Monarch Wine Co. v. Butte

• Decision Date: 27 October 1952
• Docket Number: No. 15234,15234
• Citation: 113 Cal.App.2d 833,249 P.2d 291
• Court: California Court of Appeals
• Parties: MONARCH WINE CO., Inc. et al. v. BUTTE et al.

Page 291

249 P.2d 291

113 Cal.App.2d 833

MONARCH WINE CO., Inc. et al. v. BUTTE et al.

No. 15234.

District Court of Appeal, First District, Division 1, California.

Oct. 27, 1952.

Cosgrove, Cramer, Diether & Rindge, Los Angeles, Brobeck, Phleger & Harrison, Moses Lasky, Richard Haas, San Francisco, for appellant.

Bronson, Bronson & McKinnon, San Francisco, for respondent.

BRAY, Justice.

Defendant Citizens National Trust & Savings Bank of Los Angeles ¹ appeals from an order denying its motion for change of venue from the San Francisco superior court to that of Los Angeles County.

Question Presented.

Does Title 12 U.S.C.A. § 94, give a national bank, regardless of the California venue laws, the right to have an action against it tried in the county of its residence?

Record.

Plaintiffs sued defendant and others in the San Francisco superior court on combined causes of action to recover proceeds of certain fire insurance policies. Defendant is a national banking association whose main office and banking house is in Los Angeles County. Defendant moved for change of venue to that county, relying upon section 94, hereafter set forth. One of the other defendants, Felix Butte, Jr., is a resident of San Francisco. Based on that fact and the provisions of section 395 of the Code of Civil Procedure, the motion was denied.

Section 94.

Title 12 U.S.C.A. § 94, provides: 'Actions and proceedings against any association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases.'

It is conceded that as a national bank is a creature of federal, rather than state law, its rights to sue or be sued are those granted and defined by congressional acts, and that the question of where it can be sued is governed by the laws of the United States. See Crofoot v. Giannini, 196 Misc. 213, 92 N.Y.S.2d 191; Burns v. Northwestern Nat. Bank of Minneapolis, Minn., 1935, 65 N.D. 473, 260 N.W. 253. Thus, there is no question but that the Congress has the power to require that the national banks be sued only at the place of residence. The question is, did it by the provisions of section 94, do so? The plain reading of the section would indicate that it did. Actions against a national bank 'may be had in any district' (this obviously refers to districts of the federal courts) 'or in any State, county, or municipal court in the county or city' in which the bank is located.

The federal cases interpreting section 94 seem to establish three propositions: (1) Where actions against a national bank are brought in a state court outside the state where it is located the action must be dismissed because there is no procedure for transferring the action from one state to another. See Schmitt v. Tobin, D. C., 15 F.Supp. 35, where an action brought in Nevada against a California national bank was dismissed. (2) Where the actions are brought in a federal court in a district other than that in which the bank is located the actions formerly were required to be dismissed as the federal law provided no procedure for transfer. See Leonardi v. Chase Nat. Bank of City of New York, 2 Cir., 81 F.2d 19, where the court dismissed an action brought against a national bank in a federal court in a district other than that of the bank's residence. To the same effect, International Refugee Organization v. Bank of America, etc., D. C., 86 F.Supp. 884, and Buffum v. Chase Nat. Bank of City of New York, 7 Cir., 192 F.2d 58. Such a procedure has now been provided and the case would now be transferred to the proper district. Plaintiffs concede that the law as to these two propositions is as above stated. (3) Where the action is brought in a state court of a state in which the bank is located but not in the county of its location, and where state law has a procedure for change of venue, the action must not be dismissed, but upon application must be transferred to the county in which the bank is located. There are three federal cases upon this subject. The first is First Nat. Bank of Charlotte v. Morgan, 132 U.S. 141, 10 S.Ct.37 33 L.Ed. 282. There an action was brought in Cleveland County, North Carolina, against a national bank residing in Mecklenburg County of the same state for a penalty for charging the plaintiff a greater interest than the law allowed. The bank answered with a general denial and a plea of the statute of limitations. From a judgment against it the bank appealed, claiming that under section 5198 of the Revised Statutes (the predecessor of section 94 and containing practically the same language) the action could not be brought in a county other than that of the bank's residence. The court pointed out that the section gave national banking associations 'exemption * * * from suits in state courts, established elsewhere than in the county or city in which such associations were located * * * for the convenience of those institutions, and to prevent interruption in their business that might result from their books being sent to distant counties in obedience to process from state courts.' 132 U.S. at page 145, 10 S.Ct. at page 38. The court then stated, in effect, that had the bank claimed the exemption when it apeared in the superior court of Cleveland County the action would have had to be transferred. The exemption was a personal privilege that the bank could and did waive. But having made defense upon the merits and not having chosen to claim immunity from suit in that court, it was too late now to claim it for the first time upon appeal. While the action there was one for a penalty under the then Bank Act, the decision cannot be limited to actions thereunder, as it was held in Leonardi v. Chase Nat. Bank, supra, 81 F.2d 19, that the exemption was not restricted to actions under the particular act but to all actions against national banks.

