Radzanower v. Touche Ross & Co.

426 U.S. 148, 96 S. Ct. 1989, 48 L. Ed. 2d 540, 1976 U.S. LEXIS 103

• Court: Supreme Court of the United States
• Decided: June 7, 1976
• Docket: 75-268
• Status: Published

Opinions

Mr. Justice Stewart

delivered the opinion of the Court.

This case requires us to determine which venue provision controls in the event a national banking association is sued in a federal court for allegedly violating the Securities Exchange Act of 1934: the broad venue provision of the Securities Exchange Act, which allows suits under that Act to be brought in any district where the defendant may be found, or the narrow venue provision of the National Bank Act, which allows national banking associations to be sued only in the district where they are established.

The petitioner, Hyman Radzanower, instituted a class action in the District Court for the Southern District of New York alleging, inter alia, that the respondent, First National Bank of Boston, a national banking association with its principal office in Boston, Mass., had violated the federal securities laws by failing to disclose to the Securities and Exchange Commission and the investing public its knowledge of certain adverse financial information about one of its customers, the TelePrompter Corporation, and of securities laws violations by that company. The complaint alleged that venue was proper under § 27 of the Securities Exchange Act of 1934, 48 Stat. 902, 15 U. S. C. § 78aa, which provides that “[a]ny suit or action to enforce any liability or duty created [by or under the Securities Exchange Act] . . . may be brought in any such district [wherein any act or transaction constituting the violation occurred] or in the district wherein the defendant is found or is an inhabitant or transacts business . . . The bank moved to dismiss the complaint as to it, asserting that venue as to it lay only under the venue provision of the National Bank Act, Rev. Stat. § 5198 (1878), 12 U. S. C. § 94. That section provides that “ [a] ctions and proceedings against any [national banking] association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established . . . .”¹

Following the settled law of the Second Circuit, the District Court granted the bank’s motion to dismiss. It held that “[ajbsent waiver or consent, a national bank may be sued only in the district in which it is established. 12 U. S. C. Section 94.” The court noted that the bank was established in Boston “because its charter specifies Boston as its principal place of business,” ² and it rejected the petitioner’s claim that the bank had waived the provisions of § 94.³ The Court of Appeals affirmed without opinion.⁴ Because of differing views in the Circuits as to the statutory venue question presented,⁵ we granted the petition for certiorari. 423 U. S. 911.

Section 94 provides that suits against a national banking association “may be had” in the federal district court for the district where such association is established. The Court has held that this grant of venue is mandatory and exclusive: “The phrase ‘suits . . . may be had’ was, in every respect, appropriate language for the purpose of specifying the precise courts in which Congress consented to have national banks subject to suit and we believe Congress intended that in those courts alone could a national bank be sued against its will.” Mercantile Nat. Bank v. Langdeau, 371 U. S. 555, 560. Accord, Michigan Nat. Bank v. Robertson, 372 U. S. 591; National Bank v. Associates of Obstetrics, 425 U. S. 460.⁶ The venue provision of the Securities Exchange Act, by contrast, allows suits under that Act to be brought anywhere that the Act is violated or a defendant does business or can otherwise be found. It is the petitioner’s contention that when a national bank is named as a defendant in a suit brought under the Securities Exchange Act, it loses the protection of the venue provisions of § 94 and may be sued in any federal judicial district where that Act was violated or where it does business or can be found. For the reasons that follow, we cannot accept that contention.

