Court Opinion

ID: 9885610
Source: CourtListenerOpinion
Date Created: 2023-10-06 13:08:02.559183+00
Date Added: 2024-06-11T07:48:54.075507
License: Public Domain

Fuld, J.
(dissenting). While federal legislation explicitly authorizes national banks to receive “ savings deposits ” and to pay interest on “ savings ” (Federal Reserve Act, U. S. Code, tit. 12, § 371) and vests them with “ such incidental powers as shall be necessary ” (National Bank Act, U. S. Code, tit. 12, § 24, subd. 7; see Clement Nat. Bank v. Vermont, 231 U. S. 120, 140), this state’s Banking Law, in contrast, unequivocally prohibits a “national bank ” from making “ use of the word ‘ saving ’ or ‘ savings ’ or their equivalent in its banking or financial business, or use [of] any advertisement containing the word ‘ saving ’ or ‘ savings,’ or their equivalent in relation to its banking or financial business ” (Banking Law, § 258, subd. 1).
Mere reading of these two provisions reveals a conflict, patent and irreconcilable. New York’s Banking Law provision severely limits the power of national banks to do exactly what the federal statute authorizes. (See, e.g., 2 Baton’s Digest of Legal Opinions [1926 ed.], p. 1226; 1 Baton’s Digest of Legal Opinions [1940 ed.], p. 645.) The right to accept “ savings deposits ” and maintain “ savings accounts,” can mean very little if the bank, by virtue of state statute, must hide that fact or announce it in terms that fail to make it clear. Indeed, to tell a bank that it can receive “ savings deposits ”, and yet must not publicize the fact is very much like telling a property owner that he may produce vegetables, but must not water or cultivate them.
In a very real sense, the state statute hampers the conduct of banking activities deemed by the federal government to be necessary and beneficial. As the court at Special Term succinctly declared,1 ‘ To deny to defendant the right to invite the public by all proper means of expression at its disposal, to make ‘ savings deposits ’ with it, is to curtail the power to receive such accounts, to reduce its effectiveness as an agency handling that kind of financing — in short, to defeat one of the main purposes for which it was created by Congress. Under such conditions, *464one law or the other must give way. The State law must yield to the Federal law — the supreme law of the land (U. S. Const., art. VI).” (200 Misc. 557, 571.)
The state acknowledges, as, of course, it must, that national banks are empowered, as an incident of their business, to receive “ savings deposits ” and maintain “ savings accounts.” Since those activities are concededly legitimate and in the public interest, there is no basis for the claim that advertising them in the precise language of the Federal Reserve Act can be deceptive or harmful. If a national bank conducts only the type of business which the Federal Reserve Act sanctions and if it informs the public of the nature of that business by using only the exact language of the federal enactment, how may it be said — as it is (opinion of Desmond, J., p. 460) — that the state law serves the vital function “ of protecting our citizens against being fooled ”? 1
Section 258 of the Banking Law, insofar as it prohibits national banks from quoting the very words of the Federal Reserve Act, authorizing them to receive and pay interest on “ savings deposits ”, clashes with the paramount federal law and, accordingly, must be stricken as unconstitutional. (Cf., e.g., Easton v. Iowa, 188 U. S. 220, 229-230, 238; First Nat. Bank v. California, 262 U. S. 366, 368 et seq.; Fidelity Nat. Bank & Trust Co. v. Enright, 264 F. 236; Springfield Inst. for Sav. v. Worcester Fed. Sav. & Loan Assn., 329 Mass. 184, certiorari denied 344 U. S. 884.)
The judgment of the Appellate Division should be reversed and that of Special Term affirmed, with costs in this court and in the Appellate Division.
Lewis, Ch. J., Conway, Dye and Van Voorhis, JJ., concur with Desmond, J.; Fuld, J., dissents in opinion in which Froessel, J., concurs.
Judgment accordingly.