Manges v. Camp, 72-1962.

• Decision Date: 01 March 1973
• Docket Number: No. 72-1962.,72-1962.
• Parties: Clinton MANGES, Plaintiff-Appellant, v. William B. CAMP et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

474 F.2d 97 (1973)

Clinton MANGES, Plaintiff-Appellant, v. William B. CAMP et al., Defendants-Appellees.

No. 72-1962.

United States Court of Appeals, Fifth Circuit.

March 1, 1973.

Jack Skaggs, James Harris Denison, Jr., Harlingen, Tex., for plaintiff-appellant.

William S. Sessions, U. S. Atty., San Antonio, Tex., Walter H. Fleischer, Anthony J. Steinmeyer, Dept. of Justice, Washington D. C., Ralph Langley, Emerson Banach, Jr., San Antonio, Tex., for defendants-appellees.

Before JOHN R. BROWN, Chief Judge, and THORNBERRY and MORGAN, Circuit Judges.

LEWIS R. MORGAN, Circuit Judge:

Clinton Manges, owner of controlling interest in the stock of The Groos National Bank, received an order on March 4, 1971, from the Comptroller of the Currency of the United States, prohibiting Manges "from further participation in any manner in the conduct of the affairs of The Groos National Bank". Manges filed suit in the district court below seeking a permanent injunction against the Comptroller from continuing this order in force. The district court dismissed the suit for want of jurisdiction due to 12 U.S.C. § 1818(i), a withdrawal statute. This case involves appeal of that dismissal.

This court has determined that jurisdiction does lie in this specific case, that the withdrawal statute is not applicable here, and that the Comptroller acted outside of his proper statutory authority.

FACTS

On October 8, 1965, Clinton Manges was convicted upon his plea of guilty to the charge of making a false statement to the Small Business Administration, in violation of 15 U.S.C. § 645. Manges was sentenced to pay a fine of Two Thousand Five Hundred ($2,500.00) Dollars, and he did so pay on October 11, 1965. In December of 1970, Manges began purchasing shares of the common stock of The Groos National Bank of San Antonio, Texas. By February 2, 1971, he had obtained controlling interest of the Bank's common stock. Manges reported this acquisition to the Comptroller of the Currency on February 14, 1971, along with other required information concerning his background. The 1965 conviction was included in that information. Manges, on February 16, 1971, presented written requests to the Bank's Board of Directors asking them to pass certain resolutions. The Board took no action.

The Comptroller of the Currency then issued the order of March 4, 1971, which prohibited Manges from participating in any manner in the conduct of the affairs of the Bank.¹ A copy of the order was sent to Manges and to The Groos National Bank. Pursuant to this order, the Bank (the Board of Directors) refused Manges' participation in its affairs and prevented him from voting his stock. Manges, in July of 1971, requested that the Comptroller clarify the order of March 4, 1971. The Comptroller acknowledged Manges' request and said nothing.

This case was commenced December 20, 1971, when Manges requested that the Comptroller be permanently enjoined from continuing in force and effect his order of March 4th. Manges further requested that a preliminary injunction be issued against the Board of Directors of The Groos National Bank preventing them from taking any action to his financial detriment as concerns control of said Bank. The district court dismissed, basing its decision on 12 U.S.C. § 1818(i), a withdrawal statute.

ISSUES

Manges, on appeal, not only contends that the Comptroller was acting beyond the scope of his authority in 12 U.S.C. § 1818(g)(1), but he also attacks the constitutionality of 12 U.S.C. § 1818(h)(2) and § 1818(i), as violative of the due process and equal protection guarantee of the Fifth Amendment. Manges further states that judicial review of this statute should be allowed and cannot be excluded in this situation. These contentions should not be taken lightly.² If Manges' claims are true, then he has suffered grievous harm due to the action by the Comptroller of the Currency, possibly in violation of the United States Constitution. The government naturally asserts that the Comptroller was acting well within his designated authority under the statute and was in no way violating any of Manges' guaranteed rights. This court, therefore, feels careful scrutiny of the statute in question and the intent behind it is demanded.

JURISDICTION

This court, however, upon reading 12 U.S.C. § 1818(h)(2) and § 1818(i), is not so convinced that the Comptroller was within his designated statutory authority. Further, if the Comptroller was not acting within his authority granted by Congress, then 12 U.S.C. § 1818(i) could not withdraw jurisdiction.

There is, however, a very strong court created exception to withdrawal statutes. This exception comes into play when there has been a clear departure from statutory authority, and thereby exposes the offending agency to review of administrative action otherwise made unreviewable by statute.

Two recent decisions by the Supreme Court give concrete support to the concept that a clear departure from designated authority demands judicial review. In Oesterich v. Selective Service System, 393 U.S. 233, 89 S.Ct. 414, 21 L.Ed.2d 402 (1968), a draft board granted a divinity student exemption from military service as provided for by law. Then the board revoked this exemption and ordered the student inducted due to conduct unrelated to the granting or continuing of that exemption. The Military Selective Service Act of 1967 provided that there would be no pre-induction judicial review of the classification or processing of the registrant. The Supreme Court held that the draft board clearly departed from its statutory mandate and acted in a lawless manner. Supra at 238, 89 S.Ct. 414. Justice Douglas stated on behalf of the Court that concerning the statute itself "no one, we believe, suggests that § 10(b)(3) withdrawal section of the statute can sustain a literal reading . . . Examples are legion where literalness in statutory language is out of harmony either with constitutional requirements or with an Act taken as an organic whole." (citations omitted). Supra at 238, 89 S.Ct. at 417.

Also, in Breen v. Selective Service System, 396 U.S. 460, 90 S.Ct. 661, 24 L.Ed.2d 653 (1970), under similar facts, the Court once again ruled that a clear departure from statutory mandate was present and justified judicial review. Supra at 467, 90 S.Ct. 661. Justice Harlan in his concurrence was careful to point out that the Court's judicial scrutiny of Breen's legal contention, unlike review of factual and discretionary decisions, in no way hindered the function of the Selective Service System which was the primary concern of Congress in enacting this withdrawal section. Supra at 468, 90 S.Ct. 661.

The question then before this court is whether or not the Comptroller acted within the scope of his authority as Congress so intended it to be.

The precise language of 12 U.S.C. § 1818(g)(1) states "Whenever any . . person participating in the conduct of the affairs of such bank, is charged in any information, indictment, or complaint authorized by a United States attorney, with the commission of or participation in a felony involving dishonesty or breach of trust, the appropriate Federal banking agency may, by written notice served upon such . . . person . . . prohibit him from further participation in any manner in the conduct of the affairs of the bank. A copy of such notice shall also be served upon the bank. Such suspension and/or prohibition shall remain in effect until such information, indictment, or complaint is finally disposed of or until terminated by the agency." This language, on its face, certainly appears to speak to the present tense, that is to say, it speaks to the situation where a person is presently involved and participating in the affairs of a bank and is presently charged with a felony. The Comptroller has asserted this language was intended to go not only to the present, but also to any past felony charges or convictions that might have occurred as regards Manges.

Because what has occurred, on its face, appears highly suspect as regards the safeguarding of individual rights guaranteed under the Constitution, this court must seek the precise intent Congress had in promulgating this legislation.³

After reviewing carefully the legislative history concerning this Act there can be no doubt that Congress never intended to establish a procedure such as the one utilized here by the Comptroller, H.R.Rep. 2077, 89th Cong., 2nd Sess., 1966; S.Rep. 1482, 89th Cong., 2nd Sess., 1966, U.S.Code Cong. & Admin. News 1966, p. 3532; ...