Mutschler v. Peoples Nat. Bank of Washington

Decision Date24 October 1979
Docket Number76-2182,Nos. 76-2042,s. 76-2042
Citation607 F.2d 274
PartiesG. W. MUTSCHLER, Supervisor, Division of Banking, Department of General Administration, State of Washington, Plaintiff-Appellee, v. PEOPLES NATIONAL BANK OF WASHINGTON, a national banking association, and James E. Smith, Comptroller of the Currency of the United States, Defendants-Appellants.
CourtU.S. Court of Appeals — Ninth Circuit

John C. Coart, Seattle, Wash., argued for defendants-appellants.

Richard A. Heath, Asst. Atty. Gen., Olympia, Wash., for plaintiff-appellee.

Appeal from the United States District Court for the Western District of Washington.

Before BROWNING and TANG, Circuit Judges, and TAYLOR *, District Judge.

PER CURIAM:

William L. Hart, as Supervisor of the Division of Banking for the State of Washington, brought this action against appellants, the Federal Comptroller of the Currency and Peoples National Bank of Washington seeking a determination that the Comptroller's approval of the Bank's application to relocate one of its branches was unlawful under Washington state law. The district court granted appellee's motion for summary judgment and appellants appealed from the judgment. We affirm.

In January of 1975, Peoples National Bank of Washington (Bank), a national banking association with its principal offices in Seattle, King County, Washington, submitted an application to the Comptroller of the Currency of the United States (Comptroller) for permission to move its branch bank from Mesa, Franklin County, Washington to the unincorporated community of Basin City which is also in Franklin County. The record discloses that Basin City had become the social and commercial center of the northwestern part of Franklin County and would continue to experience significant growth in the future. The Bank claimed the branch relocation would offer services to more people in the surrounding area as well as serve its existing customers.

Appellee, in his capacity as Supervisor of the Division of Banking for the State of Washington (Supervisor), registered an objection to the application on the ground that under Washington law a bank having its principal office in one county could not establish a branch in an unincorporated area of another county. Despite the Supervisor's objection, the Acting Comptroller approved the application and the Bank opened the Basin City branch in June, 1975.

Subsequently, the Supervisor filed this action seeking a declaration that the Comptroller's approval of the Bank's application was contrary to the provisions of 12 U.S.C. § 36(c) and the provisions of § 30.40.020 of the Revised Code of Washington, and requesting a permanent injunction against the relocation of said branch to Basin City. On cross-motions for summary judgment, the district court entered judgment in favor of the Supervisor. The court held that the Comptroller does not have plenary power under 12 U.S.C. § 36(e) to approve relocation of national bank branches; that Washington law applied to this situation under 12 U.S.C. § 36(c); and that Washington law precluded the Bank from moving the branch to Basin City.

In challenging the district court's granting of the Supervisor's motion, the Bank and the Comptroller raise three substantive issues. First, the question whether 12 U.S.C. § 36(c), which incorporates applicable state law restrictions on the establishment and operation of new branch banks, applies to the Relocation of a branch of a national bank. Secondly, even if 12 U.S.C. § 36(c) does apply to such relocation, appellants contend that the district court should have construed the applicable Washington state law (RCW 30.40.020) to allow branching in unincorporated areas as well as incorporated areas. Thirdly, appellants argue that even if the district court was correct in its construction of RCW 30.40.020, it erred in holding as a matter of law that the Bank could not relocate the branch pursuant to the state statute (RCW 32.04.030) since it allows mutual savings banks to establish branches in any county of the state.

I

Appellants argue the move of the Bank's branch from Mesa to Basin City was a "relocation" as opposed to the establishment of a new branch, and 12 U.S.C. § 36(e) empowers the Comptroller to authorize branch relocations independently of 12 U.S.C. § 36(c). On reviewing the language of §§ 36(c) and 36(e), the legislative history of the National Bank Act, and the applicable rules of statutory construction, we are of the opinion that appellants' position is untenable.

