Baker v. Tulsa Bldg. & Loan Ass'n

• Decision Date: 06 October 1936
• Docket Number: 25959.
• Citation: Baker v. Tulsa Bldg. & Loan Ass'n, 66 P.2d 45, 179 Okla. 432, 1936 OK 568 (Okla. 1936)
• Parties: BAKER v. TULSA BUILDING & LOAN ASS'N.
• Court: Oklahoma Supreme Court

66 P.2d 45

179 Okla. 432, 1936 OK 568

BAKER v. TULSA BUILDING & LOAN ASS'N.

No. 25959.

Supreme Court of Oklahoma

October 6, 1936

Rehearing Denied Nov. 17, 1936.

Second Petition for Rehearing Denied March 23, 1937.

"Vested right" is the power to do certain actions or possess certain things lawfully, and is substantially a property right, which may be created either by common law, by statute or by contract; right being "vested" when right of enjoyment, present or prospective, has become property as present interest.

Syllabus by the Court.

1. A "vested right" is the power to do certain actions or possess certain things lawfully, and is substantially a property right, and may be created either by common law, by statute, or by contract. And when it has been once created and has become absolute, it is protected from the invasion of the Legislature by those provisions in the Constitution which apply to such rights. And a failure to exercise a vested right before the passage of a subsequent statute, which seeks to divest it, in no way affects or lessens that right (quoting 4 Words & Phrases, Second Series, p. 1166, Vested Right). Crump v. Guyer et al., 60 Okl. 222, 157 P 321, 2 A.L.R. 331.

2. The obligations of a contract between a member of a building and loan association and the association are unconstitutionally impaired, in contravention of section 15, article 2, of the Constitution of Oklahoma, and section 10 of article 1 of the Constitution of the United States, and the vested rights of such member destroyed, in violation of section 1 of the Fourteenth Amendment to the Constitution of the United States, by changes in the law covering such association whereby the obligation to pay in full upon the death of such stockholder is changed so as to require payment only less a proportionate share of any loss sustained by such association.

3. The existing statutes and the settled law of the land at the time a contract is made become a part of it and must be read into it.

All contracts are formed to be construed in the light of the rules and principles of law applicable to the subject-matter of the transaction, and those rules and principles control the rights of the parties; the laws upon the subject of a contract are read into it and become a part thereof to the same extent as though they were written into its terms.

Where parties enter into a contract by virtue of authority derived from a certain act and in view of such rights as are created defined, and conferred by such act, it is elemental that the rights of the parties must be construed by the provisions of the act.

Where a contract is entered into under such provisions and conditions, and such contract is alleged to have been breached while such act is still in force, then if any provision or terms contained in such contract are in violation of rights conferred by such act, which are remedied by a subsequent act, such subsequent act is void as to such provisions and violative of section 15, article 2 (Bill of Rights), of the Constitution, as tending to violate the obligation of contracts. Oklahoma Cotton Growers' Ass'n v. Salyer, 114 Okl. 77, 243 P. 232.

4. Under section 10, article 1, of the Constitution of the United States, and section 15, article 2, of the State Constitution, the Legislature was prohibited from impairing the obligation of a contract made pursuant to existing provisions of law by a repeal of the provisions of law under which said contract was entered into. Security Bank & Trust Co. v. Barnett et al., 169 Okl. 298, 36 P.2d 874.

Appeal from District Court, Tulsa County; Thurman S. Hurst, Judge.

Action by C. V. Baker, executor of the estate of Herbert S. Corliss, deceased, against the Tulsa Building & Loan Association of Tulsa, Oklahoma, to recover the value of certain shares of building and loan stock pursuant to the provisions of St.1931, § 9800 (18 Okl.St.Ann. § 212 note). From an order sustaining a demurrer to the plaintiff's petition, the plaintiff appeals.

Reversed, with directions.

Second petition for rehearing denied; WELCH, J., dissenting, and HURST, J., not participating.

WELCH, J., dissenting.

Hugh Ownby, of Tulsa, for plaintiff in error.

Milsten & Milsten, of Tulsa, for defendant in error.

GIBSON Justice.

This is an appeal from the district court of Tulsa county. The parties occupy the same position here as in the trial court and will be referred to as plaintiff and defendant.

