FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, AS RECEIVER FOR
MANNING SAVINGS AND LOAN ASSOCIATION, PETITIONER V. HAROLD J. TICKTIN,
JOSEPH J. TICKTIN, WILLIAM HEATON, HAROLD BROWN, AND JUDITH TICKTIN

   No. 87-1865

   In the Supreme Court of the United States

   October Term, 1987

   The Solicitor General, on behalf of the Federal Savings and Loan
Insurance Corporation (FSLIC), petitions for a writ of certiorari to
review the judgment of the United States Court of Appeals for the
Seventh Circuit.

   Petition for a Writ of Certiorari to the United States Court of
Appeals for the Seventh Circuit

            TABLE OF CONTENTS
   Question Presented
   Opinions below
   Jurisdiction
   Statutes and regulations involved
   Statement
   Reasons for granting the petition
   Conclusion

                            OPINIONS BELOW

   The opinion of the court of appeals (App., infra, 1a-18a) is
reported at 832 F.2d 1438.  The opinion of the district court (App.,
infra, 19a-37a) is unreported.

                             JURISDICTION

   The judgment of the court of appeals (App., infra, 38a-39a) was
entered on November 2, 1987.  An order denying the petition for
rehearing and suggestion for rehearing en banc (App., infra, 40a-41a)
was entered on December 14, 1987.  On March 7, 1988, Justice Stevens
extended the time in which to file this petition to and including May
12, 1988.  The jurisdiction of this Court is invoked under 28 U.S.C.
1254(1).

                   STATUTES AND REGULATIONS INVOLVED

   Pertinent federal statutes and regulations are set out in the
appendix to this petition (App., infra, 42a-71a).

                          QUESTION PRESENTED

   The Federal Savings and Loan Insurance Corporation (FSLIC), having
been appointed by the Federal Home Loan Bank Board as receiver of a
FSLIC-insured state-chartered institution, brought this suit in that
capacity against former directors and shareholders of the institution
to recover damages for the issuance and receipt of two dividends in
violation of state and federal law.  The question presented is whether
the federal district court had jurisdiction over this suit under 12
U.S.C. 1730(k)(1) and 28 U.S.C. 1345.

                               STATEMENT

   1. Prior to February 1983, Manning Savings and Loan Association
(Manning) was a savings and loan association chartered by the State of
Illinois and insured by the FSLIC.  In that month, the Federal Home
Loan Bank Board (Bank Board) appointed the FSLIC to be the receiver of
Manning, pursuant to 12 U.S.C. 1729(c)(1)(B).  /1/ The FSLIC
subsequently brought this suit against respondents, all of whom were
directors of Manning, and three others.  Two of the respondents
(Harold and Joseph Ticktin) were shareholders as well as directors;
the remaining respondents were non-shareholder directors;  two
defendants who are not respondents in this Court were shareholders but
not directors.

   According to the complaint, in 1980, Manning's directors declared a
dividend to all "permanent reserve" shareholders (chiefly, certain
directors themselves).  The Illinois Commissioner of Savings and Loan
Associations determined that the dividend violated Illinois law
because Manning had insufficient net worth and reserves when it was
paid.  The directors did not recoup any portion of the dividend, and
the FSLIC in late 1981 issued a Notice of Charges and Hearing alleging
that Manning had violated federal net worth requirements, 12 U.S.C.
1726(b);  12 C.F.R. 563.13.  The FSLIC simultaneously issued a
cease-and-desist order temporarily prohibiting the payment of
dividends.  The United States District Court for the Northern District
of Illinois modified the order to prohibit only the payment of
dividends in violation of state law.  In April 1982, the FSLIC amended
the Notice of Charges and Hearing to advise Manning and its directors
that Manning had a negative net worth of more than $500,000, was more
than $2 million below the net worth required to maintain FSLIC
insurance, and had monthly operating losses of approximately $300,000.
 Nevertheless, in May 1982, the directors authorized the distribution
of a dividend to permanent reserve shareholders.  App., infra,
20a-21a.

   The complaint alleged that the 1980 and 1982 dividends were illegal
under federal law because both were prohibited by FSLIC's net worth
and reserve requirements, 12 C.F.R. 563.13, and the latter violated
the cease-and-desist order.  The complaint also alleged that
respondents Harold and Joseph Ticktin and other directors violated
federal conflict-of-interest regulations, 12 C.F.R. 571.7(b), in
issuing the dividends.  /2/ The complaint further alleged that
issuance of the dividends violated certain Illinois statutes, Ill.
Ann. Stat. ch. 17, paras. 3093, 3110, 3111 (Smith-Hurd 1981), which
prohibited issuance of dividends unless provision had been made for
all reserves required by the FSLIC.  The complaint sought money
damages from the defendants in their capacity as directors for breach
of their fiduciary duties;  it also sought recovery from those
defendants who are also shareholders for unjust enrichment, at the
expense of creditors, as a result of their receipt of the illegal
dividends.  App., infra, 20a-22a.

