19 Utah 257 | Utah | 1899
The defendant is a building, loan, and saving association, organized and existing by virtue of the laws of New York. On November 10, 1892, the plaintiff became the owner of five shares of its fully paid-up stock, which were of the par value of $500, and were represented by a certificate bearing that date. The certificate provided, among other things, that at the option of the holder, the sum of $300 might be withdrawn any time after three years from date thereof, together with interest thereon, from date of certificate, at the rate of six per centum per annum. The by-laws at that time provided likewise, and in Art. 20 thereof contained a provision that “ payments of all claims upon certificates of shares shall be made within sixty days from the date of approval of the same
The articles of association and the by-laws contained provisions under which the by-laws might be amended from time to time, as might be necessary for the convenient and effective transaction of the business of the corporation. Art. 29, of amendments to the by-laws, which was in force at the time the plaintiff became a member of the association, reads: “ Members holding paid-up certificates may, upon the surrender of said certificates, withdraw the amount of the same, at any time after three years from date of issue, and before maturity, together with an annual interest of six per cent. Said interest shall be computed upon the withdrawal of paid-up certificates for even months only, and such paid-up certificates shall cease bearing interest after the date of such application for withdrawal.”
Afterward, on December 2, 1893, Art. 19 of the by-laws was amended, so that 11 only one half of the receipts of the association in any one month ” shall be applicable to the payment of claims.
Art. 39, of amendments to the by-laws, which was adopted on January 12, 1895, provides as follows: “All certificates for withdrawal must be filed with the secretary of the association, at the home office, properly receipted, and thirty days’ notice of intention to withdraw may be required to be given therewith. Upon the filing of notice of withdrawal the payment of dues on the shares shall cease, and the withdrawal value thereof shall be calculated as of the date of the filing of such notice, but no interest upon the withdrawal value of shares shall be paid. Payments shall be made in the order of the applications for withdrawal, but the association shall not be required to
On December 16, 1895, the plaintiff withdrew from the association and made demand on it for $300, and interest thereon at the rate of six per cent per annum from the date of his certificate. To this demand the association replied that the claim would be paid in its regular order. Afterward this suit was brought to recover that sum and interest. At the trial, upon the plaintiff resting his case, the defendant moved for a non-suit upon the ground, “that the plaintiff has not alleged and has not proven that there are any funds in the hands of the association, which, under the articles of agreement, bylaws, and laws of the State of New York, are subject to and that can legally be withdrawn for the payment of this particular stock.” This motion was overruled and judgment entered in favor of the plaintiff for the amount of his claim, and the action of the court in the premises is assigned as error.
It is not contended that any of the by-laws or amendments thereof are in contravention of the laws of New York, by virtue of which the defendant association exists, but it is claimed by the respondent that the amendments, above referred to, made after he became a member although before his withdrawal, do not apply to his case. He maintains that his contract must be construed in accordance with the by-laws which were in force when he
It is true, by-laws must not be unreasonable, or contravene the charter, or affect vested rights, or violate the law of the land, but subject to such restrictions, such a corporation may enact and adopt them whenever its operations and prosperity, in its judgment, may require them. Likewise, and for like reasons, the corporation may alter
When, therefore, the respondent became a member, he accepted membership with notice of these powers of the corporation. He thus became subject not only to the bylaws or. regulations then existing but also to such amendments as might be made thereto from time to time during the continuance of his membership, provided they were reasonable and not an infringement upon vested rights, or in violation of the charter or of any statute. The amendments in question in this case, that “only one half the receipts of the association in any one month shall be applicable to the payment of all claims,” and that “payments shall be made in the order of the applications for withdrawal,” do not appear to be unreasonable. Nor do they interfere with any vested right of the respondent or change the essential character of his contract with the association. They simply constitute an arrangement whereby the operations of the corporation