955 F.2d 731 (D.C. Cir. 1992), 90-5209, Independent Ins. Agents of America, Inc. v. Clarke

Docket Nº:90-5209, 90-5214.
Citation:955 F.2d 731
Party Name:INDEPENDENT INSURANCE AGENTS OF AMERICA, INC., et al., Appellants, v. Robert L. CLARKE, Comptroller of the Currency, et al. NATIONAL ASSOCIATION OF LIFE UNDERWRITERS, et al., Appellants, v. Robert L. CLARKE, et al.
Case Date:February 07, 1992
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit
 
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Page 731

955 F.2d 731 (D.C. Cir. 1992)

INDEPENDENT INSURANCE AGENTS OF AMERICA, INC., et al., Appellants,

v.

Robert L. CLARKE, Comptroller of the Currency, et al.

NATIONAL ASSOCIATION OF LIFE UNDERWRITERS, et al., Appellants,

v.

Robert L. CLARKE, et al.

Nos. 90-5209, 90-5214.

United States Court of Appeals, District of Columbia Circuit.

February 7, 1992

As Amended Feb. 25, 1992.

Argued March 1, 1991.

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Appeals from the United States District Court for the District of Columbia (D.C. Civ. Nos. 86-3042 and 86-3045).

Jonathan B. Sallet, for appellants. Ann M. Kappler, Washington, D.C., also entered an appearance, for appellants.

Theodore C. Hirt, Atty., U.S. Dept. of Justice, with whom Stuart M. Gerson, Asst. Atty. Gen., and Jay B. Stephens, U.S. Atty., Anthony J. Steinmeyer, Atty., Dept. of Justice, and Lester N. Scall, Atty., Office of Comptroller of Currency, Washington, D.C., were on brief, for appellee Clarke.

Kenneth L. Bachman, Jr., Giovanni P. Prezioso, and Marc C. Krantz, Washington, D.C., were on brief, for appellee U.S. Nat. Bank of Oregon.

John J. Gill and Michael F. Crotty, Washington, D.C., were on brief, for amici curiae American Bankers Ass'n and Oregon Bankers Ass'n, urging affirmance.

Before SILBERMAN, BUCKLEY and HENDERSON, Circuit Judges.

Opinion for the court filed by Circuit Judge BUCKLEY.

Dissenting opinion filed by Circuit Judge SILBERMAN.

BUCKLEY, Circuit Judge:

Appellants challenge a ruling by the Comptroller of the Currency that would permit any national bank, or its branch, located in a community of not more than five thousand inhabitants to sell insurance to customers outside that community. The Comptroller based his ruling on section 92 of the National Bank Act. As we find sua sponte that that section has been repealed, and as the Comptroller cites no alternative authority for his ruling, we reverse.

  1. BACKGROUND

    Section 92 was enacted in 1916 as an amendment to section 5202 of the Revised Statutes of the United States. It provided, in relevant part, that any national bank

    located and doing business in any place the population of which does not exceed five thousand inhabitants ... may, under such rules and regulations as may be prescribed by the Comptroller of the Currency, act as the agent for any ... insurance company authorized by the authorities of the State in which said bank is located to do business in said State.

    39 Stat. 750, 753 (1916). This provision was codified as section 92 of Title 12 of the United States Code. Although section 92 was omitted from section 5202 when the latter was revised and reenacted in 1918, and although the section has been omitted from recent editions of the United States Code, the Comptroller has continued to treat it as valid. See, e.g., 12 C.F.R. § 7.7100 (1991).

    The appellant trade associations, which represent insurance agents and underwriters, challenge a ruling by the Comptroller that is based on section 92. The ruling holds that under that statute, "a national bank or its branch which is located in a place of 5,000 or under population may sell insurance to existing and potential customers located anywhere." Letter from Judith A. Walter, Senior Deputy Comptroller for National Operations, to Mr. T. Dalrymple (Aug. 18, 1986), reprinted in Joint Appendix at 65. Appellants assert that section 92 places a geographical limit on such sales; and they brought this action to have the ruling set aside under the APA as "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," 5 U.S.C. § 706(2)(A) (1988), as a national bank is not permitted to engage in any activity that is not specifically authorized by law. See 12 U.S.C. § 24 (1988).

    The district court granted the Comptroller's motion for summary judgment based on its finding that his interpretation of section 92 was "rational and consistent with the statute." National Ass'n of Life Underwriters v. Clarke, 736 F.Supp. 1162, 1173 (D.D.C.1990) (internal quotation marks omitted). Although the court noted "that [section 92] no longer appears in the United States Code," it stated that it would "assume that the statute exists in proprio

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    vigore" because "Congress, other courts, and the Comptroller have presumed its continuing validity." Id. at 1163 n. 2 (citations omitted). The court cited no other source of authority for the Comptroller's ruling; nor does the Comptroller claim any.

