*1 BANK OF LAKEWOOD v. PEOPLES ECCLES et al. VILLAGE, CALIFORNIA. March Argued 1947 . Decided
No. 101. December petitioners. argued Townsend for /. Leonard cause Perlman, brief Solicitor General With him on the were George L. Vest. Robert Stern and B. Stewart, argued respondent. B. Jr.
Samuel the cause himWith on the brief was Luther E. Birdzell. Justice opinion delivered the Frankfurter
Mr.
the Court.
This is a proceeding under the Declaratory Judgment Act, Stat. 28 U. S. C. 400. aim § is to Its have declared invalid a condition respondent under which the a became member of the Federal System. Reserve California State Banking Commission authorized the es- tablishment of respondent provided it obtained federal deposit insurance. requirement This could be met either application direct to the Deposit Federal Insurance Corporation оr through membership in the Federal Re- System. serve 12 B (e) (f) § and of the Federal Reserve Act, 48 Stat. 170, 49 Stat. 684, 687, 12 U. S. C. 264§ (e) (f). Respondent sought such membership but application rejected. promoters Bank, having requested the Board of Governors of the Federal System Reserve application reconsider the for member- ship, advised that were depended favorable aсtion aon showing that the Transamerica a Corporation, powerful bank holding company, did not have, nor was intended have, any interest Bank. Having this been on satisfied point, this Board granted Governors membership to respondent subject to conditions of which the fourth is the bone of contention this litigation.
This condition reads as follows: If, prior
“4. without approval written of the Board of Governors of the Fеderal System, Reserve Trans- Corporation america or any unit of the Transamerica group, including Bank of America National Trust and Savings Association, or any holding company any affiliate or subsidiary thereof, acquires, directly indirectly, or through the mechanism of extension of loans for purpose bank acquiring stock, or in any manner, any other interest in bank, such other than such as arise out of correspondent usual relationships, bank such bank, within 60 days after of Governors from the Board
written notice mem- shall withdraw System, Reserve Federal System.” in the Federal Reserve bership respondent gave The Board Governors for the condition: explanation approved membership has been application for
“The fide is а bona the bank representations upon holding that no independent institution local bank at interest any has company group and that membership, of its admission to time plans, bank have no directors and stockholders looking toward understandings commitments independ- as a local of the bank change in the status *3 membership numbered Condition of institution. ent maintain that status.” designеd 4 is prior Transamerica, without in later, 1944, time Some 5,000 540 of the respondent, acquired knowledge of the duly advised Bank outstanding shares of its stock. that fact, requested but of Governors of this the Board of the Board This, relieved of Condition No. it be action, this Then followed to do. Governors declined District Court for the in States District the United decla- for a Board of Governors Columbia, against injunc- an 4 invalid and for No. was ration that Condition defend- A motion against tion its enforcement. failed to set in that it complaint, ants to dismiss Supp. 64 F. controversy, was denied. justiciable forth a that the Bank’s claiming 811. The defendants answered, questioning it from membership barred acceptance of any case No. in validity of Condition on judgment and moved for valid, the conditiоn was filed a number of Bank, having pleadings. The District summary judgment. affidavits, moved for held the Bank unreported opinion, in Court, an accepted mem- it had the condition on which bound
