MERCANTILE NAT. BANK v. LANGDEAU
Legal provision: 12 U.S.C. 94
Argument of Hubert D. Johnson
Chief Justice Earl Warren: Number 90, Mercantile National Bank at Dallas, Appellant, versus C.H. Langdeau, Receiver and Number 91, Republic -- Republic National Bank of Dallas, Appellant, versus C.H. Langdeau, Receiver.
Mr. Hubert D. Johnson: Mr. Chief Justice, may it please the Court.
The two cases appeals by the two banks have been consolidated same issues involved.
I will, as the attorney for appellant in number 90, held the opening -- opening fully rebuttal period used by Mr. Leachman representing the appellants in Number 91.
This case -- or these cases present an issue that does not seem to have been before the Supreme Court of United States in recent years.
A suit was brought in a state court in Travis County, Texas by the receiver of ICT Insurance Company.
Many defendants of 144 the pleading indicates, two of them or two national banks with offices established in Dallas, Texas, Dallas County, Texas approximately 200 miles away from Travis County, which Travis County is a state capital.
The two banks thought that they had a right to have venue of actions against them in the state court in their home county where they were established.
They each filed the type of pleading that the state practice calls for setting up this claim of right of venue.
In Texas, we call it a plea of privilege so designated.
It's been called a privilege by -- towards allover the country and other town.
We actually have a name for it that we call it a plea of privilege.
It asserts a right of venues.
The receiver of the insurance company controverted said “No, we have a right to maintain venue in the court here in Austin, in the state court here in Austin because there is a state statute that gives venue of actions by or against a receiver of an insolvent insurance company in the state court in Austin, in the state court”.
There's no question of jurisdiction of a state court.
There's no argument in this case that it ought to be in a federal court.
The argument pertains to where the venue should be and whether or not the venue right that was contained in the original National Bank Act of 1864 and was apparently inadvertently omitted in 1873 revised statute and then reinstated in the 1875 Act to correct errors and omissions confers that right on these two national banks.
And on the opposite side of that, the receiver Mr. Langdeau says that this state statute is controlling overrides, takes away the right or that the right doesn't exist which is another way of saying the same thing.
Now, the Court's notation in this case, noted it was postponing jurisdiction to consideration for the day along with the merits and that outset.
I would like to talk a little bit about the jury -- about the jurisdiction phrase.
The venue hearings under our state practice, and I don't think its uncommon practice, or the issue as to ju -- venue here are joined by the filing of a plea of privilege and by the filing of a controverting affidavit and then an issue is drawn and the court hears that and here its first.
It's a separate venue trial.
There were two.
In this instance, they were heard consolidately because they were the same basic issue.
Both banks, admittedly national banks, both banks owned the offices in Dallas direct clash between the state statute and the federal statute.
That was the issue that was before the Travis County District Court when it was appealed from that court to the Austin Court of Civil Appeals, the intermediate Court of Civil Appeals.
There was a stipulation filed in the record showing that that had been the only issue.
There was no dispute as to the facts.
It was a dispute as to the clash between the two laws.
The Austin Court of Civil Appeals said that they thought that the federal statute was clear and controlling and said that the venue should be transferred to District Courts in Dallas County Texas.
State District Courts in Texas, by the way by Texas constitution have jurisdiction of all damage suits seeking damages in excess of $ 1000.
So this was a $15,000,000 tort damage suit as the very lengthy pleading shows.
And so that was the order judgment, judgments entered by the Austin Court of Civil Appeals, a single opinion written in the two cases because they presented the same issue.
In the Supreme Court of Texas, took the case, the cases is up, heard them again consolidatedly handed down judgments said that the state statute was controlling.
We say that it leaves the federal statute as meaningless and having no meaning with reference to any proceeding of the state court and that was all court they were then passing on although it has two pieces, both relating to venue one and venue or proceedings in federal courts, one venue in state courts.
Now, the only jurisdictional objection or issue that's been drawn in issue is this to whether or not the judgments are final within the framework of the introductory phrases to Section 1257 dealing with appeals from final judgments of the state court of last resort.
And we've called the state court of last resort, I think, the record clearly shows.
We've had our motion of rehearing overruled withdraw in the state court on this venue issue.
We -- in our brief looked at this, we feel act carefully and they looked clear all due regard to the decisions of this Court on the interpretation of final, both in Section 1257 and in Section 1291.
And we've gone back and check as best we can.
And they seem to mean the same thing and the same policy standards of their print.
The case, it seems to us to be most clearly in point was the case of -- in the Cohen versus Mutual Benefit that came up under Section 1291.
It was subsequently followed in Swift and Company versus Compania Columbiana whatever.
I can't pronounce it.
I'm not very good in Spanish.
But it was followed in that.
It's a rather narrow -- narrow aperture.
It's not open just every time you have a temporary provisional tentative phase of a case.
But there's nothing temporary or provisional about this under the state court practice, which is where we were in the commissions that we have to deal with.
The venue trial was a separate trial.
There had to be an appeal from it within 20 days from the order or else it was final.
The Supreme Court of Texas holds that it is not appeal from, it's waived.
The determination is res judicata as to venue.
It's no longer within the control of the trial court.
They have even po -- held that at the end of the term and we just have two-month terms to this courts that the court can't even on its own motion make the change.
Justice Charles E. Whittaker: Let me see if I understand that.
After a challenge of the venue has been overruled, there is no way under your law to preserve the point, were you -- did you come in, except by appeal, if you come in and defend even though over protest you still have waived venue?
Mr. Hubert D. Johnson: That's the thrust of these holdings of the Supreme Court of Texas.
It was an exception in the early days that it commented on.
And I would not be -- I'd be less than frank but it mentioned it where you had a case that proceed immediately to trial on the merits disposed them for the same term, you can bring them up together but that was a situation in which you could perfect your appeal from the total within the 20 days.
It's a very narrow, not available in 144 defendant case, not available in hardly any case.
But conceivably, during might be convene to pass on the venue issue, the court might overruled it, go right ahead to try two or three-daytime could be brought up.
That's the only condition under which you would be safe in bringing the whole case up together in Texas.
Otherwise, the courts hold that you have a right of appeal.
You must appeal if you want to continue to complain.
Justice Charles E. Whittaker: In the case you mention, that would be a sort of a dual appeal and both are within the prescribed time.
Mr. Hubert D. Johnson: Both within the prescribed time.
You would have to beat it to the gate.
You'd have -- you'd have to stay within the time limits because it's sort of -- of an exception to the statutory.
It was now expressed in court rules but it -- it was one time expressed in statute.
Justice John M. Harlan: Of course, the fact that this is final under the Texas law, it doesn't mean that it's final.
Mr. Hubert D. Johnson: That's correct.
That is absolutely correct.
And that's the reason that we have gone to careful consideration.
We think careful consideration of the Radio Station WOW versus Johnson.
The cases that get into this area of certain segregated or partial issues unrelated to other issues such as the Cohen case and the Swift and Company case, cases that went the other ways such as Republic Natural Gas Company versus Oklahoma.
But it seems to me in fairness to say that -- that court recog -- the court recognized that this was not some sort of an arbitrary of technical matter and that you did have to make a choice between certain realities.
The cases that I find it -- have emphasized the fact that it's a federal court application intended to be cases that where the state court was trying to claim some degree of lack of finality in the appellate process such as the Richfield Oil Company case.
And I believe one of the others Arnold -- no, not Arnold case the Marquestry Railroad case where there was a power of review to me that came up in California.
And there was a continued power of review and the question was “Is this really final now or do we have to wait until that last power of review is -- is exhausted?”
But I -- I think that we -- we realize and we say in our brief and we recognized that all this Texas practice is not controlling on its court but it goes to consideration of the finality in fact and the fact that you have complete finality as a completely practical matter and that there is no other way to find out if you can be tried in Dallas County under -- under Texas practice except just to go head on in -- in Travis County.
And you probably would not have any right of complaint at all in Texas.
I know you would, whether you adhere confront the argument that where you had a final judgment and you didn't appeal timely that worried in some, too.
And you -- you have to be right on -- on the timely right.
The -- we made a -- a very lengthy and critical comparison of it with the standards that were describe in the Cohen case.
The formality, the being a formal judgment, being conclusive of the issue, the being separable from and collateral to and we're not merged into the judgment distinguishing from the Montgomery Trades Council case involving a temporary injunction where the issue is still before the Court on final injunction hearing as the same set of facts still subject to the provisional review and control of the court.
And frankly, on the basis of what we consider a fairly careful analysis of this matter, we believe this Court that this is -- these are final judgments that the necessary element of finality is present.
And this Court does have jurisdiction.
Now, we approach the question discussing many of these landmark cases with some fair accreditation because they're the court's own cases.
And they interpret them in a way but we tried to put things out and put together we think the cases in our brief that are pertinent to the issue.
We believe that they established the finality that's required.
Turning briefly to the interpretation of a statute, the question of whether we have the right, the statute which we quote in our brief was Section 57 of the National Bank Act 1864.
And it deals with actions and proceedings against national banks in specified federal courts and in specified state courts.
The 1863 Act, which just had a tenure of a little bit more than a year which authorized the formation of national banking associations took a completely different approach to it and referred to a proceedings by or against national banking associations in specified federal courts.
You'll find a complete divergence of change in approach in the 1864 Act.
The 1873 revision, for some reasons that is not apparent, did not include this particular Section 57 of the National Bank or anything -- Bank Act or anything like it but there were a number things that were left out in the 1873 revision.
And couple years later, in 1875, they were -- an act was passed to correct errors and omissions.
And this was put back some potentially the same language that it had before.
It's probably not necessary to say whether or not it was ever dropped out the law or not, it's been referred to frankly as having been a part of the law since 1864 without -- without interruption.
The first case that came along to construe this was a state court case.
A case up in New York Court, Cook case which is cited in our brief about 1867 and it said, well this is just permissive.
You can sue anywhere in the state notwithstanding what it said on the statute.
Couple of years later, the Massachusetts Court, they wrote a case called Crocker versus Marine National Bank.
In the Crocker case, arrived to just the exact opposite result of the New York Court said that this had to mean must under this context and otherwise it did not mean anything.
So, purpose meaningless if you put in the period of permissive form.
And about 1871, there was a case that called Bank of Bethel versus Pahquioque Bank which was a suit in a state court in Connecticut that went on up and came to this United States Supreme Court.
And in that case, the court adverted to the statute said that the suit had been brought in a proper state court, state court had jurisdiction.
It would mention that is was a court that was a court of competent jurisdiction simply apply the statute verbatim.
In 1880, this came before this Court again in Casey versus Adams, which was a case that came up to the state courts in Louisiana.
It came and arose under the Louisiana form of statute that dealt with determining priorities or classifying rates -- ranks of privileges the way they use it in the civil code statute where a mortgage foreclosure had occurred.
The money was in the court.
Who was to get the money?
The state statute there said that it -- this court was the only one that had the power or jursisdiction to make this determination and only on this national bank said that the New Orleans Court was the only one with jurisdiction.
It came to the United States Supreme Court and United States Supreme Court in Casey versus Adams apparently look at the statute, gave it a construction said that this was a typical interim proceeding, an action which was classified as a local action which was old as action themselves.
And that, it was their opinion that this statute was not designed to apply to such typically local actions as this.
In the next case that came before this Court and the key case as we see it is First National Bank of Charlotte, North Carolina versus Morgan.
Opinion was written in 1889 by Mr. Justice Harlan, the first Mr. Justice Harlan.
It's a very interesting opinion.
The -- a bank, national bank in North Carolina was sued in a state court in North Carolina which was not in the county in which the court maintains this business.
They were sued and for them to recover this double penalty for exacting your jury's interest.
The bank defendant lost his lawsuit on -- in the -- on the appeal in the Supreme Court of North Carolina.
For the first time, it said wait.
They couldn't say it sue us there anyway jurisdiction.
The court had no jurisdiction void judgment.
The -- or one of their contentions they are making was that only a federal court would have jurisdiction.
They were basing it on exclusive jurisdiction section of the Judiciary Act of 1789 dealing with suits to recover penalties under federal laws.
First they said that's wrong because the subsequent statute dealing with national banks was a later statute and modified that feature of it.
Then they said this state court was not the right state court.
The Supreme Court of United States had to decide what was the nature of this right.
They cited the Crocker case, the early Massachusetts case.
They cited the Bethel case.
They said that it was a personal privilege.
It was written years before the (Inaudible) case, but it sounded a great deal of lacking.
They say it was a waivable personal privilege.
If it had been claimed it must have been granted by the court -- the state court in which it had been brought.
Now, that case continues to be and is the key case.
Justice Charles E. Whittaker: What was that?
Mr. Hubert D. Johnson: First National Bank versus Morgan.
We refer to it all the way through as the Morgan case.
They used afraid that if there was an exception that statute was an exception that it was an immunity.
Pretty strong language has said no use speculating as to why Congress granted it so far as that it did grant it.
The Austin Court of Civil Appeals felt that that case was fully controlling on this federal statute.
The Supreme Court of Texas said we are not going to follow it.
We consider that dictum.
We don't think it was dictum.
We think that it was right straight to answering the issue.
The issue was what sort of a right does this statute grant?
And the answer would agree, not jurisdiction, venue, a waivable right but if asserted it must be granted, must be recognized.
And thus, the (Inaudible) case, the key case that we feel has been disregarded by the Texas Court.
It's been disregarded in a number of other states, a lot of collection of state court cases in the briefs.
We didn't do anything set put and in the appendix because we felt that only served to illustrate was the confusion among the various states and the almost extremes to which they have gone to try to make a clear statute into something that they could not apply and that's about all that they -- they seem to me to show.
There's a California case, the Monarch Wine Company case that we make particular reference to because it has such a thorough review of both state and federal court cases.
The cases that have construed and applied this statute as to venue in the federal courts, which as I say is the first part of it have without exemptions said that it's -- unless there's a waiver or consent to be sued elsewhere the venue right in the federal court says is provided for since against the national banks has provided for right here in this Section and those cases come right on down to very recently.
The argument is -- has been made just briefly the subsequent after 1889.
There was a case in 1917 it -- before this Court.
First National Bank versus Fellows ex rel. Union Trust Company, a quo warranto proceeding brought on relation in the state capital in Michigan against the Bank -- National Bank having trust powers under Section 11 (k) of the Federal Reserve Act.
And that -- in that case the banks actual office, the place of business was not in the state capital.
In the state courts, there were no argument, no -- no point made of that.
It was not urged.
It was not even urged in the United States Supreme Court although a dissenting opinion went back and say we can consider a jurisdiction when it could -- should have been in -- in this particular situation would.
Most the argument there was about whether not a Colorado type of proceeding -- was a type of proceeding that ought to be brought in the state court and whether it ought to be brought against the national bank or whether it ought to be brought exclusively in a federal court.
In 1923 in Bank of Whitney versus Bank in America case, a national bank with offices in New Orleans was sued in a federal court in the State of New York.
They attacked jurisdiction that they weren't there and weren't doing business there and couldn't be sued there.
It did not raise this venue right provide for under R.S. 5198 or Section 57 or is codified as 12 U.S.C. 94.
It didn't raise that.
And so, in the United States Supreme Court, I think its Mr. Justice Brandeis wrote the opinion as I recall.
Are those -- excuse me, he concluded saying that we do not have to reach this question.
It's not before this Court.
The jurisdiction point was there from the beginning was raised there such the absence of it's being present in the Federal District Court in New York, footnote to the opinion sites the statute R.S. 5198 cites First National Bank v. Morgan.
But it seems to me rather than declining to discuss it, he simply says there's another ground here that we do not have to go into.
That's the only -- that's the only thing as so I read the case to me.
As far as I can tell and I think we made a careful search other than one or two cases where there's been advertence to the section in federal court cases Cope versus Anderson as I recall made advertence to the 12 U.S.C. 94.
But that's the -- that's the case law on it.
The -- in 1875, the United States -- the Congress made a very material amendment to the Judiciary Act conferring jurisdiction on federal courts in the area of so-called federal question.
Apparently, prior to them and I was not aware that until I begin studying this.
Diversity had been the basis of it and sole basis of it except where there had been special statutes.
That also put provision and therefore removal on federal question -- basis.
And of course, in the light of some cases as had drawn the great deal of support from Osborn versus Second Bank of United States, you run in the situations where by virtue of federal origin, there was a basis for saying that any case involving brought by or against the National Bank was one that the bank could bring in the federal court if it wanted to and if it was sued as a defendant, it could be remove the federal court.
Well, that lead to some mandatory legislation.
In 1882 Act first which was a kind of garble and then in 1887 and 1888 Act to clarify what they meant as four or five cases and if going down the line on that and made very clear and that, that was all addressed to the matter of jurisdiction not venue all addressed to the manner of clarifying the lack of availability of jurisdiction in the federal courts because of federal origin.
The cases discussed the famous Pacific Railroad removal cases which seem to point up the Pandora's box which had been opened by the 1875 Act at least sets away the -- you got a situation in which yes, you have state court jurisdiction but it could be ousted by removal by many of these railroad companies and all of the national banks and that have to be clarified in Petri versus Continental Bank and the Whitmore versus Amoskeag Bank and the Con -- Commercial National Bank versus -- Continental National Bank versus Buford.
We cite a couple of those cases and they're all cited in the Petri case and in the Buford case, too, as I recall.
Make it put it clear as to what that amendatory legislation was driving at.
It has never been construed to have any other effect in the 1948 rewriting of the Judicial Code.
The statute contained a lot of -- of things that were expressly repealed.
And it stated among those expressly reapeal was this 1882, 1887, 1888 legislation that dealt with the same subject.
It's now in 28 U.S.C. 1348 as I recall.
And that is not to me indicative of any change in the clearer meaning of the statute.
The local action thing, I'll revert to that a little bit more.
This action here then exert contain in the pleading that takes up the first 321 pages of this record for which I would like to apologize in making the record so lengthy but I couldn't figure out how to present a case without pleading and I couldn't also figure out how to condense it because it was so difficult to -- to do that sort of thing.
But if you turn to the prayer portion of it, you'll see that it is a tort action based on a claim grand conspiracy, fraudulent conspiracy extending over from 1950 to 1957.
144 parties and some of them apparently coming in and off the scene at one time and another seeking joint and several liability a claim for some $15 million, some special claims on special acts against the different defendants which are covered in the part b of the prayer.
There's certainly nothing about it that suggests that it's anything other than the normal tort action, transitory in nature, be brought wherever you -- wherever you want to, nothing local in that nature.
The statute that they refer to here that the State Supreme Court of Texas seem to rely so heavily on was this 1955 statute.
There's nothing but a venue statute.
It refers to courts of competent jurisdiction.
It was not planned to give any new jurisdiction.
