FIRST NAT. BANK, ETC. v. Aberdeen Nat. Bank

• Decision Date: 15 June 1979
• Docket Number: CIV 79-1013.
• Citation: 471 F. Supp. 460
• Parties: FIRST NATIONAL BANK OF ABERDEEN, and First National Bank of Aberdeen, Redfield Branch, a National Banking Corporation, Plaintiff, v. ABERDEEN NATIONAL BANK, also using name First Bank (N.A.) Aberdeen, and the Spink County Branch of the Aberdeen National Bank, also using name First Bank (N.A.) Redfield, Defendant.
• Court: U.S. District Court — District of South Dakota

471 F. Supp. 460

FIRST NATIONAL BANK OF ABERDEEN, and First National Bank of Aberdeen, Redfield Branch, a National Banking Corporation, Plaintiff, v. ABERDEEN NATIONAL BANK, also using name First Bank (N.A.) Aberdeen, and the Spink County Branch of the Aberdeen National Bank, also using name First Bank (N.A.) Redfield, Defendant.

CIV 79-1013.

United States District Court, D. South Dakota, N. D.

June 15, 1979.

Lloyd C. Richardson, Jr., of Richardson, Groseclose, Kornmann & Wyly, Aberdeen, S. D., for plaintiff.

R. D. Miller, Aberdeen, S. D., and David A. Ranheim, of Dorsey, Windhorst, Hannaford, Whitney & Halladay, Minneapolis, Minn., for defendant.

MEMORANDUM DECISION

NICHOL, Chief Judge.

The plaintiff has filed a motion to remand the case to State Circuit Court and the defendant has filed a motion to dismiss pursuant to F.R.Civ.P. 12(b)(6). For reasons set out in this opinion, the plaintiff's motion to remand the case to State Circuit Court is denied and the defendant's motion to dismiss is granted.

WHO'S ON FIRST

This dispute arises out of the use of the word "First" in the name of the defendant's bank. The defendant, Aberdeen National Bank, as will be more fully explained later, has changed its name to First Bank (N.A.) Aberdeen. The Spink County Branch of the Aberdeen National Bank has also changed its name to First Bank (N.A.) Redfield.

The defendant is a nationally chartered bank, governed by the National Bank Act, 12 U.S.C. Section 1 et seq. It has provided banking services to the communities of Aberdeen, South Dakota, and Redfield, South Dakota, for numerous years.

The plaintiff is also a nationally chartered bank, governed by the National Bank Act. The plaintiff has also provided banking services to the communities of Aberdeen and Redfield. The plaintiff has used the name First National Bank of Aberdeen for a number of years; herein lies the problem. Because the defendant has changed its name to include the word "First", the plaintiff contends that customers will be confused and the goodwill which the plaintiff has built up over the years will be drained off by the defendant "stealing First."

The plaintiff claims that the defendant's name change is in violation of state law, specifically S.D.C.L. 47-2-38 (1967) and S.D.C.L. 51-17-2 (1970). On the other hand, the defendant maintains that name changes of national banks are controlled by federal law, in this case the National Bank Act and regulations promulgated thereunder. In defending its position, the defendant points to the fact that it followed the federal statutes and regulations in making its application for name change to the Comptroller of the Currency.

On January 24, 1978, the defendant sent a letter to the Regional Administrator of National Banks for the Ninth Region. The Regional Administrator acknowledged receipt of that application on January 27, 1978, and the application was filed on the same day. Sometime during the week of January 29, 1978, the Regional Administrator of National Banks notified the plaintiff of defendant's name change pursuant to 12 C.F.R. Section 5.2(c). The notification took place by mailing the plaintiff a copy of the Regional Administrator's weekly bulletin detailing applications received that week by the Regional Administrator's office.

On February 8, 1978, notice of defendant's name change application was published in the Aberdeen American News. On February 9, 1978, notice of the defendant's name change application was published in The Redfield Press. By these notices, the plaintiff was informed of its right to oppose the defendant's application and its right to demand an administrative hearing before the Comptroller's office. The plaintiff did not exercise this right and so the Regional Administrator of National Banks granted preliminary approval of the defendant's name change on December 8, 1978. On April 6, 1979, the Aberdeen National Bank changed its name to First Bank (N.A.).

