Merchants & Planters Bank of Newport, Arkansas v. Smith

• Decision Date: 01 August 1974
• Docket Number: No. B-73-C-18.,B-73-C-18.
• Citation: 380 F. Supp. 354
• Parties: MERCHANTS & PLANTERS BANK OF NEWPORT, ARKANSAS, and First National Bank of Newport, Arkansas, Plaintiffs, v. James E. SMITH, Comptroller of the Currency of the United States, Defendant, Jackson County National Bank, Intervenor.
• Court: U.S. District Court — Eastern District of Arkansas

380 F. Supp. 354

MERCHANTS & PLANTERS BANK OF NEWPORT, ARKANSAS, and First National Bank of Newport, Arkansas, Plaintiffs, v. James E. SMITH, Comptroller of the Currency of the United States, Defendant, Jackson County National Bank, Intervenor.

No. B-73-C-18.

United States District Court, E. D. Arkansas, N. D.

August 1, 1974.

James A. McLarty, Newport, Ark., for Merchants & Planters Bank of Newport.

Marvin D. Thaxton, Newport, Ark., for First National Bank of Newport.

W. H. Dillahunty, U. S. Atty. and Fletcher Jackson, Asst. U. S. Atty., Eastern District of Arkansas, Little Rock, Ark., and Edward Jiran, Atty., Office of the Comptroller of the Currency, Washington, D. C. for James E. Smith, Comptroller of the Currency of the United States.

Thomas A. Callaghan, Jr., Washington, D. C., and Sam Boyce, Newport, Ark., for Jackson County National Bank.

MEMORANDUM OPINION

HENLEY, Chief Judge.

This is a suit for declaratory and injunctive relief brought by the Merchants & Planters Bank of Newport, Arkansas, and the First National Bank of Newport, Arkansas, against James E. Smith, Comptroller of the Currency of the United States. Plaintiffs seek to invalidate a 1973 determination by Acting Comptroller Justin T. Watson that an application submitted by the First National Bank of Tuckerman, Arkansas, the name of which was later changed to Jackson County National Bank, pursuant to 12 U.S.C.A., section 36(c) as amended, for leave to open a branch bank in the City or Town of Diaz in Jackson County, Arkansas, should be granted. That application was alternative to an original application submitted pursuant to 12 U.S.C.A., section 30 for leave to move the main office of the applicant from the City of Tuckerman, Arkansas, to Diaz while retaining its original main office at Tuckerman as a branch bank as authorized by Arkansas Act 15 of 1973, Ark.Stats., Ann., Cum.Supp., section 67-352.2.

The original application was opposed by the banks which are plaintiffs here, and it was not granted. The alternative application, which was granted, was submitted after an administrative hearing on the original application had been held as provided by 12 CFR, section 5.1 et seq. When the protestants were notified of the filing of the alternative application, they objected to its consideration. However, the Comptroller¹ in effect overruled the objection. When the protestants were notified that the alternative application had been considered and granted, they objected and requested an administrative stay. When that application was denied, they commenced this suit on July 27, 1973.

The plaintiffs contend basically that the action of the agency in approving the alternative application that has been described was capricious and arbitrary, constituted an abuse of administrative discretion and was otherwise not in accordance with law. They also contend that the agency had no right to consider the alternative application, and that the agency committed other precedural errors which invalidate the ultimate agency determination. Jurisdiction, which is not questioned, is based upon judicial review provisions of the Administrative Procedure Act, 5 U.S.C.A., section 701 et seq., and upon 28 U.S.C.A., section 1331(a).

On September 28, 1973, the Comptroller filed his answer. On October 9, 1973, the Jackson County National Bank obtained leave to intervene in the case as a defendant, and on the same day it filed an answer and a counterclaim against plaintiffs alleging that in opposing the original and alternative applications plaintiffs violated the federal anti-trust laws and are liable to the intervenor under the Clayton Act, 15 U.S.C.A., section 15. In due course plaintiffs filed their reply to the counterclaim.

In early 1974 the Comptroller and the intervenor filed motions for summary judgment under Rule 56 of the Federal Rules of Civil Procedure praying that the complaint be dismissed. Plaintiffs oppose the motions, and the motions have been briefed thoroughly.

