Court Opinion

ID: 6375127
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:54:21.559393+00
Date Added: 2024-06-11T15:50:08.763267
License: Public Domain

Per Curiam,
The theory of the Act of Congress under which national banks may acquire fiduciary functions is that Congress may preserve the paramountcy of national banks by giving them such functions as are possessed by competing state banking corporations, but Congress may not regulate this character of business which is peculiarly within state administrative *156control unless the regulations are “discriminatory or so unreasonable as to justify the conclusion that they necessarily would so operate.” If the state regulations are not unreasonable, they are “controlling upon banks chartered by Congress when they came in virtue of authority conferred upon them by Congress to exert such particular powers. And these considerations clearly were in the legislative mind when it enacted the statute in question.” See opinion of Chief Justice White in First National Bank of Bay City v. Union Trust Co., 244 U. S. 416.
The Federal Reserve Board is authorized to promulgate rules and regulations under which national banks shall exercise their fiduciary functions, “thus affording,” as Chief Justice White said in the last cited case, “the means of co-ordinating the functions . . . with the reasonable and non-discriminating provisions of state law regulating their exercise as to state corporations — the whole to the end that harmony and the concordant exercise of the national and state power might result.”
This case has been presented and argued as if our ruling arbitrarily closed the door to national banks. Nothing could be further from the truth. We would refuse to appoint as a fiduciary any individual or corporation, national bank or otherwise, (1) who asserted the right to mingle trust funds with their own and use them for their private profit; (2) who refused to disclose fully and freely their financial condition; or (S) whose trust assets, in case of insolvency, might be removed beyond our jurisdiction and control.
These regulations' are unfortunate and could be cured by virtue of the authority of the Federal Reserve Board to make rules, were it not for the fact that they are imbedded in the Act of Congress.
There is no such profit in handling trust estates as would justify the haste of national banks to acquire and exercise these functions. They should procure amendments to the Act of Congress which would forbid the use of trust funds for private gain, which would assure every court of their authority to inquire fully as to the solvency of the bank, and which would require the retention of all ear-marked trust assets within the jurisdiction of their origin to be there accounted for by the representatives of insolvent banks.
The amendment of the Act of Congress in these three particulars could neither hinder nor harm national banks. They should not strive to break down these reasonable safeguards, but rather to uphold and protect them.
We also refer to In re National Bank of Germantown, 30 Dist. R. 603.
The exceptions are dismissed and the adjudication is confirmed absolutely.