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

• Decision Date: 27 July 1962
• Docket Number: No. 1424.,1424.
• Citation: 208 F. Supp. 457
• Parties: UNITED STATES of America, Plaintiff, v. FIRST NATIONAL BANK & TRUST COMPANY OF LEXINGTON, Security Trust Company and First Security National Bank & Trust Company of Lexington, Defendants.
• Court: U.S. District Court — Eastern District of Kentucky

208 F. Supp. 457

UNITED STATES of America, Plaintiff, v. FIRST NATIONAL BANK & TRUST COMPANY OF LEXINGTON, Security Trust Company and First Security National Bank & Trust Company of Lexington, Defendants.

No. 1424.

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

July 27, 1962.

Robert F. Kennedy, U. S. Atty. Gen., Larry L. Williams, Melvin Spaeth, George J. Mitchell, Lawrence F. Noble, Attys., Dept. of Justice, Washington, D. C., for plaintiff.

Stoll, Keenon & Park, John L. Davis, Gladney Harville, Gayle A. Mohney, Robert M. Odear, Harbison, Kessinger, Lisle & Bush, Clinton M. Harbison, Rufus Lisle, Lexington, Ky., for defendants.

HIRAM CHURCH FORD, Chief Judge.

Invoking jurisdiction under section 4 of the Sherman Act, (15 U.S.C.A. § 4), the plaintiff seeks that the defendants be enjoined from carrying out an agreement of merger or consolidation charging that the defendants are engaged in an unlawful combination, monopolization and attempt to monopolize interstate trade and commerce in violation of section 1 and section 2 of the Sherman Anti-Trust Act (15 U.S.C.A. §§ 1 and 2), which provide as follows:

§ 1. "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal * * *." (15 U.S.C.A. § 1)

§ 2 (as amended) "Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding fifty thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court." (15 U.S.C. A. § 2, as amended).

Section 4 of the Act provides:

§ 4. "The several district courts of the United States are invested with jurisdiction to prevent and restrain violations of sections 1-7 of this title; and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations. * * *" (15 U.S.C.A. § 4).

The defendants challenge the jurisdiction of the court claiming that the above mentioned provisions of the Sherman Act have been rendered inapplicable to bank mergers or consolidations by the provisions of the so-called Bank Merger Act of 1960, as amended (12 U.S.C.A. § 1828 (c), as amended), which, in so far as here relevant, provides:

"* * * No insured bank shall merge or consolidate with any other insured bank or, either directly or indirectly, acquire the assets of, or assume liability to pay any deposits made in, any other insured bank without the prior written consent (i) of the Comptroller of the Currency if the acquiring, assuming, or resulting bank is to be a national bank or a District bank, * * *. In granting or withholding consent under this subsection, the Comptroller, * * * shall consider the financial history and condition of each of the banks involved, the adequacy of its capital structure, its future earnings prospects, the general character of its management, the convenience and needs of the community to be served, and whether or not its corporate powers are consistent with the purpose of this chapter. In the case of a merger, consolidation, acquisition of assets, or assumption of liabilities, the appropriate agency shall also take into consideration the effect of the transaction on competition (including any tendency toward monopoly), and shall not approve the transaction unless, after considering all of such factors, it finds the transaction to be in the public interest. In the interests of uniform standards, before acting on a merger, consolidation, acquisition of assets, or assumption of liabilities under this subsection, the agency * * * shall request a report on the competitive factors involved from the Attorney General and the other two banking agencies referred to in this subsection * * *. The Comptroller * * * shall * * * include in its annual report to the Congress a description of each merger, consolidation, acquisition of assets, or assumption of liabilities approved by it during the period covered by the report * * *."

The recent cases of California v. Federal Power Commission, 369 U.S. 482, 82 S.Ct. 901, 8 L.Ed.2d 54, and United States v. Radio Corporation of America, 358 U.S. 334, seem to compel the conclusion that by the provisions of the above quoted "Bank Merger Act", Congress did not intend to confer upon the Comptroller of the Currency power to decide anti-trust issues, as such, or to supersede the provisions of the Sherman Act in any respect. Jurisdiction to pass on alleged anti-trust violations remain with the Courts irrespective of the action of the Comptroller of the Currency.

This conclusion is confirmed by the history of the legislation. In the Reports of the Committee of the Senate, referring to the Bank Merger Act which was passed as S. 1062, it is said:

"S. 1062 would not affect in any way the applicability of the Sherman Act to bank mergers or consolidations." (p. 3 Senate Report).

In the House Report it is said:

"S. 1062 would not in any way affect the applicability of the Sherman Act or the Clayton Act to bank mergers." (p. 9 of the House Report), U.S.Code Cong. and Adm. News 1960, p. 2002.

Upon the issues of fact presented by plaintiff's allegations in respect to violation of the Sherman law, this case was tried to the Court beginning on February 19, 1962 and continuing to and including February 27, 1962. On the testimony introduced and the exhibits and admissions filed, I find the material facts to be as follows:

Prior to the merger or consolidation herein referred to the defendant First National Bank and Trust Company of Lexington was and for many years had been a National banking association organized under the laws of the United States, engaged in interstate commerce, with its principal place of business in Lexington, Ky. It conducted its commercial banking business through four offices, all of which were located in Fayette County, Kentucky. As of December 31, 1960, it was the largest bank in Fayette County having total assets of $65,069,000, total deposits of $58,673,000 and total net...