Petition — Citizens & Southern Nat. Bank v. Bougas

Supreme Court, U.S.

FILED |

y, pend

| MICHAEL RODAK, JR., CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

no. ...7§-398 9

THE CITIZENS AND SOUTHERN NATIONAL BANK,

Petitioner,

VS.

: NICK BOUGAS.

Respondent.

PETITION FOR WRIT OF CERTIORARI

To the Court of Appeals of the

State of Georgia

DANIEL B. HODGSON

WILLIAM C. HUMPHREYS, JR.

PETER Q. BASSETT

ALSTON, MILLER & GAINES

1200 C&S National Bank Building

Atlanta, Georgia 30303

(404) 588-0300

Counsel for Petitioner

St. Louis Law Printing Co., Inc., 812 Olive Street 63101 314-231-4477

Ee

TABLE OF CONTENTS

Page

| Peery TET TERT ET EL TCT Tete l

i tome ne le hale o's ae een eee ea oe bike 4 2

Se a ee ad te a a a a Oe 2

i ea ta eae eae aad an kw eee ewe 2

I Pa Pr re 3

Reasons for Granting the Writ .................46-. 5

A. The interpretation of the word “located” in 12 U.S.C.

$94 is the subject of irresolute conflict among the

Se Sw oncGee ee oak CRN ds aewels eee lketsnesns 6

B. The Court of Appeals interpretation of “located”

conflicts with prior decisions of this Court ....... 8

C. The Court of Appeals has decided an important ques-

tion of Federal Law which has not been, but should

be, authoritatively settled by this Court ....... . eS

D. The Court of Appeals interpretation of “located” is

antithetical to the congressional purpose underlying

+ | | Sn er parr ere ee eee ren gr ar 14

E. The Court of Appeals interpretation of “located” is

completely inconsistent with the legislative history

See sO Goes n see ec eee oescneses 15

F. The Court of Appeals decision is appropriate for

PE tree ctr ae Wha ee dalek eee ee se aN ea 17

EE 6 etna ds wk a ei eed oe Oe Oe KO Nees oe EO 18

Appendix:

A. Opinion filed May 6, 1976 ................... A-|

Sf FO er eererrererre A-5

i. See GN Wy G, FD. ww ccc cc cess A-6

eS fg errr rr reer Te rer A-7

wm a re ere A-8

i 5 § fe Aer re Tre ee Tere A-9

eee

TABLE OF AUTHORITIES

Cases

Bruns, Nordeman Co. v. American National Bank and

Trust Co., 394 F.2d 300 (2d Cir.), cert. denied 393

a EE.» 5. Kove GE+ Odd4s wad cake voce cas 12

Casey v. Adams, 102 U.S. 66 (1880) ............... 10, 11

Central Bank v. Superior Court, 30 Cal App. 3d 962,

ee ee Ss ED o's 5 Gs Vad dares cxe eeaeds 7

Ebeling v. Continental Illinois National Bank & Trust Co..,

272 Cal. App. 2d 724, 77 Cal. Rptr. 612 (1969) .... 6

First National Bank v. Morgan, 132 U.S. 141 (1889). .9, 11, 14

Gregor J. Schaefer Sons, Inc. v. Watson, 26 A.D. 2d 659,

SPS. C6.0. I Be FO CUM 6 wine cee csnsndeusnce 6

Holson v. Gosnell. 264 S.C. 619, 216 S.E. 2d 539 (1975),

cert. denied, 423 U.S. 1048 (1976) ............... 7, 10

Langdeau v. Republic National Bank, 161 Tex. 349, 341

S.W. 2d 16! (1960), rev'd sub nom. Mercantile Na-

tional Bank v. Langdeau, 371 U.S. 555 (1963) ...... 9,18

Lapinsohn v. Lewis Charles, Inc., 212 Pa. Super. 185, 240

A.2d 90, cert. denied 393 U.S. 952 (1968) ......... 7

Leonardi v. Chase National Bank, 81 F.2d 19 (2d Cir.).

cert. denied, 298 U.S. 677 (1936) ................. 6

McClung v. La Salle National Bank, 387 F. Supp. 977

5 ae 8. are ee eee 5

Mercantile National Bank v. Langdeau, 371 U.S. 555

| ERR ea ae ee anew 8,9, 11, 12, 14, 17

Michigan National Bank v. Robertson, 372 U.S. 591 (1963) 11

National Bank of North America v. Associates of Obstetrics

and Female Surgery, Inc., — U.S. —, 96 S. Ct. 1632

Ne os one ew Gas doe ees +e e dud 6, 15, 18

Northside Iron & Metal Co. v. Dobson and Johnson, Inc.,

480 F.2d 798 (Sth Cir. 1973) ........... cece eeees 5, 6

Prince v. Franklin National Bank, 62 Misc. 2d 855, 310

N.Y. Supp. 2d 390 (1970) .......--- ee eee eee eee 6

Radzanower v. Touche Ross & Co., — U.S. —, 96 S. Ct.

Ds vont caeenaceseceSevesceess 6, 12, 13, 14

Rice v. Sioux City Cemetery, 349 U.S. 70 (1955) ......-. 12

Ronson Corp. v. Liquifin Aktiengesellschaft, 483 F.2d 852

oo Fr ee ee ee 12

Security Mills of Asheville, Inc. v. Wachovia Bank and

Trust Co., 281 N.C. 525, 189 S.E. 2d 266 (1972) ..... 7

United States National Bank v. Hill, 434 F.2d 1019 (9th

EE a ar ee ad alee Oi oo ao 0a Oe

Vann v. First National Bank, 324 So. 2d 94 (Fla. App.

ee ee reeks a che Hehe ORR 8 Bcd w Be8 Oe 7

Van Reed v. People’s National Bank, 198 U.S. 554

te ae Rte hu Se a eee Ole eb 4 4 10, 13

Acts and Statutes

McFadden Act, Act of February 25, 1927, ch. 191 § 7,

44 Stat. 1228. as amended, 12 U.S.C. § 36 (1970) .... 10

Act of June 16, 1933, ch. 89 § 23, 48 Stat. 189, 190, as

ee Oe oe, 2 Cee peck ascerderrececes 10

National Banking Act of 1863, Act of February 25, 1863,

ON EE er ee eee eee eee 15

iV

National Bank Act of 1864, Act of June 3, 1864, ch. 106

BB) Sf ae ee 16

Section 6—13 Stat. 101 (1864), amended by Rev.

