the Comptroller of the Currency of the United States to the Peoples National Bank of Sparta, New Jersey authorizing that bank to establish a branch office in Wantage Township, New Jersey be declared to have been issued in contravention of law and to be null and void.
On September 14, 1965 Comptroller noticed a motion to dismiss the complaint under Rule 12(b), F.R.Civ.P., or in the alternative for summary judgment under Rule 56(b). In support of this motion defendant urged that the complaint failed to state a claim upon which relief could be granted; that the complaint failed to allege the existence of a justiciable controversy, and that plaintiff (Sussex Bank) lacks standing to maintain the action against the Comptroller.
On October 28, 1965 Peoples Bank moved for an order permitting it to intervene as a defendant and to file a motion to dismiss the complaint for failure to state a claim, or, in the alternative, to file an answer thereto. Leave to intervene for that purpose was granted by this Court's order filed November 24, 1965.
On November 22, 1965 Sussex Bank moved for summary judgment under Rule 56(a) upon the ground that it was entitled to judgment as a matter of law. On motion filed December 20, 1965, Commissioner was permitted to intervene as a plaintiff in this action and to file a motion for summary judgment. A Complaint was filed in behalf of plaintiff-intervenor Commissioner on January 10, 1966.
This case was originally assigned to the Honorable Robert Shaw, one of the Judges of this Court, who, on December 27, 1965, heard partial argument upon the then pending motions and cross motions. At its conclusion the hearing was continued without decision to January 24, 1966. During the period of that continuance the case was re-assigned to the writer of this opinion, who heard further argument upon the pending motions therein and at the conclusion thereof reserved decision. This memorandum embodies that decision.
This court has jurisdiction over the cause of action alleged in the complaint of Sussex Bank under 28 U.S.C. § 1331(a) because that cause of action is predicated upon the Federal Statute, 12 U.S.C. § 36(c). Plaintiff Sussex Bank has standing to maintain this action. First National Bank of Smithfield, etc. v. Saxon, Comptroller, et al., 4 Cir. 1965, 352 F.2d 267; State of South Dakota v. National Bank of South Dakota, D.S.D., 1963, 219 F. Supp. 842, affirmed 8 Cir. 1964, 335 F.2d 444, cert. den. 1964, 379 U.S. 970, 85 S. Ct. 667, 13 L. Ed. 2d 562; Whitney National Bank v. Bank of New Orleans & Trust Co., 1963, 116 U.S.App.D.C. 285, 323 F.2d 290, rev. on other grounds 379 U.S. 411, 85 S. Ct. 551, 13 L. Ed. 2d 386; Suburban Trust Co. v. National Bank of Westfield, D.N.J., 1962, 211 F. Supp. 694; Commercial State Bank of Roseville v. Gidney, D.D.C. 1959, 174 F. Supp. 770, affirmed per curiam on opinion below, Gidney v. Commercial State Bank of Roseville, 1960, 108 U.S.App.D.C. 37, 278 F.2d 871.
CROSS MOTIONS OF COMPTROLLER AND SUSSEX BANK FOR SUMMARY JUDGMENT
In support of his motion to dismiss, or alternatively for summary judgment, defendant Comptroller submits the affidavit of Richard J. Blanchard, Deputy Comptroller of the Currency for Branches and Mergers from which it appears that pursuant to the authority granted by 12 U.S.C. § 36(c), the Comptroller has established a procedure relating to branch bank applications in accordance with 12 C.F.R. 4.5(d).
The factors which according to this procedure are to be considered by the Comptroller in determining whether to approve a new branch for a national bank include the financial history and condition of the bank, the adequacy of its capital structure, its future earnings prospects, the general character of its management, the convenience and needs of the community served by the bank and the proposed branch, whether the bank's corporate powers are consistent with the purposes of the Federal Banking Laws, the probable effect of the proposed branch on competition, including the welfare of other banks, and the tendency, if any, toward monopoly, as well as the limitation contained in 12 U.S.C. § 36(c).
With respect to Peoples Bank, affiant further states: That that Bank's application, dated October 6, 1964, to establish a branch at the M & M Shopping Center in Wantage Township, Sussex County, New Jersey, was received by the Regional Comptroller of the Currency for the Second National Bank Region, Charles M. Van Horn, on October 7, 1964, who, on the same date, advised the New Jersey Commissioner by letter of the receipt of the application; that on October 13, 1964 the New Jersey Deputy Banking Commissioner, Raymond H. Wesner, acknowledged Van Horn's letter of October 7, and informed him that the New Jersey Department of Banking and Insurance had received an application from the Sussex Bank on October 15, 1963 for permission to establish a branch in Wantage Township. Wesner's letter stated that, as of October 13, 1964, the permission sought had not been granted to Sussex Bank, but was being withheld pending an increase in that bank's capital as required by the New Jersey Department as a condition for approval. A field investigation was made by a National Bank Examiner on October 9 and 10, 1964 in connection with the Peoples Bank application for the use of the Comptroller in determining whether to approve or disapprove the application. On October 19, 1964 the Regional Comptroller received a letter from Sussex Bank, dated October 16, 1964, protesting against the pending application of Peoples Bank.
The Blanchard affidavit also states that at no time prior to the Comptroller's approval of the branch application of Peoples Bank did the Sussex Bank request a hearing before the Comptroller pursuant to the provisions of the Administrative Procedure Act, 5 U.S.C. § 1001 et seq. The affidavit concludes that "upon consideration of material submitted by the applicant [Peoples] bank in support of its application, the several recommendations of subordinate personnel of the Comptroller of the Currency, * * * and other materials received in connection with the subject application, including the letters from the Bank of Sussex County and the New Jersey Department of Banking and Insurance, and in accordance with the Comptroller's regular administrative procedures, the then Acting Comptroller of the Currency, Mr. Thomas G. DeShazo, applying the criteria referred to [above], on October 26, 1964 approved the application of the Peoples National Bank of Sparta for a branch in Wantage Township." It further appears that Blanchard notified Peoples Bank on October 26, 1964 that a certificate of approval for the proposed branch had been issued. With respect to an aspect of this case to be hereinafter referred to, the affidavit also states that, as of September 9, 1964, and during the tenure in office of the present Comptroller "there never has been any agreement, working or otherwise, between the Comptroller and the New Jersey Department of Banking and Insurance whereby approval of competing state and national branch bank applications would be given on the basis of priority in filing."
Comptroller contends that:
1. The approval of the application of Peoples Bank and the establishment of its branch in Wantage Township occurred prior to the establishment of any other bank or branch in said Township.
2. When acting upon applications for establishment of branches of national banks, Comptroller is not required to hold adversary hearings under the Administrative Procedure Act, and, in any event, Sussex Bank may not so contend because it failed to request a hearing after it had knowledge of the pendency of the application of Peoples Bank before the Comptroller.