The state of Missouri brought this proceeding in the nature of quo warranto in the state Supreme Court against the plaintiff in error to determine its authority to establish and conduct a branch bank in the city of St. Louis. The information avers that the bank was organized under the laws of the United States and was and is engaged in a general banking business in that city at a banking house, the location of which is given; that, in contravention of its charter and of the act of Congress under which it was incorporated, it has illegally opened and is operating a branch bank for doing a general banking business in a separate building several blocks from its banking house, and proposes to open additional branch banks at various other locations; and that this is in violation of a statute of the state expressly prohibiting the establishment of branch banks. The prayer is that, upon final hearing, the bank be ousted from the privilege of operating this branch bank or any other. A demurrer to the information was interposed and the cause thereupon submitted. The contention of the state was upheld and judgment rendered in accordance with the prayer. 249 S. W. 619.
The correctness of the judgment is challenged under numerous specifications of error presenting federal questions, which, for the purposes of the case, may be considered under two heads: (1) Whether the state statute is valid as applied to national banks; and (2) whether a proceeding to call a national bank to account for acts of the kind here alleged may be maintained by the state, and whether the form of remedy pursued is sustainable.
First. The Missouri statute (§ 11737, R. S. Mo., 1919) provides 'that no bank shall maintain in this state a branch bank or receive deposits or pay checks except in its own banking house.' That the facts alleged in the information bring the case within that part of the statute which prohibits the maintenance of branch banks and that the statute applies to national banks is conclusively established by the decision of the state court, and we confine ourselves to the inqury whether, as thus applied, the statute is valid.
National banks are brought into existence under federal legislation, are instrumentalities of the federal government and are necessarily subject to the paramount authority of the United States. Nevertheless, national banks are subject to the laws of a state in respect of their affairs, unless such laws interfere with the purposes of their creation, tend to impair or destroy their efficiency as federal agencies, or conflict with the paramount law of the United States. National Bank v. Commonwealth, 9 Wall. 353, 362, 19 L. Ed. 701; Davis v. Elmira Savings Bank, 161 U.S. 275, 283, 16 Sup. Ct. 502, 40 L. Ed. 700. These two cases are cited and followed in the later case of McClellan v. Chipman, 164 U.S. 347, 357, 17 Sup. Ct. 85, 87 (41 L. Ed. 461) and the principle which they establish is said to contain a rule and an exception-'the rule being the operation of general state laws upon the dealings and contracts of national banks; the exception being the cessation of the operation of such laws whenever they expressly conflict with the laws of the United States or frustrate the purpose for which the national banks were created, or impair their efficiency to discharge the duties imposed upon them by the law of the United States.' See, also, Waite v. Dowley, 94 U.S. 527, 533, 24 L. Ed. 181. The question is whether the Missouri statute falls within the rule or within the exception.