State Etc. Bur. v. Pomona Etc. Assn.

37 Cal.App.2d Supp. 765 (1940) STATE BONDED AUDIT BUREAU, INC. (a Corporation), Appellant,

v.

POMONA MUTUAL BUILDING AND LOAN ASSOCIATION (a Building and Loan Association), Respondent.

California Court of Appeals.

January 30, 1940. Franz R. Sachse and John C. Campbell for Appellant.

Allard, Whyte & Brownsberger for Respondent.

Schauer, J.

This is an appeal by plaintiff from a judgment for defendant in an action by the assignee of a depositor in a building and loan association to recover from the association a sum equal to the difference between interest on his deposits at the rate called for by his certificates and the interest actually paid him at a lesser rate pursuant to a statute enacted during a period of national emergency. The certificates involved herein were all issued prior to March 10, 1933, and each declares that the "principal sum shall bear dividends from the date of issue hereof, at the rate of Six Per Cent (6%), per annum, payable Quarterly". [37 Cal.App.2d Supp. 767]

On March 10, 1933, there became effective the provisions of section 8.09 of the Building and Loan Association Act. (Act 986, Deering's Gen. Laws, 1933 Supp.) By the terms of that section "Notwithstanding anything to the contrary contained in this Act or in any investment certificate or certificate evidencing shares or in any agreement or elsewhere, no association shall hereafter at any time pay, credit, declare or allow any interest, or dividends in excess of the rate of four per cent per year in respect of interest or dividends which shall accrue or be earned during the emergency period (but only during such period) as hereinafter in this section 8.09 defined, upon investment certificates or shares, whether heretofore or hereafter issued. ... The commissioner is hereby authorized, however, during such emergency period, in the case of any or all associations, to increase such rate to a rate not in excess of five per cent per year, or to decrease such rate or to postpone the time for the payment of such interest or dividends, or any part thereof, or to decrease such rate and to postpone such time of payment, if he shall determine that such increase is reasonably justified in the interest of the certificate holder or shareholders, or is in the public interest, or that such decrease or postponement, or decrease and postponement, is reasonably necessary for the protection of the investment in such association of its certificate holders or shareholders, or is in the public interest." [1] The term "emergency period" as used in the section is defined as the period commencing with the effective date of such section (March 10, 1933) and ending September 1, 1935, unless sooner terminated by order of the commissioner as provided for therein. The amendatory act of March 10, 1933, also declared (sec. 10) the intention of the legislature to enact each portion of such act regardless of the constitutionality of any other portion thereof, that it was acting (sec. 11) under "the police powers of this State in view of the existing emergency", declared the act to be (sec. 12) an urgency measure and stated various "facts constituting such necessity." The facts so stated are ample, prima facie, to constitute a basis for emergency exercise of police powers. In 1935, prior to September 1st, another declaration of public emergency and necessity was made and the period of the emergency was extended to February 1, 1937 (likewise as the former subject to sooner legal termination by the Building [37 Cal.App.2d Supp. 768] and Loan Commissioner). Said section 8.09 requires the giving of a five days' notice of any change of interest or dividend rate and contains other provisions which are immaterial to our decision.