Petition for Writ of Certiorari — Elliott v. Federal Home Loan Bank Board

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SUPREME COURT.U.& = ° FEB 14 1968

"IN THE | |

Supreme Court of the United! seatés”* ="

October Term, 1967

No ELT 8

SIDNEY ELLIOTT, WINNIE BUCKLIN, MABEL FER-

. GUS and JOHN (BEANS) REARDON, individually and as

the Shareholders’ Protective Committee of Long Beach Federal

Savings and Loar Association, suing on behalf ofall of the

savings shareholders of said association as a class;.and LONG

BEACH FEDERAL SAVINGS AND LOAN ASSOCIA- .

TION, a Federal mttual savings and loan association ; and N.

JOSEPH ROSS, Intervenor i in the District Court,

Petitioners,

US.

FEDERAL, HOME LOAN BANK BOARD, a sue and be sued

agency of the United States; FEDERAL SAVINGS AND

~ LOAN INSURANCE CORPORATION, a sue and be sued

Federal corporation and agency of the United States; SAV-

INGS-AND LOAN COMMISSIONER OF THE STATE

OF CALIFORNIA; EQUITABLE SAVINGS AND LOAN

ASSOCIATION, a California corporation; JOSEPH

FIELDS, a citizen of New York; MARION FIELDS, a

Bg of New York and RALPH F -asacenti a citizen of New

ork. ek en elle TI

= ; ar Respondents.

Petition of Lode Beach Federal and Its Shareholders’

Protective Committee, Etc., for Writ of Cer- .

tiorari to the United States Court of Appeals :

for the Ninth Circuit. )

« A :

Co qe of

; 2 &- ;

CHARLES K. CHAPMAN, GEORGE W. TRAMMELL,

110 West Ocean Blvd., 2 :

Nifath Floor, Suite 512,

Ocean Center Bldg., - 200 Pine Avenue,

Long Beach, Calif. 90802, Long Beach, Calif. 90802,

. Attorney for Petitioner, Attorney. for. Petitioner,

Long Beach Federal Sav- » Shareholders’ Protec-

ings and Loan Associa- tive C ommittee |

tion. ;

Parker & Son, Inc, Taw Printers, Los Angels Phone MA. 69171

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SUBJECT INDEX-

Opinions: Below -:....2............ RatinGi as MBM eae oe 2.

Grounds: of Jurisdiction aati iis ae 3

Questions EVCRCMCT \-sccececeres eae snscsnssenedenecend tages, §

Importance of the Question sijldneeccniocsiceeinanhoeneetevsney 4

Constitutional and Statutory Provisions ....2..--:0----00+-- 6 |

Statement eecccccecceccceeeee CAE OR eee 7

Congressional Committee and the District Court—>

Condemn Bank Board’s Retroactive Forfeitures

as Arbitrary and Illegal .020.2.ot eee ecececececeeeeeees 8

‘ Bank Board’s Retroactive Forfeitures Are Im-

posed to Punish Thousands of- Small Savings

Depositors Because They Would Not Agree to

Forfeitures of Larger Depositors Jiaenianiahcoaanideds 8

The Court of Appeals Holds United States Courts

Without Power to Remedy Invalid and Illegal ‘

tI aicesiectivieniecie ae

Bank Board Says Savings hese of Over $10, -

000 Each Are Not Bona Fide Yet 150,000 Such- °

Accounts Exist in ‘Three’ Other ew As-

ee as 14

$42,000,000 of New deuiae ease Were

Needed to Help Restore Damaged Savings As-

sociation Ruined by Bank Board Seizures and

~ $69,000,000 Run sncenient acvibsanvsicaeeninenendetwencssemaetiiioune 15

‘Bank Board Retroactively Forfeits Seinen De-

_ posits Months After Deposits Were Made .......... 18

All Long Beach Savings Depositors Vote for

Equal and Pro Rata Distribution and ‘Con-

demn the Bank Board’s FOrsenaTe ” as’ Arbi-

trary and Illegal . llsasiecia . 20

Bre” ie aie ok aR lal

° rik -

PUY

EES

IE PERI Re eet,

RN IAI RN Ns

li.

3 —_

Long Beach ‘sites Depositors Vote for Mer-

ger in Reliance Upon Bank Board’s Provisions

for a Court Test of Any Part Thereof ......... a

; Jurisdiction of the District Court .......2.t....... 23

Reasons Why the Writ Should Be Granted -...c--:--- 24

gees 3 |

P ~ The Constitutional and. Statutory Power of —

7 . - United States Courts to Correct Unconstitu-

i tional, Ilegal,. or Void Administrative ‘Action

: Is Destroyed Without Discussion ............2.0-+-+-+ 26

| II.

~ Compelling Federal Savings Depositors ‘to Sue

Only Before Any Merger Places a Premium on

IE GINS. stdaknncidecasbbiseiiaieataanintinuidakeimiiidaiinics 36

The Equitable Rule of Laches Is Misused to

Cause Injustice, Instead of to Prevent It ........ 38

IV. no

Reniondert Bank Board’s Language “or Any Part

/’” Thereof”. Was a Severance Clause Expressly

“9 Permitting a Court Test of “Any Part” of the — -

The Court of Appeals Approves Retroactive For-

feitures.of Thousands of Innocent Small Fed-

eral Savings Depositors’ Statutory and Charter

Rights Without Findings or Trial and Regard-

less of Their Guilt or Innocence ...............2....--. 45

Conclusion falinterecny tee eines iadichlienabmalestiss eer ree ee 50

eA OR ori ene 60 Sh ae

Page

Appendix: I. Ofléion of District Court and Refer-.

ence to Opinion of Court of Appeals’ Opinion (Not

Yet Reported) Appendix “A” to separate petition

for Certiorari of Intervenor Ross filed concurrently:

herewith.

Appendix II. Constitutional and Satutory Provi- |

sions Involved. |

TABLE. OF AUTHORITIES CITED |

_.Cases a "Page —

‘Abbott Laboratories vv. Gardner, 387 U.S... 136,

18 L. ed. 2d 681 (1967) PU Ge Deen wee 31, 35

American Seating Co. v. Bullard, 290 Fed. 896

(CA-6, 1923) ...... . ‘ .. 41

Coho v. Beneficial Industrial Loan Corp., (337 USS.

* 541, 93 L. ed’ 1528 (1949) ..... ASNT ON A “36

oatidhidiy Vv: Bilder, 369 U.S. 499, 8 L.-ed. 2d

65 (1962) on. i Seni eae 31

Elliott v. Federal Home Loan Bank Board, 233 F.

- Supp. 578 (1964) (Appendix “T” hereof pages

578-600) ........--.- 2, 4, 8, 9, 10, 11,.12, 14, 16,-18, 19

seek epabusibinlciedisaceuaelidaiad 21, 27, 31, 32, 33, 38, 43, 46

Federal Home Loan Bank Board et al. v. Sidney

. Elliott, et al... F. 2d -..... (not yet reported) Ap-

pendix “A” to separate petition for certiorari of

Intervenor Ross filed concurrgntly herewith ..........

Saban 2, 5, 8, 10, 13, 14, 15, 18, 24, 25, 29; 35, 41, 46

Fahey v. Mallonee, 332 U. S. 245, 91° L. ed. 2030

CRE P ctirnnennions pinnbiinladetdbinuiadi behcsstoecetly B0y- OO

Farmers v. United Electrical, ete., 211 F. 2d 36.

(CA-DC, 1953) [Cert. Denied 347 U.S. 943,

98 L. ed. 1091] jineialabistieasan 48

2S OT HACER ERR a

. °

LEME PTET NETS ETE IN RTE EP FET SNE I TE TA,

“ .

ee SOE eee Or, Ore Sa aes

iv. aS

Ee ey . <—_

Greene v. United i Staves, 376 U.S. 149, 11 L. ed. 2d

"IAG. (IDGE)”: csrcereeernes Peaed vO Dn Wer ODER SHORE ERT er 45.

J: I? Case Co. v. ‘Beak: 377 US. 426, 12 L. ed. 2d

"423 (1964) .....-.--:. ae 40

Jones v. Missouri-Edison Electric Co: 144 Fed. 765 re

(CA-8, 1906) -.n.-cscosnsceceeiseseecsarensesteperesassenseeneneess 41

‘Krupp v. Federal Housing Adetintatration, 285 F...

: 2d 833 (CA-1, 1961) a eee 44

Laat -v Deller, 500. U.S. 731. 91 L. ed- 1209

| BSR RSGES TRIER NRE FPeEION ODORS aA er 34

Lebold v. Inland Steel Co., 125 F. 2d 369. (CA-7,

1941) [Cert. Denied 316 U.S. sian 86 L. ed. 1749

[ees eT Ae 41.

NLRB v. Brown; 380 US. 278, 13 L. ed. 2d: 839 _

CHIC occcnes csnye Dp coy AR perreporeeserreononsnonenenintinent ....12, 35

. Northern P. R. Co. v. mon 228 US. 482, 57 L. ed.

~~ 931 (1913) Diet SPER SRLS. SEIN AC aE ADR ROC 40

R.F.C. v. Sullivan anne, a0 F. 2d 247 (CA.9,

1956) -researesosseenseceseennsenpestncesnesneseesersqaeenitennnennecsnnstons 44

_Schwabacher v. U. S., 334 U.S. 182, 92 c ed. 1305

CIID) erciceresnssrevevecoorseinseconisctinanconveinesoveatpenenttweenenimess 41 Ss

Southern Pacific Co. v. Bogert, sd USS. 483, 63 L.

©. BA BD LIDTD). csvsecrserecsroreiveesevesizoccersceniecetcoqnyeeaoeees 40

Sterling v. Constantin, 287 U. S. 378, 77 L. ot 375 .

| CID > eencicatencerentconesichncnenncnopinsenavnrceonee 36

Tcherepnin v. a October 1967 Term No. 104 .

: (12/18/67), . 719 L. ed. 2d 564 .......... 31

United States v. Sencha & O. R. Co., 284 U. S.

195,76 L. ed. 243 (1931) ........----- Sica camatoaeaiaheaion 45

United States v. MeCrillis, 200 F. 2d 884 (CA-1, a

1952) eseoeeecovesseeneesonsteceeee ecneseesscboenssoneneseteoeovoveenveveneee , %.:-.

4 ; - | V.

Statutes. Waser rae Page.

United States Code Annotated, Title 12, See. 1464-

Fae, |: ema ener «Stace on ere ey OS See . 6, 32

. United States Code’ Annotated, Title 12,°Sec. 1464-

ae ee , nrc

United States Code Annotated, Title 12, Sec. 1464-

(4d) euaiennechieeeltotanadtindiipametiinidisatianiaicalieauneis win sieceaniss 3, °, 29

United States Code Annotated, ‘Title 12, Sec. 1464-

(4) (1) eeeeeeeeeeeee wcengeveve Steet 6, 34, 35, 0

United States ‘Céde Annotated, bi 12, Sec. 1464.

Se NES SsessereeetOy U1, 33 -

United States Code Annotated, Title 5, Sec. 1009 .

* (e) (now United States Code Annotated; 2

5. Secs. 701(a); 704 and 706) , wevecvere= Dy, "Oy 20

| United States Code Annotated, Title 5, Sec. 1009

(e) (now United States Code Annotated, Title a

~ Secs. 701(a); 704 and 706) ......... amet 26, 28

United States. Code Annotated, Title 5, Secs. 1001-

— «= ee eee : my ... 23

United States Code Annotated, Title 12, Sec. ’ 1725

(6) (4) enn ae

-United: States Code’ Annotated, Title 28, Sec. 1254 é

. (1) cvesenevennessedeconnecaseecs in 4

United .States Code Annotated, Title 28, . Sec. 1391 |

(€) y. oneeeeegentnnneeerseenend teeseneeee 2S

California Financial Code, Sec. 5258 .:......3, 5, 6, 31

California Financial Code, Sec.. 9204-0 lew 6

Federal Rules of Civil Procedure, Riile: 52, ieseesuibiaas tice

Federal Rules of Civil ata Rule 56 cninetanel t 47

eee ho rw SPOT WEY

LAND MASE SIN Ne tae NORMA COE Or gm,

Ph,

Federal Rules of Civil Procedure, Sec. 65(c) ....... 37

California Code of Civil Procedure, Sec. 529 ........ 37

Regulations

12 CFR I siaiscsesttciecisiateeactsesediaeid 6, 49.

anon

Board ........... ICMR ee TEE A EL SONNY ITY 5, 25

34th Annual Report . of the Federal Home -Loan .

