Mercantile National Bank at Dallas v. Langdeau/Opinion of the Court

by Byron White

United States Supreme Court

371 U.S. 555

Mercantile National Bank at Dallas  v.  Langdeau

 Argued: Dec. 5, 1962. --- Decided: Jan 21, 1963

Appellee, the receiver for a Texas insurance company in liquidation in the Ninety-eighth District Court of Travis County, Texas, brought an action in that court against the two national banks who are appellants here and against 143 other parties, alleging a conspiracy to defraud the insurance company and claiming damages jointly and severally in the amount of 15 million dollars. Each appellant filed a plea of privilege, as provided by the Texas Rules of Civil Procedure, asserting that it was located in Dallas County, Texas, and was therefore immune from suit in Travis County under the provisions of Rev.Stat. § 5198 (1878), 12 U.S.C. § 94, which provides:

'Actions and proceedings against any association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases.' ^[1]

Appellee, on the other hand, relied upon Texas Insurance Code, Art. 21.28, Section 4, V.A.T.S. of which provides:

'(f) New Lawsuits. The court of competent jurisdiction of the county in which the delinquency proceedings are pending under this Article shall have venue to hear and determine all action or proceedings instituted after the commencement of delinquency proceedings by or against the insurer or receiver.'

The pleas of the banks were overruled and they appealed, it being agreed that the only issue for review was whether 12 U.S.C. § 94 entitled appellants to have the action transferred to the state court in Dallas County or whether the state venue provision contained in § 4(f) of the Insurance Code was controlling. The Court of Civil Appeals reversed and sustained the pleas of privilege on the ground that 12 U.S.C. § 94 required an action against a national bank to be brought in the county of its location. The Texas Supreme Court, however, refused to accept § 94 as prohibiting a suit against petitioners in Travis County when a state venue statute expressly permitted it. 161 Tex. 349, 341 S.W.2d 161. On the one hand, the court interpreted § 94 as permissive only, not mandatory, and on the other, as having been repealed by an omnibus repealing clause in an 1882 statute ^[2] subsequently absorbed into 28 U.S.C. § 1348. ^[3] Appellants brought the cases here under 28 U.S.C. § 1257(2) and, because of the finality question, we postponed ruling upon our jurisdiction until the merits were considered. 368 U.S. 809, 82 S.Ct. 32, 7 L.Ed.2d 19.

The question of our appellate jurisdiction is quite similar to the one considered in Local No. 438 Const. and General Laborers' Union, AFL-CIO v. Curry, 371 U.S. 543, 83 S.Ct. 531, although there the jurisdiction of any and all state courts was at issue and here the inquiry is only as to which state court has proper venue to entertain an action against two national banks. Nonetheless, a substantial claim, appealable under state law, is made that a federal statute, rather than a state statute, determines in which state court a national bank may be sued and, as in Curry, prohibits further proceedings against the defendants in the state court in which the suit is now pending. This is a separate and independent matter, anterior to the merits and not enmeshed in the factual and legal issues comprising the plaintiff's cause of action. Moreover, we believe that it serves the policy underlying the requirement of finality in 28 U.S.C. § 1257 to determine now in which state court appellants may be tried rather than to subject them, and appellee, to long and complex litigation which may all be for naught if consideration of the preliminary question of venue is postponed until the conclusion of the proceedings. Accordingly, we note our jurisdiction to hear this appeal under § 1257(2) and turn now to the question of whether appellants may be sued in the Travis County court.

The roots of this problem reach back to the National Banking Act of 1863, 12 Stat. 665, replaced a year later by the Act of 1864, 13 Stat. 99. ^[4] National banks are federal instrumentalities and the power of Congress over them is extensive. 'National banks are quasipublic institutions, and for the purpose for which they are instituted are national in their character, and, within constitutional limits, are subject to the control of Congress, and are not to be interfered with by state legislative or judicial action, except so far as the lawmaking power of the government may permit.' Van Reed v. People's Nat. Bank, 198 U.S. 554, 557, 25 S.Ct. 775, 776, 49 L.Ed. 1161. Unquestionably Congress had authority to prescribe the manner and circumstances under which the banks could sue or be sued in the courts and it addressed itself to this matter in the 1863 Act.

