Variable Annuity Life Insurance v. Clarke , 998 F.2d 1295 ( 1993 )

United States Court of Appeals,
Fifth Circuit.
No. 92-2010.
VARIABLE ANNUITY LIFE INSURANCE CO., Plaintiff-Appellant,
v.
Robert L. CLARKE, Comptroller of the Currency, the Office of the
Comptroller of the Currency, the United States of America, NCNB
National Bank of North Carolina, Defendants-Appellees.
Aug. 26, 1993.
Appeal from the United States District Court for the Southern
District of Texas.
Before GOLDBERG, JOLLY, and WIENER, Circuit Judges.
GOLDBERG, Circuit Judge:
In an opinion letter issued on March 21, 1990, the Comptroller
of the Currency determined that § 24(7) of the National Bank Act,
which grants national banks the power to engage in incidental
activities necessary to the business of banking, authorizes
national banks to sell annuity contracts. The Comptroller also
concluded that 12 U.S.C. § 92, which permits national banks to act
as insurance agents in towns with less than 5,000 inhabitants, does
not limit national banks' power to sell insurance in towns with a
population of over 5,000; and in any case, that annuities are not
a form of insurance. The district court deferred to the
Comptroller's interpretation of §§ 92 and 24(7) of the National
Bank Act, 786 F. Supp. 639. We reverse, finding that under § 92 of
the Act, national banks may not sell annuities in cities with more
than 5,000 inhabitants.
We begin by giving a broad adumbration of our analysis. As a
threshold matter we affirm the existence of § 92. The D.C.
Circuit's finding that § 92 was "repealed" by Congress was recently
rejected by the Supreme Court which found § 92 to be alive and
well. The plain language of § 92, as interpreted by this court in
Saxon v. Georgia Association of Independent Insurance Agents, 399
F.2d 1010 (5th Cir.1968), prohibits national banks from selling
insurance products in towns with a population larger than 5,000.
Because we conclude that annuities are a form of insurance, we hold
that § 92 bars national banks from selling annuities in cities with
a population larger than 5,000. The Comptroller's determination
that banks may sell annuities pursuant to the "incidental" powers
provision of the National Bank Act, 12 U.S.C. § 24(7), is erroneous
because the specific limitation on national banks' power to sell
insurance contained in § 92 controls the general grant of
incidental powers in § 24(7).
BACKGROUND
On August 8, 1989, NationsBank of North Carolina ("NCNB"), a
national bank based in Charlotte, North Carolina, sought permission
from the Comptroller of the Currency to sell fixed and variable
annuity contracts through its wholly-owned subsidiary NationsBanc
Securities. NCNB proposed to sell the annuity contracts as an
agent for various life insurance companies in cities with more than
5,000 inhabitants. On March 21, 1990, the Comptroller issued an
opinion letter approving NCNB's proposed sale of annuities, finding
that the sale of annuities is within the power of national banks
under the National Bank Act. The Comptroller reasoned that "[a]s
part of their traditional role as financial intermediaries, banks
have broad powers to buy and sell financial investment instruments
as agents for customers ... [and] [a]lthough annuities have
historically been a product of insurance companies, they are
primarily financial investments."
Challenging the Comptroller's approval of NCNB's proposed sale
of annuities, the Variable Annuity Life Insurance Company ("VALIC")
filed the instant lawsuit in the Southern District of Texas seeking
declaratory and injunctive relief. VALIC is an insurance company
which underwrites and sells fixed and variable annuity contracts in
all fifty states, and would be in direct competition with the
NCNB's sale of annuities. In its motion for summary judgment,
VALIC argued that NCNB's proposed sale of annuities violates 12
U.S.C. § 92, which prohibits national banks from selling insurance
products in towns with a population larger than 5,000. The
Comptroller and the NCNB filed cross motions for summary judgment,
claiming inter alia that § 92 does not limit the powers of national
banks and that § 92 does not apply to the sale of annuities.
The district court granted appellees' cross motions for
summary judgment, and denied VALIC's motion for summary judgment.
The district court determined that it "must defer to the
Comptroller's interpretation of the National Bank Act, so long as
the interpretation is reasonable." Finding that the Comptroller's
interpretation "was more than a reasonable construction," the
district court affirmed the Comptroller's approval of the proposed
annuities sale.
ANALYSIS
On appeal, the central question before us is whether 12 U.S.C.
