Full opinion text
HALL, District Judge. This oetopean litigation is again before the Court in connection with the subject matter of eleven undecided matters in case No. 13979-FH. They are as follows: 1. Report of Receiver and Petition for Instructions 2. Motion of Federal Home Loan Bank Board to quash service of summons made pursuant to court order filed 3-3-53; 3. Motion of Home Investment Co. et al., for summary judgment quieting title to homes of 8000 borrowers against foreclosure of loans paid in full, and motions for summary judgment quieting title of trustee, Title Service Co. and beneficiary Long Beach Federal Savings and Loan Assn. pur. not. filed 5-21-53; 4. Motion of Plaintiff to (a) Dismiss Homeowners cross-claim for quiet title, and (b) Strike and drop Home Investment Co. as a party pur. not. filed 5-29-53; 5. Motion of Plaintiff (a) To drop parties (b) Or for severance and early trial filed 6-5-53; 6. Motion of Plaintiff (a) To dismiss cross-claim of defendant Long Beach Federal Savings and Loan Assn., (b) To strike said cross-claim, fid 6-5-53; 7. Motion of Plaintiff (a) To vacate order granting leave to Title Service Co. to intervene and to file its complaint in Intervention and Inter-pleader, and to strike said pleading, (b) To dismiss said complaint in intervention, fid 6-5-53; 8. Motion of Plaintiff to dismiss third party complaint of Long Beach Federal Savings and Loan Assn, (fid 10-10-52) fid 6-5-53; 9. Motion of Plaintiff (a) To vacate order granting leave to Robert 'H. Wallis to intervene and to file its complaint in intervention and interpleader, and to strike said pleading, (b) To dismiss said complaint in intervention fid 6-5-53; 10. Motion of Plaintiff to strike from Answer of Defendant Long Beach Federal Savings and Loan Assn, fid 6-5-53; 11. Motion of Long Beach Association to deposit $7,000,000, cash or bonds, into court in case No. 13979, fid 12-21— 53; Any consideration of any of said matters must be had in the light of proceedings heretofore in it and related matters, (actually about 60 different lawsuits under only three numbers), only a portion of which have found their way into the reports, as follows: Mallonee v. Fahey (statutory three-judge court), D.C., 68 F.Supp. 418, (Sept. 5, 1946); Fahey v. Mallonee, 332 U.S. 245, 67 S.Ct. 1552, 91 L.Ed. 2030 (June 23, 1947) reversing D.C., 68 F.Supp. 418; Ex parte Fahey (June 23, 1947), 332 U.S. 258, 67 S.Ct. 1558, 91 L.Ed. 2041; Mallonee v. Fahey, D. C., 14 F.R.D. 273, (Dec. 1, 1949); Home Loan Bank Board v. Mallonee (April 2, 1952), 9 Cir., 196 F.2d 336; Fahey v. O’Melveny & Myers (November 6, 1952), 9 Cir., 200 F.2d 420; Mallonee v. Fahey (Nov. 30, 1953), D.C., 117 F.Supp. 259; Fahey v. Calverley (Dec. 29, 1953), 9 Cir., 208 F.2d 197. There are several suits in this court, all of which are interlocked in one way or another, bearing numbers 5421, 5678, 13979, 7989, 13953 and 15588. In view of the fact that some matters herein discussed concern consolidated case 5421-5678, as well as 13979, this: memorandum will be filed in those cases- and will serve as their direction for orders which are appropriate hereunder in each of them. In the memorandum order of this court made on November 30, 1953, 117 F.Supp. 259, provision was made for disposition, of a number of pending motions in the consolidated case 5421-5678, and action, on the motions which were pending in. 13979 above set forth was deferred. Of the motions in 13979, above listed,, that indicated as No. 1, “Report of Receiver and Petition for Instructions,” was-placed off calendar and has not been reset. The first portion of this memorandum will treat with those motions listed above-which have to do with what has been described as the “Homeowners quiet title”' actions, on various cross-claims in intervention in the within action. A more complete description of what is involved, in that connection can be found in 14 F.R.D. 273 and in 117 F.Supp. 259, and: will not be repeated herein except as is-necessary to give clarity to the views-herein. Briefly, however, it would be well to-describe at this point the situation giving-rise to that phase of this, and related,, litigation which long ago reached the-quagmire stage. The Los Angeles Federal Loan Bank" was a home loan bank, organized under the appropriate federal statutes, which, acted as the banking agency for savings, and loan associations, organized under the Federal Home Loan Bank Act, 12 U.S.C.A. § 1421 et seq., and related statutes.. Among other things, it acted as a depository for safekeeping of property and assets of Federal Savings and Loan Associations. By a series of orders of the Federal Home Loan Bank Board, made-on March 29, 1946, the Los Angeles Bank was dissolved, its assets and properties, were forthwith transferred to the Portland Home Loan Bank and the offices of the Portland Home Loan Bank were removed from Portland to San Francisco- and the name thereof changed to the San Francisco Federal Home Loan Bank, see 14 F.R.D. 273. The Long Beach Federal Savings and Loan Association (hereinafter called the Long Beach Association), was a savings and loan association organized under the Home Loan Bank Act and related statutes. Its principal business was to receive money on savings accounts from ■depositors and to loan the same to borrowers on real estate. Substantially, if not all, of its loans were made on individually owned homes or to builders on individual homes which were to be sold to individual buyers by the builders. ' The owner of the real property would execute a note payable to the Long Beach Federal Savings and Loan Association and, to secure that note would execute a trust deed, which trust deed conveyed the legal title of the real estate involved to a third party, who thereafter held the legal title, as trustee, under the trust deed and note, for the purpose of securing the payment of the note. The practice is customary in Southern California and has almost entirely replaced the traditional mortgage procedure. The notes were installment notes. The borrower who owned the parcel of property involved was the payor and obligor on the note, and is known, in the language of the law and the real estate business, as the “trustor” under the trust deed; the Long Beach Federal Savings and Loan Association which was the lender and payee on the note, as the “beneficiary” under the trust deed; and the person or organization holding the legal title as security under the terms of the trust deed .and note, as the “trustee.” On May 20, 1946, about 8000 of such notes and trust ■deeds were in existence with Long Beach Association as beneficiary, and Title Service Company as trustee. On May 20, 1946, A. V. Ammann, under order No. 5254 of the Home Loan Bank Board of the same date, seized all ■of the property and assets of the Long Beach Federal Savings and Loan Association, as Conservator. It appears that on March 29, 1946, there was on deposit with the Los Angeles Federal Home Loan Bank several thousand of such notes wherein the Long Beach Federal Savings and Loan Association was the payee, and the accompanying trust deeds wherein Long Beach Federal Savings and Loan Association was the beneficiary. These trust deeds and notes, along with approximately five and one-half million dollars in government bonds, were the property of Long Beach Federal Savings and Loan Association, were in the possession of the Los Angeles Bank for safekeeping only, and not as security for any loan; and