Amicus Curiae Brief — First National Bank v. Union Trust Co.

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Text

INDEX.

Page.

STATEMENT OF THE CASE .........-.____-. 1-3

SPECIFICATION OF ERROR ......._......_.- 3

SYNOPSIS OF ARGUMENT..._..____........ 3-6

I. JURISDICTION. Mini ake vidiges 7-9

A State court is without ‘jurisdiction to

enjoin the operation ofa Federalagency.. 7-9

Ableman v. Booth, 21 How. 506.

State v. Curtis, 35 Conn. 374.

Tarble’s Case, 13 Wall. 397.

Van Reed v. People’s National Bank, 198

U.S. 554, 557.

II. CONSTITUTIONALITY OF SECTION 11 (K)

OF THE FEDERAL RESERVE ACT....... 9-62

(1) Every intendment is in support of the

constitutionality of the act. The

courts invariably hold that an act

of Congress is constitutional unless

its repugnancy to the Constitution is

clearly apparent. . -- -- er 9

Buttfield v. Stranahan, 192 U. 8. 470, 492,

(2) It is well settled that Congress has the

power to incorporate banking associa-

tions to be used as instrumentalities

of the Government in the conduct of

its fiscal affairs... _. --- Lae ae

Easton v. —— 188 U, Ss. 220, 229.

McCulloch v. Maryland, 4 Wheat. 316, 401.

Osborn v. U. Ss. Bank, 9 Wheat. 738, 861 (and

cases cited in brief, pp. 9, 10).

(8) The power to create carries with it the

power to preserve. Congress may vest

national banks with any powers it

deems necessary to preserve the na-

tional banking system or the corporate

entity of individual banks... ........-.. 11-37

§2274—-17——1 (1)

II. CONSTITUTIONALITY OF SEC. 11—Con. Page.

(a) The powers granted to such an associa-

tion may be either public or private in

RN hahha ba oe nya ean e wh Oe we 11

Osborn v. U.S. Bank, supra, pp. 860,

865.

(b) Every banking association organized

under Federal law since 1791 has been

endowed with powers purely private

in nature, which powers have been ex-

ercised for its own advantage in legiti-

mate competition with other corpora-

ee ee ee oa ea 14

need not be even incidental to the con-

duct of the Government’s fiscal

affairs. It is sufficient if they are

necessary to the successful operation

of the bank. The character of the

powers and the degree of their neces-

sity are matters of legislative discre-

ain ah ai nh. nh oe ew da Seki en we 15

Easton v. Iowa, 188 U.S. 220, 238,

Osborn v. U. 8S. Bank, supra, pp. 860,

861, 864.

(d) While it is not essential that the powers

conferred be incidental to the ordinary

banking functions, nevertheless the

powers specified in section 11 (k) are,

in fact, exercised quite generally by

corporations which also exercise com-

mercial banking powers and are simi-

lar in many respects to other corporate

powers exercised by commercial

banks, including national banks - - - .. 21

(e) The laws of 44 of the 48 States and also

of the District of Columbia provide for

the formation of corporations with

authority to exercise both fiduciary

powers and commercial banking pow-

Wa Lee DN waka cae ee he dee tee cen 27

(BRE esis

TIr

II. CONSTITUTIONALITY OF SEC. 11—Con. Page,

(f) In order to compete successfully with

corporations organized or operating

under State banking laws, national

banks must be given powers substan-

tially similar to those en joyed by such

State corporations, It was therefore

hot an unreasonable exercise of its dis-

cretion for Congress to determine that

the powers of national banks should be

enlarged by the addition of those

specified in section 11 (k) of the Fed-

eral Reserve Act.........0.. 32

(4) Section 11 (k) has a direct relation to the

underlying purpose of the Federal Re-

serve Act, to wit, the creation of a new

basis for nonmetallic currency, to be

Supported by a cohesive banking sys-

tem which should include a majority

of the banks of the United States, and

insure a currency stable in character

andelasticin volume —s_ eee | |

(a) The currency system created by the

National Bank Act was made neces-

sary by lack of uniformity and by in-

stability of the State bank note... .. 39

(6) Experience has demonstrated that while

the National Bank Act provided a uni-

form and stable currency system it

lacked elasticity and was otherwise

se ky CE OR Ge eg pee 42

Holdsworth’s Money and Banking,

pp. 330, 331.

Paine’s National Banking Laws, 7th

ed., p. 18,

remedy these defects while preserving

uniformity and stability........_. 45

(4) Section 11 (k) is a necessary factor in

providing a more elastic currency and

in insuring stability of the new cur-

rency system provided by the act____ 48

‘

Lemnenes.,|

FORA MLNOE EGR Na al BES Sa ES Rig ROR EE Ns ies

II. CONSTITUTIONALITY OF SEC. 11—Con. Page.

(5) The section is not a delegation of legis-

lative authority. The Federal Re-

serve Board is not empowered to

permit any national bank to exercise

any fiduciary power not enumerated

in section 11 (k). Its power is ad-

ministrative, not legislative....._.... 51-54

Mutual Film Co. v. Ohio Industrial Com-

mission, 236 U.S. 230.

People v. Brady, 271 Ul. 100.

United States v. Grimaud, 220 U.S. 506.

(6) Neither the granting nor the exercise of

the powers in question involves any

invasion of the sovereign rights of the

States. The opinions of the Illinois

and Michigan courts in this regard

are based upon a manifest misappre-

hension of the effect of the exercise

of these powers..................... 55-62

I 2a Se ay ee i cae ask 63

SINS 525s ina. ecu waeew alee we cans 64

AUTHORITIES CITED.

Page.

Ableman v. Booth, 21 How. 506____.__- ‘i 7

American Can Co. v. Williams, 178 Fed. Rep. 420. 25

Boone County Nat. Bank v. Latimer, 67 Fed. Rep. 27 -- 26

Buttfield v. Stranahan, 192 U.S. 4702... 222-222.) 9,53

Christopher v. Norvell, 201 U.S. 216... ...... 2... -- 10

Dolley v. Abilene Nat. Bank, 179 Fed. Rep. 461... -- 10

Drover’s Nat. Bank v. O’ Hare, 119 Ill. 646... 88. 26

Easton v. fowa, 188 U.S. 220... .. .. 2... -.-----. 10, 20

Farmers’ Nat. Bank v. satus ta. | ee 10,19

Field v. Clark, 143 U.S. 649... _ - netbeans = 52

Hall v. Geiger-Jones Co. (No. 438, Oct. Term, 1916) _- 53

Hepburn v. Griswold, 8 Wall. 603_........-.---.-- 9

Page.

Intermountain Rate Cases, 234 U.S. sg ge Eee 53

Interstate Com. Comm. v. Goodrich Trans. Co., 224 U.S.

Serpe KabaUGnsaheg enue cpa pee ee 54

Kans. City So. Ry. Co. v. United States, 23) U.S.423:/ “4

Knox v. Lee and Parker v. Davis (Legal Tender Cases),

12 Wall. 457____ _- Molsha tt Te eee ae 19

Larabee v. Dolley, 175 Fed. ot sins CE 10

Legal Tender Case, 110 U.S, 421. SS Senha ee: 9

Legal Tender Cases (Knox v. Lee and Parker v. Davis),

12 Wall. 4 ERE Or nee oa eae i)

Luxton v. North River Bridge Co., 153 U.S. 525. _. ne 9

Massey v. Fisher, 62 Fed. 26

MeCulloch v. Maryland, 4 Wheat. 316. __ ----- 9,10, 18, 60

Mercantile Bank v. New York, 121U.8.138... 0 = 40

Mercantile Trust Co. v. Texas & P. Ry. Co., 216 Fed.

“cise, thomas TENE oe ee re 10

Merchants Nat. Bank v. United States, 214 U.S. 33_. 40)

Merrick v. Halsey (No. 413, Oct. Term, 1916). __ 53

Monongahela Bridge Co. v. United States, 216 U.S.177. 53

Montagu v. Pacific Bank, 81 Fed. Rep. 602......... 26

Mutual Film Corp. v. Ohio Industrial Comm., 236 U. 8.

we ce nhs Ona Saoeeta Ts .-sse- 88,88

Osborn v. U. 8. Bank, 9 Wheat. 738. __- 9,12, 13, 15, 19, 61

Pattison v. Syracuse Nat. Bank, 80N. Y.82... 33

People v. Brady, 271 1.100. pane os Fy

Red “C” Oil Oo. v. North Carolina, 222 U.S. 380 __ 54

Richardson v. New Orleans Coffee Co., 102 Fed. Rep.

ca Te A ROEE Mache nd team Se es Ase ae Co. 26

Richardson v. Olivier, 105 Wed. Rep. 277......... _. 26

Robinson v. Turrentine, 59 Fed. Rep. 654........._. 10

St. Louis Ry. v. Taylor, 210 U.S. 281. aoe 53

Slaughter-House Cases, 16 Wall. oe a5 9

State v. Kenosha E. R. Co., 145 Wis. 337... __ 54

State v. R. R. Commission, 137 Wis. 80... 54

State ex rel. Wilcox vy. Curtis, 35 Conn. 374___- 8

Tarble’s Case, 13 Wall. 397. SR Gee aly cep ae es, 7

Tennessee v. Davis, 100 U.S. 257. pean ee 8

Tiffany v. Nat. Bank of Missouri, 18 Wall. 409... __ 40

Page.

United States v. Grimaud, 220 U. S. 506... ..--..--- 52

Van Reed v. People’s Nat. Bank, 198 U.S. 554...--- 8

Veazie Bank v. Fenno, 8 Wall. 533......--.-..---- 10,41

Wallace v. Stone, 107 Mich. 190... ......----..---- 26

Wilson v. Shaw, 204 U.S. 24... ......-.---------- 10

Holdsworth, Money and pues

p. 295 - PPI Trp i,

p. 330 - oY NOR 8 Oe eee

p. 383 . Fe dg edie ck Lebdy decks tae oon a

Paine’s Nat. ae’ Lawes, 7th o¢6., p. 18... ..-.-. 44

White’s Money and Banking, 5th ed., p. 107 --- -- -- 39

“

;

ores

WR Boag

Inthe Supreme Court of the Wnited States,

OcroBerR TERM, 1916.

First NaTionAL Bank or Bay Ciry, )

plaintiff in error,

GRANT FELLOWS, ATTORNEY GENERAL OF

the State of Michigan, on the relation of

Union Trust Co. et al.

No. 764.

IN ERROR TO THE SUPREME COURT OF THE STATE OF

MICHIGAN.

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE.

STATEMENT OF THE CASE.

This case involves the validity of section 11(k) of

an act of Congress approved December 23, 1913,

known as the Federal Reserve Act. 38 Stat. 251, 262,

c. 6. That section gives to the Federal Reserve

Board created by the act the following power:

Sec. 11(k). To grant by special permit to

national banks applying therefor, when not in

contravention of State or local law, the right

to act as trustee, executor, administrator, or

registrar of stocks and bonds under such rules

and regulations as the said board may pre-

scribe.

(1)

PO ae EET ee Sta ata TK?

EEE ELEN MRE PEA

PYKSS

Cone Gre ee

ea ibatarpevesaens

The First National Bank of Bay City, Michigan,

plaintiff in error, was chartered as a national bank

on December 1, 1882, under the National Bank Act of

June 3, 1864, 13 Stat. 99, c. 106, as amended. (See

the National Bank Act of June 20, 1874, 18 Stat. 123,

c. 848; Rev. Stat. sec. 5133, 5136; R. 4.) After the

passage of the Federal Reserve Act it became a mem-

ber of the system of banks therein established, and,

on application, was granted by the board the right

to act as trustee, executor, administrator, and regis-

trar of stocks and bonds. (R. 5, 10.) On the rela-

tion of five trust companies the attorney general of

Michigan filed an information in the nature of quo

warranto in the Supreme Court of Michigan to pre-

vent plaintiff in error from thus acting. (R. 2, 23.)

The respondent bank pleaded the statutes and the

authority granted in pursuance thereof. (R. 4.)

The State attorney general demurred to the plea on

the grounds (1) that section 11 (k) is unconstitutional

in that it is beyond the authority of Congress to con-

fer the power specified upon national banks; (2) that

even if Congress possessed such authority it can not

delegate it to the Federal Reserve Board; (3) that

the granting of the corporate power specified is in

contravention of the laws of the State. (R. 11.)

The State court sustained the demurrer on the first

ground, six of the eight justices expressly finding no

contravention of State law. (R. 20-22.) By writ

of error the case comes before this court on the plead-

ings. (R. 24.)

i): a bie bcs By Reektes eis

Leave having been obtained, the United States files

this brief as amicus curiae.

SPECIFICATION OF ERROR.

The second assignment of error (R. 25) is as follows:

The Supreme Court of Michigan erred in

entering a judgment of ouster against the

above named respondent, said judgment being

based solely upon the decision that the act of

Congress above mentioned [§11k] was and is

void as beyond the powers conferred upon the

Congress of the United States by the Constitu-

tion of the United States.

Two issues are thus raised:

1. Has Congress power to authorize a national

bank to act as trustee, executor, administrator, or

registrar of stocks and bonds?

2. Does the Federal Reserve Board in granting the

permission authorized by section 11 (k) exercise

nondelegable powers of Congress ?

SYNOPSIS OF ARGUMENT.

JURISDICTION.

While no jurisdictional question is raised by the

pleadings, the Federal Reserve Board, appearing by

counsel as amicus curiae, called the attention of the

Supreme Court of Michigan to the fact that some

doubt exists as to the right of a State court to enjoin

and exclude a national bank created as a Federal

agency from the exercise of powers granted it by

Congress.

Pe a

ive

Sse Retin StS NRIs Sore:

Inasmuch as the parties to these proceedings can

not confer jurisdiction by consent it seems proper to

call to the attention of this court certain cases which

have a probable bearing on this subject, although it

is the desire of all parties concerned and a matter of

great public importance that the determination of

the constitutional question involved be expedited as

far as possible.

If.

CONSTITUTIONALITY OF SECTION 11 (K) OF THE FEDERAL

RESERVE ACT.

(1) Every intendment is in support of the consti-

tutionality of the act. The courts invariably hold

that an act of Congress is constitutional unless its

repugnancy to the Constitution is clearly apparent.

(2) It is well settled that Congress has the power to

incorporate banking associations to be used as in-

strumentalities of the Government in the conduct of

its fiscal affairs.

(3) The power to create carries with it the power

to preserve. Congress may vest national banks with

any powers it deems necessary to preserve the na-

tional banking system or the corporate entity of in-

dividual banks.

(a) The powers granted to such an association may

be either public or private in nature.

(b) very banking association organized under Fed-

eral law since 1791 has been endowed with powers

purely private in nature, which powers have been

exercised for its own advantage in legitimate com-

petition with other corporations.

;

Nee a RE ons

not be even incidental to the conduct of the Govern-

ment’s fiscal affairs. It is sufficient if they are neces-

sary to the successful. operation of the bank. The

character of the powers and the degree of their neces-

sity are matters of legislative discretion.

(d) While it is not essential that the powers con-

ferred be incidental to the ordinary banking functions,

nevertheless the powers specified in section 11 (k)

are, in fact, exercised quite generally by corporations

which also exercise commercial banking powers and

are similar in many respects to other corporate

powers exercised by commercial banks, including

national banks.

(e) The laws of 44 of the 48 States and also of the

District of Columbia provide for the formation of

corporations with authority to exercise both fidu-

ciary powers and commercial banking powers.

(f) In order to compete successfully with corpora-

tions organized or operating under State banking

laws, national banks must be given powers substan-

tially similar to those enjoyed by such State corpo-

rations. It was therefore not an unreasonable exer-

cise of its discretion for Congress to determine that

the powers of national banks should be enlarged by

the addition of those specified in section 11 (k) of

the Federal Reserve Act.

