Stilwell v. People's Building, Loan & Saving Ass'n

• Decision Date: 08 April 1899
• Citation: 57 P. 14,19 Utah 257
• Parties: O. J. STILWELL, RESPONDENT, v. THE PEOPLE'S BUILDING, LOAN, AND SAVING ASSOCIATION, APPELLANT
• Court: Utah Supreme Court

57 P. 14

19 Utah 257

O. J. STILWELL, RESPONDENT, v. THE PEOPLE'S BUILDING, LOAN, AND SAVING ASSOCIATION, APPELLANT

Supreme Court of Utah

April 8, 1899

Rehearing denied May 2, 1899.

Appeal from the Second District Court, Weber County, Hon. H. H Rolapp, Judge.

Action by plaintiff after withdrawal from the defendant company for the withdrawal value of five shares of capital stock.

From a judgment for plaintiff defendant appeals.

The opinion states the facts.

Reversed.

Valentine Gideon, Esq., for appellants.

Plaintiff had been a stockholder in the defendant company prior to the date that this certificate of stock was issued to him, and he is conclusively presumed in law to know the plans, purposes rules, and regulations of the association which he entered. Morawetz on Corporations, Vol. 1, p. 96.

By the terms of the certificate of shares, the articles of association, by-laws, terms, and conditions printed thereon, together with the application, are to be read and construed together as the contract made and entered into between the plaintiff and the defendant association. Van Nostrand v. N.Y. Guaranty, etc., Co., 39 S.Ct. 73; Marsh v. Dodge, 66 N.Y. 533; Seward v. Huntington, 94 N.Y. 104; Gibbs v. Long Island Bank, 83 Hun., 92; O'Malley v. The People's Bldg. Assn., 36 N.Y.S. 1016; Englehardt v. 5th Ward Loan Assn., 148 N.Y. 281; Thompson on Building Associations, pp. 15 and 16, and cases cited; Thompson's Commentaries on Corporations, Vol. 1, Sec. 1136.

A member of an association is bound by all by-laws, rules, and regulations, and his rights and duties are to be measured thereby. Beach on Corporations, Vol. 1, p. 521.

There is no allegation in the complaint, neither is there any attempt to show on the part of the plaintiff, that there was money in the treasury which could be withdrawn to pay this plaintiff, and it being a condition of his contract that before he could recover there must be money in the treasury, it is incumbent upon him to allege and prove that fact. Heinboker v. National Assn., Minn., 340, (S.C.), 59 N.W. 1050; Englehardt v. Fifth Ward Permanent Dime Sav. & Loan Assn., 148 N.Y. 281; Brett v. The Monarch Investment Society, L. R. 1 Q. B. Div. (1894), 267; Barnard v. Thompson, 1 Ch. Div. 374; Texas Bldg. & Loan Assn. v. Kerr., 13 S.W. 1020; Pawlick v. Homestead, 37 N.Y.S. 164.

The plaintiff contracted with the defendant company with notice that the by-law might be amended if it became necessary. Such an amendment has been held lawful and binding upon the stockholders, although their contract antedated the amendment under the identical statute under which the association was organized. Englehardt v. Fifth Ward P. D. S. & L. Ass'n (N.Y.), 42 N.E. 710; see also Pawlick v. Homestead Saving Ass'n, 37 N.Y.S. 164; Hoyt v. Interocean Bldg. Ass'n, 58 Minn. 345.

It is insisted by respondent that as his stock is "fully paid-up stock" his relation to the association is different from the ordinary stockholders." The authorities do not sustain that contention. Towle v. American B. & L. Ass'n, 75 F. 938; Gibson et al., v. Safety Homestead Loan Ass'n, 48 N.E. 580; Endlich on Bldg. Ass'ns, 2d ed., 108; 81 F. 776.

H. H. Henderson, Esq., for respondent.

Respondent claims that (the by-law in question) did not affect the contract or the certificate of stock delivered to him; that his right to be paid at the time mentioned in the certificate of stock and the by-laws that were in force at that time (the date of issuance) was a vested right and could not be impaired without his consent. Holyoke Bldg. & Loan Ass'n v. Lewis, 27 P. 872; Bergman v. Ass'n, 29 Minn. 275, 13 N.W. 120.

There is only one error assigned by appellant in which there can be any merit, and that is this:--

"Was it necessary for plaintiff to allege and prove that there were sufficient funds in the treasury of the defendant corporation at the time he commenced this action to pay his claim?"