Disgressing for a moment, it is noted that when the suit was filed no certificate had been issued by the Comptroller authorizing the opening of the branch bank at Diaz, although the Comptroller had advised all concerned that the alternative application would be granted and that an administrative stay would be denied. The prayer of the complaint was that a declaratory judgment be entered to the effect that the Comptroller had acted unlawfully and that the Court "issue a preliminary injunction restraining comptroller from proceeding further and issue an order of remand of the matter to the comptroller for findings, conclusions and a well reasoned opinion justifying the issuance of authority to the applicant to branch into the town of Diaz, Arkansas . . . ."

Although the complaint contained the prayer for preliminary injunctive relief that has been mentioned, plaintiffs never filed any formal motion for a preliminary injunction and never called upon the Court to grant the preliminary relief asked for in the complaint. Consequently, that particular phase of the case has never been considered by the Court, and no preliminary injunction has been issued. Whether one would have been issued had plaintiffs requested that action specifically is an open question.

In late August 1973 plaintiffs filed with the Comptroller a formal motion for reconsideration of his determination, and that motion or request was formally denied by the agency on October 30, 1973.

In view of the absence of any preliminary injunction the intervenor proceeded to meet the conditions that had been imposed by the Comptroller upon his grant of operating authority; it increased its capital substantially and made certain changes in its personnel, and it constructed at very substantial cost a bank building in Diaz. In early March of this year the Comptroller issued his formal certificate authorizing the opening of intervenor's branch bank, and it is the Court's information that the branch was opened and is now doing business. Intervenor's main office continues to be located at Tuckerman.

The plaintiffs were aware of the fact that no preliminary injunction had been issued, and they were also aware of at least the fact that the intervenor was constructing its branch bank building. On the other hand, the intervenor was aware of the fact that this suit was pending, and intervenor certainly had no right to assume that plaintiffs would inevitably lose their case.²

The cause is now before the Court on the motions of the defendant and intervenor for summary judgment dismissing the complaint, and the Court considers that the question of whether the complaint should be dismissed is appropriate for summary disposition. See Sterling National Bank of Davie v. Camp, 5 Cir., 1970, 431 F.2d 514, and First National Bank of Fayetteville v. Smith, W.D.Ark., 1973, 365 F.Supp. 898.

The record before the Court consists of the pleadings and motions, certain discovery material, and a complete record of the preceedings before the agency, including the proceedings in connection with plaintiffs' formal application for a reconsideration of the agency's initial determination that intervenor should be permitted to operate in Diaz.

The scope of review available to plaintiffs in this action is quite limited. The Court does not try the case de novo and is not at liberty to substitute its judgment for the discretion of the Comptroller, assuming that that discretion was permissibly exercised. If the Comptroller committed no procedural errors that would call for a remand to the agency, if his determination had a rational basis in fact, which basis is established by the administrative record, and if he did not act arbitrarily or capriciously or otherwise contrary to law, the complaint must be dismissed; it is immaterial that the Court may not agree with the determination that was made. See e. g.: Camp v. Pitts, 1973, 411 U.S. 138, 93 S.Ct. 1241, 36 L.Ed.2d 106; Bank of Commerce of Laredo v. City National Bank of Laredo, 5 Cir., 1973, 484 F.2d 284; First National Bank of Fairbanks v. Camp, 9 Cir., 1972, 465 F.2d 586; Sterling National Bank of Davie v. Camp, supra; Webster Groves Trust Co. v. Saxon, 8 Cir., 1966, 370 F.2d 381; First National Bank of Fayetteville v. Smith, supra; Driscoll v. Northwest National Bank of St. Paul, D.C.Minn., 349 F.Supp. 245.³

Before stating any more facts or attempting to discuss the contentions of the parties, it may be helpful to look at relevant State and federal statutes and at the regulations that the Comptroller has promulgated which apply to the procedures to be followed in connection with applications made to him for the chartering of new national banks, for the establishment of branch banks, and for changes in the names or locations of existing banks.

Title 12, U.S.C.A., sections 26 and 27 authorize the Comptroller to approve or disapprove applications for charters for new national banks and lay down certain guidelines for him to follow in making his determinations with respect to such applications. In passing upon a given application he may consider facts reflected by the application and other facts reported to him or which may come to his knowledge "whether by means of a special commission appointed by him for the purpose of inquiring into the condition of such association, or otherwise." (Section 27.)

Section 30, as amended, authorizes an existing national bank, with the approval of the Comptroller, to change its location within the city or town in which it is situated, or to change its location to another city or town in the same State not more than 30 miles away from that in which the bank is currently operating.

And section 36(c), as amended, provides in substance that a national bank, with the approval of the Comptroller, may establish a branch bank in a city or town in the same State other than that in which its main office is situated if a State bank would be permitted under governing State law to establish...