Earl Warren: Number 14, Mercantile National Bank at Dallas versus C. H. Langdeau, Receiver. Number 15, Republic National Bank of Dallas, Appellant, versus C. H. Langdeau, Receiver. Mr. Johnson.
Hubert D. Johnson: Mr. Chief Justice, may it please the Court. These cases where number 14 and number 15 were consolidated in this Court's original October 1961 order, were argued in February 28 and 29, consolidated and -- or here again today in that shape. The cases come from judgment of the Texas Supreme Court hereby appeal through the root provided, we believe, under 28 U.S.C. Section 1257 (2). The cases in each case, National Banks located in Dallas where their sole offices in Dallas had been sued in -- as one of two of 144 defendants according to the pleading, in a state court, State District Court in Travis County, Austin, Texas. For information of non-Texan that's approximately 200 miles from Dallas and that Austin is right on the very center of the State, Dallas is a little bit north there. The -- most of this record is comprised of the rather lengthy pleading which was the suit itself or the allegations are made by the plaintiff. The plaintiff was the receiver appointed by the Court of an insolvent insurance company. He also is a -- an official as provided for by state law and only as the statutory liquidator. And by the state law he becomes the receiver by appointment of the Court. Each of the banks promptly filed what we call a plea of privilege under Texas practice which is the method of setting up the assertion of the venue right. Each set up by -- for itself as it had to under Texas practice its right to have the cause transferred as to it -- to its home county there in Dallas County. The only place where it's established and the only place that it does have a place of business. We don't have a branch office problem here. Texas is -- did not have branch banking and that's there -- was their only office. The venue issue is set for separate trial as is provided for under state practice. We've attached to our briefs the -- two practice rules that govern it. Each of the venue claims or pleas of privilege were controverted by the receiver and a hearing was held, actually hearings, although when it developed that there are really no fact issues that it was basically a stipulated matter in the law issue, they were held consolidatedly. Orders entered in each case denying the pleas of privilege. Then each of the defendants took its appeal to the Austin Court of Civil Appeals. Each had to decide then under state court practice whether it would appeal or not appeal because if it did not do so, the matter was closed under state practice. The Austin Court of Civil Appeals had before it the case, both the cases, a stipulation that the only issue involved was this legal issue of whether the provision of the National Bank Act of 1864 origination gave the National Banks this venue right notwithstanding a venue right that the receiver, plaintiff had conferred on him by 1955 Texas statutes. The Austin Court of Civil Appeals said that the trial court had erred in these cases and then ordered the cases transferred and the appeal then went to the Texas Supreme Court and it said, “No, the Austin Court of Civil Appeals had not erred. The time for motion of rehearing filed overruled, were through in Texas”. This Court in its October order noted that the question of jurisdiction was carried forward to consideration along with the merits. The casebooks tell me that that's a warning to me, that I better come prepared to talk about jurisdiction. I talk some about it before and I want to talk some more about it now. If I can't get in here what the rest of the questions involved, that would make much difference. I have before in the period of time when we are preparing our notice of appeal, we made a -- what we think is a very careful study. We have followed it up thereafter and we have devoted the substantial part of our brief. Better than half of it, as I recall, to this jurisdiction question, a jurisdiction question. First has in it the aspect of finality of the matter as far as the state court is concerned, the state practice. We have cited case in here, the Supreme Court of Texas case that I think is contained at page 16 of our brief is which it all falls in SR Company v. McDonald which announces a number of rules that might not be the practice everywhere on a venue right but they are the practice in the law in Texas and they make it beyond -- clear beyond peradventure that we had to appeal from the judgment of the trial court unless we wanted to acquiescent that we could not sit back and bring the matter up again. In that Wichita Falls Railroad case, in fact, that's just exactly what have happened. In July, one term of the court, the trial court had overruled a plea of privilege. Later in November at another term of the court, the defendant who had asserted the plea of privilege had the temerity to say, let's reconsider this. And he had -- he is more persuasive the second time. The trial court then said, “Alright, we'll transfer it. We'd already transferred it. I grant you plea of privilege”. The appellate courts pointed out to him that he could not do that, that this was a separate trial that it granted that it had certain interlocutory phases, he would not lack a ruling on appeal. There is not enough lack of ruling that could be carried forward if this had -- the time to appeal was now, that it not haven't been appealed from, and that the order attempting to make the transfer was void. And I don't think that the appellee disagrees with me in the slightest as to what Wichita Falls Railroad Company versus McDonald said. Now, I'm aware of the fact that that's what the Texas Court has said as to the finality of this phase of the case, this res judicata plea which is a basic element of finality is fully recognized in Texas and we've -- this case was not the first case it so held is, it was the most recent one in Texas and it is more or less the keystone case that we all cite. In Gospel Army versus --
Speaker: The order under Texas law might be final. It doesn't necessarily follow this final --
Hubert D. Johnson: Yes, that's true. I quite agree and I realize I have not -- that's only the one aspect of it and certainly apart from saying that that is conclusive of it. Yes, sir.
Arthur J. Goldberg: Your federal question that you raised, taking questions as to the findings -- suppose representing the other trial at the (Inaudible) bank in relating to the issue, has not been a settled issue?
Hubert D. Johnson: That's the way -- yes, sir. That's what we're saying. The -- the trial on the merits is not, it all concern with whether Dallas National Bank in Dallas or a National Bank, it would be the same thing if we were --
Arthur J. Goldberg: That involved questions of the state law.
Hubert D. Johnson: -- individuals. Involved questions -- it would appear both state law and common law principles as to the pleading as a typical transitory tort action for a lot of money, the $15 million bond which even in their own ways is a lot of money. The -- so we began to look at these cases in this Court that have gone -- that have interpreted this meaning of final judgment as in 1257 (2), also as in 1391 which relates to the final decisions of district courts. In our federal district courts, they do have an area there for appeals from certain types of specified interlocutory orders but if you don't come within one of those then you have to get in this final category. That led us to the decision of this case, this Court in the Cohen versus Beneficial Industrial Corporation in, I believe, it's 1949. And frankly, that case intrigued us and we have tried to apply every analysis that we could to it as to why this case might or might not come within the purview of that case. And we frankly believe that this case does come within the -- what the Court describe as a small class of case that was dealt with in the Cohen-Beneficial Industrial case. As you probably recall in that, that was a suit by minority stockholders in a Federal District Court in the State of New Jersey. After the case had been filed, New Jersey adopted a statute which gave the defendant corporation, under certain circumstances, the right to require security for cost. The statute said that it applied to pending actions. The defendant corporation moved to have the cost bond made, the security for cost made and the trial court denied it, primarily based apparently on a theory that the New Jersey statute was not intended to be applied in an action in the federal court. There was some Erie Railway versus Tompkins problems in it. And at that point, having denied it, the corporation is faced with the question of, can we go up now or do we have to wait and have this trial happen to us without security and then come up? Is this the final decision? It's not one of those interlocutory types that are covered by Section 1291 or 1292 that deals with certain types of injunction receivership orders that can be appealed from as -- even though they are interlocutory orders. The Circuit Court held that it could entertain jurisdiction and held that the trial court had erred that this statute should have been applied in the federal court and this Court took the case and coming at considerable length and discuss in great detail the appealability or jurisdictional aspect of it. Apparently, there really weren't any disagreement among the court on that part. There was a disagreement, a dissent as to whether or not the New Jersey statute was such a statute that should be applied in the federal court proceedings. But as far as the explanations and the discussions are concerned, we have excerpted in our brief and in the appendix the total portion of the opinion on appealability and we've tried to subject the present case to an analysis as to each of the factors. And frankly, we were prejudiced, I will admit, in what we hope was the answer but we feel like ‘it fits to a T' and we feel that actually in some measure, this one is even more demanding of it because here, we have a situation where beyond peradventure, the issue is not even subject to review fully by the state court. Now, I don't get the feeling in the Cohen case that if the federal district judge had decided to change his mind 90 days later on whether he would require security for cost -- give security for cost that the Court would have been powerless to do so. There wasn't any inclination that he was going to. And so actually, from that -- in that standpoint, we have a more permanent and irrevocable finality established by virtue of the peculiar state court practice. Now, you can say, “Well, that's state court practice and we're not governed by that”. But we're in the state court and we have to deal with our rights with reference to what the state court does with them and I don't -- we don't feel that we have a complete immunity from those rules with respect to timeliness of appeal and preservation of our rights. It was a good deal of discussion here the last time about -- well what if this -- we don't entertain jurisdiction and this matter is saved and brought up again, where will it would be? Certainly, the state court by its own determination will not consider the venue matter again. When it -- that circumstance should happen, if it should happen and we come up here again, we'll have kind of an odd situation in which the last state court action on it took place a year or so before. And I think someone commented before that there would be a good deal to unscramble at that stage. Now, the appellee before is taking the position and I think probably would now that actually they would like to have this question settled, realizing, however, that this Court's jurisdiction can't be conferred by what my opponents would like or what I would like and that I have this burden of showing that this Court does have jurisdiction, I believe that it does.
