# Appendix — Mallonee v. Federal Home Loan Bank of San Francisco

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1956
- **Citation:** 350 U.S. 968

## Text

Appendix A:
a. Legislative History
‘

b. Applicable Statutes
1.

INDEX TO APPENDICES

PAGE

Letter of General Counsel of Housing and Home
Finance Agency to Senate Committee on Banking
and Currency, re Amendments to 1954 Housing Act

Conclusions and Recommendations of H. R. Report
No. 2659, 79th Congress, 2d Session, re Investiga-
tion of Home Loan Bank Administration...................

Portions of Housing Act of 1954, 68 Stat. 590,
Secs. 501, 502, 503 and 818

Portions of Home Owners’ Loan Act of 1933, as
Amended, 48 Stat. 128, 12 U. S. C., Sec. 1462 et seq. 18

(a) Sec. 1462. Definitions 18
(b) Sec. 1464. Federal Savings and Loan Associa-
tions—Organization Authorized 18

Portions of Federal Home Loan Bank Act, as
Amended, 47 Stat. 725, 12 U. S. C., Sec. 1421 et seq. 25

(a) Sec. 1430. Advances—Authorization to Make;
Limitation on Amount 25

(b) Sec. 1431. Powers and Duties of Banks—Bor-
rowing Money; Issuing Bonds and Debentures;

General Powers 27
(c) Sec. 1432. Incorporation of Banks; Corporate

Powers 27
Portions of National Housing Act, as Amended, 48
Stat. 1246, 12 U. S. C., Sec. 1724 et sequen. 28
(a) Sec. 1724. Definitions 28

(b) Sec. 1725. Creation of Federal Savings and
Loan Insurance Corporation 29

3 j
| PAGE
4 c. Opinions Below 35
$ 1. Opinion of U. S. District Court in Mallonee v.
; Fahey, 117 Fed. Supp. 259, re Consolidated Man-
iH date of Court of Appeals 35 j
i Audit of Funds in Court 49
The Appellate Court Stay and Other Pending Ap-
peals 50
The Preliminary Injunction of December 2, 1949
(Proposed Order No. 7) 51
The Dismissal of Action No. 5678 at the Cost of
Plaintiffs 52

Observations Concerning Construction of Mandate,
Opinions of Appellate Court and Proposed Orders
Nos. 1, 2, 3, 4 and 5 58

Order No. 8, re George Turner Interpleader.............. ed

Proposed Order No. 9—the Cross-Claim of Hegg.... 69

Proposed Order No. 10, re Willhoit Intervention... 70

Proposed Order No. 11 Concerning the Turn-back
Order of Jan. 23, 1948 71

Proposed Order No. 12, re Discovery. 75

Proposed Order No. 13, re Bellflower Interpleader.... 76

Proposed Order No. 6, re Return of Security to San
Francisco Bank 76

by abel iis ie daet Sarasa dale Pato rks ii Sek SA AAEA its URED Oh a ein Rae

ao

B
A

Appendix B:
Opinion of U. S. Court of Appeals Here Sought to Be Re-
viewed by Certiorari (Bound in Separate Volume, as Ap-
pendix B)

IN THE

Supreme Court of the United States

October Term, 1955
RES eS

MALLONEE, et al.,
Petitioners,
US.
FEDERAL HoME LoANn BANK oF SAN FRANCcrIsco, et al.,

Respondents.

APPENDIX A TO COMBINED CERTIORARI
PETITION OF CERTAIN PETITIONERS.

A. LEGISLATIVE HISTORY.

1. Letter of General Counsel of Housing and Home
Finance Agency to Senate Committee on Banking
and Currency, Re Amendments to 1954 Housing
Act.

[Agency Seal] Housinc Anp Home FINANCE AGENCY
OFFICE OF THE ADMINISTRATOR—Washington 25, D. C.

June 17, 1954,
Mr. Joseph P. McMurray
Senate Committee on Banking and Currency
United States Senate
Washington 25, D. C.

Dear Joe:
You requested my comments on memoranda submitted
to you objecting to the Senate Amendments to H. R. 7839

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which would except pending litigation from provisions in
the bill relating to jurisdiction, venue, service of process,
and suability of the Home Loan Bank Board and the
Federal Savings and Loan Insurance Corporation.

One of these Senate amendments would add the follow-
ing to section 503 of the Bill (which relates to the appoint-
ment of conservators and receivers for Federal Savings
and Loan associations) :

“Nothing in this subsection relating to jurisdiction
venue, service of process or suability of the Board
shall be applicable to any pending court action, or
suit, or to any action or suit involving the subject
matter, or part thereof, of such pending action or
suit.”

Objection is made to the inclusion of this provision on
the ground that there is pending at the present time an
action for declaratory relief which involves interpretation
of the laws governing the Home Loan Bank System,
the appointment of conservators by the Board, and the ac-
countability of such conservators. It is contended that
the effect of the provision would be to prohibit future
suits against the Home Loan Bank Board if the subject
matter of such suits or parts thereof involve in any way
the broad range of questio..s in the pending litigation.
This is not true. The wording of the provision is the
usual wording of a savings clause which excepts pending
litigation from the provisions of new statutory provisions.
It has been well accepted as such for years by the courts.
The reference to the “subject matter” involved in the suits
refers only to the facts being litigated in the particular
case. It in no way applies to any new litigation. It only
prevents the same parties in the pending suit from again

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bringing up the same case. The same question can be
raised by other parties involving the same or similar facts.
The same parties can still litigate similar questions having
any different facts. In other words, the objection is
completely unfounded. If there were any way of making
the provision more clear, there would be no objection to
doing so. However, inasmuch as this is the most clear-
cut language possible in view of its long history of use
and acceptance by the courts, it would be a mistake to
change it in any manner.

There is but one pending suit to which the provision
would be applicable, i.c., the California litigation, which
the Court of Appeals for the Ninth Circuit and the Su-
preme Court have already decided. It appears to be the
intent on the part of those litigants to continue that litiga-
tion ad infinitum, and the objections to the above provi-
sion are undoubtedly for that reason. The Court of Ap-
peals for the Ninth Circuit has issued an order to the
District Court and the litigants to show cause why that
litigation should not be permanently enjoined. Actually,
therefore, those litigants by objection to inclusion of the
quoted provision in the bill seek to obtain Congressional
sanction to the continuance of litigation which the Court
of Appeals and the Supreme Court of the United States
have said has no foundation in law. The Appellate Court’s
decisions were based on the legal issues involved aside
from the questions of service of process or suability of
the Board. Those decisions made a determination of the
legal issues involved in the litigation. Therefore, it is
entirely clear that the only purpose of the objection to the
Senate amendment is the prolongation of this one pending
suit which the Court of Appeals said should have been

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dismissed long ago on grounds other than the questions of
service, venue or suability.

The following Senate amendment would except pending
litigation from the new provision in section 501 of the
bill to make clear that service may be made upon the
Federal Savings and Loan Insurance Corporation outside
the District of Columbia:

“c

Provided, That the provisions hereof relat-
ing to service of process shall not be applicable to any
pending court action or suit or to any action or suit
involving the subject matter, or part thereof, of such
pending action or suit.”

Objection is made to this provision on the grounds that
it is worded ambiguously and in certain cases would pro-
hibit suits against the Corporation. This objection is ob-
viously unfounded. Since its creation the Corporation
has been amenable to suit and it is so provided in the
statute creating it. Anyone who has occasion to bring an
action against the Corporation may do so by service on
the Corporation in Washington. This Senate amendment
is merely for the purpose of avoiding any delay which
might otherwise result in pending litigation as a result
of section 501. It would in no way nullify the right to
sue the Corporation—a right which has existed since its
creation 20 years ago.

Sincerely yours,

/s/ Fitz
B. T. Fitzpatrick

General Counsel

[Postcript handwritten]

P.S. Prior to recommending these amendments to
the Senate Banking and Currency Committee, the lan-
guage thereof was also cleared with the General Counsel
of the United States Savings and Loan League and the
General Counsel of the National Savings and Loan
League.

F,

2. Conclusions and Recommendations of H. R. Re-
port No. 2659, 79th Congress, 2d Session, Re
Investigation of Home Loan Bank Administra-
tion.

Union Calendar No. 819

79th Congress, 2d Session

House or REPRESENTATIVES
Report No. 2659

INVESTIGATION OF EXECUTIVE AGENCIES

July 25, 1946.—Committed to the Committee of the
Whole House on the State of the Union and ordered to
be printed.

Mr. Smith of Virginia, from the Select Committee to
Investigate Executive Agencies, submitted the following

TENTH INTERMEDIATE REPORT
[Pursuant to H. Res. 88]

* * * * * * * * *

CoNCLUSION

The action here complained of was not only a disservice
to the Government but also a greater disservice to the

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people for the protection of whose rights and affairs our
Government exists. Should the time come when our
Government is incapable of discharging that fundamental
function it must cease to exist in the form and for the
purpose for which it was founded. The same end is in-
evitable for any endeavor with which the Government is
identified. The necessity for unquestioned rectitude of
purpose and sound, just and impartial administration of
governmental endeavor is paramount.

The Federal Home Loan Bank System was created to
meet a need which the Nation experienced. It is a poten-
tial factor in the era which lies ahead of us. The func-
tions of this Government agency loom up as far more im-
portant in the future than it has ever been. Unless its
administration is elevated to a higher esteem and under-
goes decided improvements, its efficiency will be seriously
impaired.

RECOM MENDATIONS

The recommendations of your committee are—

(1) That the Commissioner revoke the order reducing
the number of districts from 12 to 11 in the Federal
Home Loan Bank System.

(2) That the Commissioner take all necessary steps
to reestablish a Federal Home Loan Bank of Los Angeles
and a Federal Home Loan Bank of Portland, and revoke
the order or orders by which the assets of these two dis-
trict banks were intermingled.

(3) Should the Commissioner, in the light of the evi-
dence adduced before your committee, still adhere to the
opinion that the number of districts should be reduced
from 12 to 11, and is still of the opinion that he has the

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legal authority to reduce the number of districts, he should
proceed to give due notice of such intention to all of the
associations in the area affected, hold hearings, and give
due weight to the recommendations of the officials of the
banks involved and to the views of the associations which
are members of the regional banks affected, and should
likewise take into consideration the views of the industry
generally. Any sudden and unheralded action, such as
that taken in the case of the Los Angeles bank, is certain
ito have an unfavorable effect on the confidence of the pub-
lic in the institutions involved.

(4) That the Commissioner revoke the order appoint-
ing a conservator for the Federal Savings and Loan As-
sociation of Long Beach and restore the assets and affairs
of the association to its duly elected management, and
render a proper accounting for the same, as expeditiously
as is consistent with judicial determination of the ques-
tions at issue. Your committee questions whether the law
ever contemplated that the Board should have the extraor-
dinary power to seize and appoint a conservator for a
solvent institution as a part of the supervisory functions
entrusted to the Board over member banks.

(5) That the appropriate committees of Congress give
consideration to the necessity (if, in the opinion of such
committees, the necessity exists) of amending the Federal
Home Loan Act in the following particulars:

(a) Clarifying the authority of the Board in the mat-
ter of approval of elective officers of the regional banks
to the end that neither the Board nor other officials may
exercise such authority arbitrarily.

(b) Clarifying the authority of the Board or the Ad-
ministrator to increase or decrease the number of regional

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banks, and specifying the condition and procedure under
which such changes may be made.

(c) Prohibiting the agency from appointing conserva-
tors for any member association, except under specific
and well-defined limitations.

(6) It developed in the hearings that the order relat-
ing to the appointment of a conservator for the Federal
Savings and Loan Association of Long Beach had not
been filed with the Federal Register, as required by law.
The Division of the Federal Register advised your com-
mittee that only on three occasions has the Federal Home
Loan Bank Administration complied with the requirement
that its orders be filed with the Federal Register. Your
committee further recommends that the Administrator
comply with the law in this respect in the future.

Howarp W. SmirTH.
Joun J. Devaney.
HucGu PErTeERSON.
ALBERT GORE.

Frep A. HARTLEY, Jr.
JouHN JENNINGS, Jr.
CLARE E. HorrMan.

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B. APPLICABLE STATUTES.

1.

Secs. 501, 502, 503, and 818.

Public Law 560—83d Congress
Chapter 649—2d Session
H. R. 7839
An Act

Portions of Housing Act of 1954, 68 Stat. 590,

All 68 Stat.
590

To aid in the provision and improvement of
housing, the elimination and prevention of slums,
and the conservation and development of urban
communities.

Be it enacted by the Senate and House of Rep-
resentatives of the United States of America in
Congress assembled, That this Act may be cited
as the “Housing Act of 1954.”

