State Bank of Fargo v. Merchants National Bank & Trust

Under the National Bank Act, the United States Comptroller of the Currency (defendant) had the authority to regulate the use of customer-bank communication terminals, or automated teller machines (i.e., ATMs). The National Bank Act provided that a national bank could not operate a branch in circumstances under which a state-chartered bank would not be permitted to operate a branch. In 1975, North Dakota enacted a law that permitted state banks to provide off-premises electronic services to customers to the same extent that financial institutions chartered by the federal government were permitted to provide such services. At that time, federal savings-and-loan associations were permitted to use remote service units, which were essentially customer-bank communication terminals, or automated teller machines. The Merchants National Bank and Trust Company of Fargo (Merchants) (defendant) was a national bank that sought to operate two automated teller machines in the City of Fargo, North Dakota. In 1976, Merchants applied to the comptroller for permission to operate the machines. In 1977, the comptroller granted approval. State Bank of Fargo (State Bank) (plaintiff), a state-chartered bank in Fargo, sued Merchants and the comptroller, arguing that the automated teller machines were branch banks prohibited by state law. Merchants and the comptroller moved for summary judgment, which was granted. State Bank appealed.