it appears from the record in the case, and is undenied any place in these proceedings or in the multitude of proceedings had in consolidated case 5421-5678, that the Long Beach Federal Savings and Loan Association was not indebted in any sum whatsoever on March 29, 1946 or on May 20, 1946, to the Los Angeles Federal Home Loan Bank, or the Portland Home Loan Bank, or the San Francisco Home Loan Bank, (hereinafter called the San Francisco Bank). Following the seizure of the Long Beach Association by Ammann, notes in the sum of approximately $7,000,000 were executed by Ammann to the San Francisco Bank. In addition to the retention by that bank of approximately five and one-half million dollars of government bonds owned by the Long Beach Association, and in the possession of the Los Angeles Bank on March 29, 1946, for safekeeping only, Ammann assigned all of the trust deeds and notes which were in the possession of the Los Angeles Bank on March 29,1946, to the San Francisco Bank, as security on said notes and apparently continued to do so on other trust deeds and notes on loans made by Ammann during his conservatorship. While conservator, Ammann executed three documents to San Francisco Bank, (1) “Subordination Agreement” on May 28, 1946; (2). “Collection Agreement” on May 28,1946, and, (3) “Pledge Agreement” on May 20,1946. The text of each follows: “Subordination Agreement “Whereas, the undersigned has applied to the Federal Home Loan Bank of San Francisco for a loan to be made to it upon its note secured by certain collateral notes and mortgages or deeds of trust, and may hereafter make application for further loans upon like security; and, “Whereas, the Federal Home Loan Bank of San Francisco requires, as a condition to making such loan, that the undersigned subordinate to the lien of the Federal Home Loan Bank of San Francisco, as pledgee, any other notes secured by said mortgages or deeds of trust, or claims for additional loans made under the terms of, or secured by, any such mortgage or deed of trust; “Now, Therefore, in consideration of the premises, and of the making of any loan by the Federal Home Loan Bank of San Francisco to the undersigned, the undersigned does hereby undertake and agree to and with the Federal Home Loan Bank of San Francisco, its successors and assigns, that all notes, secured by mortgage or deed of trust at any time pledged by the undersigned to the Federal Home Loan Bank of San Francisco as collateral security for loans made to it by said Federal Home Loan Bank of San Francisco, shall have priority in right and remedy over any claims, however evidenced, for other loans heretofore or hereafter made by the undersigned to the makers of such collateral notes and mortgages or deeds of trust, and shall be satisfied out of the property mortgaged or hypothecated before recourse to such property may be had by the undersigned for the repayment of any such additional loans, and that the undersigned will retain possession of any notes taken for such additional loans and will not assign, pledge, or transfer the same, it being the intent hereof that any note secured by mortgage or deed of trust pledged to the Federal Home Loan Bank of San Francisco shall, as between the undersigned, its successors and assigns, and the Federal. Home Loan Bank of San Francisco, its successors and assigns, be deemed the sole obligation so secured, and. that until full payment thereof shall have been made, the mortgaged or hypothecated property and all proceeds from sale or other disposition thereof shall be held solely as security for the repayment of such pledged note. The undersigned expressly reserves the right to apply any surplus-of mortgaged or hypothecated property or proceeds from sale or other-disposition thereof remaining after-satisfaction of such note, to the-liquidation of other loans made by it to the mortgagor or trustor. “In Witness Whereof, the undersigned has caused these presents to-be executed in its name by its proper officers, thereunto duly authorized, and its corporate seal to be hereunto affixed this 28th day of May 1946. “Note: This form should be executed and transmitted with all mortgages or trust deeds offered as security for collateral whenever such mortgages or trust deeds recite that they are intended to secure future or additional loans to the mortgagor or trustor, or other indebtedness of such mortgagor or trustor to the Borrower. 18594” “Collection Agreement “This Agreement, entered into this 28th day of May, 1946, between Federal Home Loan Bank of San Francisco, a corporation duly organized under the Laws of the United States, hereinafter called the ‘Bank’, and Long Beach Federal Savings and Loan Association, a corporation organized and existing under the laws •of the-hereinafter called the ‘Institution’: “Witnesseth: That for and in consideration of the loan of money made •or about to be made or hereafter to be made to the Institution by the Bank, upon the primary obligation -of the Institution secured by the assignment of certain notes, bonds, mortgages, deeds of trust, deeds to .secure a debt, Vendors’ liens and shares of stock pledged therewith .and/or other collateral or one or all •of them, and jointly and severally hereinafter referred to as Collateral; “The Institution as its agent shall •collect all interest and principal, dues upon shares, installments of principal or other sums secured by or stipulated in said Collateral to be paid, as herein provided, and when .adequate security has been given by The Institution and maintained, the Institution may retain such collections until a payment to the Bank from the Institution becomes due, .and the Bank may permit the Institution to retain sums so collected in ■excess of the amount required to meet obligations of the Institution to "the Bank; provided, however, that if "the Institution shall receive payment of the full balance remaining due on any said Collateral, or if the Institution shall collect sums in excess of the amount payable thereon in due course, reducing the balance due by as much as five per centum, all such collections shall be forthwith reported by the Institution to the Bank, in order that immediate note may be taken thereof with respect to its bearing upon the diminution of the collateral security held by the Bank, and if from such consideration it shall appear that the collateral security has been unduly diminished by such collections, the Institution shall forthwith upon demand from the Bank substitute other Collateral in place of the reduced or satisfied Collateral, or failing to furnish such substituted Collateral the Institution shall transmit such collections to the Bank to be held by the Bank in place of such reduced Collateral. “The Bank will refrain from collecting any payments upon Collateral until default shall have been made in due payment or otherwise, or the Institution shall be in receivership or liquidation. “All payments received by the Institution as dues, subscriptions or payments on installment shares of the Institution held as Collateral to the assigned Collateral, the withdrawal value of all dividends upon such shares are, for the purposes of this agreement, payments of installments of principal on the debtors’ indebtedness, and as such, repayable to the Bank as installments on the principal of this indebtedness if and when demanded. “The Institution further agrees that if the whole or any part of this obligation shall be due and payable