(4) Section 11 (k) has a direct relation to the

underlying purpose of the Federal Reserve Act, to wit,

the creation of a new basis for nonmetallic currency,

disitdig

eet Sater ay

SRA ON

Brg SE ye ER SRO REIS

to be supported by a cohesive banking system,

which should include a majority of the banks of the

United States, and insure a currency stable in char-

acter and elastic in volume.

(a) The currency system created by the National

Bank Act was made necessary by the lack of uni-

formity and by instability of the State bank note.

(b) Experience has demonstrated that while the

National Bank Act provided.a uniform and stable

currency system it lacked elasticity and was other-

wise defective.

these defects while preserving uniformity and sta-

bility.

(d) Section 11 (k) is a necessary factor in pro-

viding a more elastic currency and in insuring sta-

bility of the new currency system provided by

the act.

(5) The section is not a delegation of legislative

authority. The Federal Reserve Board is not em-

powered to permit any national bank to exercise any

fiduciary power not enumerated in section 11 (k).

Its power is administrative.

(6) Neither the granting nor the exercise of the

powers in question involves any invasion of the sov-

ereign rights of the States. The opinions of the

Illinois and Michigan courts in this regard are based

upon a manifest misapprehension of the effect of the

exercise of these powers.

ARGUMENT.

JURISDICTION.

A State court is without jurisdiction to enjoin the

operation of a Federal agency.

In the case of Ableman v. Booth, 21 How. 506, the

Supreme Court of Wisconsin held that the fugitive

slave law was unconstitutional and discharged a

prisoner held under a warrant issued by a United

States Commissioner for aiding and abetting the

escape of a fugitive slave, and also discharged the

same person from confinement after indictment and

conviction in the United States District Court. This

judgment of the Supreme Court of Wisconsin was

reversed by the Supreme Court of the United States.

The same question was presented in Tarble’s Case,

13 Wall. 397, where a soldier in the United States

Army was discharged on habeas corpus by a supreme

court commissioner of the State of Wisconsin on the

ground that he had been unlawfully enlisted while a

minor without the consent of his guardian.

In both cases the courts of the State were declared

by the Supreme Court of the United States to have

been without jurisdiction.

The fundamental proposition upon which the Able-

man and Tarble cases rest is that no State has power

to obstruct a Federal officer in the discharge of his

duties. It is true, as was argued in the Ableman case,

that the Supreme Court of Wisconsin had general

jurisdiction to pass upon the constitutionality of the

fugitive slave law; it had power to do this in any

proceeding which did not directly interfere with or

arrest the functions of the Federal Government, but

no State can lawfully do an act which will suspend the

machinery of the Federal Government. As stated by

the court in Tennessee v. Davis, 100 U. 8. 257, 262—

“The general government must cease to exist

whenever it loses the power of protecting itself

in the exercise of its constitutional powers.”’

The principle of these cases would seem to apply to

an attempt by the State to enjoin or restrain any

Federal agency from the exercise of a right or the

performance of a duty arising under a Federal statute.

The right of Congress to determine to what

extent a State court shall be permitted to

entertain actions against national banks and

how far these institutions shall be subject to

State control, is undeniable. National banks

are quasi-public institutions, and for the pur-

pose for which they are instituted are national

in their character, and, within constitutional

limits, are subject to the control of Congress

and are not to be interfered with by State

legislative or judicial action, except so far as

the lawmaking power of the Government may

permit. [Van Reed v. People’s National Bank,

4 198 U. S. 554, 557.]

4 Whether the Federal or State courts have juris-

q diction in quo warranto proceedings against national

j banks was the subject of discussion in the case of

State ex rel Wilcox v. Curtis, 35 Conn. 374, in which

it was held that an information in the nature of a

Wt raters: ie Bae,

quo warranto would not lie in a State court to try

the right to the office of director in a national bank.

Il.

CONSTITUTIONALITY OF SECTION 11 (K) OF THE FEDERAL

RESERVE ACT.

(1) Every intendment is in support of the constitu-

tionality of the act. The courts invariably hold that

an act of Congress is constitutional unless its re-

pugnancy to the Constitution is clearly apparent.

In the case of Buttfield v. Stranahan, 192 U. 8.

470, 492, the court says:

In examining the statute in order to de-

termine its constitutionality we must be

guided by the well-settled rule that every

intendment is in favor of its validity. It must

be presumed to be constitutional unless its

repugnancy to the Constitution clearly appears.

(Citing Nicol v. Ames, 173 U.S. 509, 514, 515;

Gettysburg Park Case, 160 U.S. 668, 680.)

See also Hepburn v. Griswold, 8 Wall. 603; Legal

Tender Cases, 12 Wall. 457.

(2) It is well settled that Congress has the power to

incorporate banking associations to be used as

instrumentalities of the Government in the conduct

of its fiscal affairs.

McCulloch v. Maryland, 4 Wheat. 316, 401.

Osborn v. U. S. Bank, 9 Wheat. 738, 861.

Slaughter-House Cases, 16 Wall. 36, 64.

Legal Tender Case, 110 U.S. 421, 445.

Luxton v. North River Bridge Co., 153 U.S.

525, 529.

Christopher v. Norvell, 201 U.S. 216, 226.

Wilson v. Shaw, 204 U.S. 24, 34.

Robinson v. Turrentine, 59 Fed. Rep. 554,

555.

Dolley v. Abilene Nat. Bank, 179 Fed. Rep.

461, 465.

Larabee v. Dolley, 175 Fed. Rep. 365, 392.

Veazie Bank v. Fenno, 8 Wall. 533, 551.

Mercantile Trust Co. v. Texas and P. Ry.

Co., 216 Fed. Rep. 225, 231.

Easton v. Iowa, 188 U. 8. 220, 229.

Farmers’ Nat. Bank v. Dearing, 91 U. S.

29, 33.

As stated by Chief Justice Marshall, in delivering

the opinion of the court, in McCulloch v. Maryland,

supra (p. 401):

The first question made in the cause is, Has

Congress power to incorporate a bank?

It has been truly said, that this can scarcely

be considered as an open question, entirely un-

prejudiced by the former proceedings of the

3 nation respecting it. The principle now con-

tested was introduced at a very early period

of our history, has been recognized by many

successive legislatures, and has been acted

upon by the judicial department, in cases of

peculiar delicacy, as a law of undoubted

obligation.

* * * * *

se eeT Lr

BRE EMEA A ESE SL BEL OLE ARE APE LION,

The power now contested was exercised by

the first Congress elected under the present

Constitution.

The bill for incorporating the Bank of the

United States did not steal upon an unsuspect-

ing legislature and pass unobserved. Its prin-

ciple was completely understood, and was op-

posed with equal zeal and ability. After being

resisted, first in the fair and open field of de-

bate, and afterwards in the executive cabinet,

with as much persevering talent as any meas-

ure has ever experienced, and being supported

by arguments which convinced minds as pure

and as intelligent as this country can boast,

it became a law.

This decision, which was affirmed and elaborated

in the case of Osborn v. U. S. Bank, supra, has been

uniformly followed by the later decisions of this

court.

(3) The power to create carries with it the power to

preserve. Congress may vest national banks with

any powers it deems necessary to preserve the na-

tional banking system or the corporate entity of

individual banks.

(a) The powers granted to such an association may be either public

or private in nature.

This question was considered by this court when the

constitutionality of the act of Congress creating the

first Bank of the United States was before it. An

effort was made at that time to sustain the contention

that while Congress might have the power to incor-

porate a bank to be used as an instrument of the

Government in the conduct of its fiscal affairs it could

not vest corporations so created with the capacity to

engage in private business, but could only authorize

the exercise of functions to be performed for the

Government.

82274—17——-2

Be J

‘

¥®

In discussing this question Chief Justice Marshall,

in the case of Osborn v. U. S. Bank, supra, said

(p. 860):

The whole opinion of the Court, in the case of

McCulloch v. The State of Maryland, is founded

on, and sustained by, the idea that the Bank is

an instrument which is “necessary and proper

for carrying into effect the powers vested in

the government of the United States.” It is

not an instrument which the government

found ready made, and has supposed to be

adapted to its purposes; but one which was

created in the form in which it now appears, for

national purposes only. Jt is, undoubtedly,

capable of transacting private as well as public

business. While it is the great instrument by

which the fiscal operations of the government

are effected, it is also trading with individuals

for its own advantage. [Italics ours.]

It was contended in this case that a branch of the

Bank of the United States doing business in Ohio

was subject to tax under a law of that State which

made it liable to an annual tax of $50,000 on each

office of discount and deposit, because the operations

of the bank were to a large extent of a private busi-

ness character. To this argument the court replied

(p. 863):

The operations of the Bank are believed

not only to yield the compensation for its

services to the government, but to be essen-

tial to the performance of those services.

Those operations give its value to the cur-

rency in which all the transactions of the

ee ee =

government are conducted. They are, there-

fore, inseparably connected with those trans-

actions. They enable the Bank to render

those services to the Nation for which it was

created, and are, therefore, of the very essence

of its character as national instruments. The

business of the Bank constitutes its capacity to

perform its functions, as a machine for the money

transactions of the government. Its corporate

character is merely incident, which enables

it to transact that business more beneficially.

[Italics ours. ]

Again (p. 864):

Congress was of opinion that these faculties

were necessary to enable the Bank to perform

the services which are exacted from it, and for

which it was created. This was certainly a

question proper for the consideration of a

national Legislature. But, were it now to

undergo revision, who would have the hardi-

hood to say, that, without the employment of

a banking capital, those services could be per-

formed ?

Again (p. 865):

The court has already stated its conviction,

that without this capacity to trade with indi-

viduals, the bank would be a very defective in-

strument, when considered with a single view

to its fitness for the purposes of government.

[Italics ours. |

It is clear, therefore, that a banking corporation

created by Congress may be vested with powers of a

private nature to be used for its own advantage as

well as with the power to perform public functions.

ee spartans

Re Rea ace WOON ecg Je Na aia,

CRS

(b) Every banking association organized under Federal law since

1791 has been endowed with powers purely private In nature,

which powers have been exercised for its own advantage in legiti-

mate competition with other corporations.

When the first Bank of the United States was

organized (1791) powers of the most general character

were conferred upon it. It was enacted (Feb. 25, 1791,

1 Stat. 191, 192, c. 10) that a bank of the United States

should be established with a prescribed capital stock,

the subscribers to which were made a corporation,

with power to take personal property, to sell and

dispose of it, and to ‘‘put in execution such by-laws,

ordinances, and regulations, as shall seem necessary

and convenient for the government of the said cor-

poration, not being contrary to law, or to the con-

stitution thereof,’ and “generally to do and execute

all and singular acts, matters and things, which to

them it shall or may appertain to do” subject to the

restrictions prescribed by the act. Those restric-

tions limited the real estate holdings of the bank,

prohibited the purchase of public debts and trade in

commodities, and limited the amount of indebted-

ness which could be incurred. The bank was thus

clothed with general powers to transact a banking

business subject to few restrictions.

The charter of the second United States Bank

(1816) was of a similar broad and comprehensive

nature. Act Apr. 10, 1816, 3 Stat. 266, 269, c. 44.

While the powers granted to national banks by

the act of 1864 were more restricted than the powers

granted to the first and second banks of the United

; eengemal a

States, they were, nevertheless, intended to enable

such associations to engage in the banking business

to the same extent as other banking corporations

organized at that time under State laws.

(¢) These powers, though private in nature, need not be even inei-

dental to the conduct of the Government’s fiscal affairs. It is

sufficient If they are necessary to the successful operation of the

bank. The character of the powers and the degree of their

necessity are matters of legislative discretion.

It is not essential that any particular power vested

in a national bank shall be incidental or necessary

to the conduct of the Government’s fiscal affairs, but

it is sufficient if such power is, in the discretion of

Congress, necessary to the successful operation of the

bank.

The court, in discussing further this question

(Osborn v. U.S. Bank, supra), said (pp. 860, 861):

The appellants endeavour to distinguish be-

tween this trade and its agency for the public,

between its banking operations and those

qualities which it possesses in common with

every corporation, such as individuality, im-

mortality, ete. While they seem to admit the

right to preserve this corporate existence, they

deny the right to protect it in its trade and

business.

If there be anything in this distinction, it

would tend to show that so much of the act as

incorporates the Bank is constitutional, but so

much of it as authorizes its banking operations

is unconstitutional. Congress can make the

inanimate body, and employ the machine as a

depcsitory of, and vehicle for, the conveyance

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of the treasure of the Nation, if it be capable

of being so employed, but can not breathe into

it the vital spirit which alone can bring it into

useful existence.

Let this distinction be considered.

Why is it that Congress can incorporate or

create a bank? This question was answered

in the case of McCulloch v. State of Maryland.

It is an instrument which is “necessary and

proper” for carrying on the fiscal operations

of the government. Can this instrument, on

any rational calculation, effect its object, un-

less it be endowed with that faculty of lending

and dealing in money, which is conferred by

its charter? If it can, if it be as competent

to the purposes of government without, as

with this faculty, there will be much difficulty

in sustaining that essential part of the charter.

If it cannot, then this faculty is necessary to

the legitimate operations of goverument, and

was constitutionally and rightfully engrafted

on the institution. It is, in that view of the

subject, the vital part of the corporation; it

is its soul; and the right to preserve it origi-

nates in the same principle, with the right to

preserve the skeleton or body which it ani-

mates. The distinction between destroying what

is denominated the corporate franchise, and de-

stroying its vivifying principle, is precisely as

incapable of being maintained, as a distinction

between the right to sentence a human being to

death, and a right to sentence him to a total priva-

tion of sustenance during life. Deprive a bank

of its trade and business, which is its suste-

nance, and its immortality, if it have that prop-

erty, will be a very useless attribute.

This distinction, then, has no real existence.

(Italics ours. ]

It is clear ongress not only has authority to

grant to na oanks powers which in themselves

are not incidental to the performance of a public

function, but it is necessary that it should do so in

order that the agency selected by it may efficiently

serve the Government when called upon to render any

public service.

When national banks were created the powers

vested in them were designed to enable them to

perform public services and to engage in private

business for their own advantage. In their public

capacity they may be used as fiscal agents of the

Government, as Government depositories, and can

and do help materially in the emission of currency

and in the transfer of Government funds from one

part of the country to another.

It is at once manifest, however, that if Congress

had limited the powers of national banks to the

exercise of these functions they could not have

existed as corporations and hence could not have

performed the services required of them.

The deposit of Government funds in a national

bank designated as a depository involves an expense

to the bank, which is required to pay interest on such

deposits, and unless it is permitted to lend these

funds to its customers it will receive no compensation

for the service of acting as a Government depository.

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Its revenue is earned from the use of its funds. It

must, of necessity, derive its sustenance primarily

from its banking operations conducted for its own

advantage, as distinguished from its banking opera-

tions conducted as an agent or instrument of the

Government, and since this is true those powers

which are necessary to preserve and sustain the

corporation are to that extent necessary to the

Government, and the grant of such powers has been

repeatedly held to be within the constitutional

power of Congress.

That Congress in the exercise of reasonable discre-

tion must determine what means are necessary to

accomplish the proper execution of any power con-

ferred on it by the Constitution, is settled beyond all

dispute.

