cureton: It isn't but it also --
Potter Stewart: It is not a suit to acquire title or anything like that.
William E. Cureton: No, but it is a peculiarly local actions since the Court in which the delinquency proceedings are pending has custodia legis of all of the insolvent insurance company's property.
Potter Stewart: The Court --
William E. Cureton: And it (Voice Overlap) it is a District Court of general jurisdiction in Travis County, Texas.
Potter Stewart: Isn't a tort action?
William E. Cureton: This -- yes, this -- this suit if independent of the statute and going back to the common law of distinction between transitory and -- and local action would be transitory and it is -- it is a sec -- we -- I -- I wouldn't say it's entirely tort because the suit against the banks here involves not only a charge of conspiracy but also that having let this man Ben Jack Cage borrowed $920,000 on December the 31st -- personally on his personal note, the vice president of the bank taking out a deposit ticket to the insurance company under a long committees agreement that the money won't be removed and it will be paid back on January the 2nd. And then, having been paid back the banks had stopped to deny that those are not the funds of the insurance company. So, it's not entirely tort.
Potter Stewart: So what -- what -- what was that slander theory be?
William E. Cureton: I still think that's (Voice Overlap)
Potter Stewart: I mean that's just (Voice Overlap).
William E. Cureton: Yes, I still think that's a transitory. If you go back to the common law distinction but -- I'd go back to Casey versus Adams which not only says local action has a common law of history but as made so by a statute.
Potter Stewart: Where is -- can you tell us any opinion, any record, which I guess begins on page 365, where it is that the Texas Court says that they are refraining from deciding whether or not there's a local action. I can't find it but I --
William E. Cureton: They specifically say that --
Potter Stewart: Well, I thought they had.
William E. Cureton: We make no point with that.
Potter Stewart: I thought they had.
William E. Cureton: We of course, were trying this case with an eye on being here today. And we're -- and we're familiar with Casey versus Adams and -- and wanted them to decide that point. But they actually decided it on a different basis.
Potter Stewart: On a broader basis.
William E. Cureton: On a broader basis and -- and ignore that point except to say that they -- they are not making that decision.
Potter Stewart: But then my question to you and I guess perhaps you've answered it is whether you think it's up to us to decide whether this was a local action or whether if we decide that Casey exception should prevail that we should remand it to the Texas Court to decide or whether under local laws or local action.
William E. Cureton: There -- if I may say this much further, Mr. Justice Stewart. There had been one case on -- that has come up from the lower courts as to whether this particular statute was mandatory and even controlled over other cases where they were -- had been mandatory before. It went to intermediate Appellate Court, the Supreme Court of Texas refused a writ in it. There has recently been a case coming up from another intermediate court that held to the reverse. The Supreme Court in -- of Texas in the last two weeks has granted a writ in that case. In the first case, they -- they let the matter stand in that case they -- which held in reverse, they have granted a writ so we have -- of course, we have reason to believe that they will hold that this statute is not mandatory in controlling over other mandatory provisions in our code.
Felix Frankfurter: But basically in Adams as Justice Stewart indicated, Casey and Adams for the construction of Section 94 in a case relating to real estate. And Chief Justice in writing the opinion said local actions which are in the nature which concern the things which are in the nature of suits. And therefore, he construed the statute to mean that if you go after the thing, you have to go after it where it is. Isn't that right? Isn't that what the Chief Justice said?
William E. Cureton: He did say that but he also said, Mr. Justice Frankfurter, and made it very plain that he referred to local actions both at common law and local actions made so by statute.
Felix Frankfurter: But it can't be whether the state by calling all actions local can derail the federal act. That's too easy.
William E. Cureton: Mr. Justice Frankfurter, in all candid, there is no -- there is no language of course in 94 that specifically for the course in Casey versus Adams to base its decision on. I understand --
Felix Frankfurter: But, we --
William E. Cureton: -- we understand that.
Felix Frankfurter: But we lawyers constantly construe language in its settings.
William E. Cureton: And --
Felix Frankfurter: Chief Justice -- waived it perfectly, if I may say so without disrespect, lawyer-like things and say you construe this in the light of circumstances that went vividly in the minds of the Congress. And when you're confronted with that kind of a problem, you put yourself in the place of the Congress. And it couldn't be that he in effect, these aren't his words, I'll come to the exact words in a minute, but couldn't be that they meant suit must be brought and get hold of the thing where there is no thing. And therefore he said it doesn't apply to interim proceedings.
