Lead Opinion
Opinion
We granted review in this cause—which is one of numerous similar matters brought in federal and state courts throughout the
I
Plaintiff Barbara Smiley (hereafter Smiley) filed a complaint in the Superior Court of Los Angeles County against defendant Citibank (South Dakota) N.A. (hereafter Citibank). Smiley purported to proceed on behalf of herself and all others similarly situated—specifically, the class of persons “who held or currently hold a Citibank credit card . . . while they were residents of California and while they maintained a California billing address, and who have contracted for or been charged a late charge on such credit card account.” She alleged facts to the following effect: she was a resident of Los Angeles County; Citibank was a national bank chartered by the Comptroller of the Currency with its only address in Sioux Falls, South Dakota, and consequently located solely in that state; it issued credit cards under the “Visa” and “MasterCard” service marks; she held a Citibank “Preferred” Visa credit card and had held a Citibank MasterCard credit card; as a condition of the extension of credit, Citibank “charges a late charge of up to $15.00 upon California consumers who use its credit cards, irrespective of the outstanding balance or amount owing on the credit card in question,” when they do not timely make a minimum payment; she had been charged late payment fees by Citibank on both her Preferred Visa and her MasterCard credit card accounts. On the basis of such allegations, she attempted to state various causes of actions arising under California law, including statutes and common law, going ultimately to the amount of the late payment fees in question, and sought various forms of relief.
Citibank filed in the United States District Court for the Central District of California a notice of removal of Smiley’s action from state court to federal—its petition for removal. The sole ground on which it relied was diversity of citizenship—so-called “diversity jurisdiction”—under of section 1332(a)(1) of title 28 of the United States Code, which requires not only that the parties are “citizens of different States” but also that the “matter in controversy exceeds the sum or value of $50,000 ....’’
Smiley then filed in federal district court a motion to remand the action to the superior court. Her ground was that diversity jurisdiction was lacking because, properly considered, the matter in controversy did not exceed $50,000.
Citibank in turn filed in federal district court a motion requesting leave to amend its petition for removal. It sought to add as a ground that the action, as a result of preemption, arose “under the Constitution, treaties or laws of the United States”—so-called “federal question jurisdiction”—under section 1441(b) of title 28 of the United States Code.
In due course, the federal district court filed an order denying Citibank’s motion requesting leave to amend its petition for removal and granting Smiley’s motion to remand. (Smiley v. Citibank (South Dakota), N.A. (C.D.Cal. 1993)
Citibank then filed in the superior court a common law motion for judgment on the pleadings. Its ground was to the effect that Smiley’s complaint failed to state facts sufficient to constitute a cause of action against it as a result of preemption through section 85. Smiley filed opposition. By leave of the court, the United States filed a statement of interest on behalf of the Comptroller of the Currency as amicus curiae in support of Citibank’s position.
The superior court caused entry of a minute order wherein it denied Citibank’s motion.
Citibank proceeded to file a petition for writ of mandate in the Court of Appeal, Second Appellate District, seeking to compel the superior court to
After soliciting and receiving opposition from Smiley, the Court of Appeal caused issuance of an alternate writ of mandate, compelling the superior court either to vacate its earlier order denying Citibank’s motion and to grant its request or to show cause why, among other things, it should not be required to do so by peremptory writ.
Complying with the Court of Appeal’s alternative writ of mandate, the superior court caused entry of a minute order. In that order, it vacated its earlier order denying Citibank’s motion and proceeded to grant its request.
Thereupon, Smiley filed a notice of appeal in the superior court. That same day, the Court of Appeal discharged the alternative writ of mandate and dismissed Citibank’s petition as moot.
Subsequently, the superior court filed an order, with reasons stated, granting Citibank’s motion, and in accordance therewith filed a judgment of dismissal.
On appeal, the Court of Appeal affirmed.
On Smiley’s petition, we granted review. We now affirm.
Smiley’s sole contention is that Court of Appeal erred in its conclusion upholding the superior court’s order granting Citibank’s common law motion for judgment on the pleadings.
A
In ruling on a common law motion for judgment on the pleadings made by a defendant, a trial court determines what has been called a pure question of law (Donohue v. State of California (1986)
An appellate court independently reviews a trial court’s order on such a motion. (See Lumbermens Mut. Cas. Co. v. Vaughan (1988)
Finally, we as the court of last resort independently review a decision by a lower appellate court concerning a trial court’s order on a motion of this sort. Indeed, we so review all such decisions. We have no need to defer, because we can ourselves conduct the same analysis. In fact, we have need not to defer, in order to be free to further the uniform articulation and application of the law within our jurisdiction.
B
The question that is central to our analysis involves section 85—which, as stated above, provides that a national bank “may take, receive, reserve, and charge on any loan . . . interest at the rate allowed by the laws of the State . . . where the bank is located”—and the preemption of California law. It is clear that national banks are authorized to conduct credit card programs, to issue credit cards to holders, and to provide money thereunder to such
As to preemption generally, the law is as follows.
The supremacy clause declares, in pertinent part, that “Laws of the United States . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” (U.S. Const., art. VI, cl. 2.)
Since the decision in McCulloch v. Maryland (1819)
Whether federal law preempts state law “fundamentally is a question of congressional intent . . . .” (English v. General Electric Co. (1990)
Such preemption is found in “three circumstances.” (English v. General Electric Co., supra,
“Consideration of issues arising under the Supremacy Clause start[s] with the assumption that the historic police powers of the States [are] not to be superseded by . . . Federal Act unless that [is] the clear and manifest purpose of Congress.’ ” (Cipollone v. Liggett Group, Inc., supra,
Turning to the case at bar, we must be precise concerning the question of preemption.
The issue is not the existence of preemption under section 85. In Marquette Nat. Bank v. First of Omaha Corp. (1978)
The issue, to return to our theme, is not the existence of preemption under section 85, but rather its scope. Its resolution will depend on the meaning that the term “interest” bears within the provision.
We cannot find the meaning of the term “interest” in section 85 itself. The provision simply does not define the word. (E.g., Ament v. PNC Nat. Bank (W.D.Pa. 1994)
Let us then proceed to consider the source of section 85, which is section 30 of the National Bank Act.
