Northeast Bancorp, Inc. v. Woolf

576 F. Supp. 1225, 1983 U.S. Dist. LEXIS 10692
CourtDistrict Court, D. Connecticut
DecidedDecember 16, 1983
DocketCiv. A. H-83-654 (TFGD)
StatusPublished
Cited by5 cases

This text of 576 F. Supp. 1225 (Northeast Bancorp, Inc. v. Woolf) is published on Counsel Stack Legal Research, covering District Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Northeast Bancorp, Inc. v. Woolf, 576 F. Supp. 1225, 1983 U.S. Dist. LEXIS 10692 (D. Conn. 1983).

Opinion

RULING ON MOTION TO DISMISS

DALY, Chief Judge.

The plaintiff Northeast Bancorp Inc. (“Northeast”) is a Connecticut bank holding company and the plaintiff Union Trust Company is a Connecticut bank and wholly-owned subsidiary of Northeast. They have brought suit, pursuant to 28 U.S.C. § 2201, seeking a declaratory judgment that various provisions of a recent Connecticut statute 1 entitled “An Act Concerning Interstate Banking” are unconstitutional. In addition, the plaintiffs seek the issuance of a permanent injunction prohibiting the defendant, the Banking Commissioner of the State of Connecticut, from enforcing the alleged unconstitutional provisions of the statute. In response, the defendant has moved to have the plaintiffs’ complaint dismissed, arguing that the plaintiffs lack standing to make their claims. After reviewing the briefs submitted and hearing oral argument, the Court has concluded that the plaintiffs have not made adequate allegations of standing in either their complaint or the affidavits which they filed in ■opposition to the defendant’s motion to dismiss; although they have alleged that they will be injured by the new Connecticut law, the plaintiffs have not alleged a concrete injury which can fairly be traced to the *1227 challenged statute and which is likely to be redressed by a favorable decision of the Court. Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982). Accordingly, the defendant’s motion must be granted and the plaintiffs’ complaint dismissed. The Court’s reasoning is set forth below.

Factual Background

The American banking industry is regulated on both the state and federal level. One of the major pieces of federal legislation is the Bank Holding Company Act of 1956 (“the BHC Act”), 12 U.S.C. § 1841 et seq. Section 3(d) of the BHC Act, commonly known as “the Douglas Amendment,” prohibits the Federal Reserve Board from approving any application by a bank holding company to acquire an interest in a bank located in another state, unless the laws of that other state explicitly authorize acquisition of local banks by out-of-state holding companies. 12 U.S.C. § 1842(d). The Douglas Amendment, as the defendant points out in his brief, thus acts as a general bar to interstate banking under federal law, 2 but permits a state to enact specific legislation lifting this bar. Defendant’s Memorandum in Support of Motion to Dismiss at 6.

In early June of 1983, the State of Connecticut took action to lift the bar of the Douglas Amendment when it enacted Public Act No. 83-411, entitled “An Act Concerning Interstate Banking” (“The Connecticut act” or “the act”). The new law does not completely open up the Connecticut borders to all out-of-state banking holding companies, but is instead designed to be a limited experiment in interstate banking involving only New England states. The act provides that a Connecticut banking institution may be acquired by an out-of-state banking institution only if two conditions are met: (1) the acquiring institution must conduct its principal operations and maintain its principal place of business in one of the other five New England states, and (2) that state must accord reciprocal acquisition privileges to banking institutions in Connecticut through legislation that is “no more restrictive than” the Connecticut act. Public Act No. 83-411, § 2; Plaintiffs’ Memorandum in Opposition to Motion to Dismiss at 2. In addition, the act contains what one Connecticut senator has called an “anti-leapfrogging” provision. This provision states that if, following an acquisition of a Connecticut bank under the act, the resulting entity comes to be controlled by a non-New England banking institution, the Banking Commissioner of Connecticut must immediately order that institution to divest itself of the subsidiary Connecticut bank which was acquired earlier. Id.

Massachusetts and Rhode Island have passed laws which'are similar to the Connecticut act and only allow interstate transactions with banks in other New England states with reciprocal legislation. Act of Dee. 20, 1982, 1983 Mass.Adv.Legis.Serv. ch. 626 (Law.Coop.); 1983 R.I.Pub.Laws Ch. 201. The Massachusetts act took effect on July 1, 1983 and the Rhode Island act will take effect on July 1, 1984. Maine has also enacted an interstate banking statute. Me.Rev.Stat.Ann.Tit. 9-B § 1013(2) (1975, effective January 1, 1978) (amended 1983). Unlike the other New England statutes, the Maine act does not have any geographic restrictions, but allows interstate transactions with any banks located in a state with reciprocal legislation. According to the plaintiffs, the less discriminatory nature of the Maine act caused Connecticut to write the “anti-leapfrogging” provisions into its law in order to prevent two-step transactions by a non-New England bank. Complaint at 1113.

Since the Connecticut act went into effect in June, three Connecticut banks have entered into agreements with Massachusetts banks. CBT Corporation, Conneeti *1228 cut’s largest bank holding company, has agreed to merge with the Bank of New England Corporation, the third largest bank holding company in Massachusetts. Hartford National Corporation, a Connecticut bank holding company which owns the Connecticut National Bank, has entered into an agreement to acquire Arltru Ban-corporation, a $783 million banking institution based in Lawrence, Massachusetts. Most recently, the First National Boston Corporation, the largest bank holding company in New England, agreed to acquire Colonial Bancorp, a Connecticut bank holding company with assets of $1.3 billion. These three agreements are currently .pending before the defendant Banking Commissioner and the Federal Reserve Board.

Unlike the above Connecticut banks, the plaintiffs have not entered into any agreements with a Massachusetts bank. Instead, on August 3, 1983, two months after the passage of the Connecticut statute, the plaintiffs announced that they had agreed to merge with the Bank of New York Co., Inc., a New York banking institution. Such a merger is clearly barred under the Douglas Amendment and the Connecticut act, and is only viable if enabling legislation is passed by the State of Connecticut or the Federal government or if a court strikes down and excises the geographic restrictions in the existing Connecticut law.

On July 29, four days before they announced their merger agreement with the Bank of New York, the plaintiffs instituted this action. In their complaint, they allege that the geographic restrictions of the Connecticut act violate the supremacy, commerce, compact, due process and equal protection clauses of the United States .Const,itution and the due process and equal protection clauses of the Connecticut Constitution.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
576 F. Supp. 1225, 1983 U.S. Dist. LEXIS 10692, Counsel Stack Legal Research, https://law.counselstack.com/opinion/northeast-bancorp-inc-v-woolf-ctd-1983.