United States v. First Nat. Bank & Trust Co. of Lexington, Ky.

• Decision Date: 29 December 1967
• Docket Number: No. 1424.,1424.
• Citation: 280 F. Supp. 260
• Parties: UNITED STATES of America, Plaintiff, v. FIRST NATIONAL BANK AND TRUST COMPANY OF LEXINGTON, KENTUCKY, Security Trust Company, and First Security National Bank and Trust Company of Lexington, Kentucky, Defendants. Central Bank and Trust Company and Dages I. Boyle, Individually, and as a Representative of the First National Bank & Trust Company of Lexington, Kentucky, Intervenors.
• Court: U.S. District Court — Eastern District of Kentucky

280 F. Supp. 260

UNITED STATES of America, Plaintiff, v. FIRST NATIONAL BANK AND TRUST COMPANY OF LEXINGTON, KENTUCKY, Security Trust Company, and First Security National Bank and Trust Company of Lexington, Kentucky, Defendants Central Bank and Trust Company and Dages I. Boyle, Individually, and as a Representative of the First National Bank & Trust Company of Lexington, Kentucky, Intervenors.

No. 1424.

United States District Court E. D. Kentucky, Lexington Division.

December 29, 1967.

Donald F. Turner, Asst. Atty. Gen., William H. McManus, William D. Kilgore, Jr., Charles L. Whittinghill, Attys., Dept. of Justice, Washington, D. C., for plaintiff.

Arnold, Fortas & Porter, Washington, D. C., Stoll, Keenon & Park, Harbison, Kessinger, Lisle & Bush, Lexington, Ky., for defendants.

Sidney Harris, Earl W. Kintner, Arent, Fox, Kintner, Plotkin & Kahn, Washington, D. C., Earl Wilson and Edwin F. Schaeffer, Jr., Frank Ginocchio, Lexington, Ky., for intervenors.

OPINION

SWINFORD, Chief Judge.

This case has had a long and tortuous career. The record is now before the court on a stipulation between the plaintiff and defendants to enter a proposed final judgment which is tendered with the stipulation. Both the stipulation and the proposed final judgment are made a part of this opinion as appendages.

To give a detailed and comprehensive history of this case would add nothing to an understanding of the conclusions the court reaches here and would be but boring both to the litigants and their counsel who have been over these facts so many times. It is necessary, however, in order to properly establish the basis of the motions now before the court to give very briefly the steps by which the case has come to this point.

Lexington, Kentucky is a relatively small city. It is the center and heart of a rich agricultural section known as the Bluegrass region of Kentucky. Formerly there was relatively little industry in the locality and the principal business in Lexington and its environs was agriculture. While agriculture is still most likely the principal business of the region, many industrial plants have moved into Lexington and the surrounding county seat towns and have become a major source of the economic life of the locality. The First National Bank and Trust Company of Lexington and the Security Trust Company prompted by an idea, so they say, that big business requires big financing, arranged between themselves to merge their banking operations into one large commercial bank and trust company to be known as the First Security National Bank and Trust Company of Lexington. All preliminary steps were taken and the proposed merger was approved by the Comptroller of the Currency of the United States. The merger was consummated on March 1, 1961 and later on the same day the United States filed its complaint against the two independent banking institutions, pursuant to Section 4 of the Sherman Act, seeking to enjoin alleged violations of Sections 1 and 2 of that Act. 15 U.S.C.A. §§ 1, 2. By an amended complaint, filed on March 3, 1961, the First Security National Bank and Trust Company of Lexington was joined as a party to the action.

A trial was held in this court, at which the parties and all competitors were given an opportunity to be heard in opposition to the merger. The court was of the opinion that there was no violation of either Section 1 or Section 2 of the Sherman Act, but as a precautionary measure required, by order, that the defendants agree to keep separate their respective business transactions until the time for appeal had expired, or, in the event of an appeal, until the case had been finally determined. The opinion of the trial court is found in the case of United States v. First National Bank & Trust Co. of Lexington, D.C., 208 F. Supp. 457.

The United States prosecuted an appeal and on April 6, 1964, the Supreme Court reversed the judgment of this court and held that the merger of the defendants, First National Bank and Trust Company of Lexington and the Security Trust Company, violated Section 1 of the Sherman Act. It declined to review the question posed by the complaint under Section 2 of the Sherman Act and remanded the case to this court for further proceedings in conformity with its opinion. United States v. First National Bank & Trust Co. of Lexington et al, 376 U.S. 665, 84 S.Ct. 1033, 12 L.Ed.2d 1. No steps were taken to effect a separation of the banking business of the First National Bank and Trust Company of Lexington and the Security Trust Company, being operated as the First Security National Bank and Trust Company of Lexington. This court was of the opinion that the defendants were ignoring the decision of the Supreme Court and deliberately delaying a compliance with its mandate and thereupon entered an order holding the banks in contempt. An appeal was taken from this order and it was reversed by the Supreme Court, 382 U.S. 34, 86 S.Ct. 157, 15 L.Ed.2d 28 on the ground that no order of divestiture had been entered and that therefore the defendants were not in contempt of any order of the court.