In Marquette, the United States Supreme Court declared that the purpose of the National Bank Act was “to facilitate ... a ‘national banking system[]’ ” (Marquette Nat. Bank v. First of Omaha Corp., supra,
In Tiffany, the United States Supreme Court declared that the purpose of section 30 of the National Bank Act, as it later stated in Marquette, was to grant national banks “ ‘most favored lender’ status” in their home states. (Marquette Nat. Bank v. First of Omaha Corp., supra,
With this in mind, we can undertake to construe the term “interest” in section 30 of the National Bank Act.
Looking at the National Bank Act itself, we find no express definition of the term “interest” in section 30. The provision itself does not offer a meaning. Neither does any other.
Surveying the National Bank Act within its context, we discover a basis for inferring an implied definition of the term “interest” in section 30.
Thus, the term “interest” readily embraced a periodic charge based on a percentage of a certain sum, either the amount lent or some other, payable absolutely by maturity.
But the word was not so limited. As reported decisions demonstrate, it could include as well a late payment fee, payable contingently in the event of default after maturity. Such a fee could be calculated as a periodic percentage charge. (See Wilkinson v. Daniels (Iowa 1848)
In view of the foregoing, we believe that the term “interest” in section 30 of the National Bank Act should be construed to cover late payment fees, if such fees are allowed by a national bank’s home state. Recall the definition of “interest” as a “sum of money paid or allowed by way of compensation for the loan or use of another sum” (2 Burrill, A New Law Diet, and
This is not to suggest that, in using the term “interest” in section 30 of the National Bank Act, Congress did not employ the word in the sense of a periodic percentage charge payable absolutely by maturity. It evidently did. (See, e.g., Cong. Globe, 38th Cong., 1st Sess., supra, at pp. 1373-1376, 2123-2128.)
But it is to state that, in doing so, Congress did not employ the word only in that sense. Certainly, “rate” was not tied exclusively to that sense. (See fn.
In the years since the enactment of section 30 of the National Bank Act, including its codification in section 85, we have discerned nothing to affect
Consequently, we believe that the term “interest” in section 85 should be construed to cover late payment fees, if such fees are allowed by a national bank’s home state.
Our construction of the term “interest” in section 85 accords with the decisions of practically all other courts. (See, e.g., Ament v. PNC Nat. Bank, supra, 849 F.Supp. at pp. 1018-1021; Tikkanen v. Citibank (South Dakota) N.A. (D.Minn. 1992)
Our construction is also in line with interpretations of the Comptroller of the Currency, who “is charged with the enforcement of the [federal] banking
Lastly, our construction conforms with views of commentators. (See, e.g., Clark & Clark, The Law of Bank Deposits, Collections and Credit Cards (rev. ed. 1995) *][ 15.09[2][c], pp. 15-56 to 15-61 & especially pp. 15-59 to 15-60; Rosenblum, Exporting Annual Fees (1986) 41 Bus. Law. 1039, 1042-1044.)
Against our conclusion, Smiley argues that the term “interest” in section 85 may not, or at least should not, be construed to cover late payment fees, even if such fees are allowed by a national bank’s home state. She asserts that the word should instead be interpreted as such compensation as is either “based on the amount of the loan balance” or “measured over time” or “required up-front as consideration for the loan.”
Smiley’s argument in favor of her own construction of the term “interest” in section 85 is unpersuasive. On its very face, her interpretation is peculiar.
Smiley’s argument against our constmction of the term “interest” in section 85 is as unpersuasive as her argument in favor of her own.
In part, Smiley asserts that the term “interest” in section 85 may not be construed to cover late payment fees, even if such fees are allowed by a national bank’s home state. To do so, she claims, would compel a conclusion that Congress failed to define the word itself, but rather delegated the task to the several states in violation of section 1 of article I of the United States Constitution, which “vests” in it “[a]ll legislative Powers [t]herein granted.” That is simply not the case. Congress has made no such delegation. As shown above, it has itself defined the word, impliedly if not expressly, to cover late payment fees, if such fees are allowed by a national bank’s home state. True, it has adopted in this regard, as by a choice-of-law provision, the usury law of the national bank’s home state as the rule governing all loans by the bank in question, even interstate loans, notwithstanding the law of any other state. It has thereby entrusted the question of the lawfulness of a national bank’s late payment fees to its home state and to its home state alone. But it has not thereby made a delegation. In United States v. Sharpnack (1958)
In other part, Smiley asserts that the term “interest” in section 85 at least should not be construed to cover late payment fees, even if such fees are allowed by a national bank’s home state. She says that the word as used in other contexts is of narrower compass. What is dispositive, however, is the word as used here.
Some of the non-section-85 authorities on which Smiley relies do not, in fact, show the term “interest” employed in a limited sense. Thus it is with section 521 of DIDA. Its purpose is “to achieve a measure of parity and competitive equity between national banks and” federally insured state banks and federally insured branches of foreign banks “by permitting” the latter “to enjoy the same ‘most favored lender’ status that national banks enjoy.” (Hunter v. Greenwood Trust Co. (1994)
By contrast, other of the non-section-85 authorities on which Smiley relies do indeed show the term “interest” employed in a limited sense—but, by definition, not in section 85. Thus, in United States v. Texas (1993)
In addition, Smiley specifically asserts that the term “interest” in section 85 necessarily excludes late payment fees (at least such as are
To the extent that Smiley maintains that late payments fees are, or at least were, unlawful per se under the common law, she is wrong. (See Annot., Provision for Interest After Maturity at a Rate in Excess of Legal Rate as Usurious, supra, 82 A.L.R. at pp. 1214-1223; Annot., Provision for Interest After Maturity at a Rate in Excess of Legal Rate as Usurious or Otherwise Illegal (1969)
To the extent that Smiley maintains that late payments fees are unjustifiable as a matter of policy, she is also wrong. As a general matter at least, late payment has no social utility. Indeed, it causes various costs relating to default, including collection—costs that may be especially high when, as is typically the case in credit card transactions, the underlying loan is unsecured. Late payment fees may be employed to impose default costs on late payers, who are responsible for them, and to avoid shifting them to timely payers, who are not. Fairness is served thereby: late payment fees make late payers shoulder the burden they themselves have created. In addition, the efficient use of limited resources is furthered: late payment fees deter late payers from creating the burden in the first place. Without question as to their legitimacy, differential periodic percentage charges payable absolutely by maturity are used to impose default costs, albeit prospectively on projected late payers, with higher or lower charges depending on the borrower’s creditworthiness. It can be argued that late payment fees may properly be
Smiley may then be understood to argue that, even if the term “interest” in section 85 is construed to cover late payment fees, if such fees are allowed by a national bank’s home state, it should not be deemed preemptive—or, in Marquette's word, “exportable”—against a sister state’s law involving its “ ‘historic police powers’ ” in consumer protection and banking, “ ‘unless that [is] the clear and manifest purpose of Congress.’ ” (Cipollone v. Liggett Group, Inc., supra,
Smiley may next be understood to argue that, even if the term “interest” in section 85 is construed to cover late payment fees, if such fees are allowed by a national bank’s home state, it should not be deemed preemptive against a sister state’s law beyond periodic percentage charges payable absolutely by maturity, or, perhaps more broadly, beyond such charges as are either “based on the amount of the loan balance” or “measured over time” or “required up-front as consideration for the loan.” We do not see any logical basis for such a limitation. (See Tikkanen v. Citibank (South Dakota) N.A., supra,
Smiley may lastly be understood to argue that, even if the term “interest” in section 85 is construed to cover late payment fees, if such fees are allowed by a national bank’s home state, it should not be deemed preemptive against a sister state’s common law. She is unpersuasive. Her sole basis is section 521 of DIDA, which is inapplicable, or more accurately, her peculiar interpretation of that provision, which is overly narrow (see Hunter v.
