State v. First Nat. Bank

• Decision Date: 03 March 1923
• Docket Number: No. 23753.,23753.
• Citation: 297 Mo. 397,249 S.W. 619
• Parties: STATE ex rel. BARRETT, Atty. Gen., v. FIRST NAT. BANK OF ST. LOUIS.
• Court: Missouri Supreme Court

249 S.W. 619

297 Mo. 397

STATE ex rel. BARRETT, Atty. Gen., v. FIRST NAT. BANK OF ST. LOUIS.

No. 23753.

Supreme Court of Missouri, in Banc.

March 3, 1923.

Original proceeding in quo warranto by the State, on relation of Jesse W. Barrett, Attorney General, against the First National Bank of St. Louis. Judgment of ouster ordered.

Jesse W. Barrett, Atty. Gen., and Merrill E. Otis, Asst. Atty. Gen. (Sam B. Jeffries, Carter, Collins & Jones, H. R. Small, Fortstel & Eagleton, Marion C. Early, and T. F. Chaplin, all of St. Louis, of counsel), for petitioner.

Jones, Rocker, Sullivan & Angert, of St. Louis, for respondent.

WALKER, J.

This is an original proceeding in quo warranto to determine the authority of a national bank engaged in business in the city of St. Louis to establish and conduct a branch bank at another than its regular place of business in said city.

I. A national bank is an artificial legal entity, created to facilitate the transaction of fiscal affairs under the authority of the laws of the United States. Like other corporations, it possesses such powers as are granted to it by the act of its creation, or, more comprehensively stated, which have been or may be conferred upon it by Congress within the limitations of the federal Constitution. This reference as to the origin of its powers does not, as we shall subsequently show, prevent state legislation in regard thereto. Existing, as it necessarily does, by law, it possesses only such powers as are expressly granted or which may necessarily be implied for the effective discharge of its corporate functions. As to powers expressly granted, no difficulty need be encountered in defining their limitations. As to those incidental, it must appear, to authorize their exercise, that they are clearly within the scope and purview of the purpose for which the corporation was created. This rule is especially applicable when it is sought to invoke what are termed the powers of a corporation incident to it at common law; such application being authorized only when it is apparent that the power invoked is a necessary incident to the proper exercise of the corporation's existence or functions. Kerens v. Trust Co., 283 Mo. loc. cit. 621, 223 S. W. 645, 11 A. L. R. 288; State ex inf. Missouri Ath. & St. L. Clubs, 261 Mo. loc. cit. 599, 170 S. W. 904, L. R. A. 1915C, 876, Ann. Cas. 1916D, 931; Millinery Co. v. Trust Co., 251 Mo. loc. cit. 575, 158 S. W. 359.

These rules are elementary in character to the extent that they May be termed horn-book law on this subject. They have been stated to emphasize their general application to ail classes of corporations In the absence of statutes to the contrary. While we have contented ourselves with the citation of cases in this behalf determined within our own jurisdiction, they assert a general doctrine, which does not contravene the rulings of any court, state or national, when Rightly considered: To illustrate: In Bullard v. Bank, 18 Wall. loc. cit. 593, 21 D. Ed. 923 it was held that:

"The extent of the powers of national banking associations is to be measured by the act of Congress under which such associations are organized."

In Logan, etc., Bank v. Townsend, 139 U. S. loc. cit. 73, 11 Sup. Ct. 496, 35 L. Ed. 107, it was announced with equal emphasis that:

"It is undoubtedly true, as contended by the defendant, that the National Bank Act is an enabling act for all associations organized under it. and that a national bank cannot rightfully exercise any powers except those expressly granted by that act, or such incidental powers as are necessary to carry on the business of banking for which it was established."

To a like effect are the following cases: Bowen v. Needles Nat. Bk., 94 Fed. 925, 36 C. C. A. 553; Commercial Nat. Bk. v. Pirie, 82 Fed. 799, 27 C. C. A. 171, 49 U. S. App. 596; Hanover Nat. Bk. v. Burlingame Nat. Bk., 109 Fed. 421, 48 O. C. A. 482; Hyde v. Equit. Life. Assur. Soc., 61 Misc. Rep. 518, 116 N. Y. Supp. 219; Ocmulgee Riv. Lum. Co. v. Ocmulgee Val. Ry. Co. (D. C.) 251 Fed. 161; State v. Am. Sugar Ref. Co., 138 La. 1005, 71 South 137; Somerville Water Co. v. Somerville, 78 N. J. Eq. 199, 78 Atl. 793; Knapp v. Sup. Commandery, 121 Tenn. 212, 118 S. W. 390.