On March 18, 1965, this court entered a divestiture order which required the creation of a separate, competitive and independent commercial bank to be the equivalent of the former Security Trust Company. Subsequently, on April 29, 1965, an order was entered clarifying in minor respects the order of March 18, 1965.

Before the divestiture, directed by these orders, was accomplished, the Congress of the United States enacted Public Law 89-356, 80 Stat. 7, designated as the Bank Merger Act of 1966. Section 2(a) of this Act provides as follows:

"Any merger, consolidation, acquisition of assets, or assumption of liabilities involving an insured bank which was consummated prior to June 17, 1963, the bank resulting from which has not been dissolved or divided and has not effected a sale or distribution of assets and has not taken any other similar action pursuant to a final judgment under the antitrust laws prior to the enactment of this Act (Feb. 21, 1966), shall be conclusively presumed to have not been in violation of any antitrust laws other than section 2 of the Act of July 2, 1890 (section 2 of the Sherman Antitrust Act, 15 U.S.C. 2) (section 2 of Title 15)."

After this statutory enactment there is no indication from the record that the defendants made any effort to comply with the orders of the court with respect to the matter of divestiture.

On April 28, 1966 the United States moved the court for an adjudication that the merger of the defendants violated Section 2 of the Sherman Act because the Bank Merger Act does not apply to banks which are in violation of Section 2 of the Sherman Act. By order of February 1, 1967, the motion was overruled for reasons set forth in a written opinion. United States v. First National Bank & Trust Co., et al, D.C., 263 F. Supp. 268.

On March 30, 1967, the plaintiff filed a notice of appeal to the Supreme Court from the order of this court of February 1, 1967. So far as the court is advised no further steps were taken to prosecute the appeal and on August 7, 1967, the plaintiff and defendants filed the stipulation in this court consenting to the entry of a final judgment. See appendix.

On September 15, 1967 the Central Bank and Trust Company, a commercial banking institution of Lexington, Kentucky, filed a motion "for leave to intervene as a party plaintiff in order: (1) to move that the Court not accept the proposed Final Judgment prior to hearing Central Bank's motions to intervene and for other relief; (2) to move that the proposed Final Judgment not be accepted by this Court; and (3) to move that this Court reconsider its decision of February 1, 1967, upholding the consolidation of First National Bank and Trust Company of Lexington and Security Trust Company resulting in the establishment of First Security National Bank and Trust Company of Lexington; and (4) to permit it to file the intervening Complaint attached hereto."

On the same date Dages I. Boyle, individually and as a representative of the First National Bank and Trust Company of Lexington and the Security Trust Company, filed his motion to intervene as a party plaintiff in order to oppose the entry of the final judgment. Dages I. Boyle is a citizen and resident of Fayette County, Kentucky, a stockholder in the defendant Security Trust Company and a stockholder in the First Security National Bank and Trust Company of Lexington.

Both the plaintiff and the defendants vigorously oppose the right of these two intervenors to be permitted to intervene and be heard on the question of the propriety of the entry of the stipulation and final judgment.

The court is of the opinion that both the petitioners should be permitted to intervene and thereby permitted to be heard in opposition to the proposed final judgment. I rest my decision on the case of Cascade Natural Gas Corp. v. El Paso Natural Gas, 386 U.S. 129, 87 S.Ct. 932, 17 L.Ed.2d 814, which I believe to be directly in point. If the Court by its decision in Cascade grants intervention of right to any volunteer claiming to speak for the public interest when he can convince a court that the Government might have used bad judgment in conducting or settling a lawsuit, these intervenors are well within the class entitled to intervene. The interpretation of the opinion is that made by a member of the Court who sat in the case. See dissenting opinion of Mr. Justice Stewart.

Equal justice under law means that any court action, whether civil or criminal, should be a satisfying experience to each litigant; not that each litigant would be satisfied with the results, but satisfied that his rights have been thoroughly and objectively considered. I do not mean to imply that the United States has not conscientiously represented the public interest, but I do seriously question its judgment in not permitting this case to go to a final decision by the...