State of Missouri Burnes Nat Bank of St Joseph v. Duncan, 762

• Decision Date: 28 April 1924
• Docket Number: No. 762,762
• Citation: 265 U.S. 17,68 L.Ed. 881,44 S.Ct. 427
• Parties: STATE OF MISSOURI ex rel. BURNES NAT. BANK OF ST. JOSEPH v. DUNCAN, Judge of Probate Court
• Court: U.S. Supreme Court

265 U.S. 17

44 S.Ct. 427

68 L.Ed. 881

STATE OF MISSOURI ex rel. BURNES NAT. BANK OF ST. JOSEPH

v DUNCAN, Judge of Probate Court.

No. 762

Argued and Submitted April 11, 1924.

Decided April 28, 1924.

Mr. J. D. Bowersock, of Kansas City, Mo., for plaintiff in error.

[Argument of Counsel from pages 18-19 intentionally omitted] Mr. Solicitor General Beck, of Washington, D. C., for the United States, as Amicus curiae.

Messrs. Morton Jourdan, of St. Louis, Mo., and Charles H. Mayer, of St. Joseph, Mo., for defendant in error.

[Argument of Counsel from page 21 intentionally omitted] Mr. Justice HOLMES delivered the opinion of the Court.

The ralator, the Burnes National Bank of St. Joseph, was appointed executor by a citizen of Missouri who died on November 22, 1922, leaving a will. The Bank applied to the proper Probate Court for letters testamentary, but was denied appointment on the ground that by the laws of Missouri national banks were not authorized to act as executors. Thereupon it applied to the Supreme Court of the State for a writ of mandamus to the Judge of the Probate Court and an alternative writ was issued. The respondent demurred, the demurrer was sustained and the peremptory writ was denied. 257 S. W. 784. A writ of error was allowed by the Chief Justice of the State Court. The Bank claims the capacity to fill the office under the statutes of the United States.

By the Act of September 26, 1918, c. 177, § 2, 40 Stat. 967, 968, amending section 11(k) of the Federal Reserve Act (Comp. St. Ann. Supp. 1919, § 9794), the Federal Reserve Board was empowered:

'To grant by special permit to national banks applying therefor, when not in contravention of State or local law, the right to act as trustee, executor, administrator, * * * or in any other fiduciary capacity in which state banks, trust companies, or other corporations which come into competition with national banks are permitted to act under the laws of the State in which the national bank is located.'

If the section stopped there the decision of the state court might be final, but it adds the following paragraph:

'Whenever the laws of such State authorize or permit the exercise of any or all of the foregoing powers by state banks, trust companies, or other corporations which compete with national banks, the granting to and the exercise of such powers by national banks shall not be deemed to be in contravention of State or local law within the meaning of this Act.'

This says in a roundabout and polite but unmistakable way that whatever may be the State law, national banks having the permit of the Federal Reserve Board may act as executors if trust companies competing with them have that power. The relator has the permit, competing trust companies can act as executors in Missouri, the importance of the powers to the sustaining of competition in the banking business is so well known and has been explained so fully heretofore that it does not need to be emphasized, and thus the naked question presented is whether Congress had the power to do what it tried to do.

The question is pretty nearly answered by the decision and fully answered by the reasoning in First National Bank of Bay City v. Fellows, 244 U. S. 416, 37 Sup. Ct. 734, 61 L. Ed. 1233, L. R. A. 1918C, 283, Ann. Cas. 1918D, 1169. That case was decided before the amendment to the Federal Reserve Act that we have quoted and came here on the single issue of the power of Congress when the state law was not contravened. It was held that the power 'was to be tested by the right to create the bank and the authority to attach to it that which was relevant in the judgment of Congress to make the business of the bank successful.' 244 U. S. 420, 37 Sup. Ct. 735. The power was asserted and it was added that:

'This excluded the power of the State in such case, although it might possess in a general sense authority to regulate such business, to use that authority to prohibit such business from being united by Congress with the banking function.' 244 U. S. 425, 37 Sup. Ct. 737.

