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Ramapo Bank and Broadway Bank & Trust Co. v. William B. Camp

decided: April 17, 1970.

THE RAMAPO BANK AND BROADWAY BANK & TRUST COMPANY, BOTH BANKING CORPORATIONS OF THE STATE OF N.J., AND NEW JERSEY BANK (NATIONAL ASSOCIATION), A NATIONAL BANKING ASSOCIATION, FORMERLY N.J. BANK AND TRUST CO., A BANKING CORP. OF THE STATE OF N.J., HORACE J. BRYANT, JR., COMMISSIONER OF THE DEPT. OF BANKING AND INSURANCE, STATE OF N.J. (PLAINTIFF INTERVENOR),
v.
WILLIAM B. CAMP, COMPTROLLER OF THE CURRENCY OF THE UNITED STATES, AND PROSPECT PARK NATIONAL BANK, A NATIONAL BANKING ASSOCIATION. THE RAMAPO BANK AND BROADWAY BANK & TRUST COMPANY, APPELLANTS IN NO. 18022, HORACE J. BRYANT, JR., COMMISSIONER OF THE DEPT. OF BANKING AND INSURANCE, STATE OF N.J. (PLAINTIFF INTERVENOR), APPELLANT IN NO. 18117



Biggs, Kalodner and Freedman, Circuit Judges.

Author: Kalodner

Opinion OF THE COURT

KALODNER, Circuit Judge.

The instant appeals present substantial questions concerning the authority of the United States Comptroller of the Currency to issue certificates which would permit a nationally chartered bank simultaneously to relocate its main office and to retain its former main office as a branch, when similar action on the part of state banking institutions is barred by state law. At issue principally is the scope and application of Sections 30 and 36(c) (2) of the National Bank Act.*fn1

Appellants are the Ramapo Bank and the Broadway Bank & Trust Company, both banking corporations of the State of New Jersey, and the New Jersey Commissioner of Banking and Insurance.*fn2 Defendants are William B. Camp, Comptroller of the Currency of the United States, and the Prospect Park National Bank ("PPNB"), a national banking association chartered in 1925 to conduct business in Prospect Park, New Jersey.

On May 17, 1968, PPNB applied to the Administrator of National Banks for permission to relocate its main office from Prospect Park to a site in the adjoining township of Wayne, New Jersey, a distance of 2.7 miles. The application and supporting documents stated that the relocation was necessary to relieve the overcrowded condition in the existing main office; to service customers who were moving away from Prospect Park to nearby suburban areas such as Wayne; and to move the bank from an area of declining population and economy into a rapidly developing community. The main office relocation was approved by a vote of 99 per cent of the PPNB shareholders.

PPNB is the only bank with offices in Prospect Park, a small, highly urbanized borough on the border of Paterson, New Jersey.*fn3 Wayne Township, in contrast, is a large suburban community in which over one-third of the land is available for development. While the population of Prospect Park has remained constant at about 5,200 since 1930, the population of Wayne has grown from 11,822 in 1950 to an estimated 47,000 in 1968. Wayne Township is currently served by six banking offices: the main office and branch of the appellant Ramapo Bank,*fn4 two branch offices of the New Jersey Bank, and two branches of the First National Bank of Passaic County.

PPNB's main office application was filed pursuant to 12 U.S.C. Section 30, which provides that a national bank may, with the approval of the Comptroller of the Currency and two-thirds of its shareholders, move its main office to any location outside of the municipality in which it is presently situated, but not more than 30 miles distant.*fn5 There is nothing in the language of Section 30 to indicate that the propriety of the relocation is made subject to state law.

In a separate but simultaneous application, filed pursuant to 12 U.S.C. Section 36(c) (2), PPNB sought approval for the retention of its former main office in Prospect Park as a branch. In support of its branch application, PPNB noted the substantial number of its customers who would continue to require banking facilities in Prospect Park.

