FIRST NAT. BANK, ETC. v. NATIONAL BANK OF SD, CIV 79-4057.

Decision Date16 July 1981
Docket NumberNo. CIV 79-4057.,CIV 79-4057.
Citation517 F. Supp. 1296
PartiesThe FIRST NATIONAL BANK IN SIOUX FALLS, a National Banking Corporation, Plaintiff, v. NATIONAL BANK OF SOUTH DAKOTA and all its Branches using the name of First Bank of South Dakota (N.A.) — Sioux Falls, a National Banking Corporation, and John G. Heimann, Comptroller of the Currency, Defendants.
CourtU.S. District Court — District of South Dakota

Michael F. Pieplow of Davenport, Evans, Hurwitz & Smith, Sioux Falls, S. D., for plaintiff.

M. T. Woods of Woods, Fuller, Shultz & Smith, Sioux Falls, S. D. and David A. Ranheim of Dorsey, Windhorst, Hannaford, Whitney & Halladay, Minneapolis, Minn., for defendant National Bank of South Dakota.

Bonnie P. Ulrich, Asst. U. S. Atty., Sioux Falls, S. D., for defendant Heimann.

MEMORANDUM DECISION

NICHOL, Senior District Judge.

The present action is before the Court on the defendants' motions for summary judgment. The plaintiff First National Bank in Sioux Falls (First Sioux Falls) challenges the decision of the defendant Comptroller of the Currency (Comptroller) allowing the defendant National Bank of South Dakota (National Bank) to change its name to First Bank of South Dakota (N.A.). The plaintiff alleges that the Comptroller's action granting the name change was arbitrary, capricious, an abuse of discretion and unsupportable on the record. The plaintiff further alleges that the Comptroller's procedure for hearing plaintiff's objections was inadequate, arbitrary and not calculated to provide a full and fair hearing of the controversy.

On March 21, 1979, the defendant National Bank applied to the Comptroller for permission to change its name, pursuant to 12 U.S.C. section 30 (1959). The First National Bank in Sioux Falls and the First National Bank of the Black Hills opposed the defendant's name change and requested a public hearing to present evidence in opposition to the name change. A public hearing was held in Minneapolis, Minnesota, on May 31, 1979, before the Comptroller's Regional Administrator of National Banks. At this hearing, seven witnesses appeared for the applicant National Bank and four witnesses appeared for the protestants, First National Bank in Sioux Falls and First National Bank of the Black Hills. Each party presented testimony and exhibits and cross-examined adverse witnesses. Following the hearing, all parties submitted post-hearing briefs to the Comptroller's office. On September 5, 1979, the Comptroller granted preliminary approval of the defendant's name change application.

The present case was filed prior to approval of the name change by the Comptroller, although action was not taken on the case until October 3, 1979, when this Court issued a preliminary injunction prohibiting the defendant National Bank from adopting its new name until such time as the issues before the Court were decided.1

The defendants have moved for summary judgment on all counts. For the reasons stated infra the Court grants summary judgment in favor of the National Bank and the Comptroller and dismisses the claims of the plaintiff First Sioux Falls.

Congress has delegated to the Comptroller of the Currency authority to investigate and grant or withhold approval of name change applications by national banks. 12 U.S.C. section 30. The regulations applicable to name change applications are found at 12 C.F.R. sections 4.2, 5.1-5.14. In addition, the Comptroller in October, 1976, promulgated the following policy statement relating to name changes:

The Office of the Comptroller of the Currency (OCC) considers an application for change in corporate title to be primarily a business decision of the applicant. Such applications will be approved subject to the following limitations.
The proposed title must be sufficiently dissimilar from any other existing or proposed unaffiliated bank or depository financial institution, so as not to substantially confuse or mislead the public in a relevant market.

41 Fed.Reg. 47964, 47968.

The appropriate standard of review by the Court is whether the Comptroller's decision was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. section 706(2)(A) (1966). The focal point for judicial review is the administrative record as a whole. Camp v. Pitts, 411 U.S. 138, 93 S.Ct. 1241, 36 L.Ed.2d 106 (1973) (Per Curiam). The United States Supreme Court has described the "arbitrary and capricious" standard of review as a narrow one, requiring a clear error of judgment. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971). The Eighth Circuit Court of Appeals has stated that an administrative action may be regarded as arbitrary and capricious only where there is no rational basis to support the decision. First National Bank of Fayetteville v. Smith, 508 F.2d 1371, 1376 (1974).

Before the Court can set aside an administrative action as arbitrary and capricious, the party challenging the action must prove that the decision was willful and unreasoning, without consideration, and lacked regard for the facts and circumstances of the case. Fayetteville v. Smith, supra at 1376. Although the plaintiff raises convincing arguments as to the potential confusion that may develop as a result of the Comptroller's decision, the plaintiff has failed to show that the Comptroller's decision was a "willful and unreasoning" action.

The Court's decision must be based on the administrative records as a whole and even though the Court may not agree with the decision reached by the Comptroller, it is well established that the reviewing court cannot substitute its judgment for that of the agency. Overton Park v. Volpe, supra at 416, 91 S.Ct. at 823; Fayetteville v. Smith, supra at 1378. While it is true that much of the evidence did not favor the proposed name change, the decision of the Comptroller was not without some support in the record. The Court concludes that, taken as a whole, there is support in the record which forms a rational basis for the Comptroller's decision. The plaintiff has failed to meet the burden of showing by a preponderance of the evidence that the Comptroller's decision to approve defendant's name change application was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law.

In arriving at this conclusion the Court has considered as relevant factors the guidelines set forth in the...

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1 cases
  • First Nat. Bank in Sioux Falls v. National Bank of South Dakota
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • December 29, 1981
    ...District Judge. The First National Bank in Sioux Falls BSiouxFallsappealsfrom the summary judgment entered by the district court 1, 517 F.Supp. 1296, affirming the Comptroller of the Currency's approval of a name change for National Bank of South Dakota (National Bank) to First Bank of Sout......

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