Insofar as it forbids national banks to use the word "saving" or
"savings" in their business or advertising, the New York statute
here involved is invalid, because it conflicts with federal laws
expressly authorizing national banks to receive savings deposits
and to exercise incidental powers. Pp. 347 U. S.
(a) The provision of § 24 of the Federal Reserve Act authorizing
national banks to "continue hereafter as heretofore to receive time
and savings deposits" is declaratory of the right of national banks
to enter into or remain in that type of business, and their
authority to receive savings deposits is not limited or qualified
by the expression "continue hereafter as heretofore." P.
347 U. S.
(b) Nor are national banks precluded from advertising for the
savings deposits which they are expressly authorized to accept. Pp.
347 U. S.
(c) Congress did not intend to make this phase of national
banking subject to local restrictions because of the special
significance attached to the word "savings" in some states. P.
347 U. S.
, 113 N.E.2d 796, reversed.
Page 347 U. S. 374
Opinion of the Court by MR. JUSTICE JACKSON, announced by MR.
This appeal from the Court of Appeals of New York presents the
narrow question whether federal statutes which authorize national
banks to receive savings deposits conflict with New York
legislation which prohibits them from using the word "saving" or
"savings" in their advertising or business. We think the federal
and state statutes are incompatible, and, in such circumstances,
the policy of the State must yield.
It is the policy of New York to charter and foster the mutual
savings bank, a nonprofit institution whose earnings inure to the
benefit of depositors, rather than to stockholders. These
institutions have a long history as relatively stable and safe
depositaries for the accumulations of thrifty New Yorkers and as a
source of credit for limited uses. They have grown to be an
important part of New York's banking and economic structure. That
State also charters the savings and loan association, an
institution of a different type, intended to serve somewhat similar
ends. The Legislature was concerned lest commercial banks, in
seeking to induce deposits of the same character, so use the word
"savings" as to lead uninformed and indiscriminating persons to
believe that they were dealing with the chartered savings
institutions. Hence, by its Banking Law, New York has forbidden use
of the word "savings," or its variants, by any banks other than its
own chartered savings banks and savings and loan associations.
Page 347 U. S. 375
However, the Federal Government is a rival chartering authority
for banks. Since McCulloch v.
4 Wheat. 316, it has not been open to
question that the Federal Government may constitutionally create
and govern such institutions within the states. The United States
has set up a system of national banks as federal instrumentalities
to perform various functions such as providing circulating medium
and government credit, as well as financing commerce and acting as
private depositaries. Some of their functions, especially as a
source for federal credit, depend upon their success in attracting
private deposits. That these federal institutions may be at no
disadvantage in competition with state-created institutions, the
Federal Government has frequently expanded their functions and
authority. Of such nature are the measures now before us.
The Federal Reserve Act provides that a national bank
"may continue hereafter as heretofore to receive time and
savings deposits and to pay interest on the same, but the rate of
interest which such association may pay upon such time deposits or
upon savings or other deposits shall not exceed the maximum rate
authorized by law to be paid upon such deposits by State banks or
Page 347 U. S. 376
organized under the laws of the State in which such association
is located. [Footnote 2
The Act authorizes the Board of Governors of the Federal Reserve
System to make necessary rules and regulations, [Footnote 3
] which the Board has done by
defining such terms as "time deposits" and "savings deposits."
] The National Bank
Act authorizes national banks to receive deposits without
qualification or limitation, and it provides that they shall
"all such incidental powers as shall be necessary to carry on
the business of banking; by discounting and negotiating promissory
notes, drafts, bills of exchange, and other evidences of debt; by
receiving deposits; by buying and selling exchange, coin, and
bullion; by loaning money on personal security; and by obtaining,
issuing, and circulating notes according to the provisions of this
chapter. [Footnote 5
Appellant, believing it was authorized by the Federal Government
to do so, used the words "saving" and "savings" in advertising, in
signs displayed in the bank, on its deposit and withdrawal slips,
and in its annual reports. It is beyond question that appellant
violated the State's prohibition if it is a valid one.
The Attorney General of the State initiated this case by a
complaint alleging such violations, seeking a broad injunction. The
trial accumulated a large record devoted mainly to the merits and
demerits of the New York legislation and its consequences upon
banks and depositors. The trial court found no purposeful deception
of the public. It held that the advertising and other use of the
forbidden terms were in pursuit of implied and incidental powers
conferred upon national banks by the
Page 347 U. S. 377
Acts of Congress, and that the New York statute in conflict with
them must yield. The Appellate Division disagreed, and directed a
permanent injunction prohibiting the use of the term. The Court of
Appeals affirmed, and we noted probable jurisdiction of an appeal.
We are unable to support the contention that the authorization
for national banks to receive savings deposits is limited or
qualified because of the expression that they may "continue
hereafter as heretofore" to do so. It appears that, previous to the
enactment, acceptance of such accounts by national banks had been
usual, but was not expressly authorized. We do not think the
Federal Reserve Act should be construed to freeze individual banks
or those located within any state to the customs and practices
preceding the statute. We read the Act as declaratory of the right
of a national bank to enter into or remain in that type of
business. That has been the administrative construction, and we
think it is correct.
Nor can we construe the two Federal Acts as permitting only a
passive acceptance of deposits thrust upon them. Modern competition
for business finds advertising one of the most usual and useful of
weapons. We cannot believe that the incidental powers granted to
national banks should be construed so narrowly as to preclude the
use of advertising in any branch of their authorized business. It
would require some affirmative indication to justify an
interpretation that would permit a national
Page 347 U. S. 378
bank to engage in a business but gave no right to let the public
know about it.
