Hopkins Federal Savings Loan Ass v. Cleary Reliance Building Loan Ass v. Same Northern Building Loan Ass v. Same 8212 57
| Decision Date | 09 December 1935 |
| Docket Number | Nos. 55,s. 55 |
| Parties | HOPKINS FEDERAL SAVINGS & LOAN ASS'N et al. v. CLEARY et al. RELIANCE BUILDING & LOAN ASS'N v. SAME. NORTHERN BUILDING & LOAN ASS'N v. SAME. —57 |
| Court | U.S. Supreme Court |
[Syllabus from pages 315-316 intentionally omitted] Messrs. Emery J. Woodall, of New York City, and Horace Russell, of Washington, D.C., for petitioners.
[Argument of Counsel from pages 316-320 intentionally omitted] Messrs. Benjamin Poss and Joseph P. Brazy, both of Milwaukee, Wis., for respondent.
[Argument of Counsel from pages 320-327 intentionally omitted]
The controversy in each of these causes is one as to the meaning and validity of an Act of Congress whereby building and loan associations organized under the laws of a state may be converted into Federal Savings & Loan Associations upon the vote of a majority of the shareholders present at a meeting legally convened.
In No. 55, an original suit was brought in the Supreme Court of Wisconsin by the respondents, constituting the banking commission of that state, against the Hopkins Federal Savings & Loan Association, formerly the Hopkins Street Building & Loan Association, its officers and directors. The complaint prayed for a decree annulling the proceedings whereby the state association had attempted to convert itself into a federal one, and compelling the directors and officers to continue the busi-
ness in accordance with Wisconsin law or else to wind it up. The state court granted the decree upon grounds to be considered later. State ex rel. Cleary v. Hopkins Street B. & L. Ass'n, 217 Wis. 179, 257 N.W. 684.
In Nos. 56 and 57, suits were brought by Wisconsin corporations, the Reliance Building & Loan Association (plaintiff in No. 56) and the Northern Building & Loan Association (plaintiff in No. 57) to restrain the banking commission and the supervisor of building and loan associations from interfering with the plaintiffs in the attempt to convert themselves into federal corporations. Decrees of the trial court in favor of the plaintiffs were reversed by the Supreme Court of Wisconsin with directions to enter judgment in favor of the Commission. State ex rel. Cleary v. Hopkins Street B. & L. Ass'n, 217 Wis. 179, 257 N.W. 684.
Building and loan associations organized in Wisconsin are subject to strict supervision by the administrative agencies of the state both in the course of doing business and in that of liquidation. They are quasi public corporations, chartered to encourage thrift and promote the ownership of homes, with powers and immunities peculiarly their own. See Wisconsin St. 1933, c. 215, § 215.01 et seq.; cf. Louisville Gas & Electric Co. v. Coleman, 277 U.S. 32, 40, 48 S.Ct. 423, 72 L.Ed. 770; United States v. Cambridge Loan & Building Co., 278 U.S. 55, 57, 49 S.Ct. 39, 73 L.Ed. 180.1 They may loan their moneys to members only. Wisconsin St. 1933, § 215.07(1). They must submit many of their proposed investments for the approval of the commissioner of
banking. Section 215.07(6)(7)(8). They must conform to precise restrictions as to the quality of mortgages accepted as security for loans. Section 215.15;2 cf. section 215.01(10)(11). At the close of every year they must submit to the commissioner a report of their condition (section 215.31); and at all times they shall be subject to his control and supervision (section 215.31). If their business has been conducted in a manner contrary to law, or if their financial condition appears to be unsound, the commissioner may take charge of the business and liquidate the assets. Section 215.33. In recognition of their quasi public functions, they are given an exemption from income taxes payable by corporations generally. Section 71.05(d). Cf. United States v. Cambridge Loan & Building Co., supra. The statute contains provisions governing the consolidation of such associations and their voluntary dissolution. Corporations formed thereunder may consolidate with other building and loan associations located in the same county, but only with the consent of the commissioner of banking and that of two-thirds of the outstanding shares as well as the consent of a majority of the directors. Section 215.335. A vote of approval by two-thirds of the outstanding shares is necessary also for voluntary dissolution. Section 215.36(1). With the consent of the commissioner an association formed under the act may become a member of a Federal Home Loan Bank, or a borrower therefrom. Section 215.07(7)(8). Membership in such a bank grows out of a subscription to its shares, and has no effect upon the corporate life of the subscribing member. On the other hand, there is nothing in the statutes of Wisconsin whereby building and loan associations chartered in that state may be transmuted into associations chartered by the federal government.