   2. The district court's jurisdiction over the FSLIC's claims as
receiver for Manning /3/ was based in part on 12 U.S.C. 1730(k)(1),
which was enacted as part of the Financial Institutions Supervisory
Act of 1966, Pub. L. No. 89-695, Section 102(a), 80 Stat. 1042.  That
section states:

         Notwithstanding any other provision of law, (A) the
      Corporation (FSLIC) shall be deemed to be an agency of the
      United States within the meaning of section 451 of title 28;
      (B) any civil action, suit, or proceeding to which the
      Corporation shall be a party shall be deemed to arise under the
      laws of the United States, and the United States district courts
      shall have original jurisdiction thereof, without regard to the
      amount in controversy;  and (C) the Corporation may, without
      bond or security, remove any such action, suit, or proceeding
      from a State court to the United States district court for the
      district and division embracing the place where the same is
      pending by following any procedure for removal now or hereafter
      in effect:  Provided, That any action, suit, or proceeding to
      which the Corporation is a party in its capacity as conservator,
      receiver, or other legal custodian of an insured State-chartered
      institution and which involves only the rights or obligations of
      investors, creditors, stockholders, and such institution under
      State law shall not be deemed to arise under the laws of the
      United States. * * *

   Unless limited by the proviso just set forth, Clause (B) of this
section grants jurisdiction over this suit, since the FSLIC is a
party.  Moreover, Clause (A) indirectly establishes jurisdiction under
28 U.S.C. 1345, which grants the federal courts jurisdiction over any
suit brought by "any agency * * * expressly authorized to sue by Act
of Congress," /4/ since Clause (A) states that FSLIC is an agency for
purposes of 28 U.S.C. 451, and under 12 U.S.C. 1725(c)(4), FSLIC has
"power * * * (t)o sue and be sued." See also 12 U.S.C. 1729(b) and
(c)(1)(B)(i)(II) (powers of FSLIC as receiver);  12 U.S.C. 1729(d)
(power to collect obligations to institution).

   Respondents, however, moved to dismiss, arguing that this suit fell
within the jurisdiction-limiting proviso of Section 1730(k)(1).  The
district court denied the motion.  The court concluded first (App.,
infra, 24a) that the case does involve only the rights of Manning and
its investors, creditors, and stockholders, stating that the fact
"(t)hat some defendants here are directors as well as stockholders
does not persuade the court the action should be removed from the
proviso's coverage" (ibid.).  The court held, however, that the
proviso was not applicable because the case did not "involve" only
rights and obligations "under State law." This requirement of the
proviso, the court observed (id. at 24a-25a), was not satisfied merely
because all claims "arise under" state law;  rather, the court said,
since the case "requires the interpretation of federal law, if falls
outside of the proviso's scope" (id. at 25a).  Here, the court held,
the state-law claims for breach of duty were based on and would
require resolution of federal-law questions -- notably, whether the
dividends violated the FSLIC regulations establishing net-worth and
reserve requirements.  /5/ Concluding that the proviso of Section
1730(k)(1) therefore does not apply to this case, the district court
held that it had jurisdiction.  /6/ The court then certified this
ruling for appeal.

   3. The United States Court of Appeals for the Seventh Circuit
reversed, holding that the proviso of Section 1730(k)(1) bars
federal-court jurisdiction in this case (App., infra, 1a-18a).  /7/
The FSLIC contended that the district court had jurisdiction under
Clause (A) and 28 U.S.C. 1345, and that the proviso does not limit
that jurisdiction because the proviso declares only that certain cases
do not arise under federal law and Section 1345 confers jurisdiction
over suits commenced by an "agency" regardless of whether they arise
under federal law.  The FSLIC also contended that the district court
had jurisdiction in any event under Clause (B).  The court of appeals
ruled that the proviso barred jurisdiction under either clause.

   The court stated (App., infra, 11a-12a) that Clause (A) was
inserted solely to make clear that the FSLIC is an agency for purposes
of Section 1345 (a point that had then recently been in dispute, see
Acron Investments, Inc. v. FSLIC, 363 F.2d 236 (9th Cir.), cert.
denied, 385 U.S. 970 (1966)), and was not intended, despite its
language, to add a basis of jurisdiction not limited by the proviso.
The court further reasoned (App., infra, 10a-12a) that Congress could
not have intended to confer jurisdiction under Clause (A) and Section
1345 whenever the FSLIC is a plaintiff, but to confer jurisdiction
only within the limits stated in the proviso when the FSLIC is a
defendant, since Clause (B) grants jurisdiction whenever the FSLIC is
a party, defendant or plaintiff, and does not suggest an intention to
distinguish the two situations.  The proviso, the court concluded,
states an absolute limit on federal-court jurisdiction, either under
Clause (B) or under Clause (A) and 28 U.S.C. 1345.  /8/

   The court of appeals next held that the proviso applied to this
case.  First, the court rejected the FSLIC's contention that, because
the suit involves claims against Manning's former directors, it does
not involve "only the rights or obligations of investors, creditors,
stockholders, and (the failed) institution" (Section 1730(k)(1)).  The
court concluded (App., infra, 13a-15a) that the proviso applies
whenever the only "rights" in the case are those of the failed
institution, regardless of who the defendants are.

