White v. Wogaman

• Decision Date: 24 February 1936
• Docket Number: Civil 3656
• Citation: 47 Ariz. 195,54 P.2d 793
• Parties: Y. C. WHITE, Superintendent of Banks of the State of Arizona and Receiver of First National Building and Loan Association, Appellant, v. CARMON WOGAMAN and MARION WOGAMAN, Appellees
• Court: Arizona Supreme Court

54 P.2d 793

47 Ariz. 195

Y. C. WHITE, Superintendent of Banks of the State of Arizona and Receiver of First National Building and Loan Association, Appellant, v. CARMON WOGAMAN and MARION WOGAMAN, Appellees

Civil No. 3656

Supreme Court of Arizona

February 24, 1936

APPEAL from a judgment of the Superior Court of the County of Maricopa. M. T. Phelps, Judge. Judgment reversed and case remanded with instructions.

Mr John L. Sullivan, Attorney General, and Mr. Allan K. Perry Mr. Evo De Concini and Mr. W. Francis Wilson, Assistants Attorney General, for Appellant.

Mr. R G. Langmade, for Appellees.

OPINION

LOCKWOOD, C.J.

This is an action by Carmon and Marion Wogaman, hereinafter called plaintiffs, against Y. C. White, hereinafter called defendant, as superintendant of banks of the state of Arizona and thereby ex-officio receiver of First National Building and Loan Association, a corporation, hereinafter called the company, to recover from him the sum of $6,000 together with interest thereon, which it is alleged the company owes to plaintiffs. A judgment was rendered in favor of plaintiffs, whereupon this appeal was taken.

There is little, if any, conflict in the facts necessary for the determination of the case, and we state them as follows. The company was organized under the laws of the state of Arizona in November, 1925. Thereafter, and on May 15, 1926, it filed with the Arizona Corporation Commission amended articles of incorporation which were, in fact and law, a reorganization under the provisions of chapter 76, Session Laws 1925, hereinafter called the act. Before the adoption of this act, there was no special provision of the Arizona law explicitly defining building and loan associations, and regulating their organization and operation, though there were a number of sections of the 1913 Code providing for the manner in which certain phases of their business should be conducted. The act defines building and loan associations as follows:

"Building and Loan Associations are defined hereby to be corporations, societies, organizations or associations having for their object the accumulation by the members of their money by periodical payments into the treasury thereof, to be invested, from time to time in loans to the members upon real estate for home purposes."

It then requires that their articles of incorporation shall contain, among other things, the following provision:

"3. The amount of the par value and the kinds of stock that the association will issue."

Nowhere in the act is there any express authority given such associations to borrow money from nonmembers for any purpose whatsoever, nor are they authorized to do any acts which would necessarily require such borrowing. The articles of the company therefore stated:

"... The amount of the capital authorized, shall be twenty million dollars, which shall be divided into three classes of stock, which classes are particularly described as follows, to-wit:

"Class 1. Expense Guarantee (Guaranty) Stock,

"Class 2. Permanent Reserve Guarantee (Guaranty) Stock,

"Class 3. Investors Guaranteed Dividend Stock.

"(a) The expense Guarantee Stock shall consist of fifty thousand shares of the par value of one dollar per share, which shall be paid for as subscribed for at the rate of one dollar cash per share,...

"(b) The Permanent Reserve Guarantee Stock shall consist of two hundred fifty thousand shares of stock of the par value of one dollar per share, which shall be paid for as follows: ...

"(c) The Investors Guarantee Dividend Stock shall consist of one hundred ninety-seven thousand shares of the par value of one hundred dollars per share, payable by the subscriber in one installment, or on such suitable installment plans as the Directors of this corporation may, by resolution, provide....

"All stock of the Association may be sold from time to time by the board of directors, who shall provide and issue certificates therefor."

In addition, article 9 thereof reads as follows:

"The highest amount of indebtedness or liability, direct or contingent, to which the corporation is at any time subjected shall never exceed the liability authorized by law."