Our jurisdiction is given by constitutional provision in Texas, District Courts, all land suits, all damage suits over a thousand dollars, the courts under $500, between $200 and $500 they had to be our county court wasn't changing any of that.
There's been a state court case in Texas holding.
And it was purely a venue statute that it even applied to existing facts and that it did not violate the provisional ex post facto theory because it was a procedural venue statute.
And it just took right over and applied a lawsuit.
It was brought after even those based on facts that are ruled before.
The -- there's nothing that I can't see in the statute that purports to create any kind of an action or to make it local.
If you have an action against the receiver on a rejected claim, there is a section of the statute, Section 3 (h) of Article 21.28 that like so many instances and receivership statute says that you present your claim, one is denied then you sue in the receivership court but this is not that kind of an action.
It is just exactly the opposite.
The receiver who is suing the banks and many others for things that happened to the insurance company from 1950 to 1957 long prior to the receivership suing 28 or 30 parties that by the pleadings, allegations live outside the State are foreign corporations has not doing business in the State to get in personam jurisdiction is not going to be impossible in all probability to do it in the state district court there in Austin.
I don't think that the local action claim stands on the basis of any common law.
The definition of local is transitory by its very nature by the definitions of this Court in some cases that we've cited by the definitions of the Texas Courts in cases that we've cited there and by all the literature that you could see on it.
The statute, this Insurance Code does not purport to create any locality of action.
And the Supreme Court of Texas say we don't pass on whether this is a local or transitory action.
No indication that they were much impressed with that.
If I could just use a minute or two to summarize the opening, it is the position of the appellants in these cases which are here consolidated that the right given to them by the federal statute has been finally determined against them that the validity of the state statute is contracting with the applicability of the federal statute has been appealed, that it comes clearly within Section 1257 if it's final then it's final.
It's final under all practical tests.
It's comes clearly within the test outlined in the Cohen case.
And it's, therefore, we feel that this is a case where jurisdiction of this Court can attach, should attach the -- there's no other place, no other way that this determination whether this right exist can be made.
It's been -- we've gone the gamut in Texas and we've haven't been able to make it get into recognition.
As to the merits phrase of it, we have a very clear statute.
It's a venue statute.
It's a valuable venue right.
It's been denied.
And we feel that there isn't really a great deal of doubt about the fact that in First National Bank versus Morgan, the Court correctly construed the statute and that the Texas Supreme Court was completely erroneous in saying that this was a matter that was -- I think the use of phrase insulated from federal judicial review.
Well, when the interpretation of a federal statute and the decision as to whether or not that right is available to us is not a matter that can be brought for federal judicial review then we have completely repealed Section 1257, I think.
Justice Felix Frankfurter: Before you -- before you sit down, may I ask you unless you referred to it and I didn't hear it, do you agree with the lineup of ca -- state cases in the appellee's brief?
Is it true that --
Mr. Hubert D. Johnson: No --
Justice Felix Frankfurter: -- federal state court has gone one way, has gone against you on these two cases, two state courts?
Mr. Hubert D. Johnson: No, sir.
I did not --
Justice Felix Frankfurter: Have you -- have you marshaled the state decisions?
Mr. Hubert D. Johnson: Yes, sir, I -- I have.
I have not put them in my brief now.
I did that although the state courts but I -- I do and I have a complete disagreement with them.
I cited them in the -- in the appendix there but I don't agree with the lineup of them at all.
Justice Felix Frankfurter: Are they -- where's the appendix in your brief?
Mr. Hubert D. Johnson: The appendix to the brief in -- Brief Appellant Number 90 has a list of them over pages 53 -- I'll put my glasses on.
I can't see the numbers -- page 53, Appendix C.
I believe that that's an exhausted list of the state court decision and 53, 54, 55 --
Justice Felix Frankfurter: You got 20 and years 12, is that right?
Mr. Hubert D. Johnson: That's right.
There may be one or two.
They're not in that list but I -- I don't think so.
We made a pretty exhausting search of them and we don't agree with them at all.
Many other cases were -- like in the Morgan case, it was waived not presented.
Others are cases of strictly local action.
Justice Felix Frankfurter: Does a Morgan case in -- before this Court?
That -- it's urging on --
Mr. Hubert D. Johnson: I have --
Justice Felix Frankfurter: -- was that -- I don't mean -- I don't mean contested or -- or canvas but has there any been reference (Voice Overlap) --
Mr. Hubert D. Johnson: The only reference that I can recall, Mr. Justice Frankfurter, is in the footnote in the Whitney Bank case which said we don't have to reach this question.
Justice Felix Frankfurter: But does that mean that they left open?
Mr. Hubert D. Johnson: I didn't interpret it that way.
I didn't interpret the --
Justice Felix Frankfurter: Where's that case?
Mr. Hubert D. Johnson: -- Court's elusion to it.
Justice Felix Frankfurter: Where's that case?
Mr. Hubert D. Johnson: Whitney case appears at -- in this brief number 90, Bank of America versus Whitney at page 36.
Justice Felix Frankfurter: What's the citation, the volume?
Mr. Hubert D. Johnson: It's 261 U.S. 171.
Justice Felix Frankfurter: That's the one right now.
Mr. Hubert D. Johnson: That's the one it was in a federal court in New York on a bank that did its business in New Orleans and went up on the jurisdictional point for no -- nothing was made of the other point.
It seems to me all the Court was saying that there's another thing that this thing could've going up and we don't have to write about it because it wasn't brought before the Court.
Thank you very much.
Argument of Quentin Keith
Mr. Quentin Keith: Mr. Chief Justice, may it please the Court.
Chief Justice Earl Warren: Mr. Keith.
Mr. Quentin Keith: It might be helpful if I would give to Your Honors just a little background on the factual aspects of this matter because unlike most cases that you have before you, this case has never been tried.
We have been through all of the Courts of Texas.
And there, there hasn't a court union yet the trying to file in we're going to try this lawsuit.
The two banks here are on the two defendants that were involved in a -- in a large case.
There was a man by the name of Ben Jack Cage, a certainly co-conspirator whom we allege conceive the idea of forming a labor union, by forming an insurance company to be owned by labor unions which was an excellent idea except that Ben Jack Cage apparently had large in his heart rather than a public spirited undertaking.
Mr. Cage had occasion to appear before the Court of Criminal Appeals of Texas and unsuccessfully appealing his 10-year conviction and is now taking sanctuary in Brazil.
The banks being sued as co-conspirators and being in -- we allege that there are stopped to deny that they have not waived their right to the federal venue statute and then let me say at the very outset of this, if I may, sir, that we make no contention here and I've never made any contention that this Court cannot review state court action relating to federal statute.
We make no contention or did the State made any contention that the -- the national banks here are to be deprived of anything.
I may say I make a further concession here, sir.
I do not say that this -- that we can confer jurisdiction on a court by agreement.
But I do agree with counsel that under Texas practice, for all purposes and I emphasize the word all, for all purposes, the determination of a venue issue is now final in Texas.
It is not final should this Court determine it does not have jurisdiction here.
I think that that case can be brought along and eventually reach this Court at the conclusion of a hearing on the merits.
But I say to Your Honors that insofar as Texas Courts are concerned, the venue question will never be litigated regardless of whether this Court takes the jurisdiction assuming it denied the jurisdictional question that they did not take jurisdiction.
So far as Texas law is concern we are through litigating.
Justice Felix Frankfurter: Mr. Keith.
Mr. Quentin Keith: Yes, sir?
Justice Felix Frankfurter: I think you'll have to enlighten me a little bit.
Did I understand you to say that as of this moment, this is a non-relitigable issue in Texas Court?
Mr. Quentin Keith: Yes, sir.
Justice Felix Frankfurter: But if this Court should, according to its own standard of finality for purposes of taking jurisdiction over a state judgment suppose it has not -- does not have the quality of finality for our purposes?
Mr. Quentin Keith: Yes, sir.
Justice Felix Frankfurter: You say then the question could be litigated in the federal court?
Mr. Quentin Keith: I think so, sir, because what we are -- what we have here now is the interlocutory judgment under our practice.
It has settled the venue issue but it is still an interlocutory judgment.
We can only have one final judgment in our -- in our practice --
Justice Felix Frankfurter: If you --
Mr. Quentin Keith: -- which will be the one at the end of the road.
Justice Felix Frankfurter: If you tell me that -- that howsoever that go, howsoever that go, if it goes to the merit that on review, the Texas Supreme Court or whatever the court is that has a final to say could not review the question of venue.
Mr. Quentin Keith: No, sir.
Not again --
Justice Felix Frankfurter: But then -- then how do you open it?
Because the Supreme Court of United States says for our purposes, it is not final.
Mr. Quentin Keith: Well, I think it poses a procedural dilemma that I cannot answer and --
Justice Felix Frankfurter: But if they -- your answer -- on your answer may turn --
Mr. Quentin Keith: Well --
Justice Felix Frankfurter: -- that it's final for our purposes.
Mr. Quentin Keith: I want to be as frank as I can with Your Honors.
Justice Felix Frankfurter: But you are.
Mr. Quentin Keith: I say in the City of Wichita -- the Wichita Falls Railroad case, the McDonnell, its in 141 Texas holds flat out and plainly nonequivocally that the decision of on a hearing, on a plea of privilege by an appellate court and in this case, the last appellate that will review it is final and binding and will not be reviewed upon a subsequent hearing.
It -- it then becomes res judicata insofar as venue is concerned.
Justice Felix Frankfurter: But suppose you don't -- if I may interrupt, suppose no reviews -- suppose exception is taken that the seizure of jurisdiction by the local Texas court, suppose the present appellant having made that warrant that the Court has no jurisdiction, it's ruled against them and they duly may take an exception whatever you call it in Texas and say we'll reserve the review of that until -- until the disposition of the merits because they waived them then they couldn't raise it there after?
Mr. Quentin Keith: No, sir.
We don't have business that we waived down there, sir.
Justice Felix Frankfurter: Well now --
Mr. Quentin Keith: Your venue questions are there.
You file your plea of privilege, it must be controvert, you file what's known as a controverting affidavit.
That it comes on for hearing if that it adversely determined to either the plaintiff or the defendant, if that is to see if it is transferred over the plaintiff's objection or if it is retained over the defendant's objection.
The losing party has 20 days will then which --
Justice Felix Frankfurter: In which to -- in to which to seek a reviewing that just --
Mr. Quentin Keith: In which to appeal for practice appeal.
Justice Felix Frankfurter: In which -- then that is if he doesn't desire.
Mr. Quentin Keith: If -- that is right.
Justice Felix Frankfurter: Are you telling me -- are you telling me that the trial section law is concerned, that's final but if this Court, says it isn't final for purposes of review for -- under the original -- original article Section 25 of the Judiciary Act that then Texas might set a different review?
Mr. Quentin Keith: No, sir.
Justice Felix Frankfurter: I don't understand that.
Mr. Quentin Keith: I don't say Texas.
Justice William O. Douglas: What you're saying is --
Mr. Quentin Keith: I said this Court plea.
Justice William O. Douglas: When you come to the end of the road, we can still take it and re -- review the finding as to venues there.
Mr. Quentin Keith: That's those -- I don't think that whatever we call it a final judgment down there can't preclude this Court from eventually reviewing that decision.
I'll say the --
Justice William O. Douglas: At the end road in any of that?
Mr. Quentin Keith: Yes.
And I say for venue, we're now at the end of the road.
Justice William J. Brennan: You would have to unscramble an awful lot of eggs though, wouldn't you?
Mr. Quentin Keith: You -- yes, sir.
You would have a record that would be that they can instead of an --
Justice Felix Frankfurter: I can't understand but -- but the prior -- Texas case would come up here from final determination of your appellate court and says we're -- you don't look at.
Applying statute as to the venue disposition of the Supreme Court of the United States wants to deal with it, that it's through.
Mr. Quentin Keith: That's accepts in substance what they would say if there is a remaining federal question, the court -- the court in Washington will undoubtedly seize the broad and then review it.
Now sir, I made -- did I make myself clear?
I don't want to create or try to create jurisdiction by agreement but I don't want to try to talk to this Court into a local practice situation here that will leave us both in doubt as to where we are.
Now, in this case, if I may say to Your Honors, we have concluded here that this Court has before it now for the first time since the National Banking Act was passed nearly 100 ago, the -- the final and then the ultimate determination to make whether this is a venue or it's a jurisdictional or whether it's a mandatory statute.
First, before we get to that Section 94, I want to call Your Honors' attention to Section 24 of Article or Section 12 of the U.S. Code.
National banks shall have the right to sue and be sued, complain and defend in any court of law and equity as fully as natural person.
Now, what did the bank seek here?
It's just exactly what Ben Jack Cage sought in Brazil.
They want sanctuary and in Texas we have no such thing as branch banking.
A bank sets up business in Dallas goes out and tries to do business all over the State.
If this there's the law as they contend for that you can only sue in the county in which they are a domicile then they have sanctuary but they can go from El Paso to Orange or they can go from Texarkana to El Paso from -- from Amarillo to Galveston seeking business but regards to what they tell you, “You got the follow me home before you can sue me.”
I say to Your Honors that that's the law of sanctuary.
It has no place in our present setup of the relationship between the State and the Federal Government.
Justice Charles E. Whittaker: Well now, is it true that the statute which gives the right to sue and be used has anything to do with the place where isn't that left to the other statute namely 94 or am I not wrong?
Mr. Quentin Keith: One is Section 24.
It gets on the right pursuant basis if it is 94 that they weren't.
Justice Charles E. Whittaker: Yes.
Mr. Quentin Keith: Now, I say to Your Honors that a corporation has long since been decided by this Court that the -- it's inherent and the -- in the creation of a corporation that they have the right to sue and to be sued.
So that it if it becomes any question of whether or not we're going to give the national bank something with the state banks who complete whether or not they have.
Justice Felix Frankfurter: But if the concession of the Congress to allow suit at all in the state courts?
Mr. Quentin Keith: Yes, sir.
That I -- yes sir, I'm very re -- readily consent to this.
I say to Your Honor this, Congress has not been blind to the fact that national banks are not something that needed protection.
They are not an in -- industry any longer.
In facts does the national banks although may not outnumber our state banks later about four other powerful banking institutions in our area.
We are trying to say to Your Honors this, before I get to the -- I see we're practically on the adjournment time, I'm not going to get in too much state statutes yet as to where I say this course of action come from of why it must be brought there and ousted.
I say to Your Honors is this that this national banking statute were passed 1863 and so on down through the several amendments there, too, was designed for the reason of brief to protect the infant industry.
And for 100 years this Court has not passed the point of direct that is to say whether or not now they can be sued as other citizens of the states may be.
Chief Justice Earl Warren: We'll recess now.
Argument of Quentin Keith
Chief Justice Earl Warren: Mercantile National Bank at Dallas, Appellant, versus C. H. Langdeau, Receiver and Number 91, Republic National Bank of Dallas, versus C. H. Langdeau, Receiver.
Mr. Keith, you may continue your argument.
Mr. Quentin Keith: Mr. Chief Justice, and may it please the Court.
Upon adjournment yesterday afternoon, I have words about to pass to another phase of the matter.
That is to say, I do not dispute the fact that this Court can always determine the finality of a state court judgment and the determination of the finality of a state court judgment as a matter for this Court to determine.
So, our Texas practice will not control, of course and I so hope can see, with Your Honors' permission I'll now pass on to the -- the matters involved in this lawsuit as -- if it reaches the merits, the Court reaches the merits of the consideration of this suit originated with Mr. Langdeau as the receiver appointed of an insolvent insurance company.
He was appointed a receiver under our Liquidation Code or under our Insurance Code.
This is a lawsuit that was brought under the provisions of a particular Texas statute which says in substance and it is quoted in our brief “that the Court of competent jurisdiction of the county in which delinquency proceedings are pending, under this Act shall have venue to hear and determine all actions and proceedings et cetera instituted by the receiver”.
That is followed by another provision of the code which says a court, unless the same clearly appears to the contrary from the text, means that court in which the delinquency proceedings are pending.
Now, I say to you, Your Honor, that this is the type of a case that the Supreme Court mentioned and had in mind when they brought upon the decision in Casey against Adams.
It was your -- with the Court's permission, I would like to quote very briefly from Casey against Adams.
That is the case Mr. Johnson alluded to very briefly yesterday.
That is the only case by this Court which squarely presents a question involved in this case.
That is to say whether or not this particular -- peculiar federal statute relating to national banks must be observed in every instance and that there are no exceptions.
Justice Felix Frankfurter: I don't -- Mr. Keith --
Mr. Quentin Keith: Yes, sir.
Justice Felix Frankfurter: I fully understand what was decided in Morgan but I do not quite see why you say it wasn't presented there.
Mr. Quentin Keith: I've -- I had not alluded to Morgan if -- if Your Honor please.
I was speaking --
Justice Felix Frankfurter: But you just said, the only -- you just said that Casey was the only case in which that issue would (Voice Overlap).
Mr. Quentin Keith: The Morgan case, sir, if I may allude to it.
The Morgan case held that the bank had waived this right.
Justice Felix Frankfurter: I understand that.
Mr. Quentin Keith: Yes, sir.
Justice Felix Frankfurter: I fully understand that.
Mr. Quentin Keith: Now --
Justice Felix Frankfurter: I understand that.
All I'm saying is that before they got to waive, they considered -- the Court considered quite extensively, what it is that required waiver or what -- what is -- what's involved in the waiver.
Mr. Quentin Keith: Correct, sir.
Justice Felix Frankfurter: I fully understand that you can say technically that was a -- that was a dictum.
And if the Court had written an opinion in which it said in fact, whatever may be the requirement of the statute in this case, you're not called upon to decide it because even if it was waived, but there was no even if talking in the Morgan opinion, was there?
Mr. Quentin Keith: No, sir -- no, sir.
I concede sir, that there is some language in the Morgan case that is adverse.
But I say to Your Honor and I say again that Casey against Adams is the only case in which this Court has squarely faced and where it was not over to dictum.
Justice Felix Frankfurter: You said -- I followed you yesterday.
I thought your argument yesterday was, and I don't see why you shouldn't have a greater wisdom overnight.
But your argument -- your argument yesterday was that the impact of national banks or the role of national banks in the economy in -- in the banking scheme of the country as a matter of fact has considerably changed since the Morgan case in that knowledge, whatever may numerical number of national banks in Texas, their power unrelated to the unit of banks, their power is far greater than the larger number of state banks, that's what your oral argument yesterday, isn't it?
Mr. Quentin Keith: There is no question -- there is no question about that.
It does not appear in the record but it --
Justice Felix Frankfurter: Well, I understood to say that you wanted us in effect understanding these words.
