Variable Annuity Life Ins. Co. v. Clarke

Citation998 F.2d 1295
Decision Date26 August 1993
Docket NumberNo. 92-2010,92-2010
PartiesVARIABLE ANNUITY LIFE INSURANCE CO., Plaintiff-Appellant, v. Robert L. CLARKE, Comptroller of the Currency, the Office of the Comptroller of the Currency, the United States of America, NCNB National Bank of North Carolina, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

David Overlock Stewart, Raymond C. Ortman, Jr., Ropes & Gray, Washington, DC, for plaintiff-appellant.

Ellen K. Dollase, Kansas City, MO, pro hac vice amicus curiae in support of appellant.

Jacob M. Lewis, Mark B. Stern, U.S. Dept. of Justice, Civil Div., Washington, DC, for Clarke, Office of Comp. & USA.

Steven S. Rosenthal, Robert M. Kurucza, Morrison & Foerster, Washington, DC, for NCNB Bk. & NCNB Sec.

Jonathan Sallet, Ann M. Kappler, Jenner & Block, Washington, DC, for amicus curiae.

Michael F. Crotty, Washington, DC, for amicus curiae (AMA).

Appeal from the United States District Court for the Southern District of Texas.

Before GOLDBERG, JOLLY, and WIENER, Circuit Judges.

GOLDBERG, Circuit Judge:

In an opinion letter issued on March 21, 1990, the Comptroller of the Currency determined that § 24(7) of the National Bank Act, which grants national banks the power to engage in incidental activities necessary to the business of banking, authorizes national banks to sell annuity contracts. The Comptroller also concluded that 12 U.S.C. § 92, which permits national banks to act as insurance agents in towns with less than 5,000 inhabitants, does not limit national banks' power to sell insurance in towns with a population of over 5,000; and in any case, that annuities are not a form of insurance. The district court deferred to the Comptroller's interpretation of §§ 92 and 24(7) of the National Bank Act, 786 F.Supp. 639. We reverse, finding that under § 92 of the Act, national banks may not sell annuities in cities with more than 5,000 inhabitants.

We begin by giving a broad adumbration of our analysis. As a threshold matter we affirm the existence of § 92. The D.C. Circuit's finding that § 92 was "repealed" by Congress was recently rejected by the Supreme Court which found § 92 to be alive and well. The plain language of § 92, as interpreted by this court in Saxon v. Georgia Association of Independent Insurance Agents, 399 F.2d 1010 (5th Cir.1968), prohibits national banks from selling insurance products in towns with a population larger than 5,000. Because we conclude that annuities

                are a form of insurance, we hold that § 92 bars national banks from selling annuities in cities with a population larger than 5,000.   The Comptroller's determination that banks may sell annuities pursuant to the "incidental" powers provision of the National Bank Act, 12 U.S.C. § 24(7), is erroneous because the specific limitation on national banks' power to sell insurance contained in § 92 controls the general grant of incidental powers in § 24(7)
                
BACKGROUND

On August 8, 1989, NationsBank of North Carolina ("NCNB"), a national bank based in Charlotte, North Carolina, sought permission from the Comptroller of the Currency to sell fixed and variable annuity contracts through its wholly-owned subsidiary NationsBanc Securities. NCNB proposed to sell the annuity contracts as an agent for various life insurance companies in cities with more than 5,000 inhabitants. On March 21, 1990, the Comptroller issued an opinion letter approving NCNB's proposed sale of annuities, finding that the sale of annuities is within the power of national banks under the National Bank Act. The Comptroller reasoned that "[a]s part of their traditional role as financial intermediaries, banks have broad powers to buy and sell financial investment instruments as agents for customers ... [and] [a]lthough annuities have historically been a product of insurance companies, they are primarily financial investments."

Challenging the Comptroller's approval of NCNB's proposed sale of annuities, the Variable Annuity Life Insurance Company ("VALIC") filed the instant lawsuit in the Southern District of Texas seeking declaratory and injunctive relief. VALIC is an insurance company which underwrites and sells fixed and variable annuity contracts in all fifty states, and would be in direct competition with the NCNB's sale of annuities. In its motion for summary judgment, VALIC argued that NCNB's proposed sale of annuities violates 12 U.S.C. § 92, which prohibits national banks from selling insurance products in towns with a population larger than 5,000. The Comptroller and the NCNB filed cross motions for summary judgment, claiming inter alia that § 92 does not limit the powers of national banks and that § 92 does not apply to the sale of annuities.

The district court granted appellees' cross motions for summary judgment, and denied VALIC's motion for summary judgment. The district court determined that it "must defer to the Comptroller's interpretation of the National Bank Act, so long as the interpretation is reasonable." Finding that the Comptroller's interpretation "was more than a reasonable construction," the district court affirmed the Comptroller's approval of the proposed annuities sale.

ANALYSIS

On appeal, the central question before us is whether 12 U.S.C. § 92 prohibits banks from selling annuities in cities with more than 5,000 inhabitants. "When an appeal is taken from summary judgment, we review the district court's actions de novo, applying the same standard used by the district court. (citation omitted) When, as here, questions of law control the disposition on summary judgment, we must subject the controverted issues to full appellate review." Texas Commerce Bank, Forth Worth, N.A. v. United States, 896 F.2d 152, 155 (5th Cir.1990). See also Farmers-Merchants Bank and Trust Co. v. CIT Group/Equipment Financing, Inc., 888 F.2d 1524, 1526 n. 3 (5th Cir.1989) (questions of law subject to de novo review).

