Wisconsin Bankers Association v. Robertson, 16212.

• Decision Date: 13 July 1961
• Docket Number: No. 16212.,16212.
• Citation: 294 F.2d 714,111 US App. DC 85
• Parties: WISCONSIN BANKERS ASSOCIATION et al., Appellants v. Albert J. ROBERTSON et al., comprising the Federal Home Loan Bank Board, Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

111 US App. DC 85, 294 F.2d 714 (1961)

WISCONSIN BANKERS ASSOCIATION et al., Appellants v. Albert J. ROBERTSON et al., comprising the Federal Home Loan Bank Board, Appellees.

No. 16212.

United States Court of Appeals District of Columbia Circuit.

Argued April 17, 1961.

Decided July 13, 1961.

Petition for Rehearing Denied August 10, 1961.

Mr. Harvey W. Peters, Milwaukee, Wis., with whom Messrs. Percy W. Phillips, H. Stewart Dunn, Jr., and Johannes R. Krahmer, Washington, D. C., were on the brief, for appellants.

Mr. Albion W. Fenderson, Attorney, Federal Home Loan Bank Board, of the bar of the Supreme Court of Maine, pro hac vice, by special leave of court, with whom Messrs. Thomas H. Creighton, Jr., General Counsel, Federal Home Loan Bank Board, Ray E. Dougherty, Max Wilfand, and Paul E. McGraw, Attorneys, Federal Home Loan Bank Board, were on the brief, for appellees.

Before WILBUR K. MILLER, Chief Judge, and BAZELON and BURGER, Circuit Judges.

WILBUR K. MILLER, Chief Judge.

In their complaint, filed June 25, 1958, the appellants asked the United States District Court to declare unauthorized and illegal certain regulations and charter provisions for federal savings and loan associations promulgated by the appellees in 1949. They also asked the District Court to order that the 1949 regulations "generally be restored to the original regulations prevailing prior to March 7, 1949 * * *." In a pre-trial statement the parties agreed that the District Court first determine two legal issues, and that trial of the action would not be necessary unless both were decided in favor of the plaintiffs appellants. The issues were thus stated in an order of the District Court:

"(a) The legality of the regulations (and charter provisions) promulgated and maintained by defendants as a Board since on or about March 7, 1949.

"(b) The plaintiffs\' legal standing to sue upon the basis of the defendants stipulating for purpose of determining this question that the business of banking may be conducted in Wisconsin by only such organizations, including plaintiffs, as are chartered to operate as banks, and upon the assumption for the purpose of determining this question that the factual allegations of the complaint are true. * * *"

Argument was heard on the agreed issues and thereafter, in a carefully considered opinion, reported in 1960, 190 F.Supp. 90, the trial judge held that the plaintiffs had standing to sue but that the challenged regulations and charter provisions are authorized and legal. Consequently, the complaint was dismissed.

This appeal by the Wisconsin banks and bankers brings before us only the holding that the regulations and charter provisions are valid, for "An appeal brings up for review only that which was decided adversely to the appellant." Loudon v. Taxing District, 1881, 104 U.S. 771, 774, 26 L.Ed. 923. As a cross appeal was not filed by the appellees, we cannot consider, and therefore express no opinion concerning, their argument that the District Court erred in holding the appellants had standing to sue. In the absence of a cross appeal, an "appellee may not attack the decree with a view either to enlarging his own rights thereunder or of lessening the rights of his adversary * * *." United States v. American Ry. Exp. Co., 1924, 265 U.S. 425, 435, 44 S.Ct. 560, 564, 68 L.Ed. 1087. In Morley Co. v. Maryland Casualty Co., 1937, 300 U.S. 185, 191, 57 S.Ct. 325, 328, 81 L.Ed. 593, Mr. Justice Cardozo said this "rule is inveterate and certain."

The general theory of the complaint is that the challenged regulations and charter provisions are not in accord with Section 5 of the governing statute,¹ which provides that federal savings and loan associations "shall raise their capital only in the form of payments on such shares as are authorized in their charter" and that "No deposits shall be accepted * * *" by them.

We recently held that a "share" in a federal savings and loan association is an investment, and is not equivalent to the deposit of money in a bank.² But the appellants here contend the 1949 regulations unlawfully permit federal savings and loan associations to raise capital by payments on "savings accounts" instead of on "shares" as the statute requires; that under this provision, the holder of a savings account in a federal savings and loan association is a creditor of the association just as a holder of a savings account in a bank is a creditor of the bank; and that, therefore, the provision authorizes the acceptance of deposits. They argue that, as a result of this and other related provisions of the 1949 regulations, federal savings and loan associations in Wisconsin are accepting deposits and so illegally engaging in the banking business in competition with the duly chartered banks of that state.

The appellants principally rely for support of their theory of illegality upon the 1949 regulation which defines "capital" as "the aggregate of the payments on savings accounts in a Federal association, plus earnings credited thereto, less lawful deductions therefrom." Whether this regulation is in accord with Section 5(b) of the Act depends upon the meaning of the term "savings account." If it means an account similar to a savings account in a bank with respect to which the bank is debtor to the depositor, the regulation is repugnant to Section 5(b), for two reasons: (a) payments on such savings accounts cannot be payments on "shares" of capital, as contemplated by the statute, and (b) it violates the provision that "No deposits shall be accepted * * *." On the other hand, if the term "savings accounts" was used to mean "shares" of an association's capital, the regulation is in accord with Section 5 (b).

The section of the 1949 regulations which defines capital in terms of payments on savings accounts is immediately followed by a section which defines the term "savings account" as "the monetary interest of the holder thereof in the capital of a Federal association and consists of the withdrawal value of such interest." It seems quite clear, therefore, that the words "savings accounts" in the regulation defining "capital" have the same meaning as the word "shares" in the statutory provision governing the raising of capital.

It is suggested, however, that the term "savings accounts" has a special significance and is generally understood to describe such accounts in banks, with the result that its use in the regulation concerning the raising of capital permits the associations to accept...