It is a basic principle of statutory construction that a statute dealing with a narrow, precise, and specific subject is not submerged by a later enacted statute covering a more generalized spectrum. “Where there is no clear intention otherwise, a specific statute will not be controlled or nullified by a general one, regardless of the priority of enactment.” Morton v. Mancari, 417 U. S. 535, 550-551.⁷ “The reason and philosophy of the rule is, that when the mind of the legislator has been turned to the details of a subject, and he has acted upon it, a subsequent statute in general terms, or treating the subject in a general manner, and not expressly contradicting the original act, shall not be considered as intended to affect the more particular or positive previous provisions, unless it is absolutely necessary to give the latter act such a construction, in order that its words shall have any meaning at all.” T. Sedgwick, The Interpretation and Construction of Statutory and Constitutional Law 98 (2d ed. 1874).⁸

When Congress enacted the narrow venue provisions of the National Bank Act, it was focusing on the particularized problems of national banks that might be sued in the state or federal courts. When, 70 years later, Congress enacted the Securities Exchange Act, its focus was on the objective of promoting fair dealing in the securities markets, and it enacted a general venue provision applicable to the broad universe of potential defendants subject to the prohibitions of that Act. Thus, unless a “clear intention otherwise” can be discerned, the principle of statutory construction discussed above counsels that the specific venue provisions of § 94 are applicable to the respondent bank in this case. Fourco Glass Co. v. Transmirra Products Corp., 353 U. S. 222.

The issue thus boils down to whether a “clear intention otherwise” can be discovered — whether, in short, it can be fairly concluded that the venue provision of the Securities Exchange Act operated as a pro tanto repeal of § 94. “It is, of course, a cardinal principle of statutory construction that repeals by implication are not favored.” United States v. United Continental Tuna Corp., 425 U. S. 164, 168.⁹ There are, however,

“two well-settled categories of repeals by implication — (1) where provisions in the two acts are in irreconcilable conflict, the later act to the extent of the conflict constitutes an implied repeal of the earlier one; and (2) if the later act covers the whole subject of the earlier one and is clearly intended as a substitute, it will operate similarly as a repeal of the earlier act. But, in either case, the intention of the legislature to repeal must be clear and manifest. . . .” Posadas v. National City Bank, 296 U. S. 497, 503.

It is evident that the “two acts” in this case fall into neither of those categories.

The statutory provisions at issue here cannot be said to be in “irreconcilable conflict” in the sense that there is a positive repugnancy between them or that they cannot mutually coexist. It is not enough to show that the two statutes produce differing results when applied to the same factual situation, for that no more than states the problem. Rather, “when two statutes are capable of co-existence, it is the duty of the courts . . . to regard each as effective.” Morton v. Mancari, supra, at 551. As the Court put the matter in discussing the interrelationship of the antitrust laws and the securities laws: “Repeal is to be regarded as implied only if necessary to make the [later enacted law] work, and even then only to the minimum extent necessary. 'This is the guiding principle to reconciliation of the two statutory schemes.” Silver v. New York Stock Exchange, 373 U. S. 341, 357.¹⁰

Here the basic purposes of the Securities Exchange Act can be fairly served by giving full effect to the provisions of 12 U. S. C. § 94. The primary purpose of the Securities Exchange Act was not to regulate the activities of national banks as such but “[t]o provide fair and honest mechanisms for the pricing of securities [and] to assure that dealing in securities is fair and without undue preferences or advantages among investors . . . .” H. R. Rep. No. 94 — 229, p. 91 (1975).¹¹ Its venue provision, § 27, was intended to facilitate that goal by enabling suits to enforce rights created by the Act to be brought wherever a defendant could be found. The venue provision of the National Bank Act, § 94, was intended, on the other hand, “for the convenience of those [banking] institutions, and to prevent interruption in their business that might result from their books being sent to distant counties . . . .” Charlotte Nat. Bank v. Morgan, 132 U. S. 141, 145, quoted in Mercantile Nat. Bank v. Langdeau, 371 U. S., at 561-562, n. 12.

