282

STEVENS, J., dissenting

I assume that this case will ultimately be regarded as nothing more than an archaic gargoyle. It is nevertheless distressing to witness such a demeaning construction of a majestic bulwark in the framework of our Constitution. I respectfully dissent.

passed with retroactive application in mind-I am sure that before today no one would have considered such an application constitutional-but the potential for this kind of legislative (and prosecutorial) abuse is created by the Court's holding. It was precisely this potential that the Framers wished to avoid.

Indeed, the Court's holding today seems inconsistent with its holding in Grayned. For in Grayned, the Court agreed with a concession that the 1971 amendment "'has, of course, no effect on Appellant's personal situation,'" and went on to say that "[n]essarily, we must consider the facial constitutionality of the ordinance in effect when appellant was arrested and convicted." 408 U. S., at 107 n. 2. Under today's holding, it is difficult to see why the 1971 amendment could not simply have been applied ex post facto to cure the defect in the original statute.

THIRD NATIONAL BANK IN NASHVILLE v. IMPAC LIMITED, INC., ET AL.

CERTIORARI TO THE SUPREME COURT OF TENNESSEE

No. 76-674. Argued April 26, 1977-Decided June 17, 1977 Title 12 U. S. C. §91, which prohibits an "attachment, injunction, or execution" from being issued against a national bank or its property before final judgment in any state or local court, held, when read in context, merely to prevent prejudgment seizure of bank property by creditors and not to apply to a mortgagor-debtor's action seeking a preliminary injunction to protect its real property from wrongful foreclosure. The legislative history indicates that when the statute was originally enacted in 1873 it was aimed at preventing preferences by creditors. In the provision itself, the word "injunction" is sandwiched in between the words "attachment" and "execution," both of which are writs used by creditors to seize bank property, strongly implying that Congress intended only to prevent state judicial action, prior to final judgment, which would have the effect of seizing the bank's property. Moreover, no reason has been given for assuming that Congress intended to give national banks engaged in making real estate mortgage loans a privilege not available to competing lenders, it being especially unlikely that Congress intended to give national banks a license to inflict irreparable injury on others, free from the normal constraints of equitable relief. Pp. 318-324.

541 S. W. 2d 139, affirmed.

STEVENS, J., delivered the opinion of the Court, in which BRENNAN, STEWART, MARSHALL, POWELL, and REHNQUIST, JJ., joined. BLACKMUN, J., filed a dissenting opinion, in which BURGER, C. J., and WHITE, J., joined, post, p. 324.

Thomas P. Kanaday, Jr., argued the cause and filed briefs for petitioner.

Gail P. Pigg argued the cause and filed a brief for respondents.

MR. JUSTICE STEVENS delivered the opinion of the Court. A federal statute enacted in 1873 provides that certain

prejudgment writs shall not be issued against national banks by state courts. The question presented by this case is whether that prohibition applies to a preliminary injunction restraining a national bank from holding a private foreclosure sale, pending adjudication of the mortgagor's claim that the loan is not in default. We conclude that the prohibition does not apply.

I

Only the essentials of the rather complex three-party transaction giving rise to this dispute need be stated. Respondents borrowed $700,000 from petitioner, a national bank, to finance the construction of an office building. The third party, a mortgage company, agreed to provide permanent financing to replace the bank loan upon completion of the building. The loan was secured by a deed of trust, which granted a first lien on respondents' property to the bank while the construction loan was outstanding. A dispute developed between respondents and the long-term lender over whether respondents had satisfied certain preconditions of the long-term loan. Petitioner contends that respondents are in default because of their failure to close the long-term loan. Respondents deny

1 Title 12 U. S. C. § 91, entitled "Transfers by bank and other acts in contemplation of insolvency," now reads as follows:

"All transfers of the notes, bonds, bills of exchange, or other evidences of debt owing to any national banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or decrees in its favor; all deposits of money, bullion, or other valuable thing for its use, or for the use of any of its shareholders or creditors; and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its assets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void; and no attachment, injunction, or execution, shall be issued against such association or its property before final judgment in any suit, action, or proceeding, in any State, county, or municipal court." (Emphasis added.)

that they are in default and contend that petitioner's remedy is against the long-term lender. On September 4, 1975, petitioner notified respondents that foreclosure proceedings would be commenced unless the loan, plus accrued interest and an extension fee, was paid in full in 10 days.

On September 23, 1975, petitioner published a notice of foreclosure. Under Tennessee practice, foreclosure of a deed of trust is not a judicial proceeding, but is routinely consummated by private sale unless restrained by judicial action initiated by the mortgagor. On September 26, 1975, respondents commenced this litigation by filing a sworn complaint in the Chancery Court of Davidson County, Tenn., seeking to restrain the foreclosure on the ground that the loan was not in default. The chancellor ordered the petitioner to show cause why an injunction should not issue.

Petitioner's answer set forth the basis for its claim of default, but did not question the court's power to restrain the foreclosure. Based on the pleadings, the exhibits, and extensive arguments of counsel, the chancellor found "the existence of issues which should be determined upon a full hearing of this cause and that [respondents] would suffer irreparable harm if the foreclosure occurred prior to such full hearing." App. 56. He therefore temporarily enjoined the foreclosure.

Two days later, petitioner filed a supplemental answer alleging that the state court lacked jurisdiction to enter a temporary injunction against a national bank. In due course, the chancellor concluded that 12 U. S. C. § 91 removed his jurisdiction to grant an injunction "prohibiting the foreclosure of property in which the bank has a security interest." App. 69. He therefore dissolved the preliminary injunction, granted an interlocutory appeal, and "stayed" the bank from foreclosure until the appeal to the Tennessee Supreme Court could be perfected.

The Tennessee Supreme Court reversed. 541 S. W. 2d 139 (1976). It concluded that the federal statute was intended "to

secure the assets of a bank, whether solvent or insolvent, for ratable distribution among its general creditors and to protect national banks in general." Id., at 141. It did not believe this purpose justified an application of the statute when "a debtor of a national bank is seeking, by interlocutory injunction, to protect his property from wrongful seizure and foreclosure sale by the bank." Ibid. The court acknowledged that the bank had a security interest in respondents' property, but did not believe that the statute was intended to give additional protection to an interest of that kind which was already amply protected. One member of the court read the statute as absolutely forbidding the issuance of any temporary injunction against the national bank before judgment, and therefore reluctantly dissented from what he described as the majority's "just result." Id., at 143. We granted certiorari to decide whether the Tennessee Supreme Court's construction of the statute is consistent with the congressional mandate. 429 U. S. 1037. We affirm. The critical statutory language reads as follows:

2

"[N]o attachment, injunction, or execution, shall be issued against such association or its property before final judgment in any suit, action, or proceeding, in any State, county, or municipal court." 12 U. S. C. § 91.

At least three different interpretations might be placed on that language. Most narrowly, because the rest of § 91 relates

2 "In the instant case, appellee is not using the statute as a shield to protect its assets, but is using it to preclude appellant from protecting its own property. True, appellee has a security interest of $700,000 in the property. However, the property is in the form of an office building allegedly worth in excess of $1,000,000 which cannot be sold, or assigned, or spirited away in the dark of the night so as to defeat appellee's security interest. The Chancellor predicated the temporary injunction (before it was dissolved) upon the condition that appellant continue to pay interest on the $700,000 at the contract rate until a final determination on the merits could be made. In short, appellee's security interest in appellant's property was completely protected." 541 S. W. 2d, at 142.