Mazaika v. Bank One, Columbus, N.A.

the Court years, respectively, and three Lehigh County for six discre- may, its Northampton County Pleas of Common of order. tion, support to enforce current jurisdiction retain As the frivolous. First, hardship are Obligor’s allegations distance between noted in its 1925 opinion, trial court inconse- is Northampton Counties county Lehigh seats Obligor’s fact that miles. The fifteen quential approximately — taking him from preclude is in does disrepair automobile Next, in light of transportation. of other modes advantage frequent process his past avoidance Obligor’s find that venue support obligation, fulfill we refusal to his County, where the Domestic Northampton best retained on, and years has spent has almost ten Relations Section with, support intensely enforcing the various become involved circumstances, that the In we conclude light orders. of these Obligor’s in denying abuse discretion trial court did not its Battuello, supra. to transfer venue. petition affirmed. Order A.2d Mazaika, on behalf of and Daniel A. M. MAZAIKA

Jennifer similarly situated, Appellants, and all others themselves COLUMBUS, N.A., ONE, Appellee. BANK Pennsylvania. Superior Court of Argued April 1994.

Filed 1994. Dec. May 1995. Appeal Granted Petition Allowance Malakoff, for Pittsburgh, appellants. P. Michael Aronchick, Philadelphia, for appellee. Mark A. CIRILLO, WIEAND, McEWEN, CAVANAUGH,

Before SAYLOR, KELLY, and JJ. BECK, TAMILIA, POPOVICH McEWEN, Judge: the appeal by in this presented questions

The essential intend, by 38th Did the appellee1 are: demurrer to power delegate to Ohio Act June all other purposes preempting “interest” for the term define and, fact, it laws, if, in did so protection consumer states’ intend, Supreme of the United States the decision did Corp., v. Omaha Bank First Service Marquette National objections appellee preliminary filed recount: The 1. thereof, every a Complaint, and count fails 1. each lending governs Bank One's federal law cause of action because preempts state law. WHEREFORE, requests Plaintiff's that the Court dismiss Bank One thereof, every count Complaint, Class and each and Amended Action prejudice. with 299, 540, (1978), 58 L.Ed.2d 534 bestow that power upon legislature?2 Ohio poseWe a negative re- and, sponse these inquiries accordingly, reverse the order dismissed, which prejudice, with complaint by appel- filed lants.

Our scope of review in an appeal from an order sustaining preliminary objections in the nature of a demurrer and, is plenary, after accepting as true all material facts set forth in complaint as well as all reasonably inferences therefrom, deducible whether, we determine on the facts averred, the law precludes with certainty a recovery by plain tiff. Where exists as to doubt whether a demurrer should sustained, be it must be resolved favor of overruling the Criste, Kyle demurrer. 631, McNamara & 506 Pa. (1985); 487 A.2d Kreithen, J.M. White v. 435 Pa.Su per. (1994); 644 A.2d Newtown Village Kimmel, Partnership 53, 55-56, 424 Pa.Super. 621 A.2d 1037 (1993); Gibson, Solomon v. 419 Pa.Super. 286- A.2d One, Columbus, N.A., nationally chartered bank- ing Columbus, Ohio, institution located which extends open- ended credit accounts individuals living throughout States, United including Pennsylvania. Jennifer and Daniel Mazaika are Pennsylvania residents of who obtained a credit card from Bank One pursuant to a agreement card-member (24%) provides twenty-four percent3 finance issues, 2. Due to our resolution of these two we do not reach the question delegation of whether such a authority by Congress to a single permissible state is under our federal constitution. Anyone 3. perplexed who is banking persuaded interests have the Pennsylvania legislature approve surely an interest rate of must 18% appalled be banking to learn that the interests have convinced the legislature of Ohio that an interest rate of is neither 25% criminal nor confiscatory. rasped: lawyer Don Corleone once “A with his briefcase Puzo, can steal more guns.”, than a hundred men with Mario (Putnam p. 1969) Publishing Group supposes that Godfather —one professional courtesy precluded Having, his allusion to the banker. footnote, advocate, this tamed the analysis- the task of and decision resumes. agree- The cardholder balances. charge outstanding on all card holders: Bank credit One permits ment also dollars, ($20) twenty fee of An annual ($18) for checks eighteen dollars A service fee of returned, ($18) over-credit-limit dollars for eighteen fee of

A service charges, and ($18) monthly if minimum dollars eighteen fee of

A service (25) days after twenty-five not received within payment same is due. the in its by appellee interest computed or as

Although not termed statements, charges these monthly agreement cardholder a result of under Ohio law as “interest” are considered lawful statutory provision: following the interest, collect, receive, other as may charge, bank

[A] the bank and charges agreed upon by that are fees and to, membership borrower, periodic but not limited including, exceeding designated fees, fees, charges for cash advance for the limit, charges payments, late credit a dishonored check.... return of 1107.262(A) (emphasis § supplied).

Ohio Revised Code and com- statutory Pennsylvania contend that Appellants and Services Pennsylvania Goods including mon law— Pennsylva- Act, §§ 1101 et seq., 69 P.S. Installment Sаles §§ and the seq., 101 et P.S. Banking nia Code Protec- Practices and Consumer Pennsylvania Unfair Trade Law, imposition seq. prohibit §§ 201-1 et tion 73 P.S. — Appellee argues by appellee. fees aforementioned levied fees, has characterized legislature such since the Ohio 1107.262(A) “interest”, lawfully as be them ORC a result card holders as charged Pennsylvania Act, of all of the National preemption, Section in connection charged fees regulate purporting state laws with such loans.

All parties agree that the interest rate appellee, Ohio,4 national bank located in may lawfully charge its custom- ers, regardless domicile, of their governed by Section 85 of 1864, the National Bank Act of 13 Stat. which specifically permits a national bank to charge “on any interest loan ... at the rate by allowed the laws of the state ... in which the bank § is located”. 12 U.S.C. 85.

The National Bank Act by was enacted the 38th place national banks on a competitive footing -with banks, state-chartered and sought prevent legislatures from discriminating against national banks.5 Section 85 of the Act, § National Bank 12 U.S.C. specifically more pre- scribes the amount of interest that a national bank as follows:

Any take, receive, association may reserve, and charge on any loan ... interest at the rate allowed the laws of the ... located, State where the bank is or at a rate 1 per centum in excess of the discount rate on ninety-day com- mercial paper in effect at the Federal reserve bank Federal reserve district located, where the bank is whichev- more____ er may be the greater, and no 4. A national bank is designated “located” in the state "organiza- in its Act, tion § certificate”. The National Bank Rev.Stat. 12 U.S.C. 22, provides that a national bank “organization must create an specifically certificate” which place operations states “[t]he where its on, State, deposit discount and are to be carried designating the District, town, Territory, particular or county and the city, village.” See: Bougas, and Southern National Bank v. Citizens 35, 43, 88, 93, (1977); 98 S.Ct. 54 L.Ed.2d First National Missouri, Bank in St. Louis v. State 68 L.Ed. 486 Appeals 5. The Court of for the First Circuit in Greenwood Trust Co. v. Massachusetts, (1st Cir.1992), 971 F.2d 826 n. 6 noted that: originally Section 85 was enacted to shield national banks from state laws that were discriminating against Marquette them. See Nat’l Bank v. First Corp., supra, Omaha Service 439 U.S. at 548-50; Cong.Globe, S.Ct. at Cong., 38th 1st Sess. 2126 (statement Sherman). later, of Sen. century More than a this shield had become a sword wielded against national banks state-char- before, tered lenders. As we have "irony stranger written is no to the Nelson, (1st Cir.1987). law.” Amanullah 811 F.2d protec- and consumer usury that all state Appellee contends may be any fees which regulate to purport tion laws which loan, long a so a in connection with by national bank charged state in as interest a law of the they by as are characterized “located”, expressly preempted have been the bank is which that agree Act. While we the National Bank this section of by preempts the Bank Act express National language regulate the rate interest legislature to attempt by state located, pur- for a national bank charged by be which law, state, not persuaded we are in another federal poses purport laws which Pennsylvania protection all consumer that such as those charges, default contingent fees and prohibit to by the case, preempted have instant been at issue rate of governing Act of the National Bank provisions charged by to be national banks. interest

I. PREEMPTION Article VI of argument arises from Appellee’s preemption the laws enacted provides that the U.S. Constitution Land; be the Law Congress supreme U.S. “shall any state or Laws of any Thing ... in the Constitution VI, Art. cl. 2. notwithstanding.” Contrary is laid out cases pre-emption be followed path the authority, has Congress It is accepted our cases. law. In I state powers, preempt exercising its Article that state by Congress an statement express the absence of finding two other bases there are pre-empted, law is First, that federal law Congress intends when pre-emption. pre-empted. is field, law that field given state occupy Energy Resources Electric v. State Gas & Co. Pacific Comm’n, 190, 212- 461 U.S. Development Conservation (1983). 1713, 213, 1726-27, Sec- 75 L.Ed.2d 752 103 S.Ct. field, is ond, if state law occupied has not even it conflicts actually the extent pre-empted nevertheless is, with both compliance when with federal Lime & Avocado impossible, law Florida and federal 1210, Growers, 142-143, Paul, 132, Inc. v. 373 U.S. S.Ct. “stands 1217, (1963), or when the state law 10 L.Ed.2d 248 as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” Hines v. Davi- dowitz, 52, 67, 399, 404, U.S. 61 S.Ct. 85 L.Ed. 581 (1941). See, e.g., Silkwood v. Kerr-McGee Corp., 238, 248, 615, 621, (1984). 104 S.Ct. 78 L.Ed.2d 443 Co., Field v. Philadelphia Electric 400, 408-09, 388 Pa.Super. 1170, (1989), A.2d quoting, v. ARC Amer California ica Corp., 100-101, 490 U.S. 109 S.Ct. (1989). Accord: English v. General Electric

L.Ed.2d Co., 72, 78-79, 110 L.Ed.2d (1990); Fidelity Federal Savings & Loan 73-74 Assoc. Cuesta, de la