By allowing suits against national banks to be brought only pursuant to § 94, the purposes of that section will obviously be served. Yet application of § 94 will not “unduly interfere” with the operation of the Securities Exchange Act. See Gordon v. New York Stock Exchange, 422 U. S. 659, 686. Section 94 will have no impact whatever upon the vast majority of lawsuits brought under that Act. In the tiny fraction of litigation where its effect will be felt, it will foreclose nobody from invoking the Act's provisions. Members of the investing public will still be free to bring actions against national banks under the Act. While suits against this narrow and infrequent category of defendants will have to be brought where the defendant is established, that is hardly an insurmountable burden in this day of easy and rapid transportation.¹² Since it is possible for the statutes to coexist in this manner, they are not so repugnant to each, other as to justify a finding of an implied repeal by this Court. It is simply not “necessary” that § 94 be repealed in part in order “to make the Securities Exchange Act work.” See Silver v. New York Stock Exchange, supra, at 357.

Moreover, it cannot be said either that “the later act covers the whole subject of the earlier one and is clearly intended as a substitute,” or that “the intention of the legislature to repeal [is] clear and manifest.” 296 U. S., at 503. The Securities Exchange Act of 1934 covers a “subject” quite different from the National Bank Act. The 1934 Act was enacted primarily to halt securities fraud, not to regulate banks. Indeed, banks were specifically exempted from many provisions of the securities laws,¹³ and Congress almost contemporaneously enacted other specific legislation dealing with the problems arising from banks’ involvement in the securities business.¹⁴ The passage of that legislation and the exemption of national banks from important provisions of the securities laws suggest, if anything, that Congress was reaffirming its view that national banks should be regulated separately by specific legislation applying only to them.¹⁵ And there is nothing in the legislative history of the Securities Exchange Act to support the view that Congress in enacting it gave the slightest consideration to the pro tanto repeal of § 94, let alone to indicate “that Congress consciously abandoned its [prior] policy,” Morton v. Mancari, 417 U. S., at 551, or that its intent to repeal § 94 pro tanto was “ 'clear and manifest/ ” United States v. Borden Co., 308 U. S. 188, 198, quoting Red Rock v. Henry, 106 U. S. 596, 602.¹⁶

For these reasons it is impossible to conclude that § 94 was partially repealed by implication in 1934. It follows under the general principles of statutory construction discussed above that the narrowly drawn, specific venue provision of the National Bank Act must prevail over the broader, more generally applicable venue provision of the Securities Exchange Act. We conclude, therefore, that a national banking association is subject to suit under the Securities Exchange Act only in that district wherein it is established, and that the judgment before us must accordingly be affirmed.

It is so ordered.

1 Section 94 in its entirety reads :

“Actions and proceedings against any association under this chapter 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.”

2 The petitioner does not claim that the bank is “established” anywhere else than in Boston. Federal courts have consistently ruled that the place specified in a bank’s charter as its home office is determinative, of the district in which the bank is “established” for purposes of § 94. See, e. g., Buffum v. Chase Nat. Bank, 192 F. 2d 58, 60 (CA7); Leonardi v. Chase Nat. Bank, 81 F. 2d 19, 22 (CA2).

3 The opinion of the District Court is unreported.

It has long been settled that the restrictive venue provisions of § 94 can be waived by a defendant bank. See, e. g., Charlotte Nat. Bank v. Morgan, 132 U. S. 141, 145; Michigan Nat. Bank v. Robertson, 372 U. S. 591, 594; National Bank v. Associates of Obstetrics, 425 U. S. 460.

Although the parties each devoted a portion of their briefs to the waiver issue, that issue was not raised in the petition for certiorari. Since we consider “[o]nly the questions set forth in the petition or fairly comprised therein,” this Court’s Rule 23 (1) (e), we have no occasion to pass on the. correctness of the decisions below on the waiver question.

4 The judgment of the Court of Appeals is reported at 516 F. 2d 896.

5 The Second and Ninth Circuits have concluded that § 94 is the exclusive venue provision governing suits against national banking associations, while the Third Circuit has ruled that such suits may also be brought pursuant to § 27 of the Securities Exchange Act. Compare Bruns, Nordeman & Co. v. American Nat. Bank, 394 F. 2d 300 (CA2), and United States Nat. Bank v. Hill, 434 F. 2d 1019 (CA9), with Ronson Corp. v. Liquifin Aktiengesellschaft, 483 F. 2d 852 (CA3).

