United States National Bank of Oregon v. Independent Insurance Agents of America, Inc.

PETITIONER:United States National Bank of Oregon
RESPONDENT:Independent Insurance Agents Of America, Inc., et al.
LOCATION:City Council of Hialeah

DOCKET NO.: 92-484
DECIDED BY: Rehnquist Court (1991-1993)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 508 US 439 (1993)
ARGUED: Apr 19, 1993
DECIDED: Jun 07, 1993

ADVOCATES:
Ann Mary Kappler – on behalf of the Respondent
Christopher J. Wright – on behalf of the Petitioner

Facts of the case

Question

Audio Transcription for Oral Argument – April 19, 1993 in United States National Bank of Oregon v. Independent Insurance Agents of America, Inc.

William H. Rehnquist:

We’ll hear argument first this morning in number 92-484, United States National Bank of Oregon v. the Independent Insurance Agents of America, and a companion case.

Mr. Wright.

Christopher J. Wright:

Mr. Chief Justice, and may it please the Court:

This unusual case arose out of a dispute concerning the proper construction of section 92 of the banking laws, a provision that authorizes banks in small towns to sell insurance.

No question was raised about the validity of section 92.

In fact, the Insurance Agents pointed out that at this late date, they thought there was no real question about whether section 92 remained in existence.

They pointed out that the Controller of the Currency and the Federal Reserve Board has assumed its continued existence for more than 70 years; that the banking industry and the insurance industry had relied on section 92; and that Congress and… and the courts had… had as well.

But the D.C. Circuit, nevertheless, held that section 92 had been repealed by Congress in 1918.

And that’s the question presented to this Court today.

The dispute between the parties has necessarily turned on a few phrases and some quotation marks in… in a number of documents that were written more than 70 years ago.

And I’d like to direct the Court’s attention to those documents this morning.

But before I do so, I… I’d like to say two things about what I think close analysis of these documents shows.

The first thing it shows is that Congress did not intend to repeal section 92.

The Second Circuit has issued a decision on this issue since the D.C. Circuit handed down the judgment in this case.

And the Second Circuit, in… in holding that section 92 had not been repealed, stressed the clarity of the evidence showing that this is not what Congress had in mind.

And, indeed, the Insurance Agents, while they are now defending the D.C. Circuit’s decision that… that section 92 has been repealed, they do not claim, as I understand it anyway, that Congress intended to repeal section 92.

But I don’t want to give what I think is the false impression that this case presents some sort of clash between Congress’s intent and… and the text that Congress enacted.

The second point that I think that a close analysis of the documents that I want to direct the Court’s attention to this morning shows is that in fact the text of those documents supports the conclusion that section 92 was not repealed.

And… and I… and I hope to show that the only thing that’s really on the Insurance Agents’ side of this dispute is some quotation marks.

And–

Byron R. White:

You… you can’t find the section in the United States Code now, can you?

Christopher J. Wright:

–Well, it… it is… it is true that in 1952 the compilers of the United States Code replaced section 92 with a statement that says omit it.

And… and it’s followed by an explanation that section 92 was repealed in… in… in 1918.

Byron R. White:

And who were they, the compilers?

Christopher J. Wright:

They… they’re… they’re an official body whose statements about what the law is, is prima facie evidence of what the law is.

If I… if I may, I’d like to make two points about that, since… since you brought it up.

First, the… the 1926 edition of the U.S. Code, the 1934 edition of the U.S. Code, the 1940 edition, and the 1946 edition all contain section 92.

That is to say, the… in fact, the 1926 edition of the U.S. Code was the very first edition of the U.S. Code–

Byron R. White:

But, in any event, the code has omitted it since 1952?

Christopher J. Wright:

–Since 1952, the Code has omitted it.

Byron R. White:

And… and yet the banking authorities have continued to say it wasn’t?

Christopher J. Wright:

After the cod… the second point I’d like to make about that is after the 1952 codifiers decided that the prior codifiers has been wrong–

Byron R. White:

Yeah.

Christopher J. Wright:

–And raised this issue, Congress held hearings on the subject.

And… and apparently decided that it’d stayed in effect since… since Congress has twice, in the last 11 years, actually amended section 92.

Of course, the holding that section 92 was repealed makes those congressional enactments totally superfluous.

The Controller, since… since almost the day after section 92–

Byron R. White:

Yeah, but… but it would seem to me the banking authorities have any doubt about it would have suggested that Congress, that they… they enact something called section 92.

Christopher J. Wright:

–Well, of course, if that had ever happened, we wouldn’t be here today.

Byron R. White:

Well, that’s true.

Christopher J. Wright:

But… but… but… every–

Antonin Scalia:

Is that why they didn’t do it?

I knew they must have had a reason?

[Laughter]

Christopher J. Wright:

–But the… a… a… as I say, the regulations governing sales of insurance by banks in small towns have been in effect since 1916, have continued in effect to this day.

This case just involved an interpretation of… of… of whether… of to whom banks in small towns may sell insurance.

And as I say, even the insurance industry thought that there was no question about the continued existence of section 92.

And as Judge Pratt emphasized in his District Court opinion, you know, the banking industry has… had relied on this provision.

A lot of banks in small towns have made substantial investments in… in the insurance business.

And… and… and have relied on the Controller and everyone else’s assumption in the operation of their business to… that section 92 exists.

Well, if I may, let me… let me turn to these documents for… for a moment.

I… there are many versions of them printed.

I… I have the… the bank’s cert petition in front of me and… and I was hoping to direct the Court’s attention to page… page 77a of that… of the appendix to that petition, which… which, on that single page, presents two of the critical statutes that are… that are involved in this case.

The dispute between the parties re… really boils down to was this provision, section 92, was it added to revise statute section 5202 or was it added to section 13 of the Federal Reserve Act?

And both of those provisions are actually printed on this page of the appendix.

Section 5202 is up at the top of the page.

And I’d just like to make a… a brief note about that provision.

It had actually been in effect in some form or another since 1863.

It… and it had always dealt with the same thing.

It… it… it involves the excess indebtedness that national banks may… may incur.

Christopher J. Wright:

And the version that’s printed in the bank’s appendix here is the way section 5202 looked before section 13 of the Federal Reserve Act was enacted in 1913.

Now, right under that, about halfway down the page, is section 13 of the Federal Reserve Act just the way it was printed in 1913, the… the… which is when the Federal Reserve Act was enacted for the first time.

