THIRD NATIONAL BANK IN NASHVILLE v. IMPAC LIMITED, INC., ET AL.
No. 76-674
Supreme Court of the United States
Argued April 26, 1977—Decided June 17, 1977
432 U.S. 312
Thomas P. Kanaday, Jr., argued the cause and filed briefs for petitioner.
Gail P. Pigg argued the cause and filed a brief for respondents.
MR. JUSTICE STEVENS delivered the opinion of the Court.
A federal statute enacted in 1873 provides that certain
I
Only the essentials of the rather complex three-party transaction giving rise to this dispute need be stated. Respondents borrowed $700,000 from petitioner, a national bank, to finance the construction of an office building. The third party, a mortgage company, agreed to provide permanent financing to replace the bank loan upon completion of the building. The loan was secured by a deed of trust, which granted a first lien on respondents’ property to the bank while the construction loan was outstanding. A dispute developed between respondents and the long-term lender over whether respondents had satisfied certain preconditions of the long-term loan. Petitioner contends that respondents are in default because of their failure to close the long-term loan. Respondents deny
On September 23, 1975, petitioner published a notice of foreclosure. Under Tennessee practice, foreclosure of a deed of trust is not a judicial proceeding, but is routinely consummated by private sale unless restrained by judicial action initiated by the mortgagor. On September 26, 1975, respondents commenced this litigation by filing a sworn complaint in the Chancery Court of Davidson County, Tenn., seeking to restrain the foreclosure on the ground that the loan was not in default. The chancellor ordered the petitioner to show cause why an injunction should not issue.
Petitioner‘s answer set forth the basis for its claim of default, but did not question the court‘s power to restrain the foreclosure. Based on the pleadings, the exhibits, and extensive arguments of counsel, the chancellor found “the existence of issues which should be determined upon a full hearing of this cause and that [respondents] would suffer irreparable harm if the foreclosure occurred prior to such full hearing.” App. 56. He therefore temporarily enjoined the foreclosure.
Two days later, petitioner filed a supplemental answer alleging that the state court lacked jurisdiction to enter a temporary injunction against a national bank. In due course, the chancellor concluded that
The Tennessee Supreme Court reversed. 541 S. W. 2d 139 (1976). It concluded that the federal statute was intended “to
The critical statutory language reads as follows:
“[N]o attachment, injunction, or execution, shall be issued against such association or its property before final judgment in any suit, action, or proceeding, in any State, county, or municipal court.”
12 U. S. C. § 91 .
At least three different interpretations might be placed on that language. Most narrowly, because the rest of
Although there is support for the narrowest reading in the history of the statute, both that reading and the broadest literal reading have been rejected by this Court‘s prior cases. Before discussing those cases, we shall review the available information about the origin and revisions of the statute.
II
The National Currency Act of 1864 authorized the formation of national banks.3 Section 52 of that Act contained the first part of what is now
That prohibition was enacted in 1873 as § 2 of “An Act to require national Banks to restore their Capital when impaired, and to amend the National-currency Act.” 17 Stat. 603. If the prohibition had been added to § 52 of the 1864 Act,4 the
There is no direct evidence of the reason for the amendment. It was passed without debate, Cong. Globe, 42d Cong., 3d Sess., 870, 2117-2118 (1873), and does not seem to have been recommended by the administration.5 However, the historical context in which the bill was passed may offer some clue as to its purpose. We may take judicial notice of the historical fact that 1873 was the year of a financial panic. Moreover, a number of reported cases involved attachments against national banks and attempts by creditors to obtain a preference by attaching assets of an insolvent bank.6
When the first edition of the Revised Statutes of the United States was prepared in 1873, the prohibition against prejudgment writs was combined with the provision concerning preferential transfers and acts in contemplation of insolvency to
For the past century the prohibition against prejudgment writs has remained in the preferential-transfer section.
III
This Court has construed this prohibition only three times.8 In two cases, the Court held that assets of a national bank could not be attached; in the third, the Court held that property of a third party in the custody of the bank was subject to attachment by a creditor. None of the three involved a preliminary injunction.
