Seattle Trust & Savings Bank v. Bank of California, NA

• Citation: 492 F.2d 48
• Decision Date: 30 January 1974
• Docket Number: 72-2750.,No. 72-2712,72-2712
• Parties: SEATTLE TRUST & SAVINGS BANK, a Bank incorporated under the laws of the State of Washington, et al., Plaintiffs-Appellants, v. The BANK OF CALIFORNIA, N.A., a national banking association, Defendant-Appellee, and William B. Camp, Comptroller of the Currency of the United States, Intervening Defendant-Appellee. John J. McCARTHY, Supervisor, Division of Banking, Department of General Administration, State of Washington, Plaintiff-Intervenor-Appellant, v. The BANK OF CALIFORNIA, N.A., a national banking association, Defendant-Appellee, and William B. Camp, Comptroller of the Currency of the United States, Intervening Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

492 F.2d 48 (1974)

SEATTLE TRUST & SAVINGS BANK, a Bank incorporated under the laws of the State of Washington, et al., Plaintiffs-Appellants, v. The BANK OF CALIFORNIA, N.A., a national banking association, Defendant-Appellee, and William B. Camp, Comptroller of the Currency of the United States, Intervening Defendant-Appellee.

John J. McCARTHY, Supervisor, Division of Banking, Department of General Administration, State of Washington, Plaintiff-Intervenor-Appellant, v. The BANK OF CALIFORNIA, N.A., a national banking association, Defendant-Appellee, and William B. Camp, Comptroller of the Currency of the United States, Intervening Defendant-Appellee.

Nos. 72-2712, 72-2750.

United States Court of Appeals, Ninth Circuit.

January 30, 1974.

Lauren D. Studebaker (Argued) of Davis, Wright, Todd, Riese & Jones, Slade Gorton, Atty. Gen., and Richard A. Heath, Deputy Atty. Gen., Olympia, Wash., Thomas Beierle (Argued) (amici curiae) Seattle, Wash., for appellants.

Noble Gregory (Argued), William I. Edlund, Walter J. Robinson, III, of Pillsbury, Madison & Sutro, San Francisco, Cal., Paul W. Steere of Bogle, Gates, Dobrin, Wakefield & Long, Seattle, Wash., John E. Shockey, Director of Litigation. Comptroller of the Currency, Dept. of the Treasury, Washington, D. C., James L. Browning, Jr., U. S. Atty., and Peter V. Shackter, Asst. U. S. Atty., San Francisco, Cal., Walter H. Fleischer, Anthony J. Steinmeyer (Argued) Civ. Div., Appellate Section, U. S. Dept. of Justice, Washington, D. C., for appellees.

Before TRASK and CHOY, Circuit Judges, and KELLEHER,^* District Judge.

PER CURIAM:

In this action seven banks in the State of Washington challenged, in the District Court, a decision of the Comptroller of the Currency of the United States granting to the Bank of California, N. A., a national banking association, permission to open a new branch in the City of Seattle, Washington. The trial court found that the Comptroller had properly applied federal and state law in reaching his decision and granted summary judgment in favor of defendants. The plaintiff banks and the Washington State Supervisor of Banking, as plaintiff intervenor, appeal. We affirm.

The parties apparently agree that no factual dispute exists and that summary judgment was an appropriate form of disposition by the trial court, each side having so moved the court.

On July 1, 1970, the Bank of California applied to the United States Comptroller of the Currency for permission: (1) to relocate its existing Seattle office to a new location in Seattle, and (2) to establish a new branch at 815 Second Avenue in Seattle, the site of its existing Seattle office. Upon receipt of the application, competing national and state banks and the Washington Supervisor of Banking were notified of the application. Objections were filed to that portion of the application seeking to establish a new branch. The Comptroller allowed presentations by all interested parties and, after an independent investigation by a national bank examiner and review by his staff, issued his opinion granting the application and setting forth reasons for his decision.

Plaintiffs filed this action to enjoin the Bank of California from taking the Comptroller's authorized action of opening a second branch in the City of Seattle; the Comptroller of the Currency intervened as a defendant and the Washington Supervisor of Banking intervened as a plaintiff. Another group of banks, Western Independent Bankers, have also appeared as amicus curiae supporting plaintiffs. Upon cross-motions for summary judgment, the District Court held that the decision of the Comptroller was reasonable and entered judgments for defendants.