In the case of McCulloch v. Maryland, supra, when

discussing the right of Congress to create the first

Bank of the United States, the court says (p. 421):

We admit, as all must admit, that the powers

of the government are limited, and that its

limits are not to be transcended. But we

think the sound construction of the Constitu-

tion must allow to the national legislature that

discretion with respect to the means by which

the powers it confers are to be carried into exe-

cution, which will enable that body to perform

the high duties assigned to it, in the manner

most beneficial to the people. Let the end be

legitimate, let it be within the scope of the

Constitution, and all means which are appro-

priate, which are plainly adapted to that end,

which are not prohibited, but consist with the

letter and spirit of the Constitution, are con-

stitutional. [Italics ours. ]

In the case of Osborn v. U.S. Bank, supra (p. 864):

Congress was of opinion that these faculties

were necessary to enable the Bank to perform the

services which are exacted from it, and for which

at was created. This was certainly a question ¥

proper for the consideration of the national

Legislature. But, were it now to undergo

revision, who would have the hardihood to say,

that, without the employment of a banking

capital, those services could be performed?

{Italies ours. ]

In Knox v. Lee and Parker vy. Davis (Legal Tender

Cases), 12 Wall. 457, 536, the court says:

Indeed the whole history of the government

and of congressional legislation has exhibited

the use of a very wide discretion, even in times

of peace and in the absence of any trying emer-

gency, in the selection of the necessary and

proper means to carry into effect the great ob-

jects for which the government was framed, and

this discretion has generally been unques-

tioned, or, if questioned, sanctioned by this

court. [Italics ours.]

nae ae aaa See etna ee

Again, in Farmers’ National Bank v. Dearing, 91

U.S. 29, 33:

The constitutionality of the act of 1864 is

not questioned. It rests on the same prin-

ciple as the act creating the second bank of

the United States. The reasoning of Secre-

tary Hamilton and of this court in WeCulloch

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v. Maryland (4 Wheat. 316) and in Osborne v.

The Bank of the United States (9 id., 708),

therefore, applies. The national banks organ-

ized under the act are instruments designed to

be used to aid the government in the admin-

istration of an important branch of the public

service. They are means appropriate to that

end. Of the degree of the necessity which ex-

isted for creating them Congress is the sole judge.

* * * * * * *

The power to create carries with it the power

to preserve. The latter is a corollary from

the former. [Italic ours. ]

Again, in Easton v. Iowa, 188 U. S. 220, 238, the

court says:

Our conclusions, upon principle and authority,

are that Congress, having power to create a system

of national banks, is the judge as to the extent of

the powers which should be conferred upon such

banks, and has the sole power to regulate and

control the exercise of their operations. [Italics

ours. |

Applying this doctrine to the present case it seems

clear that since the right to create and to preserve

national banks has been established Congress in its

discretion must determine what means are ap-

propriate to that end and what powers should be

conferred upon and exercised by national banks.

That the addition of the powers specified in section

11 (k) does not constitute an unreasonable exercise

of this discretion, will appear from a consideration of

the character of such powers.

ail

(d) While it is not essential that the powers conferred be incidental

to the ordinary banking functions, nevertheless the powers

specified in section 11 (k) are, in fact, exercised quite generally

by corporations which also exercise commercial banking powers

and are similar in many respects to other corporate powers ex-

ercised by commercial banks, including national banks.

While Congress is given a wide discretion in deter-

mining what means shall be employed to preserve the

integrity of the national banking system and the

several national banks, and might, if it deemed neces-

sary, vest in such banks powers not ordinarily exer-

cised by banking corporations, in the present case

the powers added are peculiarly appropriate to bank-

ing institutions.

It is probably true that at the time the national

bank act was passed the right to act in the capacity

of trustee, executor, or administrator was not regarded

as a banking function nor as incidental to any banking

power.

It is probably equally true, however, that this right

was not then generally regarded as a corporate func-

tion at all, since the selection of corporations to act in

fiduciary capacities is of comparatively recent develop-

ment in this country. An individual rather than a

corporation was then selected and this is still true in

many sections of the United States. In so far as

these powers have become functions of corporations,

other than trust companies organized for the sole

purpose of doing a trust business, they may be said to

have been confined to that class of corporations the

earnings of which are derived from the loan or invest-

ment of funds at interest and that they are more

@ Re aan ciees,

nearly allied to the banking business than to any

other.

It would be difficult to define with any degree of

accuracy what constitutes “recognized banking pow-

ers,”’ since there is little uniformity in the laws of the

several States prescribing the powers which may be

engaged in by banking institutions. A composite

definition of banking, including an enumeration of

the charter powers of banks organized under State

laws, would include a very large proportion of all

corporate powers, and it is this fact that no doubt

influenced Congress in determining to extend the

powers of national banks in order that they might be

placed on a more nearly uniform basis with other

banking institutions. In enlarging the powers of

national banks, however, it added only those which

have in the natural development of banking become

incidental to this class of business.

The argument has been made that the relationship

which exists between a national bank and its cus-

tomer is ordinarily that of debtor and creditor; that

this relationship differs from that of trustee and

cestui que trust, and accordingly a national bank can

not consistently be vested with the power to act as

trustee or in any other fiduciary capacity.

It is somewhat difficult to appreciate the force of

this argument when we consider that the relation-

ships of “debtor and creditor,” “ principal and agent,”

and ‘‘trustee and cestui que trust’? have been demon-

strated by experience to be so interrelated as corpo-

rate functions and so frequently incidental each to

the other that it is the rule rather than the exception

for the same corporation to act in each of these

capacities.

Trust companies organized for the purpose of

acting only in the capacity of fiduciaries have, as an

incident of the performance of some trust function,

become debtors or creditors of their customers.

Beneficiaries of trust estates have found it advisable

or convenient to leave on deposit with the trust com-

pany which acted as trustee their share of the pro-

ceeds of a distribution of an estate to be held subject

to the order of the beneficiary and not for reinvest-

ment by the trustee. In such case the relationship

between the trust company and the beneficiary is

changed from that of trustee and cestui que trust to

that of debtor and creditor. It was probably due to

a development of this practice that trust companies

by a process of evolution gradually entered the field of

what was popularly known as commercial banking.

That is to say, having received deposits from those

for whom they had acted as trustees and having

thus been placed in funds held subject to the same

conditions as demand deposits held by commercial

banks, trust companies naturally sought investments

in those short-term self-liquidating securities invested

in by commercial banks. This was obviously neces-

sary because the deposits so held were subject to

check and were payable on demand. These demands

could not be met in due course if such deposits were

invested in those long-term securities in which trust

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funds are ordinarily invested. The practice of re-

ceiving funds on deposit from beneficiaries of estates

held in trust having proved remunerative to trust

companies, it was natural that such companies should

solicit similar deposits from others, thus increasing

their earning power.

As the demand deposits of such companies in-

creased, the demand on their part for short-term

investments in commercial paper and other securities

increased as a matter of course, thus bringing them

into greater and more active competition with

national banks.

The increasing activity of the trust companies in the

general commercial banking business is clearly illus-

trated in one of the exhibits which accompanies the

report of the Comptroller of the Currency made to

Congress pursuant to the requirements of law for

the year 1915. This exhibit, copy of which is

printed as an appendix, infra, p. 63, consists of an

analysis of the business of trust companies made up

from reports furnished the comptroller by more than

90 per cent of the trust companies doing business in

the United States. From this report it will appear

that the aggregate deposits in trust companies have

increased from $85,025,371 in 1875 to $4,216,017,244

in 1915. National bank deposits, according to the

comptroller’s report, increased during the same period

from $696,652,020 to $6,611,218,000. The trust

companies, therefore, held deposits in 1875 equal to

about 12 per cent of the amount held by national

VRID EEE EP ce SRE LL ARES AT RS CAP ARLG IMG ete

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banks, while in 1915 the deposits in trust companies

amounted to approximately 66 per cent of the de-

posits held by national banks.

While the trust-company deposits are not classified

in this report until 1909, it will be observed that in

1915 demand deposits subject to check amounted to

$2,652,323,201, whereas demand certificates of de-

posit aggregated $94,827,754, certified checks Sind, -

787,783, and cashiers’ checks $23,386,418. These

figures indicate what a great proportion of the total

demand deposits is of the kind formerly considered

peculiar to the business of a commercial bank; that

is, deposits subject to check without notice. They

equal approximately 96 per cent of the total demand

deposits of the trust companies exclusive of savings

deposits which may be either demand or time de-

posits.

It thus appears that the commercial banking busi-

ness has become so closely allied to the other activi-

ties of trust companies that it may be said now to be

incidental to the business of a trust company.

On the other hand, commercial banks, even prior

to the passage of the Federal Reserve Act, were at

times required to assume trust relations as an incident

of their business.

They not infrequently came into the possession of

funds impressed with a trust. For example, in the

case of American Can Co. v. Williams, 178 Fed. Rep.

420, it was held that when sight drafts attached to

bills of lading were delivered to a national bank for

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collection and remittance the relation of trustee and

cestui que trust undoubtedly existed.

Again, in the case of Boone County National Bank

v. Latimer, 67 Fed. 27, where a bank received a note

for collection and remittance, but credited proceeds,

this was held to be a clear breach of trust—a diver-

sion of a trust fund. See also:

Richardson v. Olivier, 105 Fed. Rep. 277.

Richardson v. New Orleans Coffee Co., 102

Fed. Rep. 785.

Wallace v. Stone, 107 Mich. 190.

The Drover’s National Bank v. O’ Hare, 119

Ill. 646.

Massey v. I’isher, 62 Fed. Rep. 958.

Montagu v. Pacific Bank, 81 Fed. Rep. 602.

The powers specified in section 11 (k) of the Federal

Reserve Act appear, therefore, to be more nearly inci-

dental and more closely related to the business of

banking than to that of any other class of corpora-

tions, except those organized solely for the purpose

of acting in fiduciary capacities. Such powers do

not differ materially from other powers vested in

national banks.

Under the provisions of the National Bank Act,

banks may receive deposits; may discount notes,

drafts, bills of exchange, and other evidences of debt;

may lend money on personal security and may make

such investments of their funds as are permitted by the

National Bank Act. All of these operations are con-

ducted in their private capacity and for their own ad-

vantage. They necessarily involve trading with per-

———— scien at

sons and dealing in property within the borders of a

State.

The relation created is contractual whether funds

are received on deposit subject to investment by the

national bank in accordance with the laws of the

United States or whether such funds are received in

trust subject to investment according to the provi-

sions of the instrument creating the trust or the laws :

of the State which relate to the administration of the

trust estate. But without the aid of section 11 (k)

national banks are confined to trusteeships which

result from the operation of law while their competi-

tors—trust companies and many State banks—may

voluntarily act in the capacity of fiduciaries and at

the same time may compete with national banks in

the more limited field of commercial banking.

That there is no inconsistency in combining in

one corporation fiduciary powers and commercial

banking powers is abundantly illustrated by an

analysis of the State laws relating to the incorpora-

tion of financial institutions.

RONG TS

(e) The laws of 44 of the 48 States and also of the District of Colum-

i bia provide for the formation of corporations with authority to

' exercise both fiduciary powers and commercial banking powers.

An examination of the laws of the various States

shows that though there were very few corporations

of any kind possessing fiduciary powers prior to the

passage of the National Bank Act in 1864, at the

present day the laws of every State in the Union

authorize corporations to exercise certain trust

§2274—17——3

powers and in 44 of the 48 States the laws permit a

single corporation to exercise not only fiduciary powers

but also commercial banking powers.

Whether commercial banks are allowed to exer-

cise trust powers or trust companies are allowed to

exercise commercial banking powers is, for the pur-

pose of this discussion, immaterial. The point to

be considered is the competitive force given to a

4 single corporation endowed with both classes of

3 powers. It was that fact which Congress was under

, the necessity of considering and which not only jus-

tifies the action of Congress in giving trust powers

to national banks but which made such action im-

perative.

The court’s attention is directed to the fact that

2 in the following States corporations may, upon com-

: pliance with various rules and regulations dependent

upon the laws of each State, exercise at one and the

same time both fiduciary powers and general banking

powers:

: Alabama: Code of 1907, sections 3518 and

Arizona: Civil Code, 1913, sections 284-305.

§ Arkansas: Section 2, act of April 13, 1903,

: (banking powers limited to buying and selling

all kinds of stocks, bonds, negotiable and non-

negotiable paper, and other investment secur-

: ities, and to receiving monies in trust and

paying interest on same).

California: California bank act of March

1, 1909, as amended May 6, 1913, section 22.

PRE AS miseries eA;3

Colorado: Revised Statutes 1908, section

305, subdivisions 7 and 10.

Connecticut: Laws 1913, chapter 194, sec-

tion 8.

Delaware: Special acts of legislature incor-

porating trust companies authorize the exer-

cise of banking powers.

District of Columbia: 31 United States

Statutes, chapter 854, subchapter eleven, sev-

tions 715 to 748.

Florida: Act of June 5, 1911, section 3.

chapter 6425, Laws of Florida.

Georgia: Code, 1914, section 2817.

Idaho: Session Laws, 1911, chapter 124,

section 20.

Illinois: Section 1. chapter 16a of Hurd’s

Revised Statutes of Illinois, 1915-1916.

Indiana: Laws of 1915, chapter 97,

Towa: Code of Iowa, Supplement, 1913,

section 1889d, page 683.

Kansas: Laws of 1907, chapter 425,

Kentucky: Kentucky Statutes, 1915, sec-

tion 612a.

Louisiana: Act 45, Laws of 1902, page 59,

Maine: Laws of 1907, chapter 96, page 93,

Maryland: Special acts of legislature incor-

porating trust companies authorize the exer-

cise of banking powers,

Massachusetts: Chapter 116, Revised Laws,

1902, sections 12 and 13.

Minnesota: Genera] Statutes, 1913: sections

6409, 6416, 6417. Banking powers exercised

by trust companies are considerably restricted,

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BORE EERIE cata aS.

Reger.

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Mississippi: Section 263, Mississippi Code,

1906, as amended by chapter 125 of the acts

of 1914.

Missouri: Laws of 1907, article XII, section

5, pages 135 and 136.

Montana: Revised Code, 1907, title 2, chap-

ter 2, sections 3927, 3928, 2930, and 3937.

Nevada: Revised Laws of Nevada, 1912,

section 620.

New Hampshire: Special acts of legislature

incorporating trust companies authorized the

exercise of banking powers. Laws 1915, chap-

ter 109, section 84, prohibit any corporation,

national or State, from acting as administrator

or executor.

New Jersey: Laws of 1899, chapter 174,

section 6.

New Mexico: Laws of 1915, chapter 67,

sections 2 and 3.

New York: Laws of New York, 1914, vol-

ume 2, chapter 369, Article V, section 185.

North Carolina: Revised Laws, 1908, sec-

tions 222, 228, 228a.

North Dakota: Civil Code, chapter 22, sec-

tions 4682 and 4689; Laws of 1903, chapter

195, section 1.

Ohio: Laws of 1908, page 269, house bill 833,

sections 1 and 4.

Oklahoma: Session Laws of 1908, chapter

6, house bill 615, Article I, section 3.

Oregon: General Laws, 1918, chapter 354,

section 4.

Rhode Island: Laws of 1908, chapter 1590,

section 46.

South Carolina: Acts of 1903, act 37.

South Dakota: Compiled Laws, 1913, vol.

2, p. 1282a; chapter 225, Laws of 1911.

Tennessee: Shannon’s Code, 1896, sections

2090-2100; Code Supplement, 1904, sections

3217-3273.

Texas: McEachin’s Civil Statutes Ann.,

1913, vol. 1, article 380.

Utah: Compiled Laws of 1907, chapter 9,

section 424,

Vermont: Acts of 1910, No. 158.

Virginia: Special acts of legislature incor-

porating trust companies authorize the exer-

cise of banking powers.

Washington: Section 3349 of Remington &

Ballinger’s Codes and Statutes.

West Virginia: Acts of 1903. chapter 7,

section 1.

Wyoming: Revised Statutes, 1899, section

3085.

