Leuthold v. Camp

• Decision Date: 29 August 1967
• Docket Number: No. 1444.,1444.
• Citation: 273 F. Supp. 695
• Parties: Albert E. LEUTHOLD, Superintendent of Banks, State of Montana, Helena, Montana, Security Bank and Miners Bank of Montana, N. A., Plaintiffs, v. William B. CAMP, Comptroller of the Currency, Defendant. The First National Bank of Butte and Daly National Bank of Anaconda, Intervenors.
• Court: U.S. District Court — District of Montana

273 F. Supp. 695

Albert E. LEUTHOLD, Superintendent of Banks, State of Montana, Helena, Montana, Security Bank and Miners Bank of Montana, N. A., Plaintiffs, v. William B. CAMP, Comptroller of the Currency, Defendant.

The First National Bank of Butte and Daly National Bank of Anaconda, Intervenors.

No. 1444.

United States District Court D. Montana, Butte Division.

August 29, 1967.

COPYRIGHT MATERIAL OMITTED

Forrest H. Anderson, Atty. Gen. of Montana, Donald A. Garrity, Asst. Atty. Gen. of Montana, Helena, Mont., for plaintiff Leuthold.

John M. Schiltz, of Hutton, Schiltz & Sheehy, Billings, Mont., for plaintiff Security Bank.

Fred J. Weber, of Weber, Bosch & Kuhr, Havre, Mont., for plaintiff Miners Bank of Montana N. A.

Moody Brickett, U. S. Atty. for D. of Montana, Butte, Mont., Michael R. Lemov, Dept. of Justice, Washington, D. C., for defendant Camp.

Howard A. Johnson and Keith P. Johnson, Butte, Mont., for intervenor First National Bank of Butte.

John L. McKeon, of McKeon & Brolin, Anaconda, Mont., John D. French, of Faegre & Benson, Minneapolis, Minn., for intervenor Daly National Bank of Anaconda.

OPINION AND ORDER

RUSSELL E. SMITH, District Judge.

This case concerns branch banking in Montana. The Bank Holding Company Act, 12 U.S.C. § 1841 et seq. and The National Bank Act, 12 U.S.C. § 36(c) are involved.

The plaintiffs are: Albert Leuthold, Superintendent of Banks of the State of Montana (Superintendent), who has general supervisory power over state banks, and who is charged with the duty of executing all laws in relation to banks¹ and who may close any bank which has violated any law of the state² Security Bank (Security), a bank chartered under the state law with offices in Butte; the Miners Bank of Montana, N. A. (Miners), a bank chartered under the federal law with offices in Butte.

The defendant is William B. Camp, Acting Comptroller of the Currency of the United States (the Comptroller).

The intervenors are The First National Bank of Butte (First of Butte) and Daly National Bank of Anaconda (Daly). Both are federal banks. Daly is a subsidiary of, and is controlled by, Northwest Bancorporation, a bank holding company. Daly proposes to acquire the assets of the First of Butte in exchange for stock of Northwest Bancorporation; to consolidate the First of Butte and Daly, and then to maintain full banking facilities in the present offices of the First of Butte and Daly. The Comptroller has approved the plan and will issue a final certificate of approval unless enjoined by this court. At the outset the court is faced with motions upon which rulings have been reserved and with affirmative defenses questioning the standing of the plaintiffs to sue and the court's jurisdiction.

JURISDICTION AND STANDING TO SUE.

This court does have jurisdiction and all parties have standing to sue. The decisions of the Comptroller relating to branch banking are subject to review under the provisions of the Administrative Procedure Act.³ The problem is fully discussed in First National Bank of Smithfield, N. C. v. First National Bank of Eastern North Carolina (Saxon, Comptroller of the Currency) 232 F.Supp. 725 (E.D.N.C.1964), affirmed on this point, 352 F.2d 267 (4 Cir. 1965); Community National Bank of Pontiac v. Saxon, 310 F.2d 224 (6 Cir. 1962); Bank of Dearborn v. Saxon, 244 F.Supp. 394 (E. D.Mich.1965); American Bank and Trust v. Saxon, 248 F.Supp. 324 (W.D.Mich. 1965); Continental Bank v. National City Bank, 245 F.Supp. 684 (N.D.Ohio 1965), rev'd on other grounds, 373 F.2d 283 (1967); Bank of Sussex County v. Saxon, 251 F.Supp. 132 (D.N.J.1966). While the cases do not specifically say so, it is clear from the alignment of the parties that the courts treated competing banks as "persons suffering legal wrong * * * or adversely affected or aggrieved" within the meaning of 5 U.S.C. § 1009(a), and therefore entitled to a judicial review of agency action.

