Marion National Bank of Marion v. Van Buren Bank, 17078

• Decision Date: 06 January 1970
• Docket Number: No. 17078,17114.,17078
• Citation: 418 F.2d 121
• Parties: MARION NATIONAL BANK OF MARION and First National Bank in Marion, Plaintiffs-Appellees, v. The VAN BUREN BANK and William B. Camp, Comptroller of the Currency of the United States, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

418 F.2d 121 (1969)

MARION NATIONAL BANK OF MARION and First National Bank in Marion, Plaintiffs-Appellees, v.The VAN BUREN BANK and William B. Camp, Comptroller of the Currency of the United States, Defendants-Appellants.

Nos. 17078, 17114.

United States Court of Appeals Seventh Circuit.

November 5, 1969.

Rehearing Denied January 6, 1970.

Morton Hollander, Chief, Appellate Section, Leonard Schaitman, Attorney, U. S. Department of Justice, Washington, D. C., J. A. Bruggeman, Fort Wayne, Ind., Wasson J. Wilson, Hammond, Ind., Alfred W. Moellering, U. S. Atty., Fort Wayne, Ind., Wilson, Benne, Feingold & Donnersberger, Hammond, Ind., Barrett, Barrett & McNagny, Fort Wayne, Ind., for Van Buren Bank.

George P. Osborn, David L. Kiley, Kiley, Osborn, Kiley & Harker, Marion, Ind., for First Nat. Bank in Marion.

William F. Welch, McHale, Cook & Welch, Indianapolis, Ind., for Marion Nat. Bank of Marion.

Before HASTINGS, Senior Circuit Judge, and SWYGERT and FAIRCHILD, Circuit Judges.

FAIRCHILD, Circuit Judge.

Action by two banks in Marion, Indiana to enjoin the Comptroller of the Currency of the United States from approving, and the Van Buren Bank from carrying out, a plan whereby the Van Buren Bank will open a banking facility in Marion as well as in Van Buren.The district court granted the injuction.¹

Marion is a city of about 40,000, the county seat of Grant county.The town of Van Buren is in the same county, twelve miles from Marion.Van Buren has a population of about 1,000.

Van Buren Bank is a state bank and the only bank in Van Buren.It proposes to become a national bank, change its name, increase its capital, open a banking facility in Marion as its main office, and retain its facility in Van Buren as a branch.

On July 19, 1966, Van Buren Bank forwarded three applications to the comptroller and the appropriate regional administrator.They were accompanied and supplemented by a letter of transmittal.

One was an "Application to convert a state bank into a national banking association."It proposed a new name, an increased capital structure, and stated that the bank had no branches, but desired "to move its head office to Marion, Indiana, and retain present head office as branch."

The second was an "Application for a change in location of head office with the present head office to become a branch."It sought permission to change the location of the head office from an address in Van Buren to one in Marion.

The third was an "Application of converting bank for fiduciary powers."For the purpose of this case, this application may be disregarded.

Notice was given to plaintiffs, and objections made.Plaintiffs alleged that the procedure followed by the comptroller in considering the applications and objections denied them due process.This issue was not decided below, nor argued on appeal.

On October 11, 1966 the deputy comptroller informed the Van Buren Bank that, subject to fulfilment of certain conditions, preliminary approval had been given to convert to a national bank under the title "Citizens National Bank of Grant County", to relocate the main office at Marion with a branch office at the present address, and to increase the capital.

Plaintiffs brought this action.The Van Buren Bank stipulated to their standing.The comptroller did not, but has not seriously contested it on appeal.

Such aspects of the transaction as conversion to a national bank, change of name, and change of capital structure present no issue.We can consider the matter as if Van Buren Bank were a national bank with sufficient capital to meet the requirements of having its head office in one community and a branch in the other.

As we see it, the issue is whether Indiana law would affirmatively permit a state bank to branch in like manner under like circumstances.

Relocation of a national bank is permitted in certain circumstances, and with the approval of the comptroller, by 12 U. S.C. § 30.The propriety of the move is not made to depend on state law.

Creation of a branch of a national bank must also have approval of the comptroller, but in addition the statute law of the particular state must specifically and affirmatively grant such authority to state banks.12 U.S.C. § 36(c) provides:

"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. * * *"

The history of the provision is outlined in First Nat. Bank of Logan, Utah v. Walker Bank² where the Supreme Court of the United States described the intention of Congress as placing "national and state banks on a basis of `competitive equality' insofar as branch banking was concerned."³The Court was dealing with a portion of the section designated (1), and omitted above, governing branches within the same municipality as the main office.(1) Simply requires the branching to be "expressly authorized" by state law and does not contain the other emphatic language in (2), above quoted, yet the Court, without the aid of the latter language, rejected an argument that one need look only at the portion of the statestatute which authorized branches, but not at the portion which imposed restrictions.

The portion of the pertinent Indiana statute, applicable in counties such as Grant, reads as follows:

"* * * any bank or trust company may open or establish a branch bank in any city or town within the limits of the county in which the principal office of such bank or trust company is located, if there is no bank or trust company located in such city or town. * * *."⁴

It is clear, of course, that even as a national bank and with the approval of the comptroller, the Van Buren Bank could not establish and operate a new branch in Marion.It would not be permitted to do so as a state bank because plaintiffs are already there.

On the other hand, it is also clear that:

(1) The Van Buren Bank could, as a national bank and with the comptroller's approval, move its entire banking facility from Van Buren to Marion, notwithstanding plaintiffs' presence in Marion, and,

(2) Having done so, and assuming no other bank had been established in Van Buren in the interim, the Van Buren Bank could, with the comptroller's approval, establish and operate a new branch in Van Buren.

Defendants' case as we see it, is that since the single maneuver...