347 U.S. 373 (1954), 427, Franklin National Bank of Franklin Square v. New York

Docket Nº:No. 427
Citation:347 U.S. 373, 74 S.Ct. 550, 98 L.Ed. 767
Party Name:Franklin National Bank of Franklin Square v. New York
Case Date:April 05, 1954
Court:United States Supreme Court

Page 373

347 U.S. 373 (1954)

74 S.Ct. 550, 98 L.Ed. 767

Franklin National Bank of Franklin Square


New York

No. 427

United States Supreme Court

April 5, 1954

Argued March 9-10, 1954



Insofar as it forbids national banks to use the word "saving" or "savings" in their business or advertising, the New York statute here involved is invalid, because it conflicts with federal laws expressly authorizing national banks to receive savings deposits and to exercise incidental powers. Pp. 374-379.

(a) The provision of § 24 of the Federal Reserve Act authorizing national banks to "continue hereafter as heretofore to receive time and savings deposits" is declaratory of the right of national banks to enter into or remain in that type of business, and their authority to receive savings deposits is not limited or qualified by the expression "continue hereafter as heretofore." P. 377.

(b) Nor are national banks precluded from advertising for the savings deposits which they are expressly authorized to accept. Pp. 377-378.

(c) Congress did not intend to make this phase of national banking subject to local restrictions because of the special significance attached to the word "savings" in some states. P. 378.

305 N.Y. 453, 113 N.E.2d 796, reversed.

Page 374

FRANKFURTER, J., lead opinion

Opinion of the Court by MR. JUSTICE JACKSON, announced by MR. JUSTICE FRANKFURTER.

This appeal from the Court of Appeals of New York presents the narrow question whether federal statutes which authorize national banks to receive savings deposits conflict with New York legislation which prohibits them from using the word "saving" or "savings" in their advertising or business. We think the [74 S.Ct. 552] federal and state statutes are incompatible, and, in such circumstances, the policy of the State must yield.

It is the policy of New York to charter and foster the mutual savings bank, a nonprofit institution whose earnings inure to the benefit of depositors, rather than to stockholders. These institutions have a long history as relatively stable and safe depositaries for the accumulations of thrifty New Yorkers and as a source of credit for limited uses. They have grown to be an important part of New York's banking and economic structure. That State also charters the savings and loan association, an institution of a different type, intended to serve somewhat similar ends. The Legislature was concerned lest commercial banks, in seeking to induce deposits of the same character, so use the word "savings" as to lead uninformed and indiscriminating persons to believe that they were dealing with the chartered savings institutions. Hence, by its Banking Law, New York has forbidden use of the word "savings," or its variants, by any banks other than its own chartered savings banks and savings and loan associations.1

Page 375

However, the Federal Government is a rival chartering authority for banks. Since McCulloch v. Maryland, 4 Wheat. 316, it has not been open to question that the Federal Government may constitutionally create and govern such institutions within the states. The United States has set up a system of national banks as federal instrumentalities to perform various functions such as providing circulating medium and government credit, as well as financing commerce and acting as private depositaries. Some of their functions, especially as a source for federal credit, depend upon their success in attracting private deposits. That these federal institutions may be at no disadvantage in competition with state-created institutions, the Federal Government has frequently expanded their functions and authority. Of such nature are the measures now before us.

The Federal Reserve...

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