Radalj v. Union Savings & Loan Ass'n

• Citation: 138 P.2d 984,59 Wyo. 140
• Decision Date: 22 June 1943
• Docket Number: 2234
• Parties: RADALJ v. UNION SAVINGS & LOAN ASS'N
• Court: Wyoming Supreme Court

138 P.2d 984

59 Wyo. 140

RADALJ v. UNION SAVINGS & LOAN ASS'N

No. 2234

Supreme Court of Wyoming

June 22, 1943

APPEAL from District Court, Sweetwater County; V. J. TIDBALL, Judge.

Action by Anthony J. Radalj against the Union Savings & Loan Association on savings certificates. From a judgment for plaintiff, defendant appeals.

Judgment set aside.

For appellant, there was a brief by C. R. Ellery and A. G McClintock, of Cheyenne, and Edwin V. Magagna, of Rock Springs, and oral arguments by Messrs. Ellery and Magagna.

Appellant was organized in December, 1922, under the laws of Wyoming for the purpose of conducting a building and loan business under what is known as the "Permanent Guarantee Reserve Stock" plan. Appellant, after its organization, engaged in business and continued therein until the latter part of 1934 or early in 1935, at which time it went into voluntary liquidation and has been in process of voluntary liquidation since then. Appellant issued a Class F Savings Certificate Pass Book No. 181 to respondent on January 8, 1930, and credits of principal and interest were entered therein aggregating $ 12,308.41 as of January 1, 1934. Said account is involved in the first cause of action of plaintiff's petition. Plaintiff's second cause of action is based on Class F Savings Certificate Pass Book No. 303, dated January 20, 1932, and issued to plaintiff. It contained credit items on January 1, 1934, aggregating $ 10,143.37. Both causes of action are founded upon the theory that they evidence loans of money made by plaintiff to defendant, which defendant was to repay upon demand. It is appellant's contention that said certificates constituted membership in said association and that no relation of debtor and creditor occurred as a result of their issuance. The trial court sustained plaintiff's contention and rendered judgment in his favor. The basic and controlling questions in this case are first, whether defendant was a building and loan association under the laws of Wyoming at the time plaintiff acquired Savings Certificates; and, second, assuming, for the purpose of argument, that defendant was not a building and loan association, and was not subject to the regulatory building and loan statutes of Wyoming but that defendant became insolvent in the latter part of 1934 and ceased active business, is plaintiff by reason thereof, entitled to a preference over other creditors of defendant. It is the contention of the appellant, that plaintiff is not entitled to such preference, and that he became a member of the association subject to such losses as incurred in its operation. Defendant was incorporated on December 23, 1922 and adopted its by-laws on December 27, 1922. Its articles of incorporation clearly show that it was organized as a building association with a capital stock of $ 100,000.00 each share having a par value of $ 100.00, each payable by subscribers upon call. At the time of appellant's organization in 1922 the only type of building and loan company authorized in Wyoming, was the serial plan type. See Chapter 331, C. S. 1920. In 1923 statutory control of building associations was extended to the "permanent plan" type. Laws 1923, Chapter 95, now appearing as Article 2 of Chapter 17, R. S. 1931. Section 10, Chapter 95, of the Act of 1923 required corporations doing a permanent plan building and loan business, whose articles of incorporation were not in compliance with the Act of 1923, to re-incorporate, or amend its articles to conform therewith. Re-incorporation was unnecessary in appellant's case, its articles being in compliance with the Act of 1923. In 1927, Wyoming had two separate statutes relating to building and loan associations, to-wit: one known as the serial plan statute (Chapter 331, C. S. 1920; Art. 3, Chapter 17, R. S. 1931); and the other the permanent plan statute (Chapter 95, Laws 1923; Art. 2, Chapter 17, R. S. 1931). In 1927 there was enacted what is known as the building and loan association code. See Chapter 103, Laws 1927; Art. 1, Chapter 17, R. S. 1931. This Act was made effective June 30, 1927, and contains a number of Sections. The purpose of this law was to make all building associations organized either before or after its enactment subject to its provisions and to operate as an amendment of articles of incorporation of such associations theretofore organized, including its by-laws and rules of every kind. Every type and character of share was required to bear its portion of losses. It was contended by respondent in the court below, that the Act of 1927 was not applicable to appellant because of the provisions of Section 28, Chapter 103, Laws 1927 (17-128, R. S. 1931), which exempts associations organized under Chapter 95, Laws 1923, providing for the organization of serial