Commercial State Bank of Roseville v. Gidney, 1626-59.
Decision Date | 01 July 1959 |
Docket Number | No. 1626-59.,1626-59. |
Citation | 174 F. Supp. 770 |
Parties | COMMERCIAL STATE BANK OF ROSEVILLE and State Bank of Fraser, Plaintiffs, v. Ray M. GIDNEY, Comptroller of the Currency, Defendant. |
Court | U.S. District Court — District of Columbia |
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N. Barr Miller, Washington, D. C. (J. Marvin Haynes; Joseph H. Sheppard, Washington, D. C., Clark C. Seely, Detroit, Mich., J. Russell LeBarge, Roseville, Mich., Kenneth J. McCallum, East Detroit, Mich., of counsel), for plaintiffs.
Robert J. Asman, Asst. U. S. Atty., Washington, D. C., for defendant.
Two state banks have moved for a preliminary injunction to restrain the Comptroller of the Currency from issuing a certificate authorizing a national bank to open a branch office in Clinton Township, Michigan.
Plaintiffs are two Michigan banks; one has its principal place of business in Roseville, Michigan, and the other in Fraser, Michigan. Immediately adjacent to Roseville, and one mile from the eastern boundary of Fraser is the unincorporated township of Clinton. The Manufacturers National Bank of Detroit (hereinafter referred to as National) has applied to the Comptroller of the Currency for a certificate authorizing the establishment of a branch bank in this township at a place within two and one-half miles of the principal office of each of plaintiff banks. Plaintiffs filed suit for an injunction and a declaratory judgment prohibiting the issuance of the defendant's certificate of authorization to National.
The chronology is as follows: On March 9, 1959, National submitted its application to the Comptroller. On May 26, the Comptroller's District Examiner notified the plaintiffs of the pending application and asked for their views "regarding the establishment of branch banking facilities at the location described". The letter then stated: "We shall appreciate your early reply as a decision on the subject proposal is imminent." The next day, May 27, objections to the establishment of National's branch were filed on behalf of the Fraser and Roseville state banks; a hearing was granted and scheduled for June 17. Shortly before June 11, plaintiffs asked the defendant whether the "usual practice" of having a time delay between approval of the application and issuance of the certificate, would be followed in this case. Defendant advised plaintiffs that the certificate might be issued contemporaneously with the approval; that the certificate of authorization might be used as notification of approval. On June 11, plaintiffs requested defendant to advise them of any contemplated issuance of a certificate prior to its issuance so that plaintiffs could, if they desired, take legal action to protect their rights. Defendant's reply, received by counsel for plaintiffs on June 15, stated:
Because plaintiffs believed they would be powerless to question the validity of the branch bank once the certificate issued, plaintiffs, on June 16, brought suit in this court and secured from Judge Curran, ex parte, an order restraining the defendant and his agents until June 26 "from issuing to * * * National * * * his Certificate approving and authorizing * * * a branch of said Bank * * * in * * * Clinton * * *."1
The next day, June 17, the scheduled hearing was held in the Comptroller's office at which time the Comptroller informed the plaintiffs that so long as the order restraining him from issuing a certificate to National was outstanding, he would make no determination.
In Perry v. Perry, 1951, 88 U.S. App.D.C. 337, 190 F.2d 601, 602, Judge Bazelon stated:
" 2
It is seen, then, that the Court must explore the merits of plaintiffs' contentions so as to be able to exercise its discretion.
Federally chartered banks exist solely by virtue of federal law; the National Banking Act constitutes "by itself a complete system for the establishment and government of national banks."3 "But a national bank is subject to state law unless that law interferes with the purposes of its creation, or destroys its efficiency, or is in conflict with some paramount federal law."4 Branch banking (banking operations at other than the principal office) by national banks is regulated by state law because Congress has so provided. That is, Congress has adopted state law on the establishment of branches by state banks as the measuring stick for the establishment of branches by national banks. 12 U.S.C.A. § 36(c).5
In banking parlance, there are "outside branches" and "inside branches". An "outside branch" is a branch office in a village or city other than the one in which the parent bank is located. An "inside branch" is a branch in the same village or city as the parent. This statute permits a parent bank to have inside branches in the same village or city that other inside branches are located; but it prohibits a parent bank from having an outside branch in a village or city that already possesses a bank (be it parent or branch). See Michigan National Bank, Lansing, Michigan v. Gidney, 1956, 99 U.S.App.D.C. 134, 237 F.2d 762, certiorari denied 1956, 352 U.S. 847, 77 S.Ct. 55, 1 L.Ed.2d 54.
National's main office is located in Detroit (Wayne County) and they are seeking to establish a branch in Clinton Township (Macomb County) at a point which is within twenty-five miles of their main office in Detroit. Plaintiffs argue that this outside branch can not legally be authorized since: (1) Clinton is not a "village or city" within the meaning of § 487.34, and (2) even if Clinton is considered a "village or city", an outside branch is already in operation in Clinton.
Is Clinton a "village or city" within the meaning of § 487.34?
Plaintiffs contend that Clinton is not a "village or city" because (a) it is unincorporated, and (b) the nature of the community does not satisfy the test laid down in Wyandotte Savings Bank v. Eveland, 1956, 347 Mich. 33, 78 N.W.2d 612.
Wyandotte squarely holds that § 487.34 does not prohibit branch banks in an unincorporated village. While a branch of a state bank was involved there, § 36 (c) would appear to compel a federal court to adopt Michigan law on the point and hold that a national bank is not prohibited from having a branch in an unincorporated village in Michigan. This seems reasonable in light of the apparent purpose of Congress to have exactly the same standards—state law—apply to the establishment of national bank branches as apply to the establishment of state bank branches.7 Thus, plaintiffs' contention (a) seems without merit. But (b) is not so easily disposed.
In Wyandotte, S, a state bank, had secured approval from the Michigan Commissioner of Banking for the location of a branch office in the unincorporated township of Ecorse. W, a state bank, and N, a national bank, brought a bill in chancery to have the approval set aside and to enjoin the establishment of S's branch. W and N argued that the language of § 487.34—"village or city"— limited branch banking to incorporated municipalities. In rejecting the argument and holding that § 487.34 did not forbid branch banks in unincorporated villages, the Court carefully presented the facts peculiar to Ecorse in order to show that Ecorse was indeed a village within the common understanding of the word. The Court stressed that the community was "built up solid", had a population in excess of 18,000, "forty stores, drive-in restaurant, professional and dental offices, Federal Department store, parking for five thousand automobiles", and was a "thriving, growing community" with "every type of business except the bank". 78 N.W.2d at page 615.
Clinton township apparently is of a different character. It is an unincorporated area of approximately seven square miles in Macomb County, Michigan. It has at least one elementary school, two churches and a population of 1,300. A considerable part of the area is utilized for cemeteries and it has been described as lacking any "solid mercantile area" or industry, although it is indicated that there is a lumber yard in the area. The roads are gravel and "bordered by open ditches"; "there are no sewers" in at least part of the area;...
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