First National Bank of Smithfield, North Carolina v. Saxon

• Citation: 352 F.2d 267
• Decision Date: 21 October 1965
• Docket Number: No. 9795-9796.,9795-9796.
• Parties: FIRST NATIONAL BANK OF SMITHFIELD, NORTH CAROLINA, Appellee, v. James J. SAXON, Comptroller of the Currency of the United States, Appellant. FIRST NATIONAL BANK OF SMITHFIELD, NORTH CAROLINA, Appellee, v. FIRST NATIONAL BANK OF EASTERN NORTH CAROLINA, Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

352 F.2d 267 (1965)

FIRST NATIONAL BANK OF SMITHFIELD, NORTH CAROLINA, Appellee, v. James J. SAXON, Comptroller of the Currency of the United States, Appellant. FIRST NATIONAL BANK OF SMITHFIELD, NORTH CAROLINA, Appellee, v. FIRST NATIONAL BANK OF EASTERN NORTH CAROLINA, Appellant.

Nos. 9795-9796.

United States Court of Appeals Fourth Circuit.

Argued April 7, 1965.

Decided October 21, 1965.

David L. Rose, Atty., Dept. of Justice (John W. Douglas, Asst. Atty. Gen., Morton Hollander, Atty., Dept. of Justice, and Robert H. Cowen, U. S. Atty., on the brief), for appellant in No. 9795.

Carl V. Venters, Jacksonville, N. C., for appellant in No. 9796, and John R. Jordan, Jr., and Herbert L. Toms, Raleigh, N. C. (E. V. Wilkins, Smithfield, N. C., and F. T. Dupree, Jr., Raleigh, N. C., on the brief), for appellee.

Before SOBELOFF, BOREMAN and BRYAN, Circuit Judges.

ALBERT V. BRYAN, Circuit Judge:

The Comptroller of the Currency's approval of the establishment of a branch of a National bank¹ is ex facie invalid, the District Court has held, if it is issued by the Comptroller without a hearing conforming to the requirements of the Administrative Procedure Act². In this view³ we think the Court was mistaken. Throughout it must be remembered that we are not deciding whether it would be advisable or more equitable for the Comptroller to grant a hearing. We are deciding only that the law does not require it.

This is not to say that there may not be judicial review of the Comptroller's action. We hold, too, that the bank's competitors have standing to seek the review, not because of the potential sharpening of competition, but because they have an immediate concern, apart from the public generally, to prevent an approval contrary to law. Thus they are "interested" within the purpose of § 1004(b), APA.

The First National Bank of Eastern North Carolina applied to the Comptroller of the Currency on July 11, 1963 for authorization to establish a branch in the Town of Smithfield, North Carolina. The applicant has its principal office at New River, North Carolina and eleven branches in the east end of the State. In a field investigation made by the Comptroller preparatory to consideration of Eastern's request, an examiner called upon the First National Bank of Smithfield, North Carolina. Thereupon the latter sought and obtained a conference with the Comptroller's office, on August 5, 1963, where its representatives pressed objection to the advent of a new bank in town. Eastern was not present or heard at that time.

Approval was given the Eastern application by the Comptroller on August 19, 1963, without a formal statement of fact findings, conclusions of law or opinion. However, no certificate of authority then issued. The Bank of Smithfield brought this action on September 9, 1963 to have the Comptroller's determination declared illegal and its effectuation enjoined. The bank denied any need or necessity for Eastern's branch, predicted irreparable damage to follow from the permitted entry of another bank in the Town and averred that the approval was illegal because arbitrary, capricious and contravening the Comptroller's own regulations.

In limine the complaint charged the Comptroller's procedure violative of the Administrative Procedure Act and abridging the rights of the Smithfield Bank without Constitutional due process of law. More specifically in this regard, it alleged that the Comptroller's ruling was an adjudication under § 1004, APA, which could not be made without notice and a full-dress hearing. This primary position the District Court upheld.

The Banking Act in pertinent part, 12 U.S.C. § 36(c) (1964 Ed.)⁴, provides:

"(c) A national banking 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; and (2) at any point within the State in which said association is situated, if such establishment and operation are at the time authorized to State banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition, and subject to the restrictions as to location imposed by the law of the State on State banks. * * *"

The North Carolina statute, to be read under the reference in the Banking Act, is G.S. § 53-62. It permits the establishment of bank branches with the approval of the Commissioner of Banking which "may be given or withheld by him in his discretion". In this judgment he is required to consider stated relevant factors.

Assuming that the Comptroller is an "agency", that the approval by the Comptroller is a "license" and that the consideration by him of the application is an "adjudication", all within the meaning of § 1001, still no requirement is found in the APA of the hearing now claimed by the Bank of Smithfield. The provision on which appellee relies is § 1004, but that section compels an agency hearing only when the "adjudication is required by statute to be determined on the record after opportunity for an agency hearing," and there is no such compulsion here.