    After the parties had submitted their appellate briefs, we asked them to address two questions: First, should this court decide the validity of section 92 in the absence of a challenge to that validity by any of the parties? Second, was section 92 in fact valid? In response to the first question, appellants took the position that this court was required to consider the validity of section 92 as it "would be without constitutional authority or power to render [a decision on the merits] if Section 92 [did] not exist." Supplemental Brief for Appellants at 3. The Comptroller, on the other hand, argued that it would be inappropriate for the court to address the issue: It had not been raised by the parties; and, in any event, "the legal issue identified by the Court [did] not go to its jurisdiction, but rather to the merits of plaintiffs' claims." Supplemental Brief for Federal Appellees at 5.

    In responding to our second question, the parties agreed that section 92 remains in effect. They argue that Congress did not intend to repeal section 92. Its technical deletion, they claim, was the result of misplaced quotation marks and therefore should be ignored; moreover, as section 92 was unrelated to the purposes of the 1918 revision of section 5202, an intention to repeal it should not be imputed to Congress. Finally, the parties claim that subsequent action by Congress, the Comptroller, and the federal courts (including the Supreme Court) confirms that section 92 remains in effect.

    For the reasons set forth below, we conclude that we must decide whether section 92 continues to have the force of law; and because we find it does not, we reverse.

  2. DISCUSSION

    1. Should the court decide section 92's validity?

      The role of the judicial branch is a limited one.

      The premise of our adversarial system is that appellate courts do not sit as self-directed boards of legal inquiry and research, but essentially as arbiters of legal questions presented and argued by the parties before them.

      Carducci v. Regan, 714 F.2d 171, 177 (D.C.Cir.1983) (Scalia, J.). On occasion, however, a court will find it necessary to go beyond the specific legal theories advanced by the parties. In Arcadia, Ohio v. Ohio Power Co., --- U.S. ----, 111 S.Ct. 415, 112 L.Ed.2d 374 (1990), for example, the parties agreed that the case depended on the proper application of section 318 of the Federal Power Act. The Supreme Court concluded, however, that the challenged orders did not fall within the scope of that section, and it disposed of the case on another basis. Id. at 111 S.Ct. 418. See also Kamen v. Kemper Financial Services, Inc., --- U.S. ----, 111 S.Ct. 1711, 1718, 114 L.Ed.2d 152 (1991) ("court is not limited to the particular legal theories advanced by the parties, but rather retains the independent power to identify and apply the proper construction of governing law"). Moreover, federal courts "are not bound to accept, as controlling, stipulations as to questions of law." Estate of Sanford v. Commissioner of Internal Revenue, 308 U.S. 39, 51, 60 S.Ct. 51, 59, 84 L.Ed. 20 (1939); see also Sebold v. Sebold, 444 F.2d 864, 870 n. 8 (D.C.Cir.1971) ("Since this is a question of law, ... the agreement of counsel is not binding on this court."). The Supreme Court has also held that a court must take judicial notice of a state law that is invalid, stating that "on general principles, the question as to the existence of a law is a judicial one, and must be so regarded by the courts of the United States." Town of South Ottawa v. Perkins, 94 U.S. 260, 268, 24 L.Ed. 154 (1876).

      We believe that this is one of those occasions where a court may properly dispose of a case on a basis not advanced by the parties. Here, the legal question we are asked to decide is the geographical reach of section 92. We are on notice,

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      however, that the section no longer appears in the United States Code. That fact gives rise to a statutory presumption that the law invoked by the parties is invalid, see 1 U.S.C. § 204(a) (1988), a presumption that the parties have been given ample opportunity to rebut. Because this controversy hangs on the interpretation of a statute that is presumed not to exist, we not only have the right to inquire into its validity, we have the duty to do so.

    2. Is section 92 valid?

      Section 204(a) of Title 1 of the United States Code states:

      The matter set forth in the edition of the Code of Laws of the United States current at any time shall ... establish prima facie the laws of the United States, general and permanent in their nature.

      Therefore, in order to determine whether section 92 is valid, we first consult the Code. On inspecting 12 U.S.C. § 92 (1988), we find the following:

      § 92. Omitted

      Codification

      The provisions of this section, which authorized national banking associations in any place where the population did not exceed 5,000 to act as an insurance agent or real estate broker, were added to R.S. § 5202 by act Sept. 7, 1916, were omitted in the amendment of R.S. § 5202 by act Apr. 5, 1918, and therefore this section was omitted from the Code. Pub.L. 97-320, Oct. 15, 1982, purported to amend the Act of September 7, 1916 by deleting [two provisions]. R.S. § 5202, as amended, was set out as section 82 of this title prior to repeal by Pub.L. 97-320.

      12 U.S.C. § 92 (1988) (citations omitted). In sum, the codifiers treat section 92 as having been repealed in 1918.

      Because we must look to the Code for prima facie evidence of federal...

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