Guided by these rules a reference to and a review of the laws creating national banks and defining their powers is of first consideration.

Persons desiring to form a national bank are required, among other things, under the act of Congress of June 3, 1864 (National Banking Act), to file with the Comptroller of the Currency a statement of the place where its operations of discount and deposit are to be carried on, designating the state, territory, or district and the particular county, city, town, or village. Subdivision 2, § 5134, p. 3455, 3 Comp. Stat. U. S. 1901, now U. S. Comp. St. § 9659. A subsequent section of the same act provides that the usual business of each national banking association shall be transacted at an office or banking house located in the place specified in its organization certificate. Section 5190, p. 3486, 3 Comp. Stat. U. S. 1901, now U. S. Comp. St. § 9744.

No express power to establish a branch bank appears in either of these statutes. Section 5134, in requiring the certificate of organization to designate the county, city or town in which the bank is to be located, Is intended for the information of the Comptroller in enabling him to intelligently determine whether the authority sought to be exercised should be granted. While the Banking Act is silent on the subject, a construction of same is not unreasonable which clothes the Comptroller with at least such discretion in the premises as will enable him to act intelligently or with a proper regard for the demands of business in approving or rejecting the articles of organization. Hence a general designation of the proposed business location as provided in said section is all that is necessary.

The purpose of section 5190 is not for the information of the Comptroller, it being a matter with which he has no concern, when he has granted the articles, as to where the place of the business shall be located within the county, city, or town. This is a matter to be determined by the board of directors in establishing the business. To render their act specific it must be confined to the terms of the statute, viz. to "an office or banking house within the county, city or town" named in the articles. This location having been established, it is within the contemplation of the statute that the power of the bank is to be there exercised. Otherwise the words "an office or banking house" ceased to be specific, and instead of being singular in number may be construed as plural, and thus permit the establishment of banks in as many places within the county, city, or town as the judgment of the directors may prompt. Such a construction finds no resting place in reason. If followed, it would, instead of centralizing and rendering more stable the powers of a bank, enable it, by multiplying its places of business, to subdivide and at the same time extend its powers in such manner as to stifle competition. Such an effect was certainly never contemplated by the Banking Act.

II. We are more concerned, however, with an interpretation of the language of subdivision 7 of section 5136 (U. S. Comp. St. § 9661), granting incidental powers, whether literally or liberally construed than with the probable effect of its operation under the construction sought to be given to it by the respondent. If, as we have stated, the terms of section 5190 be unmistakable in limiting the location of the place of business, such location, so long as maintained, will, under the terms of the statute, exclude by implication the establishment of a branch bank, the business of which is to be conducted under the authority of the original articles of organization. However, it is contended that the power to establish branches is authorized under section 5136. The language of subdivision 7 of that section provides among other things, that the board of directors of a bank may, subject to law, exercise all such incidental powers as shall be necessary to carry on the banking business. Several preliminary assumptions are necessary before substantial color can be given to this contention. First, section 5190 must be so construed as to authorize the transaction of a bank's business at offices or banking houses, instead of at "an office or banking house"; second, the establishment of a branch bank must be held to be the exercise of an incidental power; third, such power, when exercised, must be within the law; and, fourth, it must be necessary to the transaction of the banking business.

The first assumption we have discussed with the result that the unmistakable character of the words employed and the purpose to be accomplished did not, in our opinion, authorize such an interpretation of the section as to enable its terms to be read, in the plural as well as the singular number. The second involves the question as to the meaning of incidental powers. The statute (subdivision 7, § 5136) employs the word "incidental," rather than the word "implied" in designating the power other than that expressly conferred on the board of directors. An incidental power, as we said in State ex inf. Harvey v. Missouri Ath. & St. L. Clubs, 261 Mo. loc. cit. 599, 170 S. W. 904, L. R. A. 1915C, 876, Ann. Cas. 1916D, 931, is one directly and immediately appropriate to the execution of the powers expressly granted and exists only to enable the corporation to carry out the purpose of its creation (citing cases). An implied power is one that may be inferred from that granted, or, as the Supreme Judical Court of Massachusetts has said (Adams v. Marshall, 138 Mass. 228, 52 Am. Rep. 271), it is a grant or reservation by implication of law. In State ex inf. Harvey v. Missouri Athletic Club, supra, we defined an implied power more elaborately as one ...