Driscoll v. Northwestern National Bank of St. Paul, 3-72-Civ-42.

• Decision Date: 25 October 1972
• Docket Number: No. 3-72-Civ-42.,3-72-Civ-42.
• Citation: 349 F. Supp. 245
• Parties: Edward J. DRISCOLL, Chairman, Commerce Commission, and Marvin L. Rye, Commissioner of Banks, State of Minnesota, Plaintiffs, Independent Bankers of Minnesota, a nonprofit corporation, Plaintiff-Intervenor, Commercial State Bank, a state bank, Plaintiff-Intervenor, v. NORTHWESTERN NATIONAL BANK of ST. PAUL, a national banking association, and William B. Camp, Comptroller of the Currency of the United States, Defendants.
• Court: U.S. District Court — District of Minnesota

349 F. Supp. 245

Edward J. DRISCOLL, Chairman, Commerce Commission, and Marvin L. Rye, Commissioner of Banks, State of Minnesota, Plaintiffs Independent Bankers of Minnesota, a nonprofit corporation, Plaintiff-Intervenor Commercial State Bank, a state bank, Plaintiff-Intervenor, v. NORTHWESTERN NATIONAL BANK of ST. PAUL, a national banking association, and William B. Camp, Comptroller of the Currency of the United States, Defendants.

No. 3-72-Civ-42.

United States District Court, D. Minnesota, Third Division.

October 25, 1972.

Warren Spannaus, Atty. Gen. of State of Minnesota, Curtis D. Forslund, Sol. Gen. of State of Minnesota, and Steven M. Gunn, Sp. Asst. Atty. Gen. of State of Minnesota, St. Paul, Minn., for plaintiffs.

Hansen, Hazen, Dordell & Bradt, Horace R. Hansen, St. Paul, Minn., for plaintiff-intervenor Independent Bankers of Minnesota.

Cummins, Gislason, Sheahan, Joyce & McHaffie, Carl W. Cummins, Jr., St. Paul, Minn., for plaintiff-intervenor Commercial State Bank.

Faegre & Benson, Lawrence C. Brown, Minneapolis, Minn., for defendant Northwestern Nat. Bank of St. Paul.

Robert G. Renner, U. S. Atty., and J. Earl Cudd, Asst. U. S. Atty., Minneapolis, Minn., and Edward Jiran, Office of Comptroller of the Currency, Washington, D. C., for defendant William B. Camp.

MEMORANDUM & ORDER FOR JUDGMENT

DEVITT, Chief Judge.

The broad issue in this declaratory judgment action is whether the Northwestern National Bank of St. Paul is operating more than one branch bank in violation of state and federal banking laws. Minnesota law prohibits branch banking except to the limited extent of allowing state banks to operate one "detached facility." This restriction is incorporated into federal law and made applicable to national banks by 12 U.S.C. § 36(c)(1)¹.

Northwestern National Bank of St. Paul presently operates two paying and receiving facilities other than at its main banking floor: the first consists of three walk-up television tellers in the Skyway Building, approximately 300 feet from its main banking office in the Northwestern Bank Building; the second consists of six teller stations in the Endicott Building, approximately one and one-half blocks from Northwestern's main banking office. Each of these facilities is within a twelve block skyway system providing covered passageways between business places in the downtown St. Paul loop.

Plaintiffs, state officials responsible for supervising state chartered banks, ask the Court to enjoin Northwestern from operating its facility in the Endicott Building and to declare that defendant Camp, Comptroller of the Currency, unlawfully approved the application of Northwestern for a branch bank in the Endicott Building at a time when Northwestern already operated the one detached facility permitted by state law in the Skyway Building. Plaintiff-intervenors, a state bank competing with Northwestern in downtown St. Paul and an association of 490 state and national banks in Minnesota, were permitted to join plaintiffs on the original complaint under Rule 24(b).

All parties agree that there is no fact dispute and submit the issue on cross motions for summary judgment. Jurisdiction rests on 28 U.S.C. § 1331, the matter in controversy exceeding $10,000 exclusive of interest and costs.

In 1964 Northwestern applied for and received approval from the Comptroller to establish new offices in the then proposed Northwestern Bank Building as part of the new skyway system in downtown St. Paul. Somewhat later, Northwestern planned a walk-up teller station consisting of three television teller machines, to be located on a wide pedestrian concourse in the adjacent Skyway Building approximately 300 feet from its main banking office on a wide pedestrian concourse.

In 1965 the Comptroller approved Northwestern's plans for the walk-up tellers (Skyway facility) finding that the proposed facility was merely an extension of the main banking premises and not a "branch" under federal law requiring certification by the Comptroller. Minnesota law in 1965 prohibited state banks from branching in any form,² including operation of a detached facility.

