Fisher v. First Nat. Bank of Chicago

• Decision Date: 31 August 1976
• Docket Number: No. 75-1670,75-1670
• Citation: 538 F.2d 1284
• Parties: Fred FISHER, Plaintiff-Appellant, v. The FIRST NATIONAL BANK OF CHICAGO, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1284

538 F.2d 1284

Fred FISHER, Plaintiff-Appellant, v. The FIRST NATIONAL BANK OF CHICAGO, Defendant-Appellee.

No. 75-1670.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 12, 1976.

Decided July 29, 1976.

Rehearing and Rehearing En Banc Denied Aug. 31, 1976.

James E. Beckley, Chicago, Ill., Everett Meeker, Washington, Iowa, for plaintiff-appellant.

Joseph DuCoeur and Alan I. Becker, Chicago, Ill., for defendant-appellee.

Before FAIRCHILD, Chief Judge, and CUMMINGS and SPRECHER, Circuit Judges.

SPRECHER, Circuit Judge.

The principal issue in this appeal is whether the interest rate charged by a national banking association with its principal place of business in Chicago in connection with the use of its bank credit cards by customers in Iowa, is governed by the 18% rate fixed by the Illinois Revolving Credit Act, by the 18% rate fixed for Iowa Small Loan Companies, by the 12% rate fixed for Iowa state banks or by the 9% rate fixed for persons generally in Iowa.

I

The plaintiff, Fred Fisher, brought this action in the district court for the Southern District of Iowa as a class action on behalf of himself as well as on behalf of all other persons within the State of Iowa who were customers of the defendant's, The First National Bank of Chicago, FirstCard and BankAmericard credit card plans who had unpaid balances in their credit accounts within two years of the filing of his complaint on September 3, 1971, alleging that the defendant charged usurious interest. The complaint was based on two sections of the National Bank Act, 12 U.S.C. § 85, establishing rates of interest, and § 86, fixing penalties for usurious interest.

The defendant bank moved to dismiss the action on February 18, 1972, on the ground that the jurisdiction over national banks is derived from 28 U.S.C. § 1348 ¹ and that under that section federal courts lack jurisdiction unless diversity or a federal question, as well as the jurisdictional amount, is pleaded under 28 U.S.C. § 1332 or § 1331. ²

On May 9, 1972, the district court in Iowa sustained defendant's motion and dismissed the case on the basis of lack of subject matter jurisdiction. The Eighth Circuit Court of Appeals sitting en banc heard the Fisher case and another similar case, and concluded on April 20, 1973, that 28 U.S.C. § 1337, ³ the commerce jurisdiction provision, which does not require a minimum jurisdictional amount or diversity, applies to and gives federal courts jurisdiction over all suits brought under specific provisions of the National Bank Act. The court said that "(i)t seems almost elementary that Congress regulates national banks primarily under the commerce clause, and that the National Bank Act, including 12 U.S.C. §§ 85 and 86, is an Act regulating commerce for purposes of § 1337." Burns v. American National Bank and Trust Co., 479 F.2d 26, 29 (8th Cir. 1973).

We consider the question of proper jurisdiction under § 1337 settled by the Eighth Circuit's opinion in Burns v. American National Bank and Trust Co., supra, as part of the law of this case. 1B J. Moore, Federal Practice P 0.404(8) at 531-537 (2d ed. 1974). In any event, the Eighth Circuit opinion appears to express the prevailing view. Cupo v. Community National Bank & Trust Co., 438 F.2d 108 (2d Cir. 1971); Brown v. First National City Bank, 503 F.2d 114 (2d Cir. 1974); Partain v. First National Bank of Montgomery, 467 F.2d 167 (5th Cir. 1972); Cosgrove v. First & Merchants National Bank, 68 F.R.D. 555 (E.D.Va.1975); cf. State of Iowa v. First of Omaha Service Corp., 401 F.Supp. 439 (S.D.Iowa 1975).

The Eighth Circuit pointed out that plaintiff Fisher had originally failed to allege jurisdiction under 28 U.S.C. § 1337, but after the trial court had sustained defendant's motion to dismiss, the plaintiff moved to amend his complaint, charging that the defendant violated plaintiff's civil rights and violated the antitrust laws by charging usurious interest. In the antitrust count, the plaintiff expressly alleged that jurisdiction was based on § 1337. The Eighth Circuit directed the Iowa district court upon remand to permit the filing of the amendment to the complaint. 479 F.2d at 30.

II

Upon remand the Iowa district court allowed the amendment to be filed. There remained pending in the district court, however, the defendant's motion to dismiss for improper venue which it had filed on November 4, 1971, shortly after the original complaint had been filed, The defendant's motion was phrased in the alternative, to dismiss or transfer the cause.

