Fayetteville Sav. and Loan Ass'n, Fayetteville, Arkansas v. Federal Home Loan Bank Bd.
| Decision Date | 25 January 1978 |
| Docket Number | Nos. 77-1475 and 77-1494,s. 77-1475 and 77-1494 |
| Citation | 570 F.2d 693 |
| Parties | FAYETTEVILLE SAVINGS & LOAN ASSOCIATION, FAYETTEVILLE, ARKANSAS, Appellant, v. FEDERAL HOME LOAN BANK BOARD, Garth Marston, Grady Perry and Superior Federal Savings & Loan Association, Fort Smith, Arkansas, Appellees. FIRST FEDERAL SAVINGS & LOAN ASSOCIATION OF FAYETTEVILLE, ARKANSAS, Washington Federal Savings & Loan Association, Springdale, Arkansas and Benton County Savings & Loan Association, Bentonville, Arkansas, Appellants, v. FEDERAL HOME LOAN BANK BOARD, Garth Marston, Grady Perry and Superior Federal Savings & Loan Association, Fort Smith, Arkansas, Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Hermann Ivester, (on rebuttal and filed appendix and briefs) Smith, Williams, Friday, Eldredge & Clark, Little Rock, Ark., argued for appellant.
Bradley D. Jesson, (filed brief) of Hardin, Jesson & Dawson, Fort Smith, Ark., argued for appellee, Superior Federal Sav. & Loan Assn.
Harvey Simon, Sr., Trial Atty., Washington, D. C., argued; Simon, Daniel J. Goldberg, Acting General Counsel, Harold B. Shore, Associate General Counsel and John E. Gunther, Atty., Washington D. C., filed brief for appellee, Federal Home Loan Bank Bd.
Before WEBSTER and HENLEY, Circuit Judges, and SMITH, Senior District Judge. *
This is an action brought in the United States District Court for the Western District of Arkansas by seven savings and loan associations located in Benton and Washington Counties in extreme Northwest Arkansas against the Federal Home Loan Bank Board, the individuals who were members of the Board at the time of the filing of the suit, and Superior Federal Savings & Loan Association of Fort Smith, Sebastian County, Arkansas. 1
The purpose of the suit is to nullify a resolution of the Board adopted in September, 1976 which granted to Superior the authority to open a branch office adjacent to an established shopping center in the City of Fayetteville, which is the county seat of Washington County, and which is some sixty miles north of Fort Smith.
Plaintiffs' complaint in the district court alleged that in the administrative proceedings leading up to the granting of Superior's application for branching authority plaintiffs had been denied due process of law; that the Board acted unlawfully, arbitrarily and capriciously in granting the application, and that the action of the Board lacked adequate evidentiary support. Plaintiffs sought both preliminary and permanent injunctive relief.
The case was assigned to the docket of Chief District Judge Paul X Williams who conducted a hearing in connection with plaintiffs' application for a preliminary injunction. In the course of the hearing it was agreed that plaintiffs would not insist on their prayer for a preliminary injunction; that Superior would not seek to establish or operate its proposed branch office prior to determination of the controversy between the parties, provided that the case was disposed of as expeditiously as possible; and that the case would be submitted to the district court on cross motions for summary judgment, the administrative record made before the Board in connection with Superior's application, briefs and oral arguments.
The cross motions for summary judgment were duly filed and briefed, and the case was set down for oral argument on January 7, 1977 and was argued on that day. Shortly before the argument one of the plaintiffs, Fayetteville Savings & Loan Association, employed special counsel who filed a motion seeking leave to amend the complaint so as to raise issues not raised by the original complaint and not covered by the briefs that had been filed in connection with the cross motions for summary judgment. While the Board objected to the amendment, it was allowed, and the other plaintiffs were permitted to join in it.
In February, 1977 Judge Williams filed an opinion in which he dealt with all of the issues before him, including those raised by the amendment to the complaint. He found that the motion of the defendants should be granted, that the motion of plaintiffs should be denied, and that the complaint, as amended, should be dismissed.
After the filing of that opinion plaintiffs filed a motion praying that the holding be limited to the issues raised by the original complaint and covered by the briefs of the parties, and that further consideration be given to the new issues raised by the amendment. That motion was denied in a supplemental opinion filed by the district court.