§ 92 prohibits banks from selling annuities in cities with more
than 5,000 inhabitants. "When an appeal is taken from summary
judgment, we review the district court's actions de novo, applying
the same standard used by the district court. (citation omitted)
When, as here, questions of law control the disposition on summary
judgment, we must subject the controverted issues to full appellate
review." Texas Commerce Bank, Forth Worth, N.A. v. United States,
896 F.2d 152, 155 (5th Cir.1990). See also Farmers-Merchants Bank
and Trust Co. v. CIT Group/Equipment Financing, Inc., 888 F.2d
1524, 1526 n. 3 (5th Cir.1989) (questions of law subject to de novo
review).
Before discussing the applicability of § 92 to the facts of
the instant case, we must first dispel any lingering existential
doubts regarding § 92's viability. Section 92 of Title 12 was
enacted in 1916 as part of the Act of Sept. 7, 1916, 39 Stat. 753.
In Independent Insurance Agents, Inc. v. Clarke, 955 F.2d 731
(D.C.Cir.1992), the D.C. Circuit held that § 92 was repealed by
Congress in 1918, and is no longer in force. The Independent
Insurance Agents court found that the 1916 Act placed § 92 in
Rev.Stat. § 5202, and that in 1918 Congress eliminated § 5202, thus
eliminating § 92. Relying on the D.C. Circuit's analysis, the NCNB
argues that § 92 does not exist.
While the appeal in the instant case was pending, the Supreme
Court granted a writ of certiorari to review the D.C. Circuit's
opinion in Independent Insurance Agents. Because the existence or
nonexistence of § 92 is central to the disposition of the instant
case, we withheld the issuance of this opinion while we waited for
the Supreme Court to resolve the question raised by the D.C.
Circuit: whether § 92 was to be, or not to be. The answer has
come: § 92 is to be. The Supreme Court rejected the D.C.
Circuit's analysis, finding that "the 1916 Act placed § 92 not in
Rev.Stat. 5202 but in § 13 of the Federal Reserve Act," and "since
the 1918 Act did not touch § 13, it did not affect, much less
repeal, section 92." United States National Bank of Oregon v.
Independent Insurance Agents of America, --- U.S. ----, ----, 113
S. Ct. 2173, 124 L. Ed. 2d 402, 417 (1993).
Having established the existence of § 92, we must next
determine the applicability of § 92 to the sale of annuities by
national banks in cities with a population greater than 5,000.
Section 92 provides in relevant part that national banks,
located and doing business in any place the population of
which does not exceed five thousand inhabitants, as shown by
the last preceding decennial census may, under such rules and
regulations as may be prescribed by the Comptroller of the
Currency, act as the agent for any fire, life, or other
insurance company authorized by the authorities of the State
in which such bank is located to do business in such state, by
soliciting and selling insurance and collecting premiums on
policies issued by such company.
Section 92 explicitly authorizes national banks in towns with a
population smaller than 5,000 to act as insurance agents, and
impliedly prohibits national banks in towns with a population
larger than 5,000 from acting as insurance agents. In Saxon v.
Georgia Association of Independent Insurance Agents, we reversed
the Comptroller's ruling that "National banks have the authority to
act as agent in the issuance of insurance" regardless of the size
of the city in which they are operating. 399 F.2d 1010, 1012 (5th
Cir.1968). We held that by application of the ancient maxim of
expressio unius est exlusio alterius (the mention of one thing
implies the exclusion of another) it is clear that under § 92
"national banks have no power to act as insurance agents in cities
of over 5,000 population." Id. at 1013.
The Saxon court's interpretation of § 92 was recently followed
by the Second Circuit in American Land Title Association v. Clarke,
968 F.2d 150 (2nd Cir.) cert. denied --- U.S. ----, 113 S. Ct. 2959,
125 L. Ed. 2d 660 (1993), which reversed a Comptroller's directive
allowing national banks to act as agents for title insurance
companies in cities with a population over 5,000. The Second
Circuit adopted the reasoning of Saxon, also finding that the
"maxim expressio unius est exlusio alterius, used as an aid to
construction, leads to the conclusion that Congress intended to
prohibit national banks located and doing business in towns with
over 5,000 inhabitants from engaging in the insurance agency
business." Id. at 155.
