Central S. & L. Ass'n of Chariton, Iowa v. Federal HLB Bd.

Citation422 F.2d 504
Decision Date25 February 1970
Docket NumberNo. 19614-19616.,19614-19616.
PartiesCENTRAL SAVINGS AND LOAN ASSOCIATION OF CHARITON, IOWA, et al., Appellants, v. FEDERAL HOME LOAN BANK BOARD et al., Appellees. CENTRAL SAVINGS AND LOAN ASSOCIATION OF CHARITON, IOWA, et al., Appellants, v. UNITED FEDERAL SAVINGS AND LOAN ASSOCIATION OF DES MOINES, IOWA, Appellee. FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION, Carroll, Iowa, Appellant, v. FEDERAL HOME LOAN BANK BOARD et al., Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

John D. Shors and A. Arthur Davis, Des Moines, Iowa, for appellants; Donald A. Wine, Des Moines, Iowa, Shirley A. Webster, Winterset, Iowa, R. H. Werner Creston, Iowa, Walter Ward Reynoldson, Osceola, Iowa, and G. A. Minnich, Jr., Carroll, Iowa, on the briefs.

Edward F. Sloane, of Sloane & Muldoon, Washington, D. C., for appellee United Federal Savings and Loan Assn. of Des Moines; Joseph A. Muldoon, Jr., Washington, D. C., on the brief.

Daniel J. Goldberg, Asst. Gen. Counsel, Federal Home Loan Bank Bd., Washington, D. C., for Federal Home Loan Bank Bd.; Arthur W. Leibold, Jr., Gen. Counsel, Max Wilfand, Deputy Gen. Counsel, Paul E. McGraw, Assoc. Gen. Counsel, Federal Home Loan Bank Bd., on the brief.

Before MATTHES, BLACKMUN and BRIGHT, Circuit Judges.

BRIGHT, Circuit Judge.

When the Federal Home Loan Bank Board authorized United Federal Savings and Loan Association of Des Moines, Iowa (United Federal) to utilize a mobile savings and loan facility (essentially an office mounted on wheels) to provide its services to three Iowa communities, several competitors brought civil actions for injunctive and declaratory relief to negate the exercise of such authority. In two actions against the Federal Home Loan Bank Board (Board) and its members, plaintiffs, state-chartered commercial banks, a director of one of them, two state savings and loan associations, two federal savings and loan associations, and a director of a third, sought to invalidate the regulations and the order under which the Board had authorized United Federal to furnish such services. In a third action similar relief on similar grounds was sought against United Federal and as an additional basis for an injunction these plaintiffs alleged that United Federal, in seeking to operate the mobile facilities and in seeking to merge with another Iowa Federal savings and loan association, had violated the Sherman Anti-Trust Law and the Clayton Act, 15 U.S.C. § § 1 et seq., 15 et seq.

The trial court consolidated these actions and, thereafter, in response to defendants' motions to dismiss, treated as applications for summary judgment (per Fed.R.Civ.P. 12(b), 56), entered judgments dismissing all of the actions. Plaintiffs appeal from these judgments.

Appellants do not dispute an initial determination of the trial court that only federal savings and loan associations and their officers possess standing to sue the Board. See 12 U.S.C. § 1464(d) (1). The standing of these plaintiffs, as well as the appeal on the separate anti-trust allegations, suffice to enable us to review all issues raised. 12 U.S.C. § 1464(d) (1); 15 U.S.C. § 26; 28 U.S.C. § 1291.

The trial court in an opinion reported as Central Savings and Loan Association of Chariton, Iowa v. Federal Home Loan Bank Board, 293 F.Supp. 617 (S.D.Iowa 1968), determined that United Federal possessed lawful and proper authority to provide savings and loan services through a mobile facility. The court also determined that the appellants' complaint for violation of the anti-trust laws failed to state a proper claim for relief.

We agree with Judge Stephenson's opinion and affirm for the reasons he has advanced, together with our amplification of them.

Appellants essentially claim:

(1) that the Board exceeded its statutory authority in promulgating the regulations relating to the use of mobile facilities;

(2) that the Board acted arbitrarily and capriciously in granting United Federal authority to provide such savings and loan services to three Iowa communities; and

(3) that United Federal's proposed operation of mobile facilities together with its proposed merger with a similar association violate the federal anti-trust laws.

