Firstar Bank v. Faul

• Decision Date: 13 June 2001
• Docket Number: No. 00-4029,00-4029
• Citation: 253 F.3d 982
• Parties: (7th Cir. 2001) Firstar Bank, N.A., a National Banking Association, Plaintiff-Appellant, v. Lawrence J. Faul and Faul Chevrolet, Incorporated, an Illinois corporation, Defendants-Appellees
• Court: U.S. Court of Appeals — Seventh Circuit

Page 982

253 F.3d 982 (7th Cir. 2001)

Firstar Bank, N.A., a National Banking Association, Plaintiff-Appellant, v. Lawrence J. Faul and Faul Chevrolet, Incorporated, an Illinois corporation, Defendants-Appellees.

No. 00-4029

In the United States Court of Appeals For the Seventh Circuit

Argued April 19, 2001

Decided June 13, 2001

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 00 C 4061--Marvin E. Aspen, Chief Judge. [Copyrighted Material Omitted] Before Flaum, Chief Judge, and Harlington Wood, Jr., and Rovner, Circuit Judges.

Flaum, Chief Judge.

Firstar Bank ("Firstar"), aided by the Comptroller of the Currency ("Comptroller") as amicus curiae, appeals the district court's dismissal of its suit for lack of jurisdiction. Firstar argues that the district court incorrectly held that for purposes of diversity jurisdiction a national bank is a citizen of every state in which it has a branch. For the reasons stated herein, we reverse and remand.

I. Background

Firstar filed a breach of contract action naming Lawrence J. Faul and Faul Chevrolet (collectively, "Faul") as defendants. Federal jurisdiction was alleged to be present under 28 U.S.C. sec. 1332. Firstar identified its principal place of business as Ohio, while stating that Lawrence Faul is a citizen of Illinois and Faul Chevrolet was incorporated and had its principal place of business in Illinois. The state identified in Firstar's organization certificate as the place where its operations are carried on is also Ohio. Firstar pled that the amount in controversy exceeds $75,000.

Faul moved to dismiss, claiming that diversity jurisdiction was lacking because Firstar has branches in Illinois and thus was a citizen of that state. Firstar does in fact maintain forty-five branches in Illinois. Faul's motion was granted. The district relied on a rule first set forth in Connecticut National Bank v. Iacono, 785 F. Supp. 30 (D.R.I. 1992), which held that for diversity purposes a national bank is a citizen of every state where it maintains a branch. Firstar appeals, challenging the correctness of Iacono and the various district court decisions that have followed it.

II. Discussion

This case turns on the interpretation of the jurisdictional statute for national banks, 28 U.S.C. sec. 1348, which states:

The district courts shall have original jurisdiction of any civil action commenced by the United States, or by direction of any officer thereof, against any national banking association, any civil action to wind up the affairs of any such association, and any action by a banking association established in the district for which the court is held, under chapter 2 of Title 12, to enjoin the Comptroller of the Currency, or any receiver acting under his direction, as provided by such chapter.

All national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are respectively located.

The question in this case is whether "located" in the second paragraph of the statute refers to every state where a national bank has a branch. Since Iacono answered yes to this query, no appellate court has weighed in on the issue. We have noted in passing the existence of Iacono's holding, though without either endorsement or disapproval. See Hemenway v. Peabody Coal Co., 159 F.3d 255, 257 (7th Cir. 1998). The district courts are split, with a majority favoring the rule of Iacono and holding that a bank is located wherever it has a branch. Compare Ferraiolo Constr., Inc. v. Keybank, 978 F. Supp. 23 (D. Me. 1997); Norwest Bank Minn., N.A. v. Patton, 924 F. Supp. 114 (D. Colo. 1996); Bank of N.Y. v. Bank of Am., 861 F.Supp. 225, 231 (S.D.N.Y. 1994) (all following Iacono and holding that a national bank is a citizen of every state where it has a branch) with Baker v. First Am. Nat'l Bank, 111 F. Supp.2d 799, 800-01 (W.D. La. 2000); Financial Software Sys., Inc. v. First Union Nat'l Bank, 84 F. Supp. 2d 594 (E.D. Pa. 1999) (both holding that a national bank is a citizen only of the state of its principal place of business).

