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February 28, 1966

STATE CHARTERED BANKS IN WASHINGTON, a corporation, et al., Plaintiffs,
PEOPLES NATIONAL BANK OF WASHINGTON, a national banking association, Defendant, Jack C. Hood, Supervisor of Banking, State of Washington, Plaintiff-Intervenor, James J. Saxon, Comptroller of the Currency of the United States, Defendant-Intervenor

The opinion of the court was delivered by: LINDBERG

 The plaintiffs, State Chartered Banks in Washington, a Washington corporation, and its member banks chartered by the State of Washington, filed this action on December 16, 1964 against the defendant, Peoples National Bank of Washington, a national banking association. Plaintiffs seek injunctive relief and a judgment declaring that it would be unlawful for the defendant to receive deposits, cash checks or lend money at a building then under construction in the City of Renton, Washington or at any other place in said city other than the defendant's presently-established branch at 222 Williams Street in Renton, except by taking over or acquiring an existing bank or national banking association or branch bank presently operating in Renton, as provided in RCW 30.04.280 and 30.40.020.

 Plaintiffs allege that the action arises under the National Bank Act, 12 U.S.C. § 21 et seq, and particularly under § 36 thereof, and that jurisdiction vests in this court by virtue of 28 U.S.C. §§ 1331 and 2201, the matter in controversy exceeding (exclusive of interest and costs) the sum of $10,000.

 On December 21, 1964, Honorable John C. Bowen, a judge of this court, after hearing and making findings and conclusions of law, decided the matter in controversy exceeded the sum of $10,000, the court had jurisdiction, and plaintiffs were entitled to an injunction pendente lite as sought. On the same day a preliminary injunction was entered and a bond by plaintiff association and its surety in the penal sum of $20,000 (required as a condition of the issuance of the injunction) was filed and approved under the direction of the court.

 Following the issuance of the temporary injunction Ray D. Carrell, Supervisor of Banking, Division of Banking, Department of General Administration of the State of Washington, and later his successor, Jack Hood, was given leave to intervene and file a complaint as plaintiff-intervenor, pursuant to Rule 24(b) of the Federal Rules of Civil Procedure, and thereafter James J. Saxon, Comptroller of the Currency of the United States, was also granted leave to intervene and file an answer to the complaint in intervention under the same subsection of the rule.

 Upon completion of discovery and other pretrial procedures an agreed pretrial order was submitted and plaintiffs, together with plaintiff-intervenor, moved for summary judgment, contending that there was no genuine issue as to any material fact; and that under a correct interpretation of 12 U.S.C.A. § 36(c), considered in the light of the applicable provisions of the state statutes, i.e. RCW 30.40.020 and 30.04.280, the proposed drive-in facility to be operated at 818 Second Avenue in the City of Renton would be an additional branch of the defendant, Peoples National Bank, which could not be lawfully authorized or operated.

 The case having been submitted following trial and extensive argument, the basic issue for decision, assuming standing to sue and jurisdiction, is whether the operation of the proposed facility would constitute a branch of a national banking association under the applicable federal statute. The Comptroller of the Currency of the United States, James J. Saxon, upon inquiry by the defendant bank, undertook a limited investigation of the proposal, approved it and thereby made an administrative determination that the facility would not constitute a branch under the federal statute.

 A brief outline of the factual situation, largely undisputed, will be helpful in understanding the court's discussion of the issues.

 Peoples National Bank is a national banking association chartered by the federal government and operating under the supervision of the Comptroller of the Currency. It is essentially a commercial bank and has its main office at 1414 Fourth Avenue in the heart of the business district of Seattle.

 The Renton branch, established as such in 1934, is the oldest of some thirty-five or more operating branches in the State of Washington.

 With a present population of approximately 21,000 people, the City of Renton is situated on the south end of Lake Washington with its northwesterly boundary adjoining a part of Seattle's southeasterly city limits. It is in the midst of a rapidly growing industrial development to the south of Seattle, which includes Boeing Aircraft, Pacific Car and Foundry, and many other growing industries.

 Renton has many suburban residents who commute to and from work in Seattle. Also, there are many residents of Seattle and other nearby communities commuting between home and various industrial plants in the vicinity of Renton. Increased traffic in recent years has caused serious congestion in the area of Peoples Renton branch which is located at 222 Williams Street. The block of this location is bounded by Williams Street on the front, Wells Street to the rear, and Second and Third Avenues on either side, all being restricted to one-way traffic. An alley sixteen feet in width bisects the block, running from Second to Third Avenue. To accommodate existing customers, avoid loss of business and to develop new patrons, Peoples acquired, in addition to the limited parking space already provided in the immediate vicinity of the branch, a half block of parking area some 260 feet away, located on Second Avenue, one of the most heavily traveled arterials through Renton. To provide a more convenient service a "drive-in, walk-in" facility was proposed for customers whose only bank business was cashing checks or making deposits or installment payments. This facility would be serviced by two or more tellers and a supervisor as business might require, but all operations would be subject to the branch management at Williams Street and persons desiring additional service would be required to go there.

