Fahey v. O'Melveny & Myers

• Citation: 200 F.2d 420
• Decision Date: 17 December 1952
• Docket Number: No. 12591.,12591.
• Parties: FAHEY et al. v. O'MELVENY & MYERS et al. FEDERAL HOME LOAN BANK OF SAN FRANCISCO v. O'MELVENY & MYERS et al.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

200 F.2d 420 (1952)

FAHEY et al. v. O'MELVENY & MYERS et al.

FEDERAL HOME LOAN BANK OF SAN FRANCISCO v. O'MELVENY & MYERS et al.

No. 12591.

United States Court of Appeals Ninth Circuit.

November 6, 1952.

Rehearing Denied December 17, 1952.

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Holmes Baldridge, Asst. Atty. Gen., Edward H. Hickey, Donald B. MacGuineas, Attys. Dept. of Justice, Washington, D. C., Verne Dusenbery, Portland, Or., Philip H. Angell, San Francisco, Cal., and Sylvester Hoffmann, Los Angeles, Cal. (Mose Silverman, Washington, D. C., Robert M. Adams, Jr., San Francisco, Cal., of counsel), for appellants.

Richard Fitzpatrick in pro. per.

Louis W. Myers, Paul Fussell, John Whyte and Pierce Works, Los Angeles, Cal., for appellees O'Melveny & Myers and Richard Fitzpatrick.

W. I. Gilbert, Jr., Los Angeles, Cal., for appellee W. I. Gilbert, Jr.

Charles K. Chapman, Long Beach, Cal., for appellee Long Beach Fed. Savings & Loan.

Westover & Smith, Los Angeles, Cal., for appellees Mallonee and others.

Before STEPHENS, HEALY and BONE, Circuit Judges.

BONE, Circuit Judge.

I

The essential issues presented on this appeal primarily involve and concern the status and operations of Federal Home Loan Banks. The instant appeal is from one of the many orders made by the lower court in proceedings in the so-called "consolidated cases" ("Mallonee Case" and the "Los Angeles Action") described in our opinion in Case No. 12,511, 196 F.2d 336, entitled "Home Loan Bank Board et al. v. Mallonee et al., and consolidated case Federal Home Loan Bank of San Francisco, et al. v. Federal Home Loan Bank of Los Angeles, et al." For convenience we shall hereafter refer to the entensive litigation embraced in these consolidated cases as the "main case," and for a better understanding of the facts and issues involved in this appeal reference should be had to our opinion in the main case. Many important contentions advanced on this appeal were relied on by the same parties in that case and they have stipulated that portions of the printed record in appeal No. 12,511 should be available for reference and utilization in this case. We approved this procedure.

A frequent reference will be made herein to "the Board" or "Board." As indicated in footnote 3 to our opinion in the main case, 196 F.2d 342, the composition and official status of the administrative authority or agency having supervisory control over the operations of Federal Home Loan Banks under the Federal Home Loan Bank Act, Chapter 11, Title 12 U.S.C.A., underwent the various changes there noted. Our use of the terms "Board" or "the Board" is a reference to this central administrative agency or authority and includes (when suggested in context) the former Home Loan Bank "Administration" referred to in our opinion in case No. 12,511. The term "association" or "associations" is a reference to any Federal Savings and Loan Association other than the "Long Beach Federal Savings and Loan Association" (a litigant in the main case) the latter being referred to herein as "Association."

A reference to three Board orders here in controversy means the three reorganization orders issued by the Board (then "Administration") on March 29, 1946, these being numbered 5082, 5083 and 5084. See footnote 5 in our main case opinion for text of the orders. 196 F.2d 343. The former Federal Home Loan Bank of Los Angeles was abolished by these Orders which merged it (along with the Federal Home Loan Bank of Portland) into the Federal Home Loan Bank of San Francisco. The former Federal Home Loan Bank of Los Angeles will be variously referred to by that title or as "Los Angeles Bank," or "Los Angeles." "Los Angeles Action" means the action instituted in the main case by the Federal Home Loan Bank of Los Angeles and six "association" co-plaintiffs. It was there consolidated with the so-called "Mallonee Case."

The Federal Home Loan Bank of San Francisco will be referred to by that title or simply as "San Francisco." Where necessary or desirable, the Federal Home Loan Bank of Portland will be referred to by that title, or as "Portland," or the "Portland Bank."

