Harding Realty Co. v. Blanchard

• Decision Date: 26 March 1934
• Docket Number: 32763
• Citation: 154 So. 47,179 La. 430
• Court: Louisiana Supreme Court
• Parties: HARDING REALTY CO. v. BLANCHARD

154 So. 47

179 La. 430

HARDING REALTY CO. v. BLANCHARD

No. 32763

Supreme Court of Louisiana

March 26, 1934

Appeal from Civil District Court, Parish of Orleans; Hugh C. Cage Judge.

Suit by the Harding Realty Company against Oliver C. Blanchard. Judgment for plaintiff, and defendant appeals.

Affirmed.

Lionel Adams, of New Orleans, for appellant.

Scott E. Beer, Carroll, McCall, Plough & Carroll, A. D. Danziger Legier, McEnerny & Waguespack, Hyman Mithoff, D. J. Murphy J. Zach. Spearing, P. H. Stern, Weiss, Yarrut & Stich, and Delvaille H. Theard, all of New Orleans, for appellee.

ODOM Justice. ST. PAUL, J., absent.

OPINION

ODOM, Justice.

On September 10, 1933, plaintiff and defendant entered into an agreement by the terms of which plaintiff agreed to sell to defendant certain described real estate situated in New Orleans at a stipulated price, and defendant agreed to purchase the same at the price named. Defendant refused to carry out his agreement to purchase on the ground that the title to the property was not a good, valid, and merchantable title, and was suggestive of litigation.

Plaintiff brought the present suit against defendant to compel specific performance of his contract to purchase. From a judgment in plaintiff's favor, defendant appealed.

The reason assigned by defendant why the title to the property is not valid, and is suggestive of litigation is that plaintiff acquired it from the Phoenix Building & Homestead Association of New Orleans, which in turn had acquired it by foreclosure from a defaulting borrower, in accordance with the by-laws, rules and regulations of the association; and that, in making the sale to plaintiff, the homestead association had accepted, as the sale price thereof, unpledged and fully paid stock of the association, as permitted by section 57, Act No. 140 of 1932; that, previous to the date on which the homestead association had sold to plaintiff, accepting said stock as the price, numerous stockholders of the association had filed notices of their intention to withdraw the stock owned by them, as provided in section 7, Act No. 280 of 1916 (page 570); that the stock represented by this withdrawal list aggregated many thousands of dollars; that all these applications had been filed prior to July 27, 1932, the date on which Act No. 140 of 1932 was adopted.

It is contended that the filing of these notices of intention to withdraw vested in said stockholders certain rights, among them being the right to be paid in preference to any stockholder who had not filed such notice, and the right to require that none of the assets of the association should be disposed of in any manner which would not add the price of the disposal to the funds out of which the withdrawing stockholders had the right to be paid.

It is argued by counsel for defendant that, by permitting plaintiff to purchase this repossessed property with unpledged fully paid stock, the homestead association, in effect, paid plaintiff the value of his stock, which was not on the withdrawal list, to the prejudice of the rights of those who had filed their applications to withdraw, in violation of section 7 of the act of 1916, which provides that "each association shall keep a register of notices of withdrawal in the order in which they are filed, giving dates of notices and amounts to be withdrawn, and shall pay the same in the order in which such notices of intention to withdraw were filed"; that this method of paying stockholders who have not given notice of intention to withdraw is a discrimination in favor of them and against those who have filed such notices; that it permits, in effect, stockholders to withdraw without filing notice of such intention, as provided in the act of 1916, and without complying with the charter and by-laws of the association; that, by this method, the homestead association is permitting some of the stockholders to get possession of the assets of the association to the detriment of those who have signified their intention to withdraw.

This, it is argued, divests the vested rights of the withdrawing stockholders, and is therefore illegal, for which reason the sale of this property by the homestead association to plaintiff was illegal, and its title is therefore invalid.

It is not disputed, but admitted, that the homestead association was authorized to make the sale as it did by section 57, Act No. 140 of 1932, which reads in part as follows:

"An association (meaning a building and homestead association such as this one), in payment and settlement of the price and consideration of any sales made of any real estate belonging to it, and acquired by repossession or otherwise, may accept unpledged shares of said association at a value not greater than par, and such transfers shall be in all respects legal and binding."

It is conceded that, if section 57 of the act of 1932 is valid legislation, the sale by the homestead association to plaintiff was legal and its title is good. But it is contended that section 57 of that act is unconstitutional, in that it impairs the obligation of contracts in violation of section 10, art. 1, of the Federal Constitution, which provides that no state shall have power to pass any law "impairing the Obligation of Contracts," and section 15, art. 4, Constitution of 1921, of this state, which reads as follows:

"No ex-post facto law, nor any law impairing the obligation of contracts, shall be passed; nor shall vested rights be divested, unless for purposes of public utility, and for just and adequate compensation previously paid."

The sole question presented, then, is whether section 57, Act No 140 of 1932, is constitutional. The only ground on which it is contended that this section of the act is unconstitutional is that it authorizes and permits homestead associations to divest the statutory rights of those stockholders who had, previous to the date on which the act was adopted, filed notices of their intention to withdraw their stock, and to impair the obligation which the association...