* * * * * * * *

Tirte V—Home Loan Bank Boarp

Sec. 501. The National Housing Act, as
amended, is hereby amended—

(1) by amending section 402(c)(4) to read
as follows:

(4) To sue and be sued, complain and de-
fend, in any court of competent jurisdiction in
the United States or its Territories or posses-
sions or the Commonwealth of Puerto Rico, and
may be served by serving a copy of process on
any of its agents or any agent of the Home Loan
Bank Board and mailing a copy of such process
by registered mail to the Corporation at Wash-
ington, District of Columbia.” ;

(2) by adding the following new subsection
to section 405:

Housing Act of
1954.

Federal Savings
Insurance

12 U.S.C. 1725.
Service of

process.

12 U.S.C. 1728.
Claims

Statute of limi-
tations.

WR ca ate ee ew oo 4 ee mee nr nn me

12 U.S.C. 1730.
Termination of
insurance.

—

“(c) No action against the Corporation to en-
force a claim for payment of insurance upon an
insured account of an insured institution in de-
fault shall be brought after the expiration of
three years from the date of default unless,
within such three-year period, the conservator,
receiver, or other legal custodian of the insured
institution shall have recognized such insured ac-
count as a valid claim against the insured insti-
tution and the claim for payment of insurance
shall have been presented to the Corporation and
its validity denied, in which event the action may
be brought within two years from the date of
such denial.” ; and

(3) by striking the first four sentences of sec-
tion 407 and inserting the following: “Any in-
sured institution other than a Federal savings
and loan association may terminate its status as
an insured institution by written notice to the
Corporation. Whenever in the opinion of the
Home Loan Bank Board any insured institu-
tion has violated its duty as such or has con-
tinued unsafe or unsound practices in conduct-
ing the business of such institution, or has know-
ingly or negligently permitted any of its officers
or agents to violate any provision of any law or
regulation to which the insured institution is sub-
ject, said Board shall first give to the authority
having supervision of the institution, if any, a
statement with respect to such practices or viola-
tions for the purpose of securing the correction
thereof and shall give a copy thereof to the in-
stitution. In the case of an institution of a
State where there is no supervisory authority
the statement shall be sent directly to the insti-
tution. Unless such correction shall be made

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within one hundred and twenty days or such
shorter period of time as the supervisory au-
thority, if any, shall require, the Home Loan
Bank Board, if it shall determine to proceed
further, shall give to the institution not less than
thirty days’ written notice of intention to termi-
nate the status of the institution as an insured
institution, and shall fix a time and place for a
hearing before the Home Loan Bank Board, a
member thereof, or a person designated by the
Board. The Home Loan Bank Board shall make
written findings. Unless the institution shall ap-
pear at the hearing by a duly authorized repre-
sentative, it shall be deemed to have consented
to the termination of its status as an insured
institution. If the Home Loan Bank Board
shall find that any unsafe or unsound practice
or violation specified in such notice has been
established and has not been corrected within
the time above prescribed in which to make such
correction, the Home Loan Bank Board may is-
sue its order terminating the insured status of
the institution effective on a date subsequent to
such finding and to the expiration of the time
specified in such notice of intention. The hear-
ing hereinabove provided for shall be held in
accordance with the provisions of the Adminis-
trative Procedure Act and shall be subject to re-
view as therein provided and the review by the
court shall be upon the weight of the evidence.
In the event of the termination of such status,
insurance of its accounts to the extent that they
were insured on the date of such notice by the
institution to the Corporation or such order of
termination, less any amounts thereafter with-
drawn, repurchased, or redeemed which reduce

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Hearing.

12 U.S.C. 1430.

Home mortgage
as security.

12 U.S.C. 1464.

Enforcement.
Rules and
Regulations.

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the insured accounts of an insured member be-
low the amount insured on the date of such no-
tice or order, shall continue for a period of two
years, but no investments or deposits made after
the date of such notice or order of termination
shall be insured. The Corporation shall have the
right to examine such institution from time to
time during the two-year period aforesaid. Such
insured institution shall be obligated to pay,
within thirty days after any such notice or or-
der of termination, as a final insurance premium,
a sum equivalent to twice the last annual insur-
ance premium paid by it.”

Sec. 502. The Federal Home Loan Bank Act,
as amended, is hereby amended by striking
“$20,000” in section 10(b)(2) and inserting
“$35,000.”

Sec. 503. The Home Owners’ Loan Act of
1933, as amended, is hereby amended—

(1) by striking “$20,000” wherever it appears
in the first paragraph of subsection (c) of sec-
tion 5 and inserting “$35,000”;

(2) by amendment subsection (d) of section
5 to read as follows:

“(d)(1) The Board shall have power to en-
force this section and rules and regulations made
hereunder. In the enforcement of any provi-
sion of this section or rules and regulations
made hereunder, or any other law or regulation,
and in the administration of conservatorships
and receiverships as provided in subsection (d)
(2) hereof, the Board is authorized to act in its
own name and through its own attorneys. The
Board shall have power to sue and be sued, com-

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plain and defend in any court of competent juris-
diction in the United States or its territories or
possessions or the Commonwealth of Puerto
Rico. It shall by formal resolution state any
alleged violation of law or regulation and give
written notice to the association concerned of
the facts alleged to be such violation, except that
the appointment of a Supervisory Representative
in Charge, a conservator or a receiver shall be
exclusively as provided in subsection (d)(2)
hereof. Such association shall have thirty days
within which to correct the alleged violation of
law or regulation and to perform any legal duty.
If the association concerned does not comply
with the law or regulation within such period,
then the Board shall give such association twenty
days’ written notice of the charges against it
and of a time and place at which the Board will
conduct a hearing as to such alleged violation of
duty. Such hearing shall be in the Federal ju-
dicial district of the association unless it con-
sents to another place and shall be conducted by
a hearing examiner as is provided by the Ad-
ministrative Procedure Act. The Board or any
member thereof or its designated representa-
tive shall have power to administer oaths and
affirmations and shall have power to issue sub-
penas and subpenas duces tecum, and shall issue
such at the request of any interested party, and
the Board or any interested party may apply to
the United States district court of the district
where such hearing is designated for the enforce-
ment of such subpena or subpena duces tecum and
such courts shall have power to order and require
compliance therewith. A record shall be made
of such hearing and any interested party shall

Bates, we

U. S.. district
court.
Jurisdiction.

Conservators
and receivers.
Appointment.

kiiek:

be entitled to a copy of such record to be fur-
nished by the Board at its reasonable cost.
After such hearing and adjudication by the
Board, appeals shall lie as is provided by the
Administrative Procedure Act, and the review
by the court shall be upon the weight of the
evidence. Upon tue giving of notice of alleged
violation of law or regulation as herein provided,
either the Board or the association affected may,
within thirty days after the service of said no-
tice, apply to the United States district court
for the district where the association is located
for a declaratory judgment and an injunction
or other relief with respect to such controversy,
and said court shall have jurisdiction to adjudi-
cate the same as in other cases and to enforce
its orders. The Board may apply to the United
States district court of the district where the as-
sociation affected has its home office for the en-
forcement of any order of the Board and such
court shall have power to enforce any such order
which has become final. The 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 dis-
trict court for the district where the home office
of such association is located, and may be served
by serving a copy of process on any of its agents
and mailing a copy of such process by registered
mail, to the Home Loan Bank Board, Washing-
ton, District of Columbia.

“(2) The grounds for the appointment of a
conservator or receiver for a Federal savings
and loan association shall be one or more of the
following: (i) insolvency in that the assets of

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E such association are less than its obligations to

I. its creditors and others, including its members;

iB (ii) violation of law or of a regulation; (iii)

bi the concealment of its books, records, or assets

E or the refusal to cubmit its books, papers, rec-

2 ords, or affairs for inspection to any examiner

or lawful agent appointed by the Home Loan

Bank Board; and (iv) unsafe or unsound opera-

tion. The Board shall have exclusive jurisdic- Bupervisory
: : y 2 epresentative
tion to appoint a Supervisory Representative in in Charge.
Charge, conservator, or receiver. If, in the epeetanat.
opinion of the Board, a ground for the appoint-

ment of a conservator or receiver as herein pro-

vided exists and the Board determines that an
emergency exists requiring immediate action,

the Board is authorized to appoint ex parte

and without notice a Supervisory Representa-

tive in Charge to take charge of said association

and its affairs who shall have and exercise all

the powers herein provided for conservators and

receivers. Unless sooner removed by the Board,

such Supervisory Representative in Charge shall

hold office until a conservator or receiver, ap-

pointed by the Board after notice as herein pro-

vided, takes charge of the association and its

affairs, or for six months, or until thirty days

after the termination of the administrative hear-

ing and final proceedings herein provided, or

until sixty days after the final termination of

any litigation affecting such temporary appoint-

ment, whichever is longest. The Board shall

have the power to appoint a conservator or re-

ceiver but no such appointment of a conservator

or receiver shall be made except pursuant to a

formal resolution of the Board stating the

grounds therefor and except notice thereof is

60 Stat. 537.
5 U.S.C. 1001
note.

Powers.

Violation.

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given to said association stating the grounds
therefor and until an opportunity for an ad-
ministrative hearing thereon is afforded to said
association. Such hearing shall be held in ac-
cordance with the provisions of the Adminis-
trative Procedure Act and shall be subject to
review as therein provided and the review by
the court shall be upon the weight of the evi-
dence. A conservator shall have all the powers
of the members, the directors, and officers of the
Federal association and shall be authorized to
operate it in its own name or conserve its assets
in the manner and to the extent authorized by
the Board. The Board shall appoint only the
Federal Savings and Loan Insurance Corpora-
tion as receiver for any Federal savings and loan
association, which shall have power as receiver
to buy at its own sale subject to approval by
the Board. With the consent of the associa-
tion expressed by a resolution of the board of
directors or of its members, the Board is au-
thorized to appoint a conservator or receiver for
a Federal association without notice and without
hearing. The Board shall have power to make
rules and regulations for the reorganization,
merger, and liquidation of Federal associations
and for such associations in conservatorship and
receivership and for the conduct of conservator-
ships and receiverships. Whenever a Supervi-
sory Representative in Charge, conservator, or
receiver, appointed by the Board pursuant to the
provisions of this section, demands possession
of the property, business and assets of any as-
sociation, the refusal of any officer, agent, em-
ployee, or director of such association to comply
with the demand shall be punishable by a fine of

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not more than $1,000 or by imprisonment for
not more than one year or both by such fine and
imprisonment”; and

(3) by striking out the second paragraph of
subsection (c) of section 5 and inserting in lieu
thereof the following new paragraph:

“Without regard to any other provision of
this subsection except the area requirement such
associations are authorized to invest a sum not
in excess of 15 per centum of the assets of such
association in loans insured under title I of the
National Housing Act, as amended, in unsecured
loans insured or guaranteed under the provisions
of the Servicemen’s Readjustment Act of 1944,
as amended, and in other loans for property al-
teration, repair, or improvement: Provided, That
no such loan shall be made in excess of $2,500.”

* * * *x * * *

ACT CONTROLLING

Sec. 818. Insofar as the provisions of any
other law are inconsistent with the provisions of
this Act, the provisions of this Act shall be con-
trolling.

* * * x *x * *

Approved August 2, 1954.

Penalty.

12 U.S.C. 1464.

Investment of
assets.

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Portions of Home Owners’ Loan Act of 1933, as
Amended, 48 Stat. 128, 12 U. S. C., Sec. 1462 Et
Seq.

(a) Sec. 1462. Definitions.

As used in this chapter—

(a) The term ‘Board’ means the Home Loan Bank
Board.

(b) The term “Corporation” means the Home Owners’
Loan Corporation created under section 1463 of this title.

(c) The term “home mortgage” means a first mort-
gage on real estate in fee simple or on a leasehold (1)
under a lease for not less than ninety-nine years which is
renewable, or (2) under a lease having a period of not
less than fifty years to run from the date the mortgage
was executed, upon which there is located a dwelling or
dwellings for not more than four families, which is used
in whole or in part by the owner as a home or held by
him as his homestead and which has a value of not to
exceed $20,000; and the term “first mortgage’ includes
such classes of first liens as are commonly given to se-
cure advances on real estate under the laws of the State
in which the real estate is located, together with the credit
instruments, if any, secured thereby.

(d) The term “association” means a Federal Savings
and Loan Association chartered by the Board as provided
in section 1464 of this chapter. June 13, 1933, c. 64, §2.
48 Stat. 128; June 27, 1934, c. 847, §508(a), 48 Stat.
1264; May 28, 1935, c. 150, §10, 49 Stat. 296.

(b) Sec. 1464. Federal Savings and Loan Associations—
Organization Authorized.

(a) In order to provide local mutual thrift institutions
in which people may invest their funds and in order to
provide for the financing of homes, the Board is author-
ized, under such rules and regulations as it may prescribe,

_— — . a te 8 CD, aN ie te ALLA ERO i I ALO AEN AR ig PRA oa ete
> Gri Dine paths BS ar BO

— =

to provide for the organization, incorporation, examina-
tion, operation, and regulation of associations to be known
as “Federal Savings and Loan Associations,” and to issue
charters therefor, giving primary consideration to the best
practices of local mutual thrift and home-financing in-
stitutions in the United States.

