# Amicus Curiae Brief — Steinbrink v. Independent Insurance Insurance Agents Agents of America (Nos. 92-507, 92-484)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1992

## Text

FIL!
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No. 92-507 NOV 29 3
—
| office &
IN THE eel

a

Supreme Court of the Anited States

OCTOBER TERM, 1992

STEPHEN R. STEINBRINK, et al.,
Petitioners,
V.

INDEPENDENT INSURANCE AGENTS OF AMERICA, et al.,
Respondents.

On Petition for Writ of Certiorari
To the United States Court of Appeals
For the District of Columbia Circuit

BRIEF OF THE AMICI CURIAE
AMERICAN BANKERS ASSOCIATION, ET AL.,*
IN SUPPORT OF THE PETITIONERS

JOHN J. GiLu Il
Counsel of Record

MICHAEL F. CROTTY

AMERICAN BANKERS ASSOCIATION
1120 Connecticut Avenue, N.W.
Washington, D. C. 20036

(202) 663-5026

Attorneys for Amici Curiae

*Complete List of Sponsoring Organizations and Counsel
on inside of cover.)

November 20, 1992

— EE,
PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

RICHARD M. WHITING

ASSOCIATION OF BANK HOLDING COMPANIES
730 15th Street, N.W.

Washington, D.C. 20005

(202) 393-1158

JAMES T. MCINTYRE

McNAIR LAW FIRM

1155 15th Street, N.W.

Washington, D.C. 20005

(202) 659-3900

Attorney for Association of
Banks in Insurance

MARCIA Z. SULLIVAN

CONSUMER BANKERS ASSOCIATION
1000 Wilson Boulevard

Arlington, Virginia 22209

(703) 276-1750

LEONARD J. RUBIN

BRACEWELL & PATTERSON

2000 K Street, N.W.

Washington, D.C. 20006

(202) 828-5800

Attorney for Independent Bankers
Association of America

KATHLEEN A. TAYLOR

KANSAS BANKERS ASSOCIATION

1500 Merchants National Bldg.

8th & Jackson

Topeka, Kansas 66612

(913) 232-3444

JOHN S. JACKSON

MINNESOTA BANKERS ASSOCIATION
730 Second Avenue South
Minneapolis, Minnesota 55402
(612) 338-7851

WADE L. NASH

MISSOURI BANKERS ASSOCIATION
207 E. Capitol

Jefferson City, Missouri 65101
(314) 636-8151

OREGON BANKERS ASSOCIATION

JOHN E. KNIGHT

BOARDMAN, SUHR, CurRY & FIELD

P.O. Box 927

Madison, Wisconsin 53701

(608) 257-9521

Attorney for Wisconsin Bankers Association

Ss

QUESTION PRESENTED

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ne inaavertent ciericai n
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irKS 1h anh ENTOMuUeaG SUaAvu
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pea ser T IZ ne

REASONS FOR GRANTING THE WRIT
I. The Conflict Among The Circuits

TABLE OF CONTENTS

SPT EERE EEE EEE EEE HHH EEE EEE OH OOS
SEER EEE EEE EEE EEE EEE EEE
eli dededddte tte

I]. The Important Question of Federal Law ....

CONCLUSION

STS EE EEE ESSE ES ESE EEE SESE HEE EE EE EEE ES

il
TABLE OF AUTHORITIES

CASES:

American Land Title Association v. Clarke, 968
F.2d 150 (2d Cir. 1992), petitions for
cert.pending, Nos. 92-482, 92-645 ............000+

Board o ny Premera of the Federal Reserve System
mension Financial Corp., 474 U.S. 361
(1986) sananesesnannenenesmnenneeaennnenanneEmereneee

Commissioner of Internal Revenue v. First Security
Bank of Utah, 405 U.S. 394 (1972) ...............

Commissioner of Internal Revenue v. W. Morris
Trust, 367 F.2d 794 (4th Cir. 1966) ...............

Crawford v. Burke, 195 U.S. 176 (1904) ...............

Exchange Bank of Commerce v. Meadors, 199 Okla.
10, 0. 184 BD ED GED eenecececscenennemnetesnsccsensens

First National Bank of Lamarque v. Smith, 610
F.2d 1258 (6th Cir. 1960) ....................s00000000e.

