Corbett v. Lincoln Sav. & Loan Ass'n
| Decision Date | 07 May 1929 |
| Citation | 17 S.W.2d 275,223 Mo.App. 329 |
| Parties | CHARLES J. CORBETT, APPELLANT, v. LINCOLN SAVINGS AND LOAN ASSOCIATION, RESPONDENT. [*] |
| Court | Missouri Court of Appeals |
Rehearing Denied 223 Mo.App. 329 at 338.
Appeal from the Circuit Court of the City of St. Louis.--Hon Franklin Miller, Judge.
REVERSED AND REMANDED.
Judgment reversed and remanded.
Ephrim Caplan and Abbott, Fauntleroy, Cullen & Edwards for appellant.
(1) Ordinarily, an action in equity and a bill for the appointment of a receiver of a building and loan association may be maintained by a stockholder. Universal Sav. Co. v Stoneburner, 113 F. 251; Gunby v. Armstrong, 133 F. 417; Amer. v. Union Bldg., etc., Assoc., 50 N.J.Eq. 170, 24 A. 552; Andrews v. Roanoke Bldg. Assoc., etc., Co., 98 Va. 445, 36 S.E. 531, 49 L.R.A. 659; Lamp v. Homestead Bldg. Assoc., 62 W.Va. 56, 57 S.E. 249; In re National Sav., etc., Bldg. Assoc., 9 W. N. C. (Pa.) 79. (2) The finance commissioner is only a representative plaintiff, filling a position similar to that of a trustee, and if he fails to discharge his duties the beneficiary may sue. Rogers v. Gosnell, 51 Mo. 466; Stillwell v. Hamm, 97 Mo. 579; Barton v. Martin, 60 Mo.App. 351; Anthony v. German American Ins. Co., 48 Mo.App. 65; McComas v. Covenant Mut. L. Ins. Co., 56 Mo. 573; Couteau v. Boughton, 100 Mo. 406; Bracken v. Atlantic Trust Co., 36 A.D. 67; Healey v. New Haven, 49 Conn. 394; Soulard v. St. Louis, 36 Mo. 546; Jamison v. Springfield, 53 Mo. 224; State ex rel. v. Heege, 37 Mo.App. 338. (3) The finance commissioner, by failing to discharge his duties and entering into and endorsing the unlawful conduct of the officers, waived his right to sue, and the right having been waived, the beneficiary may sue. State v. Flitcraft, 36 S.W. 675; Dill v. Supreme Lodge Knights of Honor, 226 F. 807; Broadwell v. Inter-Ocean, 161 Ill. 327, 43 N.E. 1067; Falls v. Anglo-Teutonia Bldg., etc., Assoc., 105 Tenn. 18, 58 S.W. 325. (4) It is impliedly held in the cases heretofore decided by this court that if the commissioner refuses to act suit may be brought by the creditor or contract holder. Koch v. Mo. Lincoln Trust Co., 181 S.W. 44; Kroeger v. Garkie, 274 S.W. 478; White v. Pool, 272 S.W. 1021. (5) If the statute be construed to prevent the creditor or contract holder from maintaining suit, it is unconstitutional. Pritchard v. Norton, 106 U.S. 124; Baltimore & O. Southwestern R. Co. v. Reed, 158 Ind. 25, 92 A. S. R. 293, 56 L.R.A. 468; West v. Jaloff, 113 Ore. 184, 232 P. 642, 36 A. L. R. 1391; Constitution Missouri, sec. 1030 of Article II; Constitution of Missouri, sec. 2, Article IV; Section 2, Article IV, Constitution of the United States; Section 1, Fourteenth Amendment, Constitution of United States; Cleveland v. Drainage District, 213 Ill. 83, 72 N.E. 684.
Vincent L. Boisaubin for respondent.
