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( C o p y ) X-4117 Supreme Court of Rhode I s l a n d Herbert L. Carpenter, Atty. Gen. M. P. No. 417 v. Aquidneck National Bank OPINION S1EETLAND, C. J . The above e n t i t l e d proceeding i s an information i n the nature of quo warranto, prosecuted by the Attorney General f o r and i n behalf of the S t a t e . Therein the Court i s informed t h a t t h e defendant although p r o h i b i t e d by the laws of t h i s s t a t e has been and i s , by u s u r p a t i o n , e x e r c i s i n g the powers of an executor, and a l s o has been and i s a c t i n g as t r u s t e e , and i n other f i d u c i a r y c a p a c i t i e s . The informant prays t h a t judgment be entered a g a i n s t the defendant excluding and o u s t i n g i t from the f u r t h e r exercise of such powers. In i t s p l e a the defendant admits t h a t i t i s a c t i n g as executor and a s t r u s t e e a s a l l e g e d i n the information; but s e t s up t h a t i t i s not a c t i n g in contravention of the laws of t h i s s t a t e ; because such laws authorize and permit t h e e x e r c i s e of s i m i l a r powers by t r u s t companies organized i n the s t a t e , which t r u s t companies compete with n a t i o n a l banks l o c a t e d i n the s t a t e . For support of i t s p l e a the defendant r e l i e s upon the p r o v i s i o n s of the Federal Reserve Act of December 23, 1913, Section I I , L -2- <• ' ^ -9 x-4117 s u b - s e c t i o n k, as amended September 26, l g i S , c o n f e r r i n g upon t h e Federal Reserve Board a u t h o r i t y "To grant by s p e c i a l p e r mit to n a t i o n a l banks applying t h e r e f o r , when not i n contravent i o n of S t a t e or l o c a l law, t h e r i g h t t o a c t as t r u s t e e , execut o r , a d m i n i s t r a t o r , r e g i s t r a r of stocks and bonds, guardian of e s t a t e s , a s s i g n e e , r e c e i v e r , committee of e s t a t e s of l u n a t i c s , or in any other f i d u c i a r y capacity in which S t a t e banks, t r u s t companies, or o t h e r corporations which come i n t o competition with n a t i o n a l banks a r e permitted to act under the laws of t h e S t a t e i n which the n a t i o n a l bank i s l o c a t e d . Whenever t h e laws of such S t a t e a u t h o r i z e or permit the e x e r c i s e of any or a l l of the foregoing powers by S t a t e banks, t r u s t companies, or o t h e r c o r p o r a t i o n s which compete with n a t i o n a l banks, the g r a n t ing t o and the e x e r c i s e of such powers by n a t i o n a l banks s h a l l not be deemed to be i n contravention of S t a t e or l o c a l law w i t h i n the meaning of t h i s A c t . " The defendant shows t h a t i n conformity with t h e Federal Re- . serve Act a s amended i t has been granted by t h e Federal Reserve Board the r i g h t to a c t , under the r u l e s of the board, as t r u s t e e , executor, a d m i n i s t r a t o r or i n any other f i d u c i a r y c a p a c i t y i n which t r u s t companies which come i n t o competition with i t a r e p e r m i t t e d t o a c t under the lc.ws of the S t a t e of Rhode I s l a n d . By t h e p r o v i s i o n s of the s t a t u t e s of t h i s s t a t e , now Chapt e r 271, General Laws 1923, a t r u s t company, e s t a b l i s h e d in X-4H7 accordance with our laws and which has conformed t o t h e regul a t i o n s t h e r e i n p r e s c r i b e d , i s empowered, among other t h i n g s , t o accept and execute a l l t r u s t s committed to i t by any p e r son, c o r p o r a t i o n or court of t h i s s t a t e , or of the United S t a t e s , and t o accept and execute the o f f i c e of executor, a d m i n i s t r a t o r , guardian of the e s t a t e and other o f f i c e s , i n the chapter named, having s i m i l a r f i d u c i a r y c h a r a c t e r . Any court of p r o - b a t e i n t h i s s t a t e i s empowered i n i t s d i s c r e t i o n t o appoint such a t