In interpreting the intended scope of § 92, the Second Circuit
cogently deduced that "had Congress intended to grant national
banks located in towns with a large population the authority to
sell insurance, it would never have limited the grant of authority
in section 92 to national banks in locations with under 5,000
inhabitants." Id. The reasoning of the Saxon and American Land
Title courts, that an affirmative grant of a specific power
includes a denial of powers not granted, relies on interpretive
principles that are firmly ensconced in our jurisprudence. See
Botany Worsted Mills v. United States, 278 U.S. 282, 289, 49 S. Ct.
129, 132, 73 L. Ed. 379 (1929) ("when a statute limits a thing to be
done in a particular mode, it includes the negative of any other
mode"); National R.R. Passenger Corp. v. Passengers Association,
414 U.S. 453, 458, 94 S. Ct. 690, 693, 38 L. Ed. 2d 646 (1974) (same);
Rogers v. Frito-Lay Inc., 611 F.2d 1074, 1085 (5th Cir.) (same)
cert. denied 449 U.S. 889, 101 S. Ct. 246, 66 L. Ed. 2d 115 (1980);
Midland Telecasting v. Midessa Television Co., Inc., 617 F.2d 1141,
1145 n. 7 (5th Cir.) (same) cert. denied 449 U.S. 954, 101 S. Ct.
361, 66 L. Ed. 2d 219 (1980).
The Saxon and American Land Title courts' interpretation of §
92 is bolstered by the legislative history of § 92. The Chairman
of the Senate Banking and Currency Committee inserted into the
legislative record of § 92 a letter from the then Comptroller of
Currency, John Skelton Williams. 53 Cong.Rec. 11001 (1916). In
this letter the Comptroller recommended that Congress give national
banks in small communities the authority to act as insurance
agents, but the Comptroller added: "It seems desirable from the
standpoint of public policy and banking efficiency that this
authority should be limited to banks in small communities." Id.
(emphasis added) The Comptroller explained that "in many small
places the amount of insurance policies written or mortgages to be
placed on commission is not sufficient to take up the entire time
of an insurance broker, and the bank is not therefore likely to
trespass upon outside business naturally belonging to others." Id.
The Comptroller and NCNB challenge the Saxon court's
interpretation of § 92, claiming that § 92 does not limit the
powers of national banks located in towns with a population larger
than 5,000. The Comptroller's opinion letter states that it
"disagreed with the Saxon court's interpretive approach."1 Stare
decisis notwithstanding, the district court deferred to the
Comptroller's interpretation of § 92, finding that it is "neither
arbitrary nor capricious to view 12 U.S.C. § 92 as a supplemental
power provision and not a limitation on national banks ...," and
that the Comptroller's interpretation of § 92 was "more than a
"permissible construction.' "
The district court's deference to the Comptroller was based on
its reading of Chevron U.S.A., Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 104 S. Ct. 2778, 81 L. Ed. 2d 694 (1984).
In Chevron, the Court outlined a two step analysis to be followed
by courts reviewing an administrative agency's statutory
interpretation:
When a court reviews an agency's construction of the statute
which it administers, it is confronted with two questions.
First, always, is the question whether Congress has directly
spoken to the precise question at issue. If the intent of
Congress is clear, that is the end of the matter; for the
court, as well as the agency, must give effect to the
unambiguously expressed intent of Congress. If however, the
court determines that Congress has not addressed the precise
question at issue, the court does not simply impose its own
construction on the statute, as would be necessary in the
absence of an administrative interpretation. Rather, if the
statute is silent or ambiguous with respect to the specific
issue, the question for the court is whether the agency's
answer is based on a permissible construction of the statute.
Id. at 842-43, 104 S.Ct. at 2781.
