Partain v. First National Bank of Montgomery, 72-1207.

Citation467 F.2d 167
Decision Date13 September 1972
Docket NumberNo. 72-1207.,72-1207.
PartiesJames W. PARTAIN et al., Plaintiffs-Appellants, v. The FIRST NATIONAL BANK OF MONTGOMERY, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Robert S. Vance, Birmingham, Ala. (Callaway & Vance, Birmingham, Ala., of counsel), for plaintiffs-appellants.

Steiner, Crum & Baker, M. R. Nachman, Jr., Robert E. Steiner, III, Montgomery, Ala., for defendant-appellee.

C. B. Arendall, Jr., Larry V. Sims, Mobile, Ala. (Hand, Arendall, Bedsole, Greaves and Johnston, Mobile, Ala.), amicus curiae for First National Bank of Mobile.

William E. Shinn, Jr., Norman W. Harris, Decatur, Ala., amicus curiae for State National Bank of Alabama.

Thomas H. Watkins, Jackson, Miss. (Watkins & Eager, Jackson, Miss., of counsel), amicus curiae for First National Bank of Jackson, Miss.

Vardaman S. Dunn, Jackson, Miss. (Cox & Dunn, Jackson, Miss., of counsel), amicus curiae for Deposit Guaranty National Bank of Jackson, Miss.

Before WISDOM and INGRAHAM, Circuit Judges, and BOOTLE, District Judge.

BOOTLE, District Judge:

The three plaintiffs, suing for themselves and all other holders of Bank-Americards issued by First National Bank of Montgomery, sued said Bank under 12 U.S.C.A. § 86, alleging that through the use of said credit cards the Bank charged plaintiffs and their class usurious interest. The plaintiffs appeal from rendition of summary judgment against them, D.C., 336 F.Supp. 65. We reverse.

Plaintiffs alleged that during the period of two years next preceding the filing of their complaint in credit card transactions with plaintiffs and others similarly situated the defendant bank knowingly took, received, reserved and charged interest greater than that allowed by the laws of Alabama and demanded judgment as follows: (1) the sum of $3,500,000.00 together with interest according to law; or such other sum as represents the aggregate of the following: (a) twice the amount of interest paid within two years next preceding the filing of this complaint by all members of this class; and (b) such additional interest as has been charged to but not paid by members of the class within two years next preceding the filing of this complaint; (2) attorneys' fees and costs of this action, and (3) such other relief as the court may deem just and proper.

Defendant's motion to dismiss invoked this ruling of the District Court:

"This Court is clear that the correct reading of the cases of Tiffany v. National Bank of Missouri, 85 U.S. 409 18 Wall. 409, 21 L.Ed. 862 (1873) and National Bank v. Johnson, 104 U.S. 271 26 L.Ed. 742 (1881) is that the national banks of a state are authorized to charge the highest rate of interest for any sort of lending permitted by that state. Thus, it appears that defendant and all other national banks in Alabama are allowed to charge the rate of interest authorized for small loan companies. See Title 5, § 290, Alabama Code.
"While defendant is permitted to charge this rate of interest, it is possible that plaintiffs will be successful in proving their allegation that defendant has charged more than the rate legally allowed. Accordingly, a cause of action has been stated.
"The denial of defendant\'s motion to dismiss is without prejudice to its filing a motion for summary judgment accompanied by relevant data in support of its contention that it has not, in fact, exceeded the interest rate legally allowed."

Then followed defendant's motion for summary judgment supported by the following factual showing. None of the three plaintiffs ever had an outstanding balance in his account with defendant exceeding $300.00.1 During the two year period involved plaintiff Partain paid finance charges totaling $27.95; plaintiff Willis paid finance charges totaling $18.81, and plaintiff Wooten paid finance charges totaling $27.97.2 For the purposes of the motion for summary judgment, the Bank stated that it would assume that the finance charge which it received was "interest", but that if the case were tried on the merits it would expect to prove that such finance charge covered many items in addition to interest and that the interest charged was considerably less than the finance charge. Assuming that the entire finance charges represented interest, the rate of interest paid by plaintiff Partain was on an annual basis 17.2675%, by plaintiff Willis 15.3365%, and by plaintiff Wooten 14.7095%. Calculated on the daily average balance method total charges to the three accounts on a monthly basis ranged from zero to 2.14%, reaching the latter figure in only one billing cycle.

