Court Opinion

ID: 9462487
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:42:23.850048+00
Date Added: 2024-06-11T17:37:37.080151
License: Public Domain

WEBSTER, Circuit Judge, joined by HENLEY, Circuit Judge,
dissenting.
I respectfully dissent. This case was in my view correctly decided in the original panel opinion, authored by Judge *765Devitt,1 which affirmed the District Court’s findings under the clearly erroneous standard of review. Our holding today undercuts First National Bank v. Dickinson, 396 U.S. 122, 90 S.Ct. 337, 24 L.Ed.2d 693 (1969), by assigning to state law an “indispensable role” in the determination of what is a “branch” of a national bank. Majority Opinion at 11-12. Judge Lay, in his separate concurring opinion, shares my view that the definition of a branch bank is solely a question of federal law and that state law is irrelevant to this issue. I cannot agree with him, however, that the Omaha National Bank facility is “clearly a ‘branch bank’ under federal law” or that the District Court’s holding to the contrary was clearly erroneous.
If, as the majority opinion seems to imply,2 the existence of a state statute or regulation limiting or prohibiting certain types of activities may operate to pre-empt the determination by a federal court of whether a specific facility is or is not a branch, then the established rule that branch banks are defined under federal law is mere lip service. I cannot accept such a circular result.
The federal definition of branch banks, set forth in 12 U.S.C. § 36(f), provides:
The term “branch” as used in this section shall be held to include any branch bank, branch office, branch agency, additional office, or any branch place of business located in any State or Territory of the United States or in the District of Columbia at which deposits are received, or checks paid, or money lent.
The Supreme Court elaborated upon this definition in First National Bank v. Dickinson, supra, 396 U.S. at 135, 90 S.Ct. at 344, where it said:
[T]he term “branch bank” at the very least includes any place for receiving deposits or paying checks or lending money apart from the chartered premises * * *. (emphasis original)
The Supreme Court has made it abundantly clear that while a state may limit or prohibit branch banking within its borders it has no role to play in determining what is or is not a “branch” of a national bank:
We reject the contention made by amicus curiae National Association of Supervisors of State Banks to the effect that state law definitions of what constitutes “branch banking” must control the content of the federal definition of § 36(f). Admittedly, state law comes into play in deciding how, where, and when branch banks may be operated * * * f0r jn § 36(c) Congress entrusted to the States the regulation of branching as Congress then conceived it. But to allow the States to define the content of the term “branch” would make them the sole judges of their own powers. Congress did not intend such an improbable result, as appears from the inclusion in § 36 of a general definition of “branch.” (citation and footnote omitted)
First National Bank v. Dickinson, supra, 396 U.S. at 133-34, 90 S.Ct. at 343.
Once a facility of a national bank has been determined to be a “branch” under federal law, then state law may govern the “how, where, and when” of its operation. That is the extent of competitive equality. When Congress undertook to include a general definition of “branch” in the McFadden Act, it could hardly have intended that the definition should have one meaning in Nebraska and another meaning in Virginia. State law is, therefore, irrelevant in the determination of what is or is not a “branch” of a national bank.3
The issue before this Court is whether the District Court was clearly erroneous in determining that the facility was not *766a branch bank. See Fed.R.Civ.P. 52(a). A number of factors have been recognized as being relevant to the issue of whether a facility is a branch. See Majority Opinion at 760-761. These include:
(1) the distance separating the main bank from the added facility; (2) the presence or absence of intervening structures; (3) the physical connection, if any, between the main bank and the facility; (4) the effect upon the balance of competition (that is, whether the facility expands in a material way customer access to banking services in a location not previously served so as to give a material competitive advantage in securing customers); (5) the availability of other locations for attached expansion; and finally (6) the dependence of the facility upon the main bank in day-to-day banking operations.
Id. See also Virginia ex rel. State Corporation Commission v. Farmers and Merchants National Bank, 380 F.Supp. 568, 572-74 (W.D.Va.1974), aff’d per curiam, 515 F.2d 154 (4th Cir.), cert. denied, 423 U.S. 869, 96 S.Ct. 133, 46 L.Ed.2d 99 (1975).
Because the evidence is undisputed that deposits are received and checks are paid at the facility in question, the key issue under Dickinson is whether the facility is “apart from the chartered premises”. In Virginia ex rel. State Corporation Commission v. Farmers and Merchants National Bank, supra, the district court applied these various factors in determining whether the questioned facility, which was 200 feet from an existing bank, was “apart from the chartered premises”. After carefully evaluating the unavailability of feasible alternatives which would have been closer to the main bank and the fact that the new facility did not materially increase the region of customer service so as to impair the existing competitive balance, the court concluded that the facility was not “apart from the chartered premises” and was thus not a branch bank under the federal definition of that term.
In this case, the factors considered by the District Court included (1) the distance between the main bank and the challenged facility; (2) the regular utilization of a pneumatic tube system between the two facilities; (3) the unavailability of feasible alternate sites for an attached auxiliary teller office; (4) the high degree of integration of the operations of the main bank and the facility; (5) the absence of intervening physical structures; and (6) the absence of an effect upon the balance of competition.4 *767After considering “all of the relevant factors and circumstances peculiar to this case”, including the Comptroller’s investigation and ruling, the court concluded that the Omaha National Bank facility was not a branch bank.
Competitive equality does not mean that there, will not be some differences from time to time between what is or is not a “branch” as determined under federal law and what a particular state considers a branch to be. Such differences are inevitable in a federal system. The federal standards were applied in this case and the facility was determined not to be a branch. There was substantial evidence to support the District Court’s finding that “[t]he 18th & Douglas facility did not expand in a material way customer access in a geographical area not previously served,” and that the facility was not so situated physically “as to give the Omaha National Bank a material competitive advantage in securing customers.” The ultimate finding that the facility was “an integrated extension of the main bank” and not a branch under federal law was not clearly erroneous.