It will be observed that the only States not in-

cluded in this list are Michigan, Nebraska, Pennsyl-

vania, and Wisconsin. In many of the 44 States

which are listed above State banks and, in some of

them, even national banks are expressly authorized

by the State laws to do a trust business; in others

the State law provides for the formation of joint

banks and trust companies, and in the majority of

them the law expressly authorizes trust companies

to do a general banking business. The result in all

cases, however, is a single corporation, whether called

a bank, a trust company, or a bank and trust com-

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pany, possessing the power to do both a commercial

banking and trust business.

(f) In order to compete successfully with corporations organized

or operating under State banking laws, national banks must be

given powers substantially similar to those enjoyed by such State

corporations. It was therefore not an unreasonable exercise of

its discretion for Congress to determine that the powers of

national banks should be enlarged by the addition of those

specified in section 11 (k) of the Federal Reserve Act.

When the act of 1864 became a law a national

bank organized under that law was authorized (13

Stat. 101), to exercise by its board of directors, or

duly authorized officers or agents, subject to law—

all such incidental powers as shall be necessary

to carry on the business of banking; by dis-

counting and negotiating promissory notes,

drafts, bills of exchange, and other evidences

of debt; by receiving deposits; by buying and

selling exchange, coin, and bullion; by loan-

ing money on personal security; and by ob-

taining, issuing, and circulating notes accord-

ing to the provisions of this act.

The genesis of the legislation creating national

banks, as well as the subsequent course of such legis-

lation, is consistent only with the theory that Con-

gress intended that these banks should have in gen-

eral powers similar to those exercised by other bank-

ing institutions organized under State laws. The

words quoted were not intended as a limitation upon

the incidental powers appropriate to a banking busi-

ness but were intended to confer in broad outline the

usual banking powers.

Commenting upon this clause, Mr. Justice Rapallo,

in Pattison v. Syracuse National Bank, 80 N. Y. 82,

89, said:

That the enumeration of banking powers

contained in the act of 1864 was not significant

of an intention to place any special restriction

upon national banks, as distinguished from

State banks, is apparent from the fact that it

is a usual formula, descriptive of the banking

business, contained in bank charters (Charter of

Commercial Bank of Albany, Laws of 1825,

p. 198; Dutchess Co. Bank, id., p. 204), and is

almost identical with that contained in the

general banking law of 1838 (Laws of 1838,

p. 249, Sec. 18) which provides that “such

association shall have power to carry on the

business of banking by discounting bills, notes,

and other evidences of debt; by receiving de-

posits; by buying and selling gold and silver

bullion, foreign coins and bills of exchange in

the manner specified in this act: by loaning

money on real and personal security, and by

exercising such incidental powers as shall be

necessary to carry on such business.” The

meaning of the two provisions is the same. and

their language is the same, except in the order

of arrangement. In both, the business of

banking is defined, that is, discounting paper,

receiving deposits, ete., and all powers incident

to these general banking powers are added.

In the act of Congress the frame of the sentence

is that national banks shall exercise all such

incidental powers as shall be necessary to carry

on the business of banking, and then follows

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a description of the banking business, while in

the act of 1838 the banking business is first

described and the grant of incidental powers

follows. The enumeration in the act of Con-

gress is not of the incidental, but of the prin-

cipal powers, and to them are superadded all

incidental powers.

Since that time a number of powers and privileges

have been conferred upon State institutions so that

the powers enumerated in section 5136 R.S. above

quoted can no longer be said to constitute the “usual

formula, descriptive of the banking business, contained

in bank charters.”

Congress has found it necessary from time to time

to modify the restrictions imposed upon national

banks in order to enable them to compete success-

fully with State institutions. For example, by the

act of June 22, 1906, 34 Stat. 451, c. 3515, it permitted

national banks to lend to one person, firm, or cor-

poration an amount equal to 10 per cent of the cap-

ital and surplus of the lending bank instead of an

amount equal to 10 per cent of its capital. By the

act of March 14, 1900, 31 Stat. 45, 48, ¢. 41, it author-

ized the incorporation of banks with $25,000 capital

under certain conditions, thus reducing the minimum

amount ($50,000) required before the passage of this

act. By the act of June 20, 1874, 18 Stat. 123, ¢. 348,

it amended section 5191 R.35.,so as to require no

reserve to be carried against circulation, thus increas-

ing the lending power of such banks.

beanie peas ee

Prior to the passage of the Federal Reserve Act,

however, Congress had not in any sense kept pace

with State legislatures in the extension of corporate

banking powers and the discrepancy between State

banking powers and national banking powers had

become a source of serious concern to those engaged

in the banking business under national charters.

When section 9 was incorporated in the Federal

Reserve Act, giving to State banks and trust compa-

nies the right to obtain the benefits of the Federal

reserve system, this discrepancy became a matter of

even more serious moment, since it deprived national

banks of certain advantages which up to that time had

served to offset to some extent the broader powers

enjoyed by State banks and trust companies. State

banks becoming members of the Federal reserve

system under section 9 of the act are entitled to the

privilege of obtaining Federal reserve notes and of

rediscounting commercial paper. They may be des-

ignated as Government depositories by the Secretary

of the Treasury and enjoy practically all of the privi-

leges of national banks except the privilege of issu-

ing circulating notes against the security of Govern-

ment bonds, and this is largely offset by the privi-

lege of obtaining Federal reserve notes.

With these faculties added to thead vantages already

enjoyed by reason of the broader corporate powers of

State banks and trust companies, it became impera-

tively necessary for Congress, in order to preserve

the integrity of the national banking system and of

“

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the banks composing this system, to enlarge to some

extent the competitive powers of national banks by

giving them rights and privileges somewhat similar

to those already enjoyed by competing State corpo-

rations.

In addition, therefore, to extending the corporate

powers of national banks by authorizing them (1)

to increase their loaning power (section 19, Federal

Reserve Act), (2) to loan money under certain restric-

tions on the security of real estate (section 24,

Federal Reserve Act), and (3) to accept drafts or bills

of exchange based on the exportation or importation

of goods (section 13, Federal Reserve Act), Congress

: also provided that, with the permission of the Federal

3 Reserve Board, such banks should have the right to

act as trustee, executor, administrator, and registrar

of stocks and bonds (section 11 (k), Federal Reserve

Act), in order to enable them to compete with those

State corporations which possess both fiduciary and

commercial banking powers. By anamendment to the

act, approved September 7, 1916, 39 Stat. 752, Congress

has attempted to still further coordinate the powers

of national banks and those created and organized

under State laws, (1) by authorizing national banks

to accept drafts and bills of exchange in certain

domestic transactions (section 13, as amended);

(2) by authorizing banks under certain conditions

to subscribe to stock of banks engaged in inter-

national or foreign business; (3) by permitting banks

to lend on city real estate under certain conditions

and subject to certain restrictions; (4) by permitting

—— A eae ea tanta

those banks located in places of less than 5,000

inhabitants to act as the agent for insurance com-

panies and as broker or agent for others in making

loans under certain prescribed conditions.

The burden of showing that Congress has exceeded

its powers in enacting section 11 (k) into law rests

upon the defendants in error, and ( assuming for the

moment that there is no question of the delegation

of legislative authority) unless proven affirmatively

to the satisfaction of the court that Congress has

grossly exceeded its diseretion in determining that

the powers conferred by section 11 (k) are neces-

sary to the successful operation of the national bank-

ing system, it is respectfully submitted that there is

no basis for the contention that this section is uncon-

stitutional and void.

It is to be noted that, not withstanding this burden

is upon defendants in error, they have failed to pre-

sent any evidence to indicate that Congress abused

its discretion in determining that fiduciary powers

were necessary adjuncts to the operations of national

banks at the present time.

(4) Section 11(k) has a direct relation to the underlying

purpose of the Federal Reserve Act, to wit, the crea-

tion of a new basis for nonmetallic currency, to be

supported by a cohesive banking system which

should include a majority of the banks of the United

: States, and insure a currency stable in character

: and elastic in volume.

While it is in no sense necessary under the deci-

sions of this court that the private powers granted to

T e: . PDA RT DISA aoe DRS Md POR STIRS UD RIN iT, BS

national banks should be related or incidental to the

: public functions performed by such banks, never-

: theless the grant of powers specified in section 11 (k)

Q yas in fact an appropriate means selected by Con-

: gress not only of insuring to banks composing the

3 Federal reserve system an adequate supply of com-

‘ mercial paper to be used as security for Federal

reserve notes, but also of establishing the system itself

upon the broadest basis of membership. It was

designed both to protect banks within the system

from unequal competition which might destroy their

allegiance, and to induce those without the system

to enter it. One of the purposes of the act, which

is aided by section 11 (k), was the creation of a new

basis of nonmetallic currency to be supported by a

cohesive banking system, such system to include a

large majority instead of a minority of the banks

of the United States as at present. This new system,

while insuring by appropriate safeguards the sta-

bility of notes circulating as currency, will also pro-

vide for elasticity in its volume. In this view the

grant of these powers is directly connected with an

important governmental function, namely, the crea-

tion of a uniform, sound, and stable currency system.

An analysis of the purposes of the Federal Reserve

Act will show the relation of section 11 (k) to the

new currency system. Such an analysis makes

necessary a brief review of the history of currency

legislation and a consideration of some of the de-

fects of the financial system which the Federal

Reserve Act was intended to correct.

Cn RGAE IME TBI EN OPE pats esis

(a) The currency system created by the National Bank Act was

made necessary by lack of uniformity and by instability of the

State bank note.

After the liquidation of the second bank of the

United States in 1836 the fiscal affairs of the Gov-

ernment were conducted without the aid of any

banking institution organized under the laws of the

United States until the national banking system was

created at the close of the Civil War. Collections

and disbursements of Government revenues during

this period were made in specie. As stated by White

in “Money and Banking,” 5th ed., p. 107:

Prior to the Civil War the fiscal operations

of the Government were transacted exclu-

sively with coin, by its own officers, without

the intervention of banks.

The nonmetallic currency of the country then con-

sisted of the notes issued by State banks. The grave

hardships of that system—to the Government and

the people at large—are a matter of common knowl-

edge.

In the stress of the Civil War, when the Govern-

ment was under the necessity of borrowing large

sums of money and the people at large were struggling

with the evils of a depreciated paper currency,

consisting of United States notes and notes of some

1,400 State banks, some good and more bad, the

national bank system was created.

This system was in brief the incorporation of a

number of banks under national charters and under

Federal supervison which were authorized to engage

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SSE ee aE Td an eS ae oe POINT TAP OME we

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_in a general banking business in the several States.

Each of these national banks was permitted to issue

its bank notes, uniform in character, against and

based upon an equal amount of United States bonds

owned by the banks but deposited with the Treas-

urer of the United States as collateral security for the

notes issued. Two of the main purposes of the act

which brought this system into existence were to

ereate an enlarged market for United States bonds

and to establish in the country at large a uniform

and reliable nonmetallic currency. As stated by

this court in Tiffany v. Nat. Bank of Missouri, 18

Wall. 409, 413:

National banks have been National favor-

ites. They were established for the purpose,

in part, of providing a currency for the whole

country and in part to create a market for the

loans of the General Government.

The same idea is expressed in other cases. See

Merchants Nat. Bank v. United States, 214 U. 5. 33,

42; Mercantile Bank v. New York, 121 U.S. 138,

154.

While the national bank note was issued and _per-

mitted to circulate under appropriate safeguards

designed to insure its stability, so long as several

hundred State banks placed their notes in circulation,

without these safeguards, it was of course impossible

to bring about uniformity in the value of this form

of currency. Accordingly, on July 13, 1866, 14 Stat.

98, 146, c. 184, Congress found it necessary to pass

an act which placed a prohibitive tax on all circu-

lating notes of State banks. This act drove many of

the State banks into the national system—just as

Congress intended.

In sustaining the constitutionality of this act this

court said in Veazie Bank v. Fenno, 8 Wall. 533, 549:

Having thus, in the exercise of undisputed

constitutional powers, undertaken to provide

a currency for the whole country, it cannot be

questioned that Congress may constitution-

ally secure the benefit of it to the people by

appropriate legislation. To this end, Congress

has denied the quality of legal tender to foreign

coins, and has provided by law against the im-

position of counterfeit and base coin on the

community. To the same end. Congress may

restrain, by suitable enactment, the circula-

tion as money of any notes not issued under

its own authority. Without this power, in-

deed, its attempts to secure a sound and uni-

form currency for the country must be futile.

It was argued in this case that the act was uncon-

stitutional because the amount of the tax indicated

& purpose on the part of Congress to destroy a fran-

chise of the State banks. The court in discussing

this point said (p. 548):

It is insisted, however, that the tax in the

case before us is excessive, and so @XCeSSIVE As

to indicate a purpose on the part of Congress to

destroy the franchise of the bank, and is

therefore beyond the constitutional power of

Congress.

The first answer to this is that the judicial

cannot prescribe to the legislative departments

in a

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of the government limitations upon the exer-

cise of its acknowledged powers. The power

to tax may be exercised oppressively upon

persons, but the responsibility of the legisla-

ture is not to the courts, but to the people by

whom its members are elected. So if a partic-

ular tax bears heavily upon a corporation, or

a class of corporations, it cannot, for that

reason only, be pronounced contrary to the

Constitution.

The initial failure of the system of national bank

currency came from the fact that the State banks

continued to do the main banking business of the

country and to be the main handlers of currency.

The success of the system was expedited by the

statute above referred to, which put the State banks

out of business as banks of issue and thus left in cir-

culation only those notes which were issued and

redeemed under appropriate safeguards.

(b) Experience has demonstrated that while the National Bank Act

provided a uniform and stable currency system It lacked elas-

ticity and was otherwise defective.

In the period following the Civil War, and _ par-

ticularly in the period from 1885 to 1913, difficulties

developed in the national banking system.

The first difficulty lay in the fact, clearly under-

stood by the banking community, that the currency

was not sufficiently elastic. Inasmuch as it was based

on a nonelastic basis, 7. e., the United States bonds

owned by the banks, there was no way in which the

bank-note currency could quickly and easily adapt

itself to the varying demands for a proper circulating

medium—as, for instance, in crop-moving periods,

when there was need for a much greater amount of

currency. (See Holdsworth’s “ Money and Banking,”

pp. 330, 331.)

A second defect in the national banking system was

the immobility of bank reserves—due to rigid reserve

requirements by which each bank kept its metallic

reserve against liabilities in its own vaults or with

some other bank in the large cities. The result of this

system of scattered reserves was that in times of

financial stress and falling prices there were likely to

occur currency panies, which paralyzed the credit of

the whole country and demoralized prices and mar-

kets. At such times each bank, selfishly fearing for

its own position, hoarded currency and at the very

worst of times called loans, with the inevitable result

of shaking public confidence in the soundness of the

country’s financial institutions. This was demon-

strated in the panic of 1907. It is needless to describe

in detail these currency panics peculiar to the United

States. They were rightly attributed to the lack of

cohesion in our banking structure and illustrated the

worst defect of our currency and banking system.!

' The reports which accompanied the introduction of the Federal Reserve

Act in both the House and Senate show how keenly Congress was alive to

to these difficulties.

Thus the House report (H. Rept. No. 69, 63d Cong., Ist sess.. Pp. 4) states:

| “Tn view of the lack of any factor of unity the national banks have failed

to furnish to the Nation as a whole a single and powerful system of credit.

The strength of the credit situation in each community has depended upon

the strength of the banks there situated, and, except in times of stress, has

even in these communities been measured by the strength not of the strong-

est, but of the weakest institution there located.”

The Senate committee was unable to agree on details and reported the

House bill without recommendation. (S. Rept. No. 133, pt. 1, 63d

82274—17-——-4

In Paine’s National Banking Laws, seventh edition,

at page 18, it is said that—

Within the last fifty years our country has

had six panics, namely, 1873, 1884, 1890, 1893,

1901 and 1907.

