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NATIONAL BANK OF MCKEESPORT v. SAXON

May 31, 1967

National Bank of McKeesport and Peoples Union Bank and Trust Co., Plaintiffs,
v.
John J. Saxon, Comptroller of the Currency of the United States and Mellon National Bank and Trust Co., Defendants


Weber, J.


The opinion of the court was delivered by: WEBER

This matter involves motions for summary judgment on the record filed by both of the within defendants.

 The plaintiffs have filed a complaint for declaratory judgment asking, among other things, for injunctive relief to restrain the Comptroller from granting a certificate to operate a branch bank to the defendant Mellon National Bank and Trust Company (Mellon Bank) and injunctive relief against the Mellon Bank from operating such a branch in McKeesport, Pennsylvania.

 McKeesport, Pennsylvania, is a community of about 80,000 people located at the confluence of the Monongahela-Youghiogheny Rivers (known as the "Mon-Yough" Region). The Mon-Yough Region has traditionally maintained a separate identity from the nearby Pittsburgh and Allegheny County area, even though McKeesport is located in Allegheny County.

 The National Bank of McKeesport, a plaintiff in this action, is a national bank having its principal place of business in McKeesport, Pennsylvania, with several branches in the "Mon-Yough" area. The Peoples Union Bank and Trust Company, another plaintiff in this action, is a state bank organized under Pennsylvania law, having its principal place of business in McKeesport, with branches located in the surrounding "Mon-Yough" area.

 Defendants are the Comptroller of the Currency of the United States, a federal officer, and Mellon Bank.

 After purchasing a certain piece of property in McKeesport, Mellon Bank, on June 8, 1964, applied to the Comptroller of Currency for a certificate to operate a branch office. The Deputy Comptroller, after conference with protesting banks and investigation by his staff, indicated on December 27, 1965, that a branch certificate would be issued to operate a branch on that property.

 The plaintiffs filed the within complaint on February 19, 1966. By agreement of the parties, the proceedings were stayed to allow the Comptroller to conduct further hearings to determine the appropriateness of issuing Mellon Bank such a branch certificate. Hearings were held on May 16 and 17, 1966, and the Comptroller filed further findings on November 25, 1966. In February 1967, the Comptroller indicated that a certificate was to be issued thereby removing the stay in the proceedings of this law suit. As a result of such hearing the plaintiffs now admit that the original allegation of lack of due process in the original administrative proceeding has been disposed of.

 The defendants have moved for summary judgment on the record before the Comptroller, asserting that there "is no genuine issue of fact" open to establish that the Comptroller's decision was arbitrary and capricious.

 The defendants argue that the Comptroller's opinion demonstrates as a matter of law that all of the Pennsylvania requirements for the issuance of a branch bank certificate to Mellon Bank were met in this particular instance. Defendants argue that there was ample evidence presented at the two hearings from which the Comptroller could find that the Mellon Branch would provide a useful public service in McKeesport. The defendants further contend that the determination of a Comptroller in the granting of a branch bank certificate is a discretionary matter and that 5 U.S.C. § 1009 of the Administrative Procedure Act excepts from judicial review "(2) agency action . . . committed to agency discretion."

 The plaintiffs oppose the defendants' motion on a three-fold basis; one, that the Comptroller failed to consider certain requirements of branch banking under Pennsylvania law as he is obliged to do under 12 U.S.C.A. § 36(c); two, the Comptroller failed to consider overwhelming evidence presented at the hearings which demonstrated that no additional banking services were needed in the McKeesport area; and three, the Comptroller acted capriciously in not considering the effect of Mellon Bank's opening a branch in McKeesport under the various anti-trust laws.

 The guidelines to be followed by the Comptroller in deciding on the appropriateness of granting a certificate to a national bank to operate a branch bank are established by 12 U.S.C.A. § 36(c). This federal statute requires the Comptroller generally to grant branches to national banks in those instances where the State Banking Authority in the state where the branch is to be located would grant a certificate to a state bank to open such a branch. Behind this statute was a congressional intention to foster a parity between the granting of certificates for branches of national banks and the granting of certificates for branches of state banks. First National Bank v. Walker Bank & Trusr Co., 385 U.S. 252, 261, 17 L. Ed. 2d 343, 87 S. Ct. 492 (1966).

 The plaintiffs argue that there is an issue of fact as to whether the Comptroller found that this branch bank was needed in McKeesport. The Pennsylvania statute, 7 P.S. §§ 904, 905, requires that such a need be established in the area where the branch is to be located before the ...


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