The plaintiff filed an action in the State Circuit Court on April 10, 1979, seeking an injunction to prevent the defendant from using the word "First" in its name. The defendant filed a petition to remove the case from Circuit Court on April 17, 1979. The plaintiff now seeks to have the case remanded to Circuit Court.

There are two questions to be answered here. First, whether this case should be remanded? Second, whether the defendant's motion to dismiss should be granted? Obviously, if the first question is answered affirmatively there is no need for this court to delve into the second question.

PLAYING IN THE BIG LEAGUES

Removal is one of the swampy areas of the law. At the outset the court notes that it is clear that a national bank may not claim original or removal jurisdiction solely on the basis of being a national bank. Mercantile National Bank at Dallas v. Langdeau, 371 U.S. 555, 83 S.Ct. 520, 9 L.Ed.2d 523 (1963); Burns v. American National Bank & Trust Co., 479 F.2d 26 (8th Cir. 1973), cert. denied, 429 U.S. 1062, 97 S.Ct. 786, 50 L.Ed.2d 778 (1977).

First, the court must look to the statute for guidance. Since federal courts are courts of limited jurisdiction, we must carefully scrutinize the jurisdictional grant which Congress has provided. The removal statute, 28 U.S.C. Section 1441 (1976), states in pertinent part:

(a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

(b) Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States, shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

. . . . .

The removal statute is obviously keyed to original federal jurisdiction. In this case the defendants claim that they fall within the purview of several jurisdictional statutes.

The first of those statutes is 28 U.S.C. Section 1331(a) (1976), which is as follows:

(a) The district courts shall have original jurisdiction of all civil actions wherein the matter in controversy exceeds the sum or value of $10,000, exclusive of interest and costs, and arises under the Constitution, laws or treaties of the United States except that no such sum or value shall be required in any such action brought against the United States, any agency thereof, or any officer or employee thereof in his official capacity.

The two federal jurisdictional statutes quoted above bring to mind some perplexing problems. First, what does the term "arising under" mean? Second, what information may be used to determine if the right is one "arising under" federal law?

In answering both of those questions, it must be conceded that Gully v. First National Bank, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70 (1936) provides some of the component principles. Those rules of law, as they apply to this case are:

1. A right or immunity created by a federal law must be an essential element of the plaintiff's cause of action.

2. The federal nature of the controversy must be disclosed by well-pleaded allegations, unaided by responsive pleadings.

See also, Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, 94 S.Ct. 1002, 39 L.Ed.2d 209 (1974); Skelly Oil Co. v. Phillips Co., 339 U.S. 667, 70 S.Ct. 876, 94 L.Ed. 1194 (1950); Home Federal S. & L. Ass'n. v. Ins. Dep't. of Iowa, 571 F.2d 423 (8th Cir. 1978).

With respect to the first question, regarding the term "arising under", 13 Wright, Miller & Cooper, Federal Practice and Procedure, Section 3562, at 414, states:

Rather than attempting a test it might be wiser simply to recognize that "the existing doctrines as to when a case raises a federal question are neither analytical nor entirely logical," and that in the unusual case in which there is a debatable issue about federal question jurisdiction, pragmatic considerations must be taken into account.

The plaintiff has argued that this controversy is not one which arises under the laws of the United States. In making that argument the plaintiff relies on several cases, in particular Marquette National Bank of Minneapolis v. First National Bank of Omaha, 422 F.Supp. 1346 (D.Minn.1976).

There the plaintiff had commenced an action in state court against a non-resident national bank, a Nebraska corporation authorized to do business in Minnesota, and the Credit Bureau of St. Paul, a Minnesota corporation. The action was removed to federal court, and the case before the court was a motion to remand. The complaint alleged a cause of action in five counts. The first alleged that the two foreign corporations had induced Minnesota residents to contract with the Omaha bank's credit card program and that the Omaha bank assessed finance charges in excess of those allowed by the Minnesota Bank Credit Card Act. The remaining counts alleged conspiracy to violate that Act, violation of the Minnesota Deceptive Trade Practices Act, conspiracy to violate that Act, and tortious interference with plaintiff's contractual relations with its customers. In opposing the motion to remand, the defendants took the position that the federal court had jurisdiction because plaintiff's allegation concerning an illegal rate of interest must be construed as an allegation that the federal statute establishing legal interest rates for national banks, 12 U.S.C. Section 85 (1974), had been violated. The defendants argued that this statute preempted state regulations and that any claim that an illegal interest rate had been charged could be litigated only as a claim arising under federal statut...