agency, additional office, or any branch place of business located in any State or Territory of the United States or in the District of Columbia at which deposits are received, or checks paid, or money lent. "(g) This section shall not be construed to amend or repeal section 25 of the Federal Reserve Act, as amended, authorizing the establishment by national banking associations of branches in foreign countries, or dependencies, or insular possessions of the United States. "(h) The words 'State bank,' 'State banks,' 'bank,' or banks,' as used in this section shall be held to include trust companies, savings banks, or other such corporations or institutions carrying on the banking business under the authority of State laws." One of the conditions precedent to the establishment of a branch bank by a national banking association is contained in subsection (c), namely, "if such establishment and operation are at the time permitted to State banks by the law of the State in question." We must, therefore, look to the laws of the State in which the proposed branch is to be located to ascertain whether such laws permit the establishment of branches by State banks. Giving consideration to the first case submitted, that of the establishment of a branch bank in the State of Pennsylvania, I find the Act of the General Assembly of Pennsylvania, approved April 27, 1927 (Laws of Pennsylvania 1927, p. 400), prohibits the establishment of branch banks in that State with certain exceptions. The Act reads in part as follows: That no bank, banking company, banking institution, savings bank, trust company, title insurance company, or other corporation now or hereafter authorized to received deposits or to carry on a banking or trust business, whether incorporated under the laws of Pennsylvania or of any other State or of the United States of America, and no individual, partnership, or unincorporated association carrying on a banking business, shall establish, maintain, or operate, either directly or indirectly, any branch bank, branch office, agency, suboffice, subagency, or branch place of business, within the Commonwealth of Pennsylvania, for the transaction of any part of its, his, or their business, but all of the business of such corporations, individuals, partnerships, and unincorporated associations shall be carried on solely and exclusively at its, his, or their principal place of business. This act shall not apply to branches, suboffices, and subagencies established, or for which locations had been purchased or leased by deed recorded or leases actually delivered prior to March first, one thousand and nine hundred and twenty-seven; or to branches, suboffices, and subagencies which resulted from consolidations effective prior to April first, one thousand nine hundred and twenty-seven, by banks, banking companies, banking institutions, savings banks, trust companies, title insurance companies, or other corporations authorized to receive deposits, or carry on a banking or trust business, whether incorporated under the laws of Pennsylvania or of any other State or of the United States of America, * This Act shall not apply to any bank, banking company, banking institution, savings bank, trust company, title insurance company, or other corporation, now or hereafter authorized to receive deposits or carry on a banking or trust business, whether incorporated under the laws of Pennsylvania or of any other State or of the United States of America, or to any individual, partnership, or unincorporated association carrying on a banking business, which has its, his, or their principal place of business in a city, borough, or township within the Commonwealth of Pennsylvania, in which one or more national banking associations, incorporated under the laws of the United States of America, was, on March first, one thousand nine hundred and twenty-seven operating one or more branch banks, branch offices, agencies, suboffices, subagencies, or branch places of business, for the transaction of any part of its business; and any such corporations, individuals, partnerships, and unincorporated associations may hereafter establish, subject to the approval of the Secretary of Banking, and thereafter maintain and operate branch banks, branch offices, agencies, suboffices, subagencies, and branch places of business for the transaction of any part of its, his, or their business, but only within the corporate limits of the city, borough, or township in which its principal office is located and in which such national banking association was, on March first, one thousand nine hundred and twenty-seven, operating one or more branch banks, branch offices, agencies, suboffices, subagencies, or branch places of business. * The exception referred to is that in any city in the State of Pennsylvania where, on March 1, 1927, a national banking association was operating a branch, a State bank or other banking association may be permitted to establish and operate a branch. This exception is for the purpose of putting State banks on a parity with national banking associations in those cities where national banking associations have acquired and are operating branches. In your letter you state that on March 1, 1927, national banking associations were operating branches in the following cities in Pennsylvania: Altoona, Chester, Johnstown, Philadelphia, Reading, McKees Rocks. It is also stated that the city in which it is proposed to establish a branch is not one of the above-named cities. With the above noted exception, the Act of the General Assembly of Pennsylvania, approved April 27, 1927, specifically forbids branch banking within that State. The condition contained in subsection (c) of section 7 of the Act of February 25, 1927, supra, applies to the case submitted and, accordingly, the establishment of the proposed branch bank in the State of Pennsylvania is unauthorized. The contention is put forward that two State banks may merge under the general law of the State authorizing consolidation, enacted May 3, 1909 (P. L. 1909, p. 408), and that the