Both the original and supplemental opinions are published as First Federal Savings & Loan Ass'n v. Federal Home Loan Bank Board, 426 F.Supp. 454 (W.D.Ark.1977). Final judgment having been entered, timely notices of appeal were filed by Fayetteville Savings & Loan Association, First Federal Savings & Loan Association, Washington Federal Savings & Loan Association and Benton County Savings & Loan Association. The other three plaintiffs did not see fit to appeal. 2
Federal savings and loan associations were authorized by the Home Owners Loan Act of 1933, and the authority of the Board to charter such institutions is to be found in § 5(a) of that Act which is codified as 12 U.S.C. § 1464(a), and which is as follows:
(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 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.
As it has been written for the past several years, 12 U.S.C. § 1464(c) permits a federally chartered association to make loans secured by its own savings accounts or by first liens on residential real estate located within one hundred miles of the home office of the association or within the same state as that in which the home office is located.
Unlike the National Bank Act, as amended, which permits the Comptroller of the Currency to authorize national banks to establish branches subject to certain conditions and restrictions, the Home Owners Loan Act contains no provision which expressly authorizes the establishment of branch facilities by existing savings and loan associations. However, for many years the Board has successfully asserted the power to authorize associations to establish branches in conformity with regulations that the Board has promulgated and which appear in 12 C.F.R. § 545.14 (1976). See Central Savings & Loan Ass'n of Chariton, Ia. v. Federal Home Loan Bank Board, 422 F.2d 504 (8th Cir. 1970), aff'd. 293 F.Supp. 617 (S.D.Ia.1968); Bridgeport Federal Savings & Loan Ass'n v. Federal Home Loan Bank Board, 307 F.2d 580 (3d Cir. 1962), cert. denied, 371 U.S. 950, 83 S.Ct. 504, 9 L.Ed.2d 499 (1963); First Nat'l Bank of McKeesport v. First Federal Savings & Loan Ass'n of Homestead, 96 U.S.App.D.C. 194, 225 F.2d 33 (1955); North Arlington Nat'l Bank v. Kearny Federal Savings & Loan Ass'n, 187 F.2d 564 (3d Cir.), cert. denied, 342 U.S. 816, 72 S.Ct. 30, 96 L.Ed. 617 (1951); Bank of Ozark v. Federal Home Loan Bank Board, 402 F.Supp. 162 (E.D.Ark.1975).
The Board's regulation, above cited, provides among other things that the Board may grant branching authority where there is a public need for the proposed service, where there is a reasonable probability that the branch to be established will succeed and be useful, and where the establishment of the branch will not unduly injure properly managed and existing thrift and home financing institutions in the area. 3 12 C.F.R. § 545.14(c) (1976).
As to the geographical extent of its power to authorize the establishment of branches, the position of the Board is that it can in general authorize an existing association to establish a branch at any point within its authorized lending area as defined by 12 U.S.C. § 1464(c) (1976). 4
Turning to the facts, Benton and Washington Counties are the two most northwesterly counties in Arkansas. Benton County is immediately north of Washington County and is bordered on the north by the State of Missouri. Both of the counties are bordered on the west by the State of Oklahoma. Bentonville is the county seat of Benton County, as Fayetteville is the county seat of Washington County. Springdale is immediately adjacent to Fayetteville on the north; Rogers is somewhat north of Springdale and somewhat south of Bentonville. Siloam Springs is located in the extreme western part of Benton County and is about twenty-five miles west of Springdale.
Benton and Washington Counties are traversed from north to south by U. S. Highway 71, and Bentonville, Rogers, Springdale and Fayetteville are all located along that highway. Those cities constitute or are close to constituting a single heavily populated urban area with much in common economically and commercially.
Fort Smith is the county seat of Sebastian County and is located in the Arkansas River Valley on the south bank of the river. It is a much larger city than any of the others involved in the case. Sebastian County is separated from Washington County by Crawford County which is a large and in parts mountainous county. As stated, Fort Smith is about sixty miles from Fayetteville and is still further from the other cities to which reference has been made.
In early May, 1976 Superior filed its application for authority to branch into Fayetteville. Notice of the filing of the application was duly published and was promptly protested by the existing savings and loan associations which were plaintiffs in the district court.
Both sides submitted relevant economic data to the Board's Supervisory Agent in Arkansas, and he heard oral...
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