State ex rel. Cotonio v. Italo-American Homestead Ass'n

Decision Date29 May 1933
Docket Number32207
Citation149 So. 449,177 La. 766
PartiesSTATE ex rel. COTONIO v. ITALO-AMERICAN HOMESTEAD ASS'N
CourtLouisiana Supreme Court

Rehearing Denied July 7, 1933

Appeal from Civil District Court, Parish of Orleans; M. M. Boatner Judge.

Mandamus proceeding by the State, on the relation of Theodore Cotonio against the Italo-American Homestead Association. Suit was dismissed, and relator appeals.

Affirmed.

Theo. Cotonio, Jr., of New Orleans, for appellant.

S. Roccaforte and Delvaille H. Theard, both of New Orleans, for appellee.

O'NIELL Chief Justice. OVERTON and ST. PAUL, JJ., dissent.

OPINION

O'NIELL, Chief Justice.

This is a mandamus proceeding brought by a stockholder in a homestead association compel the association "to permit relator or any person by him designated to examine the books of the association and to make notes or extracts therefrom." That is all that the relator asks for. He avers that he is a stockholder in the association; that he is the attorney at law for several other stockholders; that he asked the association for permission, for himself and for his clients, to examine the books of the association and to make notes and extracts therefrom, and that the association denied him the privilege; that he has been informed that a stockholder and director named Sam Danna was permitted to withdraw his investment of about $ 4,000 in advance of stockholders whose applications for withdrawal were filed previous to Sam Danna's, among which prior applications were those of relator's clients; that the affairs of the association have been mismanaged to such an extent that the association has had to take over property amounting to about $ 200,000, because of excessive loans made thereon, in violation of the bylaws of the association; that a careful examination of the books and records of the association is necessary to ascertain the true condition of all loans; that relator is informed that the affairs of the association are being managed, not by the board of directors, but by the secretary, who has assumed exclusive control and seems to be the absolute master and arbiter of the affairs of the association; that the purpose of the denial of relator's right to examine the books of the association is to conceal the true condition of affairs, which, instead of showing improvement, is growing worse; that by the Constitution of Louisiana the right of a stockholder in a homestead association to examine the books of the association is made absolute; and that the only process for enforcing the right is by way of mandamus.

The defendant homestead association pleaded that the court had not jurisdiction ratione materiae, and that the petition of the relator did not set forth a cause or right of action. The relator then filed an affidavit to the effect that, besides being a stockholder in the association, he was the attorney at law and in fact of Basile Merenda, who owned 100 shares of stock in the association, of the value of $ 10,000; that relator's power of attorney from Merenda was in the association's possession; and that relator was also the attorney at law and the agent and attorney in fact of Biagio Pelicano, who owned 30 shares of stock in the association, of the value of $ 3,000.

The judge of the civil district court overruled the plea to the jurisdiction of the court, but sustained the exception of no cause or right of action and dismissed the suit. The relator has appealed.

We do not consider the appellant's allegations to the effect that he is the attorney at law and attorney in fact of two or more stockholders, who are not parties to this proceeding, as being of any importance in determining whether he has a cause of action. An attorney at law has no more right than a layman would have to champion the cause of persons who are not before the court. We shall consider, therefore, only the rights of the appellant himself, as a stockholder of the homestead association, in determining whether he has disclosed a cause of action.

The appellant relies upon the decision in Orlando v. Reliance Homestead Association, 171 La. 1027, 132 So. 777; in which case it was held that a stockholder in a homestead association had the right to inspect the books of the corporation to gain information regarding the manner in which its affairs were being conducted. The decision was rendered in 1931, and in 1932 the Legislature adopted Act No. 140 of that year, entitled "An Act codifying the statutes of this State in respect to all homestead and building and loan associations," etc. The statute contains eighty-one sections, covering forty-eight pages, and purports to embrace all of the law on the subject of homestead and building and loan associations. It is, in truth, as its title declares, a codification of the law on the subject of homestead associations; and, by necessary implication, it withholds from stockholders in such associations the right to inspect their books, except that, under section 55, a withdrawing shareholder may, under such reasonable rules as the association may prescribe, inspect the books and records of the association for the purpose only of a suit against the association or its officers or representatives, for a violation of the provisions of the statute or to enforce compliance with its provisions.