(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. No deposits shall be accepted and no certifi-
cates of indebtedness shall be issued except for such bor-
rowed money as may be authorized by regulations of the
Board.

(c) Such associations shall lend their funds only on the
security of their shares or on the security of first liens
upon homes or combination of homes and business prop-
erty within fifty miles of their home office: Provided,
That not more than $35,000 shall be loaned on the se-
curity of a first lien upon any one such property; ex-
cept that not exceeding 15 per centum of the assets of
such association may be loaned on other improved real
estate without regard to said $35,000 limitation, and with-
out regard to said fifty-mile limit, but secured by first
lien thereon; And provided further, That any portion of
the assets of such associations may be invested in obli-
gations of the United States or the stock or bonds of a
Federal Home Loan Bank or in the obligations of the
Federal National Mortgage Association: And provided
further, That any such association which is converted
from a State-chartered institution may continue to make
loans in the territory in which it made loans while operat-
ing under State charter. In addition to the loans and
investments otherwise authorized, such associations may
purchase, subject to all the provisions of this paragraph
except the area restriction, loans secured by first liens on
improved real estate which are insured under the pro-

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visions of the National Housing Act, as amended, or in-
sured as provided in the Servicemen’s Readjustment Act
of 1944, as amended.

Without regard to any other provision of this subsec-
tion except the area requirement such associations are
authorized to invest a sum not in excess of 15 per centum
of the assets of such association in loans insured under
subchapter I of chapter 13 of this title, in unsecured loans
insured or guaranteed under the provisions of the Service-
men’s Readjustment Act of 1944, as amended, and in
other loans for property alteration, repair, or improve-
ment: Provided, That no such loan, unless so insured or
guaranteed, shall be made in excess of $2,500. (As
amended by 1954 Housing Act.)

(d)(1) The Board shall have power to enforce this
section and rules and regulations made hereunder. In the
enforcement of any provision of this section or rules and
regulations made hereunder, or any other law or regula-
tion, and in the administration of conservatorships and
receiverships as provided in paragraph (2) of this sub-
section, the Board is authorized to act in its own name
and through its own attorneys. The Board shall have
power to sue and be sued, complain and defend in any
court of competent jurisdiction in the United States or
its territories or possessions or the Commonwealth of
Puerto Rico. It shall by formal resolution state any al-
leged violation of law or regulation and give written no-
tice to the association concerned of the facts alleged to
be such violation, except that the appointment of a Super-
visory Representative in Charge, a conservator or a re-
ceiver shall be exclusively as provided in paragraph (2)
of this subsection. Such association shall have thirty days
within which to correct the alleged violation of law or
regulation and to perform any legal duty. If the asso-
ciation concerned does not comply with the law or regu-
lation within such period, then the Board shall give such

wnt

association twenty days’ written notice of the charges
against it and of a time and place at which the Board will
conduct a hearing as to such alleged violation of duty.
Such hearing shall be in the Federal judicial district of
the association unless it consents to another place and
shall be conducted by a hearing examiner as is provided
by the Administrative Procedure Act. The Board or any
member thereof or its designated representative shall have
power to administer oaths and affirmations and shall have
power to issue subpenas and subpenas duces tecum, and
shall issue such at the request of any interested party, and
the Board or any interested party may apply to the United
States district court of the district where such hearing is
designated for the enforcement of such subpena or sub-
pena duces tecum and such courts shall have power to
order and require compliance therewith. A record shall
be made of such hearing and any interested party shall
be entitled to a copy of such record to be furnished by
the Board at its reasonable cost. After such hearing
and adjudication by the Board, appeals shall lie as is pro-
vided by the Administrative Procedure Act, and the re-
view by the court shall be upon the weight of the evi-
dence. Upon the giving of notice of alleged violation
of law or regulation as herein provided, either the Board
or the association affected may, within thirty days after
the service of said notice, apply to the United States dis-
trict court for the district where the association is located
for a declaratory judgment and an injunction or other
relief with respect to such controversy, and said court
shall have jurisdiction to adjudicate the same as in other
cases and to enforce its orders. The Board may apply to
the United States district court of the district where the
association affected has its home office for the enforce-
ment of any order of the Board and such court shall have
power to enforce any such order which has become final.
The Board shall be subject to suit by any Federal savings
and loan association with respect to any matter under this

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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, and may be served by serving a copy of process on
any of its agents and mailing a copy of such process by
registered mail, to the Home Loan Bank Board, Wash-
ington, District of Columbia.

(2) The grounds for the appointment of a conservator
or receiver for a Federal savings and loan association shall
be one or more of the following: (i) insolvency in that
the assets of such association are less than its obliga-
tions to its creditors and others, including its members;
(ii) violation of law or of a regulation; (iii) the con-
cealment of its books, records, or assets or the refusal to
submit its books, papers, records, or affairs for inspection
to any examiner or lawful agent appointed by the Home
Loan Bank Board; and (iv) unsafe or unsound opera-
tion. The Board shall have exclusive jurisdiction to ap-
point a Supervisory Representative in Charge, conserva-
tor, or receiver. If, in the opinion of the Board, a ground
for the appointment of a conservator or receiver as herein
provided exists and the Board determines that an emer-
gency exists requiring immediate action, the Board is au-
thorized to appoint ex parte and without notice a Super-
visory Representative in Charge to take charge of said
association and its affairs who shall have and exercise
all the powers herein provided for conservators and re-
ceivers. Unless sooner removed by the Board, such Su-
pervisory Representative in Charge shall hold office until
a conservator or receiver, appointed by the Board after
notice as herein provided, takes charge of the associa-
tion and its affairs, or for six months, or until thirty
days after the termination of the administrative hearing
and final proceedings herein provided, or until sixty days
after the final termination of any litigation affecting such
temporary appointment, whichever is longest. The Board

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anit.

shall have the power to appoint a conservator or receiver
but no such appointment of a conservator or receiver shall
be made except pursuant to a formal resolution of the
Board stating the grounds therefor and except notice
thereof is given to said association Stating the grounds
therefor and until an opportunity for an administrative
hearing thereon is afforded to said association. Such hear-
ing shall be held in accordance with the provisions of the
Administrative Procedure Act and shall be subject to re-
view as therein provided and the review by the court
shall be upon the weight of the evidence. A conservator
shall have all the powers of the members, the directors,
and officers of the Federal association and shall be au-
thorized to operate it in its own name or conserve its
assets in the manner and to the extent authorized by
the Board. The Board shall appoint only the Federal
Savings and Loan Insurance Corporation as receiver for
any Federal Savings and loan association, which shall
have power as receiver to buy at its own sale subject to
approval by the Board. With the consent of the associa-
tion expressed by a resolution of the board of directors
or of its members, the Board is authorized to appoint a
conservator or receiver for a Federal association without
notice and without hearing. The Board shall have power
to make rules and regulations for the reorganization,
merger, and liquidation of Federal associations and for
such associations in conservatorship and receivership and
for the conduct of conservatorships and receiverships.
Whenever a Supervisory Representative in Charge, con-
servator, or receiver, appointed by the Board pursuant to
the provisions of this section, demands possession of the
property, business and assets of any association, the re-
fusal of any officer, agent, employee, or director of such
association to comply with the demand shall be punish-
able by a fine of not more than $1,000 or by imprison-
ment for not more than one year or both by such fine and
imprisonment. (As amended by 1954 Housing Act.)

eecens ees OR NEES SE SSI

ae a

(e) No charter shall be granted except to persons of
good character and responsibility, nor unless in the judg-
ment of the Board a necessity exists for such an institu-
tion in the community to be served, nor unless there is a
reasonable probability of its usefulness and success, nor
unless the same can be established without undue injury
to properly conducted existing local thrift and home-
financing institutions.

(f) Each such association, upon its incorporation, shall
become automatically a member of the Federal Home
Loan Bank of the district in which it is located, or if
convenience shall require and the Board approve, shall
become a member of a Federal Home Loan Bank of an
adjoining district. Such associations shall qualify for
such membership in the manner provided in chapter 11
of this title with respect to other members.

[No issue concerning the following subsections is in-
volved. They are therefore not printed here. |

(g) Loans to redeem foreclosed property.
(h) Appraisal rules.
(i) Payment of loans in bonds of corporation.

(j) Officers and employees; compensation; free use of
mails.

(k) When designated for that purpose by the Secre-
tary of the Treasury, any Federal savings and loan asso-
ciation or member of any Federal Home Loan Bank may
be employed as fiscal agent of the Government under such
regulations as may be prescribed by said Secretary and
shall perform all such reasonable duties as fiscal agent
of the Government as may be required of it. Any Fed-
eral savings and loan association or member of any Fed-
eral Home Loan Bank may act as agent for any other
instrumentality of the United States when designated for
that purpose by such instrumentality of the United States.
June 13, 1933, c. 64, §5, 48 Stat. 132; Apr. 27, 1934,

x

c. 168, §§5, 6, 48 Stat. 645, 646; May 28, 1935, c. 150,
§18, 49 Stat. 297; Aug. 10, 1939, c. 666, Title IX, §909,
53 Stat. 1402.

3. Portions of Federal Home Loan Bank Act, as
Amended, 47 Stat. 725, 12 U. S. C., Sec. 1421, Et
Seq.

(a) Sec. 1430. Advances—Authorization to Make; Limitation
on Amount.

(a) Each Federal Home Loan Bank is authorized to
make advances to its members upon the security of home
mortgages, or obligations of the United States, or obli-
gations fully guaranteed by the United States, subject to
such regulations, restrictions, and limitations as the Board
may prescribe. Any such advance shall be subject to the
following limitations as to amount:

(1) If secured by a mortgage insured under the pro-
visions of subchapters I, II, VI, VIII or X of chapter
13 of this title, the advance may be for an amount not in
excess of 90 per centum of the unpaid principal of the
mortgage loan.

(2) If secured by a home mortgage given in respect of
an amortized home mortgage loan which was for an
original term of six years or more, or in cases where
shares of stock, which are pledged as security for such
loan, mature in a period of six years or more, the ad-
vance may be for an amount not in excess of 65 per
centum of the unpaid principal of the home mortgage
loan; but in no case shall the amount of the advance ex-
ceed 60 per centum of the value of the real estate secur-
ing the home mortgage loan.

(3) If secured by a home mortgage given in respect
of any other home mortgage loan, the advance shall not
be for an amount in excess of 50 per centum of the un-
paid principal of the home mortgage loan; but in no case

wits

shall the amount of such advance exceed 40 per centum
of the value of the real estate securing the home mort-
gage loan.

(4) [Not applicable. Not printed. ]

(b) Home Mortgages as security. [No issue con-
cerning this subsection is involved. It is therefore not
printed here. ]

(c) Such advances shall be made upon the note or ob-
ligation of the member or nonmember borrower secured as
provided in this section, bearing such rate of interest as
the board may approve or determine, and the Federal
Home Loan Bank shall have a lien upon and shall hold
the stock of such member as further collateral security
for all indebtedness of the member to the Federal Home
Loan Bank. At no time shall the aggregate outstanding
advances made by any Federal Home Loan Bank to any
member exceed twelve times the amount paid in by such
member for outstanding capital stock held by it or made
to a nonmember borrower exceed twelve times the value
of the security required to be deposited under subsection
(e) of section 1426 of this title.

(d) The institution applying for an advance shall enter
into a primary and unconditional obligation to pay off all
advances, together with interest and any unpaid costs
and expenses in connection therewith according to the
terms under which they were made, in such form as shall
meet the requirements of the bank and the approval of
the board. The bank shall reserve the right to require
at any time, when deemed necessary for its protection,
deposits of additional collateral security or substitutions
of security by the borrowing institution, and each bor-
rowing institution shall assign additional or substituted
security when and as so required. Subject to the approval
of the board, any Federal Home Loan Bank shall have
power to sell to any other Federal Home Loan Bank, with

ET OO ee ee

—

a

or without recourse, any advance made under the provi-
sions of this chapter, or to allow to such bank a participa-
tion therein, and any other Federal Home Loan Bank shall
have power to purchase such advance or to accept a par-
ticipation therein, together with an appropriate assign-
ment of security therefor. July 22, 1932, c. 522, §10, 47
Stat. 731; Apr. 27, 1934, c. 168, §10, 48 Stat. 646; June
27, 1934, c. 847, §501, 48 Stat. 1261; May 28, 1935, c.
150, §§5, 6, 49 Stat. 294, 295; Mar. 28, 1941, c. 31,
§7, 55 Stat. 62.

(b) Sec. 1431. Powers and Duties of Banks—Borrowing
Money; Issuing Bonds and Debentures; General Powers.
* * * * - + * * *

(d) The board shall have full power to require any
Federal Home Loan Bank to deposit additional collateral
or to make substitutions of collateral or to adjust equities
between the Federal Home Loan Banks.

