No.

10-4117
IN THE UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT
PENI COX, an individual,
Plaintiff-Appellant,
v.
RECONTRUST COMPANY; BANK OF AMERICA HOME LOANS
SERVICING; BANK OF AMERICA; NEW LINE MORTGAGE, DIVISION
OF REPUBLIC MORTGAGE HOME LOANS; MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC.,
Defendants-Appellees.
On Appeal from an Interlocutory Order of the United States ,District
Court for the District of Utah, No. 2:10-CV-00492-CW-SA (Waddoups, J.)
BRIEF OF AMICUS CURIAE STATE OF UTAH
IN SUPPORT OF APPELLANT AND REVERSAL
Jerrold S. Jensen
Assistant Attorney General
MARKL. SHURTLEFF
Utah Attorney General
160 East 300 South, Fifth Floor
P. O. Box 140857
Salt Lake City, Utah 84114-0857
Telephone: (801) 366-0353
Attorneys for Amicus Curiae State of Utah
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TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 111
INTEREST OF AMICUS ............................................ 1
BACKGROUND ................................................... 2
ARGlJMENT ...................................................... 4
1. THE NATIONAL BANK ACT APPLIES ONLY "WHEN NOT IN
CONTRAVENTION OF STATE OR LOCAL LAW" ................ 4
A. The U.S. Supreme Court Has Cited § 92a as an Example
of the National Bank Act Subjecting National Banks to State Law. 4
B. Section 92a(a) and (b) of the National Bank Act. ............... 5
C. The Meaning of Competitive Equality and Its Application to § 92a. 7
D. Where a Bank "Acts," Not Where the Bank is "Located," Determines
Which State's Laws Apply ................................. 8
E. OCC Regulations Are Consistent with the OCC's Interpretive Letter
No.695 ................................................ 13
II. APPLICATION OF SECTION 92a OF THE NATIONAL BANK
ACT TO THE UTAH TRUSTEE STATUTES ...................... 14
CONCLUSION ................................................... 15
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ADDENDA
ADDENDUM 1 - OCC Interpretive Letter No. 695 entitled "Authority of a
National Bank to Conduct Fiduciary Activities Nationwide Through Trust
Offices in Various States." 1996 WL 187825
ADDENDUM 2 - Utah Code §§ 57-1-21(3), 57-1-23
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TABLE OF AUTHORITIES
Page
CASES
Barnettv. Nelson, 517U.S. 25 (1996) .................................. 4
Blaney v. Florida Nat'l Bank at Orlando, 357 F.2d 27 (5
TH
Cir. 1966) ......... 8
Cuomo v. The Clearing House Association, L.L.c., 129 S.Ct. 2710 (2009) ..... 7
First Nat'l Bankv. Dickinson, 396 U.S.122 (1969) ........................ 7
First Nat'l Bank a/Logan v. Walker Bank and Trust Co., 385 U.S. 252 (1967) .. 7
Kleinsmith v. Shurtleff, 571 F.3d 1033 (10th Cir. 2009) ................... 3,4
New Hampshire Bankers Assn v. Nelson, 460 F.2d 307 (lst Cir. 1972) ......... 8
. th .
Oklahoma v. Pope, 516 F.3d 1214 (10 Cir.2008) ........................ 2
St. Louis County Nat'l Bankv. Mercantile Trust Co., N A., 548 F.2d 716 (8
th
Cir.
1976) ............................................................ 8
CONSTITUTIONAL PROVISIONS, STATUTES, AND RULES
Utah Code § 57-1-21 ............................................... 15
Utah Code § 57-1-21(3) .......................................... 1, 14
Utah Code § 57-1-23 .......................................... 1, 14, 15
12 C.F.R. § 9.7(e) ................................................. 13
12 U.S.C. § 92a ......... ; .............. 4,5,6,7,8,9, 10, 11, 12, 13, 14, 15
12 U.S.C. § 92a(a) ........................................ 1,5,6,10,15
iii
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12 U.S.C. § 92(b) ........................................... 5, 6 ~ 10, 15
28 U.S.C. § 2403(b) ............... ; ................................. 2
acc Interpretive Letter No. 695 ........................ 6, 9, 10, 11, 12, 13
IV
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INTEREST OF AMICUS
The State of Utah has an interest in protecting the laws of the State in
eliminating unlawful foreclosures, and in keeping its citizens in their homes.
Because of companies like ReconTrust, the Utah Legislature has restricted who
may conduct foreclosures of real estate trust deeds. ReconTrust Co., N.A., is a
non-depository national bank initiating approximately 4,000 home foreclosures in
Utah each year/ in violation of Utah law.
Under Utah law, trustees of trust deeds with a "power of sale" must be
members of the Utah State Bar or title insurance companies. Utah Code §§ 57-1-
21(3), 57-1-23. (See Addendum 1.) ReconTrust is neither. It justifies its
foreclosure actions in Utah by claiming that Utah's statute dealing with
qualifications of trustees is preempted by the Supremacy Clause of the U.S.
Constitution through the National Bank Act ("NBA"). And the District Court so
held.
But the section of the NBA governing fiduciary activities of national banks
specifically states that national banks may exercise fiduciary powers "when not in
contravention of State or local law." 12 U.S.C. § 92a(a). Clearly, the Supremacy
ICalculated based on number of properties ReconTrust lists on its website
for Utah. See counties.aspx?state=Utah.
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Clause of the U.S. Constitution does not preempt State law when Congress has
explicitly stated that federal law is not to preempt State law.
Utah's sole interest in this appeal is the preemption of State law issue
involving ReconTrust. Whether Judge Waddoups rightly or wrongly dissolved the
State court preliminary injunction, whether he retains jurisdiction of the on-going
case, etc., are not matters of concern to the State and will not be addressed herein.
Upholding Utah law is a matter of great concern to the State.
BACKGROUND
Defendants-Appellees are asserting that the Supremacy Clause of the U.S.
Constitution preempts the constitutionality of Utah law. As such the Attorney
General of the State of Utah was entitled to receive notice of the challenge
pursuant to 28 U.S.C. § 2403(b) and Federal Rules of Civil Procedure 5.1. No
notice was provided to the Attorney General either by Defendants-Appellees or
the District Court. As a result of not being notified, the State of Utah believes the
matter should be remanded to the District Court to give the Attorney General of
the State of Utah an opportunity to be heard on the matter, consistent with this
Court's ruling in Oklahoma v. Pope, 516 F.3d 1214 (lOth Cir. 2008).
It is important to understand the context in which Judge Waddoups issued
the ruling that is being appealed here, and to understand the shortness of time
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under which the events unfolded - which probably also explains why the Attorney
General of the State of Utah was never given notice. Plaintiff below had obtained
a preliminary injunction in State court against ReconTrust conducting any
foreclosures in the State of Utah. A Notice of Removal was filed with the District
Court on May 26, 2010. Doc. 1. A Motion to Vacate the Preliminary Injunction
was filed June 4, 2010. Doc. 17. A Motion for an Expedited Hearing was filed
June 6, 2010. Doc. 23. The hearing was held on June 10,2010 and the Order
being appealed from here was issued June 11, 2010. Given the shortness of time -
a total of one week from the time the Motion to Vacate was filed to an Order by
the Court - resulted in the issues involving preemption by the NBA being dealt
with in a very cursory fashion.
A history of the legislative amendments leading up to the current Utah
statute governing trustee qualifications can be found in Kleinsmith v. Shurtleff,
571 F.3d 1033, 1036-37 (lOth Cir. 2009). In short, beginning in 2001 the Utah
legislature enacted legislation to respond to a growing problem in the State.
Trustees, like ReconTrust, were sending Notices of Default and Trustee's Sale to
homeowners, stating that their mortgage is in default, and their home will be
auctioned for sale. Like ReconTrust, these trustees would provide a telephone
number in their notices, but when called the number immediately went to a
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recording with no opportunity for the homeowner to speak to a real person. To
resolve this problem, the Utah legislature enacted a statute restricting the "power
of sale" to trustees who are either members of the Utah State Bar or title insurance
companies with either a place or office in the State. The purpose was to provide
the homeowner with an opportunity to meet with the trustee face-to-face. It took
three attempts by the legislature to get the matter right, but the final language -
which is the current statute - was upheld by this Court in Kleinsmith. This Cpurt
said "[m]aking it easier for Utahns to meet with trustees, who playa pivotal role in
nonjudicial foreclosures, is a legitimate State interest." Id. at 1048.
The issue presented here is not the same as that presented in Kleinsmith.
But the observation by this Court that making it easier for citizens of the State to
meet with a trustee foreclosing on their property is a "legitimate state interest"
underlies the basic reason the State is adamant about upholding the Utah statute.
ARGUMENT
I. THE NATIONAL BANK ACT APPLIES ONLY "WHEN NOT IN
CONTRAVENTION OF STATE OR LOCAL LAW"
A. The U.S. Supreme Court Has Cited § 92a as an Example of the
National Bank Act Subjecting National Banks to State Law.
In a recent case dealing with the preemption of State law by the National
Bank Act, the U.S. Supreme Court cited 12 U.S.c. § 92a as an example in which
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Congress has granted an "explicit power with an explicit statement that the
exercise of that power is subject to State law." Barnett v. Nelson, 517 U.S. 25, 34
(1996). Two examples were cited: (1) branching, and (2) authorization of
fiduciary powers. Id. at 34. Then, after citing cases that have allowed for State
regulation of national banks - without explicit language in the NBA authorizing
such - the Court said:
[T]hese cases [do not] control the interpretation of
federal banking statutes that accompany a grant of an
explicit power with an explicit statement that the
exercise of that power is subject to state law. See, e.g.,
12 U.S.C. § 36(c) (McFadden Act) (authorizing national
banks to operate branches, but only where state law
authorizes state banks to do so); § 92a(a) (Comptroller of
Currency may grant fiduciary powers "by special permit
to national banks applying tJ1erefor, when not in
contravention of State oflocallaw"). Not surprisingly,
this Court has interpreted those explicit provisions to
mean what they say.
Id. (Citations omitted.) Thus, the U.S. Supreme Court has specifically identified
§ 92a of the NBA as a section that grants national banks authority to exercise
certain powers subject to State law.
B. Section 92a( a) and (b) of the National Bank Act.
Section 92a(a) of the NBA reads:
The Comptroller of the Currency shall be authorized and
empowered to grant by special permit to national banks
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applying therefore, when noUn contravention of State or
local law, the right to act as trustee, executor, .
administrator, registrar of stocks and bonds, guardian of
estates, assignee, receiver, committee of estates of
lunatics, or in any other fiduciary capacity in which State
banks, trust companies, or other corporations which
come into competition with national banks are permitted to act
under the laws of the State in which the national bank is
located.
(Emphasis added.) Section 92a(b) reiterates the same thing:
Whenever the laws of such State authorize or permit the
exercise of any or all of the foregoing powers by State
banks, trust companies, or other corporations which
compete with national banks, the granting to and the
exercise of such powers by national banks shall not be
deemed to be in contravention of State or local law
within the meaning of this section.
(Emphasis added.) The italicized portion of the above quoted statute is what the
Office of the Comptroller of the Currency ("OCC") calls the "state law condition."
OCC Interpretive Letter, No. 695, 1996 WL 187285 *2. It is not exactly language
one would be citing for preemption - and ReconTrust hasn't. Though they make
numerous references to §92a(a) throughout their brief and quote portions of it
twice, Appellees' Br. at 34 & 39, they never set out the entirety of either § 92a(a)
and (b), and they never provide the Court with the actual language of the "state
law condition." That language is, however, the critical language upon which the
entire issue of preemption of fiduciary powers of national banks pivots.
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C. The Meaning of Competitive Equality and Its Application to §
92a.
ReconTrust persuaded the court below of the complete preemptive force of
the NBA. But such a position is not consistent with 150 years of banking law in
this country. As the Supreme Court recently noted, "[n]o one denies that the
National Bank Act leaves in place some state substantive laws affecting banks."
Cuomo v. The Clearing House Association, L.L.c., 129 S.Ct. 2710, 2717,;,18
(2009). In what the courts call "competitive equality" State and national banks in
certain specified areas are to compete on an equal basis. This is done by having
both State and national banks being subject to the State law. As Chief Justice
Warren Burger put it:
The policy of competitive equality is ... firmly
embedded in the statutes governing the national banking
system. The mechanism of referring to state law is
simply one designed to implement that congressional
intent and build into the federal statute a self-executing
provision to accommodate to changes in state regulation.
First Nat 'I Bankv. Dickinson, 396 U.S.122, 133 (1969). See also First Nat 'I Bank
of Logan v. Walker Bank and Trust Co., 385 U.S. 252,261 (1967).
Further, every court that has ruled on the application of State law to the
fiduciary powers of national banks - except the ruling by the Utah federal district
court on appeal here - has held that competitive equality applies to § 92a. The
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Eighth Circuit noted "[t]he policy of competitive equality was incorporated into
section 92a. . .. Therefore, to allow [a national bank] to accomplish what a state
bank could not would frustrate the purpose of section 92a." St. Louis County Nat 'I
Bankv. Mercantile Trust Co., N A., 548 F.2d 716,720 (8
th
Cir. 1976). And in
Blaney v. Florida National Bank at Orlando, 357 F.2d 27,30 (1966), the Fifth
Circuit stated that it "is obvious from the most cursory reading of ... 12 U.S.C. §
92" that federal fiduciary law places "national banks on an equal competitive basis
with state banks and trust companies in the state where the national bank is
situated." See also New Hampshire Bankers Assn v. Nelson, 460 F.2d 307 (1 st Cir.
1972).
D. Where a Bank "Acts," Not Where the Bank is "Located,"
Determines Which State's Laws Apply.
ReconTrust takes the position that because it does not have a physical office
or building in Utah it is not located in Utah and, therefore, Utah law does not
apply to the foreclosures it conducts. Rather, it claims that the State laws that
apply by virtue of § 92a are the laws of the State where the national bank is
"located." Appellees' Br. at 34. Because ReconTrust is headquartered in
California, ReconTrust claims California law applies to all its foreclosures? In
2But its trust office doing foreclosures in Utah is located in Texas.
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support of that position it cites several OCC Interpretative Letters which state that
a national bank may "market" its product in States other than where it has a
physical office, and such marketing does not require the national bank to comply
with the State law of the State in which it is doing the marketing. Appellees Br. at
34-35, 40. The State of Utah takes no issue with the statement oflaw in the OCC
Interpretive Letters cited by ReconTrust, but "fiduciary" activities are not the same
as "marketing" activities, and the law governing such is not the same either.
The OCC Interpretive Letter ReconTrust should be citing is Interpretive
Letter No. 695 entitled "Authority of a National Bank to Conduct Fiduciary
Activities Nationwide Through Trust Offices in Various States." 1996 WL .
187825. (See Addendum 2.) This letter addresses the issue of the application of
State law to fiduciary powers of national banks operating in various States and
specifically addresses the issue of where a bank is "located" for purposes of
conducting fiduciary activities under § 92a of the NBA. The letter begins by
saymg:
[I]n our opinion section 92a authorizes a national bank
that has been granted fiduciary powers to exercise those
powers in any state, provided that within each state, the
state may bar the exercise of such fiduciary powers as
the state also does not allow for its own state-chartered
institutions. In essence, with respect to national bank
fiduciary powers in a given state, we believe section 92a
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applies the same standards to all national banks, both
those headquartered in that state and those that are"out-
of-state banks" with respect to that state.
Id. at *1. The letter then cites § 92a(a) and (b) of the NBA as being the basic
authority for national banks to exercise fiduciary powers. Id. at *2-3. From there
it launches into a detailed discussion of the powers § 92a grants to national banks.
For example, it says that the NBA does not place geographic limits on where a
national bank may offer fiduciary services or have trust offices. Id. at *3. It also
states that a State may limit national banks from exercising any or all fiduciary
powers in that State if it also limits its own institutions from exercising those same
powers. Specifically, the letter says:
Thus, the effect of section 92a is that in any specific
state, the availability of fiduciary powers is the same for
out-of-state national banks or for in-state national banks
and is dependent upon what the state permits for its own
state institutions. A state may limit national banks from
exercising any or all fiduciary powers in that state, but
only if it also bars its own institutions from exercising
the same powers. Therefore, a national bank with its
main office in one state may conduct fiduciary business
in that state and other states, depending upon - with
respect to each state - whether each state allows its own
institutions to engage in fiduciary business.
Id. at *4. Following an historical analysis of § 92a, the letter discusses "The
Authority for a National Bank to Offer Fiduciary Services in a State Is the Same
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Whether the Bank Is In-state or Out-of-state." Id. at * 10. In part, it states: "[I]n
our view, with respect to a national bank that proposes to offer fiduciary services
in more than one state, section 92a ... does not imply that Congress intended that
the provisions of section 92a would apply only to one state for each national
bank." Id. at * 12. Rather, the OCC says the State in which the national bank is
operating is decided on a "state-by-state basis." Specifically:
[S]ection 92a authorizes national banks to offer fiduciary
services in multiple states, but then conditions the exercise of
that power with each state on a state-by-state basis under the
same test: is the exercise of fiduciary powers by national banks
prohibited by state law, and even if it is, does that state permit
its state institutions to exercise these powers or not.
Id. at * 12. As if addressing the argument in the present case directly,
the OCC embarks on a detailed discussion of the meaning of the word "located" as
used in § 92a. As the letter notes, the U.S. Supreme Court has said there is no
"enduring rigidity about the word 'located' as used in" the NBA. Id. at 13. The
letter says::
Other federal statutes also refer to the places where a
national bank is "located" "situated" "existing" or of , , ,
which it is a "citizen." The United States Supreme Court
has made clear that the locationallanguage.in these
statutes should be flexibly construed, taking full account
of changes in the banking system, to suit the underlying
purposes of each provision, and has emphasized that
"[t]here is no enduring rigidity about the word 'located'"
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as it is used in these provisions. Citizens & Southern
National Bank v. Bougas, 434 U.S. at 44. Hence the
Supreme Court, lower federal courts, and the OCC
consistently have held that, for purposes of these
statutes, a national bank is not located only in the place
of its main office but can be "located," "situated" or
"existing" in, or be a "citizen" of, multiple cities,
counties, or states.
Id. at *13. (Citations omitted.) In the next paragraph, the letter states that a bank
is to be considered located in a State where it is "merely doing business - and
treated under the statute in the same manner as any other national bank in the
state." Id. at * 13. Certainly conducting 4,000 foreclosures a year in Utah would
qualify ReconTrust as "doing business" in the State, and hence subject it to the
State law applicable to both State and national banks.
In wrapping up Section I of Interpretive Letter 695, the OCC says that a
State has the authority to restrict national banks from exercising fiduciary powers
if it also restricts these powers for its own State institutions:
Therefore, we conclude that section 92a authorizes a
. national bank that has been granted fiduciary powers to
exercise those powers in any state, including having trust
offices in any state, except that the bank may not offer
such services in a state that prohibits it and in which the
state does not authorize or permit its state banks, state
trust companies or other corporations that compete with
national banks to offer such services. An out-of-state
national bank has the same authority under section 92a to
offer fiduciary services in a state that in-state national
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banks have. The state has the authority to restrict
national banks from exercising these powers only if it
restricts these powers for its own state institution. * * *
Only state laws that bar any or all fiduciary activities to
all corporate fiduciaries, in particular including the
state's own state banks, state trust companies, and other
corporations, can limit out-of-state national banks under
section' 92a.
Id. at * 16. So, rather than preempting State law, as ReconTrust contends, the OCC
clearly takes the position that a national bank's fiduciary powers are restricted in
the State in which it is "doing business" if that State also restricts the exercise of
those same powers to that State's own financial institutions.
E. OCC Regulations are Consistent with the OCC's Interpretive
Letter No. 695.
ReconTrust also cites OCC regulations for the proposition that a trustee is
authorized to act in all fifty states in accord with the laws of the State where the
bank is "located" - meaning a physical office. They cite 12 C.F.R. § 9.7(e) as
authority. Appellees' Br. at 40. But again, that is not what the regulation says,
and they do not quote it. Section 9.7 (e) uses the word "acts" for determining
where a bank is located, and hence which State's laws apply. 12 C.F.R. § 9.7(e)
states:
(1) State laws used in section 92a. The state laws that
apply to a national bank's fiduciary activities by virtue of
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12 U.S.C. 92a are the laws of the state in which the bank
acts in a fiduciary capacity.
(2) Other state laws. Except for the state laws made
applicable to national banks by virtue of 12 U.S.C. 92a,
state laws limiting or establishing preconditions on the
exercise of fiduciary powers are not applicable to
national banks.
(Emphasis supplied.) Thus, rather than the OCC regulations saying that the only
state laws that may be applied to fiduciary activities of a national bank are the
laws of the state where the national bank is physically located, Appellees' Br. at
39, the regulation actually says the State laws that apply to national banks are
those of the States where the bank "acts.,,3 That is a far different criterion than
where the bank has a physical building.
II. APPLICATION OF SECTION 92a OF THE NATIONAL BANK ACT
TO THE UTAH TRUSTEE STATUTES.
The Utah trustee qualification statute limits the trustees who have a power
of sale to foreclose a trust deed to members of the Utah State Bar and title
insurance companies with offices in the state. See Utah Code §§ 57-1-21(3),57-1-
23. (Addendum 1.) Both State and national banks may be a trustee ofa trust
3"State laws limiting or establishing preconditions," as used in § 9.7(e)(2),
refers to laws other than those governing fiduciary duties under § 92a. Those laws
would include such things as establishing a minimum net worth, who can be an
officer of the bank, who may be on the bank's board of directors, etc. These
preconditions are the exclusive province of the ace.
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deed, but neither possess the "power of sale" necessary to foreclose a trust deed.
Thus, the Utah statute treats both State and national banks equally - achieving the
desired goal of "competitive equality" - consistent with the State law condition of
§ 92a.
CONCLUSION
The grant of an explicit power by Congress to national banks to exercise
fiduciary powers is also accompanied by an explicit statement that those powers
are subject to State law. 12 U.S.C. § 92a(a) and (b). As a result, this Court should
hold that § 92a of the National Bank Act does not preempt Utah's law governing
trustee qualifications, Utah Code §§ 57-1-21 and 57-1-23, and that ReconTrust is
not a qualified trustee for purposes of conducting trustee foreclosures in Utah.
Dated this 16th day of February, 2011.
15
Is/Jerrold S. Jensen
Jerrold S. Jensen
Assistant Attorney General
Attorney for Amicus Curiae
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CERTIFICATE OF ELECTRONIC FILING AND SERVICE
I hereby certify that on this 16th day of February, 2011, the foregoing
BRIEF OF AMICI CURIAE OF THE STATE OF UTAH was electronically
filed with the Clerk of the Court, and the following were served electronically via
the Court's CMJECF system:
E. Craig Smay
174 E. South Temple
Salt Lake City, UT 84111
Tel: (801) 539-8544
Cameron Soran (Law Student)
40 N. 300 E. #101
St. George, UT 84771
Tel: (253) 250-9449
Richard F. Ensor
Vantus Law Group, P.C.
3165 East Millrock Drive, Suite 160
Salt Lake City, UT 84121
Tel: (801) 833-0500
Fax: (801) 931-2500
Roy W. Arnold (Admitted Pro Hac
Vice)
Reed Smith LLP
225 Fifth Avenue
Pittsburgh, P A 15222
Tel: (412) 288-3131
Fax: (412) 288-3063
Michael Huber
8170 S. Highland Drive, Suite E5
Sandy, UT 84093
J ames Martin
Reed Smith LLP
225 Fifth Avenue
Pittsburgh, P A 15222
Jmartin@ReedSmith.com
Tel: (412) 288-3131
David Bird
Reed Smith LLP
225 Fifth Avenue
Pittsburgh, P A 15222
Dbird@ReedSmith.com
Tel: (412) 288-3131
Amir Shlesinger (Admitted Pro Hac
Vice)
Reed Smith LLP
355 South Grand Avenue, Suite 2900
Los Angeles, CA 90071-1514
Tel: (213) 457-8000
Fax: (213) 457-8080
Is/Sherri L. Cornell
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CERTIFICATE OF DIGITAL SUBMISSION
THIS IS TO CERTIFY THAT:
(1) All required privacy redactions have been made, and with the
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ADDENDUM 1
Utah Code §§ 57-1-21, 57-1-23
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U.C.A. 1953 § 57-1-21
West's Utah Code Annotated CUlTentness
Title 57. Real Estate
"§J Chapter 1. Conveyances (Refs & Annos)
~ § 57-1-21. Trustees of trust deeds--Qualifications
(l)(a) The trustee ofa trust deed shall be:
Page 1
(i) any active member of the Utah State Bar who maintains a place within the state where the trustor or other
interested parties may meet with the trustee to:
(A) request information about what is required to reinstate or payoff the obligation secured by the trust deed;
(B) deliver written communications to the lender as required by both the trust deed and by law;
(C) deliver funds to reinstate or payoff the loan secured by the trust deed; or
(D) deliver funds by a bidder at a foreclosure sale to pay for the purchase of the property secured by the
trust deed;
(ii) any depository institution as defined in Section 7-1-103, or insurance company authorized to do business
and actually doing business in Utah under the laws of Utah or the United States;
(iii) any corporation authorized to conduct a trust business and actually conducting a trust business in Utah
under the laws of Utah or the United States;
(iv) any title insurance company or agency that:
(A) holds a certificate of authority or license under Title 31A, Insurance Code, to conduct insurance busi-
ness in the state;
(B) is actually doing business in the state; and
(C) maintains a bona fide office in the state;
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Page 3 of 4
U.C.A. 1953 § 57-1-21
(v) any agency of the United States government; or
(vi) any association or corporation that is licensed, chartered, or regulated by the Farm Credit Administra-
tion or its successor.
(b) For purposes of this Subsection (1), a person maintains a bona fide office within the state if that person
maintains a physical office in the state:
(i) that is open to the public;
(ii) that is staffed during regular business hours on regular business days; and
(iii) at which a trustor of a trust deed may in person:
(A) request information regarding a trust deed; or
(B) deliver funds, including reinstatement or payoff funds.
Page 2
( c) This Subsection (1) is not applicable to a trustee of a trust deed existing prior to May 14, 1963, nor to any
agreement that is supplemental to that trust deed. .
(d) The amendments in Laws of Utah 2002, Chapter 209, to this Subsection (1) apply only to a trustee that is
appointed on or after May 6, 2002.
(2) The trustee of a trust deed may not be the beneficiary of the trust deed, unless the beneficiary is qualified to
be a trustee under Subsection (l)(a)(ii), (iii), (v), or (vi).
(3) The power of sale conferred by Section 57-1-23 may only be exercised by the trustee of a trust deed if the
trustee is qualified under Subsection (l)(a)(i) or (iv).
(4) A trust deed with an unqualified trustee or without a trustee shall be effective to create a lien on the trust
property, but the power of sale and other trustee powers under the trust deed may be exercised only if the benefi-
ciary has appointed a qualified successor trustee under Section 57-1-22.
CREDIT(S)
Laws 1961, c. 181, § 3; Laws 1963, c. 110, § 1; Laws 1969, c. 162, § 1; Laws 1985, c. 64, § 1; Laws 1996, c.
182, § 25, eff. July 1, 1996; Laws 2001, c. 236, § 2, eff. April 30, 2001; Laws 2002, c. 209, § 1, eff. May 6,
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U.C.A. 1953 § 57-1-21
2002; Laws 2004, c. 177, § 1, eff May 3, 2004; Laws 2008, c. 250, § 41, efT. May 5, 2008.
Current through 2010 General Session, including results from the November 2010 General Election.
Copr (c) 2010 Thomson ReuterslWest. No claim to orig. U.S. govt.
END OF DOCUMENT
© 2011 Thomson Reuters. No Claim to Orig. US Gov. Works.
Page 4 of4
Page 3
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Page 2 of2
U.C.A. 1953 § 57-1-23
West's Utah Code Annotated Currentness
Title 57. Real Estate
''l§l Chapter 1. Conveyances (Refs & Annos)
-+ § 57-1-23. Sale of trust property--Power oftrustee--Foreclosure of trust deed
The trustee who is qualified under Subsection 57-1-21 (1)( a )(i) or (iv) is given the power of sale by which the
trustee may exercise and cause the trust property to be sold in the manner provided in Sections 57-1-24 and
Page 1
57 -1-27, after a breach of an obligation for which the trust property is conveyed as security; or, at the option of
the beneficiary, a trust deed may be foreclosed in the manner provided by law for the foreclosure of mortgages
on real property. The power of sale may be exercised by the trustee without express provision for it in the trust deed.
CREDIT(S)
Laws 1961, c. 181, § 5; Laws 2001, c. 236, § 5, efI. April 30, 2001.
Current through 2010 General Session, including results from the November 2010 General Election.
Copr (c) 2010 Thomson ReuterslWest. No claim to orig. U.S. govt.
END OF DOCUMENT
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ADDENDUM 2
OCC Interpretive Letter No. 695 entitled "Authority of a National Bank to
Conduct Fiduciary Activities Nationwide Through Trust Offices in Various
States." 1996 WL 187825
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Page 2 of19
15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010, 1996 WL 187825 (O.C.C)
15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking L. Rep. P 81,010, 1996 WL
187825 (O.CC.)
Office of the Comptroller of the Currency (O.CC)
Interpretive Letter
Page 1
*1 AUTHORITY OF A NATIONAL BANK TO CONDUCT FIDUCIARY ACTNITIES NATIONWIDE
THROUGH TRUST OFFICES IN VARIOUS STATES
Laws
12 U.S.C 92A(a)12 US.C. 92Al
Steven Alan Bennett, Esq. .
Senior Vice President and General Counsel
Banc One Corporation
100 East Broad Street
Columbus, Ohio 43271-0158
Interpretive Letter No. 695
December 1995
March 1996
Re: Authority of a National Bank to Conduct Fiduciary Activities on a Nationwide Basis through Trust Offices
in Various States .
Dear Mr. Bennett:
This is in reply to your letter of August 28, 1995, requesting the opinion of the Office of the Comptroller of the
Currency (OCC) on your position that 12 US.C 92a authorizes a national bank that has been granted fiduciary
powers to conduct fiduciary activities through limited purpose trust offices in multiple states, on a parity with
the state-chartered institutions in each state. You also ask our views on the manner in which the requirement for
the deposit of securities in 12 US.C 92a(f) would apply to such a national bank.
As set out below, in our opinion section 92a authorizes a national bank that has been granted fiduciary powers to
exercise those powers in any state, provided that within each state, the state may bar the exercise of such fidu-
ciary powers as the state also does not allow for its own state-chartered institutions. In essence, with respect to
national bank fiduciary powers in a given state, we believe section 92a applies the same standards to all national
banks, both those headquartered in that state and those that are "out-of-state banks" with respect to that state.
Hence, we are in general agreement with your conclusion regarding the scope of section 92a(a) & 92a(b). We
also agree with your view that, for a national bank administering trust assets at offices in more that one state, the
securities deposit requirements of section 92a(f) apply on a state-by-state basis, i.e., for each state, only on the
basis of those trust assets the bank administers from offices in that state.
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15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010, 1996 WL 187825 (O.c.c.)
Background
The Proposal
Page 3 of 19
Page 2
Banc One Corporation ("the company") is a registered, multi-bank holding company headquartered in Colum-
bus, Ohio, that has a total of 65 bank subsidiaries in 11 states. Currently, the company conducts fiduciary busi-