Stat. § 5134 (1875), as amended, 12 U.S.C. § 22

(i. Sr yer ce 16

Section 8—13 Stat. 102 (1864), amended by Rev.

Stat. § 5198 (1875), as amended, 12 U.S.C. § 81

(4, Bra re 16

Section 57—13 Stat. 116-117, amended by Rev. Stat.

§ 5190 (1875), as amended, 12 U.S.C. § 94 (1970) 16

Public Law No. 86-230, 73 Stat. 457 (1959) .......... 17

SS UAC. § Zo COVED «sone cs wneeeeee oo neebe ene 2

2 USC. § OS qiRpeP . cise ccuet 2,3, 4, 5, 6, 7, 8, 9, 10, 11

12, 13, 14, 15, 17, 18

28 U.S.C. § 12573) CISTED . wc ca ends 2

Ga. Code Ann. § 24-4536(h) ...................06.

IN THE

SUPREME COURT OF THE UNITED STATES

|

THE CITIZENS AND SOUTHERN NATIONAL BANK.

Petitioner,

VS.

NICK BOUGAS,

Respondent.

PETITION FOR WRIT OF CERTIORARI

To the Court of Appeals of the

State of Georgia

Petitioner, The Citizens and Southern National Bank, prays

that a writ of certiorari issue to review the judgment of the

Court of Appeals of the State of Georgia (Docket No. 51622)

entered in this proceeding on May 6, 1976.

OPINIONS BELOW

The opinion of the Georgia Court of Appeals, is reported in

138 Ga. App. 706 (1976) and appears in the Appendix, infra,

pp. A-1 to A-4. The order of the State Court of DeKalb

County, Georgia, is unreported and appears in the Appendix,

infra, p. A-5). The judgment of the Court of Appeals, and the

orders denying rehearing, petition for certiorari and reconsidera-

tion appear in the Appendix, infra, pp. A-6—A-9.

JURISDICTION

The judgment of the Georgia Court of Appeals was entered

on May 6, 1976, affirming the order of the State Court of De-

Kalb County dated August 22, 1975. The Court of Appeals

denied a timely motion for rehearing on May 21, 1976. There-

after, on June 30, 1976, the Georgia Supreme Court denied a

petition for certiorari, one Justice dissenting; a motion for re-

consideration was finally denied by the Supreme Court on July

15, 1975, two Justices dissenting. The jurisdiction of this Court

is invoked under 28 U.S.C. §1257(3) (1970).

QUESTION PRESENTED

Whether, for purposes of laying venue in transitory’ actions

prosecuted in the Georgia state courts, 12 U.S.C. §94 requires

that Petitioner, a national banking association, be sued only in

Chatham County, Georgia. the county in which its charter? was

issued?

STATUTE INVOLVED

12 U.S.C. $94 (1970) provides:

“Actions and proceedings against any association under

this chapter may be had in any district or Territorial court

of the United States held within the district in which such

association may be established, or in any State, county, or

municipal court in the county or city in which said asso-

ciation is located having jurisdiction in similar cases.”

, Oy Pi acuion exception to 12 U.S.C. $94 is discussed

- The “charter” county is thai partic : speci

“al - 7 particular county specified in th

national bank's organization certificate. See 12 usc $22 (1970 .

STATEMENT OF THE CASE

This case, involving a suit for alleged unlawful redemption

and conversion of a particular savings bond, was filed in the

State Court of DeKalb County, Georgia, on June 30, 1975,

by Nick Bougas (hereinafter “Bougas”) against The Citizens

and Southern National Bank (hereinafter “C&S”), a national

banking association chartered in Chatham County, Georgia, un-

der the laws of the United States. C&S duly answered and con-

currently filed a motion to dismiss the complaint, showing as

grounds therefor that 12 U.S.C. §94 lays exclusive venue, in

transitory actions against C&S, in Chatham County, Georgia.

R. 11-16. On August 22, 1975, the C&S motion to dismiss

was denied without discussion of the 12 U.S.C. §94 privilege.

R. 17; App. A-5.

On appeal to the Georgia Court of Appeals,* C&S reiterated

the 12 U.S.C. $94 mandate restricting venue in transitory suits

against a national bank to the county in which its charter was

issued.* In its decision of May 6, 1976, the Court of Appeals

recognized both the applicability of 12 U.S.C. $94 to C&S as an

“association under this chapter” (App. A-2), and that 12

U.S.C. §94 posits mandatory venue in suits against national

banking associations. App. A-2. Furthermore, the Court of

Appeals implicitly acknowledged that the charter of C&S was

issued in Chatham County, Georgia (App. A-1, A-4; see R.

11-13), and that a national banking association is “established”

within the meaning of 12 U.S.C. $94 only in the federal district

‘ C&S perfected its interlocutory appeal by duly obtaining a cer-

tificate for immediate review from the trial court (R. 18) and an

order granting interlocutory appeal from the Court of Ap als (R.

19): a notice of appeal was filed in the State Court DeKalb

County on September 30, 1975. R. 1-2.

' The C&S arguments are set forth in the “Brief of Appellant,”

which is included in the certified record herein but is not separately

paginated as part of the record.

pa Te

encompassing the county specified in its charter and not in what-

ever district it may do business. App. A-2, A-3, A-4.

However, although cognizant of the significant federal and

state authority substantiating that “established” and “located”

in 12 U.S.C. §94 are functionally synonymous words designat-

ing a single federal district and state county, respectively, in

which transitory actions against national banks can be prose-

cuted (see App. A-2—A-3), the Court of Appeals dichotomized

these two words and held:

“We conclude that when a national bank, ‘established’

in this state, operates and maintains in counties other than

the county of its principal office, branches at which it con-

ducts its general banking business, the corporation is pres-

ent at ali times [in] each such branch and is ‘located’

therein within the meaning of this Act of Congress. Thus,

it is subject to suit in a state court in such county, otherwise

having jurisdiction, just as it is in the county wherein its

principal office is located,” App. A-4.

The C&S motion for rehearing in the Court of Appeals,* the

petition for certiorari in the Georgia Supreme Court and the

motion for reconsideration were substantially based upon the

erroneous interpretation of 12 U.S.C. §94 by the Court of Ap-

peals and were denied without opinion.