(c) Sec. 1432, Incorporation of Banks; Corporate Powers.

The directors of each Federal Home Loan Bank shall,
in accordance with such rules and regulations as the board
may prescribe, make and file with the board at the earliest
practicable date after the establishment of such bank, an
organization certificate which shall contain such informa-
tion as the board may require. Upon the making and fil-
ing of such organization certificate with the board, such
bank shall become, as of the date of the execution of its
organization certificate, a body corporate, and as such
and in its name as designated by the board it shall have
power to adopt, alter, and use a corporate seal; to make
contracts; to purchase or lease and hold or dispose of
such real estate as may be necessary or convenient for the
transaction of its business, but no bank building shall be
bought or erected to house any such bank, nor shall any
such bank make any lease for such purpose which has a
term of more than ten years; to sue and be sued, to com-
plain and to defend, in any court of competent jurisdiction,

_— SiS Es I Die is nl ati nn = we ‘ “ 1s rer

—_ =

State or Federal; to select, employ, and fix the compen-
sation of such officers, employees, attorneys, and agents as
shall be necessary for the transaction of its business, sub-
ject to the approval of the board; to define their duties,
require bonds of them and fix the penalties thereof, and
to dismiss at pleasure such officers, employees, attorneys,
and agents; and, by its board of directors, to prescribe,
amend, and repeal by-laws, rules, and regulations gov-
erning the manner in which its affairs may be adminis-
tered; and the powers granted to it by law may be exer-
cised and enjoyed subject to the approval of the board.
The president of a Federal Home Loan Bank may also
be a member of the board of directors thereof, but no
other officer, employee, attorney, or agent of such bank,
who receives compensation, may be a member of the board
of directors. Each such bank shall have all such incidental
pewers, not inconsistent with the provisions of this chap-
4 ter, as are customary and usual in corporations generally.
% July 22, 1932, c. 522, §12, 47 Stat. 735.

i 4. Portions of National Housing Act, as Amended,
: 48 Stat. 1246, 12 U. S. C., Sec. 1724 Et Seq.

(a) Sec. 1724. Definitions.

As used in this subchapter—

(a) The term “insured institution’”’ means an institu-
tion whose accounts are insured under this subchapter.

(b) The term “insured member” means an individual,
partnership, association, or corporation which holds an
insured account. Each officer, employee, or agent of the
United States, of any State of the United States, of the
District of Columbia, of any Territory of the United
States, of Puerto Rico, of the Virgin Islands, of any
county, of any municipality, or of any political subdivision
thereof, herein called “public unit,” having official custody
of public funds and lawfully investing the same in an in-
sured institution shall, for the purpose of determining the
amount of the insured account, be deemed an insured

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member in such custodial Capacity separate and distinct
from any other officer, employee, or agent of the same or
any public unit having official custody of public funds
and lawfully investing the same in the same insured in-
stitution in custodial capacity. Funds held in fudiciary
capacity, when invested in an insured institution, shall be
insured in an amount not to exceed $10,000 for each trust
estate, and notwithstanding any other provisions of this
chapter, such insurance shall be separate from and addi- .
tional to that covering other investments by the owners
of such trust funds or the beneficiaries of such trust
estates. As amended July 16, 1952, c. 883, 66 Stat. 727. ;
: (c) The term “insured account” means a share, certifi- ;
: cate, or deposit account of a type approved by the Federal
Savings and Loan Insurance Corporation which is held
; by an insured member in an insured institution and which
is insured under the provisions of this subchapter.

(d) The term “default” means an adjudication or other
official determination of a court of competent jurisdiction
or other public authority pursuant to which a conservator, E
receiver, or other legal custodian is appointed for an in-
sured institution for the purpose of liquidation. June 27, ;
1934, c. 847, §401, 48 Stat. 1255.

A OTTO ENE TES Pie 5 ah. PN FOR
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0b EE ee ae OS

a eS SA eS ee a Pe ee le

(b) Sec. 1725. Creation of Federal Saving and Loan
Insurance Corporation.

(a) There is hereby created a Federal Savings and
Loan Insurance Corporation (hereinafter referred to as
the “Corporation”), which shall insure the accounts of
institutions eligible for insurance as hereinafter provided,
and shall be under the direction of a board of trustees, to
be composed of five members and operated by it under
such bylaws, rules, and regulations as it may prescribe
for carrying out the purposes of this subchapter. The
members of the Federal Home Loan Bank Board shall
constitute the board of trustees of the Corporation and

See er

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shall serve as such without additional compensation. The
principal office of the Corporation shall be in the District
of Columbia.

(b) The Corporation shall have a capital stock of
$100,000,000, which shall be divided into shares of $100
each. The total amount of such capital stock shall be
subscribed for by the Home Owners’ Loan Corporation
which is hereby authorized and directed to subscribe for
such stock and make payment therefor in bonds of the
Home Owners’ Loan Corporation. The Corporation shall
issue to the Home Owners’ Loan Corporation receipts for
payment for or on account of such stock, which shall serve
as evidence of the ownership thereof, and the Home
Owners’ Loan Corporation shall be entitled to the pay-
ment of dividends on such stock out of net earnings at
a rate equal to the net interest rate on such bonds, which
dividends shall be cumulative.

(c) On June 27, 1934, the Corporation shall become a
body corporate and shall be an instrumentality of the
United States, and as such shall have power—

(1) To adopt and use a corporate seal.

(2) To have succession until dissolved by Act of Con-
gress.

(3) To make contracts.

(4) To sue and be sued, complain and defend, in any
court of competent jurisdiction in the United States or its
Territories or possessions or the Commonwealth of Puerto
Rico, and may be served by serving a copy of process on
any of its agents or any agent of the Home Loan Bank
Board and mailing a copy of such process by registered
mail to the Corporation at Washington, District of Colum-
bia.

(5) To appoint and to fix the compensation, by its
board of trustees, of such officers, employees, attorneys, or
agents, as shall be necessary for the performance of its
duties under this title, without regard to the provisions

P dP Pe : - . .
* - =

a

of any other laws relating to the employment or compen-
sation of officers or employees of the United States. Noth-
ing in this subchapter or any other provision of law shall
be construed to prevent the appointment and compensa-
tion as an officer, attorney, or employee of the Corpora-
tion, of any officer, attorney, or employee of any board,
corporation, commission, establishment, executive depart-
ment, or instrumentality of the Government. The Cor-
poration, with the consent of any board, corporation, com-
mission, establishment, executive department, or instru-
mentality of the Government, including any field service
thereof, may avail itself of the use of information, serv-
ices, and facilities thereof in carrying out the provisions
of this subchapter. The Corporation shall be entitled to
the free use of the United States mails for its official busi- :
ness in the same manner as the executive departments of ;
the Government, and shall determine its necessary ex-
penditures under this chapter and the manner in which
the shall be incurred, allowed, and paid, without regard L
to the provisions of any other law governing the expendi-
ture of public funds. All necessary expenses in connec-
tion with the making of supervisory or other examina-

tions (except examinations of Federal home loan banks),
including the provision of services and facilities therefor,
shall be considered as nonadministrative expenses.

(d) For the purposes of this subchapter, the Corpora-
tion shall have power to borrow money, and to issue
notes, bonds, debentures, or other such obligations upon
such terms and conditions as the board of trustees may
determine. Moneys of the Corporation not required for
current operation shall be deposited in the Treasury of
the United States, or upon the approval of the Secretary
of the Treasury, in any Federal Reserve bank, or shall be
invested in obligations of, or guaranteed as to principal
and interest by, the United States. When designated for
that purpose by the Secretary of the Treasury, the Cor-
poration shall be a depository of public money under

ee teattaty

a em te at a od 9

—

such regulations as may be prescribed by the Secretary
of the Treasury, and may also be employed as fiscal agent
of the United States, and it shall perform all such reason-
able duties as depositary of public money and fiscal agent
as may be required of it.

(e) All notes, bonds, debentures, or other such obliga-
tions issued by the Corporation shall be exempt, both as
to principal and interest, from all taxation (except sur-
taxes, estate, inheritance, and gift taxes) now or hereafter
imposed by the United States, by any Territory, de-
pendency, or possession thereof, or by any State, county,
municipality, or local taxing authority. The Corporation,
including its franchise, capital, reserves, surplus, and in-
come, shall be exempt from all taxation now or hereafter
imposed by the United States, by any Territory, de-
pendency, or possession thereof, or by any State, county,
municipality, or local taxing authority; except that any
real property of the Corporation shall be subject to State,
territorial, county, municipal, or local taxation to the same
extent according to its value as other real property is
taxed.

(f{) Repealed. Aug. 2, 1954, c. 649, Title VIII, §802
(b), 68 Stat. 642.

(g) No individual, association, partnership, or corpora-
tion shall use the words ‘Federal Savings and Loan In-
surance Corporation,” or any combination of any of these
words which would have the effect of leading the public
in general to believe there was any connection, actually
not existing, between such individual, association, partner-
ship, or corporation and the Federal Savings and Loan In-
surance Corporation, as the name under which he or it
shall hereafter do business. No individual, association,
partnership, or corporation shall advertise or otherwise
represent falsely by any device whatsoever that his or its
accounts are insured or in anywise guaranteed by the
Federal Savings and Loan Insurance Corporation, or

- » oa ee - a wat a et ect RTA al te LA ie a as Sh i

a

by the Government of the United States, or by any instru-
mentality thereof; and no insured member shall advertise
or otherwise represent falsely by any device whatsoever
the extent to which or the manner in which its accounts
are insured by the Federal Savings and Loan Insurance
Corporation. Every individual, partnership, association,
or corporation violating this subsection shall be punished
by a fine of not exceeding $1,000, or by imprisonment
not exceeding one year, or both. June 27, 1934, c. 847,
§402, 48 Stat. 1256; May 28, 1935, c. 150, §22, 49 Stat.
298.

(h) After June 27, 1950, the Corporation is authorized
and directed to pay off and retire annually at par an
amount of its capita! stock equal to 50 per centum of its
net income for the fiscal year. Such payments shall be
made promptly after the end of each fiscal year (beginning
with the first fiscal year which begins after June 27, 1950)
until the entire capital stock of $100,000,000 is retired.
In lieu of any and all unpaid dividends, whether for any
present, past, or future period, on its capital stock, the
Corporation shall pay to the Secretary of the Treasury,
promptly after the end of each fiscal year, beginning with
the fiscal year 1951, a return on the average amount, at
par, of its capital stock outstanding during such fiscal
year at a rate determined by the Secretary of the Treas-
ury, taking into consideration the current average rate
on outstanding marketable obligations of the United States
as of the last day of the sixth month of such fiscal year,
and the Corporation shall also pay to the Secretary of the
Treasury an amount equal to 2 per centum simple interest
per annum on its capital stock of $100,000,000 from June
27, 1934, to June 30, 1950, less any amount heretofore
paid by the Corporation as dividends on such capital stock.
The retirement of such capital stock shall not affect the
' applicability to said Corporation of the Government Cor-
poration Control Act, as amended.

th Nee oan “AE FSD. AS IO MY he OD ae es ncaigae

oye Pamir 2 ACE Di LDCs Ml ts LP At SE i I A ODN NG BEY FG,

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(i) The Corporation is authorized to borrow from the
Treasury, and the Secretary of the Treasury is authorized
and directed to loan to the Corporation on such terms as
may be fixed by the Corporation and the Secretary, such
funds as in the judgment of the Home Loan Bank Board
are from time to time required for insurance purposes,
not exceeding in the aggregate $750,000,000 outstanding
at any one time, and the Corporation hereafter shall not
exercise its borrowing power under the first sentence of
subsection (d) of this section for the purpose of borrow-
ing méney from any other source: Provided, That each
such loan shall bear interest at a rate determined by the
Secretary of the Treasury, taking into consideration the
current average rate on outstanding marketable obliga-
tions of the United States as of the last day of the month
preceding the making of such loan: Provided further,
That nothing in this subsection shall prevent the Cor-
poration from issuing debentures im accordance with the
provisions of subsection (b) of section 1728 of this title.
For the purposes of this subsectiom the Secretary of the
Treasury is authorized to use as a public-debt transaction
the proceeds of the sale of any securities hereafter issued
under the Second Liberty Bond Act, as now or hereafter
in force, and the purposes for which securities may be
issued under the Second Liberty Bond Act, as now or
hereafter in force, are extended to include such loans.
Any such loan shall be used by the Corporation solely
in carrying out its functions with respect to such insur-
ance. All loans and repayments under this subsection
shall be treated as public-debt transactions of the United
States. As amended July 3, 1948, c. 825, §2, 62 Stat.
1240; June 27, 1950, c. 369, §§5, 6, 64 Stat. 258; Aug.
2, 1954, c. 649, Title V, §501(1), Title VIII, 802(b),
68 Stat. 633, 642.