 Accordingly, Peoples notified the Comptroller that it planned an "expansion" of their present facility by the addition of a parking lot teller service. The Comptroller advised that he considered this project as "an extension" of the present facilities rather than a branch; therefore no authorization from his office was necessary. He asked to be kept informed so that the Treasury records would remain current. (Exhibits A-1 and A-2.)

 Construction on the project commenced, but as noted above, it was soon interrupted.


 I will consider first the defendant's contention that no plaintiff, including the intervenor Hood, has standing to sue. Lack of standing to sue means there exists no justiciable controversy between the person suing and a defendant. For the judicial power to be exercisable there must be a case or controversy. However, if the person bringing the action suffers no direct injury and has no property or no rights that will be directly affected, there is no case or controversy upon which the federal judicial power depends. Constitution, Article III, section 2; see Frothingham v. Mellon, 262 U.S. 447, 43 S. Ct. 597, 67 L. Ed. 1078 (1923); Doremus v. Board of Education etc., 342 U.S. 429, 72 S. Ct. 394, 96 L. Ed. 475 (1952).

 First, let us look at the plaintiff, State Chartered Banks, together with its members. In determining whether there is any standing for plaintiffs to sue, it will be helpful to apply the standards laid down by Justice Frankfurter in his concurring opinion in Joint Anti-Fascist Refugee Committee v. McGrath, 341 U.S. 123 at 151, 71 S. Ct. 624 at 638, 95 L. Ed. 817 (1951), a leading case on the issue of "standing." He there stated:

"Adverse personal interest, even of such an indirect sort as arises from competition, is ordinarily sufficient to meet constitutional standards of justiciability. The courts may therefore by statute be given jurisdiction over claims based on such interests. (Citations.)
"* * * To require a court to intervene in the absence of a statute, however, either on constitutional grounds or in the exercise of inherent equitable powers, something more than adverse personal interest is needed. This additional element is usually defined in terms which assume the answer. It is said that the injury must be 'a wrong which directly results in the violation of a legal right.' Alabama Power Co. v. Ickes, 302 U.S. 464, 479, [58 S. Ct. 300, 303, 82 L. Ed. 374]. Or that the controversy 'must be definite and concrete, touching the legal relations of parties having adverse legal interests.' Aetna Life Ins. Co. v. Haworth, supra, 300 U.S. at 240-241, [57 S. Ct. at page 464]. These terms have meaning only when contained by the facts to which they have been applied. In seeking to determine whether in the case before us the standards they reflect are met, therefore, we must go to the decisions. They show that the existence of 'legal' injury has turned on the answer to one or more of these questions: (a) Will the action challenged at any time substantially affect the 'legal' interests of any person? (b) Does the action challenged affect the petitioner with sufficient 'directness'? (c) Is the action challenged sufficiently 'final'?"

 Applying the test of "legal" injury by posing the suggested questions to our situation, let us inquire first whether the "legal" interests of any person are challenged by the defendant's proposed action. To begin with, What are the broad legal interests here involved? Both state banks and federal banks are chartered institutions, the charter being given by the respective sovereign for the conduct of banking business. Such banks would be entitled, it would seem, to bring an action against any activity threatening the property rights of the charter or flowing from the charter. See Wisconsin Bankers' Association v. Robertson, 190 F. Supp. 90 (DC DC 1960). Furthermore, the state (and federal) banks have the legal right to operate within a competitive scheme that has been statutorily defined. If an act threatens to disrupt the balance of that scheme, those others who are affected have the right to legal redress. See National Bank of Detroit v. Wayne Oakland Bank, 252 F.2d 537 (6 Cir. 1958). Therefore, if one or more members of State Chartered Banks individually have the right to sue, upon what grounds can the association, formed for the protection of banking interests, be denied a concurrent right? Cf. Tileston v. Ullman, 318 U.S. 44, 63 S. Ct. 493, 87 L. Ed. 603 (1943). I do not think the association can be denied this right.

 The statutory scheme designed to sustain the lives of both state and federal banks allegedly has been threatened in the State of Washington. Perhaps only a few of the plaintiff banks could be irreparably injured if the defendant is allowed to operate its parking lot teller windows at Renton. Nevertheless, once the pattern is established whereby national banking associations are permitted such drive-in facilities and state banks are not, other state banks throughout the state may be similarly threatened by other national banking associations establishing similar facilities. Their future existence and economic health may soon be in jeopardy by an alleged violation of federal law, a law designed for their protection. These state banks therefore have "legal" interests which will be substantially affected by the challenged action.