You properly, to my point of view, you said that what was said in Morgan should be reconsidered because the underlying circumstances were different.
Mr. Quentin Keith: I will still adhere to that statement, sir.
But if I come back and I repeat sir with your permission that Casey against Adams is the only case in which this Court has squarely faced the issue of Section 94 as to whether or not it is a mandatory provision.
There, if I may say so, was a case wherein a bank in New Orleans had timely claimed their privilege to be sued in New Orleans, but the land upon which the lawsuit was predicated to clear the title to it was situated in another phrase, a similar -- a similar to a county in the State of Louisiana.
The court there held that -- and this is a very brief quotation that I want to present to the Court.
It says this, “We think this statute, we think relates to transitory action only and not to such actions as or by law local in their nature”.
And that Section 5136, that's the predecessor of the present Section 24, subjects the banks to suits at law or in equity as fully as natural persons, and we see nowhere in the banking act any evidence on the part of the Congress to exempt banks from the ordinary rules affecting the locality of actions found at all local claims.
Justice Felix Frankfurter: I don't remember and you will tell me, the Casey case was earlier than the Morgan case.
Mr. Quentin Keith: Yes, sir.
The Casey case --
Justice Felix Frankfurter: If the Morgan case eat what you just quoted.
Mr. Quentin Keith: The Casey case was, sir, was in 19 -- in 1880 and the Morgan case 19 years later in 1899.
Justice Felix Frankfurter: Well, now that the Morgan case --
Mr. Quentin Keith: The Morgan case --
Justice Felix Frankfurter: -- go back on what -- what you'd find in Casey?
Mr. Quentin Keith: Sir?
Justice Felix Frankfurter: Did the Morgan case go back on what you'd find in Casey?
Mr. Quentin Keith: I do not, sir.
I do not think that the Morgan case --
Justice Felix Frankfurter: It seems to me very strange that the Morgan case discussing, not saying we're not qualified to discuss these things for there was waiver thus, discuss it on the merits quite -- quite unreservedly that the later case after a full discussion should have overruled in effect what you say was the prior law.
Mr. Quentin Keith: If they overruled it sir, they overruled it sub silentio because it had mention it, I don't know why, but if Your Honor will study the Morgan case, Casey against Adams wasn't mentioned there.
And then certainly 19 years before there was bound about an overlapping judge on that point.
I didn't study the personnel.
Justice Felix Frankfurter: No just -- no justices had few books to turn to when they --
Mr. Quentin Keith: Yes, sir but --
Justice Felix Frankfurter: -- cases that we have.
Mr. Quentin Keith: Yes, they had few books.
But I think they studied them probably as well as we do some of our myriad of books.
Justice Felix Frankfurter: Yes.
Well, that's really insignificant that they didn't mention it?
Mr. Quentin Keith: Well, I would think sir that when they once have held a case and upheld firmly and definitely on a -- on a provision that was squarely presented and where it should not be considered over detective that they meant to hold what they say.
And if it is overruled, it will be overruled as a matter of fact and expressly so.
Now, sir, this case presents one wherein a lawsuit could have been brought in all over the one county because this man, its property itself was in custodia legis.
The receiver had the control and the custody of the property itself.
He was invested by a statutory authority to bring the suit in one county and one only.
He brought that suit there.
And he brought it against many individuals.
Let me say to Your Honors that while this case has not yet been tried, this case precedes against the banks on the theory of a conspiracy on so-called year-end transactions.
For instance and I now call Your Honors attention to page 180 and 100 and -- wait a minute, it is 169 of the -- of the record, as an illustration on what we are called upon here to establish upon the trial of this Court is on a transaction, for instance, that occurred on December 31 of 1953, the insurance company promoters and their operators being desires and of decorating their year-end statement borrowed $400,000 from the Republic Bank.
Taking a security therefore, a box sealed up with an affidavit on it that it contains $584,000 worth of premium load.
They purported to buy $400,000 worth of bonds on the 31st of December.
They earmark those bonds and on January 2, reappropriated those bonds to their own accounts, canceled out the note and collected some few dollars in interest on $88.88 interest.
Now, we have a conspiracy charge out of proposition that they were bolstering, that the banks directly participate or it is in the scheme to defraud the public.
Now we have, in a conspiracy action generally and touch as it is elsewhere where a person joins a conspiracy already in existence and/or he participates in that conspiracy and where you get, you then can choose your form.
We chose a form here because it was a statutory choice.
We now have a situation wherein a conspiracy action such as I have demonstrate.
That's only one of them.
There are many of them.
Justice Hugo L. Black: What do you mean by statutory choice?
Mr. Quentin Keith: By that is to say the Insurance Code which created this man's title the “statutory liquidator”, said under our Texas practice that new lawsuits shall be -- be brought in a court of competent jurisdiction where the delinquency proceedings are pending.
The delinquency proceedings which are not challenged were brought in Travis County that has receipt of Government in Texas.
The -- that is the court of competent jurisdiction having custody of the property of the defunct insurance company, one of the assets which is this lawsuit, seeking to recoup the money that the -- the debtors and the stockholders and the -- the unfortunate creditors of this company were defrauded of.
So we say to Your Honors that this is a suit somewhat lacked the Florida case had in the Okeechobee case wherein -- I grant you again that that is a state court case.
It is not binding and may be not even persuasive upon this Court.
But the Okeechobee case was a situation wherein a -- two banks in Florida had contracted with a county whereby that they were going to deposit certain securities to secure county of funds.
One of the banks was located in Jacksonville and another one was located, I believe, in Lake County.
But in any event in two separate counties, there was a tripartite arrangement there.
The Florida Court considered the statute which we have involved here and said in substance that if -- if, and my I quote for just a moment from that, “The suit could not be maintained against the one under the allegation of this bill of complaint without the other being joined in that suit under the Florida National Bank of Jacksonville may not be sued upon its joint contract in Okeechobee County and the People's Bank of Okeechobee County cannot be sued on its joint contract in Duval County then there is no jurisdiction in which a complainant may maintain its suit.
We're not quite in that position here because granted that we can try a conspiracy case in two different forms.
But Your Honors well know that the difficulty appended upon that.
If you try one set of co-conspirator as one place, it is the other fellow that is guilty.
If you try them together, it's the only place a successful conspiracy suit can ever be prosecuted.
Now, if the Court please, I know I violated one of the Court's rules so we're going to split the argument.
May I submit the remainder of the time to Mr. Cureton.
Thank you, sir.
Argument of William E. Cureton
Mr. William E. Cureton: Mr. Chief Justice --
Chief Justice Earl Warren: Mr. Cureton.
Mr. William E. Cureton: -- and if it please the Court.
The first significant and most important result of construing this federal statute has -- it's urged on the Court by the appellants, is that you are going to create a substantial area, a substantial number of cases where neither a federal court nor any state court will have jurisdiction.
Justice Hugo L. Black: Why would this follow?
Mr. William E. Cureton: That will fall up for this reason.
National banks cannot be sued or sue in a federal court at this time in most instances except in the same cases in which a local state bank or for that matter, a local state corp -- corporation can sue or be sued in a federal court.
There are certain exceptions when there are suits involving a co --controller but that -- that's a very limited area.
Justice Felix Frankfurter: Would you mind repeating that?
I don't think I get the force of it.
Mr. William E. Cureton: The force of it is that a national bank cannot sue in a federal court or be sued in a federal court except in the same jurisdictional circumstances in which a local state bank --
Justice Felix Frankfurter: Is that by federal statute?
Mr. William E. Cureton: That is by federal statute.
Justice Felix Frankfurter: What is it?
Have you got the reference?
Mr. William E. Cureton: I have, sir.
Justice Felix Frankfurter: I thought those were independent provisions?
Mr. William E. Cureton: That, Your Honor, was a -- first grew out of a statute passed on July the 12th, 1882.
It's in my briefs.
Justice Felix Frankfurter: Where is that in your briefs?
Mr. William E. Cureton: I'll have it just a second.
Page 27 of the brief.
Justice Felix Frankfurter: This is 91 you're (Inaudible)
Justice Hugo L. Black: This was passed on after the other statute?
Mr. William E. Cureton: This was passed on July the 12th, 1882.
And it grew out of Chief Justice Marshall's decision in the Osborn case in which -- in which he decided because a national bank was a creature of Congress of federal statute that thereof -- and all of it's rights, powers and privileges were the result of the act of Congress therefore, that any suit that was instituted by or against the bank on any -- even a private cause of action necessarily was a suit under the laws of the United States and therefore it was removable.
The Railroad cases followed that same reasoning until -- until this statute and then a --
Justice Felix Frankfurter: What page did you say of your brief?
You said 90 --
Justice Hugo L. Black: On page 27 at the -- near the top of the page.
Justice Felix Frankfurter: Alright.
Chief Justice Earl Warren: Go right ahead, Mr. Cureton.
Mr. William E. Cureton: Now --
Justice Felix Frankfurter: That -- is that in construed to the (Voice Overlap) means?
Mr. William E. Cureton: Yes.
Justice Felix Frankfurter: What you said is that a suit against the national bank can only be brought in the county in which a state and all the state banks could be sued.Is that right?
Mr. William E. Cureton: That is not correct, Your Honor.
Justice Felix Frankfurter: What did you say?
Mr. William E. Cureton: Mr. Justice Frankfurter, I said that a national bank can only institute a suit in a federal court or be sued in a federal Court under the same jurisdictional circumstances that a local state bank with -- with a limited exception set out by the statute --
Justice Felix Frankfurter: But that has nothing to do as to the venue of the county.
Otherwise, this act would have repealed the earlier statute.
Mr. William E. Cureton: Mr. -- and that is exactly my contention in -- in our brief, Your Honor.
Justice Felix Frankfurter: If you --
Mr. William E. Cureton: And I -- what I am trying to demonstrate is that that being true, and since our state venue and the counties in which suit can be brought in the states, the locality of actions in the state are governed by state law.
For example, a suit involving title to the land like in the Casey versus Adams case.
We can only bring that suit in our statute in Texas like most statutes and this has common law history, too, says that it must be brought in the county where the land is located.
Justice Felix Frankfurter: But if you are right, that's an easy answer to this whole case then, all the case that I've been talking -- I've been talking irrelevances.
What you're now saying is, in order to determine where a federal -- where a national bank may be sued, you go to the state -- to the state venue provision pursuing a state there?
Mr. William E. Cureton: That is correct, sir.
Justice Felix Frankfurter: Well, if that's so, there's no problem.
You've just turned 94 around instead of saying that the statute in 94 defined by Congress where a suit may be brought against the -- against the national bank even if brought in the state court.
Do not make federal jurisdiction pendent on state jurisdiction.
Mr. William E. Cureton: I'm trying to say, Mr. Justice Frankfurter --
Justice Felix Frankfurter: Is that what you're saying?
Mr. William E. Cureton: -- that we -- that there -- if you follow that construction of the statute urged by the appellant, that you have a no man's land area in which you have numerous cases that cannot be filed either in the federal court or the state court because the state statute controls the locality of actions filed in the State Court.
And if it's a suit for the title of the land, it must be brought there and cannot be brought elsewhere.
And if -- if it is a case in which the national bank cannot file in a federal court or cannot be sued in the federal court then there is no court anywhere in the land where that particular suit can be filed.
And that was --
Justice Felix Frankfurter: If you'll appeal at the other side because I'm trying to find out what you are saying.
And if I follow you, what you are saying is, jurisdiction against the -- in a suit involving a national bank in the federal court is determined by the jurisdiction against the state bank in a state court.
Is that what you're saying?
Mr. William E. Cureton: That is what I'm saying.
Justice Felix Frankfurter: And that means that Section 94 is repealed.
Mr. William E. Cureton: That is one of the positions that we are -- have taken throughout this course and it's in our brief.
Justice Felix Frankfurter: Okay (Voice Overlap).
Mr. William E. Cureton: That is correct, sir.
That is correct, sir.
Because -- I say that because this statute passed in 1882 following the difficulties that grew out of Chief Justice Marshall's opinion in the Osborn case in which they were removing every kind of case possible no matter what the amount was or the -- to the federal courts was passed in which it says provided however, that jurisdiction for suits hereafter brought by or against any association established under any law providing for national banking associations except suits between them and certain United States Government officials and the Government shall be the same as and not other than the jurisdiction for a suit by or against banks not organized under any law of the United States which do or might do banking business whereas such national banking association may be doing business.
And it winds up and says, “And all laws and parts of laws of the United States inconsistent with this provision, provides all be and the same are hereby repealed”.
Justice John M. Harlan: What section is that?
Is that in the code?
Mr. William E. Cureton: That is not in the code now.
That remained in the code of the United States from July the 12th, 1882 until in 1948.
Now, this is a part of the Banking Code.
In July -- in 1948, when the Judiciary Act was passed, it was repealed as a part of the passing of the Judiciary Act without comment although most statutes that were repealed, there were some specific reason gave -- given for that.
But in 1948, in passing Title 28, the Judiciary Code, it was repealed without comment.
But what I'm saying, if this repealed Section 94 in 1882, the repealing of this statute in 1948 in no way revise or reconstitute Section 94.
Justice John M. Harlan: But was this argument (Inaudible)?
Mr. William E. Cureton: No, sir it did not.
It's still a part of the banking provision.
It was not.
And the 1920 -- I'll call your attention further.
The 1926 recodification did not repeal the prior existing laws but we must go back to what they were if there's any question about it.
Justice Felix Frankfurter: But you're also saying, if you're right, that when this Court discussed Section 94 in 18 -- in the Morgan case, it discussed the Section that has been repealed and assumed that this was in existence.
Mr. William E. Cureton: In the Morgan case, the Court expressly said, “This case is not determined on the basis of the Act of July the 12th, 1882 because it was passed subject -- subsequent to the filing of this suit and by its own terms has no application to it.
Justice Felix Frankfurter: Yes, I know that.
Mr. William E. Cureton: And if it had no application to that case, the Court has --
Justice Felix Frankfurter: But, you --
Mr. William E. Cureton: -- except for saying that the Court had no reason to further discuss it.
Justice Felix Frankfurter: And what -- and you are saying now that, impliedly, the 1882 Act repealed 94 and therefore in 1882 was repealed by 18 -- 1948.
There was nothing left.
Mr. William E. Cureton: That is correct, sir.
Justice Felix Frankfurter: That's what you're saying?
Mr. William E. Cureton: And I -- I particularly -- I want to come back to the question that if -- the importance of our position because you're going to have a no man's land area in Casey versus --
Justice Felix Frankfurter: Only if you are right, only if you are right.
You're assuming that you are right.
Otherwise, it wouldn't be true.
Mr. William E. Cureton: Well, if -- if a national bank can always sue or be sued in a federal court, then I am wrong.
But If I am correct in saying that a national bank except in certain exceptional instances cannot sue or be sued in a federal court.
And I feel personally quite sure that I am correct in that except under the same jurisdictional circumstances that a local national bank or a local corporation, then you have a land title suit in Texas.
But you don't have a diversity of parties.
You don't have one of these peculiar or one of those federal parties in there, that suit cannot be filed in the federal courts.
It cannot be tried in the state courts in Dallas County in this instance.
It must be tried where the land is located.
Therefore, no court has jurisdiction.
That's the significance of Casey versus Adams.
The Court there solved this.
It solved that in suits when they're talking about a local suit.
It solve that under state practice, that suit must be where the raise was in that instance.
And that if they should give 94 the full literal significance that is urged on this Court, that there would be no court that had jurisdiction.
And therefore they said --
Justice Felix Frankfurter: Unless 94 has superiority over your state law restriction.
Mr. William E. Cureton: Mr. Justice Frankfurter, if the suit cannot be filed in a federal court because there's no diversity of parties or it has no jurisdiction, and it cannot be filed in the county in the state court where the banks are located because it's a land suit for example, there is no court, federal or state that has jurisdiction of that course of action.
Justice Felix Frankfurter: But you're assuming that Congress cannot pass a venue statute that should control and put to one side a restrictive state venue statute relating to federal national bank.
Mr. William E. Cureton: Each one of these federal statutes have recognized that the Congress cannot give or take away or affect the jurisdiction of the state court insofar as it's -- the causes of action that it will entertain.
Justice Felix Frankfurter: But the whole -- I'd like to be clarified about this.
The whole power to sue a national bank in a state court is federally granted.
The Congress may take it all away and restrict for the whole jurisdiction to the federal court.
Mr. William E. Cureton: Mr. Justice Frankfurter, may, if I -- if I may, let me grasp just a moment on that question.
In trying to -- to establish what Section 94 mean, I've gone clear back to the creation of the First Bank of the United States.
And I did that because I find that the author of the first National Banking Act of 1863, apparently from reading the Acts, had decided on the previous charters.
The first national -- the first national bank was created in 18 -- 1791 and its charter provided that the bank was empowered to sue and be sued, defend, complain and answer in any court of record or anywhere else.
Now, the first case that came up under that Act was the Deveaux case, which was simply a suit for conversion by some Georgia citizens against a branch of that bank situated in Georgia, there was not a diversity of citizenship nor was there any other jurisdictional reason why it could be filed in a federal court.
Justice Felix Frankfurter: That isn't so, I'm sorry to say.
National banks from the beginning, I happen to be familiar with the history of what you are now reading, national banks from the constitutional power to create them, rested on the power of the Federal Government to create federal agents, national banks of federal agencies and therefore it's within the power of Congress to restrict suit, the Court through which suits may be brought against federal agencies.
Mr. William E. Cureton: Mr. Justice Frankfurter, I do not deny that in the least.
But Chief Justice Marshall in that case held that the Court did not have jurisdiction.
And he -- since corporations where quite new in the United States that --
Justice Felix Frankfurter: But that would be for a different --
Mr. William E. Cureton: Alright.
Justice Felix Frankfurter: -- reason because of the whole conception of corporations in those areas --
Mr. William E. Cureton: Alright.
Justice Felix Frankfurter: -- and incorporated would deem to thee --
Mr. William E. Cureton: Yes, sir.
Justice Felix Frankfurter: -- individual citizens of the place where the thing was incorporated.
Mr. William E. Cureton: That is true sir.
But when we pass on -- when that charter to that bank expired and it was recreated during the war of 1812.
And the Osborn case came up subsequently in the early 1820's.
That particular provision of the charter had been modified to say that state courts of competent jurisdiction and the Federal Circuit Courts would have jurisdiction.
And Chief Justice Marshall in the Osborn case held to the Court in that particular instance had jurisdiction and quotes the new language in the second national bank charter and sustained it.
Now, that charter expired during the Jackson Administration and there were no national banks until the National Banking Act of 1863.