So everything in this provision basically is new, with one exception.

And I’d like to direct the Court’s attention to that exception which appears on page 79a of the appendix.

William H. Rehnquist:

When you say everything in this section was… now you’re referring to section 13 of the Federal Reserve?

Christopher J. Wright:

That’s right.

Yes, Your Honor.

However, near the bottom of page 79 of the appendix, you’ll see a paragraph that begins:

“Section 5202 of the revised statutes of the United States is hereby amended so as to read as follows. “

And it then reprints section 5202, the provision we were just looking at, almost exactly the way it existed before 1913, with one addition.

And that addition appears on page 80a of the appendix.

It’s the line that begins fifth, and says that liabilities incurred under the provisions of… of the Federal Reserve Act, that banks may also incur those in excess of their… of their capital.

This is a… a strange provision, at least today, a peculiar practice, that section 5202 was amended as part of the Federal Reserve Act, right in the middle of a number of other provisions amending the Federal Reserve Act.

This appendix doesn’t show it, but we’ve just been looking at the 1913 vers… I mean of section 13, the… section 12 of the Federal Reserve Act is right before what’s printed here, section 14 of the Federal Reserve Act is what comes right after what’s printed here, and… and in fact it goes 1 through 16 around this.

But at that time Congress had the peculiar habit of occasionally amending the revised statutes as part of an act.

I’d also like to direct the Court’s attention to the very next paragraph on… on page 80a, a paragraph that I think is very important.

It’s… it’s the key to… to our textual argument here today.

It involves the re-discount authority of… of… of Federal Reserve Banks.

That provision was clearly part of section 13 of the… of the Federal Reserve Act in 1913.

And… and that’s shown by… by a couple of things, one of which is reading the text.

It very logically belongs in the Federal Reserve Act.

This provision grants the Federal Reserve Board authority over the rediscounting practices of Federal Reserve Banks, and it logically belongs in the Federal Reserve Act for that reason, rather than in some other provision of the banking statutes.

Another thing about this provision is that it includes the phrase, “this act”.

“This act” are the last… last word of the third line and the first word of the fourth line.

It is undisputed that “this act” means the Federal Reserve Act.

The Insurance Agents agree with us on that.

We say that it refers to the Federal Reserve Act as this act for the straightforward reason that it was part of the Federal Reserve Act.

Now–

John Paul Stevens:

Mr. Wright, can I interrupt you.

I… I read these briefs a little while ago, and it’s hard to get the sequence in mind.

John Paul Stevens:

On page 77a, the section 13 was enacted in 1913, right.

And then the… what the bottom begins, 1913?

Christopher J. Wright:

–Yes… yes, Your Honor.

The… the… the–

John Paul Stevens:

Everything from 77a, on, is… was enacted in 1913?

Christopher J. Wright:

–Everything from 77a to 79a is… is all the 1913 version, Your Honor.

John Paul Stevens:

And we… we… and we have two more… there’s a 1916 statute?

Christopher J. Wright:

Yes, Your Honor.

John Paul Stevens:

And a 1918 statute we have to deal with, right?

Christopher J. Wright:

Yes, Your Honor.

John Paul Stevens:

Okay.

Well… well, you’re just concentrating on 1913 now?

Christopher J. Wright:

Yes.

John Paul Stevens:

Okay.

I want to be sure.

Christopher J. Wright:

But if I may turn to 1916, that… that is at page 67a of the appendix.

And that is the next… the next few pages are all part of the 1916 amendments, which is where most of our attention has… has concentrated in the briefs.

Let me… let me point out, right at the top of that page the title of this act.

It says it’s an act to amend certain sections of the act entitled Federal Reserve Act approved December 23rd, 1913.

Now, that title doesn’t have controlling authority, but as we pointed out in more detail in our brief, the practice at that time was that Congress had two kinds of titles.

One was a descriptive title, you know, an act to improve the Federal banking system or something like that.

The other sort of title Congress used was this sort of title.

It identified the acts that were being amended.

Now, what it did when it listed the acts that were being amended, it had some awfully long titles because they listed everything that was being amended.

This one lists the Federal Reserve Act.

It says nothing about revised statute 5202 being amended.

And that’s important because we don’t think section 5202 was amended in 1916, and the Insurance Agents think it was.

Now, towards the bottom of page 67a comes an indentation, and then it says section 13… that section 13b and is hereby amended so as to read as follows.

So Congress is mending… is amending section 13, which we were looking at a minute ago.

And the… the bank, in the appendix, has added these little numbers in the parenthesis.

Christopher J. Wright:

Ever… everything else is just the way it appeared in the statutes at large, but there… there are then 10… 10 numbers in the margins which are… which were added by the bank.

The… the Insurance Agents, the bank and the Controller all agree that the first six paragraphs were part of section 13.

Where we start dis–

William H. Rehnquist:

So the bracketed numbers in the margins on page 60 and 69 were added by the parties to this… this case?

Christopher J. Wright:

–Yes, Your Honor.

Every… everything else is the way it looked in the statutes at large.

But when you get to page 70a and you get to that paragraph that begins number 7, that’s where… that’s where there is some disagreement.

We contend that 7, 8, 9, and 10 are all part of section 13 of the Federal Reserve Act.

The Insurance Agents say that they were all moved into… into revised statute 5202.

And that’s important to their argument because they’re going to say… they then say that when revised statute 5202 was amended in 1918 and Congress didn’t… didn’t include the paragraphs numbered 8, 9 and 10, those paragraphs all got repealed.

Now, I’d like to… I’d like to focus again on paragraph number 8, which is at the bottom of page 70a.

That’s the paragraph I was looking at just a minute ago.

It is almost identical… it’s the rediscounting paragraph… it’s almost identical to the paragraph the way it existed in 1913.

Just a couple of words were changed.

And I’d like to make the two points again that I made before.

First, it refers to “this act”.

We say it refers to “this act” because it was part of the Federal Reserve Act.

And if we’re right on that, we win this case.

The second thing is that it again, just as in 1913, grants the Federal Reserve Board authority over re-discounting practices of Federal Reserve Banks.

This provision belongs in the Federal Reserve Act.

Now, the argument to the contrary relies on… on these quotation marks that you’ll see if you look closely at… at the 1916 amendments.

In paragraph 7, following that introductory phrase about section 5202 of the revised statute’s being amended, there’s a colon, and then there are some open quotation marks.