Petitioner seeks review of the May 6, 1976 judgment of the

Georgia Court of Appeals, the highest appellate court which has

ruled on the federal question involved herein.

* The filing of a motion for rehearing is a statutory prerequisite

to petitioning for certiorari in the Georgia Supreme Court. Ga. Code

Ann. §24-4536(h).

REASONS FOR GRANTING THE WRIT

This case presents the singular question of where a national

bank is “located” within the meaning of 12 U.S.C. §94 for

purposes of defending transitory suits in state courts. This

particular question can only arise in the state courts® and herein

is untainted by any factual issues concerning “waiver” of the

venue privilege.‘

However, the very simplicity of the question should not ob-

fuscate its import. The judgment of the Court of Appeals, which

truncated the national bank venue privilege, is prototypical of

the persistent assaults on 12 U.S.C. § 94 in which modern

courts are presently indulging with disquieting frequency. This

very year, this Court has already rejected two other purported

* 12 U.S.C. $94 independently regulates venue in federal courts,

providing that suits against national banking associations may be

had in any district or Territorial court of the United States held

within the district in which such association may be established we

Although several federal courts consider the words “established” and

“located” to be functionally interchangeable, the interpretative hold-

ing of such courts, as federal courts, must be restricted to the mean-

ing of the word “established” in 12 U.S.C. $94. See e.g., United

States National Bank v. Hill, 434 F.2d 1019 (9th Cir. 1970); North-

side Iron & Metal Co. v. Dobson and Johnson, Inc., 480 F.2d 798

(Sth Cir. 1973); McClung v. La Salle National Bank, 387 F. Supp.

977 (S.D. lowa 1975).

* The Court of Appeals commented:

“As to whether a national bank is ‘located’ in a county

simply by setting up a branch to conduct general bank business,

therein, it seems clear that it has manifested an intent to be

found in that jurisdiction for purposes of suits arising out of

any business conducted there.” App. A-4. | |

Although this observation app ars to broach the issue of waiver, it

bears no relationship to the actual holding (see p. 4, supra; App.

A-4) of the Court and is, in fact, tantamount to obiter dictum.

Moreover, the concept of waiver suggested by the Court of Appeals

is independent of the facts of a particular case and is reviewable on

appeal as a question of law. See n. 10, infra.

igi

lim#*ations on the scope of 12 U.S.C. § 94;° Petitioner respect-

fully submits that this is the expedient and opportune occasion

for the Court to prevent further encroachment upon, and erosion

of, the traditional mandate of that venue statute.

A. The Interpretation of the Word “located” in 12 U.S.C.

§ 94 Is the Subject of Irresolute Conflict Among the States.

Although the lower federal courts are in unanimous accord

that a national bank is “established” under 12 U.S.C. § 94 only

in that federal district in which its charter was issued,® an un-

fortunate variety ot geographical referents has been associated

with the word “located” by the state judiciary. Three different

theories manifest this contemporary discord:

1. Certain courts have held that the words “established” and

“located” are functionally synonymous and, following the fed-

eral interpretation of “established”, have concluded that, absent

intentional waiver, transitory suits in state courts can only be

brought in the county in which the charter of the national bank

was issued. Gregor J. Schaefer Sons, Inc. v. Watson, 26 A.D. 2d

659, 272 N.Y.Supp. 2d 790 (1966); Prince v. Franklin Na-

tional Bank, 62 Misc. 2d 855, 310 N.Y. Supp. 2d 390 (1970):

Ebeling v. Continental Illinois National Bank & Trust Co..

272 Cal. App. 2d 724, 77 Cal. Rptr. 612 (1969).

2. A second theory has emerged which is premised not upon

4 purely interpretative analysis of the word “located”, but rather

‘ See, National Bank of North America v. Associat IC

and Female Surgery, Inc., — U.S. —, 96 S.Ct. 1632 ( 976) Rad.

zanower v. Touche Ross & Co., — U.S. —, 96 S.Ct. 1989 (1976).

" See, e.g., Leonardi v. Chase National Bank, 81 F.2

" . ' .2d 19 (2d

Cir.), cert. denied, 298 U.S. 677 (1936): N

Co. v. Dobson and Johnson, Inc., am ——

=

upen a notion of presumptive “waiver.” The judicial adherents

to this theory, while paying superficial homage to the general

principle that a national bank is “located” only in the county

in which its charter was issued, hypostasize a waiver of 12

U.S.C. § 94 by the creation of a branch bank, concluding there-

from that a national bank can be sued in any county in which

i¢ operates a branch bank as to actions arising out of its bank-

ing activity at such branch. Lapinsohn v. Lewis Charles, Inc.,

212 Pa. Super. 185, 240 A.2d 90, cert. denied 393 U.S. 952

(1968); Security Mills of Asheville, Inc. v. Wachovia Bank &

Trust Co., 281 N.C. 525, 189 S.E. 2d 266 (1972) (alternative

holding. )'®

3. The extreme position espoused by some courts rejects the

synonymity of “established” and “located”, and concludes that

a national bank is “located” in any county in which it operates

and maintains branches conducting general banking business,

notwithstanding that it may be “established” only in its charter

county. Security Mills of Asheville, Inc. v. Wachovia Bank and

Trust Co., supra; Holson v. Gosnell, 264 S.C. 619, 216 S.E.2d

§39 (1975) cert. denied, 423 U.S. 1048 (1976); Central Bank

vy. Superior Court, 30 Cal. App. 3d 962, 106 Cal. Rptr. 912

(1973)."'

\” The waiver is “presumptive” because it automatically ensues

from the creation of a branch bank without regard to the voluntary

intention of the national bank. Thus alienated from the facts of

each particular case, the theoretical legitimacy of this type of waiver

is actually a question of law subject to review as such on appeal.

A variation of this theory postulates a “waiver” of the 12 U.S.C.

$94 venue privilege as to actions arising out of any business con-

ducted in the county in which suit is brought, whether or not branch

banking is conducted in that county. See e.g., Vann v. First National

Bank, 324 So.2d 94 (Fla. App. 1976).

11 The Georgia Court of Appeals apparently subscribes to this

last variation. See p. 4, supra; App. A-4.