Petitioner contends that the earliest of the three, Pacific Nat. Bank v. Mixter, 124 U. S. 721, “squarely controls” this case. Brief for Petitioner 13. Actually, however, the holding in Mixter was quite narrow. The question before the Court was “whether an attachment can issue against a national bank before judgment in a suit begun in the Circuit Court of the United States,” 124 U. S., at 724. Although the statutory prohibition was not directly applicable to federal suits, the federal courts were authorized to issue attachments only as provided by state law. The Court concluded:
“In our opinion the effect of the act of Congress is to deny the state remedy altogether so far as suits against national banks are concerned, and in this way operates as
well on the courts of the United States as on those of the States. Although the provision was evidently made to secure equality among the general creditors in the division of the proceeds of the property of an insolvent bank, its operation is by no means confined to cases of actual or contemplated insolvency. The remedy is taken away altogether and cannot be used under any circumstances.” Id., at 727.9
The statement in Mixter that the remedy of attachment cannot be used against a national bank “under any circumstances” makes it clear that the statutory prohibition is applicable to solvent as well as insolvent national banks. The financial circumstances of the bank are not of controlling importance. That Mixter did so hold was settled by this Court‘s most recent decision concerning this statute, Van Reed v. People‘s Nat. Bank, 198 U. S. 554:
“Since the rendition of that decision [Mixter] it has been generally followed as an authoritative construction of the statute holding that no attachment can issue from a state court before judgment against a national bank or its property. It is argued by the plaintiff in error that
the decision in the Mixter case, supra, should be limited to cases where the bank is insolvent; but the statement of facts in that case shows that at the time when the attachment was issued the bank was a going concern and entirely solvent so far as the record discloses. The language of Chief Justice Waite, above quoted, is broad and applicable to all conditions of national banks, whether solvent or insolvent; and there is nothing in the statute, which is likewise specific in its terms, giving the right of foreign attachment as against solvent national banks.” Id., at 559 (citations omitted).
Between Mixter and Van Reed, this Court rendered its only other decision in this area, Earle v. Pennsylvania, 178 U. S. 449. In that case, the Court held that an “attachment sued out against [a] bank as garnishee is not an attachment against the bank or its property, nor a suit against it, within the meaning of that section.” Id., at 454 (emphasis omitted). The holding in Earle forecloses a completely literal reading of the statute.10 It also demonstrates that the “under any circumstances” language in Mixter had reference to the financial condition of the bank, rather than to any possible case in which a prejudgment writ issues against a national bank.
Speaking for the Court in Earle, the first Mr. Justice Harlan stated that the ban on prejudgment writs must “be construed in connection with the previous parts of the same section” concerning preferential transfers. 178 U. S., at 453. This statement was consistent with the Court‘s earlier comment in Mixter:
“The fact that the amendment of 1873 in relation to attachments and injunctions in state courts was made a
part of § 5242 shows the opinion of the revisers and of Congress that it was germane to the other provision incorporated in that section [concerning preferential transfers], and was intended as an aid to the enforcement of the principle of equality among the creditors of an insolvent bank.” 124 U. S., at 726.11
Thus, the statute can be given its full intended effect if it is applied to actions by creditors of the bank. As always, “[t]he meaning of particular phrases must be determined in context“;12 read in context, the anti-injunction provision has only a limited scope.13
Petitioner argues, however, that the Court erred in Earle by reading the anti-attachment and preferential-transfer provisions together. It contends that the two were simply combined by mistake in the Revised Statutes. The burden is on petitioner, we think, to show that the present form of the statute—which, after all, constitutes the legal command of Congress—does not reflect congressional intent. If any mistake occurred, it seems at least as likely that the 1873
First, the historical evidence supports the revisers. It appears likely that when originally passed the provision barring prejudgment writs actually was aimed at preventing preferences by creditors. As noted earlier, the threat of insolvency was a serious national problem in 1873, and there had been a number of cases just before in which state courts had allowed creditors to obtain preferences in this manner. There does not seem to have been any similar problem with actions by noncreditors. It seems improbable, for instance, that there were many actions by mortgagors to enjoin foreclosures by national banks, because at that time national banks were allowed to accept mortgages only in very limited circumstances.15
Second, the anti-injunction provision itself bears strong signs that it was meant to have a limited scope. It is a familiar principle of statutory construction that words grouped in a list should be given related meaning.16 The word “injunction” is sandwiched in between the words “attachment” and “execution.” Both are writs used by creditors to seize bank property. On the other hand, the word “garnishment”
Third, petitioner completely fails to identify any national or local interests which its reading of the statute would serve. That reading would give national banks engaged in the business of making loans secured by mortgages on real estate a privilege unavailable to competing lenders. No reason has been advanced for assuming that Congress intended such disparate treatment. We cannot believe that Congress intended to give national banks a license to inflict irreparable injury on others, free from the normal constraints of equitable relief. It is true that Congress has consistently and effectively sought to minimize the risk of insolvency for national banks, and to protect bank creditors from disparate treatment. But those interests are fully vindicated by our construction of the Act.
