New Hampshire Bankers Association v. Nelson, Civ. A. No. 3355.
Citation | 336 F. Supp. 1330 |
Decision Date | 19 January 1972 |
Docket Number | Civ. A. No. 3355. |
Parties | NEW HAMPSHIRE BANKERS ASSOCIATION et al. v. James W. NELSON, Bank Commissioner for the State of New Hampshire, and Warren B. Rudman, Attorney General for the State of New Hampshire. |
Court | United States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of New Hampshire |
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William S. Green, Sheehan, Phinney, Bass & Green, Manchester, N. H., for plaintiffs.
Donald W. Stever, Jr., Attorney, Office of the Attorney General for the State of New Hampshire, Concord, N. H., for defendants.
This case, brought under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201, is a three pronged attack on that provision of New Hampshire Revised Statutes Annotated, Chapter 390:13, which prohibits trust companies or similar corporations or national banks from advertising or circularizing the fact that they are authorized to act as executors.
The plaintiffs seek a decree adjudging that:
1. The prohibition is null and void as to the national bank plaintiffs on the grounds that federal law preempts the field.
2. The prohibition is null and void as to both national and state banks because it denies them due process of law and equal protection of the law guaranteed by the United States Constitution.
3. The prohibition is null and void as to both national and state banks because it contravenes Articles 1st and 2d of Part First of the New Hampshire Constitution.
All of the facts have been stipulated:
The statute under attack provides:
I first consider the question of whether or not federal law preempts the field as far as the national banks are concerned and renders the advertising prohibition inoperative as to them. The pertinent federal statute is 12 U.S.C. § 92a:
It is significant that this section of the Act uses the phrase "when not in contravention of State or local law." The Congress clearly intended that national banks should have the same rights as state banks "under the laws of the State in which the national bank is located."
One of the leading cases in this field is Franklin National Bank v. New York, 347 U.S. 373, 74 S.Ct. 550, 98 L.Ed. 767 (1954). That case, in the words of Mr. Justice Frankfurter, presented:
. . . the narrow question whether federal statutes which authorize national banks to receive savings deposits conflict with New York legislation which prohibits them from using the word "saving" or "savings" in their advertising or business. At page 374, 74 S.Ct. at page 551.
The Court held:
We think the federal and state statutes are incompatible, and in such circumstances the policy of the State must yield. At page 374, 74 S.Ct. at page 552.
The New York statute clearly discriminated against national banks in favor of state mutual savings banks. Mr. Justice Frankfurter, in the course of deciding the narrow question used some broad language that the plaintiffs have seized upon as the spearhead of their preemption attack:
Nor can we construe the two Federal Acts as permitting only a passive acceptance of deposits thrust upon them. Modern competition for business finds advertising one of the most usual and useful of weapons. We cannot believe that the incidental powers granted to national banks should be construed so narrowly as to preclude the use of advertising in any branch of their authorized business. It would require some affirmative indication to justify an interpretation that would permit a national bank to engage in a business but gave no right to let the public know about it. At pages 377-378, 74 S.Ct. at page 553.
This paragraph does suggest that there can be no prohibition of advertising as it affects a national bank. But it is dicta only and, in my opinion, does not overcome the plain words of 12 U.S.C. § 92a. The purpose of this type of federal banking statute can best be expressed in the words of Mr. Justice Frankfurter:
That these federal institutions may be at no disadvantage in competition with state-created institutions, the Federal Government has frequently expanded their functions and authority. Franklin National Bank v. New York, supra, at page 375, 74 S.Ct. at page 552.
The New Hampshire statute does not put the national banks at any competitive disadvantage with state banks. Both are treated equally. 12 U.S.C. § 92a allows national banks to offer the equivalent fiduciary services to their customers as do state banks. Investment Company Institute v. Camp, 274 F.Supp. 624, 640 (D. C.1967). If, as plaintiffs urge, advertising is necessary to make these services effective, then both sets of banks labor under the same handicap.
In First National Bank of Logan v. Walker Bank and Trust Co., 385 U.S. 252, 87 S.Ct. 492, 17 L.Ed.2d 343 (1966), Mr. Justice Clark delved deeply into the history and background of the National Banking Act. Although the case was concerned with branch banking, the opinion makes it clear that the Congress in enacting, supplementing, and amending the National Banking Act was ever seeking to keep national banks and state banks on the same basis of "competitive equality." The holding indicates that state statutes are not to be swept aside by federal law merely because they may inhibit banking activities, but must be complied with by national banks if they do not put them at a competitive disadvantage with state banks.
Indeed, it would fly in the face of the legislative history not to hold that national branch banking is limited to those States the laws...
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