The statute places all homestead associations under the supervision and control of the state bank commissioner, who, according to section 18 of article 6 of the Constitution 1921, is ex officio supervisor of homestead and building and loan associations. Section 64. All such associations must make annual reports to the commissioner. Their affairs must be examined by him at least twice annually. Section 65. If the officers or directors of such an association have violated the provisions of the statute or of the charter of the association, or if in the opinion of the commissioner it is inexpedient or would endanger the interests of the shareholders for the association to continue in business, the commissioner has the authority to compel a correction of the condition, and, if the complaints and demands of the commissioner are not fully complied with within 30 days, he may have the affairs of the corporation liquidated for the benefit of its shareholders. Section 67. The commissioner is made the representative of all of the shareholders.

Section 78 of the statute declares:

"The provisions of the present Statute in respect of the organization, management and operation, and for the supervision, liquidation, and administration of building and loan association shall be exclusive; and the other laws of this State, and particularly, the laws providing for the receivership of corporations, shall have no application to building and loan associations."

In other jurisdictions, where statutes have been enacted placing such quasi public institutions as building and loan associations, life insurance companies, savings banks, and the like, under the supervision and control of a designated public official, and prescribing the rights and remedies of the stockholders in such corporations, it has been held that the rights and remedies so prescribed are exclusive, and that the other laws relating to the rights and remedies of stockholders in corporations generally are not applicable to these quasi public institutions. State of Ohio ex rel. Bettman, Attorney General v. Court of Common Pleas of Franklin County, 124 Ohio St. 269, 178 N.E. 258, 78 A. L. R. 1079; Wright v. Federal Reserve Life Insurance Co., 131 Kan. 601, 293 P. 945; Union Savings & Investment Co. v. District Court of Salt Lake County, 44 Utah 397, 140 P. 221, Ann. Cas. 1917A, 821; Picklesimer v. Morris, Judge (Abbott, Commissioner of Banking, v. Morris, Judge), 101 W.Va. 127, 132 S.E. 372; Ulmer v. Falmouth Loan & Building Association, 93 Me. 302, 45 A. 32, 33.

In the case last cited the complainant, as a shareholder in the Falmouth Loan & Building Association, charged many acts of mismanagement and of violation of the by-laws of the corporation on the part of the officers, and asked for an injunction, for the appointment of a receiver, and for a winding up of the affairs of the association. In dismissing the shareholder's complaint, the Supreme Judicial Court of Maine made use of these appropriate expressions, viz.:

"Loan and building associations, like savings banks, are creatures of the statutes. Their manner of organization and method of doing business are specifically prescribed by statute. They are placed under the charge, and to a certain extent under the control, of a public official, -- the bank examiner. Upon him the statutes impose the power and the duty of an examination and investigation, and to him the associations must make stated reports. The bank examiner has the same powers and duties with respect to such associations that he has with respect to savings banks. Laws 1897, c 319, § 4. He is required to visit each institution once in each year, and as much oftener as he deems expedient. At such visits he has free access to the vaults, books, and papers, and is required to thoroughly inspect and examine all the affairs of the institution, and make such inquiries as are necessary to ascertain its condition and ability to fulfill all its engagements, and whether it has complied with the law. * * *

"The statute points out the conditions under which the intervention of the court may be obtained, and the officer by whom the machinery of litigation may be set in motion. It suggests no other way. And it is the opinion of the court that it was the intention of the legislature, as expressed in the statute, that the power of invoking the interference of the court should be vested in the bank examiner alone, and that he only may pray for an...

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    ...Loan Association, 99 Wash. 593, 169 P. 979; Krimke v. Guarantee Building & Loan Association, supra; State ex rel. Cotonio v. Italo-American Homestead Association, 177 La. 766, 149 So. 449; Iowa Central Building & Loan Association v. Klock (Iowa) 104 N. W. Plaintiff relies upon the decision ......
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    ... ... Atty ... Gen., for J. S. Brock, State Bank Commissioner and Supervisor ... of Homestead and ... claims were paid ... In ... State ex rel. Orlando v. Reliance Homestead Association, ... 174 La ... 119, ... 143 So. 23, and in State ex rel. Cotonio v ... Italo-American Homestead Association, 177 La. 766, ... ...
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    ...protection, it would have conferred such right upon him as it did upon stockholders of banks.' In State ex rel. Cotonio v. Italo-American Homestead Association, 177 La. 766, 149 So. 449, the court held that under a state statute relating to building and loan corporations which contained no ......
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    ...re Steinway, supra, 159 N.Y. 264, 53 N.E. 1107, 45 L.R.A. 475. As holding contra, defendant relies on State ex rel. Cotonio v. Italo-American Homestead Ass'n, 177 La. 766, 149 So. 449; Ulmer v. Falmouth Loan & Bldg. Ass'n, 93 Me. 302, 45 A. 32; and State ex rel. Powell v. State Bank, 90 Mon......
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