Hansell v. Citizens & Southern National Bank

98 S.E.2d 622, 213 Ga. 205, 1957 Ga. LEXIS 341

• Court: Supreme Court of Georgia
• Decided: May 13, 1957
• Docket: 19635
• Status: Published

Opinions

Almand, Justice.

This is an action brought by a minority stockholder against The Citizens & Southern National Bank, a national banking corporation, seeking a declaratory judgment declaring a provision of an act of the General Assembly of Georgia (Ga. L. 1956, p. 309) to be unconstitutional and void, and any permit issued on the strength thereof by the Comptroller of the Currency to be of ím force and effect, and praying that the defendant be enjoined from establishing or operating any new branches in any city or municipality of the State of Georgia other than in the City of Savannah, where its principal office is located. Petitioner alleges that, pursuant to said unconstitutional act of the General Assembly, the officers and directors of the defendant bank are proceeding to act ultra vires and in violation of the regulatory laws of this State covering the establishment of branch banks, and, unless enjoined, they will proceed to establish illegal branch banks and expend excessive sums in doing so, to the detriment of the stockholders. The case is before this court on review of a judgment whereby certain demurrers were sustained to the petition as amended, and the same was thereafter dismissed.

The petition, as finally amended, fully set out numerous constitutional attacks upon the act in question and, together with the attached exhibits, fully reviewed the entire history of banking in this State, setting forth the various statutes which regulate the banking business and are pertinent to this case. In substance, these are as follows:

(a) Prior to the general Banking Act of 1919, there were no> statutory restrictions on branch banking in Georgia, but in 1919 (Ga. L. 1919, p. 135), the Superintendent of Banks was authorized to approve the establishment of branches in the same city or elsewhere if satisfied that the public convenience and advantage would be promoted.

(b) In 1927, a general act (Ga. L. 1927, p. 195) was passed prohibiting the establishment of new branch banks in the State.

(c) In 1929, the General Assembly enacted two statutes (Ga. L. 1929, pp. 214, 215) authorizing the establishment of branch banks in cities, “now or hereafter having a population of not less than 80,000 or more than 125,000” and. “having a population of not less than 200,000,” in which the principal office of said bank is located.

(d) The act of 1956 (Ga. L. 1956, p. 309) deals with restrictions on banks having a holding-company relation, and authorizes present branches of a bank with a holding-company relation to make branches of existing holding-company banks, and in the future in cities of over 80,000 population, now having branches of a bank, present branches will have the same privilege of additional branches as permitted to other banks.

(e) Title 12, U. S. C., Sections 21-95, known as the National Banking Act, authorizes national banks to establish and operate new branches “at any point within the State ... if such establishment and operation are at the time authorized to State banks by the statute law of the State.” 12 U. S. C. A. 129, § 36.

Under the authority of (d) and (e) above, the defendant national bank is allegedly establishing and operating new branches which are here sought to be enjoined because the State law authorizing the same is unconstitutional. The petition raises the following constitutional questions in regard to the act: (a) it is a special law enacted in a case where there is already a general law; (b) it is lacking in uniformity throughout the State; (c) the basis for the classification has no reasonable relation to the subject matter; (d) being a special law, it lacks the proper notification by publication of the intent to apply for local legislation; (e) it has more than one subject matter; (f) it violates the due-process and equal-protection clauses of the State and Federal Constitutions; (g) it is vague and indefinite and a reasonable construction cannot be applied «so as to determine its meaning.

The demurrers, in substance, set out: that no cause of action is alleged; that the State court lacks jurisdiction; that the petition fails to allege valid constitutional attacks; and that there is a nonjoinder of necessary parties. The lower court, in sustaining the general demurrers, wrote a lengthy opinion explaining its ruling, which was that: (a) the court lacked jurisdiction; (b) the action was a collateral attack on the action of the Comptroller of the Currency, and he was an indispensable party to the suit; (c) the plaintiff failed to show uncertainty and insecurity entitling him to declaratory relief; and (d) in the event that the court was in error on any of the above, then the statute attacked is, nevertheless, not subject to any of the attacks made on its constitutionality. Thereafter, the petition was dismissed, and the exceptions here are to that dismissal and to the sustaining of the general demurrers.