It is a well settled rule of statutory construction that a statute must be read not only to give effect to all of its parts, Washington Market Company v. Hoffman, 101 U.S. 112, 25 L.Ed. 782 (1879), but also so as to implement the broad national policy of the legislation. National Woodwork Manufacturers v. NLRB, 386 U.S. 612, 87 S.Ct. 1250, 18 L.Ed.2d 357 (1967). In this context, sections of a statute should be read as consistent rather than conflicting. Helvering v. Credit Alliance Corporation, 316 U.S. 107, 62 S.Ct. 989, 86 L.Ed. 1307 (1942). Title 12 U.S.C. § 36 enumerates certain conditions upon which a national banking association may retain or establish and operate a branch bank. Section 36(e) provides:

No branch of any national banking association shall be Established or moved from one location to another without first obtaining the consent and approval of the Comptroller of the Currency. (emphasis provided)

In pertinent part § 36(c) addresses the establishment and operation of new branches:

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 language of § 36(e) does give the Comptroller the authority to approve the relocation of branch banks. However, as the district court noted in its opinion and order, the Comptroller's authority to allow relocation "stems from § 36(c), since it is nowhere else affirmatively expressed, and § 36(c) specifically conditions the branching of national banks upon State law", citing Bank of Dearborn v. Saxon, 244 F.Supp. 394 (E.D.Mich.1965), aff'd, 377 F.2d 496 (6th Cir. 1967).

In the Dearborn case, a Michigan state bank brought an action challenging the validity of the Federal Comptroller's approval of a national bank's application for a branch. The trial court held that the Comptroller had abused his discretion in approving the national bank's scheme, which sought to evade applicable state law prohibiting the establishment of a branch in a city (inside branch) in which the bank was already in operation. The bank had closed an existing branch and relocated it a short distance across the city line. The bank then opened a branch in a new shopping center within the city limits which, the bank claimed, was only a move of the old branch to a new location. In holding that the Comptroller did not have plenary power to authorize moves of national bank branches regardless of the state law, the district court discussed the history and the nature of the statutory grant of power to the Comptroller under the National Bank Act (12 U.S.C. § 21 Et seq.).

Prior to 1927, national banks were forbidden to branch. First National Bank in St. Louis v. State of Missouri, 263 U.S. 640, 44 S.Ct. 213, 68 L.Ed. 486 (1924). However, with the enactment of the McFadden Act in 1927, Congress authorized "inside" branching (branching in the same city as the main office). Congress severely restricted this form of branching by providing that national banks could establish and operate inside branches if such branches were permitted to state banks by the law of the state in question. The court in Dearborn, supra, stated that:

Here we see for the first time the dependence upon state law, which is one of the primary issues in this case, and which dependence is denied by the Comptroller. It is of significance to our interpretation of the law that the precise issue here argued by the Comptroller (namely, his independence of state law) was also urged to Congress at this time and rejected. 76 Cong.Rec. 1998-2026 (1933). See, also, Chapman and Westerfield, Branch Banking, 102-108, 118-120 (1942).

Bank of Dearborn v. Saxon, supra at p. 400.

Also appearing in the 1927 McFadden Act was § 36(e). In the court's view, the enactment of § 36(e), together with the provision for inside branching, indicated that in 1927 Congress intended that national banks would establish and operate inside branches subject to the Comptroller's approval. However, the court stated:

. . . the authority to move branches (referred to in Sec. 36(e) above) was considered to be merely incidental to the establishment thereof. The "moving" authority is to be implied from Sec. 36(c), which section refers back to and is subject to state law.

Id. at p. 400

Congress amended § 36(c) in 1933 and by the language of the amendment it became clear that the law of the state would be determinative in regard to the problem of branch banking. Bank of Dearborn, supra. The United States Supreme Court, after reviewing the history of the National Bank Legislation, noted the rationale for such an approach in First National Bank of Logan v. Walker Bank & Trust Company, 385 U.S. 252, 87 S.Ct. 492, 17 L.Ed.2d 343 (1966):

It appears clear from this reesumee of the legislative history of § 36(c)(1) and (2) that Congress intended to place national and state banks on a basis of "competitive equality" insofar as branch banking was concerned.

Id. at p. 261, 87 S.Ct. at p. 497.

Thus the National Bank Act gave national banks the same...

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