The District Judge thought that the implication of the APA was to command an adversary hearing before the Comptroller. This inference, we think, is unwarranted. Not only is statutory foundation wanting for it, but the legislative history of the APA discloses that Congress expressly disavowed any intent that the Act demand a hearing except where already required by some other statute. See: Statement of the Chairman of the Drafting Subcommittee, 92 Cong.Rec. 5651, 5655; Sen.Rept. No. 752, 79th Cong., 1st Sess., pp. 6, 7, 16 (1945); H. Rept. No. 1980, 79th Cong., 2d Sess., pp. 10, 18, 26 (1946). For compilation see Sen.Doc. No. 298, 79th Cong., 2d Sess., pp. 192, 193, 202, 244, 252, 260, 359, 370 (1946).

Furthermore, the uniform administrative practice of the Comptroller for a hundred years has sanctioned his present course. True, his own regulations had permitted an adversary hearing, but resort to these rules was entirely at his option. 12 C.F.R. § 4.8(d), (e) (1963). It is stipulated that when Eastern's application came before the Comptroller, these regulations were in suspense pending revision — they had been rescinded on February 20, 1963, 12 C.F.R. Part 4 (Cum.Supp.1965), and were not republished until June 9, 1964, 12 C.F.R. § 4.1 et seq. (Cum.Supp.1965). The practice in the Comptroller's office has not gone unquestioned, but it has never been disapproved. Northwest Bancorporation v. Board of Governors, 303 F.2d 832, 843 (8 Cir. 1962), citing Davis, Administrative Law Treatise, § 4.04, pp. 247-248. This strongly argues its validity. Zemel v. Rusk, 381 U.S. 1, 85 S.Ct. 1271, 14 L.Ed.2d 179 (May 3, 1965); Paragon Jewel Coal Co. v. Commissioner, 380 U.S. 624, 85 S.Ct. 1207, 14 L.Ed.2d 116 (April 28, 1965).

Procedural due process is not offended by the Comptroller's practice. The absence of a hearing provision in the Banking Act raises no Constitutional question, for the omission was within the power of Congress. Bridgeport Fed. Sav. & Loan Ass'n v. Federal Home Loan Bank Bd., 307 F.2d 580, 581 (3 Cir. 1962), cert. den., 371 U.S. 950, 83 S.Ct. 504, 9 L.Ed.2d 499. However, all apprehension is dissipated by the APA's grant in § 1009 of a review of the Comptroller's decision in the District Court to any party in interest. Lichter v. United States, 334 U.S. 742, 791, 68 S.Ct. 1294, 92 L.Ed. 1694 (1948); cf. Federal Communications Comm. v. WJR, 337 U.S. 265, 274, 69 S.Ct. 1097, 93 L.Ed. 1353 (1949).

Abundant authority, with which we agree, holds that the Comptroller's determination in the present area is not immunized from review by the exemption in the preface of § 1009, APA, reading, "Except so far as * * * agency action is by law committed to agency discretion." Any discretion vested in the Comptroller in passing upon applications for approval of bank branches is not the type of discretion to which action has been "committed by law" but is rather one of the character expressly made reviewable by § 1009(e) (1). 4 Davis, Administrative Law Treatise, § 28.16; Community National Bank of Pontiac v. Saxon, 310 F.2d 224 (6 Cir. 1962); Whitney Nat. Bank v. Bank of New Orleans & Trust Co., 379 U.S. 411, 428, 85 S.Ct. 551, 13 L.Ed.2d 386 (1965) (dissenting opinion of Justice Douglas); Commercial Security Bank v. Saxon, 236 F.Supp. 457 (D.D.C.1964).

Protestant, Smithfield Bank, also contends that the Comptroller's approval is contingent upon his compliance with the inquiries and ascertainments required of the State Commissioner of Banks by the North Carolina statute, G.S. § 53-62 supra. It stipulates: that no branch shall be permitted save upon the approval of the Commissioner of Banks, which "may be given or withheld by * * * him in his discretion"; that "in exercising such discretion, he shall take into account, but not by way of limitation, such factors as the financial history and condition of the applicant bank, * * its future earnings prospects, and the general character of its management"; and that the approval shall not be given until the Commissioner shall have "ascertained to his satisfaction (i) that the establishment of such * * * will meet the needs and promote the convenience of the community to be served by the bank, and (ii) that the probable volume of business and reasonable public demand in such community are sufficient to assure and maintain the solvency of said branch * * * and of the existing bank or banks in said community".

The Federal statute, the protestant continues in argument, incorporates all of these requirements and exacts analagous compliance with them by the Comptroller. For this contention reliance is placed upon the clause in 12 U.S.C. § 36(c), supra,...