The trial court held that the petition failed to state a case for declaratory judgment. In substance, the petition alleged: that the plaintiff owned 800 shares of the capital stock in the defendant bank; that the defendant has applied to the Comptroller of the Currency of the United States for permits to establish branch banks in Atlanta, Macon, and possibly in places other than Savannah; that, under the National Banking Act, supra, a national bank is authorized to establish and operate a new branch only if the establishment and operation thereof is at the time authorized to State banks by the statute law of the State; that the defendant claimed that it had authority to establish branches in cities other than Savannah by virtue of sec. 3 of the Act of 1956, supra; that any and all permits which the Comptroller of the Currency may issue to the defendant, and the application of any act towards the opening, maintenance, or operation of a branch bank in any city outside of Savannah, “are and will be unconstitutional, void, illegal and of no force or effect because they are contrary to and in violation of” specified provisions of the Constitution of Georgia; that on July 6, 1956, plaintiff, as a stockholder of defendant bank, addressed a letter to the president of said bank protesting the contemplated establishment of branch banks in cities other than Savannah, demanded that no such banks be established because the last sentence of sec. 3 of the act of 1956, supra, was void and unconstitutional as being a special law, and requested that his objections be submitted to the stockholders of the bank; that the president of the defendant bank replied by letter on July 10, 1956, and stated that the board of directors had elected to proceed immediately to establish branch offices in Atlanta and Macon when permission was granted, and “if the constitutionality of the act is to be tested, it can be done here without jeopardizing our present affiliates”; that on July 24, 1956, the Comptroller of the Currency approved the issuance of a permit to the defendant to establish a branch bank in Atlanta. The plaintiff further alleged: “In the event defendant proceeds to establish a branch bank or branches, as herein complained of, and it should be finally determined that such establishment is unconstitutional or illegal, then such branches would have to be closed down and disposed of and not further operated by the defendant, and the charter of defendant would be subject to action of forfeiture or revocation, and great losses in the establishment of facilities, in advertisements, in promotional work, in salaries, and in development of businesses would automatically occur, all to the great detriment of petitioner”; and that, “unless enjoined, defendant will proceed to establish branch banks as above set forth, and will expend sums in excess of $100,000.00 in doing so, and will place its right to operate in jeopardy and subject its charter to cancellation because of its violation of law. Once these branch banks are established, it will be expensive to disestablish them, and this expense can be avoided by an injunction and by a declaration of the unconstitutionality and invalidity of the proposed course of action by defendant. Plaintiff has no adequate relief in law or equity except such as is prayed for in this action.” It was further alleged that the Attorney General of Georgia and the Deputy Comptroller of the Currency had declined to render any opinion as to the validity of sec. 3 of the act of 1956, supra.

The Declaratory Judgment Act (Ga. L. 1945, p. 137) authorizes the superior courts of this State, in cases of actual controversy where it appears to the court that the ends of justice require it, to declare rights and other legal relations of any interested party petitioning for such declaration. In Cohen v. Reisman, 203 Ga. 684 (1) (48 S. E. 2d 113), this court said: “The liberality of construction as to whether resort to a declaratory judgment is available is determined by reference to whether any existing provision of law or equity will provide as complete protection as would a declaratory judgment with respect to some future action or conduct, as to the propriety of which a rationable doubt exists. Code (Ann. Supp.) § 110-1111.” The petition shows an unquestionably justiciable controversy, where there is uncertainty and insecurity with respect to the right of the defendant to carry out present plans to create and operate branch banks, in which venture the plaintiff, as a stockholder, and the defendant bank are entitled to a declaration as to whether this action is valid or ultra vires. The petition sets forth a cause of action for declaratory judgment. See Ashwander v. Tennessee Valley Authority, 297 U. S. 288 (56 Sup. Ct. 466, 80 L. ed. 688).