Greene v. First National Bank of Thief River Falls,
172 Minn. 310, 215 N.W. 213 (1927) .............

Guaranty M. Co. v. Z.1.D. Associates, 506 F.
— 101 (S.D.N.Y. 1980) ........ccccccccceseesseseeees

7 ~ Insurance Agents of America v. Board
Governors of the Federal Reserve System,
F.2d 468 (8th Cir. 1984) ..............cccceeeeeees

Independent Insurance Agents of America v. Clarke,
955 F.2d 731 (D.C. Cir SEED wxeensenenemtntannenne

Independent Insurance Agents of America v. Hei-
mann, 613 F.2d 1164 (D.C. Cir. 1979), cert

denied, 449 U.S. 823 (1980) .........cceccsseecssvessees
Marshall National Bank v. Corder, 169 Va. 606,
194 S.E. 734 (Va. Ct. App. 1938) ..................

Owensboro National Bank v. Moore, No. 91-3, (E.D.
a sy appeal pending, Nos. 92-6330, 6331
(6 Se

Richards v. United States, 369 U.S. 1 (1962) .......

Page

3,7,8
10

IV

Table of Authorities Continued

| Page
Salyersville National Bank Uni
F.2d 650 (6th Cir. 1980)... sritennca tie ‘
Sazon v. Georgia Association of I t Insur-
ance Agents, 399 F.2d 1010 (5th Cir. 1968) ... 6
i v. Kerr, 555 F. Supp. 1090 (S.D. Ohio
a a ae iotie stetetesseseseneneneeceneens 7
U.S. 621 (1879) inant sth — 9
ae he sseseennesnsessnesssssesnseenes
287 US. 77 (1932) thats icine 10
a Annuities Life Insurance Co. ». Clarke
F. Supp. 639 (S.D. Tex. 1991), appeal
OD tg No. 92-2010 (5th Cir.) ...... alates 7
ington Agency Inc. v. F ich. 683.
16 N.W.2d 121 (1944) — a 7 7
STATUTES:
12 U.S.C. § 24 (Seventh)
Tc. ch... pass
SOs ooesSseetososococcoccceece um
Pub. L. No. 63-64, 38 Stat. 25] (1923) ................. 11
Pub. L. No. 65-121, 40 Stat. 506 (1918) ......... 5
Rev. Stat. section 5202 0000000000! passim
MISCELLANEOUS:
ne} Sack lnsusonce Activities Survey Conducted
t Bankers Association of
America & Wyatt Company (1990) 3

IN THE

Supreme Court of the Gnited States
OCTOBER TERM, 1992

No. 92-507

STEPHEN R. STEINBRINK, ef a/.,
Petitioners,

Vv.

INDEPENDENT INSURANCE AGENTS OF AMERICA, et al.,
Respondents.

Ee

On Petition for Writ of Certiorari
To the United States Court of Appeals
For the District of Columbia Circuit

BRIEF OF THE AMICI CURIAE
AMERICAN BANKERS ASSOCIATION, ET AL.,
IN SUPPORT OF THE PETITIONERS

The American Bankers Association, et al., hereby
ly submit this brief as amici curiae in sup-

rt of the Petitioners in accordance with the pro-
visions of Rule 37.2 of the Supreme Court Rules. All
ies have consented to this filing, and their written

consents are filed with this brief.

INTEREST OF THE AMICI CURIAE

The national and state-based trade associations
sponsoring this brief together represent vircually

2

every commercial bank in the United States and most
of their holding companies (if any) as well.

Commercial banks have relied upon the continued
existence of Section 92 of the National Bank Act for
the past three-quarters of a century in order to act
as general insurance agents in small towns through-
out much of the country. It has been an entirely
reasonable reliance, since the Comptroller of the Cur-
rency, the principal regulator of national banks, has
treated the law as remaining in full force and effect.
as have the courts, state and federal (including this
Court), that have had occasion to deal with the issue,
and as has the United States Congress, which has
purported to amend Section 92 in two instances. It
is a reliance that is not limited to national banks. The
laws of approximately 37 states confer upon their own
state chartered banks, in addition to their specifically
enumerated powers, other powers that are available
to national banks under federal law.

