Holabird v. Richardson

SHENK, J.

On January 23, 1933, the defendant, Friend W. Richardson, as Building and Loan Commissioner, pursuant to the power vested in him by the provisions of section 13.11 of the Building and Loan Act (Stats. 1931, p. 483), took possession of the business and assets of the defendant California Mutual Building & Loan Association.

[301]

On February 21, 1933, the plaintiff, as receiver of North American Associated Companies, a stockholder of said association, brought the present action against the commissioner and the association to enjoin the possession and further proceedings in relation thereto. The trial court sustained, without leave to amend, a demurrer to the plaintiff’s third amended complaint. From the judgment entered on the order the plaintiff appeals.

We may assume that the plaintiff, as receiver of the corporation North American Associated Companies, has authority to bring any action which the corporation for which he is receiver could bring. The action purports to have been brought pursuant to section 13.12 of the Building and Loan Act. The questions for determination are whether the plaintiff’s corporation, as a stockholder of the defendant California Mutual Building & Loan Association, under the circumstances alleged, may bring the action provided by said section 13.12 on behalf of- the association. The plaintiff also questions the validity of the provisions in question in relation to the due process clauses of the federal and state constitutions.

Section 13.11 of the act, among other things, provides that if it shall appear to the building and loan commissioner that any building and loan association is in an unsafe condition, or is conducting its business in an unsafe or injurious manner such as to render its further proceeding hazardous to the public or to any or all of its investors, or if he shall find that its assets are impaired to such an extent that, after deducting all liabilities other than to investors, they do not equal or exceed the sum of the value of its outstanding shares and investment certificates and the par value of its outstanding stock, the commissioner may forthwith demand and take possession of the property, business and assets of the association and retain possession until the association shall resume possession with the consent of the commissioner, or until its affairs be liquidated.