Beutelspacher v. Spokane Sav. Bank

• Decision Date: 01 September 1931
• Docket Number: 23098.
• Citation: 164 Wash. 227,2 P.2d 729
• Parties: BEUTELSPACHER et al. v. SPOKANE SAV. BANK et al.
• Court: Washington Supreme Court

2 P.2d 729

164 Wash. 227

BEUTELSPACHER et al. v. SPOKANE SAV. BANK et al.

No. 23098.

Supreme Court of Washington

September 1, 1931

Department 1.

Appeal from Superior Court, Spokane County; Wm. J. Steinert, Judge.

Action by H. F. W. Beutelspacher and others against the Spokane Savings Bank and others, in which another intervened. From the judgment, plaintiffs and intervener appeal, and defendants cross-appeal.

Affirmed.

Farley, Young & Farley, F. A. Garrecht, A. O Colburn, and Powell & Herman, all of Spokane, for appellants.

Post &amp Russell, Hamblen & Gilbert, and Chas. P. Lund, all of Spokane, for cross-appellants.

MAIN J.

The plaintiffs and the intervener in this action were shareholders in the Spokane Savings & Loan Society; the defendants are the Spokane Savings Bank, the Spokane Savings & Loan Society, and the officers and directors of those two corporations. The purpose of the action was to have declared illegal and void the transfer of the assets of the Building &amp Loan Society to the Savings Bank. The trial was to the court without a jury, and resulted in findings of fact from which the court concluded that the dissolution of the Spokane Savings & Loan Society and the sale and transfer of all of its property and assets to the Spokane Savings Bank was in all respects regular, valid, and according to law, but that all persons who objected to and voted against the resolution for dissolution of the Savings & Loan Society, and all persons who were minors, were entitled to have their respective accounts credited or paid by the Spokane Savings Bank to the amount of their respective proportionate shares in what is called the contingent or reserve fund, in addition to the amount of their deposits, plus interest. Judgment was entered in accordance with the conclusions from which the plaintiffs and intervener appeal, and the defendants cross-appeal.

The facts which will present the questions here to be determined may be summarized as follows: The Spokane Savings & Loan Society (which will be referred to as the society) was organized in the year 1897; the term of its existence being fixed at fifty years. It was a prosperous institution, and had acquired deposits amounting to approximately $15,000,000. In January, 1929, the Legislature of this state passed what is known as the corporation excise tax law (Laws 1929, c. 151, p. 380). It was estimated that under this law the tax which the society would be required to pay per annum would be from thirty-five to forty thousand dollars. For many years prior to this time, the society had paid its shareholders interest at 5 per cent. per annum, payable semiannually. The officers of the society, believing that, if it was required to pay the amount of tax exacted by the law, its income would not be sufficient to maintain the 5 per cent. dividend, formulated the plan of dissolving the society and transferring its assets to the Spokane Savings Bank (which will be referred to as the bank). The plan was by the president of the society and its attorney presented to the state supervisor of savings and loan societies and an Assistant Attorney General, and was by them informally approved. The capital of the bank was increased to $1,000,000, which was divided into $50,000 shares of the par value of $20 per share. The board of directors of the society and that of the bank consisted, with one or two exceptions, of the same persons. On Friday, October 11, 1929, the directors of the society made and passed a resolution approving the change and transferring the assets of the society to the bank, and thereafter it was announced through the press that, beginning the following Monday, the intervening Saturday being a holiday, the business of the society would be conducted by the bank. When the bank opened Monday, as shareholders came in they were tendered a new pass book and a card to sign, transferring their accounts from the society to the bank. Some time during the month of November the present action was begun, which, as stated, sought to set aside the transfer of the assets of the society to the bank.

After this action was begun, and on December 14, 1929, a meeting of the shareholders of the society was held, and a resolution to dissolve the society, liquidate its affairs, and make distribution among the shareholders in accordance with the law was passed. At this meeting the total number of shares voting for the resolution was 54,006, and the total number against was 342; the total number of ballots was 90, the number for the resolution being 71, and against, 19.

The book value of the society's assets October 11, 1929, when the transfer was made, was $14,695,200.32; there being approximately 50,000 shareholders. At the time of the trial, out of deposits of $14,113,610 on October 11, accounts representing $12,682,297 had been transferred by express authority of the shareholders. The accounts which had not been transferred numbered 4,954, of which 3,669 were inactive accounts of less than $100 each. The shareholders in the society were given the right either to withdraw their entire accounts, with interest thereon up to the time of withdrawal, or to transfer the accounts to the bank. The shareholders of the society were also given an opportunity to take stock in the bank, which 750 did. The parties bringing the action, the appellants, are a small proportion of the number of shareholders, and their deposits bore about the same relation to the total deposits as the number of shareholders bringing this action bore to the total number of shareholders.

The principal and important question, as stated in the appellants' brief, is whether the 'conversion and transfer of the business and assets of the Spokane Savings & Loan Society to the Spokane Savings Bank, under the circumstances of this case, was unauthorized and is illegal and void.' To determine the answer to this general question, a number of more specific or particular questions must be considered; the first of which is whether the society could be dissolved by a two-thirds vote of the shareholders present at the meeting on December 14, 1929. This depends upon whether the statute under which the society was organized authorizes such a dissolution. Central Transportation Co. v. Pullman's Co., 139 U.S. 24, 11 S.Ct. 478, 35 L.Ed. 55; Geddes v. Anaconda Copper Mining Co., 254 U.S. 590, 41 S.Ct. 209, 65 L.Ed. 425. Section 3742, Rem. Comp. Stat., provides that:

'Any savings and loan association incorporated under the laws of the State of Washington may dissolve itself voluntarily in the following manner:

'A majority of the board of directors shall publish a notice in some newspaper of general circulation in the county wherein is the principal place of business of the association once each week for eight consecutive weeks calling a meeting of the shareholders to determine whether said savings and loan association shall voluntarily dissolve. If at such meeting two-thirds of the shareholders then present and voting shall vote to dissolve, and the state auditor [director of efficiency] shall approve of such dissolution, the officers of the association, under the direction of the directors of the association, shall thereupon proceed to liquidate the affairs of the association and reduce the assets thereof to cash, and, after paying all indebtedness and expenses, distribute the same

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