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February 25, 1993

JAMES W. WETZLER, as Commissioner of Taxation and Finance of the State of New York, and the NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, Plaintiffs,
FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver of the Seamen's Bank for Savings, F.S.B., Defendant.


The opinion of the court was delivered by: LAWRENCE M. MCKENNA


 By this Order, the Court decides cross motions by defendant Federal Deposit Insurance Corporation (the "FDIC") and by plaintiffs James W. Wetzler and the New York State Department of Taxation and Finance ("Plaintiffs") for summary judgment pursuant to Rule 56(b) and (c) of the Federal Rules of Civil Procedure. The FDIC is the Receiver of the Seamen's Bank for Savings, F.S.B. ("Seamen's"). At issue in this case is the proper construction of section 1823(i)(9) of the Garn-St. Germain Depository Institutions Act, 12 U.S.C. § 1823(i)(9) (Supp. II 1990) (the "Garn Act"), and the effect of the Garn Act on the administration of the State of New York's Bank Franchise Tax, N.Y. Tax Law §§ 1450 et seq. (McKinney 1975) (the "New York Franchise Tax"), for the years 1982, 1983, and 1984. *fn1" For the reasons that appear below, the FDIC's motion is granted and Plaintiffs' motion is denied.


 In the fall of 1982, Congress passed the Garn Act *fn2" in order to assist financially troubled banking institutions whose deposits were insured by the FDIC. "Congress determined that one method of accomplishing this goal was to permit the FDIC to issue promissory notes to ailing banks in exchange for the banks' 'net worth certificates.'" FDIC v. New York, 928 F.2d 56, 57 (2d Cir. 1991). Net worth certificates were to correspond with promissory notes in value and interest rate. *fn3" While it may be argued that "net worth assistance under the Garn Act is thus merely a paper transaction (an exchange of notes for net worth certificates) to bolster the net worth of weak banks" (Pls.' Mem. at 4), "Congress believed that the exchange would 'partially offset [participating banks'] current losses and shore up the net worth of qualified institutions." FDIC v. New York, 928 F.2d at 57 (quoting S. Rep. No. 536, 97th Cong., 2d Sess. 10 (1982), reprinted in 1982 U.S.C.C.A.N. 3054, 3063). "In other words, by issuing promissory notes to the banks, the FDIC would, in effect, be guaranteeing some of the banks' assets." FDIC v. New York, 928 F.2d at 57. In this way, "Congress sought to strengthen the capital base of ailing thrift institutions with minimal use of federal revenues." (FDIC's Mem. at 8.)

 In order to be a qualified institution within the meaning of the Garn Act, a depository institution must, inter alia, (i) maintain insured deposits, (ii) have a net worth equal to or less than three percent of its assets, (iii) have incurred losses during the two previous quarters, (iv) agree to comply with all terms and conditions established by the FDIC, and (v) not have a net worth of less than one-half of one percent of assets after any purchase of its net worth certificates by the FDIC. 12 U.S.C. § 1823(i)(2) (Supp. II 1990). It is undisputed that "Seamen's was a qualified institution within the meaning of the Garn Act, 12 U.S.C. § 1823(i)(2), during a portion of the fourth quarter of 1982, in the first, second and third quarters of 1983, and in the second quarter of 1984." (Pls.' Mem. at 4; see also Hammond Aff. Ex. A PP 7-8, 30-31, & 41-42.) *fn4"

 Section 1823(i)(9), the meaning of which is vigorously contested by the parties, provides that:

During any period when a qualified depository institution has outstanding net worth certificates issued in accordance with this subsection, such depository institution shall not be liable for any State or local tax which is determined on the basis of the deposits held by such depository institution or the interest or dividends paid on such deposits.

 12 U.S.C. § 1823(i)(9) (Supp. II 1990). The State of New York imposes a tax based on deposits held or interest or dividends paid by depository institutions. (Pls.' Mem. at 5.) "New York's alternative minimum Bank Franchise Tax, New York Tax Law § 1455(b)(2) and (3), measured by deposits held and interest or dividends credited to depositors or shareholders, was such a tax." (Pls.' Mem. at 5.) At issue, then, is whether the State of New York may collect taxes assessed on the basis of Seamen's deposits for the taxable years 1982, 1983, and 1984 during which Seamen's had net worth certificates outstanding. The Court concludes that the State of New York may not.


 Pursuant to Rule 56 of the Federal Rules of Civil Procedure, summary judgment should be granted only where "there is no genuine issue as to any material fact" and a party is "entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). In the present case, the material facts are not in dispute, and the parties' motions can be determined as a matter of law.

 In enacting the Garn Act, Congress weighed different methods of granting relief from state and local deposit taxes to depository institutions receiving the Garn Act's benefits. Congress considered, but rejected, a proposal to grant such institutions deferral from the payment of deposit taxes. See 128 Cong. Rec. 10811 (1982). Instead, Congress enacted section 1823(i)(9) which confers exemption from state and local deposit taxes "during any period when a qualified depository institution has outstanding net worth certificates." *fn5" Congress failed, however, to provide any specific direction with respect to the meaning of the term "period." Plaintiffs contend that "period" refers only to those particular days on which a depository institution was qualified to enter into an exchange of net worth certificates for promissory notes and had net worth certificates outstanding. (Pls.' Mem. at 14.) The FDIC, on the other hand, argues that "period" means the interval for which the deposit tax due is assessed, in this case the calendar year. In this Court's view, the FDIC's interpretation is consonant with the overall statutory purpose of the Garn Act and effects a result compatible with its legislative history.

 Plaintiffs rightly observe that "where . . . the statute's language is plain, 'the sole function of the courts is to enforce it according to its terms.'" United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241, 103 L. Ed. 2d 290, 109 S. Ct. 1026 (1989) (citations omitted); see also United States v. Goldberger & Dubin, P.C., 935 F.2d 501, 506 (2d Cir. 1991) ("words of a statute should be given their normal meaning and effect in the absence of a showing that some other meaning was intended"). "The purpose of a statute includes not only what it sets out to change, but also what it resolves to leave alone. . . . The best evidence of that purpose is the statutory text adopted by both Houses of Congress and submitted to the President." West Virginia University Hospitals, Inc. v. Casey, U.S. , 111 S. Ct. 1138, 1147, 113 L. Ed. 2d 68 (1991). But when the statute's language is not clear, courts must attempt to interpret a statute in such a manner as will effectuate Congress' overriding remedial purpose. "'Where, as here, the resolution of a question of federal law turns on a statute and the intention of Congress, we look first to the statutory language and then to the legislative history if the statutory language is unclear.'" Toibb v. Radloff, 115 L. Ed. 2d 145, U.S. , 111 S. Ct. 2197, 2200 (1991) (quoting Blum v. Stenson, 465 U.S. 886, 896, 79 L. Ed. 2d 891, 104 S. Ct. 1541 (1984)). "Courts 'appropriately may refer to a statute's legislative history to resolve statutory ambiguity.'" Patterson v. Shumate, U.S. , 112 S. Ct. 2242, 2248 (1992) (citation omitted).

 The parties have demonstrated that the use of "period" in section 1823(i)(9) is susceptible of differing interpretations--including a taxable year, a quarter, a month, or even a few days--without doing violence to the language of the statute. Dictionary definitions are not, in the case of the word "period" as used in the statute, of much use. According to Webster's Third New International Dictionary, for instance, the definition of the phrase "period" includes "a point of time marking a termination of a course or an action . . . a temporal unit of measure . . . the completion of a cycle, a series ...

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