— oF

As the “waiver” theory indicates, the modern trend of some

courts is to achieve the net effect of permitting suits against

national banks in most state counties without literal offense

to the language and legislative history of 12 U.S.C. § 94. How-

ever, the practical result of this theory is functionally indis-

tinguishable from that entailed by the extreme position that

national banks are “located” in all counties wherein they oper-

ate branch banks, any differences between these theories be-

ing merely semantic ones.

| Petitioner submits that this tripartite disharmony, thus far

involving few states, can only become increasingly aggravated

as other states consider the meaning of “located” in 12 U.S.C.

§ 94. The interpretative dialectic shows no signs of abating

and can only be finally resolved by a determinative ruling of

this Court.

| B. The Court of Appeals’ Interpretation of “located” Con-

flicts With Prior Decisions of This Court.

After superficial analysis, the Court of Appeals held that

C&S, while “established” only in one federal! district, is “lo-

cated” in all counties wherein it operates and maintains branches

conducting general bank business. App. A-4. Not only is

this conclusion offensive to the purpose and the legislative his-

tory of 12 U.S.C. § 94,'* but it also contravenes prior decisions

of this Court. The most expansive of such decisions is the

recent and oft-cited Mercantile National Bank vy. Langdeau, 371}

U.S. 555 (1963). In Langdeau, two national banks chartered

in Dallas County, Texas, were sued in Travis County in accord-

ance with lenient state venue provisions. The Texas Supreme

Court rejected those banks’ 12 U.S.C. § 94 defense on the

alternative grounds that 12 U.S.C. § 94 was “permissive” or

'= Discussed, §§ D and E, infra.

= en

that it had been impliedly repealed.'* Reversing the Texas

Supreme Court, this Court held that 12 U.S.C. § 94 “must be

given a mandatory reading,” 37! U.S., at 562, and is “fully ef-

fective and must be recognized when [it is| duly raised.” /d.,

at 567. In rejecting the argument that 12 U.S.C. § 94 was

“permissive,” the Court noted:

“We would not lightly conclude that a congressional en-

actment has no purpose or function. We must strive to give

appropriate meaning to each of the provisions of Title 12

and its predecessors. . .. Appellee, however, would have us

hold that any state court could entertain a suit against a na-

tional bank as long as state jurisdictional and venue require-

ments were otherwise satisfied. Such a ruling, of course,

would render altogether meaningless a congressional enact-

ment permitting suit to be brought in the bank's home

county. This we are unwilling to do, particularly 1n light

of the history cf §57....

All of the cases in this Court which have touched upon

the issue here are in accord with our conclusion that na-

tional banks may be sued only in those state courts in

the county where the banks are located.” /d., at 560-

561 (emphasis added ).

Langdeau evidences this Court's continuing affirmation that the

word “located” in 12 U.S.C. § 94 designates the county of suit

as the home county. See First National Bank v. Morgan, 132

U.S. 141 (1889). The phrase “home county” can have no other

referent than the county in which the national bank was char-

tered; this fact implicitly entails the conclusion that a national

bank cannot also be sued in any county wherein it operates

branch banks. The Langdeau opinion, having issued some thirty

years after the initiation of multi-county national bank branch-

1s Langdeau v. Republic National Bank, 161 Tex. 349, 34] S.W

2d 161 (1960), rev'd sub nom. Mercantile National Bank v. Lang.

deau, 371 U.S. 555 (1963).

=

ing,'* cannot be facilely dismissed as quaint nineteenth century

obsolescence.”

While there are two commonly acknowledged limitations on

the scope of 12 U.S.C. § 94, neither is relevant to the present

case.'® Furthermore, this Court has never countenanced interfer-

ence with 12 U.S.C. § 94 for any state “policy” reasons; it is

solely “[t]he right of Congress to determine to what extent a

State court shall be permitted to -ntertain actions against national

banks, and how far these institutions shall be subject to state con-

trol.” .. . Van Reed v. People’s National Bank, 198 U.S. 554,

557 (1905). This congressional prerogative precludes, as a

method of statutory construction, the Court of Appeals’ effort to

interpret 12 U.S.C. §94 “in harmony with the laws of venue of

this state.” App. A-4. Van Reed implicitly postulates, as a matter

of basic federalism, that the harmony of federal and state statutes

encompassing similar subject matter is irrelevant and that the

State judiciary is neither empowered to arbitrate disparities be-

tween such statutes according to their supposed relative merits,

nor authorized to reformulate federal statutes in accordance with

-

14 The McFadden Act of 1927 first permitted a national bank to

establish branches within its charter location. Aci of February 25,

1927, ch. 191 $7, 44 Stat. 1228, as amended, 12 U.S.C. §36 (1970).

In 1933, national banks were effectively authorized to engage in

multi-county branch banking. Act of June 16, 1933, ch. 89, §23,

48 Stat. 189, 190, as amended, 12 U.S.C. §36 (1970).

'* A common attack on the restrictive interpretation of 12 U.S.C.

$94 is based upon the antiquity and alleged irrelevance of that

Statute in the twentieth century. See, e.g., Holson v. Gosnell, supra,

264 S.C at 620, 216 S.E. 2d at 540.

_1© The first limitation, restricting the applicability of 12 U.S.C.

$94 to transitory actions, was initially validated in Casey v. Adams,

102 U.S. 66 (1880) where the Court noted:

“Local actions are in the nature of suits in rem, and are to

be prosecuted where the thing on which they are founded is

Situated. To give the act [the predecessor to 12 U.S.C. §94] of

Congress the construction now contended for would be in effect

to declare that a national bank could not be sued at all in a

local action where the thing about which the suit was brought

its own normative philosophy; “such a situation is a matter for

Congress to consider.” Mercantile National Bank v. Langdeau,

supra, 371 U.S. at 563.

In short, this Court has repeatedly enunciated and consist-

ently respected the restricted venue of 12 U.S.C. § 94, and has

never sanctioned efforts to limit its effect for reasons of incon-

venience to non-national bank litigants or for any other puta-

tively desirable purposes. See, Michigan National Bank v. Rob-

ertson, 372 U.S. 591 (1963).

C. The Court of Appeals Has Decided an Important Question

of Federal Law Which Has Not Been, But Should Be, Authori-

tatively Settled by This Court.

Notwithstanding implicit recognition that transitory suits

against national banks can only be prosecuted in a single county,

this Court has never explicitly defined the meaning of the word

was not in the judicial district of the United States within which

the bank was located.”” Id., at 68 (emphasis added).