In making her various arguments, Smiley criticizes the reasoning of the Greenwood Trust court and the views of the Comptroller of the Currency. Since we have not relied on either except to show that the conclusions that we ourselves have arrived at are not novel, we need not respond to her complaints.
We acknowledge that, to construe the term “interest” in section 85 to cover late payment fees, if such fees are allowed by a national bank’s home state, would empower a national bank to “export” its home state’s law of usury in that regard. We also acknowledge that such “exportation” of the usury law of a national bank’s home state would prevent sister states from enforcing their own usury laws to that extent against the national bank in question by entrusting the question of the lawfulness of the national bank’s late payment fees to its home state and to its home state alone. We cannot, and do not, ignore the immanent threat to efforts by sister states to provide such protection as they deem fit to consumers who reside therein. But—to follow Marquette—this displacement of the usury laws of sister states has always been implicit in the structure of the National Bank Act, since residents of one state have ever been free to visit another to receive credit subject to the latter’s usury law, even when that law permits unlimited interest. This displacement may in fact be accentuated by the ease with which interstate credit is available by mail through the use of modem credit cards. The protection of the usury laws of sister states, however, is an issue of policy committed to Congress. Any plea to amend section 85 to further that end must be addressed to that body and not to this.
C
Applying the law as set out above, we must reject Smiley’s contention that Court of Appeal erred in its conclusion upholding the superior court’s order granting Citibank’s common law motion for judgment on the pleadings.
Smiley’s complaint is based on California law bearing on the amount of late payment fees. It is, however, without support because that law is preempted as to Citibank through section 85. Citibank is a national bank. Its home state is South Dakota. Because the term “interest” in section 85 covers late payment fees, if such fees are allowed by a national bank’s home state, it embraces Citibank’s late payment fees, which are permitted by South Dakota pursuant to section -54-3-1 of the South Dakota Codified Laws Annotated. Whether California law would prohibit such fees, at least under certain circumstances, is of no consequence. That law is displaced.
Against our conclusion, Smiley argues to the following effect: her complaint “alleges” as a “material fact” that Citibank’s late payment fees for its credit card accounts are not late payment fees within the meaning of South Dakota law, but rather “penalties”; if this “material fact” is accepted as true, California law bearing on the amount of late payment fees is not preempted as to Citibank through section 85; and if California law is not preempted in this regard, the superior court’s order granting Citibank’s motion was erroneous, and the Court of Appeal’s conclusion upholding that order was erroneous as well.
We are not persuaded. Smiley’s complaint simply does not “allege” as a “material fact” that Citibank’s late payment fees for its credit card accounts are not late payment fees within the meaning of South Dakota law, but rather “penalties.” Indeed, the pleading does not even allude to South Dakota law at all. With the premise of her argument gone, the conclusion falls of its own weight. In any event, we ourselves have considered the question independently, and conclude that the late payment fees in question are indeed late payment fees within the meaning of South Dakota law, and not “penalties.”
For the reasons stated above, we conclude that the judgment of the Court of Appeal must be affirmed.
Kennard, J., Baxter, J., Werdegar, J., and Ardaiz, J.,
Notes
The Court of Appeal impliedly treated Smiley’s appeal as taken from the superior court’s judgment—which was appealable (see Campbell v. Jewish Com. for P. Service (1954)
Citibank requests us to take judicial notice of matter reflected in several items, comprising the following: certain decisions of federal, sister-state, and English courts; certain documents from the Office of the Comptroller of the Currency and other federal administrative agencies; certain submissions filed in the courts of California and a sister state by the United States on behalf of the Comptroller; and certain documents from Citibank relating to the terms of its “Preferred” credit card accounts in the general period pertinent here. We do so. We are either required or permitted to take judicial notice (Evid. Code, § 459, subd. (a)) with respect to all such matter. Specifically, we are required to take judicial notice of decisions constituting the law of the United States. (Id., § 451, subd. (a).) We are permitted to take judicial notice of the following: decisions constituting the law of any state of the United States (id., § 452, subd. (a)); the law of any foreign nation (id., § 452, subd. (f)); official acts of the executive departments of the United States (id., § 452, subd. (c)); records of any court of record of any state of the United States (id., § 452, subd. (d)); and “[fjacts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy” (id., § 452, subd. (h)). Smiley argues against judicial notice of some of the matter in question, but does so unpersuasively.
In conjunction with a brief filed as amicus curiae supporting Citibank’s position, Chase Manhattan Bank, N.A., requests us to take judicial notice of matter reflected in several items, comprising certain decisions of sister-state courts and certain documents from federal administrative agencies. We do so. As stated above, we are permitted to take judicial notice with respect to all such matter.
Smiley effectively moves us to strike a brief filed by the Comptroller of the Currency as amicus curiae supporting Citibank’s position. She argues that, by appearing under his own name, the Comptroller has acted outside his authority under the laws of the United States. He has not. (12 U.S.C. § 93(d) [sic: the subsection should be designated “(e)”].) Accordingly, we deny her request.
We note in passing that, during the course of this action, section 438 was added to the Code of Civil Procedure dealing with motions for judgment on the pleadings, and section 4001 was added to the Financial Code dealing with late payment fees in consumer credit agreements. Neither Smiley nor Citibank has raised any claim that either provision is pertinent to the conduct of the proceedings or to the outcome thereof.
