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

Suprem

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Nos. 92-484 and 92-507 JAN

Qn 72 ”~

@ Court, U.S.

Gu the Supreme Court of the United States |

OCTOBER TERM, 1992

UNITED STATES NATIONAL BANK OF OREGON,

PETITIONER

v.

INDEPENDENT INSURANCE AGENTS OF

AMERICA, INC., ET AL.

STEPHEN R. STEINBRINK, ACTING COMPTROLLER

OF THE CURRENCY, ET AL., PETITIONERS

Vv.

INDEPENDENT INSURANCE AGENTS OF

AMERICA, INC., ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE FEDERAL PETITIONERS

WILLIAM C. BRYSON

Acting Solicitor General

STUART M. GERSON

Assistant Attorney General

LAWRENCE G. WALLACE

WILLIAM P. BowDEN. JR. Deputy Solicitor General

Chief Counsel CHRISTOPHER J. WRIGHT

ERNEST C. BARRETT III Assistant to the Solicitor General

LESTER N. SCALL ROBERT V. ZENER

Attorneys JACOB M. LEWIs

Office of the Attorneys

Comptroller of the Department of Justice

Currency Washington, D.C. 20530

Washington, D.C. 20219 (202) 514-2217

a TT I aE IEICE

i)

——-

QUESTION PRESENTED

Whether 12 U.S.C. 92, which authorizes national

banks “located and doing business” in places of 5,000

or fewer inhabitants to act as the agent for “any

fire, life or other insurance company,” was repealed

in 1918.

(1)

PARTIES TO THE PROCEEDINGS

The petitioner in No, 92-484 is the United States

National Bank of Oregon. The petitioners in No.

92-507 are Stephen Kk. Steinbrink, Acting Comptroller

of the Currency: the Office of the Comptroller of the

Currency; and the United States.

The respondents in both cases are the Independent

Insurance Agents of America, Inc.; the Independent

Insurance Agents of Oregon; National Association of

Casualty and Surety Agents; the National Association

of Life Underwriters; the National Association of

Professional Insurance Agents; the National Associa-

tion of Surety and Bond Producers; the Oregon Asso-

ciation of Life Underwriters; and the Oregon Profes-

sional Insurance Agents, Inc.

TABLE OF CONTENTS

Opinions below

Jurisdiction

Statutes involved

Statement

Summary of argument

Argument:

Section 92 Was Not Repealed In 1918

A.

The language, structure, and substance of the

1916 Act show that Section 92 was not placed in

Rev. Stat. § 5202

The 1916 Act's quotation marks are of no inter

pretive significance

'. There is no indication that Congress intended to

(

repeal Section 92 in 1918, nor any reason why it

should have

D. There is no reason to credit Section 92's treat-

ment by two privately published statutory cor.

pilations

FE. Section 92’s existence has heen the basis for

congressional, judicial, and administrative ac-

tions for 75 years

Conclusion

TABLE OF AUTHORITIES

Cases:

American Land Title Ass'n Vv. Clarke, 968 F.2d 150

(2d Cir. 1992), petitions for cert. pending, Nos.

92-482 & 92-645

Arcadia, Ohio ¥V. Ohio Power Co., 111 S. Ch. 415

(1990)

Bank of Lamarque v. Smith, 610 F.2d 1258 (3th

Cir. 1980)

Carducei V. Regan, 714 F.2d 171 (D.C. Cir. 1983)

(tT)

13,

23

29

33

i4

i4

IV

Cases—Continued : Page

Chevron U.S.A. Inc. Vv. Natural Resources Defense

Council, Inc., 467 U.S. 887 (1984)... 32

Commissioner Vv. First Security Bank of Utah,

N.A., 405 U.S. 394 (1972)... 9, 18, 29-30, 30-31

Commissioner v. Morris Trust, 367 F.2d 794 (4th

ee ae: aT re me 30

Erie R.R. v. United States, 240 F. 28 (6th Cir

REE a Pee DERE a eT Z 20

Ewing V. Burnet, 36 U.S. (11 Pet.) 4: (1837) . a 20

First National Bank of Lamarque v. Smith, 610

OD yxy 30

Genessee Trustee Corp. Vv. Smith, 102 F.2d 125

IS GR, al aaa 30

Greene V. First National Bank of Thief River

Falls, 215 N.W. 213 (Minn. 1927) ................... 30

Guaranty Mortgage Co. Vv. Z1.D. Assocs., Inc.,

506 F. Supp. 101 (S.D.N.Y. 1980). 80

INS v. National Center for Immigrants’ Rights,

Inc., 112 8. Ct. 551 (1991) ....... ee 18

Independent Bankers Ass'n of Am. V. Heimann,

613 F.2d 1164 (D.C. Cir. 1979), cert. denied,

Statutes:

449 U.S. 823 (1980) 24, 30

Independent Ins. Agents of Am., Inc. Vv. Board of

Governors, 835 F.2d 1452 (D.C. Cir. 1987) .. 30

Marshall National Bank & Trust Co. v. Corder, 194

S.E. 734 (Va. 1938) ......... 20

a Nitrogen Co. v. U nited Statea, 288 U. s.

294 (1933) . inillentiliiaaimaeraeaal _ 81-32

Owensboro National Bank v. Moore, 803 F. Supp.

Ff ¢ fll 30

Saxon V. Georgia Ass'n of Indep. Ins. Agents, Inc.,

399 F.2d 1010 (5th Cir. 1968) 30

Thompson V. Kerr, 555 F. Supp. 1090 (S.D. Ohio

EERE NP eB RE 30

United States v. Burke, 112 S. Ct. 1867 (1992) 14

Washington Agency V. Forbes, 16 N.W.2d 121

(Mich. 1944) .... meni etiieaiibdaaid SR 8 ES 30

Act of Sept. 26, 1918, ch. 177, 40 Stat. 967 18

Act of Mar. 3, 1919, ch. 101, 40 Stat. 1314 2000. 18

Vv

Statutes—Continued : Page

Competitive Equality Banking Act of 1987, Pub.

L. No. 100-86, 101 Stat. 552 . 29

§ 201 (b) (5), 101 Stat. 583 29

Federal Reserve Act of 1913, ch. 6, 38 Stat. 251 2

§ 11(m), 38 Stat. 261 -? 16

§ 13, 38 Stat. 263-264 5, g, 18, ‘15, 19, 21, 27, 28

§ 14, 38 Stat. 264 , 7

§ 16, 38 Stat. 265 16

§ 19, 38 Stat. 270-271 16

Federal Reserve Act Amendments of 1916, ch. 461,

39 Stat. 752 2,5

§ 13, 39 Stat. 752-754 5, 6, 13

§ 14, 39 Stat. 754 7

Garn-St Germain Depository Institutions Act of

1982, Pub. L. No. 97-320, 96 Stat. 1469 13, 29

§ 403(b), 96 Stat. 1510-1511. . 13, 29

National Bank Act of 1863 (Act of Feb. 25, 1863),

ch. 58, 12 Stat. 665 13

§ 42, 12 Stat. 677 13

National Bank Act of 1864 (Act of June 3, 1864),

ch. 106, 13 Stat. 99 19

§ 36, 13 Stat. 110 19

War Finance Corporation Act, ch. 45, 40 Stat. 506 2

§ 7, 40 Stat. 508 23

§ 20, 40 Stat. 512 . caniens 4, 19, 23

12 U.S.C. 92 passim

Rev. Stat. § 5202 (1878) passim

9 U.S. Comp. Stat. Ann. § 9764 (West 1916) 9, 27

3 U.S. Stat. Ann. § 5202 (T.H. Flood & Co. 1916) = 9, 27

Miscellaneous:

Annual Rep. of the Comptroller of the Currency

(Dec. 2, 1918):