to the Bank, the Bank shall not be required to have recourse first to the Collateral held as security for this obligation, but may, at its option, first have recourse thereto or pursue such other and further remedies for the enforcement of the collection of this debt as it may deem proper in its discretion to adopt. “In Witness Whereof the respective parties hereto have caused this instrument to be executed and their corporate seals to be affixed hereto by their duly authorized officers the day and year hereinabove written. “Pledge Agreement “To the Federal Home Loan Bank of San Francisco “It is hereby agreed by the undersigned association that any and all Government obligations owned by the undersigned at any time deposited with your Bank, or with the Federal Reserve Bank of San Francisco for your account, are pledged and assigned to your Bank as security for any and all indebtedness now or hereafter owing by this association to your Bank. “In case of a default by this association in the payment of any indebtedness or in the performance of any obligation to your Bank, you are hereby authorized to realize on such security in the manner and to the extent provided in the note or notes evidencing such indebtedness and/or obligation. Ammann also executed to San Francisco Bank a document designated “Assignment of Mortgages or Deeds of Trust” bearing date of May 28, 1946, (the date of its execution seems to be a matter of dispute), which reads as follows: “Assignment of Mortgages or Deeds of Trust “For Value Received, the undersigned Long Beach Federal Savings and Loan Association hereby assigns and transfers.to Federal Home Loan Bank of San Francisco, a corporation organized under and existing by virtue of the laws of the United States, with its principal office in the City and County of San Francisco, State of California, certain mortgages on all beneficial interest under certain deeds of, or transfers in,, trust hereinafter respectively described : Together With the note or notes therein described or referred to, all of which the undersigned hereby endorses, the money due or-to become due thereon with interest, and all rights accrued or to accrue under said mortgages or said deeds of, or transfers in trust. “This assignment is made to secure any indebtedness now or hereafter owing by the undersigned to-said Bank, its successors or assigns. Upon any default of the undersigned, said Bank may sell the property hereby assigned, at public or private sale with or without notice. “Description of Mortgages or Deeds of Trust (There follows 40 pages of lists describing several thousand trust deeds with date, Trustor, Trustee and recording information.) “In Witness Whereof, the undersigned has caused this Assignment to be duly executed by its officers thereunto duly authorized, and its corporate seal to be hereunto affixed this 28th day of May, A.D., 1946. Its acknowledgment bears the same-date. An acknowledgment entitles a document to be recorded in the office of the County Recorder. But neither it, nor any other such assignments, were recorded. He also executed three similar documents bearing the same date, one containing 23 pages of similarly described trust deeds and each of the other two containing only one sheet of described trust deeds. He executed a total of at least 12 similar documents covering many thousand trust deeds, bearing the dates of June 1, 1946, June 21, 1946, December 23, 1947, and January 6, 1948. All of the “Homeowners” notes and trust deeds involved in the motions for summary judgment were included in the descriptions of notes and trust deeds attached to said assignments. On January 24,1948, Ammann, as conservator, released possession of the assets and properties of the Long Beach Association to it under the terms of an order of the Home Loan Bank, No. 388, and an order of this court of January 23, 1948, in action No. 5421, (action No. 5421 having been filed May 27, 1946). On March 13, 1948, the conservator’s notes in favor of the San Francisco Bank in the sum of $7,000,000 had been reduced to $6,300,000 in face, and on that date, after proceedings in court, this court made its order, (Appendix A, text of order), in action No. 5421-5678, directing the deposit in court by the San Francisco Bank of the original conservator’s notes of $6,300,000, of all of the government bonds and of all of the homeowners notes in favor of Long Beach Association and the trust deeds securing them, which it then had in its possession, as security on the conservator’s notes. Thereafter, in order to prevent approximately 8000 separate obligors on those notes and trust deeds from being drawn into the quicksands of this complicated litigation as parties, or compelling each of them to institute separate suits to protect them and their property rights, and at the same time to preserve the asserted rights of the main contestants, this court, on March 26, 1948, made its order (Appendix B, text of Order), directing the delivery of all the homeowners notes and trust deeds securing them, to the Long Beach Association which had theretofore been deposited in court under the above-mentioned order of March 13, 1948 made in consolidated actions 5421-5678, but retained in the registry of the court the United States government bonds and approximately one and one-half million dollars in cash, theretofore deposited in Court, subject to adjudication of liability on the conservator’s notes of $6,300,000, and subject to whatever lien rights existed on the property so retained in court, in favor of San Francisco Bank. The Title Service Company was trustee holding the legal title to several! thousand parcels of property under trust, deeds executed to secure homeowners, notes in favor of Long Beach Association, as beneficiary, in the manner above described. The Title Service Company has filed a cross-complaint in intervention in the within matter which will be described later at more length, but which, among' other things, seeks by its third cause of' action therein to quiet title of the trustors to the 8000 properties covered by the notes and trust deeds, and to quiet its title as trustee under said trust deeds as against the San Francisco Bank and other cross-defendants. The Home Investment Co. was the borrower,' i. e., the payor, on 174 different notes and the trustor on the 174 separate deeds of trust wherein the Title Service Company was the trustee and the Long Beach Association was the beneficiary. The Home Investment Co. has filed a cross-complaint in intervention on behalf of itself and of all of the other borrowers or payors or homeowners similarly situated, i. e., all of the borrowers on notes and trustors under trust deeds in existence on May 20, 1946, (the date of the seizure), and in existence on March 13. and March 26, 1948 (the date of 'the orders) for the delivery to the association of the trust deeds & notes. (Appendix B), to quiet their title as against the. claims of the San Francisco Bank in the within action, and other cross-defendants. The Long Beach Association, as payee and owner of the notes and as beneficiary under the trust deeds securing each of them, has filed a cross-claim, the third cause of action of which seeks likewise to quiet title of the borrowers, i. e., the “homeowners” of the real properties, and of itself to the notes and as beneficiary under the trust deeds securing them. The above motions which relate to the subject matter of “Home Owners Quiet 