We also note in passing that Smiley asserts that the superior court’s order, with reasons stated, granting Citibank’s common law motion for judgment on the pleadings is “not reflective of the actual proceedings or pleadings in the case.” So far as appears, it is.
The “three categories” of preemption referred to in the text should not be taken to be “rigidly distinct. Indeed, field pre-emption may be understood as a species of conflict pre-emption: A state law that falls within a pre-empted field conflicts with Congress’ intent (either express or plainly implied) to exclude state regulation.” (English v. General Electric Co., supra, 496 U.S. at pp. 79-80, fn. 5 [
In his dissenting opinion, Justice Arabian takes the position that the standard for preemption applicable here “requires the invalidation of a state law only where it ‘ “incapacitates the [national] banks from discharging their duties to the government (Dis. opn. of Arabian, J., post, at p. 175, italics in original.) That is not the case. For his test, he quotes McClellan v. Chipman (1896)
We note in passing that, in its preemption analysis, Marquette says not a word about whether section 85 “ ‘incapacitates the [national] banks from discharging their duties to the government’ ” (McClellan v. Chipman, supra,
In Marquette, the United States Supreme Court noted that the “ ‘most favored lender’ status for national banks under Tiffany has since been incorporated into the regulations of the Comptroller of the Currency.” (Marquette Nat. Bank v. First of Omaha Corp., supra,
In English legal usage, from which the American derived, the term “interest” carried substantially the same broad meaning as indicated in the text. Thus, in Arnott v. Redfern (1826 C.P.) 130 Eng.Rep. 549, 551-552, the court declared: “[I]t appears there are two principles on which interest is given in our courts: first, where the intent of the parties that interest should be paid, is to be collected from the terms or nature of the contract; secondly, where the debt has been wrongfully detained from the creditor.”
Compare 7 Oxford English Dictionary (2d ed. 1989) pages 1099 to 1100: In medieval Latin, “interesse (Interest) differed from usura (Usury) in that the latter was avowedly a charge for the use of money, which was forbidden by the Canon Law; whereas originally ‘interesse refers to the compensation which under the Roman Law, was due by the debtor who had made default. The measure of compensation was id quod interest, the difference between the creditor’s position in consequence of the debtor’s laches and the position which might reasonably have been anticipated as the direct consequence of the debtor’s fulfilment of his obligation’.” (Accord, Library of Congress v. Shaw (1986)
In his dissenting opinion, Justice George ignores the broad meaning of the term “interest” in American legal usage around the time of the passage of the National Bank Act. This is not surprising in view of the fact that, with the singular exception of Greenwood Trust, he fails to cite any of the scores of decisions and other authorities bearing directly on the question before the court.
Even if used in conjunction with “rate,” the term “interest”—contrary to what Justice Arabian implies in his dissenting opinion—was not limited to a periodic percentage charge, whether or not payable absolutely by maturity. (See Wernwag et al. v. Mothershead et al., supra, 3 Blackford at pp. 401-402.) Thus, it was stated that a “promissory note . . . , on default of payment when due, drew interest at the rate specified in the note from the time it became due,” to wit, “ ‘five dollars interest per week until paid.’ ” (Ibid.)
In his dissenting opinion, Justice George effectively asserts that the term “interest” could not include a late payment fee or indeed any other contingent charge. That is not so. Lloyd v. Scott (1830)
In his dissenting opinion, Justice Arabian effectively asserts that the term “interest” did not include a late payment fee. In doing so, he merely begs the question, simply and repeatedly labeling such a fee a “non-interest-rate . . . term[].” (Dis. opn. of Arabian, J., post, at p. 165, italics in original; accord, id. at pp. 166, 169, 172, 173, & 174.) We need not respond.
In their separate dissenting opinions, Justice Arabian and Justice George suggest that Congress had no need to protect national banks through the “most favored lender” doctrine under section 30 of the National Bank Act insofar as late payment fees were concerned. To quote Justice George: “It has been quite well settled, since the early 1800’s, that—even in the absence of a specific federal statutory prohibition—a state may not discriminate against a ‘federal instrumentality’ either in the enactment or the enforcement of state laws, and a national bank, of course, is a federal instrumentality.” (Dis. opn. of George, J., post, at p. 182, italics in original; accord, dis. opn. of Arabian, J., post, pp. 171-172.) By the same reasoning, Congress had no need to protect national banks at all. In Tiffany, however, the United States Supreme Court concluded that Congress had in fact provided them protection, whether it needed to do so or not. We are bound thereby.
In his dissenting opinion, Justice Arabian attempts to deconstruct the “most favored lender” doctrine, transforming it from a rule to protect national banks in their home states from possible unfriendly state legislation into a mechanism to prevent states from abolishing banking as an institution. He fails in his endeavor. He cannot overcome Senator Sherman, who, as the sponsor in the Senate of the bill that would become the National Bank Act, urged “most favored lender” status for national banks. (See Cong. Globe, 38th Cong., 1st Sess., p. 2126 (1864).) Neither can he overcome the Tiffany court, which articulated the doctrine as here presented not long afterwards. Lastly, he cannot overcome the Marquette court, which reaffirmed the doctrine in the same form a century later. It may be noted in passing that the words of Tiffany on which he relies reflect a purpose not to prevent states from abolishing banking as an institution but, as explained in the text, to protect national banks in their home states from possible unfriendly state legislation, whether such legislation was unfriendly in intent or effect.