> dare eae 25

Vol. 2 25

53 Cong. Rec. (1916):

p. 19,998 . = 21

VI

Miscellaneous—-Continued : Page

I sccciessceicsnsigebsiasincelbcnaicniceetaniinsicitain 26

p. 11,155 ioiendiniee 12, 21

p. 13,069 ; 22

p. 13,354 22

56 Cong. Rec. (1918) :

p. 2793 ....... ” 24

pp. 2799-2801 24

pp. 2848-2850 24

pp. 2852-2855 ibiaen —s 24

p. 2858 - 24

pp. 2860-2861 24

pp. 2919-2924 siaielaianaiies 24

pp. 2926-2927 24

pp. 3040-3048 : 24

p. 3090 a eae 24

pp. 3107-3109 24

pp. 3131-3133 __. eaivcainisligiesianesitiuhiniiaiii 24

pp. 3135-3136... - 24

pp. 3138-3144 24

p. 3151 . cealieaineatiel 24

p. 3804 _. a mee 23

p. 4379 24

Federal Res. Bd., Federal Reserves Act and Other

Statutory Provisions Affecting the Federal Re-

serve System (1990) 31

Federal Res. Bd., The Federal Reserve Act as

Amended:

(1917) TTL OE EIS Mer RE a 28

(1919) ........... aie pre 14, 28, 31, 32

Financial Institutions Act of 1957: Hearings on

S. 1451 and H.R. 7026 Before the House Comm.

on Banking and Currency, 85th Cong., 2d Sess.

(1958) ........... —e 6 Ut

H. Doc. No. 1453, 65th Cong. 2d Sess. (1919) 25

H.R. Rep. No. 481, 64th Cong., Ist Sess. (1916) 21

S. Doc. No. 412, 64th Cong., Ist Sess. (1917)... 13, 28

S. Doc. No. 216, 66th Cong., 2d Sess. (1920) 14, 28, 31, 32

Ju the Supreme Court of the United States

OCTOBER TERM, 1992

No. 92-484

UNITED STATES NATIONAL BANK OF OREGON,

PETITIONER

v.

INDEPENDENT INSURANCE AGENTS OF

AMERICA, INC., ET AL.

No. 92-507

STEVHEN R. STEINBRINK, ACTING COMPTROLLER

OF THE CURRENCY, ET AL., PETITIONERS

”,

INDEPENDENT INSURANCE AGENTS OF

AMERICA, INC., ET AL.

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE FEDERAL PETITIONERS

OPINIONS BELOW

The statements filed with the order denying the

suggestions for rehearing en banc (92-507 Pet. App.

(1)

2

34a-42a) are reported at 965 F.2d 1077. The opinion

of the court of appeals (92-507 Pet. App. la-33a) is

reported at 955 F.2d 731. The opinion of the district

court (92-507 Pet. App. 43a-73a) is reported at 736

F. Supp 1162.

JURISDICTION

The judgment of the court of appeals was entered

on February 7, 1992. A petition for rehearing was

denied on May 22, 1992. 92-507 Pet. App. 34a. On

August 7, 1992, the Chief Justice extended the time

for filing a petition for a writ of certiorari to and

including September 19, 1992. The petition in No.

92-484 was filed on September 18, 1992, and the peti-

tion in No. 92-507 was filed on September 19, 1992.

The jurisdiction of this Court is invoked under 28

U.S.C. 1254(1).

STATUTES INVOLVED

Section 13 of the Federal Reserve Act of 1913, ch.

6, 38 Stat. 263: the Federal Reserve Act Amendments

of 1916, ch. 461, 39 Stat. 752; and the War Finance

Corporation Act of 1918, ch. 45, 40 Stat. 506, are

reproduced at 92-507 Pet. App. 80a-94a.

STATEMENT

1. Petitioner United States National Bank of Ore-

gon (the Bank) is a federally chartered bank head-

quartered in Portland. In 1984, the Bank applied to

the Comptroller of the Currency to sell a full range of

insurance through a wholly owned subsidiary located

in the Bank’s branch in Banks, Oregon, a town of 489

persons. The Comptroller, who is also a petitioner,

approved the Bank’s application. The Comptroller

~

relied on a provision of federal law formerly codified

at 12 U.S.C. 92, which authorizes a national bank

“located and doing business in any place the popula-

tion of which does not exceed five thousand inhabi-

tants” to act as an agent for “any fire, life or other

insurance company.”

The Comptroller noted that Section 92, as originally

enacted, “impos[ed] * * * a geographic limitation in

the statute with regard to [a national] bank’s broker-

age of real estate loans,’ but contained no such limi-

tation with respect to the sale of insurance. 92-507

Pet. App. 77a. In addition, the Comptroller observed,

the primary purpose underlying Section 92’s enact-

ment was to provide “additional income to banks in

small towns that were having problems deriving a

reasonable profit from their banking business.” /d.

at 78a. “[I]t is consistent with that purpose,” the

Comptroller stated, to permit national banks to sell

insurance outside the small town where its selling

office is located; indeed, “the market area for the gen-

eral banking services of some small town banks may

not be large enough to improve significantly the bank’s

profitability if its insurance sales are limited to that

area.” Ibid. The Comptroller therefore determined

that, under Section 92, the Bank’s subsidiary was au-

thorized to sell a full range of insurance products to

existing and potential customers in Oregon, as well as

in those States in which the Bank’s insurance subsid-

iary is authorized to do business. See 92-507 Pet. App.

79a.

Respondents—various trade associations represent-

ing insurance agents—challenged the Comptroller’s

decision in the United States District Court for the

District of Columbia. The insurance agents argued

4

that the sale of insurance by national banks located

in small towns should be limited to sales in those

towns. Thus, in this case the insurance agents argued

that Section 92 authorized the Bank’s branch to sell

insurance only in Banks, Oregon.

The district court disagreed and granted summary

judgment for the defendants, finding that the Comp-

troller’s interpretation of Section 92 was “rational

and consistent with the statute.” 92-507 Pet. App.

70a-7la. In the course of its opinion, the court noted

that Section 92 no longer appears in the United States

Code.’ The district court assumed, however—on the

basis of the fact that “Congress, other courts, and the

Comptroller have presumed its continuing validity”—

that the statute “exists in proprio vigore.” 92-507

Pet. App. 44a-45a n.2.

2. A divided court of appeals reversed and re-

manded with instructions to enter judgment for the

insurance agents, after concluding, sua sponte, that

Section 92 had been repealed less than two years after

its enactment by the War Finance Corporation Act of

1918. 92-507 Pet. App. 20a. The court acknowledged

that the result it reached was not one that had been

urged by any of the parties to the case. In fact, the

court observed, when it asked for further briefing on

the issue of Section 92’s continued existence, the par-

ties had “agreed that section 92 remains in effect.”

92-507 Pet. App. 4a. Nevertheless, the court concluded,

1 Section 92 appeared in the editions of the United States

Code issued in 1926, 1928, 1934, 1940, and 1946. It has not

appeared in any subsequent edition of the United States

Code. In its place, there is a notation by the codifiers that

the provision was omitted in the 1918 amendment of Section

5202 of the Revised Statutes.

5

given that the underlying controversy revolved around

the interpretation of a statute omitted from the

United States Code, it had a duty to inquire into the

statute’s existence. /d. at 6a.

The court of appeals reviewed laws passed by Con-

gress in 1913, 1916, and 1918. The 1913 Act was the

Federal Reserve Act. As originally enacted in 1913,

Section 13 of the Federal Reserve Act (which is re-

printed in 92-507 Pet. App. 80a-82a as it was enacted

in 1913) contained seven paragraphs under the title:

“Powers Of Federal Reserve Banks.” Ch. 6, § 13, 38

Stat. 263-264. The sixth of those paragraphs began

by providing that ‘Section fifty-two hundred and two

of the Revised Statutes of the United States”—a stat-

ute that dated back to 1863 and which listed certain

liabilities that a national bank was permitted to incur

in “an amount exceeding the amount of its capital

stock”—‘‘is hereby amended so as to read as follows.”

