First Nat Bank In St Louis v. State of Missouri Barrett

Decision Date28 January 1924
Docket NumberNo. 252,252
Citation263 U.S. 640,44 S.Ct. 213,68 L.Ed. 486
PartiesFIRST NAT. BANK IN ST. LOUIS v. STATE OF MISSOURI, at inf. of BARRETT, Atty. Gen. Re
CourtU.S. Supreme Court

Messrs. Frank H. Sullivan, of St. Louis, Mo., C. A. Severance, of St. Paul, Minn., James C. Jones, of St. Louis, Mo., Wm. J. Hughes, of Washington, D. C., and Lon O. Hocker, of St. Louis, Mo., for plaintiff in error.

[Argument of Counsel from pages 641-643 intentionally omitted] Mr. James M. Beck, Sol. Gen., of Washington, D. C., for the United States, amicus curiae.

[Argument of Counsel from pages 644-652 intentionally omitted]

Page 652

Messrs. Merrill E. Otis, of St. Joseph, Mo., Harold R. Small, of St. Louis, Mo., Jesse W. Barrett, of Jefferson City, Mo., Robert C. Morris, of New York City, and Frederick W. Lehmann, Wm. T. Jones, Marion C. Early, and Sam Jeffries, all of St. Louis, Mo., for defendant in error.

[Argument of Counsel from pages 652-654 intentionally omitted]

Page 655

Mr. Justice SUTHERLAND delivered the opinion of the Court.

The state of Missouri brought this proceeding in the nature of quo warranto in the state Supreme Court against the plaintiff in error to determine its authority to establish and conduct a branch bank in the city of St. Louis. The information avers that the bank was organized under the laws of the United States and was and is engaged in a general banking business in that city at a banking house, the location of which is given; that, in contravention of its charter and of the act of Congress under which it was incorporated, it has illegally opened and is operating a branch bank for doing a general banking business in a separate building several blocks from its banking house, and proposes to open additional branch banks at various other locations; and that this is in violation of a statute of the state expressly prohibiting the establishment of branch banks. The prayer is that, upon final hearing, the bank be ousted from the privilege of operating this branch bank or any other. A demurrer to the information was interposed and the cause thereupon submitted. The contention of the state was upheld and judgment rendered in accordance with the prayer. 249 S. W. 619.

The correctness of the judgment is challenged under numerous specifications of error presenting federal questions, which, for the purposes of the case, may be considered under two heads: (1) Whether the state statute is valid as applied to national banks; and (2) whether a proceeding to call a national bank to account for acts of the kind here alleged may be maintained by the state, and whether the form of remedy pursued is sustainable.

First. The Missouri statute (§ 11737, R. S. Mo., 1919) provides 'that no bank shall maintain in this state a branch bank or receive deposits or pay checks except in its own banking house.' That the facts alleged in the information

Page 656

bring the case within that part of the statute which prohibits the maintenance of branch banks and that the statute applies to national banks is conclusively established by the decision of the state court, and we confine ourselves to the inqury whether, as thus applied, the statute is valid.

National banks are brought into existence under federal legislation, are instrumentalities of the federal government and are necessarily subject to the paramount authority of the United States. Nevertheless, national banks are subject to the laws of a state in respect of their affairs, unless such laws interfere with the purposes of their creation, tend to impair or destroy their efficiency as federal agencies, or conflict with the paramount law of the United States. National Bank v. Commonwealth, 9 Wall. 353, 362, 19 L. Ed. 701; Davis v. Elmira Savings Bank, 161 U. S. 275, 283, 16 Sup. Ct. 502, 40 L. Ed. 700. These two cases are cited and followed in the later case of McClellan v. Chipman, 164 U. S. 347, 357, 17 Sup. Ct. 85, 87 (41 L. Ed. 461) and the principle which they establish is said to contain a rule and an exception—'the rule being the operation of general state laws upon the dealings and contracts of national banks; the exception being the cessation of the operation of such laws whenever they expressly conflict with the laws of the United States or frustrate the purpose for which the national banks were created, or impair their efficiency to discharge the duties imposed upon them by the law of the United States.' See, also, Waite v. Dowley, 94 U. S. 527, 533, 24 L. Ed. 181. The question is whether the Missouri statute falls within the rule or within the exception.