   Second, the court rejected the FSLIC's contention that complaint
alleged, in support of the state-law causes of action, the respondents
violated federal law -- the FSLIC's net worth and reserve regulations,
federal criminal statutes (18 U.S.C. 657, 1006), and regulations
establishing bookkeeping and reporting requirements.  The court
observed (App., infra, 16a) that the proviso uses the words "involves
only * * * rights or obligations * * * under State law," rather than
the words "involves only State law." The proviso would be rendered all
but meaningless, the court stated, if it were read as inapplicable in
any case involving any question of federal law:  "(e)very suit with
the FSLIC as a party necessarily involves federal law" (ibid.).  The
court concluded that, since all the questions in this case are
"subsidiary questions" to the state-law question whether the directors
breached their fiduciary duties, and the case involves only rights to
recover under state law, the case comes within the proviso of Section
1730(k)(1) (App., infra, 16a-17a).  /9/ The court therefore remanded
the case with instructions that it should be dismissed for lack of
jurisdiction (id. at 18a).

                   REASONS FOR GRANTING THE PETITION

   The court of appeals read the proviso in Section 1730(k)(1) to deny
federal-court jurisdiction over this suit, which was brought by the
FSLIC, as a receiver appointed by the Bank Board, against persons not
listed in the proviso, and which involves the obligations of parties
under federal law.  That reading is incorrect on several grounds.
Four other circuits have reached contrary views.  There is a large
volume of litigation commenced by the FSLIC as a result of recent
failures of state-chartered FSLIC-insured institutions, and it is
important that the fundamental jurisdictional question presented by
this case be resolved.

   1. The court of appeals' decision is incorrect for at least three
different reasons.  First, the proviso does not apply to a suit that
involves the rights or obligations of a non-proviso party -- i.e., a
person who is not the failed institution, an investor, a creditor, or
a stockholder.  Second, the proviso does not apply to a suit that
involves a claim that the defendants violated "obligations" under
federal law, even if the right to damages for that violation arises
under state law.  Third, the proviso does not limit the federal-agency
jurisdiction that Clause (A) and 28 U.S.C. 1345 together grant to the
federal courts over suits initiated by the FSLIC acting in either its
corporate capacity or its capacity as receiver.

   a. The court of appeals erred in concluding that this case
"involves only the rights or obligations of investors, creditors,
stockholders, and (the failed) institution" (Section 1730(k)(1)).
That language is most naturally read to restrict the reach of the
proviso to cases that involve the listed parties and no one else.  On
this straightforward reading, the proviso does not apply here because
this case involves the obligations of directors, who as such are not
"investors, creditors, (or) stockholders," /10/ and it therefore does
not "involve() only the rights or obligations" of the parties listed
in the proviso.  The court of appeals' view (App., infra, 13a), under
which the proviso applies in every case in which the only claims are
those asserted by the receiver on behalf of the failed institution, is
contrary to this natural meaning.  The fact that each claim in this
case involves the rights of the failed institution, for example, does
not mean that the case involves "only" such rights:  this case also
involves the obligations of directors, who are not listed in the
proviso.

   Nothing in the legislative history of Section 1730(k)(1), which is
sparse, supports a contrary construction of the proviso.  As noted,
Section 1730(k)(1) was enacted in 1966.  The only commentary on the
provision simply described it and observed that it is similar to the
proviso in 12 U.S.C. 1819 Fourth, applicable to the FDIC.  See S. Rep.
1482, 89th Cong., 2d Sess. 19 (1966);  Financial Institutions
Supervisory Act of 1966:  Hearings on S. 3158 Before a Subcomm. of the
Senate Comm. on Banking and Currency, 89th Cong., 2d Sess. 319M (1966)
(section-by-section analysis of the bill submitted by the FSLIC, FDIC,
Federal Reserve Board, and Comptroller of the Currency).  /11/ The
proviso of the FDIC provision had been enacted in 1935.  /12/ Banking
Act of 1935, ch. 614, Section 101, 49 Stat. 692 (codified originally
at 12 U.S.C. (1940 ed.) 264(j) Fourth).  That proviso applied only to
suits that involved only the rights or obligations of "depositors,
creditors, stockholders and (the failed) bank" under state law.  Its
legislative history, too, offers no explanation for the listing of
particular persons:  the House and Senate Committee Reports merely
give oversimplified descriptions of the provision.  H.R. Rep. 742,
74th Cong., 1st Sess. 4 (1935);  S. Rep. 1007, 74th Cong., 1st Sess. 5
(1935).  /13/

   The identities of the parties listed in the proviso of Section
1730(k)(1) suggest the reason for the listing.  The receiver for a
failed state-chartered finanacial institution will often have reason
to bring suit against a variety of persons, including borrowers,
guarantors, and other debtors, as well as those in a relationship of
trust with the failed institution, such as directors, officers,
attorneys, accountants, and other professionals.  See, e.g., 12 U.S.C.
1729(b) and (d), 1821(d);  12 C.F.R. 548.2, 549.3;  FSLIC v. Dixon,
835 F.2d 554, 562 (5th Cir. 1987).  If Congress had meant the proviso
to reach all such claims by a receiver, it could easily have said so.
Instead, it listed, in addition to the failed institution itself, only
"investors, creditors, (and) stockholders" of the receivership estate.
 /14/ The evident purpose was to cover only cases involving the rights
or obligations of the persons who have claims on the assests of the
failed institution, not cases involving claims the receiver has
against "outsiders."