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Sapa io anak re LI AES at CEOs . , > AE,
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C. OPINIONS BELOW.

1. Opinion of U. S. District Court in Mallonee v.
Fahey, 117 Fed. Supp. 259, Re Consolidated Man-
date of Court of Appeals.

Mallonee et al. v. Fahey et al. Federal Home Loan
Bank of Los Angeles v. Federal Home Loan Bank of
Portland. Civ. Nos. 5421, 5678.

Nov. 30, 1953.

Sylvester Hoffmann, Los Angeles, Cal., Philip H. An-
gell, San Francisco, Cal., Verne Dusenbery, Portland,
Ore., for Federal Home Loan Bank of San Francisco,
et al.

F. Henry NeCasek, Long Beach, Cal., for Roy E. Hegg
and George Turner.

O’Melveny & Myers, Los Angeles, Cal., Richard Fitz-
patrick, Los Angeles, Cal., for Federal Home Loan Bank
of Los Angeles and Coast Federal Savings & Loan Ass’n,
et al.

W. I. Gilbert, Jr., Los Angeles, Cal., for Receiver Ern-
est Utley and for First Federal Savings & Loan Ass’n
of Wilmington.

James E. Burns, San Francisco, Cal., Charles Dal
Sooy, San Francisco, Cal., Alden Ames, San Francisco,
Cal., for Pioneer Investors Savings & Loan Ass’n, et all.

Linnell & Smith, Long Beach, Cal., for Harold Lee
Newendorp and Charles E. Bradley.

Robert A. Moffitt, Los Angeles, Cal., for Land Title
Ins. Co.

Thomas P. Menzies and Harold L. Watt, Los Angeles,
Cal., for Home Indemnity Co.

Lyman B. Sutter, Long Beach, Cal., for Title Service
Co.

Raymond Tremaine, Los Angeles, Cal., for Robert H.
Wallis.

Charles K. Chapman, Long Beach, Cal., for Long
Beach Federal Savings & Loan Ass’n.

—_ SO ERIE LESS SC LG LTA NEV SBOE LS ILO, LTS ELAN: AIR SRE ITLL! SNOUT IEE I he
4

Seyeaae dak esa A SER ARR,

Westover & Smith, Los Angeles, Cal., for Mallonee,
et al.

Frank G. Makepeace, Long Beach, Cal., for intervenor,
Lillian A. Coggswell.

Crail & Crail, Los Angeles, Cal., for Joe Crail.

Roger W. Powers and Paul L. Zimmerman, Los An-
geles, Cal., for Charles Taylor.

Shafer & Seymour, Compton, Cal., for Fred G. Hunter
and Melba N. Hunter.

Austin, Austin & Jones, Compton, Cal., for Wayne H.
Sones and Helen M. Sones.

Kelsey Petterson, Los Angeles, Cal., for M. E. Spice.

Bates S. Himes, Beverly Hills, Cal., for C. C. Connor,
dba Surety Finance & Adjustment Co,

Emmett E. Doherty, Los Angeles, Cal., for plaintiff
in intervention, John D, Wilthoit.

Ronald Walker, Los Angeles, Cal., Special Master.
HALL, District Judge.

Without attempting to narrate the whole, or even a
small portion, of the history of this proliferating litiga-
tion, it is necessary, none-the-less, to state some of it for
a better understanding of the problems involved in the
multitude of motions (29) which were argued for eight
days in consolidated actions 5421 and 5678 and related
action 13979 of this court.

On May 20, 1946 the Federal Home Loan Bank Ad-
ministration, by an order No. 5254, designated A. V.
Ammann as Conservator of the Long Beach Federal
Savings and Loan Association, who, on the same date
summarily took possession thereof and of all its assets and
properties, for text of Order 5254 see 14 F. R. D. 273,
footnote 6.

On May 27, 1946 action No. 5421 was commenced by
the filing of a complaint by Mallonee and others as a
shareholdcr: committee (California State Corporation
Commissioner license No. 80282-Ta) of the Long Reach
Federal Savings & T.oan Association, against various de-

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fendant officials and others alleging the invalidity of
order No. 5254 appointing the conservator and seeking
his ouster and the return of the Association to its share-
holders. The complaint, among other things, attacked
the constitutionality of those provisions of the Federal
Home Owners’ Loan Act, mainly section 5(d) thereof,
12 U. S.C. A. § 1464(d), relating to the appointment
of conservators. A temporary restraining order was
issued; a three-judge court was convened under then
28 U.S. C. § 380a (now 28 U. S. C. § 2282 et $eq.): a
hearing was had before the three-judge court on July
; 15 and 16, 1946 and on September 5, 1946 the three-
judge court made its decision, D. C., 68 F. Supp. 418,
‘ holding the above mentioned section of the Act uncon-
stitutional and ousting the conservator, requiring account-
ing, enjoining proposed administrative hearing, and signed
_ a judgment to that effect on September 30, 1946. The
next day, October 1, 1946, Justice Rutledge of the Su-
preme Court stayed the enforcement of the three-judge
court order. Appeal was taken to the Supreme Court on
October 3, 1946 from the judgment of the three-judge
court; on April 7, 1947 on application, and after hearing,
the District Court made an order allowing $50,000 on
account of attorneys’ fees and approximately $17,000 on
account of costs, to the shareholders’ committee upon
which a petition for writ of prohibition, etc. was promptly
taken to the Supreme Court for hearing at the same time
as the main appeal from the decision of the three-judge
court. The matters were argued April 30, 1947 (the
_ Administrative Procedure Act, 5 U. S. C. A. § 1001
et seq., was signed June 11, 1946), and on June 23, 1947
the Supreme Court made its decision, 332 U. S. 245, 67
S. Ct. 1552, 91 L. Ed. 2030, reversing the judg-ient of
the three-judge court but did not direct the dismissal of
action No. 5421, and on the same day denied a motion for
a writ of prohibition and likewise did not direct the dis-
missal of the action, 332 U. S. 258, 67 S. Ct. 1552; the

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mandate from the Supreme Court was received and spread
in the District Court on August 19, 1947,

In the meanwhile, on August 22, 1946, action No.
5678 was commenced by the filing of a complaint by the
Federal Home Loan Bank, of Los Angeles and six of
its stockholders Associations as a class for all members,
seeking restoration of said Los Angeles Bank to its status,
location and officials prior to March 29, 1946, and re-
covery of its assets and attacking the validity of various
orders of the Federal Home Loan Bank Administration,
all of which were made on March 29, 1946, which sum-
marily provided for the dissolution of the Los Angeles
Bank, discharge of its officers and directors, and the trans-
fer of its assets and properties to the Portland Bank, the
name of which was changed to the Federal Home Loan
Bank of San Francisco, and headquarters therefor re-
moved both from Portland and Los Angeles to San
Francisco (for text of orders see 14 F. R. D. 273-283,
footnote 5). Under the “low-number rule” of this court,
case No. 5678 was transferred to me and thereafter, in
due course, on November 7, 1947, an order of consolida-
tion of the two cases for all purposes was made. In the
meanwhile (August 26, 1946), the Los Angeles Bank,
not joining with any of its members, had filed a cross-
claim in action 5421 seeking substantially the same relief
it sought in action 5678.

Thereafter, numerous orders were made by the District
Court, particularly in connection with interpleaders, by
persons owing notes to the Long Beach Association se-
cured by trust deeds, which interpleaders brought approxi-
mately a million and a half dollars into Court. Numerous
orders were made thereon as well as numerous other
orders, among them certain orders allowing attorneys’
fees and costs. From several of such orders appeals
were taken by the official defendants attacking the juris-
diction of the District Court but all of said appeals were
dismissed. Appeals were taken from subsequent orders

SO ngs Rf eet

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allowing attorneys’ fees, Master’s fees, and the like, some
of which are still pending.

On December 1, 1949, an order (14 F. R. D. 273) was
made after hearing in the Consolidated case enjoining and
restraining an administrative hearing before the Home
Loan Bank Board on its order No. 2015 dated September
9, 1949, (for text of order see 14 F. D. R. 273-289, foot-
note 11), which hearing was set for Washington, D. C.
and concerned the administration of the affairs of the
Long Beach Federal Building and Loan Association.
Neither the order of the Home Loan Bank Board No.
2015, nor the injunction of December 1, 1949, were con-
cerned directly with the subject matter of the Los An-
geles Bank action No. 5678.

On December 29, 1949 the Home Loan Bank Board,
Federal Savings and Loan Insurance Corporation and the
defendants who were officials of the United States, gave
notice of appeal from said order for injunction, and on
January 5, 1950 the Federal Home Loan Bank of San
Francisco gave similar notice. Thereafter, on April 2,
| 1952, the United States Court of Appeals handed down
its opinion in the injunction appeal Home Loan Bank
Board v. Mallonee, 9 Cir., 196 F. 2d 336, at page 391 the
concluding paragraph of which reads as follows:

“Upon consideration of the whole record we conclude
that the order of the lower court dated December 1, 1949,
which restrains and enjoins the holding of an administra-
tive hearing called pursuant to the provisions of Order
No. 2015 of the Home Loan Bank Board, dated Sep-
tember 9, 1949, was erroneously issued. It is therefore
ordered that the said order for Preliminary Injunction be,
and the same is, hereby reversed, and the court below is
directed to vacate and set aside the said injunction.”
(Italics supplied. )

=

oor

Subsequently petitions for certiorari were filed and
ultimately denied.

a OER GORE OEP LLG OED LIAR DA TEEN BLE NE ENO Rt Tey

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On June 19, 1950, after due notice and hearing, this
court made its order for allowance of attorneys’ fees
limited to counsel for plaintiffs in the Los Angeles Bank
action No. 5678. On June 20, 1950, the Home Loan Bank
Board, Federal Savings & Loan Insurance Corporation,
and the various individual defendants who were officials
of the United States, filed notice of appeal from that order
as did the Federal Home Loan Bank of San Francisco.

On November 6, 1952 the United States Court of Ap-
peals for the Ninth Circuit filed its opinion in the attor-
neys’ fee appeal, Fahey v. O’Melveny & Myers, 200 F.
2d 420, at page 481, in the Los Angeles Bank case, No.
5678, the concluding paragraph of which reads as follows:

“For reasons set forth in this opinion the order of the
lower court here on appeal which awards attorneys’ fees
to appellees is reversed. The validity of the claim for such
fees is sustainable only on the theory that the lower court
had jurisdiction in personam over indispensable parties
to the Los Angeles Action and jurisdiction of the subject
matter of that action. We have previously held that the
court did not have such jurisdiction and we therefore
remand the case before us with directions to the lower
court to dismiss the Los Angeles Action.” (Italics sup-
plied. )

Applications for certiorari were likewise made and ulti-
mately denied in that matter.

The appeal from the order of injunction, of December
1, 1949, in action 5421, carried No. 12511 in the appellate
court, and the appeal from the order for allowance of
attorneys’ fees carried No. 12591 in the appellate court.
No order of consolidation was made of the appeals in
the appellate court.

On May 25, 1953 a Special Assistant to the Attorney
General, traveling from Washington, D. C. for that pur-
pose, and without the customary notice to all counsel,
presented to the court for spreading, the mandate of the

OR SAA BIR pp ie cm 4" .
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—
stil ence

Court of Appeals which appears to be a consolidated man-
date, although no order was ever made on appeal consoli-
dating the two appeals. The mandate reads as follows:
“United States of America, SS: The President of the
United States of America to the Honorable, the Judges
of the United States District Court for the Southern
District of California, Central Division, Greeting:
“Whereas, lately in the United States District Court for
the Southern District of California, Central Division,
| before you or some of you, in consolidated causes be-
| tween Mallonee, Bucklin and Fergus, et al., plaintiffs,
third party plaintiffs and cross-claimants, and John H.
.
|

Fahey, et al., defendants, Civil No. 5421-P. H.: and be-
tween Federal Home Loan Bank of Los Angeles, et al.,
plaintiffs, and Federal Home Loan Bank of San Fran-
cisco, et al., defendants, Civil No. 5678-P.H.; wherein
an Order of Preliminary Injunction was duly filed, and
entered on the 2nd day of December, 1949, and wherein
an Order re allowance of attorneys’ fees on account was
duly filed and entered on the 19th day of June, 1950;
which said orders are of record and fully set out in said
causes in the office of the Clerk of the said District Court,
to which record reference is hereby made and the same
is hereby expressly made a part hereof.

“And Whereas, the said John H. Fahey, et al., and said
Federal Home Loan Bank of San Francisco have appealed
to this Court as by the inspection of the transcript of the
record of the said District Court, which was brought into
the United States Court of Appeals for the Ninth Circuit
by virtue of an appeal agreeable to the Act of Congress,
in such cases made and provided, fully and at large ap-
pears.

