De Fazio v. Haven Sav. & Loan Ass'n

Decision Date13 November 1956
Docket NumberNo. A--37,A--37
Citation22 N.J. 511,126 A.2d 639
PartiesM. Edward DE FAZIO, Plaintiff-Appellant, v. HAVEN SAVINGS AND LOAN ASSOCIATION, a corporation of the State of New Jersey, and Henry Wessling, Defendants-Respondents.
CourtNew Jersey Supreme Court

Samuel J. Davidson, Hoboken, for appellant (DeFazio, Davidson & DeFazio, Hoboken, attorneys).

Emil W. A. Schumann, Jersey City, for respondents.

The opinion of the court was delivered by


The inquiry here is whether or not the court below had jurisdiction and whether a cause of action requiring a trial on its merits was presented.

The amended complaint, a proceeding in lieu of prerogative writ sounding in mandamus, filed by the plaintiff as a member of the respondent savings and loan association, recited the following facts:

The respondent operates a savings and loan association; the members are those in whose names accounts are established either as saving or as borrowing members; the plaintiff is such a member and has a participating interest with two other persons in account No. 12303 amounting to $3,124.47 and therefore claims voting rights inherent in said membership.

By-law No. 27 of the defendant corporation provides each member shall be entitled to one vote at any meeting of the association regardless of the number of accounts standing in his name, but only one vote shall be allowed on an account held by two or more persons jointly. The voting may be in person or by proxy.

The plaintiff, it is said, is a member of the respondent loan association and under its by-laws was entitled to vote at the annual meeting originally scheduled for January 17, 1956, at which meeting directors of the association were to be elected.

On December 19, 1955 the plaintiff filed with the respondent loan association an application requesting, amongst other things, the names and addresses of the members of the association so he could solicit their proxies or receive word from the association that it would forward and mail at the expense of the plaintiff requests to his comembers for their proxies to be voted at said annual meeting. The purpose for which such names and addresses were sought was to protect the proxies already obtained by him and to be obtained by him in an effort to elect independent directors at the annual meeting.

The loan association on December 28, 1955 advised that this request would not be complied with. Such information list was wanted by the plaintiff for the purpose of sending to the other members a communication in advance of the date fixed for the adjourned annual meeting. The communication was to let the other members have such information which the plaintiff believed would be in their interest and at the same time to request proxies to be voted at the meeting.

In an endeavor to obtain this list or, in the alternative, to have the respondent mail the proxy solicitations to co-members, the plaintiff appealed from the defendant's refusal to comply to the Commissioner of Banking and Insurance of the State of New Jersey pursuant to R.S. 17:12A--100, as amended, N.J.S.A., but the Commissioner in his determination held:

'However, no such right of inspection has been written specifically into the Savings and Loan Act of New Jersey, and hence, it would appear that generally on this subject the common law doctrine prevails. Otherwise it seems reasonable to assume that the Legislature would have spoken more definitely on the subject.

'It is therefore our considered judgment that the application of M. Edward DeFazio for the relief requested under section 100 of the Savings and Loan Act be dismissed because of our belief that the word 'information' cannot be construed to encompass within its scope the right of the Commissioner to order an association to furnish to a member a list of names and addresses of the other members of the association; nor does it, in our opinion, confer upon the Commissioner the right to order the circularization of such members.

'And it is hereby ordered that the application be denied.'

The complaint sought relief under the common law and protection of the Res by preventing the holding of a meeting until the issue was determined.

The respondent moved for judgment in its favor and the court, finding as a matter of law that it had no jurisdiction to hear and determine the matter, entered a judgment for the respondent. The court held:

'* * * This court has no jurisdiction over the subject matter of this proceeding either original or De novo or by way of review or appeal but that original jurisdiction is exclusive in the Commissioner of Banking and Insurance of the State of New Jersey under N.J.S. 17:12A--100, as amended by the laws of 1953, chapter 17, page 202, section 67, N.J.S.A., and that jurisdiction to review the Determination of the Commissioner under said statute is exclusive in the Appellate Division of the Superior Court under New Jersey Rules of Civil Practice 4:88--8.'