Now that Congress has expressed its paramount will this language is more apposite than ever. The States cannot use their most characteristic powers to reach unconstitutional results. Western Union Telegraph Co. v. Kansas, 216 U. S. 1, 30 Sup. Ct. 190, 54 L. Ed. 355; Pullman Co. v. Kansas, 216 U. S. 56, 30 Sup. Ct. 232, 54 L. Ed. 378; Western Union Telegraph Co. v. Foster, 247 U. S. 105, 114, 38 Sup. Ct. 438, 62 L. Ed. 1006, 1 A. L. R. 1278. There is nothing over which a State has more exclusive authority than the jurisdiction of its courts, but it cannot escape its constitutional obligations by the device of denying jurisdiction to courts otherwise competent. Kenney v. Supreme Lodge of the World, 252 U. S. 411, 415, 40 Sup. Ct. 371, 64 L. Ed. 638, 10 A. L. R. 716. So here—the State cannot lay hold of its general control of administration to deprive national banks of their power to compete that Congress is authorized to sustain.

The fact that Missouri has regulations to secure the safety of trust funds in the hands of its trust companies does not affect the case. The power given by the Act of Congress purports to be general and independent of that circumstance and the Act provides its own safeguards. The authority of Congress is equally independent, as otherwise the State could make it nugatory. Since the decision in First National Bank of Bay City v. Fellows 244 U. S. 416, 37 Sup. Ct. 734, 61 L. Ed. 1233, L. R. A. 1918C, 283, it generally has been recognized that the law now is as the relator contends. In re Turner's Estate, 277 Pa. 110, 116, 120 Atl. 701; Estate of Stanchfield, 171 Wis. 553, 178 N. W. 310; Hamilton v. State, 94 Conn. 648, 110 Atl. 54; People v. Russel, 283 Ill. 520, 524, 119 N. E. 617; In re Mollineaux, 109 Misc. Rep. 75, 179 N. Y. Supp. 90. Fidelity National Bank & Trust Co. v. Enright (D. C.) 264 Fed. 236.

Judgment reversed.

Mr. Justice SUTHERLAND (dissenting).

The real question here, as I understand it, is not whether Congress may safeguard national banks against ordinary state legislation of a discriminative character; but whether Congress may intrude upon and prohibit the exercise of the governmental powers of a state to the extent that such exercise discriminates against such banks in favor of competing state corporations. The authority of the Fellows Case, I think, is pressed too far. The statute there under review simply made national banks competent to act as executors, etc., 'when not in contravention of state or local law.' The statute did not attempt to override the will of the state in that respect, but expressly recognized its control and authority. The state Supreme Court conceded that the powers thus conditionally conferred by the federal statute, in fact, would not be in contravention of the state law, but held that Congress was without constitutional authority, because the functions sought to be given to such banks were subject of state regulation. That view of the matter was rejected; but, putting aside some expressions not necessary to the decision, I do not think the case can be regarded as authority for the conclusion, apparently now reached, that Congress may so limit the power of a state, against its expressly declared will to the contrary, that it may confer the right to act as executors and administrators upon state corporations which compete with national banks, only upon condition that the same right be conferred upon the latter. Certainly that precise question was not there presented for decision.

It is fundamental, under our dual system of government, that the nation and the state are supreme and independent, each within its own sphere of action, and that each is exempt from the interference or control of the other in respect of its governmental powers, and the means employed in their exercise. Bank of Commerce v. Comrs. of Taxes and Assessments, 2 Black, 620, 634, 17 L. Ed. 451; South Carolina v. United States, 199 U. S. 437, 452, et seq., 26 Sup. Ct. 110, 50 L. Ed. 261, 4 Ann. Cas. 737; Farrington v. Tennessee, 95 U. S. 679, 685 (24 L. Ed. 558). 'How their respective laws shall be enacted; how they shall be carried into execution; and in what tribunals, or by what officers; and how much discretion, or whether...