It is contended that the plaintiff, as a stockholder, cannot maintain this action to challenge the act of 1956, supra, because such statute operates to his benefit, and because he does not show that the operation of the statute injures him in any manner. In Central Railroad Co. v. Collins, 40 Ga. 582, 617, the stockholders of certain railroad companies sought to enjoin the ultra vires acts of their corporations. It was there held: “We do not think the profitableness of this contract, to the stockholders of the Central and Southwestern Railroad stockholders, has anything to do with the matter. These stockholders have a right, at their pleasure, to stand on their contract. If the charters do not give to these companies the right to go into this new exterprise [sic], any one stockholder has a right to object. He is not to be forced into an enterprise not included in the charter.” (Italics ours.) The plaintiff, as a stockholder in the defendant bank, has a right to insist that the defendant, in carrying out its corporate powers, does not transgress the laws of the State of Georgia, and the fact that the establishment of branch banks will result in benefit to the stockholders has no bearing on the right of a stockholder to challenge the validity of the bank’s action where such action or threatened action of the bank’s directors is alleged to be beyond the charter powers of the corporation. Code § 22-711; Cherokee Iron Co. v. Jones, 52 Ga. 276; Macon Gas Co. v. Richter, 143 Ga. 397, 401 (85 S. E. 112); South Western R. Co. v. Benton, 206 Ga. 770, 788 (58 S. E. 2d 905).

The defendant bank insists that the court did not have jurisdiction in a collateral action to void the permit issued to the defendant by the Comptroller of the Currency to establish a branch bank. The only prayer of the petition that relates to the Comptroller of the Currency is that the court declare any permit issued by the Comptroller of the Currency on the strength, of sec. 3 of the act of 1956, supra, “to be unconstitutional and of no force and effect whatsoever.” The plaintiff does not seek to have the court restrain or control any future action of the Comptroller of the Currency. Under the provisions of 12 U. S. C. A. 129, § 36(c), the Comptroller can approve the establishment of branch banks by the defendant only “if such establishment and operation are at the time authorized to state banks by the statute law of the State in question by language specifically granting such authority affirmatively.” The petition in the instant case not only alleges past and present action by the defendant in obtaining permits from the Comptroller of the Currency for the establishment of branches, but also alleges that the defendant plans the establishment of branches in other cities in the future. What consequences would follow, if and when it is determined by the courts of this State that the challenged provisions of the act of 1956, supra, are unconstitutional as to the operation, of branch banks established under permits issued by the Comptroller of the Currency since the passage of said act, is a matter that cannot be determined in this proceeding. See Thompson v. Saint Nicholas National Bank, 146 U. S. 240 (13 Sup. Ct. 66, 36 L. ed. 956). Whether there is or is not a valid statute of Georgia that permits the establishment of branch banks in cities other than where their principal office is located is a question for decision by the courts of Georgia and not by the Federal courts. Thompson v. Consolidated Gas Utilities Corp., 300 U. S. 55 (57 Sup. Ct. 364, 81 L. ed. 510); South Western Railroad Co. v. Benton, supra, headnote 2. If Georgia laws do not allow the establishment of branches by the defendant in cities other than Savannah, the Georgia courts may grant appropriate relief irrespective of any approval granted by the Comptroller of the Currency allowing the defendant to do so. First Nat. Bank of Bay City v. Union Trust Co., 244 U. S. 416 (37 Sup. Ct. 734, 61 L. ed. 1233); First Nat. Bank in St. Louis v. Missouri, 263 U. S. 640 (44 Sup. Ct. 213, 68 L. ed. 486).

The bank involved is an instrumentality of the Federal Government, being chartered under Federal law. The petitioner, as a stockholder, seeks his relief against the bank, which is located in this State, upon an allegation that it is undertaking to act beyond the scope of its charter powers. If the Federal courts have exclusive jurisdiction, the State courts should be just as careful to respect the jurisdiction of the Federal courts as they should be careful to preserve their own. On this question, opposing counsel have cited numerous decisions in support of their respective positions. While we have read and considered carefully the decisions cited, we believe that Congress has answered this question in favor of the jurisdiction of the State courts. 12 U. S. C. A. 442, § 94 provides: “Actions and proceedings against any association under this chapter [National Banking Act] may be had in any district or territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases.” Excepting actions by the United States for any of its officers or agents against a banking association, or suits by such banking associations against the Comptroller of the Currency or his receiver, Congress has specifically provided that national banking associations shall be deemed citizens of the States in which they are respectively located. 28 U. S. C. A. 241, § 1348. Certainly, State courts have jurisdiction of suits against its citizens unless jurisdiction has been assumed exclusively by the Federal courts.

