Gullo v. Veterans Cooperative Housing Association

• Decision Date: 01 July 1957
• Docket Number: No. 13516.,13516.
• Citation: 247 F.2d 573,101 US App. DC 167
• Parties: Joseph S. GULLO et al., Appellants, v. VETERANS COOPERATIVE HOUSING ASSOCIATION, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

101 US App. DC 167, 247 F.2d 573 (1957)

Joseph S. GULLO et al., Appellants, v. VETERANS COOPERATIVE HOUSING ASSOCIATION, Appellee.

No. 13516.

United States Court of Appeals District of Columbia Circuit.

Argued February 12, 1957.

Decided July 1, 1957.

Petition for Rehearing Denied September 11, 1957.

Mr. Joseph S. Gullo, Washington, D. C., appellant, pro se, with whom Mr. George Thomas Montgomery, Washington, D. C., was on the brief, for appellants.

Mr. James R. Worsley, Jr., Washington, D. C., with whom Messrs. Paul Daniel and Carlyle Conwell Ring, Jr., Washington D. C., were on the brief, for appellee.

Before WILBUR K. MILLER, DANAHER, and BASTIAN, Circuit Judges.

DANAHER, Circuit Judge.

The District Court granted the motion of the appellee (Association) for summary judgment in an action in which the appellants¹ sought $15,000 for the loss of the Gullo apartment, $5,000 on account of rights and interests in apartments held by the Association for rental, $15,000 as punitive damages, $5,000 for physical discomfort and mental anguish because of eviction from the Gullo apartment and for the expense of relocation elsewhere; and "such other and further relief as is just." The facts pertinent to the issues will be developed as we proceed.

Gullo and the Association entered into an agreement on December 7, 1947, under the terms of which Gullo, upon payment of the sum of $50 became a member of the Association entitled to "all rights and privileges of membership." By virtue of such membership, Gullo became entitled to purchase from the Association a right of perpetual use and enjoyment of apartment No. B-394 in a project known as Naylor Gardens. The original perpetual use agreement was superseded by an instrument dated September 16, 1949, known as a mutual ownership contract. In accordance with its terms, Gullo agreed to pay to the Association as the purchase price for the perpetual use the sum of $7,350 "on terms and with interest" as in the contract provided. Gullo made a down payment of $1,682.09 and was bound to make payment of the unpaid balance of the purchase price in equal monthly principal and interest payments of $4.175 for each thousand dollars of the original assigned price of the perpetual use less the down payment, interest to be included on the unpaid balance at the rate of 3% per annum. It was agreed that the "original assigned price shall be the amount set or established by the Association as the value of the Perpetual Use on the date of the conveyance of the Project Naylor Gardens by the Government to the Association." When the total purchase price had been paid in full, principal and interest payments were to cease "and the Member shall continue to enjoy all the rights and privileges provided under this Contract, subject to the payment of the Operating Payments as hereinafter provided."

Gullo defaulted in the April 1, 1954, payment, and on April 12, 1954, commenced this action. The mutual ownership contract provided that in the event of default by the member as to any of the payments or charges required to be made, the Association might terminate the contract upon ten days' written notice. Acting pursuant thereto the Association's Board of Directors by resolution of April 23, 1954, exercised its authority to terminate the contract. Furthermore, the Association exercised its election, permitted by the contract, to purchase Gullo's perpetual use. The reasonable market value of the perpetual use, calculated as the contract provided, was $9,000. After deduction of the unpaid balance of the purchase price and the estimated cost of maintenance, repairs, painting and decorating, and in furtherance of the Board's resolution to purchase Gullo's perpetual use for an amount "equal to the current value of such perpetual use," the Association tendered to Gullo its check for the balance, computed to be $3,781.41. Gullo received but has never cashed the check.

Careful consideration of the stipulation of facts, the pleadings, the affidavits and the exhibits, has convinced us that the Association was authorized to take each of the steps thus far noted. We are satisfied that the District Court correctly concluded that no genuine issue of material fact existed with respect to the valuation of the perpetual use and that the sum of $3,781.41 was properly found to be due to Gullo as provided in the mutual ownership contract.

