Independent Ins. Agents of America, Inc. v. Ludwig, s. 90-5209

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Citation997 F.2d 958
Docket Number90-5214,Nos. 90-5209,s. 90-5209
Parties, 62 USLW 2051 INDEPENDENT INSURANCE AGENTS OF AMERICA, INC. et al., Appellants, v. Eugene LUDWIG, Comptroller of the Currency. NATIONAL ASSOCIATION OF LIFE UNDERWRITERS, et al., Appellants, v. Eugene LUDWIG, et al. District of Columbia Circuit
Decision Date16 July 1993

Anthony G. Steinmeyer, Theodore C. Hirt, U.S. Dept. of Justice, Civ. Div., Washington, DC, for defendant.

Jonathan B. Sallet, Ann M. Kappler, Genner & Block, Washington, DC, for appellants.

Before SILBERMAN, BUCKLEY, and HENDERSON, Circuit Judges.

BUCKLEY, Circuit Judge:

This case is before us on remand from the Supreme Court. It concerns the interpretation of section 92 of the National Bank Act, which authorizes any bank located in a community with a population of 5,000 or less to sell insurance, subject to the regulations of the Comptroller of the Currency. The Comptroller determined that section 92 imposes no geographic limit on the insurance market so that, as long as it is located in a small town, a bank is free to solicit and serve insurance customers everywhere. We uphold the Comptroller's interpretation as permissible.


Enacted in 1916, section 92 of the National Bank Act ("NBA") provides in relevant part that

any [national banking] association located and doing business in any place the population of which does not exceed five thousand inhabitants, as shown by the last preceding decennial census, may, under such rules and regulations as may be prescribed by the Comptroller of the Currency, act as agent for any ... insurance company authorized by the authorities of the State in which said bank is located to do business in said state....

12 U.S.C.S. § 92 (1978). In 1963, the Comptroller ruled that section 92 permits the branch of a national bank located in a community with a population of 5,000 or under ("small town") to sell insurance even though its principal office is located in a larger community. This policy is codified at 12 C.F.R. § 7.7100 (1993).

The present controversy has its genesis in an opinion issued in 1983 by Debra A. Chong, an attorney in the Comptroller's San Francisco office. In response to a letter from a Commerce Department official, she asserted that a small-town bank could sell insurance "without geographic restriction to the community [in which] it is located," though whether sales could be made across state lines was "an unsettled issue." Joint Appendix ("J.A.") 61. In 1984, the United States National Bank of Oregon ("the Bank"), a subsidiary of U.S. Bancorp, proposed to sell insurance from its branch in Banks, Oregon, population 489, "to customers of U.S. Bank and others." J.A. 63. The Bank said that its proposal relied on section 92 and the Chong letter. In reply, the Comptroller told the Bank not to proceed until "this Office communicates in writing that it has no objection." J.A. 64; see 12 C.F.R. § 5.34(d)(1). The Comptroller then undertook a review of the policy set forth in the Chong letter.

In 1986, the agency endorsed the Chong position and approved the Bank's proposal. A letter from Judith A. Walter, the Senior Deputy Comptroller for National Operations, explained:

Based on our analysis of the relevant legal precedent, we have concluded that Ms. Chong correctly determined that a national bank or its branch which is located in a place of 5,000 or under population may sell insurance to existing and potential customers located anywhere. In other words, while the bank or bank branch must be located in a small town, it can sell insurance to persons and businesses located outside that town.

J.A. 65. As bases for this conclusion, the official discussed the statute, its legislative history, principles of statutory construction, and the regulation allowing branch banks to sell insurance from small towns.

Trade associations representing insurance agents and underwriters filed suit, arguing that the Comptroller had exceeded his statutory authority. The district court (Pratt, J.) granted the defendants' motion for summary judgment. National Ass'n of Life Underwriters v. Clarke, 736 F.Supp. 1162 (D.D.C.1990). We reversed on the ground that Congress had repealed section 92 in 1918; hence, there was no legal authority to support the Comptroller's ruling. See Independent Ins. Agents of Am., Inc. v. Clarke, 955 F.2d 731, 739 (D.C.Cir.1992). On June 7, 1993, however, the Supreme Court found that section 92 had not been repealed and remanded the case to us. See United States Nat'l Bank of Oregon v. Independent Ins. Agents of Am., Inc., --- U.S. ----, ----, 113 S.Ct. 2173, 2186-87, 124 L.Ed.2d 402 (1993).


Appellants challenge the Comptroller's action as contrary to congressional intent, contrary to the Comptroller's prior interpretations of section 92, and contrary to the parallel provisions of the Bank Holding Company Act. We discuss these arguments in turn.