Speaker: But you -- you got another -- I take a very favorable view of Cohen too because I represented the prevailing party in that case. But you got another factor in it. And that is when you come to the merits of this case, I suppose the underlying premise of your argument would be that Congress intended to protect these banks, national banks by reason of this venue statute.
Hubert D. Johnson: That's correct.
Speaker: And therefore, if you're not allowed to appeal now, the very purpose, assuming you're right on the merits --
Hubert D. Johnson: The comments in the Cohen case --
Speaker: -- or the ruling of this Court --
Hubert D. Johnson: -- is about too late to effectively review about the fact that if they didn't get the right to see whether they could have security for cost until after they had already incurred the cost, it'd be somewhat late or really quite strikingly apt here. They're quite a bit like, Mr. Justice Frankfurter's comments in the Swift & Company attachment case where the attachment was vacated which is a case that's cited and followed the Cohen case. And he said that appellate review of this order at a later date after the -- it would be an empty right after the vessel had been released in the restoration of the attachment only theoretically possible that it is somewhat the situation we ought to hear. If we go to trial in Austin, and it's later determined that we weren't required to go there, it'll be kind of apparent victory to find it out that time goes -- it would have already happened. And neither this law means, we don't have to be tried twice there, I don't know but seriously, that feature of the Cohen case is certainly quite appropriate. Now, we've done the best we could to check the comparable statutes in the cases under 1257 dealing with appeals coming up from state court system in the state and the cases that come up from the other side, from the federal side and we haven't been able to find any reason for arriving at different standards on this area of finality. In Radio Station WOW versus Johnson and there was some discussion of that but that was an accounting work. And one issue had been decided but it was still accounting and the Court went ahead and heard the concluded issue of the case. The cases are numerous. I think we have cited most of them here. We think we have. The Montgomery Trade Council case, which is sometimes cited for the opposite position, involved the temporary injunction in Alabama, but there they had the -- you were faced with the old rule of Gibbons versus Ogden. It said that the temporary injunction was continuing in the (Inaudible) of the Court and that it might very well take it up at anytime and that it was in contemplation of a hearing on a permanent injunction. And -- but the -- I'll cite that case because the dissent which felt that the real issue there was the power of the state court to interfere in the merits that was preempted by the National Labor Relations Act which I think pretty well have been settled later on but at that time, it was still a crying issue was really what has been involved and if that had been decided very finely, and it took a comment on the fact that these things had to be given a practical rather than a technical construction and commented on the fact that there was no reason why you should have one standard that's going to the federal system of finality and another system when it's come up to the state court system. Many of the cases that have come up to the state court system had been cases where the judgment of the Highest Supreme Court did not reverse the case or settled it, that it had effective remand and by operation, sometimes a state practice. Some cases where there was something still yet to be done, a remittitur problem. We don't think and we'd be the last to say that interlocutory orders per se should be brought before this Court. The Texas case there again pointed out that this was no ordinary interlocutory order. The Cohen case points out that this is not only talking about opening the door to appeal some interlocutory orders generally, not talking about fragmentary review, piecemeal review, advisory opinions to guide the court, the trial court as it goes along. We are not here on that type of case. We believe that there is always ample precedent in the constructions of the statutes that govern this Court's jurisdiction to recognize jurisdiction in this case without stretching anything that has been done. That it does not call for a new exception at all, it calls for a recognition of an application of the Cohen rule as we call it and that type of thing which there again was not the first in this area. The accounting cases had come on long before the cases of that type where there still were things to be done in other aspects of the litigation but not related. I apologize for belaboring at such a detail the jurisdiction point, but I say again if I -- if I don't have jurisdiction and everything else, I have to say it's -- it's (Inaudible). The basic statute, federal statute on which we --
Byron R. White: Before you leave the jurisdictional point --
Hubert D. Johnson: Sure.
Byron R. White: -- did you think that Pope against Atlantic Coast Line Railroad was a relevant case on that jurisdiction?
Hubert D. Johnson: This is a Georgia case.
Byron R. White: I see you don't cite it in here that --
Hubert D. Johnson: Frankly, I've forgotten it. I read, it but I've forgotten it. I can tell you something else but that's the truth and I -- that I just don't recall it at this time. They --
Hugo L. Black: I'll be delighted if you look at it in here too.
Hubert D. Johnson: I gather that. I think so and I will. The basic thing on which the national banks were basing their right was the provision of what was Section 57 of the National Bank Act of 1864 and it was carried forward as a part of Section 5198 of the revised statutes when they revised under the 1873 authorized revision. And nowadays, you'll find it in 12 U.S.C. 94. This 1940 edition at least carries it at that place. This statute is -- we think it's really quite clear on its face it -- the reading of it -- we set it out in full, doesn't seem that it ought not cause so much concern as to the construction of it. It says, actions and proceedings against national banks maybe had in any district or territorial court of the United States held within the district in which such association may be established or in any state county or municipal court in the county or city in which such association is located having jurisdiction in similar cases. Now, in our brief we've gone over all of the cases in this Court and few in some other courts that have construed this statute. The -- beginning with the Bethel case that involved a Connecticut proceeding. The question of whether or not the Connecticut courts could entertain one against the national banks, they said that they could. The Casey v. Adams which was a state court proceeding up from Louisiana's Highest Court held that -- with respect to the statute, it was not intended to apply to an interim action, a type of local action that there's been known there, as long as there'd been actions. That being a peculiarly local action from the very description of it, the opinion is very short. You can see that that was what was there. The main case and the one that we think was being controlling and which we've based our rights was this First National Bank of Charlotte, North Carolina versus Morgan, that arose in the early 1880s and was decided in this Court in 1889 and it was a suit, in the state court in North Carolina where the bank was sued away from its home county but it didn't raise its rights until it -- he lost. Then it raised its rights saying that there was complete lack of jurisdiction of the Court out in their outlying county where it had been heard. The opinion in that case was written by the first Mr. Justice Harlan. Looks like I'm thinking on the Harlan cases a little bit, but that's the way the thing worked out. That opinion had occasion then to say, was this so jurisdictional that it could be raised for the first time in this Court. What did the statute's proper right did it grant? And the Court said that it was not a jurisdiction statute, that it was a personal privilege which if it had been asserted, it must have been recognized. Now, that opinion is -- the opponents don't like it. They say that it's a dictum because it didn't have to go so far. But we think that they had then -- in saying what the statute was not, they said what it was, which is not an uncommon way of answering the question. And the answer was already quite clear and it seems to us that if they hadn't said at least that much then the statute was totally and completely meaningless. The state courts have gone off all around the clock on it. They have said that it was a mere permissive thing, meaning that the Court could grant it if they wanted to or could not grant it if they didn't want to. They didn't -- well that's not much of a right and it