The by-laws also limited the capital stock of the association to the three kinds above described, and provided somewhat elaborately for the methods of issuing the "Investors Guarantee Dividend Stock." The company was taken over by defendant as an insolvent association on April 7, 1934. Prior to that time, it had collected from various investors some $2,000,000, and some ten or eleven different forms of certificates purporting to be contracts between these investors and the company, defining their respective rights, were issued, aggregating over $1,850,000 book value at the time of the insolvency. Plaintiffs held two so-called "coupon certificates," on which this suit is brought. These certificates, not including the coupons attached thereto, read as follows:

"United States of America

"Number A3-606

$3,000.00 Dollars

"First National Building and Loan Association Incorporated

"Investor's Guaranteed Dividend Stock Coupon Certificate

"For value received, the First National Building & Loan Association promises to pay Carmon or Marion Wogaman of Phoenix, Arizona, or the registered owner hereof, at the expiration of ten years from the date of this certificate, upon its presentation and surrender to the Association, at its office in the City of Phoenix, State of Arizona, $3,000.00 in legal tender money of the United States of America, with interest thereon, at the rate of seven per cent per annum, from date hereof, payable semi-annually, at the office of the Association, in the City of Phoenix, State of Arizona, on presentation and surrender of the annexed coupons, as they severally become due.

"The First National Building and Loan Association reserves the right, on or after the expiration of five years from the date hereof; to pay this certificate, on any interest payment date, upon mailing to the recorded owner, written notice, six months prior thereto, and thereupon, said principal sum shall become due and shall be paid upon presentation and surrender of the certificate and all unpaid coupons, to the Association, at its office, in the City of Phoenix, and it may be surrendered after two years from date of issue, at the option of the recorded owner hereof, upon six months' notice, interest to be paid to date of withdrawal...."

Upon the back was found this indorsement:

"Security: As security for the performance of the obligations of the Association hereunder, the Association will hold intact, subject to the examination and inspection of the State Banking Departments, first mortgages on improved real estate, in an amount equal to at least one hundred per cent of its liability hereunder."

There were outstanding certificates substantially like plaintiffs' aggregating about $200,000 face value, but the great bulk of the certificates issued by the company were substantially in one of the two following forms:

"Maturity Value

Certificate No.

"First National Building and Loan Association

"[Seal.]

"Phoenix, Arizona

"Serial Date

Number Units

"Installment Accumulative Certificate

"Investors Guarantee Dividend Stock

"This is to certify that of is the original recorded owner of the above numbered Installment Accumulative Certificate issued by the First National Building and Loan Association of Phoenix, Arizona, of the value when matured of $ ; that in consideration of the payment by the recorded owner hereof, his heirs or assigns, to the First National Building and Loan Association at its office in Phoenix, Arizona, of $ monthly in advance for months from serial date hereof, the First National Building and Loan Association promises to pay to the then recorded owner hereof, at the expiration of said period, upon presentation and surrender of this certificate, properly endorsed to the First National Building and Loan Association, at its general offices in Phoenix, Arizona, Dollars, legal tender money of the United States of America...."

"Maturity Value

Certificate No.

"First National Building and Loan Association

"[Seal.]

"Phoenix, Arizona

"Serial Date

Number Units

"Installment Accumulation Certificate Fully Paid.

"This Is To Certify That of is the recorded owner of the above numbered fully paid accumulation certificate, issued by the First National Building and Loan Association of Phoenix, Arizona, of the value when matured of $ .

"That in lieu of and in full payment of the cash withdrawal value of an Accumulative Investors Guaranteed Dividend Stock Certificate of the same number as shown above, the First National Building and Loan Association promises to pay, at the expiration of months from serial date hereof, to the then recorded holder of this certificate, at its offices in Phoenix, Arizona, the sum of $ in legal tender money of the United States of America...."

The blanks as set forth above were filled in in an appropriate manner. Of these certificates an aggregate of some $1,300,000 book value was outstanding. Some of these last two classes of certificates had indorsed on them the security clause found on plaintiffs' certificates, and some did not. There was never, however, any segregation of securities made by the company in accordance with the security clause above for any of the certificates issued by it.

Plaintiffs had paid to the company the sum of $3,000 each for their two certificates above referred to, and had drawn the interest provided by the coupons attached to the certificates several times before the company became insolvent. The receiver admittedly had in his hands, at the beginning of the insolvency, a sum of cash amply...