Independent Bankers Ass'n of America v. Smith

Decision Date23 March 1976
Citation175 U.S.App.D.C. 184,534 F.2d 921
CourtU.S. Court of Appeals — District of Columbia Circuit

Michael Kimmel, Atty., Dept. of Justice, Washington, D. C., with whom Rex E. Lee, Asst. Atty. Gen., Earl J. Silbert, U. S. Atty., Ronald R. Glancz, Atty., Dept. of Justice, and C. Westbrook Murphy, Atty., Washington, D. C., were on the brief, for appellant. Robert E. Kopp, Atty., Dept. of Justice, Washington, D. C., also entered an appearance for appellant.

Meyer Eisenberg, Washington, D. C., with whom Horace R. Hansen, St. Paul, Minn., and Leonard J. Rubin, Washington, D. C., was on the brief, for appellees.

William J. Brown, Atty. Gen. of the State of Ohio, Columbus, Ohio, filed a brief on behalf of the State of Ohio ex rel. F. Scott O'Donnell, Superintendent of Banks as amicus curiae urging affirmance.

James F. Bell and Peter B. Work, Washington, D. C., filed a brief on behalf of the Conference of State Bank Supervisors as amicus curiae.

A brief was filed on behalf of the State of Oklahoma as amicus curiae urging affirmance.

Before WRIGHT, LEVENTHAL and WILKEY, Circuit Judges.

Opinion for the Court filed by Circuit Judge WILKEY.

WILKEY, Circuit Judge: *

This is an appeal by the Comptroller of the Currency from a judgment of the United States District Court for the District of Columbia (Robinson, J.) declaring unlawful and enjoining an interpretive ruling of the Comptroller relating to the use of electronic funds transfer systems by national banks. 1 Appellant Comptroller challenges the district court's memorandum and order by arguing (1) that plaintiffs' challenge to his interpretive ruling is not ripe for judicial resolution, (2) that, in any event, he correctly ruled that customer-bank communication terminals are not "branches" under the National Bank Act, 2 and (3) that the district court erred in granting an injunction against his ruling. We agree with none of these contentions and, therefore, affirm the judgment of the district court.

I. FACTUAL BACKGROUND

On 11 December 1974 the Comptroller of Currency issued an interpretive ruling in which he construed the National Bank Act as permitting national banks to establish customer-bank communication terminals (CBCT's) apart from their main offices and branches. 3 The Comptroller's ruling required national banks to give the Comptroller written notice of proposed CBCT operations thirty days before terminals were established, and a later amendment imposed a fifty mile geographical restriction on exclusive (unshared) terminals. 4

CBCT's are manned or unmanned electronic terminals which, depending on how the machines are programmed, permit an existing bank customer to accomplish various financial transactions, including the deposit and withdrawal of funds and the transfer of funds between accounts. These automated tellers may be installed off bank premises in shopping centers, supermarkets, stores, factories, office buildings, etc., and any approved bank customer with a plastic "key card" can effect transactions at these terminals. Some CBCT's are connected directly to their bank's central computer, while others record transactions on electronic tapes which are later decoded or read by a machine at the bank. Most CBCT's which accept deposits and dispense funds require some periodic transportation of funds to and from the bank. 5

The central, substantive issue in this case is whether CBCT's are bank "branches" under the National Bank Act. If they are, then CBCT's are subject to the restrictions of the Act governing branching; if they are not, national banks can install and operate CBCT's anywhere (even across state lines) subject only to the thirty day filing requirement and the fifty mile geographical limitation of the Comptroller's ruling. For our purposes, the important restrictions of the Act applicable to "branches" are found in sections 36(c), 36(d) and 51. Section 36(c) outlines the terms under which a national bank may establish and operate a new branch. First, the bank must secure the approval of the Comptroller. Second, the establishment and operation of the branch must be expressly authorized to state banks under state law. Third, the branch must comply with state law restrictions governing location and state law requirements as to minimum capital stock and surplus. 6 In short, section 36(c) provides "that a 'branch' may be established only when, where, and how state law would authorize a state bank to establish and operate such a branch . . . ." 7 The other two sections mentioned above, sections 36(d) and 51, set an additional minimum capital requirement for national banks and their branches. 8