The district court deferred to the Comptroller's
interpretation of § 92 because it found that Congress had not
1
The two circuit cases cited by the Comptroller indicating
disagreement with Saxon, Independent Insurance Agents v. Board of
Governors of the Federal Reserve System, 736 F.2d 468, 477 n. 6
(8th Cir.1984) and Independent Bankers Association v. Heimann,
613 F.2d 1164, 1170 n. 18 (D.C.Cir.) cert. denied 449 U.S. 823,
101 S. Ct. 84, 66 L. Ed. 2d 26 (1980), discuss Saxon only in dicta.
directly addressed the question at issue. While "[j]udicial
deference to an agency's interpretation of ambiguous provisions of
the statutes it is authorized to implement reflects a sensitivity
to the proper roles of the political and judicial branches," Pauley
v. BethEnergy Mines, Inc., --- U.S. ----, ----, 111 S. Ct. 2524,
2534, 115 L. Ed. 2d 604 (1991), such deference is not appropriate
under Chevron if the intent of Congress is clear. The district
court erred in reaching the second step of the Chevron analysis
because our interpretation of § 92 in Saxon was based on the plain
language of the statute which exhibits Congress' clear intent to
permit only banks in towns with less than 5,000 inhabitants to sell
insurance products. Federal courts are not to defer to an
administrative agency's interpretation of a statute which
frustrates the clear intent of Congress. See Presley v. Etowah
County Commissioner, --- U.S. ----, 112 S. Ct. 820, 117 L. Ed. 2d 51
(1992) ("we defer to an administrative interpretation of a statute
... only if Congress has not expressed its intent with respect to
the question"); Nicklos Drilling Co. v. Cowart, 927 F.2d 828, 831-
32 (5th Cir.1991) (en banc) (refusing to follow administrative
agency's interpretation when words of statute are unambiguous).
NCNB questions the precedential value of Saxon, noting that
the Saxon decision precedes Chevron by sixteen years. But
regardless of the passage of time, deference under Chevron does not
permit administrative agencies to overrule precedents. See
Lechmere, Inc. v. NLRB, --- U.S. ----, ---- - ----, 112 S. Ct. 841,
847-848, 117 L. Ed. 2d 79 (1992) ("once we have determined a
statute's clear meaning, we adhere to that determination under the
doctrine of stare decisis, and we judge an agency's later
interpretation of the statute against our prior determination of
the statute's meaning"); BPS Guard Services Inc. v. NLRB, 942 F.2d
519, 523 (8th Cir.1991) ("Chevron does not stand for the
proposition that administrative agencies may reject, with impunity,
the controlling precedent of a superior judicial body"). While
administrative agencies serve important functions, these do not
include the occlusion of the positivistic declarations of this
court.
It is plain from the language of the statute, and from the
legislative history, that § 92 prohibits national banks, including
the NCNB, from selling insurance products in towns with a
population greater than 5,000. The NCNB and the Comptroller argue
that even if § 92 prohibits NCNB from selling insurance in towns
with a population greater than 5,000, this prohibition should not
be applied to the instant case because "annuities are not
insurance." We disagree; annuities are an insurance product, both
historically and functionally.
The Comptroller concedes that "annuities have historically
been a product of insurance companies," and Justice Brennan has
likewise observed that "the granting of annuities has been
considered part of the business of life insurance." Securities and
Exchange Comm. v. Variable Annuity Life Insurance Co., 359 U.S. 65,
81, 79 S. Ct. 618, 627, 3 L. Ed. 2d 640 (1959). See also Black's Law
Dictionary, (sixth ed. 1990) (classifying annuities as a type of
insurance, and defining annuities as "an insurance contract calling
for periodic payments to the insured or annuitant for a stated
period or for life") (emphasis added).
All fifty states currently regulate annuities under their
insurance laws.2 See Securities and Exchange Comm. v. Variable
2
Ala.Code §§ 27-3-6(1), 27-5-3 (1986);
Alaska Stat. § 2109.060(1) (1990);
Ariz.Rev.Stat.Ann. § 20-254 (1990);
Ark.Stat.Ann. §§ 23-64—102(1), (3), (1987);
Cal.Ins.Code § 101 (1977);
Colo.Rev.Stat. § 10-1-102(7) (1990);
Conn.Gen.Stat. § 38-68t(a) (1990);
Del.Code Ann. tit. 18 § 512 (1989);
Fla.Stat.Ann. § 624.602(1) (1990);