The highly involved controversy described in our opinion in the main case appears to be without a counterpart in the books and by reason of entire absence of case law authority which directly deals with and/or directly passes on issues here presented which involve the problem of administrative supervision of Federal Home Loan Banks, we must and do conclude that the final and conclusive answer to many important contentions of the parties before us must necessarily be found in the clear and unambiguous terms of the Federal Home Loan Bank Act. Allied legislation touching the operations of associations under the Home Owners' Loan Act of 1933, as amended, 12 U.S.C.A. § 1461 et seq., is also involved. Where any issues raised in the main case legitimately come within the orbit of the instant appeal we will treat them as proper factors for consideration and comment.

The Basis of This Appeal.

The order which is the subject of the instant appeal directed the payment of "interim attorneys' fees" to appellees from certain funds which had been impounded in the registry of the lower court by an order made during proceedings in the main case. Which of the various litigants in that case owned these funds, and/or had right to possession of the whole or any part thereof, was a controversy confronting the lower court, and the impounding order here involved placed these funds and assets in the registry of the court pending final adjudication of the merits of the various claims. At a later point we discuss their source and nature.

The order on appeal originated in the manner we now indicate. It was entered on June 19, 1950 in the main case and was issued pursuant to motions filed in that case in January 1949 and February 1950 by the co-plaintiffs in the so-called "Los Angeles Action." Appellees were and are counsel for the former Federal Home Loan Bank of Los Angeles and one of its six association co-plaintiffs (Wilmington) and the motion was based on the grounds that this former bank had no funds with which to pay its attorneys for services in that case "since all of its assets are in the possession of Federal Home Loan Bank of Portland, sometimes known and referred to as a Federal Home Loan Bank of San Francisco,"¹ and that the associated plaintiffs (plaintiffs in the so-called "Los Angeles action") "have a beneficial interest in the assets of Los Angeles Bank now in possession of said defendant Federal Home Loan Bank of Portland sufficient to entitle them, and each of them, to the payment out of said assets of the fees of their attorneys." (Emphasis supplied.)

The order directed the clerk of the lower court to pay from and out of these impounded funds the sum of $67,500 to appellees who were counsel for Los Angeles, for services theretofore rendered in the so-called "Los Angeles action"; and to pay the sum of $7,500 to counsel for Wilmington Association (a co-plaintiff in said action) for services theretofore rendered in the "consolidated actions."² The court described the allowance as "an interim allowance on account only" and the formal order provided that the payment be made "out of funds and moneys heretofore deposited and now on deposit in the Registry of the Court in the above entitled consolidated actions" and that "the amounts ordered hereby paid generally from the funds in the Registry of the Court are not by the terms of this Order, imposed, allocated or assessed upon or against any specific party or parties, fund or funds, provided, however, that it is hereby determined and ordered that the amounts, or any part thereof, herein allowed and ordered paid from said funds shall never be allocated against or imposed upon funds or assets owned by or belonging to the Long Beach Federal Savings and Loan Association, (Association) or any of its shareholders, members or stockholders, either individually, or as an association, except as such association shall be required to bear as a member-shareholder only of a Federal Home Loan Bank. The intention being that the services for which fees are herein allowed are primarily for the benefit of said Los Angeles Bank and its association member-shareholders as distinguished from the Long Beach Association and other parties as separate entities or parties."

The order further provided "that Long Beach Association³ shall not at any time be required to deposit any additional money or property in Court in these consolidated actions upon or because of the payment of all or any portion of the sums herein ordered and directed to be paid."

It will be noted that the foregoing motion of Los Angeles refers to "assets of Los Angeles Bank now in possession of said defendant Federal Home Loan Bank of Portland." As indicated above, "Portland" and "Los Angeles" banks were merged into the Federal Home Loan Bank of San Francisco.

Other appeals now pending in this court also involve these impounded funds which suggests the necessity of identifying their source and nature. The record indicates, and stress is given the fact that this fund arose out of five "interpleader or intervention proceedings" in the so-called "Mallonee Case," supra, (which was consolidated with the "Los Angeles Action" in the main case) each of which interpleader proceedings was based on the presumption that the 1946 order of the Federal Home Loan Bank Administration appointing Ammann as Conservator of the Long Beach Federal Savings and Loan Association was void ab initio, and that every act performed by Ammann in the management of the said Association was a nullity and therefore subject to collateral attack. These interpleader and/or intervention proceedings in the main case which we describe at this point were instituted by Title Service Company, Robert H. Wallis, Home Investment...