We begin by laying out what we perceive as the primary arguments for both parties. Firstar and the Comptroller contend that the predecessors of 28 U.S.C. sec. 1348 were meant to place national and state banks on equal footing for federal jurisdiction, and the current version should be interpreted in light of this background. Understanding this argument requires a brief recounting of the early history of federal court jurisdiction over national banks. National banks were created by the National Bank Act of 1863, 12 Stat. 665. For the first couple decades of their existence, any suit involving a national bank could be brought in or removed to federal court since national banks are creatures of federal law and thus any suit by or against them was a suit arising under federal law. See Petri v. Commercial Nat'l Bank, 142 U.S. 644, 648 (1892). In 1882, Congress acted to limit federal jurisdiction over national banks to only what existed for state banks. The Act of July 12, 1882, sec. 4, 22 Stat. 162, 163 stated in part that:

[T]he jurisdiction for suits hereafter brought by or against any association established under any law providing for national banking-associations, except suits between them and the United States, or its officers and agents, shall be the same as, and not other than, the jurisdiction for suits by or against banks not organized under any law of the United States which do or might do banking business where such national- banking associations may be doing business when such suits may be begun . . . .

"This was evidently intended to put national banks on the same footing as the banks of the state where they were located for all the purposes of the jurisdiction of the courts of the United States." Leather Mfrs.' Nat'l Bank v. Cooper, 120 U.S. 778, 780 (1887). The 1882 Act was later superseded by the Act of March 3, 1887, sec. 4, 24 Stat. 552, 554-55,¹ which proclaimed:

[A]ll national banking associations established under the laws of the United States shall, for the purposes of all actions by or against them, real, personal, or mixed, and all suits in equity, be deemed citizens of the States in which they are respectively located; and in such cases the circuit and district courts shall not have jurisdiction other than such as they would have in cases between individual citizens of the same State.

The language of the 1887 Act, which first included the phrase making national banks "citizens of the States in which they are respectively located" that appears in 28 U.S.C. sec. 1348, has been consistently interpreted by the Supreme Court to maintain jurisdictional parity between national banks and state banks or other corporations. See Mercantile Nat'l Bank v. Langdeau, 371 U.S. 555, 565-66 (1963) ("Section 4 [of the 1882 and 1887 Acts] apparently sought to limit, with exceptions, the access of national banks to, and their suability in, the federal courts to the same extent to which non-national banks are so limited."); Petri, 142 U.S. at 650-51 ("No reason is perceived why it should be held that Congress intended that national banks should not resort to Federal tribunals as other corporations and individual citizens might."). Firstar and the Comptroller argue that this operative phrase should be given the same meaning in the current statute. National banks should be treated like state banks or any other corporation under 28 U.S.C. sec. 1332.

Faul has two primary justifications for the position that a national bank is located in every state where it has a branch. The first is that Citizens & Southern National Bank v. Bougas, 434 U.S. 35 (1977) held that a bank was "located" wherever it had a branch for purposes of a prior version of the venue statute for national banks, 12 U.S.C. sec. 94 (amended 1982). This holding of Bougas should be used to interpret "located" in 28 U.S.C. sec. 1348. Furthermore, Bougas itself cited 28 U.S.C. sec. 1348 as an example of a federal banking statute using the word "located," 434 U.S. at 36 n.1, strongly suggesting that the Court intended for its definition to apply to jurisdictional matters.

The second argument is that "located" should be given a meaning distinct from "established," which is used in the first paragraph of 28 U.S.C. sec. 1348. "Established" appears to refer to a single district. Thus, a bank should be considered to be "established" in the single state where its principal of business is found. See Iacono, 785 F. Supp. at 33. In order to give "located" a different meaning, it must refer to any state where a branch is.

We move from the parties' arguments to our own analysis. As in all statutory construction cases, we begin with the statutory language to determine if it provides a clear answer to the meaning of the words in question. Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999). Because "located" is not defined, we start with the assumption that Congress intended the word to have its ordinary meaning. FDIC v. Meyer, 510 U.S. 471, 476 (1994). The primary definitions of "locate" are "to determine or indicate the place of," "to fix or establish in a place," and similar variations. See The American Heritage Dictionary 1026 (4th ed. 2000); Webster's Third New International Dictionary 1327 (1993); 8 The Oxford English Dictionary 1081 (2d ed. 1989). Unfortunately, such definitions do not provide much aid in our inquiry--what we are trying to determine is the number or scope of places where a national bank is fixed or established. Some definitions do suggest that "locate" refers to a particular or specific location. See Webster's Third at 1327 (giving one definition of "locate" as "to set or establish in a particular spot or position"). However, these definitions referencing particular places would be a thin reed on which to rest our decision, given their own...