The Casey exception is nothing more than a logical incident of 12

U.S.C. $94; having specifically enacted a statute authorizing suits

against national banking associations in both federal and state courts,

Congress could hardly have intended its venue provision to com-

pletely preclude certain suits altogether. However meritorious or

justifiable the Casey exception may be, it is immaterial to the resolu-

tion of this case; the Court of Appeals did not deem it necessary to

consider how an action for conversion can remotely qualify as

a “local” action.

The second limitation is not strictly an exception to the applica-

bility or scope of 12 U.S.C. $94, but merely an exposition of the

well-settled principle that 12 U.S.C. §94 venue, being a privilege, can

be voluntarily waived if not asserted in a timely fashion. First Na-

tional Bank v. Morgan, supra. The complexities of waiver are myriad,

but need not be considered here since the Court of Appeals, while

commenting on waiver, did not designate this concept as the basis

for its holding. See n. 7, supra. Moreover, the recognized waiver

limitation involves waiver under the facts of a particular case, and is

thus quite different from the “presumptive” waiver discussed n. 10,

supra.

—. =

“located” in 12 U.S.C. § 94. In Mercantile National Bank v.

Langdeau, supra, the Court was not called upon to resolve any

potential dichotomy between “established” and “located” since

neither of the national banks therein engaged in multi-county

operations and each was thus “established” and “located” in a

single county. Therefore, the questions of presumptive waiver

and the geographical referent of “located” remain undecided.

The federal question at issue, measured by any standard of

importance, is undeniably a crucial one. As previously noted,"*

the state courts have long been floundering in the morass of

12 U.S.C. § 94, and the meaning of “located” has been produc-

tive of much confusion. The issue here, although a nar-

row one, is indisputably “beyond the academic or the epi-

sodic,” Rice v. Sioux City Cemetery, 349 U.S. 70, 74 (1955);

cases turning on the interpretation of the word “located” in 12

U.S.C. § 94 have proliferated in the state appellate courts,'*

and these appellate cases undoubtedly reflect even greater ac-

tivity at the significant but unreported trial court level.

The Court this year granted certiorari in Radzanower v.

Touche Ross & Co., supra, to resolve a dispute between the

Second and Ninth Circuits and the Third Circuit'” on the ques-

tion of whether the provisions of 12 U.S.C. § 94 were impliedly

repealed by the venue sections of the Securities Exchange Act.

By its decision in Radzanower, this Court manifested concern

about the integrity and contemporary viability of 12 U.S.C. § 94.

Yet Radzanower dealt only with federal securities actions against

national banks, a “narrow and infrequent category” of litiga-

17 See §A., supra.

'* See cases discussed pp. 6-8, supra.

'" See, Bruns, Nordeman & Co. v. American National Bank and

Trust Co., 394 F.2d 300 (2d Cir.), cert. denied, 393 U.S. 855

(1968); United States National Bank v. Hill, supra; Ronson Corp.

v. Liquifin Aktiengesellschaft, 483 F.2d 852 (3d Cir. 1973).

——.

tion. /d., 96 S.Ct., at 1994. On the other hand, upon the inter-

pretation of the word “located” in 12 U.S.C. § 94 depends the

venue of thousands of transitory actions brought against national

banking associations in a multitude of state courts. This is, of

course, not to demean the importance of Radzanover, but to

emphasize the comparative impact which 12 U.S.C. § 94 has

upon suits brought against national banks in state courts and

the relative importance of an immediate and definitive decision

to reconcile the unfortunate melange of rationales underlying

the various interpretations of “located”.

Most importantly, due regard must be accorded to the policy

of Title 12 that “[nJational banks are quasi-public institutions,

and for the purpose for which they are instituted are national

in their cha:acter.” Van Reed v. People’s National Bank, supra,

198 U.S. at 557. It is axiomatic that disparate treatment of

national banking associations in different states is completely

and inalterably inconsistent with the implicit congressional pur-

pose to ensure uniform treatment of national banking associa-

tions throughout the entire country. Such uniformity is presently

being thwarted with respect to venue, one of the privileges

most fundamental to the federal judicial system. There is a

pronounced anomaly when a New York national bank can be

sued only in the county wherein it was chartered, a Georgia

national bank can be sued :n ail counties in which it maintains

branches, and a Pennsylvania national bank can be sued in all

counties in which it maintains branches, but only as to actions

arising out of business conducted at such branches. It is pecu-

liarly within the province of this Court to resolve sucin anomalies

affecting important mghts of federally-chartered institutions

whose amenity to state control should be, and heretofore has

been, determined by federal law and not by the laws of the

several states.

ones ees

D. The Court of Appeals Interpretation of “located” Is An-

tithetical to the Congressional Purpose Underlying 12 U.S.C.

§94.

This Court has consistently reiterated that 12 U.S.C. §94

was “prescribed for the convenience of those [national banking]

institutions, and to prevent interruption in their business that

might result from their books being sent to distant counties in

obedience to process from state courts.” First National Bank

v. Morgan, supra, 132 U.S. at 145. The policy recognized by

Morgan in 1889 has remained fully effective notwithstanding

progressively modernized systems of communication and trans-

portation and incessant charges of archaism.*” See Mercantile

National Bank v. Langdeau, supra, 371 U.S. at 561-562, n. 12;

Radzanower v. Touche Ross & Co., supra, 96 §.Ct., at 1994.

The proposition that a national bank can be “located” in any

county wherein it conducts branch banking, undermines this

congressional purpose by fostering inconvenience to national

banks and encouraging interruption in their business. Such a

result is typified by this very case. The relevant transactions oc-

curred in Chatham County, Georgia; all of the business records

and documentation, and each C&S employee who has knowl-

edge of the facts, are located or domiciled in Chatham County.

The prosecution of this case in DeKalb County, Georgia will

undoubtedly impose undue burden, expense and inconvenience

upon C&S, all to the benefit and expedience of Bougas, and all

in untenable disregard of the underlying purpose of 12 U.S.C.

$94.

The preservation of this congressional solicitude for the con-

venience of national banks is no less important when judged by

the realities of contemporary national bank operations. National

banks are forced into multi-county operations, if only for the

2" See n. 15, supra.

aw §5 as

purposes of adequately competing with state-chartered banks.

Accordingly, this Court's repeated declarations on the “manda-

tory” nature of 12 U.S.C. §94*' are of small avail if this man-

date is without substance and is easily circumvented by the ex-

pedient of interpreting the word “located” to encompass, for

all practical purposes, all counties in which a national bank does

business.

