Third Nat'l Bank in Nashville v. Impac Ltd., Inc.
432 U.S. 312 (1977)

Annotate this Case

U.S. Supreme Court

Third Nat'l Bank in Nashville v. Impac Ltd., Inc., 432 U.S. 312 (1977)

Third National Bank in Nashville v. Impac Limited, Inc.

No. 76-674

Argued April 26, 1977

Decided June 17, 1977

432 U.S. 312



Title 12 U.S.C. § 91, which prohibits an "attachment, injunction, or execution" from being issued against a national bank or its property before final judgment in any state or local court, held, when read in context, merely to prevent prejudgment seizure of bank property by creditors, and not to apply to a mortgagor debtor's action seeking a preliminary injunction to protect its real property from wrongful foreclosure. The legislative history indicates that, when the statute was originally enacted in 1873, it was aimed at preventing preferences by creditors. In the provision itself, the word "injunction" is sandwiched in between the words "attachment" and "execution," both of which are writs used by creditors to seize bank property, strongly implying that Congress intended only to prevent state judicial action, prior to final judgment, which would have the effect of seizing the bank's property. Moreover, no reason has been given for assuming that Congress intended to give national banks engaged in making real estate mortgage loans a privilege not available to competing lenders, it being especially unlikely that Congress intended to give national banks a license to inflict irreparable injury on others, free from the normal constraints of equitable relief. Pp. 432 U. S. 318-324.

541 S.W.2d 139, affirmed.

STEVENS, J., delivered the opinion of the Court, in which BRENNAN, STEWART, MARSHALL, POWELL, and REHNQUIST, JJ., joined. BLACKMUN, J., filed a dissenting opinion, in which BURGER, C.J., and WHITE, J., joined, post, p. 432 U. S. 324.

MR. JUSTICE STEVENS delivered the opinion of the Court. A federal statute enacted in 1873 provides that certain

Page 432 U. S. 313

prejudgment writs shall not be issued against national banks by state courts. [Footnote 1] The question presented by this case is whether that prohibition applies to a preliminary injunction restraining a national bank from holding a private foreclosure sale, pending adjudication of the mortgagor's claim that the loan is not in default. We conclude that the prohibition does not apply.


Only the essentials of the rather complex three-party transaction giving rise to this dispute need be stated. Respondents borrowed $700,000 from petitioner, a national bank, to finance the construction of an office building. The third party, a mortgage company, agreed to provide permanent financing to replace the bank loan upon completion of the building. The loan was secured by a deed of trust, which granted a first lien on respondents' property to the bank while the construction loan was outstanding. A dispute developed between respondents and the long-term lender over whether respondents had satisfied certain preconditions of the long-term loan. Petitioner contends that respondents are in default because of their failure to close the long-term loan. Respondents deny

Page 432 U. S. 314

that they are in default, and contend that petitioner's remedy is against the long-term lender. On September 4, 1975, petitioner notified respondents that foreclosure proceedings would be commenced unless the loan, plus accrued interest and an extension fee, was paid in full in 10 days.

On September 23, 1975, petitioner published a notice of foreclosure. Under Tennessee practice, foreclosure of a deed of trust is not a judicial proceeding, but is routinely consummated by private sale unless restrained by judicial action initiated by the mortgagor. On September 26, 1975, respondents commenced this litigation by filing a sworn complaint in the Chancery Court of Davidson County, Tenn. seeking to restrain the foreclosure on the ground that the loan was not in default. The chancellor ordered the petitioner to show cause why an injunction should not issue.

Petitioner's answer set forth the basis for its claim of default, but did not question the court's power to restrain the foreclosure. Based on the pleadings, the exhibits, and extensive arguments of counsel, the chancellor found

"the existence of issues which should be determined upon a full hearing of this cause and that [respondents] would suffer irreparable harm if the foreclosure occurred prior to such full hearing."

App. 56. He therefore temporarily enjoined the foreclosure.

Two days later, petitioner filed a supplemental answer alleging that the state court lacked jurisdiction to enter a temporary injunction against a national bank. In due course, the chancellor concluded that 12 U.S.C. § 91 removed his jurisdiction to grant an injunction "prohibiting the foreclosure of property in which the bank has a security interest." App. 69. He therefore dissolved the preliminary injunction, granted an interlocutory appeal, and "stayed" the bank from foreclosure until the appeal to the Tennessee Supreme Court could be perfected.