   Thus interpreted, the proviso draws a sensible line.  The process
of evaluating creditor and stockholder claims against the estate, and
distributing its assets, may be appropriately carried out, in the case
of a state-chartered institution, in a state court or administrative
proceeding.  /15/ In contrast, there is no special reason for
state-court jurisdiction over suits by the receiver against outsiders
-- notably, the collection of estate assets in suits against debtors.
No single court would ordinarily have personal jurisdiction over the
defendants in all such suits, and it seems entirely plausible that
Congress wanted to assure the FSLIC of access to federal courts to
pursue such claims.  /16/ The proviso reflects this distinction
(refining it even one step further):  when claims against the estate
of a state-chartered institution involve only rights or obligations
under state law, the proviso states that such claims do not arise
under federal law, which commonly means that they may be adjudicated
in a single state court having supervisory authority over the
receivership.

   b. The court of appeals also erred in holding that this case
"involves only the rights or obligations" of the parties "under State
law" (Section 1730(k)(1)).  As a matter of plain statuory language,
the proviso does not apply to a case that involves the obligations of
defendants under federal law.  This is such a case, because it
involves the obligations of the respondent directors under federal
law:  the FSLIC has asserted, in support of the claim of breach of
fiduciary duties, that respondents failed to comply with various
federal-law obligations, including those under criminal laws, a
cease-and-desist order, and FSLIC regulations establishing net worth
and reserve requirements.  /17/

   The court of appeals drew a contrary conclusion because the
relevant provisions of federal law do not themselves give rise to the
cause of action.  The court noted (App., infra, 16a) that the proviso
speaks of "rights or obligations * * * under State law," not of claims
that "involve() only State law." But this case does involve the
"obligations" of respondents under federal law.  The court of appeals
would read the proviso as if it covered all claims except those
"arising under" federal law, but that is not how the proviso is
written.  Indeed, Congress's failure to use that familiar terminology
in defining what suits are within the proviso's coverage is especially
telling, because Section 1730(k)(1) elsewhere uses the words "arise
under" in two places, once in the proviso itself.  Had Congress wished
the proviso to apply in all cases where federal law is not the source
of the cause of action, it surely would have said so.

   The court of appeals' view that the proviso applies whenever the
source of the cause of action is state law, even if the claim involves
questions of federal law, ignores the obvious policy behind the
inclusion of the "under State law" restriction in the proviso.  By
restricting the proviso to cases that involve "only rights to be
determined according to State laws," as the Senate Report described
the FDIC's proviso upon its enactment in 1935 (S. Rep. 1007, 74th
Cong., 1st Sess. 5 (1935)), Congress left to the state courts cases
that are peculiarly within their expertise.  In light of Section
1730(k)(1)'s otherwise plenary grant of jurisdiction to the federal
courts to hear cases involving the FSLIC, there is no warrant for
reading the proviso to exclude from federal-court jurisdiction cases
that may involve numerous questions of the proper interpretation of
federal law.  /18/

   Finally, contrary to the court of appeals' view, giving the proviso
its natural reading -- restricting it to cases that involve only
questions of state law -- would not bring into federal court "(e)very
suit with the FSLIC as a party" (App., infra, 16a).  To be sure, suits
like this one against directors will very often involve federal-law
questions, because of the extensive federal regulation of
FSLIC-insured institutions.  But claims by proviso parties against the
assets of the failed institution will often involve only questions of
state law.  As explained above, those claims are what the proviso, in
a natural reading, is addressed to.

   c. The court of appeals further erred in holding that the proviso
deprives the district court of the jurisdiction it appears to have
under 28 U.S.C. 1345.  That section states that, except as otherwise
provided by law, the federal courts have jurisdiction over suits
commenced by an "agency" of the United States expressly authorized to
sue by act of Congress.  This suit meets the requirements for
jurisdiction under that provision.

   This suit was commenced by the FSLIC.  Clause (A) of Section
1730(k)(1) provides that the FSLIC is an "agency" for purposes of 28
U.S.C. 451, the section that defines "agency" for purposes of 28
U.S.C. 1345.  And the FSLIC is authorized "(t)o sue and be sued," 12
U.S.C. 1725(c)(4), and has broad powers to take the actions it deems
appropriate as receiver of a failed institution.  See 12 U.S.C.
1729(c) and (d).  /19/

   The plain terms of the proviso of Section 1730(k)(1) make clear
that it does not override the jurisdiction granted by 28 U.S.C. 1345.
The proviso states only that suits described therein "shall not be
deemed to arise under the laws of the United States." Jurisdiction
under 28 U.S.C. 1345, however, does not depend on whether the claim
arises under federal law:  Section 1345 grants jurisdiction whenever
the plaintiff is a federal agency, regardless of the nature of the
claim.