Casey v. Adams, 102 U.S. 66, 26 L.Ed. 52, was an action concerning real property brought in a Louisiana state court, parish of La Fourche, against, among others, Casey, the receiver of a national bank established in New Orleans, which was in another parish. In considering the question of the effect of the predecessor of section 94 the court stated 102 U.S. at pages 67-68: '* * * sect 5198 * * * we think, relates to transitory actions only, and not to such actions as are by law local in their character. Section 5136 subjects the banks to suits at law or in equity as fully as natural persons, and we see nowhere in the Banking Act any evidence of an intention on the part of Congress to exempt banks from the ordinary rules of law affecting the locality of actions founded on local things. The distinction between local and transitory actions is as old as actions themselves, and no one has ever supposed that laws which prescribed generally where one should be sued, included such suits as were local in their character, either by statute or the common law, unless it was expressly so declared. Local actions are in the nature of suits in rem, and are to be prosecuted where the thing on which they are founded is situated. To give the act of Congress the construction now contended for would be in effect to declare that a national bank could not be sued at all in a local action where the thing about which the suit was brought was not in the judicial district of the United States within which the bank was located.' That case was decided in 1880 and First Nat. Bank of Charlotte v. Morgan, supra, 132 U. S. 141, 10 S.Ct. 37, in November, 1889. In March 1890, came Fresno National Bank v. Superior Court, 83 Cal. 491, 24 P. 157. There a national bank whose residence was in Fresno County sought to prohibit the superior court of San Joaquin County from further proceeding in an action brought against the bank on a building contract. The bank contended, among other grounds, that section 5198, U.S.Rev.Stats., denied jurisdiction to any state court except the court of the county of the bank's residence. In determining this question the court referred to Casey v. Adams, supra, 102 U.S. 66, 26 L.Ed. 52, saying that the remark of the Supreme Court therein that section 5198 'relates to transitory actions only' was not necessary to the decision and 'there is nothing in section 5198 relating to the distinction between local and transitory actions.' 83 Cal. at page 499, 24 P. at page 159. It then referred to section 5136, Rev.Stats., which provides that national banks "shall have power * * * Fourth, to sue and be sued, complain and defend, in any court of law and equity, as fully as natural persons" and quoted from Claflin v. Houseman, 93 U.S. 130, 23 L.Ed. 833, to the effect that these sections of the Revised Statutes gave state courts jurisdiction of actions by and against national banks. It stated that there is nothing in the distinction between local and transitory actions which should affect the application of these sections 'except, perhaps, when local actions are purely in rem, and therefore require no actual service of process upon any person, natural or artificial.' 83 Cal. at page 500, 24 P. at page 160. It then held that the superior court of San Joaquin County had jurisdiction of the person of the defendant, but that, upon the showing made, that county was not the proper county in which to commence the action against the bank. However, as the bank had filed the necessary motion and demand for change of venue (which had not been acted upon) that motion gave the bank 'a plain, speedy, and adequate remedy, in the ordinary course of law, for the error and wrong of commencing the action in an improper county.' Thus, it is apparent that the court was considering the effect of the federal sections on jurisdiction and not venue. It is not clear from the opinion as to whether when it referred to the...