ness in these states through two limited purpose trust companies and the trust departments of several of the com-
pany's banks. The company wishes to combine all its fiduciary business in one entity. The present structure pre-
vents the company from taking full advantage of economies of scale and creates obstacles to centralized man-
agement and administration. You also believe you could serve customers better as one integrated fiduciary oper-
ation. You propose consolidating all of your fiduciary activities nationwide under a single national bank charter
(the "trust bank"). The trust bank may be one of the company's existing' national banks, or you may organize a
new bank for that purpose. You propose initially to seek approval to conduct fiduciary business and operate trust
offices in each of the 11 states in which the company currently has one or more bank subsidiaries and conducts
fiduciary business: Arizona, Colorado, Illinois, Indiana, Kentucky, Ohio, Oklahoma, Texas, Utah, West Virgin-
ia, and Wisconsin. You also contemplate seeking approval to conduct fiduciary business and operate trust of-
fices in Louisiana and New York. In the future, trust bank may also seek approval for operations in other states.
*2 You relate that many states - including several of the states in which the proposed trust bank would have trust
offices - have statutes that would prohibit, limit, or condition certain national banks (namely, national banks
headquartered in other states) from conducting fiduciary business in their states, either in general or with respect
to various specific kinds of fiduciary appointments. You also state that some states require that a national bank
seeking to conduct fiduciary business or accept fiduciary appointments in those states first register or make fil-
ing with, or obtain the approval or certification of, state officials. And the laws of some states at least appear to
require that an out-of-state national bank qualify to do business as a foreign corporation before conducting fidu-
ciary business there.
You request the OCC's confirmation of your views on the following positions: (1) A national bank may conduct
fiduciary business and have trust offices in more than one state under 12 U.S.c. 92a; and such offices, if limited
to fiduciary services, are not covered by the McFadden Act. (2) Section 92aauthorizes a national bank, includ-
ing an out-of-state national bank, to conduct fiduciary business in a state on a parity with that state's own state-
chartered institutions. (3) Section 92a preempts any state laws that deny or restrict the right of national banks to
conduct fiduciary business on this basis, and national banks' exercise of fiduciary powers under section 92a is
not subject to state approval requirements. And (4) any securities deposit a national bank must make in any state
under section 92a(f) is based on the trust assets the bank administers from offices in that state, and not on the
bank's total trust assets nationwide.
Statutes
The basic authority for national banks to exercise fiduciary powers is contained in 12 U.S.c. 92a(a) and 92a(b):
(a) Authority of Comptroller of the Currency
The Comptroller of the Currency shall be authorized and empowered to grant by special pennit to national
banks applying therefor, when not in contravention of state or local law, the right to act as trustee, executor,
administrator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of
lunatics, or in any other fiduciary capacity in which state banks, trust companies, or other corporations
which come into competition with national banks are permitted to act under the laws of the state in which
the national bank is located.
(b) Grant and exercise of powers deemed not in contravention of state or local law
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15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010,1996 WL 187825 (O.c.c.)
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Page 3
Whenever the laws of such state authorize or permit the exercise of any or all of the foregoing powers by
state banks, trust companies, or other corporations which compete with national banks, the granting to and
the exercise of such powers by national banks shall not be deemed to be in contravention of state or local
law within the meaning of this section.
12 U.S.c. 92a(a) and 92a(b). As discussed in Part II-B below, in subsection (a), by the clause "when not in con-
travention of state or local law," Congress has conditioned the grant of fiduciary powers to national banks. In
our discussion, this clause is referred to as the "state law condition." Then, in subsection (b) Congress has lim-
ited the state law condition in the manner set out.
*3 Section 92a also imposes a number of administrative requirements. Among them is:
Whenever the laws of a state require corporations acting in a fiduciary capacity to deposit securities with the
state authorities for the protection of private or court trusts, national banks so acting shall be required to
make similar deposits and securities so deposited shall be held for the protection of private or court trusts,
as provided by the state law.
12 U.S.c. 92a(f)(frrst sentence).
Discussion
1. Authority for a National Bank to Exercise Fiduciary Powers in Different States.
A. Federal law does not place geographic limits on where a national bank may offer fiduciary services or have
trust offices.
Section 92a does not contain any language that limits where a national bank may conduct its fiduciary business.
(For some states, the state law condition may have the effect of creating a geographic limit. That is discussed in
section B below. Here we are considering whether the fiduciary power as granted by federal law is itself geo-
graphically limited). That is, if a national bank is authorized under section 92a to act in any or all of the listed fi-
duciary capacities, there is nothing in section 92a that imposes any limitations on the places where, or the cus-
tomers for whom, the bank may so act.lFN1J If there is a federally imposed geographic limit on national banks'
fiduciary powers it must lie elsewhere.
The only provision in the national banking laws that arguably could impose a geographic limit is the McFadden
Act, 12 U.S.c. 36. The McFadden Act limits where national banks may have branches. However, in order to be
a branch and so subject to the McFadden Act, a bank facility must, among other things, be a branch as defmed in
12 U.S.c. 36(j): it must perform at least one of the core banking functions of receiving deposits, paying checks,
or lending money. The locational limitations of 12 U.S.c. 36 and 81 are not intended to reach all activities in
which national banks are authorized to engage, but only core banking functions. See Clarke v. Securities In-
dustlY Association, 479 U.S. 388 (1987). Fiduciary activities under section 92a are not such core banking func-
tions. Indeed, the treatment of the trust function in section 92a as something segregated from the "commercial
side" of the bank: reflects this. Thus, a national bank office. that provided only fiduciary services would not be
subject to geographic limitations under the McFadden Act. OCC staff have consistently taken this position. See,
e.g., Letter from William B. Glidden, Assistant Director (January 28, 1992) (unpublished); Letter from James M.
Kane, District Counsel (June 5, 1990) (unpublished).
One court reached the opposite result and found that a trust office was subject to the McFadden Act. See St.
Louis County National Bank v. Mercantile Trust Company, NA., 548 F.2d 716 (8th Cir. 1976), cert. denied, 433
U.S. 909 (1977). The court based this conclusion on the position that what could be a branch for McFadden Act
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15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, oce Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010, 1996 WL 187825 (O.C.c.)
Page 5 of 19
Page 4
purposes was not limited to offices performing the functions in section 36(j) but could include other functions.
We believe this analysis has been superseded by the Supreme Court's decision in Clarke v. SIA, emphasizing the
centrality of the core banking functions in the defmition of branch under section 36(i). Similarly, another earlier
case that ruled a national bank from Missouri could not have a trust office in Illinois because the office would be
a branch and therefore impermissible under the McFadden Act is also superseded. See National Bank
of St. Louis v. Hughes. 385 Ill. 431,53 N.E.2d 403 (1944).
*4 Therefore, just as with the securities brokerage powers at issue in Clarke v. SIA, there is no inherent geo-
graphic limitation to the fiduciary powers granted by federal law under section 92a. Accordingly, solely as a
matter of federal law without regard to the state law condition, a national bank (such as the proposed trust bank)
with its main office in one state may offer fiduciary services to customers anywhere, including at trust offices in
other states.
B. The states have only a limited authority to restrict the geographic scope of national banks' fiduciary powers:
a state may prevent national banks from offering fiduciary services in the state only if it also does not permit its
own state institutions to offer those fiduciary services.
Thus, a national bank with fiduciary powers is authorized to offer those services without geographic limit, both
in the state of its main office and in other states. You point out that many states have laws prohibiting or restrict-
ing out-of-state fiduciaries, including out-of-state national banks, from providing fiduciary services or having
trust offices within their state. You ask whether those laws would apply to prohibit an out-of-state national bank
from offering fiduciary services in such a state or whether the national bank may offer such services, and have
trust offices, under section 92a.
This question hinges upon the scope and effect of the state law condition in section 92a (the clause, "when not in
contravention of state or local law"). In this clause, Congress has conditioned national banks' exercise of fidu-
ciary powers on state law, thereby giving the states a power to limit national banks that the states would not oth-
erwise have.f
FN2
] It might be argued that this provision allows a state to prohibit or limit out-of-state national
banks from exercising fiduciary powers in that state. However, as set forth below, the statutory language, legis-
lative history, and circumstances surrounding the adoption of the language make it absolutely clear that, if a
state permits its own state institutions to exercise certain fiduciary powers, then national banks are authorized to
exercise those fiduciary powers in that state, and the state may not limit them. Section 92a does not limit the ap-
plication of this principle only to national banks whose main office is in the state in question. We discern no
basis in the statutory language to apply section 92a in a different manner to a national bank's proposed trust of-
fice or other proposed fiduciary business in a state depending upon whether the national bank also has its main
office in that state or not.
Thus, the effect of section 92a is that in any specific state, the availability of fiduciary powers is the same for
out-of-state national banks or for in-state national banks and is dependent upon what the state permits for its
own state institutions. A state may limit national banks from exercising any or all fiduciary powers in that state,
but only if it also bars its own institutions from exercising the same powers. Therefore, a national bank with its
main office in one state (such as the proposed trust bank) may conduct fiduciary business in that state and other
states, depending upon - with respect to each state - whether each state allows its own institutions to engage in
fiduciary business.
1. The language, legislative history, and statutory development of section 92a show how the state law con-
dition is limited.
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15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010,1996 WL 187825 (O.C.C.)
Page 6 of 19
Page 5
*5 As originally enacted in 1913, the state law condition was apparently unlimited in scope. But in 1918 Con-
gress added the second paragraph (now codified at section 92a(b» with the express intention of specifically lim-
iting it. Whenever a state permits its state institutions to exercise fiduciary powers, then by the rule of law set
out in section 92a(b), the exercise of fiduciary powers by national banks shall not be deemed in contravention of
state or local law and therefore automatically meets the state law condition for the exercise of powers. Any other
laws of the state that would prevent national banks from exercising those powers therefore conflict with section
92a and are preempted. Burnes National Bank v. Duncan, 265 U.S. 17 (1924).
National banks were first authorized to engage in fiduciary activities in 1913. Congress included this power in
section 11(k) of the Federal Reserve Act. See Act of December 23, 1913, Pub. 1. No. 63-43, 11(k), 38 Stat. 251,
262 (1913). At the time, administration of this provision was placed with the Federal Reserve Board, rather than
the OCC. This original version of section 92a was very short. As originally enacted, section 11(k) simply em-
powered the Federal Reserve Board:
To grant by special permit to national banks applying therefor, when not contravention of state or local law,
the right to act as trustee, executor, administrator, or registrar of stocks and bonds under such rules and reg-
ulations as the said board may prescribe.
Congress included this provision to enhance national banks' power to compete with state-chartered institutions
which, "by reason of their broader functions, had shown ability to cut into the fields presumably appropriated to
the national banks." H. Parker Willis & William H. Steiner, Federal Reserve Banking Practice 680 (1926). See
also 51 Congo Rec. 883-84 (1913).
This original version contained the basic state law condition ("when not in contravention of state or local law").
It also listed four, and only four, specific fiduciary capacities in which national banks could act. We have found
no legislative history in 1913 explaining the purpose of the state law condition, but in light of subsequent devel-
opments, its purpose clearly was to limit the newly granted fiduciary powers to national banks in states where
state institutions had fiduciary powers. That is, without the state law condition, the statute would have been a
simple, absolute grant of the power to act in the four listed fiduciary capacities, and national banks in any and
every state would have had that power, even in a state that did not permit its own state banks, trust companies or
other corporations to engage in any or all of the four activities. If granted in this absolute manner, it would have
been like the power of a national bank to engage in any of its other federally authorized powers: the federal
power cannot be prohibited or curtailed by the states. See note 2 above.
*6 The 1913 statute was immediately controversial in some states. In a case arising in Michigan, the Supreme
Court upheld the constitutionality of section 11 (k). First National Bank of Bay City V. Fellows, 244 U.S. 416
(1917). A national bank in Michigan had obtained fiduciary powers from the Federal Reserve Board, but five
state trust companies brought action in state court to question the right of the national bank to act as trustee, ex-
ecutor, administrator, and registrar of stocks and bonds. The Michigan Supreme Court held, first, that it was not
in contravention of state law for a national bank to be granted such powers, because Michigan law allowed for-
eign corporations to act as fiduciaries in Michigan, but second that section 11(k) was invalid under the U.S.
Constitution because Congress did not possess the power to convey fiduciary powers on any corporation includ-
ing national banks. See Fellows V. First National Bank of Bay City, 192 Mich. 640, 150 N.W. 335 (1916).
Trusts, estates, and other fiduciary affairs were particularly matters of local concern and thus were exclusively
reserved for the states.
The United States Supreme Court reversed the and upheld the constitutionality of section ll(k). Under the
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15 GCC Q.J. 147, 15 NO.1 acc Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010, 1996 WL 187825 (O.c.c.)
Page 7 of 19
Page 6
analysis first set forth in lv1cCulloch v. Maryland, 17 U.S. (4 Vvneat.) 316 (1819) and Osborn v. Bank (?f the
United States, 22 U.S. (9 Wheat) 738 (1824), Congress has the implied power to charter national banks as a
means to carry out any of the enumerated powers of the federal govermnent, and this includes the power to grant
national banks the authority to engage in purely private functions if Congress judges the possession of such
functions meet for making the bank successful and so able to carry out its public functions. Fellows, 244 U.S. at
418-20. And, in the Court's analysis, it was in the discretion of Congress to determine what private powers
should be given to national banks, and so the grant of fiduciary powers in section 11(k) was lawfuL Fello'ws, 244
U.S. at 424.
Moreover, the Court also offered an additional, narrower analysis for Congress's authority which later became
the basis for the 1918 amendments to section 11(k). Even if Congress's discretion to add additional powers to
national banks is not unlimited and can include only certain powers, it must include the power to grant to nation-
al banks whatever powers a state has conferred on state banks and state corporations that compete with national
banks. By granting a power to such competing state institutions, the state has rendered that power one reason-
ably needed for the successful operation of a national bank, and so Congress can convey it to national banks.
Fellows, 244 U.S. at 425-26. Section lICk) met this circumstance because it granted the fiduciary powers only
when not· in contravention of state law, and so it was clearly within Congress's lawful powers. The Court's sum-
mation of this point became the basis for the critical 1918 amendments:
*7 [Section ll(k)] authorizes the exertion of the particular functions by national banks when not in contra-
vention of the state law, that is, where the right to perform them is expJ;essly given by the state law or what
is equivalent is deducible from the state law because that law has given the functions to state banks or cor-
porations whose business in a greater or less degree rivals that of national banks, thus engendering from the
state law itself an implication of authority in Congress to do as to national banks that which the state law
has done as to other corporations ....
244 U.S. at 426.
In Fellows the Court held that Congress could grant fiduciary powers to national banks. However, although its
reasoning also virtually declared that a state could not prohibit a national bank from exercising fiduciary powers
if the state allowed state institutions to do so, the case did not directly reach that issue, since Michigan's law did
not raise it. Michigan law both permitted Michigan corporations to act in fiduciary capacities and did not prohib-
it other corporations from also so acting. Thus, this situation met the Court's narrower test for when Congress
would have the power to grant national banks fiduciary powers (i.e., if the state granted them to competing state
institutions), but it did not raise the question whether, under the authority of the "when not in contravention"
clause, the same state could also ban national banks from exercising those powers.
In 1917, shortly after Fellows, this issue was addressed in an opinion of the United States Attorney GeneraL The
question was asked whether national banks located in New York could act as trustee, executor, and administrat-
or. Unlike Michigan, the laws of New York empowered only trust companies organized under New York law to
act in fiduciary capacities and expressly forbade any other corporation from doing so. The Attorney-General de-
termined that granting fiduciary powers to a national bank in New York would thus be in contravention of state
law and so not permitted under the express language of section ll(k). The opinion noted that the decision in Fel-
lows demonstrated that Congress had the authority to grant fiduciary powers to national banks, even if state laws
forbade it, but declared that Congress had not yet done so in section ll(k):
The language [in Fellows] demonstrates the power of the National Legislature to confer authority upon na-
tional banks to act as trustee, executor, and administrator, where such powers are exercised by state trust
companies, even though the state law discriminates against the national agencies in this regard. The power
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15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010,1996 WL 187825 (O.c.c.)
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of Congress to determine how far national banks may be subject to state control is settled, and state regula-
tions which conflict with the congressional enactments are invalid. (Davis v. Elmira Bank, 161 U.S. 275;
Easton v. Iowa, 188 U.S. 220; Van Reed v National Bank, 198 U.S. 554.) But in this case Congress has not
exerted its power. By section 11 (k) it has explicitly constituted the local statutory provisions as the criterion
of the corporate capacity of national banks. The New York statute, therefore, can not fairly be said to deny
to national banks operating in New York a power Congress intended they should have.
*831 Op. U.S. Att'y Gen. 186, 188 (November 26,1917) (citations in original).
In 1918, Congress completely revised section l1(k). See Pub. L. No. 65-218, 2, 40 Stat. 967, 968-69 (1918).
First, Congress added the language that is now 12 U.s.c. 92a(b). This language was expressly added to limit the
state law condition ("when not in contravention of state or local law") so as to achieve the result adumbrated in
Fellows: a national bank could exercise fiduciary powers in a state, even if state law prohibited it, as long as that
state permitted those powers to its own state institutions.
Section 2 moreover sets forth that it shall not be deemed to be "in contravention of state or local law" to
permit the exercise of such powers by national banks whenever the laws of the particular state authorize or
permit the exercise of such powers by state banks, trust companies, or other corporations competing with
national banks. Under a recent decision of the United States Supreme Court it is clearly settled that Con-
gress has the power to confer authority upon national banks to act in these fiduciary capacities, where such
powers are exercised by trust companies, state banks, or other competing corporations, even though the state
law discriminates against national banks in this regard. The terms of section 11(k) are extended, therefore,
to permit such powers to be granted to national banks in those states in which the state law discriminates
against national banks in this respect.
H.R. Rep. No. 479, 65th Cong., 2d Sess. 2 (1918). Second, Congress expanded the list of expressly specified fi-
duciary capacities to the current eight and added the final power to act in any other fiduciary capacity permitted
to state institutions in the state in which the national bank is located. See id. Finally, Congress also added a num-
ber of substantive provisions governing national banks' conduct of fiduciary powers now codified in 12 U.S.c.
92a( c )-92a(i).lFN3]
Shortly after the 1918 amendments, the General Counsel of the Federal Reserve Board issued an opinion inter-
preting the state law condition, the new paragraph, and the relationship between them. This opinion reiterated
that under the state law condition, a fiduciary power could be granted to a national bank, even if state law did
not allow it for state institutions, as long as state law did not prohibit it for national banks (e.g., state law was si-
lent on the power); and that the new paragraph acted only to limit the state law condition and did not decrease
the situations in which national banks could be granted fiduciary powers:
The phrase "when not in contravention of state or local law" is the only restrictive clause applicable in this
discussion, for it is apparent that the succeeding paragraph is permissive rather than restrictive and operates
solely as an exception to the restrictive clause of the [lIst paragraph. The purpose of this exception was
merely to insure to a national bank the right to exercise fiduciary powers in any case where a state bank,
trust company, or other competing corporation is permitted under the state law to exercise those powers,
even if the state laws should contain an express provision either directly or by necessary implication prohib-
iting national banks from doing so ..... .
*9 The restrictive phrase "when not in contravention of state or local law" was retained in the [lIst para-
graph [the current section 92a(a)] without change and the second and supplementary paragraph [the current
section 92a(b)] was inserted solely to protect national banks from any possible discrimination on the part of
state legislators. In short, while giving to the legislature of each state in the [lIst paragraph, the right ex-
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15 GCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
1. Rep. P 81,010, 1996 WL 187825 (O.e.c.)
Page 9 of 19
Page 8
pressly to prohibit national banks from exerclsmg fiduciary powers, Congress, in the second paragraph,
eliminates the possibility of discrimination against national banks by providing, as a rule of law, that no
state statute shall be construed to prohibit a national bank from exercising any fiduciary power which a state
bank, trust company, or other competing corporation can exercise.
It is respectfully submitted, therefore, that the Federal Reserve Board may legally approve the application of
any national bank to exercise any of the fiduciary powers authorized by section l1(k) unless there is an ex-
press statute of the state in which the national bank is located which either directly or by necessary implica-
tion prohibits a national bank from exercising those powers, and that even in the case where there is such an
express statute, the Board may approve the application if any state bank, trust company, or other competing
corporation in that state is permitted to exercise the powers applied for by the national bank.
5 Fed. Res. BulL 363-64 (March 31, 1919). See also Annual Report of the Comptroller of the Currency 13
(1918) ("Under its terms [section 11(k) as amended in 1918] States are in effect prohibited from denying to them
[national banks] the right to exercise trust powers where such powers are exercised by state corporations .")
In 1924, the Supreme Court [mally decided Congress's power to authorize national banks to exercise fiduciary
powers even over directly conflicting state law. Burnes National Bank v. Duncan, 265 U.S. 17 (1924). A nation-
al bank in Missouri was named executor in a will, but the state courts denied appointment on the grounds that
under Missouri law only state trust companies could so act and thus by the laws of Missouri national banks were
not authorized to act as executors. The Supreme Court, in an opinion by Justice Holmes, first noted that· under
the first paragraph alone, with the state law condition, the state court result might be final, but that Congress had
added the second paragraph to limit the first:
This says in a roundabout and polite but unmistakable way that whatever may be the state law, national
banks having the permit of the Federal Reserve Board may act as executors if trust companies competing
with them have the power.
265 U.S. at 23. In the case at hand, the criteria in the second paragraph were met, "and thus the naked question
presented is whether Congress had the power to do what it tried to do." Id.
To this question, the Court reasoned Fellows already provided the answer: if Congress has the authority to grant
a power to national banks and has granted the power, then the states may not deprive national banks of that
power (except as Congress may have allowed), even if the subject area is one characteristically within the do-
main of the states. The power of Congress to confer a power on national banks:
*10 "excluded the power of the state in such case, although it might possess in a general sense authority to
regulate such business, to use that authority to prohibit such business from being united by Congress with
the banking function." 244 U.S. 425. Now that Congress has expressed its paramount will this language is
more apposite than ever. The states cannot use their most characteristic powers to reach unconstitutional
results. . .. There is nothing over which a state has more exclusive authority than the jurisdiction of its
courts, but it cannot escape its constitutional obligations by the device of denying jurisdiction to courts oth-
erwise competent. ... So here - the state cannot lay hold of its general control of administration to deprive
national banks of their powers to compete that Congress is authorized to sustain.
265 U.S. at 24 (quotation from Fellows; other citations omitted).
Since 1918, the provisions granting national banks the authority to engage in fiduciary activities - currently co-
dified at 12 U.S.c. 92a(a) and 92a(b) - have remained substantively unchanged. In 1962, Congress .transferred
administration of the provision from the Federal Reserve Board to the OCe. Former section 11(k) of the Federal
Reserve Act was repealed, and its provisions reenacted (with the OCC substituted for the Board) as a separate
law. See Pub. 1. No. 87-722, 76 Stat. 668 (1962) (codified at 12 USc. 92a); S. Rep. No. 2039, 87th Cong., 2d
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15 oee Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010,1996 WL 187825 (O.c.c.)
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Sess. 1 (1962) ("No change would be made from the substantive provisions of section 11(k), other than the
transfer of authority [to the OCC], so that there is no alteration of existing law regarding national banks acting in
fiduciary capacities.") JFN4]
In sunnnary, several fundamental propositions are evident from the statute, its legislative development, and ba-
sic concepts of national banking law reflected in the principal cases. First, Congress has the authority to grant fi-
duciary powers to national banks. Second, if Congress grants a power to national banks, the states cannot pro-
hibit, impede, or restrict national banks from exercising it. Thus, third,but for the state law condition, national
banks could exercise the fiduciary powers granted in section 92a(a) notwithstanding state lawJFN5] Fourth, in
the state law condition, Congress has made national banks' power to act in fiduciary capacities contingent upon
state law. But, [mally, Congress has limited the state law condition by declaring that if a state allows its state in-
stitutions to exercise fiduciary powers, then national banks may exercise those powers, notwithstanding state
laws to the contrary.
2. The authority for a national bank to offer fiduciary services in a state is the same whether the bank is
in-state or out-of-state.
Your proposal raises one fundamental question: if a national bank proposes to offer fiduciary services and has
trust offices both in its home state, i.e., the state of its main office, and in other states, in what manner do the
state laws of the other states allowing or limiting the exercise of fiduciary powers apply to such a national bank
under section 92a? In particular, if one of the other states has laws prohibiting or limiting out-of-state fiduciaries
from conducting fiduciary business in that state and the state law treats an out-of-state national bank as an out-
of-state fiduciary, may that state law be applied to an out-of-state national bank such as the proposed trust bank?
We believe section 92a clearly establishes that such state laws may not prevent national banks from exercising
fiduciary powers in a state in which state law permits the state's banks, trust companies or other corporations to
exercise such powers. This determination was set into section 92a in 1918, and it applies equally to state laws
limiting out-of-state national banks as it does to state laws limiting in-state national banks. This result is logic-
ally dictated by the statute and is consistent with similar provisions elsewhere.
a. Section 92 a gives no greater authority to state laws limiting out-aI-state fiduciaries than to other state laws.
*11 Simply as a matter of pure logic under the given statutory framework, state laws limiting out-of-state fidu-
ciaries must be subject to the same standards as other state laws. On the one hand, a state law restricting out-
of-state fiduciaries from conducting fiduciary business in the state could apply to an out-of-state national bank
only if the state law is within the authority conveyed upon the states in the state law condition in section 92a(a).
If this type of state law were not within the state law condition, then it could not apply to restrict national banks
from exercising their congressionally authorized fiduciary powers. And so, national banks from other states
could conduct fiduciary business in the state.l
FN6
]
And, on the other hand, if a state law restricting out-of-state fiduciaries is within the state law condition in sec-
tion 92a(a), then it is also within the limitation of section 92a(b). The provision in section 92a(b) was expressly
added to limit the scope of the state law condition. It is linked to the state law condition in its very language. It
mandates that if a state permits its .state institutions to exercise fiduciary powers, then national banks' exercise of
them is not in contravention of state law, even if there are other state laws that purport to bar national banks.
Thus, even if a state has laws barring out-of-state fiduciaries, those laws do not bar out-of-state national banks if
the state permits its state institutions to exercise fiduciary powers.
We believe this conclusion is inescapable under the statute. In order to find that state laws barring out-of-state
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15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
1. Rep. P 81,010, 1996 WL 187825 (O.c.c.)
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fiduciaries in such a state (i.e., one that permitted its state institutions to exercise fiduciary powers) could be ap-
plied to out-of-state national banks, we would have to conclude that a state law could both apply because of the
state law condition and yet escape the rule of construction Congress placed on the state law condition. Such an
interpretation of the statute is certainly not a "plain" one and indeed is highly implausible. By contrast, the inter-
pretation that section 92a applies to these state laws in the same way it applies to others arises directly from the
statutory language.
Since section 92a(b) was enacted to limit the state law condition, the clear meaning is that every purported in-
stance of the exercise of fiduciary powers by a national bank being in contravention of state law is subjected to