It has proven to be extraordinarily difficult to de-
termine the exact number or identity of commercial
banks operating insurance agencies under the direct
or indirect authority of Section 92. No official records
are compiled or kept, but efforts have been made to
survey the industry by various parties. The Comp-
troller’s Petition for Writ of Certiorari places the
number of national banks doing so at between 90 and
100, and correctly relates that the American Bankers
Association and Oregon Bankers Association have es-
timated a number in the range of 160. (Steinbrink v.
Independent Insurance Agents of America, No. 92-507,
Petition for Writ of Certiorari at 19, n. 11). The
United States District Court for the Eastern District
of Kentucky, in related litigation, has found that ap-

proximately 179 national banks in fifteen states ex-
ercise insurance powers pursuant to Section 92. .
(Owensboro National Bank v. Moore, No. 91-3, slip
op. at 10 (E.D. Ky. 1992) (appeal pending, Nos. 92-
6330, 6331, 6th Cir.)). A 1990 study performed for
the Independent Bankers Association of America sug-
gests that the number could be considerably higher
than that. (1991 Bank Insurance Activities Survey
Conducted by The Independent Bankers Association
of America & The Wyatt Company (1990) at 7-10).

In addition to the national banks acting under direct
authority of Section 92, the American Bankers As-
sociation has identified approximately 130 state-char-
tered banks, located in small towns, that are offering
insurance services to their customers where the only
statutory authority to do so is a state law providing
that state-chartered banks may provide to their cus-
tomers whatever services a national bank in the state
can provide to customers.

Whatever the exact number of banks, state and
national, that have taken advantage of the statutory
grant of power to banks located and doing business
in small towns, it is clear that this participation is
considerable, widespread, and growing. (See, e.g., Ow-
ensboro National Bank v. Moore, supra, in which three
national banks not presently engaged in the insurance
business from their locations in small towns are strug-
gling mightily, over the opposition of the insurance
industry, to utilize the powers granted by the statute.)

It is to protect the present and future interests of
their respective members in the conduct of insurance
activities in small towns that the American Bankers
Association, Association of Bank Holding Companies,
Association of Banks in Insurance, Consumer Bankers

Association, Independent Bankers Association of
America, Kansas Bankers Association, Minnesota
Bankers Association, Missouri Bankers Association,
Oregon Bankers Association and Wisconsin Bankers
Association respectfully appear in this case in order

to urge the Court to grant the Petition for Writ of
Certiorari.

REASONS FOR GRANTING THE WRIT
I. The Conflict Among The Circuits

In the case below, the District of Columbia Circuit
held that Section 92 of the National Bank Act, en-
acted in 1916, was effectively repealed two years later
in the context of the enactment of the totally unre-
lated War Finance Corporation Act. Independent In-
surance Agents of America v. Clarke, 955 F.2d 731,
739 (D.C. Cir. 1992). Four months after the D.C.
Circuit opinion, the Second Circuit explicitly rejected
the District of Columbia Circuit’s decision, holding
that whatever it is that happened in 1918 did not
effect a repeal of Section 92. American Land Title
Association v. Clarke, 968 F.2d 150, 152 (2d Cir.
1992), petitions for cert. pending, Nos. 92-482, 92-645.
Rule 10.1(a) of the Supreme Court Rules provides that
one of the ‘‘special and important reasons’ that will
be considered by the Court in granting review on writ
of certiorari is “[w]hen a United States court of
appeals has rendered a decision in conflict with the
decision of another United States court of appeals on
the same matter.”

Section 92 of the National Bank Act was enacted
as a part of a then new version of Section 13 of the
Federal Reserve Act—a section of the law that also
amended a pre-existing, substantively unrelated stat-

ute, Revised Statutes section 5202. The placement of
a pair of quotation marks in the 1916 statute has
given rise to a longstanding academic dispute over
the question whether Section 92 was thereby placed
within the text of the amended R.S. section 5202 or
within the text of Section 13 of the Federal Reserve
Act separately from R.S. section 5202. When Con-
gress passed the War Finance Corporation Act (Pub.
L. No. 65-121, 40 Stat. 506) in 1918, it re-enacted
(with an amendment) R.S. section 5202, without in-
cluding in the amended text the words of Section 92,
leading to the argument that Section 92 was repealed
at that time.

