Mercantile National Bank v. Langdeau

Supreme Court of the United States · 1963 · Federal Courts

Federal CourtsNational banksVenueSupreme Court review of state judgmentsnational bank venue12 U.S.C. § 94mandatory venuepersonal privilege

Facts

The receiver for a Texas insurance company in liquidation brought a conspiracy and damages action in a Travis County, Texas, court against two national banks located in Dallas County and 143 other defendants. The banks filed pleas of privilege under Texas procedure, arguing that 12 U.S.C. § 94 allowed them to be sued only in the county where they were located, namely Dallas County. The receiver relied on a Texas Insurance Code provision giving the court handling the delinquency proceedings venue over actions brought by or against the insurer or receiver. The sole question agreed upon for review was whether the federal national-bank venue statute or the Texas venue provision controlled.

Issue

Does 12 U.S.C. § 94 require that an action against a national bank be brought only in the county or city where the bank is located, thereby overriding a state venue statute that would allow suit elsewhere? Also, was the Supreme Court authorized to review the state court's venue ruling at this stage under 28 U.S.C. § 1257(2)?

Rule

12 U.S.C. § 94 must be read as mandatory: absent waiver, a national bank may be sued against its will only in the federal district where it is established or in the state, county, or municipal court in the county or city where it is located, as specified by the statute. Section 94 is a venue provision conferring a personal privilege on the bank, and it was not impliedly repealed by later statutes concerning federal jurisdiction over national banks.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

A receiver for a failed finance company files suit in a state court in Phoenix, Arizona, against Desert Crest National Bank, which is located in Tucson, along with several nonbank defendants. An Arizona statute says all claims related to an insolvency proceeding may be brought in the county where the receivership is pending. The bank immediately files a venue objection invoking 12 U.S.C. § 94.

Which is the strongest argument for the bank?

Explanation. The majority held that 12 U.S.C. § 94 is mandatory, not permissive. When timely invoked, it gives a national bank a personal privilege against being sued outside the county or city where it is located. A conflicting state venue statute does not control over that federal command.