Treigle v. Acme Homestead Ass 8212 290, 316

• Decision Date: 03 February 1936
• Docket Number: Nos. 287,s. 287
• Citation: 56 S.Ct. 408,80 L.Ed. 575,101 A.L.R. 1284,297 U.S. 189
• Parties: TREIGLE v. ACME HOMESTEAD ASS'N, and four other cases. * —290, 316
• Court: U.S. Supreme Court

297 U.S. 189

56 S.Ct. 408

80 L.Ed. 575

TREIGLE

v ACME HOMESTEAD ASS'N, and four other cases.^*

Nos. 287—290, 316.

Argued Jan. 9 1936.

Decided Feb. 3, 1936.

Messrs. Alex W. Swords and A. Giffen Levy, both of New Orleans, La., for appellant.

Mr. Delvaille H. Theard, of New Orleans, La., for appellee.

[Argument of Counsel from page 190 intentionally omitted] Mr. Justice ROBERTS delivered the opinion of the Court.

This is one of five appeals¹ from a decision of the Supreme Court of Louisiana,² presenting the question whether certain provisions of Act No. 140, adopted by the Legislature of that state on July 12, 1932,³ are consistent with article 1, § 10, and section 1 of the Fourteenth Amendment, of the Constitution of the United States.

Prior to the adoption of Act No. 140 the laws of Louisiana provided that every stockholder of a domestic building and loan association should have the right to withdraw as a member upon filing a written notice of intention so to do; and thereupon to receive the amount of his investment and a share of the profits. Every association was required to keep a register, in which notices of withdrawal were to be entered in the order of presentation; and to pay withdrawals in that order. If the proportion of the association's income ordinarily made applicable to the demands of withdrawing members was insufficient to pay all such demands within sixty days from date of notice, one-half of the association's receipts was to be set apart to liquidate such members' claims, until all deferred claims were paid.⁴

On May 19, 1932, appellant, as owner of fifty shares of full-paid stock of appellee, a building and loan association incorporated and domiciled in Louisiana, gave a written withdrawal notice. Thereafter the Legislature adopted Act No. 140 of 1932. By section 53 the directors of any association are authorized, before making any appropriation of receipts which may be applied to the liquidation of claims of withdrawing members, to use its receipts and funds for operating expenses, maintenance, and improvement of repossessed property, payment of obligations, and creation of cash reserves for future dividends. Section 54 provides that whenever, subsequent to the passage of the act, the proportion of receipts ordinarily made applicable to the demands of withdrawing members is insufficient to pay all such demands within sixty days from date of application for withdrawal, the applicant first on the list shall receive 25 per cent. of the amount due him; not less, however, than $500. As to any balance his claim is to be transferred to the end of the list and, except as hereafter noted, he is to receive no further payments until his name shall have reached the head of the list. Each pending application is to be similarly treated. New applications are to be placed at the foot of the list. The association may, however, in its discretion, pay in full any demand which amounts to less than $100 and may also pay not more than $100 per month to any applicant if the directors find his necessities call for such payment.

Section 55 gives the directors discretionary power to authorize an allowance on the amount of unpaid withdrawals under such terms and conditions as to the amount of individual withdrawals in view of the time the application has been on the list, or otherwise, as the board may decide; but the amount of such allowance is not to exceed 60 per cent. of the rate of dividend currently paid in cash on continuing members' shares. The allowance may be withdrawn at any time without affecting the association's right to continue to pay dividends on the shares of continuing members.

Section 56 empowers the directors to allocate, from receipts or other assets, sums to be paid withdrawing members; and supersedes the earlier provision for setting aside 50 per cent. of all receipts for this purpose. The section further provides that 25 per cent. of the gross receipts may be used for making loans notwithstanding the existence of a withdrawal list and that all, or any part, of the funds and current receipts may be expended for payment of debts, operating expenses, or dividends to continuing members.

The appellant brought suit in the civil district court for the parish of Orleans to restrain the appellee from complying with the foregoing provisions of Act No. 140. In his petition he recited his ownership of full-paid shares; his rights under the association's charter and by-laws and the statutes in force prior to the adoption of that act; his application on May 19, 1932, for withdrawal of his shares. He alleged that, subsequent to the date of his notice, other similar applications had been paid in full but that his had not been reached for payment; that, in violation of the Contract Clause and the Fourteenth Amendment of the Federal Constitution, Act No. 140 purports to destroy and materially change his vested rights as a withdrawing shareholder. A rule nisi issued, the appellee answered, and also excepted to the petition and demand for failure to state a right of action or a cause of action. Judgment awarding an injunction was reversed by the Supreme Court of Louisiana and the suit was dismissed.

The statute, in section 76, provides: 'Any person holding shares in an association * * * who attacks the constitutionality * * * of any * * * provision of this statute, must file suit to that effect against the association within ninety days from the time when the present Statute goes into effect; and said period of ninety days is now fixed as the term of prescription within which any remedy in that behalf must be instituted in the courts by any member or other person; and the failure to file such suit within that delay shall be deemed and held by all courts at all times thereafter as an acquiescence in * * * any * * * provision of the present statute and after such ninety-day period no further attack on the constitutionality of * * * any * * * provision of the present statute can be presented.'

The appellant instituted his suit within the ninety-day period. In his petition he alleged that he had no adequate remedy at law, and that he would suffer irreparable injury if the appellee's officers acted as permitted or required by the statute. The Supreme Court said: 'There is no doubt, however, that the Act of 1932 did prevent some of the many withdrawing shareholders in building and loan associations throughout the state from collecting the amount of their shares in full at the time when payment would have been made if this statute had not been adopted. We shall rest this decision, therefore, upon the proposition that the Act of 1932 did deprive the plaintiff of an advantage, and of a valuable right, which he enjoyed by virtue of having his name on the withdrawal list more than sixty days before the statute was adopted. The question, therefore, is whether the Legislature could deprive the plaintiff of the advantage and right which he enjoyed, without violating the constitutional limitation forbidding the passing of a law impairing the obligation of contracts, or divesting vested rights.'

The statute impairs the obligation of the appellant's contract and destroys his vested rights in contravention of article 1, § 10, and Amendment 14, § 1, of the Constitution.

The court below held the challenged sections of the act proper exertions of the state's police power, upon the view that state legislation to promote health, safety, morals, or...