429 judg- System, gave in the Federal Reserve bership Appeals for the for the defendants. The Court ment It judge dissenting, reversed. Columbia, District of one validity estoppel and sustained the rejected the defense of if the Board “only that, as a statement of the condition hearing, after that Trans- determine, should of Governors shares has resulted ownership of the bank’s america’s bank’s the worse the character of the change in a for of its banking policies, safety in its personnel, it any way, may require other substantial deposits or System.” Reserve to withdraw from the Federal thе bank it remanded the case Accordingly, F. 2d 643-44. 161 entry judgment construing of a to the District Court 4 ruling to such effect. Since this involves Condition No. administration of the importance to the a matter the case here. 332 Act, brought Reserve we Federal S. 755. U. mem- provides for withdrawal
Condition No. for violation of bership System, in the Federal Reserve written notice from provisions, days “within 60 after . . . .” 9 of the Federal Board Governors Section revoke the Board of Governors to Reserve Act authorizes If hearing.”1 of a bank “after membership status any appear Board of Governors “If at time it shall to the System has failed to that a member bank of the Federal Reserve regulations provisions of section or the comply with the *4 System pursuant Reserve madе of of the Federal Board Governors banking without a receiver thereto, exercise functions or has ceased to therefor, within agent having appointed it shall be liquidating been hearing require sur such bank to power of board after the the rights reserve bank and to forfeit all stock in the Federal render its the Fed membership. of of privileges of The Board Govеrnors and membership upon proof due of System may restore eral Reserve 38 Stat. imposed this section.” compliance conditions with the 684, 704, 12 C. 250, 251, U. S. amended, 49 Stat. 251, 260, 46 Stat. as Act, 60 Stat. Administrative Procedure also 5 of the 327. See § § 237, 239, 1004. 5 U. S. C. § foregoing elements, the no more than
the case contained emerge: would questions three as it premature, brought
(1) Was this action revocаtion Governors commenced the Board of before proceedings? validity the respondent attack If the
(2) not, could accepted, it had been basis of which a on the of condition Mallonee, Compare Fahey membership? and had enjoyed, U.S. 245, power to have Board of Governors so, If (3) did against ac- guarding a of means impose the conditiоn as respondent? in interest by Transamerica of an quisition regard for the considerations However, with due declaratory judgment, a rendering guide us should without dispose a of the case requires record as whole us questions. of these reaching any Eccles, Marriner S. correspondence between Extended of Fed- of the Board of Governors the then Chairman Chairman of the Giannini, and A. P. System, eral Reserve with Transamerica, together of Directors of the tes- Board timony Banking House Committee on Eccles before the forth reason for Currency, and set insist- Board’s sought on the fourth condition. The Board block ence independent Transamerica of stock unit “acquisition when banks, especially evading it constitutes means of will requirеments agencies of the Federal who not permit its banks to establish additional branches.” Hear- Banking Currency, before Committee on House ings on H. R. 1st Representatives, Cong., Sess., 78th p. 15. The Board was concerned not Transamerica purchase independent some shares of banks for might investment, but that it would ordinary purposes buy acquire control, thereby into banks ordеr to outwardly independent, parts into banks, though turn The Board banking network. of Governors its own policy Con- underlying out carrying was therefore
431 4 formally any dition No. when it disavowed intention respondent merely be- against to invoke that condition interest acquisition by cause of Transamerica of an subversion of its inde- Bank, with no indication of after pendence.2 by action thе Board taken This did not holding it had satisfied itself that Transamerica’s in- vigorously control. Bank had affect the Bank’s independence, urging upon on its continued sisted ownership of Board the harmlessness of Transamerica’s Board, upon and the inde- stock, of the Bank’s some pendent found such to the fact. Accord- investigation be public Board concluded that interest” ingly, “the for no action. called declaratory judgment, equitable