Sete SN cee i 5,-25, 49

1965 Savings and Loan Fact Book'of the United ay

_ States Savings and Loan League ........ senses Ay a

34 Columbia, Law Review, Notes, pp. 1308-1331 36

Congressional Investigating Committee Report. of

Committee on Government Operations ..................

sssiaaacitent nin Mo, i 21,.29, 30, 31

IN THE

. Supreme Court of the United States 7

October Term, 1967

. een

te » <>

SIDNEY ELLIOTT, WINNIE BUCKLIN, MABEL, FER-

GUS and JOHN (BEANS) REARDON, individually and as

. the Shareholders’ Protective Committee of Long Beach Federal

Savings and Loan Association, suing on behalf of all of the

Savirigs shareholders of"$aid association ds a class; and LONG

».BEACH: FEDERAL SAVINGS AND LOAN ASSOCIA-

TION, a Federal mutual savings and loan association; and N.

JOSEPH ROSS, Intervenor in the District Court,

as Petitioners,

US. a

FEDERAL HOME LOAN: BANK BOARD, a sue and be sued ~

agency of the United States; FEDERAL SAVINGS AND -

LOAN INSURANCE CORPORATION, a sue and be sued

Federal corporation and agency of the United ‘States; SAV- _

INGS AND LOAN COMMISSIONER OF THE STATE

OF CALIFORNIA; EQUITABLE SAVINGS AND LOAN

ASSOCIATION, - 4 California corporation; JOSEPH

FIELDS, a citizen of New York; MARI@N F IELDS, a

citizen of New York and RALPH FIELDS, a citizen of ‘New

York. ?

Respondents.

Petition of Long Beach Federal and Its Shareholders’

Protective C »mmittee, Etc., for Writ of Cer-

. tiorari to the United States Court of Appeals

for the Ninth Circuit. | | °

PO NS li hn NA ct Oe

pa, Wren

_To the Chief Justice and Associate Justices of the

Supreme Court of the United States:

Petitioners’ pray that’ Writs of Certiorari issue to

review the judgments of the United States Court of.

Appeals for the Ninth Circuit entered in three ‘consoli-

dated cases before that Court on its August 18, 1967

opinion.

OPINIONS BELOW..,

The opinion of the Court of Appeals for the Ninth

Circuit was filed August 18, 1967, and is not yet re-

ported. A true copy of said Court of Appeals opinion

and judgments.is Appendix “A” of the Petition for

Certiorari by Intervenor Ross filed concurrently here;

with.

The opinion of the District Court (which i is also |

its findings of fact and conclusions of law. under

F.R.C.P.. Rule 52) was filed September 22, 1964. It is

reported at 233 F. Supp. 578. . A true copy thereof i is

Appendix I attached hereto.

Parties

1Petitioners are Long Beach Federal Savings and Loan Asso-

ciation (Long Beach Federal) and Elliott, et al., .as the

Shareholders’ Protective Committee of Long Beach Federal, and

Intervenor’ Ross. ;

Long Beach Federal is a mutual federal savings and loan

association owned solely by its 60,000 savings depositors who are

called shareholders.

.Elliot#} et al., are the Shareholders’ Protective Committee. of

said association holding the proxies of, and representing a ma-

jority of, said 60,000 savings depositors. ‘Said Shareholders’

Protective Committee was organized 21 years ago in 1946 when

Long Beach Federal was first. seized by the predecessors of re- — |

_ spondents Federal Home Loan Bank Board, et al. It has since

_ litigated_continuoysly before courts and Congressional Investi-

gating Committees to save Long Beach Federal ‘from repeated —

seizures and destructive liquidation by respondents. Said Pro-

tective Committee has been continuously licensed by the State

of California each year for the past 21 years since 1946. Said

‘ ae

GROUNDS OF JURISDICTION.

An opinion of the Court of Appeals for the Ninth

Circuit’ directing reversal of the judgments below was

filed on August 18, 1967. ‘Timely applications for leave

to file “Appellees’ Petition For Rehearing Or Clarifica-

- tion and Suggestion for Hearing En Banc” were filed

on September 14, .1967. An order of said Court of

Appeals granting leave to file said petitions for rehear-

ing, etc., was made and. filed September 20, 1967...

On November 27, 1967, the Court of Appeals ordered

respondent Bank Board to file a response to said Ap-

pellee’s petition for rehearing. Said response was. filed

December 26, 1967. > |

Another order of said Court of Appeals was made on

January 12, 1968. It again granted Appellee’s leave to.

file said Petition for Rehearing. _It also permitted peti-

Committee was recognized by this Court 20 years ago.in Fahey

v. Mallonee, 332 U.S. 245, 91 L. ed. 2030 (1947) discussed

, hereafter at page 39. -

Respondents include Federal Home Loan Bank Board, Federal

Savings and Loan Insurance Corporation and California State

Savings and Loan Commissioner. Said Insurance Corporation

is operated and controlled solely by said Board. Said Cali-

fornia Savings and L.oan Commissioner is the California regu-

latory counterpart of said Bank Board. The Commissioner’s

authority is limited, however, .to only California State savings

and loan associations.

All said respondents are expressly “sue and be sued” agen-

cies. They are subject to suit and judicial review by the respec-

tive federal laws creating said Bank Board (12 U.S.C. §1464-"

(d)) and Insurance Corporation (12 U.S.C. §1725(c)(4)) and

the California State law creating Savings and Loan Commis-

sioner (California Financial Code §5258). .

Equitable Savings and Loan Association is a California State

guarantee stock association. “It was a plaintiff in the District

Court and an appellee in the Court of Appeals. It is not’ a

petitioner, but is a respondent here.

Intervenor N. Joseph Ross is a savings depositor who inter-

vened in the actions in the District Court and was an appellee.

He is filing his separate Petition for Certiorari,

a [SPIRE dhe Ve Mid POR AIG ioc

_ THEY CAN TAKE PLACE? .

MaDe al Ble PEE hy es

a ae Vee

tioner’s to reply to said Bank Board’s response to: peti-

tion for rehearing. The, order of January. 12, 1968 de-

~ nied said petition for rehearing.’.

Jurisdiction of This Court on certiorari is invoked

under 28 U.S.C. §1254(1).

QUESTIONS PRESENTED.

1. UPON A “DISSOLUTION BY MERGER”

OF THEIR MUTUAL FEDERAL SAVINGS AS-

SOCIATION MUST THE ASSOCIATION’S SAV-

INGS DEPOSITORS FORFEIT THEIR FED-

-~ERAL STATUTORY AND CHARTER RIGHTS

TO EQUAL AND PRO RATA DISTRIBUTION

UNLESS THEY FILE “STRIKE SUITS” TO EN-_

JOIN AND WRECK SUCH MERGERS BEFORE

OR CAN THEY BE HEARD ON THE MERITS _

OF THEIR RIGHTS~IN US. COURT ACTIONS

FILED BY THEM ONLY ONE BUSINESS DAY

AFTER FINAL APPROVAL OF SAID’ MERGER

BY RESPONDENTS BANK BOARD, ET AL.? |

, Importance of the Question. ‘

The more than twenty million (20,000,000) people

who are mutual savings depositors in 2051 federal sav-

‘ings and loan associations own their seventy billion

dollars ($70,000,000,000) of savings deposits and as-

2There were three seperate actions in the U.S. District Court. —

They were consolidated for trial, etc. Three separate judgments

were entered by the District Court. The appeals were consoli-

dated for briefing and argument. A single opinion was filed

by the-Court of Appeals but three separate judgments are re-

quired in the Court of Appeals. Pursuant ,to Rule 23-5 of this

Court Petitioners Elliott, et al., and Long Beach Federal are,

filing a single°petition for certiorari and Petitioner Ross is also

filing a single but separate Petition for Certiorari. His Peti-

tion outlines the procedural steps in each of the three actions.

vate

eatias

sets.2 They have the federal statutory right te “equal

and pro rata” distribution of the net assets of their .

mutual ‘federal savings associations. Such rights are

» given them by the Acts of Congress authorizing the

creation of such federal associations and also by the fed-

eral association’s charters.

‘ 2; ARE U.S. COURT JUDGMENTS WHICH

HELD RESPONDENT BANK BOARD’S RETRO-

ACTIVE AND EX PARTE- FORFEITURES

WERE “ILLEGAL AND VOID .’... ARBITRARY

AND CONTRARY TO, AND WITHOUT AU-

THORITY IN, LAW” ENFORCEABLE AGAINST

BANK BOARD EFT Al.., ONLY TO THE EXTENT

IF ANY, THAT SAID BANK BOARD, ET AL.,

MAY “APPROVE” SAID U.S. COURT. ORDERS?

___OR DO-THE U.S. COURTS HAVE POWER TO

COMPEL RESPONDENTS TO STAY WITHIN.

THE EXPRESS TERMS OF SAID ACTS OF CON-

GRESS AND FEDERAL CHARTERS?

Importance of the Question.

| Respondents, Federal Home Loan Bank Board, et al., _

are subject to suit and to judicial review “. . . including

declaratory judgments or writ of. prohibitory or ‘man-

datory injunction . . .” to compel agency action unlaw-

fully withheld.* The U.S. District Court only ordered

*Figures are-estimates taken from Federal Home Loan Bank

Board 1966 Source Book and 34th Annual Report and 1965

Savings and Loan.Fact Book of the United States Savings and

Loan League. e2)

4Administrative Procedure Act, 5 U.S.C. §1009(c) and (e)

(now 5 U.S.C. §§704 and 706) ; Also 12 U.S.C. §1464(d). Re- -

spondent California Savings*and Loan Commissioner is also °

. subject to judicial review in accordance with law”. Cali-

fornia F inancia] Code §5258 (See pp. 28-31 hereof for texts of

said sections). | _ | ,

an ere * ete fer

pene Se

enforcement of the express terms of the Acts of Con-

gress and petitioners’ charter which both require “equal

. and pro rata distribution.”

The Court of Appeals assumed that the ‘forteliire

were invalid (Opn. p. 7). But yet held the U.S. Dis-

trict Court “. . . was without power to remedy [the in-

valid forfeitures] . . . without the administtative ap-

proval required by state and federal statutes and regula-—

tions...” (Opn. p. 17). ~ ieee

Thus, the constitutional and statutory powers of

Untited\ States Courts to correct unconstitutional, illegal

and void administrative action are destroyed without

discussion. —

‘Nowhere in its 21 page opinion does the Court of A p-

peals cite or discuss the Administrative Procedure Act.

The Court of Appeals gives respondent Bank Board

a veto power over every United States trial or appellate

court decision affecting the distribution of any federal

savings and loan association’s reserves and surplus

. among its thousands of mutual savings depositors.

Constitutional and Statutory Provisions.

1. Amendment 5 United States Constitution

“No person ... shall be . . . ‘deprived of life,

liberty, or property, without due process of law

2. Title 12 U.S.C.A. §1464(a); (b); (d)(1) part

only; (i)

3. Title 5. U.S.C.A. §1009(c)(e) Now Title 5

US.C.A. §701(a) ; §704 and §706.

4, Title 12 U.S.C.A. §1725(c) (4) part only

5. 12 C.F.R. Part 546.4

6. California Financial Code $5258; $9204.

For texts see Appendix IT hereof.

an ace Weis TST NE baBibci a ts -

a oy

STATEMENT.

The actions below were brought by petitioners, et al.,

to save about $9,500,000 of petitioners surplus from

certain arbitrary and void forfeitures imposed retro-.

actively by respondents Bank Board, et al., in violation

of applicable Acts of Congress and the Federal Charter

of petitioner Long Beach Federal [1R-1-28; 2R-7-29;

3R-2-17].5

The disputed $9,500,000 was deposited in the U.S.

District Court.* Respondents thereaftereagreed to con-

sent judgments for the distfibution of about $7,000,000

. thereof: among petitioners’ 60,000 mutual savings de-

_ positors. Such distribution was made pro rata as re-

quired by said charter and Acts of Congress. The bal-

ance of $2,500,000 remained in Court [1R-204-213;.2R-

260-270; 3R-180-190; 1R-316-319; 2R-331-335; 3R-

307-311; 3R-167-179]. :

‘For uniformity of record references among all briefs, appel-

lees will use the same record refererices as in their briefs to’ the

‘Court of Appeals, i.e., the original papers in No. 20378 (D.C.

No.’ 62-1072-PH), No. 20447 (D.C. No. 63-1230-PH), and

No. 20522 (D.C. No. 63-1107-PH) are designated “‘1R”, “2R”

and “3R”, respectively. References to the transcript of the pro-

ceedings in the District Court are designated “Tr.” See foot-

note 10, page 10 hereof for description of how references are

made to the opinion of the Court of Appeals and the District

Court. '

All figures are approximate. The $9,500,000 was in the

form of a single certificate for 791,650 shares of Equitable

_ guarantee stock value in 1963 at $9,500,000. See footnote 12,

page 11 hereof for details. “ie |

ANA ORE EAA oR ERE ON CE

PPTL a

ETT Me EE PIMP 2

fa.