   The court of appeals, instead of being guided by the statutory
language, simply asserted (App., infra, 11a-12a) that Congress did not
intend there to be Section 1345 jurisdiction over cases within the
proviso.  The court of appeals did not point to any legislative
history that expresses an intent contrary to the statutory text.
Instead, it argued first that Congress added Clause (A) in 1966 merely
"to clarify that the FSLIC was an agency" after the issue had been
litigated in Acron Investments, Inc. v. FSLIC, supra, and second that
since Clause (B) of Section 1730(k)(1) applies both when the FSLIC is
a party defendant and when it is a party plaintiff, Congress must have
intended the proviso to apply equally to both situations and hence to
limit Clause (A) as well.  There are several problems with these
arguments.

   First, if Congress added Clause (A) to reaffirm what the FSLIC had
just won in Acron, /20/ the point of doing so must have been to make
clear what the language says and Acron holds, namely that the FSLIC is
an agency such that any suit commenced by it may be brought in federal
court under 28 U.S.C. 1345.  If the court of appeals' view that the
proviso limits both Clause (B) and Clause (A) is correct, it is not
clear why Congress saw any need to reaffirm Acron or include Clause
(A) at all, because Clause (A) and the Acron ruling then add nothing
to Clause (B), which confers jurisdiction whenever the FSLIC is a
party and the proviso does not apply.  /21/ If instead, as the
language of the proviso suggests, the proviso limits only Clause (B)
jurisdiction, then Clause (A) serves to clarify that, where the FSLIC
is a plaintiff, the federal courts do have "agency" jurisdiction under
28 U.S.C. 1345 even though the suit is not one deemed to arise under
federal law.  This reading of Section 1730(k)(1) is the only one that
gives any independent significance to Clause (A).  /22/

   The court of appeals' concern about allowing Section 1345 to
diminish the significance of the proviso rests on a misconception of
its purpose.  As explained above, the proviso lists specified parties
because it is concerned with claims against the assets of the failed
institution held in the receivership estate.  Suits involving such
claims would rarely if ever have been commenced by the FSLIC.  Section
1345 thus does not grant jurisdiction over any appreciable number of
cases that fall within the proviso properly construed.

   Nothing in any legislative history is contrary to the plain meaning
of Section 1345 and Section 1730(k)(1).  The 1966 Congress that
enacted Section 1730(k)(1) merely took note that the FDIC's provision,
12 U.S.C. 1819 Fourth, did not contain an express declaration that the
FDIC was an agency:  it did not otherwise explain the difference
between the treatment of the FSLIC and the FDIC (see sources cited
page 11, supra).  /23/ Nothing in the 1935 legislative history of 12
U.S.C. 1819 Fourth deals with Section 1345 jurisdiction, because
Congress did not provide for general federal-agency plaintiff
jurisdiction, as 28 U.S.C. 1345 now does, until 1948.  Act of June 25,
1948, ch. 646, 62 Stat. 933.  /24/ And there is no reason why the
considerations that led Congress to enable federal agencies to bring
actions in federal courts, whether or not they arise under federal
law, should not apply fully to the FSLIC's suits brought against
directors and officers of a failed institution.  The FSLIC is a
federal agency;  it serves as receiver of state-chartered institutions
like Manning at the behest of the Bank Board;  it does so not only to
put the affairs of the institution in order but to serve important
purposes of the federal regulatory and insurance programs;  it was
thus altogether appropriate for Congress to give the FSLIC the general
power to proceed in federal court.

   2. Four courts of appeals have reached results contrary to that
reached by the court of appeals in this case, ruling that the Section
1730(k)(1) proviso was rendered inapplicable because of the presence
of a non-proviso party.  The Sixth Circuit in Andrew D. Taylor Trust
v. Security Trust Federal Savings & Loan Ass'n, Inc., No. 86-6287
(Apr. 12, 1988), slip op. 8, ruled that the proviso did not apply
because of the presence in the suit of a non-proviso party.  /25/ The
Ninth Circuit in Fidelity Financial Corp. v. FSLIC, 834 F.2d 741,
744-745 (1987), ruled that the proviso did not apply because the
rights of several non-proviso parties were at stake in the suit.  /26/
The Fifth Circuit in North Mississippi Savings & Loan Ass'n v.
Hudspeth, 756 F.2d 1096, 1100 (1985), cert. denied, 474 U.S. 1054
(1986), ruled that the proviso did not apply because the
counterclaimant sued and demanded damages from a new institution that
"was neither an investor, creditor, nor stockholder" of the failed
institution.  Although the case involved non-proviso parties on both
sides of one of the claims at issue, /27/ the opinion does not rely on
that fact, and the Sixth Circuit's Taylor decision (slip op. 8) read
Hudspeth as holding the proviso inapplicable simply because of the
presence of the non-proviso party.  /28/ Finally, the Eleventh Circuit
in American National Bank v. FDIC, 710 F.2d 1528, 1533 n.5 (1983),
held the FDIC's proviso in 12 U.S.C. 1819 Fourth inapplicable because
a non-proviso party was the stakeholder in the dispute.

   It would not be altogether impossible to reconcile the contrary
results in these cases, but it is clear that the courts of appeals
have widely differing views on the meaning of the proviso.  /29/ There
already is, and there will continue to be, a substantial volume of
litigation in the lower courts on these jurisdictional issues.
Further resources should not be devoted to litigating where cases
commenced by the FSLIC as receiver for a state-chartered institution
should be brought.