Since Chief Justice Marshall, we might not then viewing it from this 1960 have the same view but since he had placed significance on the mentioning of the federal courts by name, I say that it was a natural thing to do for the author of the bill in 1863 to have said the same thing in which in 1863, they did with no mention of state courts at that time, but where the extra language for the first time may be sued in the district in which they are located.
In 1864, that whole National Banking Act was repealed and a new one passed which included state courts and had the reference to the county and in the city in which the suits were filed, which I say, it was an attempt to grant affirmatively, not a restriction but an affirmative grant growing out of the history in the Deveaux and the Osborn cases and not an attempt to restrict it.
As a matter of fact, Chief Justice Marshall himself in the Osborn's case has this to say about the Deveaux case, whether this decision be right or wrong, he had rejected in the Deveaux case, this language that it could be sue or be sued in any court of record, whether this decision be right or wrong, it amounts only to a declaration that a general capacity of the bank to sue without mentioning the courts of the United States may not give a right to sue in those courts.There -- it -- with that language, there is no -- there's -- it -- it seems to me to follow plainly that the offer of the banks of the Act in 1863 and 1864, thought it necessary to mention the courts and that it was attempt to grant jurisdiction which were in reality this other language was amply brought to have permitted such suits.
And if I may, in the -- this Supreme Court subsequently speaking through Mr. Justice Bradley said that the result of the Deveaux case was to leave the banks open to be sued entirely and only in state courts.
And that case is cited in our brief and Mr. -- Mr. Bradley's language is quoted there.
He says that the result of the Deveaux case was not to leave the banks where they couldn't sue or be sued in any court.
But it left them solely to be sued and sue in state courts because the language of the act of Congress that says that they can sue and be sued in any court of record and that is in substance still a part of the National Banking Act to this day is broad enough.
And there's no reason on Earth as we look -- as we view it now why that shouldn't be interpreted to give them broad powers.
And if this other Act is an attempt to grant affirmatively power and not a restriction where you have another part of the statute that grants broader authority, then I say that it's not controlled.
And if -- if we examine the terms of the statute, it doesn't say, may only be brought in the county where -- where the bank is brought.
It doesn't say shall be brought.
It doesn't say must be brought.
It says maybe brought, which would indicate that the author means that he thinks he is granting something and that if he doesn't grant more, there is no more wherein in fact as a part of the banking -- Banking Act in 1863 and to the present day is this provision that they can be sued in any court.
Unknown Speaker: Perhaps there's more permissive, what purpose does it serve?
What good is it?
Mr. William E. Cureton: I do not think at this time, Your Honor.
It is our position that it is -- serves no purpose.
But it's -- I -- I think it necessary that I undertake to explain the existence of the statute and why it exist.
And I believe that the language of the Deveaux case and the Osborn case in the history of suits are examined carefully.
And when Just -- Chief Justice Marshall says that naming the federal courts was important and necessary, I think it not surprising that in 1863, when the National Banking Act was passed, that they again named the federal courts at that time the District Courts and Circuit Courts and territorial courts.
And again, and then of course there was doubt -- necessarily doubt with reference to state courts, name state courts.
Justice Felix Frankfurter: Why should there be doubt about state court, if you are right?
Mr. William E. Cureton: I don't -- I don't think there is.
Justice Felix Frankfurter: You just said that if there was doubt about a state court, that's why I'm asking you why there should be doubt about state courts.
You're accounted for their references to state courts that were doubts.
What doubt was it?
Mr. William E. Cureton: Mr. Justice Frankfurter, I don't believe that in -- in reading the Deveaux case --
Justice Felix Frankfurter: But --
Mr. William E. Cureton: -- and --
Justice Felix Frankfurter: you --
Mr. William E. Cureton: -- the Osborn case that -- that -- that a person can say parti -- not -- of course, not viewing it from our standpoint at this time but at that time, that there were not many grave doubts because the -- just -- Chief Justice Marshall for example says that a corporation couldn't be a citizen of a state.
And therefore, there wouldn't be any diversity jurisdiction.
Now, well, that's changed of course.
There are many doubts that are cast on the subject.
Justice Felix Frankfurter: In the (Inaudible) case in 309 U.S. this Court pointed out that the whole concept, the whole climate of opinion, the whole way of looking at things about corporation in the days of the Deveaux case were wholly different from our conception regarding a corporation as a legal personnel, and that's at the bottom of the Deveaux case, not the relation between state and federal courts.
Mr. William E. Cureton: He (Voice Overlap)
Justice Felix Frankfurter: They didn't conceive of a corporation as being a legal person suing and suable, they thought a corporation with a collection, was a company of adventurer as they call it.
Mr. William E. Cureton: That -- if they talk, he discuss this whether or not if all of the stockholders lived in a certain county, venue or state, then that might create diversity of citizens.
Justice Felix Frankfurter: By the time they got around to -- by the time they got around to the -- at the time of the Casey case and the Morgan case, that motion of a corporation have long since gone by way of the Bank of Augusta against Earle and all the other decisions when Chief Justice Stone is gone.
Mr. William E. Cureton: Let me come back if I may to this proposition.
I have searched through the library here in the Supreme Court as well as our own and I find no congressional committee reports and no debates on the intent or purpose of this section.
I think in the Morgan case, you may well -- the Court is in there in discussing the -- he speculates on possible purposes that it might have.
Since it had not been properly raised in the lower case and the Morgan case, it was waived and the Court, technically, did not have to reach the question and did -- it didn't cite or mention Casey versus Adams which was the only Supreme Court case in existence that time which had held local actions both by common law and by statute.
That's the language of Casey versus Adams.
Local actions both by common law as that distinction is made between local and transitory actions and by statute.
And the Court was saying that because the Court realize what my first premise here, that the locality of actions in state courts is fixed by state law, either common law or statute and that there's a broad area where no court would have jurisdiction.
If this statute has given an absolute literal, unbendable interpretation and that if you file a suit -- if you had a suit involving the title of land, I use that, there are many other cases in some county where the bank wasn't located and the federal court didn't have jurisdiction by reason of diversity and the state court in the county where the bank was located doesn't have jurisdiction by reason of its own local laws governing the locality of action.
No court has jurisdictions.
No court has jurisdiction anywhere.
Casey versus Adams is founded on that principle.
The Morgan case never reached it.
It was a waiver case.
The bank tried its case, it didn't raise the question, only raised it on appeal.
And the only actual decision in the Morgan case is that of waiver.
Justice Hugo L. Black: Was this argument (Voice Overlap)
Unknown Speaker: (Inaudible)
Mr. William E. Cureton: I have cited in the brief a case from Connecticut and another case which specifically and expressly say that when a statute fixes the county in which the court had venue, that a common law distinction of local and transitory no longer upholds and that it is a local action by state statute.
We do have a Texas case that holds that -- our venue is entirely regulated by statute that the common law distinction between transitory and local action no longer holds and that they're entirely governed by statute.
And in the Court in Casey versus Adams not only says the common law distinction but by statute recognizing that in many states that the venue is controlled or the locality of the action is controlled by a statute.
Justice Potter Stewart: On this case, the Texas Court explicitly refrained from deciding whether or not this was a local action, am I right?
Mr. William E. Cureton: That is, they decided without it.
Justice Potter Stewart: So, if -- if you're right as to the Casey case that carved out of its -- at least carved out on the exception that 94 would respect the local actions and if this Court should decide that that's all it did, then would it be your view that it would be our duty to remand it to the Texas Court to decide whether or not this was a local action under local law?
Mr. William E. Cureton: It would be, sir.
Justice Potter Stewart: Rather than for us to determine that it was a local action.
This certainly isn't the kind of traditional interim action about the -- about the --
Mr. William E. Cureton: It isn't but it also --
Justice Potter Stewart: It is not a suit to acquire title or anything like that.
Mr. William E. Cureton: No, but it is a peculiarly local actions since the Court in which the delinquency proceedings are pending has custodia legis of all of the insolvent insurance company's property.
Justice Potter Stewart: The Court --
Mr. William E. Cureton: And it (Voice Overlap) it is a District Court of general jurisdiction in Travis County, Texas.
Justice Potter Stewart: Isn't a tort action?
Mr. William E. Cureton: This -- yes, this -- this suit if independent of the statute and going back to the common law of distinction between transitory and -- and local action would be transitory and it is -- it is a sec -- we -- I -- I wouldn't say it's entirely tort because the suit against the banks here involves not only a charge of conspiracy but also that having let this man Ben Jack Cage borrowed $920,000 on December the 31st -- personally on his personal note, the vice president of the bank taking out a deposit ticket to the insurance company under a long committees agreement that the money won't be removed and it will be paid back on January the 2nd.
And then, having been paid back the banks had stopped to deny that those are not the funds of the insurance company.
So, it's not entirely tort.
Justice Potter Stewart: So what -- what -- what was that slander theory be?
Mr. William E. Cureton: I still think that's (Voice Overlap)
Justice Potter Stewart: I mean that's just (Voice Overlap).
Mr. William E. Cureton: Yes, I still think that's a transitory.
If you go back to the common law distinction but -- I'd go back to Casey versus Adams which not only says local action has a common law of history but as made so by a statute.
Justice Potter Stewart: Where is -- can you tell us any opinion, any record, which I guess begins on page 365, where it is that the Texas Court says that they are refraining from deciding whether or not there's a local action.
I can't find it but I --
Mr. William E. Cureton: They specifically say that --
Justice Potter Stewart: Well, I thought they had.
Mr. William E. Cureton: We make no point with that.
Justice Potter Stewart: I thought they had.
Mr. William E. Cureton: We of course, were trying this case with an eye on being here today.
And we're -- and we're familiar with Casey versus Adams and -- and wanted them to decide that point.
But they actually decided it on a different basis.
Justice Potter Stewart: On a broader basis.
Mr. William E. Cureton: On a broader basis and -- and ignore that point except to say that they -- they are not making that decision.
Justice Potter Stewart: But then my question to you and I guess perhaps you've answered it is whether you think it's up to us to decide whether this was a local action or whether if we decide that Casey exception should prevail that we should remand it to the Texas Court to decide or whether under local laws or local action.
Mr. William E. Cureton: There -- if I may say this much further, Mr. Justice Stewart.
There had been one case on -- that has come up from the lower courts as to whether this particular statute was mandatory and even controlled over other cases where they were -- had been mandatory before.
It went to intermediate Appellate Court, the Supreme Court of Texas refused a writ in it.
There has recently been a case coming up from another intermediate court that held to the reverse.
The Supreme Court in -- of Texas in the last two weeks has granted a writ in that case.
In the first case, they -- they let the matter stand in that case they -- which held in reverse, they have granted a writ so we have -- of course, we have reason to believe that they will hold that this statute is not mandatory in controlling over other mandatory provisions in our code.
Justice Felix Frankfurter: But basically in Adams as Justice Stewart indicated, Casey and Adams for the construction of Section 94 in a case relating to real estate.
And Chief Justice in writing the opinion said local actions which are in the nature which concern the things which are in the nature of suits.
And therefore, he construed the statute to mean that if you go after the thing, you have to go after it where it is.
Isn't that right?
Isn't that what the Chief Justice said?
Mr. William E. Cureton: He did say that but he also said, Mr. Justice Frankfurter, and made it very plain that he referred to local actions both at common law and local actions made so by statute.
Justice Felix Frankfurter: But it can't be whether the state by calling all actions local can derail the federal act.
That's too easy.
Mr. William E. Cureton: Mr. Justice Frankfurter, in all candid, there is no -- there is no language of course in 94 that specifically for the course in Casey versus Adams to base its decision on.
I understand --
Justice Felix Frankfurter: But, we --
Mr. William E. Cureton: -- we understand that.
Justice Felix Frankfurter: But we lawyers constantly construe language in its settings.
Mr. William E. Cureton: And --
Justice Felix Frankfurter: Chief Justice -- waived it perfectly, if I may say so without disrespect, lawyer-like things and say you construe this in the light of circumstances that went vividly in the minds of the Congress.
And when you're confronted with that kind of a problem, you put yourself in the place of the Congress.
And it couldn't be that he in effect, these aren't his words, I'll come to the exact words in a minute, but couldn't be that they meant suit must be brought and get hold of the thing where there is no thing.
And therefore he said it doesn't apply to interim proceedings.
Mr. William E. Cureton: It is my views that he saw clearly at that point that there was an area where no court would have jurisdiction and that therefore, some distinction had to be made between a situation where the state court wouldn't have jurisdiction in the county where the bank was located and the federal court would not have jurisdiction of the case here because there was no -- either by subject matter or no diversity upon it.
Justice Felix Frankfurter: I have find no such statute as you find.
Mr. William E. Cureton: Thank you.
Justice Felix Frankfurter: And what you do indicate what your argument leads to is if you fail on a ca -- in Casey's case is that a state by statutory definitions would make every action local and therefore practically puts to sleep Section 94.
Mr. William E. Cureton: Of course, if I am right in the premise that that Act is repealed, Mr. Justice Frankfurter --
Justice Felix Frankfurter: No I -- I had that in mind.
Mr. William E. Cureton: Oh of course, yes.
Unknown Speaker: (Inaudible)
Mr. William E. Cureton: We would be very happy in this litigation to have it decided on that --
Unknown Speaker: (Inaudible)
Mr. William E. Cureton: If the state court said that under the rule of Casey versus -- versus Adams, the rule wouldn't apply.
Unknown Speaker: (Inaudible)
Mr. William E. Cureton: That still poses a serious question is to whether --
Unknown Speaker: Did you go in your other argument?
Mr. William E. Cureton: If they say that that is not a local action, they are also saying at the same time that that suit can be tried in Dallas County under Texas practice.
Unknown Speaker: Well I might say that (Inaudible).
Justice Potter Stewart: So, it'd be at your first argument (Voice Overlap).
Mr. William E. Cureton: Under Texas practice, when -- when a court doesn't have venue, the suit isn't dismissed.
It simply --
Justice Felix Frankfurter: Transferred.
Mr. William E. Cureton: -- transfers the case -- the papers and the case is never dismissed.
It remains on file.
The case simply would be sent to Dallas as far as these people were concerned.
But we -- the promoters of this corporation and the directors of this corporation, who were parties to this year-end transaction, could be down in Austin and the banks would be in Dallas.
And we've been in pretty bad shape.
Unknown Speaker: Well your (Inaudible)
Mr. William E. Cureton: We would have to transfer as to the banks only.
We couldn't transfer the rest of it.
Unknown Speaker: Yes.
Mr. William E. Cureton: So we would have the banks in Dallas and the people -- the promoters and people who were the instigators of this thing would be in another court.
Unknown Speaker: This would follow if you're right (Inaudible)
Mr. William E. Cureton: That is correct, sir.
Justice Felix Frankfurter: And what is the reason that you are after him?
Mr. William E. Cureton: Sir?
Justice Felix Frankfurter: What is the reason that you're -- you are after here?
Did you ask for any attachment?
Mr. William E. Cureton: We do not say, Mr. Justice, that this stands on a -- a raise or the common law distinction.
We say that it is a local action by mandatory state venue statute.
Justice Felix Frankfurter: Statute makes it so.
Mr. William E. Cureton: Yes, sir.
Justice Felix Frankfurter: Your local law makes it?
Mr. William E. Cureton: That makes it so.
Justice Felix Frankfurter: Which means that this -- that the local law of any state can make anything of transitory action, anything non-transitory action and --
Mr. William E. Cureton: And I -- I find nothing wrong with that Mr. Justice Frankfurter because a national bank in reality is a local concern doing a broad local business.
It does have national significance and in the beginning had in even much broader significance.
And it had a great fight at one time between the state banks and the national banks.
Justice Felix Frankfurter: This isn't a question of wrong or right, this is a question of what limit -- what Congress has done if it has done anything as to where suits maybe brought against national bank.
It closely confined a question (Voice Overlap)
Mr. William E. Cureton: That is correct, sir.
But I am trying to create an environment by pointing out the necessary results that would cause this Court to want to find that my interpretation is incorrect.
Justice Felix Frankfurter: More for environment when it comes to matters of policies and when it comes to questions of venue, environment is a very different place.
Chief Justice Earl Warren: Mr. Leachman.
Argument of Neth L. Leachman
Mr. Neth L. Leachman: If Your Honors please, I would like to go back first and elaborate a little on the nature of this case purely from the pleading standpoint.
There was no evidence introduced below.
It was all agreed and it's all a matter of record these pleas of privilege controverting affidavit in the complaint.
So any statements made by counsel outside of the pleadings are, of course, not in the record.
They went a little far, went to Brazil out of the record that I don't think that'll be -- it would be necessary for me to go out of the record and I only intend to.
The plea -- the petition shows that this is a suit, and I say this deliberately and not in -- with any malicious thought that this is a monstrosity, this suit.
And I want to tell you what it is.
It's 144 defendants that this -- that this receiver is sued allover Texas in the United States and some in England and which the general theme running throughout this complaint is this, “That this ICT Insurance Company was organized in 1950”.
They said when it was organized, it was insolvent.
That at all times from 1950 to 1957, when it was put in to receivership and a state liquidator for insurance companies took it over, that it was insolvent.
That all of these people that had dealings with it over this period of seven years, know -- knew that it was insolvent and that their transactions with this insurance company were made with the ulterior motive and purpose of keeping it head above water, so to speak so that it could continue to commit frauds on stockholders, policyholders and the public at large.
That puts these two banks in the position of -- of dealing with an insurance company under the pleadings.
That it knew to be insolvent, lending it money from time to time.
And they do ordinary course of the banking business, knowing that it was insolvent, not lending it the money as a pure banking transaction to get interest on the money but to keep this broke insurance company alive so it could commit vast frauds on -- on the public at large.
Now, with 144 defendants in the case and each one conspiring with each other, I ask an actuary to tell me just how many conspiracies that would be.
And he came up with an astronomical figure that was greater than Mr. Glen's argument.
It was 22 with six figures behind it and then trillion, trillion, trillion conspiracies.
Now, we are asked to -- these two banks are subpoenaed to come down to Austin, Texas to bring their attorney with them, to bring an officer with them, to bring their records with them and sit there throughout that kind of a trial.
I don't know how long it would take.
No member of this Court could -- could guess how long it would take.
Justice Potter Stewart: Your bank is located in --
Mr. Neth L. Leachman: Dallas.
Justice Potter Stewart: -- Dallas.
Mr. Neth L. Leachman: Yes.
Justice Potter Stewart: And this lawsuit was brought in Austin?
Mr. Neth L. Leachman: Austin, Texas.
Justice Potter Stewart: We -- some of these cases like Colorado River case we have a map in front of us --
Mr. Neth L. Leachman: Yes, it's 200 miles.
Justice Potter Stewart: I don't have the map (Voice Overlap)
It's about 200 miles?
Mr. Neth L. Leachman: 200 miles south of (Inaudible)
Justice Potter Stewart: And where is the other bank located?