92-507 Pet. App. 82a. That sixth paragraph amended

Rev. Stat. § 5202 by listing an additional type of per-

missible national bank liability: “Fifth. Liabilities

incurred under the provisions of the Federal Reserve

Act.” Ibid. The seventh and final paragraph of Sec-

tion 13, as enacted in 1913, authorized the Federal

Reserve Board to issue regulations governing the re-

discount by federal reserve banks of certain bills

receivable and bills of exchange. /bid. The bill Con-

gress passed in 1913 included no quotation marks.

See id. at 80a-82a.

In 1916, Congress amended the Federal Reserve

Act, including Section 13 of the Act. 39 Stat. 752-

754. (The Federal Reserve Act Amendments of 1916,

ch. 461, 39 Stat. 752, are reprinted in 92-507 Pet.

App. 83a-93a.) Congress enacted Section 92 at that

6

time, by adding it to the end of the seven para-

graphs contained in Section 13 of the Federal Reserve

Act. See 92-507 Pet. App. 87a (first full paragraph).

Unlike the 1913 enactment, the 1916 statute em-

ployed quotation marks, and it was on those quotation

marks that the court of appeals focused its attention.

The 1916 amendments of Section 13 of the Federal

Reserve Act commenced by providing “[t]hat section

13 be, and is hereby, amended to read as follows,”’

followed by a colon and opening quotation marks.

92-507 Pet. App. 83a. The 1916 amendment went

on to reprint each paragraph of Section 13 as it had

been enacted in 1913, with certain substantive changes.

In addition, each paragraph began with opening quo-

tation marks, and no closing quotation marks ap-

peared until the end of the sixth paragraph.

As in the 1913 Act, that sixth paragraph (92-507

Pet. App. 86a (first full paragraph)) immediately

preceded the paragraph beginning “Section fifty-two

hundred and two of the Revised Statutes of the United

States is hereby amended so as to read as follows’’

(92-507 Pet. App. 86a (second full paragraph) ).

The paragraph involving Rev. Stat. § 5202 was re-

printed in the 1916 amendments without any change

in wording from 1913; however, opening quotation

marks were added after that paragraph’s introduc-

tory phrase. The next paragraph (92-507 Pet. App.

&6a-87a), which provided (as in the 1913 version)

for regulation by the Federal Reserve Board of cer-

tain transactions by federal reserve banks, was

amended substantively in 1916; opening quotation

marks were placed before that paragraph as well.

The following paragraph (92-507 Pet. App. 87a (first

full paragraph) ), which was new in 1916 and was

later codified at 12 U.S.C. 92, granted nationa! banks

7

in small towns the power to act as agents for any

“fire, life or other insurance company.” That para-

graph (henceforth “Section 92”) also began with

quotation marks. No closing quotation marks ap-

peared until the end of the paragraph following Sec-

tion 92 (92-507 Pet. App. 87a-88a), which was also

added in 1916. The paragraph following those clos-

ing quotation marks (id. at 88a (first full para-

graph)) amended Section 14 of the Federal Reserve

Act.

Relying on the placement of the opening and clos-

ing quotation marks in the 1916 amendments, the

court of appeals concluded that, ‘‘on its face, the

1916 amendments had the effect of placing section 92

within section 5202 of the Revised Statutes.”” 92-507

Pet. App. Ya. That is, the court concluded that Sec-

tion 13 consisted of the six paragraphs from the

words “|t]hat section thirteen be, and is hereby,

amended so as to read as follows” to the first closing

quotation marks. /d. at 83a-86a. The next four para-

graphs, from “Section fifty-two hundred and two of

the Revised Statutes of the United States is hereby

amended so as to read as follows” to the provision

amending Section 14 (92-507 Pet. App. 86a-88a)

were part of Rev. Stat. § 5202, in the court’s view.

Section 92 was the third of the four paragraphs that

the court concluded were placed in Rev. Stat. § 5202

by the 1916 amendments.

That cenelusion proved crucial, for in 1918 Con-

gress amended Rev. Stat. § 5202 in the course of

enacting the War Finance Corporation Act. See ch.

15, § 20, 40 Stat. 512, reprinted in 92-507 Pet. App.

94a. Tie 1918 amendment specified that Rev. Sta’

§ 5202 “is hereby amended so as to read as follows,”

then listed the five existing types of liabilities na-

tional banks had been authorized to incur in excess

8

of their capital stock, and added: “Sixth. Liabilities

incurred under the provisions of the War Finance

Corporation Act.” 92-507 Pet. App. 94a. The 1918

amendment did not, however, restate any of the three

paragraphs that in 1916 had followed the paragraph

beginning “Section fifty-two hundred and two of the

Revised Statutes of the United States is hereby

amended so as to read as follows.” Because the War

Finance Corporation Act did not set out those three

paragraphs (which included Section 92), the court

of appeals concluded that they had been repealed in

1918. 92-507 Pet. App. 9a-10a.

The court characterized the parties’ contrary anal-

ysis of the 1916 amendments—that Section 92 was

part of Section 13 of the Federal Reserve Act—as

“plausible” and acknowledged that “the placement of

section 92 in section 5202 of the Revised Statutes

[by the 1916 Act] might well have been a mistake.”

92-507 Pet. App. 19a. As the court observed, Section

92 and its companion paragraphs were “textually un-

related” to the listing of the permissible types of ex-

cess national bank liabilities contained in Section -

5202. 92-507 Pet. App. lla. Moreover, the court

noted, when Congress had itself examined the ques-

tion in 1958, “an impressive array of witnesses” had

concluded that Congress did not intend to place Sec-

tion 92 in Section 5202 of the Revised Statutes, and

that Section 92 had therefore never been repealed.

92-507 Pet. App. lla.

The court ultimately dismissed the intentions of the

1916 Congress as “essentially irrelevant,” on the

ground that it was the actions of the 1918 Congress

that mattered. 92-507 Pet. App. 12a. The court

found it “fair to assume” that members of the 1918

Congress “would have sought out a current text of

9

section 5202 to work from, and not relied on institu-

tional memories of what the text was, or should have

been.” /bid. Since in 1916 two “privately published

services” placed Section 92 in Section 5202 of the

Revised Statutes (see 9 U.S. Comp. Stat. Ann. § 9764

(West 1916); 3 U.S. Stat. Ann. § 5202 (T.H. Flood

& Co. 1916)), and the quotation marks in the 1916

Act supported that conclusion, the court “assume[d]

that the 65th Congress understood section 92 to be

part of section 5202, and that its exclusion from the

amended section 5202 signaled its repeal.” 92-507

Pet. App. 13a. The court reached that conclusion

despite the fact that, as the court conceded, the pur-

pose of the 1918 War Finance Corporation Act—‘‘to

assist the financing of the war effort’”—‘“had no logi-

cal relationship to the insurance activities of small

town banks.” bid.

The court gave no weight to Section 92’s subse-

quent treatment by Congress and the administrative

agencies charged with administering the federal bank-

ing laws. The court acknowledged that Congress in

1982 had purported to amend Section 92, and that

the Comptroller has continued to treat Section 92 as

valid law, but dismissed their views as “irrelevant’”’

and “immaterial” to the issue of whether Congress

had in fact repealed Section 92 in 1918. 92-507 Pet.

App. 15a. Similarly, the court dismissed the various

judicial decisions since Section 92’s omission from the

Code that have relied upon Section 92—including

Commissioner v. First Security Bank of Utah, N.A..,

405 U.S. 394 (1972)—on the ground that in each of

those cases the court “presumed” that Section 92 re-

mains valid. 92-507 Pet. App. 16a.

The court also eschewed the power to “rectify Con-

gress’s apparent error.” 92-507 Pet. App. 14a. It

10

distinguished numerous cases in which courts had

disregarded erroneous statutory punctuation on the

ground that each involved an error that “distorted

the meaning of a statute,” but did not lead to repeal

of the statute. /bid.

Judge Silberman, dissenting, would have upheld

the Comptroller’s decision as embodying a reasonable

interpretation of Section 92, without reaching the

question whether the provision remains good law.

Conceding that his position “might be thought coun-

terintuitive”’ (92-507 Pet. App. 27a), Judge Silber-

man believed that the court had no duty to reach the

issue of the statute’s existence, which appellants had

“carefully, deliberately and thoughtfully waived.”