Notwithstanding that, every court that has had oc-
casion to interpret and apply Section 92 in the past
seventy-five years has treated the law as if it has
continued to exist in full force and effect—until the
District of Columbia Circuit’s decision in the cave be-
low. Not only is the Circuit opinion in direct conflict
with the Second Circuit’s recent opinion, but it is in
conflict with all of the other court opinions as well:

¢ In Commissioner of Internal Revenue v. First Se-
curity Bank of Utah, 405 U.S. 394, 401-405 (1972),
this Court observed that Section 92 had been omitted
from the U.S. Code in recent editions, but that the
Comptroller of the Currency still considered the law
to be in effect. The Court then proceeded to act as
if the Comptroller were correct by not attributing
income from the sale of insurance to banks that, un-
der Section 92, could not lawfully receive such in-
come.

¢ In Commissioner of Internal Revenue v. W. Mor-
ris Trust, 367 F.2d 794, 795 n.3 (4th Cir. 1966), the
court examined the tax consequences when, in fur-

therance of a merger into a national bank, a state
bank was compelled—by Section 92—to spin off its
insurance department.

¢ In First National Bank of Lamar v. Smi
610 F.2d 1258, 1261-62 n.6 A | Cir. 1980), Pan
acknowledged the ‘‘considerable discussion’ over the
correctness of the U.S. Code’s omission of Section 92
since 1952, and concluded that the “issue appears to
be resolved’’ in favor of Section 92’s continued ex-
istence, so much so that “‘[uJnder these circumstances
further discussion of the issue seems moot.’’ (See also
Saxon v. Georgia Association of Independent Insur-
ance Agents, 399 F.2d 1010 (5th Cir. 1968), in which
the existence of Section 92 was unquestionably the
necessary predicate to the court’s conclusions of law.)

¢ Salyersville National Bank v. United State
F.2d 650, 652 (6th Cir. 1980), was another -seaghcom
in which the court followed this Court’s First Security
precedent, noting that ‘‘banks in cities over 5000 pop-
ulation had been and were then barred from selling
insurance by federal banking law, 12 U.S.C. § 92.”

¢ In Independent Insurance Agents of America v.
Board of Governors of the Federal Reserve System
736 F.2d 468, 476-77 (8th Cir. 1984), the very same
party who is the Respondent here argued that Section
92 of the National Bank Act prohibited national banks
in towns with a population over 5000 from acting as
Insurance agents. Necessary to that argument, of
course, is that Section 92 existed in 1984. The Eighth
Circuit did not dismiss the argument out of hand. but
rather, acting as if Section 92 existed, concluded that
it would not be violated by the Federal Reserve’s
approval of certain insurance activities of two bank
holding companies that were sufficiently separated

~

from the bank subsidiaries of the holding companies
so that the activities would not be viewed as those

of the banks.

e Even the District of Columbia Circuit itself has,
in recent past, acted inconsistently with its new view
that Section 92 does not exist. In Independent Bank-
ers Association of America v. Heimann, 613 F.2d
1164, 1170 (D.C. Cir. 1979), cert. denied, 449 U.S.
823 (1980), the court held that the incidental powers
clause of the National Bank Act, 12 U.S.C.
§ 24(Seventh), authorized national banks to act as
agent in the sale of credit life insurance, wherever
the banks were located. The court analyzed Section
92 and concluded that “‘by its own terms [section 92]
does not address the authority of national banks in
larger towns or cities to act as agents for life insur-
ance companies.” (Jd. at n.18) The court would not
have bothered saying that if Section 92 did not exist.
Moreover, it is not an adequate answer to say that
no one in JBAA v. Heimann asked the court to rule
on the existence of Section 92. No one asked the
District of Columbia Circuit to rule on that matter
in this case either.’

