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FIRST NATL. BANK & TRUST CO. v. AMERICAN SEC. & TR

July 29, 1977

THE FIRST NATIONAL BANK & TRUST COMPANY IN MACON, Plaintiff and Counter-Defendant,
v.
AMERICAN SECURITY & TRUST COMPANY, Defendant and Counter-Plaintiff



The opinion of the court was delivered by: SIRICA

 The First National Bank & Trust Company in Macon ("First Macon"), a national bank in Georgia, filed the original complaint in this case against American Security & Trust Company ("AS&T"), a national bank in Washington, D.C., for specific performance of a settlement agreement. AS&T subsequently filed a counterclaim for rescission, claiming that First Macon committed fraud in inducing AS&T to enter into the agreement; AS&T also raised fraud as a defense to its non-compliance with certain of its contractual obligations.* First Macon has now moved to dismiss the counterclaim and to strike the defense of fraud on the ground that AS&T has failed to offer to restore to the Georgia bank the benefits AS&T has received under the agreement. First Macon has also moved for dismissal of the counterclaim for lack of venue.

 AS&T claims that tender is not necessary under the circumstances of this case, and also that this Court in fact has venue jurisdiction over the counterclaim. It is these issues which the Court must decide at this time.

 I.

 The motion to dismiss the counterclaim for lack of venue must be denied. First Macon's argument is that it is a national bank and that venue in a suit against such a bank is governed by 12 U.S.C. § 94 (1970). That section provides, in relevant part, as follows:

 
Actions and proceedings against any [national bank] may be had in any district or Territorial court of the United States held within the district in which such [bank] may be established . . . .

 The plaintiff claims that this section applies to counterclaims as well as to original claims and that, therefore, the counterclaim can only be brought in the district where First Macon is established, which is the Middle District of Georgia.

 At least with regard to mandatory counterclaims, which AS&T's claim concededly is, the Court does not agree.

 The purpose of 12 U.S.C. § 94 is to limit the inconvenience that the national bank must suffer in defending itself, particularly the disruption that would be caused by transferring important bank records to distant courts. First National Bank of Charlotte v. Morgan, 132 U.S. 141, 145, 33 L. Ed. 282, 10 S. Ct. 37 (1889). Whenever the action against the national bank is a counterclaim, however, the general inconvenience to the bank is diminished substantially. And when the counterclaim is a mandatory one -- that is, one which "arises out of the transaction or occurrence that is the subject matter of the opposing party's claim," Fed. R. Civ. P. 13(a) -- the records relevant to the counterclaim will in all likelihood be needed in the distant court in any event. In these instances, then, the inconvenience of the bank's having to defend itself in a distant forum is virtually nonexistent.

 On the other hand, the purpose of having mandatory counterclaims is to have all related claims adjudicated in a single forum. If 12 U.S.C. § 94 applies to such counterclaims, then this policy will often be thwarted for what appears to be no compelling reason. The Court cannot ascribe such an intent to Congress, and concludes that section 94 does not apply to mandatory counterclaims. Accordingly, the Court holds that it has venue jurisdiction over the counterclaim.

 II.

 A.

 The motions to dismiss the counterclaim and to strike the defense of fraud for failure of AS&T to tender back the benefit it has received under the contract also must be denied. The relevant facts, as they appear at this early stage, are these:

 In August of 1973, Halbern Industries, Inc., and its subsidiaries went bankrupt. At the time, these corporations were heavily indebted to both First Macon and AS&T. Both banks had given the bankrupts sizeable secured loans -- First Macon's totalled $750,000; AS&T's totalled at least $300,000. In addition, certain of these corporations had maintained checking accounts at both banks and, through a "kiting" scheme, had managed to overdraw their accounts at AS&T by over one million dollars. Of that amount, according to AS&T, ...


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