Wachovia Bank v. Schmidt
Citation: 546 U.S. 303 (2006) Court: Supreme Court of the United States
Facts
Wachovia Bank, N.A., a national bank chartered under federal law, was a defendant in a lawsuit filed in South Carolina federal court. The plaintiff argued that Wachovia was a citizen of every state in which it maintained a branch for purposes of federal diversity jurisdiction — which would have destroyed diversity if both parties were citizens of South Carolina. Wachovia argued it was a citizen only of the state designated in its articles of association (North Carolina).
Issue
For purposes of federal diversity jurisdiction, where is a national bank “located” — in all states where it has branches, or only in the state listed in its articles of association?
Holding
The Supreme Court unanimously held that a national bank, for diversity jurisdiction purposes, is a citizen only of the state in which its articles of association designate its main office, not of every state in which it conducts business or maintains branches.
Rule / Doctrine
For diversity jurisdiction under 28 U.S.C. §1348, a national bank is a citizen only of the state designated in its articles of association as its main office. The “located” language in §1348 does not make a national bank a citizen of every state where it does business. This is a narrow interpretation that preserves access to federal diversity jurisdiction for cases involving national banks.
Significance
Wachovia Bank v. Schmidt is significant for federal courts and legislation courses as an example of statutory interpretation of jurisdictional statutes. The case resolves how to apply the standard citizenship rules for corporations to the unique charter structure of federally chartered national banks. It is often taught alongside cases on corporate citizenship (28 U.S.C. §1332(c)(1)) to illustrate how courts handle entities that do not fit neatly into the standard citizenship framework.