r u s t company t o e i t h e r of said o f f i c e s of t r u s t . The power t o act i n such f i d u c i a r y capacity i s not conferred by our law upon a s t a t e bank, savings bank, or any other c o r p o r a t i o n in t h i s , s t a t e ; and probate courts a r e without j u r i s d i c t i o n under our s t a t u t e s t o appoint any corporation except such a t r u s t company t o t h e o f f i c e s of executor, a d m i n i s t r a t o r , guardian or t h e like. Ihen a n a t i o n a l bank has the permission of the Federal Reserve Board, Congress has conferred upon such bank a u t h o r i t y to a c t in a f i d u c i a r y capacity, and the a u t h o r i t y to so a c t becomes a p a r t of t h e corporate powers of the bank. Without q u e s t i o n a n a t i o n a l bank can e x e r c i s e such corporate powers i n t h i s s t a t e when t h e i r e x e r c i s e i s not in contravention of our domestic law. C e r t a i n of t h e corporate powers which Congress has thus c o n f e r r e d ;upon n a t i o n a l banks r e l a t e t o t r u s t s which a r i s e i n connection with o f f i c e s r e q u i r i n g f o r t h e i r e x e r c i s e t h e appointment of a probate c o u r t . Save a s such t r u s t s we see no reason t o question t h a t a n a t i o n a l bank may e x e r c i s e i n t h i s s t a t e -4- x-4117 i t s corporate powers of a f i d u c i a r y n a t u r e which i t has acquired i n conformity with the act of Congress. In Aquidneck Hational Bank Jennings , 44 R. I . 435, the defendant h e r e , in an attempt t o place i t s e l f on a p a r i t y w i t h t h e t r u s t companies of the s t a t e , sought by irandarnus t o compel the s t a t e t r e a s u r e r t o accept from i t United S t a t e s bonds i n a c e r t a i n amount, t o be held by the t r e a s u r e r a s s e c u r i t y f o r t h e performance by t h e defendant of i t s d u t i e s i n a f i d u c i a r y capacity. The Federal Heserve Act provides t h a t when t h e laws of a s t a t e r e q u i r e t h a t a t r u s t company of such s t a t e s h a l l deposit s e c u r i t i e s f o r t h e p r o t e c t i o n of t r u s t s held by t h a t company, n a t i o n a l banks in such s t a t e s h a l l be r e q u i r e d t o make s i m i l a r deposit of s e c u r i t i e s f o r the p r o t e c t i o n of p r i v a t e and court t r u s t s held by them i n t h e i r f i d u c i a r y c a p a c i t y . In that p e t i t i o n f o r mandamus, without passing upon the corporate powers of t h i s defendant bank to a c t as a t r u s t e e in t h i s s t a t e , the court denied the p e t i t i o n . The denial was p r i n c i p a l l y upon t h e ground t h a t , without the sanction of t h e general assembly, n o t h ing in the Federal Reserve Act can be regarded a s r e g u l a t i n g or extending the d u t i e s of the t r e a s u r e r as one of the general o f f i c e r s of the s t a t e , and t h a t Congress can not give the n a t i o n a l banks in t h e s t a t e the r i g h t to demand t h a t t h e general t r e a s u r e r s h a l l perform f o r t h e i r b e n e f i t the same d u t i e s which, under our lav/, he performs f o r t r u s t companies in t h i s s t a t e . In Aauidneck Bank v. Jennings, supra, we have h e l d t h a t • -r-5- X-U117 a n a t i o n a l bank can not be admitted t o an apparent standing of e q u a l i t y w i t h t r u s t companies. We can not say, however, t h a t the e x e r c i s e i n t h i s s t a t e by the defendant bank of i t s power t o a c t i n a f i d u c i a r y capacity i s i n contravention of our s t a t e law, save as t o the execution of those t r u s t s which a r i s e i n p r o b at e proceedings. In Aquidneck National Bank v . Jennings, supra, we d e c l a r e d t h a t " t h e devolution of the e s t a t e s of decedents , the c o n t r o l of the property of i n f a n t s and l u n a t i c s , the j u r i s d i c t i o n of our probate c o u r t s , and the l e g a l r e g u l a t i