E. The Court of Appeals Interpretation of “located” Is Com-

pletely Inconsistent With the Legislative History of 12 U.S.C.

$94,

The perfunctory analysis of 12 U.S.C. §94 by the Court of

Appeals is further evident in the following proposition:

“The original National Banking Act of 1863 aid not

make mention of suits against national banks in state

courts. The provisions of the Act relating to suits in state

courts were placed in the statute by later legislation. [cita-

tion omitted]. Apparently Congress intended a different

rule to apply as between suits brought in federal courts

(where the bank must be established in the district) and

suits brought in state courts (where the bank need only be

located in the county or city of the court having similar

jurisdiction in similar cases). Otherwise, Congress would

hardly have substituted ‘located’ for ‘established’ in defin-

ing venue of a suit broughi in state court.” App. A-3

(emphasis added ).

That this conclusion is nothing more than academic speculation

is demonstrated by even a casual perusal of the legislative history

of 12 U.S.C. § 94. Admittedly, the original National Banking

Act of 1863.** whether deliberately or by oversight, did not

“1 § e, e.g., National Bank of North America v. Associates of

Obstetrics and Female Surgery, Inc., supra.

22 Act of February 25, 1863, ch. 58, 12 Stat. 665

=

contain any provision permitting suits against national banks in

state courts. Such suits were first authorized by Section 57 of

the National Bank Act of 1864,** in the state, county and

municipal courts where a national bank is “located”. In inter-

preting that crucial word it should be remembered that Section

57 was not a schematically independent statute; rather it must

be reconciled with the remainder of that Act. It is thus note-

worthy that Section 6 of the 1864 Act required that a national

bank's organization certificate designate the state, territory, or

district and the particular county in which it operated.** Simi-

larly, Section 8 of the Act additionally stipulated that a national!

bank’s “ustial business shall be transacted at an office or banking

house located in the place specified in its organization certif-

icate.”*"

The upshot of these sections is that at the time Section 57 of

the National Bank Act of 1864 was enacted, the activities of

national banking associations were restricted by Sections 6 and 8

of the Act to one particular location. Not until the enactment

of the McFadden Act of 1927 were national banks even

permitted to establish branches within their charter locations,

and not until 1933 did Congress sanction national bank branches

beyond the charter location.*"

Because of the fact that in 1864 a national bank was per-

mitted only one “location”, namely the single place specified in

its organization certificate, there is no statutory basis for inter-

2* Act of June 3, 1864, ch. 106 §30, 13 Stat. 99, 116-117,

amended by Rev. Stat. §5198 (1875), as amended, 12 U.S.C. §94

(1970).

“4 13 Stat. 101 (1864), amended by Rev. Stat. § 5134 (1875),

as amended, 12 U.S.C. §22 (1970).

*> $8, 13 Stat. 102 (1864), amended by Rev. Stat. $5190

(1875), as amended 12 U.S.C. §81 (1970) (emphasis added).

*" See n. 14, supra.

ame 09 ce

preting the word “located as having multi-county reference.

The Court of Appeals’ hypothesis that Congress deliberately

chose that word to permit suits against national banks in any

county in which they conducted branch banking can only be

based upon ihe indefensible presumption that the Congress an-

ticipated by some sixty years the advent of multi-county branch

banking and formulated its statutory language accordingly.**

F. The Court of Appeals Decision Is Appropriate for Review.

Although the judgment of the Court of Appeals was not

dispositive of the merits of this case, it is the type of ancillary

decision that this Court can review on a petition for certiovari.

The appellate record herein is virtually identical to that in Mer-

cantile National Bank v. Langdeau, supra, where this Court

noted:

“The question of our appellate jurisdiction is quite simi-

lar to the one considered in Construction Laborers v. Curry,

ante, p. 542, although there the jurisdiction of any and all

State courts was at issue and here the inquiry is only as to

which state court has proper venue to entertain an action

against two national banks. Nonetheless, a substantial

-* There is no reason to suspect that Congress, between the years

1864 and the present, had any intention of repealing or limiting the

coverage of 12 U.S.C. §94. See, Mercantile National Bank v. Lang-

deau, supra, 371 U.S. at 565. Indeed, there is every reason to sup-

pose that the Congress remains completely satisfied with the original

purposes and scope of 12 U S.C. §94. As recently as 1959, Con-

gress overhauled national bank statutes by legislation which was

prefaced by the following:

“An Act to amend the national banking laws to clarify or

eliminate ambiguities, to repeal certain laws which have become

obsolete, and for other purposes.” Public Law No. 86-230, 73

Stat. 457 (1959) (emphasis added).

Since this piece of legislation did not modify the provisions of 12

U.S.C. $94 the inference can be drawn that the traditionally restric-

tive interpretation of 12 U.S.C. $94 remains viable.

am $8 a=

claim, appealable under state law, is made that a federal

statute, rather than a state statute, determines in which

state court a national bank may be sued and, as in Curry,

prohibits further proceedings against the defendants in the

state court in which the suit is now pending. This is a sepa-

rate and independent matter, anterior to the merits and not

enmeshed in the factual and legal issues comprising the

plaintiff's cause of action. Moreover, we believe that it

serves the policy underlying the requirement of finality in

28 U.S.C. § 1257 to determine now in which state court

appellants may be tried rather than to subject them, and

appellee, to long and complex litigation which may all be

- for naught if consideration of the preliminary question of

venue is postponed until the conclusion of the proceedings.”

id., 371 U.S. at 557-558. (Emphasis added).**

The jurisdictional parameters enunciated in Langdeau clearly

encompass this particular case. The venue question herein is

anterior to the merits and is unsullied by intricate factual issues.

Here, as in Langdeau, review of the Court of Appeals decision

is essential to protect C&S from the unnecessary burden and ex-

pense of defending the merits of a suit that “may all be for

naught,” that regardless of its outcome would abrogate C&S'’s

important statutory rights, and that would be substantially re-

moved from the geographical situs of all records and witnesses.

CONCLUSION

The decision of the Court of Appeals below is devoid of sub-

stantive basis in the judicial or legislative history of 12 U.S.C.

* 94, and is also offensive to prior decisions of this Court. It is

** This same jurisdictional policy apparently underlies National

Bank of North America v. Associates of Obstetrics and Female

Surgery, Inc., supra, where the Court granted certiorari to review a

judgment of the Utah Supreme Court affirming a lower court’s denial

of a motion to dismiss based on 12 U.S.C. $94.