Appellee does not object to national banks' taking savings
deposits or even to their advertising that fact, so long as they do
not use the word "savings." It takes the position that this word is
a misnomer in New York, because depositors there, as a result of
the State statute, have come to think of savings accounts as
something entirely different from those to which the Federal Act is
referring. Regardless of whether New Yorkers are really misled by
the description, the fact is that Congress has given a particular
label to this type of account. Whatever peculiar meaning the word
may have in New York, it is a word which aptly describes, in a
national sense, the type of business carried on by these national
banks. They do accept and pay interest on time deposits of people's
savings, and they must be deemed to have the right to advertise
that fact by using the commonly understood description which
Congress has specifically selected. We find no indication that
Congress intended to make this phase of national banking subject to
local restrictions, as it has done by express language in several
other instances. [Footnote
There appears to be a clear conflict between the law of New York
and the law of the Federal Government. We cannot resolve conflicts
of authority by our judgment as to the wisdom or need of either
conflicting policy. The
Page 347 U. S. 379
compact between the states creating the Federal Government
resolves them as a matter of supremacy. [Footnote 8
] However wise or needful New York's policy,
a matter as to which we express no judgment, it must give way to
the contrary federal policy.
The judgment of the New York Court of Appeals is reversed, and
the case is remanded for further proceedings not inconsistent with
Reversed and remanded.
McKinney's N.Y. Laws, Banking Law, c. 2, § 258, subd. 1,
"No bank trust company, national bank, individual, partnership,
unincorporated association or corporation other than a savings bank
or a savings and loan association shall make use of the word
'saving' or 'savings' or their equivalent in its banking or
financial business, or use any advertisement containing the word
'saving' or 'savings', or their equivalent in relation to its
banking or financial business, nor shall any individual or
corporation other than a savings bank in any way solicit or receive
deposits as a savings bank; but nothing herein shall be construed
to prohibit the use of the word 'savings' in the name of the
Savings and Loan Bank of the State of New York or in the name of a
trust company all of the stock of which is owned by not less than
twenty savings banks. Any bank, trust company, national bank,
individual, partnership, unincorporated association or corporation
violating this provision shall forfeit to the people of the state
for every offense the sum of one hundred dollars for every day such
offense shall be continued."
38 Stat. 273, 44 Stat. 1232, as amended, 12 U.S.C. (1952 ed.) §
38 Stat. 262, 12 U.S.C. (1952 ed.) § 248(i). See also
49 Stat. 714, 12 U.S.C. (1952 ed.) § 461.
12 CFR §§ 204.1, 217.1.
R.S. § 5136, 12 U.S.C. (1952 ed.) § 24 (seventh).
200 Misc. 557, 105 N.Y.S.2d 81, reversed,
757, 118 N.Y.S.2d 210, aff'd, 305
, 113 N.E.2d 796, probable jurisdiction noted,
346 U.S. 908. Appellee included in its complaint a charge that
appellant solicited business as a savings bank. However, the New
York Court of Appeals held that there was no evidence of such
practice. Therefore, the sole question before this Court relates to
appellant's other use of the prohibited words in its advertising or
R.S. § 5155, 12 U.S.C. (1952 ed.) § 36(c)
(establishment of branch banks); R.S. § 5136, 12 U.S.C. (1952 ed.)
§ 24 (eighth) (contributions to charitable instrumentalities); R.S.
§ 5153, 12 U.S.C. (1952 ed.) § 90 (security for the deposit of
state funds); R.S. § 5197, 12 U.S.C. (1952 ed.) § 85, and part of
the section involved in this case, 38 Stat. 273, 44 Stat. 1232, as
amended, 12 U.S.C. (1952 ed.) § 371 (interest rates). Even in the
absence of such express language, national banks may be subject to
some state laws in the normal course of business if there is no
conflict with federal law. Cf. Anderson National Bank v.
Luckett, 321 U. S. 233
McClellan v. Chipman, 164 U. S. 347
Easton v. Iowa, 188 U. S. 220
188 U. S.
-230; Davis v. Elmira Savings Bank,
161 U. S. 275
161 U. S.
MR. JUSTICE REED, dissenting.
I dissent. It should be noted that the New York statute,
note 1 of the Court's opinion
limits the use of the words "saving" or "savings" in relation to
their banking business to certain types of New York financial
institutions. These are those that are mutual in character as
distinguished from stockholder-owned. Such mutual institutions can
and do pay larger returns on deposits in New York than the
commercial stock-type banks, state or national, both of which are
barred by the New York statute from using the word "savings" "in
relation to banking or financial business." The mutual banks have
been successful in attracting a large proportion of savings
deposits for over a century. They have a remarkable record for
soundness in finance and profitable operation for the benefit of
the depositors. The purpose of the New York law is to reserve the
use of the word "savings" to identify the mutual type of bank
operation for the public, just as the federal banking laws reserve
the name "national" for a certain type of bank organized under
The Court's opinion permits the national banks to trade upon the
good name of the savings banks to secure deposits
Page 347 U. S. 380
of that type. Now they may advertise "A Savings Bank" under
their corporate name; their deposit slips may say "Savings
Account." As no federal statute expressly authorizes the national
banks to use the words "saving" or "savings" in their
advertisements, I think they must conform to the New York law for
the protection of the public from misunderstanding. I would not
imply a federal privilege to use "savings" in advertising from the
fact that national banks may accept savings deposits. The cases
cited by the Court in note 7
sustain that view
I know of no precedents that approve such a
limitation on state power as the Court now announces.