William E. Cureton: It is my views that he saw clearly at that point that there was an area where no court would have jurisdiction and that therefore, some distinction had to be made between a situation where the state court wouldn't have jurisdiction in the county where the bank was located and the federal court would not have jurisdiction of the case here because there was no -- either by subject matter or no diversity upon it.
Felix Frankfurter: I have find no such statute as you find.
William E. Cureton: Thank you.
Felix Frankfurter: And what you do indicate what your argument leads to is if you fail on a ca -- in Casey's case is that a state by statutory definitions would make every action local and therefore practically puts to sleep Section 94.
William E. Cureton: Of course, if I am right in the premise that that Act is repealed, Mr. Justice Frankfurter --
Felix Frankfurter: No I -- I had that in mind.
William E. Cureton: Oh of course, yes.
Speaker: (Inaudible)
William E. Cureton: We would be very happy in this litigation to have it decided on that --
Speaker: (Inaudible)
William E. Cureton: If the state court said that under the rule of Casey versus -- versus Adams, the rule wouldn't apply.
Speaker: (Inaudible)
William E. Cureton: That still poses a serious question is to whether --
Speaker: Did you go in your other argument?
William E. Cureton: If they say that that is not a local action, they are also saying at the same time that that suit can be tried in Dallas County under Texas practice.
Speaker: Well I might say that (Inaudible).
Potter Stewart: So, it'd be at your first argument (Voice Overlap).
William E. Cureton: Under Texas practice, when -- when a court doesn't have venue, the suit isn't dismissed. It simply --
Felix Frankfurter: Transferred.
William E. Cureton: -- transfers the case -- the papers and the case is never dismissed. It remains on file. The case simply would be sent to Dallas as far as these people were concerned. But we -- the promoters of this corporation and the directors of this corporation, who were parties to this year-end transaction, could be down in Austin and the banks would be in Dallas. And we've been in pretty bad shape.
Speaker: Well your (Inaudible)
William E. Cureton: We would have to transfer as to the banks only. We couldn't transfer the rest of it.
Speaker: Yes.
William E. Cureton: So we would have the banks in Dallas and the people -- the promoters and people who were the instigators of this thing would be in another court.
Speaker: This would follow if you're right (Inaudible)
William E. Cureton: That is correct, sir.
Felix Frankfurter: And what is the reason that you are after him?
William E. Cureton: Sir?
Felix Frankfurter: What is the reason that you're -- you are after here? Did you ask for any attachment?
William E. Cureton: We do not say, Mr. Justice, that this stands on a -- a raise or the common law distinction. We say that it is a local action by mandatory state venue statute.
Felix Frankfurter: Statute makes it so.
William E. Cureton: Yes, sir.
Felix Frankfurter: Your local law makes it?
William E. Cureton: That makes it so.
Felix Frankfurter: Which means that this -- that the local law of any state can make anything of transitory action, anything non-transitory action and --
William E. Cureton: And I -- I find nothing wrong with that Mr. Justice Frankfurter because a national bank in reality is a local concern doing a broad local business. It does have national significance and in the beginning had in even much broader significance. And it had a great fight at one time between the state banks and the national banks.
Felix Frankfurter: This isn't a question of wrong or right, this is a question of what limit -- what Congress has done if it has done anything as to where suits maybe brought against national bank. It closely confined a question (Voice Overlap)
William E. Cureton: That is correct, sir. But I am trying to create an environment by pointing out the necessary results that would cause this Court to want to find that my interpretation is incorrect.
Felix Frankfurter: More for environment when it comes to matters of policies and when it comes to questions of venue, environment is a very different place.
Earl Warren: Mr. Leachman.
