## Facts

- Several Wisconsin-chartered building and loan associations, subject to state supervision and liquidation rules, voted to convert into federal savings and loan associations under § 5(i) of the Federal Home Owners’ Loan Act of 1933, as amended.
- The federal provision permitted conversion based on a majority vote at a properly convened meeting, without requiring state approval.
- Wisconsin officials asserted the conversions conflicted with state law governing the continued operation, dissolution, and liquidation of these state-created institutions.
- The Wisconsin banking commission sued to annul one association’s conversion and compel compliance with state law; in related actions, two associations sued to enjoin state interference with their conversions.
- The Wisconsin Supreme Court ruled for the state officials in all three matters; the cases were reviewed together.

## Issues

1. Whether § 5(i) authorizes a state-chartered building and loan association to convert into a federal savings and loan association by majority vote without the creating state’s consent.
2. If so construed, whether the statute violates the Tenth Amendment by intruding on state power over state-created corporations and the state’s regulatory scheme.
3. Whether Wisconsin, through its banking commission, had standing to challenge the conversions, including as parens patriae for nonconsenting shareholders and creditors.

## Decision

- The Court construed § 5(i) to permit conversion of qualifying state associations into federal associations upon a bare majority vote, without state consent.
- The Court held the statute unconstitutional to the extent it allowed conversion in contravention of the law of the state of incorporation.
- The Court characterized Wisconsin building and loan associations as quasi-public instruments fostered by the state for the common good and subject to strict administrative supervision.
- The Court held Wisconsin had standing to sue to enforce its public policy and to act as parens patriae for affected nonconsenting shareholders and creditors.
- The Court affirmed the judgments for the state officials.

## Legal Principles

- Courts must apply a statute’s clear meaning and may not rewrite unambiguous text solely to avoid constitutional review.
- Congress may not, consistent with the Tenth Amendment, authorize the unilateral transformation of state-created, quasi-public corporations into federal corporations in defiance of the creating state’s laws and policy.
- Federal authority to create and maintain federal institutions does not include, as a reasonably necessary means, destroying or forcibly rechartering state institutions integral to a state regulatory framework.
- A state may have standing to challenge federal action when enforcing its regulatory policy over entities it created and supervised, and when protecting nonconsenting shareholders and creditors as parens patriae.

## Conclusion

The Court read § 5(i) to allow majority-vote conversion without state consent but invalidated that authorization as an unconstitutional intrusion on reserved state powers over state-chartered, quasi-public financial institutions, while recognizing Wisconsin’s standing to challenge the conversions.


Hopkins Fed. Sav. & Loan Ass’n v. Cleary, 296 U.S. 315 (1935)