doesn't mean anything if it says that. If it just means that they may grant it or not as this trial court sees fit to do, then it wasn't worth having the statute about it. And we have discussed that point and it's been discussed very thoroughly in a number of state courts and it had been discussed in a couple of Circuit Courts of Appeals cases but except by inference, it wasn't discussed here in the Morgan case. It was saying that if it had been claimed, it must have been recognized which certainly is mandatory type of language. In the Casey v. Adams, if it was just a main type of thing and they didn't need to go into the matter whether it was a local or a transitory action. The -- in 1923, in a case, Bank of America versus Whitney Central Bank, this Court did not have occasion to actually consider the matter because of the fact that from the brief in the case you can see that it was never asserted. The banks were claiming there that -- the bank there was claiming that it was not subject to process from the jurisdiction because it was not located there. By on this side, the Court said that if anybody had ever wanted to point out this other matter that even if they've been subject to process, it might have been that they would have been entitled to be sued in their home county, citing the Morgan case and the statutes on which it's based. Now, we've given a little bit of attention to the state court cases but nothing tremendous because they are confused. Some of them have gone off on the theory that this has -- it referenced only to this limited type of action where a bank was being sued for the penalty for having charge usurious interest which apparently was based on the legislative coincidence that in the 1875 corrective act, they put back something that had been omitted and put it back at the last part of a section that had dealt with the penalty for charging usurious in -- for National Bank charging usurious interest. But the language of the statute is quite clear that it refers to actions and proceedings against national banks, any one in this title and the whole title there is about national banks. That was not the rationale in the Morgan case. It was not the rationale in the Casey v. Adams and it's been completely explained away by the Circuit Court of Appeals in this Leonardi case and in the Buffum case, true both of those are cases that involved proceedings filed in the Federal District Court. But they're talking about the same statute and could have that limitation to usury claims in federal -- in state courts, it would have been the same thing for federal courts because the same problem was there. That I think has been pretty well laid at rest. Some of them had gone off. The cases had fall on the other category on the conclusion that this was a local action. Well, they had basis in those cases on Casey v. Adams. Casey v. Adams has not been overruled. It has not been expanded by this Court to cover more than the true interim proceeding. The argument has been made in some of the cases -- been made in the briefs here by the appellee that there was a proviso to Section 4 of an Act in 1882 that partially or wholly repealed this Section 57 of the National Bank Act of the 1864 Act. We have addressed ourselves to that in some detail and in large upon what we had originally by a supplemental brief which we think shows beyond question that the 1882 proviso was directed exclusively at a jurisdiction problem that arose out of the amendment of the Judiciary Act in 1875 that gave general federal question jurisdiction in national banks having this federal origin status. We're therefore in a position to practically eliminate the concurrent state court jurisdiction. We cite four or five cases that have gone -- that had analyzed carefully this 1882 Act and its follow up Acts of 1887 and 1888 which have carried forward in the judiciary code in 1911 and then rewritten again in the Judiciary Code of 1948 which seems to us to thoroughly exhaust the subject and thoroughly establish what the statutory language itself established that it was addressed strictly to the matter of preventing this exclusive jurisdiction of federal courts because it was for all practical purposes exclusive as long as this free right of removal existed, that is if you have the $500 amount in controversy. And that meant that this was a problem where the intention of giving any state court jurisdiction was being afforded. And that's all that that those -- that statute was about and the language of it shows it. The cases of this Court over the next 25 years after it was passed show it. It has been discussed very, very carefully by this Court in the Petri case and in the Continental National Bank versus Buford. It was also discussed and noticed in the Van Reed versus People's Bank in 1905 which involved the matter of attachments issuing out of a state court against a national bank which had been a matter that was covered by Section 57 as it had been amended in 1873. They were really into the same area there although it's true with a different point of impact. But all those cases show, it seem to me, if so thoroughly develop the legislative purpose and intention of that as its language shows that frankly one of the reasons we didn't give it as much attention in the original brief was, we didn't think it was -- merited a great deal of attention but it had been the subject of good deal discussion here before so we thought maybe -- maybe it would be better to enlarged a little bit upon it. On this local action matter, there was an argument made here before to the fact that the state statute that created the insurance -- of the insurance code and particularly this section of the 1955 Act that gave this right of venue to the receiver in the county or in the court of competent jurisdiction where the delinquency proceeding is pending, was intended to create a local action. It did create a statutory local action. At that time, we said and we say again that Casey versus Adams, seems to us makes it quite clear that they're talking about what is really a local action and not one that it just labeled such. I think Mr. Justice Frankfurter rather after he pointed out that if you can just put the label on it, then they can just go back and amend the statute and say that any action we bring is the local action and therefore we've eliminated the federal law. It's not that -- that shouldn't that simple. And so the label is not controlling but the truth of the matter is that there's nothing in the insurance code and nothing in this section that purported to create any action. It dealt with actions that arose out of transactions with the company before it went into receivership. This very pleading shows here that they're based on actions that go back to 1950 in a so-called grand conspiracy that's extended from 1950 to 1957. They're talking about a 1955 Act and the 1957 receivership. And it was not intended to be a local action. At that time, there was mention of the fact that there has been -- was pending in the Texas Supreme Court a case which would involve a construction whether this was a mandatory type of provision or what in this Section 4 (f) of Article 21.28 of the Insurance Code of Texas. That case has since been decided, and that case and we quote from in our supplemental brief is Burke versus -- Burke Investment Company versus Langdeau. And they point out there that it was a merely permissive, a place that the receiver could bring an action, not the place that he had to bring an action. It's clear from that case that the receiver could bring an action against these national banks in a District State Court in Dallas. It is clear that he could bring an action anywhere he wanted to. He might have some of them changed under local rules of venue if these people had local rights. This was not a must statute but the main thing I pointed out in that case was that in the discussion of it, in no way suggested that it had anything to do with the nature of the action. It's strictly pertains to venue and it was permissive at that. They had a case there involving the -- where a land suit had been brought where the land was and the receiver said, “No, it has to be brought here where I am”, which one of them controls. The 1955 when was later in time, if it was mandatory, perhaps it superseded the other and held that it was not. Both of them are local venue statutes in Texas. They're not concerned with the nature of the action really basically even in the land suit in Texas. The party being sued has to set up this plea of privilege or else the Court has jurisdiction. The local action argument, we didn't think had too much before and in the light of what the Texas Supreme Court has said since then and which is covered in a supplemental brief, we think now it really completely falls. I want to save some time for my -- the counsel in the other case to close and if there're no questions at this time, I'll relinquish that the appellee move.
Earl Warren: You may, sir. Mr. Cureton.