A like other forms of dis- judicial a matter of relief, granted only should be as v. Ex- interest. Brillhart public exercised cretion, Dredge & Co., Lakes 491; cess Insurance 316 Great U. S. Rep. H. R. Huffman, 293, 297-98; 319 S. Dock Co. U. Sess., p. 2; Borchard, Declara- Cong., No. 73rd 2d always It is (2d 1941) pp. ed. 312-14. tory Judgments a proper balance duty equity court of strike consеquences and the plaintiff between needs govern- where Especially desired relief. giving the un- not intervene involved, courts mental action should is clear, not remote or equitable need for relief less the speculative. meeting following minutes of a is an extract 28,1946: January
Board on report of examination “Upon consideration of the latest Village, California, the Board Bank, from which Peoples Lakewood control, change in the there had been no substantial concluded that by resulting acquisition policy from the management of the bank stock, the Corporation of certain shares of the bank’s Transamerica by vote, no need Board, decided that there was unanimous respect any with public interest fоr action the Board in the relating acquisition membership of its of the bank the condition Corporation.” stock Transamerica *6 a declaration actuality plaintiff’s need for And importance. of so is therefore decisive rights
of his Bank has of at bar. The we turn to the facts the case Transamerica; of independent that it is always insisted claim. The the Board оf Governors sustained has Re- in the Federal right Bank on its remain stands acknowledges right. that System; serve Board up independence; its any give Bank intention to disclaims condition Governors, having imposed the Board action to ter- independence, any disavows safeguard this Bank long so as the membership, Bank’s minate the it What independence on which insists. maintains the relief, it now rеally fears, Bank and for which seeks at it conditions, some future changed time, under that if membership, and to withdraw may required be Comptroller of the runs, the argument so the happens, Deposit of the Federal one of the Directors Currency, with agreed the Federal Re- Corporation, has Insurance Bank any application by for Board to refuse serve as a non-member. deposit insurance rights Bank seeks a declaration of its it Thus the if the Board of Gov- independence, lose its should if invoke the policy its and seek to should reverse ernors independent the Bank remains though even condition Insurance Deposit of the Federal Directors and then the if policy grant not to change not their Corporation should Bank as a non-member of to the deposit insurance of these con- System. The concurrence Reserve Federal realized, be is too injury events, necessary tingent determina- anticipatory judicial warrant speculative to public passing questions avoid on Courts should tions. immedi- are not constitutionality law even short are reasons ately pressing. Many same cоnstitu- adjudicating abstain from impel them to which effectively it before against tional claims statute claims. on such presently impinges appears respondent It if could, wished, it protect itself from independence the loss of its through adoption by-laws any further forbidding pledge sale or of its shares to Transamerica or its affiliates. See Cali- fornia Corporations Code, L. c. (g).3 § To replies this the Bank that even if independence its is maintained, the Board of Governors change policy, seek enforcement of Condition 4,No. whether or not such enforcement is required by public “the inter- in having independent est” which condition banks, *7 now serves. argument Such an hypothetical reveals the character of the injury on the of juris- existence which a in diction rooted discretion is to be In exercised.
light this, of all difficulties deduced from the uncertainty regarding the future enforcement of con- dition, possibly leading to uninsured deposits, are too adjudication tenuous to call for important of issues of public law.4 We are asked contemplate to aas serious danger body that a entrusted with somе of the most delicate and grave responsibilities in our Government will a change deliberately policy formulated urging after it on this Court against standing the Bank’s to ask relief.
3 by-laws corporation may provisions “501. of a make not in conflict with law or its articles for:
“(g) qualifications Special persons shareholders, of who be upon right hypothecate and reasonable restrictions to transfer shares.”