Neth L. Leachman: If Your Honors please, I would like to go back first and elaborate a little on the nature of this case purely from the pleading standpoint. There was no evidence introduced below. It was all agreed and it's all a matter of record these pleas of privilege controverting affidavit in the complaint. So any statements made by counsel outside of the pleadings are, of course, not in the record. They went a little far, went to Brazil out of the record that I don't think that'll be -- it would be necessary for me to go out of the record and I only intend to. The plea -- the petition shows that this is a suit, and I say this deliberately and not in -- with any malicious thought that this is a monstrosity, this suit. And I want to tell you what it is. It's 144 defendants that this -- that this receiver is sued allover Texas in the United States and some in England and which the general theme running throughout this complaint is this, “That this ICT Insurance Company was organized in 1950”. They said when it was organized, it was insolvent. That at all times from 1950 to 1957, when it was put in to receivership and a state liquidator for insurance companies took it over, that it was insolvent. That all of these people that had dealings with it over this period of seven years, know -- knew that it was insolvent and that their transactions with this insurance company were made with the ulterior motive and purpose of keeping it head above water, so to speak so that it could continue to commit frauds on stockholders, policyholders and the public at large. That puts these two banks in the position of -- of dealing with an insurance company under the pleadings. That it knew to be insolvent, lending it money from time to time. And they do ordinary course of the banking business, knowing that it was insolvent, not lending it the money as a pure banking transaction to get interest on the money but to keep this broke insurance company alive so it could commit vast frauds on -- on the public at large. Now, with 144 defendants in the case and each one conspiring with each other, I ask an actuary to tell me just how many conspiracies that would be. And he came up with an astronomical figure that was greater than Mr. Glen's argument. It was 22 with six figures behind it and then trillion, trillion, trillion conspiracies. Now, we are asked to -- these two banks are subpoenaed to come down to Austin, Texas to bring their attorney with them, to bring an officer with them, to bring their records with them and sit there throughout that kind of a trial. I don't know how long it would take. No member of this Court could -- could guess how long it would take.
Potter Stewart: Your bank is located in --
Neth L. Leachman: Dallas.
Potter Stewart: -- Dallas.
Neth L. Leachman: Yes.
Potter Stewart: And this lawsuit was brought in Austin?
Neth L. Leachman: Austin, Texas.
Potter Stewart: We -- some of these cases like Colorado River case we have a map in front of us --
Neth L. Leachman: Yes, it's 200 miles.
Potter Stewart: I don't have the map (Voice Overlap) It's about 200 miles?
Neth L. Leachman: 200 miles south of (Inaudible)
Potter Stewart: And where is the other bank located?
Neth L. Leachman: It's in Dallas, too.
Potter Stewart: Also in Dallas.
Neth L. Leachman: Both these banks are in Dallas. Now, if you have to go down there and engage in that sort of a -- I'm on the same mileage. It would tremendously expensive because every member of this Court knows that clients pay their attorneys expenses when they're out of town on their business and don't pay it when they're in town on their business. Now, if they tried it in Dallas, they wouldn't have any --
Potter Stewart: Lawyers are not arguing against that principle.
Neth L. Leachman: Sir? No, I'm getting to the irreparable entry that's mentioned in some of the -- this Court's decisions on the jurisdictional question. That's what I'm talking about. And it would be quite an inconvenience to put it most mileage as to have to go down there. And in the Morgan case, the -- the -- this Court said that it's -- it assumed that it was passed for the standpoint of convenience over the banks. It could see no other reason for it. Now --
Earl Warren: Are either of these banks chain banks?
Neth L. Leachman: No, sir. We don't permit branch banking in Texas, Your Honor. So, that covers the -- the -- the nature of the case. And you can see that if this Court should decline jurisdiction and we are forced to go to Austin, Texas to try this case that there certainly will be irreparable entry and damage because if we prevail, if we won after such a proceeding is there, we couldn't recover our attorneys, our attorneys fees or our expenses down there or expenses of our officers down there which we wouldn't be put to and in Dallas. And it's not just an ordinary lawsuit. This is an extraordinary proceeding, the like of which, I've never been in before. And I've been in the business about 40 years and longer. So, I get back to the -- it's our position and feeling as we read the law and we've studied it carefully and I fear these gentlemen have to. But as we read the law, this Court has jurisdiction to entertain this appeal and for the -- if we read the law correctly, if it accepts jurisdiction and hears the case on the merits, we have no concern about this honorable body here arriving at the conclusion that Section 94 of that statute is valid in force and effect and it requires its mandatory and it requires that the venue privilege that were asserted by these two banks be sustained as to the banks and the suit as to them move to Dallas County.