On February 14, 1974, the district court for the Southern District of Iowa transferred the cause of action in its entirety to the Northern District of Illinois in accordance with 28 U.S.C. § 1406(a). ⁴

The venue provision of the National Bank Act provides that suits against national banking associations may be brought only in the federal court "within the district in which such association may be established" or in the state court "in the county or city in which said association is located,"12 U.S.C. § 94. ⁵ The jurisdictional statute relating to national banking associations also uses both the terms "established" and "located." 28 U.S.C. § 1348. In Cope v. Anderson, 331 U.S. 461, 467, 67 S.Ct. 1340, 1343, 91 L.Ed. 1602 (1947), the Supreme Court in effect held that these terms are synonymous, saying:

For jurisdictional purposes, a national bank is a "citizen" of the state in which it is established or located, 28 U.S.C. § 41(16) (the predecessor of 28 U.S.C. § 1348), and in that district alone can it be sued. 12 U.S.C. § 94.

The Supreme Court construed the venue provision as recently as in Radzanower v. Touche Ross & Co., --- U.S. ----, 96 S.Ct. 1989, 48 L.Ed.2d 540 (1976), where it held that venue in a suit against a national banking association charged with violating the Securities Exchange Act of 1934 is governed by § 94 rather than by the broad venue provision of the Securities Exchange Act and hence the suit could be brought only within the district where the association was established. The Court said:

Federal courts have consistently ruled that the place specified in a bank's charter as its home office is determinative of the district in which the bank is "established" for purposes of § 94. See, e. g., Buffum v. Chase Nat. Bank, 192 F.2d 58, 60 (CA 7); Leonardi v. Chase Nat. Bank, 81 F.2d 19, 22 (CA 2). ⁶

Id. at ----, 96 S.Ct. at 1992, at 4762, n.2.

Although the Radzanower language specifies only "established," not only does the Cope language indicate that "located" means the same thing ⁷ but federal courts have also consistently ruled that the state in which the association is "located" as used in § 94 is the state in which the association's principal place of business is maintained. Buffum v. Chase National Bank, 192 F.2d 58 (7th Cir. 1951), cert. denied, 342 U.S. 944, 72 S.Ct. 558, 96 L.Ed. 702; American Surety Co. v. Bank of California, 133 F.2d 160 (9th Cir. 1943); United States National Bank v. Hill, 434 F.2d 1019, 1020 (9th Cir. 1970).

The First National Bank of Chicago is a national banking association. A national banking association is created by the making of an organization certificate, 12 U.S.C. § 22, which is filed with and recorded by the Comptroller of the Currency, § 23, who issues a certificate authorizing the association to commence the business of banking, § 27.

The organization certificate must "specifically state . . . (t)he place where (the association's) operations of discount and deposit are to be carried on, designating the State, Territory, or District, and the particular county and city, town, or village," 12 U.S.C. § 22. Any national banking association "with the approval of the Comptroller of the Currency, may . . . change the location of the main office . . . within the limits of the city, town, or village in which it is situated" or with the Comptroller's approval and by a vote of shareholders owning two-thirds of the stock "may change the location of the main office . . . to any other location outside the limits of the city, town, or village in which it is located, but not more than thirty miles distant . . ." 12 U.S.C. § 30.

The First National Bank's location as specified in its charter or organization certificate is Chicago, Illinois, and the principal office of the association is located at One First National Plaza, Chicago, Illinois. These facts are established by the complaint which alleges that the bank "has its principal banking house at Chicago, Illinois" and by the uncontradicted affidavit of the bank's cashier. Furthermore the district court for the Southern District of Iowa ordered "this cause of action transferred (on the basis of the national banking association venue provision) in its entirety to the Northern District of Illinois where the defendant . . . is established."

The plaintiff's attack on the transfer order was based in the district court in Iowa upon the claim of repugnancy between the limited venue provision of § 94 of the National Bank Act, 12 U.S.C. § 94, and the broad venue provision of § 12 of the Clayton Act, 15 U.S.C. § 22. Exactly the same argument was rejected by the Supreme Court in Radzanower v. Touche Ross & Co., --- U.S. ----, 96 S.Ct. 1989, 48 L.Ed.2d 540, 44 U.S.L.W. 4762 (1976), in the context of the broad venue provision of § 27 of the Securities Exchange Act, 15 U.S.C. § 78aa. The transfer of the case to the Northern District of Illinois was therefore proper and mandatory. We proceed to the merits.

III

The record in the transferred case arrived in the Northern District of Illinois on February 21, 1974. On May 2, 1974, the defendant bank filed a motion to dismiss for failure to state a claim upon which relief could be granted. On May 29, 1975, the district court in Chicago granted the motion and dismissed the entire action upon concluding that the defendant did not charge usurious interest. The court further found that "(i)nsofar as the alleged...