WINGATE CORPORATION v. Industrial National Bank

• Decision Date: 25 July 1968
• Docket Number: Civ. A. No. 3847.
• Parties: The WINGATE CORPORATION, Plaintiff, v. INDUSTRIAL NATIONAL BANK et al., Defendants.
• Court: U.S. District Court — District of Rhode Island

288 F. Supp. 49

The WINGATE CORPORATION, Plaintiff, v. INDUSTRIAL NATIONAL BANK et al., Defendants.

Civ. A. No. 3847.

United States District Court D. Rhode Island.

July 25, 1968.

Edward J. Regan, Eustace T. Pliakas, of Graham, Reid, Ewing & Stapleton, Providence, R. I., for plaintiff.

Matthew W. Goring, Providence, R. I., for Industrial Nat. Bank.

Edward M. Watson, of Hinckley, Allen, Salisbury & Parsons, Providence, R. I., Matthew Hale, General Counsel, The American Bankers Ass'n, Washington, D. C., for defendant.

Edward P. Gallogly, U. S. Atty., Providence, R. I., Carl Eardley, Harland F. Leathers, Marshall A. Lemov, C. Westbrook Murphy, Richard C. Doersch, Washington, D. C., for defendant-intervenor William B. Camp, Comptroller of the Currency.

Robert J. McOsker, City Sol., Vincent J. Piccirilli, Asst. City Sol., Providence, R. I., for City of Providence.

OPINION

DAY, Chief Judge.

In this action the plaintiff seeks a declaratory judgment, injunctive relief and compensatory damages on the ground that the marketing of electronic data processing services by the defendant Industrial National Bank of Rhode Island is illegal, contrary to law and constitutes illegal competition with the plaintiff and others engaged in the business of furnishing such data processing services to the public at large.

This action was originally instituted against said Industrial National Bank of Rhode Island. Upon the filing of its complaint, the plaintiff sought an ex parte restraining order enjoining said defendant from executing a contemplated contract with the City of Providence, a municipal corporation, under the terms of which the defendant, its agents and servants would perform certain data processing services for said City of Providence. This relief was denied by me.

Subsequently William B. Camp, Comptroller of the Currency of the United States, and said City of Providence were granted leave to intervene as parties defendant. Thereafter plaintiff filed an amended complaint against said three defendants.

In said amended complaint plaintiff alleges that it, a corporation organized under the laws of the State of Rhode Island, and doing business as the Wingate Computing Center, is engaged in the business of marketing and performing data processing services for the general business community; that the defendant Industrial National Bank of Rhode Island is a national banking association organized and established under the National Bank Act with its principal place of business in the City of Providence, in the State of Rhode Island; that this action arises under the National Bank Act and involves an interpretation and application of said Act and a determination of the powers granted to national banking associations under the provisions of said Act as set forth in Title 12 U.S.C. § 24; that the defendant Comptroller of the Currency has by administrative ruling authorized the defendant Industrial National Bank of Rhode Island and other national banks to perform data processing services for the public at large; that said Comptroller of the Currency and said defendant bank may exercise only those powers granted to them, respectively, by said National Bank Act; that under the provisions of Title 12 U. S.C. § 24, paragraph Seventh, a national banking association has power:

"to exercise by its board of directors or duly authorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of banking; * * *"

and that in no section of said National Bank Act is a national banking association authorized to engage in any other business activities which are not necessary to carry on the business of banking, and more specifically, that there is no provision in said Act authorizing a national banking association to engage in the business of offering and performing data processing services on equipment owned by it for the public at large.

