Fahey v. Mallonee
332 U.S. 245 (1947)

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U.S. Supreme Court

Fahey v. Mallonee, 332 U.S. 245 (1947)

Fahey v. Mallonee

No. 687

Argued April 30, 1947

Decided June 23, 1947

332 U.S. 245

Syllabus

1. Section 5(d) of the Home Owners' Loan Act of 1933, which authorizes the Federal Home Loan Bank Board to prescribe by regulation the terms and conditions upon which a conservator may be appointed for a federal savings and loan association, is not an unconstitutional delegation of legislative functions. Pp. 332 U. S. 248-254.

(a) Panama Refining Co. v. Ryan,293 U. S. 388; Schechter Corp. v. United States,295 U. S. 495, distinguished. Pp. 332 U. S. 249-250.

(b) Banking being one of the longest regulated and most closely supervised of public callings, a discretion to make regulations to guide supervisory action with respect to the appointment of conservators, receivers, and liquidators for banking institutions may be constitutionally permissible while it might not be allowable to authorize creation of new crimes in uncharted fields. P. 332 U. S. 250.

(c) The rules and regulations of the Home Loan Bank Board governing the appointment of conservators are sufficiently explicit, against the background of custom, to be adequate for proper administration and for judicial review. Pp. 332 U. S. 250-253.

(d) In view of the delicate nature of banking institutions and the impossibility of preserving credit during an investigation, it is not unconstitutional to provide for a hearing after, instead of before, a conservator takes possession. Pp. 332 U. S. 253-254.

2. When, after the appointment of a conservator for a federal savings and loan association, an administrative hearing is granted and specifications of the charges are furnished, but the making of a record is prevented by an injunction obtained by its shareholders in a derivative suit on behalf of the association without the taking of testimony by the trial court, this Court, in reviewing the judgment for the purpose of determining the case without trial, must assume that the supervisory authorities would be able to sustain the statements of fact and to justify the conclusions in their charges. P. 332 U. S. 254.

3. In a derivative suit on behalf of the association, shareholders of a federal savings and loan association organized under § 5 of the Home Owners' Loan Act of 1933 are estopped from challenging the constitutionality of the provisions of § 5(d), which authorize

Page 332 U. S. 246

the Federal Home Loan Bank Board to prescribe the terms and conditions upon which a conservator may be appointed for the association. Pp. 332 U. S. 255-256.

68 F.Supp. 418, reversed.

In a shareholders' derivative suit on behalf of a federal savings and loan association, a three-judge district court held § 5(d) of the Home Owners' Loan Act of 1933 unconstitutional, ordered removal of a conservator who had been appointed for the association, permanently enjoined the authorities from holding an administrative hearing on the matter, permanently enjoined an apprehended merger, restored the association to its former management, ordered the conservator to account, and enjoined these authorities "from ever asserting any claims, right, title or interest" in or to the association's property. 68 F.Supp. 418. On direct appeal to this Court, reversed, p. 332 U. S. 258.

Page 332 U. S. 247

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