US SUPREME COURT DECISIONS

FIRST NATIONAL BANK OF BAY CITY V. FELLOWS, 244 U. S. 416 (1917)

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U.S. Supreme Court

First National Bank of Bay City v. Fellows, 244 U.S. 416 (1917)

First National Bank of Bay City v. Fellows

No. 764

Argued March 22, 23, 1917

Decided June 11, 1917

244 U.S. 416

Syllabus

By the principles fully settled in McCulloch v. Maryland and Osborn v. Bank, and other cases, the implied power of Congress to confer a particular function upon a national bank is to be tested not by the nature of the function, viewed by itself, but by its relations to all chanrobles.com-red

Page 244 U. S. 417

the functions and attributes of the bank considered as an entity; the necessity or appropriateness of the function should be considered with reference to the situation to which it relates; and, as to what is necessary or appropriate, a court should not substitute its judgment for the judgment of Congress.

As settled also by those cases, the circumstance that a function is of a class subject to state regulation does not prevent Congress from authorizing a national bank to exercise it, nor would it lie with the state power to forbid this.

A business not inherently such that Congress may empower national banks to engage in it may nevertheless become appropriate to their functions if, by state law, state banking corporations, trust companies, or other rivals of national banks are permitted to carry it on.

Section 11(k) of the Act of December 23, 1913, establishing the Federal Reserve Board, in authorizing the board

"To grant by special permit to national banks applying therefor, when not in contravention of state or local law, the right to act as trustee, executor, administrator, or registrar of stocks and bonds under such rules and regulations as the said board may prescribe,"

is, as here construed, a valid exercise of the power of Congress.

The section authorizes the specified functions to be exercised by national banks when the right to perform them is given by state law, or is deducible therefrom through being so conferred on state banks or corporations whose business in some degree rivals that of national banks, and it gives administrative power to the Reserve Board as a means of coordinating such functions, in their exercise by national banks, with the reasonable and nondiscriminating provisions of state law regulating their exercise as to state corporations.

The section is not open to the objection that it confers legislative power on the Reserve Board.

In providing that the specified functions may be exercised "when not in contravention of state or local law," Congress impliedly, if not expressly, authorized the institution and conduct in the state supreme court of proceedings in the nature of quo warranto to test whether the exercise of such functions by a national bank is consistent with the state law.

192 Mich. 640 reversed.

The case involves the validity of provisions in the Federal Reserve Bank Act authorizing national banks to act as trustees, etc., when allowed by the Reserve Board and not in contravention of state law; also the jurisdiction of chanrobles.com-red

Page 244 U. S. 418

the state court to determine the authority of such banks in proceedings akin to quo warranto. The case is stated in the opinion.



























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