Continental Bank v. National City Bank

• Decision Date: 15 September 1965
• Docket Number: Civ. A. No. C 65-484.
• Citation: 245 F. Supp. 684
• Parties: CONTINENTAL BANK, Plaintiff, v. NATIONAL CITY BANK, and James J. Saxon, Comptroller of the Currency of the United States, Defendants.
• Court: U.S. District Court — Northern District of Ohio

245 F. Supp. 684

CONTINENTAL BANK, Plaintiff, v. NATIONAL CITY BANK, and James J. Saxon, Comptroller of the Currency of the United States, Defendants.

Civ. A. No. C 65-484.

United States District Court N. D. Ohio, E. D.

September 15, 1965.

Donald W. Hornbeck, R. Hollington, Jr., James Schiller, Cleveland, Ohio, for plaintiff.

Victor DeMarco, Geo. H. Ruldoph, J. L. Griffiths, Cleveland, Ohio, for defendant National City Bank.

Richard S. Beatty, Atty., Dept. of Justice, Washington, D. C., Dominic Cimino, Asst. U. S. Atty., for defendant Saxon.

BATTISTI, District Judge.

Plaintiff, the Continental Bank, is a state bank chartered under the banking laws of the state of Ohio and is engaged in the business of banking with its principal office located at 1375 Euclid Avenue, Cleveland, Ohio. Defendant, National City Bank of Cleveland, is a national banking association with its principal offices at 623 Euclid Avenue, Cleveland, Ohio. Defendant James J. Saxon is Comptroller of the Currency of the United States.

On August 3rd, 1965, Plaintiff filed an action for declaratory judgment. In this action Plaintiff asks that this Court find, inter alia, (1) that Defendant Saxon's issuance of authority to National City Bank to establish a branch at 1401-1501 was illegal and invalid in that the procedure employed by the Comptroller of Currency was, and is, in violation of the Administrative Procedure Act, 5 U. S.C.A. §§ 1001 through 1011 and the Constitution of the United States, and (2) that the decision of the Comptroller of Currency to grant authority to National City Bank to establish a branch at 1401-1501 Euclid Avenue was arbitrary, capricious, an abuse of discretion, and not in accordance with law.

In its complaint Plaintiff also seeks an order enjoining the establishment of any branch office at 1401 through 1501 Euclid Avenue. Underlying this entire action is the Plaintiff's factual contention that economic conditions did not warrant the establishment of a branch bank in the area where the Comptroller authorized the National City branch.

Plaintiff's initial request for an ex parte temporary restraining order was properly denied by Judge Green of this Court.

On August 4, 1965, Plaintiff filed a motion for a preliminary injunction. In the words of this motion, Plaintiff seeks a preliminary injunction:

1. Directing and requiring the Defendant, National City Bank of Cleveland, to cease and desist from operating in any manner a branch bank at 1501 Euclid Avenue, Cleveland, Ohio, during the pendency of this case.

2. Directing and requiring Defendant, National City Bank of Cleveland, to cease and desist from taking any further action to operate a branch at 1401 Euclid Avenue, Cleveland, Ohio, during the pendency of this case.

It should here be noted that the certificate authorizing the establishment of a branch was signed by the Comptroller on July 30, 1965. Pursuant to this authorization, the National City Bank opened a "temporary" branch in a small room in the Bulkley Building on August 2, 1965. This "temporary" office was evidently to be utilized until the permanent branch could be established at certain premises presently occupied by Air France.

The gist of the Plaintiff's argument in support of its motion for a preliminary injunction is: (1) That contrary to law, it has been denied a hearing on National City's request to establish a branch bank, and (2) that the decision of the Comptroller to allow the establishment of such a branch was arbitrary, capricious, and not in accordance with law.

On August 16th and 17th, a hearing was held on the motion for a preliminary injunction. Both prior and subsequent to this hearing, the respective parties have submitted briefs in support of their positions.

All parties agree that the basic statutory provision which permeates this entire action is 12 U.S.C.A. § 36 which provides, in pertinent part, as follows:

"A national bank association may, with the approval of the Comptroller of the Currency, establish and operate new branches: (1) within the limits of the city, town or village in which said association is situated, if such establishment and operation are at the time expressly authorized to State banks by the law of the State in question."