The plaintiff emphasizes and makes it perfectly clear throughout his brief that he has 'no quarrel with the determination' (referring to the Commissioner's finding) and sought his relief in the Law Division of this court under his common law rights. In fact, he criticizes the court below because it failed to realize he was not appealing from the conclusions of the Commissioner.

Referring to the banking laws of this State providing for the making of a list of stockholders which shall be available for examination by any stockholder, the plaintiff notes such a provision has not specifically been written into the Savings and Loan Act of New Jersey and insists that by this omission the common law doctrines must prevail.

The plaintiff, as we have said, argues extensively that his 'in lieu' action was misconstrued and he is seeking disclosure by virtue of his common law rights and the court therefore should have considered the merits of his cause.

This approach is a complete change of pace from his former position, as it was the plaintiff who originally applied to the Commissioner under the statute for the information in question. The about-face procedure undoubtedly is attributable to the fact that he was also, which he does not set forth in his complaint, denied the relief sought upon its merits, the Commissioner having decided it was not for the best interests of the association and its members.

The Commissioner held:

'It is partially conceded that the association is well managed. We are unable to reach the conclusion that the substitution of a slate of directors composed of two lawyers and a secretary from the applicant's firm of lawyers and a relative of a member of that law firm, in the place of four directors against whom no adverse criticisms are directed, would be for the best interests of 'the association and its other members.' McMahon v. Dispatch Printing Co., 101 N.J.L. 470, (129 A. 425) does, in our opinion, in great measure bear out our factual reasoning and conclusion on this phase of the matter. Hence, if the power to order existed, no order of circularization of the membership of the Haven Savings and Loan Association would be made on facts and circumstances before us on this application.'

The plaintiff's effort, therefore, is to switch jurisdictions and thus compel the trial court to decide the same question De novo upon its merits already determined adversely to him by the Commissioner of Banking and Insurance. The simple inquiry is whether or not he can succeed in so doing under the common law or whether our present statutory procedure covers the field completely to the exclusion of the common law.

A savings and loan association is not a private business but quasi-public. In re Eleventh Ward Building & Loan Ass'n of Newark, 130 N.J.Eq. 414, 21 A.2d 746 (E. & A.1941), certiorari denied Schaaf v. Eleventh Ward Building & Loan Ass'n. of Newark, N.J., 315 U.S. 799, 62 S.Ct. 580, 86 L.Ed. 1200 (1942); Rocker v. Cardinal Building & Loan Ass'n, 13 N.J.Misc. 397, 179 A. 667 (Sup.Ct.1935), affirmed 119 N.J.L. 134, 194 A. 865 (E. & A.1937).

These associations are creatures of statute and are quasi-public in nature. Their creation, by-laws, officers, manner of doing business, investments, expenses, reserves and accounting are all more or less subject to statutory, governmental control and supervision. Because of the inherent nature of the corporation, particularly as to its large membership, which seeks safe investment mediums, the Legislature has placed upon certain state officers the responsibility of protecting the members in dealing with the association, and while the court's power is not relinquished entirely, it is much more restricted than in cases dealing with private corporations. In re Puget Sound Savings & Loan Ass'n, 49 F.2d 922 (D.C.W.D.Wash.1931).

The act of 1946 was the result of years of study by the Committee on Revisions and Modernization of the Building and Loan Act of the New Jersey Savings and Loan League. It was given careful consideration and approval by the Commissioner of Banking and Insurance and his associates and it provided the State with a modern and efficient statute to govern its mutual and cooperative thrift and home-financing systems.

It was the first complete revision of laws governing such associations since 1903. Amendments and supplements and two partial revisions were enacted subsequent to 1903, but the 'Savings and Loan Act' of 1946 was the first general and broad revision since the passage of the 1903 act. It was approved April 4, 1946 and became chapter 56 of the Laws of 1946, and with the amendments and supplements to September 1, 1954, the legislative policy embracing character and control and supervision by the State, through its Commissioner, over the member associations and member shareholders is illuminatingly disclosed.

The statement on the bill by its introducer reads:

'This bill accomplishes a complete revision and modernization...

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