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Montgomery National Bank v. Clarke

filed as corrected october 6 1989.: August 16, 1989.

MONTGOMERY NATIONAL BANK, APPELLANT
v.
ROBERT CLARKE, COMPTROLLER OF THE CURRENCY OF THE UNITED STATES, AND THE FIRST JERSEY NATIONAL BANK/CENTRAL, APPELLEES AND MARY LITTLE PARELL, COMMISSIONER, NEW JERSEY DEPARTMENT OF BANKING, INTERVENOR



Appeal from the United States District Court for the District of New Jersey, D.C. Civil No. 88-1022.

Higginbotham, Becker, and Nygaard, Circuit Judges.

Author: Becker

Opinion OF THE COURT

BECKER, Circuit Judge.

In 1976, plaintiff-appellant Montgomery National Bank ("MNB") opened its main office in Montgomery Township, a municipality with a population of less than 10,000. In March 1987, First Jersey National Bank/Central ("First Jersey"), a national bank, applied to the federal Office of the Comptroller of the Currency ("OCC" or "Comptroller") to open a branch office in Montgomery Township. MNB filed objections before the Comptroller, but the Comptroller nevertheless approved First Jersey's application. MNB brought suit in the district court for the District of New Jersey to challenge this administrative action. The New Jersey Department of Banking was granted leave to intervene to address the constitutionality of N.J.S.A. § 17:9A-19(K) (West 1985), the statute upon which the Comptroller relied in approving First Jersey's application. The district court held the statute constitutional and granted summary judgment for the Comptroller. MNB appealed, contending that the New Jersey statute under which the Comptroller approved First Jersey's application is so vague as to violate due process. MNB also contends that the Comptroller's decision was arbitrary and capricious. We will affirm.

I.

The Comptroller must approve the establishment and operation of new branches of national banks. See 12 U.S.C. § 36(c) (1982). By its terms, section 36(c) authorizes the Comptroller to approve applications by national banks to establish branches "at any point within the State in which [the bank] is situated, if such establishment [is] authorized to State banks by the law of the State in question . . . and subject to the restrictions as to location imposed by the law of the State on State banks." Id. Consequently, the Comptroller must apply state branching laws when acting upon an application by a national bank to open a branch within a particular state. See Springfield State Bank v. National State Bank of Elizabeth, 459 F.2d 712, 717 (3d Cir. 1972).

A New Jersey statute that restricts the locations in which New Jersey state banks may branch applies, by operation of section 36(c)(2), to national banks seeking to locate branches in New Jersey. The New Jersey statute, with one relevant exception, prohibits banks from opening branch offices in municipalities of less than 10,000 if another bank has already established its home office in the municipality. See N.J.S.A. § 17:9A-19(K) ("section 19(K)"). The relevant exception is that the Commissioner of the New Jersey Department of Banking ("Commissioner") "upon application . . . may set aside the population requirement set forth" in the statute. Id.

The text of section 19(K) does not by itself state the criteria the Commissioner must use in deciding whether to waive section 19(K)'s bar on branch banking in municipalities of less than 10,000, but the standards that apply to the exercise of a New Jersey statute's delegation of power may be ascertained by examining the entire statute in light of its objectives. The standards need not be set forth "in express terms, if they may reasonably be inferred from the statutory scheme as a whole." Schierstead v. City of Brigantine, 20 N.J. 164, 169, 119 A.2d 5, 8 (1955). Legislative history is pertinent when construing enactments to determine the legislative plan. See, e.g., Helfrich v. Hamilton Township, 182 N.J. Super. 365, 370, 440 A.2d 1366, 1369 (App.Div. 1981).

The legislative history of section 19(K) suggests that "the public interest" is the criterion the Commissioner must use in deciding whether to waive section 19(K)'s bar on branch banking in municipalities of less than 10,000. The waiver provision of section 19(K) has its origin in a 1981 statute passed by the New Jersey legislature. See 1981 N.J.Laws c. 24, § 1. The Assembly Banking and Insurance Committee statement to the Senate regarding the 1981 statute stated the following:

This legislation . . . provides that the Commissioner . . . may permit the establishment of a . . . branch office . . . in any municipality, notwithstanding the statutory prohibition of such offices in municipalities with a population of 10,000 in which another banking institution maintains its principal office. . . .

This legislation would . . . permit the Commissioner to override the statutory prohibitions against [branches in towns with a population of less than 10,000] if he decides that the establishment of such banks is in the public interest.

Statement to S. 1099, Assembly Banking and Insurance Committee at 1 (1980) (emphasis added), reprinted in 1981 N.J.Sess.Law.Serv., vol. 1, p. 46 (West).

In light of its legislative history, we conclude that section 19(K) authorizes the Commissioner (and hence the Comptroller in the instant case) to permit a bank to open a branch office in a municipality whose population is under 10,000 even if another bank has its principal office there as long as the ...


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