—_ en

revelatory of the temptation experienced by some state courts

to abrogate protections that Congress has chosen to confer upon

national banks. This temptation can only grow stronger.

buoyed by this Court's implicit imprimatur, unless this Court

reviews the issue and expressly confirms the statutory rights

asserted by C&S.

Wherefore, for the foregoing reasons, the petition for certi-

orari should be granted.

Respectfully submitted,

DANIEL B. HODGSON

WILLIAM C. HUMPHREYS, JR.

PETER Q. BASSETT

ALSTON, MILLER & GAINES

1200 Citizens and Southern

National Bank Building

35 Broad Street

Atlanta, Georgia 30303

— *<

OPINION

(Court of Appeals, State of Georgia Filed May 6, 1976)

51622. The Citizens and Southern National Bank v. Bougas

M-15

Marshall, Judge

This appeal arises from a suit filed by Bougas against The

Citizens and Southern National Bank in the State Court of

DeKalb County complaining that the C & S Bank unlawfully

redeemed and converted to its own use a savings bond owned

A P Pp E N D ] X and pledged by Bougas to the bank as security for an indebted-

ness to the bank, allegedly the responsibility of Bougas’ son

claimed by the bank to be overd=. The bank answered the

complaint and concurrently therewith filed a motion to dismiss

the complaint on grounds of improper venue, maintaining that

suit against it would lie only in Chatham County. The trial court

denied the motion to dismiss but granted a certificate for imme-

diate review. Additionally, a motion by the bank for an

interlocutory appeal was granted by this court. The sole issue

pending before the court in this hearing is whether venue of the

pending cause of action lies in DeKalb County. Held:

Appellee Bougas asserts that though C & S Bank is a national

bank, it is located at numerous sites in DeKalb County furnish-

ing full service. He submits that a suit can be prosecuted in any

court of competent jurisdiction in any county in which C & S

is located and operating branch banks. Appellant C & S Bank

rejoins that as a national bank, venue against it is governed by

the provisions of Section 94 of Title 12 of the United States

Code. It contends that under the provisions of that statute,

C & S may be sued only in Chatham County, the county in

EEE

OPINION

(Court of Appeals, State of Georgia Filed May 6, 1976)

51622. The Citizens and Southern National Bank v. Bougas

M-15

Marshall, Judge

This appeal arises from a suit filed by Bougas against The

Citizens and Southern National Bank in the State Court of

DeKaib County complaining that the C & S Bank unlawfully

redeemed and converted to its own use a savings bond owned

A P P EK N D | X and pledged by Bougas to the bank as security for an indebted-

ness to the bank, allegediy the responsibility of Bougas’ son

claimed by the bank to be overdue. The bank answered the

complaint and concurrently therewith filed a motion to dismiss

the complaint on grounds of improper venue, maintaining that

Suit against it would lie only in Chatham County. The trial court

denied the motion to dismiss but granted a certificate for imme-

diate review. Additionally, a motion by the bank for an

interlocutory appeal was granted by this court. The sole issue

pending before the court in this hearing is whether venue of the

pending cause of action lies in DeKalb County. Held:

Appellee Bougas asserts that though C & S Bank is a national

bank, it is located at numerous sites in DeKalb County furnish-

ing full service. He submits that a suit can be prosecuted in any

court of competent jurisdiction in any county in which C & S

is located and operating branch banks. Appellant C & S Bank

rejoins that as a national bank, venue against it is governed by

the provisions of Section 94 of Title 12 of the United States

Code. It contends that under the provisions of that statute,

C & S may be sued only in Chatham County, the county in

po ee

which its charter was issued and the location of its principal

place of business.

Both parties agree that the focal point of this appeal is the

correct interpretation and application of 12 USC §94. That

statute, in pertinent part, provides: “Suits, actions, and proceed-

ings against any association under this Title may be had in any

district court, or territorial court of the United States held within

the district in which said association may be established, or in

any state, county, or municipal court in the county or city in

which such association is located having jurisdiction in similar

cases.

The parties are further agreed that the C & S Bank, as a

national bank, is an “association” within the meaning of the

federal statute. There is no dispute that the suit must be

brought in a district or a county in which the bank is “estab-

lished” or “located.” Mercantile National Bank v. Langdeau,

371 U. S. 555 (83 SC 529, 9 LE2d 523). The point of de-

parture occurs when a suit is brought in a state court whether

venue lies in the county of “establishment” or in a county in

which the bank is “located.”

There are cases on each side of the question. It has been

concluded that the meaning of “located,” including the venue

of a suit against a national bank, would be in any county of

the state in which the bank has branches either on the theory

that a branch bank “locates” the bank in that county or al-

ternatively that by doing business in the county, the bank has

waived its exclusive venue. See: Security Mills of Asheville,

Inc. v. Wachovia Bank and Trust Co., 281 NC 525, 189

SE2d 266; Holson v. Gosnell (So. Car.), 216 SE2d 539; Frank-

ford Supply Co. v. Matteo, 305 F.Supp., 794; Laponshon v.

Lewis Charles, Inc., 212 Pa. Super 185, 240 A2d 90. See

also: Stockholders Protective Committee v. First Jersey Bank,

133 NJ Super 462, 337 A. 2d 390.

—

In the federal courts, and in some courts considering the

issue, the question over the years had been settled adversely to

the contention advanced by Bougas. See: Mercantile National

Bank v. Langdeau, supra: Michigan National Bank v. Robert-

son, 372 U. S. 591 (7 LE2d 961, 83 SC 914): Northside Iron

and Metal Co., Inc. v. Dobson and Johnson, Inc., 480 F2d

798: First National Bank of Boston v. U. S. District Court of

Central District of California, 468 F2d 180; Helco, Inc. v.

First National City Bank, 470 F2d 883: United States National

Bank v. Hill, 434 F2d 1019; Levin v. Great Western Sugar

Co., 274 FSupp. 974: Odette v. Shearson, Hamil and Co., Inc.,

394 FSupp. 946: Prince v. Franklin National Bank, 310 NYS2d

390: Shaefer Sons, Inc. v. Watson, 26 AD2d 659, 272 NYS

2d 790.

