Law Credit Co. v. Provident Mutual Building-Loan Ass'n

Plaintiff and defendant were found by the court both to be corporations, the latter organized under the laws of California as a building and loan association; that one Wadleigh, plaintiff’s assignor, was the secretary of the defendant corporation from its incorporation until the 19th of June, 1905; that prior to 1900 various persons had become

“This certifies that G. H. Wadleigh of Los Angeles, county of Los Angeles, state of California, has paid into the Maturity Reserve Fund of this Association, the sum of one thousand dollars, on five hundred shares, stock of this association, and that he is entitled to a credit of one thousand dollars on taking a like number of shares and paying one month’s dues thereon, and surrendering this receipt. This receipt is transferable.”

Afterward Wadleigh assigned this certificate to plaintiff, who brings suit thereon.

In 1907 sections 633 to 648a, Civil Code, went into effect, which provide that such loan associations should only have power by their by-laws to charge an entrance or withdrawal fee of not exceeding one dollar on each share, and a transfer fee not exceeding ten cents on each share; that no other fee, charge, or deduction shall be made, or permitted to be made, against any shareholder, or against his shares; that on the expiration of the notice required, the shareholder shall be entitled to receive the full amount paid upon the stock or investment certificate, exclusive of entrance or withdrawal fee, together with a proportion of the profits, and so forth. Under

It is insisted by appellant that on the findings of fget judgment should have been entered for plaintiff as prayed for in the complaint, and that said judgment for defendant is not supported by the findings. The precise questions involved upon this appeal were presented to the trial court on a motion to vacate the judgment and the entry of a judgment in favor of plaintiff. There is contained in the record an opinion of the trial judge in denying such motion, which upon examination seems to cover all of the points involved and to state concisely and clearly the reason why the judgment is supported by such findings. This opinion, which we adopt as the decision of this court, is as follows:

“Plaintiff in this action moves to vacate the judgment entered herein in favor of defendant, on the ground that the findings of fact do not support the judgment, but that upon said findings of fact a judgment should be entered in favor of plaintiff. If it were to be conceded that the receipt issued on the 25th of February, 1908, to plaintiff, wherein it is recited that plaintiff has paid into the maturity reserve fund of defendant corporation the sum of $1,000, is conclusive against any right in defendant to show the entire transaction which resulted in the issuance of its receipt, then the motion is well taken. The plaintiff’s assignor, G. H. Wadleigh, however, had been an officer of defendant association and was familiar with the entire transaction, which led up to the issuance of the receipt in question, and he was also familiar with the by-laws of the association and their various provisions at all times prior to the date of the receipt. The receipt was finally issued upon account of certain stock transactions had with the association by Wadleigh and partially by the assignors of Wadleigh. Wadleigh acquired stock of the association by assignment from holders thereof, and he in turn surrendered this stock, finally receiving the receipt, which upon its face recites that he has paid the sum of $1,000 on five hundred shares of stock of the association and that he is entitled to a credit of $1,000 on taking a like number of shares and paying one month’s dues thereon, and surrendering the

receipt. The $1,000 mentioned in the receipt was a part of the maturity reserve fund, which, under the by-laws of the association as they stood at the time of the issuance of the original stock acquired by Wadleigh, was to be retained by the association and was available only to be used as a credit on the purchase of new or additional shares. All contracts for the purchase of stock made at the time the original stock surrendered by Wadleigh was acquired were impressed with the condition declared in the by-laws that ‘the maturity reserve fund shall consist of an amount equal to two per cent of the matured value of all installment shares, and is taken from the first payment made. A member having paid this, and who is afterward compelled to withdraw, shall be allowed to renew his membership and mature his stock, his new share being credited with the amount so paid.’ Under this provision the association had the right to retain the two per cent mentioned, which was only available for use by the surrendering stockholder as a credit upon new or other shares of stock taken out by him. I do not think that the fact that the receipt was issued at a time when the by-laws were without such a provision, and the statute of the state made it illegal for such a deduction to be made on account of a maturity reserve fund, affects at all the question involved in this case. The condition made by the bylaws at the time the subscription for stock was taken became a part of the contract from which Wadleigh, or his assignors, had they continued as holders of stock, have no escape. If the plaintiff here has the right to demand and receive $1,000, which appears to be a-credit available to him, then there is no reason at all why each and -every subscriber for stock, who took out shares during the time that the by-laws provided for the withholding of the pereentum on account of maturity reserve fund, has not the right to make and enforce a similar claim. This I do not believe they are- entitled to do. The motion for a different judgment to be entered will be denied. ’ ’

Judgment affirmed.

Shaw, J., and James, J., concurred.

A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the .supreme court on January 27, 1911.