Bucsi v. Longworth Bldg. & Loan Ass'n.

• Decision Date: 26 October 1937
• Docket Number: No. 57.,57.
• Citation: 119 N.J.L. 120,194 A. 857
• Parties: BUCSI v. LONGWORTH BLDG. & LOAN ASS'N.
• Court: New Jersey Supreme Court

194 A. 857

119 N.J.L. 120

BUCSI

v. LONGWORTH BLDG. & LOAN ASS'N.

No. 57.

Court of Errors and Appeals of New Jersey.

October 26, 1937.

Syllabus by the Court.

1. P.L.1932, c. 102 (N.J.St.Annual 1932, § 27 —R(52), cannot strictly be classed as emergency legislation because it is not limited in its existence to the period of any emergency but forms a permanent part of the statutes relating to and regulating building and loan associations.

2. This court takes judicial notice of what was common knowledge at the time of the adoption of said legislation, namely, that a great emergency existed respecting the financial affairs of building and loan associations throughout the state, which was of great public interest adversely affecting, directly and indirectly, the financial affairs of all the people.

3. When such a situation exists, it calls for the exercise by the Legislature of the reserved or police power of the state to adopt correcting and relieving legislation, even though contracts previously entered into may thereby be affected.

4. It is well settled that the constitutional interdiction against statutes impairing the obligation of contracts does not prevent the state from exercising such powers as are vested in it for the promotion of the common weal, or are necessary for the general good of the public, but the exercise of such powers is subject to the limitation that it must be reasonable under the conditions, and the legislation must have a substantial relation to its object and must not be arbitrary or discriminatory.

5. P.L.1932, c. 102 (N.J.St.Annual 1932, § 27 —R(52), is a constitutional legislative enactment.

PARKER, LLOYD, CASE, and HEHER, Justices, dissenting.

Appeal from Supreme Court, Essex County.

Action by Rose Bucsi against the Longworth Building & Loan Association, to recover withdrawal value of stock shares. From a judgment for defendant, plaintiff appeals.

Affirmed.

John A. Bolger, of Newark, for appellant. John Warren, of Jersey City, and Merritt Lane, of Newark (Louis J. Cohen, Asst. Atty. Gen., of counsel), for respondent. David J. Wilentz, Atty. Gen., amicus curiæ .

THE CHANCELLOR.

An action was brought for the purpose of recovering the withdrawal value of ten installment shares of the stock held by the plaintiff-appellant in the Niagara Building & Loan Association, which, on December 31, 1932, was consolidated and merged with the Longworth Building & Loan Association, the defendant-respondent. This stock was subscribed for June 17, 1919. Written notice of withdrawal was given on June 15, 1931, and on subsequent dates prior to October 15, 1931, and the action in question was commenced January 19, 1934. In her complaint the appellant rested her right of action upon the ground that she was entitled to payment according to the terms and provisions of the statute existing at the time she subscribed for the shares in question. This was P.L. 1903, p. 457 (as amended, 1 Comp.St.1910, p. 334 et seq., § 1 et seq.). The statute in effect at the time she gave notice of her withdrawal was P.L.1925, c. 65 (Comp.St.Supp.1930, § 27 —R(1) et seq.). The terms and provisions of both of these statutes, as to the question of withdrawal, are, to all intents and purposes, alike.

Between the date of giving her notice of withdrawal and the commencement of her suit P.L.1932, c. 102 (N.J.St.Annual 1932, § 27 —R(52), and P.L.1933, cc. 48, 166 and 258 (N.J.St.Annual 1933, § 27 — R(86) et seq.) had been adopted and become effective. P.L.1932, c. 102, became effective April 22, 1932, and P.L.1933, cc. 48, 166, and 258 became effective March 10, 1933, May 11, 1933, and June 21, 1933, respectively.

The appellant appears to contend that whether the act of 1903 or 1925, supra, controlled, she was entitled to have her action December 15, 1931.

In its answer the defendant-respondent pleaded, among other things, all of these statutes and certain orders of the commissioner of banking and insurance issued pursuant to the 1933 acts, and reserved the right to move to strike the complaint as not setting up a cause of action. Plaintiff-appellant moved to strike the answer and upon the coming on of the hearing of such motion before the circuit court judge, sitting under the statute, as a Supreme Court commissioner, the defendant-respondent moved to strike the complaint and prevailed, and from the judgment entered the plaintiff below appeals and urges and argues four grounds for reversal: (1) That P.L.1932, c. 102, is not retrospective; (2) that P.L.1932, c. 102, if retrospective is unconstitutional; (3) that P.L.1932, c. 102, is not an emergency act; (4) that the orders issued by the commissioner of banking and insurance under P.L.1933, cc. 48, 166, and 258 are invalid and without effect, and the statutes are unconstitutional as being an improper delegation of legislative powers.