William E. Cureton: Mr. Chief Justice, may it please the Court. First, with reference to the jurisdiction of this Court at this stage of this proceeding, from a very practical standpoint, of course the appellee would rather -- and prefers to have this matter of venue if that's what it is determined at this stage rather than to try the entire case which is of some size, and then have it reach this Court and be reversed and have to be retried again. That of course is the practical basis for the Texas statute that permits a direct appeal to the appellate courts in Texas from a trial court decision on venue so that that question maybe finally decided and it was finally decided in this case. Before, you try the case on the merits so that you don't try the case and then have to come back and retry it entirely. Based on the -- that doesn't of course precluded the possibility that some federal question could arise in the main case and that the principal case could be back here. Although, reading of the pleadings would not indicate that a federal question is involved.I do not intend to labor the question of jurisdiction of this Court, we're on to say that as far as Texas is concerned, the judgment of the Supreme Court of Texas on this venue question is final. There has been no trial and no finality to the trial of -- to the case on the merits. If I may briefly give the Court just a little background to the case, this suit is the result of a very large and grand promotion of an insurance company known as the ICT, Insurance Company of Texas by a man by the name of Ben Jack Cage, who is now a fugitive from justice in Brazil. The liquidator who represents the creditors of that company and the stockholders of that company has filed a suit under the Texas practice. Texas by statute has created a State Board of Insurance Commissions. And that Board in turn, pursuant to statute, has designated a liquidator for insolvent insurance companies. And in the proceeding in the state -- in the county of the state capital of Texas pursuant to statute, and the liquidator has been designated at the receiver for this insurance company. Now, the Texas statute, as a part of our insurance code says that proceeding is by or against the liquidator, shall be brought in the county and the court where the delinquency proceedings are pending. And that statute controls the venue and the jurisdiction of this Court unless the federal statute that is submitted by the appellants controls. Let me say in the first place that we certainly agree that in the supremacy of Acts of Congress in the Constitution, we do not contest for one minute that proposition. But let me first explain to the Court the choice that we had as attorneys for the liquidator in this case. The allegations are that the two Dallas banks in a sequence of yearend transactions in which the bank was represented by a vice president, would loan this man Cage, large sums of money up to a million dollars on his personal note. And that the vice president of the bank would make out a deposit ticket to the ICT Insurance Company for that sum of money and the money would be put into the account of that company. There would be a loan committee memorandum that the money was not to be withdrawn and was to be repaid on January the 2nd, three days later. And that enabled the company to submit to the Board of Insurance Commissioners of Texas a yearend statement that will show it to be solvent and would gain it a license to do business for the succeeding years. The promoter, Ben Jack Cage, the various officers of the corporation, the directors of the corporation and various other people connected with this specific transaction to confine it to the one transaction, are people that we want and feel are necessary to be sued in a single lawsuit involving this transaction. So, we have a choice now applying the suit in Dallas where the two banks are located or to file it in Austin, Texas, in Travis County, where the Texas statute says that the liquidator may institute the suit.
Arthur J. Goldberg: It is made --
William E. Cureton: The statute is made, yes sir.
Arthur J. Goldberg: And it's not mandatory.
William E. Cureton: It is not mandatory. But every Texas -- may I say this, that every Texas case except this recent suit involving the title for Langdeau, including two cases in which the Supreme Court of Texas has denied a writ, has held that the Texas statute contained in this insurance code with reference to venue controls and the Supreme Court of Texas in this very case held that control. If we file this suit in Dallas, these other defendants under the Texas practice which I assume must be the practice generally, would have filed pleas of privilege to be sued in the county where they live and if there were corporations in the county where they're doing business. And since we didn't file it in Travis County where this Texas statute gives these jurisdictions, they would have had an absolute right to have move their part of the case to the county where they live. The only practical opportunity that we have to sue all of these people that are important and necessary to this proceeding is under the Texas Insurance Code which says that we have the right to sue. The liquidator has the right to sue in the county where the delinquency proceedings are pending in Travis County, Texas. And there, we can sue each and every one of the individuals at any company, any private corporation, and those people now are in court in Travis County and can't be moved to Dallas. So if appellants position is sustained, the suit as to the banks alone will be taken out and move to Dallas whereas the other principles in these acts are left in Travis County. Let me go now to the statutes, to the decisions of this Court first. The first case that arose under this Act was Casey versus Adams. In Casey versus Adams, as you'll recall involved a suit for foreclosure of a mortgage or land in a parish in Louisiana. A bank located in another parish was made a party defendant and the bank asserted its privilege under this statute to be sued in the county where it was located. And this Court in Casey versus Adams held that the statute was not intended to apply to a local action, and it said not only local by common law history as this thing we contend to it, but local by statute. And we have cited two cases, one from Maine and one from Vermont. Let's say that when a state statute fix this venue, that cause of action in a particular case, that cause of action in that case is a -- constitutes a local action. In this case, the Texas statute as sustained by the Supreme Court of Texas had fixed venues in Travis County and under the language of Casey versus Adams, it is a local action.
Speaker: What do you -- what's the effect of that Langdeau case then that says it's permissive? As I understand the case, it says it's permissive only in --
William E. Cureton: The Court --
Speaker: -- it would yield to another mandatory jurisdiction -- mandatory venue.
William E. Cureton: All I can say to the Court, Mr. Justice Harlan, in respect to that is this, that there had been five or six cases that have gone up under this Texas statute. And each one of them has sustained the venue in the county where the delinquency proceedings are pending. This suit involving the title of land came up. And as the Court well know, a land has always occupied a unique position in human history and under the jurisprudence. We might have foreseen I suppose, that the Court when it -- we have a statute that says that a suit involving the title of land must be brought in the county where the land is located. Then we have this statute that says the liquidator can file a suit in the county where the delinquency proceedings are pending. Land went out as it has if you look back through the cited cases throughout history on this question, land always went out. All I can say about it is that in only the exception of land, the title of the land, as it been -- as the statute been sustained as controlled. In this very case, the Supreme Court of Texas held this statute controlling under the -- in this cause of action and in this case and in every other case that's come up except the one involving the title of the land.
Arthur J. Goldberg: The Court didn't look at it or review as afforded in this case. I don't see that the Court rested it out of the way in Petri. This is I think would --
William E. Cureton: I do not say that the Court says -- may have stated in its opinion what I have stated but ever since I've been out in law school, a great deal has been made of the fact that courts have repeatedly treated land and particularly with reference to suits involving the title of the land is -- as a special and unique situation. I'm presuming as a matter of history from the position of the fact that land was the only source of wealth for great many centuries and had a special relation during the futile days perhaps. And you'll find that throughout the decided cases. You can't get a -- but you can't get to escape the fact that in this very case, the same court held this statute controlled it, and that there are five or six other cases, all of the other cases that have arisen under the Texas statute have held the same way. That court, the Supreme Court in the Burke case is not reversing the position of those cases at all. None of those cases involved the title of land. The next case that I would like to point out to the Court is First National Bank versus Fellows ex rel Union Trust Company which reached this Court from Wisconsin in which a proceeding there had been instituted at the state capital. And the bank was a party and was located in another county and raised this very question. And the Court decided that the venue and jurisdiction of the Court in this county of the state capital, controlled. Justice Van Devanter and it's to show that if the matter was before the Court, Justice Van Devanter in his dissent takes the position that this federal statute should have controlled it but it did not control it, and the decision of that -- of the Court at that time was just as in Casey versus Adams, it sustained the venue in a different county. The Morgan case cited by appellants was a case in which the Court held, and let me, in all frankness say, that the opinion is based on the assumption that the federal statute is controlling. I don't deny that at all. But the decision is that the privilege that the bank has, and I would say if it had one, was waived when it wasn't raised in the lower court, it wasn't raised until it was on appeal. Now, I'd like to further call the Court's attention to the fact that in that opinion, the Court expressly states that this proviso to the Act of July the 12th, 1892 which we rely as repealing this statute, the Court expressly stated that that suit had been filed before that Act was passed and that that Act was not considered