The Tennessee Supreme Court reversed. 541 S.W.2d 139 (1976). It concluded that the federal statute was intended


Page 432 U. S. 315

secure the assets of a bank, whether solvent or insolvent, for ratable distribution among its general creditors and to protect national banks in general."

Id. at 141. It did not believe this purpose justified an application of the statute when

"a debtor of a national bank is seeking, by interlocutory injunction, to protect his property from wrongful seizure and foreclosure sale by the bank."

Ibid. The court acknowledged that the bank had a security interest in respondents' property, but did not believe that the statute was intended to give additional protection to an interest of that kind which was already amply protected. [Footnote 2] One member of the court read the statute as absolutely forbidding the issuance of any temporary injunction against the national bank before judgment, and therefore reluctantly dissented from what he described as the majority's "just result." Id. at 143. We granted certiorari to decide whether the Tennessee Supreme Court's construction of the statute is consistent with the congressional mandate. 429 U.S. 1037. We affirm.

The critical statutory language reads as follows:

"[N]o attachment, injunction, or execution, shall be issued against such association or its property before final judgment in any suit, action, or proceeding, in any State, county, or municipal court."

12 U.S.C. § 91.

At least three different interpretations might be placed on that language. Most narrowly, because the rest of § 91 relates

Page 432 U. S. 316

to insolvency, this language might be limited to cases in which a national bank is insolvent, or at least on the verge of insolvency. Secondly, regardless of the bank's financial circumstances, it might be construed to prohibit any prejudgment seizure of bank assets. Most broadly, it might be given a completely literal reading and applied not merely as a shield for the bank's assets, but also as a prohibition against prejudgment orders protecting the assets of third parties, including debtors of the bank.

Although there is support for the narrowest reading in the history of the statute, both that reading and the broadest literal reading have been rejected by this Court's prior cases. Before discussing those cases, we shall review the available information about the origin and revisions of the statute.


The National Currency Act of 1864 authorized the formation of national banks. [Footnote 3] Section 52 of that Act contained the first part of what is now 12 U.S.C. § 91. It prohibited any transfer of bank assets in contemplation of insolvency or with a view to preferring one creditor of the bank over another. The 1864 statute did not, however, include the prohibition against the issuance of prejudgment writs now found in 12 U.S.C. § 91.

That prohibition was enacted in 1873 as § 2 of "An Act to require national Banks to restore their Capital when impaired, and to amend the National-currency Act." 17 Stat. 603. If the prohibition had been added to § 52 of the 1864 Act, [Footnote 4] the

Page 432 U. S. 317

amended section would have been virtually identical with the present 12 U.S.C. § 91. It was, however, added to § 57 of the 1864 Act, which authorized suits against national banks in the state courts. Petitioner therefore infers that the amendment was intended to qualify the jurisdiction of state courts over national banks, and that the amendment should be given its full, literal meaning.

There is no direct evidence of the reason for the amendment. It was passed without debate, Cong.Globe, 42d Cong., 3d Sess., 870, 2117-2118 (1873), and does not seem to have been recommended by the administration. [Footnote 5] However, the historical context in which the bill was passed may offer some clue as to its purpose. We may take judicial notice of the historical fact that 1873 was the year of a financial panic. Moreover, a number of reported cases involved attachments against national banks and attempts by creditors to obtain a preference by attaching assets of an insolvent bank. [Footnote 6]

When the first edition of the Revised Statutes of the United States was prepared in 1873, the prohibition against prejudgment writs was combined with the provision concerning preferential transfers and acts in contemplation of insolvency to

Page 432 U. S. 318

form § 5242, which is now 12 U.S.C. § 91. [Footnote 7] Respondents argue that this revision placed the provision in the context which was originally intended.

For the past century, the prohibition against prejudgment writs has remained in the preferential transfer section.


This Court has construed this prohibition only three times. [Footnote 8] In two cases, the Court held that assets of a national bank could not be attached; in the third, the Court held that property of a third party in the custody of the bank was subject to attachment by a creditor. None of the three involved a preliminary injunction.