can be continued and the sudden and unexpected withdrawal of the funds necessary to carry on its corporate business, avoided. They tend to secure the association against embarrassment and loss which might result at any time if withdrawing members could compel immediate payment without reference to the condition of the treasury, and absorb the money necessary to continue its operations. They apply to all members alike, and are calculated to enable the association to discharge its obligations to withdrawing members, and at the same time protect the interests of those who do not withdraw, and are thus not only reasonable but just and wise provisions. The remedy of the shareholder to enforce the antecedent contract is somewhat affected by the amendments, but the contract itself is
The statutory provisions are quite similar to and are authority for those of the amendments. They were in force when the respondent became a shareholder, and, as we have seen, must be regarded as a part of his contract with the association. He must, therefore, be charged with having had notice, when he accepted his certificate, that the association had power to enact by-laws, not inconsistent with the statute, while he remained a member. The
In Engelhardt v. Fifth Ward Ass’n, 148 N. Y., 281, Mr. Chief Justice Andrews, delivering the opinion of the court, and speaking of the powers of an association, under provisions of statutes similar to those herein construed, to pass by-laws, and of their effect as to members of the association, said: ‘ ‘ The member of an association accepts membership with notice of the powers thus conferred. He is subject not only to regulations existing when he becomes a member, but to such as may be enacted from time to time by the association within the scope of the power given by the statute. It may be admitted that the association could not under this power destroy the contract between it and the member. But the contract was made in law subject to the power of the association to enact at any time reasonable by-laws. It would not be reasonable to extend this power so as to authorize the association by a subsequent by-law to change the essential character of an antecedent agreement bétween a member and the association, as for example, that a withdrawing member should not be repaid his dues. But a law more or less affecting the remedy of the shareholder may be passed, and existing members will be bound, so far at least as they consented to the exercise of such a power when they became members.” Endlich on Bldg. Ass’ns, Secs. 114, 141, 143; Morawetz on Corp., Sec. 96; 1 Thomp. Corp., Secs. 1136, 1137; Pawlick v. Homestead Loan Ass’n, 37 N. Y. Sup., 164; Heinbokel v. Natl. S. L. & B. Ass’n, 58 Minn., 343; Bernard v. Tomson, 1 Ch. Div. (1894), 374; Rosenberg v. Northumberland B. Soc., 22 Q. B. Div., 373; Wilson v. Miles P. B. Society, id., 381; Towles.
Haying concluded that the respondent was bound by the by-laws hereinbefore considered, the next question is, Was it necessary for the plaintiff to allege and prove that at the time he commenced his action there were funds in the treasury applicable to the payment of his claim ?
We are inclined to answer this in the affh’mative, the complaint containing no allegation of bad faith, fraud, or neglect on the part of the association. When the respondent became a member, he knew or ought to have known the probable resources of the corporation, and that it was its design to invest some of its receipts in securities or otherwise out of which to make profits, and apply but a part of them in liquidation of claims. His contract of membership rendered him subject to the articles of association, by-laws, and statutes governing the corporation. He thereby became entitled to the advantages and benefits, and also subject to the liabilities and disabilities of a member. He paid his dues in accordance with his contract, and only in accordance with his contract can he reclaim them. It is true, when he withdrew he ceased to be a member, and ceased to be longer subject to the advantages or liabilities of a member. He then assumed the róle of a creditor having a claim still subject to his antecedent agreement, but he was not in the position of a general outside creditor who might enforce his claim without reference to any regulations of the association. The respondent’s claim can be enforced only with reference to his membership, his contract with the association being still binding upon him with respect to the collection of the debt. His right to withdraw and to recover the money he had paid into the treasury exists only by virtue
We are aware that the authorities upon this question are not all harmonious, but we think those which support the conclusion reached herein rest upon the better reason.
The case must be reversed with costs, and remanded, and as it is not shown whether or not the association has available funds to pay the respondent’s claim, the court may permit amendments to the pleadings, and upon failure of amendment to the complaint dismiss the action.
It is so ordered.