   The FSLIC, when acting as receiver for state-chartered
institutions, has routinely filed suits like this one in federal
court.  Many pending cases, if now dismissed for want of jurisdiction,
could not be recommenced in state court because of statutes of
limitations or other problems due to the lapse of time.  The FSLIC
insurance fund is under severe financial strains.  Eight FSLIC-insured
state-chartered institutions were placed in liquidating receiverships
in 1987, and the FSLIC, as of January 1, 1988, was acting as
liquidating receiver for 39 state-chartered institutions.  As a result
of the numerous failures, the FSLIC has commenced in federal court
many suits against outsider defendants alleged to owe money to the
institution, and hundreds of millions of dollars are at stake in those
suits.  This case is an appropriate one for this Court to clarify the
meaning of Section 1730(k)(1) and to ensure that FSLIC has access to
federal court in circumstances like those presented here.

                              CONCLUSION

   The petition for a writ of certiorari should be granted.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   LOUIS R. COHEN

      Deputy Solicitor General

   RICHARD G. TARANTO

      Assistant to the Solicitor General

   JORDAN LUKE

      General Counsel

   DOROTHY L. NICHOLS

      Senior Associate General Counsel

   DAVID A. FELT

      Associate General Counsel

   JOHN B. BEATY

      Assistant General Counsel Federal Home Loan Bank Board

   MAY 1988

   /1/ The Bank Board, in addition to its other duties, is the
operating head of the FSLIC, which is responsible, under 12 U.S.C. (&
Supp. IV) 1724 et seq., for insuring the accounts of all federally
chartered savings and loan associations and most state-chartered
savings and loan associations.  Under 12 U.S.C. 1729(c)(1)(B), the
Board has the power in certain circumstances involving insolvency,
dissipation of assets, or unsafe or unsound conditions (12 U.S.C. (&
Supp. IV) 1464(d)(6)(A)(i), (ii), and (iii)) to appoint the FSLIC
receiver of a state-chartered FSLIC-insured institution.

   /2/ The complaint alleged as well that the directors violated a
FSLIC regulation, 12 C.F.R. 563.33, by allowing more than two members
of the same immediate family to be directors.  App., infra, 20a, 31a.

   /3/ A claim brought by the FSLIC in its corporate capacity was
dismissed by the district court (App., infra, 24a), was not pursued on
appeal, and is not at issue in this Court.

   /4/ 28 U.S.C. 1345 states:  "Except as otherwise provided by Act of
Congress, the district courts shall have original jurisdiction of all
civil actions, suits or proceedings commenced by the United States, or
by any agency or officer thereof expressly authorized to sue by Act of
Congress."

   /5/ The district court also observed that the accounting principles
used to determine whether dividends could lawfully have been paid "are
to be determined under accounting principles in part recognized by the
(Bank Board) for a federal association" (App., infra, 26a).  The FSLIC
pointed out, in addition, that whether respondents violated the
cease-and-desist order was a federal question involved in the case
(id. at 25a).

   /6/ The district court focused only on the state-law claims for
relief in resolving this issue, because it concluded (App., infra,
31a-37a) that the federal laws and orders allegedly violated did not
themselves give the FSLIC as receiver a cause of action for damages.
The court also ruled that, although the Illinois statute relied on by
the FSLIC did not provide a cause of action to the FSLIC as receiver
here (App., infra, 28a-29a), Illinois common law did furnish a cause
of action against both the directors and the shareholders (id. at
29a-31a).  The FSLIC does not contest any of those rulings.

   /7/ The court first rejected prior Seventh Circuit statements (see
Katin v. Apollo Savings, 460 F.2d 422 (1971), cert. denied, 406 U.S.
918 (1972);  FSLIC v. Krueger, 435 F.2d 633, 636 (1970)) that Clause
(B) and the proviso apply only to removals from state court
proceedings and not to actions commenced in federal court.  The court
held that Clause (B) is a grant of original jurisdiction limited by
the proviso.  App., infra, 5a-9a.  That ruling is not challenged.

   /8/ The court of appeals relied on FDIC v. Summer Financial Corp.,
602 F.2d 670 (5th Cir. 1979), which held that the Federal Deposit
Insurance Corporation (FDIC), as receiver of a state bank, could not
assert Section 1345 jurisdiction in a case that came within the
proviso of 12 U.S.C. 1819 Fourth, the counterpart for the FDIC of the
FSLIC's Section 1730(k)(1).  Section 1819 Fourth states, in relevant
part:

         All suits of a civil nature at common law or in equity to
      which the Corporation shall be a party shall be deemed to arise
      under the laws of the United States, and the United States
      district courts shall have original jurisdiction thereof,
      without regard to the amount in controversy;  and the
      Corporation may, without bond or security, remove any such
      action, suit, or proceeding from a State court to the United
      States district court for the district or division embracing the
      place where the same is pending by following any procedure for
      removal now or hereafter in effect, except that any such suit to
      which the Corporation is a party in its capacity as receiver of
      a State bank and which involves only the rights or obligations
      of depositors, creditors, stockholders, and such State bank
      under State law shall not be deemed to arise under the laws of
      the United States. * * *

   The Sumner court observed that Section 1730(k)(1) might require a
different result from Section 1819 Fourth, pointing out that when
Congress enacted Section 1730(k)(1) in 1966, it took note of the fact
that Clause (A) has no counterpart in Section 1819 Fourth.  602 F.2d
at 680, citing S. Rep. 1482, 89th Cong., 2d Sess. 19 (1966), and
Financial Institutions Supervisory Act of 1966:  Hearings on S. 3158
Before a Subcomm. of the Senate Comm. on Banking and Currency, 89th
Cong., 2d Sess. 319M (1966) (section-by-section analysis of bill
submitted by the FSLIC, FDIC, Federal Reserve Board, and Comptroller
of the Currency).  Apparently unpersuaded by this basis of
distinction, the court of appeals in the present case extended to
Section 1730(k)(1) the Sumner holding regarding Section 1819 Fourth.