The question presented by this appeal for our determination is formulated by the conflicting views of plaintiff and defendant in reference to the scope and effect of section 5377, C.O.S.1921, (section 9800, O.S.1931 [18 Okl.St.Ann. § 212 note]), and the amendment thereof as made by chapter 54, Sess.Laws 1933 (18 Okl.St.Ann. § 212).

It appears from the record that on October 6, 1930, one Herbert S. Corliss purchased 250 shares of the fully paid stock of the defendant Tulsa Building & Loan Association, which stock so purchased had at the time a par value of $25,000. At the time the stock was purchased, section 5377, C.O.S.1921 (section 9800, O.S.1931), was in effect and provided inter alia as follows: "Upon the death of a stockholder, his legal representative shall be entitled to receive the full amount paid in by him and legal interest thereon, first deducting all charges that may be due on the stock." The Fourteenth Legislature in regular session enacted Senate Bill No. 348 (chapter 54 Session Laws 1933, which became effective May 5, 1933), whereby the relevant provision of said section 5377, supra, was amended to read as follows: "Upon the death of a stockholder, his legal representative shall be entitled to receive the amount paid in by such deceased stockholder and such proportion of the profits as the by-laws may determine, less all fines and other charges and less a proportionate share of any loss sustained by such association."

Herbert S. Corliss died on July 19, 1933, testate, and C. V. Baker was duly appointed executor of his estate on October 3, 1933, and in such capacity instituted this action in the district court of Tulsa county, specifically pleading the provisions of section 5377, C.O.S.1921 (section 9800, O.S.1931), and asserting a vested contractual right thereunder in his testator and the consequent right in himself to sue for and receive from the defendant the full value of said shares of stock so held by his testator and which amounted to the sum of $26,875 at the time the suit was instituted, and for which amount the plaintiff sought recovery together with the interest thereon at the rate of 6 per cent. per annum from September 30, 1933.

The defendant interposed a general demurrer to the petition of the plaintiff. The trial court sustained the demurrer of the defendant and the plaintiff elected to stand upon his petition. Plaintiff's cause of action was thereupon dismissed without prejudice to further proceeding under the provisions of chapter 54, Sess.Laws 1933 (18 Okl.St.Ann. § 212). Thereupon plaintiff prosecuted this appeal.

It is the contention of the plaintiff that when Herbert S. Corliss purchased the 250 shares of stock involved herein on October 6, 1930, the provisions of section 5377, C.O.S.1921 (section 9800, O.S.1931), became a part and parcel of the contract between his testator and the defendant, Tulsa Building & Loan Association, evidenced by the stock certificates issued, and that said section of the statute conferred a vested right upon his testator which could not be withdrawn by either the association or by the Legislature, and that the attempt of the Legislature to do so by the enactment of chapter 54, Sess.Laws 1933, constitutes a violation of his rights in contravention of the provisions of section 15, article 2, of the Constitution of Oklahoma and of section 10, article 1, of the Constitution of the United States, and deprives him of his property without due process of law, in violation of section 1 of the Fourteenth Amendment to the Constitution of the United States.

The defendant contends that the provisions of section 5377, supra, merely granted to plaintiff's testator a power and privilege which was subject to contingencies and which, unless exercised while said provision of law was in effect, ceased and determined, and that since the statute had been amended by chapter 54, Sess.Laws 1933, while plaintiff's testator was alive and became effective before his death, thereby plaintiff and his testator were deprived of any and all prior rights, power, and privileges which were secured to them under the provisions of said section 5377, supra; and further contend that building and loan associations are peculiarly within the power and control of the Legislature and within the police power thereof, and that any and all of their contracts are subject to change thereunder. As we have said in Crump v. Guyer, 60 Okl. 222, 157 P. 321, 322, 2 A.L.R. 331:

"If this was a 'vested right' the authorities are both clear and strong to the effect that it could not be destroyed or impaired, except by 'due process of law.' Then the first question for us to determine is, 'Was the right to convey, conferred on Irene Stewart by the act of 1897, a mere "statutory privilege" or a "vested right?"' Words and Phrases, Second Series, Vol. 4, p. 1166, in defining vested rights, says:

'Rights are "vested" when the right of enjoyment, present or prospective, has become the property of some particular person or persons as a present interest. Trustees of Presbytery of Jersey City v. Trustees of First Presbyterian Church of Weehawken, 80 N.J.Law, 572, 78 A. 207, 210.'

Again:

'A "vested right" may be considered as the power to do certain actions or to possess certain things lawfully. In its latter aspect it is

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