The District Court granted summary judgment on the theory that the factual issues contended for by plaintiffs were irrelevant. These issues as stated in the District Court's order were "such questions as the criteria for the extension of credit, the use of credit cards and the manner in which interest is computed." These issues, as restated on appeal are: "(a) the type of borrower and the relative risk connected therewith, (b) the amounts of transactions to which the contemplated interest charged will be applied, (c) the uses and purposes of the extension of credit, (d) whether interest is or is not compounded, (e) the term of the loan, and (f) whether attorneys' fees are allowed." The District Court's dispositive ruling was: "Inasmuch as the plaintiffs have accepted defendant's computation of the interest they were charged, it would appear that these questions are not now relevant." We think it was the thinking of the District Court that unless the interest charged actually exceeded the 3% a month on the first $200.00 and the 2% a month on the next $100.00 allowed by the Small Loan Act plaintiffs could not complain even though the Bank violated the Small Loan Act's command that "interest or charges on loans made under this article shall not be . . . compounded." In so thinking and ruling, we think the trial court was in error for reasons hereinafter stated, but first we must come to the question of jurisdiction.

JURISDICTION

In the District Court the plaintiffs claimed jurisdiction solely under 28 U.S.C.A. § 1355, which reads:

"The district courts shall have original jurisdiction, exclusive of the courts of the States, of any action or proceeding for the recovery or enforcement of any fine, penalty, or forfeiture, pecuniary or otherwise, incurred under any Act of Congress. June 25, 1948, c. 646, 62 Stat. 934."

The defendant did not challenge the Court's jurisdiction and the Court did not expressly rule upon the issue of jurisdiction. In this court, however, several banks as Amici Curiae filed briefs vigorously attacking the claim of jurisdiction under § 1335, and insisting that the court is without jurisdiction, no claim having been made that the jurisdictional amount under § 1331(a) exists. Whereupon plaintiffs, while stoutly insisting that § 1355 confers jurisdiction, advanced 28 U.S.C.A. § 1337 as an alternative source of jurisdiction. These Amici acknowledge that a casual reading of § 1355 might indicate merit in plaintiffs' claim of jurisdiction under it and acknowledge further that an appreciation of the merit of their objection requires a close and patient study and analysis of the interplay and historical development of 28 U.S.C.A. § 1355 and of the National Bank Act and several succeeding statutes dealing with federal court jurisdiction and venue. These Amici point out that the position urged by them here was adopted in Williams, et al. v. American Fletcher National Bank and Trust Company, 348 F.Supp. 963 (S.D.Ind.1970), and also by the United States District Court for the District of Idaho by entry of and order of dismissal in the case of Colson et al. v. First Security Bank of Idaho, Civil No. 1-71-43 (July 13, 1971).

We find it unnecessary to decide whether the District Court had jurisdiction under 28 U.S.C.A. § 1355 because we are convinced that it had jurisdiction under 28 U.S.C.A. § 1337 which provides in pertinent part:

"The district courts shall have original jurisdiction of any civil action or proceeding arising under any Act of Congress regulating commerce . . ."

In Imm v. Union Railroad Company, 289 F.2d 858 (3d Cir. 1951) it was pointed out that there is an increasing recognition of the breadth of this provision. Quoted with approval was Professor Charles Bunn, Jurisdiction and Practice of the Courts of the United States 71-72 (1949), as follows: "`Acts regulating commerce' are coming rapidly to mean all acts whose constitutional basis is the commerce clause." Imm's specific holding is that the Federal Employers' Liability Act is an Act "regulating commerce" and that therefore the District Courts have jurisdiction of suits arising thereunder regardless of amount in controversy.3

Imm was followed in Murphy v. Colonial Federal Savings & Loan Association, 388 F.2d 609 (2d Cir. 1967), where it was noted that the liberal construction of § 1337 was unanimously approved by commentators and was at least inferentially approved by the 1958 Congress when the jurisdictional amount was increased to $10,000.00.4 The specific holding in Murphy is that the Homeowners' Loan Act of 1933 is an act regulating commerce and that in a suit brought under that act by a dissident group in a fight for control of a federal savings and loan association the jurisdictional amount is not required. The court pointedly ruled:

"It is true that federal regulation of finance is not grounded in the commerce power alone. As Chief Justice Hughes explained in Norman v. B. & O. R.R., 294 U.S. 240, 303, 55 S.Ct. 407, 414, 79 L.Ed. 885 (1935):
`The broad and comprehensive national authority over the subjects of revenue, finance and currency is derived from the aggregate of the powers granted to the Congress, embracing the powers to lay and collect taxes, to borrow money, to regulate commerce with foreign nations and among the several states, to coin money, regulate the value thereof, and of foreign
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