A. Interpretation of Section 92

The precise question before us is whether section 92 places any limitations on the geographical scope of the insurance business that may be conducted by a national bank located in a community having a population of 5,000 or under. It is not relevant, for this purpose, that the bank in question is a subsidiary of a major banking corporation.

In examining the Comptroller's interpretation of the National Bank Act, we apply the principles set forth in Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 842-45, 104 S.Ct. 2778, 2781-83, 81 L.Ed.2d 694 (1984). We start by searching for an "unambiguously expressed intent of Congress," id. at 843, 104 S.Ct. at 2781, that addresses the "precise question at issue," id. at 843 n. 9, 104 S.Ct. at 2781 n. 9. If we find such an intent, "that is the end of the matter"; we must enforce it. Id. at 842 104 S.Ct. at 2781. If we do not, we must defer to the agency's interpretation so long as it is permissible. Id. at 843, 104 S.Ct. at 2781; see also K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 292, 108 S.Ct. 1811, 1818, 100 L.Ed.2d 313 (1988) (court must defer if agency construction "not in conflict with the plain language of the statute"). Appellants argue that Congress specifically intended to restrict the insurance sales geographically. In the alternative, they submit that although Congress had no specific intent on the matter, the Comptroller's interpretation is unreasonable.

In our quest for congressional intent, we begin, as always, with the words of the statute. See Mead Corp. v. Tilley, 490 U.S. 714, 722, 109 S.Ct. 2156, 2161, 104 L.Ed.2d 796 (1989). Section 92 provides that a national bank located and doing business in a community having a population of not more than 5,000 may "act as the agent for any ... insurance company ... by soliciting and selling insurance and collecting premiums." 12 U.S.C.S. § 92. These words evince no unambiguous command that the banks may sell insurance only to local townspeople.

The statutory structure is even less helpful to appellants. As originally enacted, section 92 also permitted banks in small towns to "act as the broker or agent for others in making or procuring loans on real estate located within one hundred miles of the place in which said bank may be located." 12 U.S.C.S. § 92 (1978) (emphasis added). As Judge Pratt noted, this provision indicates that "Congress knew how to impose geographic restrictions when it wanted to." 736 F.Supp. at 1168; see INS v. Cardoza-Fonseca, 480 U.S. 421, 432, 107 S.Ct. 1207, 1213, 94 L.Ed.2d 434 (1987). Congress subsequently repealed the loan-brokering provision, see Pub.L. No. 97-320, § 403(b), 96 Stat. 1511 (1982), but that repeal did not purport to affect the provisions at issue here; they continue to be governed by the 1916 congressional intent.

As the words and structure do not reflect an unambiguous intent on the issue, we may consult legislative history. See Burlington N. R.R. v. Oklahoma Tax Comm'n, 481 U.S. 454, 461, 107 S.Ct. 1855, 1859, 95 L.Ed.2d 404 (1987) (stating that "[l]egislative history can be a legitimate guide to a statutory purpose obscured by ambiguity"). The only "history" appellants are able to offer is a letter from the then-Comptroller, J. Skelton Williams, to the Chairman of the Senate Banking and Currency Committee, which the Chairman entered in the Congressional Record. 53 Cong.Rec. S11,001 (1916), cited in Saxon v. Georgia Ass'n of Indep. Ins. Agents, 399 F.2d 1010, 1015-16 (5th Cir.1968).

In that letter, Mr. Williams observed that many banks in small towns had failed and others had been "tempted to exact excessive and in some cases grossly usurious rates." 53 Cong.Rec. at S11,001. To give the struggling banks "additional sources of revenue and [to] place them in a position where they could better compete with local State banks and trust companies," he recommended allowing national banks in towns with a population of 3,000 or under to sell insurance and to broker real estate loans. Id. He stressed that the new powers should be limited to small-town banks, which would be unlikely to "trespass upon outside business naturally belonging to others." Id. He added:

I think it would be unwise and therefore undesirable to confer this privilege generally upon banks in large cities where the legitimate business of banking affords ample scope for the energies of trained and expert bankers. I think it would be unfortunate if any movement should be made in the direction of placing the banks of the country in the category of department stores. The business is one requiring training, skill, and application, and I think that the profession of banking would suffer if there should be a departure from the principles which should govern and have heretofore governed.

Id. As enacted, the amendments used a population cut-off of 5,000 rather than 3,000.

We agree with appellants that U.S. Bancorp, with its more than $7 billion in assets, is not the sort of struggling "country bank"...

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