By § 11 of that Act the banking associations were given general corporate powers, among them the power to 'sue and be sued * * * in any court of law or equity as fully as natural persons.' ^[5] This section, if the teaching of Bank of the United States v. Deveaux, 5 Cranch 61, 3 L.Ed. 38, is observed, conferred no jurisdiction upon the courts but merely endowed the banks with power to sue and be sued in the courts as corporations. Congress, however, had more to say about this subject. Section 59 of the 1863 Act ^[6] provided that suits by and against any association under the Act could be had in any federal court held within the district in which the association was established. No mention was made of suits in state courts. If the law had remained in this form, there might well have been grave doubt about the suability of national banks in the state courts, as this Court noted in First Nat. Bank of Bay City v. Fellows ex rel. Union Trust Co., 244 U.S. 416, 428, 37 S.Ct. 734, 739, 61 L.Ed. 1233. ^[7] The next year, however, Congress expressly exercised its power to permit national banks to be sued in certain state courts as well as in federal courts. Section 57 of the 1864 Act ^[8] carried forward the former § 59 and also added that 'suits * * * may be had * * * in any state, county, or municipal court in the county or city in which said association is located, having jurisdiction in similar cases * * *.' The phrase 'suits * * * may be had' was, in every respect, appropriate language for the purpose of specifying the precise courts in which Congress consented to have national banks subject to suit and we believe Congress intended that in those courts alone could a national bank be sued against its will.

We would not lightly conclude that a congressional enactment has no purpose or function. We must strive to give appropriate meaning to each of the provisions of Title 12 and its predecessors. See United States v. Menasche, 348 U.S. 528, 539, 75 S.Ct. 513, 520, 99 L.Ed. 615; Inhabitants of Montclair v. Ramsdell, 107 U.S. 147, 152, 2 S.Ct. 391, 394, 27 L.Ed. 431. Appellee, however, would have us hold that any state court could entertain a suit against a national bank as long as state jurisdictional and venue requirements were otherwise satisfied. Such a ruling, of course, would render altogether meaningless a congressional enactment permitting suit to be brought in the bank's home county. This we are unwilling to do, particularly in light of the history of § 57. That section was omitted from Title 62 (National Banks) of the Revised Statutes of 1873, but at the same time, there were included in Title 13 (The Judiciary) provisions granting the federal courts jurisdiction over suits by and against national banks brought in the district of their residence. ^[9] These express provisions relating to the jurisdiction of the federal courts apparently did not solve the entire problem, for § 5198 of Title 62, Revised Statutes, was amended in 1875 by adding to it provisions substantially identical to § 57 of the 1864 Act. ^[10] Thus for a second time Congress specified the precise federal and state courts in which suits against national banks could be brought.

All of the cases in this Court which have touched upon the issue here are in accord with our conclusion that national banks may be sued only in those state courts in the county where the banks are located. ^[11] Notable among these is First Nat. Bank of Charlotte v. Morgan, 132 U.S. 141, 10 S.Ct. 37, 33 L.Ed. 282, which involved a suit against a national bank brought in a county other than that in which the bank was located. This Court stated that § 57 conferred a personal privilege on the banks exempting them from suits in state courts outside their home counties. However, since the bank in that case had not objected at the trial to the location of the suit but raised the issue for the first time on appeal, the Court held that the § 57 privilege had been waived. ^[12]

Thus, we find nothing in the statute, its history or the cases in this Court to support appellee's construction of this statute. On the contrary, all these sources convince us that the statute must be given a mandatory reading. ^[13]

The consequence of our decision, appellee says, is that a litigant will be unable to join two national banks in the same action in the state courts if they are located in different counties or in the federal courts if they are located in different districts. But aside from not being presented by these cases, such a situation is a matter for Congress to consider. Cf. 28 U.S.C. §§ 1391(a), (b), 1401; Greenberg v. Giannini, 140 F.2d 550, 552, 152 A.L.R. 966 (C.A.2d Cir.). See also, Bankers Life & Casualty Co. v. Holland, 346 U.S. 379, 384, 74 S.Ct. 145, 148, 98 L.Ed. 106.