Likewise, shareholders, to, or such of them as chose could presumably pledge Transamerica, bind themselves not to sell or to by noting agreement and on their certificates could bind their Pedrini, transferees. Cf. Vannucci v. 217 17 Cal. P. 2d 706. 4 asserted, affidavits, in its that of bank not lack confidence depositors, heavy deposits had deterred but been so that had capital expansion order, might disadvantaged by was in but be fear of prospective personal investors to risk assessment if were deposits uninsured. authority may of of
A determination administrative immediately and so made the behest of one be at course invalid, to be by a claimed truly injured regulation judicial inter- compelling justify sufficiently his need is the аdministrative completion of vention even before Bank's here seen, grievance as have process. But, we nature, speculative insubstantial, too is too remote Governors, Board of injunction against the justify an of for a declaration inappropriate equally and therefore type especially true view This is rights. were injury by the Bank. Its claims proof offered issues of Judgment affidavits. on supported entirely by subject evidence, not based on such public moment counsel, apt to treach- opposing be probing by judge subtle tend- against the appropriate Caution is erous. safeguards from the public issues free to decide ency a declaratory facts, through use scrutiny of the critical equity practiсe has tended summary judgment. Modern on and inter- procedure affidavits away from based Equity proven of its insufficiencies. rogatories, because exceptional cases. practice 46 forbade save Rule such James, 701; S. Mfg. Corp. Brush U. Angeles Los See *8 (a). Again, not Procedure 43 Rule of Civil cf. Federal Act to the Norris-LaGuardia of the led the least evils injunctions upоn issuing labor frequent practice was the pre- proof than after oral rather basis of affidavits the Amidon, J., Great Northern See open court. sented Brosseau, 416; Swan, in Aeolian 414, J., v. 286 F. R. Co. Fischer, 679, F. 2d 681-82. Co. v. has expressed intention is but
Where administrative Valley v. (Ashwander Tennessee to fruition yet not come intention 324), or where that 297 U. S. Authority, Grosjean, & Tea Co. (Great Atlantic is unknown Paсific controversy held that the 429-30), we have 301 U. S. when Surely, intervention. ripe equitable not is yet only Board not body a such as the Federal Reserve has power expressly not asserted a but has dis- challenged go beyond legitimate “public claimed intention to the stay a interest” confided to court should its hand. it,
Judgment reversed. Douglas and Mr. Justice took Chief Justice part no thе consideration or decision of this case. Reed, Burton
Mr. Justice with whom Mr. Justice joins, dissenting. Sys-
In get order to admission into the Federal Reserve tem, put was to into its charter respondent required a of the provision allegedly beyond power which was It System require. Board of of the to Governors seems mar- a restriction on the requirement obvious detrimental respondеnt's ket for the stock therefore a business, continuing to conduct of its threat respondent Board to exclude benefits System. as
Respondent regarded to be free of what it desired an not illegal requirement. The Board Governors has prohibition that it will enforce the but agreed never holds respondent resign a from the it threat force the as unde- upon acquisition of control those deemed System sirable the Board. only possibility I
Certainly, it, as there is not see injury injury by but reason of the of future marketability respondent’s stock. It threat upon a substantial bearing willingness have especially with banking it, to establish relations customers relationships long toward and close asso- major looking requires of interests. It no elaboration to con- сiations a real and substantial inter- me that the threat vince *9 action. As that by allegedly illegal governmental ference agree- the enforced form taken a definite has threat something we have not withdrawal, ment for with- requiring notice written but a concrete happen hap- System on from the respondent this drawal idea contrary to the Board’s which is of a fаct pening idea of a Board’s public interest. Whether at very point is is the public interest correct legitimate issue. controversy, justiciable is a there
In such circumstances deprive a threat and a right the claim of a damage claimed. particular person right irre- course, is, enforcement or threatened actual injured by even seriously be Any mediable. bank would juris- gives This System. it from the an effort to oust Judicial Act. Declaratory Judgment under the diction 274d. Code § peti- to refuse to consider
This Court has discretion
injunction
an
declaratory judgment and
tion for a
Labor
injury. Federation
stop
existing
a threatened or
is not
450, 461. That discretion
McAdory,
v.
325 U. S.
Freeman,
359,
319 U. S.
unfettered. Altvater v.
declaratory
involving
suits
is
between
There
no difference
Where an
equity
suits.
equitable remedy
an
other
jurisdiction exists over
controversy
actual
with federal
usually
parties,
of adverse
discretion
legal
relations
adjudication.
by refusing an
properly
cannot
be exercised
Haven,
v.
228; cf. Bell
v. Winter
320 U. S.
Meredith
Hood,
circumstances, not here
Unusual
I would decide this case on the merits. BAKERY SALES DRIVERS LOCAL UNION NO. 33
et al. WAGSHAL, trading as WAGSHAL’S DELI CATESSEN. Argued
No. 17-18, 225. December 1947 . Decided March