In their separate dissenting opinions, Justice Arabian and Justice George assert—to quote only Justice George—that “[t]here is absolutely nothing in” section 30 of the National Bank Act “that suggests that Congress . . . intended the statutory reference to ‘interest’ to include” late payment fees. (Dis. opn. of George, J., post, at p. 180; accord, dis. opn. of Arabian, J., post, at pp. 167-168.) Nothing except the word itself, whose broad meaning in American legal usage around the time of the passage of the National Bank Act was a “sum of money paid or allowed by way of compensation for the loan or use of another sum” (2 Burrill, A New Law Diet, and Glossary, supra, p. 629, col. 1) or the “compensation which is paid by the borrower to the lender or by the debtor to the creditor for its use” (1 Bouvier, A Law Diet., supra, p. 652, col. 1). Justice Arabian’s position is especially curious. He recognizes that the question of the word’s meaning is “antiquarian.” (Dis. opn. of Arabian, J., post, at p. 167.) He fails—or
In his dissenting opinion, Justice George takes the position that the term “interest” in section 85 does not include any contingent charge, including a late payment fee. He founders on Marquette. There, the United States Supreme Court treated as “interest” the apparently typical periodic percentage charges on credit card transactions that are contingent on the borrower’s failure to pay his balance in full. (Marquette Nat. Bank v. First of Omaha Corp., supra,
We recognize that, in Mazaika v. Bank One, Columbus, N.A. (1994)
We recognize that, in a letter dated June 25, 1964, the then Comptroller of the Currency stated to a correspondent: “[Y]ou inquired as to what charges paid by consumers for consumer credit obtained from a National Bank with respect to auto financing are not considered to be interest. Charges for late payments ... are illustrations of charges which are made by some banks which would not properly be characterized as interest.” The letter was perfunctory. It did not even mention section 85. We agree with the present Comptroller of the Currency: “It is not clear that the quoted passage was issued in the context of a determination of whether the term ‘interest’ used in Section 85 includes late charges nor does the context of the letter clearly indicate that it is intended as a ruling of the agency with respect to that question.”
See also Senate Report No. 96-368,1st Session, page 19 (1979), 1980 United States Code Congressional and Administrative News, at page 255 (dealing with section 501 of DIDA, codified in section 1735f-7a of title 12 of the United States Code, which concerns state law provisions limiting the amount or rate of interest, discount points, or finance or other charges with respect to mortgage loans: “In exempting mortgage loans from state usury limitations, the Committee [on Banking, Housing, and Urban Affairs] intends to exempt only those limitations that are included in the annual percentage rate. The Committee does not intend to exempt limitations on prepayment charges, attorney fees, late charges or similar limitations
Other of the non-section-85 authorities on which Smiley relies are no more helpful to her cause. See, e.g., Lloyd v. Scott, supra,
In his dissenting opinion, Justice George relies on a number of the non-section-85 authorities that we have considered. (See dis. opn. of George, J ..post, atp. 181, fn. 1.) To no avail. (See p. 159, fn. 14, & pp. 159-160, ante.)
Perdue v. Crocker National Bank (1985)
We note in passing that Citibank’s late payment fees appear roughly comparable to those authorized by the subsequently added section 4001 of the Financial Code, which deals with late payment fees. (See fn. 2, ante.)
We also note in passing that Smiley’s construction of the term “interest” in section 85 as such compensation for use of money under loan as is either “based on the amount of the loan balance” or “measured over time” or “required up-front as consideration for the loan” seems broad enough to embrace Citibank’s late payment fees for its “Preferred” credit card accounts, at least in part, because those fees—as shown by matters of which we have taken judicial notice (see fn. 2, ante)—appear, at least in part, to be set with regard to the account balance and to be determined over monthly periods.
Smiley may be understood to contend that Court of Appeal erred in its conclusion upholding the superior court’s order granting Citibank’s common law motion for judgment on
Presiding Justice, Court of Appeal, Fifth Appellate District, assigned by the Acting Chairperson of the Judicial Council.
Dissenting Opinion
I dissent. The majority offers up a thoroughgoing revision of the history of American banking to justify a result that could not conceivably have been in the minds of the members of the Civil War Congress. It is, moreover, one that ignores not only an unambiguous statutory text and a consistent legislative history but what is perhaps the most prominent feature of American banking since the National Bank Act was passed in 1864—the “dual banking system,” under which Congress has historically deferred to the interests of the states in the regulation of national banks as to all matters except those essential to their role as instrumentalities of the federal government.
The setting of non-interest-rate credit card terms—like the late payment penalties charged California credit card users by out-of-state national banks at issue in this case—is a matter appropriate for regulation by the California Legislature. It is not one to be determined by the legislatures of a handful of small or sparsely populated states that have deregulated consumer credit in an attempt to attract the interstate credit card operations of large national banks.
It may be that a nationwide banking system, especially in the consumer financial services marketplace, is the inexorable future of American banking. We have not as a nation reached that point, however, and the decision to do
I
The majority begins with the proposition that the purpose of the National Bank Act of 1864 (12 U.S.C.) was to grant to the newly established national banks “most favored lender status” by permitting them to charge the highest rate of interest allowed to lenders (including non-bank lenders) by the state in which the national bank is located. That, I agree, is the holding of the high court in Tiffany v. National Bank of Missouri (1874)
This expansive definition of interest is required, according to the majority, not because of any evidence that Congress actually had such an idea in mind when it enacted the National Bank Act; in fact, there is not a particle of textual or legislative evidence to support such a view. Instead, the majority reasons that Congress must have intended to give “interest” such a broadened definition because limiting the word’s meaning to the one that is obvious on the face of the statute would have allowed unfriendly state legislatures to “frustrate” the rise of the national banks by passing discriminatory measures imposing low noninterest terms (such as late fee penalties) on such banks while increasing the ceilings on such charges that state banks could impose. Such a course would have led to the destruction of the national banks, the majority reasons, an outcome Congress could not have
Like the proverbial red thread, a misconception not only of the high court’s opinion in Tiffany, supra,
A
We begin with the text of the statute itself. In enacting what was originally section 30 of the National Bank Act in 1864, Congress used the word “interest” a total of four times. It used the word “rate,” however, a total of nine times, more than twice as often as it used the word “interest.” Indeed, “interest” does not appear in a single sentence of section 30 unaccompanied by the word “rate”', the statute commonly links directly the two ideas, referring to “rates of interest” or “interest at a rate of,” although sometimes it refers to “rates” without referring to “interest” in the same sentence. Whatever broader currency the word “interest” may have had in American society at large in the mid-19th century, uncoupled from the notion of rates, it is highly likely that in enacting section 30, Congress actually had in its collective mind a much narrower and more precise understanding, the one the majority calls the “popular sense” of the word: a sum linked to the lending of money calculated at a rate or a percentage of the loan over time.