L.Ed.2d 664 Banking is an area in which Congress has not evi denced an intent to occupy the entire field to the exclusion of states, and thus state legislatures may legislate all areas not expressly or impliedly preempted by legislation. federal Seе, e.g., Inc., Lewis v. B.T. Managers, Investment 447 U.S. 27, 38, 2009, 2016, 100 S.Ct. (1980); 64 L.Ed.2d 702 Anderson Luckett, National Bank v. 233, 248, 599, 321 607, U.S. 64 S.Ct. (1944); 88 L.Ed. 692 First National Bank in St. v. Louis Missouri, State supra, 656, 263 215; U.S. at 44 S.Ct. at Connecticut, 563, 569, 218 132, 133, 31 S.Ct. 54 Griffith (1910), L.Ed. aff'd., 572, 134, 218 U.S. 31 S.Ct. 54 L.Ed. Abrams, General Motors Corporation v. (1910); 897 F.2d (2nd 34, Mitchell, Cir.1990); Smith v. 137, 420 Pa.Super. (1992). 616 A.2d [Njational banks have traditionally been “governed in their daily course of business far more by the laws of the State than of the Nation. All their contracts governed are and construed State laws.” National Bank v. Common- (1869) wealth (9 Wall) 76 U.S. 701; 19 L.Ed. see Scott, The Dual Banking System: A Model Competition (1977) in Regulation 30 Stan.L.Rev. 1. As explained Bank, Elizabeth, National State N.J. v. Long, 630 F.2d 981 (3d “[wjhatever Cir.1980), may be history of federal- fields, relations other regulation of banking- has been one of dual control since the passage of the first has instances only In few Bank Act 1863---- National of national regulation preempted state Congress explicitly to the courts it has been left to commonly, banks. More super- and state of federal boundaries proper delineate has a tolerant one. [National test been judicial vision. debts, and contract, acquire collect right banks’] and. F.2d at law.” [630 are all based on state property transfer exception “the apply, rule is that state laws Thus the 985] laws of such whenever operation of the being the cessation or the laws the United States conflict with they expressly banks were for which the national purpose frustrate discharge created, efficiency [their] their impair or ” (1896), Chipman McClellan v. duties.... 85, 87, 41 461. L.Ed. Bank, Cal. 38 Cal.3d Perdue v. Crocker National (footnotes omitted), appeal 702 P.2d Rptr. dismissed, 89 L.Ed.2d affect- legislation has not all state displaced Since banks, only will be preempted state law ing national law, that with federal actually “to extent that it conflicts is, with both state comply it impossible when as an obstacle where the state law stands federal objectives full accomplishment purposes Corporation, Kerr-McGee Congress....” [Silkwood (1984) 615, 621, 443 238, 248, ]. 78 L.Ed.2d 104 S.Ct. U.S. Energy Electric v. St. Resources Gas & Accord: Pacific Com’n], 461 U.S. Development & Conservation (1983). 752 Defendant 103 75 L.Ed.2d S.Ct. issue; are this persuasion “[c]ourts the burden of on bears it is burden of preemption, to infer reluctant state law Congress preempt intended party claiming 37 Cal.3d it.” v. Beech prove Corp., Elsworth Aircraft (1984) P.2d and cases there 548, 208 691 630 Cal.Rptr. cited. Bank, at supra, Cal.Rptr. 216

Perdue v. Crocker National (emphasis supplied). 702 P.2d at 519-520 104

“Consideration of issues arising Supremacy under assumption Clause starts with the that the historic police (are) powers of the States not to be superseded by____ (is) Federal Act unless that the clear and manifest purpose of Congress”. Rice v. Santa Fe Elevator Corp., U.S. 218, 230, (1947). 91 L.Ed. 1447 —Inc., U.S. -, -, v. Cipollone Liggett ‍​​​‌​​‌​​​​‌​​‌‌​‌​​‌​‌‌‌‌‌​​​​​​‌‌​‌‌​‌‌​‌‌‌‌​​‍Group S.Ct. (1992). 2608, 2617, 120 L.Ed.2d 407 Courts must tread in this arena cautiously because the authority displace a sovereign state’s law is “an extraordi ... nary power Congress that we must assume does not 452, 460, lightly.” Gregory Ashcroft, exercise (1991). 2395, 2400, S.Ct. L.Ed.2d 410 Trust, supra, Greenwood 971 F.2d at 823. noted,

As we have all parties appeal agree the instant 85 of Section the National Bank Act expressly preempts all attempts by legislatures to regulate the rate of interest which a national bank connection with disagreement loan. The over arises the items and encompassed which are within the definition of the term “interest”. bottom, intent, question, statutory is one of and we

accordingly “begin with the language employed by Congress and the assumption ordinary of that meaning language accurately expresses legislative purpose.” Inc., 374, 382, 2031, 2036, Morales v. TWA S.Ct. quoting L.Ed.2d 157 FMC Corp. Holliday, 498 52, 56-58, L.Ed.2d Thus, the issue of whether Pennsylvania law has been preempted by Section necessarily the National Bank Act involves a determination of the intent of when it employed the term “interest” in drafting Section 85 of the National Bank Act.

II. “INTEREST”: DEFINITION courts, Some in concluding that thé term “interest” can include the fees and penalties charged by appellee, have found

105 “interest”, both in that, meaning of the term plain while the contingent generally not include the does presently, 1864 defined, issue,6 term “interest” must be at the charges default by of reference Section purposes application for is located. in which the national bank the laws the state of. Dakota) N.A., (South See, e.g., Tikkanen v. Citibank (D.Minn.1992). finds this Appellee support F.Supp. 270 Appeals the opinion in the First Circuit Court argument (1st Massachusetts, v. 971 F.2d Trust Co. Greenwood Cir.1992). inquiry that the sole

The Court Greenwood conceded the word “what meant ascertaining it before was that also conceded “[i]n ‘interest’ ”. Id. at 824. intent, us to upon it is incumbent divining legislative this and the by Congress ‘begin language employed with the accu assumption ordinary meaning language that the v. Trans rately legislative purpose’. Morales expresses World Airlines, ^[504] U.S. [374, 382], 112 S.Ct. 2036, 119 (1992), Holliday, v. Corp. L.Ed.2d FMC quoting (1990).” 52, 57, 403, 407, 112 Green L.Ed.2d S.Ct. Massachusetts, F.2d at supra, 824. wood Trust Co. Court, however, the substan- disregarding The Greenwood Judge legislative history distinguished tial recited Court, that: of the District concluded Young William F. ... absolute plain meaning pedagogical doctrine of persuasive consideration evi- preclude ‘does not [and] if plain meaning such supposedly in contradiction to dence' U.S., Gravel Co exists. Boston Sand and evidence (1928) (Holmes, 170] 73 L.Ed. [49 J.). always hesitate construe words Hence a court must case, alleges annual fee is complaint in the that the 6. The instant specifically monthly computation, APR does not not included in the contingent charges default between the annual fee and the differentiate analysis applicable to the annual fee differs from at While the issue. issue, we it contingent find applicable default stage ruling purposes demurrer at this unnecessary, for on the Northampton separately. pleadings, analyze annual fee Cf. General, Mass.App. N.E.2d 1149 Attorney National Bank v. 106

in if according apparent meaning a statute to their to do so Congress’s would defeat discovered intendment. Massachusetts, F.2d at supra, Greenwood Trust Co. v. 971 825 (emphasis supplied). persuasive upon evidence which the relied in order to avoid the Circuit Greenwood is, however, ordinary meaning quite of the term “interest” and, elusive however deferential we strive to be toward that tribunal, singu- we find the of the Greenwood Court reasoning larly unpersuasive.

In charges contemplat order to determine the nature of the “interest”, ed the term in the absence of an express of Bank Act definition the term the National or direct of the intent of the Congress, principles evidence 38th settled statutory construction direct that we look to the ordinary meaning of the term and consider the then federal existing See, common law definitions of “interest”. v. e.g., Corp. FMC 57, 407; Holliday, 498 111 at supra, S.Ct. CSX — Easterwood, U.S. -, -, Inc. v. Transportation 113 1732, 1737, (1993); v. S.Ct. 123 L.Ed.2d 387 Perrin United States, 37, 42, 100 311, 314, 199, 444 U.S. 62 L.Ed.2d. 204 S.Ct. Alcala, (1979); 575, 580-581, 1180, Burns v. 420 U.S. 95 S.Ct. (1975). 469, 43 L.Ed.2d. 475 words are “[W]here in a which had employed statute at the time a well-known meaning country[,] they at common law or the law of this presumed are to have been used that sense unless the Pons, context v. compels contrary.” Lorillard 434 U.S. (1978) 866, 871, (emphasis 55 L.Ed.2d 47 S.Ct. Savannah, v. Nat’l Bank supplied). Accord: Evans First 64 L.Ed. 171 commonly percentage “Interest rate” is defined as “[t]he money an amount of which is for its use for a paid specified (5th 1979) time.” Black’s Law Dictionary (emphasis ed. added). Similarly, “interest” has been defined as “a for borrowed money[,] generally percentage a the amount borrowed.” Ninth Collegiate Dictionary Webster’s New added). It (emphasis appear beyond peradven- would plain ordinary ture that the of the term “inter- meaning fees, or est” “interest rate” does not include late over credit are levied on charges, percentage limit the like which not N.A., America, Copeland v. MBNA F.Supp. basis.7 Co., (D.Colo.1993). See, e.g., v. Stewart Title Perry (5th Cir.1985), F.2d on rehearing, F.2d 1207-1208 (Tex. (5th Cir.1985); Veytia, Seiter 756 S.W.2d 303 Bank, 913, 216 Perdue Crocker National 1988); 38 Cal.3d dismissed, (Cal.1985), appeal 702 P.2d 503 Cal.Rptr. (1986).8 fact, it In 89 L.Ed.2d 290 opinion the Ohio appear legislature would even “periodic include generally the term “interest” does fees, fees, exceeding cash advance membership limit, payments, late and charges credit for designated check”, presumably, or for the return of a dishonored charges 1107.262(A)9 the Ohio would enactment of Section of Code unnecessary. have been since, compelled although to such an Sec-

