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Springfield State Bank v. National State Bank of Elizabeth

decided as amended may 2 1972.: April 26, 1972.

SPRINGFIELD STATE BANK, A BANKING CORPORATION OF NEW JERSEY, APPELLANT,
v.
THE NATIONAL STATE BANK OF ELIZABETH, A NATIONAL BANKING CORPORATION, ET AL.



Biggs, Maris and Van Dusen, Circuit Judges.

Author: Maris

Opinion OF THE COURT

MARIS, Circuit Judge.

The plaintiff, Springfield State Bank, herein called "Springfield Bank", a banking corporation of the State of New Jersey, brought this suit in the District Court for the District of New Jersey on July 22, 1969 against the National State Bank of Elizabeth, herein called "National State", and the Union Center National Bank, herein called "Union Center", two national banking corporations, and William B. Camp, Comptroller of the Currency of the United States. In its complaint Springfield Bank alleged that since February 20, 1969 it has enjoyed the right of so-called "home office protection" conferred by N.J.S.A. 17:9A-19; that the defendants have violated that right, contrary to the New Jersey statute and 12 U.S.C.A. § 36 in that the Comptroller had granted or was about to grant approvals to National State and Union Center to establish branches in the Township of Springfield, Union County, New Jersey, plaintiff Springfield Bank's home office municipality, and National State and Union Center are wrongfully operating branches in that municipality. The complaint sought, inter alia, to restrain the implementation of the approvals thus granted by the Comptroller to National State and Union Center for the establishment of branches by each in the Township of Springfield; to enjoin National State and Union Center from acting pursuant to those approvals and from commencing construction of branch bank facilities in the township; and to adjudicate that the approvals in question were illegal.

Following the filing of the complaint, the district court denied a temporary restraining order sought by Springfield Bank and thereafter on July 30, 1969, after hearing, denied its application for a preliminary injunction. Thereafter the parties filed cross motions for summary judgment accompanied by affidavits. The facts were undisputed. The district court on July 10, 1970 filed an opinion holding that, under the law of New Jersey, Springfield Bank was not entitled to home office protection from February 20, 1969, the date it received approval from the Commissioner of Banking and Insurance of New Jersey of its application for a charter for a new bank in the Township of Springfield, but only from January 31, 1970, the date on which, after litigation, it actually opened its principal office in the township. Since National State and Union Center had actually opened their branch offices in the township prior to the latter date, namely, on July 18, 1969, the district court concluded that Springfield Bank was not entitled to home office protection against those branch offices and that the defendants' motions for summary judgment should be granted. Four days later and prior to the actual entry of the summary judgment the Appellate Division of the Superior Court of New Jersey decided an appeal from the Commissioner of Banking and Insurance entitled In re The Summit and Elizabeth Trust Co., App. Div.1970, 111 N.J.Super. 154, 268 A.2d 21, which involved the right of the Summit and Elizabeth Trust Company, herein called "Summit", to establish a branch bank in the Township of Springfield as against the objections of Springfield Bank and National State.*fn1 The court held that Springfield Bank was entitled to home office protection from February 20, 1969, the date its charter was approved rather than only from January 31, 1970, the later date on which it actually opened for banking business after receiving its certificate of authority to do so. Since Summit's application for branch banking authority was filed on May 5, 1969 and approved on January 20, 1970, all of which was subsequent to February 20, 1969 although prior to January 31, 1970, the court held that it was not entitled to open its proposed branch in view of the protection accorded Springfield Bank by the New Jersey statute, N.J.S.A. 17:9A-19. Springfield Bank promptly asked the district court to amend its conclusions of law filed July 10, 1970 to accord with the decision of the New Jersey court in the Summit case, but the court on December 7, 1970 filed a second opinion adhering to the conclusions reached in its first opinion, and on December 23, 1970 summary judgment in favor of the defendants was entered. From that judgment Springfield took the appeal now before us.

The facts being undisputed, the question presented by the appeal is a purely legal one. It is whether under the law of the State of New Jersey restricting as to location the establishment and operation of branches by state banks, to which restrictions national banks operating in that state are subjected by the national banking law, National State and Union Center were prohibited from establishing branch offices in the Township of Springfield from and after February 20, 1969, the date on which Springfield Bank's charter providing for its principal office to be in the Township of Springfield was approved, or whether the prohibition extended only from January 31, 1970, the time when Springfield actually opened for banking business in the township. If the New Jersey law had the former effect the subsequent establishment of branches in the township by National State and Union Center was unlawful and should have been enjoined. But if, on the other hand, the latter is the effect of the New Jersey law, as the district court held, the establishment by National State and Union Center of their branches in the township prior thereto, i.e., on July 18, 1969, was lawful and injunctive relief was rightly refused.

Section 5155 of the Revised Statutes of the United States, as amended by the Banking Act of 1933, 12 U.S.C.A. § 36, in pertinent part provides:

"(c) A national banking association may, with the approval of the Comptroller of the Currency, establish and operate new branches: (1) . . . (2) at any point within the State in which said association is situated, if such establishment and operation are at the time authorized to State banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition, and subject to the restrictions as to location imposed by the law of the State on State banks . . ."

Section 19 of the New Jersey Banking Act of 1948, as amended by the Act of January 17, 1969, effective July 17, 1969, N.J.S.A. 17:9A-19, in pertinent part provides:

"A. Any bank or savings bank may, pursuant to a resolution of its board of directors or board of managers, establish and maintain branch offices, subject to the conditions and limitations of this article.

"B. No bank or savings bank shall establish or maintain a branch office which is located outside the municipality in which it maintains its principal office; except that a bank or savings bank may establish and maintain a branch office or offices anywhere in the same banking district as that in which it maintains its principal office:

"(1) . . .

"(2) . . .

"(3) when each proposed branch will be established in a municipality in which no banking institution has its principal office or a branch office; except that, when a municipality has a population of 7,500 or more, and no banking institution has its principal office therein, a bank or savings bank may establish and maintain a branch office or offices in such municipality ...


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