The underlying statute here pertinent reads:

"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 authorized, under such rules and regulations as it may prescribe, to provide for the organization, incorporation, examination, 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 institutions in the United States." (Emphasis added.) 12 U.S.C.A. § 1464(a).

Appellants focus their attack on the language of the statute which requires that in promulgating regulations, the Board give "primary consideration to the best practices of local mutual thrift and home-financing institutions in the United States".

The parties concede that no local mutual thrift and home-financing institution in the United States utilized mobile facilities at the time the Board adopted the regulation authorizing their use.1 On this predicate appellants argue that the Board possessed no authority under the "best practices" clause of the statute to promulgate any regulation authorizing the use of mobile facilities. In rejecting this argument, Judge Stephenson said:

"The use of the word `primary\' in the statute necessarily indicates that the Board was also to be guided by considerations other than existing `best practices.\' It can hardly be argued that the Board was to adopt those existing practices which were not `best practices.\' The inescapable conclusion is that the Board, in the exercise of its special expertise in the area, was to institute practices it felt advisable even where the states had failed to act." 293 F.Supp. at 621-622.

Our acceptance of appellants' posture of equating best practices with only existing practices would unduly restrict the thrust of the broad, general language of the statute which lays down general rules and prohibitions, but which leaves details to the Board. North Arlington National Bank v. Kearny Federal Savings & Loan Association, 187 F.2d 564, 565 (3rd Cir.), cert. denied, 342 U.S. 816, 72 S.Ct. 30, 96 L.Ed. 617 (1951). Certainly that statutory language does not bind the Board inexorably to existing and past practices of local mutual thrift and home-financing institutions. Further, the concept of "best practices" includes changing, modifying or adapting existing practices to new conditions. The Board, by regulations, since 1934 has permitted savings and loan associations to operate branch offices. 12 C.F.R. § 545.14(a). A mobile facility offers the same services as a branch, but on a limited and part-time basis. Compare 12 C.F.R. § 545.14(a) (1) with § 545.14-4(b) (5). No radical concept underlies the placing of wheels under a structure so as to constitute an office capable of moving from place to place. The utility and sensibility of a traveling office as a method for providing limited savings and loan services needed by a small community would seem rather obvious. In the context of the federal banking law the United States Supreme Court holds that mobile facilities in which deposits are received and checks cashed serves as a "branch" of the bank which operates it. First National Bank in Plant City, Fla. v. Dickinson, 396 U.S. 122, 90 S.Ct. 337, 24 L.Ed.2d 312 (1969).

The mere fact that savings and loan associations and other similar institutions did not utilize mobile facilities at the time the regulation was adopted by the Board does not void the institution of this new practice adapted from prior experience. Accordingly, we hold the regulation to be within the purview of the underlying statute.

The appellants also specifically attack the mobile facilities regulation as being outside the purposes of the Act, urging that such facilities are inherently "non-local" to the communities they serve. Judge Stephenson, on the reasoning of North Arlington National Bank v. Kearny Federal Savings & Loan Association, supra, and First National Bank of McKeesport v. First Federal Savings and Loan Association, 96 U.S.App.D.C. 194, 225 F.2d 33 (1955), rejected this contention. Savings and loan associations may loan funds upon real property "within one hundred miles of their home office * * *." 12 U.S.C. § 1464(c). Operations within this primary lending area preserve the institution's local character.

As still another prong of appellants' attack they assert that local communities will sustain harm by services furnished through a mobile facility. They support this contention by an affidavit of the Iowa Commissioner of Banking, who states "* * * such a facility will harm the communities which it visits * * *." The statement in this affidavit raises no factual issue. The ultimate effects of the operation of mobile facilities, be they beneficial or detrimental, fall within the scope of those issues statutorily committed to the exclusive discretion of the Board. See Bridgeport Federal Savings and Loan Association v. Federal Home Loan Bank Board, 307 F.2d 580 (3rd Cir. 1962), cert. denied, 371 U.S. 950, 83 S.Ct. 504, 9 L.Ed.2d 499 (1963); Federal Home Loan Bank Board v. Rowe, 109 U.S.App.D.C. 140, 284 F.2d 274 (1960); First National Bank of McKeesport v. First Federal Savings and Loan Association, supra.

In requesting authority from the Board to serve eleven Iowa communities United Federal asserted service could feasibly be furnished to as few as five or six communities. The Board consented to service for three. Given these circumstances, appellants pled that the Board acted arbitrarily and capriciously in authorizing services to so few communities. Appellants argue that we must take the pleaded facts to be true...

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