One is inference of Revised for a maxi- provides tion 1107.261 the Ohio Code 25%,10 rate of no definition of “inter- percentage mum annual the 25% maximum application est” —for of the of purposes in If one interest —is 1107.261. provided rate of Section utilized, Supreme Marquette Nat’l First 7. Bank v. of of Corp., supra, the “interest rate’’ and “rate Omaha Service terms interest”, charged daily referring periodic rate a to a of interest on balance, that Justice outstanding pausing without to define term. note, bank, however, Marquette did that "unlike the Nebraska Brennan pеrmissible under law rate interest Minnesota was forced low of Marquette, charge $10 for the credit cards.” a annual use of fee (emphasis supplied). at S.Ct. at supra, 439 U.S. insightful enjoyable in most and 8. This issue has been addressed a Judge Philadelphia County opinion by the Common Pleas Court learned Dakota) (South Re: Credit Card J. Avellino in In Citibank Bernard presently Litigation, pending before Court at No. 1673 PHL 1994. this 1107.262(A). supra page 9. text of ORC See for provides: 10. Section 1107.261 of the Ohio Revised Code permitted' § interest or 1107.261 Alternative finance rates permitted of the As an alternative to the interest in section 1107.26 (D) charges permitted Code finance in division of Revised and to the Code, and 1107.27 the Revised a bank contract for section charges agreed upon rates or receive interest or finance rate or revolving parties to the contract or credit consented loan twenty-five exceeding percentage agreement, but an annual rate cent, (emphasis supplied) per Ohio, the term “interest” accepts proposition 1107.262(A), mem- always “periodic includes to ORC pursuant fees, fees, charges exceeding for cash advance bership limit, payments, for late charges credit designated check”, logically it of a dishonored charges for the return usury laws in violation of Ohio would be appellee follows issue, when imposed the fees at in those instances where applied by appellee of interest the 24% rate combination with balances, rate of exceed an effective credit outstanding to all 25%. however, caused the word having legislature,

The Ohio 1107.262(A) member- “periodic to include “interest” Section fees, fees, exceeding designat- charges for cash advance ship for the limit, charges charges payments, for late ed credit check,” provide that such proceeded of a return dishonored “interest”, could not designated as charges, although fees and annual rate computation percentage in the be “included charges purposes finance for rates or the interest rate or percentage the maximum annual determining whether interest____have exceed- been the maximum rate or rates 1107.262(A) Thus, even (emphasis supplied). ed.” ORC default levied contingent the fees and under Ohio one, unique purpose. except are not interest by appellee failed to reveal the event, the Court any In since Greenwood the “ordi- it relied to avoid upon evidence” which “persuasive “interest”, unable to simply we are of the term nary meaning” “interest at the phrase when it used the Congress, find that Act, Bank intend- in 85 of the National enacting rate” Section meaning and of ordinary popular other than the anything ed “interest”, and average intelligence which a of person the word would understand.11 experience permits charge its home state’s rate of 11. Section 85 a national bank to or, alternative, per in excess of the "a rate of 1 centum interest the ninety-day paper in effect at the Federal discount rate on commercial located, where the bank is reserve bank in the Federal reserve district (emphasis greater, no more....” 12 U.S.C. whichever be and ninety-day rate on com- supplied). On March the discount P-1, 4.1%, resulting paper, A-l was in an effective mercial rated and Appellants alleged in their rate of have alternative interest 5.1%! PRINCIPLE III. EXPORTATION however, plain that if the contends, even Appellee include not the term “interest” Section 85 does of meaning of herein,12 issue the decision default contingent charges the Marquette requires apply that we the Court in Supreme demurrer. ruling of on the the Ohio definition interest conceding exporta the appellee, while More specifically, in Mar Supreme the Court by tion as enunciated principle rates, interest only periodic to quette expressly applicable (1) Marquette provides exportation for the urges that because batiks, and Ohio has character by rates national interest as as well annual fees charges default as contingent ized interest, protection prohibiting consumer laws Pennsylvania’s of the term the Ohio definition preempted by such fees are “interest”. decide Marquette was called to Supreme upon

The Bank, a authorized U.S.C. by whether Omaha national bank the by § 85 interest on loan at the rate allowed charge to located, Nebraska, was laws the in which the bank was inter- its customers the rate of charge “entitled to Minnesota delegation right the term Ohio of the to define complaint that appellee, interest enabled in addition rate of "interest” has 24% balances, variety charges outstanding on a which it charges rate of contingent which can amount to an effective default outstanding in excess of balance. interest 200% prohibiting such majority courts have found state law A 12. preempted by Section 85 have done so in reliance charges to have been finding term "interest” Marquette on and not as result of that the charges. Congress to include was the 38th such intended Jr., Cohill, of Penn- Judgе Maurice B. of Western District eminent opinion sylvania, relying upon and the the Court of Greenwood case, in the observed that: Common Pleas instant developments ignore inspect we the case ask that recent and Plaintiffs so, that, doing prior upon deny and we defendants’ law will as penalty because at were not the same motions common they compensa- required "interest” because were not lender as loan, single late usurious sum fees were not tion for argu- they Essentially, plaintiffs were not are because "interest.”.... penalties historically as ing interest, been that because have never classified regulate such National Act and DIDA do penalties, Pennsylvania state law does. (WD Bank, F.Supp. PNC National 1018-1019 Ament v. 1994) (emphasis supplied). Pa. supra, law”. Marquette, authorized Nebraska est noted specifically Court Supreme at 545. The at Minnesota, banks operated Bank “no branch that Omaha Marquette, federal law”. ... nor could it under apparently Bank, at at 546. Omaha 439 U.S. S.Ct. supra, 18% charge permitted to Nebraska was pursuant balances, of all and 12% year interest on the first per $999.99 contrast, By over on all amounts per year interest $1000.00. rate of “[t]o an interest 12% but permitted Minnesota law reduced, interest, per Minnesota law for the compensate of for the charge up annual banks mitted] $15.00 fees supra, card”. using Marquette, of a bank credit privilege It (emphasis supplied). at 542-543 U.S. at S.Ct. that the Court held Supreme these essential facts upon was Nebraska, Bank, lawfully “located” in could that Omaha domicile, customers, regardless all of its of their Court, the state of Nebraska. The rate interest allowed statute, to find upon express words of thе refused based interstate loans part “exempt an intent on the 439 U.S. supra, Marquette, [Section 85].” from the reach thus conclud Marquette 99 S.Ct. at 550. was to all of applicable ed that the Nebraska rate interest located, Bank’s transactions where Omaha was Omaha situated, operations all of its business and transacted n. 439 U.S. at 309 Marquette, supra, state of Nebraska. See: n. 20. 99 S.Ct. at 546 a narrow Marquette involved thereby apparent It is bank, issue, single located in a whether a national namely, state, of interest to its custom provide had to different rates did Marquette ers who had domiciles different from bank. or other loan terms. More penalties not involve fees over, Brennan, pro William J. as he legendary Justice exportation principle Marquette claimed the for the unanimous Court, following language cited to the contained Seattle (9th Savings California, Trust & Bank v. Bank 492 F.2d 48 Cir.1974) denied, 77, L.Ed.2d 72 cert. (1974):

HI provisions [12 in these or “situated” “located” If the words the site of to refer to 24, 36, 85, 90, were §§ 371] U.S.C. in Francis- San headquarters corporate Bank of California’s Washington in the State of co, performance the Bank’s then by governed be functions would banking many essential control would The law of California the laws of California. non-California are carried on these functions when even competition and in customers in with local dealings branches limitations. Such statutory to local state subject banks with by Congress intended could not have been anomaly an National through the policy banking national establishing Act. Banking California, supra, Bank v. Bank Savings Trust &

Seattle F.2d at 51. 492 in other our brethren that, many of it is unlike

Thus support in Marquette to find we are unable jurisdictions,13 has been intended to or 85 was that Section premise the pro- all state consumer Marquette preempt interpreted loan of consumer regulate aspects laws which seek tection interest, at the whim of other than rates transactions legislature.14 Ohio state Supreme States the United are further mindful

We Act National Bank that when the noted Marquette required was a national bank on June was enacted “the place certificate organizational state its specifically be carried are to deposit of discount and operations its where See, e.g.: 13. (1994). Bank, F.Supp. 1015 849 PNC Ament v. National Bank, (E.D.Pa.1993). F.Supp. 1239 825 Goehl v. Mellon Bank, (D.Minn.1992). F.Supp. 948 Chemical 799 Hill v. Co., N.J.Super. A.2d 855 Trust v. Greenwood Hunter (1994). 1992). Citibank, (D.Minn. F.Supp. Nelson v. Citibank, A.2d 325 N.J.Super. Sherman Greenwood, and one citing Circuit Court cases to four The Court in 14. read, case, expand opinions "[flairly these conceded that District Court at 830. preemption....” Greenwood scope of Section 85 Court, cases, binding this are not on thought occurs that these well scope of Section 85 expanded preemptive improperly have contemplated Congress or by the 38th beyond what was intended Marquette. Supreme Court in States United State, District, on, and the designating Territory, village”. Marquette, town or su- particular county city, quoting at 301 n. at 542 n. pra, 439 U.S. § U.S.C. 22. Act the activities of a passed, the time the 1864 was

[A]t to one location. particular national bank were restricted organization That to the effect provisions Act’s (as shall requires today) certificate U.S.C. also town, or county city, “the specifically particular 13 Stat. and that the village” place operations, of its an or shall be transacted at office bank’s “usual business in place specified organiza- in the its banking house located (cf. 81), certificate,” § 12 indicated tion U.S.C. Stаt. (other, than those that perhaps, much. National banks as branches) existing with were not originally were state banks until when the permitted engage banking branch Act, more- p. passed; McFadden Pt. was Stat. over, Act allowed national banks to “estab- the McFadden only if state only permitted lish” branches town, said city, village “within the limits of the or situated,” id., at 1228. It was not until 1933 association is conditions, specified that national Congress approved, upon beyond place named the charter. 48 bank branches Stat. 189-190. ‡ Hí # H* H*

sfc contemplate that did not Congress It suffices to. stress branches, system, replete with today’s banking national Act; no it the 1864 that there are [and] when formulated to a congressional respect indicators of 1864 intent with sure that did not then exist.... banking system Bank v. Bougas, Citizens and Southern National (1977). 54 L.Ed.2d Moreover, Marquette declared that the intent of the 38th ... Congress, providing “may that national banks State, ... at the rate allowed the laws of the interest located, ... or District where the bank is and no Territory ”, § ... was to allow (emphasis supplied), more U.S.C. banks and state-chartered compete with national banks “ over their State to National banks ‘advantages certain give 314, 99 at supra, Marquette, competitors’ Missouri, 85 U.S. v. National Bank Tiffany quoting (1873). also: First See Wall.) (18 409, 413, 21 L.Ed. Dickinson, Florida v. City, Plant Bank in National Surely the 337, 24 L.Ed.2d 312 122, 90 S.Ct. intended, Section 85 via logically not then have