1In addition to these Supreme Court and U.S. Court of
Appeals decisions, lower federal courts and state courts have
discussed, relied on or cited Section 92 innumerable times with-
out ever concluding that it had been repealed. See Variable
Annuities Life Insurance Co. v. Clarke, 786 F. Supp. 639
(S.D.Tex. 1991), appeal pending, No. 92-2010, 5th Cir.; Owens-
boro National Bank v. Moore, No. 91-3 (E.D.Ky. 1992), appeal
pending, Nos. 92-6330, 6331, 6th Cir.; Thompson v. Kerr, 555
F. Supp. 1090, 1096 (S.D. Ohio 1982); Guaranty Mortgage Co.
v. ZLD. Associates, 506 F. Supp. 101, 104(S.D.N.Y. 1980); Ex-
change Bank of Commerce v. Meadors, 199 Okla. 10, 184 P.2d
458, 464 (1947); Washington Agency Inc. v. Forbes, 309 Mich.

In light of all the contrary authority, one would
almost be tempted to dismiss the District of Columbia
Circuit opinion as an aberration, unlikely to recur or
be followed elsewhere, except for the fact that the
District of Columbia is the home circuit to the Comp-
troller of the Currency who may be sued there any-
time he approves a proposed activity of a national
bank pursuant to Section 92, or anytime he promul-
gates a rule regarding the insurance activities of small
town banks in the exercise of the rulemaking powers
granted him by Section 92. The insurance industry
has already enunciated its intent to follow precisely
that strategy. See Defendant’s and Intervenors’ Joint
Opposition and Response to Plaintiffs’ Memorandum
of Supplemental Authorities, Owensboro National
Bank v. Wright,? Civil Action No. 91-3 at 5-6 n.3
(February 1992). The conflict needs to be resolved.

II. The Important Question of Federal Law

We have already pointed out above that the decision
of the District of Columbia Circuit below imminently
threatens the business operations and settled expec-
tations of a great many state and national banks and
their customers. That is coupled with the confusion
within the industry and the industry’s regulators, state
and federal, engendered by two diametrically opposed
U.S. Courts of Appeals decisions coming within a few

683, 16 N.W.2d 121, 122 (1944); Marshall National Bank v.
Corder, 169 Va. 606, 194 S.E. 734, 736 (Va.Ct. App. 1938);
Greene v. First National Bank of Thief River Falls, 172 Minn.
310, 215 N.W. 213 (1927).

* This case has subsequently become known as Owensboro Na-

tronal Bank v. Moore, upon replacement of the Insurance Com-
missioner.

months of one another. Further adding to the equa-
tion is the pendency of other litigation in the Fifth
and Sixth Circuits’ that would clearly benefit from
this Court’s resolution of the issue one way or the
other. All together, these factors make this an im-
portant question to the business and governmental
interests of many parties.

But there is also a question raised in the Circuit
opinion that is an important one in a legal sense as
well. It is the court’s perception of its: role in con-
struing and applying statutes. The District of Colum-
bia Circuit was unwilling to “‘correct(] flaws in the
language and punctuation of federal statutes where
to do so would be “to reinstate a law that, inten-
tionally or unintentionally, Congress has stricken from
the statute books.’ Independent Insurance Agents of
America v. Clarke, 955 F.2d at 739.

The court’s opinion presumes that Congress has
stricken the laws from the books, preswmes that “‘cor-
recting”’ punctuation errors would have the effect of
“reinstating’’ the law. But in point of fact, proper
application of the rules of statutory construction
should lead to the conclusion that the law was not
repealed in the first place.

We begin with the a proposition set forth by this
Court long ago: ‘‘The intent, not the letter of the
statute, constitutes the law.”” Union National Bank
of St. Louis v. Matthews, 98 U.S. 621, 626 (1879).
The opinion of the court below gives no regard to
the intent of Congress—either in 1916 when it en-
acted Section 92, or in 1918 when it enacted the War

3 See n. 1 above.

10

Finance Corporation Act. The District of Columbia
Circuit found that the latter repealed the former
whether Congress intended that result or not.

This Court has also often invoked “thé plain lan-
guage of the statute itself’’ as a’ means of finding
and effectuating Congressional intent, not as an end
in itself. See, e.g., Board of Governors of the Federal”
Reserve System v. Dimension Financial Corp., 474

U.S. 361, 373-75 (1986); Richards v. United States,
369 U.S. 1, 9 (1962).

Finally, this Court has held that-language is lan-
guage. It does not include punctuation:

Punctuation marks are no part of an act. To
determine the intent of the law, the court,
in construing a statute, will disregard the
punctuation or will repunctuate, if that be
necessary, in order to arrive at the natural
meaning of the words employed.