The petitioners insist that without the consent of Wisconsin the transmutation from a state into a federal association has become possible now by virtue of an Act of Congress. The act relied upon for that purpose is section 5 of the Home Owners' Loan Act of 1933 (48 Stat. 128, 132), as amended in April, 1934 (48 Stat. 643, 645, 646), and again in May, 1935 (49 Stat. 297), 12 U.S.C. § 1464 (12 USCA § 1464). By subdivision (a) of that section the Federal Home Loan Board is empowered to issue charters for the creation of Federal Savings and Loan Associations 'in which people may invest their funds and in order to provide for the financing of homes.' By subdivision (e), 'no charter shall be granted, except to persons of good character and responsibility,' nor unless in the judgment of the board the institution is likely to be successful and is necessary for the well-being of the community to be served. By other subdivisions (b, c, d, f, g, h, j, and k), the powers and duties of the associations are defined. Subdivision (i), the one that concerns us specially, permits state associations to be converted into federal ones. As amended in April, 1934, 12 USCA § 1464(i), its provisions are as follows:
'(i) Any member of a Federal Home Loan Bank may convert itself into a Federal savings and loan association under this Act upon a vote of 51 per centum or more of the votes cast at a legal meeting called to consider such action; but such conversion shall be subject to such rules and regulations as the Board may prescribe, and thereafter the converted association shall be entitled to all the benefits of this section and shall be subject to examination and regulation to the same extent as other associations incorporated pursuant to this Act (chapter).'3
The exchange of a state for a federal charter may be made under this section by any member of a Federal Home Loan Bank. To ascertain the limits of that membership, we turn to the 'Federal Home Loan Bank Act' of 1932, as amended from time to time. 47 Stat. 725, 48 Stat. 128, 643, 1246, 12 U.S.C. c. 11 (12 USCA § 1421 et seq.); cf. 49 Stat. 297. We learn from that act that the term 'member' means any institution which has subscribed for the stock of a Federal Home Loan Bank (section 2(4), 12 USCA § 1422(4), and that 'any building and loan association, savings and loan association, cooperative bank, homestead association, insurance company, or savings bank,' shall be eligible to become a member of a Federal Home Loan Bank, or a nonmember borrower from such a bank, upon compliance with conditions not important at this time (sections 4 and 5 (12 USCA §§ 1424, 1425).
Each of the three building and loan associations, the petitioners before us, was a member in good standing of the Federal Home Loan Bank of Chicago, Ill. After application in proper form, each received from the board permission to convert itself into a federal association under section 5(i) of the Federal Home Owners' Loan Act (12 USCA § 1464(i). Each convened a meeting of its shareholders to consider such action and approve or disapprove it. At the meeting of the Hopkins Street Building & Loan Association, held on May 31, 1934, 5,973 shares were represented in person or by proxy. A resolution authorizing the change was unanimously adopted. Shares outstanding and not represented numbered 976. This association (under the name of Hopkins Federal Savings & Loan Association) has received a charter from the board, under which it will act unless restrained. At the meeting of Reliance Building
& Loan Association, held August 20, 1934, 7,286 shares were voted in favor of the change and 66 against it; shares outstanding and not represented numbered 3,533. At the meeting of Northern Building & Loan Association, held August 14, 1934, 23,291 shares were voted in favor of the change and 11 against it; shares outstanding and not represented numbered 12,006.
The state of Wisconsin, acting through its banking commission, came forward at this point to check the process of conversion. It took the position (1) that section 5(i) of the Home Owners' Loan Act was subject to an implied condition whereby no conversion was to be permitted in contravention of local laws; and (2) that if this reading of the section were to be rejected as erroneous, the statute to that extent was void under the Tenth Amendment as an unconstitutional trespass upon the powers of the states. Other provisions of the Constitution, believed not to be material, were invoked at the same time.
The Supreme Court of Wisconsin placed its decision upon the first of these positions to the exclusion of the other. It read the federal statute as subject to the implied condition contended for by the state officials. It did this to avoid embarrassing and doubtful questions of constitutional power, which it described without deciding. To determine the meaning and, if need be, the validity of an important federal statute writs of certiorari were granted by this court.4 295 U.S. 721, 55 S.Ct. 925, ...
To continue reading
Request your trial
-
United States v. State
...more expansive and confined readings of the scope of the interests supported by Debs. See, e.g., Hopkins Fed. Sav. & Loan Ass'n v. Cleary , 296 U.S. 315, 339, 56 S.Ct. 235, 80 L.Ed. 251 (1935) (citing Debs in support of government standing when the interest at issue involves a matter "of gr......
-
Garcia v. San Antonio Metropolitan Transit Authority Donovan v. San Antonio Metropolitan Transit Authority, s. 82-1913
...because the conversion is not a reasonably necessary exercise of power to reach the desired end. Hopkins Federal Savings & Loan Assn. v. Cleary, 296 U.S. 315, 56 S.Ct. 235, 80 L.Ed. 251 (1935). The operative language of these cases varies, but the underlying principle is consistent: state a......
-
Menhorn v. Firestone Tire & Rubber Co.
...a jurisdictional grant in the absence of clear evidence of such intent. See, e.g., Hopkins Fed. Sav. & Loan Ass'n. v. Cleary, 296 U.S. 315, 334-35, 56 S.Ct. 235, 239-40, 80 L.Ed. 251 (1935). We conclude that ERISA provides no basis for federal jurisdiction over Menhorn's action. The distric......
-
Jay v. Boyd
...E.g., United States v. Sullivan, 332 U.S. 689, 693, 68 S.Ct. 331, 334, 92 L.Ed. 297; Hopkins Federal Savings & Loan Ass'n v. Cleary, 296 U.S. 315, 334—335, 56 S.Ct. 235, 239, 240, 80 L.Ed. 51. Moreover, the constitutionality of § 244 as herein interpreted gives us no difficulty. Cf. William......