Sjoberg v. Security Savings & Loan Association
| Decision Date | 02 July 1898 |
| Docket Number | 11,047 - (126) |
| Parties | JOHN A. SJOBERG and Others v. SECURITY SAVINGS & LOAN ASSOCIATION |
| Court | Minnesota Supreme Court |
Petition on Rehearing Filed July 7, 1898
Action in the district court for Hennepin county to wind up the affairs of defendant corporation, and for the appointment of a receiver for that purpose. From an order, Elliott, J. appointing a receiver, defendant appealed. Reversed.
Enacting Clause of Laws -- Constitution.
Article 4, § 13, of the constitution of the state, which provides that the style of all laws of this state shall be "Be it enacted by the legislature of the state of Minnesota," is mandatory, and a statute without any enacting clause is void.
Enacting Clause of Laws -- Approval by Governor -- Extrinsic Evidence.
It is not competent, for the purpose of sustaining the validity of a statute which had no enacting clause when it was sent to and was approved by the governor, to show that it contained an enacting clause when it passed the legislature.
Building and Loan Association without Debts is not Insolvent under G.S. 1894, c. 76.
Where a building and loan association has no creditors or liabilities except its liability to its stockholders on account of their stock, and there is a deficiency in its assets, so that it cannot mature its stock, or pay back to its stockholders the actual money paid on their stock, it is not "insolvent," in the sense in which the word is used in G.S. 1894, c. 76, providing for the appointment of a receiver for corporations when they are insolvent.
Building and Loan Association without Debts is not Insolvent under G.S. 1894, c. 76 -- Appointment of Receiver -- Equitable Jurisdiction.
A court of equity has jurisdiction to wind up the affairs of a building and loan association, and for that purpose to appoint a receiver on the application of a minority of its stockholders, whenever the purposes for which it was organized have failed, and it is shown that such action is reasonably necessary for the protection of the interests of such stockholders.
Findings of Court -- Omission of Necessary Facts -- Reversal on Appeal.
Where the trial court makes findings of fact as the basis of its order (although it is unnecessary so to do), and omits to find all facts legally necessary to sustain the order, it will be reversed unless the record conclusively shows that the order is right.
Findings of Court -- Order not Sustained by Findings.
Held, that the findings of fact of the trial court are not sufficient to justify its order appointing a receiver herein.
Welch, Hayne & Hubachek and A. D. Smith, for appellant.
The constitutional provision (art. 4, § 13) relating to the enacting clause of statutes, is directory merely, and not mandatory; hence the absence of an enacting clause from a statute does not render it invalid. McPherson v. Leonard, 29 Md. 377; City v. Riley, 52 Mo. 424; Swann v. Buck, 40 Miss. 268; City v. Foster, 52 Mo. 513; Seat of Government Case (dissenting opinion) 1 Wash. T. 124; Powell v. Jackson, 51 Mich. 129; Washington v. Page, 4 Cal. 388; Pierpont v. Crouch, 10 Cal. 315; Pim v. Nicholson, 6 Oh. St. 177; Ex parte Falk, 42 Oh. St. 638. As to other constitutional requirements relating to enactment of statutes which have been held directory merely, see Pacific v. Governor, 23 Mo. 353; People v. Supervisors, 8 N.Y. 317; Hill v. Boyland, 40 Miss. 618; Davis v. Wood, 7 Mo. 162; Hanna v. Russell, 12 Minn. 30 (80); Jump v. Batton, 35 Mo. 193; Doan v. Boley, 38 Mo. 450; Cooley, Const. Lim. 74; Thompson v. Bickford, 19 Minn. 1 (17).
Parol evidence was admissible to show that, when the bill passed the legislature, it contained an enacting clause. State v. Moore, 37 Neb. 13; Sharp v. Merrill, 41 Minn. 492; Meisen v. Canfield, 64 Minn. 513; State v. Robertson, 41 Kan. 200; Lincoln v. Haugan, 45 Minn. 451; State v. Platt, 2 So. C. 150; State v. Francis, 26 Kan. 724; People v. Petrea, 92 N.Y. 128; U.S. v. Allen, 36 F. 174; State v. Hagood, 13 So. C. 46, 70; Gildewell v. Martin, 51 Ark. 559; Gardner v. Collector, 6 Wall. 499, 508; State v. City of Hastings, 24 Minn. 78; State v. Peterson, 38 Minn. 143; New York v. Smith, 148 N.Y. 540; Rode v. Phelps, 80 Mich. 598. See also Williams v. Taylor, 83 Tex. 667; Rumsey v. New York, 130 N.Y. 88.
Conceding Laws 1897, c. 250, relating to the voluntary liquidation of building societies to be wholly bad, and the liquidation proceedings taken thereunder by defendant a nullity, yet plaintiffs are not entitled to the appointment of a receiver, because the corporation was not shown to be insolvent, within the meaning of that term, as applied to building associations. Towle v. American B. L. & I. Soc., 61 F. 446; Knutson v. Northwestern L. & B. Assn., 67 Minn. 201.
J. C. Haynes, at the instance of the Home Savings & Loan Association, by consent filed a brief in behalf of the appellant.