Petitioner contends that the earliest of the three, Pacific Nat. Bank v. Mixter,124 U. S. 721, "squarely controls" this case. Brief for Petitioner 13. Actually, however, the holding in Mixter was quite narrow. The question before the Court was "whether an attachment can issue against a national bank before judgment in a suit begun in the Circuit Court of the United States," 124 U.S. at 124 U. S. 724. Although the statutory prohibition was not directly applicable to federal suits, the federal courts were authorized to issue attachments only as provided by state law. The Court concluded:

"In our opinion, the effect of the act of Congress is to deny the state remedy altogether so far as suits against national banks are concerned, and in this way operates as

Page 432 U. S. 319

well on the courts of the United States as on those of the States. Although the provision was evidently made to secure equality among the general creditors in the division of the proceeds of the property of an insolvent bank, its operation is by no means confined to cases of actual or contemplated insolvency. The remedy is taken away altogether, and cannot be used under any circumstances."

Id. at 124 U. S. 727. [Footnote 9]

The statement in Mixter that the remedy of attachment cannot be used against a national bank "under any circumstances" makes it clear that the statutory prohibition is applicable to solvent, as well as insolvent, national banks. The financial circumstances of the bank are not of controlling importance. That Mixter did so hold was settled by this Court's most recent decision concerning this statute, Van Reed v. People's Nat. Bank,198 U. S. 554:

"Since the rendition of that decision [Mixter] it has been generally followed as an authoritative construction of the statute holding that no attachment can issue from a state court before judgment against a national bank or its property. It is argued by the plaintiff in error that

Page 432 U. S. 320

the decision in the Mixter case, supra, should be limited to cases where the bank is insolvent; but the statement of facts in that case shows that, at the time when the attachment was issued, the bank was a going concern and entirely solvent so far as the record discloses. The language of Chief Justice Waite, above quoted, is broad and applicable to all conditions of national banks, whether solvent or insolvent; and there is nothing in the statute, which is likewise specific in its terms, giving the right of foreign attachment as against solvent national banks."

Id. at 198 U. S. 559 (citations omitted).

Between Mixter and Van Reed, this Court rendered its only other decision in this area, Earle v. Pennsylvania,178 U. S. 449. In that case, the Court held that an

"attachment sued out against [a] bank as garnishee is not an attachment against the bank or its property, nor a suit against it, within the meaning of that section."

Id. at 178 U. S. 454 (emphasis omitted). The holding in Earle forecloses a completely literal reading of the statute. [Footnote 10] It also demonstrates that the "under any circumstances" language in Mixter had reference to the financial condition of the bank, rather than to any possible case in which a prejudgment writ issues against a national bank.

Speaking for the Court in Earle, the first Mr. Justice Harlan stated that the ban on prejudgment writs must "be construed in connection with the previous parts of the same section" concerning preferential transfers. 178 U.S. at 178 U. S. 453. This statement was consistent with the Court's earlier comment in Mixter:

"The fact that the amendment of 1873 in relation to attachments and injunctions in state courts was made a

Page 432 U. S. 321

part of § 5242 shows the opinion of the revisers and of Congress that it was germane to the other provision incorporated in that section [concerning preferential transfers], and was intended as an aid to the enforcement of the principle of equality among the creditors of an insolvent bank."

124 U.S. at 124 U. S. 726. [Footnote 11] Thus, the statute can be given its full intended effect if it is applied to actions by creditors of the bank. As always, "[t]he meaning of particular phrases must be determined in context"; [Footnote 12] read in context, the anti-injunction provision has only a limited scope. [Footnote 13]

Petitioner argues, however, that the Court erred in Earle by reading the anti-attachment and preferential transfer provisions together. It contends that the two were simply combined by mistake in the Revised Statutes. The burden is on petitioner, we think, to show that the present form of the statute -- which, after all, constitutes the legal command of Congress -- does not reflect congressional intent. If any mistake occurred, it seems at least as likely that the 1873

Page 432 U. S. 322

amendment was incorrectly added to § 57 as that the revisers, that very year, made an error which has gone undetected for over a century. [Footnote 14] But there are three stronger reasons for rejecting the argument.