Similarly, even if all of the 145 defendants may not be sued in one proceeding in Dallas County with the same facility as they may in Travis County, this, of course, is insufficient basis for departing from the command of the federal statute. Nevertheless, though we have no intention of venturing an opinion on matters of Texas procedure, particularly when the parties were in disagreement about them in argument before this Court, we are aware of the recent ruling of the Texas Supreme Court, Langdeau v. Burke Investment Co., Tex., 358 S.W.2d 553, holding Texas Insurance Code, Art. 21.28(4), permissive, not mandatory, thus not restricting the receiver to suits in the receivership court. We have also noted that Texas procedural rules might very well permit the transfer of the entire case to Dallas County. Tex. Rules Civ.Proc. 89; ^[14] Tunstill v. Scott, 138 Tex. 425, 160 S.W.2d 65; Terrell v. Kohler, 48 S.W.2d 531 (Tex.Civ.App.). Moreover, Tex.Rules Civ.Proc. 164 ^[15] appears to permit dismissal of suits without prejudice when a plea of improper venue is sustained, see Luck v. Welch, 243 S.W.2d 589 (Tex.Civ.App., ref. n.r.e.); Wiley v. Joiner, 223 S.W.2d 539 (Tex.Civ.App.), opening the way for a new suit which Article 1995(4) ^[16] indicates could be brought in Dallas County. ^[17]

Appellee, finally, attempts to avoid his venue problem entirely by denying the very existence of § 5198, Rev.Stat. (1878). Section 5198, appellee says, was repealed by the proviso to § 4 of the Act of July 12, 1882:

'(T)he jurisdiction for suits hereafter brought by or against any association * * * shall be the same as, and not other than, the jurisdiction for suits by or against banks not organized under any law of the United States * * *. And all laws and parts of laws of the United States inconsistent with this proviso be, and the same are hereby, repealed.' ^[18]

It is also said that 28 U.S.C. § 1348, ^[19] derived from the Act of March 3, 1887, ^[20] re-enacts § 4 of the 1882 Act, in somewhat modified form, thus continuing the congressional intent to repeal § 5198 to the extent that it prescribes the venue of suits in state courts. See 161 Tex., at 356, 341 S.W.2d, at 166.

Since § 4 of the Act of 1882 and its successors do not expressly repeal § 5198, appellee's contention is necessarily one of implied repeal requiring some manifest inconsistency or positive repugnance between the two statutes. United States v. Borden Co., 308 U.S. 188, 198-199, 60 S.Ct. 182, 188, 84 L.Ed. 181. We find neither here. Section 5198, as construed in the First Nat. Bank of Charlotte case, is essentially a venue statute governing the proper location of suits against national banks in either federal or state courts, whereas § 4 of the 1882 Act and the 1887 Act were designed to overcome the effect of §§ 563 and 629 Rev.Stat. ^[21] which allowed national banks to sue and be sued in the federal district and circuit courts solely because they were national banks, without regard to diversity, amount in controversy or the existence of a federal question in the usual sense. Section 4 apparently sought to limit, with exceptions, the access of national banks to, and their suability in, the federal courts to the same extent to which non-national banks are so limited. ^[22]

Decisions of this Court have recognized that § 4 purported to deal with no more than matters of federal jurisdiction. As we observed in Continental National Bank of Memphis v. Buford, 191 U.S. 119, 123-124, 24 S.Ct. 54, 56, 48 L.Ed. 119:

'The necessary effect of this legislation was to make national banks * * * citizens of the states in which they were respectively located, and to withdraw from them the right to invoke the jurisdiction of the circuit courts of the United States simply on the ground that they were created by, and exercised their powers under, acts of Congress. No other purpose can be imputed to Congress than to effect that result.' See also Leather Manufacturers' Nat. Bank v. Cooper, 120 U.S. 778, 7 S.Ct. 777, 30 L.Ed. 816. Moreover, nothing in the subsequent history of this statute, now 28 U.S.C. § 1348, warrants the conclusion that Congress sought, even by implication, to relax the venue restrictions of § 5198.

