Board of Dir. & O., Forbes Fed. Cr. U. v. National Cr. U. Adm.

Decision Date26 April 1973
Docket NumberNo. 72-1351.,72-1351.
Citation477 F.2d 777
PartiesBOARD OF DIRECTORS AND OFFICERS, FORBES FEDERAL CREDIT UNION, Charter No. 11258, Forbes Air Force Base, Topeka, Kansas, Petitioners, v. NATIONAL CREDIT UNION ADMINISTRATION, Respondent.
CourtU.S. Court of Appeals — Tenth Circuit

COPYRIGHT MATERIAL OMITTED

Gerald W. Hyland (Dale W. Bruce and Robert L. Davis, Davis, Bruce, Davis & Cather, Wichita, Kan., on the brief), for petitioners.

Edwin E. Huddleson, III, Atty., Dept. of Justice (Harlington Wood, Jr., Asst. Atty. Gen., and Robert E. Kopp, Atty., Dept. of Justice, on the brief), for respondent.

Before HILL, McWILLIAMS, and BARRETT, Circuit Judges.

McWILLIAMS, Circuit Judge.

This is a dispute between the officers and directors of the Forbes Federal Credit Union of Topeka, Kansas, and the National Credit Union Administration over the meaning of a 1967 amendment to the charter of the Forbes Federal Credit Union. The amendment in question relates to the eligibility requirements for membership in the Forbes credit union.

The matter was first heard by a Hearing Examiner designated by the Administrator of the National Credit Union Administration to conduct a hearing. After an extended evidentiary hearing, the examiner made elaborate findings and conclusions, and filed a "Recommended Decision," all of which was then adopted by the Administrator as his "Final Decision and Order." The officers and directors of the Forbes Federal Credit Union thereafter filed a petition in this court seeking direct judicial review by us of the Administrator's order, asking in connection therewith that we invalidate the order. 12 U.S.C. § 1786(i). Background facts will have to be developed if the narrow issue is to be seen in context.

A federal credit union is defined by statute as a "cooperative association organized * * * for the purpose of promoting thrift among its members and creating a source of credit for provident or productive purposes." 12 U.S.C. § 1752(1). The initial Act of Congress permitting the formation of such credit unions occurred in 1934.

In 1956, Forbes Federal Credit Union, hereinafter referred to simply as Forbes, was organized under the Federal Credit Union Act and was granted a charter by the Bureau of Federal Credit Unions, the predecessor agency to the National Credit Union Administration. 12 U.S.C. §§ 1771-1790. By its terms this charter permitted Forbes to serve military personnel permanently assigned to the Forbes Air Force Base in Topeka, Kansas, and civilian personnel employed thereat.

In April 1967, Forbes was advised by the Bureau that it could apply for an amendment to section 5 of its charter which would permit it to extend its credit union services to a somewhat larger field of membership. Application for such charter amendment was made by Forbes, and the application therefor was approved by the Bureau on May 5, 1967. Section 5 of Forbes' charter, as thus amended by the so-called 1967 amendment, reads as follows:

"The field of membership shall be limited to those having the following common bond: Civilian employees and military personnel of the Department of the Air Force who work at and are permanently assigned to the Forbes Air Force Base in Topeka, Kansas; members of the U. S. Armed Forces, active or retired, or their dependents or dependent survivors who are eligible by law or regulation to receive benefits or services from the above military installation; members of this credit union who are stationed at military bases overseas and retain their membership in this credit union; employees of this credit union; members of their immediate families; and organizations of such persons." (Emphasis added.)

The emphasized portion in the foregoing constitutes the so-called 1967 charter amendment and the present controversy concerns the meaning of that particular language.

By way of additional background, this particular charter change came about as the result of a request from the Department of Defense to the Bureau that eligibility requirements be altered so as to permit membership in a local federal credit union by military personnel who were "geographically separated" from their parent organization and were receiving normal services such as, for example, commissary and exchange services, from the nearest military base providing such services. More particularly, in this regard the Department of Defense wrote as follows:

"* * * In order to correct this situation, we request your consideration of an amendment to BFCU regulations which would permit a member of the armed services, either active or retired or his legal survivors, to become a member of a credit union located on the military installation which provides other services to that member or survivor. * * *"

As a result of that request, the Bureau authorized amendments to the charters of several local federal credit unions of the same type granted Forbes. Inquiry was soon made to the Bureau as to whether such amendment permitted local credit unions to enroll as members any and all military personnel who were eligible to receive services at their particular military installation, regardless of whether they had actually received any benefits or services from the military base where the particular credit union was located. In this regard, apparently all military personnel, wherever located geographically, are "eligible" to receive benefits and services from any military base, even though they may never do so. In response to these inquiries, the Bureau issued a memorandum to all of its regional representatives and examiners in June 1967, interpreting the 1967 Amendment as follows:

"The Bureau interprets the 1967 Amendment as applying only to those persons who are so situated that they can and in fact do utilize the benefits or services provided by the named installation. This is necessary to assure that the person is a part of the military community of the installation."

The foregoing "interpretation" of the so-called 1967 Amendment was generally announced to the federal credit union industry and in October 1967 the Bureau's bulletin specifically advised all Department of Defense affiliated credit unions, including Forbes, of its interpretation in the following language:

"To avoid any misunderstanding as to who would be eligible for membership by the adoption of the amendment, the following interpretation should be used as a guide:
`Those people who are so situated that they can and in fact do, make fairly regular use of the benefits and services provided by the named installation.\'
"This is necessary to assure that the person is a part of the military community of the installation."

