State ex rel. Wagner v. Farm & Home Savings & Loan Ass'n of Missouri

• Decision Date: 04 January 1936
• Docket Number: 33065
• Parties: State of Missouri at the Relation of George W. Wagner, Supervisor of Building and Loan Associations, v. Farm & Home Savings & Loan Association, a Corporation, Defendant, George Kissinger et al., Appellants
• Court: Missouri Supreme Court

90 S.W.2d 93

338 Mo. 313

State of Missouri at the Relation of George W. Wagner, Supervisor of Building and Loan Associations, v. Farm & Home Savings & Loan Association, a Corporation, Defendant, George Kissinger et al., Appellants

No. 33065

Supreme Court of Missouri

January 4, 1936

Appeal from Vernon Circuit Court; Hon. C. A. Hendricks Judge.

Affirmed.

Hallett & Hallett for appellants.

(1) A building and loan association or corporation, like any other corporation, is a creature of the statutes, and its powers are granted and limited within the statutes. It can have no power to do anything except those things that are authorized by the statute or such incidental things as may be necessary in order to give effect to the powers granted. Casten v Stafford, 92 Mo.App. 182; Sundheim on B. & L. Assn. (3 Ed.), p. 6; Eberhart v. Preferred B. & L. Assn., 157 Mo. 40, 145 A. 202; Wilkinson v. Mut. B. & Savs. Assn., 13 F.2d 997. (2) A building and loan association is not insolvent within the meaning of the law when its assets are sufficient to pay its general creditors and to return to its stockholders the amount of their contributions dollar for dollar. Sundheim on B. & L. Assn. (2 Ed.), p. 179, sec. 175. (a) The fact that the supervisor of building and loan associations took over the affairs of the association did not make the association insolvent. Laws of 1931, pp. 162-165; Sec. 5627, R. S. 1929; Caston v. Stafford, 92 Mo.App. 182; Allan v. Marshall, 294 Pa. 185. (b) The fact that the building and loan supervisor found that the association could be reorganized creates the presumption that the association was solvent. R. S. 1929, sec. 5627; Laws 1931, pp. 162-165. (3) The supervisor of building and loan associations was acting in this case as such supervisor and as temporary receiver. Laws 1931, pp. 162-165; Sec. 5627, R. S. 1929. (a) As such supervisor and temporary receiver, he succeeded to all the rights of the association, but the association being solvent his rights were no higher than the rights of the association. Sec. 5627, R. S. 1929; Laws 1931, pp. 162-165; Consolidated B. & L. Assn. v. Shipley, 95 Pa.Super. Ct. 232. (4) Neither a building and loan association when solvent, nor the receiver when insolvent, can prefer one class of shareholders to another. Sundheim on Building & Loans (2 Ed.), p. 183, sec. 179; Smith v. Bath L. & B. Assn., 136 A. 284, 50 A. L. R. 526; Woerhide v. Johnson, 81 Mo.App. 193; Latten v. Hough, 169 Mo.App. 213; Fidelity B. & L. Assn. v. Thompson, 45 S.W.2d 167, 51 S.W.2d 578, 25 S.W.2d 247; Rietz v. Hayward, 100 Mo.App. 224; 4 R. C. L., p. 377, sec. 33; 9 C. J., p. 982; Habenshell v. Home Savs. & L. Assn., 140 Mo. 566; Bertsche v. Equitable L. & Inv. Co., 147 Mo. 343; Schell v. Equitable L. & Inv. Co., 150 Mo. 103. (5) The appointment of a receiver for a building and loan association in the case of insolvency makes all loans immediately due and payable, and all contracts between the association and the shareholders are at an end, the association not being entitled to collect dues, and all amounts owing to the institution by shareholders become due and payable, and mortgages securing such loans may be foreclosed. In such event, the entire purpose of the association fails, thus resulting in the dissolution of the existing contracts and the relations between the association and its members, except for the purpose of liquidating its affairs. Union Savs. & Inv. Co. v. District Court, 44 Utah 397, 140 P. 221; Sundheim on B. & L. Assns. (2 Ed.), p. 183, sec. 179; Lewis v. Clark, 129 F. 570; State Savs. & L. Assn. v. Carroll, 4 Pa. Dis. Rep. 6; Levy v. Natl. B. & L. Assn., 100 Wis. 554, 76 N.W. 625. (6) A building and loan corporation cannot, by an amendment to its by-laws, materially change the character of the contract held by the shareholders. 2 Thompson on Corporations (3 Ed.), p. 509, sec. 1105; Interstate B. & L. Assn. v. Wooten, 113 Ga. 247, 38 S.E. 738; Teel v. Eastern B. & L. Assn., 117 Iowa 185, 90 N.W. 717; Northport Camp Meeting Assn. v. Perkins, 93 Me. 335, 44 A. 893; Fidelity B. & L. Assn. v. Thompson, 51 S.W.2d 578; Fisher v. Patton, 134 Mo. 32. (a) The right of withdrawal was a vested right under these contracts, and any change in the right to withdraw against the stockholders was an impairment of the right of the contract, and in conflict with the Constitution of the United States and the State of Missouri. Fisher v. Patton, 134 Mo. 32; Sec. 10, Art. I, Const. of U.S.; Sec. 15, Art. II, Const. of Mo. (b) If notice is given when association is solvent, shareholder is not liable for future losses of the association. State ex rel. Gray v. Active B. & L. Assn., 80 Mo.App. 585; Reitz v. Hayward, 100 Mo.App. 216. (7) It is the function of courts to enforce contracts, not make them. Patten v. Railroad Co., 85 F. 838; 15 Fletcher, Cyclopedia of Corporations (Permanent Ed.), p. 299.

