United States v. First Federal Savings & Loan Ass'n

• Decision Date: 21 October 1957
• Docket Number: No. 12031.,12031.
• Citation: 248 F.2d 804
• Parties: UNITED STATES of America ex rel. STATE OF WISCONSIN, Plaintiff-Appellant, v. FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION and Federal Home Loan Bank Board, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

248 F.2d 804 (1957)

UNITED STATES of America ex rel. STATE OF WISCONSIN, Plaintiff-Appellant, v. FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION and Federal Home Loan Bank Board, Defendants-Appellees.

No. 12031.

United States Court of Appeals Seventh Circuit.

October 21, 1957.

Roy G. Tulane, Asst. Atty. Gen., John D. Winner, Stewart G. Honeck, Harold H. Persons, Madison, Wis., for plaintiff-appellant.

Horace Russell, Chicago, Ill., Jack C. Werner, Edward G. Minor, U. S. Atty., Milwaukee, Wis., Morton Hollander, Civil Division, Dept. of Justice, Washington, D. C., George Cochran Doub, Asst. Atty. Gen., Samuel D. Slade, Atty., Dept. of Justice, Washington, D. C., for appellee.

Before DUFFY, Chief Judge, and SCHNACKENBERG and HASTINGS, Circuit Judges.

HASTINGS, Circuit Judge.

This is an appeal by the state of Wisconsin from an order dismissing an action in the nature of a quo warranto filed by it in the name of the United States, with the consent of the district court, against appellee, First Federal Savings and Loan Association of Milwaukee, Wisconsin.

First Federal is a savings and loan association which operated from 1934 to 1954 at a single office in Milwaukee under a charter granted by the Federal Home Loan Bank Board pursuant to the Home Owners' Loan Act of 1933, 12 U.S.C.A. § 1461 et seq., and the Board's Regulations under that Act, 24 C.F.R. 141.13-141.15, inclusive.

In 1954, under authority of the Board's Regulation No. 145.15, First Federal established three limited agency offices in Milwaukee for servicing its mortgage loans and contracts and managing its real estate. These limited agencies did not accept applications for or negotiate loans and rendered no service in connection with savings accounts, these matters being handled exclusively at the main office.

In 1947, Wisconsin adopted a statute which prohibits its state financial institutions from operating agencies. Section 215.02(20) of the Wisconsin statute reads:

"(20) One office only. No savings and loan association or building and loan association carrying on business in this state shall operate or maintain any branch offices, paying or receiving stations, agencies or branch associations within this state."

On October 29, 1954, Wisconsin made a formal demand upon the United States Attorney General to institute this action to determine whether or not First Federal was exceeding its charter and operating contrary to the policy of the state. The Attorney General formally replied (citing decisions of the courts supporting the action of First Federal) and refused to have such action instituted in the name of the Attorney General, "even assuming that quo warranto would be the appropriate type of proceeding in such a situation." (our emphasis).

Following this refusal, the Attorney General of Wisconsin filed a petition in the United States District Court for the Eastern District of Wisconsin in the name of "United States of America ex rel. State of Wisconsin, Plaintiff", asking leave to file an information in the nature of a quo warranto to test the right of First Federal to establish the three limited agency offices. After a proper hearing, such leave was granted and the information was filed. Since the proceeding directly challenged the validity of the Regulation under which First Federal established the agencies, 24 C.F.R. 145.15, the Federal Home Loan Bank Board intervened in the action. The facts were stipulated, including the depositions of two witnesses describing the operations carried on at the agencies in question.

Under these facts, Wisconsin moved for summary judgment, having asserted in its information that the Regulation (24 C.F.R. 145.15) "is null and void in that it is beyond the powers delegated to the Home Loan Bank Board by Congress", "is an invalid subdelegation of the powers of the board itself, and hence is not a part of the charter issued to defendant by the United States", and that "the establishment of branch or receiving agencies of savings and loan associations in the state of Wisconsin is prohibited by sec. 215.02(20) of the Statutes of the State of Wisconsin." First Federal and the Board then moved to dismiss the action on the grounds that the court lacked jurisdiction to entertain such an action in quo warranto, that the state of Wisconsin had no authority to use the name of the United States in maintaining such an action, that the state of Wisconsin had not exhausted administrative remedies, and that no claim had been stated upon which relief could have been granted.

The district court assumed, without deciding, that it had jurisdiction to entertain the instant action and, on the merits, found that First Federal had acted lawfully in pursuance of a valid regulation. Accordingly, the court granted the motions for dismissal and denied the motion for summary judgment.

The contested issues are whether the district court has jurisdiction over a quo warranto action filed by the state of Wisconsin in the name of the United States to challenge the assertion of corporate authority by a federally chartered corporation after the United States Attorney General had formally declined to file such an information and whether the Regulation of the Federal Home Loan Bank Board, which authorizes federal savings and loan associations to establish limited agencies, is valid.

We find ourselves in accord with the district court's well considered opinion on the merits of this case, but the issue of jurisdiction rises to meet us first. As will appear later, we cannot give further consideration to affirmance of the judgment below on the merits if our determination of jurisdiction is adverse to the relator. The question of jurisdiction is basic and fundamental and cannot be ignored. It has been raised by appellees throughout this proceeding. Since we believe its determination is of paramount necessity here we shall give it first consideration.

The district court said, 151 F.Supp. 691 on the issue of jurisdiction:

"* * * being of the opinion that the relator * * * had made a showing that a substantial issue existed, ordered that it be granted leave to file its information in the nature of quo warranto * * *.

"The assertion of the right of the State of Wisconsin or any person to bring an action in the nature of quo warranto without the consent of the Attorney General of the United States raises a substantial question. This court is inclined however, to the opinion that if the defendant Association in asserting the right to maintain agencies is asserting and usurping a prerogative and franchise not conferred upon it by its charter and is invading the sovereign prerogatives of the United States by whom the charter was granted, the sovereign State of Wisconsin has standing to employ the extraordinary writ of quo warranto to test the legality of the Association so to act. We are of the further mind that the State of Wisconsin is not required to seek its remedy by use of the administrative procedure under the Act nor is it required to use less extraordinary remedies before resorting to quo warranto. We assume these procedural points, however, and do not decide them, since our decision does not turn upon them." (our emphasis).

The modern information in the nature of a quo warranto is an extraordinary remedy and has been defined "as an information, criminal in form, presented to a court of competent jurisdiction, by the public prosecutor, for the purpose of correcting the usurpation, mis-user, or non-user, of a public office or corporate franchise * * * and while still retaining its criminal form, it has long since come to be regarded as in substance, a civil proceeding, instituted by the public prosecutor, upon the relation of private citizens, for the determination of purely civil rights." High, Extraordinary Legal Remedies, 2d Ed., p. 458. The origin of the original writ itself is to be found in the earliest history of the common law. The employment of the original writ, its subsequent limitation by statute, its lapse into disuse in England, the usurpation of its place by the modern remedy of an information and the recognition of the remedy by constitutional and statutory provisions in the various jurisdictions are all the subject of an...