BT Inv. Managers, Inc. v. Lewis
Decision Date | 15 December 1978 |
Docket Number | TCA 73-184. |
Citation | 461 F. Supp. 1187 |
Parties | BT INVESTMENT MANAGERS, INC. and Bankers Trust New York Corporation, Plaintiffs, v. Gerald A. LEWIS, Comptroller of the State of Florida and Commissioner of Banking of the State of Florida, Defendant. |
Court | U.S. District Court — Northern District of Florida |
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John E. Mathews, Jr. and Stephen E. Day, Mathews, Osborne, Ehrlich, McNatt, Gobelman & Cobb, Jacksonville, Fla., for plaintiffs.
Franklyn J. Wollett, Asst. Gen. Counsel, Tallahassee, Fla., for defendant.
J. Thomas Cardwell, Akerman, Senterfitt & Eidson, Orlando, Fla., for amicus curiae.
Before RONEY, Circuit Judge, ARNOW, Chief District Judge, and STAFFORD, District Judge.
Plaintiffs Bankers Trust New York Corporation (BTNYC) and BT Investment Managers (BTIM) have brought this action seeking a declaration that Florida Statutes § 660.10 and a portion of Florida Statutes § 659.141(1) contravene the United States Constitution and for an injunction restraining their enforcement. Jurisdiction, which is not contested, is founded upon 28 U.S.C. §§ 1331 and 1343(3). This three-judge district court was convened pursuant to 28 U.S.C. § 2281.1
The case was submitted to the court upon a stipulation of facts by the parties, and a final hearing was conducted on September 1, 1978. Upon consideration of the matters presented to the court, we hold that the challenged portion of Florida Statutes § 659.141(1), which prohibits a bank, trust company, or holding company that principally conducts its business outside the State of Florida from owning or controlling a business organization in this state which furnishes investment advisory services, violates the commerce clause, Article I, § 8, of the Constitution.2 Similarly, we hold invalid under the commerce clause Florida Statutes § 660.10, which bars all corporations except banks and trust companies incorporated in Florida and national banks located in Florida from exercising various trust powers and duties in this state.3 Since the determination that the subject statutes offend the commerce clause is sufficient to dispose of the controversy between the parties, we express no opinion as to the validity or invalidity of the statutes under any other constitutional theory proffered by plaintiffs.4
BTNYC is a corporation organized under the laws of New York and is a "bank holding company" within the meaning of the Bank Holding Company Act, 12 U.S.C. § 1841, et seq. BTIM is a corporation organized under the laws of Delaware, and is a wholly-owned subsidiary of BTNYC. BTIM qualified to do business in Florida on November 27, 1972, and plans to locate an office in the city of Palm Beach, Florida.
Defendant Gerald A. Lewis is the incumbent Comptroller and Commissioner of Banking of the State of Florida. The Florida Bankers Association (FBA or amicus) has been granted leave to appear in this action as amicus curiae to argue, along with defendant, in favor of the validity of the challenged statutes.
The factual history of this litigation opens with the 1970 amendments to the Bank Holding Company Act, and specifically the amendment to § 4(c)(8) of the Act, 12 U.S.C. § 1843(c)(8). Prior to 1970 § 4(c)(8) provided that a bank holding company could not acquire ownership or control of any company which is not a bank or bank holding company, except for "any company all the activities of which are . . . of a financial, fiduciary, or insurance nature and which the Board of Governors of the Federal Reserve System . . . by order has determined to be so closely related to the business of banking or of managing or controlling banks as to be a proper incident thereto . . ." (emphasis added).
12 U.S.C. § 1843(c)(8).
The statute grants the Board of Governors of the Federal Reserve System authority to adopt regulations more specifically defining those business activities "so closely related to banking . . . as to be a proper incident thereto." The Board has determined that performing or carrying on any one or more of the functions or activities that may be performed or carried on by a trust company" and "acting as investment or financial advisor" are such activities. 12 C.F.R. § 225.4(a)(4) & (5).5
Acting on the basis of the post-1970 federal bank holding company statutes and regulations, BTNYC applied to the Board of Governors of the Federal Reserve System on October 3, 1972, for authority indirectly to engage de novo in the performance of investment advisory services through its subsidiary BTIM, at an office to be located in Palm Beach, Florida.
While the application was pending, the Florida Legislature, convened in special session for the purpose of considering matters unrelated to this lawsuit, also passed a bill amending Florida Statutes § 659.141(1) in such a manner as to remove BTNYC's right under state law to engage in the investment advisory business in Florida. Laws of Florida 1972, ch. 72-726. It is apparent that the bill was hurriedly enacted at the instance of the FBA and defendant's predecessor in office in response to BTNYC's application; the Board so found,6 and defendant and the FBA have offered no evidence to the contrary.
Until passage of the amendment to § 659.141(1), that statute forbade any "bank, trust company or holding company, the operations of which are principally conducted outside Florida" from acquiring control over "any business organization having a place of business in Florida where or from which it furnishes investment advisory services to trust companies or banks in Florida" (emphasis added). The amended statute eliminated all reference to trust companies or banks, thereby extending the prohibition on the furnishing of investment advice to the giving of advice to any person from a place of business located in this state.
On April 26, 1973, the Board issued an order rejecting BTNYC's application. The Board's reasoning bears partial recitation here:
Absent the recent enactment of amendments to section 659.141 and any evidence indicating that de novo entry in this case would have the purpose or effect of foreclosing future competition or would otherwise be contrary to the public interest, it appears likely that the Board would have approved the instant proposal. The Board recognizes, as has Congress, "that an activity commenced de novo will tend to have pro-competitive effects, and consequently should be viewed more favorably than the commencement of an activity through the acquisition of an existing concern" and "where a bank holding company enters a new market de novo . . ., its desire to succeed in its new endeavor is more likely to be competitive". However, while the instant proposal was pending before the Board, the Florida Statutes were amended to generally prohibit the provision of investment advisory services in Florida by non-Florida-based bank holding companies through control of business organizations having offices in Florida.
Federal Reserve Board Order of April 26, 1973, 59 Fed.Res.Bull. 364, 365 (1973). Under the authority of Whitney National Bank in Jefferson Parish v. Bank of New Orleans & Trust Co., 379 U.S. 411, 85 S.Ct. 551, 13 L.Ed.2d 386 (1965), and § 7 of the Bank Holding Company Act, 12 U.S.C. § 1846, the Board concluded that it was required to deny BTNYC's proposal on the ground that it was prohibited by state law.
Stipulation filed May...
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