Such a self-evident and unambiguous use of the term should mark the end of the inquiry, the question before this court being, after all, the antiquarian one of the content Congress probably ascribed to a word inserted in a statute in 1864. The answer, it is evident to me, is furnished by the text of the statute itself. Another court, examining the identical question, and rejecting the very construction placed on the text by the majority, has written that “a proposition that is not obvious from the plain meaning of a statute’s language, nor from its legislative history, simply cannot be regarded as a clear manifestation of congressional intent.” (Copeland v. MBNA America, N.A. (D.Colo. 1993)
During the Senate debate on the bill that became the National Bank Act, moreover, the talk was of interest “rates,” not of abstract notions of interest encompassing the expansive formulation of the majority. Thus, in the midst of the debate over the bill’s terms on May 5, 1864, the senators discussed the controversial proposal whether to enact into law a national interest rate ceiling of 7 percent. Senator Grimes of Iowa sought to have the ceiling reduced to 6 percent, the figure prevailing in his state. “This bill purports to be a bill to provide a national currency, and its friends claim that it is to have a uniform operation all through the country. Let me tell the Senate how it will operate in [Iowa]. In the State of Iowa the legal rate of interest is six per cent., but where special contracts are entered into the parties can receive ten per cent. Under this bill as it stands each of these national banks can receive ten per cent, on all its discounts and all its monetary transactions, while in the adjacent States the rate will be only six per cent.” (Cong. Globe, 38th Cong., 1st Sess. (1864) p. 2123.)
After further criticizing the measure, the senator concluded, “This is no time to be increasing the rate of interest.” Senator Pomeroy of Kansas disagreed: “I only desire to say that I think a uniform rate of interest is desirable and should be fixed in this bill, if it is to be a bill to establish a national currency . . . .” Senator Trumbull disagreed with both of his colleagues. “Money is worth more in some portions of the country than others. Money commands a higher rate of interest in new sections of the country than it does in the old. . . . This provision . . . allows the same rate of interest in a State which is allowed by the laws of the State.” (Cong. Globe, 38th Cong., 1st Sess., supra, at pp. 2123-2124, italics added throughout.)
Examples could be multiplied, but there would be little point. The fact is that there is literally nothing in the reported debates on the bill that became the National Bank Act of 1864 to suggest that the drafters of the measure had anything in mind beyond the common sense, conventional notion of “rates of interest.” The record of the congressional debates on the meaning of “interest” as Congress used it in the National Bank Act is thus further evidence—in addition to the unambiguous text of the statute itself—that Congress had in mind a notion of interest that was linked ineluctably to rates. (See Cong. Globe, 38th Cong., 1st. Sess., supra, at pp. 2123-2125.)
B
Indeed, the repeated and uniform linkage of “interest” with “rates of interest” in both statutory text and Senate debate is so clear and unwavering
Here is the argument deployed by the majority to support its central conclusion: “Thus, a state could allow periodic percentage charges payable absolutely by maturity for all lenders, including national banks, but fix them at a rate so low that they could lend only at a loss. It might then allow late payment fees to some lenders, not including national banks, at a level high enough that they could lend at a profit. Such a result would be untenable.” (Maj. opn., ante, at p. 154, italics in original.)
A fair reading of the opinion in Tiffany, supra,
Here is the critical text of Justice Strong’s opinion in Tiffany, supra,
I suppose it is possible to construe this text as referring to the threat of state discrimination against national banks by the setting of interest rate differentials that favored state banks. In point of historical fact, however, the greater likelihood is that Justice Strong had in mind what the words of his opinion literally convey: that the states might enact legislation that, far from favoring state banks over national banks, would sweep away all banks, leaving the business of lending (and the circulation of bank notes) to nonbank lenders. In other words, just as Justice Strong wrote in Tiffany, supra,
At this historical distance, it is easy to lose sight of the fact that in 1864 the history of American banking had been one of decades of financial turmoil, cyclical bank “panics,” the sudden appearance and disappearance of “wildcat” banks, the absence of a national currency (and of national banks), and volatile, often worthless notes issued by private state-chartered banks. The country’s first “central bank,” the Bank of the United States, had been destroyed in its second incarnation by President Jackson’s veto of its charter renewal in 1832. The following period, roughly from 1836 to 1863, often referred to as the era of “free banking,” was one of the most chaotic in American financial history, an era in which all banking was carried on by state chartered banks that issued their own currencies and in which the very idea of banks and bankers came to be distrusted by many Americans.
Against this backdrop, what Congress likely feared was not that the states would favor their local banks over those holding newly issued federal charters by setting discriminatory interest rates, but that the institution of private commercial banking itself would be abandoned in favor of other forms of lending in a country that, though still in its financial youth, had had much bitter experience with a system that relied on largely unregulated state-chartered banks for its medium of exchange. It was thus to induce state banks to convert their charters and to protect the future of banking itself, that Congress tied national bank interest rate ceilings to those set by local legislatures for lenders other than state banks.
That linkage, however, gives no support to the majority’s argument that Congress must have intended to invest the term “interest” with a meaning that is broader than the text of the statute and legislative materials will
C
There is another thread prominent in the intellectual fabric of the immediate post-Civil War era that reinforces the view that in its opinion in Tiffany, supra,
It was only two years after Tiffany, supra,
The second line of argument anchoring the majority’s broadened reading of the word “interest” in section 30 is derived from the comparatively recent decision in Marquette Nat. Bank v. First of Omaha Corp. (1978)
The vice of this reasoning is that neither the high court in Marquette, supra,
The opinion in Marquette, supra, 439 U.S 299, of course, addressed only the question of interest rates', it does not hint at, much less embrace, the Pickwickian notion of “interest” embraced by the majority. Moreover, the high court’s statement in Marquette that in enacting the National Bank Act, Congress debated the measure “in the context of a developed interstate loan market” (id. at p. 317 [
Given the system of regional banking that even today continues to be the prevailing pattern, it is evident that in 1864 American banks did not “export” rates across state lines or that they even conceived of doing so. Congress thus could not have legislated with an awareness, however unarticulated, of “true” interstate banking as we are only coming to perceive it, however dimly, today. The pressures that drive the economic behavior of Citibank and like banks (and that lead to class actions such as this one) were unknown to the world of American banking until around 20 years ago. Because the Congress of the Civil War era could not have foreseen such developments, it could not have enacted section 30 of the National Bank Act with the idea of “interest” in mind that the majority attributes to it, that is, one that permits the exportation of credit terms—including late payment penalties—unrelated to interest rates allowed by the exporting bank’s home state.