Even though petitioner‘s reading of the Act can be supported by its text and by fragments of history, accepted principles of construction require that the provision in ques-
The judgment of the Supreme Court of Tennessee is affirmed.
It is so ordered.
MR. JUSTICE BLACKMUN, with whom THE CHIEF JUSTICE and MR. JUSTICE WHITE join, dissenting.
I fear that the Court in this case is driven by sentimentality to reach for what it perceives to be a “just result.” In so doing, in my view, it invades the domain of Congress.
The statute provides in unambiguous terms that “no attachment, injunction, or execution, shall be issued against such association or its property before final judgment in any suit, action, or proceeding, in any State, county, or municipal court.”
I
At its core, the opinion for the Court rests on a postulated connection between the provision barring prejudgment state writs and certain preceding language of
The provision at issue was originally enacted in 1873 as an amendment to § 57 of the National Currency Act of 1864. Section 57 originally read:
”And be it further enacted, That suits, actions, and proceedings, against any association under this act, may be had in any circuit, district, or territorial court of the United States held within the district in which such association may be established; or in any state, county, or municipal court in the county or city in which said association is located, having jurisdiction in similar cases: Provided, however, That all proceedings to enjoin the comptroller under this act shall be had in a circuit, district, or territorial court of the United States, held in the district in which the association is located.” 13 Stat. 116.
And the 1873 amendment to this section provided:
“That section fifty-seven of said act be amended by adding thereto the following: ’And provided further, That no attachment, injunction, or execution shall be issued against such association, or its property, before final judgment in any such suit, action, or proceeding in any State, county, or municipal court.‘” Act of Mar. 3, 1873, § 2, 17 Stat. 603.
Thus, as originally enacted by the Congress, the provision
As it happened, the amendment of 1873 was separated from the remainder of § 57 in a subsequent compilation of the federal statutes. At the hands of the revisers, the provision barring prejudgment writs found its current resting place as an addendum to what had been § 52 of the National Currency Act of 1864, a section dealing with preferential transfers. Rev. Stat. § 5242 (1874). The Court seizes upon the revisers’ accidental reconstruction to limit the amendment‘s scope. It justifies its action by suggesting that Congress really intended to amend § 52 rather than § 57. The Court states: “If any mistake occurred, it seems at least as likely that the 1873 amendment was incorrectly added to § 57 as that the revisers, that very year, made an error which has gone undetected for over a century.” Ante, at 321-322. Thus, the Court by sleight-of-hand transforms a simple clerical error into an error made by Congress in the original placement of the amendment. This attempt to refashion the legislative history will not stand scrutiny.
