Facts
- Marquette National Bank of Minneapolis, a national bank based in Minnesota, participated in the BankAmericard credit card program.
- First National Bank of Omaha, a Nebraska-chartered national bank, issued BankAmericard credit cards to Minnesota residents and solicited Minnesota customers.
- Omaha Bank charged Minnesota cardholders interest rates permitted by Nebraska law that exceeded Minnesota’s usury limits.
- Marquette sought to enjoin Omaha Bank from charging those rates to Minnesota residents unless it complied with Minnesota usury law.
- The dispute turned on 12 U.S.C. § 85, which permits a national bank to charge interest at the rate allowed by the laws of the state “where the bank is located.”
Issues
- Whether, under 12 U.S.C. § 85, a national bank may charge out-of-state credit card customers the interest rate permitted by the bank’s home state when that rate exceeds the customers’ state usury ceiling.
- Whether a national bank becomes “located” in a borrower’s state for § 85 purposes merely by soliciting customers and extending credit there.
Decision
- The Supreme Court unanimously affirmed the Minnesota Supreme Court (opinion by Justice Brennan).
- The Court held that § 85 permitted Omaha Bank to charge Minnesota cardholders the higher interest rate allowed by Nebraska law.
- The Court rejected the argument that Omaha Bank’s credit card operations made it “located” in Minnesota for § 85 purposes.
- Minnesota’s usury law could not be enforced against Omaha Bank with respect to the interest charged to Minnesota cardholders.
Legal Principles
- Under 12 U.S.C. § 85, a national bank may charge interest on any loan at the rate allowed by the laws of the state where the bank is “located.”
- For § 85, a national bank is “located” in the state of its charter/main office, and that location does not change because it extends credit to residents of other states or because cardholders use credit outside the home state.
- Conflicting host-state usury limits are preempted as applied to national banks; any change to the interstate effect of § 85 is a matter for Congress, not judicial revision.
Conclusion
The Court held that a Nebraska-located national bank could “export” Nebraska’s permissible interest rate to Minnesota credit card customers under § 85, thereby preempting Minnesota’s lower usury ceiling as applied to that national bank’s interstate lending.