Whitney National Bank In Jefferson Parish v. Bank of New Orleans and Trust Company Saxon v. Bank of New Orleans and Trust Company
| Citation | 13 L.Ed.2d 386,85 S.Ct. 551,379 U.S. 411 |
| Decision Date | 18 January 1965 |
| Docket Number | Nos. 26,30,s. 26 |
| Parties | WHITNEY NATIONAL BANK IN JEFFERSON PARISH, Petitioner, v. BANK OF NEW ORLEANS AND TRUST COMPANY et al. James J. SAXON, Comptroller of the Currency, Petitioner, v. BANK OF NEW ORLEANS AND TRUST COMPANY et al |
| Court | United States Supreme Court |
[Syllabus from pages 411-412 intentionally omitted] Ralph S. Spritzer and Dean Acheson, Washington, D.C., for petitioners.
Edward L. Merrigan, Washington, D.C., for respondents.
This suit is a facet of the complicated controversy between the Whitney National Bank of New Orleans (Whitney-New Orleans) and three of its state-chartered banking competitors over the establishment by Whitney-New Orleans of a national bank (Whitney-Jefferson) in Jefferson Parish, Louisiana, which adjoins the Parish of Orleans. In order to avoid the restrictions of the national banking laws as to branch banking1 and still tap the banking market in Jefferson Parish, Whitney-New Orleans resorted to the organization of a bank holding company. After approval of the plan by the Federal Reserve Board on May 3, 1962, two of the respondent banks filed this declaratory judgment action on June 9, 1962, seeking a declaration that the Comptroller of the Currency had no power to grant the necessary authority and praying in addition for injunctive relief restraining him from issuing a certificate of authority for the new bank.
Four days later two of the respondent banks petitioned the Board for reconsideration of its approval of the Whitney application. Their petition was denied, and on June 30, 1962, they sought judicial review of the Federal Reserve Board decision in the Court of Appeals for the Fifth Circuit.2 That suit is presently pending there awaiting our decision here.
Meanwhile, in this suit the United States District Court for the District of Columbia assumed jurisdiction and held on the merits that § 7 of the Bank Holding Company Act of 19563 reserved to the States final authority to prohibit the opening of subsidiaries of bank holding companies within their borders and that Louisiana had adopted such a law (albeit subsequent to the approval of the plan involved here by the Federal Reserve Board)4 which prevented the Comptroller from issuing the certificate. A permanent injunction was issued against the Comptroller restraining the issuance of the authority. 211 F.Supp. 576. On appeal the Court of Appeals upheld the jurisdiction of the District Court, rejecting the contention that the competitor banks lacked standing to sue. It related bank charters to semi-exclusive franchises conferring upon their holders a right to be free from the competition of a branch bank the operation of which was violative of the Banking Act of 1933, 12 U.S.C. § 36 (1958 ed.). On the merits it concluded that the proposed Jefferson Parish bank would be but a branch of Whitney-New Orleans which was prohibited by the Act. It therefore found it unnecessary to pass upon the effect of Louisiana's law prohibiting the opening or operation of subsidiaries by bank holding companies. 116 U.S.App.D.C. 285, 323 F.2d 290. In view of tangle in which the parties had thus involved themselves and the national banking laws as well, we granted certiorari. 376 U.S. 948, 84 S.Ct. 967, 11 L.Ed.2d 969. We have concluded that the District Court for the District of Columbia had no jurisdiction to pass on the merits of the holding company proposal; that appropriate disposition of the controversy cannot be made without further consideration of the case by the Federal Reserve Board, where original exclusive jurisdiction rests; and that since the application for review of its decision is now pending in the Court of Appeals for the Fifth Circuit, reasonable time should be allowed for that court to act. We, therefore, reverse these judgments and order dismissal of the complaint. But issuance of our judgment is stayed for a period of 60 days in order to give the parties time to move in the Court of Appeals for the Fifth Circuit for an order remanding that case to the Federal Reserve Board; and, in the event of such a remand, to permit the Court of Appeals to issue such orders as will protect its jurisdiction pending final determination of the matter.