First, although Congress in 1873 could have amended either § 57 or § 52, there is ample internal evidence that the addition of the amendment of § 57 reflects its considered choice. There can be no question, as the Court seems to acknowledge, ante, at 322 n. 14, that the reference to § 57 in the 1873 amendment was not a typographical error. The amendment was in ”And provided further” form; § 57, unlike § 52 of the 1864 statute, already contained one proviso and so the use of “further” was grammatically proper only with respect to § 57. And the broad reading that is compelled by the language of the amendment attaches logically to the other provisions of § 57. The body of § 57 established venue “in
Second, the Court‘s confidence in the reliability of the compilation is misplaced. It is hard to believe that the revisers, faced with the task of compiling for the first time the mass of congressional legislation from 1789 to 1873, could have performed the delicate task of determining what Congress “really” intended in adopting the 1873 amendment and of “correcting” its error. It is far more likely that the revisers’ “placement” of the provision governing prejudgment writs was just one of the many errors that marred the first compilation. See M. Price & H. Bitner, Effective Legal Research 29 (3d ed. 1969); Dwan & Feidler, The Federal Statutes—Their History and Use, 22 Minn. L. Rev. 1008, 1014 (1938). Indeed the portion of § 57 dealing with venue in state courts was totally omitted in the first edition of the Revised Statutes and was rescued by inclusion in the second edition at the end of a section dealing with usurious interest rates. Act of Feb. 18, 1875, 18 Stat. 320; Rev. Stat. § 5198 (1878). Just as the Court would not, and has not, construed the venue provision established in § 57 as limited to cases involving usurious interest rates,1 so, too, it should not in good conscience construe the amendment to § 57 as limited to cases involving bank insolvency and preferential transfers.
If any doubts remain as to the intended scope of the provision, they should be settled by a century of consistent interpretation by this Court and other courts. The Court first construed the statute in 1888 in Pacific Nat. Bank v. Mixter, 124 U. S. 721. The Court quotes the following sentence from that opinion, ante, at 320-321:
“The fact that the amendment of 1873 in relation to attachments and injunctions in state courts was made a part of § 5242 shows the opinion of the revisers and of Congress that it was germane to the other provision incorporated in that section, and was intended as an aid to the enforcement of the principle of equality among the creditors of an insolvent bank.” 124 U. S., at 726.
Since the Court confines its quotation to this solitary sentence, it is able to draw from Mixter the proposition that “the statute can be given its full intended effect if it is applied to actions by creditors of the bank.” Ante, at 321. In its original context, however, the sentence was intended to explain how it happened that the revisers misplaced the amendment and that Congress acquiesced. The sentences immediately following the Court‘s carefully selected single-sentence quotation are:
“But however that may be, it is clear to our minds that, as it stood originally as part of § 57 after 1873, and as it stands now in the Revised Statutes, it operates as a prohibition upon all attachments against national banks under the authority of the state courts. That was evidently its purpose when first enacted, for then it was part of a section which, while providing for suits in the courts of the United States or of the State, as the plaintiff might elect, declared in express terms that if the suit was begun in a state court no attachment should issue until after judgment. The form of its reenactment
in the Revised Statutes does not change its meaning in this particular. It stands now, as it did originally, as the paramount law of the land that attachments shall not issue from state courts against national banks, and writes into all state attachment laws an exception in favor of national banks. Since the act of 1873 all the attachment laws of the State must be read as if they contained a provision in express terms that they were not to apply to suits against a national bank.” 124 U. S., at 726.
As this passage conclusively demonstrates, Mixter hardly provides the support the Court attempts to derive from it. And the revisers’ error, far from remaining “undetected for over a century,” as the Court states, ante, at 322, was exposed and overcome in the very first case in which the Court examined the statutory provision. The Mixter court gave the provision the broad scope that Congress intended.
The Court next considered the statute in Earle v. Pennsylvania, 178 U. S. 449 (1900). A national bank was holding a deposit of a customer who happened to be a defendant in an action that otherwise had no connection with the bank. The Court allowed the plaintiff in the action against the defendant-customer to attach the deposit, but only because “an attachment sued out against the bank as garnishee is not an attachment against the bank or its property, nor a suit against it, within the meaning of [§ 5242].” Id., at 454. The bank itself had no interest in the fund, and it was immaterial to it whether the deposit was considered the property of the plaintiff or of the defendant. The attachment thus was allowed because the bank was merely a stakeholder. Earle offers no suggestion of a distinction between debtors and creditors. In fact, the Court dissolved that portion of the attachment that ordered the sale, subject to the bank‘s interest, of certain securities the defendant had pledged to the
The most recent case, Van Reed v. People‘s Nat. Bank, 198 U. S. 554 (1905), is consistent with this unbroken theme. The Court quoted extensively from Mixter, and summarized that case‘s “authoritative construction of the statute” in simple and unambiguous terms: “[N]o attachment can issue from a state court before judgment against a national bank or its property.” 198 U. S., at 559. The Court specifically held, in vivid contrast to the intimations of the Court‘s opinion today, that the provision was not limited to cases in which the solvency of the bank was threatened. Ibid.
