318 So. 2d 907 | La. Ct. App. | 1975
Lead Opinion
Defendant, a Louisiana non-profit corporation, in aid of financing the construction and equipping of a building for the use and enjoyment of its members devised a plan whereby a member would purchase a “25 Year Debenture Note.” Plaintiff, as a member purchased an instrument complete on its face which was delivered to him and read as follows:
“VISTA SHORES CLUB
New Orleans, Louisiana
25-Year Debenture Note
(8% per annum interest from maturity)
“VISTA SHORES CLUB, a Louisiana non-profit corporation, herein called the Corporation, for value received, hereby promises to pay Judge Oliver P. Schuling-kamp or order, the sum of $1,250 on or before April 15, 1985, with 8% per annum interest from maturity. The principal shall be payable at the office of the Corporation in New Orleans, Louisiana.
“This note is one of an issue known as 25-year debenture notes, duly authorized, in the aggregate principal amount of $375,000.00 and issued in denominations of $1,250, all of like date, tenor and maturity, exept the variations necessary to express the name of the payee and the number of each note.
“The Corporation reserves the right to pay all or any portion of the principal amount of this note at any time without making a similar payment or a pro rata payment upon any other note included in this issue of 25-year debenture notes.
“No recourse shall be had for payment of any part of the principal of this note against any incorporator, officer, director or any present or future member of this Corporation by virtue of any law, or by the enforcement of any assessment, or other
“In witness whereof the Corporation has signed and sealed this note on April 15, 1960.
VISTA SHORES CLUB
Attest:
/s/ Ted Drell_
Secretary
By /s/ John M, Key_
President "
Plaintiff resigned his membership on February 24, 1966. He demanded the return of the face value of the “debenture note.” Defendant refused and plaintiff filed this suit. The district court dismissed plaintiff’s suit. We affirm.
Plaintiff argues that the face value of the “debenture note” should be returned to him prior to maturity because (1) the membership in the defendant was increased from 500 to 600 and these additional members were admitted to membership in defendant without the requirement to purchase such a “debenture note” and thereby the negotiability of his “debenture note” was destroyed and his proportionate undivided ownership of the defendant was reduced; and (2) new members have benefited and been unjustly enriched at his expense. The arguments are without merit.
It is well settled that the term applied to an instrument does not necessarily determine its character. The instrument sued upon creates and acknowledges a debt; it is a simple acknowledgment or promise to pay like a promissory note. It confers no legal title or any ordinary right of ownership; except to the extent that plaintiff, as a member of the corporation, had a voice in the affairs of defendant, it grants him no legal right to interfere with the defendant’s control or use of its property. See: Carson, Pirie, Scott & Co. v. Duffy-Powers, Inc., 9 F.Supp. 199, 201 (D.C.1934); United Masonic Temple Corp. v. Harris, 242 Ill.App. 296 (1926); Lorimer v. McGreevy, 229 Mo.App. 970, 84 S.W.2d 667 (1935). The instrument is in the form required for it to be negotiable. LSA-R.S. 7:1. The lack of “marketability” does not adversely affect its character as a negotiable instrument. It was negotiable in its origin and continues to be so. LSA-R.S. 7:47. In no part of the preorganization documents is there anything to indicate that the instrument is of a character differently than we have described it, i. e., an unconditional promise to pay a debt in a fixed amount.
To the preorganization documents we look to ascertain the intent of the parties. While intent would not necessarily be controlling, the intent here seems clear and unambiguous. Our examination of the preorganization documents reveals no conflict with the denomination, date, tenor, maturity or rate of interest set forth in plaintiff’s “25-Year Debenture Note.” Though the preorganization data discloses that defendant hoped for a membership of 500, the “debenture” issued to plaintiff, clearly manifests it to be one of an aggregate issue of 300. Therefore, plaintiff, who voluntarily became a member of defendant and purchased the “debenture” has no cause now to complain of any increase in the membership.
New members of defendant or defendant have not been unjustly enriched by plaintiff’s loan of money to defendant which is evidenced by defendant’s obligation in the form of plaintiff’s “25 Year Debenture Note.” The provisions of LSA-R.C.C. Art. 1965 are inapplicable to the agreement clearly voiced by the parties in the terms of the “25 Year Debenture Note.”
Affirmed.
Concurrence Opinion
(concurring in the result).
Plaintiff’s suit for a refund of his $1250 purchase price for a debenture note issued by defendant in connection with his becoming a member of defendant is based upon the following: When he joined the club he understood that there would be no more than 500 members in the club. When the club subsequently increased the number of members his percentage of ownership in the club was diluted. Furthermore, while defendant did not require new members to purchase bonds similar to the one plaintiff purchased, the new members got the same benefits as did plaintiff, enabling the new members unjustly to enrich themselves at the expense of plaintiff. Finally, the failure of the club to require that the new members at least purchase outstanding debentures from old members had the effect of destroying the marketability of plaintiff’s debenture.
Plaintiff’s position is without merit because of the very wording of the charter of the club whose debenture he voluntarily purchased in connection with his application for membership.
The charter, adopted on March 26, 1959, provided that “the total number of members shall be set forth in the by-laws of this corporation.” It contained no provision establishing as a condition of membership that a debenture must be purchased. On August 11, 1959, at a general meeting of defendant corporation it was agreed that membership would be limited to 500 families, a $1250 bond would be offered to the members and the first 300 members would not be required to pay an initiation fee while the remaining 200 members would be required to pay an initiation fee of $250. Against this backdrop plaintiff applied for membership, and on April 7, 1960, defendant addressed to plaintiff a letter advising him that his application for membership had been approved and informing him:
“As you know, the club has a limited membership of 500 and there is a monetary advantage of being one of the first 300 members. We want to thank you for volunteering to purchase a bond from the club. Please forward your check in the amount of $1260, made payable ,to ‘Vista Shores Club’ to cover the bond in the amount of $1250 and semi-annual dues in the amount of $10. .
“It would be a pleasure to count you among our members.”
In due course plaintiff put up his $1250 and the debenture note was issued to him on April 15.
Plaintiff in his testimony acknowledged that he was not compelled to purchase the debenture note except insofar as he desired to be a member and he understood that he could not become a member unless he purchased the note. But by voluntarily becoming a member he subjected himself to the consequences of the charter and then existing by-laws. Since nothing therein required defendant to exact from future members the purchase of debentures plaintiff assumed whatever risk was involved to the value or marketability of his debenture should future members not be required to purchase debentures.
Furthermore, he assumed the risk of legal changes in membership requirements which might come about within the framework of the charter. The first formal bylaws limited the number of members to 500, exempted the first 300 members from an initiation fee and set a membership fee for others at $250. But on July 1, 1963, the members legally changed the membership clause of the by-laws to raise the number from 500 to 600. Thus, plaintiff by being among the first 300 members was exempt from the payment of an initiation fee, while those who came afterward were required to pay this fee.
There was no such connexity between his application for membership and pur
