Burns v. American National Bank and Trust Company

• Decision Date: 20 April 1973
• Docket Number: No. 72-1135,72-1507.,72-1135
• Citation: 479 F.2d 26
• Parties: Thos. F. BURNS, on behalf of himself and on behalf of all other persons similarly situated, Appellant, v. AMERICAN NATIONAL BANK AND TRUST COMPANY, a National Banking Association, Appellee. Fred FISHER, on behalf of himself and on behalf of all other persons similarly situated, Appellant, v. The FIRST NATIONAL BANK OF CHICAGO, CHICAGO, ILLINOIS, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

479 F.2d 26 (1973)

Thos. F. BURNS, on behalf of himself and on behalf of all other persons similarly situated, Appellant, v. AMERICAN NATIONAL BANK AND TRUST COMPANY, a National Banking Association, Appellee.

Fred FISHER, on behalf of himself and on behalf of all other persons similarly situated, Appellant, v. The FIRST NATIONAL BANK OF CHICAGO, CHICAGO, ILLINOIS, Appellee.

Nos. 72-1135, 72-1507.

United States Court of Appeals, Eighth Circuit.

Submitted March 12, 1973.

Decided April 20, 1973.

Everett Meeker, Washington, Iowa, for appellant Fisher.

J. Bradley Littlefield, Portland, Or., for appellant Burns.

Before MATTHES, Chief Judge, and MEHAFFY, GIBSON, LAY, HEANEY, BRIGHT, ROSS and STEPHENSON, Circuit Judges.

ROSS, Circuit Judge.

These cases present identical jurisdictional questions under provisions of the National Bank Act. Both Burns and Fisher brought an action in federal court against a national bank seeking to recover usury penalties for themselves and for other members of their class, under 12 U.S.C. §§ 85 and 86. In both cases the defendant bank filed a motion to dismiss on the ground that the court lacked subject matter jurisdiction. These motions were sustained and the cases were dismissed by the trial courts on the ground that under 28 U.S.C. § 1348 federal courts do not have jurisdiction over actions brought against national banks by individuals unless diversity or a federal question, as well as the jurisdictional amount, is pleaded under 28 U.S.C. § 1332 or § 1331.

Both of these cases were originally heard by panels of this Court. In Burns, which was submitted October 19, 1972, and decided December 27, 1972, a divided panel affirmed the trial court's determination that it lacked subject matter jurisdiction under 28 U.S.C. § 1348. On January 9, 1973, a different panel of this Court heard the Fisher case, and on January 15, 1973, orders were entered in both cases granting a combined en banc hearing.

We hold that jurisdiction may be founded on 28 U.S.C. § 1337, and reverse and remand for further proceedings.

Section 1348 provides as follows:

"The district courts shall have original jurisdiction of any civil action commenced by the United States, or by direction of any officer thereof, against any national banking association, any civil action to wind up the affairs of any such association, and any action by a banking association established in the district for which the court is held, under chapter 2 of Title 12, to enjoin the Comptroller of the Currency, or any receiver acting under his direction, as provided by such chapter.

"All national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are respectively located."

The principal question here is the proper interpretation of the final sentence of this section. The banks claim that this shows an intention of Congress to eliminate federal jurisdiction over suits against national banks except under 28 U.S.C. §§ 1331 or 1332; and appellants claim that this section was intended only to eliminate the right of national banks to claim original or removal jurisdiction solely on the basis of being a nationally chartered corporation. We adopt the latter view.

Originally Congress provided that national banks could only be sued in federal court. However, Congress later adopted § 4 of the Act of July 12, 1882, which provided:

"`The jurisdiction for suits hereafter brought by or against any association . . . shall be the same as, and not other than, the jurisdiction for suits by or against banks not organized under any law of the United States. . . . And all laws and parts of laws of the United States inconsistent with this proviso be, and the same are hereby, repealed.\'" Mercantile National Bank v. Langdeau, 371 U.S. 555, 565, 83 S.Ct. 520, 526, 9 L.Ed.2d 523 (1963).

Section 1348 was derived from the Act of March 3, 1887, which reenacted § 4 of the 1882 Act in modified form. As the Supreme Court stated in Mercantile National Bank v. Langdeau, supra, 371 U.S. at 565-566, 83 S.Ct. at 526,

"§ 4 of the 1882 Act and the 1887 Act were designed to overcome the effect of §§ 563 and 629 Rev.Stat. which allowed national banks to sue and be sued in federal district and circuit courts solely because they were national banks, without regard to diversity, amount in controversy or the existence of a federal question in the usual sense. Section 4 apparently sought to limit, with exceptions, the access of national banks to, and their suability in, the federal courts to the same extent to which non-national banks are so limited.

