Warren Bank v. Saxon

• Decision Date: 14 November 1966
• Docket Number: Civ. A. No. 28290.
• Parties: WARREN BANK, a Michigan Banking Association, Plaintiff, v. James J. SAXON, Comptroller of the Currency, U. S. Treasury Department, and National Bank of Warren, a National Banking Association, Defendants.
• Court: U.S. District Court — Western District of Michigan

263 F. Supp. 34

WARREN BANK, a Michigan Banking Association, Plaintiff, v. James J. SAXON, Comptroller of the Currency, U. S. Treasury Department, and National Bank of Warren, a National Banking Association, Defendants.

Civ. A. No. 28290.

United States District Court E. D. Michigan, S. D.

November 14, 1966.

Richard S. Beattie, Dept. of Justice, Washington, D. C., Lawrence Gubow, U. S. Atty., Patricia Pernick, Asst. U. S. Atty., Detroit, Mich., for the Government (James Saxon, Comptroller of the Currency).

Fred Gordon, Bizer & Sommers, Detroit, Mich., for defendant National Bank of Warren.

Wallace M. Handler, Lebenbom & Handler, Detroit, Mich., for plaintiff.

OPINION

TALBOT SMITH, District Judge.

The case before us presents the issue of the judicial reviewability of a decision of the Comptroller of the Currency. The decision litigated is his grant of preliminary approval to the organizers of the National Bank of Warren to open a new national bank in the City of Warren, Michigan. The plaintiff is a state bank, asserting, in its complaint, in part as follows:

6. That Plaintiff is informed and verily believes that said charter was granted improperly in that the defendant Comptroller of the Currency did not properly follow the procedures of the Statute and of the Administrative Code in such case made and provided.

7. That Defendant Comptroller of the Currency has abused his discretion and acted arbitrarily and capriciously in granting said charter in that said Comptroller of the Currency did not, your Plaintiff is informed and verily believes, properly investigate the convenience and needs of the community with reference to the formation of said bank. Further, that the Defendant, Comptroller of the Currency has abused his discretion with reference to the banking ability and experience of the proposed officers and other employees.

8. That Plaintiff is informed and verily believes that said newly chartered NATIONAL BANK OF WARREN is not necessary, nor is the same convenient or required in the City of Warren or the environs. Further, Plaintiff is informed and verily believes that the employees hired by the proposed NATIONAL BANK OF WARREN are without substantial experience. Further, your Plaintiff is informed and verily believes that the Defendant Comptroller of the Currency has acted arbitrarily and capriciously in determining the earning prospects of the proposed bank.

9. That your Plaintiff is informed and verily believes that the NATIONAL BANK OF WARREN is in truth and in fact an alter ego of an existing national banking association, which existing association is forbidden by the laws of the State of Michigan to place branches in the City of Warren, Macomb County, Michigan.

On July 7, 1966 the court heard arguments by the parties respecting, primarily, the motion of defendant Saxon to dismiss the complaint upon grounds stated. Such motion was denied. Immediately thereafter the parties stipulated and agreed that the defendants would "file as soon as possible a motion of Summary Judgment based upon the administrative record in this case", providing for stay of discovery pending ruling thereon, subject to "right reserved to the plaintiff to move for discovery after receiving" such motion, the defendant bank agreeing, as well, not to open for business until decision on such motion was had.

Defendant Saxon's motion for summary judgment was filed on September 29, 1966 and noticed for hearing on October 17, 1966, time for hearing being extended upon motion, and over opposition, to October 31, 1966.

We do not believe that any useful purpose would be served by attempting to write a dissertation upon the exercise of discretion by an administrative official in this sensitive and complex field of banking. The cases are legion and some of the more significant for our purposes are listed in the footnote.¹ A review of the statutes involved clearly demonstrates that the Comptroller has been vested with a broad discretion, the situation being well stated in Davis, 1 Administrative Law Treatise, Sec. 4.04, p. 251, in the following terms:

"The critical process in the federal control of banking is the supervising power, not adjudication or rule making. The supervising power is not and probably cannot be surrounded by procedural safeguards in formal hearings, and it is largely immune from the check of judicial review. Freedom from arbitrary or unfair administrative action must depend upon factors other than formal procedures or judicial review."

The courts have, in the main, consistently recognized the wide area of discretion possessed by federal banking authorities. Thus in Adams v. Nagle, 303 U.S. 532, 58 S.Ct. 687, 82 L.Ed. 999 (1938), the Supreme Court held that the Comptroller had unreviewable discretion to levy assessments against shareholders of national banks even if he acted upon a mistake of fact or law.

"Where a statute vests no discretion in an executive officer but to act under a given set of circumstances, or forbids his acting except upon certain named conditions, a court will compel him to act or to refrain from acting if he essays wholly to disregard the statutory mandate; but if a discretion is vested in him, and he is to act in the light of the facts he ascertains and the judgment he forms, a court cannot restrain him from acting on the ground that he has exceeded his jurisdiction by reason of an error either of fact or law which induced his conclusion." 303 U.S. at 542, 58 S.Ct. at 693.

The fact that the Comptroller is "largely immune" from judicial review (Davis, Administrative Law Treatise, supra) does not mean, of course, that his immunity is absolute. Upon a proper showing (Bank of Dearborn v. Saxon, 244 F.Supp. 394 (D.C.Mich.1965) a review de novo will be made. But first a foundation must be laid, and with that we proceed to a detailed examination of what the parties have put before us.

As noted above, immediately after the hearing on July 7th the parties stipulated that a legal test of the issues before us would be brought on by defendants' motion for summary judgment, the defendant bank agreeing not to attempt to open for business until decision upon such motion, the plaintiff reserving the right "to move for" further discovery after receiving defendants' said motion. Our disposition of the further discovery motion will be discussed in due course.

The purpose of the motion for summary judgment, of course, is to pierce the allegations of the pleadings and to determine whether the movant is entitled to judgment as a matter of law, or whether there is a genuine issue as to material facts. To this end the motion for summary judgment enables the parties to go beyond the pleadings and present evidentiary materials to the court. The plaintiff bank has supported its opposition to the motion by a brief, by extensive affidavit, and by other materials. Before considering the contents thereof we note the provisions of Rule 56(e), Federal Rules of Civil Procedure, requiring, in part, as follows:

"* * * When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him."

What we have, at this point is this: The allegations of the complaint, as quoted above, are not only vague, but they are completely devoid of specific factual allegations, consisting entirely of conclusory allegations. Thus, it is said that the charter was "granted improperly" in that the defendant "did not properly follow the procedures of the Statute and of the Administrative Code", but what procedures he did not follow are not stated. It is alleged also that the defendant has acted arbitrarily and capriciously in that he did not "properly investigate the convenience and needs of the community with reference to the formation of said bank", but in what respects his investigation was faulty we are not told. It is further asserted that the defendant has abused his discretion "with reference to the banking ability and experience of the proposed officials and other employees" but what factual needs constitute such abuse are not spelled out.

In addition, it is asserted that the newly chartered National Bank "is not necessary, nor is the same convenient or required in the City of Warren or its environs," that the employees of the proposed bank "are without substantial experience", and that the defendant has further acted "arbitrarily and capriciously in determining the earning prospects of the proposed bank." Finally, it is alleged that the National Bank is "in truth and in fact an alter ego of an existing National banking association" but of what national banking association we are not informed nor is there any statement of specific facts which would bring into play, if applicable, the alter ego doctrine.

The theory of the plaintiff in so...