Moreover, we are satisfied that Gullo is entitled to no recovery on account of the "humiliation" of which he complains, which stemmed from the circulation of a petition by and among certain other members of the Association and which called for the expulsion of Gullo. No facts have been pleaded and none otherwise exhibited showing, or tending to show, that the circulation of the petition was the act of the Association. Indeed, the contrary appears. On no theory of Gullo's claim deducible from this record is there a basis for punitive damages. To the extent that Gullo predicates this aspect of his claim upon his eviction, there can be no question that Gullo's April 1, 1954, default in the payments then due was the result of his own decision. His continued default was a matter of reasoned, if ill-advised, personal choice. The steps thereafter taken by the Association to gain possession of the perpetual use were authorized by the contract and strictly in accordance with its terms. We are all in accord that on the aspect of the case so far considered, no error was shown.

My colleagues say that Gullo is entitled to no additional relief and that the circumstances resulting in the discharge of his right under the mutual ownership contract likewise worked a termination of his interest in the equity assets of the Association. They would affirm, without more.

Affirmed.

DANAHER, Circuit Judge (dissenting in part).

I would go farther, for it seems to me that the peculiar facts present a case of unjust enrichment as to which equity should afford relief. As I see the case, Gullo should be accorded the same pro rata entitlement, as of the date of suit, as the other members had voted for themselves under their plan of corporate reorganization. I would reverse on this phase of the case leaving the actual framing of the decree to abide the establishment of the respective equities in further proceedings in the District Court. As briefly as the complicated situation will permit, I will outline the highlights of the circumstances which suggest the course I would adopt. Gullo's prayers that he be made whole with respect to his interest in apartments held for rental and for "such other and further relief as is just" are compatible with and flow from his allegations and from the facts of record.² The basis for his claim, as I see it, will presently be developed.

The Association argues that no matter what rights Gullo asserts he may have acquired, the doors of the courts must be closed to him and, under the circumstances here, no remedy can be available. Perhaps the position of the appellee can most readily be illuminated by a quotation from the summary of its argument as set forth in its brief:

"Among the undisputed facts is the execution by appellants and appellee of a contract as of September 16, 1949. By the terms of the contract appellee extended to appellants membership in appellee corporation, agreed to deliver the perpetual use of a designated apartment and to provide appellants with specified services in connection with their occupancy of the apartment. Appellants agreed to pay to appellee an amount designated as the purchase price — a portion in cash at the time of the purchase and the balance with interest in monthly payments. Appellants also agreed to make a monthly payment to cover the estimated cost of operating services, utilities and reserves. The facts are undisputed that appellee performed its contractual obligations described above. It is also undisputed that during the life of the contract appellee performed or omitted to perform the following additional acts which appellants contend constituted a breach of the contract between the parties or a breach of a fiduciary duty owed by appellee to its members: (1) In 1951 appellee suspended further efforts to increase the number of its members; (2) From time to time appellee purchased the membership interests of members who wished to withdraw from membership; (3) In 1951 and 1952 appellee designated a portion of the monthly member\'s payment provided for in the contract as a capital contribution; (4) Appellee has not distributed or apportioned any `Net Savings\' as defined in D.C. Code (1951 Ed.) section 29-801; (5) In March 1953 the Board of Directors began preparation of a plan for reorganizing the corporation and in March 1954 the membership of appellee by a vote of 122 to 28 approved a proposed plan of reorganization and instructed the Board of Directors to proceed with a more detailed formulation to be further considered by members."

The various steps which the Association "performed or omitted to perform" as above listed provide only a small measure of understanding of the total situation. This cooperative Association had been incorporated as of January 3, 1946, as a mutual ownership, non-profit corporation, under the District of Columbia Cooperative Association Act.³ Each member contracted with each other member and with the Association itself that the Association and its affairs should be conducted to achieve the corporation's stated purposes. The Association agreed with its members to hold and manage its assets for the accomplishment of those purposes. The Articles of Association show that the corporation was organized without share capital and was to consist of not more than 5,000 members. No person was to acquire an interest in the capital of the Association other than a duly accepted member. The Articles further provided:

"The maximum amount or percentage of capital which may be owned or controlled by any member shall be a single

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