In short, the “exportation” of interest rates is a phenomenon associated with the contemporaneous rise of true interstate banking. There is certainly no hint of it in the Tiffany opinion, which deals solely with interest rates in the intrastate context. The word itself, in the context of banking, does not appear in the case law until around the time of the high court’s opinion in Marquette, supra,
It is clear, in short, that the majority reads back into the intent of the Civil War Congress an anachronistic awareness of the imperatives of modem interstate banking, an awareness that, because it did not exist at the time, could not have weighed on Congress’s collective consciousness. It is equally clear from the historical materials that Congress was concerned with ensuring the survival of the newly established national banks in the context of a banking industry geographically confined within a single state and operating
Ill
Having relied on the foregoing materials and arguments—the clear and unambiguous text of the statute itself, the tenor of the debate in the Senate, the high court’s opinion in Tiffany, supra,
So solicitous has Congress historically been of the interests of the states in the regulation of banking, both state and federally chartered, that the high court has adopted an especially restrictive standard of preemption by which to judge federal laws that impact state regulation of federal banks. That test, announced by the high court at least a century ago in such cases as McClellan v. Chipman (1896)
The California statute nominally at issue in this case—section 1671, subdivisions (c) and (d), of the Civil Code—can hardly be said to fail to pass constitutional muster under the governing test. Certainly on the basis of the text of section 30 alone, Congress’s intent to displace credit terms other than interest rates applicable to out-of-state national banks is far less than “clear and manifest.” Even more pronounced is the failure of Citibank—which bears the burden of demonstrating federal preemption (see Perdue v. Crocker National Bank, supra,
Conclusion
Professor Geoffrey Miller, an authority on the American banking system and its history, commenting on the revolution sweeping the industry, has observed that “It is sobering, if edifying, to realize that banking, the world’s most regulated industry, is evolving in almost blithe disregard of regulatory constraints. The industry has changed through the use of previous dormant statutory powers, through the aggressive manipulation of loopholes, or (sometimes) in apparent disregard of well-established legal principles. But legislators and the regulators have not forced the action. They have been
It is difficult to imagine a more classic example of this diagnosis than the case before us. Late payment charges exacted by credit card issuing banks totaled almost $2 billion in 1992, according to one industry source. (Credit Card News (Apr. 1, 1994) at p. 2.) A large part of this revenue, from what one authority has called the “massive interstate credit card exportation phenomenon,” has gone to Citibank, easily the dominant credit card issuer in the interstate market, by exploiting what can only be called a loophole in the interstices of federal-state banking regulation. (See Burgess & Ciolfi, Exportation or Exploitation? A State Regulator’s View of Interstate Credit Card Transactions, supra, 42 Bus. Law. at p. 936; see also the study, General Accounting Office, U.S. Credit Card Industry: Competitive Developments Need to be Closely Monitored (Apr. 1994) p. 27 [Citibank is the single largest issuer of Visa and Mastercard with over $35 billion in billings.].)
However valuable to the economy of South Dakota, that scheme is in derogation of the right of the California Legislature to ensure the welfare of its residents in their credit dealings, more or less as it sees fit. To paraphrase the high court’s opinion in Marquette, supra,
Examining the shifting terrain of modem American banking in 1981, Judge Douglas Ginsburg wrote that “We have already seen Citicorp relocating some of its retail operations in South Dakota, and the Chase Manhattan and Morgan banks undertaking similar moves to Delaware .... In return for jobs and taxes, these jurisdictions have traded local entry rights and powers, but in each case their real purpose is to serve as a base state for [national] retail banking: the national charter enables the banks to extend credit to residents of other states at their new ‘home’ state interest rates, and newly provided state laws make these interest rates unlimited.” (Ginsburg, Interstate Banking (1981) 9 Hofstra L.Rev. 1133, 1370, fns. omitted.)
It is worth noting that the power of the South Dakota Legislature to affect the interests of California credit card holders endorsed by the majority is not limited to the setting (or the removal) of ceilings on late payment penalties; it encompass as well the manipulation of the following credit card charges: annual fees, grace periods, conditions of default, changes in terms provisions, bad check charges, and restrictions on the imposition of attorney fees and collection costs. (See Burgess & Ciolfi, Exportation or Exploitation? A State Regulator’s View of Interstate Credit Card Transactions (1987) 42 Bus. Law. 929, 930.) As the majority point out, the Legislature enacted a measure effective January 1, 1995, adding division 1.1 to the Financial Code, dealing with the setting of fees in consumer credit transactions. (See maj. opn., ante, at p. 145, fn. 2.) Notwithstanding this recent change, the federalist question remains not how the Legislature has decided to regulate consumer financial services, but the extent of its power to act as it sees fit.
A vivid sense of what must have seemed the financial chaos surrounding the most everyday affairs of the average citizen can be gained from the observations of a writer in the January 1863 issue of Merchants’ Magazine describing the currency of the West as including “the ‘shinplasters’ of Michigan, the ‘wild-cats’ of Georgia ... the ‘red-dogs of Indiana and Nebraska, the miserably engraved ‘rags’ of North Carolina and Kentucky . . . and the not-soon-to-be-forgotten ‘stumptail’ of Illinois and Wisconsin . . . .” (Quoted in Million, The Debate on the National Bank Act of1863 (1894) 2 J. of Pol. Economy 251, 264, fn. 2.) In
To Secretary Chase and others, one of the central objectives of the National Bank Act and allied legislation was the destruction of the state banking system and the assumption of federal control of the nation’s banking, a condition that almost came to pass after Congress levied a 10 percent tax on state bank notes in 1865, prompting most of the state banks to convert to federal charters and marking the end of the era of state bank notes. Between 1864 and 1869, the number of state banks fell from a high of 1,089 to a low of 259, while national banks increased from 467 to 1,617. (See Anderson, Federal and State Control of Banking (1934) pp. 72-74; Bedford, Dual Banking: A Case Study in Federalism (1966) 31 Law & Contemp. Probs. 749, 755.) State banks launched a comeback of sorts over the following decades, primarily because of the increasing importance of banks drafts in lieu of money, eventually achieving a rough equilibrium with their national competitors. It is this historically inadvertent coexistence of state and federally chartered banks in the aftermath of the National Bank Act that has come to be referred to as the “dual” banking system. (See, e.g., Hackley, supra, 52 Va. L.Rev. 565, 572.)