the protective standard added in section 92a(b). Textually, the introductory phrase ("whenever the laws of such
state ... ") is a reference to that state the laws of which it is asserted the grant of fiduciary powers would be in
contravention of. That is, "such state" is the state referred to in the state law condition ("when not in contraven-
tion of state or local law"). The phrase may also be a reference to "the state in which the national bank is loc-
ated" in the immediately preceding sentence. But all three of these terms refer to the same state: the state in
which the national bank proposes to engage in fiduciary activities. In other words, the same level of contact with
a state that is sufficient to make a national bank potentially subject to that state's laws under the state law condi-
tion in section 92a(a) also makes the bank located in that state for other section 92a(a) purposes.EFN
7J
*12 Moreover, Congress's purpose in adding section 92a(b) was to prevent states from preventing national banks
from exercising fiduciary powers through prohibitory laws while allowing their own state banks and trust com-
panies to have these powers. The statutory language encompasses all national banks in this protection from a
state's discrimination. It is not limited only to national banks headquartered in the state. If the exercise of fidu-
ciary powers by a national bank is asserted to be in contravention of state law, the standard of section 92a(b) ap-
plies whether the alleged contravention is of a state law barring all national banks or of a state law barring only
some national banks (e.g., out-of-state national banks). Nothing in the statute or legislative history suggests that
state laws that bar only a certain class of national banks are treated differently. Indeed, if section 92a is inter-
preted to allow states to discriminate against out-of-state banks but not against in-state banks, that would make it
an instance of Congress allowing the states to discriminate in an area of interstate commerce.E
FN8
J But such ac-
tion on Congress's part is not lightly inferred. See, e.g., Wyoming v. Oklahoma, 502 U.S. 437, 458 (1992); Maine
v. Taylor, 477 U.S. 131, 139 (1986). There is no evidence of such congressional intent here, and so we believe
section 92a may not be construed to allow such discrimination against out-of-state national banks.
Thus, in our view, with respect to a national bank that proposes to offer fiduciary services in more than one
state, section 92a applies equally for each and every state. The use of a singular term in section 92a ("whenever
the laws of such state ... "; "the laws of the state in which the bank is located") does not imply that Congress in-
tended that the provisions of section 92a would apply only to one state for each national bank. Generally, legis-
lative terms which are singular in form may apply to multiple subjects or objects, and plural terms to single. See
1 U.S.c. 1; First National Bank in St. Louis v. Missouri, 263 U.S. 640, 657 (1924); Johnston v. Penrod Drilling
Co. 803 F.2d 867, 870 (5th Cir. 1986). See generally 2A Sutherland Statutes and Statutory Construction 47.34
(5th ed. 1992). In particular, there is no historical basis to attach significance to the use of singular nouns in the'
National Bank Act. See R. Robertson, The Comptroller and Bank Supervision: A Historical Appraisal 82 (1968).
Moreover, the Supreme Court rejected such an interpretation when construing an earlier version of section 94,
and said the use of the singular noun in the statute was not persuasive. Citizens & Southern National Bank v.
Bougas, 434 tLS. 35,45 (1977).
b. The state-by-state application of section 92a is consistent with other statutes.
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15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010,1996 WL 187825 (O.c.c.)
Page 12 of 19
Page 11
Thus, section 92a authorizes national banks to offer fiduciary services in multiple states, but then conditions the
exercise of that power within each state on a state-by-state basis under the same test: is the exercise of fiduciary
powers by national banks prohibited by state law, and even if it is, does that state permit its state institutions to
exercise these powers or not. This result is consistent with other banking statutes that treat a single national bank
as present in different states for purposes of that statute.
*13 Other federal statues also refer to the places where a national bank is "located," "situated," "existing," or of
which it is a "citizen." [FN9] The United States Supreme Court has made clear that the locational language in
these statutes should be flexibly construed, taking full account of changes in the banking system, .to suit the un-
derlying purposes of each provision, and has emphasized that "[t]here is no enduring rigidity about the word
'located'" as it is used in these provisions. Citizens & Southern National Bank v. Bougas, 434 U.S. at 44. Hence
the Supreme Court, lower federal courts, and the OCC consistently have held that, for purposes of these statutes,
a national bank is not located only in the place of its main office but can be "located," "situated" or "existing"
in, or be a "citizen" of, multiple cities, counties, or states. See, e.g., Bougas (venue); Fisher v. First National
Bank of Omaha, 548 F.2d 255 (8th Cir. 1977) (interest rates); Fisher v. First National Bank of Chicago, 538
F.2d 1284 (7th Cir. 1976), cert. denied, 429 U.S. 1062 (1977) (interest rates); Seattle Trust & Savings Bank v.
Bank ofCal(fornia N.A., 492 F.2d 48 (9th Cir. 1974), cert. denied, 419 U.S. 844 (1974) (establishing branches);
Bank of New York v. Bank of America, 853 F.Supp. 736 (S.D.N.Y. 1994) (citizenship for diversity jurisdiction);
Connecticut National Bank v. Iacono, 785 F.Supp. 30 (D.R.I. 1992) (original jurisdiction); Decision on the Ap-
plications of American Security Bank, N.A., Washington, D.C., and Maryland National Bank, Baltimore, Mary-
land (OCC Corporate Decision No. 94-05, February 4, 1994), reprinted in [1993-1994 Transfer Binder] Fed.
Banking L. Rep. (CCH) ~ 89,695 (establishing branches, and mergers with other banks); OCC Interpretive Letter.
No. 686 (September 11, 1995), reprinted in Fed. Banking L. Rep. (CCH) ~ 81-001 (interest rates); OCC Inter-
pretive Letter No. 654 (December 19, 1994), reprinted in [1994-95 Transfer Binder] Fed. Banking L. Rep.
( C C H ) ~ 83,602 (directors' residency qualification).
In these other instances, just as with section 92a here, the statutes were similarly applied to the bank on a state-
by-state basis. The bank was considered present in each state - through a branch, another type of office, or
merely doing business - and treated under the statute in the same manner as any other national bank in the state.
Moreover, in the recent interstate branching statute Congress has provided a similar system for the application of
state law to the interstate branches of national banks: within each host state, a branch of an out-of-state national
bank is treated as an in-state national bank for purposes of applying that state's laws. See Riegle-Neal Interstate
Banking and Branching Efficiency Act of 1994, Pub. L. No. 103-328, 102(b)(I), 108 Stat. 2338, 2350 (1994)
(codified at 12 U.S.c. 36(£)(2». These Riegle-Neal Act provisions do not directly apply to the authority to have
trust powers, since the authority to have trust powers is governed by federal law in section 92a, not state laws.
Nevertheless, since Congress has created a similar rule for the general applicability of state law to national
banks' interstate branches when state law is applicable to national banks, it is reasonable to interpret section 92a
as applying in a similar state-by-state manner for national banks' interstate fiduciary activities. Indeed, if the
Riegle-Neal Act's applicable law provisions do apply to how state law applies to the fiduciary activities of an
out-of-state national bank at a branch in a host state, supplementing section 92a in this regard, then clearly a host
state could not prevent an out-of-state national bank from providing fiduciary services at a host state branch on
the same basis as an in-state national bank. In many respects, our interpretation of section 92a simply makes the
treatment of fiduciary activities at an interstate trust office the same as it indisputably would be at an interstate
branch. [FNI 0]
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15 acc Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010,1996 WL 187825 (O.c.c.)
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Page 12
*14 This interpretation of the statute also fosters desirable public policies. First, every national bank offering fi-
duciary services in a given state will have the same authority to conduct fiduciary business. A national bank con-
ducting fiduciary business and administering trust assets at a trust office will be subject to the same standards ir-
respective of whether the office is part of an in-state national bank or an out-of-state national bank. Second,
there will be a level playing field for enhanced competition in the provision of fiduciary services within each
state, because more potential providers will be able to compete on similar terms.
We are aware that one federal district court reached a result inconsistent with this analysis. In Americall Trust
Company, inc. v. South Carolina State Board of Bank Control, 381 F.Supp. 313 (D.S.C. 1974) (three-judge
court), the court upheld the application to North Carolina National Bank of South Carolina statutes that barred
from South Carolina fiduciary appointments any corporation domiciled or licensed to do business in any state
contiguous to South Carolina. This court held that a state could bar an out-of-state national bank from acting in
fiduciary capacities in the state, even though its state institutions were permitted to act in those capacities.
However, North Carolina National Bank did not raise the issue that section 92a preempted the South Carolina
law; instead, it based its case on the due process and commerce clauses. In rejecting the commerce clause argu-
ment, the court viewed section 92a as a statute in which Congress has allowed the states to impose burdens on
interstate commerce: "Since South Carolina's ban on foreign testamentary trustees operates equally against state
and national banks located in North Carolina, the exclusion of North Carolina National is not an impermissible
burden on interstate commerce; Congress has allowed it by enacting section 92a." 381 F.Supp. at 323.
We believe this reasoning and result were clearly mistaken. First, it completely ignored the statutory language
and legislative history of sections 92a(a) and 92a(b) discussed earlier, and instead based its construction of the
statute solely on an oversimplified generalization that the statute is intended to create "competitive equality."·
Second, in using the state law condition to reach its result, the court misused the limit placed on it in section
92a(b). Instead of comparing how a state treats national banks with how it treats its own banks, the court com-
pared how South Carolina treated North Carolina state banks and North Carolina national banks. Third, there is
no evidence in the language or legislative history of section 92a that Congress intended to grant the states the
power to discriminate in interstate commerce in trust services. But it is well settled that Congress must manifest
its unambiguous intent before a federal statute will be read to authorize state action that would otherwise be in
violation of the commerce clause. See, e.g., Wyoming v. Oklahoma, 502 U.S. 437, 458 (1992); Maine v. Taylor,
477 U.S. 131, 139 (1986). Indeed, since section 92a says nothing about the relation between a state and the state
banks or trust companies of other states, it plainly is not a statute intended to give states power to burden inter-
state commerce. Finally, the court's treatment of the South Carolina statutes and the commerce clause is ques-
tionable in light of Lewis v. BT Investment Managers, Inc., 447 U.S. 27 (1980).
*15 Two other cases have language that could suggest states have a power to restrict national banks from exer-
cising trust business in their state. In a decision upholding a New Hampshire law that banned corporate fiduciar-
ies in the state from advertising, in dictum the First Circuit stated that section 92a in effect gives states the
"power to proscribe national banks from acting as executors." See New Hampshire Bankers ASS/II v. Nelson, 460
F.2d 307, 308 (1st Cir.), cert. denied, 409 U.S. 1001 (1972) (per curiam). And, in its decision on national bank
trust offices, the Eighth Circuit used section 92a as a secondary basis for decision and held that section 92a per-
mits each state "to nondiscriminately limit the location where fiduciary powers may be exercised." St. Louis
County National Bank" 548 F.2d at 720. However, both cases are consistent with our analysis. At issue in both
cases was whether the same limits that the state imposed on its own corporate fiduciaries also applied to national
banks in the state. In our analysis, such limits would, if applicable, continue to apply within each state on a
state-by-state basisJFNIIJ
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15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010, 1996 WL 187825 (O.c.c.)
Page 14 of 19
Page 13
Finally, we are aware that an early opmlOn of the Federal Reserve Board[FN12] and a similar opmlOn of the
OCOFN13] may be read by some to suggest that national banks are subject to state laws prohibiting nomesident
fiduciaries. However, neither opinion directly considered the precise issue or offered any analysis. Indeed, the
OCC opinion appears simply to be a restatement of the earlier Federal Board opinion for inclusion in an
OCC collection of opinions regarding examination of trust departments. The opinions directly answer only the
question whether a national bank located in one state may exercise fiduciary powers in another state when the
laws of the other state do not prohibit it. In that instance, there would be no doubt but that the exercise of fidu-
ciary powers would not be in contravention of state law, and so may be granted under section 92a(a). The opin-
ions may give rise to the negative inference that, if the other state did prohibit nomesident fiduciaries, then an
out-of-state national bank could not exercise fiduciary powers in that state. But, in fact, the opinions do not ad-
dress that question. That would be an instance of a state's laws prohibiting the exercise of fiduciary powers by a
national bank, thus requiring consideration of Section 92a(b) in the determination whether the exercise of fidu-
ciary powers is in contravention of state law. Moreover, even if these opinions had directly taken the position in-
dicated in the negative inference above, they would need to be reconsidered in light of the subsequent cases,
such as Citizens & Southern National Bank and Seattle Trust, establishing that national banking laws may ap-
propriately be applied on a state-by-state basis. Similarly, with respect to fiduciary activities at interstate
branches, they clearly would need to be reconsidered in light of the Riegle-Neal Act.
C. Conclusion
*16 Therefore, we conclude that section 92a authorizes a national bank that has been granted fiduciary powers to
exercise those powers in any state, including having trust offices in any state, except that the bank may not offer
such services in a state that prohibits it and in which the state does not authorize or permit[FN14] its state banks,
state trust companies or other corporations that compete with national banks to offer such services. An out-
of-state national bank has the same authority under section 92a to offer fiduciary services in a state that in-state
national banks have. The state has the authority to restrict national banks from exercising these powers only if it
restricts these powers for its own state institutions. Thus, state laws prohibiting out-of-state fiduciaries from con-
ducting fiduciary business in the state, or restricting these services, or conducting such services upon state ap-
proval requirements cannot apply to limit the section 92a authority of national banks. Only state laws that bar
any or all fiduciary activities to all corporate fiduciaries, in particular including the state's own state banks, state
trust companies, and other corporations, can limit out-of-state national banks under section 92a.
In your proposal, the trust bank would be headquartered in one state and have trust offices in a number of other
states. You have asked us to confirm your position that section na preempts state laws in these other states that
would prohibit the exercise of fiduciary powers by out-of-state national banks, even though state institutions
(and in-state national banks) are permitted to exercise such powers. We believe this is not a new determination.
While these state laws may not have been subjected to examination under section na previously, the relation-
ship, of section 92a and state law is well established. Since section 92a applies in the same manner for in-state
and out-of-state national banks, these state laws would be subject to the same preemption analysis applied to
earlier state laws that prohibited in-state national banks from exercising fiduciary powers or that attempt to place
state approval or licensing requirements on the fiduciary activities of in-state national banks. See Burnes Nation-
al Bank, 265 U.S. at 23-24; Fidelity National Bank & Trust Co. v. Enright, 264 F. 236, 239 (W.D. Mo. 1920);
OCC Interpretive Letter No. 628 (July 19, 1993), reprinted in [1993-94 Transfer Binder] Fed. Banking L. Rep.
(CCH) 83,511; Letter from Peter Liebesman, Assistant Director (March 30, 1982) (unpublished).[FN15] Al-
though the analytic framework is not new, we believe it would be premature to apply it to particular states at this
time. With respect to each state, that analysis is more appropriately done when an out-of-state national bank,
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15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010, 1996 WL 187825 (O.c.c.)
such as the proposed trust bank, defInitely seeks to offer fIduciary services in that state.
II. Application of Section 92a(jj to an Interstate National Bank
Page 15 of 19
Page 14
*17 Under section 92a(f), if a national bank conducts trust business in a state in which state-chartered fIduciaries
are required to deposit securities with the state for the protection of private or court trusts, the national bank is
required to make "similar deposits." You relate that some states require fiduciaries to deposit securities equal to
a specified percentage of all their trust assets. We agree with your conclusion that a national bank conducting
trust operations in multiple states is not required to calculate the amount of any such deposit required by a par-
ticular state on the basis of all of its trust assets nationwide, but only on the basis of those trust assets that the
bank administers from offIces located in that state.
When a national bank conducts trust operations in multiple states and administers trust assets at offices in mul-
tiple states, it becomes necessary to determine how the requirement of section 92a(f) applies. We agree that the
best interpretation is to apply the requirement on a state-by-state basis, applying each state's requirement to trust
assets administered at offIces in that state. First, the statute requires that national banks make deposits that are
"similar" to those required of state institutions, and not those that are "identical." Thus, the statute allows its re-
quirements to be imposed in a flexible manner to address changing circumstances. Second, the obvious purpose
of state deposit requirements is to protect benefIciaries of trusts administered in the state imposing the require-
m e n t ~ That purpose will be achieved if a national bank deposits securities based upon trust assets administered in
the state. Indeed to require otherwise would, in effect, be allowing one state to impose a requirement that gov-
erns trust assets in, and protects benefIciaries in, another state.
Third, any other interpretation leads to absurd results, as shown in the following example. If two national banks
are separately conducting trust business in two states (i.e., one bank in each state), each bank is subject to a de-
posit requirement based on the deposit requirement of its state. If the two banks merge (e.g., in a merger under
12 U.S. C. 1831 u), then the deposit requirement of each state will apply to the total combined trust assets, unless
section 92a(f) is applied on a state-by-state basis. There is no logical reason to suppose that Congress intended
the combined bank's deposit requirement to be, in t<ffect, more than (indeed, perhaps double) the aggregate of
the requirements far the separate banks. Finally, we note that the Office of Thrift Supervision has taken this pos-
ition in applying an identical provision in the Home Owners' Loan Act governing fIduciary activities of federal
savings associations, 12 U.S.C. 1464(n)(5). See OTS Letter No. 92/CC-59 (December 24, 1992), reprinted in
[1992-1993 Transfer Binder] Fed. Banking L. Rep. (CCH) ~ 82,645.
Conclusion
We believe a national bank that has been granted fIduciary powers may offer fIduciary services in, and have
trust offIces in, multiple states. Such a national bank may exercise any of the fiduciary powers granted in section
92a(a) in any state unless that state both prohibits national banks and restricts its own state institutions from ex-
ercising that fIduciary power. We also agree that the deposit requirement of section 92a(f) is similarly applied on
a state-by-state basis. We hope this analysis is helpful as you develop your plans for the proposed trust bank.
*18 Julie L. Williams
Chief Counsel
FNl. Indeed, in 1921 the Federal Reserve Board .opined that a national bank with fIduciary powers could exer-
cise those powers in other states. See 7 Fed. Res. Bull. 816 (1921) (state law aspects of this opinion are dis-
cussed further at note 12 below). See also In re: Annijo's rVill, 57 N.M. 649, 261 P.2d 833, 838-40 (1953)
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15 OCC Q.l 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010, 1996 WL 187825 (O.C.c.)
(national bank from Illinois may be appointed ancillary administrator of estate in New Mexico).
Page 16 of 19
Page 15
FN2. If Congress has authorized national banks to engage in a certain activity, it is axiomatic that the states may
not prohibit or reduce that power. See, e.g., Farmers & l11echanics' National Bank v. Dearing, 91 U.S. 29,33-34
(1875); Davis v. Elmira Savings Bank, 161 U.S. 275, 283 (1896); First National Bank of Eastern Arkansas v.
Taylor, 907 F.2d 775,778 (8t11 Cir.), cert. denied, 498 U.S. 972 (1990); Bank o{America National Trust & Sav-
ings; Ass'n v. Lima, 103 F. Supp. 916, 917-18 (D. Mass. 1952); Indiana National Bank v. Roberts. 326 So.2d
802, 803 (miss. 1976). See generally Decision on the Applications of Bank Midwest of Kansas, N.A. and Bank
Midwest, N.A. (OCC Corporate Decision No. 95-05, February 16, 1995), reprinted in Fed. Banking L. Rep.
(CCH) ~ 90,474 (Part III-A).
FN3. Subsections 92aG) and 92a(k) were added later, in 1930 and 1980 respectively: See Act of June 26, 1930,
Pub. L. No. 71-435, 46 Stat. 814 (1930); Depository Institutions Deregulation and Monetary Control Act of
1980, Pub. L. No. 96-221, Title VII, 704,94 Stat. 132, 187 (1980).
FN4. In the re-enactment, Congress added the present alphabetical subsection markers to the existing simple se-
quence of paragraphs. However, there were no subsection headings.
FN5. We refer here only to the authority to have the legal capacity to act as a fiduciary. A national bank acting
as trustee or executor of an estate is, of course, subject to the law governing the trust or estate. For example, a
national bank's fiduciary duties in conducting its fiduciary activities and its standard of care in discharging those
duties are subject to the state or local law, or other law, governing the fiduciary relationship. The OCC's fidu-
ciary regulations in 12 CFR 9 recognize the applicability of such laws.
FN6. If these state laws are outside the state law condition, then this situation would be similar to others in
which a national bank from one state can conduct an authorized business in another state without regard to its
being authorized by the other state. See, e.g., Marquette National Bank v. First of Omaha Service emp., 439
U.S. 299 (1978) (national bank from one state lending to customers in another state may charge federally author-
ized interest rate without regard to law of customers' state); Bank of America National Trust & Savings Ass'n v.
Lima, 103 F.Supp. 916,917-18 (national bank's ability to lend in a state does not depend on state's permission;
state cannot require national banks to register as foreign corporations); Indiana National Bank v. Roberts, 326
So.2d 802, 803 (Miss. 1976) (same, citing other cases). .
FN7. This is a different meaning than "located" many have in other banking statutes. National banks have been
found to be "located" in or "situated" in multiple jurisdictions (counties or states) in which they have a main of-
fice, branch, or other physical office. See cases and OCC opinions cited in section B-2-b below. We believe this
interpretation of "located" is correct for section 92a(a) because of its origin in the statute. Originally, as outlined
earlier, in 1913 section 11Ck) had only the phrase, "when not in contravention of state or local law." In 1918,
both section 92a(b) and the expanded fiduciary capacities clause containing the phrase, "state in which the na-
tional bank is located," were added. They were separate changes done for different reasons. See H.R. Rep. 479,
supra. But in each one, it is reasonable to presume that Congress was legislating with reference to the state
already referred to in the statute: the state in which the national bank would be exercising fiduciary powers and
whose state law was at issue in the state law condition. Unlike other statutes, in section 92a(a), the term "state in
which the bank is located" is not used as the initial and principal identifier of the state to which the statute is re-
ferring.
However, arguably the referent of "such state" in section 92a(b) is only to "the state in which the national
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15 OCC Q.J. 147, 15 NO.1 OCC Q.l 147, OCC Inter. Ltr. 695, Fed. Banking
L Rep. P 81,010, 1996 WL 187825 (O.CC)
Page 17 of 19
Page 16
bank is located" and the meaning of "states in which the bank is located" is not co-extensive with the states
whose laws are asserted to be contravened in the state law condition. That is, "such state" refers only to
states in which the bank is "located" and "located" does not include every state in which it proposes to en-
gage in fiduciary activities. We need not resolve this question now because in your proposal, the trust bank
would have brick-and-mortar trust offices in each state in which it proposed to offer fiduciary services, and
so it would be clearly located in those states. And thus the limiting rule of construction of section 92a(b)
would be invoked for those states even under this narrower interpretation.
FN8. State restrictions on the interstate provision of fiduciary services are clearly subject to scrutiny under the
Commerce Clause, notwithstanding the state interest in overseeing trusts and estates. See Lewis v. BT investment
Managers, inc., 447 US. 27 (1980).
FN9. See, e.g, 12 U.S.C 24(Eighth) (charitable contributions); 12 U.S.C 36 (establishment of branches); 12
U.S.c. 72 (directors' residency requirement); 12 U.S.C 85 (interest on loans); 12 US.C 90 (security for public
deposits); 12 USc. 215 (consolidations); 12 US.C 215a (mergers); 28 US.C 1348 (jurisdiction of US. dis-
trict courts); 28 U.S.c. 1394 (venue).
FNlO. The Riegle-Neal Act also has another provision regarding the application of host state laws to the inter-
state branches of national banks in the four areas of community reinvestment, consumer protection, fair lending,
and establishment of intrastate branches. See Riegle-Neal Act 102(b)(1) (codified at 12 USc. 36(£)(1)). In
those areas, host state laws apply to an interstate branch of an out-of-state national bank in the host state to the
same extent as such laws apply to a branch of a bank chartered by the host state, unless federal law preempts ap-
plication of such state laws to national banks or application of the laws is found to have a discriminatory effect.
State laws granting or prohibiting fiduciary powers to institutions do not appear to be in one of the four areas.
But even if they were, and the applicable law provisions of section 36(£)(1) did apply to national bank fiduciary
powers, the authority of an out-of-state national bank to offer fiduciary services at a branch in a host state would
be like that of the host state's own banks. Thus, even in that case, the treatment of fiduciary activities would also
be like our analysis of section 92a here.
FNll. Moreover, we believe these cases are incorrect to the extent that they imply that section 92a grants the
states the power to impose operational limitations on national bank fiduciary activities (such as banning advert-
ising or limiting locations). Whether such state operational limits (e.g, administrative or ministerial provisions
regarding how a state fiduciary institution organizes its business) are applicable to national banks is determined
. by genenil principles of preemption with respect to the applicability of state law to national banks; section
92a(a) does not incorporate them. The state law condition in section 92a pertains only to whether a national bank
mayor may not be granted the authority to act in a particular fiduciary capacity. When section 92a does incor-
porate state law for operational limits, it does so by specific provision with respect to particular types of limits.
See 12 U.S.c. 92a(£), 92a(g) & 92a(i). Indeed, the fact that Congress expressly provided for state laws to apply
only for these three areas strongly implies that Congress did not intend that other state administrative require-
ments governing how a corporate fiduciary conducts business would apply to national banks through section 92a
. (Of course, such state laws governing the administration and operation of corporate fiduciaries are different
from state laws governing the fiduciary relationships themselves. See note 5 above.) Some earlier OCC letters
may suggest that all aspects of state law governing state fiduciary institutions apply to national banks. See, e.g,
OCC Letter No. 525 (August 8, 1990), reprinted in Fed. Banking L Rep. (CCH) ~ 83,236. However, those let-
ters generally dealt with substantive fiduciary law and so may not have fully distinguished between state sub-
stantive fiduciary duties and standards and state administrative requirements and expressly stated that their ana-
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15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010, 1996 WL 187825 (O.C.C.)
lysis pertained to the former.
FN12. In 1921 the Board stated:
Page 18 of 19
Page 17
The Federal Reserve Board is of the opinion, therefore, that a national bank which has been granted permis-
sion to exercise fiduciary powers under the provisions of section 11(k) may, without other authority, exer-
cise the powers granted not only in the State where the bank is located but also in any other State the laws
of which do not expressly or by necessary implication prohibit the exercise of those powers by national
banks located in other States. The Board is of the opinion, however, that in any such case the national bank
would have to conform to those laws of any State in which it is acting which relate to the exercise of fidu-
ciary powers by foreign corporations.
7 Fed. Res. Bull. 816 (1921). In this ruling, the Board appears to assume that a national bank may be "located'?
in one and only one state for section 92a purposes. That assumption, of course, is incorrect today after Citizens
& Southern National Bank, Seattle Trust, and the other cases cited earlier.
FN13. In 1963 shortly after administration of section 92a was transferred, the OCC issued a manual for trust ex-
aminers. It contained a number of opinions on aspects of the operation of a trust department. These included:
This Office is of the opinion that a national bank authorized to exercise fiduciary powers may, without addi-
tional authority from this Office, exercise such power in other jurisdictions, the laws of which do not ex-
clude nonresident fiduciaries. Accordingly, a national bank with fiduciary powers may exercise them in an-
other State or country if the bank conforms t6 the laws of that jurisdiction.
Comptroller's Manual for Representatives in Trusts, Section of Opinions, page G-1 (1963 ed.). See also Current
Legal and Regulatory Developments, 1 National Banking Review 599, 610 (1964) (summarizing 1963 opinion).
Since at least 1976, this opinion no longer appeared in later editions. See Comptroller's Handbook for National
Trust Examiners, Precedents and Opinions Section (1976 ed.).
FN14. State laws that "authorize or permit" the exercise of fiduciary powers by state institutions for purposes of
section 92a(b) clearly would include laws that specifically authorize state institutions to act in a specific fidu-
ciary capacity. But the addition of the term "or permit" implies that something less than specific authorization in
state statutes may be sufficient. One such example could be instances in which state institutions in a particular
state are engaged in a particular fiduciary capacity by custom or state administrative determinations, even
though there is no express state statute.
FN15. See also OTS Letter No. 94/CC-13 (June 13, 1994), reprinted in [1994 Transfer Binder] Fed. Bankillg L.
Rep. (CCH) ~ 82,814 (similar preemption analysis for fiduciary activities of federal savings associations). Cf
OCC Letter No. 614 (January 15, 1993), reprinted in [1992-93 Transfer Binder] Fed. Banking L. Rep. (CCH) ~
83,454 (similar preemption analysis for state licensing and visitation requirements for national bank lending in
the state); OCC Letter No. 475 (March 22, 1989), reprinted in [1989-90 Transfer Binder] Fed. Banking L. Rep.
(CCH) ~ 83,012 (similar preemption analysis for applicability of state approval and licensing requirement for
other authorized activity); Letter from James F.E. Gillespie, Senior Attorney (August 11, 1986) (unpublished)
(same); OCC Letter No. 122 (August 1, 1979), reprinted in [1981-82 Transfer Binder] Fed. Banking L. Rep.
(CCH) ~ 85,203 (same); Letter from John Shockey, Chief Counsel (July 19, 1977) (unpublished) (same). See
generally Guthrie v. Harkness, 199 U.S. 148, 159 (1905) (states may not exercise right of visitation over nation-
al banks).
15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking L. Rep. P 81,010, 1996 WL
187825 (O.c.c.)
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15 OCC Q.J. 147, 15 NO.1 OCC Q.J. 147, OCC Inter. Ltr. 695, Fed. Banking
L. Rep. P 81,010,1996 WL 187825 (O.c.c.)
END OF DOCUMENT
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TABLE OF CONTENTS