(1) Under the laws of Missouri the finance commissioner has the exclusive right to institute proceedings for injunction or receivership against a building and loan association. The suit must be brought in the name of the State, at the relation of the finance commissioner, and conducted by the attorney-general. Sections 10234, 10235, 10236 R. S. 1919; Laws of Missouri 1921, p. 394, secs. 1 and 4; 2 Tardy's Smith on Receivers (2 Ed.), sec. 487; Koch v. Missouri-Lincoln Trust Co. et al., 181 S.W. 44; Union Savings & Investment Co. v. Dist. Ct. of Salt Lake County, 44 Utah 397, 140 P. 221; Ulmer v. Falmouth Loan & Building Ass'n, 93 Maine, 302, 45 A. 32; Craughwell et al. v. Mousam River Trust Co., 95 A. 220; Huntington County Loan & Savings Ass'n v. Fulk, 158 Ind. 113, 63 N.E. 123; Huffman v. Bank Commissioner of Okla., 237 P. 603; Sundheim on Building and Loan Associations (2 Ed.), sec. 177. (2) The statute assures to the association and its directors a period of sixty days within which to put its house in order, correct any illegal or improper practices and secure the assets. No proceedings involving a receivership can be commenced until this opportunity has been had. Sec. 10234, R. S. 1919; Continental Investment, etc., Soc. v. People, 167 Ill. 195, 47 N.E. 381; 2 Tardy's Smith on Receivers (2 Ed.), sec. 486; Cases cited under point 1. (3) An injunction and receivership such as prayed for in this case would inevitably result in the winding up and dissolution of the association, and this, whether the petition is to be construed as alleging insolvency or not. A receiver cannot be appointed to continue such a business, but only to wind it up. Receivership matures all obligations and contracts. If no insolvency is alleged, no receivership is proper. 2 Tardy's Smith on Receivers (2 Ed.), secs. 504, 485; Strohen v. Franklin Saving Fund & Loan Ass'n, 8 A. 843; Carson v. Allegheny Window Glass Co., 189 F. 791; Mason v. Supreme Court of the Equitable League, 77 Md. 483, 39 A. S. R. 433. (4) The laws of the State, giving the finance commissioner the exclusive right to institute injunction or receivership proceedings against a building and loan association, become a part of the contract of the members of such associations who are bound thereby. 2 Tardy's Smith on Receivers (2 Ed.), sec. 487. (5) The fact that the finance commissioner has been applied to and refuses to bring the proceedings for injunction or receivership does not justify or authorize a member of a building and loan association to institute them. The commissioner may be compelled to act by appropriate proceedings in a proper case. Sundheim on Building and Loan Associations (2 Ed.), sec. 177; Koch v. Missouri-Lincoln Tr. Co., 181 S.W. 44, 48, 49; Union Sav. & Inv. Co. v. Dist. Ct. of Salt Lake County, 44 Utah 397; Ulmer v. Falmouth Loan & Bldg. Ass'n, 93 Maine, 302. (6) No one has a vested right to a mere remedy. The remedy of an injunction or receivership may be qualified. The qualification or modification of a right to a remedy, provided some other remedy is afforded, does not deprive one of a property right, is not discriminatory and is not a denial of due process under the Constitution. The statutes are constitutional. Koch v. Missouri-Lincoln Trust Co., 181 S.W. 44; League v. Texas, 184 U.S. 156; 2 Tardy's Smith on Receivers (2 Ed.), sec. 487; Union Sav. & Inv. Co. v. Dist. Ct., 44 Utah 397; New York Central R. R. Co. v. White, 243 U.S. 188.
Haid, P. J., not sitting.
In this case the court below gave judgment for defendant after sustaining a demurrer to plaintiff's petition when plaintiff declined to plead further. From this judgment plaintiff appealed to the Supreme Court. But that court, finding itself without jurisdiction of the cause, transferred it to this court. The opinion transferring the cause is reported in 4 Southwestern Reporter (2d Series) at page 824.
The petition alleges that plaintiff was the owner of four certificates in an organization known as the Lincoln Housing Trust; that in May, 1923, the Supreme Court of Missouri held that the business in which that organization was engaged was without legal status in Missouri; that under that ruling the finance commissioner proceeded against all housing trusts doing business in the State of Missouri, excepting the Lincoln Housing Trust; that thereupon certain certificate holders of the Lincoln Housing Trust filed suit in the circuit court of St. Louis for the purpose of having a receiver appointed for said Lincoln Housing Trust; that thereupon Frank P. Millspaugh, Finance Commissioner, at the instance of the officers and directors of the Lincoln Housing Trust instituted a suit in the circuit court for the purpose of procuring the appointment of said finance commissioner as receiver of said Lincoln Housing Trust; that in said suit said finance commissioner was appointed receiver, and employed counsel for the purpose of working out a plan to divert the assets of the Lincoln Housing Trust into the Lincoln Savings and Loan Association, defendant here, which the finance commissioner publicly announced had been organized as a building and loan association. The petition at great length sets forth many circumstances concerning this new organization, the alleged building and loan association, and its connection with other corporations and financial concerns, the purport of which is that a real building and loan association never was organized or put in operation in good faith; that the funds of the Lincoln Housing Trust, which went into the hands of the finance commissioner, as receiver, and were transferred to the alleged building and loan association, were misspent and misappropriated; that on the four certificates held by plaintiff in the housing trust he had paid $ 2070, and had borrowed in one loan $ 403, and in another loan $ 873.60, and had pledged for each loan two of said certificates; that subtracting the amount of the two loans from the face value of the certificates so pledged there remained due him, for which he was entitled to certificates in the building and loan association under the plan worked out and approved by the finance commissioner, $ 317 and $ 521.40, respectively; that defendant failed and refused to issue to him building and loan association certificates in lieu of his said housing trust certificates, although it had printed and circulated a form of certificate which it promised to issue to certificate holders in said housing trust; that plaintiff made due demand upon defendant for $ 521.40, being the aggregate amount of the withdrawal values on building and loan certificates to which he was entitled in exchange for three of his housing trust certificates (Nos. R. P. 45, 46, and 47, Series 1) under said plan; that defendant had offered to pay plaintiff $ 286.86 in settlement of his said claim for withdrawal values which plaintiff refused. It...
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