The provisions of § 5198 are fully effective and must be recognized when they are duly raised. The judgments of the Texas Supreme Court are reversed and the causes remanded for further proceedings not inconsistent with this opinion.

Reversed and remanded.

Mr. Justice BLACK and Mr. Justice DOUGLAS, while agreeing with the Court that the judgments are 'final,' dissent on the merits of the controversy.

Mr. Justice CLARK took no part in the consideration or decision of these cases.

(For dissenting opinion of Mr. Justice HARLAN, see post, p. 572.)

'Sec. 11. And be it further enacted, That every association formed pursuant to the provisions of this act may make and use a common seal, and shall have succession by the name designated in its articles of association and for the period limited therein, not, however, exceeding twenty years from the passage of this act; by such name may make contracts, sue and be sued, complain and defend in any court of law or equity as fully as natural persons * * *.' 12 Stat. 668.

'Sec. 59. And be it further enacted, That suits, actions, and proceedings by and against any association under this act may be had in any circuit, district, or territorial court of the United States held within the district in which such association may be established.' 12 Stat. 681.

'Sec. 8. * * * Such association * * * may make contracts, sue and be sued, complain and defend, in any court of law and equity as fully as natural persons.' 13 Stat. 101; Rev.Stat. § 5136 (1873).

'Sec. 57. * * * That suits, actions, and proceedings, against any association under this act, may be had in any circuit, district, or territorial court of the United States held within the district in which such association may be established; or in any state, county, or municipal court in the county or city in which said association is located, having jurisdiction in similar cases: Provided, however, That all proceedings to enjoin the comptroller under this act shall be had in a circuit, district, or territorial court of the United States, held in the district in which the association is located.' 13 Stat. 116-117.

3. Section 57 was omitted from Title 62, National Banks, in the Revised Statutes of 1873. It was added to § 5198 of Title 62, National Banks, by the Act of February 18, 1875, c. 80, 18 Stat. 320. Section 5198, as amended, reads as follows:

'Sec. 5198. The taking, receiving, reserving, or charging a rate of interest greater than is allowed by the preceding section, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon. In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover back, in an action in the nature of an action of debt, twice the amount of the interest thus paid from the association taking or receiving the same; provided such action is commenced within two years from the time the usurious transaction occurred. That suits, actions, and proceedings against any association under this title may be had in any circuit, district, or territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases.' (Amendment in italics.)

4. The portion of § 5198, Rev.Stat. (1878), relating to suits in federal and state courts, derived from § 57 of the 1864 Act, now appears as 12 U.S.C. § 94:

's 94. Venue of suits

'Actions and proceedings against any association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases.'

Title 12 has not as yet been enacted into positive law.

5. Revised Statutes of 1873, Title 13, The Judiciary, c. 3, District Courts-Jurisdiction.

'Sec. 563. the district courts shall have jurisdiction as follows: * * * Fifteenth. Of all suits by or against any association established under any law providing for national banking associations within the district for which the court is held.'

Revised Statutes of 1873, Title 13, The Judiciary, c. 7, Circuit Court-Jurisdiction.

'Sec. 629. The circuit courts shall have original jurisdiction as follows: * * * Tenth. Of all suits by or against any banking association established in the district for which the court is held, under any law providing for national banking associations.'

These provisions were derived from that part of § 57 of the 1864 Act which conferred jurisdiction on the federal courts.