Felix Frankfurter: May I ask you if you will be good enough to address yourself to the argument we just heard before you got on your feet, the Act of 1882, the provider of 1882 by virtue of its last clause repealing all of the inconsistent prior legislation in effect repealed 94 and that was subsequent repeal in 1948 of the 1882 Act, couldn't bring to life that theretofore repealed Section 94. I think that's the correct (Voice Overlap).
Neth L. Leachman: Your Honor, that is a very strained technical analysis --
Felix Frankfurter: Well, this whole subject is technical.
Neth L. Leachman: -- of these statutes which I have never been able to follow them very far in it. I know this --
Felix Frankfurter: Your job is --
Neth L. Leachman: -- that --
Felix Frankfurter: -- to convince us that we shouldn't follow it.
Neth L. Leachman: Yes, sir. Yes, sir I -- I understand that. I know of this, that the 1864 statute is clear and non-ambiguous. And I know that you don't resort to history to -- to determine the meaning of a statute if it's clear and non -- non-ambiguous. And the statute is there on the books. It was -- it's been on the books since 1864. And where the confusion arises and they inject confusion into the picture because they don't differentiate between jurisdiction and venue. They're two entirely different things. And they even inject into their arguments of the -- the question of capacity to sue. For example, in your -- in your 1864 statute, you had -- you had 12 U.S. Code Section 24 which deals along with capacity to sue. And that's the question that Your Honor asked yesterday, capacity to sue. They can sue and be sued. Now, the venue statute in 1864, Section 94 of 1957 as it was then. It gave to the federal courts jurisdiction and the second clause gave to the state courts -- it gave to the federal courts, provided the juris -- the venue for the federal court jurisdiction and provided for the venue of the state courts in the suits brought in the state court. We -- their -- their assumption is -- is reached based on the good deal of speculation on what they think Congress had in mind. They suspect that Congress had this in mind. And it's in their brief. I don't know how they can look into Congress' mind except from the written result of what Congress came up with.
Felix Frankfurter: When was -- can you tell me when section -- when was Section 94 originally enacted?
Neth L. Leachman: In 1863, Your Honor, I believe and then it was in 1864 and then it was left out of one enactment and then passed about a year later, I believe.
Felix Frankfurter: From now -- in revisions -- there were revisions of -- of the statutes at large, from time to time, there was a revised statue of course in 77 and 78 and there's a Judicial Code in 1911. In any of those subsequent revisions of judiciary matters, was this Section 94 included?
Neth L. Leachman: Yes, yes.
Felix Frankfurter: When?
Neth L. Leachman: When it was brought forward, I haven't traced it, Your Honor, as to --
Felix Frankfurter: It might be important --
Neth L. Leachman: Yes.
Felix Frankfurter: -- because if it was brought forward after 1882 for enactment of Congress, it's hardly a plausible argument that it was repealed in 1882, though I think those (Voice Overlap)
Neth L. Leachman: In 1926 -- in 1926, it was brought forward.
Felix Frankfurter: In a -- in an act relating to national banks or in the Judicial Code?
Neth L. Leachman: In the national bank section.
Felix Frankfurter: Well, then in 1926, the revision of the National Bank Act included in effect Section 94 and it's what -- and carried down to 1926.
Neth L. Leachman: Yes, sir.
Felix Frankfurter: But couldn't very well of -- or if it was repealed in 1882, it was revised in 1926.
Neth L. Leachman: Yes.
Hugo L. Black: Was that statute cited in your brief?
Neth L. Leachman: That's the U.S. Code that was rewritten in 1926 that we're talking about.
Felix Frankfurter: What -- give me -- what's the title of the -- you know (Inaudible)
Speaker: Is that the general code or --
Neth L. Leachman: Codification.
Speaker: That was no special in rewriting (Inaudible)
Felix Frankfurter: The Congress passed it --
Speaker: Codification of all federal law.
Neth L. Leachman: Codification of all federal -- yes.
Felix Frankfurter: Congress passed it, didn't it? It was an act of Congress.
Neth L. Leachman: Yes.
Felix Frankfurter: It wasn't of -- it wasn't a private venture or a -- alright.