The Comptroller's ruling states that CBCT's are not "branches" within the meaning of section 36(f) of the National Bank Act. 9 Under this interpretation, the restrictions of sections 36(c), 36(d), and 51 are totally circumvented. The ruling would permit national banks to install and operate CBCT's without reference to, or limitation by, state laws regulating or prohibiting branching by state-chartered banks. Also, insofar as CBCT's are concerned, it would permit national banks to ignore the minimum capital requirements established by sections 36(d) and 51. The ruling does not provide for public notice of the thirty-day filings; nor is there any requirement for approval by the Comptroller, as there would be for the establishment of a traditional branch. 10 As of 9 July 1975 twenty-eight national banks in seventeen states had filed notices of intention to establish 155 CBCT's in accordance with the Comptroller's ruling. 11

On 20 January 1974 plaintiff-appellee, Independent Bankers Association of America (IBAA), filed a petition asking the Comptroller (1) to repeal his interpretive ruling and (2) to conduct formal rulemaking proceedings under the Administrative Procedure Act. IBAA is a nonprofit Minnesota corporation representing over 7300 commercial banks. After the Comptroller denied both requests, IBAA, ten state-chartered banks, and an individual bank customer filed the complaint in this case and Robert A. Mampel, Commissioner of Banks for the State of Minnesota, joined as an additional party plaintiff. The Comptroller then moved to dismiss the action on grounds of nonjusticiability or, in the alternative, for summary judgment on the merits, and plaintiffs filed a cross-motion for summary judgment.

In response to these motions, the district court dismissed several state bank plaintiffs (who were not within fifty miles of a proposed CBCT) and the individual plaintiff for lack of standing. The court found that all other plaintiffs satisfied the requirements for standing to sue and that their challenge to the Comptroller's ruling presented a justiciable case or controversy. On the merits, the district judge ruled that, within the meaning of section 36(f) of the National Bank Act, a CBCT was a "branch bank, branch office, branch agency, additional office, or any branch place of business . . . at which deposits are received, or checks paid, or money lent." Accordingly, he held the Comptroller's ruling null and void, permanently enjoined further implementation of the ruling, and rescinded any authority given to national banks by the ruling. On 4 August 1975 the district court denied the Comptroller's motion for a stay of the injunction pending appeal, and on 10 October 1975 this court denied a similar motion.

II. RIPENESS

While standing to sue focuses on the parties before the court, ripeness asks whether the issues presented by those parties are appropriate for judicial review at this time. After resolving the threshold question of standing, the district court below correctly held,

(A)lthough the Comptroller labelled his ruling "interpretive" and has indicated his intention to monitor the development of CBCT's, the ruling represents the definitive position of the Comptroller on this issue and the challenge presented herein "raises a clearcut legal issue susceptible of judicial solution." 12

In Abbott Laboratories v. Gardner, 13 the leading case on ripeness, the Supreme Court articulated two policy objectives underlying the ripeness doctrine: (1) avoiding premature adjudications which could embroil the courts in abstract debates over administrative policy; and (2) protecting the agencies from judicial intervention before administrative decisions are formalized and felt in a concrete way by the affected parties. The Court also announced a two-fold test for ripeness requiring courts "to evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." 14

A. Fitness for Judicial Decision

While deciding in favor of reviewability in Abbott Laboratories, Justice Harlan found three factors controlling on the issue of fitness for judicial review these same factors emphasize the correctness of the district court's decision:

1. A Purely Legal Issue First, Justice Harlan recognized that "the issue tendered is a purely legal one: whether the statute was properly construed by the Commissioner . . . ," 15 i. e., whether the statutory term "prominently" authorized the Commissioner to promulgate the challenged regulations. In the instant case the issue facing the district court was strikingly similar: Did the Comptroller act within the scope of his delegated authority when he construed the statutory definition of "branch" to exclude the CBCT operations authorized by his ruling? It is well settled that similar issues of delegated authority and statutory interpretation raise "purely legal" questions. 16

The Comptroller now argues that the issue before the district court was not purely legal. He contends that "there is a very definite problem of identifying and refining...

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