Apfel v. Mellon, 4837.

• Decision Date: 03 June 1929
• Docket Number: No. 4837.,4837.
• Citation: 59 App. DC 94,33 F.2d 805
• Parties: APFEL et al. v. MELLON et al., Federal Reserve Board.
• Court: U.S. Court of Appeals — District of Columbia Circuit

59 App. DC 94, 33 F.2d 805 (1929)

APFEL et al. v. MELLON et al., Federal Reserve Board.

No. 4837.

Court of Appeals of District of Columbia.

Submitted April 1, 1929.

Decided June 3, 1929.

Vernon E. West, of Washington, D. C., and Ormsby McHarg, of New York City, for appellants.

Leo A. Rover, of Washington, D. C., and Newton D. Baker, of Cleveland, Ohio, for appellees.

Before MARTIN, Chief Justice, and ROBB and VAN ORSDEL, Associate Justices.

MARTIN, Chief Justice.

This is an appeal from a final order of the lower court dismissing the appellants' petition for a writ of mandamus upon the allegations of the petition and answer.

The case arises under the Act of Congress of December 24, 1919 (41 Stat. 378), commonly known as the "Edge Act," first enacted as section 25(a) of the Federal Reserve Act. See title 12 USCA §§ 611 to 631.

The act provides that corporations may be organized for the purpose of engaging in international or foreign banking or other international or foreign financial operations, and may be formed by any number of natural persons not less than five; that such persons shall enter into articles of association which shall specify in general terms the objects for which the association is formed, and shall execute an organization certificate which shall set out the name assumed by the corporation, the place or places where its operations are to be carried on, the place in the United States where its home office is to be located, the amount of its capital stock and the number of shares into which it shall be divided, the names and places of business or residence of the persons executing the certificate and the number of shares to which each has subscribed, and the fact that the certificate is made to enable the subscribers and their successors to avail themselves of the advantages of the act. It provides also that no corporation shall be organized under the act with a capital stock of less than $2,000,000, one quarter of which shall be paid in before the corporation may be organized to begin business; that the persons signing the organization certificate shall duly acknowledge the execution thereof, and forward it to the Federal Reserve Board, and that after the articles of association and an organization certificate are duly made and filed, and "after the Federal Reserve Board has approved the same and issued the permit to begin business, the association shall become and be a body corporate," with certain specified powers including in general the right to engage in international or foreign banking or other financial operations. The act provides "that except such as is incidental and preliminary to its organization no such corporation shall exercise any of the powers conferred by this section until it has been duly authorized by the Federal Reserve Board to commence business as a corporation organized under the provisions of this section." It also provides that such a corporation may establish and maintain branches or agencies in foreign countries at such places as may be approved by the Federal Reserve Board and under such rules and regulations as the Board may prescribe.

In the instant case the appellants, as relators below, filed their petition against the appellees as members of the Federal Reserve Board, alleging that the relators had duly executed and filed with the respondents, a certificate for the organization of a corporation under the foregoing act for the purpose of engaging in international or foreign banking under the name "Foreign Financing Corporation," and that the certificate fully conformed with the requirements of the act; but that the respondents nevertheless had wrongfully refused to approve of the same or to issue a permit to relators to begin business as a body corporate under the act. The relators prayed for a writ of mandamus to compel the respondents acting as the Federal Reserve Board to approve the articles of incorporation and the organization certificate aforesaid, and to permit relators to begin business as a body corporate under the name "Foreign Financing Corporation," in accordance with the provisions of the act.

The respondents filed their answer admitting that the articles of association and organization certificate filed with the Board by relators were in proper legal form, but stating that the Board had refused to approve the same on the following grounds:

"That the Federal Reserve Board as a board, and the respondents as members thereof, deem it their duty carefully to inquire into the qualifications of the organizers of such proposed corporations and to refuse to approve the articles of association and organization certificates of such proposed corporations and to issue a permit for such proposed corporations to do business, unless after investigation, said Board is of the opinion that the financial responsibility, experience, training, and other qualifications of the organizers of such proposed corporations are such as may reasonably be calculated to hold promise of the financial soundness, reliable and competent management, and proper and successful operation of such proposed corporation."

"* * * That relators do not possess the qualifications reasonably necessary to assure the financial soundness, reliable and competent management, or the proper or successful operations of a corporation organized under Section 25 (a) of the Federal Reserve Act to engage in the highly technical activities of international or foreign banking or other international or foreign financial operations and that it would be detrimental to the public interest to approve such articles of association or organization certificate and to issue a preliminary permit for such proposed corporation to commence business; and that, therefore, the said Board refused to approve the articles of association and the organization certificate and refused to issue a permit to said proposed corporation to begin business. Respondents say that this...