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MID-WEST N.B. OF LAKE FOREST v. COMPTROLLER OF CUR.

June 14, 1968

MID-WEST NATIONAL BANK OF LAKE FOREST, ILLINOIS, A NATIONAL BANKING ASSOCIATION, PLAINTIFF,
v.
COMPTROLLER OF THE CURRENCY OF THE UNITED STATES OF AMERICA (ADMINISTRATOR OF NATIONAL BANKS); THE FIRST NATIONAL BANK OF LAKE FOREST, ILLINOIS, A NATIONAL BANKING ASSOCIATION; CHICAGO AND NORTHWESTERN RAILWAY CO., A RAILROAD CORPORATION; AND THE CITY OF LAKE FOREST, ILLINOIS, A MUNICIPAL CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Marovitz, District Judge.

CROSS MOTIONS FOR SUMMARY JUDGMENT

This action, brought by the Midwest National Bank of Lake Forest, Illinois, challenges an order of the Comptroller of the Currency, dated July 13, 1967, approving the application of the First National Bank of Lake Forest to establish a detached drive-up banking facility in the depot of the Chicago and Northwestern Railway Company, in Lake Forest. Named as defendants are the Comptroller of the Currency (in his capacity as Administrator of National Banks), the First National Bank of Lake Forest, the Chicago & Northwestern Railway Company, and the City of Lake Forest.

The parties have filed cross-motions for summary judgment. They have submitted affidavits, documents, the administrative record before the Comptroller, and voluminous briefs in support of their respective motions.

The application was assigned to a national bank examiner and notice was sent to the competitor banks in the area, including plaintiff. Plaintiff filed a written protest, noting the Illinois prohibition against branch banking (Chap. 16 1/2, § 106, Ill.Rev.Stat. 1967), and arguing that the proposed facility did not comply with Illinois law. A hearing was held at plaintiff's request on May 17, 1967, before the Regional Administrator of National Banks, and subsequently the Comptroller approved the application.

This suit was filed a month later to challenge the order of approval, and to seek an injunction restraining the defendant Bank from locating its facility on the proposed site.

Although branch banking is prohibited in Illinois, there are certain exceptions to the rule. Chap. 16 1/2, § 102, Ill.Rev.Stat., permits a facility adjacent and connected to the main banking facility provided it complies with certain conditions,*fn1 and that section additionally allows a facility established and maintained in accordance with § 105(15).*fn2

Subsection (15), which was adopted at a referendum election and became effective January 1, 1967, provides for a species of detached drive-up facilities. The disputed facility in this case is alleged to comply with the requirements of subsection (15), and the Comptroller's approval, as is necessary, was based upon his belief that the facility was in conformity with Illinois law. 12 U.S.C. § 36(c)(1); First National Bank of Logan v. Walker Bank & T. Co., 385 U.S. 252, 87 S.Ct. 492, 17 L.Ed.2d 343 (1966).

There is no question that the plaintiff, as a competitor subject to potential competitive harm from the proposed facility, has standing to pursue this action. 5 U.S.C. § 702 (1967); First National Bank of Smithfield v. Saxon, 352 F.2d 267 (4th Cir. 1965); Leuthold v. Camp, 273 F. Supp. 695, 697 (D.Mont. 1967). Jurisdiction is proper under the Administrative Procedure Act, 5 U.S.C. § 1009, and under 28 U.S.C. § 1348, 1394.

The questions in issue are essentially legal ones, calling for a determination whether the proposed facility complies with the applicable state law. Although the Comptroller contends review of his actions is limited by the "substantial evidence" test, or to correct an abuse of his discretion, the court may review his actions to be certain they comport with Illinois law. 5 U.S.C. § 706(2)(A). Since he may only approve an Illinois facility which is permitted under Illinois law, it follows that any action not complying therewith must be reversed.

Determinations of such legal issues do not involve the exercise of discretion, unlike issues within the Comptroller's peculiar expertise in the field of banking. Since legal issues are here in dispute, the Court, in effect, must review them de novo, paying due regard to any factual determinations made by the Comptroller in reaching his decision, and the record which was before him.

There are three issues to be resolved. First, plaintiff contends that the distance requirements of subsection (15) are not met. Insofar as pertinent, they provide:

  "(a) No facility shall be more than 1500 feet from
  the main banking premises of the maintaining bank.
  (b) No facility shall be closer than 600 feet to any
  then existing main banking premises of another bank
  unless * * * [not pertinent here]
  [(d)] The distance referred to in this subsection
  (15) shall be measured in a straight line from the
  nearest point of one premises to the nearest point of
  the other premises, the word `premises' being deemed
  to mean the boundaries of the real estate on which
  the facility or the maintaining bank is located, as
  the case may be, and the areas contiguous thereto
  which the bank has the exclusive right as owner or
  lessee to use or maintain for egress from or ...

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