o n of the t r u s t s which aritss i n t h e a d m i n i s t r a t i o n of probate law a r e m a t t e r s which p e r t a i n exclusively t o the powers of a s t a t e over i t s domestic a f f a i r s . Under the s t a t e law no c o r p o r a t i o n o t h e r than a t r u s t company, organised under t h e Bhode I s l a n d s t a t u t e , may be appointed executor, a d m i n i s t r a t o r or guardian by our probate court or may accept and execute the d u t i e s of such o f f i c e " * * * " In t h e absence of the express s a n c t i o n of the general assembly t h e appointment of a n a t i o n a l bank t o execute the t r u s t s which a r i s e i n probate proceedings, or the attempted execution of such t r u s t s by a n a t i o n a l bank, would be i n c o n t r a v e n t i o n of our s t a t e law." In the case b e f o r e us now, where the matter i s d i r e c t l y p e r t i n e n t t o t h e i s s u e s , we a r e s t i l l of the same o p i n i o n . In conformity with i t s conclusion o f t e n s t a t e d , the Supreme. Court of the United S t a t e s declared, in T i l t v . Kelsey, 207 U. S. 43, t h a t " i n r e s p e c t to the settlement of the succession t o p r o p e r t y on death the s t a t e s of the union a r e s o v e r e i g n . n Yonley -6v . Lavender. 88 U. S. 2J6; United S t a t e s v . Fox. X-4117 U. S. J13* In t h e Federal Reserve Act when f i r s t enacted i t was provided t h a t the Federal Reserve Board nay grant n a t i o n a l banks the r i g h t to a c t a s t r u s t e e s , executors, a d m i n i s t r a t o r s , guardians, e t c . , '•when not in contravention of s t a t e or l o c a l law." s t i l l remains. This p r o v i s i o n In People v . Brady. 271 111*100. the court h e l d t h a t a u t h o r i t y given "by the Federal Reserve Board t o a n a t i o n a l bank t o a c t as t r u s t e e or the personal r e p r e s e n t a t i v e of a decedent was i n contravention of the law of I l l i n o i s . In F i r s t Na- t i o n a l Bank v . Union Trust Co.. 244 U. S. 4l6, the Supreme Court appeared to recognize the a u t h o r i t y of the court of l a s t r e s o r t of a s t a t e t o construe the s t a t u t e s of such s t a t e and t o determine whether such a u t h o r i z a t i o n did contravene the l o c a l law. Apparently to meet t h i s s i t u a t i o n , in the i n t e r e s t of n a t i o n a l banks, Congress i n 1918 amended the Federal Reserve Act by passing the e x t r a o r d i n a r y amendment which became the l a s t sentence of t h a t p o r t i o n of t h e a c t quoted above as f o l l o w s : "Whenever the laws of such S t a t e a u t h o r i z e or permit t h e e x e r c i s e of any or a l l of the foregoing powers by S t a t e banks, t r u s t companies, or other corporations which compete with n a t i o n a l banks, the granting t o and the e x e r c i s e of such powers by n a t i o n a l banks s h a l l not be deemed to be i n c o n t r a v e n t i o n of s t a t e or l o c a l law w i t h i n the meaning of t h i s a c t . " Our s t a t u - tory p r o v i s i o n s r e g u l a t i n g the j u r i s d i c t i o n of probate courts i n the i s s u i n g of l e t t e r s testamentary and of a d m i n i s t r a t i o n , and i n -7- appointing / g u a r d i a n s a r e not of doubtful i n t e r p r e t a t i o n . x-Uiiy I t i s the p r a c t i c e of the Federal Supreme Court t o adopt the c o n s t r u c t i o n placed upon a s t a t e s t a t u t e by the court of l a s t r e s o r t of t h a t state. We f e l t confident t h a t t h e United S t a t e s Supreme Court would not hold a s v a l i d and c o n s t i t u t i o n a l the amendment of 1918, which assumed a r b i t r a r i l y t o place a l e g i s l a t i v e construct i o n upon s t a t u t e s of a s t a t e , r e g a r d l e s s of t h e i r p o s i t i v e terms, or the c o n s t r u c t i o n placed upon them by the supreme court of such s t a t e . In Aquidneck National Bank v . Jennings. supra T , we