No closed quotation marks appear again until after the paragraph marked number 10, which precedes an amendment to section 14 of the Federal Reserve Act.

The Insurance Agents argue, on the basis of those quotation marks, that Congress actually moved that re-discounting paragraph out of section 13 of the Federal Reserve Act and into section 5202 in 1916, and then, in 1918, omitted it altogether.

And that’s important in this case because they contend that the same thing happened to the paragraph numbered 9 here.

And that paragraph numbered 9 is the… is the paragraph that’s ultimately at issue here.

Nine is the one that grants banks in small towns the authority to sell insurance.

Anthony M. Kennedy:

And is it part of your submission, Mr. Wright, that in the paragraph that’s numbered 7 at the very end, where it says

“Fifth: Liabilities incurred under the provisions of the Federal Reserve Act. “

that that reference would have been unnecessary if section 7 was amending the Federal Reserve Act?

Christopher J. Wright:

No, Your Honor, because section 7 is, as I… as I tried to say at the start, it’s just the same as in 1913.

It’s this peculiar provision that’s part of section 13, but it’s clearly meant to… to amend section 5202.

So there was a separate section 5202 and it was amended, and Congress knew that people were going to… were going to draw out section 5202 of the revised statutes from time to time and look at this provision.

And it had to say… Congress had to say Federal Reserve Act in that provision because otherwise a reader of section 5202 wouldn’t know what… what the provision was talking about if it just said something like–

Anthony M. Kennedy:

Yes, that was my point, since it stood separately, it had to reference the act?

Christopher J. Wright:

–Yes, Your Honor.

“This act”, in that next paragraph, on the other hand, could logically say “this act” because it was part of the Federal Reserve Act, in our view.

Now, let me say that there… there… Congress actually took note of the quotation marks that are the heart of the Insurance Agents’ case.

What happened… and this is detailed in the lodging that was filed by the bank if you follow through all the documents… when Congress… the original bill in 1916 included some quotation marks, it did not include these confusing quotation marks that were ultimately on… in… that ultimately appeared in the statutes at large.

The quotation marks that were on the original bill just started at the beginning of section 13 is hereby amended, and ended at the end.

So there is nothing about that original bill that would make you think that section 92 got moved out of section 13.

In the Senate, Congress actually focused on those quotation marks, had a brief discussion in which everyone agreed they were confusing, voted to delete the quotation marks, and in fact, in the final print of the House bill and the final print of the Senate bill, there are no quotation marks.

Someone added them back in… no one knows whom… they appear in the statutes at large, though, and we acknowledge that.

But the point–

Antonin Scalia:

Well, aren’t we supposed to accept that, then?

You shouldn’t tell us all of this, should you?

Christopher J. Wright:

–Well, Your Honor–

Antonin Scalia:

I mean, we don’t want to know that.

Don’t we just take the statutes at large as they are?

Christopher J. Wright:

–Well, Your Honor, that’s true.

Antonin Scalia:

Well, then, I close my ears, Mr. Wright.

Mr. Wright, my ears are still open.

[Laughter]

Let me just assure you that I follow what you’re saying, because it is–

–Mr. Wright… we’re… yeah, excuse me.

I’m sorry, did I… I didn’t mean to interrupt you.

No, I didn’t… I interrupted you.

I just… would you tell us, looking at 70a, where the quotation mark should be omitted and replaced?

Am I correct in thinking that the run-over paragraph on 70a, which ends with a quotation mark after United States, that is the quotation mark you say should be omitted?

They intended… that you say would… to get the proper meaning across, should be ignored?

Christopher J. Wright:

That’s… that’s… that’s probably right, if those… if those closed quotation marks weren’t there, I don’t think we’d have a problem.

John Paul Stevens:

And do you think that there were intended to be quotation marks… opening quotation marks in front of section 5202 on the next–

Christopher J. Wright:

Well, Your Honor, that’s the way it appeared on the original bill.

John Paul Stevens:

–But, in other words, what we do… if you’re to follow you, you would move the closed quote from after United States to an open quote beginning with section 15?

Christopher J. Wright:

Your Honor, I think that that’s… that that’s probably what Congress really meant.

That’s the way it appeared on the original bill.

Remember, though, if you’re talking about what Congress intended here, Congress actually voted to get rid of these quotation marks.

They didn’t want them at all.

John Paul Stevens:

But what I’m trying to find out is where should we place the quotation marks where we will best understand your understanding of what the statute really means.

Christopher J. Wright:

If you place them exactly where you just suggested.

If you get rid of that closed quotation marks and move the open quotation marks to the beginning of section 5202–

John Paul Stevens:

And then what do you do with the opening quotation mark after the colon in the third line, before National Bank, do you make that an internal quote?

Christopher J. Wright:

–I… I moved those to the beginning of section 52–

John Paul Stevens:

You moved those to the beginning.

Christopher J. Wright:

–Right.

John Paul Stevens:

So it says to read as follows, and you don’t put any quotes around what is to read as follows?

Christopher J. Wright:

No.

That’s… that’s the way it appeared.

There were no quotation marks after that colon on the original bill.

I think that that’s probably the fairest guide to… to what–

John Paul Stevens:

You put a closed quotation mark at the end of the sentence marked

“Fifth: Liabilities incurred under the provisions of the Federal Reserve Act? “

Christopher J. Wright:

–Well, if you did that, certainly–

John Paul Stevens:

It would make it really clear?

Christopher J. Wright:

–Yeah, that would make it really… I don’t think you need to do that, but that would–

John Paul Stevens:

That would make it even more clear, I think?

Christopher J. Wright:

–That would certainly solve matters, yeah.

Sandra Day O’Connor:

But, Mr. Wright, the enrolled bill have the quotation marks as we find it here.

Christopher J. Wright:

Yes, Your Honor.

Sandra Day O’Connor:

And that’s what the President signed.

Christopher J. Wright:

Yes, Your Honor.

Sandra Day O’Connor:

So we have to accept that, don’t we?

I mean, goodness.

Christopher J. Wright:

Well, I… I… I think you do, but the enrolled bill also had the text of the provision.

It had… it had that rediscount provision that I’ve been pointing to.

It had the word “this act” in that provision, which meant the Federal Reserve Act.

William H. Rehnquist:

But so far as the quotation marks argument is concerned, the enrolled bill had them.

