Blaney v. Florida National Bank at Orlando, No. 22229.

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtTUTTLE, , WISDOM, Circuit , and FISHER
Citation357 F.2d 27
PartiesCharles A. BLANEY et al., Appellants, v. FLORIDA NATIONAL BANK AT ORLANDO et al., Appellees.
Decision Date07 March 1966
Docket NumberNo. 22229.

357 F.2d 27 (1966)

Charles A. BLANEY et al., Appellants,
v.
FLORIDA NATIONAL BANK AT ORLANDO et al., Appellees.

No. 22229.

United States Court of Appeals Fifth Circuit.

March 7, 1966.


357 F.2d 28

Robert Dyer, George T. Eidson, Jr., Akerman, Senterfitt, Eidson, Mesmer & Robbinson, Orlando, Fla., for appellants.

Fred H. Kent, Clarence G. Ashby, Haywood M. Ball, Ulmer, Murchison, Kent, Ashby & Ball, Jacksonville, Fla., for appellees.

Before TUTTLE, Chief Judge, WISDOM, Circuit Judge, and FISHER, District Judge.

TUTTLE, Chief Judge:

Appellants (plaintiffs below) brought this action individually, and as representatives of a class comprised of the holders of ten per cent mortgage bonds, issued pursuant to a trust indenture agreement by Fischer-Electro-Magnetics, Inc., a now bankrupt corporation. The complaint alleges improper action by appellee-bank (and its Trust Officer) as trustee under said indenture agreement. In light of our disposition of the case, we do not elaborate upon the specific acts which appellants urge as a breach of the bank's fiduciary obligations as trustee, other than to note the substantiality of their claim. It should be noted, however, that the trust indenture contained an exculpatory clause, purporting to limit the trustee's liability to "gross neglect of its duties hereunder or for failure to exercise good faith in the performance hereof." In holding, as we do, that appellants' complaint does not state a federal claim, we are mindful of the possibility that the Florida courts may give effect to this exculpatory clause, thus rendering non-compensable an otherwise actionable breach of fiduciary duty on the part of the bank. See Smith v. Boyd, 119 Fla. 481, 161 So. 381 (1935).

A threshold problem faces this court in light of the disposition of this case below. The district court's dismissal for lack of diversity or "other jurisdictional grounds" was improper in light of Bell v. Hood, 327 U.S. 678, 66 S.Ct. 773, 13 A.L.R.2d 383 (1946). This latter case teaches that where a complaint is drawn, as here, to seek recovery directly under the Constitution or laws of the United States, a federal court must entertain the suit "to decide whether the allegations state a cause of action on which the court can grant relief as well as to determine issues of fact arising in the controversy," id. at 682, 66 S.Ct. at 776, unless 1) the alleged federal claim appears to be immaterial and made solely for the purpose of obtaining jurisdiction, or 2) the claim is wholly insubstantial and frivolous. Ibid. However, in the interest of economy of judicial time and effort, this court expressly declines to remand on this ground. Rather, we proceed to determine whether, as a matter of law, appellants' claim states a federal cause of action — a question which "must be decided after and not before the court has assumed jurisdiction over the controvesy." Ibid.

Appellants premise their claim for relief upon the following regulation promulgated by the Board of Governors of the Federal Reserve System, pursuant to its authority under former 12 U.S.C. § 248(k) (repealed Sept. 28, 1962):1

"Every such national bank shall conform to sound principles in the operation of its trust department."
357 F.2d 29

12 C.F.R. § 206.6(f) (1961). Footnote 5 to this subsection "commended" to banks operating trust departments the statement of "principles" of trust institutions approved by the Executive Council of the American Bankers Association (Appendix to Regulation F of the Board of Governors of the Federal Reserve System, 12 C.F.R. § 206 at p. 35 et seq.). Appellants ask this court to imply from Section 206.6(f) a federal civil remedy in their favor, as holders of securities subject to the trust indenture administered by appellee. Such an implied cause of action would be based upon the bank's failure to "conform to sound principles in the operation of its trust department." Thus, in effect, we are invited to fashion a federal common law of "sound" trust principles pursuant to "authorization" found in an innocuous administrative regulation. We decline this invitation.