plan associations, but plaintiff has contended that defendant was not organized under Chapter 95, Laws 1923. That Act denied power to corporations organized under it, to obtain capital except by collection of dues from its members and therefore without power to borrow funds. We believe the contention to be erroneous. The legislature has plenary power over building associations. Plaintiff erroneously contends, we believe, that because of appellant's organization before Wyoming laws had provided for the supervision of permanent plan associations, it was not subject to legislation enacted since its organization. As against this contention, we cite the following authorities. Art. 10, Sections 1 and 2, State Constitution; State v. Loan Company (Ohio) 143 N.E. 894; Rocker v. Ass'n. of Newark (N. J.) 179 A. 667; Moore v. Conover (N. J.) 195 A. 833; Richardson v. Court (Calif.) 32 P.2d 405; Hopkins Ass'n. v. Cleary, 296 U.S. 315; People v. Ass'n. (Ill.) 17 N.E.2d 4-9; Paul et al. v. Creamer, 24 F.Supp. 353; State v. Ass'n. (Mo.) 90 S.W.2d 93. Under the laws of Wyoming, building associations are restricted to the raising of capital by the collection of dues from their members. U. S. v. Co., 278 U.S. 55; People v. Ass'n'. (Ill.), supra. First legislation dealing with building associations was enacted in 1897 and provided for a serial plan. (Section 17-301, R. S. 1931). The next legislation was Section 1, Chapter 95, Laws of 1923, providing for a permanent plan, (Section 17-201, R. S. 1931); and the next legislation was Chapter 103, Section 1, Laws 1927 (Section 17-101, R. S. 1931) which was in the nature of a building association Code. The certificates issued to plaintiff made him a member of the association, irrespective of the language of such certificates. White v. Wogoman (Ariz.) 54 P.2d 793; Towle v. Ass'n., 75 F. 938; Teller v. Wilcoxen (Ia.) 81 N.W. 772; In re Savings Ass'n., 253 F. 722. The record shows that plaintiff in applying for the savings certificates intended to become a member of the association. Plaintiff's case is founded on the theory that the pass book certificates indicate, that in depositing money with defendant he became a creditor and not a member thereof. This theory might have plausibility with respect to certificate numbered 181 but Certificate 303 shows that there is no merit in the contention. During the latter part of 1934, defendant's situation was discussed with the State Examiner, and thereafter in 1935 negotiations were commenced with the Reconstruction Finance Corp. concerning a loan for use in the liquidation of its business. In order to procure a loan it was necessary for defendant to reduce its 1,000 shares of $ 100.00 par value per share stock, to an evaluation of $ 1.00 per share and to obtain the consent of at least 90% of its certificate holders to accept a 30% reduction in the value of their certificates as computed January 1, 1934. At that time, there was due upon outstanding certificates issued by the defendant the sum of $ 1,013,251.29. Such an agreement was entered into by 92% of defendant's certificate holders prior to June 1, 1935, but plaintiff refused to sign said agreement. On June 4, 1938, plaintiff served a written demand upon defendant for the payment of all of the funds claimed in this action. Said demand was nothing more or less than a notice of withdrawal, and was filed three years after liquidation of defendant had commenced. But said demand did not change plaintiff's status as a member of the association. Sundheim, "Building and Loan Associations," 3rd Ed., 166, 200 and 206; Conally v. Ass'n'., 54 S.W.2d 244; Publicker v. Ass'n. (Pa.) 159 A. 58; Mott v. Ass'n. (Ore.) 20 P.2d 236; McPherson v. Ass'n. (Colo.) 25 P.2d 388; Aldrich v. Gray, 147 F. 453; Prudential Co. v. Shaw (Tex.) 26 S.W.2d 168; Weinroth v. Ass'n. (Pa.) 165 A. 28. Irrespective of the question as to whether defendant is a building association, or a mere investment corporation, it was the duty of its board, in voluntary liquidation proceedings, to see to it that all creditors were paid on a pro rata basis, without preference of one over the other. Fletcher Cyc. Corp., Vol. 15 A, Sec. 7360; Calnan v. Corp. (Mass.) 171 N.E. 830; Wright Co. v. Steenman (Ky.) 71 S.W.2d 991; Ratcliff v. Clendenin, 232 F. 61; Trust Co. v. Corp., 8 F.2d 338; Pritchard v. Myers (Md.) 197 A. 620; Fidelity Ins. Co. v. Le Bow (Tex.) 107 S.W. 755.

For the respondent, there was a brief by George W. Bird and Mahlon E. Wilson, of Salt Lake City, Utah, and oral argument by Mr. Wilson.

The case is based on two causes of action for the recovery of money had and received, as evidenced by pass books numbered 181 and 303. Case No. 2235 presents one cause of action by Linda Parks Radalj to recover money had and received. It was consolidated, for the purposes of trial, with Case No. 2234. In support of the judgments below, respondent urges the following points: I. The only specifications discussed by appellant are Numbers V, VI, and VII, and they...