The original National Banking Act of 1863 did not make

mention of suits against national banks in state courts. The

provisions of the Act reiating to suits in state courts were placed

in the statute by later legislation. See: Mercantile National

Bank v. Langdeau, 371 U. S. 555, supra. Apparently Congress

intended a different rule to apply as between suits brought in

federal courts (where the bank must be established in the district)

and suits brought in state courts (where the bank need only be

located in the county or city of the court having similar jurisdic-

tion in similar cases). Otherwise, Congress hardly would have

substituted “located” for “established” in defining venue of a

suit brought in state court.

A close examination of the federal cases dealing with the

dichotomy of “established” and “located” discloses that in each

of those cases the federal court was dealing with its own venue,

i.e., was the bank established (under its charter) within the

tederal court's district. E.g., Helco, Inc. v. First National City

Bank, 470 F2d 883, supra. None of the cases were dealing

with the venue of a suit brought in a state court 'n a county

in which the bank was operating a branch facility but in which

ee

—

it was not “established.” In order to accept venue, the federal

courts were required, under the express language of § 94, to

conclude that a bank must be “established” in its district, and

of course, it would be “located” there also. We find these cases

to be inapposite to the problem presented by this case, because

in a state court the bank need not be both “established”

and “located” in the county.

As to whether a national bank is “located” in a county simply

by setting up a branch to conduct general bank business, therein,

it seems clear that it has manifested an intent to be found in

that jurisdiction for purposes of suits arising out of any business

conducted there. Lapinsohn v. Lewis Charles, Inc., supra.

“We conclude that when a national bank, ‘established’ in this

State, Operates and maintains in counties other than the county

of its principal office, branches at which it conducts its gen-

eral banking business, the corporation is present at all times

each such branch and is ‘located’ therein within the meaning

of this Act of Congress. Thus, it is subject to suit in a state

court in such county, otherwise having jurisdiction, just as it

is in the county wherein its principal office is located.” Security

Mills v. Asheville v. Wachovia B & T Co., supra, at page 271.

Such an interpretation is in harmony with the laws of venue

of this state which provide that a corporation may be sued on

contract in any county in which the contract was made or was

to be performed; and as to torts, it may be sued in the county

where the cause of action originated. See: Ga. L. 1968, pp.

565, 584; 1975, pp. 583, 857 (Code Ann. § 22-404 (c) and

(d)). Insofar as the footnote found in Carswell v. Cannon, 110

Ga. App. 315 (138 SE2d 468), at page 317. may imply a con-

trary result, we find the language therein to be obiter dicta, not

persuasive and decline to follow its lead.

Judgment affirmed. Pannell, P. J.. and McMurray, J., concur.

— " oe

(Order, filed August 22. 1975)

In the State Court of DeKalb County

State of Georgia

Nick Bougas

| Civil Action

- ' File No. C77256

The Citizens and Southern National Bank

ORDER

Defendant's motion to dismiss, having been filed in the above-

style case and having come on for hearing before this Court,

after hearing argument of counsel and considering the papers on

file in the case it is hereby ordered:

That the defendant's motion to dismiss filed in the above-

style case be denied.

This the 22 day of August, 1975.

s J. O. MITCHELL

Judge. DeKalb State Court

=

(Judgment, filed May 6, 1976)

Court of Appeals of the

State of Georgia

Atlanta, May 6, 1976

The Honorable Court of Appeals met pursuant to adjourn-

ment. The foilowing judgment was rendered:

51622. The Citizens and Southern National Bank v. Nick

Bougas

This case came before this court on appeal from the State

Court of DeKalb County: and, after argument had, it is con-

sidered and adjudged that the judgment of the court below be

affirmed. Pannell, P. J.. Marshall and McMurray, JJ3., concur.

Bill of costs $30.00.

Court of Appeals of the State of Georgia

Clerk’s Office, Atlanta

Sep. 20, 1976

I certify that the above is a true extract from the minutes of

the Court of Appeals of Georgia, and that ...............

paid the above bill of costs.

Witness my signature and the seal of said court hereto affixed

the day and year last above written.

MORGAN THOMAS

Clerk

(Order, filed May 21, 1976)

Court of Appeals of the

State of Georgia

Atlanta, May 21, 1976

The Honorable Court of Appeals met pursuant to adjourn-

ment. The following order was passed:

51622. The Citizens and Southern Nationa! Bank v. Bougas.

Upon consideration of the motion for a rehearing filed in this

case, it is ordered that it be hereby denied.

Court of Appeals of the State of Georgia

Clerk's Office, Atlanta

May 21. 1976

I certify that the above is a true extract from the minutes of

the Court of Appeals of Georgia.

Witness my signature and the seal of said court hereto affixed

the day and year last above written.

MORGAN THOMAS

Clerk

EEE

—y YY

(Order, filed June 30, 1976)

Supreme Court of Georgia

Atlanta, June 30, 1976

The Honorable Supreme Court met pursuant to adjournment.

The following judgment was rendered:

31402. Citizens and Southern Bank v. Nick Bougas.

Upon consideration of the application for certiorari filed to

review the judgment of the Court of Appeals in this case, it is

ordered that the writ be hereby denied. All the Justices concur

except Hill, J., dissents and Nichols, C. J.. disqualified.

Supreme Court of the State of Georgia

Clerk’s Office, Atlanta

July 29, 1976

I certify that the above is a true extract from the minutes of

the Supreme Court of Georgia.

Witness my signature and the seal of said court hereto

affixed the day and year last above written.

JOLINE B. WILLIAMS

Clerk

Case No. 51622

Court of Appeals of Georgia

Remittitur from Supreme Court

Filed in office

Clerk, Court of Appeals of Georgia

A-9 -

(Order, filed July 15, 1976)

Supreme Court of Georgia

Atlanta, July 15, 1976

The Honorable Supreme Court met pursuant to adjournment.

The following order was passed:

31402. Citizens and Southern National Bank v. Nick Bougas.

Upon consideration of the motion for a reconsideration filed

in this case, it is ordered that it be hereby denied. All the

Justices concur, except Ingram and Hill, JJ., dissent and Nichols,

C. J., disqualified.

Supreme Court of the State of Georgia

Clerk's Office, Atlanta

September 17, 1976

I certify that the above is a true extract from the minutes oi

the Supreme Court of Georgia.

Witness my signature and the seal of said court hereto affixed

the day and year last above written.

HAZEL E. HALLFORD

Deputy Clerk