“And Whereas, on the Ist day of May, in the year of
our Lord, one thousand nine hundred and fifty one, the
said consolidated causes came on to be heard before the
said United States Court of Appeals for the Ninth Cir-

i
—_— AeA ae ES et heen oo Ar ' FELONS SOR Le LESLIE LEGS EATEN

—.

cuit, on the said transcript of record, and was duly sub-
mitted.

“And Whereas, on the 6th day of May, in the year
of our Lord, one thousand nine hundred and fifty-two, the
said consolidated causes came on to be heard before the
said United States Court of Appeals for the Ninth Cir-
cuit, on the said transcript of record, and was duly sub-
mitted.

“And Whereas, said actions were consolidated in the
District Court for all purposes, and a review of decisions
in both said appeals was sought by appellees upon con-
solidated petitions for writs of certiorari to the United
States Supreme Court, which said petitions were denied
on the 4th day of May, 1953:

“On Consideration Whereof, It is now here ordered
and adjudged by this Court that the said orders of the
said District Court in these consolidated causes be and
hereby are reversed and that said consolidated causes be
and hereby are remanded to the said District Court with
directions to:

“1. Dismiss Civil Action No. 5678-P.H. at the cost
of plaintiffs.

“2. Dismiss the following pleadings in Civil Action
5421-P.H.:

“(a) The complaint of Malionee, Bucklin and Fergus,
and all amendments and supplements thereto, at the cost
of said complainants;

“(b) The cross-claim and third party complaint of
Long Beach Federal Savings and Loan Association, and
all amendments and supplements thereto, at the cost of
third party complainant and cross-claimant;

“(c) The cross-claim of Federal Home Loan Bank of
Los Angeles, and all amendments and supplements thereto
at the cost of said cross-claimant;

“(d) The cross-claim in interpleader of Title Service
Company, and all amendments and supplements thereto, at
the cost of said cross-claimant;

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“(e) The cross-claim in interpleader, and all amend-
ments and supplements thereto, of Robert H. Wallis,
at the cost of said cross-claimant;

“3. Dissolve, set aside and vacate the order of said
District Court entered the 13th day of March, 1948, inso-
far as the same requires Federal Home Loan Bank of
San Francisco to deposit in the Registry of said District
Court promissory notes in the aggregate principal amount
of $6,300,000.00, collateral securing the same and any
other documents or property deposited by San Francisco
Bank pursuant to said order; and return to Federal Home
Loan Bank of San Francisco without charge or impair-
ment said promissory notes, together with Government
bonds in the face amount of $5,300,000.00 with all interest
coupons attached thereto at the time of deposit and to-
gether with cash from the sum in the Registry of said
Court sufficient to make the combined total sum of
$6,324,098.35, with interest on $6,300,000.00 at 2% per
annum from the 10th day of March, 1948 until the date
of such release.

“4. Set aside and vacate said order of preliminary in-
junction entered the 2nd day of December, 1949,

“You, Therefore, are Hereby Commanded that such
proceedings be had in said consolidated causes, in con-
formity with the opinions and judgments of this Court,
as according to right and justice, and the laws of the
United States, ought to be had, the said appeals not-
withstanding.

“Witness, the Honorable Fred H. Vinson, Chief Jus-
tice of the United States, the 21st day of May in the
year of our Lord one thousand nine hundred and fifty
three.

Paul P. O’Brien

Clerk, United States Court of Appeals for the Ninth
Circuit.”

——— '

3
POM ELIEE SLO LG RIL OSLER SS EEE

Si ibaa RSs AGAMA IAI hei Mili Sak es Wahl De REG IAA ARN re Be tS A a A tory aay 7 ‘ shinai a

ver oe

At the time the mandate was offered for spreading
there was still pending undecided a petition for rehearing
before the Supreme Court.

While the appeals were taken from only the order of
injunction of December 1, 1949, in 5421, and only from
the order for allowance of attorneys’ fees in the Los
Angeles Bank case, 5678, the mandate, as appears on its
face, is unusual in that it goes a great deal furiner than
a mere disposition or reversal of the two orders from
which appeals were taken. The opinion of the Court of
Appeals in the injunction case, No. 12511, occupies 56
printed pages in the report and in 12591 the attorneys’ fee
matter, 62 pages. The record on appeal in 12511 con-
sumed approximately 12,000 printed pages and the files
and records in the case in this court, to date, in 5421
and 5678 are colossal, occupying several filing cabinets
of 4 drawers each. Innumerable hearings had been held
in the consolidated cases and hundreds of orders made
affecting numerous parties and things besides the main
litigants so that it became apparent, before complying with
the insistent demands of appellants’ counsel, and in order
to properly carry out the terms of the mandate that con-
siderable care and study were required of all the matters
involved, as the mandate, in addition to requiring specific
things, commands such further proceedings, “in con-
formity with the opinions and judgments of”, the Appel-
late Court, “as according to right and justice, and the
laws of the United States, ought to be had, the said ap-
peals notwithstanding,” .

Counsel for the San Francisco Bank and counsel for
the United States Attorneys’ Office and the office of the
Attorney General indicated considerable provocation and
impatience because this court would not forthwith either
spread the mandate and enter the judgments which they
submitted for entry without an opportunity for this Court
to again read and study the opinions of the Appellate
Court and in light of them endeavor to make such orders

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as in conformity with them and according to right and
justice and the laws of the United States ought to be had,
the said appeals notwithstanding.

There was then (May 25, 1953) a stay in force,
ordered by the appellate court, pending the final disposi-
tion of cases 12511 and 12591, which stay would have
prevented action by this court until disposition of the
petitions for rekearing before the Supreme Court, above
mentioned. The petitions for rehearing were not denied
by the Supreme Court until June 9, 1953, 345 U. S. 978,

73S. Ct. 1120 and not brought to the attention of this
court until sometime later.

The matter again came on for hearing on June 22,
and 24, 1953, at which times I was (and advised all
counsel that I was), then engaged in the trial of a water
rights case at Fresno which had been continuing for some
18 months and which required my presence in Fresno
every day of each week except Monday, and beginning
in the first part of July it was the duty of this Judge
to take the criminal calendar of this court which requires
the hearing of all arraignments and pleas and the trial
of all criminal cases consuming less than three days for

a period of three months’ time, and consumes all of a
judge’s time.

At the various hearings, the Court suggested that, in
view of the fact that the mandate covered many things
other than the two orders from which appeals were taken,
counsel for the prevailing parties on appeal should pre-
pare and submit whatever judgments and orders in their
opinion were required to be made and signed by this
court.

On July 16, 1953 counsel for the prevailing parties on

appeal accordingly filed 14 different judgments and orders
as follows:

Proposed Judgment No. 1
Judgment on Mandate.

ie... IERIE PRL LAGOS SELENA IOUT DION TL ALE AED, BARR OE IIE Ie I

ee

Proposed Order No. 1
Order Dismissing Complaint, Amended and Supple- |
mental Pleadings Pursuant to Mandate. :

Proposed Order No. 2
Order Dismissing Cross-Claim and Third Party
Complaint of Long Beach Federal Savings and Loan |
Association, and All Amendments and Supplements
Thereto, Pursuant to Mandate.

Proposed Order No. 3
Order Dismissing Cross-Claim of Federal Home
Loan Bank of Los Angeles Pursuant to Mandate.

Proposed Order No. 4
Order Dismissing Cross-Claim in Interpleader of
Title Service Company, and All Amendments and
Supplements Thereto, Pursuant to Mandate.

Proposed Order No. 5
Order Dismissing Cross-Claim in Interpleader of
Robert H. Wallis, and All Amendments and Supple-
ments Thereto Pursuant to Mandate.

Proposed Order No. 6
Order Directing Delivery of Documents and Col-
lateral to Federal Home Loan Bank of San Fran-
cisco Pursuant to Mandate.

Proposed Order No. 7
Order Vacating Order of Preliminary Injunction
Pursuant to Mandate.

Proposed Order No. 8
Order Dismissing Cross-Claim in Interpleader of
George Turner Pursuant to Mandate.

Proposed Order No. 9
Order Dismissing Cross-Claim of Roy E. Hegg
Pursuant to Mandate.

Proposed Order No. 10
Order Dismissing Complaint in Intervention of John
D. Willhoit Pursuant to Mandate.

=

Proposed Order No. 11
Order Vacating Orders Re Accounting by A. V.
Ammann Pursuant to Mandate.

Proposed Order No. 12
Order Vacating Orders Re Discovery and Inspection
Proceedings, Pursuant to Mandate.

Proposed Order No. 13
Order Denying Petition and Supplement to Petition
to Interplead or Deposit in Court Disputed Stock
Subscription Demands of First Federal Savings and
Loan Association of Bellflower, California, Pursuant
to Mandate.

All matters again came on for hearing on August 3,
1953, at which time I indicated to counsel that I would
be unable to hear the arguments on the various motions
and opposition thereto until after the completion of the
criminal calendar at the end of September, and set the
matter down for hearing with the consent of all counsel,
to begin on October 12th, at which time I would not
only hear counsel in connection with the proposed judg-
ments and orders, but also hear all motions which had
been set in the related case, No. 13979—Federal Home
Loan Bank of San Francisco vy. Long Beach Federal Sav-
ings and Loan Association, which had been filed in the
Superior Court of California on March 27, 1952, and
removed to this court, and a motion to remand denied.
Action 13979 was a suit by the San Francisco Bank to
collect on notes of the face amount of $6,300,000 signed
by the conservator, and to foreclose on claimed security
therefor.

Inasmuch as many of the matters involved in the con-
solidated cases 5421 and 5678 are also involved in 13979,
it was felt necessary that they should be heard together,
and accordingly, on October 12th hearing was commenced
on the motions for and against the above mentioned judg-
ments and orders in 5421 and 5678, and the following
motions in 13979;

4
Be... TEE CRIN ISS MOAEE SE ALLL DESIG LAO ISTO Sai RN ELSON Re a aca

RE ct ae aN at ela ase ata rene! bate oh

_—

1. Hearing on Report of Receiver and Petition for
Instructions

2. Hearing on Motion of Federal Home Loan Bank |
Board to quash service of summons made pursuant to
court order filed 3-3-53

3. Hearing on motion of Home Investment Co. et al.
for summary judgment quieting title to homes of 8000
borrowers against foreclosure of loans paid in full, and
motions for summary judgment quieting title of trustee,
Title Service Co. and beneficiary Long Beach Federal
Savings & Loan Assn. pur. not. filed 5-21-53

4. Hearing on motion of Plaintiff to

(a) Dismiss Homeowners cross-claim for quiet title,
and

(b) Strike and drop Home Investment Co. as a party
pur. not. filed 5-29-53

5. Hearing on motion of Plaintiff

(a) To drop parties

(b) or for severance and early trial fld 6-5-53

6. Hearing on Motion of Plaintiff

(a) to dismiss cross-claim of defendant Long Beach
Fed. Sav. & Loan Assn.,

(b) To strike said cross-claim, fld 6-5-53

7. Hearing on Motion of Plaintiff

(a) To vacate order granting leave to Title Service
Co. to intervene and to file its complaint in Intervention
and Interpleader, and to strike said pleading,

(b) To dismiss said complaint in Intervention, fld
6-5-53

8. Hearing on Motion of Plaintiff to dismiss 3rd party
complaint of Long Beach Fed. Sav. & Loan Assn. (Fld
10-10-52) fld 6-5-53

" mn Ata Ene Bal ite
~ “

9. Hearing on Motion of Plaintiff

(a) To vacate order granting leave to Robert H.
Wallis to intervene and to file its complaint in interven-
tion and interpleader, and to strike said pleading,

(b) To dismiss said complaint in intervention fld 6-
5-53

10. Hearing on Motion of Plaintiff to strike from
Answer of deft. Long Beach Fed. Sav. & Loan Assn.
fld 6-5-53

Audit of funds in Court

As noted, sub-paragraph No. 3 of the Mandate directs
the return of certain bonds and cash in the registry of the
court in the within actions, to the Federal Home Loan
Bank of San Francisco.

The money on deposit in court was derived not from
a single source but from many and as the result of many
interpleaders and interventions. And before making any
order concerning a definite amount of money it appeared
only reasonable and proper that an audit should be made
of the funds on deposit in court with a statement as to
their source so that in making any order in compliance
with the mandate, compliance also might be had with
the rules concerning disposition of money deposited in
court, laid down by the Ninth Circuit in Berdie v. Kurtz,
88 F. 2d 158. I suggested to the parties that each side
might select an auditor and two of them go over the
records jointly so that there would be agreement among
the parties and not leave such a simple matter to the
querulous contentions which have marked this case al-
ready overloaded with a multitude of various contentions
and innumerable angry and distracting clashes between
the many counsel,

The Long Beach Association did make such an audit
which was filed on July 16, 1953, and a summary and
recapitulation thereof filed on July 23, 1953. Neither

SLO PLE ALES R BILLIE, EIDE VE EA IRE

=

the San Francisco Bank nor the parties represented by
the United States Attorney saw fit to make such an audit,
or if so they did not see fit to aid the court by filing a
copy of it. In connection therewith the court has re-
ceived only a letter from Mr. Hoffman, one of the counsel
for the San Francisco Bank dated September 25, 1953
which, on its face, is not complete. The Court will, there-
fore, accept as true and accurate the audit and summary
and recapitulation thereof as to source of funds, and
amounts, made and filed by the Long Beach Federal Sav-
ings & Loan Association.

