NationsBank of N. C., N. A. v. Variable Annuity Life Ins. Co., 513 U.S. 251 (1995)

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OCTOBER TERM, 1994

Syllabus

NATIONSBANK OF NORTH CAROLINA, N. A., et al. v. VARIABLE ANNUITY LIFE INSURANCE CO. et al.

certiorari to the united states court of appeals for the fifth circuit

No. 93-1612. Argued December 7, 1994—Decided January 18, 1995*

Petitioner national bank and its brokerage subsidiary applied to the Comptroller of the Currency, charged by Congress with superintendence of national banks, to allow the subsidiary to act as an agent in the sale of annuities. Under the proposed plan, bank customers could purchase a "variable annuity"—which invests payments in a designated way and yields income that varies with investment performance—a "fixed" annuity—which yields income that does not vary—or a hybrid account. Granting the application, the Comptroller typed the annuity sales "incidental" to "the business of banking" under the National Bank Act, 12 U. S. C. 24 Seventh. The Comptroller further concluded that annuities are not "insurance" within the meaning of 92; that provision, by expressly authorizing banks in towns of no more than 5,000 people to sell insurance, arguably implies that banks in larger towns may not sell insurance. Respondent Variable Annuity Life Insurance Co. (VALIC), which sells annuities, filed a suit challenging the Comptroller's decision. The District Court upheld the Comptroller's conclusions as a permissible reading of the Act. Reversing the District Court's judgment, the Court of Appeals held that 92 bars banks not located in small towns from selling insurance, and rejected the Comptroller's conclusion that annuities are not insurance under 92.

Held: The Comptroller's determination that national banks may serve as agents in the sale of annuities is a reasonable construction of the Act and therefore warrants judicial deference. Pp. 256-264. (a) If a statute is silent or ambiguous with respect to the precise question at issue, the reviewing court must determine whether the answer reached by the agency charged with the statute's enforcement is based on a permissible construction. If an expert administrator's reading fills a gap or defines a term in a way that is reasonable in light of

*Together with No. 93-1613, Ludwig, Comptroller of the Currency, et al. v. Variable Annuity Life Insurance Co. et al., also on certiorari to the same court.

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