Law Credit Co. v. Provident Mutual Building-Loan Ass'n
Before: Allen
Synopsis
Building and Loan Association—By-laws—Maturity Reserve Fund —Credit on New Shares.—Where the by-laws of a building and loan association in force when certificates of stock were issued required a payment of two dollars per share into its maturity reserve fund, to be applied only as a credit on a new share of stock purchased, an assignee of five hundred shares of stock originally issued to members who have withdrawn, on which there was a credit of $1,000 in the maturity reserve fund, an assignable certificate of the amount of which was given after the passage of a statute changing the amount of the reserve fund, the assignee of such original certificates and assignable certificate cannot maintain an action to recover any part of such original maturity reserve fund contrary to the term of its creation.
Id.—Condition Made by By-laws Part op Contract.—The condition made by the by-laws when the stock was issued as to the reserve fund was part of the contract from which no subsequent assignee of the stock can escape.
Id.—Facts at Date op Receipt Showing Amount op Original Reserved Fund Immaterial.—The fact that at the date of the assignable receipt showing the amount in the reserve fund, the statute as well as the by-laws had been changed as to the amount of the reserved fund thereafter to accrue, cannot affect the questions involved as to the amount and conditions of the original reserve fund as fixed by the by-laws in force when it was created.
ALLEN, P. J.
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
[690]
members of said building and loan association, and while Wadleigh was secretary they desired to surrender their stock and accordingly delivered the same to Wadleigh, who thereafter made payments thereon of his own means, but carried the same on the books of the corporation in the names of the members. Wadleigh thereafter surrendered the stock so assigned to him and received the amount thereof, less two dollars per share retained by the corporation under its by-laws as a maturity reserve fund, by which transaction he profited to the extent of $12,000. Under the by-laws of the association it was stipulated that withdrawing members were entitled to a certificate showing the amount of this maturity reserve fund, and, if they were so advised, might thereafter subscribe for stock and be credited upon the dues with the amount of such certificate. Thereafter, Wadleigh made application to retain his membership in the corporation and mature his stock and returned said maturity reserve certificates, together with $200 in cash, the same being received by the association as five months’ advanced dues upon the new subscription, and in 1908 received back from the association the $200 paid and a maturity certificate as follows:
“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
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