United States v. Shreveport Grain and Elevator Co.,
287 U.S. 77, 82-83 (1932\emphasis added).

So little is punctuation a part of statutes that
courts will read them with such stops as will
give effect to the whole.

Crawford v. Burke, 195 U.S. 176, 192 (1904).

An examination of the language of the appli
statutes shows clearly that Section 92 of the National
Bank Act was never placed within Revised Statutes
section 5202, so that the subsequent changes to sec-
tion 5202 had no effect upon Section 92.4 An ex-

‘ The court below printed the applicable statutes as appendices

to its opinion. We reproduce those appendices as appendices to
this brief as well for convenience.

11

amination of the origin of the misplaced quotation
marks clearly shows them to be an act of a scribe
and not an act of Congress.

Section 5202 of the Revised Statutes of the United
States was enacted in 1878, derived from Section 36
of the National Bank Act of 1864 which, in turn, was
derived from Section 42 of the National Bank Act of
1863. Generally, it forbade any national bank to be
indebted in an amount exceeding its paid-in capital,
and then set forth four short exceptions to that gen-
eral rule.

In 1913, Congress enacted the Federal Reserve Act,
Pub. L. 63-64, 38 Stat. 251 (1913). Section 13 of the
Act contained a series of unnumbered paragraphs, the
sixth one of which amended R.S. section 5202. That
paragraph contained five numbered subparagraphs.
The first four of them essentially duplicated the orig-
inal four exceptions to the general prohibition against
excess indebtedness of national banks; the fifth one
was a new exception for “‘[Ijiabilities incurred under
the provisions of the Federal Reserve Act’ (emphasis
added). After the fifth numbered subparagraph, there
began a new unnumbered paragraph, authorizing the
Federal Reserve Board to adopt restrictions, limita-
tions and regulations upon the rediscount by a Fed-
eral Reserve bank of certain bills receivable, foreign
bills of exchange and acceptances ‘‘authorized by this
Act” (emphasis added). (See Appendix A.)

The statute clearly did not make R.S. section 5202
a part of the Federal Reserve Act; otherwise the
internal reference to ‘the Federal Reserve Act” in
the fifth numbered subparagraph would have been
superfluous. Similarly, the unnumbered paragraph fol-
lowing the fifth numbered subparagraph was not made

12

a part of R.S. section 5202. If it had been intended
to be a continuation of the fifth numbered subpara-
graph, the internal reference to “this Act” would have
made no sense whatsoever. R.S. section 5202 con-
tained no authorization of bills of exchange or ac-
se ya an authorization was found in the
second and third unnumbered paragra

13 of the Federal Reserve Ace. id aie

In summary, the amendment to R.S. section 5202
was contained only in the sixth unnumbered para-
graph including the five numbered subparagraphs. The
seventh unnumbered paragraph, like the first five,
was part of the then new Federal Reserve Act.

In 1916, Congress amended the Federal Reserve
Act. Among other things, the 1916 statute set forth
a new version of section 13 of the Act “to read as
follows: The new version (See Appendix B) followed
the same format as the prior version, containing a
series of unnumbered paragraphs. Each of those par-
agraphs—with one exception—was preceded by quo-
tations marks, which was the grammatically correct
thing to do after the phrase “to read as follows.”
The exception, of course, is what gives rise to the
difficulty here. The unnumbered paragraph carrying
forward the three-year old amendment to R.S. section
5202 was not preceded by a quotation mark. Tex-
tually, this unnumbered paragraph and its five num-
bered subparagraphs remained unchanged (except the
1916 version refers, in the fifth subparagraph, to the
‘Federal reserve Act,” whereas in the 1913 version
the second word of that phrase also had an initial
capital letter). The unnumbered paragraph following
the five numbered exceptions was a modification of
the same paragraph as had appeared in the 1913 ver-

13

sion of the Federal Reserve Act. It now provided for
the discount, purchase and sale, as well as the re-
discount of the same bills receivable, bills of exchange
and acceptances “authorized by this Act.” Again, de-
spite the placement of quotation marks in the 1916
statute, there was no authorization in R.S. section
5202, as amended, for any such bills or acceptances.