Irrespective of the validity of Laws 1897, c. 250, and conceding the insolvency of appellant, in the sense that its assets are insufficient to reimburse its members the amount they have paid into its treasury, the order of the court appointing a receiver for the purpose of winding up its affairs, and thereby necessarily dissolving the corporation, was clearly illegal and unjustified. Mere shrinkage of values, or suffering losses, does not constitute legal insolvency of a building association. Knutson v. Northwestern L. & B. Assn., 67 Minn. 201. Our building and loan statute very wisely makes complete provision for adjusting and equalizing the rights of all of the members of an association whenever and as often as a loss shall occur, and it clearly contemplates that any association governed by it, so long as it regards the law, shall not be interfered with, but shall be allowed to conduct its affairs to a final end, whether successful or otherwise. Laws 1891, c. 131, § 27; G.S. 1894, § 2881; Broadwell v. Inter-Ocean, 161 Ill. 327; Chapman v. Young, 65 Ill.App. 131. The authorities are clear that when there is any other remedy which will afford ample protection to those applying for it, a receiver should never be appointed. Etowah v. Wills, 106 Ala. 492; State v. Commercial Bank, 10 Ohio 535; Smith, Rec. § 226; McGeorge v. Big Stone Co., 57 F. 262. Statutes authorizing the appointment of receivers for corporations should be strictly construed in favor of the corporation. High, Rec. § 289; Bangs v. McIntosh, 23 Barb. 591; Smith, Rec. § 221. The insolvency complained of must be in the commercial sense, and of such an extent as to seriously endanger a substantial right; otherwise it alone is not sufficient cause for the intervention of the court. Steinberger v. Independent, 84 Md. 635. See also Wait, Insol. Corp. § 357; High, Rec. § 289; Bangs v. McIntosh, supra; Hale v. Omaha, 33 N.Y.S. 39.
The fact that appellant ceased doing business, and went into voluntary liquidation, does not authorize the appointment of a receiver, because chapter 76 does not authorize the appointment of a receiver upon any such ground. In the absence of express statutory authority, the general jurisdiction of equity over corporations does not extend to sequestrating corporate property, and appointing a receiver of the same in aid of judgment creditors. Spooner v. Bay St. L. Syn., 44 Minn. 401; Beach, Rec. §§ 403, 404; 4 Thompson, Corp. § 4539; Benedict v. Columbus, 49 N.J.Eq. 23, 36; Wallace v. Pierce, 101 Iowa 313; Barton v. International, 85 Md. 14; Mason v. Supreme Ct., 77 Md. 483; Heinbokel v. National S.L. & B. Assn., 58 Minn. 340; Pinkus v. Minneapolis L.M., 65 Minn. 40.
Independently of all other points herein urged, the common law imposes on the members of building associations the duty to endeavor to adjust all of their rights and differences among themselves. Lafond v. Deems, 81 N.Y. 507; Roman v. Woolfolk, 98 Ala. 219, 237; 4 Thompson, Corp. § 4518; Mason v. Supreme Ct., supra. Members have the inherent right to liquidate and wind up their own affairs through the medium of their own chosen agents, provided the plan adopted is equitable, and such agents are capable and trustworthy; and any judicial interference with such right is an abuse of discretionary power. City Pottery Co. v. Yates, 37 N.J.Eq. 543; 1 Morawetz, Priv. Corp. § 285; Pringle v. Eltringham, 49 La. An. 301.
Fifield, Fletcher & Fifield, for respondents.
By the overwhelming weight of authority, the constitutional provision relating to the enacting clause of statutes has been held to be imperative. State v. Rogers, 10 Nev. 250; State v. Patterson, 98 N.C. 660; May v. Rice, 91 Ind. 546; Burritt v. Commissioners, 120 Ill. 322; Seat of Government Case, 1 Wash. T. 115.
Extrinsic evidence is incompetent to show that the duly authenticated enrolled act differs in its contents from the bill passed by the legislature. Stein v. Leeper, 78 Ala. 517; Pangborn v. Young, 32 N.J.L. 29; Standard v. Attorney General, 46 N.J.Eq. 270; Mayor v. Harwood, 32 Md. 471; Ex parte Tipton, 28 Tex.App. 438; Central v. Hearne, 32 Tex. 546; Sherman v. Story, 30 Cal. 253; People v. Burt, 43 Cal. 560; Weeks v. Smith, 81 Me. 538; Green v. Weller, 32 Miss. 650; Ex parte Wren, 63 Miss. 512; Pacific v. Governor, 23 Mo. 353; State v. Swift, 10 Nev. 176; State v. Glenn, 18 Nev. 34; People v. Commissioners, 54 N.Y. 276; State v. Jones, 6 Wash. 452; State v. Clare, 5 Iowa, 509; Duncombe v. Prindle, 12 Iowa 1; Fouke v. Fleming, 13 Md. 392; Eld v. Gorham, 20 Conn. 8, 16; Williams v. Taylor, 83 Tex. 667; Usener v. State, 8 Tex.App. 177. A material variance in the contents between the bill as passed by the legislature and that presented to and approved by the governor is fatal to the validity of the act. Moog v. Randolph, 77 Ala. 597; Sayre v. Pollard, 77 Ala. 608; Abernathy v. State, ...
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