Id. at 31a.

3. The Comptroller and the Bank filed timely pe-

titions for rehearing with suggestions for rehearing

en bane, which were denied. Judge Silberman (this

time joined by two colleagues) again dissented on the

ground that the panel should not have decided

whether Section 92 had been repealed. 92-507 Pet.

App. 38a. In addition, Judge Silberman observed

that the government had made “a forceful argument

that the panel * * * decided the matter incorrectly.”

Id. at 40a. He added that “the panel’s opinion * * *

created legal uncertainty concerning the sale of in-

surance by banks located and doing business in small

towns (which has been the settled practice for most

of this century).” Id. at 40a-41a.’

2 Judge Sentelle, joined by the panel majority, filed a state-

ment concurring in the denial of rehearing en banc. 92-507

Pet. App. 35a-37a. Judge Randolph filed a separate statement

expressing his view that “denials of rehearing en banc are

best followed by silence.” Jd. at 42a.

11

SUMMARY OF ARGUMENT

The court of appeals suggested no reason why Con-

gress in 1918 might have wanted to repeal Section

92, which it had enacted just 19 months before. In-

stead, the court was content to consider the matter

a “mistake” (92-507 Pet. App. 20a) resulting from

the placement of the quotation marks in the 1916

Act. But the court’s conclusion ignores the language,

structure, and substance of the 1916 Act. Where the

language of a statute admits of no other meaning, a

court may be obliged to give effect to a provision that

does not embody Congress’s intent. But respect for

the legislative process requires a court to do more

than conclude that Congress blindly erred where, as

we show here, there is another reasonable in-

terpretation.

A. The quotation marks in the 1916 Act support

the court of appeals’ decision only when considered

in isolation. The language of the 1916 Act suggests

that Section 92 was never placed in Rev. Stat. § 5202,

and therefore was not affected when Rev. Stat. § 5202

was amended in 1918. More specifically, in 1916 Con-

gress used the phrase “this Act” to refer to “the Fed-

eral Reserve Act” in those provisions that were to be

part of the Federal Reserve Act. On the other hand,

it referred to the Federal Reserve Act by its full name

if the provision was to be codified elsewhere. The

paragraph beginning “Section fifty-two hundred and

two of the Revised Statutes of the United States is

hereby amended so as to read as follows” (92-507

Pet. App. 86a (second full paragraph) ) accordingly

used the full name of the Federal Reserve Act. The

paragraph immediately preceding Section 92, in con-

trast, referred to the Federal Reserve Act as “this

Act,” showing that it was part of the Federal Reserve

12

Act. If the paragraph preceding Section 92 was part

of the Federal Reserve Act, then so was Section 92.

That structure is supported by the fact that the

title of the 1916 Act did not state that the Act was

amending a provision of the Revised Statutes, even

though the practice of the day was to make such a

specification if an amendment to the Revised Statutes

was contained in the body of the statute. In addition,

it would have been inconsistent with the substance

of Rev. Stat. § 5202, which for more than fifty years

had dealt with limits on national bank indebtedness,

for Congress to have codified Section 92 and the

paragraphs preceding and following it in Rev. Stat.

§ 5202, since those three paragraphs had nothing to

do with limits on national bank indebtedness. Those

three paragraphs fit into the Federal Reserve Act,

however, which is where Congress intended to place

them.

B. As a general matter, it is a mistake to exalt

punctuation over the language, structure, and sub-

stance of a statute. In this case, moreover, there is

affirmative evidence that Section 92’s drafters did not

intend the quotation marks to have any interpretive

significance—the Senate voted to delete the confus-

ing marks. 53 Cong. Rec. 11,155 (1916).

C. The conclusion that Section 92 was never

placed in Rev. Stat. § 5202 explains why there is no

indication in the language or the legislative history

of the 1918 Act that Congress thought that it was

repealing Section 92. Moreover, there is no reason

why Congress would have wanted to repea! the three

paragraphs it had enacted 19 months earlier. Such

considerations led the Second Circuit to hold, after

the decision in this case, that Section 92 remains good

law. American Land Title Ass’n vy. Clarke, 968 F.2d

13

150, 154 (2d Cir. 1992), petitions for cert. pending,

Nos. 92-482 and 92-645.

D. Contrary to the court of appeals’ suggestion,

it is unlikely that the 1918 Congress understood Sec-

tion 92 to be in Rev. Stat. § 5202 simply because two

private compilations placed the provision there. As

we have stated, the text of the 1916 Act as reprinted

in the Statutes at Large suggested a different struc-

ture. In any event, the most easily accessible com-

pilation of the banking laws in 1918 was that pub-

lished by the Senate Committee on Banking and

Currency, which showed Section 92 as part of Rev.

Stat. § 5202 and as part of Section 13 of the Federal

Reserve Act. S. Doc. No. 412, 64th Cong., Ist Sess.

83-84 (1917) (Rev. Stat. § 5202); S. Doc. No. 412,

supra, at 136-137 (Section 13). On the basis of the

Senate compilation—the compilation to which the

Congress most likely would have turned—the drafters

of the 1918 Act would have concluded that Section

92 would remain in force no matter how Rev. Stat.

§ 5202 was amended.

E. Congress, the courts, and the agencies charged

with the administration of the banking laws have

consistently acted on the assumption that Section 92

remains good law. See, e.g., Garn-St Germain Deposi-

tory Institutions Act of 1982, Pub. L. No. 97-320,

§ 403(b), 96 Stat. 1469, 1510-1511; Commissioner v.

First Security Bank of Utah, N.A., 405 U.S. 394,

400-401 (1972); Financial Institutions Act of 1957:

Hearings on S. 1451 and H.R. 7026 Before the House

Comm. on Banking and Currency, 85th Cong., 2d Sess.

1036-1040 (1958) (statement of Comptroller and

Federal Reserve Board memorandum). Moreover,

the contemporaneous view of Congress and the agen-

cies administering the federal banking laws—the best

available guide to what Congress intended—was that

14

Section 92 remained in effect after 1918. See S. Doc.

No. 216, 66th Cong., 2d Sess. 146 (1920); Federal

Res. Bd., The Federal Reserve Act As Amended 30

(1919).

ARGUMENT

SECTION 92 WAS NOT REPEALED IN 1918

A. The Language, Structure, And Substance Of The 1916

Act Show That Section 92 Was Not Placed In Rev.

Stat. § 5202.

The court of appeals’ error lies in its reliance on

the placement of the quotation marks in the 1916

Act to the exclusion of analysis of the text, structure,

and substance of the Act, all of which demonstrate

that Section 92 was never placed in Rev. Stat. § 5202

in 1916. As a result, Section 92 was not affected at

all—much less repealed—when Rev. Stat. § 5202 was

amended in 1918.*

1. The opening and closing quotation marks, con-

sidered in isolation, suggest that in 1916 Section 92

* The Bank has raised the question whether the court of

appeals should have addressed the issue of Section 92’s ex-

istence when the parties to the proceeding agreed that Section

92 remained good law. We did not present this as a question

in our petition for a writ of certiorari in this case, and do

not urge it as a ground for reversal here. Although the court

of appeals may have had the discretion to refuse to determine

the issue of Section 92’s existence (see Carducci v. Regan,

714 F.2d 171, 177 (D.C. Cir. 1983)), we cannot say that it

was powerless to resolve the question if it chose to do so (see

Arcadia, Ohio v. Ohio Power Co., 111 S. Ct. 415, 418, 422

(1990), and United States v. Burke, 112 S. Ct. 1867, 1877

(1992) (Scalia, J., concurring) ). Indeed, had the text of the

law shown that Section 92 actually had been repealed in 1918,

it would have been entirely proper for the court to decline to

construe it. Moreover, at this point we think the Court should

provide a definitive answer as to whether Section 92 was

repealed.