in reaching the decision. Now, except by reference in two other cases, which didn't involve the point at all, there are no other decisions by this Court on the point. Of course, there are great many state court decisions as counsel for appellant has said. And for one reason or another, they have generally and nearly unanimously found that this statute does not apply. Now, I would like for a minute to trace the history of the statute as I understand it. The First National Bank, Bank of the United States, was created by act of Congress, granted a charter by act of Congress, it was no banking act, in 1791 and existed for 20 years. And it had a provision in this charter granted by Congress that said that the bank could sue or be sued in any court of record or anywhere else. Following the -- the granting of charter and some years later while the bank was still in existence, the Supreme Court in the Deveaux case held that that did not confer -- that language did not confer jurisdiction on the federal circuit court which at that time was the trial court of the federal system. That the federal courts had only expressed jurisdiction and that this language would not confer jurisdiction, although it would give authority for the corporation to be sued when the Court did have jurisdiction. That -- the charter of the first -- of the Bank of United States, the first one, expired after 20 years in following the financial problems of the war of 1812 was rechartered as the Second National Bank of the United States in 1860. And the charter of the Second National Bank in addition to the language that I've quoted that it could sue and be sued, complain and defend in any court record, also, specifically said that the Circuit Court of the United States has jurisdiction. And it is my view that that was the outgrowth of the Deveaux case. And an effort to give jurisdiction to the federal court in the famous Osborn case the Supreme Court subsequently held that the bank having been chartered by act of Congress, any suit that it was involved then was a suit under the law of the United States. And according to the language, stated that the federal courts had jurisdiction. After that charter had expired as a result of -- during Henry Jackson's administration, there were no national banks at all from 1836 to 1863, the present National Banking Act which has come down to us with amendment before us was passed. And the first -- and if that National Banking Act is read side by side with these older charters, you will see that the author of that Act, wrote the Banking Act with his eye on many other provisions contained in those original charters including specific authority for the National Bank to be sued in the federal circuit and territorial courts. A year later, the state courts were expressly included. And the language of that Act though, instead of saying generally, said in the county and city or territory in which they are located. Now, it's my position that that language grew out of the old Deveaux case which had held that the federal courts had no jurisdiction until finally the second charter had been granted in which they were given expressed jurisdiction. And that it was thought necessary both to mention both the federal courts and the state courts. And that, that that is not a restriction but an affirmative grant and the language of that statute says ‘may'. It doesn't say ‘may only be brought' or ‘must be brought', it says ‘may'. And that historically as an affirmative grant and not a restriction, there was still a broader language which is still contained in the National Banking Act that national banks can sue and be sued, defend and complain in both -- in any court of record and in subject to that language has come down to us to this day and it's much broader than that. But if I am wrong about that and let's assume for the moment that I am, and that this language was a restriction and incidentally, although -- and United States Code annotated, it says, venue statute, it says venue as a heading for this section of the statute. Neither the original Act nor any other official publications of the acts of Congress had used or ever used the word ‘venue'. And I think it means jurisdiction. But let's assume that it is a restriction. By 1882, the national banks were going -- were removing all cases to the federal courts. I will agree with counsel and that a number of decisions have arisen. There were filing suits in the federal courts and they were removing cases to the federal courts. And Congress had an intent and a purpose to put national banks for the purpose of lawsuits on the same footing as state banks located in the same counties and territories where the national banks were located. And as far of renewing the charter, understanding the charters of the existing banks and also applicable to all future banks, it passed this Act of July the 12th, 1882, in which it said, the jurisdiction for suits hereafter brought by or against any association under any law providing for National Banking Associations, and then it accept suits between them and the United States or its officers and agents, shall be the same as and not other than the jurisdiction for suits by or against banks not organized under any law of the United States which do or might do banking business whereas such national banking associations maybe doing business when such suits maybe forgotten. And then it says, “All laws and parts of laws of the United States inconsistent with this proviso be in the same or hereby repealed”. Now, that's not limited to suits. It says nothing about suits in federal courts. It says suits. And counsel, of course, following that, the leather -- this Leather Manufacturers' National Bank versus Cooper and several other cases arose in which involved an attempt to remove cases to federal courts. And I do not deny that the language of this statute would apply in a removal case. I simply say that Congress was trying to put national banks on the same footing as state banks, not only in removal cases but in all suits, it says suits. And I might say for that I have traced every recodification of the federal statutes down to the present for fear that this present Act that is being urged by the appellants, might have been repassed. And except for the recodification in 1874 which was before this, all of the others have expressly said that they are not original enactments and they're not -- that they do not pass the language as contained therein as a new law. And if there's any dispute as in 1926, if there's any dispute as what the statute means, you have to go back to the original enactment. I might say in closing --
Speaker: There's no -- if you have to sue again in Dallas, there's no way you can bring under your law, no way you can bring in these other defendants?
William E. Cureton: There is none, sir.
Speaker: There is none.
William E. Cureton: That had been finally settled. They are now in Travis County. Had we brought the suit initially against all of them in Dallas, they would have filed a plea of privilege setting up where they live. And under Texas law, they will -- Texas put to that no alternative where to move that the case is condemned to that county. That is the very purpose of this insurant provision because after all, we're dealing with the business which is a business affected by public interest, as the Court knows, in which there is a special provision for an insurance commission to regulate those issues. There is a special provision for a state liquidator to handle insolvent insurance companies or insurance companies in distress. And so that it can be held in an orderly fashion that all suits, all parties can be brought into the single court. That's the purpose of the Texas statute and that's the reason it's been held controlling in every cases after this land title suits.
Speaker: Was your -- was this case decided by your Supreme Court --
William E. Cureton: It was and it --
Speaker: -- before or after Langdeau?
William E. Cureton: This particular case -- this particular case was decided before.
Speaker: Before.
William E. Cureton: Yes, sir. The Langdeau case -- the Merchant v. -- both the Langdeau because Langdeau is the liquidator in all of the suits. The Burke Investment Company case, the recent case does not overrule any of the prior decisions with reference to the controlling effect of this statute except as to Section 14 of our statute relating to land titles and when that -- the fact that that case was pending, was mentioned here by counsel before -- in the previous argument, I knew very well and I felt uneasy to tell that and I didn't tell this Court that that case would -- that this case -- this particular case had any connection with that one because realizing that rarely is it held that you can sue for title of land anywhere where the land is located. And that's just one of the -- one of the things that's engrained in our human system, our common law system, and our system of jurisprudence. Nonetheless in this case it's settled by the Supreme Court of Texas. There are many problems that would -- could be inherent in this situation and I don't think Texas is different from other states. If you sue the administrator of a state, you got to sue him where the administration is pending. If you want to file a mandamus proceeding against the state official, you got to file it usually at the county where the state capital is located. A bank that is just as well involved the decision in the Burke case is a good illustration. Suppose the bank claim to be the owner of an interest in a track of land in Texas, and it was located in another county. And the national bank or the Texas Bank then can't remove the case to a federal court and the suit can't be filed on the federal court. In Texas, that suit must be filed where the land is located. Now this Court holds that it must be filed where the bank is located and there are other parties to the suit, how can the Texas Court proceed? Since it's governed by the state law as far as the locality of action is concerned, it must -- it must say that the suit has to be where the land is located. The Supreme Court has said it in this case.
Byron R. White: Of course, this isn't a land case.
William E. Cureton: It isn't a land case. I think (Voice Overlap) --
Byron R. White: And your court, and your court --
William E. Cureton: I'm simply saying that to illustrate --
Byron R. White: And your court held it wasn't?
William E. Cureton: That is right. I'm simply giving that as an illustration of the practical difficulties and I say that -- I'd say that a no man's land area is going to be created where if the case can't be filed in the federal court and can't be removed to a federal court, then under the Texas statute, it must be in the county where the land is located. For example, no court will have jurisdiction. Thank you.
Earl Warren: Mr. Keith.