There is no question but that, to a material

degree, these panics resulted from defects in

our system of banking.

In addition to these inherent defects the constantly

increasing activities of trust companies in the field of

commercial banking had proven a serious menace to

the national banks. From 1895 to 1907 there had

Cong., Ist sess.) The views of the members of the committee were printed

as parts 2 and 3 of the report. The report states (pt. 2, pp. 7, 8):

“Both sections of the committee, however, agreed on the great funda-

mentals of the bill—that is:

‘First. On the necessity for greater concentration of the banking reserves

of the country.

“Second. The volume of such reserves.

“Third. The volume of the capital of the proposed banks.

‘‘Fourth. The mobilization of such reserves.

“Fifth. The promotion of an open discount market.

“Sixth. The provision for an elastic currency; the issuance of Federal

reserve notes.

* * * * *

“The chief purpose of the banking and currency bill is to give stability

to the commerce and industry of the United States, prevent financial

panics or financial stringencies; make available effective commercial credit

for individuals engaged in manufacturing, in commerce, in finance, and in

business to the extent of their just deserts; put an end to the pyramiding

of the bank reserves of the country and the use of such reserves for gambling

on the stock exchange.

‘“‘In order to accomplish these results there are certain great fundamen-

tals recognized by all experts as essential and necessary, to wit:

‘First. The proper concentration of the bank reserves of the country

under the control of the banks themselves, safeguarded by governmental

supervision.

“Second. A suitable banking capital as a margin of safety.

“Third. Placing the larger part of the Government funds with such

banks, where they may be used in the service of the national commerce.

“Fourth. Authorizing the issuance of elastic currency against liquid

commercial bills under proper safeguards.’ * * *

been an enormous and, as compared with the national

banks, a disproportionate growth in the commercial

banking business done by trust companies which were

outside the national bank system. They shared, and

still share; banking predominance with the largest

and strongest national banks. The result was that

by 1913 the trust companies had become the “depart-

ment stores of finance.’ (Holdsworth’s “ Money and

Banking,”’ p. 295.)

It was therefore evident that any new banking

system which sought to check currency panics like

the panic of 1907, by joining the sound commercial

banking institutions of the country together, could

not leave out of consideration the trust companies

which had become such important factors in this field

of activity.

(¢) The Federal Reserve Act is designed to remedy these defects while

preserving uniformity and Stability.

In order to remedy these defects in our financial

system the Federal Reserve Act provides for (a) the

creation of a new basis of issue of circulating notes,

(b) for the mobilization of banking reserves, and (c)

for the inclusion of State banks and trust companies

in the Federal reserve system.

Under the Federal Reserve Act the country is divided

into 12 districts. The national banks of each district

are compelled to contribute a certain proportion of

their capital to form a strong Federal reserve bank,

the resources of which are conserved primarily for the

member banks of that district. Any member bank

eS etapa

may at any time take to its Federal reserve bank

sound, short-time commercial paper (which it has

discounted for the business community), indorse it,

and rediscount it with the Federal reserve bank.

The Federal reserve bank may deposit this paper

with its Federal reserve agent (the local representa-

tive of the Federal Reserve Board) as security for an

issue of Federal reserve notes, and upon setting aside

a gold reserve equal to 40 per cent of the amount of

commercial paper deposited may obtain Federal

reserve notes equal in amount to 100 per cent of

the commercial paper deposited. These notes, which

are obligations of the United States, are a new form

of currency redeemable ultimately by the Federal

reserve bank but which are backed by the credit of

the United States.

By the scheme thus generally outlined, which is

carried on under the supervision of the Federal

Reserve Board, a new basis of currency is provided.

These notes, instead of being issued against United

States bonds, as the national bank notes are, are

based upon, and the amount of them is measured by,

~ the commercial paper received by the member banks

in the ordinary course of their so-called private

business and rediscounted with the Federal reserve

banks. Thus, under the new system, because the

member bank can always transform its sound com-

mercial paper into currency at the Federal reserve

bank, it is expected that the amount of currency out-

standing will, as in other countries, automatically

vary with the demands of business and will be im-

mediately obtainable at any time it may be needed

by the banks.

The volume of Federal reserve notes issued must

necessarily depend upon the volume of commercial

paper obtainable from member banks.

It is therefore apparent that, in so far as the

State banks and trust companies remain outside the

Federal reserve system, by so much the Federal

reserve system must fail in furnishing a completely

elastic currency.

Holdsworth in his ‘Money and Banking,” article

198, p. 383, says, under the heading “State banks

and the new law”:

One of the requisites of banking reform out-

lined in the previous chapter was solidarity—

and unity—of the whole banking system.

Since there are at present nearly three times

as many banks operating under state charters

as national banks it can be seen that this

desideratum can not be attained unless a

large proportion of the state banks enter the

new system.

To make the new currency basis efficient it should

ultimately include all the sound commercial banks of

the country, and to avoid the currency panics, such

as the panic of 1907, all the sound commercial banks

as opposed to the speculative institutions of the

country should be united and their eredit and re-

serves mobilized through the Federal reserve system.

The Federal Reserve Act by admitting State banks

and trust companies to membership makes them

Federal agencies for regulating the currency.

(d) Section 11(k) is a necessary factor in providing a more elastic

currency and in insuring stability of the new currency system

provided by the act.

It follows from this review that section 11 (k) is

not an unrelated phrase, flung in to please some

national bank stockholder so that he may make more

profit; it is not simply a scheme to increase the

private faculties and private business of the national

banks, but it too has a real place and part in the

scheme of the Federal Reserve Act. Undoubtedly it

tends to enlarge the powers of the national banks,

and tends to invade the fields of activity of the State

trust companies. Our opponents see in that its vice;

on the contrary it is a constitutional justification.

Section 11 (k) is obviously an important factor in

the creation of a new basis of currency issue. It is

necessary to offset the invitation to State banks and

trust companies to join the system. If trust com-

panies become member banks they receive all the

advantages of membership in the system, including

the stability and standing that comes from Federal

supervision and the ability to obtain currency

through their Federal reserve banks—and since they

already enjoy broader corporate powers than national

banks, will become still more dangerous competitors

Piet

unless the powers of national banks and trust com-

panies are more nearly coordinated.

On the other hand, even if trust companies do

not, in large numbers, join the Federal reserve sys-

tem (and as a matter of fact they have not), never-

theless, unless the powers of national banks are en-

larged in order that they may compete with the trust

companies which remain outside of the Federal

reserve system these trust companies will continue

their growth and the gradual acquisition of the com-

mercial banking business of the country at the

expense of the national banks. If this process goes

on for the next 10 years as it has in the last 20, then

in 10 years the Federal reserve system may fail or

break in a panic—just because the basis of the

currency will have become not the commercial paper

of the country but only a small part of it, and

because there will again be lacking the necessary

cohesion among the main banking institutions of

the country.

A successful and sound plan to regulate the cur-

rency of a country must have the cooperation of the

predominant financial institutions of the country

which are engaged in loaning money and credit.

The true purpose of section 11 (k) is to cordinate the

powers of national banks and trust companies so that

trust companies shall not, by their success and power

outside the Federal reserve system, continue such a

menace to the system as to curtail its usefulness.

poe a he Bg

50 ; 3 : * are

It may be unimportant to the Federal Govern-

ment whether or not national banks make any con-

siderable profit from the trust business so long as the

profits earned from all sources are sufficient to sus-

tain them and to enable them to perform satisfac-

torily their publie functions. It is important, how-

ever, to the Government that national banks shall

continue banking preeminence, and shall continue

to do their share of the commercial banking

business. To retain banking preeminence it is most

important that the national banks should be able

to offer to the general public the same conven-

iences (as to execution of trusts) afforded by their

chief rivals, the trust companies, the ‘department

stores of finance.”

The fact that the trust companies have an enormous

advantage in gaining commercial banking business

is made evident in several ways. First, the stock-

holders of national banks of the large cities have in

many instances united to form a trust company to

be operated by the same officers which operate the

bank—and have thus practically started trust de-

partments, but with the necessary handicap of main-

taining a separate organization. Second, it is nota-

ble that some of the States in order to protect their

State banks against the competition of the trust

companies (operating under the laws of the same

State) have permitted their banks to exercise some

or all of the functions of trust companies.

This is true of Illinois, Georgia, Idaho, and Nevada.

(See statutes, supra, pp. 28-31.) The same course has

been followed in the laws of New Zealand and England.

The Federal Government in granting trust powers to

national banks by section 11 (k) is simply protecting

the banks against trust company competition in the

way which the States themselves have pointed out.

It is in the light of that history and those purposes

that we must consider the constitutionality of section

11 (k) as a part of a complete scheme wisely adopted

by the National Government to regulate the cur-

rency of the country, and to protect commerce be-

tween the States from the destructive effect of recur-

rent panics.

(5) The section is not a delegation of legislative au-

thority. The Federal Reserve Board is not empow-

ered to permit any national bank to exercise any

fiduciary power not enumerated in section 11 (k).

Its power is administrative, not legislative.

The second ground of demurrer assigned by defend-

| ants in error was—

Because, even if Congress itself possessed

the authority to confer upon national banks

the corporate powers specified in said section

11 (k), it cannot lawfully delegate such au-

thority to the Federal Reserve Board.

It was argued that Congress by this section has

not granted any powers to national banks, but has

undertaken to delegate to the Federal Reserve Board

the power to legislate on this subject.

52 id

This contention was not passed upon by the Su-

preme Court of Michigan (R. 15, 22). It was, how-

ever, expressly declared unsound by the Supreme

Court of Illinois in People v. Brady, 271 Ill. 100, the

court saying (p. 104):

The legislation granting the power was that

of Congress; the decision as to what banks the

legislation was applicable was delegated to the

Federal Reserve Board.

The Illinois court called attention to the fact that

the constitutionality of acts delegating adminis-

trative power to boards, commissions, or individuals

has often been before the courts and as often upheld,

citing, among others, the familiar cases of Field v.

Clark, 143 U. S. 649, 694, and United States v. Gri-

maud, 220 U. 8. 506.

A long line of recent cases exemplifies the law on

this point. It is well settled that Congress need not

prescribe in detail its legislative policies. It is suffi-

cient if a general rule is laid down. Where the situ-

ation dealt with by the legislature is complex, and

the applications of the law must vary according to

circumstances, great discretion to fill in the details

may be vested in the administrative officers. “If

this were not so,” said Mr. Justice Mc Kenna in Mutual

Film Corporation v. Ohio Industrial Commission, 236

U.S. 230, 246, ‘the many administrative agencies

created by the state and National Governments

would be denuded of their utility and government

in some of its most important exercises become

impossible.”

——

The legislative rule prescribed for administrative

action in Buttfield v. Stranahan, 192 U. 8. 470, was

merely the fitness and purity of the tea sought to be

imported; that in Monongahela Bridge Co. v. United

States, 216 U.S. 177, was the unreasonable obstruction

to free navigation. In St. Louis Ry. v. Taylor, 210

U. S. 281, it was held that the height of drawbars

on freight cars could be fixed by the Interstate Com-

merce Commission. In the Intermountain Rate Cases,

234 U. S. 476, wide discretionary powers of the

Interstate Commerce Commission to fix rates under

the long and short haul clause of the Interstate Com-

merce Act were sustained. The Ohio Board of Cen-

sors were held to have power to determine what are

“moral, educational, amusing, and harmless’’ films

in Mutual Film Co. v. Ohio Industrial Commission,

236 U. S. 230,. Again, it seems impossible to

distinguish the case at bar from the Ohio Blue Sky

Law case, in which it was held proper to prohibit

engaging in the sale of stocks and bonds unless the

Commissioner of Banks and Banking was satisfied

that the applicant for license was of good repute.

Hall v. Geiger-Jones Co. (No. 488, Oct. Term, 1916),

opinion rendered January 22, 1917. A similar case

is Merrick v. Halsey (No. 413, Oct. Term, 1916),

opinion rendered January 22, 1917, in which the

Michigan Blue Sky Law Commission was empowered

to approve securities listed in any standard manual

thereby exempting them from operation of the law.

See also Red “C”’ Oil Co. v. North Carolina, 222 U.S.

380; Interstate Com. Comm. v. Goodrich Trans. Co., 224

U.S. 194; Kansas City So. Ry. Co. v. United States,

231 U.S. 423.

Numerous cases uphold the right of the legislature

to clothe a commission with capacity to determine

the conditions precedent upon which corporate rights

created by the legislature are exercisable. State v.

R. R. Commission, 137 Wis. 80; State v. Kenosha

E. R. Co., 145 Wis. 337, 347.

In the present case the congressional rule is as fully

defined as the circumstances will permit. National

banks are to have the power to act as executor,

administrator, and trustee only when not in contra-

vention of the State or local laws, and when the par-

ticular bank is the proper institution to act in the

fiduciary capacity. The definite standard is the

State law and the fitness of the bank. The banks

which may apply are many, and their circumstances

varied. Higher capitalization or a larger surplus

may be necessary in some communities than in

others. The banks in the Federal reserve system,

moreover, constitute one single system under the

general business and governmental supervision of the

reserve board. Discretionary power is appropriately

vested in their general managers.

As said in the JVerrick case, supra, it is presumed

that the reserve board will do its duty. But if there

ever is arbitrary action, relief may be had in the

courts. (p. 9.)

: a

(6) Neither the granting nor the exercise of the powers

in question involves any invasion of the sovereign

rights of the States. The opinions of the Illinois

and Michigan courts in this regard are based upon

a manifest misapprehension of the effect of the

exercise of these powers.

In declaring section 11 (k) unconstitutional, the

Supreme Court of Illinois, like the Supreme Court of

Michigan, reached the conclusion that when Congress

undertook to vest trust powers in national banks it

invaded the rights of the States. People v. Brady,

supra. It is somewhat difficult, however, to deter-

mine from either opinion in just what way the rights

LuGatR ae Mink ant sie

of the States are supposed to be invaded. The

powers specified in the act can not be exercised except

“when not in contravention of State or local law,”

and so no conflict can arise as between any State law

and the Federal statute under consideration. The

right of a State to legislate on the subject of trust

estates is not impaired nor affected. The adminis-

tration of State laws is in no way interfered with.

No State is deprived of any control over persons or

corporations acting as trustees, executors or adminis-

trators within its borders. Congress has merely

vested in national banks the capacity to act when

selected by the parties in interest and when permitted

by State or local law. It has expressly given to the

State the right to place national banks in the class of

those under disability.

ape

It would seem, therefore, that the Illinois and

Michigan courts have concluded that national banks

vested with trust powers may invade the field of ac-

tivity of trust companies and that such an invasion

constitutes an invasion of the “sovereignty of the

States’? because trust companies are created by the

States. Such a contention is merely a revival of the

argument that no Federal agency can be vested with

any private power. It is at once manifest that the

same argument would apply with equal force to an

invasion by national banks of the field of commercial

banking, since State banks which engage in this class

of business are likewise created by the States. While

this appears to be the only basis for the contention

that there has been an invasion of the rights of the

States, even this theory is not consistent with other

parts of the opinions of the Illinois and Michigan

courts since both courts concede the right of Congress

to create national banks and to vest them with private

powers. The underlying thought in both opinions

appears to be that in some vague and indefinite way

national banks, if vested with trust powers, may

prove a menace to the State’s control over property

within its borders and for this reason the act is un-

constitutional.

The Illinois court held that the exercise of trust

powers by national banks would contravene the laws

of that State. That part of the decision, therefore,

which declared section 11 (k) unconstitutional was in

the nature of dicta. It might be assumed that under

these circumstances it would not have deemed it

— ss

necessary to consider the constitutional question in-

volved unless it was apparent that Congress grossly

abused its authority. An analysis of the opinion,

however, makes it clear that there were no facts be-

fore the court indicating any such abuse.