Not surprisingly, in light of the consistent and expansive interpretation of the statutory provision established by this Court‘s cases, decisions of other courts are also consistent; they hold with near unanimity that all prejudgment writs issued by state courts and directed at the property of national banks cannot stand. See, e. g., Robinson v. First Nat. Bank of Plainview, 45 F. 2d 613 (ND Tex. 1930), aff‘d on other grounds, 55 F. 2d 209 (CA5 1932); Garner v. Second Nat. Bank, 66 F. 369 (CC SDNY 1895), appeal dismissed, 79 F. 995 (CA2 1896); First Nat. Bank v. Superior Court, 240 Cal. App. 2d 109, 49 Cal. Rptr. 358, cert. denied, 385 U. S. 829 (1966); National Bank of Savannah v. Craven, 147 Ga. 753, 95 S. E. 246 (1918); Meyer v. First Nat. Bank, 10 Idaho 175, 77 P. 334 (1904); Chesapeake Bank v. First Nat. Bank, 40 Md. 269 (1874); Freeman Mfg. Co. v. National Bank of the Republic, 160 Mass. 398, 35 N. E. 865 (1894);2 First Nat. Bank v. La Due, 39 Minn. 415, 40 N. W. 367 (1888).
In short, in over a century of the application of the statute by this Court and others, no distinction has been drawn between suits by debtors and suits by creditors, and no limitation to bank insolvency has been imposed. And, of course, Congress’ continued acquiescence in this interpretation of the statute only reaffirms the correctness of the long-settled construction.
III
Even if the legislative history in the cases were less clear, I could not accept the distinction the Court today draws between applications for prejudgment writs by creditors and those by debtors. If the purpose of the provision is to protect the bank‘s property, no such distinction logically follows. Surely, it must be acknowledged that an injunction interfering with a bank‘s security interest in mortgaged property is as much an action against its assets as an attachment of its funds or property. And a debtor‘s injunction directed at a bank‘s security interest in a building is just as harmful as an attachment of bank property of comparable value by a creditor.3
I suspect that the only justification for the Court‘s decision today is its belief that the statute is unfair in its application. It should be noted in that regard, however, that any unfairness can be traced at least as much to the Tennessee procedure governing foreclosure as to the federal provision barring prejudgment writs in state courts. For if Tennessee law required judicial approval for a foreclosure, any perceived need for the instant preliminary injunction would be eliminated. But even if any unfairness were attributed solely to the federal law, the decision whether to alter the statute remains with the Congress, not with this Court. Since I do not feel free to amend the statute, I respectfully dissent.
Notes
“All transfers of the notes, bonds, bills of exchange, or other evidences of debt owing to any national banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valuable thing for its use, or for the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void; and no attachment, injunction, or execution, shall be issued against such association or its property before final judgment in any suit, action, or proceeding, in any State, county, or municipal court.” (Emphasis added.)
Radzanower v. Touche Ross & Co., 426 U. S. 148 (1976); Mercantile Nat. Bank v. Langdeau, 371 U. S. 555, 558-562 (1963).“It was further said that if the power of issuing attachments has been taken away from the state courts, so also is the power of issuing injunctions. That is true. While the law as it stood previous to the act of July 12, 1882, 22 Stat. 163, c. 290, § 4, gave the proper state and federal courts concurrent jurisdiction in all ordinary suits against national banks, it was careful to provide that the jurisdiction of the federal courts should be exclusive when relief by attachment or injunction before judgment was sought.” 124 U. S., at 727.
This was simply dictum, as no injunction was involved in Mixter. Moreover, in Mixter the Court was not presented with a situation in which the requested relief related to assets not belonging to the bank. The Mixter dictum is therefore not controlling now that “the very point is presented for decision.” Cohens v. Virginia, 6 Wheat. 264, 399. See generally Barrett v. United States, 423 U. S. 212, 223.