Mr. Neth L. Leachman: It's in Dallas, too.
Justice Potter Stewart: Also in Dallas.
Mr. Neth L. Leachman: Both these banks are in Dallas.
Now, if you have to go down there and engage in that sort of a -- I'm on the same mileage.
It would tremendously expensive because every member of this Court knows that clients pay their attorneys expenses when they're out of town on their business and don't pay it when they're in town on their business.
Now, if they tried it in Dallas, they wouldn't have any --
Justice Potter Stewart: Lawyers are not arguing against that principle.
Mr. Neth L. Leachman: Sir?
No, I'm getting to the irreparable entry that's mentioned in some of the -- this Court's decisions on the jurisdictional question.
That's what I'm talking about.
And it would be quite an inconvenience to put it most mileage as to have to go down there.
And in the Morgan case, the -- the -- this Court said that it's -- it assumed that it was passed for the standpoint of convenience over the banks.
It could see no other reason for it.
Chief Justice Earl Warren: Are either of these banks chain banks?
Mr. Neth L. Leachman: No, sir.
We don't permit branch banking in Texas, Your Honor.
So, that covers the -- the -- the nature of the case.
And you can see that if this Court should decline jurisdiction and we are forced to go to Austin, Texas to try this case that there certainly will be irreparable entry and damage because if we prevail, if we won after such a proceeding is there, we couldn't recover our attorneys, our attorneys fees or our expenses down there or expenses of our officers down there which we wouldn't be put to and in Dallas.
And it's not just an ordinary lawsuit.
This is an extraordinary proceeding, the like of which, I've never been in before.
And I've been in the business about 40 years and longer.
So, I get back to the -- it's our position and feeling as we read the law and we've studied it carefully and I fear these gentlemen have to.
But as we read the law, this Court has jurisdiction to entertain this appeal and for the -- if we read the law correctly, if it accepts jurisdiction and hears the case on the merits, we have no concern about this honorable body here arriving at the conclusion that Section 94 of that statute is valid in force and effect and it requires its mandatory and it requires that the venue privilege that were asserted by these two banks be sustained as to the banks and the suit as to them move to Dallas County.
Justice Felix Frankfurter: May I ask you if you will be good enough to address yourself to the argument we just heard before you got on your feet, the Act of 1882, the provider of 1882 by virtue of its last clause repealing all of the inconsistent prior legislation in effect repealed 94 and that was subsequent repeal in 1948 of the 1882 Act, couldn't bring to life that theretofore repealed Section 94.
I think that's the correct (Voice Overlap).
Mr. Neth L. Leachman: Your Honor, that is a very strained technical analysis --
Justice Felix Frankfurter: Well, this whole subject is technical.
Mr. Neth L. Leachman: -- of these statutes which I have never been able to follow them very far in it.
I know this --
Justice Felix Frankfurter: Your job is --
Mr. Neth L. Leachman: -- that --
Justice Felix Frankfurter: -- to convince us that we shouldn't follow it.
Mr. Neth L. Leachman: Yes, sir.
Yes, sir I -- I understand that.
I know of this, that the 1864 statute is clear and non-ambiguous.
And I know that you don't resort to history to -- to determine the meaning of a statute if it's clear and non -- non-ambiguous.
And the statute is there on the books.
It was -- it's been on the books since 1864.
And where the confusion arises and they inject confusion into the picture because they don't differentiate between jurisdiction and venue.
They're two entirely different things.
And they even inject into their arguments of the -- the question of capacity to sue.
For example, in your -- in your 1864 statute, you had -- you had 12 U.S. Code Section 24 which deals along with capacity to sue.
And that's the question that Your Honor asked yesterday, capacity to sue.
They can sue and be sued.
Now, the venue statute in 1864, Section 94 of 1957 as it was then.
It gave to the federal courts jurisdiction and the second clause gave to the state courts -- it gave to the federal courts, provided the juris -- the venue for the federal court jurisdiction and provided for the venue of the state courts in the suits brought in the state court.
We -- their -- their assumption is -- is reached based on the good deal of speculation on what they think Congress had in mind.
They suspect that Congress had this in mind.
And it's in their brief.
I don't know how they can look into Congress' mind except from the written result of what Congress came up with.
Justice Felix Frankfurter: When was -- can you tell me when section -- when was Section 94 originally enacted?
Mr. Neth L. Leachman: In 1863, Your Honor, I believe and then it was in 1864 and then it was left out of one enactment and then passed about a year later, I believe.
Justice Felix Frankfurter: From now -- in revisions -- there were revisions of -- of the statutes at large, from time to time, there was a revised statue of course in 77 and 78 and there's a Judicial Code in 1911.
In any of those subsequent revisions of judiciary matters, was this Section 94 included?
Mr. Neth L. Leachman: Yes, yes.
Justice Felix Frankfurter: When?
Mr. Neth L. Leachman: When it was brought forward, I haven't traced it, Your Honor, as to --
Justice Felix Frankfurter: It might be important --
Mr. Neth L. Leachman: Yes.
Justice Felix Frankfurter: -- because if it was brought forward after 1882 for enactment of Congress, it's hardly a plausible argument that it was repealed in 1882, though I think those (Voice Overlap)
Mr. Neth L. Leachman: In 1926 -- in 1926, it was brought forward.
Justice Felix Frankfurter: In a -- in an act relating to national banks or in the Judicial Code?
Mr. Neth L. Leachman: In the national bank section.
Justice Felix Frankfurter: Well, then in 1926, the revision of the National Bank Act included in effect Section 94 and it's what -- and carried down to 1926.
Mr. Neth L. Leachman: Yes, sir.
Justice Felix Frankfurter: But couldn't very well of -- or if it was repealed in 1882, it was revised in 1926.
Mr. Neth L. Leachman: Yes.
Justice Hugo L. Black: Was that statute cited in your brief?
Mr. Neth L. Leachman: That's the U.S. Code that was rewritten in 1926 that we're talking about.
Justice Felix Frankfurter: What -- give me -- what's the title of the -- you know (Inaudible)
Unknown Speaker: Is that the general code or --
Mr. Neth L. Leachman: Codification.
Unknown Speaker: That was no special in rewriting (Inaudible)
Justice Felix Frankfurter: The Congress passed it --
Unknown Speaker: Codification of all federal law.
Mr. Neth L. Leachman: Codification of all federal -- yes.
Justice Felix Frankfurter: Congress passed it, didn't it?
It was an act of Congress.
Mr. Neth L. Leachman: Yes.
Justice Felix Frankfurter: It wasn't of -- it wasn't a private venture or a -- alright.
Mr. Neth L. Leachman: No --
Justice Felix Frankfurter: So that -- there was -- there was an emission, a legislative emission in 1926 by Congress of the statute.
Justice Hugo L. Black: I understood the other side to say that was not the case.
Mr. Neth L. Leachman: Well, we're -- we just differ on it then, Your Honor.
Justice Felix Frankfurter: I think we could simply turn the pages of this argument --
Mr. Neth L. Leachman: We could find it out.
Justice Felix Frankfurter: -- and find out.
Mr. Neth L. Leachman: Sir?
Justice Hugo L. Black: We can find it out.
I understood them to say that was not the case.
Mr. Neth L. Leachman: That's right.
Nor we don't agree with them on that.
Now, we've gone over, rather thoroughly, the question about how final this matter is.
And of course, the -- the federal courts are not bound by state rulings on finality of the judgment.
We concede that but how final can anything be?
You are looking at it from your view point.
Is it as a matter of fact finding?
Forget about what the text has said.
You change -- if change be reviewed again in Texas where we -- we can't go back there and ask anybody to -- to review that question again.
You go from the trial court on that and the Supreme Court and you can't get it reviewed again.
So, if we were to come back here at a later date, we couldn't come back here in a different complexion or status then we are out of date.
It would still be the very same record and the very same situation that this final question on venue.
Now venue, in this case, has nothing whatever to do with the merits.
And you go into the merits, it's -- they're not going to mention the -- the venue has nothing whatever to do with the merits.
So, it is on this question that involves the federal right of these banks to be sued in the county of their locale.
It's the sole question here before this Court.
And it's a valuable right.
And the Supreme Court of Texas has -- has held in effect.
I won't look for the opinion to quote it exactly.
But they held that this question of venue was once exclusively within the area of jurisdiction so to speak or -- or this exclusive decision of -- of the Texas Courts.
And that the -- that this question and we are insulated from the Supreme Court of the United States with respect to this question.
Well, if we -- if we are, then this statute is repealed by judicial legislation and there's no relief that can -- can come to -- to an injured party that has the right.
Now, Mr. Justice Frankfurter was asking yesterday if we would go over the state court decisions that were cited for adversaries in this case.
And I don't have much time but I -- I have just a few more minutes.
And I'll -- I'll attempt to -- they're distinguishable, had great of them are.
The Austin Court of Civil Appeals made a statement in -- in a very brief language what they involved and that is -- that court's notation was -- was correct about it.
It said this, that their decisions involved one, only usury cases.
Well now, the -- the usury case distinction has been repudiated in Leonardi versus Chase National in the Second Cir -- Circuit with this Court denying certiorari.
They said they were applicable only in transitory cases.
And three, that it is permissive.
Well, this Court can determine as well as the state court whether it's permissive.
But some of them held it was permissive.
Then they held that it was repealed in Section 1348 supra.
Now, in the International Refugee case by the Southern District of New York in 1949, they answered that -- that question.
And it also is -- was answered in the Buffum case, decided contrary in the Buffum case in which this Court denied certiorari as to whether or not that was repealed.
Now, the -- the fifth distinction was a single New Jersey Court in the Cassatt case wherein the -- the court there in New Jersey said, “We're inclined to think that the direct application of the statute is jurisdic -- as -- is to jurisdiction and that it is not in such potent control of venue as to be imperative in the present case.
So that's the -- that's the way those cases fall.
Now, there are several of them, I have notes here on what each one holds.
And now, I won't have time to go over it, but I'll say this, that they -- they don't sustain our adversaries in the way that they say they do because at least two of them in there hold that it's mandatory to the cases they cite, hold that it's mandatory.
And then there were some waiver cases in there where they have waived it.
And then there was one where they claim they we're stopped to -- to assert it.
So, those -- those cases don't -- don't help them as much as they would like for them to.
For example, this Iowa case that they cite.
That was a state law fixing super headed liability of a stockholder of a state bank.
And the national bank apparently was one of the stockholders and has held there that it was a local action statute created the cause of action, it was not a common law liability.
And as to -- as to our case -- whether or not it's a local action, I don't think it could be any question about it.
And I -- I would think that this Court can certainly pass on that -- that question because as Mr. Justice Frankfurter mentioned, if a state legislature can make a local action out of any kind of action that it sees fit to then it can effectively repeal the force and effect of this venue statute.
If Casey versus Adams is the -- is the -- the law.
Thank you very much.
Argument of Hubert D. Johnson
Chief Justice Earl Warren: Number 14, Mercantile National Bank at Dallas versus C. H. Langdeau, Receiver.
Number 15, Republic National Bank of Dallas, Appellant, versus C. H. Langdeau, Receiver.
Mr. Hubert D. Johnson: Mr. Chief Justice, may it please the Court.
These cases where number 14 and number 15 were consolidated in this Court's original October 1961 order, were argued in February 28 and 29, consolidated and -- or here again today in that shape.
The cases come from judgment of the Texas Supreme Court hereby appeal through the root provided, we believe, under 28 U.S.C. Section 1257 (2).
The cases in each case, National Banks located in Dallas where their sole offices in Dallas had been sued in -- as one of two of 144 defendants according to the pleading, in a state court, State District Court in Travis County, Austin, Texas.
For information of non-Texan that's approximately 200 miles from Dallas and that Austin is right on the very center of the State, Dallas is a little bit north there.
The -- most of this record is comprised of the rather lengthy pleading which was the suit itself or the allegations are made by the plaintiff.
The plaintiff was the receiver appointed by the Court of an insolvent insurance company.
He also is a -- an official as provided for by state law and only as the statutory liquidator.
And by the state law he becomes the receiver by appointment of the Court.
Each of the banks promptly filed what we call a plea of privilege under Texas practice which is the method of setting up the assertion of the venue right.
Each set up by -- for itself as it had to under Texas practice its right to have the cause transferred as to it -- to its home county there in Dallas County.
The only place where it's established and the only place that it does have a place of business.
We don't have a branch office problem here.
Texas is -- did not have branch banking and that's there -- was their only office.
The venue issue is set for separate trial as is provided for under state practice.
We've attached to our briefs the -- two practice rules that govern it.
Each of the venue claims or pleas of privilege were controverted by the receiver and a hearing was held, actually hearings, although when it developed that there are really no fact issues that it was basically a stipulated matter in the law issue, they were held consolidatedly.
Orders entered in each case denying the pleas of privilege.
Then each of the defendants took its appeal to the Austin Court of Civil Appeals.
Each had to decide then under state court practice whether it would appeal or not appeal because if it did not do so, the matter was closed under state practice.
The Austin Court of Civil Appeals had before it the case, both the cases, a stipulation that the only issue involved was this legal issue of whether the provision of the National Bank Act of 1864 origination gave the National Banks this venue right notwithstanding a venue right that the receiver, plaintiff had conferred on him by 1955 Texas statutes.
The Austin Court of Civil Appeals said that the trial court had erred in these cases and then ordered the cases transferred and the appeal then went to the Texas Supreme Court and it said, “No, the Austin Court of Civil Appeals had not erred.
The time for motion of rehearing filed overruled, were through in Texas”.
This Court in its October order noted that the question of jurisdiction was carried forward to consideration along with the merits.
The casebooks tell me that that's a warning to me, that I better come prepared to talk about jurisdiction.
I talk some about it before and I want to talk some more about it now.
If I can't get in here what the rest of the questions involved, that would make much difference.
I have before in the period of time when we are preparing our notice of appeal, we made a -- what we think is a very careful study.
We have followed it up thereafter and we have devoted the substantial part of our brief.
Better than half of it, as I recall, to this jurisdiction question, a jurisdiction question.
First has in it the aspect of finality of the matter as far as the state court is concerned, the state practice.
We have cited case in here, the Supreme Court of Texas case that I think is contained at page 16 of our brief is which it all falls in SR Company v. McDonald which announces a number of rules that might not be the practice everywhere on a venue right but they are the practice in the law in Texas and they make it beyond -- clear beyond peradventure that we had to appeal from the judgment of the trial court unless we wanted to acquiescent that we could not sit back and bring the matter up again.
In that Wichita Falls Railroad case, in fact, that's just exactly what have happened.
In July, one term of the court, the trial court had overruled a plea of privilege.
Later in November at another term of the court, the defendant who had asserted the plea of privilege had the temerity to say, let's reconsider this.
And he had -- he is more persuasive the second time.
The trial court then said, “Alright, we'll transfer it.
We'd already transferred it.
I grant you plea of privilege”.
The appellate courts pointed out to him that he could not do that, that this was a separate trial that it granted that it had certain interlocutory phases, he would not lack a ruling on appeal.
There is not enough lack of ruling that could be carried forward if this had -- the time to appeal was now, that it not haven't been appealed from, and that the order attempting to make the transfer was void.
And I don't think that the appellee disagrees with me in the slightest as to what Wichita Falls Railroad Company versus McDonald said.
Now, I'm aware of the fact that that's what the Texas Court has said as to the finality of this phase of the case, this res judicata plea which is a basic element of finality is fully recognized in Texas and we've -- this case was not the first case it so held is, it was the most recent one in Texas and it is more or less the keystone case that we all cite.
In Gospel Army versus --
Justice John M. Harlan: The order under Texas law might be final.
It doesn't necessarily follow this final --
Mr. Hubert D. Johnson: Yes, that's true.
I quite agree and I realize I have not -- that's only the one aspect of it and certainly apart from saying that that is conclusive of it.
Justice Arthur J. Goldberg: Your federal question that you raised, taking questions as to the findings -- suppose representing the other trial at the (Inaudible) bank in relating to the issue, has not been a settled issue?
Mr. Hubert D. Johnson: That's the way -- yes, sir.
That's what we're saying.
The -- the trial on the merits is not, it all concern with whether Dallas National Bank in Dallas or a National Bank, it would be the same thing if we were --
Justice Arthur J. Goldberg: That involved questions of the state law.
Mr. Hubert D. Johnson: -- individuals.
Involved questions -- it would appear both state law and common law principles as to the pleading as a typical transitory tort action for a lot of money, the $15 million bond which even in their own ways is a lot of money.
The -- so we began to look at these cases in this Court that have gone -- that have interpreted this meaning of final judgment as in 1257 (2), also as in 1391 which relates to the final decisions of district courts.
In our federal district courts, they do have an area there for appeals from certain types of specified interlocutory orders but if you don't come within one of those then you have to get in this final category.
That led us to the decision of this case, this Court in the Cohen versus Beneficial Industrial Corporation in, I believe, it's 1949.
And frankly, that case intrigued us and we have tried to apply every analysis that we could to it as to why this case might or might not come within the purview of that case.
And we frankly believe that this case does come within the -- what the Court describe as a small class of case that was dealt with in the Cohen-Beneficial Industrial case.
As you probably recall in that, that was a suit by minority stockholders in a Federal District Court in the State of New Jersey.
After the case had been filed, New Jersey adopted a statute which gave the defendant corporation, under certain circumstances, the right to require security for cost.
The statute said that it applied to pending actions.
The defendant corporation moved to have the cost bond made, the security for cost made and the trial court denied it, primarily based apparently on a theory that the New Jersey statute was not intended to be applied in an action in the federal court.
There was some Erie Railway versus Tompkins problems in it.
And at that point, having denied it, the corporation is faced with the question of, can we go up now or do we have to wait and have this trial happen to us without security and then come up?
Is this the final decision?
It's not one of those interlocutory types that are covered by Section 1291 or 1292 that deals with certain types of injunction receivership orders that can be appealed from as -- even though they are interlocutory orders.
The Circuit Court held that it could entertain jurisdiction and held that the trial court had erred that this statute should have been applied in the federal court and this Court took the case and coming at considerable length and discuss in great detail the appealability or jurisdictional aspect of it.
Apparently, there really weren't any disagreement among the court on that part.
There was a disagreement, a dissent as to whether or not the New Jersey statute was such a statute that should be applied in the federal court proceedings.
But as far as the explanations and the discussions are concerned, we have excerpted in our brief and in the appendix the total portion of the opinion on appealability and we've tried to subject the present case to an analysis as to each of the factors.
And frankly, we were prejudiced, I will admit, in what we hope was the answer but we feel like ‘it fits to a T' and we feel that actually in some measure, this one is even more demanding of it because here, we have a situation where beyond peradventure, the issue is not even subject to review fully by the state court.