15

and its companion paragraphs (that is, the para-

graphs preceding and following Section 92) were to

be placed in Rev. Stat. § 5202. However, the lan-

guage of the 1916 Act suggests differently. The

paragraph preceding Section 92 in the 1916 Act

grants the Federal Reserve Board authority to regu-

late 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 ex-

change, and of acceptances authorized by this Act.”

92-507 Pet. App. 86a-87a (emphasis added). The

reference to “this Act” must mean the Federal Re-

serve Act, not Rev. Stat. $5202, since the discount

and rediscount authority was granted by the second

and third paragraphs of Section 13 of the Federal

Reserve Act, and not by Rev. Stat. $5202. See 92-

507 Pet. App. 84a-85a. Thus, the use of the term

“this Act” in the paragraph preceding Section 92

suggests that, despite the use of quotation marks, the

preceding paragraph was not placed in Rev. Stat.

§ 5202.

The conclusion that the paragraph preceding Sec-

tion 92 was part of Section 13 of the Federal Reserve

Act, and not part of Rev. Stat. § 5202, is strength-

ened by the fact that that paragraph was indisput-

ably part of Section 13 of the Federal Reserve Act as

enacted in 1913, since the 1913 Aci contained no

quotation marks. See 92-507 Pet. App. 80a-82a. In

addition, no one has suggested any reason that Con-

gress would have felt it necessary or appropriate in

1916 to transfer the paragraph preceding Section 92

—a provision granting the Federal Reserve Board

authority to regulate certain practices of federal re-

serve banks—from the Federal Reserve Act to a sec-

tion of federal law dealing with the indebtedness of

national banks. To the contrary, a provision dealing

16

with regulation of federal reserve banks by the Fed-

eral Reserve Board would seem to belong in the Fed-

eral Reserve Act. Moreover, as enacted in 1913, the

paragraph that preceded Section 92 in 1916 also re-

ferred to “this Act” (see id. at 82a), as it did in 1916.

In our view, it is clear that “this Act” referred to the

Federal Reserve Act both in 1913 and in 1916.

By referring to “this Act,” the paragraph preced-

ing Section 92 follows the same usage as other para-

graphs in the 1916 Act, which also refer to “this

Act” in a manner that can only mean “the Federal

Reserve Act.” For example, the 1916 Act added a

new subsection (Section 11(m)) to the Federal Re-

serve Act, which authorized the Federal Reserve

Board to permit member banks to deposit all or part

of the reserves “now required by section nineteen of

this Act to be held in their own vaults” in federal

reserve banks. 92-507 Pet. App. 83a (emphasis

added). Because the 1916 Act was not divided into

numbered sections, the reference to “section nineteen

of this Act” can only be to Section 19 of the Federal

Reserve Act, which set forth detailed requirements

according to which member banks were to hold a

certain percentage of their reserves in their own

vaults. See 38 Stat. 270-271. (Section 19 was not

amended at all in 1916.) The same usage was em-

ployed in the provision in the 1916 Act amending

the second paragraph of Section 16 of the Federal

Reserve Act. See 92-507 Pet. App. 89a (referring to

“section thirteen of this Act” and “section 14 of

this Act”).

The text of the paragraph beginning “Section

fifty-two hundred and two of the Revised Statutes

of the United States is hereby amended so as to read

as follows” also supports the conclusion that it was

only that paragraph that related to Rev. Stat. § 5202,

17

because that paragraph refers to the “Federal re-

serve Act,” rather than “this Act.” See 92-507 Pet.

App. 86a (line beginning “Fifth”’). The reference in

that paragraph to the Federal Reserve Act by its ful!

title is not surprising, since a reader of Rev. Stat.

$ 5202 would otherwise have no way of knowing to

which Act the provision referred. The usage makes

the inference to be drawn from the term “this Act”

in the paragraph preceding Section 92 even stronger,

since it suggests that Congress in 1916 distinguished

between statutory provisions that were not to be

placed in the Federal Reserve Act (and thus would

have to refer to that Act by its full title) and provi-

sions that remained part of the Federal Reserve Act,

which could intelligibly refer to the Federal Reserve

Act as “this Act.” ‘

In short, since the text of the paragraph preceding

Section 92 uses the term “this Act” to refer to the

Federal Reserve Act, that paragraph was not placed

in Rev. Stat. § 5202. And if the paragraph preced-

ing Section 92 was not placed in Rev. Stat. § 5202,

then there is no reason to think that any of the para-

graphs that followed it, including the paragraph later

codified as Section 92, were placed in Section 5202.

That is, no reading of the quotation marks permits

the conclusion that the paragraph preceding Section

* The use of the term ‘this Act” in the paragraph preceding

Section 92 is plainly not an antecedent reference to the term

“Federal reserve Act,” contrary to the suggestion of the in-

surance agents. Br. in Opp. 14. The term “this Act” was used

twice in the 1916 amendments before the phrase “Federal re-

serve Act” appears. See 92-507 Pet. App. 83a (paragraph be-

ginning “‘(m)”), 84a (first full paragraph). There was no

antecedent reference in either of those instances, and there is

no good reason to think that “this Act,” as similarly used in

the paragraph preceding Section 92, referred back to “Federal

reserve Act” in the paragraph containing Rev. Stat. § 5202.

18

92 was placed in the Federal Reserve Act, but Section

92 was placed in Rev. Stat. § 5202.

2. The title of the 1916 Act, which “can aid in

resolving an ambiguity in the legislation’s text” (JNS

v. National Center for Immigrants’ Rights, Inc., 112

S. Ct. 551, 556 (1991) (citations omitted) ), also is

inconsistent with the conclusion that the 1916 Act

amended Rev. Stat. § 5202. That title, “An Act To

amend certain sections of the Act entitled ‘Federal

reserve Act,’ approved December twenty-third, nine-

teen hundred and thirteen,” nowhere suggests that

the statute was adding matter to Rev. Stat. § 5202.

(And, in fact, none of the words in the paragraph

involving Rev. Stat. § 5202 differ from the words in

that provision as it was amended in 1913. Compare

92-507 Pet. App. 82a with id. at 86a.) By contrast,

the titles of other statutes passed during the same

period demonstrate that when Congress intended to

amend a section of the Revised Statutes as well as a

provision of the Federal Reserve Act, that intent was

refiected in the title. See ch. 177, 40 Stat. 967 (1918)

(‘An act to amend and reenact sections four, eleven,

sixteen, nineteen, and twenty-two of the Act approved

December twenty-third, nineteen hundred and thirteen

and known as the Federal reserve Act, and sections

fifty-two hundred and eight and fifty-two hundred

and nine, Revised Statutes.’’); ch. 101, 40 Stat. 1314

(1919) (“An act To amend sections seven, ten, and

eleven of the Federal reserve Act, and section fifty-

one hundred and seventy-two, Revised Statutes of the

United States.”). The absence of any similar indica-

tion in the title of the 1916 Act supports the conclu-

sion that the 1916 Act did not add Section 92 and its

19

companion paragraphs to Rev. Stat. § 5202, but sim-

ply restated Rev. Stat. § 5202 without change.”

3. The substance of the 1916 amendments also

indicates that Section 92 was not placed in Rev.

Stat. § 5202. Section 5202, originally enacted as part

of the National Bank Act, had always dealt with

limits on the indebtedness of national banks.® By

contrast, Section 92 dealt with insurance agency and

real estate brokerage powers of national banks and

has nothing to do with limits on indebtedness. The

subject matter of the paragraphs on either side of

Section 92 is similarly remote from the subject mat-

ter of Rev. Stat. § 5202. As noted, the paragraph

® The paragraph in the 1916 Act relating to Rev. Stat. § 5202

begins by stating “Section fifty-two hundred and two of the

Revised Statutes of the United States is hereby amended so

as to read as follows” (92-507 Pet. App. 86a) (emphasis

added) ), but that is exactly how it read in 1913 (see id.

at 82a). Thus, the substantive amendment to Rev. Stat. § 5202

(the addition of the provision stating “[flifth,” that “[l]i-

abilities incurred under the provisions of the Federal Re-

serve Act” may be incurred in excess of the value of the bank’s

capital stock) occurred in 1913. Congress did not intend to

amend Rev. Stat. § 5202 in 1916; it simply reprinted it, along

with the rest of Section 13 of the Federal Reserve Act as en-

acted in 1913, with the amendments made in 1916.

