allegations are taken is true we played certain facts and they're all in agreement that the charter of this particular student loan interstate had to charter provisions one provide provided for reserve surplus and distribution the  the briefs the interstate had a huge surplus twenty five million dollars had merged into another savings and loan with no excess surplus we gave allegations of fact that the compensation on the savings and loan so also no agreement that the charter is a contract we all agree to that thereafter i think the courts analysis goes awry this is a decision without any legal support they not only did not consider our facts as being true they didn't even consider that the the we did not plead a case based on ownership we put a case based on certain contractual provisions the court didn't address that at all in fact if you look at the captions of the opinion the the the court provided for example and roman to pay the member depositors ownership of interstate did not give them rights comparable to those of stockholders in the bank we didn't plead a case based on or our member deposit and and the amicus tried to inject that and there's even a reference to that in the opinion in a footnote but that's not the case there's no evidence of that whatsoever this we believe this is a unique charter defendants take take a thirty year old and sixty year old precedent that absolutely do not consider anything like this you not consider contractual rights under  when it describes the right or not the right but when it describes the decision to distribute surplus funds like in the last line it says i'm just reading it any of the association surplus funds may like may likewise be distributed and so surplus phrase says may but it says likewise may which references back to the shall but that's not the that's not the critical thing even under paulson which which rules on an i r s provision paulson notes that case notes that there may be rights in a in a voluntary liquidation of surplus so perhaps this is a voluntary liquidation it certainly was was a voluntary liquidation i'm saying that under the under the as the case developed it could be it could possibly be construed as a voluntary liquidation it was in fact at terminations of the charter th charter by operation of statute terminated when the merger was completed the charter had to be amended to adopt the the provisions in the other in the other savings and loan so there was a change that would have required a vote and they they didn't take that they didn't take that vote but rather they delivered a surplus surplus to the other savings and loan now there seeking damages and the court and the court in fact swept those away with the with the same provision we believe we believe that the that the decision to  deprived us is of the ownership interest in the surplus if we disagree with you on the surplus does your nd claim go away and i think your brief indicates you know i don't want to misquote you but i think it's that all of your claims are premised on the theory that you had an ownership interest whether it's under the charter under some contract theory if if if we disagree and that is your nd claim go away our claims are based on the fact that we have a contractual right and if we disagree to the other institution the surplus and i think the question is what's your damage for failure in denial of the right of our damage our damage our damage was if you had a right to vote you you had and you had an but the premise to his question was that you lose we don't read with the right to the surplus that's the premise to the question and is sure you're voting rights act all voting rights clean al or when when the when the case the save the loan was sitting there before the before the merger it had a twenty five million dollars surplus or back to the surplus again back to the surplus ok and it and i think it is going around in circles and i want to ask a they they basically set up another case in that event set up another case that that our our position was premised on and on a membership only were pleading a contract and we should have been permitted to go forward to that there is no there is no evidence of any adverse effect on the industry this is probably unique here because of this huge surplus so it's not a usual case i think it's never the list may be unique but in any event at this stage of the proceeding the the under the allegations taken is true and the in the contractual rights that we have pled in the admission that the charter is a contract and the case should have permitted been permitted to go forward  they please the court adrian van winkle on behalf of the your honor hit the nail on the head judge strasse the bank directors here had one hundred percent discretion to decide what to do with the surplus whether to retain it or whether  distribute it and plaintiffs ownerships arry turns that idea on its head this is a case about the positives in a mutual bank who are demanding a windfall distribution of twenty five million dollars from the surplus of the bank which the bank and its directors were generations to build up interstate was a pillar of its community and it was prudently managed by bank directors for over one hundred years during that time as plaintiffs of plaid there were never any distributions of surplus instead the bank directors exercise their discretion as was their right to retain the capital which the regulator encouraged them to do so that in our state with a safe and sound banking an institution and so that can continue to serve its community through economic rough economic patches like the great depression and like the great recession that we just and so i take it that the argument here is by executing merger did the charter allow depositors the right to vote on that because the st institution was well run and had a long history and i don't know that the record says what the nd one is with certain you can  damages as a result of the alleged breach of fiduciary duty as you are suggesting judge codes from that ledge denial of the right to it on the merger with respect to the right to vote on the larger the plain language of the charter and sectional levon does not say they get a right to vote on the merger and they conceded in their brief that they do not generally have a right to vote on the merger and i think in interpretating sectional levon we have to we cannot forget the regulated nature of this industry this is a highly regulated industry charter k revised the charter that they were operating under was a standard issue charter and every version of the standard issue charter as the o c c pointed out in it contains the same version of sectional levon on the voting rights and the drafted that language and it doesn't contain the word merger and it doesn't say that they get a right to vote on the merger and in fact elsewhere in the charter specifically in section three it does use the word merger so if the o c c had intended sectional levon to apply in the situation of a merger it would have said it we also know that the in its regulations and its