And we don’t go behind that.

Christopher J. Wright:

That’s correct, Your Honor.

William H. Rehnquist:

So, I’m a little bit surprised that you would rest your argument at all on that.

Christopher J. Wright:

My argument is that they were not meant to have interpretive significance and that there is textual ambiguity on the enrolled bill.

Because the enrolled bill, besides the quotation marks, also had the phrase, 8 in its entirety, which logically belongs in the Federal Reserve Act.

If you follow these quotation marks and give them the meaning that the Insurance Agents say they should have, you do violence to the actual words that Congress enacted.

And in our view, the words of what Congress enacted deserve more significance than the quotation marks that were part of the enrolled bill.

And I think once we’ve introduced this textual ambiguity, under anyone’s view, it should be perfectly fair to look at what Congress… how those quotation marks got there.

And when you look at how those quotation marks got there, it is absolutely clear to anyone that Congress didn’t mean to have them there.

And it’s just as clear in 1918 that Congress didn’t intend to get rid of this provision.

David H. Souter:

But you would simply win if we sort of followed a rule that when the ambiguity is created as between punctuation and verbal text, the verbal text controls?

Christopher J. Wright:

Exactly, Your Honor.

David H. Souter:

That’s all you need?

Christopher J. Wright:

That’s right.

And… and if you… and if you adjust that rule to say, well, there is some ambiguity here, we’re going to take a look at what Congress intended, we’re going to look at the drafting history and that sort of matter, then we surely win.

Because it certainly would be a perverse rule to resolve the ambiguity on the enrolled bill by holding that Congress repealed a statute in the face of pretty clear evidence that it didn’t mean to do that.

William H. Rehnquist:

Have our… any of our previous cases dealing with the enrolled bill doctrine indicated that an ambiguity is sufficient to go behind the enrolled bill?

Christopher J. Wright:

I… I don’t… I don’t recall any case like that, Your Honor.

There certainly haven’t been many.

But I don’t know what else the Court could do if there’s an ambiguity on the enrolled bill.

It has to be resolved.

David H. Souter:

Well, isn’t another way of dealing with it, though, simply to say don’t go behind the enrolled bill, but make a choice between the two signals in the enrolled bill, and the verbal signal is the one that controls over the punctuational signal?

Christopher J. Wright:

There are certainly plenty of cases of this Court saying that punctuation is the poorest guide to Congress’s intents.

Christopher J. Wright:

Surely the text ought to control over the punctuation.

Antonin Scalia:

Mr. Wright, you may be arguing the other side of that some day.

Do you really want us to adopt that rigid a rule, that the word always governs over the punctuation?

I mean, surely how much sense… how much sense it makes with different punctuation, versus how much sense it makes with different languages enters into the matter?

I mean, you know, how much of a… of a seeming… seemingly foolish bill is created if you… if you ignore the punctuation, versus how much of a seemingly foolish bill is created if you ignore the language.

I think it’s a very rigid rule to say just ignore it.

Christopher J. Wright:

It’s… it’s hard to imagine every possible future case.

I certainly wouldn’t have imagined this.

But I think that we’re very comfortable with the general rule that the words almost always mean more than the punctuation.

If there are no further questions, at this time I would like to reserve the remainder of my time.

William H. Rehnquist:

Very well, Mr. Wright.

Ms. Kappler, we’ll hear from you.

Ann Mary Kappler:

Mr. Chief Justice, may it please the Court:

The Petitioners assert that law exists which permits national banks to sell insurance in small towns.

Now, as Justice White pointed out, that law cannot be found in the U.S. Code, in the current version of the U.S. Code.

That creates a statutory presumption that no such law is in force.

John Paul Stevens:

Well, may I ask you.

Do you think the changes in the U.S. Code after the enactment of this statute have any bearing on what was intended when the statute was enacted?

Ann Mary Kappler:

No, Your Honor, I do not think they have any bearing, Your Honor.

John Paul Stevens:

Well, then, shouldn’t we look at the U.S. Code for the period right after the enactment, rather than today?

Ann Mary Kappler:

No, Your Honor.

The statutory provision expressly states that it’s the current version of the Code that creates prima facie evidence of what law is in force today.

Therefore, Congress wants litigants to look at today’s Code, not at the 1950 version of the Code, not at the 1926 version of the Code.

John Paul Stevens:

Well, let me just be sure I understand you.

Are you saying that in 1952, or whenever it was, when the Code was published omitting this section, that that worked a change in the law?

Ann Mary Kappler:

It worked a change in the presumption, Your Honor, not a change in the law, whether it existed or not.

But, yes, it changed the presumption.

When the law was on the books in the U.S. Code, the presumption was that it was in force.

Once it was omitted, and it has been omitted for the last 40 years, it is not the presumption that it is not in force.

In either way–

John Paul Stevens:

Well, but changing the presumption, in your view, must have changed the law, too?

Ann Mary Kappler:

–No, Your Honor.

In either way, we can see that… that it can’t be contradicted by the statutes at large.

But Petitioners are here trying to demonstrate to you that the statutes at large actually present a law that is in force that permits national banks to sell insurance.

Now, that provision appears once in the statutes at large.

And that’s in 1916.

On its face, the enrolled bill, which is exactly the same as the statutes at large, of that 1916 act places section 92 in revised statutes 5202.

And it does both with language and with punctuation.

It begins by stating: Revised statutes 5202 are hereby amended to read as follows.

William H. Rehnquist:

Do you have a place that we can follow you, Ms. Kappler?

Ann Mary Kappler:

Certainly, Your Honor.

Using, again, the Bank Petitioner’s cert petition at page 70a, in the appendix of that.

And this is the paragraph that is noted as bracketed number 7.

It begins by stating:

“Section 5202 of the revised statutes of the United States is hereby amended so as to read as follows. “

It then sets out the series of paragraphs.

And it includes those paragraphs within bracket and quotation marks.

Now, as this Court held in Nashville Milk, the only way to interpret those words and those quotation marks is as amending a statute and as setting out in haec verbia the new amended version of 5202.

Antonin Scalia:

Ms. Kappler, I can agree with that, but what do you do with the language, 8?

That makes no sense as included in section 5202, does it?

Ann Mary Kappler:

Correct… no, Your Honor, it does make sense.

And I think it’s important to understand how laws were made.

At the time, there was no code.