The Appellate Court Stay and Other Pending Appeals

It should be mentioned also that during the pendency
of the appeal, while no stay was in effect, this court ap-
pointed a Receiver for the purpose of bringing suit both
in the federal court and the state court to preserve the
running of the statute of limitations against certain as-
serted causes of action or liability in connection with the
administration of the affairs of the Long Beach Associa-
tion by the conservator and his relationship with the
San Francisco Bank. An appeal was taken from the order
appointing the Receiver and is currently pending unde-
cided along with appeals taken by the San Francisco
Bank from various, but not all, of the orders allowing
fees to the Special Master.

Pursuant to the order appointing the Receiver he filed
two actions, one in the state court which was removed to
this court, and one in this court. Thereafter, a stay of
all proceedings in the within consolidated cases, 5421 and
5678, and the Receiver’s actions, was made by the appel-
late court on November 13, 1952 “Until the final disposi-
tion of cases No. 12511 and 12591; except that said Dis-
trict Court is hereby permitted to entertain and determine
the cause designated as 13979-PH filed in said (this)
District Court.”

| 7

_—

The petitions for rehearing were denied by the Supreme
Court on June 9, 1953. On June 24, 1953 the above men-
tioned mandate of the U. S. Court of Appeals was ordered
spread in this court.

I therefore regard the disposition of appeals No. 12511
and No, 12591 as final, and the stay as terminated.

As above stated, appeals are pending undecided in 5421
and 5678 from the order appointing the Receiver and from
certain allowance of fees to the Special Master but no stay
has been issued in connection therewith and I shall proceed
accordingly.

The Preliminary Injunction of December 2, 1949
(Proposed Order No. 7).

Paragraph numbered “4” of the mandate directs this
court to “set aside and vacate said order of preliminary in-
junction entered the 2nd day of December, 1949,”

I indicated to all counsel from time to time from the
outset of the various hearings since the mandate came
down that, whatever else may be said concerning the
opinions on appeal and the mandate, there could be no
doubt that both the opinion in 12511 and the mandate in-
tended and required that said order of injunction be
reversed. It was the only order on which the appeal was
taken.

I also indicated to counsel that it seemed to me that an
order should be made as promptly as possible to vacate
the order of preliminary injunction of December 1, 1949,
in order that such administrative hearings might be as
promptly proceeded with as were deemed advisable. I
also indicated that if counsel would request it I would as
promptly as time and the press of other duties would
permit, make such an order. Accordingly, without adopt-
ing the forms of order proposed by either the prevailing
parties on appeal, or the one proposed by those opposing
them, I dictated an order dissolving the injunction of

jaa ceneettyaeg coe OEP BRAN tO ELEV (SSNS ED LR REAELE NEES TNE TREY AS A Ha ae apa

a"

December 1, 1949 and filed it September 21, 1953. Para-
graph “4” of the mandate is thus complied with.

The Dismissal of Action No. 5678 at the Cost of Plaintiffs

The mandate, in paragraph “1”, directed that this court
“dismiss Civil Action No. 5678-PH at the cost of plain-
tiffs.”

No costs were set forth in the mandate.

During the course of the litigation, among the many
hundreds of other orders made, an order was made with
the consent of, among others, the Long Beach Associa-
tion and the defendant officials speaking through the
U. S. Attorney and the Attorney for the Home Loan Bank
Board, appointing Ronald Walker, (then Assistant United
States Attorney who had been handling the within liti-
gation for the defendant officials), as Special Master, for
the purpose of supervising and directing the carrying out
of Order No. 388 of the Home Loan Bank Board and
the order of this court of January 23, 1948, directing the
return of the Long Beach Association and its assets and
properties to the regularly elected officials of said Associa-
tion and for an accounting by Ammann to the share-
holders, and supervising the election of a Board of Direc-
tors of said Association, no meeting of shareholders hav-
ing been had, or election of such officers, since prior to
the conservatorship.

Thereafter, on motion for discovery, the court appointed
said Ronald Walker as Special Master to supervise the
discovery proceedings. The motion for discovery was
made by Long Beach Association and its affiliated defen-
dants and was joined in by the plaintiffs in 5678. The
purpose of appointing the Special Master was principally
to protect the San Francisco Bank in connection with
the conduct of its affairs and to protect the public interests
against any disclosure of confidential matters which might
concern the San Francisco Bank and the affairs of other

, —33—

building and loan associations, or might otherwise affect
the public interest.

The Special Master performed rather prodigious duties
in connection with the turn-back of the Association, the
election of directors and the meeting of shareholders, and
in connection with the discovery proceedings. No final
report has yet been made by the Special Master. Interim
reports have been filed and interim allowances on his fees,
but no final order fixing his fees either on the turn-
back and accounting or on the discovery have been made,
and, as above stated, appeals are now pending on some, but
not all, of the orders allowing fees to the Master.

There can be no doubt concerning the duty of this
court in connection with the mandate. It was ordered
spread and under the decisions it is my duty to carry it
out without attempting to question the correctness of
either the appellate court’s opinion or decision or the cor-
rectness of the mandate. As stated in Thornton v. Carter,
8 Cir., 109 F. 2d 316, at page 320, “A mandate is com-
pletely controlling as to all matters within its compass,
but on remand the trial court is free to pass upon any
issue which was not expressly or impliedly disposed of on
appeal.” Many other authorities are to the same effect
but it would be a matter of supererogation to cite them.

It does not appear to me at this time that the plaintiffs,
in action No. 5678, should be burdened with any of the
costs resulting from allowance of fees and costs to the
Special Master in connection with carrying out order
No. 388 and the order of this court of January 23, 1948
directing the turn-back and accounting. But, the plaintiffs
in action No. 5678 joined in the motion for discovery
and inspection of documents, (at last report approximately
44,000 were marked by the Special Master on the inspec-
tion hearings), and it seems to me that the plaintiffs in
action No. 5678 should be made to bear a portion of such
fees as part of the costs in compliance with the mandate.

a RE

Se

Ne er

RIERA

ills

The mandate clearly requires a judgment of dismissal of
Civil Action No. 5678 but there are two steps in the
judgment, one is the making of the judgment to be settled
and approved as provided in Rule 58, Fed. Rules Civ.
Proc. 28 U. S. C., and the other is the entry thereof. Rule
58 provides that the entry of judgment shall not be de-
layed for the taxing of costs. Whether or not a portion
of the fees of the Special Master in connection with the
discovery proceedings can be assessed as costs against the
plaintiff in Civil Action No. 5678 is a question which none
of the parties has seen fit to touch upon or to brief. Also,
whether or not, if they are assessable as costs, it should be
done before the making and the entry of the judgment
of dismissal, they have likewise not seen fit to discuss or
to brief or inform the court of their position whatever.

There has been paid out of funds on deposit in court
a sum in the neighborhood of $10,000 as costs incurred
by the Special Master on the two references to him for
clerical help, court reporters, photostating, microfilming
and the like. In addition to that the sum of $61,000 has
been allowed and paid to the Special Master out of funds
on deposit in court as fees on interim or partial allow-
ances only. No final report of the Special Master on
either the turn-back proceedings and accounting, or the
discovery and inspection proceedings has been made or
approved and in none of the orders for allowance of fees
to the Special Master was there any determination or
indication of a determination of the total amount of fees
to be allowed or the total value of his services. There
has likewise been no order of court allocating the fees
and costs as charges against the various parties or any
party to the action under Rule 53(a), F. R. C. P. which
provides that “The compensation to be allowed to a master
shall be fixed by the court, and shall be charged upon
such of the parties or paid out of any fund or subject
matter of the action, which is in the custody and control

pe”

of the court as the court may direct.” The rule also
permits execution to be issued for such fees.

While the fees and costs were paid out of funds on
deposit in court the matter of who they would or should
ultimately be charged against was not at any time
settled. None of the funds on deposit in court were
received from any of the plaintiffs in action No. 5678.

Regardless of what disposition is made with relation
to the reference to the Special Master on the turn-back
proceedings and the accounting thereon under the previous
order of this court of January 23, 1948 and Order No.
388 of the Home Loan Bank Board, it seems clear to me
that the reference to the Special Master for discovery and
inspection should be wound up under the mandate and
the decision in 12591, as promptly as possible by a final
report of the Special Master and a hearing thereon and a
final order fixing additional fees and costs, if any, and
making an allocation of the charges under Rule 53 (a)
therefor upon such of the parties to this action as may
be liable therefor. This is particularly so in view of the
holding of the appellate court as to the lack of jurisdiction
of this court in action 5678 and the clear terms of the
mandate to dismiss 5678 at the costs of the plaintiffs. This
has been partially done by requiring counsel for plaintiffs
in action 5678 to redeposit the $75,000 allowed them as
fees.

The principal reason for the appointment of the Mas-
ter was for the protection of the San Francisco Bank and
its member Associations and its, and their, records.

It is conceivable that a portion of the Master’s fees
and costs could or should be assessed against the San
Francisco Bank. See Associated Almond Growers v.
Wymond, 9 Cir., 69 F. 2d 912. However, it is neither
necessary nor appropriate to determine this issue at this
time.

iin

While the San Francisco Bank is entitled to have
5678 dismissed as promptly as possible there can be no
injury come to the Bank or its security by postponing
such dismissal until such time as the Master makes his
final report and until such time as the matter of whether
or not “according to right and justice and the laws of the
United States, the said appeals notwithstanding,” a por-
tion of the costs and fees of the Special Master should or
should not be assessed against and paid by the plaintiffs
as specifically required by the mandate, or others in action

No. 5678.

In the course of deliberation on this matter it occurred
to me that action 5678 could be dismissed and that possibly
any costs and fees which might be assessed against the
plaintiffs in action 5678, because of the discovery and in-
spection proceedings, might be assessed in action 5421
because of the cross-complaint filed in that action by the
Los Angeles Bank seeking practically, if not identically,
the same relief sought originally by the complaint in action
5678. But recourse to the record (printed record page
564) discloses that the cross-claim in action 5421 was
filed only by the Federal Home Loan Bank of Los Angeles
and did not contain any allegations as a class action by the
six so-called member associations as was included in the
original complaint in 5678. The Los Angeles Bank, by
the opinion in 12591, is now non-existent and according
to that opinion has been non-existent since March 1946.
Any judgment for costs in 5421 against the Los Angeles
Bank alone would, therefore, be a futile and idle act, and
it appears that it would certainly not be in compliance
with the mandate or according to right and justice unless
the contrary is shown at a hearing on that subject. Hence,
costs, if a judgment for costs against the plaintiffs in
5678 results, can only be collected from the six so-called
member associations who joined in 5678, but not in the
cross-claim in 5421, as plaintiffs or possibly from all of
the members of the class they represent.

Lope ee
3 ese bi or

Se ig Wa RGA NR ae AD SE OR a

Pas’ te
Peel ate se

—57——

Certainly the appellate court, in requiring the dismissal
of 5678 at the “cost of plaintiffs,’ did not intend an
idle and ineffective act, but imtended that whatever the
costs were they should be paid by plaintiffs in 5678. The
procedure I am adopting thus appears to be the only
means of effecting such payrnent and complying with
the mandate, as a writ of execution for costs against

the non-existent Los Angeles Bank would be wholly use-
less.

And I, therefore, deem it jn strict compliance with
the express terms of the mamdate that such costs and
fees be allocated and charged under Rule 53(a) so that
at the time of dismissal the matter of the liability of the
plaintiff in action 5678 for such share, if any, of the
Master’s fees and costs for the discovery proceedings may
be settled and set forth by appropriate judgment or order.

The fees and costs of the Special Master do not ap-
pear to be included within those which might be settled
by the Clerk under Section 1920 of Title 28 U. S. C A.
Such fees and costs must be fixed and assessed by the
Court. Furthermore, Rule 54(d) permits the court to
review any action by the Clerk. And it has been dem-
onstrated upon many occasions in this lawsuit that any
appellate review will not be lightly passed by any of the
litigants.

A copy of this memorandum will be furnished the
Special Master who will regard it as a direction to forth-
with file a final report and account on the discovery pro-
ceedings and request for further fees and costs. if any,
and notice the same for hearing,

Upon settlement thereof and the charging of costs there-
on under Rule 53(a) against the litigants in the consoli-
dated cases 5421 and 5678 the reference to the Special
Master for the purposes of discovery and inspection will
be formally terminated and the Master discharged in con-

ba hl ia he BL SN

SA SRO L IE LEANER ASD OAV AOE AT tt Ee

.—58—

nection with the discovery and inspection; an Order will
then be made severing action 5678 from action 5421 and
a judgment made of dismissal and for costs incurred
against the plaintiffs in 5678 in accordance with the terms
of the mandate.