Before discussing the applicability of § 92 to the facts of the instant case, we must first dispel any lingering existential doubts regarding § 92's viability. Section 92 of Title 12 was enacted in 1916 as part of the Act of Sept. 7, 1916, 39 Stat. 753. In Independent Insurance Agents, Inc. v. Clarke, 955 F.2d 731 (D.C.Cir.1992), the D.C. Circuit held that § 92 was repealed by Congress in 1918, and is no longer in force. The Independent Insurance Agents court found that the 1916 Act placed § 92 in Rev.Stat. § 5202, and that in 1918 Congress eliminated § 5202, thus eliminating § 92. Relying on the D.C. Circuit's analysis, the NCNB argues that § 92 does not exist.

While the appeal in the instant case was pending, the Supreme Court granted a writ Having established the existence of § 92, we must next determine the applicability of § 92 to the sale of annuities by national banks in cities with a population greater than 5,000. Section 92 provides in relevant part that national banks,

                of certiorari to review the D.C. Circuit's opinion in Independent Insurance Agents.   Because the existence or nonexistence of § 92 is central to the disposition of the instant case, we withheld the issuance of this opinion while we waited for the Supreme Court to resolve the question raised by the D.C. Circuit:  whether § 92 was to be, or not to be.   The answer has come:  § 92 is to be.   The Supreme Court rejected the D.C. Circuit's analysis, finding that "the 1916 Act placed § 92 not in Rev.Stat. 5202 but in § 13 of the Federal Reserve Act," and "since the 1918 Act did not touch § 13, it did not affect, much less repeal, section 92."  United States National Bank of Oregon v. Independent Insurance Agents of America, --- U.S. ----, ----, 113 S.Ct. 2173, 124 L.Ed.2d 402, 417 (1993)
                

located and doing business in any place the population of which does not exceed five thousand inhabitants, as shown by the last preceding decennial census may, under such rules and regulations as may be prescribed by the Comptroller of the Currency, act as the agent for any fire, life, or other insurance company authorized by the authorities of the State in which such bank is located to do business in such state, by soliciting and selling insurance and collecting premiums on policies issued by such company.

Section 92 explicitly authorizes national banks in towns with a population smaller than 5,000 to act as insurance agents, and impliedly prohibits national banks in towns with a population larger than 5,000 from acting as insurance agents. In Saxon v. Georgia Association of Independent Insurance Agents, we reversed the Comptroller's ruling that "National banks have the authority to act as agent in the issuance of insurance" regardless of the size of the city in which they are operating. 399 F.2d 1010, 1012 (5th Cir.1968). We held that by application of the ancient maxim of expressio unius est exlusio alterius (the mention of one thing implies the exclusion of another) it is clear that under § 92 "national banks have no power to act as insurance agents in cities of over 5,000 population." Id. at 1013.

The Saxon court's interpretation of § 92 was recently followed by the Second Circuit in American Land Title Association v. Clarke, 968 F.2d 150 (2nd Cir.) cert. denied --- U.S. ----, 113 S.Ct. 2959, 125 L.Ed.2d 660 (1993), which reversed a Comptroller's directive allowing national banks to act as agents for title insurance companies in cities with a population over 5,000. The Second Circuit adopted the reasoning of Saxon, also finding that the "maxim expressio unius est exlusio alterius, used as an aid to construction, leads to the conclusion that Congress intended to prohibit national banks located and doing business in towns with over 5,000 inhabitants from engaging in the insurance agency business." Id. at 155.

In interpreting the intended scope of § 92, the Second Circuit cogently deduced that "had Congress intended to grant national banks located in towns with a large population the authority to sell insurance, it would never...

To continue reading

Request your trial
14 cases
  • In re Kaufman, 96,254.
    • United States
    • Supreme Court of Oklahoma
    • 16 octobre 2001
    ...annuitant, and the insurance company gambles that the annuitant will die prior to actuarial predictions. Variable Annuity Life Ins. Co. v. Clarke, 998 F.2d 1295, 1301 (5th Cir.1993) [Reversed on other grounds, 513 U.S. 251, 115 S.Ct. 810, 130 L.Ed.2d 740 8. The qualified assignment and the ......
  • American Deposit Corp. v. Schacht, 95 C 207.
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • 24 mai 1995
    ...Second, the OCC in NationsBank issued an approval letter in response to the bank's application for same. Variable Annuity Life Ins. Co. v. Clarke, 998 F.2d 1295, 1297 (5th Cir.1993); Variable Annuity Life Ins. Co. v. Clarke, 786 F.Supp. 639, 640-41 (S.D.Tex. 1991). Here, by comparison, Blac......
  • NBD Bank, N.A. v. Bennett, 95-1310
    • United States
    • United States Courts of Appeals. United States Court of Appeals (7th Circuit)
    • 4 octobre 1995
    ...the negative implication that banks not located in small towns may not serve as insurance agents. Variable Annuity Life Insurance Co. v. Clarke, 998 F.2d 1295, 1302 (5th Cir.1993), reversed under the name NationsBank of North Carolina, N.A. v. Variable Annuity Life Insurance Co., --- U.S. -......
  • Nationsbank v. Variable Annuity Life Ins.
    • United States
    • United States Supreme Court
    • 18 janvier 1995
    ...whether § 92, by negative implication, precludes national banks in places more populous than 5,000 from selling insurance. Pp. 8-12. 998 F.2d 1295 (CA5 1993), GINSBURG, J., delivered the opinion for a unanimous Court. Edward C. DuMont, Washington, DC, for petitioners in No. 93-1613. Steven ......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT