City Federal Sav. & Loan Ass'n v. Federal Home Loan Bank Bd., s. 78-1038

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Citation600 F.2d 681
Docket NumberNos. 78-1038,78-1498,s. 78-1038
PartiesCITY FEDERAL SAVINGS & LOAN ASSOCIATION, Plaintiff-Appellant, v. FEDERAL HOME LOAN BANK BOARD and First Federal Savings & Loan Association, Defendants-Appellees. MUTUAL SAVINGS & LOAN ASSOCIATION OF WISCONSIN, Plaintiff-Appellant, v. FEDERAL HOME LOAN BANK BOARD et al., Defendants-Appellees.
Decision Date21 June 1979

Edward A. Dudek, Milwaukee, Wis., for plaintiff-appellant.

Harvey Simon, Washington, D. C., for defendants-appellees.

Before FAIRCHILD, Chief Judge, PELL, Circuit Judge, and WHELAN, Senior District Judge. *

PELL, Circuit Judge.

These consolidated appeals are from summary judgments granted in suits challenging two resolutions of the Federal Home Loan Bank Board (FHLBB or Board). Both of the resolutions at issue grant authority to the First Federal Savings and Loan Association of Wisconsin (First Federal) to operate branch facilities in two areas near Milwaukee, Wisconsin. The plaintiff-appellant in No. 78-1038, City Federal Savings and Loan Association (City Federal), challenges FHLBB Resolution No. 75-400, approving the establishment by First Federal of a limited branch facility. 1 The plaintiff-appellant in No. 78-1498, Mutual Savings and Loan Association of Wisconsin (Mutual), challenges FHLBB Resolution No. 72-1161, approving the establishment by First Federal of a regular branch facility. Both plaintiff associations sought declaratory and injunctive relief in the district court. In both actions the district court granted summary judgment in favor of the FHLBB. City Federal Savings and Loan Association v. FHLBB, 441 F.Supp. 89 (E.D.Wis.1977); Community Savings and Loan v. FHLBB, 443 F.Supp. 927 (E.D.Wis.1978).

In Appeal No. 78-1038 City Federal raises two major arguments. The first challenges the legality of the Board's limited branch facility regulation, 12 C.F.R. § 545.14(j). The second challenges as arbitrary and capricious the Board resolution authorizing the limited branch facility. In Appeal No. 78-1498 Mutual challenges the Board resolution authorizing the regular branch facility as arbitrary and capricious. An underlying issue is raised concerning the scope of judicial review and the extent of the limitations on that review imposed by the concept of deference to administrative expertise, particularly when the administrative record reflects little more than that a decision has been made and what that decision was. For the reasons explained herein, we do not reach the merits of the arbitrariness issue in either case. Before discussing in detail the issues raised by these appeals we shall summarize the facts of each case.

I. The Facts
A. No. 78-1038: The Limited Facility Branch

In August 1974, First Federal filed with the Board an application proposing a limited branch facility at a specified location in West Allis, Wisconsin. At the time of this application, the appellant City Federal was operating a regular branch office from temporary trailer quarters 240 feet west of the proposed site. City Federal had opened this office pursuant to Board authority obtained approximately one year prior to First Federal's application. Another plaintiff, West Allis Savings and Loan, which did not join in the present appeals, operated an office 900 feet east of the proposed site. City Federal and West Allis Savings and Loan filed protests with the Board with supporting documents. The Board's Regional Supervisory Agent heard oral arguments.

After the oral argument, the Regional Supervisory Agent and the Office of Industry Development (OID) summarized the information compiled in the course of the application proceedings, including the results of a study conducted by the OID to determine the effect of other First Federal branches on nearby savings and loan offices. On April 29, 1975, the Board approved First Federal's application for a limited branch facility.

B. No. 78-1498: The Regular Branch

In June 1968, First Federal filed an application with the Board proposing a regular branch to be located in or near the Mayfair Shopping Center in Wauwatosa, Wisconsin. The application designated a primary service area (PSA) 2 already served by ten other savings and loan associations.

Mutual and several other savings and loan associations filed protests. Other associations, although plaintiffs below, did not join in the present appeal. The Regional Supervisory Agent reviewed the application and protests and concluded that the application should be disapproved. The Office of Applications also recommended disapproval. In November 1968, the Board rejected the application. In February 1969, following a request for reconsideration by First Federal, the Board conducted a hearing on the same application, after which the hearing officer and the Office of Applications recommended disapproval. Again the Board rejected the application.

A few years later, in February 1972, First Federal filed a new application, again proposing a regular branch in or near the Mayfair Shopping Center. The application was based on a different PSA, this one containing nine other savings and loan offices and having a population of 14,000 fewer people than the PSA for the original application. This time, both the Supervisory Agent and the OID recommended approval. The Board approved the application.

We shall discuss other facts in detail as they become pertinent to the issues.

II. The Limited Facilities Regulation

The first argument we consider is City Federal's challenge to 12 C.F.R. § 545.14(j), the FHLBB regulation governing the creation of limited facility branch offices. City Federal argues that it is unlawful because it does not incorporate the restrictions applicable to charters set forth in section 5(e) of the Home Owners' Loan Act of 1933 (HOLA), 12 U.S.C. § 1461 Et seq.

