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October 26, 1987

Ford Motor Company, et al.
Insurance Commissioner Of the Commonwealth Of Pennsylvania

The opinion of the court was delivered by: KELLY

 R. F. KELLY, J.

 In this case, the plaintiff, Ford Motor Company and its subsidiaries, Ford Motor Credit Company, The American Road Insurance Company, Ford Life Insurance Company, First Nationwide Financial Corporation and First Nationwide Bank, have brought this action against the Insurance Commissioner of the Commonwealth of Pennsylvania seeking declaratory and injunctive relief against enforcement of Section 641 of the Insurance Department Act, 40 P.S. § 281. By order of October 9, 1987, the Pennsylvania Association of Independent Insurance Agents, John M. Ulrich, Jr., the Professional Insurance Agents Association of Pennsylvania, Maryland and Delaware, Inc., Charles P. Leach, Jr., the Pennsylvania Association of Life Underwriters and Harold E. Alexander were permitted to intervene, maintaining that Section 641 is constitutional. Hereinafter, these intervenors will be referred to as the Insurance Agents.

 Section 641 provides, in pertinent part that, "No lending institution, . . . savings and loan holding company or any subsidiary or affiliate of the forgoing . . . may, directly or indirectly, be licensed or admitted as an insurer" except that lending institutions are permitted to sell credit life, health and accident insurance and to underwrite and sell title insurance. Ford Motor Company's subsidiaries, The American Road Insurance Company and Ford Life, are and have been for many years selling insurance in Pennsylvania.

 Ford Motor Company's subsidiary, First Nationwide Financial Corporation, owns the First Nationwide Bank (FNB) a federally chartered savings bank. Federal law treats a federally chartered savings bank as a federal savings and loan association for all purposes. 12 U.S.C. § 1464(d).

 State Savings Company of South Euclid, Ohio and Citizens Home Savings Company of Lorrain, Ohio, two failing Ohio state chartered savings and loan associations insured by the Federal Savings and Loan Insurance Corporation (FSLIC), were placed by the Federal Home Loan Bank Board into the receivership of the FSLIC. The Bank Board appointed the FSLIC as receiver of these savings and loans with authority to liquidate or make such other disposition as the FSLIC found to be in the best interests of the savings and loans, their depositors and the FSLIC.

 In June 1986, acting under authority of the 12 U.S.C. § 1730a(m), the Bank Board authorized the merger of the Ohio savings and loans with FNB, making the following findings, referring to the Ohio savings and loans as the Associations and FNB as FNS, for First Nationwide Savings, the previous name of FNB.

RESOLVED FURTHER, That the Bank Board, as operating head of the FSLIC, hereby determines with respect to the Acquisition and Merger that:
1. Severe financial conditions exist which threaten the stability of a significant number of institutions, the accounts of which are insured by the FSLIC ("insured institutions"), and of insured institutions possessing significant financial resources;
2. Each of the Associations is a failing institution that is eligible for assistance pursuant to § 406(f) of the NHA, 12 U.S.C. § 1729(f) (1982);
3. The procedures used by agents of the FSLIC to solicit practicable offers from prospective purchasers or merger partners both qualified and capable of acquiring the assets and liabilities of each of the Associations comply with the standards of § 408(m) of the NHA, 12 U.S.C. § 1730a(m) (1982);
4. The Bank Board, in making the findings and issuing the approvals contained in this Resolution, has given full and due consideration to the need to minimize the cost of financial assistance, the maintenance of specialized depository institutions, and the priorities and purposes of § 408(m) of the NHA, 12 U.S.C. § 1730a(m) (1982);
5. The Acquisition and Merger would lessen the risk to the FSLIC;
6. No other offer was made to acquire both of the Associations;
7. No offeror both qualified and capable of acquiring substantially all of the assets and liabilities of either of the Associations made an offer to acquire either of the Associations in a form and with conditions acceptable to the FSLIC the estimated cost of which was within the lesser of 15 percent or $ 15 million of the cost of the offer of FNS to acquire both Associations;
8. The offer of FNA to acquire both Associations presents the lowest expanse and least risk to the FSLIC of any proposal submitted for either of the Associations;
9. The offer of FNS is substantially less costly to the FSLIC than any alternative proposal or proposals.

 Merging with these Ohio savings and loan associations and assuming their liabilities would not have been a sound business proposition for FNB or any other company unless it were offered some inducement to do so. If the FSLIC were to have offered money to induce a merger with the Ohio savings and loan associations, it would have cost the FSLIC a substantial amount. Instead, under authority of 12 U.S.C. § 1730a(m), the Bank Board granted to FNB the right to open branches in Pennsylvania and Colorado. The Bank Board made the following finding:

The Bank Board finds that the Acquisition and Merger are of very substantial benefit to the FSLIC in a measure sufficient to constitute a compelling factor in determining to make an award of branching rights in Pennsylvania and Colorado to FNS.

 FNB would not have acquired the Ohio savings and loan associations if it did not get the right to open branches in these two states in return.

 In February 1987, FNB filed an application with the Bank Board for permission to open the Pennsylvania branch office. In April 1987, the Bank Board approved the application and the branch opened on May 20, 1987. Plaintiffs were then apparently in violation of Section 641 of the Pennsylvania Insurance Department Act which forbids companies with savings and loan affiliates from selling insurance.

 On August 5, 1987, the Insurance Agent intervenors filed their motion to intervene and appended thereto a motion to dismiss the complaint on abstention grounds. The Insurance Agents' motion to intervene was granted on October 8, 1987.

 On September 4, 1987, the defendant filed a motion to dismiss on abstention grounds, relying on the motion of the intervenors.

 On June 29, 1987, the intervenors filed a complaint with the Insurance Commissioner seeking administrative action against the plaintiffs in this case to revoke their insurance licenses. On July 27, 1987, the Insurance Commissioner ordered Ford to file an answer to this complaint. On August 31, 1987, a presiding officer was appointed to hear this complaint and the complaint was officially docketed by the Insurance Commissioner. Subsequently, the plaintiffs filed in this court a motion for a preliminary injunction to ...

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