said t h a t "we do not admit the power of Congress t o control t h i s court i n the c o n s t r u c t i o n of the s t a t e laws of Rhode I s l a n d . " I t appears t h a t we were not j u s t i f i e d in our confidence as to the p o s i t i o n which the supreme court would take i n the m a t t e r . In the r e c e n t case of S t a t e of Missouri v- Duncan, opinion rendered A p r i l 28, 1924, the United S t a t e s Supreme Court of Missouri, 257 S.W. 784, t h e Supreme Court of Missouri, i n a c a r e f u l l y considered opinion, held that under the probate law of t h a t s t a t e a n a t i o n a l bank having a ..permit from the Federal Reserve Board could not be appointed and act as executor, and t h a t the e x e r c i s e of such f i duciary f u n c t i o n s i s "in contravention of the law of Missouri, t h e l e g i s l a t i v e p o l i c y and t h e express s t a t u t e . " held i n r e l a t i o n t o the amendment of I9IS, The court f u r t h e r t h a t : " I t cannot be contended that Congress by t h i s amendment took away from the courts of a s t a t e the r i g h t to i n t e r p r e t i t s own s t a t u t e s and to -8- X-4117 determine t h i s p a r t i c u l a r q u e s t i o n . " Upon review i n the United S t a t e s Supreme Court i t was h e l d , in a m a j o r i t y opinion, t h a t notwithstanding the p r o v i s i o n s of the probate law of Missouri a n a t i o n a l bank having a permit from the Federal Reserve Board may a c t as an executor if s t a t e t r u s t companies competing w i t h i t have-that power, and t h a t "the s t a t e can not lay hold of i t s general control of a d m i n i s t r a t i o n to deprive n a t i o n a l banks of t h e i r power to compete t h a t Congress i s a u t h o r i z e d to sustain." From the m a j o r i t y opinion Mr, J u s t i c e Sutherland and Mr. J u s t i c e McReynolds d i s s e n t e d . The vigorous opinion of Mr. J u s t i c e Sutherland, based upon the former d e c i s i o n s of the Supreme Court, and the j u s t r e l a t i o n which e x i s t s under the c o n s t i t u t i o n between the powers of Congress and those of the s t a t e a u t h o r i t i e s in matters of l o c a l concern, appears to u s t o be eminently sound and convincing. In conclusion he says, "The probate courts of a s t a t e have only such powers as the s t a t e l e g i s l a t u r e gives them. They a r e wholly beyond the j u r i s - d i c t i o n of Congress, and i t does not seem to me t o be w i t h i n the competency of t h a t body, on any p r e t e x t , to compel such c o u r t s t o appoint a s ' e x e c u t o r or a d m i n i s t r a t o r one whom the s t a t e law has declared s h a l l not be appointed, The p a r t i c u l a r invasion here sanctioned n^y not be of great moment; but i t i s a precedent, which, if c a r r i e d to the l o g i c a l extreme, would go f a r towards reducing the S t a t e s of the Union to the s t a t u s of mere geographical s u b d i v i s i o n s . The case i s one, to use the phrase of Mr. J u s t i c e Brewer i n Fairbank v . United S t a t e s . 181 -9- x-4117 U. S. 283, 291-2, f o r t h e a p p l i c a t i o n of t h e maxim obsta p r i n c i p i i s . not de_ minimia non curat l e x . " The f i n a l determination of t h e c o n s t i t u t i o n a l v a l i d i t y of congressional a c t i o n i s in the Federal Supreme Court, The matter presented here i s in a l l r e s p e c t s i d e n t i c a l with t h a t b e f o r e the Supreme Court of Missouri and t h e United S t a t e s Supreme Court in t h e cases we have j u s t considered. In t h e case b e f o r e us we are constrained to be governed by t h e m a j o r i t y opinion i n S t a t e of Missouri v . Duncan, supra. Therefore our d e t e r initia- t i o n i s t h a t the defendant should not be ousted from the f u r t h e r exercise of the power a l l e g e d i n the information. Judgment i s entered f o r t h e defendant.
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