Bank Insurance Sales Survive Challenge : Courts: U.S. Supreme Court rules that a punctuation error in a 1918 act does not repeal the 77-year-old law.

The U.S. Supreme Court let some national banks continue selling insurance, ruling Monday that a punctuation error did not require the 1916 law allowing such sales to be repealed.

The court unanimously reversed a lower court decision that said Congress canceled nationally chartered banks’ authority to sell insurance in a 1918 act.

National banks generally are forbidden to sell insurance. But the 1916 law provided an exception for banks in towns with 5,000 or fewer residents.

Congress made a punctuation error in the 1918 law, but that did not mean the 1916 law was repealed, Justice David H. Souter wrote for the court.

“Against the overwhelming evidence from the structure, language and subject matter of the 1918 act there stands only the evidence from the act’s punctuation, too weak to trump the rest,” Souter wrote. “The true meaning of the act is clear beyond question, and so we re-punctuate.”

The comptroller of the currency ruled in 1986 that banks in such small towns could “export” their insurance and sell it nationwide. The federal government estimates that about 100 small-town national banks sell insurance.

The National Bank of Oregon, based in Portland, received federal permission to sell insurance nationwide from a branch office in the small town of Banks.

The Independent Insurance Agents of America and other insurance industry representatives sued, saying the branch should be allowed to sell insurance only in the town of Banks.

A ruling last year by the U.S. Circuit Court of Appeals for the District of Columbia went even further than the insurance companies hoped.

In ruling that the law was repealed because of an apparent punctuation error, the appeals court said it is up to Congress--not the courts--to correct the mistake.

The Supreme Court reversed that ruling, noting that banks, Congress and federal regulators have assumed the law was in effect for the last 77 years.

“In this unusual case, we are convinced that the (error) . . . was a simple scrivener’s error, a mistake made by someone unfamiliar with the law’s object and design,” Souter wrote.

The case now returns to the appeals court, where, said Bob Rusbuldt, vice president of the Independent Insurance Agents of America, his group will pursue its claim that the comptroller of the currency wrongly let small-town national banks sell nationwide.