6 When the Langdeau Court held that the words “may be had” serve to provide mandatory and exclusive venue, it was dealing with the relationship of § 94 to a state venue statute. Since the same words are used in connection with the federal-court venue provision, the same construction is virtually inescapable. “[I]t would indeed strain language to say that the same verbs were merely permissive with respect to suits in federal courts although prohibitory as to actions in state ones.” Bruns, Nordeman & Co. v. American Nat. Bank, supra, at 303.

7 See Brown v. GSA, 425 U. S. 820; Bulova Watch Co. v. United States, 365 U. S. 753, 758; Rodgers v. United States, 185 U. S. 83, 87-89 (“It is a canon of statutory construction that a later statute, general in its terms and not expressly repealing a prior special statute, will ordinarily not affect the special provisions of such earlier statute”); Ex parte Crow Dog, 109 U. S. 556, 570-571. See also Fourco Glass Co. v. Transmirra Products Corp., 353 U. S. 222; Stonite Products Co. v. Melvin Lloyd Co., 315 U. S. 561 (specific venue statutes for patent suits prevail over general venue statutes).

8 See also 1A J. Sutherland, Statutes and Statutory Construction §23.15 (4th ed. C. Sands 1972).

9 See also Gordon v. New York Stock Exchange, 422 U. S. 659, 682; Regional Rail Reorganization Act Cases, 419 U. S. 102, 133; Silver v. New York Stock Exchange, 373 U. S. 341, 357; United States v. Borden Co., 308 U. S. 188, 198-199.

10 See also Gordon v. New York Stock Exchange, supra, at 685; United States v. National Assn. of Securities Dealers, 422 U. S. 694, 734-735.

11 The legislative history of the Securities Acts does not indicate that Congress considered banks as likely defendants in actions brought under those Acts. While Congress did examine problems stemming from the relationship of banks and the securities business in the early 1930’s, see S. Rep. No. 1455, 73d Cong., 2d Sess. (1934), it dealt with those problems in comprehensive legislation dealing only with banks. See Banking Act of 1933, 48 Stat. 162. See generally Investment Co. Institute v. Camp, 401 U. S. 617.

12 The SEC has suggested that its enforcement activity under the Securities Exchange Act will be hindered in cases of securities law violations by geographically dispersed banks, if it cannot sue all defendants, including the banks, in one proceeding. The SEC, however, was unable to cite a single instance in the last 40 years where this situation has arisen. In any event, policy arguments such as this are more appropriately addressed to Congress than to this Court. See Mercantile Nat. Bank v. Langdeau, 371 U. S. 555, 563.

13 See 15 U. S. C. §§77c(a)(2), 771 (2); cf. 15 U. S. C. §78c (a)(6).

14 See n. 11, supra.

15 This intention was expressly stated by Congress when it exempted bank securities from the registration-statements requirements of the Securities Act of 1933: a[A]dequate supervision over the issuance of securities of a national bank is exercised by the Comptroller of the Currency.” H. R. Rep. No. 85, 73d Cong., 1st Sess., 14 (1933). Subsequent Congresses have continued to follow this policy. For example, while national banks are subject to the registration, reporting, and proxy requirements of the Securities Exchange Act, in 1964 Congress amended the Act so that the administration of those parts of the Act with respect to banks was transferred from the SEC to the various federal banking authorities. See § 3 (e), 78 Stat. 568, 15 U. S. C. § 781 (i).

16 In 1959 Congress reviewed the National Bank Act and adopted an Act designed “to repeal certain [national banking] laws which have become obsolete.” See Pub. L. 86-230, 73 Stat. 457. When it did so, it did not repeal § 94.