Roy McKittrick, Attorney General, and James L. HornBostel, Assistant Attorney General, for Supervisor of Building & Loan Associations of Missouri.

Cyrus Crane, Boyd Ewing, Lynn Ewing, Lathrop, Crane, Reynolds, Sawyer & Mersereau and Ewing, Ewing & Ewing for Farm & Home Savings & Loan Association of Missouri.

(1) Building and loan associations along with banks, insurance companies and trust companies, are quasi-public mutual financial institutions for which the State of Missouri has provided special inquisitorial, supervisory and regulatory laws which are specific, complete, adequate and exclusive. Secs. 5576-5628, R. S. 1929, as amended; Laws 1931, pp. 141-165; Noble State Bank v. Haskell, 219 U.S. 104; Relfe v. Rundle, 103 U.S. 222, 26 L.Ed. 237; Koch v. Mo.-Lincoln Trust Co., 181 S.W. 44; State ex rel. Mo. State Life Ins. Co. v. Hall, 330 Mo. 1107, 52 S.W.2d 174; Hackler v. Farm & Home Savs. & L. Assn., 6 F. 610; State ex rel. Bettman v. Court of Common Pleas, 178 N.E. 238; Fornataro v. A. Coast B. & L. Assn., 163 A. 240; Ulmer v. Falmouth B. & L. Assn., 45 A. 32; Union Savs. & Inv. Co. v. District Court, 140 P. 221. (2) The institution of this action in the Circuit Court of Vernon County, Missouri, by the State of Missouri at the relation of Wagner, Supervisor, was not only for the purpose of protecting the assets of defendant association and the rights of shareholders and others directly interested, but also for the purpose of preserving the public well-being. And the reorganization of such association was pursuant to statutory mandate to Wagner as supervisor to attempt a reorganization, as well as under the supervision and control and within the exercise of the sound discretion of a court of equity. Secs. 5626-7-8, R. S. 1929, as amended, Laws 1931, pp. 162, 165; Doty v. Love, 79 U.S. 632; Dunn v. Love, 155 So. 331; Timmons v. People's Trust Co., 173 S.E. 79; Koch v. Mo.-Lincoln Trust Co., 181 S.W. 44; State ex rel. Mo. State Life Ins. Co. v. Hall, 330 Mo. 1107, 52 S.W.2d 174; State ex rel. Bettman v. Court of Common Pleas, 178 N.E. 238. (3) Dissenting stockholders are not entitled to immediate payment of the actual value of their shares but are bound by provisions of the plan of reorganization and the decree of the court of equity approving same; and are entitled only to certificates of stock and of interest, the issuance of which is provided for thereby. Laws 1931, pp. 141-165; Doty v. Love, 79 U.S. 632; Phipps v. Railroad Co., 284 F. 945; cert. den., 262 U.S. 762, 67 L.Ed. 1221; Northern Pac. Railroad Co. v. Boyd, 228 U.S. 482, 57 L.Ed. 931; Flershem v. Natl. Radiator Corp., 64 F.2d 847; Gates v. Railroad Co., 53 Conn. 335, 5 A. 695; Flershem v. Natl. Radiator Corp., 290 U.S. 504, 78 L.Ed. 465. (4) Withdrawal of a member from a building and loan association is not a vested right but a privilege; and the court had power to stay withdrawals for a year after reorganization and approve fees provided by reorganization for withdrawal of stock thereafter and prior to maturity. Union Dry Goods Co. v. Pub. Serv. Corp., 248 U.S. 372; Maloney v. Real Estate B. & L. Assn., 57 Mo.App. 389; Fornatoro v. A. Coast B. & L. Assn., 163 A. 240; Stone v. New Schiller B. & L. Assn., 153 A. 758. (5) The allowance to a borrowing member of a credit in reduction of his loan in the amount of the value, as determined by the court, of the shares of stock pledged with such loan, was not a preference to such borrowing members nor discriminatory as to appellants; but was to the best interest of the State of Missouri, the association and of all its members, and within the discretion of the court of equity in effecting a reorganization as contemplated by the laws of Missouri. Doty v. Love, 79 U.S. 632; Dunn v. Love, 155 So. 331.

OPINION

Tipton, P. J.

In the year of 1893, the defendant, Farm and Home Savings and Loan Association of Missouri, was organized as a building and loan association with its home office at Nevada, Missouri. On June 2, 1932, the State of Missouri acting by and through its officer, George W. Wagner, Supervisor of Building and Loan Associations, and at the request of the board of directors of the defendant association, took charge of this association and its assets and took over the management and conduct of its business.

On June 6, 1932, the State of Missouri at the relation of George W. Wagner, respondent, applied to the Circuit Court of Vernon County, Missouri, for appointment of the respondent as temporary receiver, which application was granted. The court directed him to take the necessary steps to determine the financial condition of the defendant association and report to that court the results of his examination.

On December 10, 1932, the respondent, Wagner, filed an application in that court stating that his appraisals examination and audit disclosed that the defendant association was not in condition to safely...