'Title” cross-claims are Item 2, “Motion of Federal Home Loan Bank Board, William K. Divers, J. Alston Adams, Kenneth G. Heisler, Federal Savings & Loan Insurance Corp., O. K. LaRoque, A. V. Ammann, George K. Bramley and Carl R. Gray, Jr., to quash the service of summons made upon them pursuant to three separate orders for service of summons made by this court on March 3,1953”, upon application of Long Beach Federal Savings and Loan Association, the Title Service Corp., and Robert H. Wallis under the provisions of 28 U.S.C. Sections 1655, 1335, 1397 and 2361 and the Federal Rules of Civil Procedure. Item No. S above, “Motion of Home Investment Co., Long Beach Association and Title Service Co. for summary judgment” ; Item No. U above, “Motion of Plaintiff, (a) to dismiss Home Investment Company’s cross-claim for quiet title and, (b) to strike and drop Home Investment Company as a party”; Item No. 6 above, “Motion of Plaintiff, (a) to dismiss cross-claim of defendant Long Beach Federal Savings and Loan Association, and, (b) to strike said cross-claim” ; Item No. 7, “Motion of Plaintiff, (a) to vacate order granting leave to Title Service Co. to intervene, and to strike its complaint in intervention and, (b) to ■dismiss the complaint in intervention in the 'alternative.” The within action was originally commenced on March 27, 2952 as action No. 597402 in the California State ■Courts for Los Angeles County, entitled, “Federal Home Loan Bank of San Francisco, a corporation, v. Long Beach Federal Savings and Loan Association, a Corp.”. Upon appropriate proceedings it was removed to this court on April 3, 1953, and received No. 13979. A motion to remand was thereafter denied. In all of the motions of plaintiffs and cross-defendants, the point is made that the motion to remand was improperly denied. That order of denial (Appendix C, text of order), is now the law of the case and will stand, for that reason, as well as for the reason that no persuasive arguments or authorities are now presented which would require a different conclusion. The complaint by the San Francisco Bank is founded on the four notes of the total face amount of $6,300,000 allegedly executed by A. V. Ammann as conservator for the Long Beach Federal Savings and Loan Association. The complaint is in five causes of action, the first four of which are stated as causes of action for debt due on each of the four promissory notes involved. The Fifth cause of action is for declaratory relief and to foreclose the lien claimed to exist by the San Francisco Bank, under the terms of said conservator’s four notes, upon the notes and trust deeds which were the subject matter of the orders of this court of March 13 and March 23, 1948, (Appendixes A and B) in action 5421-5678. Much controversy has developed concerning the precise position of the San Francisco Bank with relation to its claimed lien on borrowers’ notes and trust deeds thereon which, after deposit in court by San Francisco Bank under said Order of March 13, 1948 (Appendix A), were turned over to the Long Beach Association by said order of March 26, 1948 (Appendix B). Two paragraphs of the complaint of the San Francisco Bank in its fifth cause of action, after reciting the appointment of Ammann as conservator and the execution by him of the four conservator’s notes of $6,300,000, read as follows: “VIII “That said defendant assigned, delivered and pledged to plaintiff certain United States Government Bonds, promissory notes secured by mortgages or deeds of trust on real property and stock of plaintiff as security for the repayment of said sums advanced and loaned to said defendant by said plaintiff as aforesaid. That said security was given and required under the provisions of the Federal Home Loan Bank Act (12 U.S.C., Sec. 1421, et seq.), and the rules and regulations adopted by the Home Loan Bank Board pursuant thereto. That by reason of said assignments and pledges said plaintiff became, ever since has been and ¿till is the owner and holder of a lien upon all said pledged and assigned property.” and paragraph XV reads as follows: “XV “That by the terms of the charter issued plaintiff by the aforesaid Home Loan Bank Board pursuant to the Home Owners Loan Act of 1933, as amended, and the application made by defendant to said Board for a charter, defendant and its members agreed to be bound by each and all of the terms and provisions of the Home Owners’ Loan Act of 1933, [12 U.S.C.A. § 1461 et seq.] the Federal Home Loan Bank Act, and the rules and regulations of the Home Loan Bank Board; and that by reason thereof and the receipt of the aforesaid unpaid advances for the use of and which was used for the benefit of defendant, defendant is estopped from denying that it is indebted to plaintiff in the aforesaid sum of $6,300,000.00, and interest, and is estopped from denying the validity of the aforesaid four promissory notes, and is estopped from denying that plaintiff is the holder of a lien upon all of the personal property pledged to plaintiff, or any substituted collateral, and is estopped from denying that plaintiff is entitled to an equitable lien upon the property of defendant in an amount equal to the value of the personal property pledged with plaintiff as aforesaid.” (Italics supplied.) The four notes are attached to the complaint and provide -for assignment in very broad terms, to San Francisco Bank of the notes and trust deeds thereon executed by borrowers to secure the repayment of loans by Long Beach Association. (Each are in the same form as the text of one which is Appendix D). Other allegations in the fifth cause of action of the complaint of San Francisco Bank allege Long Beach Association is asserting San Francisco Bank has not, and never had, any lien on the notes and accompanying trust deeds. It also alleges that the court was wholly without jurisdiction in action No. 5421 to make the orders of March 13 and 26, 1948 (Appendixes A and B). No other conclusion can be reached from the language of the complaint but that the San Francisco Bank seeks in action No. 13979 to establish its lien as of the time prior to the date of the making of the order of deposit of March 13, 1948 (Appendix A) and turnover order of March 26, 1948 (Appendix B) in 5421-5678, and as of the time prior to the dates of making the various orders on interpleader-interventions by the various Homeowners, which are listed in footnote 15, 14 F.R.D. 273, pages 306, 307, 308; or, as stated in the language of Mr. Angelí, one of counsel for the San Francisco Bank, “It is the position of the San Francisco Bank that they are entitled to have full security for their $6,-300,000 plus all interest due thereon, exactly as they had it at the time the money and the bonds and the notes and the deeds of trust were taken from the possession of the San Francisco Bank and placed in the Registry of the Court.’' (Italics supplied.) In the memorandum of November 30, 1953, 117 F.Supp. 259, at pages 286, 287, I stated, among other things, as follows: “However, the position of the San Francisco Bank was further confused by a subsequent contrary statement made by Mr. Angelí during the course of the argument on October 21, as follows, (pages 757, 758): ‘We have filed a very simple action. That is what we conceive the San Francisco Bank rights to be. We stand on it. * * * We state we stand on our complaint as it is filed and we further say this court has no jurisdiction.’ “If the San Francisco Bank stands on its complaint as it is filed, which includes a cause of action to foreclose and reestablish its position as security holder as of the date of the turn-over on March 13, 1948, then there can be no doubt in my mind that the trustees holding legal title to the individual-borrowers’ properties under the trust deeds which have been paid off and are now being paid off to the Long Beach Association, as well as the debtors on the individual notes securing those trust deeds, may be confronted with a very serious and complicated situation which might require extensive and expensive litigation on their part. It is simple logic that if the San Francisco Bank secured the title by assignment from the conservator of the trust deeds and notes, and if the order of March 13, 1948 is vacated, dissolved and set aside, then the San Francisco Bank, having assigned the notes and trust deeds, not outright but only conditionally, pursuant to the order of March 13, 1948, will be in a position to claim that all reconveyances made by the trustees holding legal title of the properties under the trust deeds, after March 13, 1948, were void and may look, or attempt to look, to such trustees for satisfaction of any judgment obtained in 13979 for the value of the property as of the time of the turn-over order on March 13, 1948. “Likewise, the San Francisco Bank may claim that the debtors on the notes securing those trust deeds, in view of the fact that they were claimed to be, (and it must be presumed that they were validly assigned to the San Francisco Bank) had no right to make payments thereon to the Long Beach Federal Savings and Loan Association but should have made payments thereon to the San Francisco Bank notwithstanding an agreement asserted by the San Francisco Bank to exist which was entered into prior to the appointment of the conservator authorizing the Long Beach Association to be its agent in the collection of balances due on notes. This is particularly so because of the confusing and contradictory statements in various pleadings as well as statements of counsel hereinbefore referred to. “It must be remembered in this connection that the San Francisco Bank, by its formal pleadings and by the last authoritative statement of its counsel in court, are asserting that the Order of March 13, 1948 was void and that they stand on their complaint as it is filed which seeks to restore the status quo as to all securities including individual-borrower notes and trust deeds as of March 13, 1948. “The two main contestants in action 13979 are the San Francisco Bank and the Long Beach Association, and the people who would be involved, or whose rights might be endangered by restoring the status quo as of March 13, 1948, are innocent third parties, that is to say, individual property owners who inter-pleaded in the 51 interpleader-proceedings in the consolidated actions 5421 and 5678, the debtors on the trust deeds and notes, and the trustees under the trust deeds holding legal title. “It therefore seems to me that in view of the fact that the mandate ordered the dissolution, vacation and setting aside of the order of March 13, 1948, requiring the deposit of the collateral in court, but did not order the dissolution, vacation or setting aside of the order of March 26, 1948, substituting collateral and directing the return to the Association of the notes and trust deeds securing them, that it was the intention of the appellate court to accept the substitution of collateral and that all questions concerning the borrowers’ notes and trust deeds should be eliminated from litigation. This can be done, by the execution and appropriate filing of disclaimers or quitclaims by San Francisco Bank.” After the filing of that memorandum the San Francisco Bank, on January 18, 1954, filed in the within case (No. 13979) a disclaimer executed and acknowledged by it on November 27, 1953 and recorded in the official records of Los Angeles County on November 30, 1953 in Book 43263, at page 416417 of Official Records. A certified copy of a resolution dated August 24, 25, 1953 of the Board of Directors of the San Francisco Federal Home Loan Bank authorizing a disclaimer was filed in the within case on January 27, 1954. The full text of the disclaimer (without the acknowledgment) follows: “Book 43263 page 416 “Disclaimer “Comes now Federal Home Loan Bank of San Francisco, the undersigned, and Disclaims any and all present right, title, lien, interest or estate in, to or upon any and all of the real property more, particularly described in any and every deed of trust, of record, wherein Long Beach Federal Savings and Loan Association, of Long Beach, California, is the named beneficiary and which were assigned to Federal Home Loan Bank of San Francisco by A. V. Ammann as Conservator of said Long Beach Federal Savings and Loan Association, or which were deposited in court in consolidated action No. 5421-5678 in the District Court of the United States for the Southern District of California, Central Division. This instrument is made for the express benefit of the owner or owners of each of the aforesaid parcels of real property, and their successors in interest, and is not made for the benefit of any other person or entity whomsoever. The undersigned, by these presents, does not waive, release, discharge, postpone or in any manner impair any of its rights as against said Long Beach Federal Savings and Loan Association or the property and assets thereof, but to the contrary expressly reserves all such rights. “Dated: November 27, 1953. (Seal) Federal Home Loan Bank of San Francisco By J. Alston Adams J. Alston Adams President Ray E. Humphrey Ray E. Humphrey Treasurer.” Under California law a grant of real property or an interest therein of more than an estate at will or for less than one year must be in writing, Cal.Civ.Code, § 1091, and is effective only upon delivery of the deed or instrument, Cal.Civ.Code, § 1054; 9 Cal.Jur. 149, and cases there cited. The above disclaimer is in effect a quit-claim deed. It was not, of course, delivered personally to the several thousand persons for whose benefit it was made. Conditional delivery is prohibited, Cal.Civ.Code, § 1056; constructive delivery is permitted, Cal.Civ.Code, § 1059; it is presumed to have been delivered on its date, Cal.Civ. Code, § 1055. Under Cal.Civ.Code, § 1059, subd. 2, a deed is constructively delivered “Where it is delivered to a stranger for the benefit of the grantee, and his assent is shown, or may be presumed.” Insofar as the disclaimer conveyed, or quit-claimed anything to Title Service Company, Long Beach Association and Home Investment Co., it was delivered to them when it was filed on January 18, 1954 in the within action. Insofar as it conveyed or quit-claimed anything to the Homeowner trustors who are not named-parties to this action, but for whose benefit the quit-claim was made, it must be presumed that they assented to its delivery for their benefit on that date also, as that was the actual date San Francisco Bank parted with possession thereof. I, therefore, hold that the effective date of the disclaimer was the date of its filing in this action, viz., January 18, 1954. The Title Service Company Cross-Complaint in Intervention. Following the removal of the within action to this court from the State Court, the Title Service Company, on August 18, 1952, filed a “Motion for Leave” to intervene and a proposed Complaint in Intervention. The