Jackson v. First National Bank of Cornelia, Civ. A. No. 1191.

• Decision Date: 22 October 1968
• Docket Number: Civ. A. No. 1191.
• Citation: 292 F. Supp. 156
• Parties: W. M. JACKSON, Superintendent of Banks of the State of Georgia, Plaintiff, and The First National Bank of Gainesville et al., Plaintiff-Intervenors, v. FIRST NATIONAL BANK OF CORNELIA, Cornelia, Georgia, Defendant, and William B. Camp, Comptroller of the Currency of the United States, Defendant-Intervenor.
• Court: U.S. District Court — Northern District of Georgia

292 F. Supp. 156

W. M. JACKSON, Superintendent of Banks of the State of Georgia, Plaintiff and The First National Bank of Gainesville et al., Plaintiff-Intervenors, v. FIRST NATIONAL BANK OF CORNELIA, Cornelia, Georgia, Defendant and William B. Camp, Comptroller of the Currency of the United States, Defendant-Intervenor.

Civ. A. No. 1191.

United States District Court N. D. Georgia, Gainesville Division.

October 22, 1968.

Arthur K. Bolton, Atty. Gen., Robert J. Castellani, Deputy Asst. Atty. Gen., Harold N. Hill, Jr., Asst. Atty. Gen., Atlanta, Ga., for plaintiff.

Kenyon, Gunter, Hulsey & Sims, Gainesville, Ga., for plaintiff-intervenors.

Joseph A. Griggs, Cornelia, Ga., for defendant.

Edwin L. Weisel, Jr., Asst. Atty. Gen., Dept. of Justice, Washington, D. C., C. Westbrook Murphy, Director of Litigation, Office of Comptroller of Currency, Washington, D. C., Charles L. Goodson, U. S. Atty., Atlanta, Ga., for defendant-intervenor.

ORDER ON SUMMARY JUDGMENT

SIDNEY O. SMITH, Jr., District Judge.

This is a suit in which the plaintiff, Superintendent of Banks of the State of Georgia, and plaintiff-intervenors, competing state and national banks, seek to enjoin the defendant First National Bank of Cornelia from operating an "armored car bank messenger service" throughout Northeast Georgia and portions of Western North Carolina, which messenger service plaintiffs contend constitutes illegal mobile branch banking contrary to 12 U.S.C. § 24 (Seventh) and 36(c) and (f) and Title 13 of the Code of Georgia § 201 et seq. Defendant First National Bank of Cornelia (referred to as "defendant bank") answered and counter-claimed for an injunction against plaintiff's interference with this activity and a declaratory judgment that the defendant bank's activities are lawful. The defendant-intervenor is William B. Camp, Comptroller of the Currency of the United States. A hearing was had on September 26, 1968, at the conclusion of which oral bench rulings were made. Now, the court formally makes the following

FINDINGS OF FACT

The original plaintiff in this suit is W. M. Jackson, Superintendent of Banks of the State of Georgia, whose duty it is to administer the Banking Laws of the State of Georgia. Ga.Code § 13-301 et seq. Plaintiff-Intervenors are the First National Bank of Gainesville, Gainesville National Bank, The Union County Bank of Blairsville, Fannin County Bank of Blue Ridge, Habersham Bank of Clarkesville, Bank of Clayton, The Peoples Bank of Cleveland, Northeastern Banking Company of Commerce, Cornelia Bank, Bank of Dahlonega, Bank of Hiawassee, The Bank of Toccoa, The Citizens Bank of Toccoa, Georgia, and the Bank of Franklin, North Carolina. As stated in the counterclaim, these are state and national banks doing business in competition with and in the competitive banking area of defendant bank. (See also affidavit of Jackson introduced at hearing.) The original defendant is the First National Bank of Cornelia, Cornelia, Georgia. The defendant-intervenor is William B. Camp, Comptroller of the Currency of the United States. The undisputed facts are as follows:

1.

The defendant First National Bank of Cornelia was chartered pursuant to the National Banking Act, with its principal office in Cornelia, Habersham County, Georgia. The population of Cornelia, Georgia, is 2,936 according to the 1960 United States Census, United States Department of Commerce.

2.

The defendant bank's "armored car messenger service" was instituted pursuant to defendant comptroller's ruling contained in paragraph 7490 of the Comptroller's Manual:

"To meet the requirements of its customers, a national bank may provide messenger service by means of an armored car or otherwise, pursuant to an agreement wherein it is specified that the messenger is the agent of the customer rather than of the bank. Deposits collected under this agreement are not considered as having been received by the bank until they are actually delivered to the teller at the bank's premises. Similarly, a check is considered as having been paid at the bank when the money is handed to the messenger as agent for the customer." (Defendant bank's answer, Exhibits "B" and "C").

3.