Counsel for appellant concedes in his brief that if P.L.1932, c. 102, supra, or the orders of the commissioner of banking and insurance issued under the 1933 statutes, supra, are controlling, then appellant's complaint failed to state a cause of action.

The first three points urged for reversal can, most conveniently, be considered together.

First, it is urged that the 1932 act is not emergency legislation because it does not recite the existence of an emergency and is not limited in its existence to the period of any emergency but forms a permanent part of the statutes relating to and regulating building and loan associations. This, in the cause before us, is not necessary. A legislative declaration of the existence of an emergency is entitled to judicial consideration but the courts must be guided by what is common knowledge. Home Building & Loan Association v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413, 88 A.L.R. 1481.

Further, an emergency does not create or bestow legislative power, not otherwise constitutionally existing, but it may furnish the occasion and necessity for the exercise of such power. Home Building & Loan Association v. Blaisdell, supra; People v. Title & Mortgage Guarantee Co., 264 N.Y. 69, 190 N.E. 153, 156, 96 A.L.R. 297; Hourigan v. North Bergen, 113 N.J.L. 143, 151, 172 A. 193, 785.

It must be noted that this statute does not, by its terms, limit its operation to the period of an existing emergency and this reason takes it out of the class of mere emergency legislation —so called. But it is unnecessary to sustain the statute on the temporary ground that it is an emergency statute, because it is sustainable on broad constitutional grounds as a valid exercise of the reserved power of the state. This so-called reserved power is generally referred to as the police power of the state and extends to all great public needs. Noble State Bank v. Haskell, 219 U.S. 104, 31 S.Ct. 186, 110, 55 L.Ed. 112, 32 L.R.A.(N.S.) 1062, Ann. Cas.1912A, 487. What are the police powers of the State?

Mr. Justice Taney, in the License Cases, 5 How. 504, 582, 583, 12 L.Ed. 256, 291, said: "They are nothing more or less than the powers of government inherent in every sovereignity to the extent of its dominions. And whether a State passes a quarantine law, or a law to punish offences, or establish courts of justice, or requiring certain instruments to be recorded, or to regulate commerce within its own limits, in every case it exercises the same power; that is to say, the power of sovereignity, the power to govern men and things within the limits of its dominion. It is by virtue of this power that it legislates; and its authority to make regulations of commerce is as absolute as its power to pass health laws, except in so far as it has been restricted by the constitution of the United States." Nebbia v. New York, 291 U.S. 502, 524, 54 S.Ct. 505, 510, 78 L.Ed. 940, 89 A.L.R. 1469.

It is well settled, however, that the constitutional interdiction against statutes impairing the obligation of contracts does not prevent the state from exercising such powers as are vested in it for the promotion of the common weal, or are necessary for the general good of the public, though contracts previously entered into may thereby be affected. Home Building & Loan Association v. Blaisdell, supra, 290 U.S. 398, at page 437, 54 S.Ct. 231, 239, 78 L.Ed. 413, 88 A.L.R. 1481; Manigault v. Springs, 199 U.S. 473, 26 S.Ct. 127, 50 LEd. 274. But the exercise of such powers is subject to the limitation that it must be reasonable under the conditions and the legislation must have a substantial relation to its object and must not be arbitrary or discriminatory. Wolff Packing Co. v. Court of Industrial Relations, 262 U.S. 522, 535, 43 S.Ct. 630, 632, 67 L.Ed. 1103, 27 A.L.R. 1280; Nebbia v. New York, 291 U.S. 502, 535, 54 S.Ct. 505, 515, 78 L.Ed. 940, 89 A.L.R. 1469.

This power is an attribute of sovereignty and all contracts are subject to its future exercise, and not only existing laws but also laws resulting from the exercise of this reserved power are read into and made a part of all contracts. Home Building & Loan Association v. Blaisdell, supra; Norman v. Baltimore & Ohio Railroad Co. et als, 294 U.S. 240, 55 S.Ct. 407, 79 L.Ed. 885, 95 A.L.R. 1352; Hourigan v. North Bergen, supra; People v. Title & Mortgage Guarantee Co., supra.

It is a matter of such common knowledge as to require judicial notice that the operation of building and loan associations in this state during the latter part of the last century had been so loose and utterly devoid of any consideration of the purpose for which they were created and the rights of the subscribing members that the situation was a public scandal and called for action on the part of our Legislature. The Legislature of 1903 undertook their regulation, P.L.1903, p. 457 (as amended, 1 Comp.St.1910, p. 334 et seq., § 1 et seq.). The need of regulation in the public interest was obvious and the statute was enacted for the protection of the public savings under the inherent police power of the state.

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