Observations Concerning Construction of Mandate, Op-
inions of Appellate Court and Proposed Orders Nos.
1, 2, 3, 4 and 5.

Before proceeding to a discussion or decision of the
other proposed orders and motions listed earlier in this
memorandum, it is necessary to make some observations
concerning the construction of the mandate and the opin-
ions of the appellate court. As heretofore indicated, I
deem it my duty to follow the mandate where it is specific,
and to do such other things, ‘‘as in conformity with the
‘ opinions and judgments of the appellate court, as accord-
4 ing to right and justice, and the laws of the United States
: ought to be done, the said appeals notwithstanding.”

Ree it oa Coe MNT”

A great deal of time and care was obviously spent by
the appellate court in the preparation of the long and de-
tailed opinions. Obviously considerable care was exerted
in connection with the preparation of the mandate. It is
clear from the mandate and the opinion in 12591 (the at-
torneys’ fees appeal), that the court held, and intended to
hold, that no jurisdiction existed in this court to enter-
tain civil action 5678 and that the entire action should be
dismissed.

Counsel for the Home Loan Bank Board and _ the
San Francisco Bank argued with more heat than illumina-
tion that certain occasional phrases in the opinion in
12511 (the injunction appeal) held there was lack of jur-
isdiction of action 5421. And basing their contention
thereon, instead of on the whole opinion, contended that
this court should dismiss action 5421 in its entirety. After
a careful re-reading of both of the appellate court’s op-

ot

a -

inions several times, as well as the mandate, I cannot
agree with that contention.

As indicated, the opinion of the appellate court was
carefully prepared and likewise the mandate. On the face
of the mandate it becomes apparent that the appellate court
intended a different result in 5421 than they did in 5678
inasmuch as they used the plain language, “dismiss civil
action 5678” and, “dismiss the following pleadings in civil
action 5421.” Had it intended to hold in 12511 that the
District Court had no jurisdiction at all, as they did in
their opinion on the appeal on the attorneys’ fees, No.
12591, I must indulge the presumption that they would
have plainly said to dismiss civil action 5421 as they did
Say to dismiss civil action 5678 instead of directing this

court to “dismiss the following pleadings in civil action
5421.”

But clearly the court held that the Administrative Pro-
cedure Act applied to proceedings for the appointment or
ousting of a conservator, an issue in action 5421. And
clearly held that “such a final administrative determina-
tion would have been subject to a judicial review at the
behest of Association,” 196 F. 2d 375, and that the
Administrative Procedure Act applied to pending cases
196 F. 2d at page 382. And specifically the court, by
footnote 15, at page 379 of 196 F. 24 stated: “We
express no opinion as to whether the lower court or a
federal court in the District of Columbia would have had
jurisdiction to review the final order or ‘determination’
of Administration.”

Neither of the appeals were before the appellate court
on the merits. There has never been any administrative
hearing either on the appointment of the conservator or
on the rescinding of the order appointing him or on his
accounting. And the very order which was on appeal to
the appellate court enjoined any such administrative hear-

ray

3
4

jail ia

ing, so such fact was well known to the appellate court in
making its opinion. I cannot read the opinion of the
appellate court in 12511 or the mandate as compelling any
other conclusion that that action 5421 was premature and
that was so because the parties had not exhausted their
administrative remedies before the Home Loan Bank
Board, and that after such an administrative hearing an
action will lie someplace, either in this court or in the
District of Columbia for judicial review in “one package”
196 F. 2d at page 390.

This conclusion is further fortified by the fact that the
mandate is specific as to the dismissal of only certain
pleadings out of the dozens which have been filed and
were in the record on appeal and the vacation of only two
orders out of the hundreds which were likewise in the
printed record on appeal and which had been made and
entered and involved and concerned interpleader and inter-
vention actions by several hundred persons owning prop-
erty and having loans from the Association, as well as
many others. Had the appellate court intended a dis-
missal of action No. 5421 and to do otherwise than limit
its mandate and its opinion, it would not have been so
specific in connection with the terms of the mandate re-
quiring the dismissal of the pleadings only.

Had the appellate court intended to dismiss action 5421
on the grounds of lack of jurisdiction, it would have been
entirely unnecessary to have included all of the directions
in the mandate which are carried in paragraph No. “2 a,
b. c, d and e,” paragraph No. “3”, and paragraph No.
“4”: all of those things would have been accomplished by
a simple order directing this court to dismiss action 5421
as it did as to action No. 5678 and all of the things speci-
fically designated in paragraphs 2, 3 and 4 would have oc-
curred as of course.

Moreover, there were many orders made in the con-
solidated proceedings which were regarded by all parties

- -

ee ee

aaa AER a te AREER LE A NER SPADA 1 Del a

—

as final orders. Under the appellate court opinions this
court must determine as to all of them whether such were,
“ancillary,” or whether “independent,” grounds of juris-
diction existed. The appellate court obviously did not
desire to disturb them, otherwise it either would have
directed the dismissal of the action or the vacation of such
orders. Reference to a few of such orders demonstrates
the point.

Entirely apart from the interpleader of Title Service
Company as owner under trust deeds of the legal title to
many hundreds of parcels of land, persons owning the
beneficial interest and purchasing over 400 separate par-
cels upon which residences either had been constructed, or
were in course of construction, filed 51 interpleader-inter-
ventions and final orders were made thereon. While the
attorneys for the San Francisco Bank refer to all inter-
ventions and interpleaders and the issues raised there-
on, as “spurious,” “specious,” “blantantly specious” and
like invectives, an appropriate judicial approach thereto
will not permit them to be brushed off so easily.

The fact is, and has never been denied by anyone, that
such owners were paying off loans on individual houses
to the Long Beach Association which loans were secured
by trust deeds upon their property under which trust deeds
the legal title of each parcel was held by a third party
as trustee; that the conservator then claimed the right to
have payments on such loans made to him as conservator
at the same time that the Long Beach Association. the
Shareholders Protective Committee were claiming the
conservator had no such right and that payments thereon
should be made to the regularly elected officers of the
Association; that such owners desired (as they were en-
titled to do), to pay their obligations on such notes and
trust deeds in full and receive clear and merchantable titles
to their property; and that if such owners paid to one

Al nae + ee ee ee _ 643 PREM vin,

_ aa —
|

agraph 3 of the mandate and with the matters and things
involved in case No. 13979, arises principally because of
two things, which may be more or less summarily stated
as follows: (1) the contention of the Long Beach Asso-
ciation that this court can, in compliance with the man-
date, and must under applicable law, retain the money and
securities referred to in Paragraph 3 of the mandate and
now on deposit in 5421, in the registry of the court, but
transfer the same to action 13979, for the reason that
Long Beach Association has filed an answer to the com-
plaint of the San Francisco Bank in 13979, denying the
indebtedness, and the validity of the notes, and asserting
affirmative relief and stating in its answer and cross-
claim that it re-interpleads into court in action 13979 all
of the bonds, securities and money now on deposit in the
registry of the court in 5421 and belonging to Long Beach
Federal Savings and Loan Association; and, (2), the
allegation contained in the complaint of the San Francisco
Bank in paragraph VIII of its Fifth Cause of Action to
the effect that all of the United States Government bonds,
and all the individual borrowers’ notes and deeds of trust
on real property securing the same were assigned, deliv-
ered and pledged to the San Francisco Bank as security
for the notes now in the principal sum of $6,300,000,
which are the subject matter of action 13979 and “that
by reason of said assignments and pledges said plain-
tiff (7. ¢., the San Francisco Bank) became, ever since has
been, and still is, the owner and holder of a lien upon all
said pledged and assigned property;” and the further
allegation contained in paragraph 15 of the complaint of
the San Francisco Bank in its Fifth Cause of Action to
the effect that Long Beach Association is estopped from
denying that plaintiff “is the holder of a lien upon all of
the personal property pledged to plaintiff, or any substi-
tuted collateral.”

_ a

oe al i! a tah et Si hd 0 PE! i th he wD wind ? a ; é - ye —

The complaint of the San Francisco Bank in No. 13979
thus appears to be a complaint to foreclose a lien upon the
United States Bonds and all of the individual borrowers’
notes and trust deeds securing them (about 6,000 sepa-
rate trust deeds and notes) which were ordered deposited
in court by this court’s order of March 13, 1948 and
which were thereafter, by an order of this court on the
26th day of March, 1948, delivered to the Long Beach
Association. After the return to the Association of the
individual borrowers’ notes and trust deeds, the Associa-
tion continued to accept payments thereon, and according
to documents on file about 1700 of them have been paid
in full and title re-conveyed.

Under the order of March 13, 1948 directing the
deposit of collateral in court there was deposited in this
court U. S. Government bonds of the face value of
$5,300,000 belonging to the Long Beach Association and
several thousand borrowers’ notes, the payee of each of
which was the Long Beach Federal Savings and Loan
Association, with the trust deeds securing each of them,
transferring the legal title to the property covered to a
third party as trustee. All these had been transferred
by Ammann as conservator to the San Francisco Bank
as security for loans made to Ammann while conservator
of the Long Beach Association. Whether the allega-
tions above mentioned contained in the complaint of the
San Francisco Bank in 13979 precipitated them or not,
the fact nevertheless remains that Home Investment Co.
which, as owner of 174 separate parcels of property, had
interpleaded cash in excess of $700,000 in action 5421
due on notes secured by trust deeds on the 174 parcels of
property, and the Title Service Co., holder of the legal
title as trustee under deeds of trust securing many of the
notes involved in 50 other interpleaders similar to Home
Investment Co., and holding the legal title as Trustee to
several thousand other parcels of property deposited in

aE —_

2 sia aXe ina

court, joined in a cross-complaint in inter-pleader in
13979 as did also the Long Beach Federal Savings and
Loan Association. All of them, that is to say, Home
Investment Co., Title Service Company and Long Beach
Federal Savings and Loan Association, have filed a mo-
tion in 13979 which was heard beginning October 12th
along with all of the other motions, for a summary judg-
ment quieting title to all of the property covered by such
trust deeds and to such trust deeds and notes executed by
individual borrowers from Long Beach Association as
against the San Francisco Bank, and as against other
persons named as cross-defendants in the various cross-
claims filed in action 13979,

By the order of March 26, 1948, returning the trust
deeds and notes to Long Beach and transferring to the
cash and bonds in court whatever lien existed in favor of
the San Francisco Bank on the conservator’s notes which
are now the subject of suit No. 13979, the court, instead
of attempting to judicially run the business of the Long
Beach Association, turned over to it. the matter of col-
lection and servicing of the several thousand notes and
trust deeds, but preserved, or attempted to preserve the
rights of the litigants for ultimate judicial determination.

Paragraph No. 3 of the mandate requires two things:
(1) that the order of March 13, 1948 requiring the de-
posit in court of the conservator’s notes, the government
bonds and trust deeds with their accompanying individual
borrowers’ notes, be dissolved, set aside, and vacated, and
(2) the return to the Federal Home Loan Bank of San
Francisco of the conservator’s notes principal aggregate
face amount of $6,300,000, together with the substituted
collateral made under the order of March 26, 1948.

If an order is made in compliance with the first provi-
sion of paragraph 3 of the mandate directing the vaca-
tion of the order for deposit in court of March 13, 1948,

tii.

a lle ath Ab Se hia AEs Nn, Sia hes ‘ = . . ay
ae

fat

*
25, 1952, action 13,979 was originally instituted in the Stu
Court by San Francisco Bank and later removed to *'
lower court. Pursuant to our suggestion, no argument was
presented in the instant proceeding on the issue of rema .
of 13,979. (See paragraph 6, supra, of prayer of petitioner:
petition referring to said case 13,979.) The ‘‘note case’’ is a.
action instituted by San Francisco Bank against Long Beach
Federal Savings and Loan Association (one of the Respondent
litigants herein) to recover judgment on four notes of Long
Beach (which had been given to evidence a loan to Long Beach
while one Ammann was serving as its Conservator) and to
foreclose the collateral securing the same.

In this opinion we will sometimes refer to the Respondent
District Judge and to his court as the ‘‘District Judge,’’ as the
*‘eourt below’’ or as ‘‘the lower court,’’ as the context will per-
mit or suggest. Respondent litigants herein may be so desig-
nated, or merely be referred to as the “‘litigants.’’ ‘‘Home Loan
Bank of San Francisco’’ will be referred to as ‘‘San Francisco
Bank.’’ As a group, petitioners in the instant petition for re-
lief may sometimes be referred to as the ‘‘petitio

[Text truncated at 120,000 characters. The full text is on the page linked above.]

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386418_0366%3A2. Public record. Not legal advice.