On June 7, 1971, a new state statute became effective, permitting state banks in Minnesota to establish a single "detached facility"³ apart from a bank's chartered premises for the purpose of performing paying and receiving functions.⁴ The law provided that state banks already operating a detached facility would be restricted to that one existing facility.⁵ On June 14, 1971 Northwestern applied to the Comptroller for permission to establish a "detached facility," the so-called Endicott branch, in the Endicott Building approximately one and one-half blocks from its main office. The application was accepted as a branch application under 12 U.S.C. §§ 36(c) and (f).

All plaintiffs and plaintiff-intervenors, after receiving notification of the application, objected on the grounds that the applicant's walk-up teller stations in the Skyway Building constituted the single, existing detached facility permitted by the new state statute and that the establishment of a second detached facility by Northwestern would constitute an illegal branch in violation of 12 U.S.C. § 36(c)(1). It was felt that this violated not only the express wording of the law but also that it did violence to the notion of equality in competition between state and national banks contemplated by federal banking laws and particularly the McFadden Act of 1927. Officers of competing banks were of the view that the Comptroller's decision could presage a proliferation of more television teller stations by national banks in the Skyway system to the competitive disadvantage of state banks, none of which were connected, or likely to be connected, to the Skyway system.

Plaintiff-intervenors and others participated in a subsequent hearing before the Comptroller's hearing panel in Minneapolis on July 13, 1971. The record reflects that in early 1971 leaders of the Independent Bankers of Minnesota decided to attempt to remedy the allegedly unequal situation by drafting and urging the enactment of an appropriate state statute. The result was Minn. Laws 1971, ch. 855, which defines "attached" and "detached" facilities and provides that each state bank could have one, and only one, "detached" facility. Representatives of the Independent Bankers of Minnesota also said at the hearing that the intention of the proponents was to legitimatize Northwestern's Skyway facility as the one permitted "detached facility", to authorize other banks to also have one "detached facility" and thus to equalize the competitive equality between state and national banks.

It was urged at the hearing that Northwestern's application for the Endicott branch should be denied because Northwestern already had the one "detached" facility to which it was entitled under the new state statute and the action of the Comptroller in approving the application would therefore be in violation of the law, 12 U.S.C. § 36(c)(1).

Northwestern's application for permission to establish the Endicott branch was subsequently approved. It is this approval which plaintiffs and plaintiff-intervenors claim is unlawful in that it allows Northwestern, a national bank, to operate two detached facilities in violation of the state law, which limits state banks to one detached facility.

Plaintiffs and plaintiff-intervenors contend that the Comptroller was obligated to apply the state law in making his determination in 1971 and that such obligation was mandatory rather than discretionary. Defendants, on the other hand, claim that the Comptroller was only obligated to determine whether the Skyway facility was a branch under federal law, which he did in 1965, that he could rely on that determination without referring to the state law when deciding upon Northwestern's application for the Endicott branch in 1971, and that his determination in 1965 is valid unless found to be arbitrary, capricious or not in accordance with law.

In reviewing the action of an administrative official, we are to determine not the correctness or wisdom of his decision but whether his action was permissible under the law and facts. Here the Comptroller's decision must be upheld if it is not arbitrary and capricious. Sterling National Bank of Davie v. Camp, 431 F.2d 514 (5th Cir. 1970), cert. denied 401 U.S. 925, 91 S.Ct. 879, 27 L.Ed.2d 829 (1971). We are limited to determining whether there is warrant in the law and in the facts for the action taken by the administrative official, and in doing so we must afford recognition to the presumed "expertise" of the administrator in the field involved and only rarely, says Mr. Justice Douglas, are we justified in disturbing it. See cases cited at footnote 2, dissenting opinion of Mr. Justice Douglas in First National Bank in Plant City, Fla. v. Dickinson, 396 U.S. 122, 140, 90 S.Ct. 337, 346, 24 L.Ed.2d 312 (1969).

I am satisfied that there is adequate support in the record for the decision reached by the Comptroller in 1965 that the Skyway facility was an integral part of the main bank premises. The record is a large one and it would be superrogatory to summarize all of it. It is enough to say that the Comptroller reached the conclusion he did for the following reasons, as summarized by the defendants:

1. That the TV tellers are located within the same building as the balance of the bank's main office operations 2. That the TV tellers are physically connected to the balance of the bank's main office operations by pneumatic tube, telephone, and TV cables;

3. That the TV tellers are immediately available to only those pedestrians who are already within the pedestrian concourse which passes through the bank's main banking floor;

4. That the TV tellers are separate from the balance of the bank's main office by less than 300 feet and from parking facilities used by the bank by less than 90 feet of continuous and open pedestrian

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