It will be observed that after conceding that Con-

gress had the right to grant trust powers to national

banks “if they were reasonably necessary to the

efficiency of such corporations for the purposes of their

’

creation as governmental agencies,’

(p. 110):

It not being shown such added powers are

now necessary to the further success of such

purposes * * * we think the act, in so far

as it attempted to confer such powers upon

national banks, is unconstitutional and void.

It thus appears that the court recognizes that Con-

gress is vested with a discretion in this matter, but

the court says

contrary to the ordinary rules of evidence, sustained

by a long line of decisions of this court, it held that

the burden was on the respondent, now plaintiff in er-

ror, to show that Congress had not abused this discre-

tion, and not on the relators, now defendants in error,

to show that Congress had exceeded its constitutional

powers. In other words, it presumed the act to be

unconstitutional and in support of its position con-

tended that Congress itself could not have believed

these powers to be necessary to national banks be-

‘ause it left it to the banks to determine whether or

not they should be exercised. If this test should be

applied to all corporate powers of national banks it

would be difficult to sustain the constitutionality

of any.

It should be borne in mind that in order to obtain

the right to exercise the powers specified in section

5136 R.8., to which the Illinois court referred, it is

necessary for those forming an association to comply

with certain statutory conditions, which include the

filing of an organization certificate with the Comp-

troller of the Currency; that whenever any corpora-

tion so organized desires to change its name, to

increase or reduce its capital stock, to change its

location, or in anywise to alter or amend its charter,

an application must first be made to the Comptroller

of the Currency and must be approved by him.

Congress might have provided for a similar pro-

cedure on the part of national banks desiring to have

trust powers added to their other corporate powers.

Inasmuch, however, as the penalty prescribed by

section 2 of the Federal Reserve Act for the violation

of any of the provisions of that act is to be enforced

under the direction of the Federal Reserve Board, it

was entirely consistent with the purpose and intent

of the act to have application made to the board and

not to the comptroller for the addition of the powers

in question.

The Michigan court likewise concedes the right of

Congress to create national banks and to vest them

with private powers. Unlike the Illinois court, it

—

holds that “undoubtedly, all presumptions are in favor

of the constitutionality of the Act in question here

and Congress is the judge, within the exercise of its

powers, of the functions a national bank should

perform” (R. 22).

The court does not suggest that any evidence has

been submitted or considered tending to show that

Congress has abused the discretion which it recog-

nizes, but in holding the act unconstitutional says

(R. 22):

But in the reasoning of the judges, in the

opinions to which I have referred, I find, I

think, a conclusive argument supporting the

proposition that Congress has exceeded its

constitutional powers in granting to banks the

right to act as trustees, executors and admin-

istrators. If for mere profit it can clothe this

agency with the powers enumerated, it can

give it the rights of a trading corporation, or

a transportation company, or both. There

is, as Judge Marshall points out, a natural

connection between the business of banking

and the carrying on of federal fiscal operations.

There is none, apparently, between such

operations and the business of settling estates,

or acting as the trustee of bondholders. This

being so, there is in the legislation a direct inva-

sion of the sovereignty of the State * * *,

Such an invasion I think the court may

declare and may prevent by its order operating

upon the offending agency.

82274—17—5

as sas erg N Ser

SYA:

tee eS

It thus appears that the sole justification for con-

cluding that Congress has abused its discretion in

granting to national banks the powers specified in

section 11 (k) is an assumption on the part of the

court that some natural connection exists between

what it terms the business of banking and the fiscal

operations of the Government and that none exists

between the business of trust companies and the

Government’s fiscal operations. The court does not

point out how any particular private power hereto-

fore exercised by national banks has a closer relation-

ship to the fiscal operations of the Government than

the private powers in question.

It is an interesting fact that the reason assigned for

its conclusion that Congress has no power to grant

trust powers to national banks is substantially similar

to one of the reasons advanced by the opponents of

the first Bank of the United States against vesting

that bank with any private powers.

As illustrating the similarity between the argu-

ments made at that time and the reasoning of the

Michigan court in the present case, it will be observed

that in the case of McCulloch v. Maryland, supra,

page 364, counsel for defendants in error stated that

a banking corporation “in its proper and natural char-

acter * * * ig a commercial institution, a part-

nership incorporated for the purpose of carrying on

the trade of banking,’ and, continuing, ‘said: “But

what natural connection is there between the collec-

tion of taxes and the incorporation of a company of

bankers?”

The contention was renewed by counsel in Osborn

v. U.S. Bank, 9 Wheat. 733, whereupon the Chief

Justice, in passing upon the point raised, said (pp.

860-862) :

The appellants endeavour to distinguish be-

tween this trade and its agency for the pub-

lic, between its banking operations and those

qualities which it possesses in common with

every corporation, such as individuality, im-

mortality, etc. While they seem to admit the

right to preserve this corporate existence, they

deny the right to protect it in its trade and

business.

If there be anything in this distinction, it

would tend to show that so much of the act

as incorporates the Bank is constitutional, but

so much of it as authorizes its banking operations

is unconstitutional. * * *

* * * The distinction between destroying

what is denominated the corporate franchise,

and destroying its vivifying principle, is pre-

cisely as incapable of being maintained, as a dis-

tinction between the right to sentence a human

being to death, and a right to sentence him to a

total privation of sustenance duringlife. * * *

This distinction, then, has no real existence.

[Italics ours. ]

No more striking illustration can be given of the

real issue involved in the present case.

It would have been useless to concede the right of

Congress to create a corporation to be used as an

agency of the Government but to deny its right to

endow this agency with those faculties which are

necessary for its existence and support.

By analogy, it is equally useless to concede the

right of Congress to endow such an agency with

faculties which a half century ago were sufficient to

enable it to live and to perform the functions for

which it was created, but to deny the right of Congress

to add such new powers as may have been made

necessary by changed conditions to enable it to meet

the increasingly active competition of corporations

created and organized under State law.

In the last analysis, the question to be determined

is, Has Congress the power to preserve the national

banking system? If it can give to national banks

powers similar to those enjoyed by their compet-

itors, the national system can be preserved and

the banks composing this system can continue to

perform the public services for which they were

created. On the other hand, if the legislative dis-

cretion of Congress is determined to be so limited

that it can not coordinate the powers of national

banks, State banks, and trust companies, it is in-

evitable that sooner or later the national system will

disintegrate and those who have embarked upon the

banking business will seek their charters from that

sovereignty which offers the wider field of activity

and the more certain source of revenue.

CONCLUSION.

The decision of the Supreme Court of Michigan

should be reversed and the cause remanded with in-

structions to dismiss the information.

Joun W. Davis,

Solicitor General.

JosepH P. Corton,

Miuton C. Exuiort,

Counsel.

Marcu, 1917.

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M4.

SUBJECT INDEX.

Page.

The implied powers of Congress, and the Congressional discretion.

Reply to subdivision (c) of Point I........... eee eee eee eee 1- 2

The nature of trust companies. Reply to subdivision (d) of

PM ES aS. ceciececcecanacnasewbeneddns pend tes bean e eee 2- 5

Invasion of State rights. Reply to subdivision (e) of Point I..... 5-8

Sufficiency of regulatory legislation. Reply to Point II........... 8-11

Delegation of legislative powers. Reply to Point III............ 11-13

LIST OF CASES REFERRED TO.

Amer. Bridge Co. v. U. S., 204 U. S., 364........... cc cece eeee 13

Amer. Miss. Assn. v. Hall, 188 Mich., 247..............ccceeeees 7

Brown v. Fletcher’s Estate, 210 U. S., 82............ cece eens sf

Dickinson v. Seaver, 44 Mich., 624...........ccccccccccccncvecs 7

Farmers etc. Bank v. Dearing, 91 U. S., 29.................2005- 6

Wiseee vw. Gaint Lowla, 106 U. Gi, BO8 qo. c ic ccscdiec cseweescssaecs 12-13

eS > = 2 Oe re errr ee 2&4

ae er ee a 7

Mercantile Bank v. N. Y., 121 U. S., 188........... cece cece eevee 2&3

Mich. Trust Co. v. Ferry, 228 U. S., 868.............ccccccceces ‘

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ae’ We Wir, Ge UE: Why. WhO av ccennicewdcncdenumsissecebnee 6

ee ee ee mee rae 9

een Mtns Dm, OR GH. By Ge iain css fn i ewe 7

United States v. Grimaud, 220 U. S., 506............. 00. ccc eee eee 12

eda iad oe ig

IN THE

Supreme Courtof the United States

October Term, 1916.

No. 764.

FIRST NATIONAL BANK OF BAY CITY, MICHIGAN,

PLAINTIFF IN ERROR.

vs.

GRANT FELLOWS, ATTORNEY GENERAL OF THE

STATE OF MICHIGAN, ON THE RELATION OF

UNION TRUST COMPANY ET AL.

REPLY BRIEF FOR PLAINTIFF IN ERROR.

POINT I.

CONSTITUTIONAL POWERS OF CONGRESS.

The brief for defendant in error merely amplifies the rea-

soning of the Supreme Court of Michigan, which was based

upon a misconception of the nature of the tests to be ap-

plied to legislation of this nature. The argument that our

theory would permit the unreasonable extension of the con-

gressional powers, by adding incidental power to incidental

power ad infinitum, overlooks the fact that this process is

BeBe sm IY SSS BEREAN RSI LS LR I ca SOY NIE EY IE

necessarily limited by the limitations of the subject under

consideration. The most minute sub-division of a given

subject does not enlarge its scope. So long as each step in

the process has a logical connection with the preceding

step, there is no danger of final transgression beyond prop-

er bounds.

We have argued merely for the recognition of a Congres-

sional-discretion in respect to the means and methods of ef-

fectuating powers already recognized.

(d) The Nature of Trust Companies.

The cases of

Mercantile Bank v. N. Y., 121 U. S., 138, and

Jenkins v. Neff, 186 U. S., 230.

(cited on page 11 of brief for defendant in error) were de-

cided when the powers of trust companies in the State of

New York were very limited. The Mercantile Bank case

was decided in 1887 and the Jenkins case in 1902. The first

enlargement of the powers of trust companies in New York

was by an amendment of the New York banking law adopted

in 1893 which authorized trust companies ‘‘to exercise the

powers conferred on individual banks and bankers by Sec-

tion 55 of this act, subject to the restrictions contained in

said section.’’

Chapter 696, Laws of 1893.

Section 55 referred to, provided as follows:

‘‘Eivery bank and individual banker doing business

in this state may take, receive, reserve and charge

on every loan or discount made, or upon any note,

bill of exchange, or other evidence of debt, interest

at the rate of 6 per cent per annum, and such interest

may be taken in advance, reckoning the days for which

the note, bill, or evidence of debt has run.’’

It was not until 1914 that the New York legislature ma-

eae

Dice

terially extended the powers of trust companies in New

York by giving them power.

“To discount and negotiate promissory notes,

drafts, bills of exchange, and other evidences of

debt; buy and sell exchange, coin and bullion; lend

money on real or personal securities ; and to receive

deposits of moneys, securities, or other personal prop-

erty from any person or corporation upon such terms

as the company shall prescribe.’’

Sec. 185, Banking Law of 1914.

The two cases cited must therefore be construed with ref-

erence to the statutes in force at the time of their decision.

Under any construction, they do not support the position of

defendants in error in the present case.

In Mercantile Bank v. New York, the point involved was

whether the methods used by the State of New York in tax-

ing shares of stock in national banks violated the section of

the revised statutes providing that state taxation of national

bank shares should not be at a greater rate than that as-

sessed upon other moneyed capital. In support of the con-

tention that national bank stock was unfairly taxed, refer-

ence was made to the method of taxing trust companies.

‘he court was distinguishing between banks and trust com-

panies merely to the extent necessary to show that there

might be a reasonable discrimination in the rate of taxation.

The principal point emphasized was the fact that the rate

of taxation of national bank stock should be compared with

the rate of taxation of the stock of state banks, and that

this was a fairer comparison than that between national

banks and trust companies. The court merely said that those

companies were not banks ‘‘in the commercial sense of that

word, and do not perform the functions of banks in carry-

ing on the exchanges of commerce.’’ This language did not

mean that trust companies, even then, were not banks in

some other sense of the word. The language which imme-

diately follows shows that the trust companies under con-

sideration were banks of deposit, as such banks are defined

in the Oulton and Field cases. Mr. Justice Matthews said:

LEO TS NTA INR YN OTE SLT REN

“They receive money on deposit, it is true, and

invest it in loans, and so deal, therefore, in money

and securities for money in such a way as properly

to bring the shares of stock held by individuals there-

in within the definition of moneyed capital in the

hands of individuals, as used in the Act of Congress.”’

The real ground of the decision was not any distinction

-etween banks and trust companies, but was the conclusion

‘mally reached that there was no real discrimination be-

tween national banks and trust companies, so far as the rate

of taxation was concerned.

Jenkins v. Neff, 186 U. S., 230, involved the same basic

question as the case last cited. It was attempted to evade

or distinguish the decision in the Mercantile Bank case by

relying upon the 1893 amendment to the New York statute

above mentioned. The court held that this new legislation

did not have the effect claimed, and that there had been no

new legislation calling for any qualification of the decision

in the Mercantile Bank case. In holding that there was no

unlawful discrimination, the court pointed out the difference

between the statutory requirements in regard to the invest-

ment of the capital of national banks and trust companies,

arguing that these differences might reasonably support some

differences in the rate and method of taxation. The lan-

guage quoted by counsel was designed merely to illustrate

some of the differences between trust companies and other

banking corporations as bearing on the propriety of discrim-

ination in respect to the rate and manner of taxation. The

court was not arguing that banks and trust companies were

essentially or vitally different, but merely that there was a

difference in the primary purposes of their organization.

No one would attempt to deny this fact, but it is of no

greater significance in the case at bar than the fact that

there may be a difference between the primary purposes of

the organization of a national bank and of a savings bank

designed for philanthropic purposes. It is not the primary

object in the minds of the incorporators which is the con-

trolling question in the case at bar. Neither is the case con-

trolled by any superficial differences between trust com-

panies as commonly organized and banks as commonly or-

ganized. Mr. Justice Brewer’s opinion in Jenkins v. Neff,

(p. 237), recognized the propriety of investing trust com-

panies ‘‘with some of the powers of banking associations as

an inducement to perform the other duties and obligations

imposed by the state.’’ It is equally proper to invest banks

with some of the powers of trust companies, as an induce-

ment to perform the other duties and obligations imposed

by congress. If the conferring of banking functions upon

trust companies does not make them banks, neither does the

conferring of trust company functions upon banks make

them trust companies. The distinction between identity and

similarity must be kept n. mind. The two classes of cor-

porations, although entirely distinct, are essentially similar.

(e) There Is No Invasion of State Rights.

The claimed exclusive jurisdiction of the several states

over persons and property within their territory, begins only

where the federal jurisdiction ends. The power of the fed-

eral government, is confined within certain definite channels,

but within those channels it is absolute and paramount. If

any legislation is concerned with a proper subject of federal

activity, the nature of the private property or interests af-

fected cannot be considered as invalidating it.

Questions involving national banks, or interstate com-

merce, or any of the other great branches of federal activ-

ity are completely within the control of Congress, and, in

case of conflict, both state rights and private rights must

give way. It is therefore entirely misleading to argue that

there are certain private rights and privileges which as

such are beyond the control of Congress. If they are be-

yond the control of Congress, it is not because they involve

the internal affairs of the states, or the private rights and

privileges of their citizens, but solely because they do not

happen to be included within any of the constitutional pow-

ers of the federal government.