Ga.Code Ann. § 33-7-4 (1990);
Haw.Rev.Stat. § 431:1-204 (1985);
Idaho Code §§ 41-103, 41-312 (1977);
Ill.Ins.Code ch. 73, art. I, § 4 (1982);
Ind.Code §§ 27-1-2-3(s) (1986);
Iowa Code § 508.31 (1990);
Kan.Stat.Ann. § 40-401 (1990);
La.Rev.Stat.Ann. § 22:6(1) (West 1969);
Me.Rev.Stat.Ann. tit. 24-A, § 411 (1990);
Md.Ins.Code Ann. Act 48A, §§ 46(1), 65 (1991);
Mass.Gen.L. ch. 175, § 47(16) (1987);
Mich.Comp.Laws Ann. § 500.602 (West 1990);
Minn.Stat.Ann. § 61A.01 (1986);
Miss.Code Ann. § 83-7-1 (1972);
Mo.Rev.Stat. §§ 375.158(2), 376.010 (1968);
Annuity Life Ins. Co., 359 U.S. 65, 69, 79 S. Ct. 618, 621, 3
L. Ed. 2d 640 (1959) ("all the States regulate "annuities' under
Mont.Code Ann. § 33-2-108(2) (1990);
Neb.Rev.Stat. § 44-201 (1990);
Nev.Rev.Stat. § 680A.110 (1988);
N.H.Rev.Stat.Ann. § 408:24 (1983);
N.J.Rev.Stat.Ann. § 17:17-1(c) (1990);
N.M.Stat.Ann. § 59A-7-2 (1988);
N.Y.Ins.Law § 1113(a)(2) (McKinney 1990);
N.C.Gen.Stat. §§ 58-7-15(2), 58-39-15(15) (1990);
N.D.Cent.Code. §§ 26.1-26-11(1), (18) (1990);
Ohio Rev.Code Ann. §§ 3902.02, 3911.01 (1990);
Okla.Stat. tit. 36 § 702 (1990);
Or.Rev.Stat. § 731.170(2) (1990);
40 Pa.Cons.Stat. § 382(a)(1) (1990);
R.I.Gen.Laws § 27-32-1(a) (1989);
S.C.Code Ann. §§ 38-1-20(7), (19) (1989);
S.D.Codified Laws Ann. § 58-6-20 (1990);
Tenn.Code Ann. § 56-2-201(4) (1986);
Tex.Ins.Code Ann. art. 3.01, § 1 (1981);
Utah Code Ann. § 31A-1-301(44)(d) (1991);
Vt.Stat.Ann. tit. 8, § 3717 (1984);
Va.Code Ann. § 38.2-602 (1986);
Wash.Rev.Code § 48.11.020 (1984);
W.Va.Code § 33-1-10(a) (1988);
Wis.Stat. §§ 71.42(3), 610.21(4) (1980);
Wyo.Stat. § 26-1-102(a)(xvi), (xvii), 26-16-101 (1983).
their "insurance' laws"). For example, Texas law defines a "life
insurance company" to be a "corporation doing business under any
charter involving ... [inter alia ] annuities." Tex.Ins.Code, art.
3.01 § 1 (1981). Federal laws also reflect the fact that annuities
are an insurance product. See e.g. Internal Revenue Code, 26
U.S.C. § 816(a) (a "life insurance company" is defined as "an
insurance company which is engaged in the business of issuing life
insurance and annuity contracts").
Annuities have historically been considered insurance products
because functionally they are the mirror image of life insurance.
In a life insurance contract, in return for periodic payments by
the insured, the insurance company promises to pay a lump sum to
the insured's beneficiary upon the death of the insured. The
insurance company determines the insurance premium by calculating
the life expectancy of the insured, and gambles that the insured
will outlive the actuarial prediction. An annuity contract is the
exact inverse of a life insurance contract. In return for a lump
sum, the insurance company typically promises the annuitant
periodic payments that will continue until the death of the
annuitant. The lump sum is determined by the life expectancy of
the annuitant, and, in this case, the insurance company gambles
that the annuitant will die prior to the actuarial predictions.
Both life insurance and annuities are formulated on the basis
of actuarial calculations of mortality risk. The Supreme Court, in
Group Life & Health Ins. Co. v. Royal Drug Co., recognized that
"[i]nsurance is an arrangement for transferring and distributing
risk." 440 U.S. 205, 211, 99 S. Ct. 1067, 1073, 59 L. Ed. 2d 261
(1979) (quoting R. Keeton, Insurance Law § 1.2(a) (1971)). Both
life insurance and annuities transfer the economic risk of death
from the policyholder to the insurance company. Life insurance
protects the insured against the economic risk of the insured's
dying prematurely, while an annuity contract protects the insured
against the possibility of outliving her resources.3 By issuing
numerous life insurance and annuity contracts, an insurance company
spreads the risk of policyholders living longer or shorter than
predicted.4
Because annuities are insurance products, and § 92 prohibits
national banks from selling insurance products in towns with a
population greater than 5,000, the Comptroller's approval of NCNB's
sale of annuities conflicts with § 92. The Comptroller attempts to
circumvent this result by arguing that even if annuities are
insurance products, "they are not the kind of "fire, life or other
insurance' to which section 92 refers and which Saxon addressed."