- 3 |

Congressional Committee and the District Court

Condemn Bank Board’s Retroactive Potteitures

_as Arbitrary and Illegal.

A Congressional Investigating Committee said of re-

spondent Bank Board’s seizures made to block-distribu-

tion of petitioner’s surplus: |

. the Board’s . : . actions must be character-

ized as arbitrary and unlawful and of the most

+ reprehensible sort. . . . by preventing the conver-

sion the board deprived the Association of .a right

created by . . . Congress .. . Without mincing

words, we may say this is a form of regulatory

“supervision by blackmail. . The Board’s action

‘was an arbitrary and unlawful exercise of power.

Raed

The District Court also held respondents”: retroactive

forfeitures were “illegal and void . . . arbitrary and con-

‘trary to, and without authority, in on" (233 F. Supp.

578 at p. 598 Appx. 1). It ordered enforcement of the

Acts of Congress and petitioners charter both of which

it held were violated by said forfeitures.

Bank Board’s Retroactive Forfeitures is Imposed |

to Punish Thousands of Small Savings Deposi-

tors Because They Would Not Agree to. wor-

feitures of Larger Depositors.

Respondent Bank Board for nearly a year threatened

to impose its retroactive forfeitures only on petitioners

savings accounts of over $100,000 each\ (233 F. Supp.

€

'The Congressional Committee had heard the sworn testi-

mony of respondent Bank: Board’s then Chairman, Members,’

Counsel and staff. Said Committee’s full report is Appendix

III to petitioner’ s briefs in the Court of nee.

sae

578 at p. 585 Appx. D: _ There were about 54 such —

accounts.

Petitioners refused to agree to the forfeitures. In an

effort.to coerce agreement, respondent Bank Board re-

fuged to permit any distribution: to any of petitioners

60,000 savings depositors regardless of the size or age -

of ther savings accounts.

Petitioners yet refused to yield. -

Respondent Bank Board then increased its retroactive

forfeitures to include all new savings accounts of over

$10,000 ‘each, and all savings accounts which were

pledged for a loan anywhere. There were thousands of .

such savings accounts (233 F. Supp.-'578 at p. 585 ©

Appx. I).°

Respendent Bank Board’s 1963 Chairman McMurray |

admitted in a letter to petitioner Long Beach Federa!

that the Board expanded its retroactive forfeitures only

because petitioners did not yield to the Board’s s initial

forfeitures.”

8The Bank Board gave no notice of any of its retroactive

forfeitures until months after the new savings deposits were

made (See p. 18 hereof for details)

®*Board Chairman McMurray said :

“You persist in saying that the Board is only ndeioned’

in eliminating accounts of $100,000 and over from partici-

pating in the distribution. . . . the $100,000 figure was used

only for the purpose of arriving at a mutually agreeable .

compromise which I thought we had reached . . . You

chose not to implement the compromise. .,. That being the

case, as you were advised, the Board’s concern with the ‘free-

rider’ , Problem is net limited to accounts of $100,000 and

over.” (Extract from May 15, 1963 letter from the Board

to Long Beach Federal) [ Pltf. Exs. one

ST NP ate oe

greta ens

SATE NAL PLATE ME GAN OG PENS CU TOR EE LE IRON BEN GAME CLEAN I AR MRE Sy: HOMEY LUE

: .

pistes

‘ —10— _

The Court of Appeals Holds United States Courts

Without Power to Lessee Invalid and Illegal

Forfeitures. oe

The Court of Appeals without considering the legal-

ity or merits of any of the retroactive forfeitures, re-

versed and ordered the actions dismissed: It-said: ~

“*’.. . the district court is without power to for-

mulate and enforce a new distribution plan free and

élear of Board and Commissiéner apron . my

(CA-9 Opn. p. 20)."° .

‘The judgment. of the District Court was for equal

pro rata distribution in the exact terms of ‘the Acts of

Congress and petitioners’ charter. It was not a new.

distribution plan. The Court of Appeals held that the

U. S. Courts are without power to make any judgments,

on the Bank Board’s - illegal forfeitures, or to enforce

Acts of Congress repealed and violated by respondents,

except such. judgments, if any, as respondents Bank

Board, et al,, might approve.” |

1References to the Court of Appeals Opiaion will be “Opn. ;

— © “CA-9 Opn. p. ....”. Said Court of Appeals opinion

is Appendix “A” attached ‘to. the petition for certiorari of N.

Joseph Ross filed concurrently herewith. References to the Dis-

trict Court opinion will-be “283 F. Supp. 578 at p.- .... Appx.

I”. It-is Appendix “I” attached to this petition for certiorari.

All petitioners respectfully request : ‘this court to consider both

said petitions together; Various statements and contentions made

in one are not-repeated in the oe,

"The Court of Appeals asstimed that respondent Banks

Board’s forfeitures were invalid. The Court said:

“ ,. . what remedy was available, assuming that the dis-

trict court was correct in determining that the, restric-

tive distribution provisions [forfeitures] . . . were invalid.

..” (CA-9 Opn. p. 17). (emphasis added).

The Court held no remedy existed and said:

“; . . without reaching the several other complex ques-

tion’ raised on these appeals, the judgments are reversed,

and the cases are remanded with directions to dismiss the .

actions... .” (CA-9 Opn. P. 21).

nfl hittin , ar Cait alten A Sots slab

¢>

lottliet oe

- The Court of Appeals also held petitioners only. re- ©

.course against respondents’ retroactive forfeitures was

to try to enjoin the merger before it took place (CA-9 *

“Opn. p. 21).

But if there were no merger then petitioner’s $9,-

500,000 of surplus could not be distributed among’ pe-

_ titioner’s 60,000" savings / depositors. To enjoin the

merger would prevent any distribution. *

_ Respondents’ retroactive forfeitures were imposed as

conditions ,of respondents approving a merger of pe-

titioner Long Beach Federal into’ respondent Equitable

(233 F. Supp. 578 at p. 598 Appx. I). ;

Said $9,500,000 became available for distribution as a

result of said merger.” |

‘Both Long Beach Federal’s charter and the express

terms ‘of the Acts of Congress require equal and pro rata

distribution of said $9,500,000 of net gworth ‘and sur-

plus of petitioner Long Beach Federal among all its

60,000 niutual savings depositors." °

By merger of Long Beach Federal into Equitable, Equi-

table assumed all Long Beach Federal liabilities. Long Beach

» Federal’s 60,000 savings depositors each received new savings

accuunts from Equitable. Thus Long Beach Federal’s surplus

-was released for distribution in the .form of Equitable stock

among Long Beach Federal’s 60,000 savings depositors. As a

result of the merger, each Long Beach Federal savings ‘deposi-

tor became a savings depositor in Equitable. His new account

in Equitable equalled his old account in Long Beach Federal.

There also becatne available for distribution to Long Beach’ Fed-

eral savings depositors a bonus of about 13% ($9,500,000 at

1963 prices) in the form of Equitable guarantee stock. How this

bonus is to be distributed is the issue of this petition..

8The District Court found in its opinion:

/ “. .-, The second unnumbered paragraph of 12 U.S.C.

§1464(i),. under. which the conversion and dissolution is

had, contains the second Congressional expression in the

Statute as to the distribution of stock upon conversion and

(This footnote is. continued on the next page)

} ° ~

YEN ON TER ND

“

LA A a a ka RPL ETA RIN

. > . aa

he ee a ia

il | |

Long Beach Federal’s charter was issued in 1934 by

" respondent Bank Board. Jt reads in part: 7

| “Section 9: ‘. . . All holders of share accounts

shall be entitled to equal distribution of net assets,

pro-rata to the value of their share accounts, in

the event of voluntary or involuntary - liquidation,

dissolution, or winding up of the Association.’ ”

(233 F. Supp. 578 at p. 592 Appx. I).

Yet respondents required unequal and_ preferential

distribution forfeiting some, and favoring others, of °

petitioner’s thousands of mutual savings depositors.

Respondents’ forfeitures caused some of “he favored . °

depositors to take all their own pro rata share and also

the entire forfeited shares of the excluded depositors,

who got nothing (233 F: Supp. 578 at p. 593 and p.°

597 Appx. I). |

Thereby said forfeitures also caused some favored

depositors to receive 13 times more distribution than’

others, where both had the same amounts deposited."

dissolution. It reads: ‘(6) that, in the évent of dissolution

after conversion, the members or shareholders of ‘the asso-

ciation will share on a mutual basis in the assets of the as-

sociation in exact proportion to their relative share or ac-

count credits.’ This provision is in addition ta ‘the specific

requirement of subsection (b) that the shares are to be re-

tired as provided in the charter. And the charter written, -

signed and issued by the Government requires a prorata

distribution on dissolution.” (233 F. Supp. 578. at p. 592

Appx...I): a . ="

Such ‘expression of the. Congressional policy underlying a stat-

ute is discussed in NLRB v. Brown, 380 U.S. 278 at 291-

. 292, 13 L. ed. 2d 839 at 849 (1965) (See page 35 hereof for

quotations). - _~

_ “The details of such arbitrary preferences were ignored by

the Court of Appeals. -It held the District Court was without

power to remedy them regardless of their invalidity (CA-9 Opn.

p.“17). Pe dy ae er

—13—

. Respondent Bank Board at the time of: said merger

(in 1963), had not adopted any regulation controlling

a direct merger of a federal Savings association, such as

petitioner, into a California State guarantee stock asso-

ciation such as Equitable. Respondent Bank Board’s

1963 regulations regulated only mergers of ‘federal asso-

ciations with each other or liquidation of federal sav-

ings ahd loan associations. Nevertheless, respondents

Bank Board, et al., insisted that no merger of Long

Beach Federal with Equitable could take place except on

retroactive forfeitures dictated by said Bank Board as

conditions of such approval months: after the “savings

deposits were made. |

Long Beach Federal’s $72,000,000 of savings deposits

and Equitable’s $51,000,000 of savings deposits were in-

sured by respondent Federal Savings and Loan Insur-

ance Corporation. Both respondent Bank Board and

Insurance ‘Corporation threatened petitioners with dis-

~ approval of the merger and termination of said deposit

insurance unless the merger was upon the terms dictated

by said respondents. The terms so dictated included

an unequal and preferential distribution of Le ng Beach

Federal’s $9,500,000 of net worth among its 60,000 mu-

tual savings depositors. Among the preferences and

inequalities demanded by respondents were: the exclu-

sion of several thousand Long Beach Federal savings

depositors from any participation, and severely limiting

and restricting the participation of thousands of others.

Such retroactive forfeitures were imposed by requir-

ing that all new savings accounts of more than $10,000

_ each be excluded’ from any share of Long Beach Fed-

eral’s surplus and that. all. savings ‘accounts, new and

old, shown on Long Beach Federal’s books as pledged

PONTE ESPON S I Be ONIN oP NOR MR am NT

- .

‘ -

| OA ASR NER 3 a re

also be excluded regardless of the size of the account

or the age of the deposit, or the purpose of the

pledge.*® | <. ,

~ Respondents Bank Board, et al., thereby forfeited the

statutory and charter rights of the excluded mutual

savings depositors and transferred said forfeited rights

to other favored savings depositors (233 F. Supp. 578

at p. 593 and p. 597 Appx. I). : ;

Bank Board Says Savings Accounts of Over $10,000

Each Are Not Bona Fide Yet 150,000 Such Ac-

counts Exist in Three Other Savings Associa-

tions. <i : )

Respondents claimed their forfeitures were required |

to protect “small”. savings depositors from “large de-

posits” made by new depositors and from “large” in-

creases in new savings deposits made by older savings

depositors. on

Respondent Bank Board told both the District Court

and the Court of Appeals: a |

“. . . the Board believed that generally new ac-

counts would not be opened by bona fide savers

in amounts larger than $10,000 in any one account.”

(emphasis added).*®

The exclusion of the over $10,000 accounts was as to the

excess over $10,000 per account. The exclusion of the pledged

accounts was to the extent of the pledge. The exact text of

respondent Bank Board’s forfeitures appears in the District Court

opinion (233 F. Supp. 578 at pp. 585-586 Appx. I).

The retroactive forfeitures were imposed at first only on sav-

ings accounts’ of ‘over $100,000 each. (See footnote 9, p. 9

hereof). ‘ete ter, 7 '

*Appellant Bank Board’s, et al., Opening Brief, page 17. Ap-

pellants also made this assertion under oath to the District

Court [McMurray affidavit, 3R-1002]. The Court of Appeals

in footnote 13, page 7 of its Opinion, quoted said Bank Board’s

“beli ef’’, ‘ :

ot hath LTE i.