Using, as an illustration, the power of Congress over na-

tional banks, we find that whenever there is any real con-

flict, both state laws, and private rights must give way.

REM EAT RENEE ITN YEE UTS PAO RIAD EN ME

‘‘The states can exercise no control over them, nor in any-

wise affect their operation except in so far as Congress may

see proper to permit.’’ It was so held in regard to the ap-

plication of state usury laws.

Farmers, etc., Bank v. Dearing, 91 U. S., 29.

The subjects referred to in Section 11-k are no more ‘‘pe-

culiarly matters for state regulation’’ than is the question

of the amount of interest which citizens of the various

states can be compelled to pay on their private loans from

national banks, or the protection by the states of their, citi-

zens from the enforcement of usurious contracts. Yet in

respect to these matters the state laws must give way, ex-

cept as they have been confirmed and re-enacted by act of

congress. To argue that any matter is purely a subject of

state regulation because of the nature of the interests affect-

ed is begging the question. The test is to be found not in

the effect of the legislation on the state or its citizens, but

in the subject of the legislation, as being included in or ex-

cluded from the great subjects over which congress is given

jurisdiction. The control of national banks is one of these

subjects, and any incidental feature of this control derives

its validity from the fact that it is such a feature, regard-

less of the nature of the private interests affected. The cases

cited by counsel for defendant in error are not in conflict

with our position.

Pennoyer v. Neff, 95 U. S., 714, did not involve any con-

flict between state and federal authority. The language

quoted was not intended to sustain the authority of the state

as against that of the federal government, but to protect each

sate against unlawful interference with its citizens by the

governments of other states.

Overby v. Gordon, 177 U. 8., 214, merely followed the

rule of Pennoyer v. Neff, in a case still more unlike the case

at bar. The question decided was that ‘‘the sovereignty of

the State of Georgia and the jurisdiction of its courts did not

extend to and embrace property not situated within the

territorial jurisdiction of the state.’’ (P. 222.)

Brown v. Fletcher’s Estate, 210 U. S., 82, was another

case which limited state, not federal, authority. A Massa-

chusetts judgment was held unenforcible against a Michigan

estate.

U. S. v. Fox, 94 U. S., 320, involved a devise of real es-

tate to the federal government. The court held that the state

statute limiting the devise of real estate to corporations,

would control, as ‘‘the title and modes of disposition of real

property within the state * * * are not matters placed under

the control of federal authority.’’

Michigan Trust Company v. Ferry, 228 U. S., 353, again

involved a mere question of the extra-territorial effect of ju-

dicial proceedings in the state courts.

Dickinson v. Seaver, 44 Mich., 624, merely held that ‘‘No

administration is extra-territorial’’ and that ‘‘no judgment

ean be enforced outside of the jurisdiction rendering it’’;

also that a federal decree could not interfere with state pro-

bate proceedings. No question affecting the peer of Con-

gress was in any way involved.

Lafferty v. Bank, 76 Mich., 35, merely determined the

rights and liabilities arising from the giving of a residuary

legatee’s bond. The questions at issue in the case at bar

were not even remotely involved.

American Missionary Association v. Hall, 138 Mich., 247,

merely denied the power of a Probate Court of Ohio to re-

move a Michigan executor.

Not one of the above decisions is in point in the case at

bar. None of them established ‘‘the right of the state to

exclusive jurisdiction over property within the state.’’ (See

brief for defendant in error, page 13.) If this sweeping

doctrine were established, nothing would be left of the rule

exempting national banks and other federal agencies from

state interference. Counsel’s argument proves too much.

If it is sound, the national bank act must give way to state

legislation, in all cases of conflict, and the case of Farmers

Bank v. Dearing, 91 U. S., 29, and the many other cases up-

holding the paramount power of Congress over all federal

agencies must be overruled.

We disagree with counsel that the subjects covered by

section 11-k are ‘‘peculiarly matters for state regulation.”’

We see no logical difference in this respect between these,

and the other purely private functions of national banks.

he handling of a trust fund, or of an estate, or the holding

of a trust mortgage is no more a private or personal trans-

action than the receipt of funds on deposit, the issuance of

certificates of deposit, the discounting of commercial paper,

or the loan of funds on collateral security. The distinctions

sought to be made are purely arbitrary.

Moreover, Section 11-k expressly avoids any possible

conflict with the state sovereignty by permitting the applica-

tion of the section only when it is ‘‘not in contravention of

state or local law.’’ This constitutes a voluntary abdication

by Congress in cases of conflict, where its authority would

otherwise be paramount.

POINT II.

Regulatory Legislation.

If the provisions made by Congress for regulating the

exercise of ‘the powers conferred by Section 11-k are still

incomplete, that it is matter for Congress to remedy. The

incomplete exercise of any lawful power does not destroy its

legality.

The claimed assumption of exclusive authority by the

states raises in a disguised form, the question whether the

provisions of Section 11-k are ‘‘in contravention of state

law,’’—a question which was of course finally decided by

the Supreme Court of Michigan. The Illinois court (in

People v. Brady, 271 Ill., 100) also confused this question

with that of the ‘‘invasion of state rights.’’ The two are

Se 2

in fact entirely distinct. The questicn of the ‘‘invasion of

state rights’’ involves only the question whether Congress

is legislating in regard to a proper subject of federal legis-

lation. The question of ‘‘contravention’’ involves the ques-

tion whether the actual carrying into effect of this legisla-

tion has resulted or will result in a conflict of laws. The

subject of the act of Congress here involved is merely the

enlargement of the corporate capacities of national banks.

It is an extraordinary claim that any legislative body ex-

cept Congress itself, is concerned with this subject. We

think that counsel confuse the question of the capacity of

a national bank to act as fiduciary, with that of the wisdom

of its selection or its proper qualification to act as such in

a particular case.

In Michigan the mere fact that national banks are, and

always have been subject to the supervision of the Comp-

troller of the Currency, has never made their business an

unlawful one from the point of view of the state authorities,

and this fact will remain true even if trust functions are

added to the functions previously exercised by such banks.

Congress by the enactment of Section 11-k, did not in-

tend to and could not compel the appointment of a national

bank as a fiduciary in any case, but merely authorized such

appointment. The result was merely to broaden the field

of choice of the appointing court or person.

To whatever extent the Probate Courts of the State may

have exclusive jurisdiction in such matters, such jurisdic-

tion would not be impaired by the mere addition of another

class of corporations which might be considered at the op-

tion of those interested in the appointment of executors and

administrators. The application of Section 11-k would

therefore not interfere with any feature of the state Pro-

bate Court jurisdiction or procedure.

The state has passed laws governing the state banks which

are fully as elaborate as the ‘so-called trust company act.

The national banks are operating in entire disregard of

these laws and yet neither the state banks, nor the state

a SOMA ST Ny AACE ARES 2 ROMER EE ON GREENE N SE gE IEEE IE Ft

government, nor the citizens of the state are injured thereby.

The fact that there might be some incidental difference be-

tween the regulations prescribed by the state for trust com-

panies and the regulations prescribed by the federal gov-

ernment for national banks would be of no greater import-

ance to the persons dealing with each than are the present

differences between the state and federal methods of regu-

lating the banking business.

The construction and effect of the state laws are disposed

of by the opinion of the Supreme Court of Michigan in

the present case.

Mr. Justice Ostrander, speaking for the majority (Rec.,

pp. 20-21), said:

‘“‘There is, therefore, no State policy opposed to

corporate trustees, executors or administrators. No

corporation, and for that matter no individual, can in

any event act in any of the capacities indicated except

by appointment. And a corporation, or an individual,

in such relations, is governed by the laws of the

State and the orders of State courts.

‘National banks are, and are not, foreign corpora-

tions. They are creatures of congress, agencies of

the federal government, domesticated in the state.

They may sue and be sued in the courts of the state,

but the powers they shall possess, their management

and control are beyond state authority, except that a

bank like the respondent may not exercise certain

powers—cannot lawfully possess them—in contraven-

tion of state law.

‘““No state law is contravened—opposed, come into

conflict with—because a corporation exercises the in-

dicated powers, nor by the act of congress creating

national banks. The legislature has not declared that

national banks in this state shall not have the right

‘to act as trustee, executor, administrator, or regis-

trar of stocks and bonds.’

‘«“* * * To say that because the legislature has re-

quired certain things of a domestic corporation as a

condition to the exercise of the right and cannot re-

LEGALS ISS EIEN LED ERI SING I SEY SEARHCES EE TE BAD ARISE NT ATES ERURTRS A SE ON I

quire the same, or similar, things from national

banks, therefore the exercise of the right by national

banks will be in contravention of state law, seems to

me to be an unsound argument. The bank is here,

with such structure as Congress has given it, and

Congress has in terms declared that among other

functions it may perform that of a trustee, ete., if

any body wants it to. The mere element of safety

of a fund is a matter to be considered by those ap-

plying to the corporation to take charge of it, or by

the court making an appointment. That one may re-

gard the domestic corporation as the safer institu-

tion is not evidence that the other, if it acts, acts in

contravention of state law. Certain safeguards sur-

rounding the execution of trusts, ete., by domestic

corporations are lost when individuals are appointed

to execute them. The individual does not therefore

act in contravention of state law.

‘‘Mr. Justice Brooke does not point out in what

way, if respondent acts within its apparent powers,

the operations of any state law governing trusts, or

the settlement of estates, will be interefered with. I

am not content to rest so important a decision upon

a doubtful inference.’’

POINT III.

Delegation of Legislative Powers.

The cases cited by relators’ counsel are not controlling.

The reasoning of these cases might be applicable if Section

11-k had given to the Federal Reserve Board the right—

‘‘to grant by special permit to national banks apply-

ing therefor such additional rights, powers and privi-

leges as the board may approve.’’

Such an unlimited delegation of authority would, doubt-

less, be void. Section 11-k, however, delegates no such au-

ORES LR SGD IES AOS SEG DEY NATAL ESATA SUR IT ED ERE DR

thority, but merely leaves to the board some administra-

tive discretion in respect to certain definitely specified pow-

ers. The primary authority to exercise these powers comes

from the statute which enumerates them, not from the board

which merely administers the statute.

The following quotations from some of the decisions cited

in our original brief furnish a complete answer to counsel’s

contentions.

‘“‘From the beginning of the government, various j

acts have been passed conferring upon executive of- ;

ficers power to make rules and regulations, not for :

the government of their departments, but for admin-

istering the laws which did govern. None of these

statutes could confer legislative power. But when

Congress had legislated and indicated its will, it

would give to those who were to act under such gen-

eral provisions ‘power to fill up the details’ by the

establishment of administrative rules and regulations,

the violation of which could be punished by fine or

imprisonment fixed by Congress, or by penalties fixed

by Congress, or measured by the injury done.’’

‘«* * * But in making these regulations the officers

did not legislate. They did not go outside of the

circle of that which the act itself had affirmatively re-

quired to be done, or treated as unlawful if done.

But confining themselves within the field covered by

the statute, they could adopt regulations of the na-

ture they had thus been generally authorized to make,

in order to administer the law and carry the statute

into effect.’’

U. S. v. Grimaud, 220 U. S., 506 (517-8).

‘‘We see no difficulty in vesting in some body of

men, presumed to be acquainted with the business and

its conditions, the power to grant permits in special

cases. * * * The authority to delegate that discretion

to a board appointed for that purpose is sustained

by the great weight of authority. (Citing cases), and

by this court the delegation of such power even to a

single individual is sustained in Wilson v. Eureka

¢ os ieliamachaeiaa acca

City, 173 U. S., 32, and Gundling v. Chicago, 177 U.

S., 183.

Fischer v. St. Lowis, 194 U. S., 361 (372).

‘*Tt is not too much to say that a denial to Congress

of the right under the constitution to delegate the

power to determine some fact or the state of things |

upon which the enforcement of its enactment depends,

would be to ‘stop the wheels of the government’ and

bring about confusion, if not paralysis in the con-

duct of public business.’’

American Bridge Co. v. U. S., 204 U. S., 364 (387).

Respectfully submitted,

Epwarp S. Crakk,

Counsel for Plaintiff in Error.

a LER LG DE PIE SINT YAEL ILE REIL I BRE

Iuthe Supreme Gourt of the Anited States.

OcToBeR TERM, 1916.

First NATIONAL Bank oF Bay Cry, )

plaintiff in error,

GRANT FELLOWS, ATTORNEY GENERAL

of the State of Michigan, on the rela-

tion of Union Trust Co. et al. J

>No. 794.

IN ERROR TO THE SUPREME CUURT OF THE STATE OF

MICHIGAN.

SUPPLEMENTAL MEMORANDUM FOR THE UNITED

STATES AS AMICUS CURIAE.

The following memorandum of State legislation

since the passage of the Federal Reserve Act is sub-

mitted in accordance with leave obtained in the

course of the oral argument.

JouHN W. Davis,

Solicitor General.

JosePH P. Corron,

Mitton C. ELuiort,

Counsel.

Marcu, 1917.

88362—17

STATUTES AUTHORIZING NATIONAL BANKS TO DO TRUST

COMPANY BUSINESS.

COLORADO, Laws 1915, ch. 48, p. 185-7, ‘“An Act

relating to banks and bankers,” approved April 12,

1915, provides:

Sec. 7. Every National Bank, now or here-

after carrying on business in this state, when

authorized by special permit granted by the

Federal Reserve Board, in conformity with

the provisions of an Act of Congress approved

December 23, 1913, and known as the “Fed-

eral Reserve Act,’ shall possess, enjoy and

exercise the following rights, privileges and

powers and be authorized to act in the capaci-

ties of trustee, executor, administrator and

registrar of stocks and bonds, and in such

other fiduciary or trust capacities as may now

or hereafter be permitted by the laws of the

United States or by the rules or regulations

of said Federal Reserve Board.

INDIANA, Laws 1915, ch. 97, p. 310, “An Act

granting fiduciary powers to duly organized banks,”

approved Mar. 8, 1915, provides:

That every person, firm or corporation

transacting a banking business subject to the

provisions of an act entitled, ‘‘An act to regu-

late and supervise the business of banking by

individuals, partnerships or unincorporated

persons,” approved March 8, 1907; and every

(2)

corporation transacting a banking business as

prescribed in, ‘An act to authorize and regu-

late the incorporation of banks of discount

and deposit in the State of Indiana,” approved

Feb. 7, 1873, and all acts amendatory or

supplemental thereto, and every national

bank coming within the United States federal

reserve act shall be empowered by this act to

accept and execute trusts of any and every

description which may be committed or trans-

ferred to them, under the same rules and regu-

lations as now govern like powers in loan and

trust companies. * * *

IOWA, Supplemental Supplement, Code, 1915, ch.

12—A, “Of additional powers conferred upon Trust

Companies, State and Savings Banks,” section

1889-d, par. 9, p. 150, provides:

When so authorized by any law of the

United States now in force or hereafter

enacted, national banks may exercise the

same powers and perform the same duties as

are by this section conferred upon trust com-

panies, state and savings banks.

Power to act as executor, administrator, trustee

and registrar is conferred by paragraphs 1, 2, 3, 4, 5,

6 of sec. 1889-d upon ‘trust companies, state and

savings banks.”

MASSACHUSETTS, ch. 233, Acts 1915, p. 228, ‘An

Act relative to the taxation of National

Banks,” approved May 8, 1915, provides:

Section 1. Every national bank located in

this commonwealth which now is or hereafter

Bas INV cD A AT BRE

may be empowered to act as trustee and in

such capacity to hold personal property shall,

annually, between the first and tenth days of

April, make a return to the tax commissioner,

signed and sworn to by some officer of the

bank, of all personal property held upon any

trust on the first day of April, whether such

property is held by said bank singly or jointly

with others, which would be liable to taxation

if held by any other trustee residing in this

commonwealth, the name of each city and

§ town in this commonwealth where any bene-

‘ ficiaries resided on said day, the aggregate

; amount of such property then held for all the

i beneficiaries resident in each of such places,

2 and also the aggregate amount held for bene-

5) ficiaries not resident in this commonwealth.