. The Honorable Edward J. Devitt, Chief Judge, United States District Court for the District of Minnesota, sitting by designation.

. The majority opinion assigns state law an “indispensable role” in this process. See Majority Opinion at 761-762.

. Judge Lay, while acknowledging that federal law controls the definition, would permit reference to the Nebraska law to “corroborate” such determination. This suggests an indirect influence which I think is impermissible.

. In evaluating these factors, the District Court said:
Even though the distance between the bank’s facilities in the Woodmen Tower and the 18th & Douglas facility, including the width of 18th Street, which is a moderately traveled truncated street,' is 102 feet (measured in a straight line diagonally from the northwest corner of the Woodmen Tower Building to the southeast corner of the property upon which the walk-in/drive-in facility is located), the integration of operation between the main bank and this auxiliary teller office under the geographical restrictions exhibited in this case, coincident with the regular utilization of the functional underground pneumatic tube system, warrants this Court in finding that the facility in issue is physically and operationally attached. * * * The positioning of a night depository on the main floor of the Woodmen Tower at a substantial distance to the west of the main bank’s premises for customer service and the utilization of several entire floors above the main floor of the Woodmen Tower Building, which abuts 18th Street on the west, exhibits the pervading presence of the operations of the Omaha National Bank on the southern half of the block contiguous to Farnam Street from 17th to 18th Streets.
* * ifc *
This Court has scrutinized the move of the Omaha National Bank from its prior attached facility immediately to the north of its main bank premises at 17th & Farnam. The reasons for the move are reasonable and compelling. The severe traffic congestion that prevailed at the entrance and exits of this facility several hours a day demanded either a structural change or a move. (A material factor contributing to this congestion was the uncontemplated alteration of the direction of the one-way traffic on 17th Street from northbound to southbound subsequent to the erection of this edifice.) Since this facility was entrenched within the ground floor of approximately an eight story parking lot, the options for structural modification when considering the magnitude of the building’s pillars within the ground floor *767and at the outlets of ingress and egress were neither physically nor financially feasible. The carbon monoxide buildup from the stacked automobiles on the tunneled approach ramp to the teller windows was a substantial safety hazard also impelling a change.
* * * * * *
The facts in the instant case support the finding that the purpose of the contested facility was an adjunct or annex to the existing main bank. A substantial part of the “deposited” business from the 18th & Douglas facility was routed to various sectors within the main bank where it was processed. Maintenance of cash at this facility was solely for operating needs and was contained within a detached, reach-in cash chest of one inch steel plate within six inches of factory poured concrete. The security system for this facility was monitored within the main bank rather than at the Police Station as were the systems at the detached facilities. Though the initial management at this facility was somewhat autonomous when this suit was filed, the Court has not deciphered the complicated and enmeshed organizational structure of this integrated operation to be either an overshadowing or preponderant factor. Rather, the functioning of this facility evinces its inherent characteristics of a dependent auxiliary teller office. The operational authority of the 18th & Douglas facility emanates from and is actively supervised by the officers located within the main bank.
******
The 18th & Douglas facility did not expand in a material way customer access in a geographical area not previously served, nor is the facility so situated physically as to give The Omaha National Bank a material competitive advantage in securing customers. Only customer convenience and the safety of the customer and local traffic, both pedestrian and automobile, have been affected. The customer must still walk or drive to approximately the same area.