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decided*fn*: December 12, 1966.



Warren, Black, Douglas, Clark, Harlan, Brennan, Stewart, White, Fortas

Author: Clark

[ 385 U.S. Page 253]

 MR. JUSTICE CLARK delivered the opinion of the Court.

These cases involve the construction of those portions of the National Bank Act, 44 Stat. 1228, 12 U. S. C. § 36 (c), which authorize a national banking association, with the approval of the Comptroller of the Currency, to establish and operate new branches within the limits of the municipality in which the bank is located, if such operation is "at the time expressly authorized to State banks by the law of the State in question."*fn1 Two national banks with their main banking houses in Logan and Ogden, Utah, respectively, seek to open branches in those municipalities. The Utah statute prohibits Utah banks, with certain exceptions not here relevant, from establishing branches except by taking over an existing bank which has been in operation for not less than five years. Utah Code Ann., Tit. 7, c. 3, § 6 (1965 Supp.).*fn2 In No. 51,

[ 385 U.S. Page 254]

     under Utah law (Utah Code Ann., Tit. 10, c. 1, § 1 (1953, as amended)), and is therefore subject to § 7-3-6 of the Utah Code, supra. It applied to the Comptroller of the Currency for a certificate to establish an "inside" branch office in Logan. At the time of the application there were no other banks with their main banking offices in Logan. However, there were two branches of banks whose home offices were situated outside of Logan, one of which belonged to respondent, Walker Bank & Trust Co., whose home office was located in Salt Lake City. After a hearing, the Comptroller ordered the certificate issued. The respondent subsequently filed this suit seeking a declaratory judgment and injunctive relief against the Comptroller and First National claiming the action of the Comptroller to be void since the proposed branch was not taking over an established bank in Logan, as required by Utah law. The District Court dismissed the complaint. It found "express authority" under Utah law for state banks to establish branch offices in Logan, relying on the general authority of the statute and holding that the subsequent conditions, such as the acquisition of another bank, did not "change the 'express authority' into a lack of authority on the part of State banks or a lack of a statutory expression of such authority, and [did] not add to the Federal statute a requirement that compliance be made by National banks with all State conditions." 234 F.Supp. 74, 78, n. 8. The Court of Appeals reversed, holding that the Congress in enacting § 36 (c)(1) acceded to state law and created "a competitive equality between state and national banks." Finding that the trial court's interpretation was to the contrary, it declared "the proper approach is for the Comptroller to look at all the State law on branch banking not just part of it." 352 F.2d 90, 94.

[ 385 U.S. Page 256]

     In Nos. 73 and 88, the First Security Bank of Utah, a national bank, applied for a certificate from the Comptroller to establish a branch bank in Ogden, where it maintained its principal banking house. Its proposal was to open a new branch and not to take over an existing bank in Ogden. Under Utah law, Ogden is also a second class city and the "take over" provision of § 7-3-6, supra, was therefore applicable. Two other banks have their main offices in Ogden. After the Comptroller approved the issuance of the certificate, respondent filed suit in the District Court of the United States for the District of Columbia asking for injunctive and other relief. The District Court imposed all of the restrictions of § 7-3-6 of Utah law on the establishment of national banks and the Court of Appeals for the District of Columbia Circuit affirmed, by a judgment without opinion, but cited the opinion of the 10th Circuit, Walker Bank & Trust Co., supra.

2. The National Bank Act: Its Background.

There has long been opposition to the exercise of federal power in the banking field. Indeed, President Jefferson was opposed to the creation of the first Bank of the United States and President Jackson vetoed the Act of Congress extending the charter of the second Bank of the United States. However, the authority of Congress to act in the field was resolved in the landmark case of McCulloch v. Maryland, 4 Wheat. 316 (1819). There Chief Justice Marshall, while admitting that it does not appear that a bank was in the contemplation of the Framers of the Constitution, held that a national bank could be chartered under the implied powers of the Congress as an instrumentality of the Federal Government to implement its fiscal powers. The paramount power of the Congress over national banks has, therefore, been settled for almost a century and a half.

[ 385 U.S. Page 257]

     Nevertheless, no national banking act was adopted until 1863 (12 Stat. 665), and it was not until 1927 that Congress dealt with the problem before us in these cases. This inaction was possibly due to the fact that at the turn of the century, there were very few branch banks in the country. At that time only five national and 82 state banks were operating branches with a total of 119 branches. By the end of 1923, however, there were 91 national and 580 state banks with a total of 2,054 branches.*fn3 The Comptroller of the Currency, in his Annual Report of 1923, recommended congressional action on branch banking. The report stated that if state banks continue to engage "in unlimited branch banking it will mean the eventual destruction of the national banking system . . . ." H. R. Doc. No. 90, 68th Cong., 1st Sess., 6 (1924). Soon thereafter legislation was introduced to equalize national and state branch banking. The House Report on the measure, H. R. Rep. No. 83, 69th Cong., 1st Sess., 7 (1926), stated among other things:

"The bill recognizes the absolute necessity of taking legislative action with reference to the branch banking controversy. The present situation is intolerable to the national banking system. The bill proposes the only practicable solution by stopping the further extension of state-wide branch banking in the Federal reserve system by State member banks and by permitting national ...

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