motion was granted. The cross-complaint is long. It is in three stated causes of action. The first cause of action appears to be one in interpleader and in the nature of interpleader wherein it states that it interpleads, “The legal titles conveyed to it as trustee upon each of said deeds of trust from the homes of approximately 8000 borrowers of said Association.” (Par. 28): The second cause of action is stated to be a cause of action for declaratory relief; the third cause of action is stated to be a cause of action to quiet title. It re-incorporates many of the allegations contained in the first and second causes of action and seeks to quiet title to the property described in paragraph 2 of the third cause of action which reads as follows: “Plaintiff in Intervention is the owner in fee, and for more than six years last past has been such owner, as trustee of the real property described in: “(a) The deeds of trust recorded upon the date and in the respective books and pages of the Official Records in the Office of the County Recorder of Los Angeles County, all as detailed in the ‘Order requiring the deposit of certain notes, deeds of trust, etc., held by the Federal Home Loan Bank of San Francisco,’ which said order was filed on March 13, 1948, in said actions numbers 5421-5678 — -P.H. in said United States District Court; on pages numbers 12,188 to, and including 12,263 of the Clerk’s Pagination of Record in the District Court. The said descriptions are also contained in pages 8423, to 8518 in Volume XVIII of the Printed Record on Appeal in Appeal Number 12511 to the United States Court of Appeals for the Ninth Circuit. “(b) Described in that certain lis pendens recorded in the office of the County Recorder of Los Angeles County, California, in said Action No. 5421 — P.H. in said United States District Court, in June of 1946, each and all of which documents are referred to, and incorporated herein by reference, and made a part hereof, the same as if set forth herein at length.” In view of the fact that this portion of the within memorandum is limited to the matter of quieting title of the property sometimes described as “Homeowners” titles I will, at this point, treat of the third cause of action for quiet title and will not discuss the allegations of either the first or second causes of action. The essence of Title Service Company’s assertion of right to intervene and to have its, and the homeowners’ rights, quieted is found in paragraph 60 (beginning on page 39 of its complaint) and incorporated by reference in its third cause of action; and specifically in a short unnumbered paragraph on page 46 of its complaint reading as follows: “That the present action by the San Francisco Bank, seeking to foreclose a lien claimed by said Bank upon said notes and deeds of trust proposes to, appears to, and does affect the security of said deeds of trust and/or the rights, and/or powers of beneficiary, and/or trustees thereunder.” It is further alleged, in substance, that each of the trust deeds contained a provision which requires the Trustor, and, on his failure so to do, permits the trustee or beneficiary to appear in, and defend, any action or proceeding purporting to affect the security of the trust deed and note or of the rights or powers of the beneficiary or trustee. Among other things, it is alleged that prior to the filing of its cross-claim and since the order of this court of March 26, 1948, in 5421-5678 (Appendix B), returning the trust deeds and notes from the registry of the court to the Long Beach Association, 1717 notes secured by trust deeds had been repaid by the payment of an approximately aggregate sum of $5,291,691.06 to the Long Beach Association by the owners of those properties who or which were obligors on the notes and Trustors under the trust deeds, and that the Title Service Company had executed reconveyances thereon. The burden of the third cause of action of the Title Service Company’s cross-complaint is, that the San Francisco Bank, by its fifth cause of action, in seeking to reestablish its lien as of the date prior to the order of March 13, 1948 (Appendix A), and as of the date prior to the date of each of the orders of 51 different interpleader-intervention proceedings in 5421-5678, involving a total of 480 parcels of property, details of which may be found in 14 F.R.D. 273, pages 306, 307, 308, has cast a cloud upon the title of, not only those who own property and are presently payors on notes still secured by trust deeds, but of all of the owners of property who have paid off their notes and secured re-conveyances of their property from the trustee, whether through deposit in court, or subsequent to the order of March 26, 1948 (Appendix B); and, that such claim of right by the San Francisco Bank likewise casts a cloud upon the rights and duties of the Title Service Company, as trustee, both as to paid notes and their accompanying trust deeds, as well as unpaid notes and their accompanying trust deeds. Home Investment Company Cross-Complaint in Intervention. The Home Investment Company was a borrower from the Long Beach Association on 174 parcels of property, executing separate notes and trust deeds for each. It intervened in action 5421-5678 and interpleaded approximately $800,000 into court, being the total of balances then due on the 174 trust-deed notes. Orders in 5421-5678 were made in that connection on its complaint in interpleader-intervention, which, among other things, required: 1. Both Ammann, as conservator claiming the sole right to receive payments on the notes, and the Long Beach Association contesting Ammann’s right and claiming it for itself, to execute simultaneous requests for reconveyances to the trustee; 2. The trustee to execute the reconveyances, 3. The original notes and trust deeds to be cancelled and surrendered into court. The purpose of that procedure was to permit the borrower to pay off his note and secure a clear and merchantable title to his property, without becoming a participant in the then already proliferating litigation. There were 50 other identical or similar proceedings had during the year 1946 and 1947, involving in some instances only one parcel of property, and, in others, many, where similar orders were made and similar proceedings followed. The total number of parcels involved in them, together with the Home Investment Co. interpleader-intervention, was 480, and the total sum of money deposited in court by the borrowers whose notes were thus discharged and property cleared, was the sum of $1,641,037.96, see 14 F.R.D. 273, at page 306 et seq. By the order in 5421-5678 of March 26, 1948 (Appendix B), the lien of San Francisco Bank under the conservator’s notes, was transferred from the homeowners notes and trust deeds to the money on deposit in court and to the $5,-300,000 of government bonds deposited in court under the order of March 13, 1948 (Appendix A). The 174 notes and trust deeds in which Home Investment Co. was the payor and trustor, as well as those involved in the other proceedings immediately above mentioned, were among those which were seized by Ammann when he took possession of the Long Beach Association on May 20, 1946, and, so far as I can learn, from the various lists of trust deeds and notes were assigned to San Francisco Bank as security under the instruments hereinbefore described. The Home Investment Co. sues for itself and as a member of the class of all other persons