Decision
Two months after oral argument, the Court ruled unanimously in Citibank's favor. Antonin Scalia wrote for the Court.
The cases from New Jersey and California, he uncharacteristically agreed, made it "difficult indeed to contend that the word 'interest' in the National Bank Act is unambiguous with regard to the point at issue here." Nevertheless, he rejected all of Donovan's arguments.
The Court did not find the timing of the regulation to be fatal. "either antiquity nor contemporaneity with the statute is a condition of validity." It was "irrelevant" that it was issued in advance of a case to be heard by the Supreme Court. He also found the regulation to be rational. "It seems to us perfectly possible to draw a line, as the regulation does, between and ... all other payments." Nor did he find the prior documents in which representatives of the Comptroller's office had said that they did not consider late fees could be considered as interest payments adequately controlling since they did not fully represent an official agency position. "What these statements show, if anything, is that there was good reason for the Comptroller to promulgate the new regulation, in order to eliminate uncertainty and confusion."
After dealing with another issue Donovan raised, that the regulation was not entitled to deference because it pre-empted state laws, by saying two issues had been confused and thus that question was moot, Scalia said "he question before us is not whether it represents the best interpretation of the statute, but whether it represents a reasonable one. The answer is obviously yes." Legal dictionaries of the late 19th century, as well as the Court's own jurisprudence of that era, did not define interest so narrowly, and indeed such flat fees were often intended to evade state anti-usury laws, as state courts of that era had ruled. Finally, he rejected an argument that penalties were inherently separate from interest by suggesting the petitioner had misread the case they were relying on and citing what he considered more appropriate. The section of the National Banking Act at issue, he noted, did not distinguish between interest and penalties.
Read more about this topic: Smiley V. Citibank
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