Pineland State Bank v. PROPOSED FIRST NAT. BK., BRICKTOWN
| Decision Date | 04 October 1971 |
| Docket Number | Civ. A. No. 613-71. |
| Parties | PINELAND STATE BANK, a banking corporation of New Jersey, and First National Bank of Toms River, a national banking corporation, Plaintiffs, v. PROPOSED FIRST NATIONAL BANK OF BRICKTOWN and/or Bricktown National Bank, and/or National Bank of Bricktown, and William B. Camp, Comptroller of the Currency of the United States of America, Defendants. |
| Court | U.S. District Court — District of New Jersey |
Barry D. Maurer, Wilentz, Goldman & Spitzer, Perth Amboy, N. J., for plaintiffs.
Alvin Weiss, Riker, Danzig, Scherer & Brown, Newark, N. J. (Frank J. Miele, Newark, N. J., on the brief) for defendant First National Bank of Bricktown.
L. Patrick Gray, III, Asst. Atty. Gen., Dept. of Justice, Civil Div., Washington, D. C., Frederick B. Lacey, then U. S. Atty., D. N. J., by Frederick W. Klepp, Asst. U. S. Atty., Trenton, N. J., Harland F. Leathers, Kenneth A. Rutherford, Office of the Comptroller of the Currency, Dept. of Justice, Washington, D. C. (John E. Shockey, Dorothy S. Kulig, Washington, D. C., of counsel), for defendant William B. Camp, Comptroller of the Currency of the United States.
The plaintiff Pineland State Bank (hereinafter "Pineland") is a bank organized under the laws of the State of New Jersey. Plaintiff First National Bank of Toms River (hereinafter "Toms River") is a national banking association organized pursuant to the laws of the United States. The defendant William B. Camp, Comptroller of the Currency of the United States of America (hereinafter "Comptroller"), is an officer of the Treasury Department charged with the enforcement of the laws of the United States relating to the formation and organization of national banks.
The plaintiffs here, both located in Ocean County, New Jersey, seek to set aside the preliminary approval by the Comptroller of a charter for a new national bank in Ocean County, to be named the First National Bank of Bricktown (hereinafter "Bricktown").
Following the institution of this action, and asserting that the competition to be offered by the proposed bank will cause them to suffer irreparable financial injury, the plaintiffs filed a motion for a preliminary injunction restraining the defendants from taking any further action in connection with the proposed national bank. The Comptroller, resisting the demand for injunctive relief, seeks dismissal of the complaint on the basis that it fails to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b) (6), or, in the alternative, for summary judgment in accord with the provisions of Fed.R.Civ.P. 56. The defendant Bricktown joins in the Comptroller's applications.
The facts may be summarized as follows:
Robert V. Paschon, on May 18th, 1970, made application to the Comptroller for authority to organize a national bank in Brick Township, Ocean County, New Jersey. The application was supported by the necessary information required by the Comptroller. Banks to be affected by the charter of the proposed bank were given notice of the application, as was the New Jersey Banking Commissioner, and publication of the application was made. In addition, a national bank examiner was assigned to investigate the application. The intention of the defendant Bricktown to charter a new national bank was protested by several banks in the area and a hearing was ultimately requested by the defendant Pineland.
The resultant hearing was held for two days, beginning October 7th, 1970, and was conducted in accordance with established federal procedures. At such hearing, the application and supporting economic data were made available for public inspection. Also, at the hearing evidence was taken and all witnesses were subject to questioning by the panel or other participants. Further, all interested parties were provided an opportunity to present additional material to the Comptroller following the hearing. Without reviewing the details of the hearing, it is sufficient to state, for the purposes of this opinion, that the application of the defendant Bricktown received unanimous recommendations of approval by the national bank examiner, the regional administrator, and the Comptroller's senior staff. As a result of the reports and recommendations made to him, as well as upon the entire record, the Comptroller, on April 14th, 1971, gave his preliminary approval to the application. Following that determination by the Comptroller, the plaintiffs instituted this action.
The complaint, in essence, requests this court to vacate the Comptroller's preliminary approval, alleging that two of the organizers of Bricktown, Robert V. Paschon and Herbert Hindin, were not acting on their own behalf but were, in fact, acting for John Giordano, Jr., and Robert Schmertz; that Mr. Giordano and Mr. Schmertz are either officers or directors of the First State Bank of Ocean County (hereinafter "Ocean County") and, as a result, that bank, its directors and shareholders, are attempting to avoid the branch banking restrictions of state and federal law by creating a new national bank as a branch or as an affiliate of Ocean County contrary to the provisions of the New Jersey Banking Act, N.J.S.A. 17:9A-3.1, as well as in violation of 12 U.S.C. § 36 of the National Banking Act.
With respect to their contentions that the approval of Bricktown's application offends the law of the State of New Jersey, the plaintiffs rely upon the language contained in N.J.S.A. 17:9A-3.1, which states:
"No officer, director or employee of any bank may be, directly or indirectly, an incorporator of another bank." Emphasis supplied.
The plaintiffs ignore, however, certain other provisions of New Jersey banking law which make it clear that N.J.S.A. 17:9A-3.1 is not designed to apply to the organization, as here, of new national banks.
The definitions contained in the New Jersey Banking Act of 1948 provide, in § 17:9A-1, as follows:
Obviously, then, the word "bank" is not intended to include national banks, and, of course, N.J.S.A. 17:9A-3(B) contains no reference to the term "banking institution", which includes, by definition, a national banking association. Clearly, it would seem, then, that 17:9A-3.1 has no application to the formation of a national bank. Moreover, New Jersey statutes relating to the organization and incorporation of state banks specifically exclude any application to the formation of national banks, it being provided in § 17:9A-2 that:
"(A) No corporation, other than a national banking association, shall hereafter be organized to transact the business of a bank or savings bank in this State, except as provided in this act." Emphasis supplied.
Accordingly, the preliminary approval of a formation of a new national bank by the Comptroller in no way transgresses the law of the State of New Jersey.
In addition, however, the plaintiffs suggest that the proposed incorporation of Bricktown offends federal law, arguing that the National Bank Act, 12 U.S. C. § 36, adopts all the restrictions imposed by the law of the State of New Jersey with respect to the establishment of branch banks in this State. And, further, it is contended that 12 U.S.C. § 36, which is the Branching Section of the National Bank Act, requires the formation of a new national bank to adhere to all of the requirements of New Jersey law relating to the organization of a state bank.
To begin with, federal law clearly permits the establishment by a national banking association of branch banks, § 36 of 12 U.S.C. providing:
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