similarly situated, i. e., borrowers owning property upon which they have executed trust deeds to secure notes payable to the Long Beach Association, whether paid or not. The burden of the allegations of the Home Investment Co. concerning clouds on titles are, in substance, the same as contained in the third cause of action of the Title Service Co. Cross-Claim of Long Beach Association. As seen from footnote 2, the cross-claim of Long Beach Association is exceedingly lengthy. It is cast in seven causes of action. For the purposes of this portion of this memorandum the third cause of action, designated “a cause of action for quiet title,” is the only one to be presently considered. That cause of action incorporates many of the allegations of the other six causes of action. The property to which it seeks to quiet title is described in paragraph 3 of its third cause of action, which reads as follows: “Cross-claimant, on May 18, 1946, was, at all times subsequent thereto, has been, and yet is, the absolute and unqualified owner of all beneficial interest in the notes and deeds of trust, and the trusts thereby created, and the ownership in real property therein involved, as beneficiary named in each of said deeds of trust, and as payee named in each of said notes. Said properties are described as: “(a) The deeds of trust recorded upon the date and in the respective books and pages of the Official Records in the Office of the County Recorder of Los Angeles County, all as detailed in the ‘Order Requiring the Deposit of Certain Notes, Deeds of Trust, Etc., Held by the Federal Home Loan Bank of San Francisco’, which said order was filed on March 13, 1948, in said Action Nos. 5421-5678 — P.H. in said U. S. District Court, on pages 12,188 to and including 12,263 of the Clerk’s pagination of record in the District Court. The said descriptions are also contained in Pages 8423 to 8518, inclusive, in Volume XVIII of the Printed Record on Appeal in Appeal No. 12511 to the United States Court of Appeals for the Ninth Circuit; “(b) Described in that certain lis pendens recorded in the Office of the County Recorder of Los Angeles County, State of California, in said Action No. 5421 — P.H. in said United States District Court, in June of 1946; and “(c) Of all assets in the Registry of this Court, including notes, deeds of trust, cash, or other valuables, deposited in the more than 50 interpleader interventions, details of which are alleged in paragraph 31 of the First Cause of Action hereof, which is reincorporated herein by reference the same as if set forth herein at length. each and all of which documents are referred to, and incorporated herein by reference, and made a part hereof, the same as if set forth herein at length.” Under Paragraph (c) above, the Long Beach Association seeks to quiet title to all of the assets in the registry of this court. Insofar as the instant matter under consideration is concerned, viz., the trust deeds described in (a) and (b) and heretofore mentioned, the court, in this memorandum, will not be concerned with, and nothing herein will be deemed to affect one way or the other, the assertion of its claim to quiet title to the property set forth in paragraph (c) above quoted, except as to the homeowners notes and deeds of trust therein mentioned which were deposited in court in 5421-5678 in the approximately 50 separate interpleader-interventions ■filed by various homeowners; that is to say, the conservator’s notes, the cash and “other valuables” (the $5,300,000 government bonds) deposited in court in 5421-5678, are not involved in this phif.se and while they are undoubtedly the property of Long Beach Association, the question of “quieting” title to them is involved on the merits as San Francisco Bank claims a lien thereon as security for the conservator’s notes. From reading the third cause of action of the cross-claim of Long Beach, together with the other portions of its complaint incorporated by reference, it becomes evident that the disturbance to, or clouding of titles, of the homeowners under the notes and trust deeds herein elsewhere described, as well as the titles and rights of Long Beach Association therein or thereunder, arises by virtue of the allegations in the complaint of the San Francisco Bank in the within matter contained in its fifth cause of action hereinbefore adverted to. Motions for Summary Judgment (No. 3) Motions to Dismiss (Nos. 4, 6, 7b) Motion to Vacate (No. 7a) On May 21, 1953 the Home Investment Co., the Title Service Co. and the Long Beach Association filed a joint motion (No. 3) for summary judgment “quieting title to the homes of 8000 borrowers against foreclosure of loans paid in full into the registry of the court, and motions for summary judgment quieting title of trustee Title Service Co. and of beneficiary Long Beach Federal Savings and Loan Assn.” As heretofore noted, there was not at that time on file in the within proceedings any disclaimer by the San Francisco Bank. (It was not filed until January 1954). On May 29, 1953, the plaintiff filed a motion (No. 4) to dismiss the cross-claim of the Home Investment Co., to strike and drop Home Investment Co. as a party. On June 5, 1953 the plaintiff filed a motion (No. 6) to dismiss the cross-claim of defendant Long Beach Association. Insofar as that motion to dismiss the cross-claim of Long Beach Association is involved, I will concern myself in this portion of this memorandum only with the motion to dismiss the cross-claim as to the third cause of action for quiet title, and that with regard only to the Homeowner-borrowers notes and trust deeds, described in (a) and (b), and that portion of (c) of paragraph 3 of the third cause of action to quiet title only as it concerns such trust deeds and notes as hereinbefore indicated, and not with regard to tjie government bonds and cash deposited in court. On June 5, 1953 the plaintiff filed a motion (No. 7a) to vacate the order granting leave to the Title Service Co. to intervene and also a motion (No. 7b) to dismiss that complaint in intervention. This portion of the memorandum will treat only with that motion to dismiss insofar as it involves the third cause of action in the Title Service Company’s complaint in intervention to quiet title. In resolving the problems presented by the last above mentioned motions which, of course, include the broad question as to whether or not the cross-claims of Title Service Co., Long Beach Association (as to their third cause of action) and Home Investment Co., state a claim for relief under Rule 8 Fed.Rules •Civ.Proc., 28 U.S.C.A., the matter is broken down into three main questions: 1. What is the correct legal procedure to effectively quiet title, i. e., whether by judgment or by dismissal, in view of the Disclaimer? 2. Whether either Title Service Co. or Long Beach Association on the third cause of action in each of their cross-claims and Home Investment Co. as to its cross-claim, are proper parties to obtain such relief for themselves and as representatives of a class; 3. Whether summary judgment may, and should, be granted under the Federal Rules of Civil Procedure. 