Section 5(a) of HOLA, 12 U.S.C. § 1464(a), authorizes the FHLBB to provide for the operation, including the chartering, of federal savings and loan associations, giving primary consideration to the best practices of local institutions. 3 Section 5(e) of HOLA, 12 U.S.C. § 1464(e), sets forth four prerequisites, without which "no charter shall be granted." 4 The prerequisites are: good character on the part of the incorporators, a necessity for the institution in the community, a reasonable probability of usefulness and success, and finally, that the association can be established without undue injury to properly conducted existing local institutions.

The FHLBB has promulgated a regulation governing the creation of regular branches which appears at 12 C.F.R. § 545.14(c). 5 This regulation incorporates the prerequisites for charters appearing in section 5(e) of HOLA. The FHLBB has promulgated a different regulation, however, which appears at 12 C.F.R. § 545.14(j), authorizing the approval of "limited facility branch offices" when the Board determines that a branch application does not satisfy in full the community need and probable success requirements for regular branches, but which, "in the opinion of the Board," nevertheless satisfies the requirements "to a degree which would support a limited operation of a branch office." 6 The limited branch facility regulation does not in haec verba include a prohibition against undue injury to existing local institutions which appears in section 5(e) of HOLA and in the regular branch regulation. Nevertheless, in our opinion, a fair reading of the limited branch facility regulation makes it clear that the prohibition in question is also applicable to the limited branch facility. A limited facility is still a branch office and the lessening of the requirements in the regulation pertaining to regular branches is limited to community need and probability of success. We also note that the Board apparently agrees with our construction of the limited branch facility regulation and did in the present case make a specific determination "that the proposed limited facility branch office can be established without undue injury to properly conducted existing local thrift and home-financing institutions."

It is well-settled that the Board has power to authorize branch facilities, Bridgeport Federal Savings and Loan Association v. FHLBB, 307 F.2d 580, 584 (3d Cir. 1962), Cert. denied, 371 U.S. 950, 83 S.Ct. 504, 9 L.Ed.2d 499 (1963); North Arlington National Bank v. Kearny Federal Savings and Loan Association, 187 F.2d 564, 565-66 (3d Cir.), Cert. denied, 342 U.S. 816, 72 S.Ct. 30, 96 L.Ed. 617 (1951), Central Savings and Loan Association of Chariton v. FHLBB, 293 F.Supp. 617, 622 (S.D.Iowa 1968), Aff'd, 422 F.2d 504 (8th Cir. 1970), and that the source of this authority is the general grant of powers to the Board in HOLA section 5(a). Central Savings and Loan Association of Chariton v. FHLBB, 422 F.2d 504, 506 (8th Cir. 1970); First National Bank of McKeesport v. First Federal Savings and Loan Association of Homestead, 96 U.S.App.D.C. 194, 225 F.2d 33, 35 (1955); North Arlington, 186 F.2d at 565-66; Lyons Savings and Loan Association v. FHLBB, 377 F.Supp. 11, 16 (N.D.Ill.1974). The language in section 5(a) requiring the Board in the exercise of its powers to give "primary consideration to the best practices of local mutual thrift and home-financing institutions in the United States" limits to some extent the discretion of the Board. 7 This clause of section 5(a) is also, however, an implied grant of authority to the Board to create assorted types of facilities, in accordance with the best local financial practices. See Chariton, 422 F.2d at 506-07. To interpret the section 5(a) powers restrictively would frustrate the purpose of HOLA to create a sound, competitive system of federal home financing institutions. North Arlington, 187 F.2d at 565-66.

In accordance with the language of section 5(a) the Board has adopted a general policy (with some exceptions) to permit federal branches and mobile facilities if state law...

To continue reading

Request your trial
31 cases
  • In re Associated Bicycle Service, Inc.
    • United States
    • United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Indiana
    • September 25, 1990
    ...based on information or belief regardless of the opponents failure to object to such an affidavit. City Federal Sav. & Loan Assn. v. Federal Home Loan Bank Board, 600 F.2d 681 (7th Cir.1979). On a motion for summary judgment the Court should disregard only the inadmissible portion of the af......
  • Nevada Power Co. v. Watt, C-78-0174.
    • United States
    • U.S. District Court — District of Utah
    • April 24, 1981
    ...Board v. Metropolitan Ins. Co., 380 U.S. 438, 442-44, 85 S.Ct. 1061, 1063-64, 13 L.Ed.2d 951 (1965); City Fed. Sav. & Loan Ass'n v. Fed. Home Loan Bank, 600 F.2d 681 (7th Cir. 1979). See F. P. C. v. Idaho Power Co., 344 U.S. 17, 20, 73 S.Ct. 85, 86, 97 L.Ed. 15 (1952); N. L. R. B. v. Food S......
  • Egger v. Phillips
    • United States
    • U.S. Court of Appeals — Seventh Circuit
    • June 22, 1983
    ...to disregard affidavits not in compliance with Rule 56(e) even in the absence of objection. City Federal Savings & Loan Association v. Federal Home Loan Bank, 600 F.2d 681, 687-88 (7th Cir.1979). It is at least questionable whether the waiver principle enunciated in the foregoing cases appl......
  • City of West Chicago, Ill. v. U.S. Nuclear Regulatory Com'n
    • United States
    • U.S. Court of Appeals — Seventh Circuit
    • March 1, 1983
    ...and conclusions of law, it is crucial that the agency articulate the reasons for its decision. City Fed. Sav. & Loan Ass'n v. Federal Home Loan Bank Bd., 600 F.2d 681, 688-689 (7th Cir.1979). In the order before this Court, NRC clearly stated its reasons for issuing Amendment No. 3. It reli......
  • Request a trial to view additional results

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