The State ex rel. Great American Home Savings Institution v. Lee

• Decision Date: 08 July 1921
• Parties: THE STATE ex rel. GREAT AMERICAN HOME SAVINGS INSTITUTION et al. v. JOHN A. LEE, Supervisor of Building & Loan Associations
• Court: Missouri Supreme Court

233 S.W. 20

288 Mo. 679

THE STATE ex rel. GREAT AMERICAN HOME SAVINGS INSTITUTION et al. v. JOHN A. LEE, Supervisor of Building & Loan Associations

Supreme Court of Missouri

July 8, 1921

Peremptory writ issued.

Wilfley Williams, McIntyre, Hensley & Nelson for relators.

(1) The business of relator does not conflict with the laws and Constitution of this State, but, on the other hand is, in each and every particular, in full accord therewith. (a) The agreement and declaration of trust for the formation of the Great American Home Savings Institution is a lawful contract providing for the formation of a "voluntary association of unincorporated individuals" to do business in Missouri, under Section 10263, R. S. 1919. State ex rel v. Swanger, 190 Mo. 561; 4 Cyc. 304; Hammerstein v. Parsons, 38 Mo.App. 332; Missouri Bottlers' Assn. v. Fennerty, 81 Mo.App. 525; King v. Webb, 14 East. 406; Kuhlman v. Meyer, 50 Mo.App. 648; Muscogee Land Co. v. Hyer, 18 Fla. 419; Coleman v. Knights of Honor, 18 Mo.App. 195; Byrne v. Jones, 159 F. 321; Michod v. Gerod, 45 U.S. 503; Sec. 10234, R. S. 1919; Heard v. March, 12 Cush. 580; Townsend v. Goeway, 19 Wendall (R. I.) 427; Husey v. Arnold, 185 Mass. 202; Cross v. Jackson, 5 Hill, 478; Pittsburg Wagon Works Est., 204 Pa. 432; Hart v. Seymour, 147 Ill. 598; Kerrison v. Stewart, 93 U.S. 155; Silk Works v. Solomon, 4 Hun, 135. (b) It is true that relators have not complied with any of said statutes relating to limited partnerships, and this for the very simple reason that said association is in no sense a limited partnership. It would be very impractical if not impossible to carry on the business known as the building and loan association business under a limited partnership. Relators in the present instance are certainly not attempting so to do. Furthermore the limited partnership statutes do not prohibit the carrying on of any business but are merely permissive in that they grant certain privileges to those who undertake to operate thereunder and in compliance with said statutes. (c) Said association does not seek to exercise the powers of a corporation, is not a corporation, and it is therefore not required to comply with the laws concerning the organization of private corporations. Uncorporated associations may have and possess many of the incidental attributes of corporations. But incidental attributes, such as having a common name, stockholders, stock certificates, by-laws, directors, limited liability of stockholders or trustees, do not render such associations corporations, such privileges are not privileges belonging exclusively to corporations but are merely such privileges as have for many generations been held and possessed by individuals under and by virtue of their common law right of contract. Spottswood v. Morris, 12 Idaho 360; Hotel Company v. Jones, 177 U.S. 449; Warner & Ray v. Beers, 23 Wend. 101; King v. Webb, 14 East. 406; 4 Cyc. 304; Hammerstein v. Parsons, 38 Mo.App. 332; Missouri Bottlers Assn. v. Fennerty, 81 Mo.App. 525; State ex rel. v. Stead, 64 Mo.App. 28; Sec. 1186, R. S. 1919 (seventh clause). (d) The name "Great American Home Savings Institution" is not an imitation of the name "American Home Building and Loan Association." State ex rel. v. McGrath, 92 Mo. 358. (e) The business proposed to be carried on by the relators (as fully explained in the statement of facts) falls clearly within the provisions of said Section 10263. Relators having fully complied with the provision of said section, said section expressly exempts the relator association from complying with the remaining sections of said article. (3) Respondent's duties under Sec. 10263, R. S. 1919, being purely ministerial, he is without right or authority to raise said constitutional questions. State ex rel. Wiles v. Williams, 232 Mo. State ex rel. Railroad Co. v. Johnston, 234 Mo. 351; Smith v. State of Indiana, 191 U.S. 138; Braxton County Court v. West Virginia, 208 U.S. 192. (4) If the court should hold that respondent can raise the question then we most earnestly insist that Section 10263, does not in any manner violate any of the constitutional provisions now attempted to be raised by respondent. (5) Mandamus is the proper remedy. State ex rel. v. Cook, 174 Mo. 118; State ex rel. v. Johnston, 234 Mo. 356.

Jesse W. Barrett, Attorney-General, and Merrill E. Otis, Assistant Attorney-General, for respondent.

The questions raised by the pleadings are purely legal. The discussion of these questions in the brief filed in this case with leave of court by the amicus curiae is, from respondent's standpoint, so exhaustive and complete that respondent desires to submit the case upon that brief, hereby adopting it as a presentation of the points and arguments by reason of which he has refused to issue to relators a certificate to do business.

Alroy S. Philips and Lee B. Ewing, Amicus Curiae.

