when the value of their debentures "plummeted" upon the expiration of their right to convert them into Eltra Corporation common stock, and the Corporation refused to extend the conversion deadline.
Although the debentures admittedly were in the possession of the plaintiffs from January, 1965 and stated on the faces thereof was the notice "Convertible up to and including March 31, 1967," the plaintiffs base their suit on alleged violations by the defendants of obligations imposed by the common law of fiduciary duties and the Trust Indenture Act of 1939, supra, to inform holders of the debentures by direct notice of the impending termination of their power to convert their debentures into common stock of the corporation, or to take other actions which would have prevented the losses suffered by the plaintiffs and others in their class. The plaintiffs contend that this alleged breach of duty by the defendants is graphically demonstrated by the fact that out of outstanding debentures of $3.2 million, some $860,000 (over 25%) were not converted prior to March 31, 1967, to their holders' obvious financial detriment.
The Complaint was filed on November 7, 1967, but with no request for issuance of summons. On January 4, 1968, the plaintiffs requested issuance of summons and on that same day sued out writs of foreign attachment against assets of the defendant First National City Bank of New York (hereafter FNCB) in three Philadelphia banks. Thereafter, on January 11, 1968, copies of the Complaint were served on Eltra's statutory agent in Philadelphia, and on FNCB at its main office, 55 Wall Street, New York City. Eltra has filed an answer to the Complaint; but, within twenty days of being served, FNCB filed a motion to dismiss the suit against it on the ground of lack of venue in this district and also a motion to dismiss the writs of foreign attachment.
It is the position of FNCB that a national bank may be sued only where it is established; and, as a bank is "established" only in the place specified in its charter as its principal place of business, since FNCB has its principal place of business at 55 Wall Street, New York City, venue properly is laid only in the Southern District of New York. In support of this position FNCB relies on the venue section of the National Banking Act 12 U.S.C. § 94,
and cases construing that statute.
A. Where National Banks May be Sued
As the Defendant FNCB correctly contends, it is now settled beyond question that 12 U.S.C. § 94 is mandatory and not permissive. All federal appellate courts which have considered the issue have held that for purposes of venue a national bank is a citizen of the state in which it is established or has its principal place of business, and only in that district can it be sued. Mercantile National Bank at Dallas v. Langdeau, 371 U.S. 555, 83 S. Ct. 520, 9 L. Ed. 2d 523 (1963); Leonardi v. Chase National Bank, 81 F.2d 19 (2d. Cir. 1936), cert. den. 298 U.S. 677, 80 L. Ed. 1398, 56 S. Ct. 941 (1936); Buffum v. Chase National Bank, 192 F.2d 58 (7th Cir., 1951), cert. den. 342 U.S. 944, 96 L. Ed. 702, 72 S. Ct. 558 (1952); Cope v. Anderson, 331 U.S. 461, 467, 67 S. Ct. 1340, 1343, 91 L. Ed. 1602 (1947) (dictum). But the plaintiffs urge that such a finding by the court is not dispositive of the defendant's motion to dismiss.
In opposing FNCB's motion to dismiss, the plaintiffs contend that since the action is based in part on alleged violations of the Trust Indenture Act of 1939, the venue section of that act, 15 U.S.C. § 77vvv
applies; and since it is a national venue statute, allowing suit wherever transactions under the indenture occurred, venue is properly established in this district. This argument rests upon two alternative bases. The plaintiffs first urge that 12 U.S.C. § 94 grants to national banks a purely personal venue privilege which can be waived; and a national bank which, as herein, accepts the obligations of an indenture trustee under the Trust Indenture Act subjects itself to all of the provisions of the Act, including the venue provision, and by so acting waives any personal privilege it once had "by conduct absolutely antithetical to the assertion of that personal privilege." Alternatively, plaintiffs argue that Congress clearly evidenced an intention that the venue provision of the Trust Indenture Act of 1939 should apply to all indenture trustees, including national banks, and to the extent that the venue section of the National Banking Act would preclude such a result, is impliedly repealed by the former provision.
B. The Waiver Question
In relying on the doctrine of waiver to support their argument in opposition to FNCB's motion to dismiss, the plaintiffs have assumed a heavy burden. While it is true that the United States Supreme Court held in First National Bank of Charlotte v. Morgan, 132 U.S. 141, 10 S. Ct. 37, 33 L. Ed. 282 (1894), that § 94 of 12 U.S.C. (then § 57 of the National Banking Act of 1864, 13 stat. 99, § 57) in exempting national banks from suit outside their home counties, conferred merely a personal privilege which could be waived by a bank; it is well to bear in mind the admonition of the Seventh Circuit Court of Appeals in Buffum v. Chase National Bank, 192 F.2d 58 (1951), that:
Waiver is a voluntary and intentional relinquishment or abandonment of a known right or privilege, which, except for such waiver, would have been enjoyed . . . it may be expressed formally or it may be implied as a necessary consequence of the waiver's conduct inconsistent with an assertion of retention of the right. . . . It must be proved by the party relying on it. And if the only proof of intention to waive rests on what a party does or forebears to do, his act or omission to act should be so manifestly consistent with and indicative of an intent to relinquish voluntarily a particular right that no other reasonable explanation of his conduct is possible