—15—

But all savings and loan associations throughout the

United States average over 31.4% of their savings de-

posits in accounts of more than $10,000 each.?”

There were more than 150,511 savings accounts of

over $10,000 each in only three Los Angeles Associa-

tions. The total deposits in said. 150,511 Savings ac-

counts exceeded one and one-half billion dollars. ($1,-

500,000,000).?® :

$42,000,000 of New Savings Deposits Were Needed

“ to Help Restore Damaged Savings Association

Ruined by Bank Board Seizures and $69,000,000

Run. f+ 24 |

Petitioners claimed the new deposits were urgently

required to partially restore the depleted assets and

baldy damaged goodwill and public esteem of petitioner -

Long Beach Federal.

~ Respondents Bank Board, et al., in April 1960 had

seized petitioner Long Beach Federal without any notice

and appointed their Supervisory Representative in

Charge.” Respondents sought and. obtained front

page, scare headline publicity of their said ex parte

171065 Savings and Loan Fact Book”, page 19.

*8Such data was before the Court of Appeals. It was takén

from published newspaper ads and financial statements of said

three Associations in the Los Angeles newspapers. Copies of

such newspaper ads were part of the “Supplement to Reply Brief

of Appellees Long Beach F ederal, et al, .Paragraph XI Re:

Three Los Angeles Savings and Loan Associations have over

150,000 savings Accounts of over $10,000 Each”. ees

194 Congressional Investigating Committee has found “such

Bank Board seizure was arbitrary and unlawful and was made

to block a conversion of Long Beach Federal from a federal to

a state ‘association. Such conversion was the first step to enable

distribution of Long Beach Federal’s net worth among its 60,000

savings depositors. (See footnote 7, page 8 hereof for record

reference to Congressional Committee Report).

Sa ek aa ae a ee

PLY ETO LI MG IT ENT 28S

seizure. A run of withdrawals of petitioners’ savings

depositors began at once. At the start of the run peti-

tioner Long Beach Federal had about $96,000,000 of

savings deposits held by over 90,000 mutual savings de-'

positors. Withdrawals in the run were as high as $4,-

- 000,000 in a single day... Over $69,000,000 (more than

70%) was so withdrawn (233 F. Supp. 578 at p. 583-

585 Appx. I). - ; Se

In 1962 as a result of Congressional Investigations

and Federal Court actions, said respondents returned |

the remnants of seized Long Beach Federal to the very

same management from which they had seized it (233

F. Supp. 578 at pp. 583-584 Appx. 1). |

Respondents paid over $5,000,000 in damages for dis-

missal of said actions. They also agreed in a “Settle-

ment Agreement””” that Long Beach Federal could

merge -with Equitable and thereby distribute Long

Beach Federal’s net worth “equally and pro rata” among

all Long Beach Federal savings depositors.

When Long Beach Federal was so returned it had

Jess than $30,000,000 left of the original $96,000,000

.of savings deposits. - a

Long Beach Federal was in desperate need of im-

mediate new savings deposits to replace the $69,000,000,

70% of its deposits, lost in the 1960 run.”

20The 100-page “Settlement Agreement” is Plaintiff's Ex-

hibit “8”. It is discussed at 233 F. Supp. 578 at p. 584, 586,

Appx. I. |

214 prior seizure of Long Beach Federal in 1946-48 by the

prédecessors of respondent Bank Board had caused a $10,000,000

_ run of withdrawals (about one-half of the then savings de-

posits.) This seizure also ended with the return of Long Beach

‘Federal to exactly the same management from which it had been

seized by said respondent. A third seizure for the expressed pur-

pose of involuntary. liquidation was threatened. It was pre-

- vented only by a Federal Court injunction.

| ae

Long Beach Federal, Equitable and their respective

officers, directors, et al., made .every effort to attract

all new savings deposits to Long Beach Federal by both

new and old depositors. Long Beach Federal spent

tens of thousands of dollars in repeated full page news-

- paper ads and for television, radio, etc. About $24,-

000,000 of such new deposits came on the first and

second: day after Long Beach Federal. was restored

from the seizure [ Pitf. Exs. 12B-3 thru 12B-17].

The total of such new deposits amounted to $42,000,000

by November 30, 1962. This was only about one-half

of the $69,000,000 of Savings deposits lost’ in the run

of withdrawals resulting from the 1960-1962 seizure by

‘respondent Bank Board.22. ~

22T he Court of Appeals said in footnotes 10 and 12 on page6

of its opinion: : :

“1°In its proposed finding of fact No. 28, Long Beach

stated : - ea

28. In March-April, 1962, Long Beach Federal’s officers

and its Shareholders’ Protective Committee wished to~re- -

habilitate the precarious financial condition of the seized

Association. They felt substantial new Savings deposits

were eagently and immediately required for such rehabilita-

he first few days of the restored’ Association upon

its return to its founding management were believed to bé

“IAs stated in its opening brief on’ these appeals, Long

Beach believes that the deposit of these ‘additional sums

were beneficial in the following respects :

““(a) Equitable paid $3,000,000 in guarantee stock for

restored Association. Said goodwill

resulted solely from the new $42,000,000 * of Savings de-

““(b) The additional $3,000,000. to. be impounded. for

10 years was released for immediate distribution among

the Long Beach Federal depositors. Equitable’s assump-

tion of all Long Beach’ Federal liabilities, known as well

as unknown, made this release possible. ;

(This footnote is continued ‘on the next page)

WAS SA indie Biaweniatie>

tt i ee ee ee ~

—18—

Bank Board Retroactively Forfeits Savings Deposits,

_ Months After Deposits Were Made.

~°--No-savings depositor was ever given any notice prior

to making his deposits that his new (or old) deposits '

would be denied their statutory and charter rights to

equal and pro rata participation in their mutual as-

sociation’s net worth, surplus and reserves (233 F.

Supp. 578 at p. 597 Appx. I).

A ‘Bank Board Member, Bank Board counsel and

dozens of Bank Board personnel were personally present

in Long Beach Federal in April, 1962, when the prem- |

ises of the Association were thronged with returning,

and new, savings depositors who made over $24,000,000

of new savings deposits in two days. »*¥et no notice or |

warning of any kind was given, or ordered by respond-

ent Bank Board of its forfeitures to any of the thou-

sands of new depositors swarming into Long Beach —

““(c) Approximately $3,884,000 of possible income

taxes were saved. The $42,000,000 in new savings de-

posits under 26 U.S.C. 593 created a tax shelter of 12%

or about $5,000,000. This tax shelter enabled Long Beach

Federal to received [sic] the $5,000,000 compensation paid

it by appellants Bank Board and Insurance Corpora-

tion as damages, tax free. The $5,000,000 tax shelter also

enabled Long Beach Federal to transfer its surplus to

Equitable without taxes which might otherwise have

wiped out the distrikution:” (Record references and foot-

notes omitted.) :

“In its reply brief the Board took issue with all of these .

assertions.”

_ But the Court-of Appeals never considered or decided whether

the $42,000,000 of new savings deposits were required for the

survival of’ Long Beach Federal just emerging from the two

years of Bank Board seizure and. a $69,000,000 (70%) run of

withdrawals. Fhe Court of Appéals assumed the Bank Board’s

forfeitures were invalid but yet held the District Court was

without power to remedy them (CA-9 Opn. p. 17).

‘

a=] Qin

Federal to deposit their savings in their restored as-

sociation.

Only months after the new deposits were made did

respondent Bank Board attempt to retroactively forfeit

, any of the new deposits. , Even then the proposed retro-

active forfeitures were to affect only new accounts of

over $100,000 each. There were 54 such accounts.

But when Long Beach Federal refused to betray

those of its new depositors whose accounts exceeded

$100,000 each, then respondent Bank Board expanded

its retroactive forfeitures to include all new accounts

over $10,000 each, and to all accounts, old and new,

which were assigned or pledged to secure a debt (233

F. Supp. 578 at p. 585 Appx. I). There were thou-

sands of such accounts.

It was almost.a year after the $24,000,000 of new

‘Savings - deposits were made before respondent Bank

Board finally announced which of thousands of the

new savings accounts would be retroactively forfeited

and the « <tent of such forfeitures.

Respondent Bank Board held no administrative hear-

ing. It made no findings, or even accusations, of any

guilt or wrong.

Respondent Bank Board’s only findings were that its

forfeitures were “advisable and in the interest of all con-

cerned” and were “fair and equitable”, Such findings

were made without any notice, testimony or hearings

[FH.LB.B. Order No. 17177; Pitf. Ex. 3-D-4].

*3See footnote 9, page 9 iil

All Long Beach Savings Depositors Vote for Equal

and Pro Rata Distribution and Condemn the

Bank Board’s Forfeitures as Arbitrary ind

Illegal.

A mass meeting of Long Beach Boderal depositors

was held in the Long Beach. Municipal Auditorium.

Resolutions unanimously adopted by the depositors at

, that meeting said impart:

“We condemn as arbitrary, unjust .and illegal

the attempts of the seizing Bank Board and Insur- -

ance Corporation, or their successors, to compel an

unconstitutional and illegal forfeiture of our said

savings account investors’ rights to their propor-

. tionate share of our Association’s net surplus, re-

serves, and undivided profits.”

Said resolutions also thanked the new large savings

depositors for:

“Investing in new savings accounts or increas-

ing the amounts of existing accounts in amounts -

in excess of the $10,000.00 insurance of accounts;

and '

“Also [for] borrowing . .. to obtain money to

invest in our mutual savings Association in its

time of peril.and need immediately following said

restoration.” [Pltf. Ex. 7-A-2-7], | -

Long Beach Sayings Depositors’ Vote for Merger

in Reliance Upon Bank Board’s Provisions for

a Court Test of Any Part Thereof. :

Resolutions were also unanimously adopted asking

Congress to aid the merger. As a result respondent

‘Bank Baard’s Chairman was questioned in 1963 before

‘Congressional Committees. He then denied any power

‘ éa® . a

A eek lads lat al ind Sian ER oe | BN A :

=—

to make any distinctions between large and small or old :

and new federal savings depositors.” . 4

He was directed by the Congressional Committee to

file a written report on the progress of the Long Beach

_ Federal-Equitable merger. Before making such report

to Congress, réspondent Bank Board through its

Chairman, members, and ‘counsel, originated a new

~ paragraph to be added to the Merger Agreement. It

. read in part: . | ;

“This Agreement is not intended to prohibit any

shareholder member of Long Beach from taking

appropriate action to exercise such- rights, if any,

_ which he may have to contest the merits or validity

of the plan of dissolution of Long Beach, or any

part thereof, incorporated herein.” (emphasis

added). :

The ‘language “any part thereof” was a severance

clause.. Any part could be accepted. Any ‘other part

be contested. . See page 43 hereof.

The Court of Appeals quoted said language and held .

_it was “. . . the. provision permitting a court test of the

distribution provisions” (CA-9 Opn. p. 19). But yet

held the only remedy was to enjoin the entire merger. | ts

a ia Saal ae

* ~

ESE EI Re ar OT.

PED PUI ey

, 8

SSE IE IE SPL F IMT NI LOA ITIL ELT INE GENE Ral AS RETR

— Copies of ‘the Merger Agreement containing such .

“. .. provision permitting a court test of the distribu- }

tion provisions” were mailed to all Long Beach Fed-

eral depositors. The mass meeting in the Municipal

*4*The District Court ¢ommented (in a footnote in 233 F.

Supp. 578 at .p. 599 Appx. I). upon said Bank Board Chair-

man’s “trapezical agility to shift, depending on whether or not

he was. talking to a Congressional Committee, to the public, or

to Long Beach Federal. . . .” See footnote 34, pp. 29-31, hereof :

. for details. , Pa

Auditorium was ‘resumnéd 3 in ‘July, 1963. Bais of all the |

olan bmi? Nate BRB Tanta? haar wt DP OS ee

—to— ae t

votes cast were in favor of said merger.”

Copies of said vote in favor of the merger, including

copies of said ballots, were sent to respondents.

Respondent California Commissioner thereafter ap-

proved the merger conditionally. One of the condi-

* tions was:

“On or before December 31, 1963, EQUI-

-. TABLE shall make distribution of the guarantee

stock of EQUITABLE to the shareholders of

LONG BEACH FEDERAL .. . subject to the

lawful orders of any court of competent jurisdic-

tion which may otherwise control the distribution

of that number of’ said shares of guarantee stock

of . EQUITABLE as to which the ownership and

entitlement are in dispute.” a Ex. 3-B-1].