6. Act of July 12, 1882, c. 290, 22 Stat. 162, an Act to enable national banking associations to extend their corporate existence, and for other purposes. Section 4 of that Act contained the following proviso:

'* * * Provided, however, That the jurisdiction for suits hereafter brought by or against any association established under any law providing for national-banking associations, except suits between them and the United States, or its officers and agents, shall be the same as, and not other than, the jurisdiction for suits by or against banks not organized under any law of the United States which do or might do banking business where such national-banking associations may be doing business when such suits may be begun: And all laws and parts of laws of the United States inconsistent with this proviso be, and the same are hereby, repealed.' ^[23] 22 Stat. 163.

7. Act of March 3, 1887, c. 373, as amended by the Act of August 13, 1888, c. 866.

'Sec. 4. That all national banking associations established under the laws of the United States shall, for the purposes of all actions by or against them, real, personal, or mixed, and all suits in equity, be deemed citizens of the States in which they are respectively located; and in such cases the circuit and district courts shall not have jurisdiction other than such as they would have in cases between individual citizens of the same State.

'The provisions of this section shall not be held to affect the jurisdiction of the courts of the United States in cases commenced by the United States or by direction of any officer thereof, or cases for winding up the affairs of any such bank.' ^[24] 25 Stat. 436.

8. 28 U.S.C. § 1348 contains the present version of the matters covered in the Acts of 1882, 1887 and 1888:

's 1348. Banking association as party

'The district courts shall have original jurisdiction of any civil action commenced by the United States, or by direction of any officer thereof, against any national banking association, any civil action to wind up the affairs of any such association, and any action by a banking association established in the district for which the court is held, under chapter 2 of Title 12, to enjoin the Comptroller of the Currency, or any receiver acting under his direction, as provided by such chapter.

'All national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are respectively located.'

Mr. Justice HARLAN, dissenting.