Page TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..
111

INTEREST OF AMICUS ............................................ 1 BACKGROUND ................................................... 2 ARGlJMENT ...................................................... 4
1.

THE NATIONAL BANK ACT APPLIES ONLY "WHEN NOT IN CONTRAVENTION OF STATE OR LOCAL LAW" ................ 4 A. The U.S. Supreme Court Has Cited § 92a as an Example of the National Bank Act Subjecting National Banks to State Law.

4

B. C. D.

Section 92a(a) and (b) of the National Bank Act. ............... 5 The Meaning of Competitive Equality and Its Application to § 92a. 7 Where a Bank "Acts," Not Where the Bank is "Located," Determines Which State's Laws Apply ................................. 8 OCC Regulations Are Consistent with the OCC's Interpretive Letter No.695 ................................................ 13

E.

II.

APPLICATION OF SECTION 92a OF THE NATIONAL BANK ACT TO THE UTAH TRUSTEE STATUTES ...................... 14

CONCLUSION ................................................... 15

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ADDENDA ADDENDUM 1 - OCC Interpretive Letter No. 695 entitled "Authority of a National Bank to Conduct Fiduciary Activities Nationwide Through Trust Offices in Various States." 1996 WL 187825 ADDENDUM 2 - Utah Code §§ 57-1-21(3), 57-1-23

ii

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TABLE OF AUTHORITIES

Page CASES

Barnettv. Nelson, 517U.S. 25 (1996) .................................. 4 Blaney v. Florida Nat'l Bank at Orlando, 357 F.2d 27 (5 TH Cir. 1966) ......... 8 Cuomo v. The Clearing House Association, L.L.c., 129 S.Ct. 2710 (2009) ..... 7 First Nat'l Bankv. Dickinson, 396 U.S.122 (1969) ........................ 7 First Nat'l Bank a/Logan v. Walker Bank and Trust Co., 385 U.S. 252 (1967) .. 7 Kleinsmith v. Shurtleff, 571 F.3d 1033 (10th Cir. 2009) ................... 3,4 New Hampshire Bankers Assn v. Nelson, 460 F.2d 307 (lst Cir. 1972) ......... 8
. th . Oklahoma v. Pope, 516 F.3d 1214 (10 Cir.2008) ........................ 2

St. Louis County Nat'l Bankv. Mercantile Trust Co., N A., 548 F.2d 716 (8 th Cir. 1976) ............................................................ 8
CONSTITUTIONAL PROVISIONS, STATUTES, AND RULES Utah Code § 57-1-21 ............................................... 15 Utah Code § 57-1-21(3) .......................................... 1, 14 Utah Code § 57-1-23 .......................................... 1, 14, 15 12 C.F.R. § 9.7(e) ................................................. 13 12 U.S.C. § 92a ......... ; .............. 4,5,6,7,8,9, 10, 11, 12, 13, 14, 15 12 U.S.C. § 92a(a) ........................................ 1,5,6,10,15
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org ..... 15 28 U.......4closureFraud...... § 92(b) ..... 13 IV Courtesy of www.. § 2403(b) ...........Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 5 12 U........... ......... 9....S.... 2 acc Interpretive Letter No...... 6~ 10....C....... 5... 695 ..... 10. 12.....S....C......... 6................. 11. .......