(emphasis added).

Such conditional approval was transmitted to re-

spondents Bank Board and Insurance Corporation.

‘They approved such condition and on September 4, 1963

25The ballots of said 96% read in part:

sa)

aay

“This ballot is cast in favor of said merger in reliance “

upon:

That: portion of the merger agreement, proxy statement,

etc., which reads as follows:

‘This Agreement is not intended to ‘prohibit any share-

-holder member of Long Beach from taking appropriate ac-

tion to exercise such rights, if any, which he may have

to contest the merits or validity of the plan of dissolu-

tion of Long Beach, or any part thereof, incorporated

herein.’, and

The action of the Federal Home Loan Bank Board, Fed-

eral Savings and Loan Insurance Corporation, et al., in ap-

proving said merger agreement, proxy statement, etc.,

containing said above quoted. language.” ( emphasis

added). [Pltf. Ex. 12-9-63-4].

age —

23 } |

gave their final approval. On September 5, 1963 re-

spondent California Commissioner gave his. final p-

proval, But a single business day elapsed (i.e. Friday

September 6, 1963) between the final approval by re-

spondents, September 5, 1963, and the filing of peti-

tioners’ Court actions in reliance upon and under the

terms of the “. . .. provision permitting a court test of

the distribution provisions.”’*

Yet the Court of Appeals holds petitioners were

guilty of “laches” in not suing to wreck and enjoin 2”

their entire merger before it took place.

Jurisdiction of the District Court.

Petitioners and plaintiffs below in their cornplaints,””. |

cross-claims, : etc., based the jurisdiction of the U.S.

* District Court on the Fifth Amendment to the Consti-

tution of the United States, on the Administrative Pro-

cedure Act, 5 U.S.C. §§1001-1011, and upon the other

Statutes cited by the District Court in its judgments.”*

Plaintiffs also relied on 28 U.S.C. §1391(e) [1R-3].

*6September. 7, 1963, was a Saturday; September 8, 1963,

was a Sunday; September 9, 1963, was a California Holiday

(Admission Day).

*7[1R-1-28; 2R-7-29; 3R-2-17 ;]

*8Paragraph I; of said judgments reads: eK

“That jurisdiction of this court, of the parties and the

subject matter exists under the Interpleader and Declara-

tory Relief Statutes, the Home Owners Loan Act, and the

Administrative Procedure Act, all as amended and in force

now or on the date of the occurrences. involved in this litiga- -

tion. - U.S.C. §§1335, 1397, 2201, 2202, 2361; F.R.C.P.

13, 22, 56(a), 12 U.S.C. 1464(d)(1), 1728(c)(4).

U.S.C. I> 0 ) (c)(4); and 5

e we

”

> —— .

20 Re Ree

‘

| —24¢ |

REASONS WHY THE WRIT SHOULD BE -

GRANTED. .

The Court of Appeals has erroneously, we believe,

decided importantsfederal questions ‘by destroying any —

effective judicial review of respondent administrative .

agencies. (including respondents Bank Board et al. )*°

Nowhere in the 21 page épinion does the Court of Ap-

peals cite or discuss the Administrative Procedure Act.

Such decision is contrary to said Acts of Congress and:

to the long line of decisions of. This Court thereon.

It is also contrary, to prior decisions of the same Court ©

of Appeals in prior litigation between petitioners and

respondénts Bank Board, e¢ al. (See p. 31 hereof y

| The application of such 1967 Court of Appeals deci-

sion is not limited to petitioners. If left uncorrected

it will encourage multitudes of similar ex parte and ret-

roactive administrative forfeitures.

?°The Court of Appeals’ opinion at page 17 says: .

_ “We do not question the power of a district court, in

appropriate circumstances, to determine the legality of pro-

visions of a particular merger-distribution plan. We hold,

however, that under the circumstances of this case the dis-

. trict court was without power ‘to remedy . . . invalid dis-

tribution provisions. ...”

But the “appropriate circumstances” required by the Court of

Appeals ‘can never occur. The opinion holds at page 21:

“

. that laches is a bar to these suits, whether the

relief sought would or would not require a setting aside of

the merger. . ..” _ ;

Petitioners’ sujts were filed the same day as:the merger and only

one business day after final approval of the merger by respond-

ents: | Enjoining and wrecking a merger before it is made is

the only remedy the Court of Appeals would permit. This rem-

‘discussion.

edy is illustory and non-existént. See pages 36 to 42 hereof for

—

Over eats million - (20,000,000) people are wits

savings depositors in 2051 federal Savings and loan as-

-sociations. They own their. ‘seventy billion dollars ($70,-

000,000,000 ) of mutual savings deposits and assets.*

They have the federal statutory right to “equal and pro

rata” distribution of the net assets of their mutual fed-

tral. savings associations upon merger or dissolution.

Such rights are given them by the Acts of Congress

authorizing the creation of such federal associations and

also by the besa» association’s charters.

Under the Court of Appeals’ opinion the Bank Board

can require unequal and preferential distribution.

Thousands of savings depositors can be. forfeited and

receive .no distribution, Others can take. their own

statutory share and also take the forfeited shares of

their fellow savings depositors.

Even before this decision respondents Bank Board

et al., in 1966 merged or otherwise dealt with 20 or

more savings and loan associations.*' If the Court of

Appeals’ opinion remains, uncorrected the ‘Tights and

ownership of every federal savings and loan depositor

in the 2051 federal associations exist only at the pleasure

or whim of respondent Bank Board.,

205; igures are estimates taken from Federal Home Loan Bank

Board 1966 Source Book and 34th Annual Report and* 1965

Savings and Loan Fact Book of United States Savings and Loan

League.

313.4th finial Report of Federal Home Loan Bank _—

to. Congress 1966 page 80 and pages 64-65,

— De lean os ot ate, AR een

NOD LN EA LIA IM EGE A HMRI rf

ALR IE

Doe FO MaDe

‘ ee ee

. ‘

—~/

—26—

‘The Constitutional and Statutory. Power of United

States Courts to Correct. Unconstitutional,

Illegal, or Void Administrative Action Is De-

troyed Without Discussion. =

The Court of Appeals says in part’:

“. . . the district court was without power to

remedy what it regarded as invalid “distribution

provisions of an administratively approved merger-

dissolution plan, by designating a revised distribu-

tion plan, without the administrative approval re-

— by state and federal statutes and regula- _

_ tion, .. .” (CA-9 Opn. p. 17).

The Acts of Congress and the Long Beach Federal

charter required equal and pro rata distribution. The

; District Court judgment also ordered equal and pro rata

distribution. It merely followed the exact terms of the

charter and statute. |

The Court of Appeals acknowledged that what it

called the “revised distribution plan” enforced by the

_ District Court, was only the equal and pro rata dis-

tribution expressly required by the Acts of Congress,

Long Beach Federal’s charter, and the Settlement

Agreement between petitioners and respondents.

Such acknowledgment was made by the Opinion say-.

ing at page 17: “. . . the court-required pro rata. dis-

tribution plan.” (emphasis added).

Enforcement by the District Court of the express

terms of the Acts of Saongreee was not “designating a

revised distribution plan.”

The Court of Appeals also assumed that respondents

retroactive forfeitures were invalid. It said: at page 17

of its opinion:

a. ae

“The problem then arises as to what remedy was

available assuming that the.district court was cor-

rect in determining that the restrictive distribution

Provisions of the approved merger agreement were

invalid. . . .” (emphasis added). ;

Respondents contend, and the Court of Appeals held,

that no remedy was available because, as the Court of

Appeals said at page 20 of its Opinion: eave.

“. . the district court is without power .to for-

mulate and enforce a new distribution plan free and

clear of Board and Commissioner approval... .”

-Thereby the Court of Appeals constituted respondent

administrative agencies as the supreme court of last

resort. | |

Respondents forfeitures were condemned by both the.

District Court and Congress. The District Court held

respondents forfeitures were “legal and void .”. . arbi- |

trary and contrary to, and without authority, in law.”

(233 F. Supp. 578 at p. 598 Appx. I).

A Congressional Investigating Committee said:

“. .. The Board’s . . . actions must be character-

ized as arbitrary and unlawful and of the most

reprehensible sort: . . .-by preventing the conversion

the board deprived the “Association of a Tight

created by . . . Congress . . . Without mincing

“words, we may say this is a form of regulatory

supervision by blackmail. . . . The Board’s action

was an arbitrary and unlawful exercise of power.

9982 ; -

The Congressional Committee had heard the sworn. testi-

mony of respondent. Bank Board’s then Chairman, members,

counsel, and staff. Said Committee’s full report is Appx. III

to petitioners briefs in the Court of Appeals.

MEINE POLAT LOY NE OREM RS ENE Me me het

EPA STINE MET KN ee

2 ELD SL DY ATM

i aati)

SERA RRR eed OE AN eee nn

a ee Sw aN Oe TAS,

—28—

By holding “the district court is without power” to

remedy such unlawful action, the Court. of Appeals

places respondents beyond judicial review. Yet - no-

where ‘does the Court of Appeals cite or discuss any

of the’several statutes subjecting Bank Board to judicial

review.

-Congréss at least twice enacted statutes: subjecting

respondents to judicial review by the U.S. Courts. The

Federal Administrative Procedure Act, reads in part

(5 U.S.C. §§1009(c), (e) :*

“Except so far as (1) statutes preclude judicial

review or (2) agency action is by law comeuiies to

agency discretion.

K(c) Acts reviewable. Every agency action

made reviewable by statute and every final agency

action for which there is no other adequate rem- °

* edy in any court shall be subject to judicial review.

“(e) Scope of review. So far as necessary to

decision and where presented the reviewing court

shall decide all relevant questions of law, interpret

constitutional and statutory provisions, and deter-

33In Seqeauter, 1966, Congress by 1 Pub. L. 89-554, 80 Stat.

392, revised and re-enacted Title 5 of the U.S. Code. Old §1009

was divided iinto new sections 701 and 702 through 706. The

“Explanation” (page v of 1967 Edition of Title 5) says in

part:

‘changes i in the law, ...

The language above quoted became S$ US. CA. 701(a), 704

and 706.

The Opinion of the District Court refers to 5 U.S.C. §1009

as it was numbered up to September, 1967. Hence, we quote

it under its old number.

“ _ * the enactment . . . did not involve . substantive

”

“mine the meaning or applicability of the terms of

any agency action. It shall (a) compel agency

‘action unlawfully withheld or unreasonably de-

layed; and (b) hold unlawful and set aside agency

action, findings, and conclusions found to be (1)

arbitrary, ‘capricious, an abuse -of discretion, or

otherwise not in accordance with law; (2) contrary

to constitutional right, power, privilege, or immu-

nity; (3) in excess of statutory jurisdiction, au-

thority, or limitations, or short of Statutory right

(4) without observance of procedure required by

law;...” (Emphasis added. )

As a result of lengthy Congressional Investigations

of respondents Bank Board et al., in 1946 and again

in 1951-1952, Congress in 1954 amended and revised

12 U.S.C. $1464, the section under which the federal

Savings system is authorized and created. After such

1954 amendment, 12 U.S.C. §1464(d) reads ix part:

i “. «. Fhe Board shall be subject to suit by -any

Federal savings and loan association with respect

- to any matter under this section or regulations

made thereunder, or any other law or regulation, in

the United States district court for the district

where the home office of such association -is lo-

cated.’’*4

*4The legislative history of this amendment demonstrates that

it was enacted for the express purpose of «subjecting respondent

Bank Board to suits then (1954) pending by petitioner Long

Beach Federal. Respondent Bank Boards 1954 Chairman Walter

W. McAllister testified before both the House and the Senate

Banking and Currency Committees, Part of his testimony is set-

forth in Petitioners Appendix III to their brief in the Court of

Appeals, pages 24-25 of the “Twenty-Third Report by the Com-

(This footnote is continued on the next page)

ts NO Re Te ee ee OT

1 ta tila

As part of such: 1954 amendment Congress also en-

acted : ,

“Inconsistent Laws.. Section 818 of Act Aug. 2,

1954, [60 Stat. 648.] provided: . ‘Insofar as the'

provisions. of any other law are inconsistent with

the provisions of this Act, the provisions of this

Act shall be controlling.’ ”

mittee on Government Operations” on “Federal Home Loan

Bank Board Seizure of Long Beach Federal Savings and Loan

Association”. . He is there quoted:

“Chairman McAllister went on to say that in addition to

formalizing the “administrative machinery, the other pur-

of the bill was :®

“«' .. to protect the institution and management from the’

capricious and arbitrary acts of the Board. If the Board

were to simply make up its mind it wanted to take a cer-

tain action with regard to an institution, they could cause

that institution and management pense Mae embarrass-

ment, if not loss and cessation of business.’