What… what we had… if you wanted to figure out what the law was in 1916, you went first to the revised statutes.

That was a compilation of all the laws that had been passed up through 1873.

It was essentially a code.

From there on, however, you had to work your way chronologically through the revised statutes.

So, if someone wanted to know what 5202 of the revised statutes was in 1916, they have to begin with the revised statutes and work their way through.

Now when the reach the text of the 1916 act, they would read… read through, and the text would say… they would come to a reference of 1916 act.

That is that 5202 is not moving anyplace.

Ann Mary Kappler:

The only place anyone is going to read it is right there in the text of the 1916 act.

This act was in fact used by Congress at the time as a reference to the very act that was enacting the words.

David H. Souter:

Well, that makes perfect sense if the provision in which this act appears is the provision which expressly speaks of an amendment taking place.

But it doesn’t make sense if this act occurs in the text which is supposed to be the result of the amendment, or the result of the reenactment.

And we’re in… we’re in the second situation here, aren’t we, or at least arguably so?

Ann Mary Kappler:

No, Your Honor.

I think exactly how someone would understand this… well, first of all, there are two ways someone would… and we absolutely agree, this act refers to the Federal Reserve Act, as amended, as first passed in 1913, and then as amended in 1916.

And there are two ways anyone who read this would understand that.

First of all, it could only refer to the Federal Reserve–

William H. Rehnquist:

When you say 7 in the margin.

Ann Mary Kappler:

–Now I’m referring to paragraph… what is bracketed number 8.

William H. Rehnquist:

Okay.

Ann Mary Kappler:

It’s the paragraph that follows afterwards on page 70a.

And it’s this… the use of the phrase, “this act”, on which the Petitioners hinge their entire textual argument.

If someone is reading this, they’re only going to read it in the context of the 1916 act.

It’s going to make reference to 1916 act.

They’re not going to read it anywhere else, because that’s the way in which laws were made.

That’s why it’s not insignificant that when a code was finally created, the codifiers replaced the phrase, “this act”, every time they saw it, and replaced it with a reference to whatever the particular statute was in which the phrase appeared.

Anthony M. Kennedy:

Well, why is it then in the previous paragraph that the statute uses the word the Federal Reserve Act?

Ann Mary Kappler:

Well, I will agree, Your Honor, that the… that Congress was not stylistically consistent.

Whether they did that for absolute clarity or not, I do not know, Your Honor.

But I will agree they were not consistent.

But there’s no ambiguity in understanding what “this act” meant.

And even when you look… even if there was–

Antonin Scalia:

Well, of course, there’s no ambiguity, but there’s only… there’s no ambiguity because it seems to me very clear that the one is intended to be in 5202, and that’s why they say the provisions of the Federal Reserve Act, and the other one is meant to be in this piece of statute that’s being amended.

Ann Mary Kappler:

–Well, Your Honor, the problem, though, is that this piece of statute that’s being amended did two things.

The 1913 act, when it was amended, did two things.

It created new law, creating the Federal Reserve system, and it amended not just 5202, but 10 different sections of the revised statutes.

So to simply refer to the Federal Reserve Act is to refer both to the newly enacted law, the Federal Reserve system, and the amendments it made to preexisting law.

That’s why Petitioners arguing about the title is an entire red herring.

Ann Mary Kappler:

I mean, of course, Congress could say we are enacting… this is an act to amend certain sections of the Federal Reserve Act.

But the Federal Reserve Act included within it amendments to revise statutes 5202.

So there was absolutely no reason to repeat that.

William H. Rehnquist:

What did section 5202 deal with before it was amended in 1913?

Ann Mary Kappler:

Section 5202 is derived… its origin is a section of the National Bank Act.

And it specifically dealt with limitations on indebtedness that national banks could incur.

And it’s our proposition, Your Honor, that that’s why in fact Congress could sensibly place section 92 in the revised statutes 5202.

The Comptroller, who is the one who suggested that section 92, this permission for banks to sell insurance, be enacted, specifically proposed it to be an amendment to the National Bank Act.

Now–

David H. Souter:

What’s that got to do with the relationship between debt to capital?

Ann Mary Kappler:

–Your Honor, I’m not sure it has a relationship to debt to capital.

But what Congress–

David H. Souter:

Well, isn’t that what 5202 is dealing with?

Ann Mary Kappler:

–But 5202, Your Honor, is part of the National Bank Act.

The provisions which the Petitioners want you to insert it… to group it together with are provisions which have nothing to do with the powers of national banks.

They want you to group it together with language that has to do with the banking powers of Federal Reserve Banks.

This had to do with the non-banking powers of just national banks, not Federal Reserve Banks at all.

Now, the fact of the matter is, when Congress enacted this law, section 92, it evidently didn’t want to just write a new law… propose a separate bill, but wanted to propose it as an amendment to a bill that was already in front of it.

Byron R. White:

You may be right that… that paragraph 9 might have some connection with liabilities, but paragraph 8 has no relevance to what 5202 deals with.

Ann Mary Kappler:

That’s correct, Your Honor.

Nor does section 10.

And that’s why it is folly for this Court to try to entertain questions of where should these paragraphs go, cutting and pasting where they’re connected with, and should follow the signals that Congress provided in the enrolled bill.

That is, the opening and closing quotation marks.

Now, the fact of the matter is, neither our interpretation of the statute, which would group all three of these paragraphs in 5202 as the quotation marks exactly show… and there’s no other way to read them… that is not particularly sensible with those two paragraphs surrounding 92.

But neither is Petitioners’ argument.

And you’ll notice in their half an hour of argument, they made absolutely no attempt to justify why Congress would have put a provision allowing national banks to sell insurance together with the rest of this Federal Reserve Act.

If the Court is going to engage in cutting and pasting, then section 92 should logically be fitted with section 5202, and those other two paragraphs should be fitted with the rest of the text.

But this Court is not about making sensible law or law that makes sense… that reads smoothly.

What this Court has to do is give effect to the text that’s on the page.

And on the page here we have opening and closing quotation marks that cannot be read any other way.

Ann Mary Kappler:

Now, the Petitioners, although they pose this as a way of sort of statutory construction, in fact, they are asking this Court to erase, to ignore the quotation marks.

And the reason they’re doing that is because there’s no other way to read those quotation marks, except but enclosing what is revised statutes 5202.

Anthony M. Kennedy:

Is this provision that’s marked 8 here the only provision in the Federal Reserve Act that applies specifically to national banks?