Quentin Keith: Mr. Chief Justice and may it please the Court. I want to first address myself to Mr. Justice Goldberg's question concerning the Burke investment case. All of these are Langdeau cases because he is the statutory receiver. This is a Langdeau case. But then 358 Southwestern 2d of page 354 at the very outset of the opinion, I quote from the reporter's series rather than the Texas reports because it's not yet in the Texas reports. The Court says this. It is well settled that Exception 14 is mandatory where the privileges of property claim being important to the suit which call within its terms quoting -- citing some cases. They purport that the words used by the legislature in Section 4 (f) which we have involved here is quite different. It does not provide that the actions makes in very end shall or must be brought in the county where the receivership is pending. A venue to hear or determine the proceeding is conferred upon the courts of that county. But there is nothing to suggest that the lawmaker is intended for such courts to have exclusive venue of all suits by or against the receiver. Now, I skip a little bit over on page 555. He says there is no conflict between the mandatory provisions of Exception 14, that's the land question and a permissive term to Section 4 (f), which is ours. Since Section 16 does not require that the former yield to the letter in the case like the present. Now finally, he comes to the conclusion in the -- as he must, having held that one is mandatory and the other is permissive, citing the general rule, a permissive statute applicable to actions of a particular kind must always yield to a mandatory provision. That's a self-evident fact. And then he finally concludes that venue under Exception 14 is determined by the location of the land and the nature of the relief sought and it does not appear that the allegations of the petitioner fraudulently made and so forth so consequently the land venue statute control. Now, nowhere in that -- now that's two times that the Supreme Court of Texas has written upon the question of venue in concerning this -- the provision of 4 (f) that we have involved here. The other one is our case that the case that we have here wherein the court there said that it was unnecessary for the Court in our case, the Supreme Court of Texas. It is unnecessary to our decision to determine whether this particular action is local or transitory. Well they answered it a year later in the Burke case in holding that it was a mandatory thing and consequent rules are transitory and it did not control. Now, he says this and I still quote from the Texas Court because it brings to bear the question that is really before this Court as a matter of practice. He says as to invoke the rule and says to the point by the respondents would in effect denied a petitioner the rights to maintain the suit. As he says in the Okeechobee case, if you got one bank or if you got 10 banks residing in different counties, each of them are necessary parties, if they weren't necessary parties, you would have to do your single individual cause of action whether under the construction sought by the banks in this case be impossible to enforce since you would be in 10 different counties. Now, I confess to this Court the proposition that national banks are not industries anymore. I address the further proposition not that I dispute for a moment that the supremacy of the act of Congress that will control it. But the national banks should no longer the estimates of the Government that they were when the National Banking Act was adopted in the civil war days. The national banks in effect are simply private corporations engaged in business for private benefit and as such are regulated by the comptroller of currency just as our state banks are regulated by our banking commission. I say to Your Honor that there should not be any rule of law that says that the national -- the City Bank of New York although it advertises every time I read the magazine about having branches all over the world, can only be sued in New York City whereas the Chase Manhattan Bank across the street can be sued just as where you can catch it. Now, those two banks one of them being a state bank and one of them a national bank, I say to Your Honors that they're in direct competition that there is no particular reason for it and that there has been shown here that there has been in effect a repeal of the statute upon which the petitioners or the appellants in this case were liable. Now, when Congress passed the Act in 1882 saying that the national banks should have a jurisdiction for a suit here and after it's brought by or against any association established under any law providing for national banking except suits between them and the United States or its officers and agents shall be the same as and not other than the jurisdiction for suits by or against banks not organized under this -- they so-called ‘where-to-do business'. Now, what they contend for here is a dual standing. They say that they want something more. Congress had said in plain and unmistakable language and there isn't any question to what that still was, that Congress said that they shall not be picked on, they shall not be -- suffer to any detriment, they shall not be subject to anything that is -- that you don't give to your own banks and chartered by your own state. Congress did not mean by that same token to make them particular wards of the federal government even though at that time they were issuing money that they were the instrumentalities of the Government. They don't issue money anymore. The Federal Reserve System has taken over the national banking functions. They are the instrument of finance of the country, not national banks. I say to Your Honors that there is here in this case a complete order and absolute answer to it, that is to say, that this statute upon which the banks rely here has been effectively repealed, that it has been repealed by an act of Congress and that the congressional treatment of banks, the reason for its existence is no longer fair and that's the reason that it was repealed. Now, in this case, it seems that this is a rather unimportant point, but the banks are involved in this case for the 142 other people. There are 142 defendants in this lawsuit. The lawsuit has been on file now five years and nothing has ever happened to it except the trial of its plea of privilege on the stipulated facts. There are (Inaudible) of evidentiary facts that must eventually go to a jury. The facts seek to remove every facet of this matter to Dallas. That leaves a 140 of them back in Austin to try the rest of the case. Now the banks don't come before this Court under the record here as anything other than relying upon the cold, bare rule that they're in business as national banks and they're entitled to be sued only in the County of Dallas, that that's the only place that you can get them. Now the lawsuit is in Austin as to 140 people. Now, there are allegations there that Ben Jack Cage who has answered and incidentally Ben Jack Cage was given 10-year penitentiary sentence for his participation in this matter and job fail and he is in Brazil according to Time Magazine. His case is reported and it's cited in our briefs. There are allegations in here that Ben Jack Cage for instance, it's found on page 168 of the record, went into the republic bank one day, the 31st day of December of 1954 and it brought with him a sealed box upon which was an affidavit that there were $584,000 worth of premium notes in that sealed box. There -- whereupon the bank loaned him $400,000 on the last date of December of 1952 on a note due January 2, 1954, my first year was wrong. It was 1953 -- it was the end of the year. It was due and payable January 2. They said that the box and treasury bills are $400,000, for those -- and of course, they kept the treasury bills. In January 2, they sold the treasury bills. They paid off the note and they gave them back the unopened box containing allegedly $584,000 worth of premium notes. In the meanwhile, when it comes time to make their appearance before the banking -- before the insurance commissioner, as to how were you doing business on the 31st of December? We have $400,000 worth of treasury bills but there's nobody who had any money. We have $184,000 worth of premium notes and they were in that box in the bank. Now, that's only one of them. There are many, many such instances here. Now, Your Honors can see -- Your Honors can see the problem upon which the receiver representing the defrauded stockholders and the people holding judgments against the ICT, wanting all these people in the one courtroom at one time. Let's just decide who's going to pay for this matter. If it's true, I say to Your Honors that they all ought to be there at one place. A conspiracy case when you try it to one place a part of it, it's all laid up on the other fellow. But you got them in their together and let one jury decide where and who's responsible for it. I say to Your Honors that as a matter of law, this statute has been repealed and as a matter of fact, they start -- the reason for the statute no longer exist, and as a matter of reason -- as a matter of reason this Court should not create anymore ‘no man's land' where you can't sue anybody for the rights of (Inaudible). And in appearing here today, we appear here not in the nature of -- as you would normally do, to litigate, but for a receiver seeking to collect money from perpetrators of fraudulent transactions so that we could pay off judgment that were recovered by the widows and the orphans in Texas and to pay them the money that we believe rightfully belongs to them, but to say that because there's an old statute of dubious ancestry and history, it's going to say we must segregate this lawsuit and try it in two places, is in effect to deny the receiver the right to bring a lawsuit, any lawsuit, anywhere or anytime.
Byron R. White: Of course, if there was not a receiver -- receivership involved here, you would have -- this problem was no way to solve whatsoever.
Quentin Keith: If there was not a receivership -- if there was not a receivership pending and if there were no limitation questions involved, then I would say to Your Honor that there is a possibility if both of the banks live in the same county, as they do here, because that might be able to allege under peculiar venue statute we have in Texas, a cause of action that in the --
Byron R. White: You mean that -- you mean that -- you mean your Texas statute is mandatory?
Quentin Keith: Sir? We have no -- Texas statute is not mandatory.
Byron R. White: Then you could have use -- under the Texas law, you could sue these two banks in one place?
Quentin Keith: Yes, I could sue these two banks in one place and I could --
Byron R. White: But you couldn't sue the individual.
Quentin Keith: I could sue the individuals even though they live in Dallas or maybe they live Houston, or Amarillo or El Paso or somewhere. I would be force to allege and to prove or make a showing on the preliminary hearing, (a) that they were necessary parties to the lawsuit, that they were parties to the conspiracy. What we term unnecessary parties then that defeats their right to be sued in their own county.
Byron R. White: Well then there is -- I mean this is where you get all your problems, I take it. You say that the statute shouldn't be -- shouldn't be construed so that you don't have the remedy against necessary party. Well, you do have a remedy against necessary parties in a conspiracy act under your own Texas statute.
