State ex rel. Johnson v. Southern Building & Loan Ass'n

31 So. 375, 132 Ala. 50, 1902 Ala. LEXIS 22
CourtSupreme Court of Alabama
DecidedJanuary 15, 1902
StatusPublished
Cited by9 cases

This text of 31 So. 375 (State ex rel. Johnson v. Southern Building & Loan Ass'n) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Johnson v. Southern Building & Loan Ass'n, 31 So. 375, 132 Ala. 50, 1902 Ala. LEXIS 22 (Ala. 1902).

Opinion

TYSON, J.

— This is an information in the nature of a quo warranto filed under section 3417, et seq. of [53]*53the Code seeking to forfeit the charter of the Southern Building & Loan Association, a corporation organized under the general laws of the State. The petition is filed in the name of the State on the relation of Thomas L. Johnson, and by said Johnson in his own behalf. As originally framed it alleged numerous conclusions of law and fact, without separating them into counts or otherwise designating the several causes of action. This was informal.—Highland Ave. & Belt R. R. Co. v. Dusenberry, 94 Ala. 413; R. & D. R. R. Co. v. Weems. 97 Ala. 270. The petition, after demurrer sustained, was twice amended, and as amended, was separated into several counts. We need only consider it as last amended since it contains, in wlrnt was conceived to be better form, all that was originally alleged as grounds of complaint, with the exception of the alleged failure to make returns required to be made by building and loan companies to the State auditor by section 1129 of the Code. While this ground need not be separately discussed, since it can be disposed of on general principles applicable to other counts of the petition, yet it may not be amiss to call attention to the fact that section 1130 provides a penalty for the violation complained of.—State v. Real Estate Bank, 41 Am. Dec. 109.

As last amended the demurrer was sustained, and the plaintiff declining to amend further, the petition was dismissed. This action of the court is now assigned as error.

The first count of the petition as last amended, after stating the age and residence of the relator and the date of the formation of the corporation, with reference to the general statutes under which it was formed, charges, generally, that the corporation “carries on its business in said city and operates and enjoys said franchises; and abuses and non-performs the duties granted and assumed by said corporation under said franchise,” etc. If grounds o'f forfeiture of a charter may be stated thus generally there was no necessity of any attempt a¡t any further or more particular statements in the later counts, for this was certainly broad enough to cover any and every dereliction of duty and abuse of franchises. From ¡the very nature of the proceeding—one involving the life [54]*54of tlie corporation—it is evident that no such general statement will suffice. It fails in the prime 'purpose of written pleadings—the information to the defendant as ¡to the charges it is to meet and defend against.—Code, §§ 3428, 3285; Note to State v. Atchison R. R. Co., 8 Am. Stat. Rep. 181.

In the second count, the complaint is, that the corporation has enacted a by-law which contravenes the provisions of section 1135 of the Code. It is alleged in substance', that under the by-law, '¡the company may hold ¡the borrowing member, after default and when it forecloses the mortgage he has given, still bound for premiums, interest, fines and dues and fail to give him credit for payments madé as required by said section. Of what member this particular exaction was ever made or whether of all members in default, there is no averment. It is, rather, a statement of the general policy of the company, and of its assumption of a right to proceed in a manner violative of the statute, than of any actual, specific statement of such violation. It is quite clear that the facts are not stated with the precision required under general rules of pleading, to sav nothing of the strictness required in procedings of this character.

It is charged in the third count, that the corporation has been guilty of a violation of section 1136 of the Code, in that in its “January,' 1900, edition of its by-laws,” it failed to set forth “a definite withdrawal value of all shares of stock in said corporation upon which all dues and charges for one year or more have been paid, at not less than eight per cent per annum thereon for the average time such dues have been paid, less fines and penalties and a proportionate share of losses and expenses sustained.” It is not seen why these facts should, under the 'statute, have been made to appear in its “January, 1900, edition of its by-laws.” Time, it is averred the corporation was acting under “the by-laws above referred to,” but still no penalty was incurred for a failure to include the stated facts in any edition of those bylaws. Moreover, it was not the duty of the corporation to include a statement of all the facts postulated in the count, in its by-laws. The pleader complains that certain facts were not so included, which are mentioned in the [55]*55statute as a basis of calculation by which the facts which are to be included may be ascertained; as for instance, the calculation of interest, at a named rate and the mailing of the deductions mentioned, etc. But aside from these objections, the count was open to all that were properly taken to the preceding count. There is no averment that there were, in fact, any shares in existence, upon which “all dues or charges, for one year or more had been paid.” The duties prescribed by the ■statute do not attach under all conditions, but only when the status is such as to call it into exercise or operation. It cannot be assumed that such a condition exists;; on the contrary, the facts that show it must be clearly alleged.

The fourth and last of the counts is equally faulty in its failure to allege specific facts as distinguished from a general state or condition of corporate affairs or general plan of conducting its business. It attempts to draw a distinction between the treatment accorded by the corporation to investors in its stock and to borrowers — stating the general policy alleged to have been pursued by the company in the way of discrimination, but giving no instances in which that policy has been put into actual operation. It assumes, moreover, a knowledge by the court of many things which the court cannot judicially know. Was there, in fact, an issue of investment stock differing from ordinary stock? In what respect did it. so differ? What were its peculiar incidents upon which the corporation predicated the light or assumed right to prefer them in the manner stated? These and other things necessary to an adjudication of the question whether the preference was or was not justified, cannot be known ito the court unless alleged in the pleadings.

But there is another proposition upon which the action of the court in sustaining the demurrers must be affirmed, without reference to the form of the pleadings. While an information in the nature of a quo warranto is generally recognized as the appropriate proceeding of testing the right to exercise corporate functions and as the proper corrective for misuses or non-user or abuse, of corporate franchises, it is not for the commission of [56]*56every act ultra vires that a charter will be declared forfeited. The abuse must he willful, continued and relate to the essence of some franchise granted.—Note on page 180 of 8 Am. St. Rep., where all the cases are collated. See also State v. Tombeckbee Bank, 2 Stew. 30. It must also appear that the matter complained of is of such character, that no adequate relief can be obtained in any other mode. Courts arejaverse to declaring forfeitures, especially at the suit of individuals who show no interest in the matter complained of.

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Bluebook (online)
31 So. 375, 132 Ala. 50, 1902 Ala. LEXIS 22, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-johnson-v-southern-building-loan-assn-ala-1902.