Citizens and Southern National Bank v. Bougas

• Decision Date: 08 November 1977
• Docket Number: No. 76-398,76-398
• Citation: 98 S.Ct. 88,434 U.S. 35,54 L.Ed.2d 218
• Parties: CITIZENS AND SOUTHERN NATIONAL BANK, Petitioner, v. Nick BOUGAS
• Court: U.S. Supreme Court

434 U.S. 35

98 S.Ct. 88

54 L.Ed.2d 218

CITIZENS AND SOUTHERN NATIONAL BANK, Petitioner,

v Nick BOUGAS.

No. 76-398.

Argued Oct. 3, 1977.

Decided Nov. 8, 1977.

Syllabus

r 12 U.S.C. § 94, which provides that actions against a national bank may be brought in any federal district court within the district in which the bank may be "established" or in any state court in the county or city in which the bank is "located" having jurisdiction in such cases, venue for a suit against a national bank brought in a state court need not be in the county where the bank's charter was issued but may be in the county in which the bank conducts its business at an authorized branch. Pp. 38-45.

138 Ga.App. 706, 227 S.E.2d 434, affirmed.

William C. Humphreys, Jr., Atlanta, Ga., for petitioner; Daniel B. Hodgson, Atlanta, Ga., on the brief.

Michael J. Kovacich, Decatur, Ga., for respondent.

Mr. Justice BLACKMUN delivered the opinion of the Court.

This case presents an issue of state-court venue of a transitory cause of action against a national bank. The suit was filed in the state court of the county of the branch and not in the court of the different county specified in the bank's charter.

The governing statute is Rev.Stat. § 5198, 12 U.S.C. § 94:

"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 dispute obviously centers in the word "located" as it is employed in the statute.¹

I

Petitioner Citizens and Southern National Bank is a national banking association. It received its charter from the Comptroller of the Currency on May 2, 1927. The "place where its operations . . . are to be carried on," ² is described in that charter as the "City of Savannah, in the County of Chatham and State of Georgia." App. 13. For some time now, however, the bank has done business not only at Savannah but also at branches, authorized under, 12 U.S.C. § 36, in other Georgia counties. Tr. of Oral Arg. 4. One of these branches is at Decatur in De Kalb County. See United States v. Citizens & Southern Nat. Bank, 422 U.S. 86, 92 n. 4, 94, 95 S.Ct. 2099, 2104-05, 45 L.Ed.2d 41 (1975). De Kalb County adjoins Fulton County; the city of Atlanta lies in both.

In late June 1975 respondent Bougas sued petitioner bank. His complaint was filed in the state court of De Kalb County. He sought actual and punitive damages for an alleged conversion of a $25,000 savings certificate issued to respondent and deposited by him as collateral for his son's note on which respondent had signed as surety.

The bank accompanied its answer to the complaint with a motion to dismiss respondent's suit "on the grounds of improper venue and lack of jurisdiction over Defendant." App. 9. It asserted that a national bank may be sued in a state court only "in the county in which its charter was issued," that is, for petitioner, only in Chatham County. Ibid. The De Kalb County Court denied that motion. App. to Pet. for Cert. A5. The Georgia Court of Appeals granted the bank's application for interlocutory appeal, but in due course affirmed. 138 Ga.App. 706, 227 S.E.2d 434 (1976).³ We granted certiorari, 429 U.S. 1071, 97 S.Ct. 807, 50 L.Ed.2d 789 (1977), in order to resolve an apparent conflict, hereinafter noted, among state courts in their construction of the word "located" in 12 U.S.C. § 94, when a defendant national bank is conducting banking business at an authorized branch outside its charter county.

Two issues are suggested by the parties: (1) Where is a national bank "located," within the meaning of § 94, for purposes of a transitory action brought in a state court, when it conducts banking business at an authorized branch outside its charter county? (2) In any event, does its conduct of banking business at the branch constitute a waiver, actual or presumptive, of any venue restriction § 94 otherwise imposes? We decide the case adversely to the bank on the first issue and do not reach the question of waiver.

II

This Court has had prior occasion to consider § 94. It is now settled that the statute's provision concerning venue in state courts, despite the presence of what might be regarded as permissive language, "is not permissive, but mandatory, and, therefore, 'that national banks may be sued only in those state courts in the county where the banks are located.' " ⁴ National Bank v. Associates of Obstetrics, 425 U.S. 460, 461, 96 S.Ct. 1632, 1633, 48 L.Ed.2d 92 (1976), quoting Mercantile Nat. Bank v. Langdeau, 371 U.S. 555, 561, 83 S.Ct. 520, 523, 9 L.Ed.2d 523 (1963). See Radzanower v. Touche Ross & Co., 426 U.S. 148, 152, 96 S.Ct. 1989, 1992, 48 L.Ed.2d 540 (1976); Cope v. Anderson, 331 U.S. 461, 467, 67 S.Ct. 1340, 1343, 91 L.Ed. 1602 (1947). The venue provision, however, has been held to be a privilege personal to the bank, and to be subject to waiver. Charlotte Nat. Bank v. Morgan, 132 U.S. 141, 145, 10 S.Ct. 37, 38, 33 L.Ed. 282 (1889); Mercantile Nat. Bank v. Langdeau, 371 U.S., at 561, and n. 12, 83 S.Ct., at 523.