Quentin Keith: That is -- not in this case. I mean time has already wiped out any possibility. I'm talking specifically and I address my part --
Byron R. White: You mean because of statute limitations?
Quentin Keith: Well, limitation is already long since about this --
Byron R. White: Yes.
Quentin Keith: -- lawsuit because --
Byron R. White: So you --
Quentin Keith: -- filed --
Byron R. White: -- but if you'd start it out, that could mean instead of trying to sue in the receivership court.
Quentin Keith: Conceivably so, had we anticipated that this Court was going to hold differently than what our Texas Supreme Court did that is with reference to the Banking Act. I say to Your Honors that I don't want to mislead you that there is a possibility and I think that there would be a possibility. Assuming this Court held against us that there would be a method and a manner whereby a future suits such as this conceivably could be brought in the county which the banks were located for filing -- all of your banks were located in one county.
Byron R. White: Or doing business.
Quentin Keith: Or doing business, sir, yes.
Speaker: That takes a little of the bloom of your equity.
Quentin Keith: Yes it does, it kind of zealously blights delineation or somewhat. It doesn't offer the fact in this particular case and I was addressing myself with this particular case. I didn't mean to mislead the Court in the sense that we're not -- I'm talking about a model suit, but some possible lawsuit in the future.
Byron R. White: Yes, but it wasn't -- in that event, it wouldn't be the construction of the statute that is -- so it would be troublesome, it would be --
Quentin Keith: I --
Byron R. White: -- in fact it started out without -- maybe starting two lawsuits in two different courts.
Quentin Keith: I raise the question, if the Court please, that we are necessary parties. Now, there is a distinction in our practice between necessary parties and nominal parties or parties at convenience and so on.
Byron R. White: Or even indispensable parties.
Quentin Keith: Or indispensable parties, but now in this instance, I say to Your Honors that Ben Jack Cage, the perpetrator for fraud is a necessary party to it. In other words, he went down and he signed ICT Insurance Company by Ben Jack Cage to the Republic Bank and that this was an estimate of fraud that Ben Jack Cage or Republic Bank ought to be in the same court house at the same time, he tried the lawsuit. Whereas if you've got two banks, one of them just 30 miles away of Fort Worth for instance, in Tarrant County and one of them in Dallas and he could have done it in two hours this apart, then it would be impossible to get the entire matter together.
Speaker: Now, there seems to be a diametrical difference of view between you and your colleague. I put this same question to him and he answered me categorically.
Quentin Keith: No, he answered you --
Speaker: I thought, maybe I mistook it.
Quentin Keith: No, I think he answered you this way, that they were -- that can you have a distinction with the necessary parties. And that's under our general venue statute. Now, so long as you can get all of your people with your banks, all in one place, then -- because if Your Honors hold that this particular national statute is mandatory then there is no way under our Texas practice that I can get two national banks who happen to live in different counties. We have no branch banking so it's not a question of doing business anywhere else. We have no national -- no branch banking by constitution in Texas.
Byron R. White: So this would be the -- this would be the case if there wasn't a receivership pending and the banks were in two different counties. This would be the normal situation that you run into in many ordinary cases around the country that sometimes you can't get two defendants together when you want it.
Quentin Keith: That -- that's true, sir.
Byron R. White: That the lawyer runs into everyday, isn't it?
Quentin Keith: Not quite that -- that you could ever get them together if they were national banks whereas if there were state banks, that's the point I'm trying to make and I'm trying to make to Your Honor. If they were state banks, you could get them together at least in one time.
Byron R. White: Well, if there is a receivership pending?
Quentin Keith: No sir, in any case --
Byron R. White: Why is that?
Quentin Keith: Because the states -- the state rights or the state bank rights are controlled by state law. And now what the national banks here seek is something that the state banks can't ever -- so long as the bank is chartered under the laws of the State of Texas, it could never claim the benefits of Section 9 accordance that you have before you --
Byron R. White: We agree with that.
Quentin Keith: Sir?
Byron R. White: I agree with that. But assume -- what is the venue for a state bank where no receivership is pending or anything, you just want to sue a state bank, where do you sue it?
Quentin Keith: Say it's just like any other citizen. I mean you would normally sue them and they have the right to be sued in the county in which they are domicile.
Byron R. White: Alright.
Quentin Keith: With exceptions to tort actions, for instance that you can bring in the county in which the tort occurred --
Byron R. White: What if you want to sue them for a conspiracy?
Quentin Keith: Where I could catch a local defendant in the department.
Byron R. White: Yes, but let's assume that you want to sue two banks who do business in two different counties, two state banks in two different counties on a conspiracy.
Quentin Keith: Let me -- let me take the illustration of Dallas and Fort Worth of 30 miles apart. I've got two state banks, one in Dallas and one in Fort Worth and I've got a local defendant living in Austin. Ben Jack Cage lived in Austin. I could take my choice. I could take my choice and I can take Austin, Fort Worth or Dallas.
Byron R. White: So you could sue them in --
Quentin Keith: Anyone of the three.
Byron R. White: Anyone of the defendants resided.
Quentin Keith: Right. Any -- one court by the three -- by some token, they entered into this conspiracy in Houston. I could sue all three of them there even though none of them lived in there because that's important -- for the cause of action to approve. Did that answer your question?
Byron R. White: Yes, it did.
Quentin Keith: Thank you, sir. Yes, sir.
Arthur J. Goldberg: Do you think the statute has any transferred provisions at the national (Inaudible)
Quentin Keith: There is only peculiar provision under our Workman's Compensation Act that provides that -- subsequently develops a strong case to moot. Otherwise, we you don't claim it and it doesn't involve land (Inaudible) where it was filed.
Arthur J. Goldberg: In other words, to make it (Voice Overlap) --
Quentin Keith: Yes, sir. Thank you, sir.
Earl Warren: Mr. Sloman.
Marvin S. Sloman: Mr. Chief Justice, if I may take one moment, I would like to say that I am the co-counsel with Mr. Johnson in number 14, the Mercantile Bank case and have signed the briefs in that case. I do not generally represent Republic National Bank in Dallas which is appellant in number 15. Mr. Neth Leachman who argued number 15 before Your Honors before was taken seriously ill and was unable to come, asked me on Monday to come and serve for him and I am doing that.
Earl Warren: Very well.
Marvin S. Sloman: May it please the Court. I would like first to address myself to the question which was under discussion when counsel sat down concerning transferability. Mr. Justice Goldberg in Texas, the subject of venue is taken very seriously. There is a statute, revised civil statute Article 1995, which has 30 odd subdivisions of exceptions to the venue right to be sued in one's home county, the annotations to it practically filled the volume that is the venue statute. On other hand, practice on a plea of privilege is governed by the Texas Rules of Civil Procedure. And under the Texas Rules as interpreted by our Texas Court, there is full provision. And in this, I respectfully disagree with the counsel for transfer of actions as to which a plea of privilege is sustained. Moreover, under Article 1995, there is an exception to the right to be sued in one's home county, which says that where there are codefendants, they may be sued in any county where one of them can be called. And under that provision, coupled with the transferability provision, my understanding of Texas venue laws sir is that this whole action may in the discretion of the Civil District Court in Travis County of where this case originated, be transferred to Dallas. In any event, the action as to these two banks may be transferred and maybe tried there. That may present some difficulty.
Earl Warren: Separately from the other 104 coconspirators?
Marvin S. Sloman: Yes, Mr. Chief Justice in the Court's discretion.
Earl Warren: Yes.
Marvin S. Sloman: It has --
Earl Warren: Could it pass for the entire -- the entire case?
Marvin S. Sloman: My understanding is it could sir, the Texas Rules of Civil Procedure provided for it. Now, if the -- if --
Tom C. Clark: In fact, this Court has said nothing about this (Inaudible)
Marvin S. Sloman: About transfer --
Tom C. Clark: Yes.