As one comment has observed, at the time the Tiffany opinion was written, national banks outnumbered state banks by a ratio of seven to one, the latter being in a general state of collapse in the aftermath of the federal impost on their circulating notes. Faced with the impending “nationalization” of banking, “it is not inconceivable that states would enact retaliatory usury laws so that profitable loans could be made only by non-bank lenders.” (Comment: Extension of the Most Favored Lender Doctrine Under Federal Usury Law: A Contrary View (1982) 27 Vill. L.Rev. 1077, 1085, fn. omitted.)
Dissenting Opinion
I respectfully dissent.
The question before us is whether federal law precludes California from applying its state consumer protection laws to late payment charges imposed upon California consumers by a national bank that is chartered in another state but is doing business in California. As I shall explain, I believe that the majority, in concluding that federal law prohibits the application of California law to such late payment charges, has failed to recognize the clear distinction that traditionally has been drawn between such late payment charges and charges that commonly are characterized as “interest.”
In analyzing the question before us, it is helpful to begin by placing the matter in perspective. As a general rule, of course, out-of-state corporations that conduct business in California ordinarily are subject to this state’s consumer protection laws. (See, e.g., California v. ARC America Corp. (1989)
Although, as Perdue demonstrates, it is well established that federal law does not broadly preempt states from applying state law to the operations of national banks, at the same time it is quite clear that, under the federal statute at issue in this case, 12 U.S.C. § 85 (hereafter section 85), the rate of interest that may be charged on loaned funds is a subject as to which California may not apply its own state law in evaluating the validity of the actions of defendant Citibank. In Marquette Nat. Bank v. First of Omaha Corp. (1978)
The Marquette decision, however, involved only the question of interest rates and did not address the issue whether section 85 applies to the type of
II
Section 85 provides in relevant part: “Any [national bank] may take, receive, reserve and charge on any loan or discount made . . . interest at the rate allowed by the laws of the State . . . where the bank is located, or at a rate of 1 per centum in excess of the discount rate on ninety-day commercial paper in effect at the Federal reserve bank . . . , whichever may be the greater, and no more .... When no rate is fixed by the laws of the State ... the bank may . . . charge a rate not exceeding 7 per centum, or 1 per centum in excess of the discount rate on ninety-day commercial paper in effect at the Federal reserve bank . . . , whichever may be the greater . . . .” (Italics added.)
Section 85 includes no special definition of the term “interest” as used in the statute, and no indication that the term was used in other than its ordinary and commonly understood sense. As numerous cases have recognized, a late payment charge that is set at a fixed-dollar amount unrelated either to the amount of the loan or the time period for which funds are advanced, and that is assessed only if the borrower fails timely to make a required payment, ordinarily is not considered “interest.” (See, e.g., Tackett v. First Sav. of Arkansas, F.A. (1991)
There is absolutely nothing in section 85 that suggests that Congress, when it enacted this provision in 1864, intended the statutory reference to “interest” to include the type of late payment fee at issue in the present case. Indeed, at the time of the 1864 enactment, the leading United States Supreme Court decisions on the subject made it quite clear that such a late payment charge, whose payment was contingent upon the borrower’s own conduct during the term of the loan, would not be considered interest for the purpose of determining whether the loan exceeded the legally permitted rate of interest. (See Spain v. Hamilton’s Administrator (1863)
III
The majority maintains, however, that the term “interest” in section 85 must be given an unusually broad interpretation, encompassing late payment fees, in order to effectuate the legislative purpose of the statute. It reasons: “If ‘interest’ were not read as indicated above, the purpose of facilitating a national banking system by granting national banks ‘most favored lender’ status in their home states could be frustrated by unfriendly state legislation. Thus, a state could allow periodic percentage charges payable absolutely by maturity for all lenders, including national banks, but fix them at a rate so low that they could lend only at a loss. It might then allow late payment fees to some lenders, not including national banks, at a level high enough that they could lend at a profit. Such a result would be untenable.” (Maj. opn., ante, at p. 154, original italics, fn. omitted.)
In my view, the foregoing reasoning of the majority is flawed in two distinct respects. First, I do not believe it is accurate to suggest that if section 85 ’s reference to “interest” were interpreted not to include late payment
Furthermore, if, absent the application of section 85, a home state lawfully could discriminate against a national bank (vis-á-vis its local state banks or other lenders) and desired to do so, a state would be able to discriminate with regard to a great variety of matters—from building permits to minimum wages to health and safety requirements—and yet no one reasonably could maintain that all of these matters should be characterized as “interest,” within the meaning of section 85, simply because they are susceptible to discriminatory application. Thus, even if a state theoretically would be free (apart from section 85) to discriminate against a national bank with regard to late payment charges—a proposition I do not accept—that circumstance still would provide no logical basis for characterizing such charges as “interest” within the meaning of section 85.
Accordingly, I believe the majority has failed to demonstrate that the legislative purpose of section 85 justifies a departure from the ordinary reading of the statutory term “interest.”
IV
In sum, I conclude that the word “interest,” as employed in section 85, cannot properly be interpreted to apply to the late payment charges at issue in this case. Of course, if Congress determines, as a matter of policy, that the validity of late payment charges imposed by a national bank should be
For the foregoing reasons, I would reverse the judgment of the Court of Appeal and permit plaintiff’s action to go forward.
The United States Supreme Court granted a petition for a writ of certiorari on January 19, 1996 (No. 95-860). The United States Supreme Court affirmed the decision of the California Supreme Court on June 3, 1996.
Although the majority acknowledges that the Spain v. Hamilton’s Administrator, supra,
The conclusion that the term “interest,” as employed in section 85, should not be interpreted to encompass late payment charges is further supported by the circumstance that other federal statutes and regulations draw a clear distinction between interest and late payment charges or fees. (See, e.g., 12 C.F.R. §§ 226.4(b)(1), 226.4(c)(2) (1995), implementing 15 U.S.C. § 1605(a)(1) [under federal Truth in Lending Act, “finance charge” includes “interest” but excludes “[cjharges for actual unanticipated late payment”]; 12 C.F.R. § 590.3 (1995), implementing 12 U.S.C. § 1735f-7a [with respect to federally related mortgage loans, state laws “expressly limiting the rate or amount of interest. . . shall not apply,” but “[njothing in this section preempts limitation in state laws on . . . late charges . . . .”]. See also Seiter v. Veytia (Tex. 1988)
I recognize that the majority’s expansive interpretation of the word “interest,” as employed in section 85, follows the lead of a number of lower federal and sister-state courts. (See maj. opn., ante, at p. 156.) In Greenwood Trust Co. v. Com. of Mass. (1st Cir. 1992)