Now, I don't get the feeling in the Cohen case that if the federal district judge had decided to change his mind 90 days later on whether he would require security for cost -- give security for cost that the Court would have been powerless to do so.
There wasn't any inclination that he was going to.
And so actually, from that -- in that standpoint, we have a more permanent and irrevocable finality established by virtue of the peculiar state court practice.
Now, you can say, “Well, that's state court practice and we're not governed by that”.
But we're in the state court and we have to deal with our rights with reference to what the state court does with them and I don't -- we don't feel that we have a complete immunity from those rules with respect to timeliness of appeal and preservation of our rights.
It was a good deal of discussion here the last time about -- well what if this -- we don't entertain jurisdiction and this matter is saved and brought up again, where will it would be? Certainly, the state court by its own determination will not consider the venue matter again.
When it -- that circumstance should happen, if it should happen and we come up here again, we'll have kind of an odd situation in which the last state court action on it took place a year or so before.
And I think someone commented before that there would be a good deal to unscramble at that stage.
Now, the appellee before is taking the position and I think probably would now that actually they would like to have this question settled, realizing, however, that this Court's jurisdiction can't be conferred by what my opponents would like or what I would like and that I have this burden of showing that this Court does have jurisdiction, I believe that it does.
Justice John M. Harlan: But you -- you got another -- I take a very favorable view of Cohen too because I represented the prevailing party in that case.
But you got another factor in it.
And that is when you come to the merits of this case, I suppose the underlying premise of your argument would be that Congress intended to protect these banks, national banks by reason of this venue statute.
Mr. Hubert D. Johnson: That's correct.
Justice John M. Harlan: And therefore, if you're not allowed to appeal now, the very purpose, assuming you're right on the merits --
Mr. Hubert D. Johnson: The comments in the Cohen case --
Justice John M. Harlan: -- or the ruling of this Court --
Mr. Hubert D. Johnson: -- is about too late to effectively review about the fact that if they didn't get the right to see whether they could have security for cost until after they had already incurred the cost, it'd be somewhat late or really quite strikingly apt here.
They're quite a bit like, Mr. Justice Frankfurter's comments in the Swift & Company attachment case where the attachment was vacated which is a case that's cited and followed the Cohen case.
And he said that appellate review of this order at a later date after the -- it would be an empty right after the vessel had been released in the restoration of the attachment only theoretically possible that it is somewhat the situation we ought to hear.
If we go to trial in Austin, and it's later determined that we weren't required to go there, it'll be kind of apparent victory to find it out that time goes -- it would have already happened.
And neither this law means, we don't have to be tried twice there, I don't know but seriously, that feature of the Cohen case is certainly quite appropriate.
Now, we've done the best we could to check the comparable statutes in the cases under 1257 dealing with appeals coming up from state court system in the state and the cases that come up from the other side, from the federal side and we haven't been able to find any reason for arriving at different standards on this area of finality.
In Radio Station WOW versus Johnson and there was some discussion of that but that was an accounting work.
And one issue had been decided but it was still accounting and the Court went ahead and heard the concluded issue of the case.
The cases are numerous.
I think we have cited most of them here.
We think we have.
The Montgomery Trade Council case, which is sometimes cited for the opposite position, involved the temporary injunction in Alabama, but there they had the -- you were faced with the old rule of Gibbons versus Ogden.
It said that the temporary injunction was continuing in the (Inaudible) of the Court and that it might very well take it up at anytime and that it was in contemplation of a hearing on a permanent injunction.
And -- but the -- I'll cite that case because the dissent which felt that the real issue there was the power of the state court to interfere in the merits that was preempted by the National Labor Relations Act which I think pretty well have been settled later on but at that time, it was still a crying issue was really what has been involved and if that had been decided very finely, and it took a comment on the fact that these things had to be given a practical rather than a technical construction and commented on the fact that there was no reason why you should have one standard that's going to the federal system of finality and another system when it's come up to the state court system.
Many of the cases that have come up to the state court system had been cases where the judgment of the Highest Supreme Court did not reverse the case or settled it, that it had effective remand and by operation, sometimes a state practice.
Some cases where there was something still yet to be done, a remittitur problem.
We don't think and we'd be the last to say that interlocutory orders per se should be brought before this Court.
The Texas case there again pointed out that this was no ordinary interlocutory order.
The Cohen case points out that this is not only talking about opening the door to appeal some interlocutory orders generally, not talking about fragmentary review, piecemeal review, advisory opinions to guide the court, the trial court as it goes along.
We are not here on that type of case.
We believe that there is always ample precedent in the constructions of the statutes that govern this Court's jurisdiction to recognize jurisdiction in this case without stretching anything that has been done.
That it does not call for a new exception at all, it calls for a recognition of an application of the Cohen rule as we call it and that type of thing which there again was not the first in this area.
The accounting cases had come on long before the cases of that type where there still were things to be done in other aspects of the litigation but not related.
I apologize for belaboring at such a detail the jurisdiction point, but I say again if I -- if I don't have jurisdiction and everything else, I have to say it's -- it's (Inaudible).
The basic statute, federal statute on which we --
Justice Byron R. White: Before you leave the jurisdictional point --
Mr. Hubert D. Johnson: Sure.
Justice Byron R. White: -- did you think that Pope against Atlantic Coast Line Railroad was a relevant case on that jurisdiction?
Mr. Hubert D. Johnson: This is a Georgia case.
Justice Byron R. White: I see you don't cite it in here that --
Mr. Hubert D. Johnson: Frankly, I've forgotten it.
I read, it but I've forgotten it.
I can tell you something else but that's the truth and I -- that I just don't recall it at this time.
Justice Hugo L. Black: I'll be delighted if you look at it in here too.
Mr. Hubert D. Johnson: I gather that.
I think so and I will.
The basic thing on which the national banks were basing their right was the provision of what was Section 57 of the National Bank Act of 1864 and it was carried forward as a part of Section 5198 of the revised statutes when they revised under the 1873 authorized revision.
And nowadays, you'll find it in 12 U.S.C. 94.
This 1940 edition at least carries it at that place.
This statute is -- we think it's really quite clear on its face it -- the reading of it -- we set it out in full, doesn't seem that it ought not cause so much concern as to the construction of it.
It says, actions and proceedings against national banks maybe 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 such association is located having jurisdiction in similar cases.
Now, in our brief we've gone over all of the cases in this Court and few in some other courts that have construed this statute.
The -- beginning with the Bethel case that involved a Connecticut proceeding.
The question of whether or not the Connecticut courts could entertain one against the national banks, they said that they could.
The Casey v. Adams which was a state court proceeding up from Louisiana's Highest Court held that -- with respect to the statute, it was not intended to apply to an interim action, a type of local action that there's been known there, as long as there'd been actions.
That being a peculiarly local action from the very description of it, the opinion is very short.
You can see that that was what was there.
The main case and the one that we think was being controlling and which we've based our rights was this First National Bank of Charlotte, North Carolina versus Morgan, that arose in the early 1880s and was decided in this Court in 1889 and it was a suit, in the state court in North Carolina where the bank was sued away from its home county but it didn't raise its rights until it -- he lost.
Then it raised its rights saying that there was complete lack of jurisdiction of the Court out in their outlying county where it had been heard.
The opinion in that case was written by the first Mr. Justice Harlan.
Looks like I'm thinking on the Harlan cases a little bit, but that's the way the thing worked out.
That opinion had occasion then to say, was this so jurisdictional that it could be raised for the first time in this Court.
What did the statute's proper right did it grant?
And the Court said that it was not a jurisdiction statute, that it was a personal privilege which if it had been asserted, it must have been recognized.
Now, that opinion is -- the opponents don't like it.
They say that it's a dictum because it didn't have to go so far.
But we think that they had then -- in saying what the statute was not, they said what it was, which is not an uncommon way of answering the question.
And the answer was already quite clear and it seems to us that if they hadn't said at least that much then the statute was totally and completely meaningless.
The state courts have gone off all around the clock on it.
They have said that it was a mere permissive thing, meaning that the Court could grant it if they wanted to or could not grant it if they didn't want to.
They didn't -- well that's not much of a right and it doesn't mean anything if it says that.
If it just means that they may grant it or not as this trial court sees fit to do, then it wasn't worth having the statute about it.
And we have discussed that point and it's been discussed very thoroughly in a number of state courts and it had been discussed in a couple of Circuit Courts of Appeals cases but except by inference, it wasn't discussed here in the Morgan case.
It was saying that if it had been claimed, it must have been recognized which certainly is mandatory type of language.
In the Casey v. Adams, if it was just a main type of thing and they didn't need to go into the matter whether it was a local or a transitory action.
The -- in 1923, in a case, Bank of America versus Whitney Central Bank, this Court did not have occasion to actually consider the matter because of the fact that from the brief in the case you can see that it was never asserted.
The banks were claiming there that -- the bank there was claiming that it was not subject to process from the jurisdiction because it was not located there.
By on this side, the Court said that if anybody had ever wanted to point out this other matter that even if they've been subject to process, it might have been that they would have been entitled to be sued in their home county, citing the Morgan case and the statutes on which it's based.
Now, we've given a little bit of attention to the state court cases but nothing tremendous because they are confused.
Some of them have gone off on the theory that this has -- it referenced only to this limited type of action where a bank was being sued for the penalty for having charge usurious interest which apparently was based on the legislative coincidence that in the 1875 corrective act, they put back something that had been omitted and put it back at the last part of a section that had dealt with the penalty for charging usurious in -- for National Bank charging usurious interest.
But the language of the statute is quite clear that it refers to actions and proceedings against national banks, any one in this title and the whole title there is about national banks.
That was not the rationale in the Morgan case.
It was not the rationale in the Casey v. Adams and it's been completely explained away by the Circuit Court of Appeals in this Leonardi case and in the Buffum case, true both of those are cases that involved proceedings filed in the Federal District Court.
But they're talking about the same statute and could have that limitation to usury claims in federal -- in state courts, it would have been the same thing for federal courts because the same problem was there.
That I think has been pretty well laid at rest.
Some of them had gone off.
The cases had fall on the other category on the conclusion that this was a local action.
Well, they had basis in those cases on Casey v. Adams.
Casey v. Adams has not been overruled.
It has not been expanded by this Court to cover more than the true interim proceeding.
The argument has been made in some of the cases -- been made in the briefs here by the appellee that there was a proviso to Section 4 of an Act in 1882 that partially or wholly repealed this Section 57 of the National Bank Act of the 1864 Act.
We have addressed ourselves to that in some detail and in large upon what we had originally by a supplemental brief which we think shows beyond question that the 1882 proviso was directed exclusively at a jurisdiction problem that arose out of the amendment of the Judiciary Act in 1875 that gave general federal question jurisdiction in national banks having this federal origin status.
We're therefore in a position to practically eliminate the concurrent state court jurisdiction.
We cite four or five cases that have gone -- that had analyzed carefully this 1882 Act and its follow up Acts of 1887 and 1888 which have carried forward in the judiciary code in 1911 and then rewritten again in the Judiciary Code of 1948 which seems to us to thoroughly exhaust the subject and thoroughly establish what the statutory language itself established that it was addressed strictly to the matter of preventing this exclusive jurisdiction of federal courts because it was for all practical purposes exclusive as long as this free right of removal existed, that is if you have the $500 amount in controversy.
And that meant that this was a problem where the intention of giving any state court jurisdiction was being afforded.
And that's all that that those -- that statute was about and the language of it shows it.
The cases of this Court over the next 25 years after it was passed show it.
It has been discussed very, very carefully by this Court in the Petri case and in the Continental National Bank versus Buford.
It was also discussed and noticed in the Van Reed versus People's Bank in 1905 which involved the matter of attachments issuing out of a state court against a national bank which had been a matter that was covered by Section 57 as it had been amended in 1873.
They were really into the same area there although it's true with a different point of impact.
But all those cases show, it seem to me, if so thoroughly develop the legislative purpose and intention of that as its language shows that frankly one of the reasons we didn't give it as much attention in the original brief was, we didn't think it was -- merited a great deal of attention but it had been the subject of good deal discussion here before so we thought maybe -- maybe it would be better to enlarged a little bit upon it.
On this local action matter, there was an argument made here before to the fact that the state statute that created the insurance -- of the insurance code and particularly this section of the 1955 Act that gave this right of venue to the receiver in the county or in the court of competent jurisdiction where the delinquency proceeding is pending, was intended to create a local action.
It did create a statutory local action.
At that time, we said and we say again that Casey versus Adams, seems to us makes it quite clear that they're talking about what is really a local action and not one that it just labeled such.
I think Mr. Justice Frankfurter rather after he pointed out that if you can just put the label on it, then they can just go back and amend the statute and say that any action we bring is the local action and therefore we've eliminated the federal law.
It's not that -- that shouldn't that simple.
And so the label is not controlling but the truth of the matter is that there's nothing in the insurance code and nothing in this section that purported to create any action.
It dealt with actions that arose out of transactions with the company before it went into receivership.
This very pleading shows here that they're based on actions that go back to 1950 in a so-called grand conspiracy that's extended from 1950 to 1957.
They're talking about a 1955 Act and the 1957 receivership.
And it was not intended to be a local action.
At that time, there was mention of the fact that there has been -- was pending in the Texas Supreme Court a case which would involve a construction whether this was a mandatory type of provision or what in this Section 4 (f) of Article 21.28 of the Insurance Code of Texas.
That case has since been decided, and that case and we quote from in our supplemental brief is Burke versus -- Burke Investment Company versus Langdeau.
And they point out there that it was a merely permissive, a place that the receiver could bring an action, not the place that he had to bring an action.
It's clear from that case that the receiver could bring an action against these national banks in a District State Court in Dallas.
It is clear that he could bring an action anywhere he wanted to.
He might have some of them changed under local rules of venue if these people had local rights.
This was not a must statute but the main thing I pointed out in that case was that in the discussion of it, in no way suggested that it had anything to do with the nature of the action.
It's strictly pertains to venue and it was permissive at that.
They had a case there involving the -- where a land suit had been brought where the land was and the receiver said, “No, it has to be brought here where I am”, which one of them controls.
The 1955 when was later in time, if it was mandatory, perhaps it superseded the other and held that it was not.
Both of them are local venue statutes in Texas.
They're not concerned with the nature of the action really basically even in the land suit in Texas.
The party being sued has to set up this plea of privilege or else the Court has jurisdiction.
The local action argument, we didn't think had too much before and in the light of what the Texas Supreme Court has said since then and which is covered in a supplemental brief, we think now it really completely falls.
I want to save some time for my -- the counsel in the other case to close and if there're no questions at this time, I'll relinquish that the appellee move.
Chief Justice Earl Warren: You may, sir.
Argument of William E. Cureton
Mr. William E. Cureton: Mr. Chief Justice, may it please the Court.
First, with reference to the jurisdiction of this Court at this stage of this proceeding, from a very practical standpoint, of course the appellee would rather -- and prefers to have this matter of venue if that's what it is determined at this stage rather than to try the entire case which is of some size, and then have it reach this Court and be reversed and have to be retried again.
That of course is the practical basis for the Texas statute that permits a direct appeal to the appellate courts in Texas from a trial court decision on venue so that that question maybe finally decided and it was finally decided in this case.
Before, you try the case on the merits so that you don't try the case and then have to come back and retry it entirely.
Based on the -- that doesn't of course precluded the possibility that some federal question could arise in the main case and that the principal case could be back here.
Although, reading of the pleadings would not indicate that a federal question is involved.I do not intend to labor the question of jurisdiction of this Court, we're on to say that as far as Texas is concerned, the judgment of the Supreme Court of Texas on this venue question is final.
There has been no trial and no finality to the trial of -- to the case on the merits.
If I may briefly give the Court just a little background to the case, this suit is the result of a very large and grand promotion of an insurance company known as the ICT, Insurance Company of Texas by a man by the name of Ben Jack Cage, who is now a fugitive from justice in Brazil.
The liquidator who represents the creditors of that company and the stockholders of that company has filed a suit under the Texas practice.
Texas by statute has created a State Board of Insurance Commissions.
And that Board in turn, pursuant to statute, has designated a liquidator for insolvent insurance companies.
And in the proceeding in the state -- in the county of the state capital of Texas pursuant to statute, and the liquidator has been designated at the receiver for this insurance company.
Now, the Texas statute, as a part of our insurance code says that proceeding is by or against the liquidator, shall be brought in the county and the court where the delinquency proceedings are pending.
And that statute controls the venue and the jurisdiction of this Court unless the federal statute that is submitted by the appellants controls.
Let me say in the first place that we certainly agree that in the supremacy of Acts of Congress in the Constitution, we do not contest for one minute that proposition.
But let me first explain to the Court the choice that we had as attorneys for the liquidator in this case.
The allegations are that the two Dallas banks in a sequence of yearend transactions in which the bank was represented by a vice president, would loan this man Cage, large sums of money up to a million dollars on his personal note.
And that the vice president of the bank would make out a deposit ticket to the ICT Insurance Company for that sum of money and the money would be put into the account of that company.
There would be a loan committee memorandum that the money was not to be withdrawn and was to be repaid on January the 2nd, three days later.
And that enabled the company to submit to the Board of Insurance Commissioners of Texas a yearend statement that will show it to be solvent and would gain it a license to do business for the succeeding years.
The promoter, Ben Jack Cage, the various officers of the corporation, the directors of the corporation and various other people connected with this specific transaction to confine it to the one transaction, are people that we want and feel are necessary to be sued in a single lawsuit involving this transaction.
So, we have a choice now applying the suit in Dallas where the two banks are located or to file it in Austin, Texas, in Travis County, where the Texas statute says that the liquidator may institute the suit.
Justice Arthur J. Goldberg: It is made --
Mr. William E. Cureton: The statute is made, yes sir.
Justice Arthur J. Goldberg: And it's not mandatory.
Mr. William E. Cureton: It is not mandatory.
But every Texas -- may I say this, that every Texas case except this recent suit involving the title for Langdeau, including two cases in which the Supreme Court of Texas has denied a writ, has held that the Texas statute contained in this insurance code with reference to venue controls and the Supreme Court of Texas in this very case held that control.
If we file this suit in Dallas, these other defendants under the Texas practice which I assume must be the practice generally, would have filed pleas of privilege to be sued in the county where they live and if there were corporations in the county where they're doing business.
And since we didn't file it in Travis County where this Texas statute gives these jurisdictions, they would have had an absolute right to have move their part of the case to the county where they live.
The only practical opportunity that we have to sue all of these people that are important and necessary to this proceeding is under the Texas Insurance Code which says that we have the right to sue.
The liquidator has the right to sue in the county where the delinquency proceedings are pending in Travis County, Texas.
And there, we can sue each and every one of the individuals at any company, any private corporation, and those people now are in court in Travis County and can't be moved to Dallas.
So if appellants position is sustained, the suit as to the banks alone will be taken out and move to Dallas whereas the other principles in these acts are left in Travis County.
Let me go now to the statutes, to the decisions of this Court first.
The first case that arose under this Act was Casey versus Adams.
In Casey versus Adams, as you'll recall involved a suit for foreclosure of a mortgage or land in a parish in Louisiana.
A bank located in another parish was made a party defendant and the bank asserted its privilege under this statute to be sued in the county where it was located.
And this Court in Casey versus Adams held that the statute was not intended to apply to a local action, and it said not only local by common law history as this thing we contend to it, but local by statute.
And we have cited two cases, one from Maine and one from Vermont.
Let's say that when a state statute fix this venue, that cause of action in a particular case, that cause of action in that case is a -- constitutes a local action.
In this case, the Texas statute as sustained by the Supreme Court of Texas had fixed venues in Travis County and under the language of Casey versus Adams, it is a local action.
Justice John M. Harlan: What do you -- what's the effect of that Langdeau case then that says it's permissive?
As I understand the case, it says it's permissive only in --
Mr. William E. Cureton: The Court --
Justice John M. Harlan: -- it would yield to another mandatory jurisdiction -- mandatory venue.
Mr. William E. Cureton: All I can say to the Court, Mr. Justice Harlan, in respect to that is this, that there had been five or six cases that have gone up under this Texas statute.
And each one of them has sustained the venue in the county where the delinquency proceedings are pending.
This suit involving the title of land came up.
And as the Court well know, a land has always occupied a unique position in human history and under the jurisprudence.
We might have foreseen I suppose, that the Court when it -- we have a statute that says that a suit involving the title of land must be brought in the county where the land is located.
Then we have this statute that says the liquidator can file a suit in the county where the delinquency proceedings are pending.
Land went out as it has if you look back through the cited cases throughout history on this question, land always went out.
All I can say about it is that in only the exception of land, the title of the land, as it been -- as the statute been sustained as controlled.
In this very case, the Supreme Court of Texas held this statute controlling under the -- in this cause of action and in this case and in every other case that's come up except the one involving the title of the land.
Justice Arthur J. Goldberg: The Court didn't look at it or review as afforded in this case.
I don't see that the Court rested it out of the way in Petri.
This is I think would --
Mr. William E. Cureton: I do not say that the Court says -- may have stated in its opinion what I have stated but ever since I've been out in law school, a great deal has been made of the fact that courts have repeatedly treated land and particularly with reference to suits involving the title of the land is -- as a special and unique situation.
I'm presuming as a matter of history from the position of the fact that land was the only source of wealth for great many centuries and had a special relation during the futile days perhaps.
And you'll find that throughout the decided cases.
You can't get a -- but you can't get to escape the fact that in this very case, the same court held this statute controlled it, and that there are five or six other cases, all of the other cases that have arisen under the Texas statute have held the same way.
That court, the Supreme Court in the Burke case is not reversing the position of those cases at all.
None of those cases involved the title of land.
The next case that I would like to point out to the Court is First National Bank versus Fellows ex rel Union Trust Company which reached this Court from Wisconsin in which a proceeding there had been instituted at the state capital.
And the bank was a party and was located in another county and raised this very question.
And the Court decided that the venue and jurisdiction of the Court in this county of the state capital, controlled.
Justice Van Devanter and it's to show that if the matter was before the Court, Justice Van Devanter in his dissent takes the position that this federal statute should have controlled it but it did not control it, and the decision of that -- of the Court at that time was just as in Casey versus Adams, it sustained the venue in a different county.
The Morgan case cited by appellants was a case in which the Court held, and let me, in all frankness say, that the opinion is based on the assumption that the federal statute is controlling.
I don't deny that at all.
But the decision is that the privilege that the bank has, and I would say if it had one, was waived when it wasn't raised in the lower court, it wasn't raised until it was on appeal.
Now, I'd like to further call the Court's attention to the fact that in that opinion, the Court expressly states that this proviso to the Act of July the 12th, 1892 which we rely as repealing this statute, the Court expressly stated that that suit had been filed before that Act was passed and that that Act was not considered in reaching the decision.
Now, except by reference in two other cases, which didn't involve the point at all, there are no other decisions by this Court on the point.
Of course, there are great many state court decisions as counsel for appellant has said.
And for one reason or another, they have generally and nearly unanimously found that this statute does not apply.
Now, I would like for a minute to trace the history of the statute as I understand it.
The First National Bank, Bank of the United States, was created by act of Congress, granted a charter by act of Congress, it was no banking act, in 1791 and existed for 20 years.
And it had a provision in this charter granted by Congress that said that the bank could sue or be sued in any court of record or anywhere else.
Following the -- the granting of charter and some years later while the bank was still in existence, the Supreme Court in the Deveaux case held that that did not confer -- that language did not confer jurisdiction on the federal circuit court which at that time was the trial court of the federal system.
That the federal courts had only expressed jurisdiction and that this language would not confer jurisdiction, although it would give authority for the corporation to be sued when the Court did have jurisdiction.
That -- the charter of the first -- of the Bank of United States, the first one, expired after 20 years in following the financial problems of the war of 1812 was rechartered as the Second National Bank of the United States in 1860.
And the charter of the Second National Bank in addition to the language that I've quoted that it could sue and be sued, complain and defend in any court record, also, specifically said that the Circuit Court of the United States has jurisdiction.
And it is my view that that was the outgrowth of the Deveaux case.
And an effort to give jurisdiction to the federal court in the famous Osborn case the Supreme Court subsequently held that the bank having been chartered by act of Congress, any suit that it was involved then was a suit under the law of the United States.
And according to the language, stated that the federal courts had jurisdiction.
After that charter had expired as a result of -- during Henry Jackson's administration, there were no national banks at all from 1836 to 1863, the present National Banking Act which has come down to us with amendment before us was passed.
And the first -- and if that National Banking Act is read side by side with these older charters, you will see that the author of that Act, wrote the Banking Act with his eye on many other provisions contained in those original charters including specific authority for the National Bank to be sued in the federal circuit and territorial courts.
A year later, the state courts were expressly included.
And the language of that Act though, instead of saying generally, said in the county and city or territory in which they are located.
Now, it's my position that that language grew out of the old Deveaux case which had held that the federal courts had no jurisdiction until finally the second charter had been granted in which they were given expressed jurisdiction.
And that it was thought necessary both to mention both the federal courts and the state courts.
And that, that that is not a restriction but an affirmative grant and the language of that statute says ‘may'.
It doesn't say ‘may only be brought' or ‘must be brought', it says ‘may'.
And that historically as an affirmative grant and not a restriction, there was still a broader language which is still contained in the National Banking Act that national banks can sue and be sued, defend and complain in both -- in any court of record and in subject to that language has come down to us to this day and it's much broader than that.
But if I am wrong about that and let's assume for the moment that I am, and that this language was a restriction and incidentally, although -- and United States Code annotated, it says, venue statute, it says venue as a heading for this section of the statute.
Neither the original Act nor any other official publications of the acts of Congress had used or ever used the word ‘venue'.
And I think it means jurisdiction.
But let's assume that it is a restriction.
By 1882, the national banks were going -- were removing all cases to the federal courts.
I will agree with counsel and that a number of decisions have arisen.
There were filing suits in the federal courts and they were removing cases to the federal courts.
And Congress had an intent and a purpose to put national banks for the purpose of lawsuits on the same footing as state banks located in the same counties and territories where the national banks were located.
And as far of renewing the charter, understanding the charters of the existing banks and also applicable to all future banks, it passed this Act of July the 12th, 1882, in which it said, the jurisdiction for suits hereafter brought by or against any association under any law providing for National Banking Associations, and then it accept suits between them and the United States or its officers and agents, shall be the same as and not other than the jurisdiction for suits by or against banks not organized under any law of the United States which do or might do banking business whereas such national banking associations maybe doing business when such suits maybe forgotten.
And then it says, “All laws and parts of laws of the United States inconsistent with this proviso be in the same or hereby repealed”.
Now, that's not limited to suits.
It says nothing about suits in federal courts.
It says suits.
And counsel, of course, following that, the leather -- this Leather Manufacturers' National Bank versus Cooper and several other cases arose in which involved an attempt to remove cases to federal courts.
And I do not deny that the language of this statute would apply in a removal case.
I simply say that Congress was trying to put national banks on the same footing as state banks, not only in removal cases but in all suits, it says suits.
And I might say for that I have traced every recodification of the federal statutes down to the present for fear that this present Act that is being urged by the appellants, might have been repassed.
And except for the recodification in 1874 which was before this, all of the others have expressly said that they are not original enactments and they're not -- that they do not pass the language as contained therein as a new law.
And if there's any dispute as in 1926, if there's any dispute as what the statute means, you have to go back to the original enactment.
I might say in closing --
Justice John M. Harlan: There's no -- if you have to sue again in Dallas, there's no way you can bring under your law, no way you can bring in these other defendants?
Mr. William E. Cureton: There is none, sir.
Justice John M. Harlan: There is none.
Mr. William E. Cureton: That had been finally settled.
They are now in Travis County.
Had we brought the suit initially against all of them in Dallas, they would have filed a plea of privilege setting up where they live.
And under Texas law, they will -- Texas put to that no alternative where to move that the case is condemned to that county.
That is the very purpose of this insurant provision because after all, we're dealing with the business which is a business affected by public interest, as the Court knows, in which there is a special provision for an insurance commission to regulate those issues.
There is a special provision for a state liquidator to handle insolvent insurance companies or insurance companies in distress.
And so that it can be held in an orderly fashion that all suits, all parties can be brought into the single court.
That's the purpose of the Texas statute and that's the reason it's been held controlling in every cases after this land title suits.
Justice John M. Harlan: Was your -- was this case decided by your Supreme Court --
Mr. William E. Cureton: It was and it --
Justice John M. Harlan: -- before or after Langdeau?
Mr. William E. Cureton: This particular case -- this particular case was decided before.
Justice John M. Harlan: Before.
Mr. William E. Cureton: Yes, sir.
The Langdeau case -- the Merchant v. -- both the Langdeau because Langdeau is the liquidator in all of the suits.
The Burke Investment Company case, the recent case does not overrule any of the prior decisions with reference to the controlling effect of this statute except as to Section 14 of our statute relating to land titles and when that -- the fact that that case was pending, was mentioned here by counsel before -- in the previous argument, I knew very well and I felt uneasy to tell that and I didn't tell this Court that that case would -- that this case -- this particular case had any connection with that one because realizing that rarely is it held that you can sue for title of land anywhere where the land is located.
And that's just one of the -- one of the things that's engrained in our human system, our common law system, and our system of jurisprudence.
Nonetheless in this case it's settled by the Supreme Court of Texas.
There are many problems that would -- could be inherent in this situation and I don't think Texas is different from other states.
If you sue the administrator of a state, you got to sue him where the administration is pending.
If you want to file a mandamus proceeding against the state official, you got to file it usually at the county where the state capital is located.
A bank that is just as well involved the decision in the Burke case is a good illustration.
Suppose the bank claim to be the owner of an interest in a track of land in Texas, and it was located in another county.
And the national bank or the Texas Bank then can't remove the case to a federal court and the suit can't be filed on the federal court.
In Texas, that suit must be filed where the land is located.
Now this Court holds that it must be filed where the bank is located and there are other parties to the suit, how can the Texas Court proceed?
Since it's governed by the state law as far as the locality of action is concerned, it must -- it must say that the suit has to be where the land is located.
The Supreme Court has said it in this case.
Justice Byron R. White: Of course, this isn't a land case.
Mr. William E. Cureton: It isn't a land case.
I think (Voice Overlap) --
Justice Byron R. White: And your court, and your court --
Mr. William E. Cureton: I'm simply saying that to illustrate --
Justice Byron R. White: And your court held it wasn't?
Mr. William E. Cureton: That is right.
I'm simply giving that as an illustration of the practical difficulties and I say that -- I'd say that a no man's land area is going to be created where if the case can't be filed in the federal court and can't be removed to a federal court, then under the Texas statute, it must be in the county where the land is located.
For example, no court will have jurisdiction.
Chief Justice Earl Warren: Mr. Keith.
Argument of Quentin Keith
Mr. Quentin Keith: Mr. Chief Justice and may it please the Court.
I want to first address myself to Mr. Justice Goldberg's question concerning the Burke investment case.
All of these are Langdeau cases because he is the statutory receiver.
This is a Langdeau case.
But then 358 Southwestern 2d of page 354 at the very outset of the opinion, I quote from the reporter's series rather than the Texas reports because it's not yet in the Texas reports.
The Court says this.
It is well settled that Exception 14 is mandatory where the privileges of property claim being important to the suit which call within its terms quoting -- citing some cases.
They purport that the words used by the legislature in Section 4 (f) which we have involved here is quite different.
It does not provide that the actions makes in very end shall or must be brought in the county where the receivership is pending.
A venue to hear or determine the proceeding is conferred upon the courts of that county.
But there is nothing to suggest that the lawmaker is intended for such courts to have exclusive venue of all suits by or against the receiver.
Now, I skip a little bit over on page 555.
He says there is no conflict between the mandatory provisions of Exception 14, that's the land question and a permissive term to Section 4 (f), which is ours.
Since Section 16 does not require that the former yield to the letter in the case like the present.
Now finally, he comes to the conclusion in the -- as he must, having held that one is mandatory and the other is permissive, citing the general rule, a permissive statute applicable to actions of a particular kind must always yield to a mandatory provision.
That's a self-evident fact.
And then he finally concludes that venue under Exception 14 is determined by the location of the land and the nature of the relief sought and it does not appear that the allegations of the petitioner fraudulently made and so forth so consequently the land venue statute control.
Now, nowhere in that -- now that's two times that the Supreme Court of Texas has written upon the question of venue in concerning this -- the provision of 4 (f) that we have involved here.
The other one is our case that the case that we have here wherein the court there said that it was unnecessary for the Court in our case, the Supreme Court of Texas.
It is unnecessary to our decision to determine whether this particular action is local or transitory.
Well they answered it a year later in the Burke case in holding that it was a mandatory thing and consequent rules are transitory and it did not control.
Now, he says this and I still quote from the Texas Court because it brings to bear the question that is really before this Court as a matter of practice.
He says as to invoke the rule and says to the point by the respondents would in effect denied a petitioner the rights to maintain the suit.
As he says in the Okeechobee case, if you got one bank or if you got 10 banks residing in different counties, each of them are necessary parties, if they weren't necessary parties, you would have to do your single individual cause of action whether under the construction sought by the banks in this case be impossible to enforce since you would be in 10 different counties.
Now, I confess to this Court the proposition that national banks are not industries anymore.
I address the further proposition not that I dispute for a moment that the supremacy of the act of Congress that will control it.
But the national banks should no longer the estimates of the Government that they were when the National Banking Act was adopted in the civil war days.
The national banks in effect are simply private corporations engaged in business for private benefit and as such are regulated by the comptroller of currency just as our state banks are regulated by our banking commission.
I say to Your Honor that there should not be any rule of law that says that the national -- the City Bank of New York although it advertises every time I read the magazine about having branches all over the world, can only be sued in New York City whereas the Chase Manhattan Bank across the street can be sued just as where you can catch it.
Now, those two banks one of them being a state bank and one of them a national bank, I say to Your Honors that they're in direct competition that there is no particular reason for it and that there has been shown here that there has been in effect a repeal of the statute upon which the petitioners or the appellants in this case were liable.
Now, when Congress passed the Act in 1882 saying that the national banks should have a jurisdiction for a suit here and after it's brought by or against any association established under any law providing for national banking except suits between them and the United States or its officers and agents shall be the same as and not other than the jurisdiction for suits by or against banks not organized under this -- they so-called ‘where-to-do business'.
Now, what they contend for here is a dual standing.
They say that they want something more.
Congress had said in plain and unmistakable language and there isn't any question to what that still was, that Congress said that they shall not be picked on, they shall not be -- suffer to any detriment, they shall not be subject to anything that is -- that you don't give to your own banks and chartered by your own state.
Congress did not mean by that same token to make them particular wards of the federal government even though at that time they were issuing money that they were the instrumentalities of the Government.
They don't issue money anymore.
The Federal Reserve System has taken over the national banking functions.
They are the instrument of finance of the country, not national banks.
I say to Your Honors that there is here in this case a complete order and absolute answer to it, that is to say, that this statute upon which the banks rely here has been effectively repealed, that it has been repealed by an act of Congress and that the congressional treatment of banks, the reason for its existence is no longer fair and that's the reason that it was repealed.
Now, in this case, it seems that this is a rather unimportant point, but the banks are involved in this case for the 142 other people.
There are 142 defendants in this lawsuit.
The lawsuit has been on file now five years and nothing has ever happened to it except the trial of its plea of privilege on the stipulated facts.
There are (Inaudible) of evidentiary facts that must eventually go to a jury.
The facts seek to remove every facet of this matter to Dallas.
That leaves a 140 of them back in Austin to try the rest of the case.
Now the banks don't come before this Court under the record here as anything other than relying upon the cold, bare rule that they're in business as national banks and they're entitled to be sued only in the County of Dallas, that that's the only place that you can get them.
Now the lawsuit is in Austin as to 140 people.
Now, there are allegations there that Ben Jack Cage who has answered and incidentally Ben Jack Cage was given 10-year penitentiary sentence for his participation in this matter and job fail and he is in Brazil according to Time Magazine.
His case is reported and it's cited in our briefs.
There are allegations in here that Ben Jack Cage for instance, it's found on page 168 of the record, went into the republic bank one day, the 31st day of December of 1954 and it brought with him a sealed box upon which was an affidavit that there were $584,000 worth of premium notes in that sealed box.
There -- whereupon the bank loaned him $400,000 on the last date of December of 1952 on a note due January 2, 1954, my first year was wrong.
It was 1953 -- it was the end of the year.
It was due and payable January 2.
They said that the box and treasury bills are $400,000, for those -- and of course, they kept the treasury bills.
In January 2, they sold the treasury bills.
They paid off the note and they gave them back the unopened box containing allegedly $584,000 worth of premium notes.
In the meanwhile, when it comes time to make their appearance before the banking -- before the insurance commissioner, as to how were you doing business on the 31st of December?
We have $400,000 worth of treasury bills but there's nobody who had any money.
We have $184,000 worth of premium notes and they were in that box in the bank.
Now, that's only one of them.
There are many, many such instances here.
Now, Your Honors can see -- Your Honors can see the problem upon which the receiver representing the defrauded stockholders and the people holding judgments against the ICT, wanting all these people in the one courtroom at one time.