As was earlier the case, that authorization appeared
only in the Federal Reserve Act itself. Likewise as
was earlier the case, R.S. section 5202’s fifth num-
bered exception referred not to “this Act,”’ but rather
to “the Federal reserve Act,” as a separate and dis-
tinct statute. The clear import of the words used,
therefore, is that the unnumbered paragraph follow-
ing the five exceptions was not a part of R.S. section
5202. Once that break is made, it is logical and gram-
matical to assume conclusively that unnumbered par-
agraphs following the bills of exchange and
acceptances paragraph are likewise not part of R.S.
section 5202. The unnumbered paragraph immediately
following the bills of exchange and acceptances par-
agraph is the enactment of what subsequently became
identified as section 92 of the National Bank Act.

That the placement of the quotations marks in the
enrolled statute is an act of a scribe rather than an
Act of Congress is beyond question. Lodged with this
brief as an Exhibit are copies of the Senate and House
Conference Reports on “An Act to amend the Act
approved December twenty-third, nineteen hundred
and thirteen, known as the Federal Reserve Act, by
adding a new section.” The Senate version of the
Conference Report contains no quotation marks in
any relevant spot; the House version of the Confer-
ence Report contains handwritten quotation marks,

14

but in relevant part, those quotation marks are not
where they eventually appear in the enrolled statute.
The unnumbered paragraph preceding the revision to
R.S. section 5202 does not end in a quotation mark
in either the House or Senate version of the Confer-
ence Report, but it does in the enrolled statute. The
paragraph of the bill pertaining to R.S. section 5202
begins with a quotation mark in the House version
of the Conference Report, but the enrolled bill does
not. If either the Senate version or the House version
had made it to the enrolled bill, we would not be
here.

The War Finance Corporation Act, in relevant part,
re-enacted R.S. section 5202 with a new sixth excep-
tion (See Appendix C). It did not pertain to the in-
surance powers and did not repeal those powers since,
as indicated above, Section 92 was not a part of R.S.
section 5202.

The words of the 1916 statute, with the internal
references to “this Act’’ and “the Federal reserve
Act,” make sense if and only if the paragraphs fol-
lowing those that obviously amend R.S. section 5202
are not deemed to be made a part of R.S. section
5202. The plain language of the statute must control,
not peculiar quotation marks of unknown origin which
would have the effect of making portions of the stat-
ute gibberish.

15

CONCLUSION

For all of the reasons stated herein and in the
Petition for Writ of Certiorari, we respectfully urge
that the Petition be granted.

Respectfully submitted,

JOHN J. GiLu Il
Counsel of Record

MICHAEL F. CROTTY

AMERICAN BANKERS ASSOCIATION
1120 Connecticut Avenue, N.W.
Washington, D.C. 20036

(202) 663-5026

Attorneys for Amici Curiae

November 20, 1992

APPENDIX

la

APPENDIX A

Section 13 of Federal Reserve Act of 1913
POWERS OF FEDERAL RESERVE BANKS.
Sec. 13. Any Federal reserve bank may receive ....

*_* *

Any member bank may accept drafts or bills of
exchange drawn upon it and growing out of transactions
involving the importation or exportation of goods having
not more than six months sight to run; but no bank shall
accept such bills to an amount equal at any time in the
aggregate to more than one-half its paid-up capital stock
and surplus.

Section fifty-two hundred and two of the Revised Stat-
utes of the United States is hereby amended so as to read
as follows: No national banking association shall at any
time be indebted, or in any way liable, to an amount
exceeding the amount of its capital stock at such time
actually paid in and remaining undiminished by losses or
otherwise, except on account of demands of the nature fol-
lowing:

First. Notes of circulation.

Second. Moneys deposited with or collected by the asso-
ciation.
Third. Bills of exchange or drafts drawn against money

actually on deposit to the credit of the association, or due
thereto.

Fourth. Liabilities to the stockholders of the association
for dividends and reserve profits.

Fifth. Liabilities incurred under the provisions of the
Federal Reserve Act.

The rediscount by any Federal reserve bank of any bills
receivable and of domestic and foreign bills of exchange,
and of acceptances authorized by this Act, shall be subject
to such restrictions, limitations, and regulations as may
be imposed by the Federal! Reserve Board.

