First National Bank of Logan v. Walker Bank & Trust Company

PETITIONER: First National Bank of Logan
RESPONDENT: Walker Bank & Trust Company
LOCATION: Hayden Residence

DOCKET NO.: 51
DECIDED BY: Warren Court (1965-1967)
LOWER COURT: United States Court of Appeals for the Tenth Circuit

CITATION: 385 US 252 (1966)
ARGUED: Nov 07, 1966 / Nov 08, 1966
DECIDED: Dec 12, 1966

Facts of the case

Question

Media for First National Bank of Logan v. Walker Bank & Trust Company

Audio Transcription for Oral Argument - November 07, 1966 in First National Bank of Logan v. Walker Bank & Trust Company

Audio Transcription for Oral Argument - November 08, 1966 in First National Bank of Logan v. Walker Bank & Trust Company

Earl Warren:

Number 51, 73 and 88, the First National Bank of Logan versus Walker Bank and Trust Company.

Mr. Posner, you may continue your argument.

Richard A. Posner:

Mr. Chief Justice and may it please the Court.

Yesterday, I urged that Congress and the National Bank Act, Section 36 (c) did not intend to incorporate and make applicable to the national banks all restrictions that a state might impose on branching by state chartered banks.

The Congressional purpose as shown by the history and in the language of the Section 36 (c) was far more limited to protect the policies of those states which feared the consequences of unlimited branch banking and to do so by subjecting the national banks in a state to state law only insofar as the state chooses to limit the scope and extent of branch banking.

If this is a correct analysis then Utah's take over restriction in suit here whereby a state bank may branch anywhere in the state provided only that it does so by taking over by purchase or merger an existing bank is not binding upon the national banks in the state.

Such a restriction does not limit the extent of branch banking in Utah and it does not reflect any policy against unlimited branch banking.

If anything it is designed to accelerate the expansion of large affluent banks throughout the state.

It is true as the Chief Justice observed during the argument yesterday that there is language in the Congressional debates referring to a goal of competitive equality.

That language is indeed the very heart of respondent's case and I should therefore like briefly to summarize the reasons why in our view competitive equality in its literal sense is not the policy of Section 36 (c).

In the first place, the term competitive equality is a rather vague one.

And to be given concrete meaning, it must be viewed in its context in the legislative debates.

The inequality that the opponents of branch banking -- that the opponents of giving branching authority to the national banks feared was that which would result if the national banks enjoyed unlimited statewide branching authority irrespective of limitations of state law.

Now Congress precluded any such drastic inequality by expressly providing in Section 36 (c) as I try to explain in somewhat greater detail yesterday that to the extent a state chooses either to forbid or geographically to circumscribe branch banking within its state, the resulting pattern binds and limits the national banks in the states as well.

This was the equality that Congress sought to create.

There was no purpose of creating a perfect equality and furthermore the goal --

Earl Warren:

If I ask -- may I ask what's the specific language in any of the committee documents or debate on the floor bears you out on it?

Richard A. Posner:

Well, we refer to no specific language defining the meaning of the term competitive equality.

We rely upon the tone and the mood of these debates which extended as I mention over ten years in Congress as making clear what it was that Congress had in mind when it adopted certain portions of state law on branching and made it applicable to the national banks.

There is no evidence -- there is no persuasive evidence in the congressional reports that perfect equality between the state and national bank systems of state with respect to branching was intended and furthermore this goal of perfect equality which the respondents placed before this Court is illusory because the national bank system was never meant to be the mirror image of the banking systems in the various states.

The dual banking structure which we have in this country presupposes a great diversity between the two systems in terms of the powers and the supervision and the management of state and national banks.

For example in the Franklin National Bank case in 347 U.S. which we've cited in our brief, New York by statute forbad all commercial banks in the state to advertise for savings account and the court held that limitation inapplicable to the national banks even though the result was to create a certain disparity.

Now, branching is not an exception to this rule of diversity.

Even respondents do not contend that a national bank must apply to Utah's banking commissioner in order to open a new branch in Utah or that the Comptroller of the Currency in passing upon the application of the national bank to branch must use the criteria which guide the state banking commissioner in the performance of his discretionary functions in deciding whether to approve a branch.

Utah's bank commissioner must make a finding that the establishment of a branch would subserve and promote the public convenience and advantage and there is no similar requirement upon the Comptroller --

William J. Brennan, Jr.:

Mr. Posner, I take it the number of the existing banks is a limitation, isn't it, on branching in and of itself under the Utah statute?

That is there may not be more branches than are existing banks because we can't establish a branch without acquiring an existing branch, isn't that so?

Richard A. Posner:

That is correct.

William J. Brennan, Jr.:

Well then why isn't that itself a state policy of limitation on a number of branching?

Richard A. Posner:

That is a -- that is a limitation of sorts but it is not the kind of limitation we think that Congress had in mind in --