National Bank of Detroit v. Wayne Oakland Bank, 13209

Decision Date25 February 1958
Docket Number13210.,No. 13209,13209
PartiesNATIONAL BANK OF DETROIT, Defendant-Appellant, v. The WAYNE OAKLAND BANK, Plaintiff-Appellee. Ray M. GIDNEY, Comptroller of the Currency, Defendant-Appellant, v. The WAYNE OAKLAND BANK, Plaintiff-Appellee.
CourtU.S. Court of Appeals — Sixth Circuit

George Cochran Doub, Paul A. Sweeney, and John G. Laughlin, Washington, D. C., Fred W. Kaess, U. S. Atty., Detroit, Mich., for appellant, Ray M. Gidney.

Sherwin A. Hill and Edward T. Goodrich, Detroit, Mich., Brownell, Gault & Andrews, Flint, Mich., for The Wayne Oakland Bank.

Before ALLEN, MARTIN, and McALLISTER, Circuit Judges.

PER CURIAM.

Appellants, National Bank of Detroit and Ray M. Gidney, Comptroller of the Currency, filed their petitions for rehearing en banc of the above cause, in which this court affirmed the judgment of the district court on the findings of fact and conclusions of law of Judge Lederle.

On the petitions for rehearing, appellants submit that this court did not pass upon the legality and efficacy of the Comptroller's approval of the application of the National Bank of Detroit for permission to establish and operate a branch bank; that the approval, alone, of the Comptroller was sufficient to give the right to establish and operate the bank; that the judgment of the district court, as affirmed, is at odds with the authoritative interpretation of the law of the State of Michigan; and that appellee had "no standing" to bring the action. Most of the points set forth in the two petitions for rehearing en banc were the subject of considerable interrogation of counsel during argument and extensive discussion by the members of this court during the hearing, and all of the matters set forth in the briefs were determined adversely to appellants' contentions. Nevertheless, it has been thought proper to outline the grounds upon which the judgment was affirmed, with reference to the statements in the petitions for rehearing.

It appears, then, that The Wayne Oakland Bank, a state bank organized under the laws of Michigan, filed an application, on April 27, 1955, with the Michigan State Banking Commissioner to secure his approval to the establishment of a branch bank in the City of Troy, Michigan. On April 2, 1956, with the approval of the Commissioner, The Wayne Oakland Bank established a branch in Troy. At that time, no other bank had been established in that city.

On January 19, 1956, the National Bank of Detroit applied to the Comptroller of the Currency of the United States for permission to establish a branch at Troy; and on March 19, 1956, the Comptroller notified the National Bank of Detroit that its application had been approved. At the same time, the Comptroller sent a letter to the Michigan State Banking Commissioner, stating that he had approved the application of the National Bank of Detroit to establish a branch in Troy, Michigan.

The Wayne Oakland Bank in this case sought a declaratory judgment that it would be unlawful for the National Bank of Detroit to open a branch bank in Troy, after The Wayne Oakland Bank had established its branch there; and it further sought a restraining order to prevent the Comptroller from issuing a certificate of authority to the National Bank of Detroit, as well as an order restraining the latter from establishing and operating such a branch.

The district court held that, since The Wayne Oakland Bank had already opened, and had in operation, a branch in Troy, the subsequent establishment in the same city of a branch of another bank, such as the National Bank of Detroit, which was chartered to do business in another city, was prohibited by Title 12 U.S.C.A. Section 36, and Section 23.762 of the Michigan Statutes Annotated, and, accordingly, the district court issued the restraining orders sought, against the Comptroller, and the National Bank of Detroit.

We are of the opinion that, contrary to the contentions of the appellants, the Michigan statute (17 M.S.A. Section 23.762)1 is here controlling; that the limitation therein contained as to branch banks applies, not only to state banks, but to national banks as well; and that Title 12 U.S.C.A. Section 36,2 not only did not empower the Comptroller to establish a branch of the National Bank of Detroit in Troy, Michigan, subsequent to the establishment in that city of a branch of The Wayne Oakland Bank, but, by clear implication, prohibited him from doing so.

Appellants contend that, by Title 12 U.S.C.A. Section 36(c), the National Bank of Detroit was permitted to establish the branch in Troy, Michigan, after The Wayne Oakland Bank had already opened a bank there with the approval of the Michigan State Banking Commissioner. The claim of the National Bank of Detroit is based upon the argument that Congress intended to permit a national bank to establish a branch at any point within the state at which the state law permitted the establishment and operation of a branch of a state bank, and that, since The Wayne Oakland Bank had established a branch in Troy, by authority of the State Banking Commissioner, the National Bank of Detroit could, therefore, establish a branch in the same city.

The history of federal legislation regarding branch banking and the statutes applying thereto leave a clear and definite impression that Congress intended, with respect to the location of branches, that a national bank should have no greater rights than it would if it were a state bank, and that a national bank was to be permitted to establish and operate a branch in a state only at such a point as it could, by express provisions of a state statute, establish and operate a branch if it were then a state bank. In spite of recommendations to Congress of the Comptroller of the Currency in 1922, 1923, 1924, and 1925, for laws granting national banks the privileges enjoyed in each state by state banks, Congress declined to enact such legislation. In 1927, Congress amended the banking statute and granted national banks the right to establish and operate branches, if such establishment and operation were, at the time, permitted to state banks by the laws of the state in question (Public Law No. 639. Sixty-ninth Congress.) Later, in 1929, 1930, and 1931, similar proposals were made by the Comptroller. In 1932, the same recommendations were made, and the passage of a bill authorizing "national banks to establish branches at any place within the State in which such banks are located" was recommended by a majority of the Senate Committee on Banking and Currency. A minority report disagreed on this question of branch banking; and the bill failed of passage. In 1933, Congress finally passed the act containing 12 U.S.C.A. § 36 in its present form,3 insofar as here pertinent.

The foregoing statute provides that a national bank may, "with the approval of the Comptroller of the Currency, establish and operate new branches: * * * at any point within the State in which said bank 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." (Emphasis supplied.) In our view, the meaning of the foregoing statutory provision is that a national bank shall be permitted to establish an outside branch in a city if state law permits a state bank to establish and operate an outside bank, at the time, in the same city. If there were no other bank operating in Troy, the establishment of a state or national bank would, at that time, be permitted. In this case, however, there was already a branch of a state bank permitted by state law and established in the city of Troy. The Michigan statute4 provided that, under the circumstances of this case, "no such branch shall be established in a city or village in which a state or national bank or branch thereof is then in operation." From the above, the conclusion follows that (1) the National Bank of Detroit could not, even with the approval of the Comptroller of the Currency, establish a branch in Troy, since the establishment of such a branch would not have been authorized, at the time, to state banks by the laws of Michigan by language specifically granting such authorizations affirmatively; and (2) that, since the branch of The Wayne Oakland Bank was established in Troy on April 2, 1956, no other branch could be established subsequent to that date by any other state or national bank. Appellants' claim that this conclusion results in discrimination against national banks seems irrelevant in the light of the statutes themselves. But to the contention that this discriminates against national banks in those cities where a state bank is the first to establish a branch, it can equally be said that the same discrimination operates against a state bank, when a national bank is the first to establish a branch.

In view of our determination as above set forth, it is not of controlling importance whether the Comptroller approved the application of the National Bank of Detroit, or not. But since much has been made of the claimed conclusive effect of the Comptroller's approval, a discussion of this aspect of the case seems proper, and, in this regard, a reference to the record is helpful.

It is undisputed that there was a working arrangement between the Comptroller of the Currency and the Michigan State Banking...

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