2a

APPENDIX B
1916 Amendments to Federal Reserve Act of 1913

CHAP. 461.—An Act To amend j j
. certain
of the Act entitled “Federal reserve Act,” Posen

ogee twenty-third, nineteen hundred and thir-

Be it enacted by the Senate and Ho
use .
sentatives of the United States of $name dg Con.
gress assembled, That the Act entitled “Federal
reserve Act,” approved December twenty-third,

nineteen hundred and thirteen. be
amended as follows: a

*_* *

That section thirteen be, and i
is he
to read as foliows: reby amended

*“* *

“Any Federal reserve bank may make adv

to its member banks on their pommel nanan the
a period not exceeding fifteen days at rates to be
established by such Federal reserve banks, subject
to the review and determination of the Federal
Reserve Board, provided such promissory notes are
secured by such notes, drafts, bills of exchange, or
bankers’ acceptances as are eligible for rediscount
or for purchase by Federal reserve banks under the
provisions of this Act, or by the deposit or pledge
of bonds or notes of the United States.”

Section fifty-two hundred and two of the Revi
Statutes of the United States is hereby te
as to read as follows: “No national banking associa-
tion shall at any time be indebted, or in any way
liable, to an amount exceeding the amount of its
capital stock at such time actually paid in and
remaining undiminished by losses or otherwise

3a

except on account of demands of the nature follow-
ing:
“First. Notes of circulation.

“Second. Moneys deposited with or collected by
the association.

“Third. Bills of exchange or drafts drawn against
money actually on deposit to the credit of the asso-
ciation, or due thereto.

“Fourth. Liabilities to the stockholders of the
association for dividends and reserve profits.

“Fifth. Liabilities incurred under the provisions of
the Federal reserve Act.

“The discount and rediscount and the purchase
and sale by any Federal reserve bank of any bills
receivable and of domestic and foreign bills of
exchange, and of acceptances authorized by this
Act, shall be subject to such restrictions, limita-
tions, and regulations as may be imposed by the
Federal Reserve Board.

“That in addition to the powers now vested by law
in national banking associations organized under
the laws of the United States any such association
located and doing business in any place the popula-
tion of which does not exceed five thousand inhabi-
tants, as shown by the last preceding decennial
census, may, under such rules and regulations as
may be prescribed by the Comptroller of the
Currency, act as the agent for any fire, life, or other
insurance company authorized by the authorities of
the State in which said bank is located to do busi-
ness in said State, by soliciting and selling insur-
ance and collecting premiums on policies issued by
such company; ... Povided [sic], however, That no
such bank shal! in any case guarantee ... the pay-
ment of any premium on insurance policies issued
through its agency by its principal: And provided

4a

further, That the bank shall not guarantee the
truth of any statement made by an assured in filing
his application for insurance.

“Any member bank may accept drafts or bills of
exchange drawn upon it ... Provided further, That
no member bank shall accept such drafts or bills in
an amount exceeding at any time the aggregate of
one-half of its paid-up and unimpaired capital and
surplus.”

APPENDIX C
Section 20 of the War Finance Corporation Act of 1918

Be it enacted by the Senate and House of Representa-

tives of the United States of America in Congress
assembled,

TITLE I.—WAR FINANCE CORPORATION.

~* *

Sec. 20. Section fifty-two hundred and two of the
Revised Statutes of the United States is hereby amended
so as to read as follows:

“Sec. 5202. No national banking association shall at any
time be indebted, or in any way liable, to an amount
exceeding the amount of its capital stock at such time
actually paid in and remaining undiminished by losses or
otherwise, except on account of demands of the nature fol-
lowing:

“First. Notes of circulation.

“Second. Moneys deposited with or collected by the
association.

“Third. Bills of exchange or drafts drawn against
money actually on deposit to the credit of the associa-
tion, or due thereto.

“Fourth. Liabilities to the stockholders of the asso-
ciation or dividends and reserve profits.

“Fifth. Liabilities incurred under the provisions of
the Federal Reserve Act.

“Sixth. Liabilities incurred under the provisions of
the War Finance Corporation Act.” .

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0352%3A06. Public record. Not legal advice.