Our conclusion is based partially upon the most recent Supreme Court pronouncement on implying civil remedies from federal regulatory statutes, J. I. Case Co. v. Borak, 377 U.S. 426, 84 S.Ct. 1555, 12 L.Ed.2d 423 (1964). There the plaintiff alleged that defendant-corporation, by seeking support for a merger through circulation of a false and misleading proxy statement, in violation of Section 14(a) of the Securities Exchange Act and regulations issued pursuant thereto, had deprived shareholders of their pre-emptive rights. The question as put by the Court was whether Section 27 of the Securities Exchange Act2 authorized a...

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23 practice notes
  • Delhomme Industries, Inc. v. Houston Beechcraft, Inc., No. 80-3335
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • March 11, 1982
    ...v. Kurtz, 589 F.2d 827, 840 (5th Cir.), cert. denied, 444 U.S. 842, 100 S.Ct. 82, 62 L.Ed.2d 54 (1979); Blaney v. Florida Nat'l Bank, 357 F.2d 27, 28 (5th Cir. We note at the outset two preliminary points. First, the Kansas Consumer Protection Act, Kan.Stat.Ann. §§ 50-623 to -644 (1976 &......
  • Rodriguez v. Ritchey, No. 75-1362
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • September 22, 1976
    ...where the invitation to create federal common law has been refused include Nolan v. Meyer, supra, and Blaney v. Florida Nat'l Bank, 357 F.2d 27 (5th Cir. 19 The majority admits that Agent Arwine has shown no malice. Relevant to this point is the First Circuit case of Madison v. Manter, 441 ......
  • Construction Industry Ass'n of Sonoma County v. City of Petaluma, No. 74-2100
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 13, 1975
    ...order to promote judicial economy, we now dispose of the other challenges to the Plan. 9 See Blaney v. Florida National Bank at Orlando, 357 F.2d 27, 28 (5th Cir. 1966); Necchi v. Necchi Sewing Machine Sales Corp., 348 F.2d 693, 697 (2d Cir. 1965), Cert. denied, 383 U.S. 909, 86 S.Ct. 892, ......
  • Branch v. FDIC, Civ. A. No. 91-10976-Y
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • June 22, 1993
    ...arrived at somewhat inconsistent conclusions. In neither case did the court apply the Cort analysis. In Blaney v. Florida Nat'l Bank, 357 F.2d 27 (5th Cir. 1966), the Fifth Circuit addressed bank creditors' claims against a national bank for failure to comply with federal reserve regulation......
  • Request a trial to view additional results
23 cases
  • Delhomme Industries, Inc. v. Houston Beechcraft, Inc., No. 80-3335
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • March 11, 1982
    ...v. Kurtz, 589 F.2d 827, 840 (5th Cir.), cert. denied, 444 U.S. 842, 100 S.Ct. 82, 62 L.Ed.2d 54 (1979); Blaney v. Florida Nat'l Bank, 357 F.2d 27, 28 (5th Cir. We note at the outset two preliminary points. First, the Kansas Consumer Protection Act, Kan.Stat.Ann. §§ 50-623 to -644 (1976 &......
  • Rodriguez v. Ritchey, No. 75-1362
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • September 22, 1976
    ...where the invitation to create federal common law has been refused include Nolan v. Meyer, supra, and Blaney v. Florida Nat'l Bank, 357 F.2d 27 (5th Cir. 19 The majority admits that Agent Arwine has shown no malice. Relevant to this point is the First Circuit case of Madison v. Manter, 441 ......
  • Construction Industry Ass'n of Sonoma County v. City of Petaluma, No. 74-2100
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • August 13, 1975
    ...order to promote judicial economy, we now dispose of the other challenges to the Plan. 9 See Blaney v. Florida National Bank at Orlando, 357 F.2d 27, 28 (5th Cir. 1966); Necchi v. Necchi Sewing Machine Sales Corp., 348 F.2d 693, 697 (2d Cir. 1965), Cert. denied, 383 U.S. 909, 86 S.Ct. 892, ......
  • Branch v. FDIC, Civ. A. No. 91-10976-Y
    • United States
    • United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts
    • June 22, 1993
    ...arrived at somewhat inconsistent conclusions. In neither case did the court apply the Cort analysis. In Blaney v. Florida Nat'l Bank, 357 F.2d 27 (5th Cir. 1966), the Fifth Circuit addressed bank creditors' claims against a national bank for failure to comply with federal reserve regulation......
  • Request a trial to view additional results

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