could authority Act, single upon to bestow National Bank the term interest” and “rate of phrase to declare thereby permitting ambiguous expressions, “interest” are include items “interest” to the term state to define single of “inter- computation included in the never been which have thereby void understood commonly that term is est” as laws. protection consumer validly enacted all other states’ however, acknowledging while even Appellee argues, commonly that term is interest rates as Marquette dealt with charges, and not service fees contingent default understood Act, See, seq.; Regulation Lending 15 U.S.C. 1601 et e.g.: In 15. Truth Lending Z, Act definition seq. §§ The Truth In 226.1 et 12 C.F.R. “interest”, many of specifically excludes charge” but includes “finance of “interest” which the Ohio definition contingent default fees 226.4(b)(1), (c)(l)-(3). Similarly, the §§ incorporates. See: 12 C.F.R. Monetary Control Act Deregulation and Depository Institution that such usury to the extent preempted state laws which 94 Stat. mortgag- on banks could collect interest national limited the rate laws charges es, limiting other protection laws consumer left intact state mortgage loans. associated with that report "[i]n Act states on the 1980 committee The Senate limitations, Commit- usury the mortgage from state exempting loans included in the exempt only limitations that are those tee intends to exempt not intend to The Committee does percentage rate. annual fees, charges or charges, attorney late prepayment limitations on (Sen.Rep. No. designed protect borrowers.” limitations similar Sess., (1979).) intended to p. Thus the committee 1st a borrower a bank and many of the contract between leave features law, placed including provisions governed by state be charge. bank could on the amount the limit Perdue, n. 37 Cal.Rptr. 702 P.2d at 522 supra, 216 at 364 n. pursuant to the regulations promulgated (emphasis supplied). See also Monetary Act of 1980 Deregulation and Control Depository Institution 590.3(c) (1989) preempts limita- ("Nothing section § in this at 12 C.F.R. charges attorneys’ fees, late prepayment charges, on tions in state laws borrowers.”) (emphasis supplied). designed protect provisions other of the National that, authority of Section solely by charge based fees, far removed from a Act, no matter how they permitted are money, long so as the time-value of on “interest”, derogation applied, be law and labeled Ohio to all contrary, to the laws protection of all state consumer permit and refuse to agree cannot loans.16 We interstate “interest”, to nibbling upon clothing sheep in the appellee, Install- and Services Pennsylvania Goods swallow whole 1965,18 Act,17 Banking Code Pennsylvania ment Sales Practices and Consumer Trade Pennsylvania Unfair Rather, to the view compelled we are Protection Law.19 determining law, applied be not state must federal by the State of permitted contingent penalties whether the “interest” be considered of “interest” can under the label Ohio 85. See: application of Section purposes for Dickinson, Florida v. City Bank in Plant National First ruling this support position find for supra. We Nat’l Bank in Plant First Supreme Court United States Dickinson, Supreme Court supra, where Florida v. City, determine, of the McFadden purposes upon was called concluded bank”. The Court Act,20 a “branch what constituted contrary, indication to the that, Congressional absent a clear term, to define the not be allowed of Florida could the state opining: legisla- enact suggested that if a state were to

16. The Greenwood decency, the statute imaginary line of intellectual an tion which crossed controlling: not be found would statutory [a be entitled to use that a State would This “does not mean ordinary strange familiar with its way entirely to thosе in a term] permissible in the there are variations usage, to the extent but at least controlling.” [may] state law ordinary concept we deem [of term] Ballentine, Greenwood, DeSylva v. supra, quoting 971 F.2d 974, 980, The Green- 100 L.Ed. 1415 Court, however, measuring or suggest any parameters for did not wood to be found strange usage would have to be in order quantifying how invalid. seq. et 17. 69 P.S. seq. § et

18. 7 P.S. seq. §

19. 73 P.S. 201-1 et amended, 1228, 12 U.S.C. 44 Stat. as The McFadden Act of 20. § 36. National made amicus curiae the contention reject We Banks to the effect of State Supervisors of Association banking” “branch of what constitutes definitions state law 36(f). § definition of of the federal control the content must how, deciding in play comes into state law Admittedly, be where, operated, [First banks and when branch Co., Bank & Trust v. Walker Logan, Utah National (1966)], in for L.Ed.2d 343 36(c) the regulation to the States entrusted Congress it. But to allow then conceived branching Congress as “branch” would the content of the term to define states powers. judges of their own make them the sole Dickinson, supra, Florida v. City, in Plant First Nat’l Bank (footnote omitted). The facts 90 S.Ct. at 343 analysis. this same application beg of the instant case Riegle-Neal recently has enacted Congress The 103rd 1994,21 Act of Branching Efficiency and Banking Interstate bound, as to that a national bank is expressly provides state, by the consumer on operations particular carried it branch- operates state which laws of each protection no light can shed Congress the intent of the es. While 103rd we believe the intent Congress, that of an earlier upon not Bank Act of was when it enacted the Congress, 38th Riegle-Neal enacting 103rd unlike that of the of 1994—national Branching Act Banking and Interstate were not meant banks, government, favorites of the while consum- designed protect all state ‍​​​‌​​‌​​​​‌​​‌‌​‌​​‌​‌‌‌‌‌​​​​​​‌‌​‌‌​‌‌​‌‌‌‌​​‍laws exempted from be banking institutions. overreaching part on the ers from not, in our Bank Act does 85 of the National Since Section protection and consumer view, all common law preempt includ- commonly dealing penalties laws with Banking Riegle-Neal Report on the Interstate 21. The Senate Committee an Branching Act 103 P.L. 108 Stat. includes as an history banking the United States as well excellent of interstate upon state and in explanation of the effect of the 1994 Act at issue upon protection laws such as those particular, consumer portions and of the Committee pertinent of the Act herein. Certain majority opinion here but are not Report are attached to the recorded reproduced. which sus- “interest”, reverse the order we ed in the term remand for further and appellee the demurrer tained proceedings. relin- Jurisdiction Case remanded. reversed.

Order quished.

CIRILLO, J., concurring opinion. files a in which WIEAND, J., opinion dissenting files a SAYLOR, JJ., POPOVICH, join. and CIRILLO, concurring: Judge, nothing it that majority insofar as finds I with the concur (NBA), seq., provides 21 et Act U.S.C. the National Bank intent congressional evidence of unambiguous the kind protec- Commonwealth’s displace this necessary consumer fees, fees, return annual payment late prohibiting tion laws further, however, fees, journey step I one check etc. would or of “interest rate” definition allowing and hold that Ohio’s protec- consumer Pennsylvania’s to preempt “rate of interest” delegation to an unconstitutional would amount tion laws For legislature. of Ohio’s to the State Congressional power reason, separately. I must write this the United States Constitution Amendment to The Tenth tо the United States delegated powers provides “[t]he States, are Constitution, it to the nor prohibited by the people.” to the U.S. respectively, to the States reserved Const, full power the states have Generally, amend. X. limits, police, matters of internal their within regulate convenience, comfort, peace, promote will include whatever to as the (collectively referred people of their prosperity and Chicago, Co. v. See Escanaba police powers). states’ 678, 27 L.Ed. S.Ct. fallen traditionally have banking are areas which

Banks our Because police powers. the ambit of the states’ under control of widely dispersed favored traditionally has country has held that Supreme the United' States banking, local profound are of related financial activities “banking and Bancorp Northeast v. Board Governors concern.” Sys., Federal Reserve (1985); Manag- BT

86 L.Ed.2d 112 see also Lewis v. Invest. ers, Inc., 64 L.Ed.2d 702 commercial history present that as a matter of (noting are of reality, profound and related financial activities banking concern). local of this Commonwealth have held

Similarly, the courts subjects of interest rates are banking regulation and the powers within the Commonwealth. squarely police Mitchell, 140, 17, 137, 19 Pa.Super. 420 616 A.2d Smith v. (1992) Geier, & Discount Co. v. 342 (citing Equitable Credit (1941)). 53, 445, 454-56, 21 58 At common the Pa. A.2d interest, illegal. was taking any percentage, of whatever the or is derived from present right impose charge interest follows, therefore, that statutory authority. naturally state It right the or interest and other concomitant privilege subject legislative Equitable fees are to state control. See Bell, 449, (1940); Inc. v. 339 Pa. 14 A.2d 316 Society, Loan (1913). Hazlett, 25, v. 242 Pa. 88 A. 869 Adinolfi elementary subject It is that the of the maximum amount to ... loaned the charged money be fоr the use of within jurisdiction police power of the state is one within the such state.

Smith, 141, v. (quoting 420 616 A.2d at 19 Pa.Super. Griffith Connecticut, 132, 133, 54 L.Ed. 218 U.S. (1910) 173, 176, Maryland, v. 218 U.S. Watson (1910)). 644, 646, Regarding necessity 54 L.Ed. 987 S.Ct. concern, action in areas of extreme local Thomas that, once we directed from pronounced “[w]ere Jefferson sow, and when to we should soon Washington reap, when (1853). Jefferson, Autobiography want bread.” Thomas including The states’ this Commonwealth’s police powers, ancillary and other authority regulate the rates of interest cards, howev- charged against fees consumer loans and credit er, Supremacy are not without limitation. The Clause of the laws of the provides United States Constitution Land; ... “shall Law of the supreme United States be in the state to the any Thing Constitution Laws Const, VI, notwithstanding.” U.S. art. cl. 2. State Contrary therefore, subject textually cannot police powers, embrace Constitution, nor Congress by committed to the United States by Congress can defeat or statutes they impair passed out to it. carry powers granted order to Jacobson Massachusetts, 11, 25, 358, 361, 49 L.Ed. 643 U.S. S.Ct. (1905). to have preempted

When “the field which is said the- occupied by [e.g., has within traditionally been States ... protection, police powers banking, etc.] states’ consumer — assumption police powers “we with the that the historic start by the Federal Act superseded not to be [are] States ” purpose Congress.’ the clear and manifest [is] unless —Inc., -, -, Liggett Cippollone Group, Rice v. (quoting S.Ct. L.Ed.2d Corp., Santa Fe Elevator S.Ct. (1947)); Inc. v. Transp., 91 L.Ed. see also CSX — Easterwood, U.S. -, 123 L.Ed.2d 387 therefore, analysis, preemption The touchstone of a — at -, turns on intent. congressional Cippollone, at 422 Malone v. (citing S.Ct. at 120 L.Ed.2d White 1185, 1190, Motor 98 S.Ct. Corp., U.S. (1978)); Fed. Sav. & Loan Ass’n Fidelity L.Ed.2d 443 see also Cuesta, 73 L.Ed.2d 664 v. De La (1982) fact that is not foreclosеd (holding preemption range subjects intrudes that the federal statute into traditionally police over which the states have exercised their clear). law Congress’ displace if intent to state powers Congress’ may intention to be either Generally, preempt Co., express Packing or v. Rath implied. Jones (1977). 1305, 1309, 51 Specifically, 97 S.Ct. L.Ed.2d 604 state federal in three circumstances: preempted by law is law