 Although mere economic injury may not be sufficient to give standing to sue in some cases the federal banking act was designed specifically to protect a particular economic interest. Under that law I believe the plaintiff, State Chartered Banks, and all its member banks have sufficient "legal" interest to justify standing to sue. See First National Bank of Smithfield, N.C. v. Saxon, 352 F.2d 267 (4 Cir. 1965) (advance pamphlet).

 The next question is whether the action challenged affects plaintiffs with sufficient directness. The association was formed to protect the interests of all its member state banks. Two of the member banks, namely, Seattle Trust & Savings Bank and The Bank of Kent, are near the proposed facility and have presented credible evidence they will suffer economic injury - loss of customers - if the defendant bank is allowed to operate this facility. They will be directly affected. By membership in State Chartered Banks they have designated the plaintiff association as a protector of their interests. Under this state of facts it seems to me that the action challenged does affect the plaintiff association as well as at least two of the plaintiff banks with sufficient directness.

 The third query is whether the action challenged is sufficiently "final." The action challenged is the proposal of the defendant, Peoples National Bank, to construct and operate a facility as an "extension" of its present establishment in Renton. The facility is partially built and its completion has been delayed solely because of the pending litigation. The Bank intends to complete and operate this facility unless permanently enjoined from doing so. As far as the action of the Comptroller is concerned, both the defendant and the intervenor defendant contend that nothing more need be done by him. He has given his approval of the facility as an extension of an existing branch and he proposes to take no further action in the matter. Also, the Comptroller infers that his action is conclusive by asking this court to take the case in a review posture. Such circumstances indicate that both the acts of the Comptroller and the defendant bank are sufficiently complete to meet the test of "finality."

 From the foregoing discussion it seems clear to me that the standing to sue of the plaintiff, State Chartered Banks in Washington, and at least two of the plaintiff banks, as noted above, cannot be seriously questioned. The remaining plaintiff banks as state banks have such a vital interest in the issue, inasmuch as it may set a precedent that will adversely affect them under similar circumstances in the future, that they also are properly joined as parties plaintiff.


 As a second preliminary issue the defendant challenges the jurisdiction of this court to hear and decide this case because of plaintiffs' failure to establish that the matter in controversy exceeds the sum or value of $10,000.

 When arguing their motion for summary judgment, the plaintiffs, recognizing that damages to the individual plaintiff banks must be prospective and not easy of evaluation, relied upon the rule stated in Ridder Bros. v. Blethen (9 Cir. 1944) 142 F.2d 395, 399, as follows:

"The value of the 'thing sought to be accomplished by the action' may relate to either or any party to the action."

 At the time plaintiffs sought a preliminary injunction in December, 1964, the defendant, by affidavit of Robert G. Perry, Senior Vice President and Cashier of defendant bank, represented that the contract for the construction of the facility (alleged branch) had been let and was in progress; and that the cessation thereof by court order would result in loss to the defendant due to "contract cancellation, return of equipment, and the like, in excess of $50,000." Plaintiffs therefore plausibly contend that under the law of the Ninth Circuit ample showing has been made that the matter in controversy exceeds the sum or value of $10,000. As noted in the introductory paragraphs of this memorandum, the fact that Judge Bowen, after hearing, so found and issued an injunction pendente lite, conditioned upon plaintiffs providing a $20,000 bond, lends additional weight to the plaintiffs' position.

 Counsel for defendant question the validity of the rule as stated in the Ridder case, supra, asking, "Is this good law?" Be that as it may, the case has never been overruled nor, so far as I have been able to ascertain, has it ever been "distinguished" to the extent that its authority is in doubt.

 To overcome the adverse effect of Ridder the defendant cites an annotation in 30 A.L.R.2d 602, et seq., entitled, "Criterion of jurisdictional amount to vest jurisdiction of federal court where injunction is sought." Two brief summaries of parts of Sections 6 and 7 of that annotation are quoted:

"Sec. 6. Value to plaintiff as test. According to the great weight of authority, the test of the jurisdictional amount in injunction cases is the value to plaintiff of the right sought to be protected. In other words, the determination of the matter in controversy is to be approached from the plaintiff's point of view." ( Id. at 621)
"Sec. 7. Value to defendant as test. * * * If not representing, in the strict sense, a minority view, it has been applied in a minority of the decisions on the subject." ( Id. at 628)

 While I have no quarrel with these statements, I must be more concerned with the authority of this circuit. Most, if not all, of the Ninth Circuit cases listed in sections 6 and 7 of the annotations are pre- Ridder cases. Their authority is ...

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