Ann Mary Kappler:

Paragraph 9 you mean, Your Honor, the one that–

Anthony M. Kennedy:

Yes.

Paragraph 9.

Ann Mary Kappler:

–No, there are other provisions which… which relate to national banks.

However, they relate to national banks as they are functioning within the Federal Reserve system.

Both State banks and national banks could become part of the Federal Reserve system.

So that, in other places where there is mention of national banks, it’s in connection with their interaction, either with the Federal Reserve Board or with Federal Reserve Banks.

This is the only section that talks specifically about simple stand-alone powers of national banks.

Anthony M. Kennedy:

Are there… were there other statutes enacted later that applied only to national banks and that were outside of the Federal Reserve Act?

Ann Mary Kappler:

Your Honor, the preexisting National Bank Act, which was codified as such in different sections of the revised statutes, did just that.

It created national banks and gave them specific powers.

They are only creatures of statute.

I… as to a specific question of what happened afterwards–

Anthony M. Kennedy:

But… but… but afterwards?

Ann Mary Kappler:

–I don’t know, Your Honor.

I don’t know the answer to that question.

I do not know whether the… I know that the National Bank Act was… sections of the National Bank Act were subsequently amended without amending the Federal Reserve Act.

But I don’t know the answer to your specific question, Your Honor.

John Paul Stevens:

May I ask.

Did… does the present version of the code omit all three paragraphs, 8, 9 and 10?

Ann Mary Kappler:

Yes, Your Honor, it does.

John Paul Stevens:

Right.

Ann Mary Kappler:

And they are deemed repealed with the exact same explanation that is given as to section 92.

Antonin Scalia:

And what do you… how do you explain the subsequent statutes that amend this nonexistent provision?

What do you do with those?

Ann Mary Kappler:

Well, as Mr. Wright has conceded, a subsequent Congress cannot amend a nonexistent statute.

Now, the fact of the matter is that Congress, in 1982, apparently assumed that section 92 was still in existence.

Ann Mary Kappler:

And it sought, purported, to strike out a provision of that law.

But as this Court explained as long ago, in Town of South Ottawa, Congress can’t because it presumes a law is in effect… and effectively reenact it.

Antonin Scalia:

No, but surely in deciding what a law means, we try to reconcile new laws with old laws, and read them together in such a way that they… that they make sense, one with the other.

And if it’s possible to read the old law in such a way that the new amendments are not vain acts, why shouldn’t we read it that way?

Ann Mary Kappler:

Well, first of all, Your Honor, we don’t concede that it’s possible to read the 1916 act any other way.

But, second, there’s no evidence here that Congress, in 1982, or again, later on, when it sought to impose a moratorium, focused at all on the issue of whether section 92 is in existence or not.

The one time in which… well, two times… in which Congress actually focused on that issue were in 1958, when there was a lot of dispute as to whether section 92 was in existence or not, and evidence was submitted on both sides.

And Congress specifically said they couldn’t resolve the issue.

Now, Justice White, you asked the question, why didn’t the Comptroller ask to have the law reenacted.

In fact, the Federal Reserve Board specifically wrote to the House Judiciary Committee, and it’s the House Judiciary Committee that’s in charge of writing the code, stating that they thought the omission was wrong; that section 92 should be put back in; you’ve made a wrong judgment.

In 1958, the chairman of the House Judiciary Committee testified, no, we think we’re exactly right.

It was… it was omitted purposefully.

We made a conscious decision.

That’s why it’s not there.

This… the person who said they made the conscious decision was the chairman of the House Judiciary Committee, who testified during the hearings in 1958.

It’s the House Judiciary Committee that’s charged by Congress with creating the code.

Again, in 1965–

Byron R. White:

Well, then, was there… there wasn’t a committee report on that?

That was just his testimony?

Ann Mary Kappler:

–It was his testimony, correct, Your Honor.

It was accompanied by the Law… the Law Revision Counsel, who is the person appointed by the Speaker of the House of Representatives to be in charge with the revisions.

Byron R. White:

And do you think you… what if this case had come up before 1952, do you think you could have won?

Ann Mary Kappler:

Yes, Your Honor, I do.

Because I think the statutes–

Byron R. White:

And you could have overcome the presumption?

Ann Mary Kappler:

–Correct, Your Honor, because I think the statutes at large are clear.

Correct, Your Honor.

I’m sorry, Justice Stevens.

John Paul Stevens:

I was just curious, who was the chairman?

Was that Congressman Celler?

Ann Mary Kappler:

It was not, Your Honor.

I think it’s Coffee.

And we do cite him in our brief.

I want to say it’s Coffee, but I may be incorrect at the time.

In terms of what Congress then… Congress did in enacting, and the only way in which Congress can revive section 92 is by going through the bicameral motions under the Constitution, presenting it to the President, and having it signed into law.

No Congress has done that here.

And if we’re asking the question: What did the post-1918 Congresses think, one way or another?

They were of mixed views.

And the fact of the matter is, no matter what these later Congresses thought, unless they reenacted the law, they could not in any way revive the law.

John Paul Stevens:

May I ask.

I know you think the law is perfectly clear, but assuming that we thought there was an ambiguity, a tension between the language and the quotation and the punctuation, do you think it would be permissible to look at the legislative history to try and resolve the ambiguity?

Ann Mary Kappler:

No, Your Honor, not the way the Petitioners ask you to do.

The case–

John Paul Stevens:

Well, that’s the way I asked you to.

Normally, we often look at legislative history.

Some of us think we shouldn’t, but do you think the Court would be… and consistent with normal statutory construction principles, would be permitted to look at legislative history?

Ann Mary Kappler:

–Yes, Your Honor, but the legislative history would get you nowhere here.

And the fact of the matter is, there was no discussion at any point in time about where this paragraph should be placed.

That is, whether it should be placed in 5202 or elsewhere.

John Paul Stevens:

No, but wouldn’t it be relevant if there’s an absence of any stated reason for repealing these provisions, whereas the discussion makes sense if you… if you treat it the way the Government would interpret it?

Isn’t that relevant?

Ann Mary Kappler:

Well, Your Honor, what the 1918 Congress thought it was doing is not relevant to what the 1916 Congress did in enacting the law in 1916.

Now, in terms of what the 1918 Congress did, of course, the best evidence of its purpose is the text of the 1918 act, which restated 5202 without section 92.