(1) Congress where the extent to which its explicitly defines law; enactments state preempt (2) explicit statutory language, the absence of where in a regulates Congress conduct field that intend- to government occupy exclusively; ed the federal and law. "with federal actually conflicts state law where Co., Elec. v. General English L.Ed.2d 65 dispute cannot that curiae

Here, and amicus parties NBA, preempted expressly neither enacting Congress, laws, nor intended banking laws or protection consumer state Pre- the field. exclusively occupy government the federal therefore, Pennsylvania’s if consumer only emption applies, 85 of the NBA. with Section “actually laws conflict” protection English, swpra. actually conflict laws Pennsylvania’s whether

To ascertain 85, we must are, therefore, by Section preempted with and mean- ordinary and Congress, plain look to the intent After terms, common law. and the federal 85’s ings Section burden of has not met its I find that Bank One doing, so laws conflict consumer Pennsylvania’s protection showing Congress’ “clear of the NBA or with Section 85 preempt was to enacting purpose” manifest Section fees, fees, return annual payment late prohibiting contract law Rice, fees, supra. Cippollone, supra; check еtc. NBA provides: 85 of the language of Section pertinent receive, loan take, on

Any association interest at debt, made, ... other evidence or discount ... where the the State the rate allowed by the laws bank is located. added). of the NBA has Section 85 (emphasis U.S.C. favored lender as the “most by many courts

been referred doctrine:” national place designed by Congress 85 was

[Section] with other competitive equality of at least plane banks on indeed, states, and, national give in the respective lenders in the field of over state banks advantage banks a possible Thus, limited to the bank is not interest rates. a national respect with to a may charge that a state bank interest rate in the state is of loan if another lender type particular of interest on the same rate charge higher permitted In that the national bank of loan. situation type rate. charge higher (8th Bank, F.2d Cir. First National

Fisher v. therefore, 1977). enacted, eliminate state 85 was Section federally chartered charged by interest rates control over the Bank, v. First Nat’l banks. See M. Nahas & Co. commercial Bank, (8th Cir.1991); City First Nat’l Brown v. 930 F.2d 608 Cir.1974). (2d 503 F.2d permit- as interpreted NBA has also been 85 of the

Section the coun- throughout customers national banks ting it is of interest in the state where try the rates permitted Marquette Nat’l principle.” See “exportation located —the 299, 99 Corp., Bank v. First Omaha Service Fisher, supra. The Court 58 L.Ed.2d 534 any with comply national banks need not held that Marquette in a state interest rate law when doing business other state’s Marquette, are located. they than the one which other effect, holding, This 99 S.Ct. at 545-48. interest rate. created a de national facto on consumer credit Mаrquette decision impact continue overwhelming. some states has been While business see, e.g., 69 P.S. protection legislation, consumer to enact view the seq.,1 § 201-1 et others § 1101 et and 73 P.S. seq., Pennsylvania Pennsylvania is the Goods particular law at issue 1. The (the Act). § P.S. 1101 et Act Sales Installment Sales Services regu- things, comprehensively Among the Sales Act seq. other they purchase of involve the insofar as lates credit card transactions § Pennsylvania. 69 P.S. 1103. While goods within services and/or impose a nominal service permits a credit card issuer to Sales Act imposition expressly prohibits the charge, § the Act 69 P.S. “fee[s], delinquencies], or other expense[s], collection^] added). charge[s].” (emphasis 69 P.S. regulate bank credit Examples statutes which either of other state adoption of the Uniform Consumer cards or retailer credit cards via the 1802.19, §§ provisions similar include: Cal.Civ.Code Credit Code or (1985 §§ to 5- Supp.1994); & Colo.Rev.Stat. 5-1-101 1810.1-1810.12 (1973 Supp.1993); §§ 28-41-101 to 28-49-107 & Idaho Code 9-103 (1982 & (Supp.1993); §§ 24-4.5-1-101 to 24-4.5-6-203 Ind.Code Ann. (1987 Supp.1994); Supp.1993); §§ 537.1101—.8101 & Iowa Code Ann. (1988 Supp.1993); §§ & Me. 16a-l-101 to 16a-9-102 Kan.Stat.Ann. 9-A, (1980 Supp.1994); §§ & Okla. tit. 1-101 11-121 Rev.Stat.Ann. 14A, (1983 Supp.1994); S.C.Code §§ 1-101 to 9-103 & tit. .Stat.Ann.

121 develop- for economic opportunity as an decision Marquette usury generally, laws interest rates and By relaxing ment. in nationwide national banks assist their resident these states bank allure out-of-state transactions and consumer credit for the jurisdictions into their subsidiaries holding company Ciolfi, Monica A. Burgess A. & See Robert purpose. same View Regulators’ A Exploitation? State Exportation (1987). Transactions, 42 Bus.Law. 929 Interstate Credit Card therefore, millions deny has been to of Marquette, The effect states in which of the laws of the protections of consumers the to ensure and my It is belief that order they reside. in commercial participation confidence and public stimulate One, lenders, must be com- transactions, like Bank interstate laws comply protection with all consumer pelled and/or in which rate laws in the states other than the regulations and until consumers reside unless borrowing their contrary. to the speaks resoundingly rates” or define expressly The NBA does “interest Additionally, 85. there of interest” as used Section “rates which we of the NBA from legislative history in the nothing fees, to include late congressional intent glean possible could fees, etc. within charges, check over-credit-limit return an definition express of “rate of interest.” Absent definition intent, in order to determine whether congressional or clear preempted, laws are we protection consumer Pennsylvania term(s) and consider meaning of the ordinary must look to the See, e.g., common law definitions. existing the then federal 52, 403, 112 Holliday, 498 U.S. S.Ct. Corp. FMC States, (1990); L.Ed.2d 356 Perrin United Alcala, (1979); Burns v. S.Ct. 62 L.Ed.2d “[Wjhere are L.Ed.2d 469 words 95 S.Ct. the time a a statute which had at well-known employed country[,] they at common law or in the law of this meaning in that sense unless the presumed are to have been used Pons, contrary.” to the Lorillard v. 434 U.S. compels context (1989 Supp.1993); §§ & Utah Code Ann. Ann. 37-1-101 to 37-10-106 (1990 Supp.1993); §§ & Wis.Stat.Ann. 70C-1-101 70C-9-102 (1988 §§ Supp.1994); Wyo.Stat. 40-14-101 to §§ 421.101-427.105 & (1977 Supp.1993). 40-14-702 & (1978); also see 55 L.Ed.2d Bank, L.Ed. v. First Nat’l Evans what defines completely that federal law (holding bank, referring to a national usury by taking constitutes the rate). permitted maximum determine the only law percentage an amount defined as “[t]he “Interest rate” is time.” specified use for a paid for its money which is added). 1979) (5th (emphasis Dictionary 730 ed. Law Black’s for borrowed as “a “interest” is defined Similarly, amount borrowed.” percentage of the generally a money[,] (1989) (em- Dictionary Collegiate Ninth New Webster’s added). “interest” meaning of ordinary and plain phasis fees, annual rate,” therefore, not include late does or “interest fees, Corp., supra. the like. FMC or rate” or “rate “interest

Similarly, parlance, in common one example, For when meaning. a narrow very interest” has loan, a the paying or is on interest rate he she is asked what “ten and three- is, one-half or percent” “eleven and response loan, response may If it is a real estate the eighths percent.” Conversely, be, points.” and two percent, “nine and one-half rate” with late associate “interest likely are not ‍​​​‌​​‌​​​​‌​​‌‌​‌​​‌​‌‌‌‌‌​​​​​​‌‌​‌‌​‌‌​‌‌‌‌​​‍to lay persons fees, etc., are because those fees fees, check return payment default, and are not the borrower’s upon usually contingent the funds. paid “interest” to obtain of the part interpretation law the federal common Turning now to relied, in interest,” court the trial or “rates of “interest rates” Trust v. Commonwealth Co. large part, on Greenwood (1st Cir.1992) Mass., Pennsylva- finding 971 F.2d 818 fees, late assessment of annual prohibiting nia’s laws like, fees, by Section preempted and the are payment “located,” is the state which One because Ohio misplaced This reliance is charges. such fees permits distinguish fail to progeny Trust and its that Greenwood rates, charged interest the amount interest between and/or fees, amount contingent penalty money, the use of default. a contractual imposed upon States the United of the NBA passage to the Prior “interest dichotomy between examined the Supreme Scott, 29 Lloyd In charges.” default “contingent rates” and Pet.) (1830), held (9 the Court 205, L.Ed. 833 etc.) not fees, were' late (e.g., default contingent “interest:” exceeding a sum pay specific party agree[s]

If a aby principal not interest, pay he provided do[es] lawful payment certain, usury. By punctual it is day stated, sum payment avoid the he principal, penalty. as a is considered added). Accordingly, an (emphasis 7 L.Ed. Id. by a not rendered usurious interest rate is debtor/cardholder’s or her delin- upon his contingent late fees pay agreement late fee of that non-payment payment quency, because definition, there- By the debtor’s control. within completely etc., deemed fees, cannot be fore, late agreement pay an fixed interest rate. pay agreement to an equivalent NBA, Supreme the the the enactment of prior to year One interest the differences between spoke to again Court once charges: default contingent rates and a upon also depends additional anything The payment of a certain any happenings upon and not contingency, to make deemed insufficient event, itself would be which of a loan usurious. (1 Wall.) 604, 626, Administrator, 68 U.S. v. Hamilton’s

Spain proposi the these cases stand for Again, 17 L.Ed. 619 loan, and not required is charge the only tion that where event, uncertain the of an contingent happening it on where is common at federal considered “interest” be will adopted to have presumed Because law. enacting Section of “interest” meaning common law federal Burns, cannot be inter Perrin, the statute supra, supra, card default contingent to include preted within in this Bank One control, imposed by as the fees such holder’s fees). fees, check return (e.g., case late NBA, have consis federal courts passage Since the di rate/contingent penalty charge interest tently upheld the Sevier, Nat’l Bank v. Merchants’ chotomy. example, For (C.C.D.Ark.1882), Federal Court held 14 F. 662 the Arkansas attorney’s an fee pay in a note “to provision promissory that a brought if suit is to enforce of 10 on the amount due percent ... for a stipulation default is a (contingent charge) payment forfeiture, of the debtor oppression and tends to the penalty or void.” Id. at 663-64. ... and usury [is] ... is a cover for limit Sevier stated would be idle to “[i]t The court name, rate, if, another forfeitures under interest certain Id.; see also limit.” to an amount without imposed be (4th Waugh, v. Orange, Nat’l Bank Va. 78 F.2d 325 Citizens Walker, (4th Park Chestertoum Cir.1935); 163 F. 510 of Md. Arline, (C.C.S.D.Ga.1887); Schlesinger v. Cir.1908); F. Johnson, Adams v. (C.C.E.D.Mo.1886); Hughitt v. 28 F. 865 Olson, Hardin v. (C.C.N.D.Tex.1883); Addington, 16 F. 89 (each (C.C.D.Minn.1882) distinction be upholding F. charges). fees or contingent penalty tween interest rates and United Supreme the United States year, Just last — Texas, U.S. -, 1631, 123 L.Ed.2d 245 States “interest,” at common its position reaffirmed In charges. fees or processing penalty does not include Texas, the Debt Collection Act of the Court examined seq., 3701 et §§ and found that: U.S.C.S. owing debts to the requiring parties rule