1. The Legal Procedure to Quiet Title, i. e., Whether by Judgment or Dismissal. The problem is easier stated than solved. One thing is certain: insofar as the San Francisco Bank is concerned, it has, by its disclaimer, now cleared the way to eliminate from the morass of this and related litigation the question of the validity of the “Homeowners” titles, regardless of the validity of the judgments in the 51 interpleader-interventions in 5421, and regardless of the validity of the orders in 5421 of January 23, 1948, 14 F.R.D. 273,315 and of March 13 and 26, 1948 (Appendixes A and B). San Francisco Bank insists that it would be effective to clear those titles by dismissing the cross-complaints. On the other hand, the three movants for summary judgment insist that the appropriate procedure requires a judgment quieting title which can, and should be done in this case under the summary judgment procedure provided by the Federal Rules of Civil Procedure and the applicable California law. The property being located in California and the trust deeds and notes being California contracts, the applicable law- is the local law of the State of California under the provisions of 28 U.S.C.A. § 1652 and Federal Case Law. In Rose v. Saunders, 9 Cir., 1934, 69 F.2d 339, 341, the Court of Appeals for this Circuit set forth the rule as to jurisdiction of this court in suits to quiet title, and as to the applicability of California law, both substantive and proceduralwise, at page 341 as follows: “* * * Neither is it true that state statutes cannot increase federal equity jurisdiction. In Devine v. City of Los Angeles, 202 U.S. 313, 333, 26 S.Ct. 652, 657, 50 L.Ed. 1046 the Supreme Court in considering section 738 of the California Code of Civil Procedure, authorizing suits to quiet title, said: ‘This statute enlarged the ancient jurisdiction of courts of equity in respect of suits to quiet title, but, the equitable rights themselves remaining, the enlargement thereof may be administered by the circuit courts of the United States as well as by the courts of the State.'" The rule as to whether or not under the California law a party is entitled to a judgment or a dismissal, after a disclaimer has been filed, has been settled in California since 1890 when the Supreme Court decided the case of Bulwer Consolidated Mining Co. v. Standard Consolidated Mining Co., 83 Cal. 589, 23 P. 1102, 1104. It was a quiet title case wherein the defendant admitted that the plaintiff was the owner of the property involved, and “expressly disclaims any estate or interest therein adverse to the plaintiff.” The defendant also denied that it ever had made any such adverse claim. The Supreme Court said: “* * * when, in an action to quiet title to land, the defendant disclaims any interest or estate in the premises, it is immaterial whether or not he had ever before claimed an interest or estate therein adversely to the plaintiff; for in either event (emphasis supplied) the plaintiff would be entitled simply to a judgment quieting his title, without costs.” And further, 83 Cal. at page 608, 23 P. at page 1108: “If, on the other hand, the defendant, as here, expressly disclaim any estate or interest in the land described in the complaint, and at the same time deny that he ever made any such adverse claim, the plaintiff would still be entitled to a decree quieting his title, but without costs. * * * The object of sections (of the California Code of Civil Procedure relating to quiet title) is to enable the plaintiff, in such action to dispel whatever may be regarded by third persons, as well as by the defendant, as a cloud upon his title; for, even though the defendant makes no adverse claim, third persons may regard plaintiff’s title as being subject to an adverse claim by the defendant, which would be a cloud upon plaintiff’s title, depreciating its value, and which he would be entitled to have removed by the decree of the court, so that his record title may appear perfect, not only to the defendant, but to all persons whom it may thereafter concern.” That case is accepted as the law of the State of California and that procedure has been, and is, followed almost universally in quiet title actions in the State of California. From that case it is quite evident that under the law of the State of California, if a party asserts a claim of right to real property, or an interest therein, and if another party disclaims it, either in its pleadings or otherwise, the plaintiff is nevertheless entitled as a matter of procedure to a judgment quieting his title. The point is made by the San Francisco Bank that a “cloud” to be removable, must be founded on an instrument of record. There is nothing to the point as it is the settled law of California that the remedy of quieting titles is not confined, “to the case of an adverse claimant setting up a legal title, or even an equitable title; but * * * was intended to embrace every description of claim whereby the plaintiff might be deprived of the property, or its title clouded, or its value depreciated, or whereby the plaintiff might be incommoded or damnified by the assertion of an outstanding title already held or to grow out of the adverse pretension”; Head v. Fordyce, 17 Cal. 149, 151; and 22 Cal. Jur. 115, 116 and cases there cited (emphasis supplied.) In Nichols v. Nichols, 8 Cir., 1927, 20 F.2d 474, the Court held that a quiet title suit would lie against an interest claimed to exist under a contract which became effective at death: At page 481 of 20 F.2d the court stated: “Under a California Statute almost identical with the Kansas statute, the Supreme Court of that state in Castro v. Barry, 79 Cal. 443, 446, 21 P. 946, 947, said: ‘the proceeding is for the purpose of stopping the mouth of a person who has asserted or is asserting a claim to the plaintiff’s property. * * * It is not aimed at a particular piece of evidence, but at the pretensions of an individual. * * * Nor is it necessary that the adverse claim should be of any particular character. * * * And the rule may be even more broadly stated, viz. that the action may be maintained by the owner of property to determine any adverse claim whatever.’ ” While it is true that it does not appear that the assignments and transfers of the trust deed and notes to San Francisco Bank were recorded in the Office of the County Recorder, it must be remembered that San Francisco Bank persists in its claim that they were validly transferred. And, it must be remembered, as well, that the delivery, Cal.Civ.Code, § 1054, of a document transferring an interest in real property is effective to pass title regardless of its recordation, which, after all, is only for notice to the world of such transfer. The allegations in the fifth cause of action of the complaint of the San Francisco Bank, are more than mere pretensions, — they are positive assertions of right and title. It is specifically held in Stoner v. Security Trust Co., 1920, 47 Cal.App. 216-221, 190 P. 500, that an action would lie under Section 1050 Cal.Code Civ.Proc. to quiet the title to a purported assignment of a note and mortgage. By both Sections 738 and 1050 Calif. Code Civ.Proc. a quiet title suit may be maintained on personal property, including money, the same as on real property. So the rules on money in the foregoing cases are applicable to the personal property involved here. I conclude that the effective procedure to quiet title in this case is by judgment and not dismissal. 2. Are Title Service and Long Beach Association (As to Their Third Cause of Action) Proper Parties: and Which of Them, or Home Investment Co., If Any, Are Representative of a Class ? As heretofore indicated, the California Law is controlling (28 U.S.C. § 1652; Rose v. Saunders, supra,) unless Federal s