C. and in keeping its citizens in their homes. is a non-depository national bank initiating approximately 4. Utah Code §§ 57-121(3).S. 57-1-23. § 92a(a). Clearly.org . ReconTrust Co.com/upcoming~counties. Under Utah law.aspx?state=Utah. See http://www. And the District Court so held.4closureFraud." 12 U. Because of companies like ReconTrust. (See Addendum 1..000 home foreclosures in Utah each year/ in violation of Utah law.S. the Supremacy ICalculated based on number of properties ReconTrust lists on its website for Utah. trustees of trust deeds with a "power of sale" must be members of the Utah State Bar or title insurance companies. Constitution through the National Bank Act ("NBA"). 1 Courtesy of www.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 6 INTEREST OF AMICUS The State of Utah has an interest in protecting the laws of the State in eliminating unlawful foreclosures.recontrustco. N.A.) ReconTrust is neither. the Utah Legislature has restricted who may conduct foreclosures of real estate trust deeds. But the section of the NBA governing fiduciary activities of national banks specifically states that national banks may exercise fiduciary powers "when not in contravention of State or local law.. It justifies its foreclosure actions in Utah by claiming that Utah's statute dealing with qualifications of trustees is preempted by the Supremacy Clause of the U.

2008).3d 1214 (lOth Cir. etc.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 7 Clause of the U. BACKGROUND Defendants-Appellees are asserting that the Supremacy Clause of the U.S. the State of Utah believes the matter should be remanded to the District Court to give the Attorney General of the State of Utah an opportunity to be heard on the matter. § 2403(b) and Federal Rules of Civil Procedure 5. No notice was provided to the Attorney General either by Defendants-Appellees or the District Court. As such the Attorney General of the State of Utah was entitled to receive notice of the challenge pursuant to 28 U. It is important to understand the context in which Judge Waddoups issued the ruling that is being appealed here. whether he retains jurisdiction of the on-going case.4closureFraud. 516 F. and to understand the shortness of time 2 Courtesy of www. are not matters of concern to the State and will not be addressed herein.. As a result of not being notified. Upholding Utah law is a matter of great concern to the State. Whether Judge Waddoups rightly or wrongly dissolved the State court preliminary injunction. Constitution preempts the constitutionality of Utah law.1.S.org . Pope.S. Utah's sole interest in this appeal is the preemption of State law issue involving ReconTrust. Constitution does not preempt State law when Congress has explicitly stated that federal law is not to preempt State law. consistent with this Court's ruling in Oklahoma v.C.

which probably also explains why the Attorney General of the State of Utah was never given notice. Trustees.4closureFraud. A Motion for an Expedited Hearing was filed June 6. The hearing was held on June 10. A history of the legislative amendments leading up to the current Utah statute governing trustee qualifications can be found in Kleinsmith v.2010 and the Order being appealed from here was issued June 11. Doc. 2010. Plaintiff below had obtained a preliminary injunction in State court against ReconTrust conducting any foreclosures in the State of Utah. Shurtleff. 571 F. were sending Notices of Default and Trustee's Sale to homeowners. Doc. these trustees would provide a telephone number in their notices.3d 1033. but when called the number immediately went to a 3 Courtesy of www. 2010. 1. 23. 2010. 2009). 17. 1036-37 (lOth Cir.org . A Motion to Vacate the Preliminary Injunction was filed June 4. and their home will be auctioned for sale.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 8 under which the events unfolded . like ReconTrust. stating that their mortgage is in default. 2010. Like ReconTrust. In short. beginning in 2001 the Utah legislature enacted legislation to respond to a growing problem in the State.resulted in the issues involving preemption by the NBA being dealt with in a very cursory fashion. Doc. Given the shortness of time a total of one week from the time the Motion to Vacate was filed to an Order by the Court . A Notice of Removal was filed with the District Court on May 26.

S. The U.4closureFraud. who playa pivotal role in nonjudicial foreclosures. is a legitimate State interest. ARGUMENT I.S.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 9 recording with no opportunity for the homeowner to speak to a real person. at 1048. But the observation by this Court that making it easier for citizens of the State to meet with a trustee foreclosing on their property is a "legitimate state interest" underlies the basic reason the State is adamant about upholding the Utah statute. The issue presented here is not the same as that presented in Kleinsmith. the U. In a recent case dealing with the preemption of State law by the National Bank Act. the Utah legislature enacted a statute restricting the "power of sale" to trustees who are either members of the Utah State Bar or title insurance companies with either a place or office in the State.c." Id. THE NATIONAL BANK ACT APPLIES ONLY "WHEN NOT IN CONTRAVENTION OF STATE OR LOCAL LAW" A. It took three attempts by the legislature to get the matter right. The purpose was to provide the homeowner with an opportunity to meet with the trustee face-to-face.was upheld by this Court in Kleinsmith.S. but the final language which is the current statute . Supreme Court Has Cited § 92a as an Example of the National Bank Act Subjecting National Banks to State Law. This Cpurt said "[m]aking it easier for Utahns to meet with trustees. Supreme Court cited 12 U. To resolve this problem.org . § 92a as an example in which 4 Courtesy of www.

when not in contravention of State oflocallaw"). Supreme Court has specifically identified § 92a of the NBA as a section that grants national banks authority to exercise certain powers subject to State law. 25. but only where state law authorizes state banks to do so).without explicit language in the NBA authorizing such . See. 34 (1996).S. this Court has interpreted those explicit provisions to mean what they say.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 10 Congress has granted an "explicit power with an explicit statement that the exercise of that power is subject to State law. B. Two examples were cited: (1) branching.) Thus." Barnett v. the U. Not surprisingly. Id.C. § 36(c) (McFadden Act) (authorizing national banks to operate branches. Section 92a(a) and (b) of the National Bank Act.. Then. Nelson.org . e. § 92a(a) (Comptroller of Currency may grant fiduciary powers "by special permit to national banks applying tJ1erefor. at 34. Section 92a(a) of the NBA reads: The Comptroller of the Currency shall be authorized and empowered to grant by special permit to national banks 5 Courtesy of www.the Court said: [T]hese cases [do not] control the interpretation of federal banking statutes that accompany a grant of an explicit power with an explicit statement that the exercise of that power is subject to state law.S. after citing cases that have allowed for State regulation of national banks . 12 U. 517 U.4closureFraud. (Citations omitted.g. Id.S. and (2) authorization of fiduciary powers.

(Emphasis added. (Emphasis added. . It is not exactly language one would be citing for preemption . 695. executor. or other corporations which come into competition with national banks are permitted to act under the laws of the State in which the national bank is located. the granting to and the exercise of such powers by national banks shall not be deemed to be in contravention of State or local law within the meaning of this section. registrar of stocks and bonds." OCC Interpretive Letter. 1996 WL 187285 *2. committee of estates of lunatics.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 11 applying therefore. trust companies. however. or in any other fiduciary capacity in which State banks. receiver.4closureFraud. trust companies.) The italicized portion of the above quoted statute is what the Office of the Comptroller of the Currency ("OCC") calls the "state law condition. Though they make numerous references to §92a(a) throughout their brief and quote portions of it twice. 6 Courtesy of www. guardian of estates. when noUn contravention of State or local law. and they never provide the Court with the actual language of the "state law condition.org . administrator." That language is.) Section 92a(b) reiterates the same thing: Whenever the laws of such State authorize or permit the exercise of any or all of the foregoing powers by State banks. Appellees' Br. assignee. at 34 & 39. No. the critical language upon which the entire issue of preemption of fiduciary powers of national banks pivots. or other corporations which compete with national banks. they never set out the entirety of either § 92a(a) and (b). the right to act as trustee.and ReconTrust hasn't.

ReconTrust persuaded the court below of the complete preemptive force of the NBA..122. 252. 129 S. Dickinson.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 12 C. 133 (1969). L. Walker Bank and Trust Co. Further.261 (1967)." Cuomo v. But such a position is not consistent with 150 years of banking law in this country. "[n]o one denies that the National Bank Act leaves in place some state substantive laws affecting banks. The mechanism of referring to state law is simply one designed to implement that congressional intent and build into the federal statute a self-executing provision to accommodate to changes in state regulation.c.L. The Meaning of Competitive Equality and Its Application to § 92a. The 7 Courtesy of www... 2710. This is done by having both State and national banks being subject to the State law. 2717. 385 U.S.Ct.except the ruling by the Utah federal district court on appeal here .18 (2009)..4closureFraud. firmly embedded in the statutes governing the national banking system. 396 U.has held that competitive equality applies to § 92a.org . The Clearing House Association. First Nat 'I Bankv. In what the courts call "competitive equality" State and national banks in certain specified areas are to compete on an equal basis. As Chief Justice Warren Burger put it: The policy of competitive equality is . As the Supreme Court recently noted. every court that has ruled on the application of State law to the fiduciary powers of national banks ..S.. See also First Nat 'I Bank of Logan v.

it claims that the State laws that apply by virtue of § 92a are the laws of the State where the national bank is "located. to allow [a national bank] to accomplish what a state bank could not would frustrate the purpose of section 92a.. 357 F. Therefore. . § 92" that federal fiduciary law places "national banks on an equal competitive basis with state banks and trust companies in the state where the national bank is situated. at 34. 12 U. Utah law does not apply to the foreclosures it conducts.30 (1966). D. 8 Courtesy of www. Nelson. And in Blaney v. ReconTrust claims California law applies to all its foreclosures? In 2But its trust office doing foreclosures in Utah is located in Texas." See also New Hampshire Bankers Assn v. 548 F." Not Where the Bank is "Located.2d 716.2d 307 (1 st Cir.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 13 Eighth Circuit noted "[t]he policy of competitive equality was incorporated into section 92a. 1972)." Determines Which State's Laws Apply." Appellees' Br." St.4closureFraud... therefore. ReconTrust takes the position that because it does not have a physical office or building in Utah it is not located in Utah and.. Louis County Nat 'I Bankv.2d 27. Mercantile Trust Co. Rather.S. 1976).720 (8 th Cir.org . the Fifth Circuit stated that it "is obvious from the most cursory reading of . . Because ReconTrust is headquartered in California. 460 F.. Florida National Bank at Orlando.C. Where a Bank "Acts. N A.

and the law governing such is not the same either. The OCC Interpretive Letter ReconTrust should be citing is Interpretive Letter No. (See Addendum 2.4closureFraud.) This letter addresses the issue of the application of State law to fiduciary powers of national banks operating in various States and specifically addresses the issue of where a bank is "located" for purposes of conducting fiduciary activities under § 92a of the NBA. and such marketing does not require the national bank to comply with the State law of the State in which it is doing the marketing. The letter begins by saymg: [I]n our opinion section 92a authorizes a national bank that has been granted fiduciary powers to exercise those powers in any state. but "fiduciary" activities are not the same as "marketing" activities.org . In essence.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 14 support of that position it cites several OCC Interpretative Letters which state that a national bank may "market" its product in States other than where it has a physical office. at 34-35. the state may bar the exercise of such fiduciary powers as the state also does not allow for its own state-chartered institutions. The State of Utah takes no issue with the statement oflaw in the OCC Interpretive Letters cited by ReconTrust. 695 entitled "Authority of a National Bank to Conduct Fiduciary Activities Nationwide Through Trust Offices in Various States. provided that within each state. Appellees Br. with respect to national bank fiduciary powers in a given state. 187825." 1996 WL . we believe section 92a 9 Courtesy of www. 40.

at *2-3.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 15 applies the same standards to all national banks. at *1. both those headquartered in that state and those that are"outof-state banks" with respect to that state.with respect to each state . the availability of fiduciary powers is the same for out-of-state national banks or for in-state national banks and is dependent upon what the state permits for its own state institutions. Id. For example.4closureFraud. depending upon . A state may limit national banks from exercising any or all fiduciary powers in that state.org . a national bank with its main office in one state may conduct fiduciary business in that state and other states. Therefore. the letter says: Thus.whether each state allows its own institutions to engage in fiduciary business. The letter then cites § 92a(a) and (b) of the NBA as being the basic authority for national banks to exercise fiduciary powers. the effect of section 92a is that in any specific state. Following an historical analysis of § 92a. at *4. the letter discusses "The Authority for a National Bank to Offer Fiduciary Services in a State Is the Same 10 Courtesy of www. From there it launches into a detailed discussion of the powers § 92a grants to national banks. at *3. Id. it says that the NBA does not place geographic limits on where a national bank may offer fiduciary services or have trust offices. Id. but only if it also bars its own institutions from exercising the same powers. Id. Specifically. It also states that a State may limit national banks from exercising any or all fiduciary powers in that State if it also limits its own institutions from exercising those same powers.

at *10. does not imply that Congress intended that the provisions of section 92a would apply only to one state for each national bank.. the OCC embarks on a detailed discussion of the meaning of the word "located" as used in § 92a. and even if it is.4closureFraud. .S. at * 12. which it is a "citizen. the OCC says the State in which the national bank is operating is decided on a "state-by-state basis." Id. As if addressing the ReconTr~st argument in the present case directly." Id. taking full account of changes in the banking system. In part. Supreme Court has said there is no "enduring rigidity about the word 'located' as used in" the NBA. and has emphasized that "[t]here is no enduring rigidity about the word 'located'" 11 Courtesy of www. The letter says:: Other federal statutes also refer to the places where a national bank is "located" "situated" "existing" or of . As the letter notes. to suit the underlying purposes of each provision.org . Rather. but then conditions the exercise of that power with each state on a state-by-state basis under the same test: is the exercise of fiduciary powers by national banks prohibited by state law.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 16 Whether the Bank Is In-state or Out-of-state. the U. it states: "[I]n our view. does that state permit its state institutions to exercise these powers or not. section 92a . Id." The United States Supreme Court has made clear that the locationallanguage. Id. with respect to a national bank that proposes to offer fiduciary services in more than one state. . at * 12..in these statutes should be flexibly construed." Specifically: [S]ection 92a authorizes national banks to offer fiduciary services in multiple states. at 13.

or states." Id.000 foreclosures a year in Utah would qualify ReconTrust as "doing business" in the State. In wrapping up Section I of Interpretive Letter 695. multiple cities. the OCC says that a State has the authority to restrict national banks from exercising fiduciary powers if it also restricts these powers for its own State institutions: Therefore.and treated under the statute in the same manner as any other national bank in the state. lower federal courts. the letter states that a bank is to be considered located in a State where it is "merely doing business . at *13. we conclude that section 92a authorizes a . An out-of-state national bank has the same authority under section 92a to offer fiduciary services in a state that in-state national 12 Courtesy of www. including having trust offices in any state. Citizens & Southern National Bank v. at * 13. and the OCC consistently have held that. and hence subject it to the State law applicable to both State and national banks.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 17 as it is used in these provisions.) In the next paragraph." "situated" or "existing" in. at 44. Id. state trust companies or other corporations that compete with national banks to offer such services. counties.national bank that has been granted fiduciary powers to exercise those powers in any state.4closureFraud. or be a "citizen" of. Hence the Supreme Court.S. Bougas. for purposes of these statutes. (Citations omitted. 434 U. a national bank is not located only in the place of its main office but can be "located.org . Certainly conducting 4. except that the bank may not offer such services in a state that prohibits it and in which the state does not authorize or permit its state banks.

at 40. can limit out-of-state national banks under section' 92a. ReconTrust also cites OCC regulations for the proposition that a trustee is authorized to act in all fifty states in accord with the laws of the State where the bank is "located" .R. and they do not quote it.7 (e) uses the word "acts" for determining where a bank is located. E. But again. OCC Regulations are Consistent with the OCC's Interpretive Letter No. and hence which State's laws apply. 695. The state has the authority to restrict national banks from exercising these powers only if it restricts these powers for its own state institution.org . They cite 12 C. * * * Only state laws that bar any or all fiduciary activities to all corporate fiduciaries. § 9. The state laws that apply to a national bank's fiduciary activities by virtue of 13 Courtesy of www.7(e) states: (1) State laws used in section 92a. § 9.7(e) as authority. Id. at * 16. Section 9.R. the OCC clearly takes the position that a national bank's fiduciary powers are restricted in the State in which it is "doing business" if that State also restricts the exercise of those same powers to that State's own financial institutions.4closureFraud.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 18 banks have. So. Appellees' Br.F. and other corporations. as ReconTrust contends. 12 C. in particular including the state's own state banks. rather than preempting State law.meaning a physical office. that is not what the regulation says. state trust companies.F.

) Both State and national banks may be a trustee ofa trust 3"State laws limiting or establishing preconditions. Those laws would include such things as establishing a minimum net worth.57-123. The Utah trustee qualification statute limits the trustees who have a power of sale to foreclose a trust deed to members of the Utah State Bar and title insurance companies with offices in the state. state laws limiting or establishing preconditions on the exercise of fiduciary powers are not applicable to national banks. etc.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 19 12 U. 92a are the laws of the state in which the bank acts in a fiduciary capacity. rather than the OCC regulations saying that the only state laws that may be applied to fiduciary activities of a national bank are the laws of the state where the national bank is physically located. Appellees' Br. at 39. (2) Other state laws.) Thus. (Addendum 1..C.S. II. who may be on the bank's board of directors.S. (Emphasis supplied.C. the regulation actually says the State laws that apply to national banks are those of the States where the bank "acts.7(e)(2). See Utah Code §§ 57-1-21(3).3 That is a far different criterion than where the bank has a physical building. who can be an officer of the bank.. These preconditions are the exclusive province of the ace. APPLICATION OF SECTION 92a OF THE NATIONAL BANK ACT TO THE UTAH TRUSTEE STATUTES. refers to laws other than those governing fiduciary duties under § 92a. Except for the state laws made applicable to national banks by virtue of 12 U. 14 Courtesy of www." as used in § 9.4closureFraud.org . 92a.

org .S. 12 U.4closureFraud.consistent with the State law condition of § 92a. Dated this 16th day of February. Jensen Jerrold S. Is/Jerrold S.C.achieving the desired goal of "competitive equality" . but neither possess the "power of sale" necessary to foreclose a trust deed. As a result. the Utah statute treats both State and national banks equally . Thus. CONCLUSION The grant of an explicit power by Congress to national banks to exercise fiduciary powers is also accompanied by an explicit statement that those powers are subject to State law.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 20 deed. Jensen Assistant Attorney General Attorney for Amicus Curiae 15 Courtesy of www. § 92a(a) and (b). and that ReconTrust is not a qualified trustee for purposes of conducting trustee foreclosures in Utah. this Court should hold that § 92a of the National Bank Act does not preempt Utah's law governing trustee qualifications. Utah Code §§ 57-1-21 and 57-1-23. 2011.

UT 84771 Tel: (253) 250-9449 Michael Huber 8170 S.com Tel: (412) 288-3131 David Bird Reed Smith LLP 225 Fifth Avenue Pittsburgh. and the following were served electronically via the Court's CMJECF system: E.org .C. UT 84093 J ames Martin Reed Smith LLP 225 Fifth Avenue Pittsburgh. Suite 160 Salt Lake City. UT 84121 Tel: (801) 833-0500 Fax: (801) 931-2500 Roy W. Craig Smay 174 E. Ensor Vantus Law Group. George. PA 15222 Dbird@ReedSmith. P. CA 90071-1514 Tel: (213) 457-8000 Fax: (213) 457-8080 Richard F. Arnold (Admitted Pro Hac Vice) Reed Smith LLP 225 Fifth Avenue Pittsburgh. P A 15222 Tel: (412) 288-3131 Fax: (412) 288-3063 Is/Sherri L. 3165 East Millrock Drive. #101 St. South Temple Salt Lake City. Cornell Courtesy of www. the foregoing BRIEF OF AMICI CURIAE OF THE STATE OF UTAH was electronically filed with the Clerk of the Court. 2011.4closureFraud. 300 E. Suite E5 Sandy.com Tel: (412) 288-3131 Amir Shlesinger (Admitted Pro Hac Vice) Reed Smith LLP 355 South Grand Avenue.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 21 CERTIFICATE OF ELECTRONIC FILING AND SERVICE I hereby certify that on this 16th day of February. Suite 2900 Los Angeles. UT 84111 Tel: (801) 539-8544 Cameron Soran (Law Student) 40 N. PA 15222 Jmartin@ReedSmith. Highland Drive.

4closureFraud.S.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 22 CERTIFICATE OF DIGITAL SUBMISSION THIS IS TO CERTIFY THAT: (1) All required privacy redactions have been made.0i with virus definitions updated daily) and.org . /s/Sherri L. are free of viruses. and (2) The digital submissions have been scanned for viruses with the most recent version of a commercial virus scanning program (McAffee Virus Scan Enterprise Version 8. according to the program. Cornell Courtesy of www. every document submitted in digital form or scanned PDF format. and with the exception of those redactions.

Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 23 ADDENDUM 1 Utah Code §§ 57-1-21.4closureFraud. 57-1-23 Courtesy of www.org .

. No Claim to Orig. 2/1512011 Courtesy of www. Conveyances (Refs & Annos) ~ § 57-1-21. 1953 § 57-1-21 Page 1 West's Utah Code Annotated CUlTentness Title 57. Insurance Code.westlaw. (iii) any corporation authorized to conduct a trust business and actually conducting a trust business in Utah under the laws of Utah or the United States. or (D) deliver funds by a bidder at a foreclosure sale to pay for the purchase of the property secured by the trust deed. (ii) any depository institution as defined in Section 7-1-103. US Gov. (C) deliver funds to reinstate or payoff the loan secured by the trust deed.Page 2 of4 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 24 U.A.org . or insurance company authorized to do business and actually doing business in Utah under the laws of Utah or the United States. to conduct insurance business in the state. © 2011 Thomson Reuters.aspx?sv=Split&prfi=HTMLE&fn=_top&mt=Ut.4closureFraud. http://web2.. and (C) maintains a bona fide office in the state.C.comiprint/printstream. Works. Trustees of trust deeds--Qualifications (l)(a) The trustee ofa trust deed shall be: (i) any active member of the Utah State Bar who maintains a place within the state where the trustor or other interested parties may meet with the trustee to: (A) request information about what is required to reinstate or payoff the obligation secured by the trust deed. (B) is actually doing business in the state. (B) deliver written communications to the lender as required by both the trust deed and by law. (iv) any title insurance company or agency that: (A) holds a certificate of authority or license under Title 31A. Real Estate "§J Chapter 1.