Antonin Scalia:

And there is no ambiguity in that, that would justify going to legislative history, even if one were so disposed?

Ann Mary Kappler:

Correct, Your Honor.

And even if–

David H. Souter:

But doesn’t that simply prove that what the case turns on is not what the 1918 act provided, but what the 1916 act provided?

Ann Mary Kappler:

–Well, I think that’s right.

Ultimately, it does, Your Honor.

I think that is correct.

Ann Mary Kappler:

Of course, what this Court is going to be giving effect to is what the 1918 Congress did, in light of the 1916 act.

But the question does, we would agree, turn on whether section 92 is part of 5202 or not part of 5202.

William H. Rehnquist:

Were there any committee reports at all indicate what would be today a section-by-section analysis of the 1916 act?

Ann Mary Kappler:

No, Your Honor… not to my knowledge, Your Honor.

I… I do know, in reading through the descriptions of the act, there is nothing that describes either the… the section 92.

That is, the paragraph that allows them to sell insurance, nor section 13, that would give you one clue… one, either way or another.

There is simply no discussion at all, frankly, of this new provision to allow banks to sell insurance.

It was introduced as an amendment on the floor in the Senate after committee, and then there was no discussion.

If there’s any indication as to where it should go, it is the Comptroller’s suggestion that it may be part of the National Bank Act, and revised statutes 5202 is the only provision in the 1916 act that comes from the National Bank Act, and Senator Owen’s suggestion, admitting it, that it go in precisely after this introductory… introductory clause introducing revised statutes 5202.

Byron R. White:

Amendments to a nonexistent provision… I suppose those amendments were… passed both houses and they were signed by the President?

Ann Mary Kappler:

Correct, Your Honor.

But they have no… Congress cannot amend a nonexistent law.

Now, if Congress had enacted… essentially, reenacted the law, then we would… we wouldn’t be here today.

But what Congress purported to do was strike out–

Byron R. White:

So, if they’d a said section so and so is amended to read as follows?

Ann Mary Kappler:

–Correct, Your Honor, that we would be in a very different situation.

Byron R. White:

Well–

Ann Mary Kappler:

In that… in that instance, as this Court has said time and again–

Byron R. White:

–Well, there… at the same time, however, there wouldn’t have been a… by your account, there wouldn’t have been a provision to amend.

Ann Mary Kappler:

–Well, I think it turns on the question of whether amended… whether Congress would be constrained by the use of the word amended to read as follows.

This Court has interpreted that… that language as meaning that Con… what Congress intended to do was enact an entirely substitute provisions.

Byron R. White:

So you think there’s really… you think there’s really a major difference between that way of amending and the way they actually amended it?

Ann Mary Kappler:

Yes, Your Honor.

I think there is a large difference between Congress reenacting new language and showing in fact that they are reenacting–

Byron R. White:

Well, they didn’t reenact new language.

They said that… they… well, they did rephrase what they thought was a… a… a statute already on the books.

Ann Mary Kappler:

–They struck out what they thought was a statute that was already on the books.

But they were wrong.

And as Con… you know, as this Court noted in Town of South Ottawa, whether by inadvertence or whether they were misled by the parties who were lobbying at the time, it can’t effect a reenactment of a law that wasn’t in existence.

William H. Rehnquist:

Of course, the Town of Ottawa case was talking about something done by the Illinois legislature, and this Court was really just upholding the ruling of the Illinois Supreme Court in that case.

William H. Rehnquist:

I don’t regard that as quite the same as if the case had been discussing an act of Congress.

Ann Mary Kappler:

Well, correct, Your Honor.

Although what… what the Court was articulating was… was a theory of statutory constructure… construction, and the notion of exactly what has to happen in order for an act to be passed.

There’s no court that I know of, and certainly Petitioners have cited no court which… which has ever held that by striking out or seeking to strike out a provision of a repealed statute it effectuates a reenactment of that law.

Chadha makes quite clear you have to go through the very precise constitutional steps in order to enact a law.

For instance, if Congress held a lot of hearings and… and you read through the hearings and read through the committee reports, and it looks as if Congress really wanted national banks to sell insurance, if they didn’t pass the law, if they didn’t write it on… on a piece of paper that became the enrolled bill and present it to Congress, it doesn’t matter what they thought was good policy or whether they wanted to enact it.

One thing I think is helpful in terms of trying to figure out what the 1918 Congress did, is not just… you need not only focus on what the text of the 1918 act says, which clearly restates 5202, omitting section 92, but every extant description, apart from the statutes at large, of section 5202 showed section 92 as part of 5202.

And as the Court of Appeals noted, there were two privately published compilations that tried to create a code, the kind of code that we now have and can rely upon.

Both of those private publishers placed section 92 in 5202.

In addition, and the Court of Appeals did overlook this, there was a compilation created by the Comptroller of the Currency.

Now, Petitioners misleadingly describe that compilation.

In fact, that compilation clearly sets out section 92 in only one place.

That place is within revised statutes 5202.

There is a section of the Comptroller’s compilation which seeks to sort of put together the current version of all the revised statutes.

So they set out in 5202 and then list the paragraphs that are included within it.

Included within that is section 92.

In a separate section–

David H. Souter:

Did 92 appear somewhere else in that compilation, too?

Ann Mary Kappler:

–Yes, Your Honor, it did.

And where it appeared was in the Comptroller’s description of the Federal Reserve Act, as amended up through that date.

The Federal Reserve Act was first enacted in 1913, amended twice in 1914, one in 1915, and then we have this 1916 amendment.

What the Comptroller did there was to pull together all of those amendments.

But he made no attempt to peel away the sections of the Federal Reserve Act that were amendments to preexisting law.

So when you read through the text of the Federal Reserve Act, it includes amendments to at least 10 different sections of the revised statutes, and sets it out in text describing it, beginning with section 5202 is hereby amended to read as follows.

David H. Souter:

Well, assuming that the Comptroller’s own compilation was therefore ambiguous, would it be a fair maybe speculation is the word… that on that assumption that one purpose of the 1918 amendment to 5202 was in fact to clear up that ambiguity, and make it clear that section 92 was in the Federal Reserve Act and not in 5202?

Ann Mary Kappler:

There was no ambiguity, Your Honor.

There is only one way you can read it.