The facts are undisputed. Whitney-New Orleans desired to extend its banking business into the expanding urban areas beyond the Parish of Orleans, its home base. It could not open branches beyond the parish line because Louisiana law, LSA—Rev.Stat. § 6:54 (1950), applicable to national banks, prohibited its operating a branch bank outside of its home parish. After discussions with the Deputy Comptroller of the Currency it was decided that the bank should establish a holding company (Whitney Holding Corporation) under federal law with a capital of $350,000 taken from the bank's undivided profits and represented by 5,600 shares of stock of the holding company to be distributed to the bank's shareholders. The holding company would then organize a new national bank, the Crescent City National Bank, with the $350,000 it had on hand. Whitney-New Orleans would then be merged into the Crescent City and the resulting bank would be known as Whitney-New Orleans. The new Whitney-New Orleans bank would declare a dividend of $650,000 from its undivided profits which would go to its owner, the holding company. The latter would then organize, with this $650,000, another national bank, Whitney-Jefferson, which would be located in Jefferson Parish. The net result of the maneuver would be that the original stockholders of the old Whitney-New Orleans would own the holding company which in turn would own and operate both banks, i.e., the new Whitney-New Orleans and Whitney-Jefferson.
Approval of the stockholders of Whitney-New Orleans was first obtained, over 88% of the shares voting for the plan. It was then submitted to the Comptroller who on October 3, 1961, gave preliminary approval, subject to the action of the Federal Reserve Board and the consummation of the various transactions outlined. On July 14, 1961, applications were filed with the Board; thereafter notice was published in the Federal Register and three potential competitors expressed opposition. However, none of the respondents appeared or made any filings. After receiving the advice of the Comptroller pursuant to § 3(b) of the Bank Holding Company Act of 1956, 12 U.S.C. § 1842(b) (1958 ed.), which was favorable, the Board ordered a public proceeding to be held on January 17, 1962, 'to afford further opportunity for the expression of views and opinions by interested persons.' At this hearing testimony was heard and opposition submitted by objecting stockholders and potential competitors but none of the respondents took any part therein. The Board by a 6—1 vote approved the plan on May 3, 1962. This suit was filed on June 9, 1962. Thereafter on June 13, 1962, a petition for reconsideration was filed with the Federal Reserve Board by two of the respondent banks and was later joined by the Bank Commissioner of Louisiana. This application was denied on the ground of untimeliness and because the Board found it 'without substantial merit.' The application for judicial review was then filed on June 30, 1962, with the Court of Appeals for the Fifth Circuit pursuant to § 9 of the Bank Holding Company Act of 1956, 12 U.S.C. § 1848 (1958 ed.). That case, as we have said, awaits our decision here.
The Bank Holding Company Act of 1956 prohibits a bank holding company from acquiring ownership or control of a national bank, new or existing, without the approval of the Federal Reserve Board. 12 U.S.C. § 1842(a) (1958 ed.). Provision is made for a full administrative proceeding before the Board in which all interested persons may participate and the views of the interested supervisory authorities may be obtained. 12 U.S.C. § 1842(b) (1958 ed.). The Board's determination is subject to judicial review by specified courts of appeals which must accept the administrative findings if they are supported by substantial evidence. 12 U.S.C. § 1848 (1958 ed.).
Thus, if the plan here merely encompassed the acquisition of an existing national bank already enjoying the Comptroller's certificate of authority to do business, only the approval of the Board would be necessary, and the Comptroller would be involved only to the extent that he provided his views and recommendations. But, of course, this is not the case. Here it is a newly created national bank not yet authorized to do business that is sought to be organized and operated by a bank holding company. This authorization is the sole function of the Comptroller, requiring his appraisal of the bank's assets, directorate, etc., and his action is therefore necessary in addition to that of the Board approving the organization of the bank by the holding company. It is against this background that we inquire whether the questions raised by the respondents in the District Court against the Comptroller were cognizable by the Board.
We think it clear that the thrust of respondents' complaint goes to the organization of Whitney-Jefferson by the holding company rather than merely the issuance of authority to Whitney-Jefferson to do business. Respondents' chief contention is that Whitney-Jefferson would be but a branch bank of Whitney-New Orleans. But this would not follow simply by virtue of the issuance of authority for the opening of the new bank. Such a situation would occur, if at all, when the Board approved the holding company plan including the organization of Whitney-Jefferson as its subsidiary. Thus, it is the plan of organization by the holding company which lies at the heart of respondents' argument.
The Bank Holding Company Act of 1956 directs the Board to consider both 'the convenience, needs, and welfare of the communities and the area concerned' and 'whether or not the effect of such...
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