First the historical evidence supports the revisers. It appears likely that, when originally passed the provision barring prejudgment writs actually was aimed at preventing preferences by creditors. As noted earlier, the threat of insolvency was a serious national problem in 1873, and there had been a number of cases just before in which state courts had allowed creditors to obtain preferences in this manner. There does not seem to have been any similar problem with actions by noncreditors. It seems improbable, for instance, that there were many actions by mortgagors to enjoin foreclosures by national banks, because, at that time, national banks were allowed to accept mortgages only in very limited circumstances. [Footnote 15]

Second, the anti-injunction provision itself bears strong signs that it was meant to have a limited scope. It is a familiar principle of statutory construction that words grouped in a list should be given related meaning. [Footnote 16] The word "injunction" is sandwiched in between the words "attachment" and "execution." Both are writs used by creditors to seize bank property. On the other hand, the word "garnishment"

Page 432 U. S. 323

is conspicuously absent from the list. [Footnote 17] That writ is directed at the bank, but is used to seize property belonging to others which happens to be in the hands of the bank. The implication is strong that Congress intended only to prevent state judicial action, prior to final judgment, which would have the effect of seizing the bank's property. [Footnote 18]

Third, petitioner completely fails to identify any national or local interests which its reading of the statute would serve. That reading would give national banks engaged in the business of making loans secured by mortgages on real estate a privilege unavailable to competing lenders. No reason has been advanced for assuming that Congress intended such disparate treatment. We cannot believe that Congress intended to give national banks a license to inflict irreparable injury on others, free from the normal constraints of equitable relief. It is true that Congress has consistently and effectively sought to minimize the risk of insolvency for national banks, and to protect bank creditors from disparate treatment. But those interests are fully vindicated by our construction of the Act.

Even though petitioner's reading of the Act can be supported by its text and by fragments of history, accepted principles of construction require that the provision in question

Page 432 U. S. 324

be construed in its present context and given a rational reading. Fairly read, the statute merely prevents prejudgment seizure of bank property by creditors of the bank. It does not apply to an action by a debtor seeking a preliminary injunction to protect its own property from wrongful foreclosure.

The judgment of the Supreme Court of Tennessee is affirmed.

It is so ordered.

[Footnote 1]

Title 12 U.S.C. § 91, entitled "Transfers by bank and other acts in contemplation of insolvency," now reads as follows:

"All transfers of the notes, bonds, bills of exchange, or other evidences of debt owing to any national banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valuable thing for its use, or for the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void; and no attachment, injunction, or execution, shall be issued against such association or its property before final judgment in any suit, action, or proceeding, in any State, county, or municipal court."

(Emphasis added.)

[Footnote 2]

"In the instant case, appellee is not using the statute as a shield to protect its assets, but is using it to preclude appellant from protecting its own property. True, appellee has a security interest of $700,000 in the property. However, the property is in the form of an office building allegedly worth in excess of $1,000,000 which cannot be sold, or assigned, or spirited away in the dark of the night so as to defeat appellee's security interest. The Chancellor predicated the temporary injunction (before it was dissolved) upon the condition that appellant continue to pay interest on the $700,000 at the contract rate until a final determination on the merits could be made. In short, appellee's security interest in appellant's property was completely protected."

541 S.W.2d at 142.

[Footnote 3]

13 Stat. 99, 100-101. The full title of the statute was

"An Act to provide a National Currency, secured by a Pledge of United States Bonds, and to provide for the Circulation and Redemption thereof,"

but subsequent amendments refer to it as the "National Currency Act." See 17 Stat. 603. The 1864 statute replaced the National Banking Act of 1863, 12 Stat. 665.

[Footnote 4]

The only difference would be that the provision on prejudgment writs would be preceded by the phrase "And provided further, That. . . ."

[Footnote 5]

It was not mentioned in the Reports of the Comptroller of the Currency for 1872 or 1873.

[Footnote 6]

One, First Nat. Bank of Selma v. Colby, 46 Ala. 435 (1871), later reached this Court, 88 U. S. 21 Wall. 609. Seen 8, infra.Colby was typical in that it involved an attempt by creditors to obtain a preference by attaching assets of an insolvent bank. This attempt was successful in the Alabama Courts, and similar attempts had met with success in New York. See Allen v. Scandinavian Nat. Bank, 46 How.Pr. 71, 82-83 (Sup.Ct., General Term, 1873); Bowen v. First Nat. Bank of Medina, 34 How.Pr. 408 (Sup.Ct., General Term, 1867). See also Cadle v. Tracy, 4 F.Cas. 967 (No. 2,279) (SDNY 1873). Moreover, Bowen and another case, Cooke v. State Nat. Bank of Boston, 50 Barb. 339 (Sup.Ct., Special Term, 1867), raised the possibility that bank assets would be routinely attached by creditors. These cases allowed attachment on the basis that a national bank, wherever it does business, is, by definition, a "foreign corporation."