(1) The relator association is not a common-law trust. (a) Its directors take no title to its assets and the title is vested in the holders of the trustee certificates, who constitute its members. Douthitt v. Stinson, 63 Mo. 278; Coal Co. v. Bingham, 97 Mo. 196. (b) Its members are owners and masters of the capital fund, who are associated together by the terms of the agreement and are principals whose managing committee, or "directors," are "at all times subject to the control" of the members, and are agents and not trustees. Williams v Milton, 215 Mass. 8; Simson v. Klipstein, 262 F. 825. (2) The relator association must comply with the chapter on limited partnerships. (a) It is a partnership and its members are liable as partners. Williams v. Milton, 215 Mass. 1; Simson v. Klipstein, 262 F. 823; Laney v. Fickel, 83 Mo.App. 63. (b) It cannot limit the liability of its members without complying with the chapter on limited partnerships. Sec. 9240, R. S. 1919; Selden v. Hall, 21 Mo.App. 462. (3) The relator asociation is an unincorporated corporation which is subject to the chapter on corporations and cannot do business without being incorporated. Sec. 11, Art. 12, Mo. Constitution; Sec. 9722, R. S. 1919. (a) The power to be sued in its partnership name is not a power or privilege possessed by a partnership. Weldon v. Fisher, 194 Mo.App. 579. (b) The right to be sued in their own names, given by our statutes to unincorporated associations, is a sovereign grant of a power not possessed by partnerships. Sec. 1186, R. S. 1919; Spottswood v. Morris, 12 Idaho 375, 382. (c) See 9722, R. S. 1919, is itself a sovereign grant to voluntary associations of all of the powers of corporations save entity and the powers incident to entity. Secs. 9722, 9749, R. S. 1919; Williams v. Express Co., 195 Mo.App. 362; Weihtuechter v. Miller, 276 Mo. 329. (d) The Missouri doctrine is that the mere assumption of corporate powers, without a sovereign grant, brings an unincorporated association within the definition of a corporation. Williams v. Express Co., 195 Mo.App. 362; Weihtuechter v. Miller, 276 Mo. 322, 329. (e) Lack of entity brings relator association into such conflict with the requirements of the law that it must incorporate under it. Secs. 9734, 9735, 9742, 9749, 10,144, 10,159, R. S. 1919; Sec. 7, Art. 12, Mo. Constitution; Sec. 8, Art. 12, Mo. Constitution, Home Lumber Co. v. Hopkins, 190 P. 601; 11 C. J. 381. (4) Not being incorporated, the relator association has no legal entity or artificial personality, and cannot take title to or act as trustee of the loan and trust fund. Great Northern Hotel Co. v. Jones, 177 U.S. 449; Guild v. Allen, 28 R. I. 434; German Land Assn. v. Scholler, 10 Minn. 338; 5 C. J. 1343; Douthitt v. Stinson, 63 Mo. 268, 73 Mo. 199; Coal Co. v. Bingham, 97 Mo. 196; Reinhard v. Mining Co., 107 Mo. 624; Miller v. Risenberger, 144 Mo. 299; Benevolent Society v. Murray, 145 Mo. 628; Lumber Co. v. Oliver, 65 Mo.App. 435; Riffel v. Ozark L. & L. Co., 81 Mo.App. 177; Talbert v. Grist, 198 Mo.App. 495. (5) Relator association's plan of compensation for itself is contrary to equitable principles. (a) It is contrary to equitable principles for a trustee to solicit being made trustee and charge the settlor or beneficiaries with the expense of creating the trust. Trustees are only allowed compensation for expenses in administering the trust. 39 Cyc. 484. (b) It is also contrary to equitable principles for relator association to share in the profits of the loan and trust fund in which it has no interest, and an agreement to that effect will not be permitted to stand. 39 Cyc. 296; Kilpatrick v. Robert, 278 Mo. 265; In re Mays, 197 Mo.App. 565; 39 Cyc. 300, 301; Cornet v. Cornet, 269 Mo. 298. (6) Relator association is a bond investment company. (a) It is a corporation within the meaning of Sec. 10333, R. S. 1919, because that section is in the chapter on corporations, and the definition in Section 9722, applies to the whole chapter. Authorities cited under Point 3. (b) The business done by relator association is that done by bond investment companies. Sec. 10333, R. S. 1919; Pratt v. Livingston Mercantile Co., 111 Mo.App. 102; 9 C. J. 7, 8; 25 Cyc. 1636; Siever v. Inv. Co., 183 Mo. 41-45; United States v. McDonald, 59 F. 563; Glover v. St. Louis Mutual Bond Inv. Co., 138 Mo. 410. (7) The relator association is a co-operative association not excepted from the operation of the Co-Operative Act. (a) Relator association is not a building and loan association, because it is organized for profit and lacks the element of mutuality and the other features of a building and loan association. 9 C. J. 919, 921, 23; Section 10201 and the other sections of Article 9, Chapter 90, Revised Statutes 1919. (b) Section 10246, excepts only building and loan associations like those referred to and incorporated under Article IX of Chapter 90, R. S. 1919. Sec....