guidance that it has never interpreted section eleven as covering a mutual to mutual merger that's just not something that the r c c who i said drafted that charter has ever interpret it as covering who want to disregard that entire regulatory structure and i think it's very important context in which this question comes up and the last point on that on voting rights is the notion that they would have voting rights in a mutual to mutual merger doesn't make sense because their ownership interest doesn't change what the supreme court said impulse in two owners and a mutual it's different from a mutual to stock merger where they may have voting rights but in a mutual to m what you have before and after is the same thing you have your deposit in the institution you have whatever stated interest rate the institution says it's going apply and you have that contingent interest in the surplus only in the event of a that basically you have these profits at the end of each period and you can put part of it in the general reserves you can and does that more directors you can but part of it into surplus and then anything that's left shall be distributed in the form of interest  that is that sort of i think he makes the point you need to distribute all of it including the surplus and i don't necessarily read it that way i agree with you judge what the charter says on the net earnings is that those shall be distributed but only after those credits to the reserves and the credits to the surplus and the board of directors it's made credit the surplus that permissive language is also in the net earnings provision of section ten and that leaves the board of directors complete discretion to say we aren't going to distribute any dividends we are going to instead take all of our net earnings and put them in a surplus and then the last the semi colon in lieu of provision and section ten also g directors complete discretion to decide whether to distribute the surplus a judge has i forgot to answer the nd part of your question about the lack of damages here on the right to vote you have more questions judged on the charter of three with respect to the lack of damages you guys again hit the nail on the head the every single great good you share at duty here rests on the idea that they had an ownership interest the only thing the plan seeking here is a distribution of the surplus capital that is true with respect to the alleged denial of their breach of fiduciary duty and so if they do not have that and the case law and the charter it's not unique it's a standard charter and provided all of the citations to the standard charters over the air charter k revised in the federal regulations that are attached to the o c c is bree it's the same charter and charter key revised the same charter that was that issue the supreme court has already looked at this exact charter and said that mutual depositors do not have a legal right to distribution of surplus and di retain their capital surplus so that they can weather economic storms and continue to serve their communities and plane of ownership theory rests that discretion away from directors and it gives it to depositors and that threatens the very survival of these institutions because they may not have enough capital in their store next time we have something like the great recession come around and with that your honor and mr further question on the opposing counsel referred to us wanting a windfall distribution of the surplus what they gave was the windfall distribution of the surplus to the other savings and loan and it's interest because what we're talking about is the when it went over there he got diluted yes our people were still depositors but the interest was diluted counsel i want to give you an opportunity to respond to the question i asked opposing counsel which is my understanding of this charter is when you have earnings after some period a part of in the board of directors can be part of it in the general reserves to put part of it in the surplus that's up to them and then anything that's remaining at the end of that period the net earnings gets distributed but that's that's up to the that's the only thing that shall be distributed that's and so and so the surplus though is subject to that last line that and they have the discretion to do it so the only thing that your clients had a right to was the net earnings not the  time forget the net earnings went into the surplus instead of being distributed as it should have been but but the but the the thing that's different here that that is is here we're talking not talking about normal surplus we're not talking about surplus that the minimum standards set by the o c c we're not talking about anything that was determined by the board of directors that it ought to be in reserve it was just it was twenty five million dollars in excess surplus beyond the regulatory requirements but certainly the board had the discretion to retain excess extra surplus isn't that right and that they they would have yes but they didn't have the discretion do was to give it away to somebody else in a windfall distribution to another savings alone without honoring the provisions of the contract that they were bound by and as for as for this being as for this being a standard form agreement there's no showing of that in the record and thing responded one of the thing in the in the opinion with respect to the no vote there is simply no authority whatsoever it's simply a merger isn't the same as those things listed although those things listed were everything that was involved in in this merger with this other institution the the the breach of fiduciary duty here was that they are to honor  contractual obligations and to and to distribute it to give them a right to vote and be if they had not given the right to vote and they'd said then they would have continued on as interstate federal savings and loan with their interest if they had decided to protest look of eight we would have gotten the surplus but what they couldn't do was give the surplus away without without  vote of the policyholders and there are the members and therefore they breached their fiduciary duty this is not going to put any dent in the industry by any means this is not a case that that is going to impair the ability of the industry to operate there still provision as you point out the that the that the board of directors has discretion to set its limits and and not distribute earnings or surplus if they feel it's necessary to protect here we're talking about the very unusual circumstance of of a savings and loan with twenty five million dollars in surplus earnings and there are no cases to support this opinion no authority becomes and says in says in the opinion that if this is based on membership membership it's not based on membership it's based on track shall obligations there's no other to which there's no question in the pleadings and we're at a motion to dismiss stage inappropriate at this stage it well thank you counsel cases been well argued and briefed it's now submitted and will issue an opinion and