A. 110. Laws 1985. and (iii) at which a trustor of a trust deed may in person: (A) request information regarding a trust deed. eff. Laws 1969. 2/1512011 . c. 2002. 236. aspx?sv=Sp lit&prft=HTMLE&fn=_ top&mt=Ut. (iii). Laws 1996. Courtesy of www. . Chapter 209. c. Works. April 30. 1953 § 57-1-21 Page 2 (v) any agency of the United States government. (v). 181. (c) This Subsection (1) is not applicable to a trustee of a trust deed existing prior to May 14. c. (2) The trustee of a trust deed may not be the beneficiary of the trust deed. 162.C. eff. a person maintains a bona fide office within the state if that person maintains a physical office in the state: (i) that is open to the public. 2001. 1996. 209. eff. No Claim to Orig. § 1. § 1. or regulated by the Farm Credit Administration or its successor. Laws 2001.. c. 64. July 1. c.Page 3 of 4 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 25 U. § 25. chartered.comiprint/printstream. Laws 2002. or (vi) any association or corporation that is licensed. or (vi). nor to any agreement that is supplemental to that trust deed. c. US Gov. § 1. (d) The amendments in Laws of Utah 2002. including reinstatement or payoff funds. § 2. (4) A trust deed with an unqualified trustee or without a trustee shall be effective to create a lien on the trust property. or (B) deliver funds..4closureFraud. c. 1963. § 3. © 2011 Thomson Reuters. but the power of sale and other trustee powers under the trust deed may be exercised only if the beneficiary has appointed a qualified successor trustee under Section 57-1-22. (ii) that is staffed during regular business hours on regular business days. 182. (b) For purposes of this Subsection (1).westlaw. unless the beneficiary is qualified to be a trustee under Subsection (l)(a)(ii). May 6. § 1. Laws 1963. (3) The power of sale conferred by Section 57-1-23 may only be exercised by the trustee of a trust deed if the trustee is qualified under Subsection (l)(a)(i) or (iv). CREDIT(S) Laws 1961.org http://web2. to this Subsection (1) apply only to a trustee that is appointed on or after May 6.

2008.aspx?sv=Split&prft=HTMLE&fn=_top&mt=Ut.. 1953 § 57-1-21 Page 3 2002. 177. Copr (c) 2010 Thomson ReuterslWest.A. Current through 2010 General Session. efT. Works.org http://web2. including results from the November 2010 General Election. c. Laws 2004. Courtesy of www. govt. 2/15/2011 . Laws 2008.C. U.4closureFraud.Page 4 of4 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 26 U. c. No claim to orig.. eff May 3. § 41. May 5. 2004. 250. END OF DOCUMENT © 2011 Thomson Reuters. US Gov.westlaw.comiprintiprintstream.S. No Claim to Orig. § 1.

CREDIT(S) Laws 1961. § 5. Laws 2001. c.C. Current through 2010 General Session. govt. a trust deed may be foreclosed in the manner provided by law for the foreclosure of mortgages on real property. including results from the November 2010 General Election.A. U. 2001. or. April 30. 1953 § 57-1-23 Page 1 West's Utah Code Annotated Currentness Title 57.aspx?sv=Split&prft=HTMLE&fn=_top&mt=Ut. The power of sale may be exercised by the trustee without express provision for it in the trust deed. efI. Real Estate ''l§l Chapter 1.S. END OF DOCUMENT © 2011 Thomson Reuters. at the option of the beneficiary. c. § 5. US Gov.org http://web2. Courtesy of www. 181. No Claim to Orig. Conveyances (Refs & Annos) -+ § 57-1-23...Page 2 of2 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 27 U. after a breach of an obligation for which the trust property is conveyed as security.com/print/printstream. No claim to orig.4closureFraud. Works. 236.westlaw. Sale of trust property--Power oftrustee--Foreclosure of trust deed The trustee who is qualified under Subsection 57-1-21 (1)( a)(i) or (iv) is given the power of sale by which the trustee may exercise and cause the trust property to be sold in the manner provided in Sections 57-1-24 and 57 -1-27. Copr (c) 2010 Thomson ReuterslWest. 2115/2011 .

org . 695 entitled "Authority of a National Bank to Conduct Fiduciary Activities Nationwide Through Trust Offices in Various States.Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 28 ADDENDUM 2 OCC Interpretive Letter No.4closureFraud." 1996 WL 187825 Courtesy of www.

for each state. Rep.010. 695.4closureFraud. P 81. provided that within each state. 1996 WL 187825 (O. 1995. Ltr. Esq. Banking L. . We also agree with your view that. 695. on a parity with the state-chartered institutions in each state. OCC Inter.1 OCC Q. Hence. As set out below.e. the securities deposit requirements of section 92a(f) apply on a state-by-state basis.) Office of the Comptroller of the Currency (O.C 92a(f) would apply to such a national bank. 695 December 1995 March 1996 Laws 12 U. Ohio 43271-0158 Re: Authority of a National Bank to Conduct Fiduciary Activities on a Nationwide Basis through Trust Offices in Various States .C 92A(a)12 US. with respect to national bank fiduciary powers in a given state. Rep. OCC Inter.J. requesting the opinion of the Office of the Comptroller of the Currency (OCC) on your position that 12 US. Fed.C. we believe section 92a applies the same standards to all national banks.C.J.C 92a authorizes a national bank that has been granted fiduciary powers to conduct fiduciary activities through limited purpose trust offices in multiple states. 147. 211512011 Courtesy of www. © 2011 Thomson Reuters.J. for a national bank administering trust assets at offices in more that one state.1 OCC Q. P 81. Senior Vice President and General Counsel Banc One Corporation 100 East Broad Street Columbus.. 1996 WL 187825 (O. 15 NO. 147. 147. Dear Mr.Page 2 of19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 29 15 OCC Q.aspx?sv=Split&prfi=HTMLE&fn=_top&mt=Ut. You also ask our views on the manner in which the requirement for the deposit of securities in 12 US. 92Al Steven Alan Bennett. 147.S..C) Page 1 15 OCC Q. US Gov.CC) Interpretive Letter *1 AUTHORITY OF A NATIONAL BANK TO CONDUCT FIDUCIARY ACTNITIES NATIONWIDE THROUGH TRUST OFFICES IN VARIOUS STATES Interpretive Letter No. only on the basis of those trust assets the bank administers from offices in that state. No Claim to Orig. we are in general agreement with your conclusion regarding the scope of section 92a(a) & 92a(b). Works. http://web2.comiprint/printstream. Ltr. 15 NO. both those headquartered in that state and those that are "out-of-state banks" with respect to that state.CC.J. Banking L.westlaw. Fed. the state may bar the exercise of such fiduciary powers as the state also does not allow for its own state-chartered institutions.org .. In essence. i. in our opinion section 92a authorizes a national bank that has been granted fiduciary powers to exercise those powers in any state.010. Bennett: This is in reply to your letter of August 28.

or obtain the approval or certification of. Courtesy of www. Ohio. And the laws of some states at least appear to require that an out-of-state national bank qualify to do business as a foreign corporation before conducting fiduciary business there.org http://web2.c. and such offices. You also contemplate seeking approval to conduct fiduciary business and operate trust offices in Louisiana and New York. .westiaw. The trust bank may be one of the company's existing' national banks. and Wisconsin. Statutes The basic authority for national banks to exercise fiduciary powers is contained in 12 U. Banking L. Rep. trust companies. No Claim to Orig..have statutes that would prohibit. Fed.1 OCC Q. national banks headquartered in other states) from conducting fiduciary business in their states. when not in contravention of state or local law. (3) Section 92a preempts any state laws that deny or restrict the right of national banks to conduct fiduciary business on this basis. US Gov. Ohio. Texas.c. Works. or you may organize a new bank for that purpose.c. the right to act as trustee. You also state that some states require that a national bank seeking to conduct fiduciary business or accept fiduciary appointments in those states first register or make filing with. Ltr. West Virginia. to conduct fiduciary business in a state on a parity with that state's own statechartered institutions. receiver. or other corporations which come into competition with national banks are permitted to act under the laws of the state in which the national bank is located. limit. OCC Inter. or condition certain national banks (namely. You request the OCC's confirmation of your views on the following positions: (1) A national bank may conduct fiduciary business and have trust offices in more than one state under 12 U.J.4closureFraud. 2115/2011 .S. 147. assignee. You also believe you could serve customers better as one integrated fiduciary operation. 1996 WL 187825 (O.aspx?sv=Spiit&prft=HTMLE&fn=_top&mt=Ut.including several of the states in which the proposed trust bank would have trust offices . 147. trust bank may also seek approval for operations in other states. Oklahoma. and national banks' exercise of fiduciary powers under section 92a is not subject to state approval requirements.J. Utah.Page 3 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 30 15 OCC Q. Illinois. registrar of stocks and bonds. executor. (2) Section 92aauthorizes a national bank. multi-bank holding company headquartered in Columbus. And (4) any securities deposit a national bank must make in any state under section 92a(f) is based on the trust assets the bank administers from offices in that state. 15 NO. or in any other fiduciary capacity in which state banks. You propose initially to seek approval to conduct fiduciary business and operate trust offices in each of the 11 states in which the company currently has one or more bank subsidiaries and conducts fiduciary business: Arizona. (b) Grant and exercise of powers deemed not in contravention of state or local law © 2011 Thomson Reuters.comiprintiprintstream. Colorado. Kentucky.c.S. The company wishes to combine all its fiduciary business in one entity. either in general or with respect to various specific kinds of fiduciary appointments.) Page 2 Background The Proposal Banc One Corporation ("the company") is a registered. and not on the bank's total trust assets nationwide. state officials. that has a total of 65 bank subsidiaries in 11 states. *2 You relate that many states .010. are not covered by the McFadden Act. Currently. the company conducts fiduciary business in these states through two limited purpose trust companies and the trust departments of several of the company's banks. You propose consolidating all of your fiduciary activities nationwide under a single national bank charter (the "trust bank"). 92a. administrator. The present structure prevents the company from taking full advantage of economies of scale and creates obstacles to centralized management and administration. guardian of estates. 92a(a) and 92a(b): (a) Authority of Comptroller of the Currency The Comptroller of the Currency shall be authorized and empowered to grant by special pennit to national banks applying therefor. including an out-of-state national bank. Indiana. P 81. if limited to fiduciary services. In the future. 695. committee of estates of lunatics.

See." Then. in subsection (a). However. Assistant Director (January 28. 15 NO. 147.c. by the clause "when not in contravention of state or local law.1996 WL 187825 (O.S.J. Rep. or the customers for whom. A. 12 U. One court reached the opposite result and found that a trust office was subject to the McFadden Act. Louis County National Bank v.S. P 81. As discussed in Part II-B below.com/printiprintstream. Discussion 1. (For some states. Fed. or lending money. the bank may so act.4closureFraud. Federal law does not place geographic limits on where a national bank may offer fiduciary services or have trust offices. Works. the treatment of the trust function in section 92a as something segregated from the "commercial side" of the bank: reflects this.c.010. 12 U. 36 and 81 are not intended to reach all activities in which national banks are authorized to engage.c. be a branch as defmed in 12 U. OCC staff have consistently taken this position. Authority for a National Bank to Exercise Fiduciary Powers in Different States.1 OCC Q." Congress has conditioned the grant of fiduciary powers to national banks. but only core banking functions. Letter from James M. the state law condition may have the effect of creating a geographic limit. NA.S. 36. trust companies. 1992) (unpublished). US Gov. in subsection (b) Congress has limited the state law condition in the manner set out. 92a(a) and 92a(b).. 12 U. national banks so acting shall be required to make similar deposits and securities so deposited shall be held for the protection of private or court trusts. *3 Section 92a also imposes a number of administrative requirements. Thus. 147. in order to be a branch and so subject to the McFadden Act. Here we are considering whether the fiduciary power as granted by federal law is itself geographically limited).c.c. Securities IndustlY Association. In our discussion.2d 716 (8th Cir. Indeed. http://web2. Ltr. 433 U. 2/15/2011 Courtesy of www.J. a national bank office.S.g. Mercantile Trust Company. 1976). OCC Inter.c. denied. District Counsel (June 5. The McFadden Act limits where national banks may have branches. That is discussed in section B below.westlaw. e. a bank facility must.S. 36(j): it must perform at least one of the core banking functions of receiving deposits. 92a(f)(frrst sentence). Kane. Section 92a does not contain any language that limits where a national bank may conduct its fiduciary business. The only provision in the national banking laws that arguably could impose a geographic limit is the McFadden Act. Fiduciary activities under section 92a are not such core banking functions. 695. cert.c. 479 U. Banking L.) Page 3 Whenever the laws of such state authorize or permit the exercise of any or all of the foregoing powers by state banks.org . Among them is: Whenever the laws of a state require corporations acting in a fiduciary capacity to deposit securities with the state authorities for the protection of private or court trusts. The locational limitations of 12 U. No Claim to Orig. among other things.S. the granting to and the exercise of such powers by national banks shall not be deemed to be in contravention of state or local law within the meaning of this section. there is nothing in section 92a that imposes any limitations on the places where.. this clause is referred to as the "state law condition. that provided only fiduciary services would not be subject to geographic limitations under the McFadden Act. That is. 548 F. Glidden.S. See St. if a national bank is authorized under section 92a to act in any or all of the listed fiduciary capacities. as provided by the state law. 1990) (unpublished). paying checks.. See Clarke v. or other corporations which compete with national banks.aspx?sv=Split&prfi=HTMLE&fn=_top&mt=Ut.. 909 (1977). The court based this conclusion on the position that what could be a branch for McFadden Act © 2011 Thomson Reuters. 388 (1987). Letter from William B.lFN1J If there is a federally imposed geographic limit on national banks' fiduciary powers it must lie elsewhere.Page 4 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 31 15 OCC Q.

another earlier case that ruled a national bank from Missouri could not have a trust office in Illinois because the office would be a branch and therefore impermissible under the McFadden Act is also superseded. the effect of section 92a is that in any specific state. 695. 147.aspx?sv=Split&prft=HTMLE&fn=_top&mt=Ut. A state may limit national banks from exercising any or all fiduciary powers in that state. both in the state of its main office and in other states. Hughes. B. a national bank with its main office in one state (such as the proposed trust bank) may conduct fiduciary business in that state and other states.with respect to each state .53 N.010. Ltr. 15 NO. Works.fFN2 ] It might be argued that this provision allows a state to prohibit or limit out-of-state national banks from exercising fiduciary powers in that state. Congress has conditioned national banks' exercise of fiduciary powers on state law.) Page 4 purposes was not limited to offices performing the functions in section 36(j) but could include other functions. and circumstances surrounding the adoption of the language make it absolutely clear that. See Boatmen:~ National Bank of St. However. Courtesy of www. just as with the securities brokerage powers at issue in Clarke v. "when not in contravention of state or local law"). Accordingly. emphasizing the centrality of the core banking functions in the defmition of branch under section 36(i). Thus. Rep. No Claim to Orig. You point out that many states have laws prohibiting or restricting out-of-state fiduciaries.org http://web2. The states have only a limited authority to restrict the geographic scope of national banks' fiduciary powers: a state may prevent national banks from offering fiduciary services in the state only if it also does not permit its own state institutions to offer those fiduciary services. We believe this analysis has been superseded by the Supreme Court's decision in Clarke v.Page 5 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 32 15 OCC Q. You ask whether those laws would apply to prohibit an out-of-state national bank from offering fiduciary services in such a state or whether the national bank may offer such services. SIA.whether each state allows its own institutions to engage in fiduciary business. 385 Ill. then national banks are authorized to exercise those fiduciary powers in that state. US Gov.1 OCC Q. Banking L. 1996 WL 187825 (O. there is no inherent geographic limitation to the fiduciary powers granted by federal law under section 92a.J. if a state permits its own state institutions to exercise certain fiduciary powers. © 2011 Thomson Reuters. 147. including out-of-state national banks. including at trust offices in other states... Therefore.E. but only if it also bars its own institutions from exercising the same powers. *4 Therefore. and the state may not limit them. oce Inter. a national bank (such as the proposed trust bank) with its main office in one state may offer fiduciary services to customers anywhere. under section 92a.C. solely as a matter of federal law without regard to the state law condition. 2/15/2011 . the statutory language. We discern no basis in the statutory language to apply section 92a in a different manner to a national bank's proposed trust office or other proposed fiduciary business in a state depending upon whether the national bank also has its main office in that state or not. This question hinges upon the scope and effect of the state law condition in section 92a (the clause. 1. Similarly. Thus. thereby giving the states a power to limit national banks that the states would not otherwise have. legislative history. and statutory development of section 92a show how the state law condition is limited.J. Section 92a does not limit the application of this principle only to national banks whose main office is in the state in question. Louis v. from providing fiduciary services or having trust offices within their state.4closureFraud.westlaw. as set forth below.2d 403 (1944). The language. P 81.c. the availability of fiduciary powers is the same for out-of-state national banks or for in-state national banks and is dependent upon what the state permits for its own state institutions. depending upon . a national bank with fiduciary powers is authorized to offer those services without geographic limit. 431. and have trust offices. legislative history. In this clause. Fed. SIA.com/print/printstream.

1 OCC Q. 416 (1917). 147. 244 U. the state law condition was apparently unlimited in scope. when not contravention of state or local law. See note 2 above. 640. 147. 695. 150 N. National banks were first authorized to engage in fiduciary activities in 1913.Page 6 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 33 15 OCC Q. Pub.. P 81.J. 262 (1913). 17 (1924). and other fiduciary affairs were particularly matters of local concern and thus were exclusively reserved for the states.S. Whenever a state permits its state institutions to exercise fiduciary powers. Trusts. Fed. then by the rule of law set out in section 92a(b). the exercise of fiduciary powers by national banks shall not be deemed in contravention of state or local law and therefore automatically meets the state law condition for the exercise of powers. See Act of December 23.4closureFraud. Federal Reserve Banking Practice 680 (1926). First National Bank of Bay City V. At the time. the right to act as trustee. because Michigan law allowed foreign corporations to act as fiduciaries in Michigan. even in a state that did not permit its own state banks. A national bank in Michigan had obtained fiduciary powers from the Federal Reserve Board. rather than the OCC. See also 51 Congo Rec. It also listed four. without the state law condition. The Michigan Supreme Court held. Constitution because Congress did not possess the power to convey fiduciary powers on any corporation including national banks. estates.J. As originally enacted. absolute grant of the power to act in the four listed fiduciary capacities. but five state trust companies brought action in state court to question the right of the national bank to act as trustee.S. 11(k). OCC Inter. executor. specific fiduciary capacities in which national banks could act. Under the © 2011 Thomson Reuters.C. 883-84 (1913). and national banks in any and every state would have had that power. first. Fellows. Any other laws of the state that would prevent national banks from exercising those powers therefore conflict with section 92a and are preempted. We have found no legislative history in 1913 explaining the purpose of the state law condition. 335 (1916). that it was not in contravention of state law for a national bank to be granted such powers. 192 Mich. Ltr. This original version of section 92a was very short. In a case arising in Michigan. Parker Willis & William H. administration of this provision was placed with the Federal Reserve Board. *6 The 1913 statute was immediately controversial in some states.west1aw. Duncan.C. 38 Stat. and only four. Steiner. See Fellows V. Burnes National Bank v. Congress included this provision to enhance national banks' power to compete with state-chartered institutions which. US Gov.comlprint/printstream. administrator." H. and registrar of stocks and bonds. it would have been like the power of a national bank to engage in any of its other federally authorized powers: the federal power cannot be prohibited or curtailed by the states. Rep.. but in light of subsequent developments. Works. That is. 63-43. Congress included this power in section 11(k) of the Federal Reserve Act. Banking L. 1. 265 U. If granted in this absolute manner.org http:~/web2. 211512011 .010. the statute would have been a simple. No.aspx?sv=Split&prft=HTMLE&fn=_top&mt=Ut. 251. had shown ability to cut into the fields presumably appropriated to the national banks. its purpose clearly was to limit the newly granted fiduciary powers to national banks in states where state institutions had fiduciary powers. executor.S. But in 1918 Congress added the second paragraph (now codified at section 92a(b» with the express intention of specifically limiting it. but second that section 11(k) was invalid under the U. 1913. the Supreme Court upheld the constitutionality of section 11 (k). No Claim to Orig. Courtesy of www.W. The United States Supreme Court reversed the re~ult and upheld the constitutionality of section ll(k). This original version contained the basic state law condition ("when not in contravention of state or local law"). administrator.) Page 5 *5 As originally enacted in 1913. or registrar of stocks and bonds under such rules and regulations as the said board may prescribe. 15 NO. First National Bank of Bay City.1996 WL 187825 (O. section 11(k) simply empowered the Federal Reserve Board: To grant by special permit to national banks applying therefor. "by reason of their broader functions. trust companies or other corporations to engage in any or all of the four activities.

J. Courtesy of www. 244 U. Works. Rep.S. and so Congress can convey it to national banks. The Court's summation of this point became the basis for the critical 1918 amendments: *7 [Section ll(k)] authorizes the exertion of the particular functions by national banks when not in contravention of the state law.Page 7 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 34 15 GCC Q. And. and so it was clearly within Congress's lawful powers. In Fellows the Court held that Congress could grant fiduciary powers to national banks.S.J. shortly after Fellows. The Attorney-General determined that granting fiduciary powers to a national bank in New York would thus be in contravention of state law and so not permitted under the express language of section ll(k). since Michigan's law did not raise it. and so the grant of fiduciary powers in section 11(k) was lawfuL Fello'ws. that is. (9 Wheat) 738 (1824). 244 U. where such powers are exercised by state trust companies. at 424. Unlike Michigan. Ltr. the same state could also ban national banks from exercising those powers. at 426. but it did not raise the question whether. although its reasoning also virtually declared that a state could not prohibit a national bank from exercising fiduciary powers if the state allowed state institutions to do so. but declared that Congress had not yet done so in section ll(k): The language [in Fellows] demonstrates the power of the National Legislature to confer authority upon national banks to act as trustee.. 17 U.. and administrator. even if state laws forbade it.aspx?sv=Split&prfi=HTMLE&fn=_ top&mt=Ut.1 acc Q.westlaw. US Gov. where the right to perform them is expJ.S.c. Even if Congress's discretion to add additional powers to national banks is not unlimited and can include only certain powers. Section lICk) met this circumstance because it granted the fiduciary powers only when not· in contravention of state law.S. if the state granted them to competing state institutions). 244 U. 147. Moreover. Congress has the implied power to charter national banks as a means to carry out any of the enumerated powers of the federal govermnent. Fellows. Bank (?f the United States. and administrator. Thus. even though the state law discriminates against the national agencies in this regard.essly given by the state law or what is equivalent is deducible from the state law because that law has given the functions to state banks or corporations whose business in a greater or less degree rivals that of national banks. OCC Inter. it must include the power to grant to national banks whatever powers a state has conferred on state banks and state corporations that compete with national banks. Maryland. Michigan law both permitted Michigan corporations to act in fiduciary capacities and did not prohibit other corporations from also so acting. 147. at 418-20. the Court also offered an additional.) 316 (1819) and Osborn v. at 425-26.c. Fellows. 2/15/2011 . The opinion noted that the decision in Fellows demonstrated that Congress had the authority to grant fiduciary powers to national banks.comiprint/printstream. narrower analysis for Congress's authority which later became the basis for the 1918 amendments to section 11(k). thus engendering from the state law itself an implication of authority in Congress to do as to national banks that which the state law has done as to other corporations . and this includes the power to grant national banks the authority to engage in purely private functions if Congress judges the possession of such functions meet for making the bank successful and so able to carry out its public functions.. Fed.) Page 6 analysis first set forth in lv1cCulloch v.. 22 U.. In 1917. in the Court's analysis. the case did not directly reach that issue. However. No Claim to Orig. it was in the discretion of Congress to determine what private powers should be given to national banks. the state has rendered that power one reasonably needed for the successful operation of a national bank.S.. The power © 2011 Thomson Reuters.010. 244 U. 695.S.org http://web2.4closureFraud.e. this issue was addressed in an opinion of the United States Attorney GeneraL The question was asked whether national banks located in New York could act as trustee. 15 NO. the laws of New York empowered only trust companies organized under New York law to act in fiduciary capacities and expressly forbade any other corporation from doing so. (4 Vvneat. under the authority of the "when not in contravention" clause. executor. executor. By granting a power to such competing state institutions. this situation met the Court's narrower test for when Congress would have the power to grant national banks fiduciary powers (i. Banking L. P 81. 1996 WL 187825 (O.