“Then Senator. Bennett asked Chairman McAllister to point

out the type of issue or disagreement between the Board

‘and the industry which occasioned the new legislation. Chair-

man McAllister replied :*

“ ‘We have a well-known case, that of the Long Beach Fed-

eral, "tone Beach, Calif. ; that has been in the courts for

about 7 years, and they have had various kinds of congres-

sional hearings.

“It is my honest belief that if that statute had been in

force at that time, that the difficulty could have been

avoided.’ ”

“@Housing Act of 1954, hearings before the Committee on

Banking and Currency, U.S. Senate, 83d Cong., 2d sess.,

on S. 2889, S. 2938 and S. 2949, pt. 1, p. 82.

‘Ibid. p. 83.

STbid.

*Ibid., p. 84.”

In 1963 respondent Bank Board’s Chairman McMurray testi-

fied twice before Congressional Committees. He was before

the House Committee on Appropriations on Janffary 24, 1963

‘and before the House Committee on Banking and Currency on

May 7, 1963. He swore to said committees “. . . that: all deposi-

tors ... were treated alike, whether [their deposits were] $100.00

- or $100,000.00 and whether pledged or not; . . . or whether

their deposits have been in . . . one year, ten years or 20 years.

aniihine

California statutes also make respondent California

Savings and Loan Commissioner’s orders re- mergers

subject to judicial review.® ,

The District Court in its opinion cited and relied

upon the above and other statutes subjecting respond-

ents to judicial review. si

The Court of Appeals discussed none of them.

Yet in prior litigation between these same petitioners.

and respondents, the same Court of Appeals has twice,

in 1952 and in 1961 cited and: discussed the Adminis-

-- + (See footnote 4 af 233 F. Supp. at p. 599 Appx. I). But

after he so testified, he yet imposed on Long Beach Federal

the retroactive forfeitures held invalid by the District Cgurt.

For the decisive effect of such legislative history on the mean-

. ing of a statute. See —— v. Knight, October, 1967,

Commissioner v. Bilder, 369 U.S. 499 at™ 502-505, 8 L. ed.

2d 65 at 68-69 (1962), and Abbott Laboratories v. Gardner, —

387 U.S. 136 at 140-141, 18 L. ed. 2d 681 at 686-691 (1967)

make similar holdings. ia

California Financial Code §5258 provides as to respondent

California Savings and Loah Commissioner :

“$5258. Acts of. commissioner subject to judicial review:

Every order, decision, approval, certificate, license, per-_

mit, or the denial: of any approval, certificate, license or

permit, or other official act of the commissioner provided

for in Articles 1, 2 and 4 of Chapter 3, Chapter 5, Sec-

tions 6450 to 6455, inclusive, and Article 1, Chapter 18,

of this division is subject to judicial review in accordance

with law... .”

Said chapters include those regulating mergers of federal and

California savings and loan associations. Respondent California

Commissioner said his order: approving the merger was “, ._

subject to the lawful orders of any court of competent juris-

diction which may otherwise control the distribution . . .” of the

‘stock now in. Court. (emphasis added) [Pitf. Ex. 3-B-1].

MLLER TE ME TEN OND RLU NR

FE:

FARM k EES COTE

AOL “iors lablaae acs Beige,

—

trative Procedure Act and held respondents subject to

judicial review.* :

Congress has -also been explicit in requiring mu-

tuality and equal and pro rata distribution in all fed-

eral savings associations. 12 U.S.C. §1464(a) author-

izes the-creation of federal savings associations such as

petitioners. It expressly requires that they be mutual

and that the charter issued to them be mutual. It reads:

“In order to provide local mutual thrift institu-

tions in which people may invest their funds and

* in order to provide for the financing of homes, the

Board is authorized, under such rules and regula-

tions as it-may prescribe, to provide for the or-

ganization, incorporation, examination, operation

and regulation of associations to be known as ‘Fed-

eral Savings and Loan Associations,’ and to -issue

‘charters therefor, giving primary consideration to

the best practices of local mutual thrift and home-

financing institutions in the United States.” (em-

phasis added). | : if om ees

12 U.S.C. §1464(b) requires that all deposits shall .

be as authorized by the charter and shall be repaid in

accordance- with the charter terms. It reads in part:

36In 233-F. Supp. 578 at p. 588 Appx. I the«District Court

said :

“[7,8] The Administrative Procedure Act is applicable

to the Bank Board, and its actions are judicially reviewable,

and it does not have ‘uncontrolled discretion.” [Home Loan

Bank Board et al. v. Mallonee (9 Cir. 1952) 196 F. 2d 336,

Cert. den. Mallonee v. Fahey, 345 U.S. 952, 73 S. Ct. 863,

97 L.Ed. 1374; Federal Home Loan Bank Board v. Long

Beach Federal Savings & Loan Association (9 Cir. 1961) |

295 F.2d 403] . . . Section 10 of the Administrative Pro-

cedure Act [5 U.S.C. § 1009], particularly subdivision (c)

thereof . . . provides that: ‘every final agency action for

which there is no other adequate remedy in any court shall

be subject to judicial review.’ ”

—33— |

“Capital: deposits; Certificates of indebtedness

-“(b) Such associations shall raise their capital

only in the: form of payments.on such shares as

are authorized in their charter, which shares may -.

be retired as is therein provided.” (emphasis.

added).

The charter issued ‘to Long Beach Federal by re-

‘Spondent Bank Board reads in part in section 9:

~ “4... All-holders of share accounts shall be en-

titled to equal distribution of net assets, pro-rata

to the value of their share. accounts, in the event

“Of voluntary or involuntary liquidation, dissolution,

or. winding up of the Association’ ” (emphasis

_ added). (233 F. Supp. 578 at p. 592 Appx. I).

Congress has also enacted its requirements for equal

distribution when a Federal Savings association converts

_ toa state association. 12 U.S.C. §1464(i) reads:

conversion, the members or shareholders of the as-

_ sociation will share on a mutual basis in the assets

of the association in exact proportion to their rela-

tive share or account credit’... .” (emphasis added)

The District Court by its judgment requiring equal

and pro rata distribution only enforced the exprfess re-

quirements of the Acts of Congress. Congress created

the Federal savings system. It included in that system

requirements for. equal pro rata distribution when a

federal association converted to a state association or

liquidated or dissolved.

- Respondent Bank Board has repealed these Acts of

Congress by requiring preferential and unequal dis-

tribution, forfeiting thousands of petitioners mutual

savings depositors and favoring others.

‘.. . (6) that, in the event of dissolution after -

PEPIN TIE TETRIS BL Be SIE ts ENR

PIT ary tee Ny ~ ; »

SR ahaa RES oa

Ee mes

CA RAT nS aR AME Whee ates

eee

ncapuincoBaiies

ain

By such forfeitures one group of favored savings

. depositors can receive a distribution of many times

their statutory pro*rata shares. ‘The forfeited savings

depositors receive no distribution. Yet both the favored

- and the forfeited savings depositors had-the same

amounts on deposit in their respective savings accounts,

Congress also specifically subjected respondents :

. to suit by any Federal savings and loan as-

sociation with respect to any matter under this sec-

tion or regulations made thereunder, or any other

law or regulations, in the United States district

court for the district where the home office of such

association is located, . . .”. (12 U.S.C. §1464-

(d)).

- Congress also said “The provisions of this Act shall

be controlling”’.*”

Yet the Court of Appeals has held the District Court

powerless to review such illegal forfeitures. Thereby

respondents’ arbitrary and void .administrative forfei-

tures, instead of the Constitution and laws of the

United States, are made the supreme law of the land.

‘In Land v. Dollar, 330. U.S. 731, 91 L. ed. 1209

(1947), the United States Maritime Commission at-

tempted to forfeit plaintiffs corporate stock. This Court -

said at hi page 738, L. ed: page 1216:

. But public officials may become tort-feasors

rs exceeding the limits of their authority. And

where .they unlawfully seize or hold a citizen’s

realty or chattels, recoverable by appropriate action

at law or in equity, he is not relegated to the Court

of Claims to recover a money judgment. The dom-

87See Pages 29-31 hereof for full text and legislative his-

tory.

—— _-

—35— |

inant interest of the sovereign is then on the side

of the victim who may bring his ‘possessory action

to reclaim that which. is wrongfully withheld.”

(emphasis added).

In NLRB v. Brown, 380 U.S. 278, 13 L. ed. 24°

839 (1965), this Court said at U.S. pages 291-292,

L. ed. 2d page 849: Sapte |

“. . . Reviewing courts are not obliged to stan

aside and rubber-stamp their affirmance of admin-

istrative decisions that they deem inconsistent with

a statutory mandate or that frustrate the congres-

sional policy underlying a statute. Such review is

always properly within the judicial province, and

courts would abdicate their responsibility if they

did not fully review such administrative decisions.

“21, 22] ‘Courts must, of course, set aside Board —

decisions which rest on an ‘erroneous legal: founda-

tion.’ ” |

_ “In Abbott Laboratories v,. Gardner, 387 U.S. 136,

18 L. ed. 2d 681 (1967), this Court said at U.S.

pages 140-141, L. ed. 2d pages 686-687: |

“. .. a survey of our cases shows that judicial -

_ Teview of a final agency action by an aggrieved

person will not be cut off unless there is persuasive

reason to believe that such. was the purpose of Con-

gress. (citing authorities ) ce only upon a showing

- of ‘clear and convincing evidence’ of a contrary

‘ legislative intent should the courts restrict. ac-.

cess to judicial review. .. .*°8

8See footnote 34, pages 29-31 hereof for legislative history

spondent Bank Board subject to sui

titioners Long Beach Federal, et al

Sara s

— , :

In Sterling v. ‘f onstantin, 287 U.S. 378, 77 L. ed.

. 375° (1932), this Court said at U. S. page 404, L. ed.

page am

Le Complainants had a constitutional right to

‘resort to the Federal court ;to have the validity of

Fil

the Commission’s orders judicially determined. ... ran

nad ce! Fe

Compelling Federal Savings asian to Sue Only .

Before. Any Merger Places a Premium on

_ “Strike Suits” fe |

The Court of Appesla’ opinion’ Ponte and places a.

premium upon strike suits by minority , stockholders-

‘depositors of ail federal savings and Joan associations.

»' Many beneficial mergers have been wrecked by prema-

ture and unfounded minority stockholder litigation.

Such strike suits, which the Court of Appeals now

holds are the only remedy of over twenty million fed-

eral savings depositors, are long discredited. ‘They

place a premium upon obstructive action and are often

used’ to coéree excessive gy, heme: payments not jus-

tified by the merits of the claims.”

_ They have been the subject of’ much ‘remedial —

tion by many of the states.

In Cohen vw. Beneficial Industrial’ nnn Corp., 337

US.. 541, 93 L. ed. 1528. (1949) the. U.S. Supreme

Court said at U.S. page 438, L. ed. page 1537:, |

Rey: ‘“Unforturiately, the remedy itself [ chee,

_ Suits] provided opportunity for abuse which was.

not neglected. Suits sometimes were brought not -

_ to redress real wrongs, but to realize -_ their

°T Hie article ‘on “Extortionate Sisndias ‘Taiedloe: The”

__. «Strike» Suit” appearing: in the Colurmbia’Law Review, Notes,

Vol. 34, pages 1308-1331, contain$ discussion; Fe a multitude

of citations re strike suits. _

—37—

nuisance value. They were bought off by secret

settlements in which any wrongs to the general

body of share owners were compounded by the _ |

P ; i. 3

suing stockholder, who was mollified by payments |

from corporate assets. These litigations were aptly .

characterized in professional slang as ‘strike suits.’

%? i

~The Court of Appeals’ opinion holds that enjoining

the $159,000,000 merger before it occurs was the only

remedy available to the thousands of small Long Beach y

Federal savings depositors. But an injunction to block ;

a $159,000,000 merger requires a bond. (F.R.C.P. |

§65(c) ; California Code of Civil Procedure §529),No °° |

small savings depositor or any group of them can be

expected to meet the requirements of such a bond.

At the timie of the merger, Long Beach Federal’s as-

sets exceeded $90,000,000. Equitable’s assets exceeded

$68,000,000. Their combined pro-forma statement

_ shows almost $159,000,000 total. assets. Any injunc-

tion bond required to indemnify the 60,000 Long Beach

Federal savings depositors and 24,000 Equitable deposi-

tors and stockholders would threaten to ruin and bank-

-rupt any small Long Beach Federal savings depositors _ |

attempting to enjoin such a merger.” , |

The duration of the injunction as this very case dem- si

onstrates, would be at least 4 years.” The amounts lost

. , ° 4 ;

“The injunction against merger obtained in 1946 but re- | '

versed as “premature” by This Court in Fahey v. Mallonee, 332 - F

U.S. 245, 257, 91 L. ed.. 2030 at 2041 (1947) was against only :

a U.S. conservator who then (in 1946-1948) was in Possession of

Long Beach Federal under respondents first seizure. Only a

nominal injunction bond was required under_these circumstances.

