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04/28/60 Old Kent Bank and Trust v. William Mcc. Martin

April 28, 1960

OLD KENT BANK AND TRUST COMPANY, APPELLANT

v.

WILLIAM MCC. MARTIN, JR., INDIVIDUALLY AND AS CHAIRMAN OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, ET AL., APPELLEES.



Before EDGERTON, WASHINGTON and DANAHER, Circuit Judges.

UNITED STATES COURT OF APPEALS DISTRICT OF COLUMBIA CIRCUIT. 1960.CDC.54

April 28, 1960.

Petition for Rehearing Denied Sept. 9, 1960.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE EDGERTON

EDGERTON, Circuit Judge.

Appellant is a State bank and a member of the Federal Reserve System. It was formed by a merger or consolidation, "under the charter" of a predecessor State bank and under State law, between that predecessor and a national bank. It proposes to operate branches that were operated, until the merger, by the national bank.

Section 9 of the Federal Reserve Act, as amended, provides: ". . . Upon the merger or consolidation of a national bank with a State member bank under a State charter, the membership of the State bank in the Federal Reserve System shall continue. . . . The approval of the Board [of Governors of the Federal Reserve System] shall . . . be obtained before any State member bank may establish any new branch . . .." 66 Stat. 633, 12 U.S.C.A. § 321 (1958 ed.).

The Board has disapproved appellant's operation of the branches formerly operated by the national bank, on the ground that this would have an "adverse effect . . . on competition . . .." Appellant asked the District Court for a declaratory judgment that the Board's disapproval is not within its statutory authority and is illegal. This appeal is from a summary judgment for the Board.

We think the court erred. In our opinion the statutory word "establish" does not include "operate after acquiring by merger", and the statutory phrase "any new branch" of a State member bank does not include "any existing branch of a national bank that merges with a State member bank." In short, we think a State bank does not "establish any new branch" when it retains the branches it has acquired by merger.

The Board is not, and does not claim to be, authorized to prevent the merger of the two banks. It should follow, in the absence of clear language to the contrary, that the Board has no authority to prevent the incident of merger which is involved here. We find no such contrary language. Moreover, the Federal Reserve Act provides that when a national banking association merges or consolidates with a State bank under a State charter, "the resulting State bank shall be considered the same business and corporate entity as the national banking association, although as to rights, powers, and duties the resulting bank is a State bank." 64 Stat. 456, 12 U.S.C.A. § 214b (1952 ed.). If Congress had meant to require "the same business and corporate entity as the national banking association" to get the Board's approval in order to continue operating the association's branches, we think Congress would have said so.

Reversed.

MINORITY OPINION

WASHINGTON, Circuit Judge (dissenting).

Section 9 of the Federal Reserve Act, 38 Stat. 259 (1913), as amended, 12 U.S.C.A. § 321, provides in pertinent part that no state bank which is a member of the Federal Reserve System or seeks ...


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