The overwhelming weight of authority is that this was not necessary. The courts have universally held, with one exception, that the plaintiff had a right to maintain this action at law, and that it was a matter of defense for the defendant to allege and prove that it had not sufficient funds to pay this claim, and, even if the defendant should allege and prove that it did not have sufficient funds to pay, then, in that case, the plaintiff would be entitled to judgment, and if a sufficient showing had been made by defendant that a great injustice would be done to it and its members, then it would lie in the discretion of the trial court to stay execution. Endlich on Bldg. Ass'n, par. 111; U.S. Bldg. & Loan Ass'n v. Silverman, 85 Penn., 394; O'Rourke v. The West Penn., L. B. A., 93 Pa. 308; Atwood v. Dumas, 149 Mass. 167; Latimer v. The Equit. L. & Sav. Ass'n, 81 F. 776; Prairie State Loan Ass'n v. Gorrie, 47 N.E. (Ill.), 739; Mc Nab v. So Mont. B. & L. Ass'n (S.C.), 27 S.E. 543; LI. Am. & Eng. Enc. of Law, p. 621 (1st ed.); Bldg. & Loan Ass'n v. Paxton (Texas), 33 S.W. 389; La Pore v. Twin City B. &. L. Ass'n, 5 Pa. Sup., 276; Reynolds v. N.Y. B. & L. Ass'n, 35 N.Y.S. 80; O' Malley v. P. B. & L. Ass'n, 35 N.Y.S. 14.

BARTCH, C. J. MINER, J., and BASKIN, J., concur.

OPINION

BARTCH, C. J.

The defendant is a building, loan, and saving association, organized and existing by virtue of the laws of New York. On November 10, 1892, the plaintiff became the owner of five shares of its fully paid-up stock, which were of the par value of $ 500, and were represented by a certificate bearing that date. The certificate provided, among other things, that at the option of the holder, the sum of $ 300 might be withdrawn any time after three years from date thereof, together with interest thereon, from date of certificate, at the rate of six per centum per annum. The by-laws at that time provided likewise, and in Art. 20 thereof contained a provision that "payments of all claims upon certificates of shares shall be made within sixty days from the date of approval of the same by the Board of Directors or a majority thereof," with an exception of such as are otherwise provided for in Art. 19, which is not material in this case.

The articles of association and the by-laws contained provisions under which the by-laws might be amended from time to time, as might be necessary for the convenient and effective transaction of the business of the corporation. Art. 29, of amendments to the by-laws, which was in force at the time the plaintiff became a member of the association, reads: "Members holding paid-up certificates may, upon the surrender of said certificates, withdraw the amount of the same, at any time after three years from date of issue, and before maturity, together with an annual interest of six per cent. Said interest shall be computed upon the withdrawal of paid-up certificates for even months only, and such paid-up certificates shall cease bearing interest after the date of such application for withdrawal."

Afterward, on December 2, 1893, Art. 19 of the by-laws was amended, so that "only one half of the receipts of the association in any one month" shall be applicable to the payment of claims.

Art. 39, of amendments to the by-laws, which was adopted on January 12, 1895, provides as follows: "All certificates for withdrawal must be filed with the secretary of the association, at the home office, properly receipted, and thirty days' notice of intention to withdraw may be required to be given therewith. Upon the filing of notice of withdrawal the payment of dues on the shares shall cease, and the withdrawal value thereof shall be calculated as of the date of the filing of such notice, but no interest upon the withdrawal value of shares shall be paid. Payments shall be made in the order of the applications for withdrawal, but the association shall not be required to pay out on withdrawing any matured stock more than one half the amount received from dues and stock payments in any month. The board of directors may apply any portion of the entire income of the association to the payment of withdrawing members whenever in their judgment they shall deem it necessary and proper. A withdrawal fee not to exceed two dollars per share may be charged upon installment stock, and may be deducted from the withdrawal value thereof."

On December 16, 1895, the plaintiff withdrew from the association and made demand on it for $ 300, and interest thereon at the rate of six per cent per annum from the date of his certificate. To this demand the association replied that the claim would be paid in its regular order. Afterward this suit was brought to recover that sum and interest. At the trial, upon the plaintiff resting his case, the defendant moved for a non-suit upon the ground, "that the plaintiff has not alleged and has not proven that there are any funds in the hands of the association, which under the articles of agreement, by-laws, and laws of the State of New York, are subject to and that can legally be withdrawn for the payment of this particular stock." This motion was overruled and judgment entered in favor of the plaintiff for the amount of his claim, and the action of the court in the premises is assigned as error.

It is not contended that any of the by-laws or amendments thereof are in contravention of the laws of New York, by virtue of which the defendant association exists, but it is claimed by the respondent that the amendments, above referred to, made after he became a member although before his withdrawal, do not apply to his case. He maintains that his contract must be construed in accordance with the by-laws which were in force when he became a member of the association unaffected by amendments or alterations made thereafter. We do not think this...