Relying on paragraph 7490 of the Comptroller's Manual, defendant bank purchased three armored trucks. Each has a driver's compartment and rear compartment. Two of the trucks have a large plate glass window in the side of the rear compartment together with a pass-through drawer to the outside of the vehicle. Each truck is equipped with a two-way radio, periodically used to dispatch orders pursuant to customers' telephone requests received at defendant bank after the truck has already left the banking house and for emergency purposes. The employee operating each car is armed with a pistol. The defendant bank's armored cars call on 235 customers at least once a week, 220 customers four times a week and approximately 50 customers six times a week. (Affidavit of Reeves attached to defendant-intervenor's motion for summary judgment, page 2 and 3, paragraphs 3 and 4 (c). Defendant's Answer, page 4.)

4.

The following transactions are conducted by the defendant bank's messenger service:

(a) The transmittal of Funds to the Bank:

The armored car messenger service is provided to call at a customer's place of business to pick up cash and checks for the purpose of transporting them to defendant bank's banking house, where they are deposited to the customer's account. The customers who use the service have accounts with the bank. Prior to using the service, they signed a "Messenger Service Agency Contract" which provided that defendant bank's messenger transports the monies and checks to the banking house as the agent of the customer. When a customer sends funds to the bank, he accompanies them with a transmittal slip on which he itemizes them. The transmittal slip contains a "Contract" which provides that the bank "messenger" is acting as the agent of the customer, and that "the currency, coins and checks transmitted by messenger to the bank's premises will not be deemed to be a deposit until delivered by the messenger into the hands of a teller on the bank's premises." Both the transmittal slip and the messenger service agency contract provide that the bank is maintaining hazard insurance for the protection of the customer. (Defendant bank's answer, pages 4-5, 8-9; Exhibit "A" and "B" attached to Reeves' affidavit in support of defendant intervenor's motion for summary judgment.)

(b) The Making of Change:

Each armored car carries between $2,000 and $3,000 of small bills and coins belonging to the bank. A customer using the messenger service may, when the armored car calls, have large bills changed into smaller bills or coins. Such a transaction does not involve checks, but is merely the exchange of cash for cash. (Reeves' affidavit in support of defendant intervenor's motion for summary judgment.)

(c) The Transmittal of Funds from the Bank:

The messenger service is also used to transport cash to those customers who have signed the "Messenger Service Agency Contract." The contract provides that in this situation, also, the bank's messenger is acting as the agent of the customer. Sums transported to the customer by this method are withdrawn by an "Authorization of Debit" (Exhibit "D" to Reeves' affidavit in support of defendant-intervenor's motion for summary judgment) or a withdrawal slip (Exhibit "C" to Reeves' affidavit in support of defendant-intervenor's motion for summary judgment) and the sums are accompanied by a receipt slip (Exhibit "E" of Reeves' affidavit in support of defendant-intervenor's motion for summary judgment) indicating that the customer's account has been charged for the amount of the order. A common use of this service is the delivery of currency and coins to be used as change by businesses. (Defendant bank's answer pages 4-5, 8-9).

(d) The Furnishing of a Teller's Service for Payroll Cashing

Defendant bank also uses the armored truck to provide a payroll cashing service to certain of its customers outside the city limits of Cornelia, Georgia. In such instances, funds are delivered by the messenger service to the customer's place of business pursuant to a written order form. For delivery, a teller accompanies the driver of the armored car. When the funds are delivered, the teller accompanies the messenger into the customer's place of business and, at a counter set up by the customer, cashes the payroll checks of the customer's employees, which are drawn not only on defendant bank but on other banks as well. (Pages 3-4, paragraph 4(d) of Reeves' affidavit in support of defendant intervenor's motion for summary judgment.)

5.

The messenger service is operated daily, six times a week. The armored car is owned by the bank and is operated by employees of the bank. The bank also purchased the insurance coverage for the operation. Customers are not charged for the service.

6.

These banking services are provided outside of the city limits of Cornelia, Georgia, including Habersham, Rabun, Stephens, White and Banks Counties, Georgia.

7.

These activities of defendant bank have resulted in a competitive advantage to defendant bank over competitor banks, resulting in a gain of customers by defendant bank and a loss of customers to defendant bank by competing banks.

8.

The amount in controversy exceeds the value of $10,000 exclusive of interest and cost.

CONCLUSIONS OF LAW

1.

Jurisdiction under 28 U.S.C. § 1331(a) is based on the amount in controversy and the existence of a question of federal law under the National Banking Act, Title 12 U.S.Code. The relief sought is proper under 28 U.S.C. §§ 2201 and 2202.

2.

The "Agency Contracts" and other forms and written stipulations used by defendant bank do not basically alter the actual banking functions being performed by defendant bank at and through its employees at its mobile facilities. The receipt of cash, checks and other...