Marvin S. Sloman: No, Your Honor because the trial court overruled the plea of privilege, the Texas Court of Civil Appeals reversed and sustained the plea. The Texas Supreme Court in turn again reversed and overruled our plea, so there's never been any consideration.
William J. Brennan, Jr.: But my point is, apparently, you and counsel for the other side would see eye to eye as to this possibility of transferring the whole cause to Dallas.
Marvin S. Sloman: That's right. Well, in response to Your Honors question, the order of the Texas Court of Civil Appeals, the judgment entered upon its decision at record 350 provides that the trial court was instructed to render judgment sustaining appellant's plea of privilege and transfer this cause as to appellants, that is as to Republic and Mercantile Bank, to any Civil District Court of Dallas County, Texas in accordance with the provisions of Rule 89, Texas Rules of Civil Procedure which rule incidentally Your Honor is printed as appendix to Mercantile Bank's opening brief.
Speaker: Did the Texas law carry on the subject to -- also to answer a simple question as to whether or not if you prevail -- if you prevail this action, the entire action could be transferred to Dallas?
Marvin S. Sloman: Maybe, Your Honor.
Speaker: Well, each of you shakes his head whenever the question is asked and I'm terribly confused about this.
Marvin S. Sloman: I apologize sincerely for having confused, Your Honor.
Speaker: This view of the Texas law is confusing.
Marvin S. Sloman: The Texas law does not require that the whole action -- perhaps that's the point of confusion, Mr. Justice Harlan. The Texas law does not require that the whole action be transferred. It does not require that the action only as to these appellants be transferred. It permits --
Speaker: It permits.
Marvin S. Sloman: -- transfer of the whole action as I understand it. And --
William J. Brennan, Jr.: Well, I gather your adversary said --
Speaker: Says no --
William J. Brennan, Jr.: -- if you prevail, they are burdened to have two actions. There's no way of taking the 140 individuals and bringing the action against them in the same courtroom with the two banks in Dallas.
Marvin S. Sloman: If Your Honor please, I would have two -- two replies to that. One, I respectfully believe that contention is incorrect.
William J. Brennan, Jr.: Well, would we have to examine this whole volume of --
Marvin S. Sloman: No sir.
William J. Brennan, Jr.: -- the new cases you mentioned?
Marvin S. Sloman: I believe that the rule is not -- that governs transfer is not in our appendix but it's in the Texas Rules of Civil Procedure and I'm not anticipating this question. I don't have the name -- the number of the rule at my fingertips.
Earl Warren: Could each of you furnish us with a memorandum within the next two days?
Marvin S. Sloman: We would greatly prefer to do so and thank you, Mr. Chief Justice. Secondly, Mr. Justice Brennan, I would reply that the trial of these banks apart from the other defendants is a hazard and not an insurmountable one of litigation which would be encountered anytime that the federal venue statute applicable to them was applied and the balance of the action brought in Travis County, Texas. Turning to the second question that I would like to mention in reply concerning the opinion of the Texas Supreme Court in the Langdeau against Burke Investment Company case, I would like to point out that the context in which this question of the Texas Supreme Court's ruling has arisen in this case, is a contention by the appellee made until we arrived here today, that Article 21.28 of the Texas Insurance Code, subdivision 4 (f), required this suit to be brought in the Court where the delinquency proceedings were pending. And from that platform, appellee sprung forward to the contention that Texas law had localized the situs of an action by a receiver as though it were not a plenary suit brought with the separate number and possibly in a separate court. Of course, we pointed out that such a contention lived down an avenue which would prohibit suits by the receiver in any federal court. A suit under the Federal Tort Claims Act, there are many difficulties rationally with that contention made but I mentioned it only in order that the Court may appreciate the context in which this question has been briefed and in which it has come up. Now, we point it out because of this contention in the reply brief on the merits filed by Mercantile Bank in Number 14 which was then number 90 last term, at page 11 that the decision of the Texas Court of Civil Appeals in Holt against Wheeler in which the Texas Supreme Court had dismissed a writ of error stated Section 4 (f) is remedial or procedural because it deals exclusively with the venue. It is not a statute dealing with substantive law. Now, we thought that decision made perfectly clear that the contention of appellee that this action had been “localized” within the purview of Casey against Adams was untenable. When the Supreme Court stated in Langdeau against Burke that the statute merely signifies an intention to give plaintiff the right if he chooses to maintain the suit there, the contention disappears all together. Now, lastly in response to this question of local actions, I would like to point out that this question is a question of federal and not of state law. While we have been debating here, this question of what Holt against Wheeler and Burke against Langdeau and other Texas decisions hold, in our view, this is purely a question of federal law under Baltimore and Ohio Railroad against Kepner and similar decisions holding that the interpretation of a federal venue right is purely a question of federal law for this Court to determine and not some state label. Under federal decisions cited in our brief, in the reply brief of Mercantile Bank, number 90, last term, number 14 this term, those cases are set forth and clearly show that this is purely a transitory action being a plenary civil action for money damages direct offense and alleged tort. Now, I'd like to, if Your Honors please, to turn briefly to this contention that there was a repeal of this venue statute in 1882 by the Congress. As a preliminary, I would like to say that between 1864 and 1875, this venue statute was known as Section 57 of the National Bank Act. From 1875 on, it's been known as Section 5198 of the revised statutes. And I say that because I'm going to make reference to some cases that discussed it one way or another. In 1873, the Congress passed an amendment to Section 57, which provided that there should be no attachment in a state court against a national bank. That aspect of Section 57 passed in 1873 has no application here except that it casts light on the decision of a later case in this Court. In 1882 because of the 1875 legislation conferring general federal question jurisdiction on the federal courts and bringing into play the Osborn decision for national banks and permitting them always to go into federal courts. Congress passed this legislation saying that the jurisdiction of suits against national bank -- by and against national banks shall be none other than banks which are not chartered under federal law. A counsel has constructed an argument based on the fact that it doesn't say federal court jurisdiction. The fact is that this Court has passed in half a dozen decisions on the meaning of that legislation. The cases are cited in our brief, Petri case coming down finally to the Buford case in 1903. And in the Buford case -- excuse me Your Honor -- this Court said that that 1882 legislation which counsel contends repealed the state court venue provisions. The necessary effect of this legislation was to make national banks for purposes of suing and being sued in the Circuit Courts of the United States, citizens of the state in which they are respectively located and to withdraw from them the right to invoke the jurisdiction of the Circuit Courts of the United States simply on the ground that they were created by and exercised their powers under acts of Congress. No other purpose can be imputed to Congress than to effect that result. Now, with all of the possibly appealing arguments made by counsel for the treatment of a bank, one bank across the street from another bank, respectfully Your Honors, should be addressed to the legislature and not to this Court. With those reasons being attributed to Congress by appellee, the whole argument falls when this Court says to the -- flatly to the contrary that no purpose such as counsel is suggesting to Your Honors can be attributed to the Congress in enacting that legislation. Now, I mentioned a moment ago an amendment to Section 57 of the National Bank Act prohibiting attachment. Now attachment is a way of getting personal jurisdiction, of course. And in the Van Reed case to which Mr. Johnson made reference and which is cited in Mercantile Bank's opening brief, this Court was faced with a contention that this 1882 legislation, just as counsel has just now argued to you, was intended to put all banks on the same footing, and that if you could get an attachment against the state bank than this 1882 law repealed Section 57 pro tanto to put on them on an equal footing. And this Court flatly rejected that contention and (Inaudible) flatly rejected the contention made by counsel today that this Act relating to state court venue was somehow repealed by 1882 legislation having the purpose of dealing with federal court jurisdiction. Thank you, Your Honor.
Earl Warren: Very well.