Clarke v. Securities Industry Association Security Pacific National Bank v. Securities Industry Association

• Decision Date: 14 January 1987
• Docket Number: Nos. 85-971,85-972,s. 85-971
• Citation: 479 U.S. 388,107 S.Ct. 750,93 L.Ed.2d 757
• Parties: Robert L. CLARKE, Comptroller of the Currency, Petitioner, v. SECURITIES INDUSTRY ASSOCIATION. SECURITY PACIFIC NATIONAL BANK, Petitioner, v. SECURITIES INDUSTRY ASSOCIATION
• Court: U.S. Supreme Court

479 U.S. 388

107 S.Ct. 750

93 L.Ed.2d 757

Robert L. CLARKE, Comptroller of the Currency, Petitioner,

v SECURITIES INDUSTRY ASSOCIATION.

SECURITY PACIFIC NATIONAL BANK, Petitioner,

v. SECURITIES INDUSTRY ASSOCIATION.

Nos. 85-971, 85-972.

Argued Nov. 3, 1986.

Decided Jan. 14, 1987.

Syllabus

Petitioner Security Pacific National Bank (Security Pacific) applied to the Comptroller of the Currency for permission to establish an affiliate named Discount Brokerage, and to offer discount brokerage services not only at its branch offices but also at other locations inside and outside of its home State. A pertinent branching provision of the National Bank Act, 12 U.S.C. § 81, originally enacted in 1927 as part of the McFadden Act, limits "the general business" of a national bank to its headquarters and any "branches" permitted by 12 U.S.C. § 36. Section 36(c) provides that a national bank is permitted to branch only in its home State and only to the extent that a bank of the same State is permitted to branch under state law, and the term "branch" is defined in § 36(f) "to include any branch bank, branch office, branch agency, additional office or any branch place of business . . . at which deposits are received, or checks paid, or money lent." The Comptroller approved Security Pacific's application, concluding that the nonchartered offices at which Discount Brokerage would offer its services would not constitute branches under the McFadden Act because none of the statutory branching functions set forth in § 36(f) would be performed there, and that treating offices conducting brokerage activities as branches under § 36(f) would be inconsistent with the longstanding practice of banks in operating nonbranch offices dealing in United States Government or municipal securities. Respondent, a trade association representing securities brokers, underwriters, and investment bankers, brought suit in Federal District Court, contending that bank discount brokerage offices are branches within the meaning of § 36(f) and thus are subject to the geographical restrictions imposed by § 36(c). The court, relying on Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184, rejected the Comptroller's contention that respondent lacked standing to maintain the action, and ruled for respondent on the merits. The Court of Appeals affirmed.

Held:

1. Respondent has standing to maintain this lawsuit. Under the "standing" standard set forth in Association of Data Processing Service Organizations, supra, at 153, 90 S.Ct., at 829, the complainant must be injured in fact, and the interest sought to be protected by the complainant must be arguably within the "zone of interests" to be protected or regulated by the statute in question. The essential inquiry in determining standing is whether Congress intended for a particular class of plaintiffs to be relied upon to challenge an agency's disregard of the law. Cf. Block v. Community Nutrition Institute, 467 U.S. 340, 347, 104 S.Ct. 2450, 2455, 81 L.Ed.2d 270. The "zone of interest" test provides standing in this case since the interest respondent asserts has a plausible relationship to the policies underlying §§ 36 and 81 with regard to Congress' concern to keep national banks from gaining a monopoly control over credit and money through unlimited branching. Pp. 394-403.

2. The Comptroller, whose construction of the statutory provisions is entitled to great weight, did not exceed his authority in approving Security Pacific's application. There is no merit to respondent's contention that the Comptroller's interpretation of the National Bank Act contradicts the plain language of the statute. The phrase "[t]he general business of each national banking association" in § 81 need not be read to encompass all the business in which a bank engages, but, as interpreted by the Comptroller, can plausibly be read as covering only those activities that are part of the bank's core banking functions. The Act's history, including that predating the branching provisions of the McFadden Act, supports the Comptroller's interpretation. The history of the McFadden Act itself does not establish that Congress intended the locational restriction of §§ 81 and 36 to reach all activities in which national banks are specifically authorized to engage. The Comptroller reasonably interprets § 36(f) as requiring "competitive equality" between state and national banks only in core banking functions, and the operation of a discount brokerage service is not such a function. Pp. 403-409.