"Decisions of this Court have recognized that § 4 purported to deal with no more than matters of federal jurisdiction. As we observed in Continental National Bank v. Buford, 191 U.S. 119, 123-124, 24 S.Ct. 54, 48 L.Ed. 119:

`The necessary effect of this legislation was to make national banks . . . citizens of the states in which they were respectively located, and to withdraw from them the right to invoke the jurisdiction of the circuit courts of the United States simply on the ground that they were created by, and exercised their powers under acts of Congress. No other purpose can be imputed to Congress than to effect that result.\'" (Footnotes omitted.)

In Herrmann v. Edwards, 238 U.S. 107, 35 S.Ct. 839, 59 L.Ed. 1224 (1915), the Supreme Court held that there was no federal jurisdiction in a suit against directors of a national bank for wrongdoing and breach of trust. But the Court made clear that there was nothing alleged in the complaint upon which to base jurisdiction except the allegation that the defendant was a national bank. The Supreme Court analyzed the predecessor statute to § 1348 as follows:

"Under the provisions of the Act of 1882 long prior to their reenactment in 1888, it had been conclusively established that because a corporation was a national bank, created under an act of Congress, gave it no greater right to remove a case than if it had been organized under a state law. Leather Manufacturers\' Bank v. Cooper, 120 U.S. 778, 7 S.Ct. 777, 30 L.Ed. 816." Id. at 111, 35 S.Ct. at 839.

At first glance Herrman, Buford, and Cooper do seem to stand for the proposition that absent jurisdiction under §§ 1331, 1332 or 1348, there can be no jurisdiction. However, it should be noted that in those cases jurisdiction was claimed simply on the basis of the fact that a national bank was involved. Moreover, jurisdiction under an act regulating commerce, 28 U.S.C. § 1337, was not even provided for until 1911, subsequent to all of these decisions except Herrmann. Therefore, the Supreme Court did not have the advantage of this additional jurisdictional provision when it decided those cases.

In Cupo v. Community National Bank & Trust Co., 438 F.2d 108, 110 (2nd Cir. 1971), the Second Circuit disposed of the argument that 28 U.S.C. § 1348 precludes jurisdiction in actions under another section of the National Bank Act, 12 U.S.C. § 61, in these words:

"Defendants urge this court to reject the holding in Murphy v. Colonial Federal Savings and Loan Association, 388 F.2d 609, contending that that holding is in direct conflict with the Congressional policy behind the enactment of 28 U.S.C. §§ 1348 and 1349. We reject this contention. It appears reasonably clear that section 1348 was designed to grant federal jurisdiction in certain limited situations involving winding up of the affairs of the national banks and to establish citizenship for diversity purposes in cases where federal court jurisdiction is based on diversity of citizenship. Cf. Austin v. Altman, 332 F.2d 273, 276 (2d Cir. 1964). The last sentence of the provision clearly indicates that Congress contemplated other common law actions involving national banks being brought in the federal courts only where diversity of citizenship exists, but in no way negates federal jurisdiction under grants such as section 1337. See also, 12 U.S.C. § 94, regulating venue. Thus section 1348 cannot be read as implying that only the actions enumerated in that section can be brought in federal court. Since the claim in this case establishes the existence of an independent federal question on the basis of the alleged violation of 12 U.S.C. § 61, section 1348 is no bar." (Footnotes omitted.)

In our opinion, § 1348, like its predecessor statutes, was intended to eliminate the right of national banks to claim original or removal jurisdiction solely on the basis of being a nationally chartered corporation, and was not intended to eliminate jurisdiction in all suits involving national banks except those actions specifically permitted in the first paragraph thereof.

The district court in Burns held that jurisdiction in cases involving national banks may be founded in §§ 1331 and 1332 as well as § 1348 where the prerequisites of those sections are met. It is inconsistent, however, to recognize jurisdiction where there is a federal question, as contemplated in § 1331, yet deny it where there is a more specific federal question arising from the commerce clause. The sole question thus becomes whether or not the sections of the National Bank Act relating to usury, 12 U. S.C. §§ 85 and 86, properly come within the classification of an "Act of Congress regulating commerce." 28 U.S.C. § 1337.¹

Section 85 limits the amount of interest which can lawfully be charged by a national bank to the interest allowed by the state wherein the bank is located. To this extent, it places national banks upon the same competitive footing as state banks having their place of business within the same state. But § 86 provides that in cases where usurious interest is charged, recovery may be had against a national bank in double the amount of the interest paid, and it sets a two-year period within which the action for recovery must be commenced. Congress has thus imposed upon national banks a penalty provision that may be different from those...