Wednesday, May 30, 2012

National Banks Are Not Required To Qualify To Transact Business In Kentucky

National Banks Are Not Required To Qualify To Transact Business In Kentucky

            Last Friday the Kentucky Court of Appeals, in an opinion “To Be Published,” held that a national bank is not required to have a certificate of authority in order to bring a lawsuit in Kentucky.  Williams v. Chase Bank N.A., No. 2010-CA-002034-MR, 2012 WL 1886502 (May 25, 2102).
            Chase sued Williams for defaulting, to the tune of in excess of $22 thousand dollars, on his Mastercard.  Williams defended, in part, by arguing that Chase was barred from bringing the action “because it had failed to obtain a certificate of authority from the Secretary of State as required by statute.”  Slip op. at 2.  The circuit court’s grant of summary judgment to Chase on that and other points was then reviewed by the Court of Appeals.
            The Court reviewed the then applicable KRS § 271B.15-020(1) (noting that it has now been replaced with the “substantially similar” KRS § 14A.9-020(1)), it providing:

A foreign corporation transacting business in this state without a certificate of authority shall not maintain a proceeding in any court in this state until it obtains a certificate of authority.

      The question was whether the requirement to have a certificate of authority is preempted by the federal National Bank Act, 12 U.S.C. § 1 et seq.  and particularly § 24 thereof.  Reviewing a Florida decision that in turn considered holdings from Massachusetts, Mississippi, Washington and New York, the Court of Appeals had no reservations with finding the Kentucky statute preempted by federal law.  On that basis the summary judgment as to that argument was upheld.

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