Thus, it is clear to us that Congress has expressly given the State courts jurisdiction. The wisdom of the Federal law in thus subjecting the national bank to the jurisdiction of the State court is emphatically underlined by the facts in this case. Congress, by 12 U. S. C. A. 129, § 36, made the right of the national bank to establish branch banks entirely dependent upon the existence of a State law. It is there provided: “A national banking association may, with the approval of the Comptroller of the Currency, establish and operate new branches: ... (2) at any point within the State in which said association is situated, if such establishment and operation are at the time authorized to State banks by the statute law of the State in question by language specifically granting such authority affirmatively and not merely by implication or recognition, and subject to the restrictions as to location imposed by the law of the State on State banks.” The State law upon which the bank relies is attacked upon the grounds that it offends, not the Federal, but the State Constitution. A Georgia law that does not offend the Federal Constitution or Federal laws can be declared violative of the State Constitution and consequently void only by the courts of Georgia. Should the Federal courts hold that the law here attacked is void as violating the State Constitution, the State court would not be bound thereby, and a decision of the State court upholding such a law as not offending the State Constitution would render it a perfectly valid law. The trial court erred in ruling that it was without jurisdiction.

The last sentence of sec. 3 of the act of 1956, supra, provides: “Also in municipalities now having branches of a bank with a holding company relation, such banks may make branches of existing holding company banks; and in the future in cities of over 80,000 population, according to the 1950 or any subsequent census, now having branches of a bank, present branches will have the same privilege of additional branches as permitted to other banks.” We are of the opinion that this is a special law and violative of art. 1, sec. 4, par. 1 of the Constitution of Georgia (Code, Ann., § 2-401), which provides that “Laws of a general nature shall have uniform operation throughout the State, and no special law shall be enacted in any case for which provision has been made by an existing general law.”

The general law of 1927 (Ga. L. 1927, p. 195) prohibited the establishment of new or additional branch banks after the effective date of the act. This law was effective in every city in the State and applicable to all banks, whether they were banks with a holding-company relation or branches of such banks. Sec. 3 of the act of 1956, supra, applies only (a) to municipalities, that on February 27, 1956, had branches of a bank with a holding-company relation, such banks being given the right to make other branches of existing holding-company banks; and (b) to cities which, in the future, attained a population of over 80,000 according to the 1950 or any subsequent census that on February 27, 1956, had branches of any bank, such branches being granted the privilege of making additional branches. Under this act, no bank could establish a branch bank in any city of less than 80,000 population unless, at the time of the passage of the act, it was a bank with a holding-company relation. In other words, if the X bank in a city of 10,000 population did not have a holding-company relationship at the time of the act’s passage, it could not establish a branch in that city; whereas, if the Z bank in the same city was a branch of a bank with a holding-company relation at the time the act was passed, it could “make branches of existing holding-company banks.” The provision as to cities of over 80,000 population applies only to banks which, at the time of the passage of the act, had an existing branch bank. It thus seems clear that the act does not operate generally or uniformly throughout the State. The act can operate only upon a, limited class of banks that had a status fixed at the time of the passage of the act, and it makes no provision for banks not having such status at the time the act was passed to come under the provisions of the act in the future. The classification for the purpose of legislation as to existing banks — those having branches of a bank with a holding-company relation, and those in cities of over 80,000 population now having branches of a bank — has no reasonable relation to the purposes of tire act declared in sec. 1, which states: “The maintenance of competitive services between banks has been found to be the best method of serving the public. There are dangers in the concentration of economic power through centralized control of banks. It is, therefore, held to be in the public interest to curtail such concentration of economic power' by preventing the expansion of bank holding companies and similar organizations.” The class is so circumscribed- that the last sentence of sec. 3 of the act of 1956, supra, can apply only to those banks having branches in existence at the time of its passage, and thus, this portion of the act is a special and not a general law, and is therefore unconstitutional. See Thomas v. Austin, 103 Ga. 701 (30 S. E. 627); Stewart v. Anderson, 140 Ga. 31 (78 S. E. 457).

The trial court erred in sustaining the general demurrers and in dismissing the petition.

Judgment reversed.

All the Justices concur, except Duckworth, C. J., Candler and Hawkins, JJ., who~ dissent from the judgment of reversal and from all rulings except division 4 and the corresponding headnote.