[Footnote 7]

Section 5242 was included in c. IV entitled "Dissolution and Receivership." The legislative history is sketched in Pacific Nat. Bank v. Mixter,124 U. S. 721, 124 U. S. 724-726.

[Footnote 8]

National Bank v. Colby, 21 Wall. 609, was decided after the passage of the 1873 amendment, but the attachment had been issued before the amendment. The Court invalidated the attachment without relying on the amendment. It based its decision, instead, on the ban against preferential transfers and the paramount lien given the United States in the assets of insolvent national banks. Id. at 88 U. S. 613-614.

[Footnote 9]

The Court then added:

"It was further said that, if the power of issuing attachments has been taken away from the state courts, so also is the power of issuing injunctions. That is true. While the law as it stood previous to the act of July 12, 1882, 22 Stat. 163, c. 290, § 4, gave the proper state and federal courts concurrent jurisdiction in all ordinary suits against national banks, it was careful to provide that the jurisdiction of the federal courts should be exclusive when relief by attachment or injunction before judgment was sought."

124 U.S. at 124 U. S. 727. This was simply dictum, as no injunction was involved in Mixter. Moreover, in Mixter, the Court was not presented with a situation in which the requested relief related to assets not belonging to the bank. The Mixter dictum is therefore not controlling now that "the very point is presented for decision." Cohens v. Virginia, 6 Wheat. 264, 19 U. S. 399. See generally Barrett v. United States,423 U. S. 212, 423 U. S. 223.

[Footnote 10]

In support of its literal reading of the statute, petitioner relies heavily on Mr. Justice Holmes' opinion in Freeman Mfg. Co. v. National Bank of the Republic, 160 Mass. 398, 35 N.E. 865 (1894); but that opinion preceded Earle, in which this Court adopted a contrary approach.

[Footnote 11]

The Court went on to say that "however that may be," the provision as originally enacted in 1873 completely barred all prejudgment attachments, and "[t]he form of its reenactment in the Revised Statutes does not change its meaning in this particular." 124 U.S. at 124 U. S. 726 (emphasis added). After Earle, this statement must be read to apply only to attachments against the bank's property.

[Footnote 12]

SEC v. National Securities, Inc.,393 U. S. 453, 393 U. S. 466; see also Haggar Co. v. Helvering,308 U. S. 389, 308 U. S. 396.

[Footnote 13]

"The statutory policy seems to be to prevent all preference or priority in claims against these banks sought to be acquired by seizure of effects under State authority before the final adjudication of such claims, and to protect the banks from being weakened or crippled by such antecedent seizures. The national banks created by Congress are to control their own assets and resources, as against State interference at the instance of creditors, or of pretended creditors, until the real existence of the alleged debts has been ascertained by final judgment."

Planters Loan & Sav. Bank v. Berry, 91 Ga. 264, 265, 18 S.E. 137 (1893).

[Footnote 14]

We do not imply that the original reference to § 57 was a typographical error. We merely suggest that the context in which the amendment was originally placed may not have accurately reflected the meaning its draftsmen intended.

[Footnote 15]

It was only much later that national banks were allowed to make loans secured by real estate mortgages. See First Nat. Bank v. Anderson,269 U. S. 341, 269 U. S. 353-354. National banks were, however, allowed to accept mortgages as "security for debts previously contracted." 13 Stat. 108.

[Footnote 16]

"One hardly need rely on such Latin phrases as ejusdem generis and noscitur a sociis to reach this obvious conclusion." United States v. Feola,420 U. S. 671, 420 U. S. 708 (STEWART, J., dissenting).

[Footnote 17]

Moreover, the provision does not forbid other ways in which a state court might exercise in rem jurisdiction over the property of a debtor of the bank, such as a state receivership involving the debtor. Yet such state court jurisdiction might prevent any other court from exercising in rem jurisdiction, as in a judicial proceeding by the bank to judicially foreclose its mortgage. See 1A J. Moore, Federal Practice

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