* Rev. Stat. § 5202 was based on Section 36 of the National

Bank Act of 1864 (Act of June 3, 1864) ch. 106, § 36, 13 Stat.

99, 110, which in turn reenacted with minor changes Section

42 of the National Bank Act of 1863( Act of Feb. 25, 1863)

ch. 58, § 42, 12 Stat. 665, 677. Rev. Stat. § 5202 originally con-

tained four listed exclusions from the limits on national bank

indebtedness. The fifth exclusion was added when Rev. Stat.

§ 5202 was amended by Section 13 of the Federal Reserve Act

in 1913 (see 92-507 Pet. App. 82a), and a sixth was added by

Section 20 of the War Finance Corporation Act of 1918 (40

Stat. 512) (see 92-507 Pet. App. 94a).

20

preceding Section 92 concerns the Federal Reserve's

power to issue regulations regarding certain practices

of federal reserve banks. The paragraph following

Section 92 deals with foreign acceptances by federal

reserve and member banks. There is no reason that

Congress would have placed those provisions in Rev.

Stat. § 5202 rather than in the Federal Reserve Act.

B. The 1916 Act’s Quotation Marks Are Of No Interpre-

tive Significance.

As a general matter, quotation marks should not

override the structure of the statute’s text. As this

Court long ago recognized, “‘[p]unctuation is a most

fallible standard by which to interpret a writing.”

Ewing v. Burnet, 36 U.S. (11 Pet.) 41, 54 (1837).

See also Erie R. R. vy. United States, 240 F. 28, 32

(6th Cir. 1917) (“The presence or absence of a

comma, according to the whim of the printer or proof

reader, is so nearly fortuitous that it is a wholly

unsafe aid to statutory interpretation.”).’ In this

case, moreover, there is strong evidence that Congress

did not intend the quotation marks in the 1916 Act to

have any interpretive effect. Indeed, it is apparent

that the statute’s drafters did not intend to employ

quotation marks at all.

7 The D.C. Circuit recognized that a number of decisions of

this Court have stated that punctuation errors may be rectified

to avoid distortion of a statute. 92-507 Pet. App. 14a. But it

said that this case differs from those cases because “the pu-

tative error brings about the repeal of a statute.” /bid. This

distinction—that courts may correct punctuation errors to

avoid what may be relatively small mistakes (such as accidental

changes in meaning), but may not correct punctuation errors

to avoid big mistakes (such as accidental repeal) —is uncon-

vincing. It seems especially unpersuasive where, as here, if the

erroneous punctuation is not corrected, the text of the statute

must be ignored.

21

The committee bill, which contained Section 92’s

companion paragraphs but not Section 92 (which was

added by amendment), used quotation marks. But the

quotation marks in the committee bill clearly placed

the paragraph preceding Section 92 in Section 13 of

the Federal Reserve Act.* Section 92 was added by

floor amendment before the quotation marks were

changed, so it is clear that Section 92 was not part

of Rev. Stat. § 5202 at the time it was adopted. After

Section 92 was added to the bill, Senator Brandegee

drew attention to the committee’s use of quotation

marks. He asked Senator Owen, “Inasmuch as this

bill provides that certain sections of the Federal re-

serve act are to be amended ‘to read as follows,’ ”

whether he thought that “the amended sections ought

to be left in quotation marks, so that they will appear

in that way in the Federal reserve act?” 53 Cong.

Ree. 11,155 (1916). Owen agreed that although quo-

tation marks had been used in the committee re-

port, he “did not think they should be used’’; instead,

he thought that they “should be omitted.” J/bid.

Brandegee thereupon suggested “that in the reprint

to be made of the bill the quotation marks be omitted,”

to which Owen replied: “I accept that amendment.”

Ibid. The amendment was then adopted by the Senate

without objection. [bid.

In the committee bill, opening quotation marks appeared

after the provision stating that Section 13 was “amended to

read as follows,” and closing quotation marks did not appear

until after the provision that ultimately preceded Section 92.

H.R. Rep. No. 481, 64th Cong., Ist Sess. 1-3 (1916) ; 53 Cong.

Rec. 10,998 (1916). The final paragraph of Section 13 in the

committee bill, which followed Section 92 after it was added,

was printed in italics in the committee bill because it was en-

tirely new; that final paragraph had no quotation marks at

all. H.R. Rep. No. 481, at 3.

“>e>

—e-

It is difficult to know precisely at what point, and

by whom, the new quotation marks were inserted.”

What is clear is that the Act’s drafters did not intend

for the marks to have any significance in interpreting

the statute, since the drafters had instructed that the

marks be removed. Thus, apart from the difficulties

associated with interpretive reliance on punctuation

in general, there is no reason in this case to conclude

that the marks should control over the evidence in the

text of the 1916 Act that Section 92 was not placed in

Rev. Stat. § 5202.""

® Materials obtained from the National Archives indicate

that before publication in the Congressional Record, the Sen-

ate Conference Report did not contain any quotation marks,

and although the House Conference Report had such marks in-

serted by hand, they did not conform to the marks as they

appear in the enrolled Act. See Exhibit to Brief of Amici

Curiae American Bankers Ass’n in Support of Petitioners. The

Senate and House Conference Reports, as they were printed

in the Congressional Record, do contain the quotation marks as

they appear in the Statutes at Large. 53 Cong. Rec. 13,069

(1916) (Senate Conf. Rep.); id. at 13,354 (House Conf.

Rep.). The enrolled Act, which has been examined in the Na-

tional Archives, also contains the quotation marks as they

appear in the Statutes at Large.

© Indeed, the quotation marks at issue in this case appear to

be of considerably less significance than most punctuation.

That is, while punctuation generally is of less significance than

text, punctuation is usually embedded in text, and frequently

serves to give meaning to the text. The quotation marks at

issue here are wholly extraneous to the meaning of the text;

they are more in the nature of marginal printer’s notes, such

as directions about spacing and indentation. The fact that

they were viewed as being of little significance is shown by the

fact that some unknown person inserted them while the Act

was being printed. See note 9, supra.

ee

23

C. There Is No Indication That Congress Intended To

Repeal Section 92 In 1918, Nor Any Reason Why It

Should Have.

The conclusion that Congress in 1916 did not place

Section 92 and its companion provisions in Rev. Stat.

§ 5202—and thus that Section 92 was unaffected by

the 1918 amendments—also satisfactorily explains

the otherwise extraordinary silence in the legislative

history of the 1918 War Finance Corporation Act,

which contains not a word about repealing the re-

cently enacted national bank and federal reserve

powers.

The 1918 Act established a “War Finance Corpora-

tion” authorized, among other things, to advance

funds to “any bank * * * in the United States” which

had outstanding loans to persons or businesses “whose

operations shall be necessary or contributory to the

prosecution of the war.” Ch. 45, § 7, 40 Stat. 508.

To further the operations of the War Finance Corpor-

ation, Section 20 of the 1918 Act amended Rev. Stat.

§ 5202 to provide for another type of indebtedness

that a national bank could assume in excess of the

amount of its capital stock: “Sixth. Liabilities in-

curred under the provisions of the War Finance Cor-

poration Act.” 92-507 Pet. App. 94a. As Representa-

tive Kitchin explained, “[i]f we do not put in this

provision, and make the change in the law which this

amendment makes, it will tie the hands of the national

banks from helping out these corporations.” 56 Cong.

Rec. 3804 (1918).

Nothing in the legislative history of the 1918 Act

suggests even indirectly that the Act was intended

to affect (much less repeal) Section 92 and its com-

panion paragraphs. As the Second Circuit has

24

observed—in concluding that Section 92 remains good

law—“if it actually was Congress’ intent to effect

such a permanent change to an unrelated area of law,

we would expect some clue to this intent to appear

somewhere in the legislative history.” American

Land Title Ass’n v. Clarke, 968 F.2d at 154.”