   /9/ The court also rejected the argument that the proviso was not
applicable because the FSLIC had been appointed receiver by the Bank
Board rather than by state authorities (App., infra, 17a-18a).

   /10/ Respondents are all former directors of Manning.  The
complaint asserts claims against them in that capacity.  It is
irrelevant to those claims whether respondents were also shareholders.
 In any event, three respondents were not shareholders.

   /11/ The House Report, H.R. Rep. 2077, 89th Cong., 2d Sess. (1966),
does not discuss the provision.

   /12/ 12 U.S.C. 1819 Fourth was amended in the same 1966 legislation
that contained Section 1730(k)(1) to add an express provision for
removal of actions to federal court and to eliminate the
jurisdictional amount requirement for federal-question jurisdiction.
Financial Institutions Supervisory Act of 1966, Pub. L. No. 89-695,
Section 205, 80 Stat. 1055.  The proviso was not altered.

   /13/ The House Report (H.R. Rep. 742, at 4) states:  "Under the
provisions of title I (of the Act), Federal courts have jurisdiction
over suits to which the Corporation is a party where the amount
involved exceeds $3,000, but an exception is made where the
Corporation is a party in its capacity as receiver of a State bank."
The Senate Report (S. Rep. 1007, at 5) states:  "new matter is added
giving jurisdiction, in the case of suits of a civil nature to which
the Corporation is a party, to courts having jurisdiction of suits
arising under the laws of the United States.  It is provided that any
suit to which the Corporation is a party in its capacity as receiver
of a State bank and which involves only rights to be determined
according to State laws shall not be deemed to arise under the laws of
the United States."

   The jurisdictional provision was recodified without change as part
of 12 U.S.C. (1952 ed.) 1819 Fourth by the Federal Deposit Insurance
Act of 1950, ch. 967, Section 2, 64 Stat. 881.  Nothing in the
committee reports comments on the provision.  See S. Rep. 1269, 81st
Cong., 2d Sess. (1950);  H.R. Rep. 2564, 81st Cong., 2d Sess. (1950);
H.R. Conf. Rep. 3049, 81st Cong., 2d Sess. (1950).

   /14/ We read the term "creditors" in this context as encompassing
all persons with claims against the receivership estate, whether based
on contract or tort.  See 11 U.S.C. (& Supp. IV) 101(9) (bankruptcy
code definition of "creditor");  12 C.F.R. 569a.1-569a.8 (treating all
claims against the estate of a state-chartered institution in FSLIC
receivership as "creditor" claims).

   /15/ At the time Congress enacted Section 1730(k)(1) in 1966, there
was a much sharper distinction between state-chartered and federally
chartered FSLIC-insured institutions.  Before 1968, when subsections
1729(c)(2) and (3) were added, a state-chartered institution could be
placed in receivership only by state authorities, even if the FSLIC
was named receiver, and the FSLIC served subject to state supervision.
 12 U.S.C. (1964 ed.) 1729(c) and (d).  As for the FDIC, it has been
true since its creation that only the appropriate state authority may
appoint it receiver of a state bank.  12 U.S.C. 1821(e).

   /16/ This differential treatment of jurisdiction over claims
against the estate, which are often centralized in a single
supervisory court, and jurisdiction over claims by the receiver to
collect estate assets from outsiders, which are not centralized,
corresponds to federal bankruptcy practice (11 U.S.C. (& Supp. IV)
501, 704;  28 U.S.C. (Supp. IV) 1334(d)) and to state laws governing
statutory receiverships, notably those involving failed banks (see,
e.g., Ill. Stat. Ann. ch. 17, paras. 371, 372 (Smith-Hurd 1981 & Supp.
1987);  N.Y. Banking Law Sections 618, 169 (McKinney 1971)).
Similarly, 12 U.S.C. 94 specifies a single venue for all actions
against a national banking association for which the FDIC has been
made receiver or against the FDIC in such capacity, whereas it does
not specify a single venue for suits by the FDIC as receiver.

   /17/ Although the net worth and reserve regulations directly apply
only to the institution, they impose obligations on the institution's
directors.  The FSLIC has the authority under 12 U.S.C. 1730(e) to
initiate cease-and-desist proceedings against directors who take
action to place the institution in violation of the regulations.  The
FSLIC also has authority to suspend or remove directors for
sufficiently harmful breaches of fiduciary duty.  12 U.S.C. 1730(g).

