Durkin v. National Bank of Olyphant

United States Court of Appeals for the Third Circuit · 1985 · Corporations

772 F.2d 55 (1985)

Updated August 22, 2026

CorporationsShareholder voting rightsNational banksDirector electionsFederal jurisdictionNational Bank Act12 U.S.C. § 6128 U.S.C. § 1337

Facts

Durkin, a shareholder of the National Bank of Olyphant, timely filed notice of her intent to nominate herself for the board of directors after receiving notice of the annual meeting and election. After her nomination, the board amended the bylaws to bar any shareholder whose spouse was affiliated with another bank from serving as a director, and notified Durkin of its intent to disqualify her only three calendar days and one business day before the election, after the nomination period had expired. At the meeting, the presiding official rejected her nomination and disallowed ballots cast for her. Management nominees each received 17,054 votes, while Durkin would have received 32,000 votes had her nomination been accepted.

Issue

Does a shareholder's claim arise under 12 U.S.C. § 61 when she alleges that a national bank's last-minute bylaw amendment prevented meaningful exercise of her right to nominate a director candidate? If so, does she lose protection under § 61 because she did not attempt a second nomination after her original, otherwise proper nomination was retroactively disqualified?

Rule

The voting rights guaranteed by 12 U.S.C. § 61 include the right of national bank shareholders to nominate candidates for the board of directors. A national bank may adopt bylaws regulating director qualifications, but it may not enact and apply a facially valid bylaw in a manner that eviscerates § 61 nominating rights by depriving a shareholder of a reasonable opportunity to nominate and support a qualified candidate; on such facts, the shareholder need not make a futile or meaningless second nomination attempt to state a claim.

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Redstone National Bank in Columbus, Ohio, sent notice of its annual director election and proxy materials to shareholders. Maya Patel, a minority shareholder, timely nominated a candidate under the bank's existing procedures, but the bank chair announced that only candidates preapproved by the incumbent board would appear on the ballot and refused to recognize any shareholder nomination.

If Maya sues in federal court alleging violation of 12 U.S.C. § 61, what is the strongest argument that her complaint states a claim?

Explanation. The majority held that § 61's shareholder voting rights include the right to nominate candidates for director. Voting would be meaningless if management could monopolize the slate. Thus a national bank's refusal to recognize shareholder nominations can state a federal claim under § 61.