Notes

1. See Appendix, No. 4. The pertinent national bank legislation appears in the Appendix to this opinion, p. 567.
2. See Appendix, No. 6.
3. See Appendix, No. 8.
4. The history of national banking in the United States begins with the First Bank of the United States, chartered in 1791 (1 Stat. 191; see Bank of United States v. Deveaux, 5 Cranch 61, 3 L.Ed. 38), which continued in existence until 1811. 1 Dictionary of American History 155 (1940). The Second Bank was incorporated in 1816, 3 Stat. 266, see Osborn v. Bank of United States, 9 Wheat. 738, and terminated in 1836 when its charter was permitted to expire. Ibid.
5. See Appendix, No. 1.
6. Ibid.
7. '(O)ur conclusion on this subject is fortified by the terms of § 57, chap. 106, 13 Stat. at L. 116 (the 1864 Act, discussed infra), making controversies concerning national banks cognizable in state courts because of their intimate relation to many state laws and regulations, although, without the grant of the act of Congress, such controversies would have been Federal in character.' 244 U.S., at 428, 37 S.Ct., at 739. But cf. Claflin v. Houseman, 93 U.S. 130, 135, 23 L.Ed. 833.
8. See Appendix, No. 2.
9. See Appendix, No. 5.
10. See Appendix, No. 3.
11. First Nat. Bank of Bethel v. Pahquioque Bank, 14 Wall. 383, 20 L.Ed. 840, was a suit in state courts against a national bank in default on its notes. The national bank contended that since it was an instrumentality of the Federal Government, it was not subject to suit in state courts. This Court, noting that the suit was in a state court where the bank was located, sustained the power of the state court squarely upon the provisions of § 57. Subsequently, Casey v. Adams, 102 U.S. 66, 26 L.Ed. 52, reaffirmed the mandate of § 57, then Rev.Stat. § 5198, as applied to ordinary transitory actions but held that Congress did not intend it to apply to local, in rem actions. Many years later, in the course of deciding Cope v. Anderson, 331 U.S. 461, 67 S.Ct. 1340, 91 L.Ed. 1602, this Court, in compelling language, pointed out: 'For jurisdictional purposes, a national bank is a 'citizen' of the state in which it is established or located, 28 U.S.C. § 41(16), and in that district alone can it be sued. 12 U.S.C. § 94.' 331 U.S., at 467, 67 S.Ct., at 1343.
12. 'This exemption of national banking associations from suits in state courts, established elsewhere than in the county or city in which such associations were located, was, we do not doubt, prescribed for the convenience of those institutions, and to prevent interruption in their business that might result from their books being sent to distant counties in obedience to process from state courts. (First Nat.) Bank of Bethel v. Pahquioque Bank, 14 Wall. 383, 394, (20 L.Ed. 840); Crocker v. Marine National Bank, 101 Mass. 200 (240). But, without indulging in conjecture as to the object of the exemption in question, it is sufficient that it was granted by congress, and if it had been claimed by the defendant, when appearing in the Superior Court of Cleveland county, must have been recognized. The defendant did not, however, choose to claim immunity from suit in that court.
13. The lower federal courts have been unanimous in holding the section fully effective and mandatory. Buffum v. Chase Nat. Bank, 192 F.2d 58 (C.A.7th Cir. 1951), cert. denied, 342 U.S. 944, 72 S.Ct. 558, 96 L.Ed. 702; Leonardi v. Chase Nat. Bank, 81 F.2d 19 (C.A.2d Cir. 1936), cert. denied, 298 U.S. 677, 56 S.Ct. 941, 80 L.Ed. 1398; International Refugee Organization v. Bank of America, 86 F.Supp. 884 (S.D.N.Y.1949); Schmitt v. Tobin, 15 F.Supp. 35 (D.Nev.1935); Cadle v. Tracy, 4 Fed.Cas. 967, No. 2,279 (C.C.S.D.N.Y.1873).
14. 'Transferred if Plea Is Sustained
15. 'Non-Suit
16. 'Venue, general rule
17. To be sure, Texas law does not permit frivolous joinder of defendants to insure a desired venue, see Stockyards Nat. Bank v. Maples, 127 Tex. 633, 95 S.W.2d 1300, but nothing before us indicates that appellee will find any difficulty in sustaining his burden to establish that the defendant national banks are residents of Dallas County and that, as he alleges, his cause of action against them has a substantial and valid basis.
18. See Appendix, No. 6. See note 13, supra, for state cases which have reached the same conclusion.
19. See Appendix, No. 8.
20. See Appendix, No. 7.
21. See Appendix, No. 5.
22. The proviso to § 4 of the 1882 Act first appeared as an amendment offered on the floor of the House by Representative Hammond, pursuant to the order of the House fixing the assignment of the bill H.R. 4167 as a special order. See 13 Cong.Rec. 3900, 3901. Mr. Hammond succinctly stated the purpose of his amendment as follows: 'My amendment, therefore, declares that the jurisdictional limits for and as to a national bank shall be the same as they would be in regard to a State bank actually doing or which might be doing business by its side; that they shall be one and the same.' 13 Cong.Rec., at 4049. Mr. Robinson then asked, 'As I understand the gentleman's proposed amendment, it is simply to this effect, that a national bank doing business within a certain State shall be subject for all purposes of jurisdiction to precisely the same regulations to which a State bank, if organized there, would be subject.' Mr. Hammond replied, 'That is all.' Ibid.
23. The proviso to § 4 of the Act of 1882 is included in the Supplement to the Revised Statutes at 354 (2d ed. 1891), despite the apparent duplication of the Acts of 1887 and 1888, appearing at 614. It does not appear in the 1925 United States Code, the first official restatement since 1878 of all United States statutes presumptively in effect, evidently because the Committee on Revision cited the entire 1882 Act as repealed, 44 Stat. 1833, by the Act of July 1, 1922, c. 257, § 2, 42 Stat. 767. When the 1948 codification of Title 28 was enacted, the proviso to § 4 of the Act of 1882 was expressly repealed. 62 Stat. 992, ch. 646, § 39.
24. The Acts of 1887 and 1888 were repealed when the 1911 codification of the judiciary and judicial procedure provisions was enacted. Act of March 3, 1911, c. 231, § 297, 36 Stat. 1168. These provisions became § 24 of the Judicial Code of 1911, 28 U.S.C. (1940 ed.) § 41(16) and then § 1348 of Title 28 enacted in 1948.