The common law interest where pay prejudgment Federal Government pay money obligation claim is a contractual underlying liability imposed interest prejudgment differs from the Act ... in that under common Debt Collections [the] penalty charges processing are not ... fees and law imposed [as interest]. — (citations at ---,

Id. at 1635-36 Childs, omitted) added). v. See United States (emphasis that “the (holding 69 L.Ed. 299 ordinary sense--- ‘interest! is to be understood its word in the sense that intended to use the word To hold interpretation all and contrary is rules penalty of the ‘interest’ special definition word invokes omitted)). (citations unwarranted.” distinc- federal common law logic continuing behind this If control and fees within a cardholder’s charges tion is clear. fees) like are deemed contingent laté (e.g., penalty not “interest,” possibly the could know banks creditors any given rate on account would whether the ultimate interest ceiling law. The cardholder provided by thé interest exceed and, her could, therefore, render his or account usurious on his or her hence, simply being delinquent unlawful by In charges. “x” amount of late thereby incurring payments, contrary, to the I congressional the intent absence clear rates” or “rates of interest” as find the term “interest to be construed ought used in Section 85 of the NBA ordinary meaning and and its plain with the term’s compliance meaning law as not to so well entrenched federal common contingent Cippollone, supra. default include fees. ordinary and ignoring plain the sidestepping

After interest,” or “rate of the “interest rate” meaning term Trust, supra, the Appeals First Court of Greenwood Circuit relied, stated that “federal baldly case the trial court on which that, in ordinary usage, interest long suggested case law has F.2d charges.” kindred may encompass late fees and following cases: Circuit cited support, 825. For First Bank, 690 v. First Nat’l Trading American Timber & Co. Cir.1982) (9th requirement); F.2d balance (compensating Cir.1977) (fee (8th Bank, F.2d 255 Fisher v. First Nat’l (6th Cir.1940) Smith, advance); 116 F.2d cash Panos Hall, (taxes F.2d 384 fees); recording Cronkleton lender) (citation (8th Cir.1933) (bonus or paid commission omitted). Id. at 829. cases court in

All of the federal cited Greenwood case, Trust, however, save one district court involved federal charges contingent upon loan required, up-front charges, fees, late e.g., contractual debtor’s/cardholder’s default — In cases to relying expand return check fees. on these therefore, scope preemption, of Section 85 Greenwood supra, precedent, Lloyd, federal ignored Trust court has al, fees” Spain, supra, erroneously equated “required et fees,” of happening the latter “contingent requiring with common Again, according an uncertain event. to federal circumstances, constitute “inter- required may, fee certain est,” not. contingent charge may while a

Next, I definition of “interest applying submit Ohio’s as to preempt rate” or “rate of interest” to Section 85 so laws is uncon- Pennsylvania’s protection inveterate consumer stitutional. Absent a declaration of what consti- congressional interest,” applying of I find that one state’s defini- tutes “rate of this Common- contrary public policy tion is to both the Specifically, wealth and the Constitution of the United States. of law to define “rate of majority’s employment Ohio improper delegation interest” in 85 amounts to an Section law, nor the law Congressional power to a state. Neither Ohio of a any preemptive scope other state determine the input Congress. federal statute without from acceptable It is axiomatic that “where an otherwise con constitutional prob struction a statute would raise serious lems, prob the Court will construe the statute to avoid such plainly contrary lems unless such construction is to the intent v. Florida Congress.” Corp. Edward J. DeBartolo Gulf Council, Trades Bldg. Coast and Constr. L.Ed.2d 645 Interpreting preempt only

“rate of interest” as used Section 85 to those time-based rates of interest regulate (e.g., state laws which APR’s) fees) for a loan avoids required (e.g., fees annual such sets question interpretation constitutional because an preemptive scope. a definite fedеral limit on Section 85’s Interpreting “rate of interest” to include late fees and other contingent default as defined Ohio law and/or laws, however, various other states’ raises fundamental consti tutional concerns.

“All legislative granted Powers herein shall be vested States, of a Congress United shall consist Senate Const, I, § 1. Representatives.” and House art. Moreover, Congress power shall have make all Laws “[t]o which shall be into Execu- necessary proper carrying Powers, this other vested and all Powers foregoing tion ” States.... Government of United Constitution Const, I, cl. 18. art. or transfer to abdicate Generally, permitted Ryan, Co. Refining Panama to a state. power this (1935); 241, L.Ed. 446 388, 421, 55 S.Ct. U.S. States, 495, 295 U.S. Poultry Corp. v. United A.L.A. Schechter (1935); see also United 55 S.Ct. L.Ed. 291, 2 78 S.Ct. L.Ed.2d 355 U.S. Sharpnack, States Stewart, 149, 40 (1958); Ice Co. Knickerbocker Rahrer, 545, 11 (1920); Re 140 U.S. In 64 L.Ed. S.Ct. (9 (1891); Ogden, U.S. Gibbons v. 35 L.Ed. (1824). however, Wheat.) legislation Sometimes, 6 L.Ed. 23 involving tedious de complex conditions be to adapted must “The directly. cannot deal Consti Congress with which tails to the regarded denying Congress as has never been tution which flexibility practicality, and resources necessary the policies down laying to its function perform will enable it standards, to selected instru leaving while establishing and prescribed rules within making subordinate mentalities policy facts to as and limits the determination apply.” Ryan, to legislature is declared Supreme the United States example, 55 S.Ct. at 421. For to Congress application may adopt, has held boundaries, future crimi located within state territory federal located, territory is the state in which legislation nal Congress has also held that The Court Sharpnack, supra. personal with to respect may adopt legislation future state jurisdiction, its territory under injury ocсurring actions within Murray within of the state. v. Joe but also the boundaries 432, 433, Co., 78 L.Ed. & Gerrick (1934). may delegate Congress to be is that The distinction drawn applied to establish rules or laws to be within states to power to borders, authority it states may delegate own but not their country. That one rules or laws for the entire to establish to the structural may contrary for the nation speak “[i]s state as the Constitution assumptions postulates tacit Law, Tribe, whole.” Lawrence H. American Constitutional distinction, insofar as 5-20 This intrastate/interstate states, pertains congressional delegation it is critical: simply delegate power cannot to the states the Congress Congress e.g., pow- in areas that are reserved to legislate — Congress ers under the interstate commerce clause—but federal refer- may by legislation adopt incorporate or that exist in the already ence state laws exist example, Congress delegate future. For cannot to Illinois legislate pollution federal standards for the power country.' abdicating whole Then would be inter- commerce control to one state to for the legislate However, Congress legislation entire nation. can enact that the federal in each state prescribing pollution standard Then, it shall be the same as the state standard. abdicating authority merely incorporating by its but refer- legislation. ence future Rotunda, Nowak, Young, R. J. J. Treatise on Constitutional Procedure, § and 12.6 See Brown-

Law—Substance Auth., v. New York Corp. Liquor Forman Distillers (1986); Edgar 106 S.Ct. 90 L.Ed.2d 552 MITE (1982); Corp., 457 U.S. 102 S.Ct. 73 L.Ed.2d Arizona, Southern Co. Pacific (1945) (each 89 L.Ed. case state laws that invalidating purported regulate to commercial conduct on an extraterritori basis). al my allowing

In Ohio law to define “rate of interest” opinion, unconstitutionally enlarges 85 of the NBA Section so, that, scope by doing Congress of the statute preemptive power banking is to Ohio the to federal delegating legislate country. trump law for the entire The effect of this is to protection individual states’ consumer laws.2 Moreover, to looking preemptive state law to ascertain the reach of 85 produces unpredictable Section absurd and results. time, legislature judicial system may, The Ohio or alter interest,” thereby its definition of “rate of expand having accompanying 2. See note 1 and text. infra and other states’ on this state’s ramifications negative further this laws. Under or consumer protection rate” “non-interest of Ohio are scheme, therefore, courts legislature and/or cardhold- majority vast of unaccountable to the completely its subjected are to Pennsylvania cardholders —who e.g., ers — application. I such an approbate cannot laws. Trust, in Greenwood court relied on decision

The trial turn, which, Supreme United States cites various supra, decisions, that and proposition its state support to define “rate of interest” be used specifically, may Ohio law misplaced reliance is Section 85. Such as that term used Trust court which the Greenwood all of the cases to in that the instant impact of lack the cites extraterritorial/interstate , are, therefore, alone. distinguishable on that basis case Brown-Forman, supra. supra; Pacific, Southern of this Commonwealth’s the financial protection

Because concern, Bancorp, Northeast profound local citizens is Smith, not its I has met find that One supra, supra, 85 of the Cоngress intended Section showing burden definition “inter- or federalize the Ohio NBA nationalize that Con- Bank One has established Additionally, est.” term “inter- using gress’ purpose” “clear manifest preempt in Section 85 was or “rate of interest” est” fees, fees, Cippollone, supra. late annual etc. prohibiting laws issue, the term “rate precise to this speaks Until in accordance with interpreted 85 must be interest” in Section I foregoing, on the Finally, law. and based federal common scope vitiate extending preemptive 85’s Section suggest is unconstitutional. consumer credit laws Pennsylvania’s I concur. Accordingly,

WIEAND, Judge, dissenting: Pennsylvania appeal in this is whether law

The issue in residing a holder charged fees credit card invalidate a national by the credit card was issued Pennsylvania, where Ohio, are charges such located under whose law bank Court, after care- majority A deemed lawful interest. fully issue, considering this concludes that it is the legislature in Pennsylvania and not the law of the which a national bank is located which determines the to be charges made to bank customers who in Pennsylvania. reside Unfor- tunately, the majority’s decision is contrary to the decisions of other courts which will, have considered this issue and in my judgment, Pennsylvania remove from the mainstream of na- tional banking practices. One, Columbus, N.A., nationally is a chartered bank- Columbus,

ing institution based in Ohio. It open- extends ended credit card accounts to a nationwide customer base. Jennifer and Daniel Mazaika are residents of Pennsylvania who obtained a credit card pursuant from Bank One to a card- (24%) member agreement provides for twenty-four percent finance charge on all outstanding balances. The card- agreement mеmber also permits Bank One to credit ($20) card holders an dollars, annual fee of twenty a service ($18) eighteen fee of returned, dollars for checks a service ($18) fee of eighteen dollars for over-credit-limit charges and a ($18) service fee of eighteen dollars if a minimum monthly payment is twenty-five received within days after the same Ohio, is due. Under the law in effect charges these are considered lawful interest.1

In a civil action filed the Mazaikas on behalf of them- selves and other Pennsylvania situated, residents similarly it is contended that such charges violate the Pennsylvania Goods and 28, 1966, Services Installment Sales Act of October P.L. § 69 P.S. et seq., Pennsylvania Consumer Protec- tion Law of § December P.L. 73 P.S. et seq., as well as Pennsylvania common law. Bank One filed preliminary objections the nature of a demurrer to the complaint on grounds that Ohio law was controlling under the 1107.262(A) 1. At Ohio Revised Code provided Annotated it is as follows: collect, receive, interest, may charge, ''[A] bank as other fees and charges borrower, agreed upon are the bank and the includ- to, fees, ing, periodic fees, but membership not limited cash advance charges limit, exceeding designated charges credit for late payments, for the return of a dishonored check....”