Does it conflict with the laws of the United States? In our opinion, it does not. The extent of the powers of national banks is to be measured by the terms of the federal statutes relating to such associations, and they can rightfully exercise only such as are expressly granted or such incidental powers as are necessary to carry on the business for which they are established. Bullard v. Bank, 18

Page 657

Wall. 589, 593, 21 L. Ed. 923; Logan County Bank v. Townsend, 139 U. S. 67, 73, 11 Sup. Ct. 496, 35 L. Ed. 107; California Bank v. Kennedy, 167 U. S. 362. 366, 17 Sup. Ct. 831, 42 L. Ed. 198. Among other things the federal law (R. S. § 5134 [Comp. St. § 9659]) provides that the organization certificate of the association shall specifically state 'the place where its operations of discount and deposit are to be carried on, designating the state, territory, or district, and the particular county and city, town, or village.' By another provision (R. S. § 5190 [Comp. St. § 9744]) it is required that 'the usual business of each national banking association shall be transacted at an office or banking house located in the place specified in its organization certificate.' Strictly, the latter provision, employing, as it does, the article 'an' to qualify words in the singular number, would confine the association to one office or banking house. We are asked, however, to construe it otherwise in view of the rule that 'words importing the singular number may extend and be applied to several persons or things.' R. S. § 1 (Comp. St. § 1). But obviously this rule is not one to be applied except where it is necessary to carry out the evident intent of the statute. See Garrigus v. Board of Commissioners, 39 Ind. 66, 70; Moynahan v. City of New York, 205 N. Y. 181, 186, 98 N. E. 482. Here there is not only nothing in the context or in the subject-matter to require the construction contended for, but other provisions of the national banking laws are persuasively to the contrary. By section 5138, R. S. (Comp. St. § 9675), the minimum amount of capital is fixed in proportion to the population of the place where the bank is located. If it had been intended to allow the establishment by an association of not one bank only, but, in addition, as many branch banks as it saw fit, it is remarkable, to say the least, that there should have been no provision for adjusting the capital to the latter contingency or for determining how or under what circumstances such branch banks might be established or for regulating them. Section 5155, R. S. (Comp. St. § 9695), provides that it shall be lawful for a state

Page 658

bank 'having branches, the capital being joint and assigned to and used by the mother-bank and branches in definite proportions, to become a national banking association * * * and to retain and keep in operation its branches, * * * the amount of the circulation * * * to be regulated by the amount of capital assigned to and used by each.' This provision, confined by its terms, as it is, to existing state institutions, may be fairly considered as constituting an exception to the general rule, and the presence of safeguarding limitations in the excepted case, with their entire absence from the statute otherwise, goes far in the direction of confirming the conclusion that the general rule does not contemplate the establishment of branch banks. This apparently was the interpretation of Congress itself, since in two instances at least special legislation was deemed necessary to allow the establishment of branch banks, viz. at the Chicago Exposition, in 1892 (chapter 71, 27 Stat. 33), and at the St. Louis Exposition, in 1901 (chapter 864, 31 Stat. 1444, § 21); the existence of the branch bank in each instance being expressly limited to the period of two years.

The construction of the executive officers charged with the administration of the law has been, with substantial uniformity, to the same effect, and in this view the Department of Justice, in a well-considered opinion, rendered May 11, 1911, concurred. Lowry National Bank—Establishment of Branches, 29 Op. Atty. Gen. 81.1

This interpretation of the statute by the legislative department and by the executive officers of the government would go far to remove doubt as to its meaning if any existed. See Tiger v. Western Investment Co., 221 U. S.

Page 659

286, 309, 31 Sup. Ct. 578, 55 L. Ed. 738; United States v. Hermanos y Compania, 209 U. S. 337, 339, 28 Sup. Ct. 532, 52 L. Ed. 821.

But it is said that the establishment of a branch bank is the exrcise of an incidental power conferred by section 5136, R. S. (Comp. St. § 9661), by which national banking associations are vested with 'all such incidental powers as shall be necessary to carry on the business of banking.' The mere multiplication of places where the powers of a bank may be exercised is not, in our opinion, a necessary incident of a banking business, within the meaning of this provision. Moreover, the reasons adduced against the existence of the power substantively are conclusive against its existence incidentally; for it is wholly illogical to say that a power which by fair construction of the statutes is found to be denied, nevertheless exists as an incidental power. Certainly, an incidental power can avail neither to create powers which, expressly or by reasonable implication, are withheld nor to enlarge...

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