   /18/ In 1968 and 1982, after the enactment of Section 1730(k)(1),
Congress authorized the Bank Board to appoint the FSLIC as receiver of
a state-chartered institution.  See note 19, infra.  Although we do
not so contend in this case, there may be cases in which the fact that
the FSLIC was appointed receiver by the Board establishes that the
case is not within the proviso.

   /19/ Moreover, at least where, as here, the FSLIC is appointed
receiver by the Bank Board, rather than by state authorities, its
authority to bring suits where necessary is solely dependent on
federal and not state law.  Section 1729(d) makes the FSLIC here, as
receiver liquidating an insured institution, "subject only to the
regulation of" the Bank Board, and not to any state authority in the
execution of its responsibilities.  Congress made this clear in 1982,
when it also added the provision (Section 1729(c)(1)(B)) under which
the Board appointed the FSLIC receiver in this case.  Garn-St Germain
Depository Institutions Act of 1982, Pub. L. No. 97-320, Section
122(d) and (g), 96 Stat. 1482.

   Congress first provided for federal appointment of the FSLIC as
receiver of a state-chartered institution in 1968, when it added
subsections 1729(c)(2) and (3).  Bank Protection Act of 1968, Pub. L.
No. 90-389, Section 6, 82 Stat. 295-296.  It indicated at that time
that FSLIC, once appointed, would not be subject to the regulation "of
any State authority, administrative or judicial." S. Rep. 1263, 90th
Cong., 2d Sess. 10 (1968);  114 Cong. Rec. 18298-18299 (1968) (remarks
of Rep. Patman);  Savings and Loan Receiverships:  Hearings on S. 3436
Before the Senate Comm. on Banking and Currency, 90th Cong., 2d Sess.
7 (1966) (testimony of Bank Board Chairman).

   /20/ In fact, there is no mention of Acron in the legislative
history of the 1966 enactment.

   /21/ Our reading does involve a partial overlap of Clause (A) and
Clause (B):  where the FSLIC commences the suit and the proviso does
not apply, both Clauses confer jurisdiction.  But there has never been
any general concern to eliminate overlap of jurisdictional provisions,
and many cases fall within more than one grant of jurisdiction.
Moreover, Clause (B) of 12 U.S.C. 1730(k)(1) overlaps considerably at
least with both 28 U.S.C. 1345 (federal agency jurisdiction) and 28
U.S.C. 1331 (federal question jurisdiction).

   /22/ The court of appeals noted that 28 U.S.C. 1345 begins
"(e)xcept as otherwise provided" and stated that Section 1730(k)(1)
provides the necessary overriding "polic(y)" (App., infra, 12a).  But
a "policy" standing alone could not override the language of Section
1345.  In any event, the court of appeals failed to identify any
policy that lay behind and fully accounts for all of Section
1730(k)(1) and that overrides Section 1345.

   /23/ The Fifth Circuit in FDIC v. Sumner Financial Corp., supra,
thought the distinction might be significant.  See note 8, supra.

   /24/ The absence of such jurisdiction, together with the fact that
there may be cases where the FSLIC or FDIC as receiver does sue a
proviso party, explains why the provisos are written to apply when the
FSLIC or FDIC is a "party" rather than a "defendant." The 1966
Congress merely borrowed the language of the proviso from 12 U.S.C.
1819 Fourth without focusing on its relation to Clause (A).

   /25/ The court ruled in the alternative that the proviso did not
apply because the case involved the FSLIC in its corporate capacity.
Slip op. 7-8.

   /26/ The court also ruled (834 F.2d at 745) that the proviso did
not apply because the case involved claims that concerned the FSLIC's
actions as receiver, claims that, because the FSLIC was appointed by
the Bank Board, were governed by federal law.

   /27/ The court below distinguished Hudspeth on the ground that,
there, "resolution of the rights and obligations of the parties listed
in the proviso would not settle the case," whereas in this case it
would (App., infra, 15a).

   /28/ The Fifth Circuit in FDIC v. Sumner Financial Corp., supra,
adopted a reading of 12 U.S.C. 1819 Fourth contrary to Hudspeth's
reading of Section 1730(k)(1).

   /29/ The court of appeals in this case found support in holdings or
statements in five cases, two in its own circuit, that involved the
FDIC's proviso, 12 U.S.C. 1819 Fourth, App., infra, 14a-15a.  In FDIC
v. Elefant, 790 F.2d 661, 663 (7th Cir. 1986), the FDIC itself took
the position - though it was not then and is not now the official
agency position - that the proviso deprived the federal courts of
jurisdiction even where the suit involved a debtor (a non-proviso)
party).  In FDIC v. Braemoor Associates, 686 F.2d 550, 552 (7th Cir.
1982), cert. denied, 461 U.S. 927 (1983), the statements about the
FDIC in its capacity as receiver were dicta, because the suit involved
the FDIC in its corporate capacity, to which the proviso by its terms
is inapplicable.  And both FDIC v. La Rambla Shopping Center, Inc.,
791 F.2d 215, 220 (1st Cir. 1986), and In re F&T Contractors, Inc.,
718 F.2d 171 (6th Cir. 1983), involved claims by creditors of the
failed institution, who are expressly named in the proviso.  See also
FDIC v. Sumner Financial Corp., supra.

   APPENDIX