244 U.S.App.D.C. 419, 758 F.2d 739, and 247 U.S.App.D.C. 42, 765 F.2d 1196, affirmed in part and reversed in part.

WHITE, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL, BLACKMUN, and POWELL, JJ., joined, and in Parts I and III of which REHNQUIST, C.J., and STEVENS and O'CONNOR, JJ., joined. STEVENS, J., filed an opinion concurring in part and concurring in the judgment, in which REHNQUIST, C.J., and O'CONNOR, JJ., joined, post, p. 409. SCALIA, J., took no part in the consideration or decision of the cases.

Charles A. Rothfeld for petitioner in No. 85-971.

William T. Coleman, Jr., Washington, D.C., for petitioner in No. 85-972.

James B. Weidner, New York City, for respondent in both cases.

Justice WHITE delivered the opinion of the Court.

In these cases, we review an application of the so-called "zone of interest" standing test that was first articulated in Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970). Concluding that respondent is a proper litigant, we also review, and reverse, a judgment that the Comptroller of the Currency exceeded his authority in approving the applications of two national banks for the establishment or purchase of discount brokerage subsidiaries.

I

In 1982, two national banks, Union Planters National Bank of Memphis (Union Planters) and petitioner Security Pacific National Bank of Los Angeles (Security Pacific), applied to the Comptroller of the Currency for permission to open offices that would offer discount brokerage services to the pub- lic.¹ Union Planters proposed to acquire an existing discount brokerage operation, and Security Pacific sought to establish an affiliate named Discount Brokerage. Both banks proposed to offer discount brokerage services not only at their branch offices but also at other locations inside and outside of their home States.

In passing on Security Pacific's application, the Comptroller was faced with the question whether the operation of Discount Brokerage would violate the National Bank Act's branching provisions. Those limitations, enacted as §§ 7 and 8 of the McFadden Act, 44 Stat. 1228, as amended, are codified at12 U.S.C. § 36 and 12 U.S.C. § 81. Section 81 limits "the general business" of a national bank to its headquarters and any "branches" permitted by § 36. Section 36(c) provides that a national bank is permitted to branch only in its home State and only to the extent that a bank of the same State is permitted to branch under state law. The term "branch" is defined at 12 U.S.C. § 36(f) "to include any branch bank, branch office, branch agency, additional office, or any branch place of business . . . at which deposits are received, or checks paid, or money lent."

The Comptroller concluded that "the non-chartered offices at which Discount Brokerage will offer its services will not constitute branches under the McFadden Act because none of the statutory branching functions will be performed there." App. D to Pet. for Cert. in No. 85-971, p. 39a. He explained that although Discount Brokerage would serve as an intermediary for margin lending, loan approval would take place at chartered Security Pacific offices, so that Discount Brokerage offices would not be lending money within the meaning of § 36(f). Likewise, although Discount Broker- age would maintain, and pay interest on, customer balances created as an incident of its brokerage business, the Comptroller concluded that these accounts differ sufficiently in nature from ordinary bank accounts that Discount Brokerage would not be engaged in receiving deposits.² He further observed that treating offices conducting brokerage activities as branches under § 36(f) would be inconsistent with the "long-standing and widespread" practice of banks' operating nonbranch offices dealing in United States Government or municipal securities. Id., at 44a. Accordingly, the Comptroller approved Security Pacific's application.³

Respondent, a trade association representing securities brokers, underwriters, and investment bankers, brought this action in the United States District Court for the District of Columbia. 577 F.Supp. 252. Among other things, respondent contended that bank discount brokerage offices are branches within the meaning of § 36(f) and thus are subject to the geographical restrictions imposed by § 36(c).⁴ The Comptroller disputed this position on the merits and also argued that respondent lacks standing because it is not within the zone of interests protected by the McFadden Act.⁵ The Comptroller contended that Congress passed the McFadden Act not to protect securities dealers but to establish competitive equality between state and national banks.

The District Court, relying on Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 90 S.Ct. 827, 25 L.Ed.2d 184 (1970), held that respondent has standing and rejected the Comptroller's submission that national banks may offer discount brokerage services at nonbranch locations. A divided panel of the Court of Appeals affirmed in a brief per curiam opinion,⁶ 244 U.S.App.D.C. 419, 758 F.2d 739 (1985), and rehearing en banc was denied, with three judges dissenting. 247 U.S.App.D.C. 42, 765 F.2d 1196 (1985).

The Comptroller sought review by petition for certiorari, as did Security Pacific. We granted both petitions,...