Section 36(c) (2) also requires the approval of the Comptroller for the creation of a branch of a national bank, but additionally provides that the statute law of the particular state must specifically and affirmatively grant such authority to state banks.*fn6

The State of New Jersey does not permit the establishment of branch offices by state banks in any municipality, other than that in which the main office is situated, if another banking institution has its principal office located there. N.J.S.A. 17:9A-19(B) (3).*fn7 Further, a state banking institution in New Jersey may not change the location of its principal office outside of the municipality in which it is situated. N.J.S.A. 17:9A-22, 23.*fn8 Thus, by virtue of the fact that the Ramapo Bank has its main office located in Wayne Township, it is clear that no other bank may establish a new branch office in Wayne.*fn9 It is equally clear that, if PPNB's main office were legally relocated in Wayne, PPNB could lawfully establish a branch in Prospect Park, since there is no other bank currently conducting business there. This, in essence, is what PPNB claims to have done by means of its concurrent applications; that is, lawfully relocate in Wayne pursuant to Section 30, and then establish a branch in Prospect Park pursuant to Section 36(c) (2) and applicable New Jersey branching law.

When PPNB's applications were brought to the attention of the New Jersey Commissioner and competing national and state banks, opposition was immediately voiced. In separate letters to the Comptroller dated June 3, 1968, the Ramapo Bank and the Commissioner set forth their belief that the planned main office relocation was in direct violation of New Jersey and federal banking statutes. Two other banks, the New Jersey Bank and the appellant Broadway Bank & Trust Company,*fn10 subsequently joined in the Notice of Opposition filed by the Ramapo Bank.

At the request of the protesting banks, the Comptroller's Regional Office conducted an informal hearing on August 20, 1968. Thereafter, both the Regional Administrator of National Banks and the National Bank Examiner assigned to investigate the applications, recommended that the applications be approved.*fn11

On April 8, 1969, following his independent examination of the record, the Comptroller issued an Opinion in which he separately approved each of the PPNB applications. In so doing, the Comptroller found:

"* * * that the proposed relocation of the main office of Prospect Park National Bank is in all ways bona fide ; that it is a prudent and necessary step to enable the applicant bank to continue serving both its shareholders and its depositors; that it will serve the public interest by establishing a banking office in Wayne Township where additional banking facilities are needed; that existing banks in the area will not be adversely affected; * * *."*fn12

The Comptroller further determined that the applications fully comported with the requirements of Sections 30 and 36(c) (2).

The following day, April 9, 1969, the protesting banks*fn13 commenced the instant declaratory judgment action in the United States District Court for the District of New Jersey, seeking preliminary and permanent injunctive relief enjoining the Comptroller from issuing a certificate of authority for PPNB to move its main office to Wayne, and enjoining PPNB from moving its main office.

In addition to alleging inadequacy of the Regional Director's hearing, the Complaint alleges that PPNB's applications are not authorized under 12 U.S.C. ยงยง 30 and 36(c) "since it does not intend in fact to relocate its 'main office'" and "its operation in Wayne is intended to and will operate as a branch"; PPNB's applications "are a subterfuge intended to circumvent the requirements" of Section 36(c) "which requires that any branches to be established must be authorized by State law"; and "the applicable New Jersey law (17 N.J.S.A. 9A-22-23) would not permit" PPNB "to change the location of its principal or main office if it were a bank chartered under New Jersey law." The Complaint further alleges that "the doctrine of competitive equality between national and state banks" bars approval of PPNB's applications.*fn14

The District Court denied the requested temporary relief. Thereafter, the plaintiff banks moved for the right to take depositions. The motion was opposed by the defendants, who moved to dismiss the action or, alternatively, for summary judgment. All motions were set down for hearing on May 19, 1969. The District Court, at the conclusion of the arguments, delivered an oral Opinion in which it sustained the approvals given by the Comptroller. In doing so it stated its function was limited to determining whether the Comptroller's action was "arbitrary and capricious, unwarranted in law and in fact."*fn15

Following a detailed review of the administrative record, the District Court found that there was "no evidence which would support a conclusion that the proposed relocation of the main office of the Prospect Park National Bank is nothing but a mere subterfuge, and that, in fact, what is being called the main office is actually a branch."*fn16

Concerning the statutory issue raised, it said:

"It is my opinion that Title 12 U.S.Code, Section 30, is the controlling statute with respect to the establishment of a main office by a national bank. It is my further opinion that when Congress enacted Title 12 U.S.Code Section 36(c) it did not intend any of the provisions of that Section to be incorporated in Section 30, either by implication or otherwise. In fact, I have reached the conclusion that a short answer to the argument that Section 30 cannot be applied without consideration ...


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