The lack of any indication in the legislative his-

tory of the 1918 Act that any member of Congress

thought that Section 92 and its companion para-

graphs were being repealed is particularly significant

given that Senator Owen, Section 92’s principal spon-

sor, remained Chairman of the Senate Banking Com-

mittee in 1918. Moreover, although Senator Owen

commented on other matters concerning the 1918

Act, during the initial Senate debates, see 56 Cong.

Rec. 2793, 2799-2801, 2848-2850, 2852-2855, 2858,

2860-2861, 2919-2924, 2926-2927, 3040-3408, 3090,

3107-3109, 3131-3133, 3135-3136, 3138-3144, 3151

(1918), and after the bill was returned to the

Senate from conference with Section 20 added, 56

Cong. Rec. 4379 (1918), he made no comment that

suggested that there was a move afoot to repeal Sec-

11 It is the Comptroller’s position, supported, inter alia, by

Independent Bankers Ass’n of Am., V. Heimann, 613 F.2d

1164 (D.C. Cir. 1979), cert. denied, 449 U.S. 823 (1980), that

Section 92 does not constitute a limitation on activities (such

as the sale of title insurance) that fall within the incidental

powers of national banks. Accordingly, we disagree with the

Second Circuit’s ultimate conclusion in American Land Title

—that Section 92 impliedly bars national banks from selling

title insurance—but not its conclusion that Section 92 remains

good law. The government has filed a petition for a writ of

certiorari seeking review of the Second Circuit’s decision,

which remains pending. Steinbrink v. American Land Title

Ass’n, No. 92-645. See also The Chase Manhattan Bank, N.A.

v. American Land Title Ass’n, No. 92-482.

25

tion 92. In addition, Comptroller Williams was still

in office in 1918. 2 Annual Rep. of the Comptroller of

the Currency (Dec. 2, 1918), H.R. Doc. No. 1453,

65th Cong., 3d Sess. 15 (1919). He, too, presumably

would also have commented on any change that would

have repealed a provision that he had successfully sub-

mitted less than two years before, particularly a pro-

vision contained in a Treasury Department-proposed

measure, as the 1918 Act was.”

Other aspects of the 1918 Act also suggest that it

was not intended to repeal Section 92. In the first

place, it would be “wholly incongruous,” as the Second

Circuit observed, “for Congress to repeal a provision

regarding the totally unrelated matter of insurance

agency powers in an emergency measure directed at

winning the war.” American Land Title, 968 F.2d at

154. It is also “highly unlikely” that the legislature’s

intent to encourage national banks to support the oper-

ations of the War Finance Corporation “would just

happen to coincide with an intent to repeal provisions

_— national banks’ insurance agency powers.”

id.

Furthermore, there is no reason to suspect that the

grounds upon which Congress had relied in passing

Section 92 had significantly changed between the 1916

Act’s enactment in September of that year and April

1918, when the War Finance Corporation Act was

passed. As Comptroller Williams stated in proposing

Section 92, the provision was intended to enlarge the

powers of small national banks in order “to provide

Indeed, Comptroller Williams submitted an annual report

to Congress in 1918 in which the War Finance Corporation Act

is described, but no mention is made of Section 92. 1 Annual

Report, supra, at 79, 171.

them with additional sources of revenue” so that they

might be able to “better compete” with state banks

and trust companies “authorized * * * to do a class

of business not strictly that of commercial banking.”

53 Cong. Rec. 11,001 (1916) (letter from Comptroller

Williams to Senator Owen). Comptroller Williams

explained that there were many banks “located in

country communities” that, given their limited deposit

base, had difficulty generating “a satisfactory return

to shareholders,” which led to pressure to charge “ex-

cessive and in some cases grossly usurious [interest]

rates.” Jbid."* It was his hope that the additional

income to be derived from their Section 92 powers

would “strengthen” the smaller national banks “and

increase their ability to make a fair return to their

shareholders.” /bid.

There is nothing to suggest that the pressures on

small banks to “yield a satisfactory return to share-

holders” (ibid.) decreased dramatically in the 19

months between the passage of the 1916 and 1918

Acts. If anything, the temptation to charge excessive

interest would have grown as the United States be-

came involved in World War I. In any event, the

problem Comptroller Williams described resulted from

the structure of small town banking, and that problem

existed whatever the economic conditions prevailing at

any particular time. In the end, no one has been able

to put forth any reason why Congress in 1918 would

have wanted to repeal the national bank insurance

18 Williams noted in his letter that in 1916 there were more

than 2,000 national banks with a minimum capital stock of

$25,000 located in towns or villages of 3,000 or fewer in-

habitants. 53 Cong. Rec. 11,001 (1916).

27

agency powers it had taken the trouble to enact in

1916."

D. There Is No Reason To Credit Section 92's Treatment

By Two Privately Published Statutory Compilations.

The D.C. Circuit acknowledged that deleting Section

92 was “unrelated” to the 1918 Act’s war financing

goals, but assumed that the 1918 Congress understood

Section 92 to be part of Rev. Stat. § 5202 because of

the “facially unambiguous language” of the 1916 Act

and the fact that two “privately published services”

placed Section 92 in Rev. Stat. § 5202. 92-507 Pet.

App. 18a (citing 9 U.S. Comp. Stat. Ann. § 9764

(West 1916); 3 U.S. Stat. Ann. § 5202 (T.H. Flood

& Co. 1916) ). However, as shown above, the 1916 Act

does not unambiguously show Section 92 to be part

of Rev. Stat. § 5202. Indeed, insofar as resort is made

te the text of the Act rather than its punctuation, the

Act placed Section 92 in Section 13 of the Federa!

Reserve Act. And it should be beyond dispute that the

views of the editors of privately published services

are not controlling.

While it is “fair to assume” (as did the D.C.

Circuit) that, while drafting the 1918 Act, inter-

ested Inembers of Congress “would have sought out

a current text of section 5202 to work from, and not

* A similar point can be made about the paragraph pre-

ceding Section 92 (providing for regulation by the Federal

Reserve Board of certain practices of federal reserve banks)

and the paragraph following Section 92 (providing for the

acceptance of certain bills of exchange). There is no explana-

tion as to why those provisions, which were added in 1913

and 1916, would have been repealed in 1918. And neither of

those provisions related to the subject matter of the War

Finance Corporation Act of 1918.

28

relied on institutional memories” (92-507 Pet. App.

12a), it is unlikely that the drafters would have

turned to privately published services. The most easily

accessible compilation of the Federal Reserve and Na-

tional Bank Acts would have been that prepared by

the Comptroller and published by the Senate Commit-

tee on Banking and Currency. Indeed, if Congress did

not use the compilation it published, it is not clear why

it would have bothered to publish the compilation. Sig-

nificantly, the Senate compilation showed Section 92

and its companion provisions as part of Rev. Stat.

$ 5202 and as part of Section 13 of the Federal Re-

serve Act. S. Doc. No. 412, 64th Cong., Ist Sess.

83-84 (1917) (Rev. Stat. $5202); S. Doc. No. 412,

supra, at 136-137 (Section 13). Thus, the drafters

of the 1918 Act would have assumed on the basis of

the Senate compilation that Section 92 would continue

in existence however Rev. Stat. § 5202 was amended.

Indeed, the Senate Committee and Federal Reserve

Board compilations published after the 1918 Act was

enacted continued to show Section 92 as part of Sec-

Lion 13 of the Federal Reserve Act. S. Doc. No. 216,

66th Cong., 2d Sess. 146 (1920); Federal Res. Bd.,

The Federal Reserve Act As Amended 30 (1919).

Thus, both Congress and the agencies charged with

administering the federal banking laws believed—

and had a reasonable basis for believing—that Section

92 remained in effect after the enactment of the War

Finance Corporation Act of 1918.