David H. Souter:

No, but I mean, if you assume there’s an ambiguity created by the Comptroller’s own compilation merely by virtue of the fact that section 92 appears in two places, might… well, let’s just stipulate that we could describe that as an ambiguity… might that be a purpose… have been a purpose of the 18 amendment?

Ann Mary Kappler:

No, Your Honor, because the 1918 act would not have cleared up the ambiguity.

What the 19–

David H. Souter:

Well, why wouldn’t it have cleared it up by making it clear that section 92 was not part of 5202?

Ann Mary Kappler:

–Because then what you would have is two different versions of 5202… one that was enacted that’s a stand-alone provision that was amended in 1918, and one that’s embedded somehow within the Federal Reserve Act that wasn’t changed.

The 1918 act–

David H. Souter:

Oh, you’re saying the only way they could have done that would have been unambiguously to take 52 out… 5202 out of the Federal Reserve Act completely?

Ann Mary Kappler:

–Correct, Your Honor.

The 1918 act did more than just strike out section 92.

It added a new limitation.

Correct, Your Honor.

Sandra Day O’Connor:

Ms. Kappler.

Ann Mary Kappler:

Yes.

Sandra Day O’Connor:

Now, none of these arguments were made in the Court of Appeals?

Ann Mary Kappler:

That’s correct, Your Honor.

Sandra Day O’Connor:

And do you concede that the Court of Appeals, nonetheless, had jurisdiction and power to reach the issues?

Ann Mary Kappler:

I think there’s no question that it had jurisdiction and power.

And certainly the United States agrees, Your Honor.

It’s a matter of discretion as to whether the Court should reach the issue.

And the Petitioners, the United States… the bank does not agree… but the United States agrees that there was a proper exercise of jurisdiction here, and a proper exercise of discretion.

Just as the Court in Arcadian and Kamen found that it could resolve legal issues on grounds not presented or not argued by the parties, so too the Court of Appeals had the authority to do so, and properly exercised its discretion here.

William H. Rehnquist:

It would be a rather strange doctrine if this Court accept only the arguments of one side or the arguments of the other, and couldn’t possibly think the thing through for itself.

Ann Mary Kappler:

Correct… correct, Your Honor.

It would be an odd game of sorts, yes.

Unless there is anything further.

Thank you.

William H. Rehnquist:

Very well, Ms. Kappler.

Mr. Wright, you have four minutes remaining.

Christopher J. Wright:

Thank you, Mr. Chief Justice.

I’d like to direct the Court’s attention to these documents.

We were said to have been misleading about what was in the… this is a 1917 collection of the banking laws that the Controller of the Currency compiled and was published by the Senate.

It’s an official Senate document.

This is what Justice Souter was referring to a minute ago.

David H. Souter:

Do we… Mr. Wright, just a technical question.

I just can’t remember this from the briefs.

Is there a citation to this or a title to this book?

Christopher J. Wright:

Yes, Your Honor.

This is Senate document 412, and it’s cited in the briefs.

In 1917, what the Controller thought had happened in 1916 was that section 92 appeared twice.

It appears in the Federal Reserve Act and it appears in the National Banking Act.

Now, this is another… this is… and this is actually I think the more significant document… it’s also cited… this is the 1920 compilation, after everything that’s most relevant had happened, at the end of the day, the Senate published another collection of the banking laws.

It was also compiled by the Controller.

The Controller thought that section 92 was still in existence, and it was still in existence in only one place, in section 13 of the Federal Reserve Act.

And, as Justice Souter said, one explanation… in fact, the explanation that flows most logically from the D.C. Circuit’s reasoning is that Congress may well have thought that two versions of… two versions of section 92 were one too many, and it cured that in 1918.

And after 1918, there was one and only one version of section 92 and it was located in the Federal Reserve Act, until 1926, when the first compilers of the U.S. Code moved it to 12 USC, section 92.

Antonin Scalia:

Mr. Wright, as I understand it, you do not contest the point in principle that Congress may have been ineffective in enacting its intent?

I mean, that that is theoretically possible?

Christopher J. Wright:

There is certainly one reading of those quotation marks that is contrary to what Congress intended–

Antonin Scalia:

And… and that if it was, then Congress simply failed to enact what it meant to enact?

That that is a possibility… that is possible, theoretically possible?

Christopher J. Wright:

–That is possible.

And… and the confusion is illustrated by that 1917 compilation I was just referring to which showed section 92 twice.

But the 1920 compilation shows it once, and for 70 years everyone has assumed that… everyone has operated on the assumption that section 92 is in existence.

Byron R. White:

Mr. Wright, what about those other sections, other than 92?

How about… is section 92 roughly what paragraph 9 is on 71a?

Christopher J. Wright:

Yes, Your Honor.

The only change is that a few words were stricken in 1982 by Congress.

Byron R. White:

But the same… the same problem or the same… all of these… 8, 9, 10… 8, 9 and 10 will suffer the same fate–

Christopher J. Wright:

Yes, Your Honor.

And… and… and let me say that I thought it was significant that the Insurance Agents agree that 8 and 10 had to go into the Federal Reserve Act in 1916.

They think that 9 belongs more logically in the National Bank Act.

Byron R. White:

–Well, I know, but–

Christopher J. Wright:

But they all go one place or another.

Byron R. White:

–But they… don’t… but don’t they claim that they were repealed?

Christopher J. Wright:

They claim… they claim they were all repealed, yes, Your Honor.

Byron R. White:

Yeah.

Even though they had… they really were part of the Federal Reserve Act.

Christopher J. Wright:

Although, if I could remind the Court, at oral argument in the D.C. Circuit, counsel for the Insurance Agents said, and I quote, that they quote, cannot advance a substantial argument that section 92 no longer exists, unquote.

That’s what they said a few months ago.

Antonin Scalia:

Is it the Government’s position that those other provisions are repealed, not repealed, what?

Christopher J. Wright:

We think that they’re not repealed either.

They went along with–

Antonin Scalia:

So your… the two sides are in disagreement as to all three of those–

Christopher J. Wright:

–Although, of course, only section 92–

Antonin Scalia:

–Is at issue here.

Christopher J. Wright:

–Is actually at issue here.

Byron R. White:

Well, I know, but it controls the other two, I would think.

Christopher J. Wright:

Yes.

And the Controller believes that those other two provisions are in effect as well, along with section 92.

Thank you.

William H. Rehnquist:

Thank you, Mr. Wright.

The case is submitted.