Ohio Revised Code, Section 1103.09, provides in part as follows:

"No branch bank shall be established until the consent of the superintendent of banks has been obtained."

The Plaintiff, as stated above contends that it has been denied a "hearing" upon National City Bank's application for authorization to establish a branch. In this regard, all parties agree that the Federal Administrative Procedure Act, 5 U.S.C.A. §§ 1001 through 1011, is applicable to the Comptroller of Currency. Title 5 U.S.C.A. § 1004 provides for certain procedures to be followed, "In every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing. * *" (Emphasis supplied)

Both defendants in this present action agree that the procedures set forth in Section 1004 were not followed in connection with Defendant National City's application. Furthermore, Plaintiff itself has not claimed that the application of Defendant National City was an adjudication "required by statute" to be determined under the procedures set forth in Section 1004 of the Administrative Procedure Act. Rather, Plaintiff contends that while a hearing may not have been required by the Act authorizing the Comptroller to establish or approve branch banks, such a hearing is, however, necessary to satisfy the requirements of procedural due process.

At the hearing on the motion for a preliminary injunction, Mr. Schulist, President of the Continental Bank, testified that he had requested a "hearing" on Defendant National City's application to establish a branch. Such a request had, according to Mr. Schulist, been made both to a Mr. Blanchard, Deputy Comptroller of the Currency, and a Mr. Ellis, Regional Comptroller of the Currency. Mr. Schulist further testified that he requested of Mr. Ellis that he be allowed to see the contents of National City's application for authorization to establish the branch. Mr. Schulist testified that he was adamantly opposed to the branch because it was almost directly across the street from Continental's main office and the economic condition of that part of the city did not warrant the establishment of further banking facilities. According to Mr. Schulist, Mr. Ellis refused to give him the information which had been supplied by National City. Mr. Ellis did, however, give Mr. Schulist a copy of the form which National City was required to fill out and submit to the Comptroller in support of its application to establish a branch. Mr. Schulist also testified that Mr. Blanchard was willing to accept further information relative to Continental's position on National City's application.

By way of affidavit, Mr. Blanchard has stated that the Plaintiff never made a request for a formal adversary hearing. Further, Mr. Blanchard stated that at no time did Plaintiff make a request to see the application of National City and, further, if such a request had been made it would have been granted.

While the parties have, by way of oral arguments and briefs, placed considerable emphasis on the question of whether the Plaintiff requested a formal adversary hearing, the Court does not feel that this disputed question of fact bears materially upon the disposition of the motion under consideration.

Even assuming that a formal adversary hearing had been requested, the question remains whether, by the denial of such a request, the Plaintiff was thereby denied procedural due process. (In this regard, it seems fairly clear to this Court from the arguments that such formal hearings are, as a practical matter, never afforded. Under such circumstances, a substantial question seems to be presented as to whether a party must make what would appear to be a futile request for such a hearing in order to protect its right to subsequently object to the failure to provide the same.)

As the Court has already noted, and as the parties agree, the statute authorizing the Comptroller to approve branch banks does not require that a hearing be held. The Plaintiff, in urging that a hearing is necessary, contends that without such a hearing it would be denied procedural due process. In Wong Yang Sung v. McGrath, 339 U.S. 33, at pages 48-50, 70 S.Ct. 445, at pages 453-454, 94 L.Ed. 616, the Supreme Court said:

"The Administrative Procedure Act, § 5, establishes a number of formal requirements to be applicable `In every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing.' The argument here depends upon the words `adjudication required by statute.' The Government contends that there is no express requirement for any hearing or adjudication in the statute authorizing deportation, and that this omission shields these proceedings from the impact of § 5. Petitioner, on the other hand, contends that deportation hearings, though not expressly required by statute, are required under the decisions of this Court, and the proceedings, therefore, are within the scope of § 5.

"Both parties invoke many citations to legislative history as to the meaning given to these key words by the framers, advocates or opponents of the Administrative Procedure Act. Because § 5 in the original bill applied to hearings required `by law,' because it was suggested by the Attorney General that it should be changed to `required by statute or Constitution,' and because it finally, emerged `required by statute,' the Government argues that the section is intended to apply only when explicit statutory words granting a right to adjudication can be pointed out. Petitioner on the other hand cites references which would indicate that the limitation to statutory hearing was merely to avoid creating by inference a new right to hearings

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