(See footnote 43, page 39 hereof) ’

“'The merger was made September. 10, 1963. The District

". Court actions -were filed the same day. The District Court’s opin- f

ion was renderéd in 1964 and its judgment was made in. 1965.

The. Court, of Appeals’ opinion was filed in. August, 1967, Re-

hearing was denied in January, 1968,

—

if an injunction prevented the merger .and then proved’ —

to be wrongful could ‘exceed $10,000,000. ($9, 500,000 ,

of Equitable’s stock, at 1963 prices, plus litigation ex-

penses, etc., defending against the injunction).

Thus the only remedy suggested by the Court of Ap- -

peals is illusory and non-existent. Yet petitioners so

abstaining from ruining all their fellow savings deposi-

tors and their savings association is held to forfeit every

other right ever to be heard on the merits.”

III.

The Equitable Rule of Laches Is Misused to Cause

| Injustice, Instead of to Prevent It.

The 1963 merger of Long Beach Federal-Equitable

remained entirely “hypothetical” until final approval on

September 4th and 5th, 1963 by both respondents Bank

Board and California Savings and Loan Commissioner.

The California Commissioner did ‘not finally approve

the merger until September 5, 1963. His first approval

was on August 28, 1963. Jt was conditional. One ‘of

such er was that:

. EQUITABLE shall make distribution

so the shasdhcidere of LONG BEACH ies

ERAL .. ., subject to the lawful orders of any

court of competent jurisdiction .. .” [Pitf. Ex. 3-

B-1].

This condition was approved by respondents Bank .

‘Board et al. (233 F. Supp. | 578 at pp. 596-597, mae

The merger took place “ie Tuesday September 10, -

1963. Three of the intervening days between Thurs- -

w Segueier , 1963 and Tuesday September 10, 1963

See isin 45, pages 40-41 hereof.

were holidays (Saturday, Sunday, and Monday, Cali-

fornia Admission Day).’ Thus, but a single business

day intervened ‘between the time the merger ceased to

be “hypothetical” and the class actions were filed to test

the validity of the stock distribution. |

- The Court of Appeals’ opinion which says at page 19,

petitioners : |

', “... had from at least the middle of June, 1963,

Aantil September 10, 1963, when the merger was

consummated, within which to institute litigation

seeking to enjoin the merger...”

is contrary to the record, and Fahey v. Mallonee, 332

U.S. 245, 91 L. ed. 2030 (1947).

Petitioners had but one business day, Friday Septem-

-ber 6, 1963 in which to have tried to enjoin the merger.

No trial of the factual issues of laches was. held. The

Court of Appeals, despite the conflict in the record

and affidavits, decided this issue as a matter of law.

depositors, through their same depositors’ protective committee,

in this same litigation against the predecessor of this same Bank

Board, enjoined a then threatened merger of their asso-

ciation before it could take place. This Court held such injunc-

_. tion was premature, and said in Fahey v. Mallonee, 332 U.S.

245, 91 L. ed. 2030 (1947) at U.S. page 257, L. ed. page 2041:

“. .. The Government has assured us at the bar that there

is no plan for such a merger in contemplation. Neverthe-

less, such a merger was enjoined . : . we do not consider it

necessary to discuss the legality of hypothetical mergers.”

(emphasis added).

It was in the light of this U.S. Supreme Court decision in

the prioryéars of this: same litigation, that all parties including

petitioners and respondents, ‘agreed that the court test of the

merits or validity of the merger “or any part thereof’.would take

place after instead of before completion of the merger. Another

“premature” attempt to secure judicial decision of the validity

of the “hypothetical” merger was not coritemplated after the

‘

+ Capt eeD

Sew she ROPE De aa

This Court has repeatedly refused to permit mere

lapse of time to block justice for oppressed minority

stockholders.“* , | .

Rights of minority stockholders have been protected

after merger.

In J. I. Case Co. v. Borak, 377 U.S. 426, 12 L. ed.

2d 423 (1964) minority stockholders sued ¢to enjoin

the merger of their corporation. The injunction was °

denied arid the merger took place. Five years after the

merger they were allowed to amend their complaints.

(317-F. 2d 838 at 840). This Court affirmed and said

at U.S. pages 433-434, L. ed. pages 428-429:

“... It is for the federal courts ‘to adjust their

remedies so as to grant the.necessary relief’ where

federally secured rights are invaded. ‘And it is

also well settled that where legal rights have been’

invaded, and a federal statute provides for a gen-

eral right to sue for such invasion, federal courts

may use any available remedy to make good. the

wrong done.’ (citing authorities)” (Emphasis

added). :

“In Southern Pacific Co. v. Bogert, 250 U.S. 483, at 488-490,

63 L. ed. 1099, at 1106-1107 (1919) this Court, 30 years

after a merger, required.compensation for minority stockholders

wrongfully excluded therefrom. The action in which such dis-

tribution was ordered had not been filed until 22 years after the

‘merger. oy

In Northern P. R. Co. v. Boyd, 228 U.S. 482, at 509, 574L.

ed. 931; at 944 (1913), a complicated railroad merger and re-

organization took place. One. creditor litigated for 26 years

from 1887 to 1913. 10 years after the merger he brought his

first action against the reorganized railroad which defended on

the ground of laches. This Court held the 10 years of delay did

not bar the enforcement of his claim. .

4512 U.S.C. §1464(d) provides’ for such a “general right to

’ sue.”. It says respondent “..... Board shall be subject to suit

_ by any Federal savings and loan association with respect to any

‘matter under this section or regulations made thereunder, or any

—41 -

See afso: | |

92 L. ed. 1305 at 1317 (1948). . | |

2° Lebold-v. Inland Steel Co., 125 F. 2d 369

at 375 (CA-7, 1941), [Cert. denied 316 U.S. 675,

86 L. ed. 1749 (1942)].

3.. Jones v. Missouri-Edison Electric C 0., 144 -

Fed. 765 at 777 (CA-8, 1906).

4. American Seating Co. v. Bullard, 290 Fed.

896 at 901 (CA-6, 1923). |

The California Savings and Loan Commissioner pré-

cluded pre-merger litigation by the terms of his stock.

permit and conditional approval of the merger.

Under his conditions Equitable stock could not be dis-

tributed until‘after it was issued. It could not be issued

until after the merger.** When so issued it was to be

distributed only “. . . subject to the lawful orders of

other law or regulation, in the United States district court for

the district where the home office of such association is located,

...”. (The legislative history of said section is discussed on

p. 29 hereof.) .

The Court of Appeals’ comments in footnote 28 at page 17

of its opinion upon other possible remédies which the Court of

Appeals says petitioners did’ not seek from the District Court,

such as appraisal rights, or damages for conversion. But ap-

* praisal rights were expressly prohibited’ by the terms of the

Merger Agreement dictated by respondent Bank Board, “et - al.

“(See petition for Certiorari by Intervenor Ross page 26 for

discussion). And petitioners ‘sued for declaratory relief and \

- prayed for any eqititable relief the court might deem just.

Such would include damages for conversion. -

*“On August 30, 1963, the California Commissioner issued his

stock permit [Pltf. Ex. 3-C-2] authorizing Equitable to issue its

guarantee stock to Long Beach Federal Savings depositors only

after the merger. paid stock permit read in part on pages 1 and

3: "3 | |

“Authorization: U pon . . . consummation of the “merger

in accordance with the provisions..of the Order Approving

Merger by the Savings and Loan Gommissioner of the State

(This footnote is continued on the next page)

—42— °°

‘any court of competent jurisdiction ...”. Until the

“merger was consummated” and: stock was issued any

cion over its distribution would be premature and —

iT - sthetical”, P

ee Beach Federal in 1946 enjoined a merger be-

fore it could occur. This Court reversed in 1947. and

refused to decide the merits of “hypothetical” mergers.

‘In 1963 Long Beach Federal sued after the merger. The

Court of Appeals now refuses ‘to consider the merits

because of “laches” for not again suing prematurely to —

onjomn the merger. * |

All parties knew the Court test of distribution: was

to follow and not precede the merger.

The Proxy Statement mailed to all 60,000 Long

Beach Federal savings depositors informed them that

litigation in Court might prevent “any distribution what-

soever”’. ‘7 But the Proxy Statement did not say (and

no one intended) that litigation might a and pre-

vent any merger whatsoever.

of California dated hue 28, 1963, -Equitable Savings and

_ Loan Association is authorized to issue 791,650 shares of

its One Dollar ($1.00) par value guarantee stock to the

withdrawable shareholder members of Long Beach F ederal ,

Savings and Loan Association. . : '

“No eertificates of shares of guarantee stock shall be is-

sued or sold or other acts done, “‘otnaaae to the authorization

_ above ‘set forth unless and until . . . consummation of the

merger. .. 2’ (emphasis added).

A7Said Proxy Statement read in part on page 5: ;

“The management of Long Beach’is informed that cer-

tain shareholder-members may contest in court the validity

of the foregoing participation plan insofar as it excludes

J from distribution rights part or all of their share account

balances on November 30, 1962. .

“Tf. all Long Beach members in a position to do so

were to contest the plan of distribution, therefore, as much

OG as 26% (205,829: shares) of the, stock being paid by Equi-

, . IV. . |

Respondent Bank Board’s Language “or Any Part

Thereof” Was a Severance Clause Expressly

Permitting a Court Test of “Any Part” of the.

Merger After the Merger Took Place. — :

The severance clause of the Merger Agreement is

quoted at pages 7, 14 and 19 of the Court of Appeals’

opinion: | :

“This Agreement is not intended to prohibit any

shareholder. member of Long Beach from taking

appropriate action to exercise such rights, if any,

which he may have to contest the merits or validity

of the plan of dissolution of Long Beach, or any

part thereof, incorporated herein,” (Emphasis

_ added). | es

“It is aptly stated by the Court of Appeals on page 19

of its opinion as “. . . the provision permitting a court.

test of the distribution provisions”. i

But, said Court’s opinion erroneously, we believe,

limits such “court test of the distribution provisions”

to only a court test of the entire merger, prior to the

merger. _ a

This language permitting a court test of “any part”

of the Merger Agreement originated with’ respondents _

Bank Board and Insurance Corporation.® Such lan-

table might become involved in litigation which could pre-

vent its. prompt distribution. Such litigation could conceiv-

ably delay or prevent any distribution whatsoever.” (empha-

sis added) [Pitf. Ex. 7-A-4-3]. 7 :

“The U.S. District Court so found in its opinion. In 233

F. Supp. 578 at p. 596, Appx. I the court found: . ,

. “. .. The Bank Board Proposed the language, and agreed

. to the insertion of the provision that the validity of any

part of the Agreement could be contested... .” (Empha- -

No respondent has denied or contested this: finding. See page

20 hereof. ps .

+ Ry

aye

ena

“ sna incest GS Slt 10 ne Late: iain te i matin ho oleae

——— .

guage is to be construed most strongly against those

USS. agencies who draft and originate it.”

Yet this language originated by respondents is now

construed by the Court of Appeals as requiring that the

entire merger.must be enjoined before it occurs.

Respondent Bank Board by its own language express-

ly made the merger severable. “Any part” could be ac-

cepted. Any other part could be tested by the “provision

permitting a court test” (CA-9 Opn. p.-19). No restric-

tion was made as to when: said “court test” of “any

part” must be made. 7

What the parties expressly made separate and sever-

able the Court of Appeals has re-written and made

whole_and indivisible.

*°The same Court of Appeals had so held in R.F.C. v. Sulli-

van Mining; 230 F. 2d 247 at 250-251 a. 1956). The

‘Court said at pages 250-251: ~ .

“. . . Bat the government in lent contends that the

crucial clause of the 1944 amendment does not mean what

it appears to say. . .. The 1944 agreement was written

in its entirety by Metals Reserve. [A U:S. Government

Agency] not by Sullivan, and its language, where ambigu-

ous, is to be construed strongly against the author. See

Restatement, Contracts, §236(d): ‘Where words or other

manifestations of intention bear more than one reasonable

meaning an interpretation is preferred which operates more

strongly against the party from whom they proceed, . . .”

