U.S. Supreme Court TREIGLE v. ACME HOMESTEAD ASS'N, 297 U.S. 189 (1936)

[Page 297 U.S. 189, 191]

Mr. Justice ROBERTS delivered the opinion of the Court.

This is one of five appeals1 from a decision of the Supreme Court of Louisiana,2 presenting the question whether certain provisions of Act No. 140, adopted by the Legislature of that state on July 12, 1932,3 are consistent with article 1, 10, and section 1 of the Fourteenth Amendment, of the Constitution of the United States.

Prior to the adoption of Act No. 140 the laws of Louisiana provided that every stockholder of a domestic building and loan association should have the right to withdraw as a member upon filing a written notice of intention so to do; and thereupon to receive the amount of his investment and a share of the profits. Every association was required to keep a register, in which notices of withdrawal were to be entered in the order of presentation; and to pay withdrawals in that order. If the proportion of the association's income ordinarily made applicable to the demands of withdrawing members was insufficient to pay all such demands within sixty days from date of notice, one-half of the association's receipts was to be set apart to liquidate such members' claims, until all deferred claims were paid. [Footnote 4]

[Page 297 U.S. 189, 196]

the distribution thereof amongst creditors and members. Other sections deal with these matters. [Footnote 5] Section 54 merely changes the order of payment of those entitled to withdraw their investments. The section effects no reduction in the amount of the debt, no postponement of payment of the total, but a redistribution of the proportions to be paid to individuals. The provision is comparable to a statute declaring that whereas preferred stockholders heretofore have enjoyed a priority in the distribution of assets, in that respect they shall hereafter stand pari passu with common stockholders. Such an interference with the right of contract cannot be justified by saying that in the public interest the operations of building associations may be controlled and regulated, or that in the same interest their charters may be amended. The statute merely attempts, for no discernible public purpose, the abrogation of contracts between members and the association lawful when made. This cannot be done under the guise of amending the charter powers of the corporation. Compare Bedford v. Eastern Building & Loan Association, , 21 S.Ct. 597.

[Page 297 U.S. 189, 198]

assets in the interest of all members. They deprive withdrawing members of a solvent association of existing contract rights, for the benefit of those who remain. We hold the challenged provisions impair the obligation of the appellant's contract and arbitrarily deprive him of vested property rights without due process of law.

The judgment of the Supreme Court of Louisiana must be reversed. As Nos. 288, 289, 290, and 316 involve the same question as the instant case, a like judgment will be entered in each.

So ordered. Footnotes

Footnote 1 The companion cases are: No. 288, Treigle v. Thrift Homestead Association; No. 289, Treigle Sash Factory, Inc., v. Conservative Homestead Association; No. 290, Treigle Sash Factory, Inc., v. Union Homestead Associatio(; No. 316, Joseph Mitchell v. Conservative Homestead Association.

Footnote 2 181 La. 941, 160 So. 637, 98 A.L.R. 69. The other cases are reported in 181 La. 971 to 973, 160 So. 646 to 648, inclusive.

Footnote 3 Louisiana Laws, 1932, p. 454, No. 140.

Footnote 4 Act No. 120 of 1902, Louisiana Laws 1902, p. 195, as amended by Act No. 280 of 1916, Louisiana Laws 1916, p. 568.

Footnote 5 See sections 66 and 67. See, also, Act No. 44, Second Extraordinary Session of 1934, Louisiana Laws 1934, p. 156.

Footnote 6 Home Building & Loan Association v. Blaisdell, 290 U.S. 398, 54 S. Ct. 231, 88 A.L.R. 1481.

Footnote 7 Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 89 A. L.R. 1469.