## Facts

- Independent travel agents in Massachusetts sued the Comptroller of the Currency and a national bank to stop the bank from operating a travel-agency department.
- The bank had purchased a large regional travel bureau and, since 1966, operated a travel agency as part of the bank’s business.
- The Comptroller had issued rulings and regulations interpreting the National Bank Act to permit national banks to conduct travel-agency activities (including a regulation later codified at 12 C.F.R. § 7.7475).
- Plaintiffs sought declaratory and injunctive relief on the ground that operating a full-scale travel agency exceeded national banks’ statutory powers.
- The dispute centered on the “incidental powers” clause of 12 U.S.C. § 24(Seventh), authorizing national banks to exercise incidental powers “necessary to carry on the business of banking.”

## Issues

1. Whether national banks’ “incidental powers” under 12 U.S.C. § 24(Seventh) authorize operating a full-scale travel agency.
2. Whether the Comptroller’s regulation and rulings were valid to the extent they construed the National Bank Act to allow national banks to operate full-scale travel agencies.

## Decision

- The First Circuit affirmed summary judgment for the travel agents.
- The court held that operating a full-scale travel agency is not authorized as an “incidental” power under 12 U.S.C. § 24(Seventh).
- The court upheld declaratory relief that it is unlawful for a national bank to operate a full-scale travel agency.
- The court upheld invalidation of the Comptroller’s regulation to the extent it was construed to authorize such activity.
- The court affirmed injunctive relief requiring the bank to divest its travel-agency operations within the period set by the district court (as stayed pending appeal).

## Legal Principles

- National banks possess only those powers expressly granted by Congress and those incidental powers that are necessary to carry on the business of banking.
- “Incidental powers” must be closely connected to the execution of express banking powers and typically involve financial services or transactions relating to money or credit.
- Customer “accommodation” services associated with banking do not justify a bank’s entry into a separate, full-scale commercial business that competes directly with nonbank firms.
- Administrative interpretations of the National Bank Act may receive respect, but they are not controlling where they effectively expand bank powers into a nonbanking commercial field without statutory support.
- A regulation interpreting the National Bank Act is invalid insofar as it purports to authorize an activity beyond the statutory scope of national bank powers.

## Conclusion

The court held that a national bank’s operation of a full-scale travel agency falls outside the incidental powers granted by 12 U.S.C. § 24(Seventh), and it affirmed declaratory and injunctive relief barring the bank’s continued travel-agency business and rejecting the Comptroller’s contrary construction.


Arnold Tours, Inc. v. Camp, 472 F.2d 427 (1st Cir. 1972)