L. therefore. Finally. 220. Banking L. Courtesy of www. and the relationship between them. Ltr. See id. 92a(b). even if the state laws should contain an express provision either directly or by necessary implication prohibiting national banks from doing so .s. where such powers are exercised by trust companies. 275.S. state law was silent on the power).Page 8 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 35 15 OCC Q. The purpose of this exception was merely to insure to a national bank the right to exercise fiduciary powers in any case where a state bank. 2 (1918). 147. First.c.c. while giving to the legislature of each state in the [lIst paragraph. 65th Cong. the right ex- © 2011 Thomson Reuters. therefore... Under a recent decision of the United States Supreme Court it is clearly settled that Congress has the power to confer authority upon national banks to act in these fiduciary capacities. Congress completely revised section l1(k). as long as that state permitted those powers to its own state institutions. H. trust company..comiprint/printstream. Elmira Bank. 967. 2. to permit such powers to be granted to national banks in those states in which the state law discriminates against national banks in this respect.010. The terms of section 11(k) are extended. No. 186. *831 Op.1917) (citations in original). No Claim to Orig.c.) But in this case Congress has not exerted its power. This opinion reiterated that under the state law condition. In short.aspx?sv=Split&prft=HTMLE&fn=_top&mt=Ut. or other competing corporations. ..org http://web2.S. as long as state law did not prohibit it for national banks (e. even though the state law discriminates against national banks in this regard. 40 Stat. 188 U. 15 NO.c.J. Iowa. U. Works. *9 The restrictive phrase "when not in contravention of state or local law" was retained in the [lIst paragraph [the current section 92a(a)] without change and the second and supplementary paragraph [the current section 92a(b)] was inserted solely to protect national banks from any possible discrimination on the part of state legislators. Rep. Second.. even if state law did not allow it for state institutions. See Pub. 2/15/2011 . state banks. 188 (November 26.J. The New York statute. 695.lFN3] Shortly after the 1918 amendments. OCC Inter. Rep. a fiduciary power could be granted to a national bank. Easton v. 2d Sess. and state regulations which conflict with the congressional enactments are invalid. This language was expressly added to limit the state law condition ("when not in contravention of state or local law") so as to achieve the result adumbrated in Fellows: a national bank could exercise fiduciary powers in a state. or other competing corporation is permitted under the state law to exercise those powers. 479. Section 2 moreover sets forth that it shall not be deemed to be "in contravention of state or local law" to permit the exercise of such powers by national banks whenever the laws of the particular state authorize or permit the exercise of such powers by state banks. for it is apparent that the succeeding paragraph is permissive rather than restrictive and operates solely as an exception to the restrictive clause of the [lIst paragraph. even if state law prohibited it. and that the new paragraph acted only to limit the state law condition and did not decrease the situations in which national banks could be granted fiduciary powers: The phrase "when not in contravention of state or local law" is the only restrictive clause applicable in this discussion. By section 11 (k) it has explicitly constituted the local statutory provisions as the criterion of the corporate capacity of national banks.4closureFraud.. can not fairly be said to deny to national banks operating in New York a power Congress intended they should have. 161 U. P 81. Van Reed v National Bank.1996 WL 187825 (O..R.) Page 7 of Congress to determine how far national banks may be subject to state control is settled.. Congress added the language that is now 12 U. 968-69 (1918). In 1918.westlaw. 65-218. trust companies. the new paragraph.S. or other corporations competing with national banks. US Gov .g. Att'y Gen. (Davis v. 147. the General Counsel of the Federal Reserve Board issued an opinion interpreting the state law condition.S.S. Fed.1 OCC Q. 92a(c)-92a(i). 198 U. No. Congress also added a number of substantive provisions governing national banks' conduct of fiduciary powers now codified in 12 U. Congress expanded the list of expressly specified fiduciary capacities to the current eight and added the final power to act in any other fiduciary capacity permitted to state institutions in the state in which the national bank is located. 554.

OCC Inter. Courtesy of www.org http://web2. 695. eliminates the possibility of discrimination against national banks by providing. Res. No.. the Supreme Court [mally decided Congress's power to authorize national banks to exercise fiduciary powers even over directly conflicting state law. trust company. 2039.4closureFraud. 87-722. national banks having the permit of the Federal Reserve Board may act as executors if trust companies competing with them have the power. 2/1512011 ." Id. or other competing corporation in that state is permitted to exercise the powers applied for by the national bank.S.S. 1996 WL 187825 (O. the Court reasoned Fellows already provided the answer: if Congress has the authority to grant a power to national banks and has granted the power. 92a(a) and 92a(b) . P 81. but it cannot escape its constitutional obligations by the device of denying jurisdiction to courts otherwise competent..") In 1924. Since 1918.have remained substantively unchanged. The Supreme Court. S. then the states may not deprive national banks of that power (except as Congress may have allowed). but that Congress had added the second paragraph to limit the first: This says in a roundabout and polite but unmistakable way that whatever may be the state law. The power of Congress to confer a power on national banks: *10 "excluded the power of the state in such case.J.c. See Pub. 92a).aspx?sv=Sp1it&prft=HTMLE&fu=_ top&rnt=Ut. Burnes National Bank v.. the provisions granting national banks the authority to engage in fiduciary activities . even if the subject area is one characteristically within the domain of the states. In the case at hand. in the second paragraph.e. Former section 11(k) of the Federal Reserve Act was repealed." 244 U. 265 U. that the Federal Reserve Board may legally approve the application of any national bank to exercise any of the fiduciary powers authorized by section l1(k) unless there is an express statute of the state in which the national bank is located which either directly or by necessary implication prohibits a national bank from exercising those powers. the Board may approve the application if any state bank.) Page 8 pressly to prohibit national banks from exerclsmg fiduciary powers. 265 U. in an opinion by Justice Holmes. There is nothing over which a state has more exclusive authority than the jurisdiction of its courts. So here . at 23. although it might possess in a general sense authority to regulate such business. 2d © 2011 Thomson Reuters.. Congress. 1919). therefore.transferred administration of the provision from the Federal Reserve Board to the OCe. . that no state statute shall be construed to prohibit a national bank from exercising any fiduciary power which a state bank. at 24 (quotation from Fellows. the state court result might be final.010. 265 U. A national bank in Missouri was named executor in a will. the criteria in the second paragraph were met. but the state courts denied appointment on the grounds that under Missouri law only state trust companies could so act and thus by the laws of Missouri national banks were not authorized to act as executors. 5 Fed..S. US Gov. 668 (1962) (codified at 12 USc.Page 9 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 36 15 GCC Q. BulL 363-64 (March 31. 147. "and thus the naked question presented is whether Congress had the power to do what it tried to do.com/print/printstrearn. See also Annual Report of the Comptroller of the Currency 13 (1918) ("Under its terms [section 11(k) as amended in 1918] States are in effect prohibited from denying to them [national banks] the right to exercise trust powers where such powers are exercised by state corporations . Works.S.the state cannot lay hold of its general control of administration to deprive national banks of their powers to compete that Congress is authorized to sustain. 15 NO.J. To this question. In 1962. 76 Stat. Duncan. or other competing corporation can exercise.1 OCC Q. and its provisions reenacted (with the OCC substituted for the Board) as a separate law.. .S. with the state law condition. Fed. The states cannot use their most characteristic powers to reach unconstitutional results. Ltr.c. Rep. first noted that· under the first paragraph alone. 1. No. as a rule of law. other citations omitted). Now that Congress has expressed its paramount will this language is more apposite than ever. and that even in the case where there is such an express statute.westlaw. No Claim to Orig. Banking 1. 425. 147. Rep.. 87th Cong. trust company. Congress . 17 (1924). It is respectfully submitted. to use that authority to prohibit such business from being united by Congress with the banking function.currently codified at 12 U.

third. P 81. then it is also within the limitation of section 92a(b). It mandates that if a state permits its . Courtesy of www.com/print/printstream.. Thus. Congress has limited the state law condition by declaring that if a state allows its state institutions to exercise fiduciary powers.1996 WL 187825 (O. then it could not apply to restrict national banks from exercising their congressionally authorized fiduciary powers. Thus. Fed. *11 Simply as a matter of pure logic under the given statutory framework. a. The provision in section 92a(b) was expressly added to limit the scope of the state law condition. national banks could exercise the fiduciary powers granted in section 92a(a) notwithstanding state lawJFN5] Fourth. its legislative development.e. other than the transfer of authority [to the OCC]. or restrict national banks from exercising it.. It is linked to the state law condition in its very language. if Congress grants a power to national banks. Second. 1 (1962) ("No change would be made from the substantive provisions of section 11(k). even if a state has laws barring out-of-state fiduciaries. Banking Page 9 L. notwithstanding state laws to the contrary. state laws limiting out-of-state fiduciaries must be subject to the same standards as other state laws.") JFN4] In sunnnary. Congress has made national banks' power to act in fiduciary capacities contingent upon state law. so that there is no alteration of existing law regarding national banks acting in fiduciary capacities. if one of the other states has laws prohibiting or limiting out-of-state fiduciaries from conducting fiduciary business in that state and the state law treats an out-of-state national bank as an outof-state fiduciary. OCC Inter. US Gov. Rep.org http://web2. national banks from other states could conduct fiduciary business in the state.J. 2. 2/15/2011 . may that state law be applied to an out-of-state national bank such as the proposed trust bank? We believe section 92a clearly establishes that such state laws may not prevent national banks from exercising fiduciary powers in a state in which state law permits the state's banks.c. Your proposal raises one fundamental question: if a national bank proposes to offer fiduciary services and has trust offices both in its home state. And so. and basic concepts of national banking law reflected in the principal cases. This determination was set into section 92a in 1918.) Sess.. Works. On the one hand. We believe this conclusion is inescapable under the statute.c. Section 92 a gives no greater authority to state laws limiting out-aI-state fiduciaries than to other state laws. In order to find that state laws barring out-of-state © 2011 Thomson Reuters. First. the states cannot prohibit. No Claim to Orig. i. trust companies or other corporations to exercise such powers. 147. in the state law condition. If this type of state law were not within the state law condition.Page 10 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 37 15 oee Q. the state of its main office.but for the state law condition.010.4closureFraud. Congress has the authority to grant fiduciary powers to national banks. if a state law restricting out-of-state fiduciaries is within the state law condition in section 92a(a). then national banks may exercise those powers. 695. Ltr.state institutions to exercise fiduciary powers. on the other hand. and it applies equally to state laws limiting out-of-state national banks as it does to state laws limiting in-state national banks.J. in what manner do the state laws of the other states allowing or limiting the exercise of fiduciary powers apply to such a national bank under section 92a? In particular. The authority for a national bank to offer fiduciary services in a state is the same whether the bank is in-state or out-of-state.aspx?sv=Split&prft=HTMLE&fn=_top&mt=Ut.westlaw.lFN6] And. impede. those laws do not bar out-of-state national banks if the state permits its state institutions to exercise fiduciary powers. a state law restricting outof-state fiduciaries from conducting fiduciary business in the state could apply to an out-of-state national bank only if the state law is within the authority conveyed upon the states in the state law condition in section 92a(a). This result is logically dictated by the statute and is consistent with similar provisions elsewhere. But.1 OCC Q. even if there are other state laws that purport to bar national banks. then national banks' exercise of them is not in contravention of state law. 147. 15 NO. several fundamental propositions are evident from the statute. [mally. and in other states.

Missouri.. that would make it an instance of Congress allowing the states to discriminate in an area of interstate commerce. The Comptroller and Bank Supervision: A Historical Appraisal 82 (1968).Page 11 of19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 38 15 OCC Q. the Supreme Court rejected such an interpretation when construing an earlier version of section 94. P 81. 1996 WL 187825 (O.g. there is no historical basis to attach significance to the use of singular nouns in the' National Bank Act. out-of-state national banks).S.S. Ltr. © 2011 Thomson Reuters.westlaw. legislative terms which are singular in form may apply to multiple subjects or objects. 147. There is no evidence of such congressional intent here. 477 U.45 (1977). That is. First National Bank in St. The state-by-state application of section 92a is consistent with other statutes. If the exercise of fiduciary powers by a national bank is asserted to be in contravention of state law.e. Courtesy of www. the standard of section 92a(b) applies whether the alleged contravention is of a state law barring all national banks or of a state law barring only some national banks (e. section 92a applies equally for each and every state. 263 U. 695. Banking 1. 35.010. 1. Wyoming v. in our view.S. Since section 92a(b) was enacted to limit the state law condition.. 1986). if section 92a is interpreted to allow states to discriminate against out-of-state banks but not against in-state banks. 139 (1986).org http://web2. Taylor. Generally. See generally 2A Sutherland Statutes and Statutory Construction 47..2d 867. Rep.J. OCC Inter. and plural terms to single.com/print/printstream. 640. The statutory language encompasses all national banks in this protection from a state's discrimination. 437. Maine v. See. 657 (1924). 803 F. 458 (1992).) Page 10 fiduciaries in such a state (i..g. 1992). Works. 131. we would have to conclude that a state law could both apply because of the state law condition and yet escape the rule of construction Congress placed on the state law condition. Louis v. Thus. Johnston v. Congress's purpose in adding section 92a(b) was to prevent states from preventing national banks from exercising fiduciary powers through prohibitory laws while allowing their own state banks and trust companies to have these powers. 2/15/2011 . with respect to a national bank that proposes to offer fiduciary services in more than one state. Robertson. It is not limited only to national banks headquartered in the state. "the laws of the state in which the bank is located") does not imply that Congress intended that the provisions of section 92a would apply only to one state for each national bank. and said the use of the singular noun in the statute was not persuasive..34 (5th ed. Moreover. US Gov. In other words. By contrast. b. Nothing in the statute or legislative history suggests that state laws that bar only a certain class of national banks are treated differently. The use of a singular term in section 92a ("whenever the laws of such state . 870 (5th Cir. The phrase may also be a reference to "the state in which the national bank is located" in the immediately preceding sentence. Indeed.c. See 1 U.EFN7J *12 Moreover.EFN8 J But such action on Congress's part is not lightly inferred. Bougas. e.. But all three of these terms refer to the same state: the state in which the national bank proposes to engage in fiduciary activities. the introductory phrase ("whenever the laws of such state . 15 NO. 434 tLS. the clear meaning is that every purported instance of the exercise of fiduciary powers by a national bank being in contravention of state law is subjected to the protective standard added in section 92a(b). ") is a reference to that state the laws of which it is asserted the grant of fiduciary powers would be in contravention of.c. 502 U. Fed. one that permitted its state institutions to exercise fiduciary powers) could be applied to out-of-state national banks.J.aspx?sv=Split&prfi=HTMLE&fn=_top&mt=Ut.. No Claim to Orig. Oklahoma.4closureFraud..S. and so we believe section 92a may not be construed to allow such discrimination against out-of-state national banks. Penrod Drilling Co. the interpretation that section 92a applies to these state laws in the same way it applies to others arises directly from the statutory language.. Such an interpretation of the statute is certainly not a "plain" one and indeed is highly implausible. "such state" is the state referred to in the state law condition ("when not in contravention of state or local law").1 OCC Q. In particular. ". See R.c. the same level of contact with a state that is sufficient to make a national bank potentially subject to that state's laws under the state law condition in section 92a(a) also makes the bank located in that state for other section 92a(a) purposes. 147. Citizens & Southern National Bank v. Textually.

section 92a authorizes national banks to offer fiduciary services in multiple states. (CCH) ~ 81-001 (interest rates). In many respects. Rep." "existing. reprinted in Fed.westlaw. Fisher v.S.J.1996 WL 187825 (O..S. 736 (S. 844 (1974) (establishing branches).Y. 108 Stat.. 548 F. Iacono. in the recent interstate branching statute Congress has provided a similar system for the application of state law to the interstate branches of national banks: within each host state. denied. 211512011 . 686 (September 11.R. (CCH) ~ 89." or of which it is a "citizen. and has emphasized that "[t]here is no enduring rigidity about the word 'located'" as it is used in these provisions. OCC Interpretive Letter No. for purposes of these statutes. 36(£)(2»." "situated" or "existing" in. 30 (D. 853 F. 429 U. (CCH)~ 83. 103-328." [FN9] The United States Supreme Court has made clear that the locational language in these statutes should be flexibly construed. 785 F. reprinted in [1994-95 Transfer Binder] Fed. OCC Interpretive Letter.D. OCC Inter.C. or be a "citizen" of. L. Rep.A. No. then clearly a host state could not prevent an out-of-state national bank from providing fiduciary services at a host state branch on the same basis as an in-state national bank. and the OCC consistently have held that.Supp.S. In these other instances.com/print/printstream. Bougas.and treated under the statute in the same manner as any other national bank in the state. 1976). 1994) (citizenship for diversity jurisdiction).J. reprinted in [1993-1994 Transfer Binder] Fed. N. or merely doing business .c.2d 255 (8th Cir. Baltimore. it is reasonable to interpret section 92a as applying in a similar state-by-state manner for national banks' interstate fiduciary activities. No Claim to Orig. Decision on the Applications of American Security Bank. Courtesy of www. Works.602 (directors' residency qualification). 538 F. See Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. 94-05. Banking L. 1992) (original jurisdiction). Banking L. but then conditions the exercise of that power within each state on a state-by-state basis under the same test: is the exercise of fiduciary powers by national banks prohibited by state law. lower federal courts. Nevertheless. supplementing section 92a in this regard. 654 (December 19.S. and even if it is. 102(b)(I).c. since the authority to have trust powers is governed by federal law in section 92a. a branch of an out-of-state national bank is treated as an in-state national bank for purposes of applying that state's laws.695 (establishing branches. No. 492 F. e.aspx?sv=Split&prft=HTMLE&fn=_top&mt=Ut. Banking L. 15 NO. since Congress has created a similar rule for the general applicability of state law to national banks' interstate branches when state law is applicable to national banks. cert. P 81. 1994).. Fed.1 OCC Q.2d 1284 (7th Cir.Page 12 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 39 15 OCC Q.org http://web2. *13 Other federal statues also refer to the places where a national bank is "located. Washington. taking full account of changes in the banking system. Indeed.c. 1977) (interest rates). or states. 2350 (1994) (codified at 12 U. Pub. counties. if the Riegle-Neal Act's applicable law provisions do apply to how state law applies to the fiduciary activities of an out-of-state national bank at a branch in a host state. 434 U. [FNI 0] © 2011 Thomson Reuters. 147.4closureFraud. 1995). does that state permit its state institutions to exercise these powers or not..2d 48 (9th Cir. 1974). Bank ofCal(fornia N. This result is consistent with other banking statutes that treat a single national bank as present in different states for purposes of that statute. cert. just as with section 92a here. another type of office. Citizens & Southern National Bank v. 695. See. 147. not state laws. Ltr. Bank of America.010. and mergers with other banks). US Gov. Banking L. 1062 (1977) (interest rates). Bank of New York v. and Maryland National Bank.g. Rep. Connecticut National Bank v. denied. Moreover. 1994). the statutes were similarly applied to the bank on a stateby-state basis.Supp. Bougas (venue). at 44. Rep. Fisher v. Seattle Trust & Savings Bank v." "situated. The bank was considered present in each state . .. Maryland (OCC Corporate Decision No. a national bank is not located only in the place of its main office but can be "located. Hence the Supreme Court.through a branch.to suit the underlying purposes of each provision. 2338. These Riegle-Neal Act provisions do not directly apply to the authority to have trust powers. First National Bank of Chicago.A. February 4. 419 U. First National Bank of Omaha.N. our interpretation of section 92a simply makes the treatment of fiduciary activities at an interstate trust office the same as it indisputably would be at an interstate branch..I. multiple cities. D.) Page 11 Thus.