Let's just decide who's going to pay for this matter.
If it's true, I say to Your Honors that they all ought to be there at one place.
A conspiracy case when you try it to one place a part of it, it's all laid up on the other fellow.
But you got them in their together and let one jury decide where and who's responsible for it.
I say to Your Honors that as a matter of law, this statute has been repealed and as a matter of fact, they start -- the reason for the statute no longer exist, and as a matter of reason -- as a matter of reason this Court should not create anymore ‘no man's land' where you can't sue anybody for the rights of (Inaudible).
And in appearing here today, we appear here not in the nature of -- as you would normally do, to litigate, but for a receiver seeking to collect money from perpetrators of fraudulent transactions so that we could pay off judgment that were recovered by the widows and the orphans in Texas and to pay them the money that we believe rightfully belongs to them, but to say that because there's an old statute of dubious ancestry and history, it's going to say we must segregate this lawsuit and try it in two places, is in effect to deny the receiver the right to bring a lawsuit, any lawsuit, anywhere or anytime.
Justice Byron R. White: Of course, if there was not a receiver -- receivership involved here, you would have -- this problem was no way to solve whatsoever.
Mr. Quentin Keith: If there was not a receivership -- if there was not a receivership pending and if there were no limitation questions involved, then I would say to Your Honor that there is a possibility if both of the banks live in the same county, as they do here, because that might be able to allege under peculiar venue statute we have in Texas, a cause of action that in the --
Justice Byron R. White: You mean that -- you mean that -- you mean your Texas statute is mandatory?
Mr. Quentin Keith: Sir?
We have no -- Texas statute is not mandatory.
Justice Byron R. White: Then you could have use -- under the Texas law, you could sue these two banks in one place?
Mr. Quentin Keith: Yes, I could sue these two banks in one place and I could --
Justice Byron R. White: But you couldn't sue the individual.
Mr. Quentin Keith: I could sue the individuals even though they live in Dallas or maybe they live Houston, or Amarillo or El Paso or somewhere.
I would be force to allege and to prove or make a showing on the preliminary hearing, (a) that they were necessary parties to the lawsuit, that they were parties to the conspiracy.
What we term unnecessary parties then that defeats their right to be sued in their own county.
Justice Byron R. White: Well then there is -- I mean this is where you get all your problems, I take it.
You say that the statute shouldn't be -- shouldn't be construed so that you don't have the remedy against necessary party.
Well, you do have a remedy against necessary parties in a conspiracy act under your own Texas statute.
Mr. Quentin Keith: That is -- not in this case.
I mean time has already wiped out any possibility.
I'm talking specifically and I address my part --
Justice Byron R. White: You mean because of statute limitations?
Mr. Quentin Keith: Well, limitation is already long since about this --
Justice Byron R. White: Yes.
Mr. Quentin Keith: -- lawsuit because --
Justice Byron R. White: So you --
Mr. Quentin Keith: -- filed --
Justice Byron R. White: -- but if you'd start it out, that could mean instead of trying to sue in the receivership court.
Mr. Quentin Keith: Conceivably so, had we anticipated that this Court was going to hold differently than what our Texas Supreme Court did that is with reference to the Banking Act.
I say to Your Honors that I don't want to mislead you that there is a possibility and I think that there would be a possibility.
Assuming this Court held against us that there would be a method and a manner whereby a future suits such as this conceivably could be brought in the county which the banks were located for filing -- all of your banks were located in one county.
Justice Byron R. White: Or doing business.
Mr. Quentin Keith: Or doing business, sir, yes.
Justice John M. Harlan: That takes a little of the bloom of your equity.
Mr. Quentin Keith: Yes it does, it kind of zealously blights delineation or somewhat.
It doesn't offer the fact in this particular case and I was addressing myself with this particular case.
I didn't mean to mislead the Court in the sense that we're not -- I'm talking about a model suit, but some possible lawsuit in the future.
Justice Byron R. White: Yes, but it wasn't -- in that event, it wouldn't be the construction of the statute that is -- so it would be troublesome, it would be --
Mr. Quentin Keith: I --
Justice Byron R. White: -- in fact it started out without -- maybe starting two lawsuits in two different courts.
Mr. Quentin Keith: I raise the question, if the Court please, that we are necessary parties.
Now, there is a distinction in our practice between necessary parties and nominal parties or parties at convenience and so on.
Justice Byron R. White: Or even indispensable parties.
Mr. Quentin Keith: Or indispensable parties, but now in this instance, I say to Your Honors that Ben Jack Cage, the perpetrator for fraud is a necessary party to it.
In other words, he went down and he signed ICT Insurance Company by Ben Jack Cage to the Republic Bank and that this was an estimate of fraud that Ben Jack Cage or Republic Bank ought to be in the same court house at the same time, he tried the lawsuit.
Whereas if you've got two banks, one of them just 30 miles away of Fort Worth for instance, in Tarrant County and one of them in Dallas and he could have done it in two hours this apart, then it would be impossible to get the entire matter together.
Justice John M. Harlan: Now, there seems to be a diametrical difference of view between you and your colleague.
I put this same question to him and he answered me categorically.
Mr. Quentin Keith: No, he answered you --
Justice John M. Harlan: I thought, maybe I mistook it.
Mr. Quentin Keith: No, I think he answered you this way, that they were -- that can you have a distinction with the necessary parties.
And that's under our general venue statute.
Now, so long as you can get all of your people with your banks, all in one place, then -- because if Your Honors hold that this particular national statute is mandatory then there is no way under our Texas practice that I can get two national banks who happen to live in different counties.
We have no branch banking so it's not a question of doing business anywhere else.
We have no national -- no branch banking by constitution in Texas.
Justice Byron R. White: So this would be the -- this would be the case if there wasn't a receivership pending and the banks were in two different counties.
This would be the normal situation that you run into in many ordinary cases around the country that sometimes you can't get two defendants together when you want it.
Mr. Quentin Keith: That -- that's true, sir.
Justice Byron R. White: That the lawyer runs into everyday, isn't it?
Mr. Quentin Keith: Not quite that -- that you could ever get them together if they were national banks whereas if there were state banks, that's the point I'm trying to make and I'm trying to make to Your Honor.
If they were state banks, you could get them together at least in one time.
Justice Byron R. White: Well, if there is a receivership pending?
Mr. Quentin Keith: No sir, in any case --
Justice Byron R. White: Why is that?
Mr. Quentin Keith: Because the states -- the state rights or the state bank rights are controlled by state law.
And now what the national banks here seek is something that the state banks can't ever -- so long as the bank is chartered under the laws of the State of Texas, it could never claim the benefits of Section 9 accordance that you have before you --
Justice Byron R. White: We agree with that.
Mr. Quentin Keith: Sir?
Justice Byron R. White: I agree with that.
I agree with that.
But assume -- what is the venue for a state bank where no receivership is pending or anything, you just want to sue a state bank, where do you sue it?
Mr. Quentin Keith: Say it's just like any other citizen.
I mean you would normally sue them and they have the right to be sued in the county in which they are domicile.
Justice Byron R. White: Alright.
Mr. Quentin Keith: With exceptions to tort actions, for instance that you can bring in the county in which the tort occurred --
Justice Byron R. White: What if you want to sue them for a conspiracy?
Mr. Quentin Keith: Where I could catch a local defendant in the department.
Justice Byron R. White: Yes, but let's assume that you want to sue two banks who do business in two different counties, two state banks in two different counties on a conspiracy.
Mr. Quentin Keith: Let me -- let me take the illustration of Dallas and Fort Worth of 30 miles apart.
I've got two state banks, one in Dallas and one in Fort Worth and I've got a local defendant living in Austin.
Ben Jack Cage lived in Austin.
I could take my choice.
I could take my choice and I can take Austin, Fort Worth or Dallas.
Justice Byron R. White: So you could sue them in --
Mr. Quentin Keith: Anyone of the three.
Justice Byron R. White: Anyone of the defendants resided.
Mr. Quentin Keith: Right.
Any -- one court by the three -- by some token, they entered into this conspiracy in Houston.
I could sue all three of them there even though none of them lived in there because that's important -- for the cause of action to approve.
Did that answer your question?
Justice Byron R. White: Yes, it did.
Mr. Quentin Keith: Thank you, sir.
Justice Arthur J. Goldberg: Do you think the statute has any transferred provisions at the national (Inaudible)
Mr. Quentin Keith: There is only peculiar provision under our Workman's Compensation Act that provides that -- subsequently develops a strong case to moot.
Otherwise, we you don't claim it and it doesn't involve land (Inaudible) where it was filed.
Justice Arthur J. Goldberg: In other words, to make it (Voice Overlap) --
Mr. Quentin Keith: Yes, sir.
Thank you, sir.
Chief Justice Earl Warren: Mr. Sloman.
Argument of Marvin S. Sloman
Mr. Marvin S. Sloman: Mr. Chief Justice, if I may take one moment, I would like to say that I am the co-counsel with Mr. Johnson in number 14, the Mercantile Bank case and have signed the briefs in that case.
I do not generally represent Republic National Bank in Dallas which is appellant in number 15.
Mr. Neth Leachman who argued number 15 before Your Honors before was taken seriously ill and was unable to come, asked me on Monday to come and serve for him and I am doing that.
Chief Justice Earl Warren: Very well.
Mr. Marvin S. Sloman: May it please the Court.
I would like first to address myself to the question which was under discussion when counsel sat down concerning transferability.
Mr. Justice Goldberg in Texas, the subject of venue is taken very seriously.
There is a statute, revised civil statute Article 1995, which has 30 odd subdivisions of exceptions to the venue right to be sued in one's home county, the annotations to it practically filled the volume that is the venue statute.
On other hand, practice on a plea of privilege is governed by the Texas Rules of Civil Procedure.
And under the Texas Rules as interpreted by our Texas Court, there is full provision.
And in this, I respectfully disagree with the counsel for transfer of actions as to which a plea of privilege is sustained.
Moreover, under Article 1995, there is an exception to the right to be sued in one's home county, which says that where there are codefendants, they may be sued in any county where one of them can be called.
And under that provision, coupled with the transferability provision, my understanding of Texas venue laws sir is that this whole action may in the discretion of the Civil District Court in Travis County of where this case originated, be transferred to Dallas.
In any event, the action as to these two banks may be transferred and maybe tried there.
That may present some difficulty.
Chief Justice Earl Warren: Separately from the other 104 coconspirators?
Mr. Marvin S. Sloman: Yes, Mr. Chief Justice in the Court's discretion.
Chief Justice Earl Warren: Yes.
Mr. Marvin S. Sloman: It has --
Chief Justice Earl Warren: Could it pass for the entire -- the entire case?
Mr. Marvin S. Sloman: My understanding is it could sir, the Texas Rules of Civil Procedure provided for it.
Now, if the -- if --
Justice Tom C. Clark: In fact, this Court has said nothing about this (Inaudible)
Mr. Marvin S. Sloman: About transfer --
Justice Tom C. Clark: Yes.
Mr. Marvin S. Sloman: No, Your Honor because the trial court overruled the plea of privilege, the Texas Court of Civil Appeals reversed and sustained the plea.
The Texas Supreme Court in turn again reversed and overruled our plea, so there's never been any consideration.
Justice William J. Brennan: But my point is, apparently, you and counsel for the other side would see eye to eye as to this possibility of transferring the whole cause to Dallas.
Mr. Marvin S. Sloman: That's right.
Well, in response to Your Honors question, the order of the Texas Court of Civil Appeals, the judgment entered upon its decision at record 350 provides that the trial court was instructed to render judgment sustaining appellant's plea of privilege and transfer this cause as to appellants, that is as to Republic and Mercantile Bank, to any Civil District Court of Dallas County, Texas in accordance with the provisions of Rule 89, Texas Rules of Civil Procedure which rule incidentally Your Honor is printed as appendix to Mercantile Bank's opening brief.
Justice John M. Harlan: Did the Texas law carry on the subject to -- also to answer a simple question as to whether or not if you prevail -- if you prevail this action, the entire action could be transferred to Dallas?
Mr. Marvin S. Sloman: Maybe, Your Honor.
Justice John M. Harlan: Well, each of you shakes his head whenever the question is asked and I'm terribly confused about this.
Mr. Marvin S. Sloman: I apologize sincerely for having confused, Your Honor.
Justice John M. Harlan: This view of the Texas law is confusing.
Mr. Marvin S. Sloman: The Texas law does not require that the whole action -- perhaps that's the point of confusion, Mr. Justice Harlan.
The Texas law does not require that the whole action be transferred.
It does not require that the action only as to these appellants be transferred.
It permits --
Justice John M. Harlan: It permits.
Mr. Marvin S. Sloman: -- transfer of the whole action as I understand it.
Justice William J. Brennan: Well, I gather your adversary said --
Justice John M. Harlan: Says no --
Justice William J. Brennan: -- if you prevail, they are burdened to have two actions.
There's no way of taking the 140 individuals and bringing the action against them in the same courtroom with the two banks in Dallas.
Mr. Marvin S. Sloman: If Your Honor please, I would have two -- two replies to that.
One, I respectfully believe that contention is incorrect.
Justice William J. Brennan: Well, would we have to examine this whole volume of --
Mr. Marvin S. Sloman: No sir.
Justice William J. Brennan: -- the new cases you mentioned?
Mr. Marvin S. Sloman: I believe that the rule is not -- that governs transfer is not in our appendix but it's in the Texas Rules of Civil Procedure and I'm not anticipating this question.
I don't have the name -- the number of the rule at my fingertips.
Chief Justice Earl Warren: Could each of you furnish us with a memorandum within the next two days?
Mr. Marvin S. Sloman: We would greatly prefer to do so and thank you, Mr. Chief Justice.
Secondly, Mr. Justice Brennan, I would reply that the trial of these banks apart from the other defendants is a hazard and not an insurmountable one of litigation which would be encountered anytime that the federal venue statute applicable to them was applied and the balance of the action brought in Travis County, Texas.
Turning to the second question that I would like to mention in reply concerning the opinion of the Texas Supreme Court in the Langdeau against Burke Investment Company case, I would like to point out that the context in which this question of the Texas Supreme Court's ruling has arisen in this case, is a contention by the appellee made until we arrived here today, that Article 21.28 of the Texas Insurance Code, subdivision 4 (f), required this suit to be brought in the Court where the delinquency proceedings were pending.
And from that platform, appellee sprung forward to the contention that Texas law had localized the situs of an action by a receiver as though it were not a plenary suit brought with the separate number and possibly in a separate court.
Of course, we pointed out that such a contention lived down an avenue which would prohibit suits by the receiver in any federal court.
A suit under the Federal Tort Claims Act, there are many difficulties rationally with that contention made but I mentioned it only in order that the Court may appreciate the context in which this question has been briefed and in which it has come up.
Now, we point it out because of this contention in the reply brief on the merits filed by Mercantile Bank in Number 14 which was then number 90 last term, at page 11 that the decision of the Texas Court of Civil Appeals in Holt against Wheeler in which the Texas Supreme Court had dismissed a writ of error stated Section 4 (f) is remedial or procedural because it deals exclusively with the venue.
It is not a statute dealing with substantive law.
Now, we thought that decision made perfectly clear that the contention of appellee that this action had been “localized” within the purview of Casey against Adams was untenable.
When the Supreme Court stated in Langdeau against Burke that the statute merely signifies an intention to give plaintiff the right if he chooses to maintain the suit there, the contention disappears all together.
Now, lastly in response to this question of local actions, I would like to point out that this question is a question of federal and not of state law.
While we have been debating here, this question of what Holt against Wheeler and Burke against Langdeau and other Texas decisions hold, in our view, this is purely a question of federal law under Baltimore and Ohio Railroad against Kepner and similar decisions holding that the interpretation of a federal venue right is purely a question of federal law for this Court to determine and not some state label.
Under federal decisions cited in our brief, in the reply brief of Mercantile Bank, number 90, last term, number 14 this term, those cases are set forth and clearly show that this is purely a transitory action being a plenary civil action for money damages direct offense and alleged tort.
Now, I'd like to, if Your Honors please, to turn briefly to this contention that there was a repeal of this venue statute in 1882 by the Congress.
As a preliminary, I would like to say that between 1864 and 1875, this venue statute was known as Section 57 of the National Bank Act.
From 1875 on, it's been known as Section 5198 of the revised statutes.
And I say that because I'm going to make reference to some cases that discussed it one way or another.
In 1873, the Congress passed an amendment to Section 57, which provided that there should be no attachment in a state court against a national bank.
That aspect of Section 57 passed in 1873 has no application here except that it casts light on the decision of a later case in this Court.
In 1882 because of the 1875 legislation conferring general federal question jurisdiction on the federal courts and bringing into play the Osborn decision for national banks and permitting them always to go into federal courts.
Congress passed this legislation saying that the jurisdiction of suits against national bank -- by and against national banks shall be none other than banks which are not chartered under federal law.
A counsel has constructed an argument based on the fact that it doesn't say federal court jurisdiction.
The fact is that this Court has passed in half a dozen decisions on the meaning of that legislation.
The cases are cited in our brief, Petri case coming down finally to the Buford case in 1903.
And in the Buford case -- excuse me Your Honor -- this Court said that that 1882 legislation which counsel contends repealed the state court venue provisions.
The necessary effect of this legislation was to make national banks for purposes of suing and being sued in the Circuit Courts of the United States, citizens of the state in which they are respectively located and to withdraw from them the right to invoke the jurisdiction of the Circuit Courts of the United States simply on the ground that they were created by and exercised their powers under acts of Congress.
No other purpose can be imputed to Congress than to effect that result.
Now, with all of the possibly appealing arguments made by counsel for the treatment of a bank, one bank across the street from another bank, respectfully Your Honors, should be addressed to the legislature and not to this Court.
With those reasons being attributed to Congress by appellee, the whole argument falls when this Court says to the -- flatly to the contrary that no purpose such as counsel is suggesting to Your Honors can be attributed to the Congress in enacting that legislation.
Now, I mentioned a moment ago an amendment to Section 57 of the National Bank Act prohibiting attachment.
Now attachment is a way of getting personal jurisdiction, of course.
And in the Van Reed case to which Mr. Johnson made reference and which is cited in Mercantile Bank's opening brief, this Court was faced with a contention that this 1882 legislation, just as counsel has just now argued to you, was intended to put all banks on the same footing, and that if you could get an attachment against the state bank than this 1882 law repealed Section 57 pro tanto to put on them on an equal footing.
And this Court flatly rejected that contention and (Inaudible) flatly rejected the contention made by counsel today that this Act relating to state court venue was somehow repealed by 1882 legislation having the purpose of dealing with federal court jurisdiction.
Thank you, Your Honor.
Chief Justice Earl Warren: Very well.