The biggest story in town last week on the legal-affairs beat was the oral argument at the U.S. Supreme Court over the constitutionality of a key provision of last year's Gramm-Rudman-Hollings law designed to cut government spending.

The key issue in the controversy is just where the comptroller general fits in the political scheme of things. But a decision by the U.S. Court of Appeals in Philadelphia may have a lot more impact on some companies than the eagerly awaited Supreme Court opinion.

When the Office of the Comptroller General was created in 1921, Congress and the White House worked out a compromise that was supposed to make it subservient to neither: The president picks the person to fill the 15-year nonrenewable term, and the lawmakers have the power to remove him.

The agency the comptroller general heads, the General Accounting Office, usually is described as being in the legislative branch of the federal government. The official U.S. Government Manual, for example, lists it that way. This determination is vital to a definition of the jobs it can do.

That's because an arm of the legislature is not allowed to perform duties of the executive branch, but a truly independent agency that doesn't fit into any of the three branches at least arguably could take on such tasks.

In the Supreme Court case, the job in question is deciding how much the spending of each executive-branch agency should be sliced to hold total federal outlays to permissible levels. In the Philadelphia case, Ameron v. Army Corps of Engineers, the issue was the comptroller general's power to hold up government contracts until protests from losing bidders are resolved.

Congress gave the comptroller that power in 1984, although President Reagan insisted at the time that the provision was unconstitutional and told contracting agencies to ignore it.

On March 27, the Philadelphia judges disagreed with the president. The fact that Congress can remove the comptroller general does not give the lawmakers enough clout to make the office an arm of the legislature, they decided, because it is up to the president to select the official in the first place. The appellate judges adopted the reasoning of a 1964 decision from the U.S. District Court in Washington that the General Accounting Office was "part of a headless 'fourth branch' of government."

The Philadelphia judges gave great weight to the fact that Congress never has taken a step to remove a comptroller general. In the Supreme Court argument, Lois G. Williams, one of the lawyers arguing that Gramm-Rudman-Hollings is unconstitutional, pointed to the same fact as evidence that the comptroller general is so subservient to Congress that the men who have filled the job all have been careful not to anger any of the lawmakers.

In other cases, courts ruled that:

*Banks can't challenge an approval given a new credit union. Six of the biggest banks in North Carolina went into court to stop the go-ahead given by the National Credit Union Administration to a new financial cooperative that would be open to any employe of a local government within the state.

Members of a credit union are supposed to have a common bond, the banks said, and the new institution's membership requirements were far too loose. But the U.S. Court of Appeals in Richmond reasoned that the banks were simply out to protect their own turf from new competition, and so were not the proper plaintiffs to bring a case arguing that the credit union rules will not ensure a cohesive operation. (Branch Bank v. NCUA, March 18)

*A government cannot force apartment building owners to make cable television available to tenants. The Florida Supreme Court struck down a law giving tenants the right to demand cable television by declaring that it deprived building owners some property rights without compensating them for the intrusion.

The U.S. Supreme Court four years ago used similar reasoning to throw out a New York State law requiring apartment buildings to be wired for cable, but the Florida cable interests had argued that their case was different because the law was meant to help tenants, not cable companies, and pertained only if a tenant demanded cable service. (Storer Cable v. Summerwinds, March 13)

*Political patronage is fine. The U.S. Supreme Court, in decisions handed down in 1976 and 1980, said that, even in local governments without formal civil service protection, newly elected officials cannot sweep out employes who have supported the opposing party. A political litmus test is constitutional only for key jobs in which party loyalty is "an appropriate requirement for effective performance."

A new ruling from the U.S. Court of Appeals in Cincinnati, however, focused not on firings but on hirings. It is okay for public officials to consider only applicants who are referred by friends and allies, the decision said, even if that means members of the out party are not likely to be hired. Elected officials may well function better if they hire people they knew of through such informal political networks, the judges explained. (Avery v. Jennings, March 20).