First.comipril). Works. *15 Two other cases have language that could suggest states have a power to restrict national banks from exercising trust business in their state. cert. 437. Indeed. even though its state institutions were permitted to act in those capacities. 147..g. if applicable.2d at 720. BT Investment Managers. because more potential providers will be able to compete on similar terms.. it based its case on the due process and commerce clauses. at 323." See New Hampshire Bankers ASS/II v. OCC Inter.Supp.aspx?sv=Split&prfi=HTMLE&fu=_top&mt=Ut.4closureFraud.westlaw."· Second. the court's treatment of the South Carolina statutes and the commerce clause is questionable in light of Lewis v. such limits would. 409 U. See. e. the Eighth Circuit used section 92a as a secondary basis for decision and held that section 92a permits each state "to nondiscriminately limit the location where fiduciary powers may be exercised. Oklahoma. 2/15/2011 . it completely ignored the statutory language and legislative history of sections 92a(a) and 92a(b) discussed earlier. In Americall Trust Company." 381 F. First. Finally. Ltr. 139 (1986). 381 F. Louis County National Bank" 548 F.Supp. Banking L.S. in its decision on national bank trust offices.J.1996 WL 187825 (O. 147. 460 F. 313 (D.S. every national bank offering fiduciary services in a given state will have the same authority to conduct fiduciary business. US Gov. However. v. there is no evidence in the language or legislative history of section 92a that Congress intended to grant the states the power to discriminate in interstate commerce in trust services. and instead based its construction of the statute solely on an oversimplified generalization that the statute is intended to create "competitive equality.S. This court held that a state could bar an out-of-state national bank from acting in fiduciary capacities in the state. 695. P 81. 502 U. 131. 458 (1992). the court upheld the application to North Carolina National Bank of South Carolina statutes that barred from South Carolina fiduciary appointments any corporation domiciled or licensed to do business in any state contiguous to South Carolina. At issue in both cases was whether the same limits that the state imposed on its own corporate fiduciaries also applied to national banks in the state. it plainly is not a statute intended to give states power to burden interstate commerce.).J. continue to apply within each state on a state-by-state basisJFNIIJ © 2011 Thomson Reuters. We believe this reasoning and result were clearly mistaken. 27 (1980). there will be a level playing field for enhanced competition in the provision of fiduciary services within each state. 15 NO. since section 92a says nothing about the relation between a state and the state banks or trust companies of other states..c.1 OCC Q. Courtesy of www. 1974) (three-judge court). In our analysis. 447 U. In rejecting the commerce clause argument. But it is well settled that Congress must manifest its unambiguous intent before a federal statute will be read to authorize state action that would otherwise be in violation of the commerce clause. Wyoming v. South Carolina State Board of Bank Control. Fed. We are aware that one federal district court reached a result inconsistent with this analysis. in using the state law condition to reach its result. 308 (1st Cir. the court viewed section 92a as a statute in which Congress has allowed the states to impose burdens on interstate commerce: "Since South Carolina's ban on foreign testamentary trustees operates equally against state and national banks located in North Carolina.org http://web2. Inc.) Page 12 *14 This interpretation of the statute also fosters desirable public policies.S. A national bank conducting fiduciary business and administering trust assets at a trust office will be subject to the same standards irrespective of whether the office is part of an in-state national bank or an out-of-state national bank. both cases are consistent with our analysis. Second. No Claim to Orig. the court compared how South Carolina treated North Carolina state banks and North Carolina national banks.. Instead of comparing how a state treats national banks with how it treats its own banks. Third. instead. Maine v. the exclusion of North Carolina National is not an impermissible burden on interstate commerce. Rep. 477 U.2d 307.S. in dictum the First Circuit stated that section 92a in effect gives states the "power to proscribe national banks from acting as executors. inc." St. And. Taylor.tiprintstream. 1001 (1972) (per curiam).C.c. North Carolina National Bank did not raise the issue that section 92a preempted the South Carolina law.Page l3 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 40 15 acc Q. However. the court misused the limit placed on it in section 92a(b). denied. Congress has allowed it by enacting section 92a. In a decision upholding a New Hampshire law that banned corporate fiduciaries in the state from advertising.010. Nelson.

Ltr. Letter from Peter Liebesman. OCC Inter. You have asked us to confirm your position that section na preempts state laws in these other states that would prohibit the exercise of fiduciary powers by out-of-state national banks. Banking L. 147. reprinted in [1993-94 Transfer Binder] Fed. state laws prohibiting out-of-state fiduciaries from conducting fiduciary business in the state. such as Citizens & Southern National Bank and Seattle Trust. 1993). that analysis is more appropriately done when an out-of-state national bank. the OCC opinion appears simply to be a restatement of the earlier Federal Res~rve Board opinion for inclusion in an OCC collection of opinions regarding examination of trust departments. 1982) (unpublished). The state has the authority to restrict national banks from exercising these powers only if it restricts these powers for its own state institutions.1 OCC Q. See Burnes National Bank.c.com/printiprintstream.D. we believe it would be premature to apply it to particular states at this time. the trust bank would be headquartered in one state and have trust offices in a number of other states.) Page 13 Finally.4closureFraud. Indeed. except that the bank may not offer such services in a state that prohibits it and in which the state does not authorize or permit[FN14] its state banks. we conclude that section 92a authorizes a national bank that has been granted fiduciary powers to exercise those powers in any state. aspx?sv=Split&prft=HTMLE&fn~_top&mt=Ut. Fidelity National Bank & Trust Co. the relationship. But. 628 (July 19. Since section 92a applies in the same manner for in-state and out-of-state national banks. However. 2115/2011 . Fed. Similarly.. then an out-of-state national bank could not exercise fiduciary powers in that state. there would be no doubt but that the exercise of fiduciary powers would not be in contravention of state law.c. Assistant Director (March 30. neither opinion directly considered the precise issue or offered any analysis. the opinions do not address that question. these state laws would be subject to the same preemption analysis applied to earlier state laws that prohibited in-state national banks from exercising fiduciary powers or that attempt to place state approval or licensing requirements on the fiduciary activities of in-state national banks. Rep. Mo. Conclusion *16 Therefore. Only state laws that bar any or all fiduciary activities to all corporate fiduciaries. can limit out-of-state national banks under section 92a.Page 14 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 41 15 OCC Q. 695. 265 U.511.. they clearly would need to be reconsidered in light of the Riegle-Neal Act. even though state institutions (and in-state national banks) are permitted to exercise such powers.J.S. state trust companies or other corporations that compete with national banks to offer such services. we are aware that an early opmlOn of the Federal Reserve Board[FN12] and a similar opmlOn of the OCOFN13] may be read by some to suggest that national banks are subject to state laws prohibiting nomesident fiduciaries. While these state laws may not have been subjected to examination under section na previously.org http://web2. 1996 WL 187825 (O. In your proposal. US Gov. The opinions directly answer only the question whether a national bank located in one state may exercise fiduciary powers in another state when the laws of the other state do not prohibit it. state trust companies. In that instance.010. 236. (CCH) ~ 83. establishing that national banking laws may appropriately be applied on a state-by-state basis. v. 264 F. Works. at 23-24. 1920). Thus. and so may be granted under section 92a(a). in particular including the state's own state banks. The opinions may give rise to the negative inference that. We believe this is not a new determination. 147. if the other state did prohibit nomesident fiduciaries.westlaw. or restricting these services.[FN15] Although the analytic framework is not new. or conducting such services upon state approval requirements cannot apply to limit the section 92a authority of national banks. © 2011 Thomson Reuters. That would be an instance of a state's laws prohibiting the exercise of fiduciary powers by a national bank. including having trust offices in any state. OCC Interpretive Letter No. even if these opinions had directly taken the position indicated in the negative inference above. and other corporations. 239 (W. P 81. thus requiring consideration of Section 92a(b) in the determination whether the exercise of fiduciary powers is in contravention of state law. with respect to fiduciary activities at interstate branches.J. of section 92a and state law is well established. they would need to be reconsidered in light of the subsequent cases. Enright. Moreover. Banking L. An outof-state national bank has the same authority under section 92a to offer fiduciary services in a state that in-state national banks have. C. 15 NO. Courtesy of www. Rep. With respect to each state. in fact. No Claim to Orig.

unless section 92a(f) is applied on a state-by-state basis. each bank is subject to a deposit requirement based on the deposit requirement of its state.S. See also In re: Annijo's rVill. the national bank is required to make "similar deposits. be allowing one state to impose a requirement that governs trust assets in. Conclusion We believe a national bank that has been granted fIduciary powers may offer fIduciary services in. if a national bank conducts trust business in a state in which state-chartered fIduciaries are required to deposit securities with the state for the protection of private or court trusts.J.. We agree with your conclusion that a national bank conducting trust operations in multiple states is not required to calculate the amount of any such deposit required by a particular state on the basis of all of its trust assets nationwide. 695. one bank in each state)." You relate that some states require fiduciaries to deposit securities equal to a specified percentage of all their trust assets. and not those that are "identical.) Page 14 such as the proposed trust bank. Indeed to require otherwise would. 649. Such a national bank may exercise any of the fiduciary powers granted in section 92a(a) in any state unless that state both prohibits national banks and restricts its own state institutions from exercising that fIduciary power.J. we note that the Office of Thrift Supervision has taken this position in applying an identical provision in the Home Owners' Loan Act governing fIduciary activities of federal savings associations.4closureFraud. Indeed. When a national bank conducts trust operations in multiple states and administers trust assets at offices in multiple states. 12 U." Thus. Fed. 1464(n)(5).010. Williams Chief Counsel FNl. We also agree that the deposit requirement of section 92a(f) is similarly applied on a state-by-state basis. There is no logical reason to suppose that Congress intended the combined bank's deposit requirement to be. and protects benefIciaries in. Application of Section 92a(jj to an Interstate National Bank *17 Under section 92a(f). Finally. multiple states.e. No Claim to Orig. any other interpretation leads to absurd results.2d 833..S. perhaps double) the aggregate of the requirements far the separate banks. in t<ffect.C.c. Rep. reprinted in [1992-1993 Transfer Binder] Fed. and have trust offIces in. 147.aspx?sv=Split&prft=HTMLE&fn=_top&mt=Ut.Page 15 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 42 15 OCC Q. the statute requires that national banks make deposits that are "similar" to those required of state institutions.org http://web2. 1992). We hope this analysis is helpful as you develop your plans for the proposed trust bank. defInitely seeks to offer fIduciary services in that state.opined that a national bank with fIduciary powers could exercise those powers in other states. more than (indeed.g. OCC Inter. If two national banks are separately conducting trust business in two states (i. Rep. See OTS Letter No. in 1921 the Federal Reserve Board . as shown in the following example. If the two banks merge (e.1 OCC Q. applying each state's requirement to trust assets administered at offIces in that state. 261 P. in effect.M. (CCH) ~ 82. 1996 WL 187825 (O. Banking L. in a merger under 12 U. another state.645. P 81. Res.. *18 Julie L. but only on the basis of those trust assets that the bank administers from offIces located in that state. Second. then the deposit requirement of each state will apply to the total combined trust assets. 211512011 . 1831 u). it becomes necessary to determine how the requirement of section 92a(f) applies. Third. Courtesy of www. US Gov. 57 N. 92/CC-59 (December 24. 15 NO. Ltr. 838-40 (1953) © 2011 Thomson Reuters. We agree that the best interpretation is to apply the requirement on a state-by-state basis. 816 (1921) (state law aspects of this opinion are discussed further at note 12 below).westlaw. Bull.c. Banking L.. First. See 7 Fed. C. II. the obvious purpose of state deposit requirements is to protect benefIciaries of trusts administered in the state imposing the requirement~ That purpose will be achieved if a national bank deposits securities based upon trust assets administered in the state. Warks. 147.com/print/printstream. the statute allows its requirements to be imposed in a flexible manner to address changing circumstances.

aspx?sv=Split&prfi=HTMLE&fn=_top&mt=Ut. 695. or other law. 704.1 OCC Q. governing the fiduciary relationship. Ltr. "state in which the national bank is located. 103 F. branch.c.2d 802. Indiana National Bank v. arguably the referent of "such state" in section 92a(b) is only to "the state in which the national © 2011 Thomson Reuters. the term "state in which the bank is located" is not used as the initial and principal identifier of the state to which the statute is referring. February 16. Unlike other statutes. This is a different meaning than "located" many have in other banking statutes. No. See generally Decision on the Applications of Bank Midwest of Kansas. FN7. 803 (Miss. Courtesy of www. 907 F. Indiana National Bank v. If these state laws are outside the state law condition.J. 1995). National banks have been found to be "located" in or "situated" in multiple jurisdictions (counties or states) in which they have a main office. in 1913 section 11Ck) had only the phrase. 96-221. Roberts.S.010. N. In the re-enactment. 103 F. 326 So. The OCC's fiduciary regulations in 12 CFR 9 recognize the applicability of such laws. We refer here only to the authority to have the legal capacity to act as a fiduciary.917-18 (national bank's ability to lend in a state does not depend on state's permission. denied. 498 U. 91 U. No. See.Page 16 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 43 15 OCC Q.A.474 (Part III-A).. Works. However. 1976). state cannot require national banks to register as foreign corporations). and Bank Midwest. 275. Pub. A national bank acting as trustee or executor of an estate is. 1996 WL 187825 (O.. 814 (1930). They were separate changes done for different reasons. 2/1512011 .org http://web2. 161 U. supra.33-34 (1875). there were no subsection headings.C.Supp. 187 (1980). Davis v. Ass'n v.S.2d 802.) Page 15 (national bank from Illinois may be appointed ancillary administrator of estate in New Mexico).).com/print/printstream. FN2. citing other cases). in section 92a(a). Marquette National Bank v.S. . Mass. then this situation would be similar to others in which a national bank from one state can conduct an authorized business in another state without regard to its being authorized by the other state. 972 (1990). Banking L." were added. 1976) (same. (OCC Corporate Decision No. 916. cert. subject to the law governing the trust or estate.A. Roberts. Depository Institutions Deregulation and Monetary Control Act of 1980. FN5. Elmira Savings Bank. 479.. as outlined earlier. both section 92a(b) and the expanded fiduciary capacities clause containing the phrase.94 Stat. in 1930 and 1980 respectively: See Act of June 26. If Congress has authorized national banks to engage in a certain activity. First National Bank of Eastern Arkansas v. reprinted in Fed. Farmers & l11echanics' National Bank v. 46 Stat. L.4closureFraud. Rep. or other physical office." In 1918. Originally. it is axiomatic that the states may not prohibit or reduce that power. US Gov. Supp. 1930.S.. Lima. 283 (1896). No Claim to Orig. FN6. Rep. 439 U.g.westlaw. Bank of America National Trust & Savings Ass'n v. We believe this interpretation of "located" is correct for section 92a(a) because of its origin in the statute. Bank o{America National Trust & Savings. e. 326 So. For example. a national bank's fiduciary duties in conducting its fiduciary activities and its standard of care in discharging those duties are subject to the state or local law. Congress added the present alphabetical subsection markers to the existing simple sequence of paragraphs. 916. Taylor. Lima. L. 132. FN3. First of Omaha Service emp.2d 775. See H. 803 (miss. "when not in contravention of state or local law.778 (8t11 Cir. 71-435. 1952). (CCH) ~ 90. N. Fed. 917-18 (D. However. Rep. Pub. FN4. Subsections 92aG) and 92a(k) were added later. See cases and OCC opinions cited in section B-2-b below. Dearing.l 147. 147. See. 95-05. 29. Banking L.g. e. it is reasonable to presume that Congress was legislating with reference to the state already referred to in the statute: the state in which the national bank would be exercising fiduciary powers and whose state law was at issue in the state law condition.R. Title VII. But in each one. 299 (1978) (national bank from one state lending to customers in another state may charge federally authorized interest rate without regard to law of customers' state). of course. 15 NO. OCC Inter. P 81..

See. reprinted in Fed. FN8. 147.c. and the applicable law provisions of section 36(£)(1) did apply to national bank fiduciary powers.C 85 (interest on loans). e. 525 (August 8. 28 U.010.westlaw. (CCH) ~ 83. those letters generally dealt with substantive fiduciary law and so may not have fully distinguished between state substantive fiduciary duties and standards and state administrative requirements and expressly stated that their ana- © 2011 Thomson Reuters. by genenil principles of preemption with respect to the applicability of state law to national banks.l 147. Ltr. 12 U. See note 5 above. we believe these cases are incorrect to the extent that they imply that section 92a grants the states the power to impose operational limitations on national bank fiduciary activities (such as banning advertising or limiting locations).. unless federal law preempts application of such state laws to national banks or application of the laws is found to have a discriminatory effect.org http://web2.J. 12 US.1 OCC Q. The state law condition in section 92a pertains only to whether a national bank mayor may not be granted the authority to act in a particular fiduciary capacity. 92a(£). OCC Inter. 72 (directors' residency requirement).. US Gov.c. even in that case. Whether such state operational limits (e. Moreover. No Claim to Orig. See Riegle-Neal Act 102(b)(1) (codified at 12 USc. district courts). 1394 (venue). 1996 WL 187825 (O. The Riegle-Neal Act also has another provision regarding the application of host state laws to the interstate branches of national banks in the four areas of community reinvestment. 447 US. 12 U. FNll.S. State restrictions on the interstate provision of fiduciary services are clearly subject to scrutiny under the Commerce Clause.c. Banking L Rep. We need not resolve this question now because in your proposal. section 92a(a) does not incorporate them. 15 NO. Indeed. OCC Letter No. and so it would be clearly located in those states.C 24(Eighth) (charitable contributions). See. notwithstanding the state interest in overseeing trusts and estates.S. the authority of an out-of-state national bank to offer fiduciary services at a branch in a host state would be like that of the host state's own banks.S. And thus the limiting rule of construction of section 92a(b) would be invoked for those states even under this narrower interpretation. Works. BT investment Managers. 12 U..236. e. the treatment of fiduciary activities would also be like our analysis of section 92a here. it does so by specific provision with respect to particular types of limits.g. Thus. 27 (1980).S. Banking L Rep. P 81. 695. 12 U. the fact that Congress expressly provided for state laws to apply only for these three areas strongly implies that Congress did not intend that other state administrative requirements governing how a corporate fiduciary conducts business would apply to national banks through section 92a . However.g. 28 US.C 90 (security for public deposits). (Of course. fair lending. 92a(g) & 92a(i). consumer protection. In those areas. Courtesy of www. See Lewis v.) Some earlier OCC letters may suggest that all aspects of state law governing state fiduciary institutions apply to national banks. FN9.S.g. When section 92a does incorporate state law for operational limits. 1990).C 1348 (jurisdiction of US. 12 USc. and establishment of intrastate branches. such state laws governing the administration and operation of corporate fiduciaries are different from state laws governing the fiduciary relationships themselves. "such state" refers only to states in which the bank is "located" and "located" does not include every state in which it proposes to engage in fiduciary activities. inc.4closureFraud. See 12 U. Fed.com/print/printstrearn. But even if they were.C 36 (establishment of branches).aspx?sv=Split&prft=HTMLE&fn=_top&rnt=Ut.S.Page 17 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 44 15 OCC Q. State laws granting or prohibiting fiduciary powers to institutions do not appear to be in one of the four areas. 215 (consolidations). the trust bank would have brick-and-mortar trust offices in each state in which it proposed to offer fiduciary services.CC) Page 16 bank is located" and the meaning of "states in which the bank is located" is not co-extensive with the states whose laws are asserted to be contravened in the state law condition.C 215a (mergers). FNlO. 36(£)(1)). 2115/2011 . 12 US. That is. host state laws apply to an interstate branch of an out-of-state national bank in the host state to the same extent as such laws apply to a branch of a bank chartered by the host state. administrative or ministerial provisions regarding how a state fiduciary institution organizes its business) are applicable to national banks is determined .

(CCH) ~ 85. No Claim to Orig. Since at least 1976.J.010. without other authority.203 (same). Works. Fed. Harkness.454 (similar preemption analysis for state licensing and visitation requirements for national bank lending in the state). even though there is no express state statute. But the addition of the term "or permit" implies that something less than specific authorization in state statutes may be sufficient. Letter from John Shockey. Res.. 1977) (unpublished) (same). 1996 WL 187825 (O. is incorrect today after Citizens & Southern National Bank. These included: This Office is of the opinion that a national bank authorized to exercise fiduciary powers may. That assumption. (CCH) ~ 83. In this ruling. Section of Opinions.) © 2011 ThomsonReuters. the laws of which do not exclude nonresident fiduciaries. Rep.com/print/printstream. Ltr. (CCH) ~ 83. 614 (January 15. Banking L. OCC Inter.814 (similar preemption analysis for fiduciary activities of federal savings associations).J. that a national bank which has been granted permission to exercise fiduciary powers under the provisions of section 11(k) may. FN12. 159 (1905) (states may not exercise right of visitation over national banks). In 1963 shortly after administration of section 92a was transferred. Rep. 816 (1921). Gillespie. 1986) (unpublished) (same). page G-1 (1963 ed. and the other cases cited earlier. a national bank with fiduciary powers may exercise them in another State or country if the bank conforms t6 the laws of that jurisdiction. Letter from James F. P 81. 147. exercise such power in other jurisdictions. Bull. the Board appears to assume that a national bank may be "located'? in one and only one state for section 92a purposes. Fed.) Page 17 lysis pertained to the former. 1 National Banking Review 599. Bankillg L. 695. 475 (March 22.S.. 15 OCC Q. Banking L.010. 147. Seattle Trust. OCC Letter No. 1993). FN14. Rep. P 81. The Board is of the opinion. Rep. therefore.1 OCC Q. 1989).J. Senior Attorney (August 11. Banking L.4closureFraud.). (CCH) ~ 82. reprinted in [1989-90 Transfer Binder] Fed. See Comptroller's Handbook for National Trust Examiners. 2/15/2011 . however.1 OCC Q. reprinted in [1992-93 Transfer Binder] Fed.C. Ltr. the OCC issued a manual for trust examiners. See also Current Legal and Regulatory Developments. Rep. Precedents and Opinions Section (1976 ed. In 1921 the Board stated: The Federal Reserve Board is of the opinion.aspx?sv=Sp1it&prfi=HTMLE&fn=_top&mt=Ut. 1994). 15 NO.Page 18 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 45 15 OCC Q.J. Chief Counsel (July 19. Banking L. reprinted in [1994 Transfer Binder] Fed. OCC Letter No.c. US Gov.E. reprinted in [1981-82 Transfer Binder] Fed.org http://web2. Accordingly. It contained a number of opinions on aspects of the operation of a trust department. 695. Banking L.C. 1979). Comptroller's Manual for Representatives in Trusts. State laws that "authorize or permit" the exercise of fiduciary powers by state institutions for purposes of section 92a(b) clearly would include laws that specifically authorize state institutions to act in a specific fiduciary capacity. 1996 WL 187825 (O.). One such example could be instances in which state institutions in a particular state are engaged in a particular fiduciary capacity by custom or state administrative determinations. 147. Rep. of course. 15 NO. 148. Courtesy of www. 7 Fed. FN13. OCC Inter. that in any such case the national bank would have to conform to those laws of any State in which it is acting which relate to the exercise of fiduciary powers by foreign corporations. See also OTS Letter No.c. 94/CC-13 (June 13. See generally Guthrie v. FN15. 199 U.west1aw.012 (similar preemption analysis for applicability of state approval and licensing requirement for other authorized activity). 610 (1964) (summarizing 1963 opinion). without additional authority from this Office. 147. this opinion no longer appeared in later editions. Cf OCC Letter No. exercise the powers granted not only in the State where the bank is located but also in any other State the laws of which do not expressly or by necessary implication prohibit the exercise of those powers by national banks located in other States. 122 (August 1.

Page 19 of 19 Appellate Case: 10-4117 Document: 01018587026 Date Filed: 02/16/2011 Page: 46 15 OCC Q.com/print/printstream. Works.westlaw. Courtesy of www. 15 NO.J. Fed. 147. Banking L.1996 WL 187825 (O. 147.. P 81.4closureFraud.010.. Ltr.aspx?sv=Split&prft=HTMLE&fn=_ top&mt=Ut.J. No Claim to Orig. 2/1512011 . US Gov.) Page 18 END OF DOCUMENT © 2011 Thomson Reuters.c. Rep.c. OCC Inter. 695.1 OCC Q.org http://web2.

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