The Comptroller attempts to distinguish Saxon by arguing that § 92
3
S.S. Huebner and K. Black, Life Insurance, explain that
life insurance and annuities "are both insurance in the true
sense of the term. Life insurance protects against the absence
of income in the event of premature death or disability, whereas
the annuity protects (insures) against the absence of income on
the part of those "afflicted' with undue longevity. Both mean
dependable protection to two unfortunate groups, the one dying to
soon and the other living too long. They are both insurance
arrangements, the one pertaining to the years of ascendancy, and
the other to the years of decline."
4
This analysis applies to both variable and fixed annuities.
The Comptroller explains that "[b]oth fixed and variable
annuities can provide investors with a stream of payments for
life, and both can involve actuarial calculations. The only
difference is that fixed annuities, by providing a guaranteed
long-term return, offer a "reduced level of investment risk for
the customer.' "
does not apply to "specialized' insurance products like annuities,
but only "to types of insurance that are similar to fire and life
insurance, such as other general casualty insurance policies." The
district court agreed with the Comptroller's finding that annuity
contracts are "a specialized insurance product and not a "broad
form' of insurance to which Saxon applied."
The Comptroller's argument, that § 92 only applies to
"general" types of insurance, was rejected by the Second Circuit in
American Land Title. The Second Circuit opined: "We believe [the
language of § 92] makes inescapable the conclusion that Congress
intended this provision to apply to "any ... insurance company.' "
968 F.2d at 156. (emphasis added) We agree with the Second
Circuit. The language of § 92 addresses the powers of banks to act
as the agents of "any fire, life or other insurance company."
Nowhere does § 92 limit "other insurance" to "general" insurance,
nor does § 92 speak of "broad forms" of insurance. Nothing in § 92
requires that we engage in the necessarily arbitrary exercise of
examining whether a particular type of insurance product conforms
to a platonic form of "general" insurance. Moreover, on its own
facts, Saxon applied to "automobile, home, casualty and liability
insurance." 399 F.2d at 1012. Likewise, the recent Second Circuit
case following Saxon struck down the sale of title insurance.
Annuities are certainly no less a "general" type of insurance than
land title insurance or automobile insurance.
The Comptroller also attempts to analogize annuities to credit
life insurance which, according to the D.C. Circuit, national banks
are permitted to sell. Independent Bankers Association v. Heimann,
613 F.2d 1164 (D.C.Cir.1979). The analogy has no merit. Credit
life insurance secures the repayment of the borrower's
indebtedness, and thus is intimately related to the bank's primary
business of lending. As the Second Circuit court explains,
credit life insurance is unique in that it protects only the
lender's interest by insuring that his loan will be repaid
even if the borrower dies. When a bank sells credit life
insurance it is similar to the bank demanding a higher price
for the loan to compensate for its assumption of a risk
inherent in any extension of credit made pursuant to a
borrower's promise to pay—the risk that the borrower's death
will render him personally incapable of repaying the loan.
American Land Title, 968 F.2d at 157.
By contrast to credit life insurance, which is closely related to
the business of banking, annuities have nothing to do with the
primary business of banking.
The Comptroller and NCNB finally argue that regardless of §
92, § 24(7) of the National Bank Act authorizes banks to sell
annuities. Section 24(7), originally enacted as part of the
National Bank Act of 1864, ch. 106, 13 Stat. 99, 101, codified at
12 U.S.C. § 24(7), grants to national banks "all such incidental
powers as shall be necessary to carry on the business of banking."
The Comptroller argues that the selling of annuities is an
"incidental power" granted to national banks under § 24(7). The
comptroller's argument ignores the rest of the quoted sentence,
i.e., "necessary to carry on the business of banking." Even
conceding arguendo that the power to sell annuities would be one
incidental to banking, by no stretch of the imagination can that
power be deemed "necessary." Moreover, the Comptroller's argument,
claiming that Congress implicitly gave national banks the power to
sell annuities under the general provision of § 24(7), ignores the
import of § 92. Even if § 24(7) can be interpreted as granting
national banks the power to sell annuities, it is a basic principle
of statutory construction that "where two statutes conflict, the
statute that addresses the matter under consideration in specific
terms controls over the one that does so in a general manner."