In 1968, the Bureau amended the 1967 Amendment to the end that charter amendments approved thereafter read as follows:

"Members of the U. S. Armed Forces, active or retired, or their dependents or dependent survivors who are eligible by law or regulations to receive and are receiving benefits or services from the above military installation."

The italicized portion of the foregoing was added in 1968 to the wording of the 1967 Amendment, which addition was in line with the Bureau's prior "interpretation" of the 1967 Amendment. However, prior to the 1968 change, many local federal credit unions, including Forbes, had their charters amended in language of the 1967 Amendment, which did not include the words "and are receiving." And Forbes, at least, does not agree with the Bureau's interpretation of the 1967 Amendment.

Forbes' position, in a nutshell, is that the 1967 Amendment should be interpreted just as it reads, and that under the 1967 Amendment, Forbes is entitled to enroll as members any and all military personnel who are "eligible" to receive benefits and services from Forbes Air Force Base, regardless of whether the military personnel have ever in fact received any benefit or service at Forbes Air Force Base. Under such interpretation, as we understand it, Forbes could enroll as a member in its credit union military personnel located anywhere around the world, since all are "eligible" to receive benefits and services at Forbes Air Force Base, regardless of whether the individual sought to be enrolled has ever in fact received any benefit or service at Forbes Air Force Base. And, conversely, we assume that other credit unions with a similar charter amendment could invade Forbes Air Force Base and enroll military personnel attached to that installation.

These differing interpretations by Forbes and the Bureau of the former's 1967 charter amendment were known and recognized by each of the parties, but apparently did not come to a head till May 1969. In April 1969, the president of Forbes advised the Bureau that in his view the 1967 Amendment authorized Forbes to enroll as members any person in the military service, notwithstanding the Bureau's narrower interpretation. Despite a warning from the Bureau, Forbes, in May 1969, set up a so-called "branch office" at Sewart Air Force Base in Tennessee. More specifically, in May 1969 Forbes sent a representative to Sewart who conducted extensive business with military personnel on that base until March 1970, accepting, for example, some 1150 new members. There is some suggestion that Sewart Air Force Base was at the time in the process of being deactivated. In any event, some of the newly enrolled members were eventually transferred to Forbes Air Force Base in Topeka. However, other newly enrolled members were never transferred to Forbes Air Force Base and in fact were eventually transferred to other military installations.

In November 1970, the National Credit Union Administration, that agency having succeeded by Act of Congress to the powers and duties of the old Bureau, formally requested Forbes to abide by its interpretation of the 1967 Amendment. Forbes refused, and as a result of such refusal the Administrator on July 13, 1971, issued a Notice of Charges to Forbes and its Board of Directors,...

To continue reading

Request your trial
25 cases
  • Jets Services, Inc. v. Hoffman
    • United States
    • U.S. District Court — Middle District of Florida
    • October 4, 1976
    ...498, 501 (5th Cir. 1974); Shell Oil Co. v. FPC, 491 F.2d 82, 88 (5th Cir. 1974); Board of Directors & Officers, Forbes Fed. Credit Union v. National Credit Union Admin., 477 F.2d 777, 784 (10th Cir. 1973); Roy Bryant Cattle Co. v. United States, 463 F.2d 418, 420 (5th Cir. 1972); Crowley v.......
  • Adams v. Califano
    • United States
    • U.S. District Court — District of Maryland
    • August 17, 1979
    ...v. Interior Board of Mine Operations Appeals, 522 F.2d 581, 584 (3d Cir. 1975); Board of Directors & Officers, Forbes Federal Credit Union v. National Credit Union Administration, 477 F.2d 777, 784 (10th Cir.), cert. denied, 414 U.S. 924, 94 S.Ct. 233, 38 L.Ed.2d 158 (1973); Jets Services, ......
  • Herbert v. National Credit Union Admin. Bd.
    • United States
    • U.S. District Court — Eastern District of Missouri
    • June 29, 1987
    ...pursuant to the APA is arbitrariness review. 5 U.S.C. § 706. See Board of Directors and Officers, Forbes Federal Credit Union v. National Credit Union Administration, 477 F.2d 777 (10th Cir.), cert. denied, 414 U.S. 924, 94 S.Ct. 233, 38 L.Ed.2d 158 It is clear that, in enacting the Federal......
  • Afton Alps, Inc. v. United States, Civ. No. 5-74-43.
    • United States
    • U.S. District Court — District of Minnesota
    • November 1, 1974
    ...in resolving the ambiguity created by that silence. See, Board of Directors and Officers, Forbes Federal Credit Union v. National Credit Union Administration, 477 F.2d 777, 784 (10th Cir. 1973), cert. denied, 414 U.S. 924, 94 S.Ct. 233, 38 L. Ed.2d 158 (1974); Gulf Oil Corp. v. Hickel, 140 ......
  • Request a trial to view additional results
1 books & journal articles
  • CHAPTER 4 PREPARING THE DEFENSE TO ADMINISTRATIVE ENFORCEMENT
    • United States
    • FNREL - Special Institute Natural Resources Administrative Law and Procedure (FNREL)
    • Invalid date
    ...792, 801, 13 L.Ed.2d 616 (1965); Board of Directors and Officers, Forbes Federal Credit Union v. National Credit Union Administration, 477 F.2d 777, 784 (10th Cir. 1973). [16] Hercules Inc. v. Environmental Protection Agency, 598 F.2d 91, 101 (D.C. Cir. 1978). [17] Guardian Federal Savings ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT