Burns v. Nw. Nat. Bank of Minneapolis

• Decision Date: 09 April 1935
• Docket Number: No. 6334.,6334.
• Citation: 65 N.D. 473,260 N.W. 253
• Parties: BURNS v. NORTHWESTERN NAT. BANK OF MINNEAPOLIS, MINN.
• Court: North Dakota Supreme Court

65 N.D. 473

260 N.W. 253

BURNS

v.NORTHWESTERN NAT. BANK OF MINNEAPOLIS, MINN.

No. 6334.

Supreme Court of North Dakota.

April 9, 1935.

Syllabus by the Court.

1. Under title 12 USCA § 94, the Courts of North Dakota have no jurisdiction to entertain a suit in a transitory action against a national bank located in another state.

2. Under the facts in this case it is held, that the defendant, by answering and trying the case on the merits, did not waive its objections to the jurisdiction of the court made by motion to vacate service of summons and to dismiss action.

Appeal from District Court, Hettinger County; H. L. Berry, Judge.

Action by Grace Burns against the Northwestern National Bank of Minneapolis, Minnesota. Judgment for plaintiff, and defendant appeals.

Judgment reversed, and action dismissed.

Hanley & Hanley, of Mandan, for appellant.

Harvey J. Miller, of New England, for respondent.

MORRIS, Judge.

This action was brought by the plaintiff to recover the proceeds of a cashier's check issued by the Anamosa National Bank of Anamosa, Iowa, payable to the plaintiff's order, which check she deposited in the Farmers' & Merchants' State Bank of New England, N. D. The check was sent through the defendant bank and collected by it, but before remittance was made to the Farmers' & Merchants' State Bank of New England the latter bank closed, and at the time of its closing was indebted to the defendant bank. Plaintiff obtained judgment.

The defendant is a national bank located at Minneapolis, Minn. Service of summons in this action was made upon one C. B. Bachman, an employee of the defendant at New England, Hettinger county, N. D., on September 10, 1932. The defendant made a motion for an order setting aside and vacating the service of summons and for the dismissal of the action upon two grounds:

First, that the defendant is a national bank organized under the National Banking Act of the United States of America (12 USCA § 21 et seq.), and having its place of business in the city of Minneapolis, in the county of Hennepin, and state of Minnesota, and that the courts of the state of North Dakota have no jurisdiction over the defendant.

Second, that the service of the summons was not made in accordance with the laws of the state of North Dakota for the reason that the person upon whom service was made was not acting as agent or doing business for the defendant in the state of North Dakota at the time the service of summons was made.

The district court denied the defendant's motion and permitted the defendant to answer, which it did.

Attorneys for plaintiff and defendant extended the time for answer by stipulation. The defendant defended at the trial of the action, but, before testimony was taken, its counsel objected to the jurisdiction of the court upon the same grounds as those set out in the previous motion to vacate the service of summons.

The specifications of error upon this appeal refer to the order of the trial court denying defendant's motion to vacate service of summons and dismiss the action. The order is included in the judgment roll certified to this court.

[1] There is presented upon this appeal the question as to whether or not the courts of this state have jurisdiction in an action over a banking association organized under the National Banking Act and having its place of business in another state. National banks, such as the defendant in this case, are created under laws enacted by the Congress of the United States. Rights of such banks to sue and be sued are those granted and defined by Congressional Acts. Section 94, tit. 12 USCA, provides:

“Actions and proceedings against any association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases.”

The above section is a part of the chapter entitled “National Banks.” The decisions of state courts are conflicting as to whether or not it is mandatory. In the case of Crocker v. Marine National Bank, 101 Mass. 240, 3 Am. Rep. 336, it is held that under section 57 of the Act of Congress of June 3d, 1864 (see 28 USCA §§ 41 (16), 110), a national bank could be sued in a state court only in the county or city in which the association is established. The section of the federal statutes referred to is similar in wording to section 94, tit. 12 USCA. In that case the court said:

“This section manifests the intention of congress that each of these associations should be sued, either in the federal or in the state courts, only in the judicial district in which it is established, and in which its officers may be summoned and its books brought into court with the least interruption and inconvenience of its business.”

The rule announced in Crocker v. Marine National Bank, supra, is recognized in the following cases decided by state courts. Cassatt v. First National Bank, 153 A. 377, 9 N. J. Misc. 222;Lee v. Citizens' Bank, 5 Ohio Dec. Reprint, 21, 1 Am. Law Rec. 385, 2 Cin. Super. Ct. Rep. 298, 13 Ohio Dec. Reprint, 913.

In the case of Cooke v. State National Bank of Boston, 52 N. Y. 96, 11 Am. Rep. 667, the court considered the same section as that considered by the Massachusetts court and came to the conclusion that it was permissive and that a national bank may be sued in a locality other than where its banking house is located. This decision was followed in other New York cases. Robinson v. National Bank, 81 N. Y. 385, 37 Am. Rep. 508, and in Talmadge v. Third National Bank, 27 Hun, 61, affirmed, 91 N. Y. 531. Cooke v. State National Bank of Boston has also been followed by the courts of several other states. These decisions are directly in conflict with Crocker v. Marine National Bank, supra. All of the New York cases which we have cited above are old cases. The last one was affirmed in 1883. The old New York rule is no longer followed in that state. In the case of Raiola v. Los Angeles First National Trust & Savings Bank, 133 Misc. 630, 233 N. Y. S. 301, we find that the facts present the identical question of law that we have before us. The summons in that case was served in New York upon the vice president of a national bank which had its principal place of business in Los Angeles, Cal. The action was on a draft drawn on the bank in favor of the plaintiff by one J. F. Walton, who was the holder of a letter of credit issued by the bank. The defendant bank appeared specially and moved to vacate the service of summons upon the grounds that it could not be sued in any other place than in Los Angeles, Cal., where its banking house was located. The court declined to follow the old New York rule. It held that section 94, tit. 12 USCA was mandatory and that the action could not be instituted in New York. In declining to follow the old rule, the court called attention to the fact that the cases supporting it were decided before the case of First National Bank of Charlotte v. Morgan, 132 U. S. 141, 10 S. Ct. 37, 38, 33 L. Ed. 282.

We will now discuss the holdings of federal courts upon the question here presented. In the case of Cadle v. Tracy, 4 Fed. Cas. 967, No. 2,279, 11 Blatchf. 101, a suit was brought in the Supreme Court of New York against a national bank located in Alabama to recover a debt, and in such suit property of the Alabama bank located in New York was attached. The jurisdiction of the New York court was attacked on the ground that it could not acquire jurisdiction of a corporation created under the Act of Congress of June 3d, 1864, and located in Alabama. The court held that the Supreme Court of New York had no jurisdiction of the suit, on the ground that jurisdiction was forbidden to it by section 57 of the Act of June 3d, 1864. The case of First National Bank of Charlotte v. Morgan, which we cited in our discussion of Raiola v. Los Angeles First National Trust & Savings Bank, supra, involved a suit against a national bank to recover back twice the amount of interest illegally collected. The suit was instituted in the superior court of Cleveland county, N. C. The defendant bank was established...