Neth L. Leachman: No --
Felix Frankfurter: So that -- there was -- there was an emission, a legislative emission in 1926 by Congress of the statute.
Hugo L. Black: I understood the other side to say that was not the case.
Neth L. Leachman: Well, we're -- we just differ on it then, Your Honor.
Felix Frankfurter: I think we could simply turn the pages of this argument --
Neth L. Leachman: We could find it out.
Felix Frankfurter: -- and find out.
Neth L. Leachman: Sir?
Hugo L. Black: We can find it out. I understood them to say that was not the case.
Neth L. Leachman: That's right. Nor we don't agree with them on that. Now, we've gone over, rather thoroughly, the question about how final this matter is. And of course, the -- the federal courts are not bound by state rulings on finality of the judgment. We concede that but how final can anything be? You are looking at it from your view point. Is it as a matter of fact finding? Forget about what the text has said. You change -- if change be reviewed again in Texas where we -- we can't go back there and ask anybody to -- to review that question again. You go from the trial court on that and the Supreme Court and you can't get it reviewed again. So, if we were to come back here at a later date, we couldn't come back here in a different complexion or status then we are out of date. It would still be the very same record and the very same situation that this final question on venue. Now venue, in this case, has nothing whatever to do with the merits. And you go into the merits, it's -- they're not going to mention the -- the venue has nothing whatever to do with the merits. So, it is on this question that involves the federal right of these banks to be sued in the county of their locale. It's the sole question here before this Court. And it's a valuable right. And the Supreme Court of Texas has -- has held in effect. I won't look for the opinion to quote it exactly. But they held that this question of venue was once exclusively within the area of jurisdiction so to speak or -- or this exclusive decision of -- of the Texas Courts. And that the -- that this question and we are insulated from the Supreme Court of the United States with respect to this question. Well, if we -- if we are, then this statute is repealed by judicial legislation and there's no relief that can -- can come to -- to an injured party that has the right. Now, Mr. Justice Frankfurter was asking yesterday if we would go over the state court decisions that were cited for adversaries in this case. And I don't have much time but I -- I have just a few more minutes. And I'll -- I'll attempt to -- they're distinguishable, had great of them are. The Austin Court of Civil Appeals made a statement in -- in a very brief language what they involved and that is -- that court's notation was -- was correct about it. It said this, that their decisions involved one, only usury cases. Well now, the -- the usury case distinction has been repudiated in Leonardi versus Chase National in the Second Cir -- Circuit with this Court denying certiorari. They said they were applicable only in transitory cases. And three, that it is permissive. Well, this Court can determine as well as the state court whether it's permissive. But some of them held it was permissive. Then they held that it was repealed in Section 1348 supra. Now, in the International Refugee case by the Southern District of New York in 1949, they answered that -- that question. And it also is -- was answered in the Buffum case, decided contrary in the Buffum case in which this Court denied certiorari as to whether or not that was repealed. Now, the -- the fifth distinction was a single New Jersey Court in the Cassatt case wherein the -- the court there in New Jersey said, “We're inclined to think that the direct application of the statute is jurisdic -- as -- is to jurisdiction and that it is not in such potent control of venue as to be imperative in the present case. So that's the -- that's the way those cases fall. Now, there are several of them, I have notes here on what each one holds. And now, I won't have time to go over it, but I'll say this, that they -- they don't sustain our adversaries in the way that they say they do because at least two of them in there hold that it's mandatory to the cases they cite, hold that it's mandatory. And then there were some waiver cases in there where they have waived it. And then there was one where they claim they we're stopped to -- to assert it. So, those -- those cases don't -- don't help them as much as they would like for them to. For example, this Iowa case that they cite. That was a state law fixing super headed liability of a stockholder of a state bank. And the national bank apparently was one of the stockholders and has held there that it was a local action statute created the cause of action, it was not a common law liability. And as to -- as to our case -- whether or not it's a local action, I don't think it could be any question about it. And I -- I would think that this Court can certainly pass on that -- that question because as Mr. Justice Frankfurter mentioned, if a state legislature can make a local action out of any kind of action that it sees fit to then it can effectively repeal the force and effect of this venue statute. If Casey versus Adams is the -- is the -- the law. Thank you very much.