‘* A compilation of the Federal Reserve Act prepared by the

Federal Reserve Board in 1917 also placed Section 92 and its

companions in Section 13 of the Federal Reserve Act, although

it reproduced the confusing punctuation of the Statutes at

Large. Federal Res. Bd., The Federal Reserve Act As Amended

27-28 (1917).

29

E. Section 92’s Existence Has Been The Basis For Con-

gressional, Judicial, And Administrative Actions For

75 Years

Finally, the subsequent actions of Congress, the

courts, and the Comptroller are utterly inconsistent

with the conclusion that Section 92 has been repealed.

After holding hearings in 1958 which aired the

issue of Section 92’s existence,'® Congress has twice in

recent years enacted legislation which has assumed

Section 92’s existence. Indeed, in the Garn-St Ger-

main Depository Institutions Act of 1982, Congress

amended “[t]he Act of September 7, 1916 (12 U.S.C.

92; 39 Stat. 753)” by striking out the section con-

cerning real estate brokerage authority. See Pub. L.

No. 97-320, §403(b), 96 Stat. 1469, 1510-1511.

Plainly, there would have been no reason to amend

Section 92 in 1982 if the statute had been repealed

in 1918. Similarly, in the Competitive Equality Bank-

ing Act of 1987, Congress imposed a one-year mora-

torium on the expansion of national bank insurance

agency activities “pursuant to the Act of September

7, 1916 (12 U.S.C. 92).” See Pub. L. No. 100-86,

§ 201(b) (5), 101 Stat. 552, 583. Again, there was

no reason for Congress to have imposed a moratorium

on the expansion of Section 92 activities if it no

longer remained good law.

In addition, until the decision in this case, every

court that had discussed Section 92—including this

Court—had assumed its continued existence. See Com-

missioner v. First Security Bank of Utah, N.A., 405

1° See Financial Institutions Act of 1957: Hearings on S.

1451 and H.R. 7026 Before the House Comm. on Banking and

Currency, 85th Cong., 2d Sess. (1958).

30

U.S. 394, 401-402 (1972); Independent Ins. Agents

of Am., Inc. v. Board of Governors, 835 F.2d 1452,

1456 n.8& (D.C. Cir. 1987); Independent Bankers

Ass’n of Am. v. Heimann, 613 F.2d 1164, 1170 (D.C.

Cir. 1979), cert. denied, 449 U.S. 823 (1980); First

National Bank of Lamarque v. Smith, 610 F.2d 1258,

1261 n.6 (5th Cir. 1980); Saxon v. Georgia Ass’n of

Indep. Ins. Agents, Inc., 399 F.2d 1010, 1013 (5th

Cir. 1968); Commissioner v. Morris Trust, 367 F.2d

794, 795 n.3 (4th Cir. 1966) ; Genessee Trustee Corp.

v. Smith, 102 F.2d 125, 127 (6th Cir. 1939); Thomp-

son v. Kerr, 555 F. Supp. 1090, 1096, 1098 (S.D. Ohio

1982); Guaranty Mortgage Co. v. Z.1.D. Assocs., Inc.,

506 F. Supp. 101, 104-105 (S.D.N.Y. 1980); Wash-

ington Agency v. Forbes, 16 N.W.2d 121, 121-122

(Mich. 1944); Marshall National Bank & Trust Co.

v. Corder, 194 S.E. 734, 736 (Va. 1938); Greene v.

First National Bank of Thief River Falls, 215 N.W.

215, 213 (Minn. 1927). Indeed, because of the wealth

of authority assuming Section 92’s existence, the

Fifth Cireuit stated in First National Bank of

Lamarque that “further discussion of the issue seems

moot.” 610 F.2d at 1262 n.6 (5th Cir. 1980). See

also American Land Title Ass’n v. Clarke, 968 F.2d

150, 154 (2d Cir. 1992), petitions for cert. pending,

Nos. 92-482 and 92-645 (holding, after the decision

in this case, that Section 92 has not been repealed) ;

Owensboro National Bank v. Moore, 803 F. Supp. 24,

33 (E.D. Ky. 1992) (same).

In First Security, for example, this Court over-

turned a determination by the Commissioner of In-

ternal Revenue which sought to allocate to certain

banks income derived from the sale of insurance pol-

icies received by affiliates. On the basis of the assump-

31

tion that Section 92 bars such banks “from receiving

insurance-related income” (405 U.S. at 402), the

Court concluded that “fairness requires the tax to

fall on the party that actually receives the premiums

rather than on the party that cannot” (id. at 405).

See also id. at 414 n.i (Marshall, J., dissenting) (de-

scribing Section 92 as “the dispositive factor” in the

Court’s analysis); id. at 419 (Blackmun, J., dissent-

ing) (noting “the Court’s repetitive emphasis on the

missing § 92”’).

Lastly, the Comptroller, who is charged with im-

plementing and interpreting Section 92, as well as

the Federal Reserve Board, which generally has au-

thority to enforce the Federal Reserve Act, have con-

sistently taken the position that Section 92 was not

enacted as part of Rev. Stat. § 5202 and was not

repealed in 1918. See, e.g., S. Doc. No. 216, 66th

Cong., 2d Sess. 146 (1920) (compilation prepared

under the Comptroller’s direction) ; Federal Res. Bad.,

The Federal Reserve Act As Amended 30 (1919).

1958 Hearings, supra, at 1036 (letter from Comptrol-

ler Gidney to House Banking Chairman Spence) ; id.

at 1036-1040 (memorandum prepared by Federal Re-

serve Board); Federal Res. Bd., Federal Reserve Act

and Other Statutory Provisions Affecting the Federal

Reserve System © 1-121 (1990).

While we readily agree that such subsequent treat-

ment cannot revive a statute whose text clearly indi-

cates its repeal, the texts of the relevant statutes in

this case, fairly read, do not support the conclusion

that Section 92 was repealed. At the least, there is

ambiguity. The best guide to the proper resolution

of that ambiguity, in our view, is the contemporane-

ous construction of the statute. Norwegian Nitrogen

32

Co. v. United States, 288 U.S. 294, 315 (1933) (the

administrative practice “has peculiar weight when it

involves a contemporaneous construction of a statute

by the men charged with the responsibility of setting

its machinery in motion’’). As we have shown, no one

at the time interpreted the 1918 Act to have repealed

Section 92. The 1920 Senate compilation, which was

prepared under the direction of the Comptroller of

the Currency, showed Section 92 to be part of Section

13 of the Federal Reserve Act. S. Doc. No. 216, 66th

Cong., 2d Sess. 146 (1920). So did the compilation

prepared by the Federal Reserve Board following the

1918 amendment. Federal Res. Bd., The Federal

Reserve Act As Amended 30 (1919). Section 92 ap-

peared in the 1926 edition of the United States Code

(and the 1928, 1934, 1940, and 1946 editions, too).

It was not until 34 years after the 1918 amendment,

when the 1952 edition of the United States Code was

being prepared, that any question arose as to whether

Section 92 was in force. But the contemporaneous

views of Congress and the agencies charged with ad-

ministering the federal banking laws—which have

not changed since 1918—show that Section 92 was

not repealed in 1918. It is that interpretation, rather

than the views of the codifiers of the 1952 edition of

the United States Code, to which deference is due in

resolving ambiguity in the statute. Cf. Chevron

U.S.A. Ine. v. Natural Resources Defense Council,

Inc., 467 U.S. 843 (1984).

33

CONCLUSION

The judgment of the court of appeals should be

reversed.

Respectfully submitted.

WILLIAM C. BRYSON

Acting Solicitor General

STUART M. GERSON

Assistant Att G al

WILLIAM P. BOWDEN, JR. meee ——

Chief Counsel ay ese een a Se

ERNEST C. BARRETT III a

LESTER N. SCALL CHRISTOPHER J. WRIGHT

Attorneys Assistant to the Solicitor General

Office of the ROBERT V. ZENER

Comptroller of the JacoB M. LEwIs

Currency Attorneys

JANUARY 1993

ov. S. GOVERNMENT PRINTING OFFics, 1993 342479 60155