In our view, this language of command does not in itself equate the statute's word "located" with the county designated in the bank's organization certificate and in its formal charter. Petitioner insists that the Court's reference in Langdeau to the effect that a ruling that would recognize state jurisdictional and venue requirements "would render altogether meaningless a congressional enactment permitting suit to be brought in the bank's home county," id., at 560, 83 S.Ct., at 523, "implicitly entails the conclusion that a national bank cannot also be sued in any county wherein it operates branch banks." Brief for Petitioner 17. This, however, overstates the language and holding in Langdeau, a case that did not concern authorized branch banking at all. Langdeau is only the starting point, not the conclusion, for the resolution of the present case.⁵

III

A. The lower federal courts appear to be unanimous in holding that a national bank, under § 94, is "established" only in the federal district that encompasses the place specified in the bank's charter. E. g., Leonardi v. Chase Nat. Bank, 81 F.2d 19, 21-22 (CA2), cert. denied, 298 U.S. 677, 56 S.Ct. 941, 80 L.Ed. 1398 (1936); Northside Iron & Metal Co. v. Dobson & Johnson, Inc., 480 F.2d 798, 799-800 (CA5 1973). See 7A Michie, Banks and Banking, ch. 15, § 220a(4) (1973 ed.); 1 J. Moore, J. Lucas, H. Fink, D. Wecksteen, & J. Wicker, Moore's Federal Practice ¶ 0.144[2.-1] (1977). This rule, however, is not without its scholarly criticism. See Steinberg, Waiver of Venue under the National Bank Act: Preferential Treatment for National Banks, 62 Iowa L.Rev. 129 (1976); Comment, Restricted Venue in Suits Against National Banks: A Procedural Anachronism, 15 Wm. & Mary L.Rev. 179 (1973); Note, An Assault on the Venue Sanctuary of National Banks, 34 Geo.Wash.L.Rev. 765 (1966); ALI, Study of the Division of Jurisdiction Between State and Federal Courts 77, 412-413 (1969). See also Ronson Corp. v. Liquifin Aktiengesellschaft, 483 F.2d 852, 855 (CA3 1973).

We are not concerned in the present case, however, with this federal aspect of venue, and we have no occasion here to review these rulings.

B. We note in the decided state cases no less than three diverse interpretations of § 94:

1. Several rulings consider the words "established" and "located" to be functionally synonymous. Absent waiver, these cases restrict a state-court action against a national bank to the place designated in the bank's charter. E. g., Ebeling v. Continental Illinois Nat. Bank & Trust Co., 272 Cal.App.2d 724, 726-727, 77 Cal.Rptr. 612, 614 (1969); Gregor J. Schaefer Sons, Inc. v. Watson, 26 A.D.2d 659, 272 N.Y.S.2d 790, 791 (1966); Prince v. Franklin Nat. Bank, 62 Misc.2d 855, 310 N.Y.S.2d 390, 391 (Sup.Ct.1970). See 7A Michie, Banks and Banking, ch. 15, § 220b (1973 ed.).⁶

2. In contrast, other decisions hold that "established" and "located" are not synonymous. For state-court purposes, it is said, a bank may be "located" in any place where it operates and maintains a branch doing general banking business, even though, for federal-court purposes, it is "established" only at the place specified in its charter. E. g., Security Mills, of Asheville, Inc. v. Wachovia Bank & Trust Co., 281 N.C. 525, 532, 189 S.E.2d 266, 271 (1972); Holson v. Gosnell, 264 S.C. 619, 623, 216 S.E.2d 539, 541 (1975), cert. denied, 423 U.S. 1048, 96 S.Ct. 774, 46 L.Ed.2d 636 (1976); Central Bank v. Superior Court, 30 Cal.App.3d 962, 971, 106 Cal.Rptr. 912, 918 (1973). The Georgia Court of Appeals in the present litigation so interpreted § 94. 138 Ga.App., at 709, 227 S.E.2d at 436.

3. Still other courts conclude that by establishing a branch in a county other than that designated in its charter, a national bank presumptively waives any venue restriction of § 94, at least as to a suit arising out of banking activity at that branch. Lapinsohn v. Lewis Charles, Inc., 212 Pa.Super. 185, 193-195, 240 A.2d 90, 94-95, cert. denied sub nom. First Camden Nat. Bank & Trust Co. v. Lapinsohn, 393 U.S. 952, 89 S.Ct. 376, 21 L.Ed.2d 363 (1968); Security Mills of Asheville, Inc. v. Wachovia Bank & Trust Co., supra (alternative ground). See Vann v. First Nat. Bank, 324 So.2d 94, 95 (Fla.App.1975), and Exchange Nat. Bank v. Rotocast Plastics Products, Inc., 341 So.2d 787, 789 (Fla.App.1977).

These inconsistent approaches cannot all be appropriately interpretive of § 94. We therefore look to the legislative history to see what light it may afford.

IV

This Court reviewed that history, so far as it concerned the state-court venue provision, in Mercantile Nat. Bank v. Langdeau, 371 U.S., at 558-562, 83 S.Ct., at 522-524. There the Court noted: (a) "Unquestionably Congress had...