Marquette Nat. Bank v. First of Omaha Svc. Corp., 439 U.S. 299 (1978)

Marquette National Bank of Minneapolis v.

First of Omaha Service Corp.
No. 77-1265

Argued October 31, 1978
Decided December 18, 1978 *
439 U.S. 299

CERTIORARI TO THE SUPREME COURT OF MINNESOTA

Syllabus

The First National Bank of Omaha (Omaha Bank) is a national banking association chartered in Nebraska; it is enrolled in the BankAmericard plan, and solicits for that plan in Minnesota. Omaha Bank charges its Minnesota cardholders interest on their unpaid balances at a rate permitted by Nebraska law, but in excess of that permitted by Minnesota law. The Marquette National Bank of Minneapolis (Marquette), a Minnesota-chartered national banking association enrolled in the BankAmericard plan, brought suit in Minnesota against Omaha Bank and its subsidiary, respondent First of Omaha Service Corp., inter alia, to enjoin the operation of Omaha Bank’s BankAmericard program in Minnesota until such time as it complied with the Minnesota usury law. Rejecting respondent’s contention that Minnesota’s usury law was preempted by the National Bank Act provision codified as 12 U.S.C. § 85, which authorizes a national banking association "to charge on any loan" interest at the rate allowed by the laws of the State "where the bank is located," the state trial court granted Marquette’s motion for partial summary judgment. The Minnesota Supreme Court reversed.

Held: Section 85 permits Omaha Bank to charge its Minnesota BankAmericard customers the higher interest rate that is sanctioned by Nebraska law. Pp. 307-319.

(a) As a national bank, Omaha Bank is a federal instrumentality whose interest rate for its BankAmericard program is governed by federal law, and under § 85, a national bank may charge interest "on any loan" at the rate allowed by the laws of the State where the bank is "located." P. 308.

(b) Apart from its BankAmericard program, Omaha Bank is located in Nebraska, where it is chartered. P. 309.

(c) Omaha Bank cannot be deprived of its Nebraska location merely because under the BankAmericard program it extends credit to residents of another State, for it is in Nebraska that credit is extended by the Bank’s honoring sales drafts of Minnesota customers, unpaid-balance finance charges are assessed, payments are received, and credit cards are issued. Pp. 310-312.

(d) Nor does the statutory location of the bank change because the credit cards can be used to purchase goods and services outside Nebraska. Pp. 312-313.

(e) Congress, in enacting the National Bank Act of 1864, intended to facilitate a "national banking system," whose interstate nature was fully recognized, and there was no intention to exempt interstate loans from the reach of the predecessor of 12 U.S.C. § 85. Pp. 313-318.

(f) Though the "exportation" of interest rates, such as occurred here, may impair the ability of States to maintain effective usury laws, such impairment has always been implicit in the National Bank Act, and any correction of that situation would have to be achieved legislatively. Pp. 318-319.

262 N.W.2d 358, affirmed. BRENNAN, J., delivered the opinion for a unanimous Court.