131 85, Act, Congress pre- § Bank 12 U.S.C. National judg- trial and entered agreed court empted field. appealed. Bank One. The Mazaikas in favor of ment provides Constitution VI of the United States Article law of supreme “shall be the of the United States laws field, are a state laws has Congress pre-empted Where land.” Wheat) (9 1, 163, 6 22 v. U.S. Ogden, without effect. Gibbons (1824). Group, 23, Cipollone Liggett 62 See also: L.Ed. — 2608, 2617, 120 Inc., U.S. -, -, L.Ed.2d 112 S.Ct. (1992). necessary is analysis, it 407, pre-emption In any 422 Inc., Group, v. Liggett intent. Congress’ Cipollone to consider 422; 2617, English at at -, L.Ed.2d 112 S.Ct. supra 2275, 79, 2270, Co., 72, 110 S.Ct. 496 U.S. v. General Elec. (1990). ex 65, be either may intent Congress’ L.Ed.2d of an clear however, expression absent a pressed implied; they in force unless remain pre-empt, state laws intent Elec. English enactment. v. General with the federal conflict Co., supra. Act, pre of question Bank respect to the National

With Act, Bank National Through the emption is settled. governing nation regulations system general

established they only state laws as adopted ally-chartered banks charged. be which could the amount interest severally fixed 111, Savannah, 108, 40 S.Ct. 251 U.S. Bank Evans v. Nat’l (1919). is a national bank 58, 59, When 64 L.Ed. inter unlawful involved, penalty charging the appropriate Act, 12 Bank the National exclusively by est provided Springfield, v. Central Nat’l 86. Haseltine U.S.C. (1901). L.Ed. S.Ct. police powers to the subject be Although a national bank instances, laws which interfere in certain of the states Bank Act are void. the National purposes with the Luckett, 233, 248, Nat’l Bank v. Anderson the Court observed 88 L.Ed. As 502, 40 Bank, 161 Savings Davis Elmira (1896), L.Ed. 700 gov- of the federal Banks instrumentalities

National are ernment, and as such necessar- public purpose, created for

ily subject paramount to the authority of the United States. It follows that an attempt by a state ‍​​​‌​​‌​​​​‌​​‌‌​‌​​‌​‌‌‌‌‌​​​​​​‌‌​‌‌​‌‌​‌‌‌‌​​‍to define their duties or control void, the conduct of their affairs is absolutely wher- ever such attempted exercise of authority conflicts expressly with the States, laws of the United and either frustrates the purpose of the legislation national or impairs efficiency of these agencies of the federal government discharge duties for the performance of which they were created. -axiomatic, These principlеs are and are sanctioned by repeated adjudications of this court.

Id. at 16 S.Ct. at 40 L.Ed. at 701. It is well established, therefore, that the National Bank Act pre-empts attempts unauthorized by the states to regulate the conduct of national banks.

Congress promulgated the National Bank Act with an intent to make national banks national favorites and to put them on a competitive plane with their counterparts state by preventing the states from passing favoring laws state-chartered banks.

It was expected [national would come into competi- banks] banks, tion with State and it was intended to give them at equal least in advantages such In competition. order to accomplish this they empowered were to reserve interest at rates, the same be, whatever those might rates which were allowed to similar State institutions. (18 Missouri, Wall)

Tiffany Nat’l Bank 85 U.S. (1873). 21 L.Ed. Act,

Section 85 of the National Bank speci- U.S.C. fies the amount of interest that a national bank may charge as follows:

Any take, receive, association may reserve, and charge on ... any loan interest at the by rate allowed the laws of the ... State located, where the bank or at a rate of 1 per in centum excess of the discount rate on ninety-day com-

mercial paper in effect at the Federal reserve in bank Federal reserve district located, where the bank is whichev- - er may be the greater, and no more.... “export” section, bank this a national Pursuant init apply its home rate from state interest favorable Nat’l Marquette borrowers. with out-of-state transactions Corp., Minneapolis v. First Omaha Serv. Bank 58 L.Ed.2d 534 Minneapolis v. Marquette Nat’l The defendant which, bank supra, was a national Omaha Serv. Corp., First оf Nebraska, credit cards had issued although located in main- who Borrowers Minnesota borrowers Minnesota. obligated pay the defendant-bank were tained accounts -with which, rate percentage at a outstanding on balances interest that which exceeded permitted under Nebraska although Supreme Minnesota. The allowed the law of was the interest rates could the defendant-bank held that Nebraska, it was located. allowed legislative purpose the Court examined doing, In so Act, which, said, a give it was to national the National Id. at 99 S.Ct. advantage competitors. over state bank an goal, this In order achieve at 58 L.Ed.2d at 545. interest the same charge Act a national bank to authorized in the bank’s the most favored lender was available to therefore, Act, of the National Bank home state. Section 85 any on interest that a- national bank could provided bank was in the state which the loan to the extent allowed This 548, 58 at 545. at at L.Ed.2d located. Id. S.Ct. held, annulled when borrowers was not principle, the court lower interest rates. laws allowed in another state whose lived its “export” home bank can holding, this national Under with out-of-state to transactions favorable interest laws state’s borrowers; states the laws of the borrowers’ the extent 318, 99 Id. at they pre-empted. have been opposition, are in 58 L.Ed.2d at 548. S.Ct. that, Nat’l Bank Marquette concedes under majority

The supra, a national Corp., Omaha Minneapolis First Serv. the rate of interest may charge out-of-state borrowers bank that, to also majority agrees in its home state. permitted rate, lower interest state sets a the extent a borrowers’ home interest, however, It is pre-empted. argued, its laws are as contemplated by Act, the National Bank does not include fees, fees, late annual return charges check or over-credit-limit charges, notwithstanding the definition of adopted by interest the state in Rather, which the bank is located. the majority asserts, charges these “penalties”, are to which the National Bank Act has no application and as to which the states remain This, effect, free to regulate. would limit the “exportation” doctrine to only those which are based on annual percentage rates.

In the statutory definition, absence it is assumed that the legislative purpose of a federal expressed enactment is ordinary meaning of the words used. Mississippi Band of Choctaw 30, 47, Indians v. Holyfield, 490 U.S. 109 S.Ct. (1989). 104 L.Ed.2d “A fundamental canon of statutory that, construction is defined, unless otherwise words will be interpreted as taking ordinary, their contempo rary, States, common meaning.” Perrin v. United 444 U.S. 37, 42, 311, 314, (1979). S.Ct. 62 L.Ed.2d “The plain meaning of legislation conclusive, should be except ‘rare cases [in the literal application which] of a statute will produce a result demonstrably at odds with the intention of its ” drafters.’ United Inc., States Ron Pair Enterprises, 235, 242, 1026, 1031, 103 L.Ed.2d (1989), quoting Contractors, Inc., v. Oceanic Griffin 564, 571, 73 L.Ed.2d 973

In general, the courts have declined to affix to the term “interest” a narrow interpretation which would any exclude flat rate fees. Traditionally, interest has been understood to include compensation allowed by law or fixed by the parties for the use or forbearance of money, or the price which is fixed for the use of money. See: Deputy v. DuPont 308 488, 498, 363, U.S. 368, 60 S.Ct. 416, (1940); 84 L.Ed. 424 Old Colony Railroad v. Revenue, Co. Commissioner Internal of 552, 560-561, 284 211, U.S. 214, 52 S.Ct. 484, 76 L.Ed. 489 (1932); National Johnson, (14 Bank Gloversville v. 104 U.S. of Otto) 742, (1881); 26 L.Ed. Hiatts, 745 Brown v. 82 (15 Wall) 177, 185, U.S. 128, 21 (1873); L.Ed. 131 Black’s Law (1991). Dictiоnary, 6th Ed. definition, Under its ordinary therefore, the term “interest” has traditionally been consid-