merged corporation, by virture of the general provisions of this statute which vest in it "all the property, rights, franchises, and privileges" of the constituent companies may thereafter, and notwithstanding the prohibition against branch banking contained in the later Act of April 27, 1927 (P. L. 1927, p. 400), continue the offices formerly occupied by each of the constituent companies. This construction of the State statutes is at best extremely doubtful. It is supported by the opinion of a Deputy Attorney General of the State of Pennsylvania, enclosed in your letter, but no judicial authority is cited. The argument proceeding upon the premise that consolidated State banks may, pursuant to this opinion, continue the offices of their constituent merged corporations as separate branches, concludes that national banking associations with which State banks have been consolidated may do likewise under the provisions of Revised Statutes 5155 (c), as amended by Act of February 25, 1927, c. 191 (44 Stat. 1224, 1228). While the premise is doubtful, the conclusion is clearly unsound because the latter section has reference, not to special privileges extended to consolidated banks but to permission to establish and operate branches extended generally to State banks, whether consolidated with other State banks or not. Furthermore, Revised Statutes 5155 (b), as amended, defines the conditions upon which branches may be retained and operated by national banking associations after their consolidations with State banks, and it is upon this section that the right of a consolidated national banking association to continue in oper ation the offices of its constituent corporations as branches of its business must depend. The section reads as follows: SEC. 5155. ** * (b) If a State bank is hereafter converted into or consolidated with a national banking association, or if two or more national banking associations are consolidated, such converted or consolidated association may, with respect to any of such banks, retain and operate any of their branches which may have been in lawful operation by any bank at the date of the approval of the Act. There is nothing in this language which authorizes the retention and operation of the principal office of the constituent State bank as a branch of the consolidated national banking association, and I am advised by the Comptroller of the Currency that it has not been the practice of his office to permit this to be done. Nor can the limitations of the statute be evaded by calling the former offices of the national banking association and the State bank with which it is merged two principal offices. After consolidation one of the two must be the "main" or principal office and the other a branch bank or branch office of the consolidated association. In this connection attention is invited to subsection (f) of section 7 of the Act of February 25, 1927, supra, which defines the term "branch." Under that definition any place of business maintained by a national banking association where deposits are received, or checks paid, or money lent, other than the main office of the bank, must be considered a branch thereof. I am. therefore, of the opinion that the Comptroller is without authority to grant the first application referred to in your letter. Your second question involves the application of a national banking association located in the State of Georgia, in a city of more than fifty thousand but less than eighty thousand population, to establish a branch in that city. Subsection (c) of section 7 of the Act of February 25, 1927, supra, applies to this application and unless the laws of the State of Georgia permit the establishment and operation of branches by State banks none can be established within that State by a national banking association. Upon examining the laws of the State of Georgia I find that section 1 of the Act approved August 25, 1927, Laws of Georgia, 1927, p. 195, 197, contains the following provision: "After this Act takes effect, no new or additional branch banks shall be established." However, by subsequent legislation, the General Assembly of the State of Georgia enacted two acts authorizing the establishment of branch banks in certain cities within that State. The first, approved July 20, 1929 (Sec. 2366 (3a) of the 1930 Supplement to the Georgia Code), provides: Banks chartered under the laws of this State, and having their principal office in a city now or hereafter having a population of not less than eighty thousand or more than one hundred and twentyfive thousand, may establish branch banks in the city in which its principal office is located. The Act of August 17, 1929 (See 2366 (3b) 1930 Supplement of the Georgia Code), provides: Banks chartered under the laws of this State, and having their principal office in a municipality now or hereafter having a population of not less than 200,000 according to the last census of the United States, or any future census of the United States, may establish branch banks in the municipality in which its principal office is located. The Attorney General for the State of Georgia, in an opinion dated November 26, 1929, a copy of which was enclosed with your letter, has held that there is no conflict between the two Acts last quoted, and that the latter does not repeal the earlier one. Whether it does or not, it is entirely clear that the laws of Georgia do not permit the establishment of branches by State banks in cities having a population of less than 80,000. Since subsection (c) of section 7 of the Act of February 25, 1927, supra, permits the establishment by a national banking association of branches within the city or town in which the association is located only "if such establishment and operation are at the time permitted to State banks by the laws of the State in question," it follows that the application of the national banking association of Georgia to establish a branch within a city having a population of less than 80,000 must be denied. Respectfully, THOMAS D. THACHER, To the SECRETARY OF THE TREASURY. |