In this case certiorari was granted, 293 U.S. 547, 55 S.Ct. 124, 79 L.Ed. --, directed to the Court of Appeals for the Third Circuit, to resolve questions of public importance growing out of the rival claims of a federal District Court and the department of banking of the commonwealth of Pennsylvania; each asserts authority to liquidate the business and affairs of an insolvent building and loan association, organized under the laws of Pennsylvania.
On February 9, 1933, a New York shareholder in Mortgage Building & Loan Association, a Pennsylvania corporation, on behalf of himself and other shareholders, filed a bill of complaint in the District Court for Eastern Pennsylvania, naming the association as defendant, and alleging that it was the result of the merger of several building and loan associations, in one of which the plaintiff in the suit was a shareholder, and that he had refused to participate in the merger and had demanded of the association cancellation and payment of his shares. The bill alleged the insolvency of the association and a threatened race of diligence by its creditors to satisfy their claims from the assets of the corporation, and prayed the appointment of receivers for the corporation, the liquidation of its business and assets, and the usual injunction restraining creditors and others from interfering with or taking possession of its property. Thereupon, on the same day, and on the appearance of the defendant corporation, which interposed no objection, the District Judge appointed temporary receivers. No notice of the application was given to the corporation's creditors or other shareholders, or to the department of banking of the commonwealth. On the following day the corporation filed its answer, admitting the material allegations in the bill of complaint and joining in its prayer.
On that day the secretary of banking informally requested the District Judge not to make the appointment of the receivers permanent and to allow the property of the defendant to be surrendered to the secretary, to be liquidated and administered in accordance with the state statutes. On March 27, 1933, the commonwealth filed its petition in the District Court, asking leave to intervene in the pending equity proceeding and for an order directing the receivers to surrender the assets of the defendant association to the state secretary of banking. In addition to the matters already stated, the petition alleged the further facts, which are admitted or established: That the association, organized as a building and loan association, is subject to the supervision of the state department of banking, as provided by the Banking Act of June 15, 1923, P.L. 809, as amended (7 PS Pa. § 1 et seq.); that the statutes of the commonwealth afford a complete, comprehensive, and economical scheme for liquidation by the secretary of banking of such a building and loan association, when insolvent or in a financial unsound condition; that section 21 of the statute, as amended by act May 5, 1927, P.L. 765, § 7 (7 PS Pa. § 21), providing that the secretary, after notice and hearing, may, with the consent of the Attorney General, take possession of the business and property of a building and loan association when it appears to be in an 'unsafe or unsound condition to continue business,' specifically authorizes the secretary to take possession of the property of the association when it is 'in the hands of a receiver appointed by any court'; that upon taking such possession the secretary is required, by section 22 (7 PS Pa. § 22), to issue and file his certificate to that effect; that, pursuant to the requirements of the statute, the secretary, after the prescribed hearing, had found the defendant insolvent and in the hands of a receiver; and that, with the consent of the Attorney General, he had on February 17, 1933, duly made and filed his certificate, 'taking possession' of the property and appointing a special deputy as agent to assist in liquidating the defendant's business and property.