135 it. interpreted has majority than the in a broader sense ered 130, Bank, Cal.App. 30 4th See: Harris v. Chase Manhattan (South (1994); Dako Tikkanen v. Citibank 733 Cal.Rptr.2d 35 (D.Minn.1992). Thus, ta) N.A., 270, Fisher F.Supp. 278 801 (8th Omaha, 255, 258 Cir. Bank 548 F.2d v. Nat'l First of cash- held that credit card 1977), appellate court a federal in Hill v. Chemical Similarly, interest. advance fees were (D.Minn.1992), a district Bank, 948, 953 federal F.Supp. 799 See also: Sherman late fees were interest. court found that Dakota) 435, (South N.A., A.2d N.J.Super. 272 640 v. Citibank (1994). rate which have been considered 325 Other flat fees lender, paid and commissions interest include bonuses (8th denied, Hall, 384, Cir.), F.2d 387 cert. Cronkleton v. (1933); 685, 121, fees recording 78 L.Ed. 590 54 S.Ct. (6th Smith, 445, taxes, v. 116 F.2d mortgage and Panos Cir.1940); costs, Hockley v. Northway Lanes Union closing (6th Cir.1972); Co., 855, Bank Trust 464 F.2d 861-862 Nat'l & Timber & balance American compensating requirements, F.2d Oregon, Co. v. First Nat'l Bank Trading of Cir.1982). (9th states to look to the laws of the several Congress may (South “interest.” Tikkanen Citibank define term Dakota) are N.A., though 280. Even federal laws supra at application, have uniform nationwide frequently intended to be interpreted that federal enactments may provide Congress Band Choctaw Mississippi reference to state law. 490 U.S. at 109 S.Ct. Holyfield, supra Indians v. Law, Bank National at 43. In Section 85 L.Ed.2d stated that national unambiguously expressly subject the interest laws provisions

bank to be was located. Accord: Franklin the state which the bank was York, New Square Franklin Nat'l n. This n. 554 n. 98 L.Ed. in which a we look to laws of the state requires in which that bank is located to determine the manner national Thus, the fact that defines and allows interest. one.state penalties fees or service to be does considers late same fees as state’s decision include the invalidate anothеr Bank, supra Harris v. Chase Manhattan interest. See: Cal.App.4th 733; Cal.Rptr.2d Tikkanen Citibank (South Dakota) N.A., supra at 278. Because each state define interest differently, the National Bank requires Act that courts on rely the definitional laws adopted by the state in See, which the bank is located. Fisher v. e.g.: First Nat’l Omaha, supra at 261. Massachusetts, (1st

In Greenwood Trust Co. v. 971 F.2d 818 — Cir.1992), denied, -, cert. (1993),

L.Ed.2d 129 plaintiff-bank was a state-chartered bank, Delaware, located which regularly issued credit cards to Massachusetts’ residents. In addition monthly finance charges, the bank assessed delinquency late fees and . against accounts in default. Although such charges were permitted Delaware, they as interest illegal were under the protection consumer laws of Massachusetts. When Attor ney General for the Commonwealth of Massachusetts advised the bank it had violated state the bank filed a declaratory judgment action in federal district court. The district court Commonwealth, ruled favor of the but the of Appeals for the First Circuit reversed.

Because the plaintiff-bank was a state-chartered insured institution, depository the Depository Institutions Deregula- Act, tion and Monetary (DIDA), Control 12 U.S.C. was DIDA, applicable. said, the Court had been derived from and and, was analogous the National Bank Act like section provide[d] the whereby mechanism a bank continue [could] to use the favorable interest laws of its home state in certain transactions with out-of-state borrowers. See Marquette Nat’l Bank v. First Corp., Omaha Serv. 540, 548-51, (1978); Gavey L.Ed.2d 534

[Properties/762 Loan, First Fin. Sav. & 845 F.2d (5th Cir.1988) ]. To the extent that regulation a law or the borrower’s home state purposes to inhibit the bank’s choice of an interest term under section DIDA express- ly preempts the state law’s operation. (footnote'оmitted). Id. at

In result, reaching this rejected court the borrowers’ contention that flat rate fees could not be considered interest. plain do not believe that place, . In the first we necessarily restricts definition of “interest” meaning works rates. Reference percentage to numerical word money[,] “a for borrowed typically define interest as Web- a of the amount borrowed.” generally, percentage (1989) (empha- 630 Collegiate Dictionary ster’s Ninth New (6th ed. Dictionary Law 812 sis see also Black’s supplied); 1990). not limit interest to numerical definitions do Such often, is rates, they simply note that interest percentage percentage. as a always, expressed but not said, Interest, enough broad the court was Id. at 824. charges. non-percentage include based words in acknowledged that contained Although court federal by defined common generally federal statutes are appropri- to state was often it determined that reference law ate. not, however, federal definitions uniquely

Resort that statutory sometimes intends “Congress automatic. law.” application term content state given be Band, 1605. In at 109 S.Ct. at Mississippi U.S. instances, use law to court state properly such a federal See, fill a federal scheme. legislative the interstices within Servs., Inc., 90, 107- e.g., Kemper Kamen Fin. U.S. [v. (1991) (hold 1711, 1722-23, 114 ] 111 S.Ct. L.Ed.2d from corporate borrow a definition ing proper it Band, 47-53, law); at 490 U.S. at S.Ct. Mississippi to in definition of “domicile” (allowing 1607-11 state-law definition); Election form a Federal Comm’n federal Comm, 197, 204-05, Right to Work National (1982) (similar 552, 557-58, corpo 74 L.Ed.2d S.Ct. Ballentine, context); 580- DeSylva v. 351 U.S. rate law (1956) 979-80, (borrowing L.Ed. 1415 law); definition from state domestic relations Reconstruc Beaver Corp. County, tion Fin. 992, 994-96, (borrowing 90 L.Ed. 1172 definition law). mean a State

from statе This “does not property in a statutory way entirely [a be entitled to use term] would ordinary its but at strange usage, to those familiar with in the permissible to the extent there are variations least law ordinary concept [may] we deem state [of term] 76 S.Ct. at 980. controlling.” DeSylva, Congress specifically at 828-829. Because the Act of Id. to the that interest should be determined reference stated located, the court laws of the state which the bank was reasoned, applica- liberal definition of interest was Delaware’s added, however, federal analysis ble. The court that an under yield did not a converse result. common law 85 of the analyzing language Several courts section Act, the term construing have- had little trouble variety lender-imposed fees encompass “interest” requirements independent and financial which are of a See, percentage e.g., numerical rate. American Timber & (9th Bank, 781, Trading Co. v. First Nat’l 690 F.2d 787-88 Cir.1982) requirement); balance Fisher v. (compensating (8th Cir.1977) (fee Bank, 255, First Nat’l 548 F.2d 258-61 Smith, 445, advance); for cash Panos v. 116 F.2d 446-47 (6th Cir.1940) (taxes fees); v. recording Cronkleton (8th Cir.) (bonus Hill, 384, paid 66 F.2d 387 or commission lender), denied, 290 54 78 L.Ed. cert. S.Ct. (South Dakota) N.A., (1933); 590 Nelson v. Citibank 794 fees). (D.Minn.1992) (late read, Fairly F.Supp. 318 scope preemption— these the of section 85 opinions expand and, by scope preemption— of section 521 implication, beyond periodic percentage well rates. (footnote omitted).

Id. at 829-830 courts which have considered this issue have uniform Other v. ly reached the same result. See: Harris Chase Manhattan Bank, (South Dakota) N.A., supra; Smiley v. Citibank 26 (1994), 32 Cal.App.4th Cal.Rptr.2d appeal granted, 562 (1994); Cal.Rptr.2d 35 883 P.2d 387 Tikkanen v. Citibank (South Dakota) N.A, Bank, supra; supra; Hill v. Chemical (South Dakota) N.A., Nelson v. Citibank 794 312 F.Supp. (D.Minn.1992); Consurve, Inc., Roper F.Supp. v. 777 508 (5th (S.D.Miss.1990), Cir.), denied, aff'd, 932 F.2d 965 cert. 502 (1991); 116 L.Ed.2d Sherman (South Dakota) N.A., Ament v. Nat’l supra; Citibank PNC Bank, (W.D.Pa.1994); Bank Mellon F.Supp. Goehl v. (DE), (E.D.Pa.1993); Nat’l v. PNC F.Supp. Ament (W.D.Pa.1992); Bank, First Un Watson v. F.Supp. (D.S.C. Carolina, 837 F.Supp. ion South Nat’l 1993). applica represent logical

In these decisions my judgment, Supreme by announced “exportation” principal tion of the v. First Service National Bank Omaha Marquette lan interpretation plain and a of the Corp., correct supra, may be National Bank Act. interest which guage of the according to charged a national bank is determined by national is located. laws which the bank of the has Where, here, bank as the home state national charges broadly to include service fees and defined interest percentage than a numerical which are measured other rate, rely charges laws in making the bank on those Thus, to borrow money. if a borrower chooses borrowed state, from a national bank located another money lending rely be permitted upon national bank should state, if charges in its even are home those permitted permitted Smiley the borrower’s state. Citibank (South Dakota) N.A., Cal.App.4th 32 Cal. supra Rptr.2d at 565.

It is consistent with significant interpretation this Currency, opinion Comptroller the Office of the given of national regulation which with the agency charged is the 388, Ass’n, Industry See: Clark Securities banks. (in 757, inter- 93 L.Ed.2d statute, interpre- may given consideration be preting a enforcement). adopted by agency charged tation with thereto, laws of the may bank look to the According national it is it state in which located to determine whether See, fees as lawful interest. include service and other Director, Advisory Ser- e.g.: Fitzgerald, Legal OCC Richard Jr., Bowden, 24, 1980; vices Letter of Nov. William Div. Serino, Counsel, 4, 1992; of Feb. Robert OCC Chief Letter This Counsel, 1988. August Letter of deputy OCC Chief interstate modern is the basis on which consensus general banking is conducted. national banks holding deprives majority’s contrary intended, Pennsylvania

the favored status savings local banks and allowing to enact laws will now be able charges while late fees and service institutions to assess Tiffany v. banks. See: rights the same denying national Missouri, at 863. at L.Ed. supra Bank Nat’l uniformity to create Congress’ ‍​​​‌​​‌​​​​‌​​‌‌​‌​​‌​‌‌‌‌‌​​​​​​‌‌​‌‌​‌‌​‌‌‌‌​​‍attempt It also undermine. will located in one state for a bank banking industry, within enacted in interest laws subject disparate to the will become does business. See: Mar in which it fifty all of the states Corp., supra Nat’l Bank v. First Omaha Service quette (requiring 58 L.Ed.2d at 544 99 S.Ct. at would restrictions of each state bank to adhere to national of modern inter complete system “throw into confusion the banking.”). at- hold, therefore, laws which Pennsylvania I would charged to type amount and of interest regulate tempt in other national banks located by residents Pennsylvania charged by to be The matter of interest states are ineffective. has been the National pre-empted a national bank state in to the laws of the according is determined Act and other- majority holds is located.2 Because which the bank wise, I dissent. respectfully SAYLOR, JJ., join.

POPOVICH “exportation” application of the doctrine announced 2. Whether Minneapolis Marquette v. First Supreme Court Nat’l Bank supra, Corp., to this case would result in an unconstitution- Omaha Serv. Congressional power the State of Ohio was not delegation of al properly before this Court. by the trial court and is not now considered date, it has necessary, decided at a later after If this issue can better be parties. argued fully by all interested briefed and been

Case Details

Case Name: Mazaika v. Bank One, Columbus, N.A.

Court Name: Superior Court of Pennsylvania

Date Published: May 25, 1995

Citation: 653 A.2d 640

Court Abbreviation: Pa. Super. Ct.