In Krupp v. Federal: Housing Administration, 285 F. 2d 833

(CA-1, 1961) the First Circuit Court of Appeals said at page

836:

. .-. these provisions : are to be construed against the de-

fendant [F.H.A.] which drafted them, .. .” :

The Court of Appeals Approves Retroactive For-

feitures of Thousands of Innocent Small Federal

Savings Depositors’ Statutory and Charter

Rights Without Findings or Trial and Regard-

less of Their Guilt or Innocence. ee |

Respondent Bank Board held no hearings nor did it

take any testimony. |

;

{

No savings depositor was ever given any notice prior

to making his deposits that his new (or old) deposits

would be denied their statutory and charter rights to

. ‘equal and pro rata participation in their mutual associa-

tion’s net worth, surplus and reserves. (See pages 18-19 “

hereof) Bank Board’s forfeitures were entirely tretro-

active and ex post facto.™ | |

In its retroactive forfeiture orders said board made

no specific findings of any individual guilt or _inno=~~

cence as to any one or more of the thousands of pe-

titioner’s innocent savings depositors it forfeited, or

those it favored. Said board’s only finding was: :

“. .. The Federal Home Loan Bank Board has 7

determined that’. . . said Merger Agreement .. . a

is advisable and in the interest of all concerned; and - _

that the distribution’. . . is fair and equitable:” '

[F.H.L.B.B. Order No. 17177 Pitf. Ex. 3-D-4]. |

, te |

Similar retroactive administrative orders have been held

void and unenforceable by this Court and other Courts.

In United States v. Baltimore & O. R. Co., 284 US. 195.

76 L. ed. 243 (1931), this Court said at U.S. page 203, L. ed.

page 247: , . E

vt “..._. The Commission had no power to put this order :

into effect as of a prior day; ..... Accordingly, the order f

did not become operative and was wholly ineffective.” . :

‘ To the same effect are: ‘ '

Greene v. United States, 376 U.S. 149 at 160, 11 L. ed. 2d °

576 at 584 (1964) ; ,

United States v. McCrillis, 200 F. 2d 884 at 889-890 (CA-1,

» 1952). |

BS Peta Nbary Samper etc oe

a ae

The District, Court required an analysis of the size

and status of each of the almost 1900 forfeited savings

: accounts. The District Court found (233 F. Supp...578

_at p. spn Appx. I, footnote 4):

1,899 accounts [are] affected. Of that

rH, . . . 324 are $500.00 or less; 1524 are

$11,000.00 or less; and only 54 are $100,000.00

or over. This, the greater number of small ac-

count shareholders are punished by the attempted

deprivation than the larger shareholders. . . .” (em-

phasis added).

Respondents Bank Board, et al., briefs and the Court

of Appeals’ opinion discussed only accounts of $20,000

or more per account. There are less than 150 of such

accounts including the 54 over $100,000 each. But

neither the Bank Board nor the Court of Appeals have

-mentioned or considered the punishment they impose

on petitioners’ thousands of innocent -forfeited small

savings depositors. ‘Their federal statutory: and charter

rights to equal pro rata distribution are retroactively

forfeited and taken from them without findings by the

Bank Board and without discussion or consideration

by the Court of Appeals.

It is not a crime or wrong,: punishable by retroactive

forfeiture, to -be an innocent small co-depositor in a

federal savings institution, with other larger deposi-

tors.”

°131.4% of all savings deposits in all savings and loan asso-

more than 150,511 savings accounts of over $10,000 each in

only: three Los ‘Angeles Associations. ‘The total deposits in said

150,511 savings accounts exceed.one and one-half billion dollars

($1,500,000,000). See page 14 hereof.

Petitioners asked the District Court for a trial on

the merits. Instead, the District Court gave them a

_° summary judgment.” car

The Court of Appeals reversed. But instead of a

‘remand for a trial on the merits it held “the District

Court*was without power to remedy what it regarded

as an invalid distribution ». .” (CA-9, Opn. p. 17).

The final result is that the thousands of admittedly

innocent small federal savings depositors are punished

by retroactive forfeiture. Yet they have’ never been

heard, or had any trial on the merits anywhere.

Respondent Bank Board expressly admitted that the

small forfeited savings depositors have never been.

heard on. the merits and will never be so heard.

Bank Board says “. . . Appellees cry out that the

small depositors have never been heard on the merits.

| This, of course,.is true, . . .” (emphasis added.)*

Respondent Bank Board made its retroactive for-

- feiture orders withiut any hearing or testimony.

The District Court set aside the forfeitures as il-

legal and void. e

The Court of Appeals asstmed the retroactive for-

feitures were invalid but yet holds the District Court

was without power to remedy them (CA-9, Opn. p.

**Respondents provoked this summary judgment by failing to

deny, as required by F.R.C.P. Rule 56, petitioners verified com-

plaints and affidavits, exhibits, etc. The motions for summary

‘ judgment were then made by petitioners at the express order and

direction of the District Court.

58Page 16 of respondent Bank Board’s “Response of Federal

Appellants To Appellee’s Petition for Rehearing” filed Decem-

_ ber 26, 1967, pursuant to order of Court Appeals _ Tequiring

such response. PE

ELIOT MP NST LN ATI FN NEI NN IY Ye

. ‘

e . .

ich taht te on dy Aik ee a ie ie

Soin tlds

RET REPS Erna

Pa i OF i ALR PA

alll

20). It orders the actions dismissed and the’ invalid

forfeitures enforced (CA-9, Opn. p. 21). |

If the’ Court of Appeals’ opinion stands, no.U.S.

Court can consider the punishment and penalties inflict-

ed by Bank Board on thousands of ‘innocent small fed-

eral savings depositors because of the alleged but un-

tried wrongs of other larger depositors. +.

Forfeiture is ‘punishment for a wrong or crime. ‘To

. . £ a 6 . . .

So~punish the innocent without hearing or findings is -

_ a denial of due process of law and a violation of Amend-

ment 5 6f the U.S. Constitution. — |

‘Such “shotgun enforcement” of respondent Bank

_Board’s vast powers cries out for judicial review. It

should not be something .“the District Court was with-

out power to remedy . . .” (CA-9, Opn. p. 17).* }

The Court of Appeals’: opinion precludes all federal

savings association depositors from any relief against

| _ the ‘punishments and: forfeitures of. an illegal or void

merger unless they sue and can enjoin the merger be-

fore it can take place. But such an injunction is im-

possible (see pages 36-38 hereof ).

*4Respondents counsel at TR-122 referred to. the large new

savings depositors as “pickpockets.” He later withdrew such epi-

thet, but it discloses the attitude. of Bank Board and their

counsel. eae | ;

In Farmers v. United Electrical, etc., 211 F. 2d 36 (CA-DC,

1953) [Cert. Denied 347 U.S. 943, 88 L. ed. 1091], the ~

N.L.R.B. denied all members of a labor union all their rights

under the Labor Act. Such denial was solely because the Un-

ion’s officers had not complied with' a Board order. The D.C.

Court: of Appeals said at page 39: ade ae Mot <>

_ “ . . To impose this penalty upon the great mass of

innocent union members is as reckless as firing a shotgun

into a crowd of people in an attempt to stop one who

is picking their pockets.” ~ ae: et .

See footnote 9, page 9 for Bank Board Chairman’s letter retro-

_ actively punishing innocent peiitioners because they would not

agree to said forfeitures.

; lnc

The dangers of such holding are intensified by: re-

Spondents 1966-1967 regulations. ap ln

Such ‘present regulations authorize mergers without

any prior notice to any of the thousands of mutual

savings depositors.in either of the merged federal sav-

ings associations.” 38 ze |

In the year 1966 at least twenty savings and loan

associations “. . ; were merged for supervisory“teasons” -

(34th Annual Report of Federal Home ‘Loan Bank

, Board to Congress for. year 1966, page 80). Said report

at pages 63-65 discusses 10 similar’ actions of. respond-°

ent Federal Savings and Loan Insurarice Corporation.

Bank Board mergers have taken place without any

notice of any kind to any of-the hundreds of thou-’

sands of mutual savings depositors in ‘either of the

merged federal mutual savings associations.™*

8512 C.F.R.: Part 546 was amended by respondent Bank Board..

in 1966-1967. It*now provides. for mergers without any notice

to the mutual savings depositors of the merged federal savings

associations. 12 C.F.R. 546.2(d) and (e) now read:

. _(d) Notwithstanding anye‘other provision of this part,

the Board may, where it deems appropriate, require that the

* plan of merger be submitted to the voting members of either

or both associations at a duly called meeting or meetings and

that the plan, to become-effective, be approved by them.

*“(e) A conservator or receiver ‘appointed by the Board .

_ under Part 547 of this chapter may merge the Federal as-

sociation in hig possession with another association as pro-

vided in §§546.2 and 546.3 without submitting the plan of

merger to the board of directors or to the members of the

association for their approval.” (emphasis added). 7

56In the Los Angeles-Long Beach, California area, on May

2, 1966, the $166,000,000 First Federal Savings and Loan Asso- ‘

ciation of: Alhambra was merged by respondent Bank Board into

the $1,260,000,000 Califarnia Federal Savings and Loan Asso-

‘ciation. No prior notice of any kind of said merger was’ required

to any of the thousands of First Federal Savings and Loan As-

sociation of “Alhambra mutual: savings depositors whose federal

(This footnote is continued on the next page)

a . : :

. _ ee bad :

RS Se

LP) OOS, ARG MD 5 TET a *

BD conpsenere esr ne rOn Ime Te aes

—50—

Few, if ariy, of the twenty million. people who are

depositors in federal mutual savings associations in the

. Unitéd. States know or realize that they own the seventy

billion dollars of assets of their mutual associations.

Nor do they know that their ownership includes their

respective association’s teris of millions of dollars of

surplus and net worth. Bye

Long Beach Federal depositors were more fortunate.

Their vigilant depositors protective committee was ac-

tive for 21 years. Such resulted in the $7,000,000 equal

and pro rata distribution made to them in 1963 by

the District Court and $2,500,000 more yet in Court

to be distributed, or forfeited. , es

Respondent Bank Board has repealed. the Acts of

_ Congress which give all federal mutual savings deposi-

‘tors equal and pro rata rights. de ;

_In our Long Beach Federal merger the Board cre-

ates classes of forfeited and punished savings deposi-

tors and other classes who are favored and who take

the forfeited shares of their fellow depositors.

Conclusion.

‘Innocence or guilt makes no dif ference.

Only Bank Board whim’ decides who-among the in-

nocent are punished by forfeitures and who are fa-

vored by receiving what has been forfeited. Only Bank

Board whim decides whether the punished and forfeited

mutual savings association thus disappeared. Nor was any notice

required to. the hundreds of thousands of California Federal

Savings*and Loan Association savings depositors who thus be-

came the new co-owners of Alhambra Federal.

‘The last’ published Annual Financial Statement of First Fed-

eral Savings and Loan Association of Alhambra shows that it

had net worth, reserves and surplus, of about $13,252,000 and

total savings deposits of about $148,000,000. _

The tens of thousands*of First Federal Savings and Loan

Association of Alhambra savings depositors owned their” respec-

pa —51— ie — \

are innocent: savings depositors of $100, $10;000 or

$100,000 or more: 3 | ,

Under the Court of Appeals’. opinion the-U.S. Courts

are “without power to remedy” such actions, unless the

court judgments receive “Board and Commissioner ap-

proval’’. .

- Said arbitrary powers were denied to respondents by

Congress in the Administrative Procedure Act .and in

the 1954 amendments to the “sue and be sued” sections

of the Federal law creating respondent Bank Board.

Yet nowhere does the Court of Appeals’ opinion cite or

discuss either of said statites. | Fo 7

Respondents’ forfeitures are repugnant to the United

States Constitution Amendment Five and the repeated

holdings of this Court. The ‘writ’ should be granted

to correct the dangerous precedent enshrining respond-

ent administrative agencies as the supreme authority

. beyond all powers of the United States Courts and

\. Congress. ‘ Cons :

arene Respectfully submitted, |

CHARLES K.-CHAPMAN,

Attorney ‘for Petitioner Long Beach—

. +, Federal Savings and Loan Associa-

_ tion,

GeEorGE W. TRAMMELL,

' Attorney for Petitioner Elliott, et al.,

as the Shareholders’ Protective

} Committee of Long Beach Federal

“8 Savings and Loan, Association, *

_ tive equal pro rata sharés’ of said surplus, etc. It amounted to

about $13,252,000 (about 9% of their respective savings de-

posits). They might have been able to attain for themselves

‘an $18,000,000. or greater bonus distribution. Petitioner Long

Beach Federal had but $72,000,000 of savings deposits. It got

a $9,500,000 bonus distribution thereon. : ; .

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.