United States v. First National City Bank

Summary

The Supreme Court considered whether a federal district court with personal jurisdiction over a national bank could temporarily enjoin the bank from transferring funds held for a foreign corporation in an overseas branch. The Court held that the district court could issue the injunction under its equitable authority and 26 U.S.C. § 7402(a), because the bank controlled the foreign branch and the order preserved property potentially subject to the Government's tax lien. The Court reversed the Second Circuit, while Justice Harlan, joined by Justice Goldberg, dissented.

Holdings

1. Once a federal district court obtains personal jurisdiction over a bank, it may order the bank to freeze property under the bank's control, including property held in a foreign branch, because the bank and its branches are parts of one federally chartered corporation.
2. The temporary injunction was a reasonable and appropriate measure under 26 U.S.C. § 7402(a) to preserve the status quo and prevent further dissipation of assets pending service on Omar and adjudication of the merits.
3. The temporary injunction could be judged as of the time of Supreme Court review in light of New York's subsequently effective long-arm statute and the possibility that Omar could be served outside New York.

Questions Presented

1. Whether a federal district court with personal jurisdiction over a bank may enjoin the bank from transferring property under its control in a foreign branch pending service of process on the foreign taxpayer.
2. Whether the temporary injunction was a reasonable and appropriate exercise of equitable power under 26 U.S.C. § 7402(a) to preserve the status quo and prevent dissipation of assets.
3. Whether the court could evaluate the temporary injunction in light of New York's subsequently effective long-arm jurisdiction statute and the possibility of obtaining personal jurisdiction over Omar.

Disposition

reversed