Every such bank shall annually pay to the

: treasurer and receiver general a tax to be

assessed by the tax commissioner upon the

total value of such personal property held in

trust at the rate determined by him under the

provisions of section six of chapter one hun-

dred and ninety-eight of the acts of the year

nineteen hundred and fourteen.

OHIO, Laws 1914, “An Act To grant additional

powers to banking corporations organized

under the laws of Ohio and to amend section

9764 of the General Code,” p. 185-6, section

9796-3, approved Feb. 17, 1914:

No state bank or national bank shall act as

administrator, executor, trustee or registrar of

stocks and bonds in this state. Provided,

however, that trust companies organized under

ears. a

the laws of Ohio shall have the same powers

in the acceptance and execution of trusts

which are now conferred upon them by law,

and other state banks and national banks may

have the same powers in the acceptance and

execution of trusts which are now conferred

by law upon trust companies, upon such state

banks and national banks complying with all

the requirements, regulations, and conditions

imposed by the laws of Ohio upon trust com-

panies in the matter of the acceptance and

execution of trusts.

SOUTH DAKOTA, Laws 1915, ch. 105, p. 224,

“An Act relating to National and State Banks

to act as trustee, executor or administrator

of stocks and bonds,” approved March 6.

1915:

It shall be lawful for National banks when

authorized by the laws of the United States

to act as trustee, executor or administrator of

estates or trusts or as registrar of stocks and

bonds. Provided, further that State banks

may act in similar capacity under such rules

and restrictions as the Department of Banking

and Finance may prescribe.

VERMONT, Laws 1915, ch. 157, p. 259, “ An Act to

authorize the appointment of National banks

to positions of trust,”’ approved April 2, 1915:

Section 1. To the extent that the laws of the

United States permit, any national bank

located and doing business in this state may be

appointed and act as executor of a will, codicil

or writing testamentary, as administrator

with will annexed, as administrator of a person

deceased, as receiver, as assignee, trustee or

guardian of a person subject to guardianship,

under the same circumstances, in the same

manner and subject to the same control by

the court having jurisdiction, as a natural

person legally qualified.

VIRGINIA, Laws 1915, ch. 29, p. 52, “An Act to

extend to national banks the rights, powers,

privileges, and immunities conferred upon

trust companies under an act entitled an act

to provide how trust companies may be incor-

porated, and to provide for general powers for

the purpose of doing a trust business in this

State, in addition to a general banking busi-

ness,” approved February 10, 1915:

1. Be it enacted by the general assembly of

Virginia, That all national banks which have

been, or hereafter may be, permitted by law

to act as trustee and in other fiduciary capaci-

ties, shall have all the rights, powers, privi-~

leges and immunities conferred upon trust

companies by an act of the general assembly

of Virginia, entitled an act to provide how

trust companies may be incorporated, and to

provide for-general powers for the purpose of

4 doing a trust business in this State in addition

| to a general banking business.

: WASHINGTON, Laws 1915, ch. 38, p. 131, “ An Act

3 relating to trust companies, national banks,

2 state banks, amending section 3346 of Reming-

ton & Ballinger’s Annotated Codes and Stat-

utes of Washington,” approved March 6, 1915:

* * * Provided, That national banks,

having a paid up capital of $50,000, or more

LRA CANA ee

cee 1 A at I RINE os HT

when authorized or permitted so to do by or

under any act of the Congress of the United

States, may exercise any of the powers con-

ferred upon trust companies organized under

this act: And provided further, That an y state

bank organized under the laws of the State of

Washington, having a paid up capital of

fifty thousand ($50,000) dollars or more may

exercise any of the powers conferred upon

trust companies organized under this act by

first obtaining permission from the state bank

examiner. * * *

II.

BP SOS RARE dh oe

Ba RG tytn a

Pas ta Seon

STATUTES WHICH MAY BE HELD TO LIMIT EITHER EX-

PRESSLY OR BY POSSIBLE IMPLICATION THE POWER

OF NATIONAL BANKS TO CARRY ON TRUST COMPANY

BUSINESS.

CALIFORNIA, Henning’s General Laws, vol. 5, 1914.

Art. I, sec. 6 (p. 238), “ Banks and Banking,”’

provides:

The term “trust company,” when used in

this act, means any corporation which is in-

corporated under the laws of this state for the

purpose of conducting the business of acting

as executor, administrator, guardian of estates,

assignee, receiver, depositary, or trustee under

appointment of any court or by authority of

any law of this state, or as trustee for any pur-

pose permitted by law.

Art. IV, sec. 90 (bottom p. 272):

* * * No foreign corporation shall have

or exercise in this state the power to act as

trustee under any mortgage, deed of trust,

YT aaa ap, 3

ERS RTE ns

ct BERR ip GEL

or other instrument securing notes or bonds

issued by any corporation * * *,

DELAWARE, Revised Code of 1915, Ch. 20, “In-

surance Department,”’ sec. 70, p. 307, provides:

Any court, judge, or officer authorized by

law to appoint any person or corporation to

any office of trust, may, in its or his discretion,

appoint to such office any trust company in-

corporated under the laws of this State, and

having its principal office or place of business

in this State, provided the said court, judge,

or officer shall be satisfied that the capital

stock of such corporation shall have been fully

paid in cash, and that such corporation is

authorized by its charter to perform the duties

of said office.

(This provision was originally enacted as

Act of March 28, 1908, Laws of 1901-1903,

vol. 22, ch. 388, sec. 1, p. 749.)

MAINE, Revised Statutes, 1916, under ch. 52, sec.

84, p. 833, entitled “Savings Banks, Trust

and Banking Companies, Loan and Building

Associations, Foreign Investment Corpora-

tions,” sub-title “Trust and Banking Com-

panies,” provides:

No trust or banking company, association,

or institution, iteorporated under the laws of

this state, or of any other state and doing

business in this state, shall act or do business

as administrator or guardian, anything in

their charter to the contrary notwithstanding.

(This section was originally enacted as Act

of March 13, 1889, Laws of 1889, ch. 312,

p. 275.)

NEW HAMPSHIRE, Laws of 1915, ch. 109, sec. 34,

p. 126, entitled “An act to provide for the in-

corporation and management of trust com-

panies and similar corporations,” approved

Apr. 8, 1915, provides:

No trust company, loan and trust company,

loan and banking company, bank or banking

company, or similar corporation, shall here-

after be appointed administrator of an estate,

executor under a will, or guardian or con-

servator of the person or property of another. :

(Sec. 15, p. 122, empowers such corporations d

to act as trustee, and sec. 16, to act as regis- :

trar.) a

NEW YORK, Laws of 1914, ch. 369, “An Act in re- :

lation to banking corporations, and_ indi- :

viduals, partnerships, unincorporated asso-

ciations and corporations under the super-

vision of the banking department, constituting

chapter two of the consolidated laws,” Article

V, sec. 223, p. 1371, approved Apr. 16, 19:4,

provides:

No corporation other than a trust company

organized under the laws of this state shall

have or exercise in this state the power to '

receive deposits of money, securities or other ,

personal property from any person or cor- :

poration in trust, or have or exercise in this

state any of the powers specified in subdivisions

one, four, five, six, seven and eight of section

one hundred eighty-five of this article, nor

have or maintain an office in this state for the

transaction of, or transact, directly or indi-

rectly, any such or similar business, except

oth es iis te

oe eos

a a i

that a federal reserve bank may exercise the

powers conferred by subdivision one of such

section if authorized so to do by the laws of

the United States and any domestic corpora-

tion legally exercising any of the powers con-

ferred by such subdivision at the time this

act takes effect may continue to exercise such

powers * * *.

Subdivisions one, four, five, six, seven, and eight of

section 185 of Article Five, relating to trust companies,

are as follows:

Sed

1. To act as the fiscal or transfer agent of the

United States, of any State, municipality, body

politic or corporation; and in such capacity to

receive and disburse money, to transfer, regis-

ter and countersign certificates of stock, bonds

or other evidences of indebtedness, and to act

as attorney in fact or agent of any person or

corporation, foreign or domestic, for any law-

ful purpose.

4. To act as trustee under any mortgage or

bonds issued by any municipality, body politic

or corporation, foreign or domestic, and accept

and execute any other municipal or corporate

. trust not prohibited by the laws of this State.

5. To accept trusts from and execute trusts

for married women, in respect to their separate

property, and to be their agent in the manage-

ment of such property or to transact any

business in relation thereto.

6. To act under the order or appointment

of any court of competent jurisdiction as

guardian, receiver or trustee of the estate of

any minor, and as depositary of any moneys

ind Sid Ue AS Bch sa Ne EIS

paid into court, whether for the benefit of any

such minor or other person, corporation, or

party, and in any other fiduciary capacity.

To be appointed and to act under the order

or appointment of any court of competent

jurisdiction as trustee, guardian, receiver, or

committee of the estate of a lunatic, idiot.

person of unsound mind or habitual drunkard,

or as receiver or committee of the property or

estate of any person in insolvency or bank-

ruptcy proceedings; to be appointed and_ to

accept the appointment of executor of or

trustee under the last will and testament, or

administrator with or without the will annexed

of the estate of any deceased person.

7. To take, accept, and execute any and all

such legal trusts, duties, and powers in regard

to the holding. management and disposition

of any estate, real or personal, wherever located

and the rents and profits thereof, or the sale

thereof, as may be granted or confided to it by

any court of competent jurisdiction, or by any

person, corporation, municipality or other

wuthority and it shall be accountable to all

parties in interest for the faithful discharge of

every such trust. duty or power which it may

so accept.

8. To take, accept and execute any and all

such trusts and powers of whatever nature or

description as may be conferred upon or en-

trusted or committed to it by any person or

persons, or any body politic, corporation, do-

mestic or foreign, or other authority by grant,

assignment, transfer, devise, bequest or other-

wise, or which may be entrusted or committed

Sass REDS — sig _ ‘ - p

a WLAMAREES WSS iz " “ INI EE ie PUR SI OTL EPR SIESTA AN SY LGED DP BAR its Bh Ap ~~?

1 ) |

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or transferred to it or vested in it by order of

any court of competent jurisdiction, or any

surrogate, and to receive, take, manage, hold

and dispose of according to the terms of suth

trust or power any property or estate, real or

personal, which may be the subject of any

such trust or power.

Il.

STATUTES EXPRESSLY AUTHORIZING TRUST COMPANIES,

OR STATE BANKS EMPOWERED TO DO TRUST COMPANY

BUSINESS, TO BECOME MEMBERS OF THE FEDERAL

RESERVE SYSTEM.

CALIFORNIA, Act of May 6, 1913 (Statutes &

Amendments to the Codes, 1913, ch.

104, sec. 22, p. 149, in connection with

sec. 56, p. 160), as amended by the Act

of June 3, 1915 (Statutes & Amend-

ments to the Codes, 1915. ch. 608, see.

56, p. 1112).

DELAWARE, Act Mar. 8, 1915 (Laws 1914, ch. 107,

sec. 18, p. 323.)

GEORGIA, Act of August 18, 1915 (Georgia Laws,

1915, Title IV, p. 33).

IDAHO, Act of March 11, 1915 (Session Laws, 1915,

sec. 41a, p. 196).

[OWA, Supplemental Supplement Code of Towa

1915, sec. 1889-0.

KENTUCKY, Act of March 14, 1914 (Acts 1914

Kentucky, ch. 16, p. 61 et seq.)

LOUISIANA, Act July 9, 1914 (Laws 1914, ch.

305, sec. 1, 2, p. 631).

MAINE, Act of March 31, 1915 (Laws of Maine,

1915, ch. 262, pp. 233-234).

MASSACHUSETTS, Act of May 19, 1914 (Acts

1914, ch. 587, p. 472).

MINNESOTA, Act of March 6, 1915 (Laws of 1915,

ch. 28, p. 36).

MISSISSIPPI, Act of March 9. 1914 (Laws of Mis-

sissippi, 1914, ch. 124, sec. 64, p. 139).

MISSOURI, Act of March 25, 1915 (Laws, Mis-

souri, 1915, Art. III, see. 127, p. 167).

MONTANA, Act of March 6, 1915 (Laws of Mon-

tana, 1915, ch. 89, sec. 23, p. 130).

NEW JERSEY, Act of Apr. 14 (Laws of 1914, ch.

159, p. 293).

NEW MEXICO, Act of March 15, 1915 (Laws of

1915, ch. 67, sec. 96, p. 105).

NEW YORK, Act of April 16, 1914 (Laws of New

York, 1914, vol. 2, ch. 369, see. 185,

sub-div. 12, p. 1344).

NEBRASKA, Act of April 12, 1915 (Laws of 1915,

ch. 175, p. 359).

NEVADA, Act of February 26, 1915 (Laws of 1915,

ch. 31, p. 32).

NORTH DAKOTA, Act of February 10, 1915 (Laws

of 1915, ch. 54, p. 61).

We eae ee

REGAL nef LO: , di ;

OHIO, Act of February 17, 1914 (Laws of Ohio,

1914, House Bill No. 5, pp. 185-186).

OREGON, Act of February 24, 1915 (Laws of 1915,

ch. 285, sec. 2, par. 9, p. 427).

SOUTH CAROLINA, Act of February 18, 1914

(Laws of 1914, ch. 333, p. 588).

UTAH, Act of March 15, 1915 (Laws of Utah, 1915,

ch. 47, see. 1, p. 53).

‘

VIRGINIA, Act of March 2, 1914 (Acts of Assembly,

1914, ch. 27, pp. 42-48).

WASHINGTON, Act of March 6, 1915 (Laws of

Washington, 1915, ch. 35, see. 5, p. 128).

SEE ARL A BE PEE GE ES

IV.

IN ADDITION TO THE STATUTES WHICH CONFER BOTH

CLASSES OF POWERS UPON THE SAME CORPORATION,

CITED ON PAGES 28 TO 31 OF THE BRIEF FOR THE UNITED

STATES AS AMICUS CURIAE, SEE:

COLORADO, Laws of 1915, ch. 48, approved April

12, 1915, p. 135-6, “‘An Act relating to banking,”

secs. 1 and 2.

MASSACHUSETTS, Acts of 1914, sec. 3, ch. 537, p.

473, “An Act relative to Trust Companies.”’

MISSOURI, Laws of 1915, p. 102, Art. 1, “State

Banking Department,” ‘‘An Act to repeal articles

I, II and III of chapter 12 of the Revised Statutes

of 1909, relating respectively to “State banking

department,” “banks of deposit and discount,”

and “trust companies” * * * and to enact in

lieu of all thereof new articles entitled respectively

‘state banking department,” “ Banks”’ and “ trust

companies,’ to be designated respectively as

articles I, II and III of said chapter 12, with an

emergency clause. Article III, “Trust Com-

panies,”’ sec. 127 (pp. 165-167).

OREGON, Laws of 1915, ch. 285, p. 427, ‘‘An act to

amend sections 4559 ete. * * * pertaining to

banks and bankers, and repealing all Acts and

parts of Acts in conflict with the provisions of this

Act.”

VIRGINIA, ch. 486, p. 817, Laws of 1916, act ap-

proved March 22, 1916, provides “how trust com-

panies may be incorporated, and to provide for

general powers for the purpose of doing a trust

business in this State in addition to a general

banking business.”

WYOMING, Laws of 1915, ch. 93, p. 104, “An Act

permitting State Banks, Saving Banks and Loan

and Trust Companies to act generally as agent,

attorney, trustee, executor, administrator or guar-

dian.”’

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.