Whitney National Bank in Jefferson Parish v. Bank of New Orleans, 379 U.S. 411, 85 S.Ct. 551, 13 L.Ed.2d 386 (1965) is not contrary. For the reasons later set forth the Bank Holding Company Act is not applicable here. In Whitney National Bank the issues which arose out of the Bank Holding Company Act were cognizable solely by the Federal Reserve Board and its findings were binding upon the Comptroller. The Bank Holding Act provides that the decisions of the Federal Reserve Board are reviewable in the Circuit Courts.⁴ The court in Whitney simply held that method of review to be exclusive.

The Superintendent's standing to sue is not so clear. On this issue defendants and intervenors rely upon State of South Dakota v. National Bank of South Dakota, 219 F.Supp. 842 (D.S.D. 1963), affirmed 335 F.2d 444 (8 Cir. 1964), cert. den. 379 U.S. 970, 85 S.Ct. 667, 13 L.Ed.2d 562 (1965).⁵ Plaintiffs rely upon Jackson v. First National Bank of Valdosta, 349 F.2d 71 (5 Cir. 1965). Neither of these cases consider the applicability of the Administrative Procedure Act. In the South Dakota case substantial reliance was placed upon the proposition that where a regulatory act provides criminal penalties and is silent as to civil enforcement, that the criminal remedy will be deemed exclusive.⁶ It is not desirable to use the criminal courts for a determination of economic rights. The penalties for incorrectly interpreting a law are too great and the criminal courts, because of the jury's inalienable right of pardon and the fact that the prosecutor cannot appeal from judgments of acquittal, are poor forums for the resolution of legal problems. The Administrative Procedure Act embracing as it does the declaratory judgment concept and providing rights of review which are not dependent upon a specific congressional authority to be found in the basic regulatory law, expresses a philosophy at odds with that underlying the rules relied upon in the South Dakota case. Even if the right of review in this case could not be found in the language of the Administrative Procedure Act, the court would consider it in appraising the South Dakota result.

The Jackson case is followed here insofar as the "standing to sue" problem is treated as one concerned with the interest of the Superintendent in the subject matter of the litigation, and the sufficiency of that interest to qualify him as a party plaintiff.⁷ This court considers jurisdiction to be a different problem. Many have standing to sue who may not find their way into the federal district courts,⁸ and the court here does not hold that Congress, in § 36(c) of the National Bank Act, adopted the remedial provisions of state law, and thus obliquely conferred jurisdiction on this court. In other words, the holding here is that the Superintendent is a person "suffering legal wrong * * * or adversely affected or aggrieved" within § 1009(a) of the Administrative Procedure Act.

In separate findings the court has concluded that as to Miners the value of the matter in controversy is in excess of $10,000.00. The solution of the controversy depends upon the application of the National Bank Act and the Bank Holding Company Act. A federal question is involved and at least as to Miners the court does have jurisdiction under § 28 U. S.C. 1331(a).⁹

THE NATIONAL BANK ACT

The Butte and Anaconda offices of the consolidated bank may be retained and operated unless such operation offends § 36(c) of the National Bank Act which provides in part:

"A national banking association may, with the approval of the Comptroller of the Currency, establish and operate new branches: * * * (2) at any point within the State in which said association is situated, if such establishment and operation are at the time authorized to State banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition, and subject to the restrictions as to location imposed by the law of the State on State banks." (Italics supplied)

The problem in this case arises under the italized portion of the section.

In 1927 the Montana Legislature adopted what now appears as § 5-1028 R.C.M. 1947. It provides:

"No bank shall maintain any branch bank, receive deposits or pay checks, except over the counter of and in its own banking house. Provided, that nothing in this section shall prohibit ordinary clearing house transactions between banks * * *"¹⁰

In 1931 the Montana Legislature adopted what now appears as § 5-1124 R.C.M. 1947. It provides:

"When any two or more banks located in the same county or in adjoining counties shall consolidate in accordance with the provisions of section 5-1021, the consolidated bank may, if it has a paid up capital of seventy-five thousand dollars ($75,000.00) or more, upon the written consent of the superintendent of banks and under rules and regulations promulgated by him, maintain and operate offices in the locations of the consolidating banks." (Italics supplied)

The Daly and First of Butte are located in adjoining counties. They have a paid up capital in excess of Seventy-five Thousand Dollars ($75,000.00). The consolidation will not be under § 5-1021 R.C.M.1947, the state law providing for consolidation, but under federal authority. None of the parties contend that this poses any problem.

The superintendent has not given his consent and has promulgated no rules governing the operation of consolidated banks. Under § 5-1124, and under these facts, may the consolidated bank maintain two separate banking facilities?

It is not seriously urged that the lack of consent by the Superintendent is fatal to the proposed operation. It seems clear that it is not.¹¹

The real controversy on the National Bank Act aspect of this case revolves about the plaintiffs' argument that § 5-1028 forbids branch banking in Montana, and that § 5-1124 provides no exception even in those cases falling within its provisions. The plaintiffs argue that the word "branch" has a very special meaning; that...