American Land Title Association, 968 F.2d at 157. As we explained
in Saxon:
In interpreting the meaning of one provision of an act it is
proper that all other provisions in pari materia should also
be considered. So in construing the general authority
contained in Section 24(7) we must give equal consideration to
Section 92 as it specifically deals with the power of national
banks to act as insurance agents. 399 F.2d at 1013.
See Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 445,
107 S. Ct. 2494, 2499, 96 L. Ed. 2d 385 (1987) ("where there is no
clear intention otherwise, a specific statute will not be
controlled or nullified by a general one"); Busic v. United
States, 446 U.S. 398, 406, 100 S. Ct. 1747, 1753, 64 L. Ed. 2d 381
(1980) ("a more specific statute will be given precedence over a
more general one, regardless of their temporal sequence").
We have previously considered and rejected the Comptroller's
argument that § 24(7) grants national banks powers that are denied
by § 92. In Saxon we held that "when the general language in
Section 24(7) dealing with "incidental' powers is construed in
conjunction with the specific grant in section 92," id. at 1013,
section 92 controls. A "power which has been withheld or denied by
Congress cannot be found to exist as an "incidental' and
"necessary' power." Id. at 1014. The same conclusion was reached
by the Second Circuit, which found that the "specific limits on
insurance activity contained in section 92" control "the general
grant of power contained in section 24 (seventh)." American Land
Title, 968 F.2d at 157.
In addition to the statutory construction outlined above, the
legislative history of § 92 clearly indicates that § 24(7) did not
grant banks the power to sell insurance products. Section 24(7)
was enacted in 1864, as part of the original National Bank Act.
"Prior to the 1916 enactment of Section 92 it seems to have been
universally understood that no national banks possessed any power
to act as insurance agents." Saxon, 399 F.2d at 1013. In a 1915
ruling, the Federal Reserve Board stated that "National banks have
no express or implied power to write fire, cyclone, liability, or
other kinds of insurance." 2 Fed. Reserve Bull. 73, 74 (1916). In
1916, the then Comptroller of the Currency John Skelton Williams
ruled that "National banks are not given either expressly nor by
necessary implication the power to act as agents for insurance
companies." 53 Cong.Rec. 11001 (1916). It was precisely the
national banks' lack of power to sell insurance under § 24(7) which
prompted Comptroller Williams to recommend that Congress grant
national banks located in towns with a population not exceeding
5,000 people the power to act as insurance agents. The Congress
adopted the recommendation of Comptroller Williams, and enacted §
92 as part of the National Bank Act of 1916. Reviewing this
history, we concluded in Saxon:
It thus appears to be clear from the contemporaneous
legislative history of Section 92 that Congress agreed with
and acquiesced in the then Comptroller's ruling that "National
banks are not given either expressly nor by necessary
implication the power to act as agents for insurance
companies.' 399 F.2d at 1016.
If § 24(7) had authorized banks to sell insurance products,
Congress would not have needed to add § 92 which grants national
banks the limited power to sell insurance in towns with less than
5,000 inhabitants. If § 24(7) authorized banks to sell insurance
products, the limited grant of such a power under § 92 would be
partially redundant (for cities with a population under 5,000), and
partially contradictory (for cities with a population over 5,000).
Obviously, § 92 reflects Congress' understanding that the general
grant of "incidental" power under § 24(7) did not include the power
to sell insurance.
CONCLUSION
Our interpretation of § 92 and § 24(7) largely follows our
interpretation of these provisions in Saxon. In the 25 years that
have past since this court interpreted § 92 and § 24(7) in Saxon,
Congress has taken no step to overrule or modify this
interpretation. We end our opinion by giving banks seeking more
power than they are currently granted under §§ 92 and 24(7) the
same advice given by Judge Homer Thornberry at the conclusion of
his concurring opinion in Saxon: "banks should look to Congress,
not the Comptroller." 399 F.2d 1021. To Judge Thornberry's
admonition we simply add, "... or the courts." We thus REVERSE the
finding of the district court and hold that the March 21, 1990
decision of the Comptroller permitting NCNB to sell annuities in
towns with more than 5,000 inhabitants is in violation of 12 U.S.C.
§ 92.