Plaintiff further alleges that the ruling¹ by said Comptroller of the Currency authorizing national banking associations to engage in the marketing of data processing services is, therefore, "in violation of the National Bank Act, beyond statutory authority, arbitrary, capricious, an abuse of discretion and not in accordance with law"; that the defendant bank is engaged in the business of performing data processing services for the public at large not necessary to carry on the business of banking, which said activities are beyond the grant of powers to national banking associations and are unlawful and constitute illegal competition with the plaintiff and other persons similarly engaged in the business of furnishing data processing services for the public at large; that on October 2, 1967, said defendant bank entered into a contract with said City of Providence for the performance of such data processing services then being performed by its employees, and, further, that it is advised that the defendant bank did commence to perform such services on or about October 1, 1967; and that said activities of the defendant bank in performing and holding itself out as willing to perform data processing services for the City of Providence and the public at large are illegal, not a part of, incidental to or necessary to carrying on the business of banking, and are beyond the powers granted to national banks under said Act; that by performing said illegal data processing services and by holding itself out as willing and able to perform such services the defendant bank has caused, and unless restrained and enjoined, will cause substantial and irreparable harm to the plaintiff and to other persons engaged in the business of furnishing data processing services to the public at large by depriving them of customers for whom data processing services would be rendered and from whom compensation would be received, and that it has suffered injury and damage and is continuing to suffer injury and damage by the unlawful authorization of the defendant Comptroller of the Currency and said illegal activities of the defendant bank.

In its answer the defendant, Industrial National Bank of Rhode Island, admits that it has in the past and is presently offering incidental to its banking services to make available, and is performing data processing services for its customers and for other banks, but denies that it has offered in the past or presently is offering to perform data processing services for the public at large, not incidental to its banking services. It also admits that it has entered into a contract for the performance of certain data processing services for the City of Providence, one of its customers, and denies that the performance by it of such services for said City of Providence and other bank customers would be illegal or beyond its statutory powers.

The City of Providence in its answer admits the execution by it of said contract with said Industrial National Bank of Rhode Island for the performance by it of the data processing services described therein, and likewise denies that the performance thereof by the latter would be illegal or beyond its statutory powers.

This matter is now before me upon the motion of each of the defendants to dismiss this action upon the grounds that the plaintiff lacks standing to maintain this action and that this Court lacks jurisdiction over the subject matter thereof.

Plaintiff contends that it has standing to challenge the validity of said ruling by the Comptroller of the Currency under the provisions of Section 10 of the Administrative Procedure Act, 5 U.S.C. § 702, which provides as follows:

"Rights of Review.

A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute is entitled to judicial review thereof."

In construing a substantially similar provision in the Administrative Procedure Act, prior to its amendment in 1966, the Court of Appeals for the District of Columbia Circuit in Pennsylvania Railroad Company v. Dillon, 1964, 118 U.S.App.D.C. 257, 335 F.2d 292, cert. denied sub nom. American Hawaiian S.S. Co. v. Dillon, 1964, 379 U.S. 945, 85 S.Ct. 437, 13 L.Ed.2d 543 held at pages 294, 295:

"* * * Under this statute appellants have standing to challenge agency action which they allege either causes them a `legal wrong' or adversely affects or aggrieves them `within the meaning of any relevant statute'.

"`Legal wrong', as we have only recently noted, is the invasion of a legally protected right. See Gonzalez v. Freeman, supra, 118 U.S.App.D.C. at 186 n. 6, 334 F.2d at 576 n. 6. Thus, in order to make out a claim of `legal wrong' under Administrative Procedure Act § 10(a), appellants must assert some legally protected right to be free of the competition provided by the two vessels whose documentation they are challenging. This court has very recently spoken on this aspect of standing. When `Congress has not given them any such standing by express or implied provision of statute * * *, mere economic competition made possible by governmental action (even if allegedly illegal) does not give standing in the courts to sue to restrain such action. Tennessee Electric Power Co. v. Tennessee Valley Authority, 306 U.S. 118, 59 S.Ct. 366, 83 L.Ed. 543 (1939); Alabama Power Co. v. Ickes, 302 U.S. 464, 58 S.Ct. 300, 82 L.Ed. 374 (1938); Kansas City Power & Light Co. v. McKay, 96 U.S.App.D.C. 273, 225 F.2d 924, cert. denied, 350 U.S. 884, 76 S.Ct. 137, 100 L.Ed. 780 (1955).' Texas State AFL-CIO v. Kennedy, 117 U.S.App. D.C. 343, 345, 330 F.2d 217, 219 (1964). For purposes of standing in this case, the sufficiency of appellants' allegations of `legal wrong' thus depend upon congressional intent to bestow upon them a legal right to protection from such competition.

"Similarly, appellants' allegations that they are `adversely affected or aggrieved * * * within the meaning of any relevant statute' depend for their adequacy as to standing upon

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