NBD Bank, NA v. Bennett, IP94-862-C.

• Decision Date: 27 December 1994
• Docket Number: No. IP94-862-C.,IP94-862-C.
• Citation: 874 F. Supp. 927
• Parties: NBD BANK, N.A., Plaintiff-Petitioner, v. Donna D. BENNETT, in her official capacity as Acting Indiana Commissioner of Insurance, Defendant-Respondent.
• Court: U.S. District Court — Southern District of Indiana

874 F. Supp. 927

NBD BANK, N.A., Plaintiff-Petitioner, v. Donna D. BENNETT, in her official capacity as Acting Indiana Commissioner of Insurance, Defendant-Respondent.

No. IP94-862-C.

United States District Court, S.D. Indiana, Indianapolis Division.

December 27, 1994.

Peter J. Rusthoven, Barnes & Thornburg, Indianapolis, IN, for NBD Bank N.A.

Thomas H. Ristine, Ice Miller Donadio & Ryan, Indianapolis, IN, for amici curiae.

Terry G. Duga, Deputy Atty. Gen., Indianapolis, IN, for Donna D. Bennett.

David A. Winston, Nat. Assoc. of Life Underwriters, Washington, DC, for Indiana Ass'n of Life.

Jeffrey M. Yates, Independent Ins. Agents of America, Inc., Alexandria, VA, for Independent Ins. Agents.

ORDER ON MOTION FOR SUMMARY JUDGMENT

SHIELDS, United States Magistrate Judge.

This cause is before the court on the plaintiff-petitioner's Motion for Summary Judgment, the defendant-respondent's Brief in Opposition, and the plaintiff-petitioner's Reply Brief. In addition, amici curiae the American Bankers Association, the Association of Banks in Insurance, the Bankers Roundtable, the Consumer Bankers Association, and the Indiana Bankers Association have filed a Statement of Points and Authorities in support of plaintiff-petitioner; amici curiae the Indiana State Association of Life Underwriters and the Independent Insurance Agents of Indiana have filed a brief in support of defendant-respondent and in opposition to plaintiff-petitioner's motion for summary judgment. The court, having considered the arguments of the parties and the amici curiae, and being duly advised, DENIES the plaintiff-petitioner's motion and GRANTS summary judgment in favor of defendant-respondent for the reasons set forth below.

BACKGROUND

This action arises out of the application of plaintiff-petitioner, NBD Bank, N.A., ("NBD") to the Indiana Commissioner of Insurance for a license to act as an insurance agent from its bank branch in Corydon, Indiana. The National Bank Act, 12 U.S.C. § 92 ("Section 92"), provides that a national bank located in a place with a population of no more than 5,000 may act as an insurance agent; Corydon is such a place.

After an administrative hearing, the Commissioner granted NBD an insurance agent's license. However, based on her interpretation of Section 92, the Commissioner geographically restricted that license, permitting NBD to sell insurance only "within the geographic boundaries of a town with a population of 5,000 or less in which it is located and doing business." Final Order Granting Limited Insurance Agent License to NBD Bank, N.A., at 3.

NBD filed this action against defendant Donna Bennett, in her official capacity as Acting Indiana Commissioner of Insurance, seeking declaratory and injunctive relief pursuant to 28 U.S.C. § 2201 and 42 U.S.C. § 1983. Specifically, NBD seeks both a declaration that the Commissioner's interpretation of Section 92 is incorrect in that the statute does not require that a geographic restriction on NBD's insurance agent license and an injunction requiring the Commissioner to approve NBD's application to act as an insurance agent without the geographic restriction.

DISCUSSION

Federal Rule of Civil Procedure 56(c) provides that summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to summary judgment as a matter of law." There are no factual disputes in this case; the sole issue is whether Section 92 authorizes a bank located and doing business in a community with a population of 5,000 or less to sell insurance to customers located anywhere in the state. If it does, NBD is entitled to summary judgment; if it does not, but instead limits the bank to selling insurance within the community in which it is located, the Commissioner is entitled to summary judgment.

Section 92 provides:

In addition to the powers now vested by law in national banking associations organized under the laws of the United States any such association located and doing business in any place the population of which does not exceed five thousand inhabitants, as shown by the last preceding decennial census, may, under such rules and regulations as may be prescribed by the Comptroller of the Currency, act as agent for any fire, life, or other insurance company authorized by the authorities of the State in which said bank is located to do business in said state, by soliciting and selling insurance and collecting premiums on policies issued by such company....