Appellants make three contentions here. First, they contend that the District Court erred in approving the Comptroller's determination that the Bank of California is "situated" in Seattle, Washington, for purposes of Section 36(c) of the National Bank Act which regulates bank branching. Second, appellants argue that the trial court erred in approving the Comptroller's determination that appellee had its "principal place of business" in Seattle within the meaning of the Washington State branch banking statute, RCW 30.40.020. Finally, appellants assert that the District Court erred in applying an erroneous standard of judicial review of the decision of the comptroller.

We consider first the question raised concerning the proper standard of judicial review of the Comptroller's decision. Although this issue was not clearly presented or determined in the trial court, it does appear from the record that the District Court adopted the view urged by the Bank of California and the Comptroller that the Courts should uphold the Comptroller's administrative ruling unless he acted "unreasonably, arbitrarily and capriciously" in construing applicable statutes. Although this standard apparently was applied by the District Court, we deem the proper standard of review to have been a de novo determination of the legal issues involved herein. We consider the determination in the trial court to have accomplished a result entirely consistent in approach and result with the de novo review requirement.

The arbitrary and capricious standard has been judicially fashioned to protect against the wrongful exercise of discretion by the Comptroller regarding factual controversies. In this case, however, the principal issue was whether the Comptroller has acted within the limitations imposed upon him by federal and state law, not whether he has acted reasonably or unreasonably. If the Comptroller was incorrect in his interpretation of the law, he should have been overruled in the District Court. First National Bank of Logan, Utah v. Walker Bank & Trust Co., 385 U.S. 252, 87 S.Ct. 492, 17 L.Ed.2d 343, reh. den., 385 U.S. 1032, 87 S.Ct. 738, 17 L.Ed.2d 680 (1966). This standard of review has been customarily applied to cases involving interpretation of 12 U.S.C.A. § 36(c). See First National Bank v. Dickinson, 396 U.S. 122, 90 S.Ct. 337, 24 L.Ed.2d 312 (1966).

The District Court had before it a review of the legal determinations of the Comptroller. The trial court, and we, may give great deference to the interpretation given a statute by the officer charged with its administration, in this case, the Comptroller of the Currency. Udall v. Tallman, 380 U.S. 1, 85 S. Ct. 792, 13 L.Ed.2d 616 (1965); Ramapo Bank v. Camp, 425 F.2d 333, 341 (3rd Cir.) cert. denied, 400 U.S. 828, 91 S.Ct. 57, 27 L.Ed.2d 58 (1970). We consider the record before us to establish a proper determination by the District Court of the applicable law, and, hence, to have been a de novo review of the Comptroller's legal determination.

Appellants' principal contention is that the Bank of California is prohibited from opening a branch in Seattle, Washington, by the National Banking Act, 12 U.S.C. § 36(c), which provides in applicable part as follows :

"(c) A national banking association may, with the approval of the Comptroller of the Currency, establish and operate new branches : (1) Within the limits of the city, town or village in which said association is situated, if such establishment and operation are at the time expressly authorized to State banks by the law of the State in question; and (2) at any point within the State in which said association is situated, if such establishment and operation are at the time authorized to State banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition, and subject to the restrictions as to location imposed by the law of the State on State banks." Italics added. 12 U.S.C.A. § 36(c).

In appellants' view, the legislative history and obvious purpose of this section of the Act is contrary to the decision of the Comptroller that the Bank of California is "situated" in Seattle, Washington. It is their contention that the Bank of California is "situated" only in the State of California and that any further interstate branching by the Bank of California is prohibited by the statute.

After consideration of the extensive briefs of the parties and of amici curiae, we conclude that this statute should not be so construed. The construction which appellants would place on "situated" for the purpose of this section of the Banking Act would prove totally unworkable if applied in other sections of the Act. Throughout the Banking Act there are numerous provisions which refer to banks which are "situated in" or "located in" certain geographical areas. These provisions exist in the Act with respect to such items as security for government deposits, interest and fiduciary capacity.¹ Such provisions govern the regulation of these aspects of banking by the state in which the bank is "situated" or "located"; they also insure that these national banks have rights equal to those of other banks in a particular state.

If the words "located" or "situated" in these provisions were to refer to the site of the Bank of California's...