12 U.S.C. § 92. NBD asserts that Section 92 was designed "to enhance the attractiveness and viability of national banks being located in ... smaller communities, by providing an additional source of revenue for banks in such locations." Brief in Support of Motion for Summary Judgment of Plaintiff-Petitioner NBD Bank, N.A., at 11 (emphasis in original). NBD then argues that, because Section 92 does not contain an express geographic limitation on a bank's authority to sell insurance, under the doctrine of Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), this court must defer to the determination of the Comptroller of the Currency, the agency charged by Congress with promulgating regulations under Section 92, that a geographic limitation does not exist. This court disagrees.

The Comptroller, in a 1986 opinion letter, interpreted Section 92 to provide that

a national bank or its branch which is located in a place of 5,000 or under population may sell insurance to existing and potential customers located anywhere. In other words, while the bank or bank branch must be located in a small town, it can sell insurance to persons and businesses located outside that town.

1986 Letter from Judith A. Walter, Senior Deputy Comptroller for National Operations, quoted in Independent Ins. Agents of Am., Inc. v. Ludwig, 997 F.2d 958, 959 (D.C.Cir. 1993). This interpretation was reiterated in a May 26, 1994, opinion letter specifically addressing NBD's application for an insurance agent's license.

In Chevron, the Supreme Court set forth the methodology for judicial review of an agency's construction of a statute it administers. The initial question¹ is whether Congress has addressed the issue because, "if the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Chevron, 467 U.S. at 842-43, 104 S.Ct. at 2781. Congressional intent may be explicitly stated in the statute or it may be determined employing traditional tools of statutory construction. Batanic v. I.N.S., 12 F.3d 662, 664 (7th Cir.1993) (citing Chevron, 467 U.S. at 842-45, 104 S.Ct. at 2781-83) ("The review of an agency's construction of a statute involves the initial determination of whether Congress has spoken precisely to the question at issue by employing traditional tools of statutory construction."). "The judiciary is the final authority on issues of statutory construction and must reject administrative constructions which are contrary to clear Congressional intent.... If a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law and must be given effect." Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. at 2782 n. 9.

Section 92 is a simple piece of legislation that accomplishes one thing — it provides banks located in communities with populations of not more than 5,000 with the authority to act as insurance agents. Logic and common sense dictates that Congress had an intent, one way or the other, regarding the geographic scope of this authority. Either Congress intended to permit banks in small towns to sell insurance only to customers within those towns, or it intended to permit those banks to sell insurance to customers anywhere.

The legislative history of the statute is instructive in ascertaining which alternative Congress intended. See Pension Benefit Guaranty Corp. v. LTV Corp., 496 U.S. 633, 649, 110 S.Ct. 2668, 2677, 110 L.Ed.2d 579 (1990) (applying Chevron analysis and reviewing legislative history to determine whether "clear congressional intent" existed on issue in question). In 1916, the 64th Congress considered amendments to the Federal Reserve Act. The Act as it then existed did not empower banks to sell insurance. In July, 1916, John Skelton Williams, the Comptroller of the Currency, wrote a letter to Senator Robert L. Owens, the Chairman of the Senate Banking and Currency Committee. In this letter, the Comptroller wrote of the plight of country banks and noted that

there are many banks located in country communities where the small deposits which the banks receive make it somewhat difficult for the banks to charge on their loans only the rates of interest permitted by law and at the same time yield a satisfactory return to shareholders, and in many such cases banks have been tempted to exact excessive and in some cases grossly usurious rates on accommodations which they extend to local borrowers. It is unfortunately true that in many other cases banks have been demanding usurious rates of interest even though they had more than an average deposit and though adherence to the legal rates would still yield them liberal dividends on their shares.

64 Cong.Rec. 11,001 (1916). Comptroller Williams continued:

For some time I have been giving careful consideration to the question as to how the powers of these small national banks might be enlarged so as to provide them with additional sources of revenue and place them in a position where they could better compete with local state banks and trust companies.

. . . . .

My investigations lead me respectfully to recommend to Congress an amendment to the national

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