Court Opinion

ID: 3240885
Source: CourtListenerOpinion
Date Created: 2016-07-05 16:14:20.140312+00
Date Added: 2024-06-11T12:56:46.129605
License: Public Domain

William L. Klein (appellant), a stockholder in Jefferson County Building  Loan Association (appellee), instituted this proceeding under the Declaratory Judgment Act, Gen.Acts 1935, p. 777, to test the constitutionality of certain features of the "Savings and Loan Act," approved September 21, 1939, Gen.Acts 1939, p. 616 et seq.
It appears from the complaint, admitted by the answer, that Jefferson County Building  Loan Association, organized under State Laws, was, for many years, actively engaged in conducting a Building  Loan Business, but having acquired a great number of pieces of real estate by foreclosure of mortgages given by borrowers, has not, for several years past, been engaged in making loans, or accepting money from investors, and has been conserving its resources, collecting its outstanding mortgages, and selling its real estate. This Association is not in position to qualify and be converted into a "Savings and Loan Association" under the new act, supra.
At the annual meeting of shareholders, January 9, 1940, at which shareholders holding more than two-thirds in value were represented, a resolution was unanimously adopted — "To comply with the provisions of the above mentioned Act of the Legislature of Alabama by forming a new corporation to take over the remaining assets of said Association in accordance with the provisions of Section 46 1/2 of said Act of the Legislature of Alabama, such resolution providing for the organization of said new corporation in either of the two methods provided for by said Act as might seem preferable to the officers and directors of said Association."
It is averred the directors propose to carry out this resolution; but if the act is unconstitutional, great confusion, expense, clouds on titles to real estate, etc., would be involved.
Plaintiff expresses grave doubt of the constitutionality of the "Savings and Loan Act" in so far as it purports to authorize the proposed action; and prays for a declaratory judgment adjudicating whether or not:
"1. Said Act of the Legislature of Alabama is constitutional insofar as the provisions of Article 9, and in particular Section 46 1/2 thereof, are concerned;
"2. Whether or not said new corporation can be formed under either or both of the methods provided for in Section 46 1/2;
"3. Whether or not, if said new corporation is formed under the second method provided for in said Section 46 1/2, such new corporation will be vested by operation of law with title to all of the property and assets owned by said Association at the time of the formation of said new corporation without the necessity of the execution and recording of a formal conveyance of such property and assets by Association to said new corporation."
The trial court, holding justiciable issues were presented, rendered his declaration, answering each of above inquiries: "Yes."
Touching inquiry No. 1, the constitutionality of Article 9, and particularly Section 46 1/2 of the "Savings and Loan Act," are challenged on the ground that these provisions are not germane to the *Page 463 
subject expressed in the title of the Act, and, therefore, violative of Section 45 of our Constitution.
The title of the Act is quite inclusive.
The subject of legislation is the creation, operation, supervision, termination and regulation of all associations accepting monies from the public for the promotion of thrift and the financing of homes; the operation, supervision, termination and regulation of all corporations heretofore incorporated under the laws of this State for the conduct of the same business.
It is designed to cover this field of legislation, repealing pre-existing statutes pertaining to Building  Loan Associations.
The body of the Act looks to the future conduct of this business by "Savings and Loan Associations," whose creation, management, supervision, final termination and liquidation are set forth in much detail, designed, among other things, to give holders of accounts the protection of insurance by the Federal Saving and Loan Insurance Corporation.
The Act makes provision for Building and Loan Associations incorporated and operating under former statutes to qualify and be converted into Savings and Loan Associations.
Article 9 (Section 46) requires steps taken to this end within a grace period of twelve months. All associations not qualifying under the new Act within twelve months, or such extended time as the Commissioner may allow not exceeding six months (Section 48), are to be liquidated in the same manner Savings and Loan Associations going out of business are to be liquidated (Section 49).
Section 46 1/2, inserted by amendment, empowers such Building and Loan Associations, with the consent of the holders of two-thirds of the book value of outstanding stock, to form a corporation under the general corporation laws of the State and merge the Building and Loan Association into such new corporation on specified conditions.
Said Section 46 1/2 provides, in the alternative, that the Building and Loan Association may become a new body corporate in a manner therein specified.
Such new body corporate shall by operation of law be vested with title to all the assets, real and personal, of the parent association.
The new corporate entity to be set up under either alternative of Section 46 1/2 is not to engage in a Building and Loan Business. They are designed to be liquidating agencies set up by those interested in the assets to be liquidated, rather than under the conservator and receivership features of the Act.
The liquidation of an association, which has gone out of business and the distribution of its assets among those entitled thereto, is a natural feature of such legislation, and provisions to that end, deemed advisable by the Legislature, are germane to the subject expressed in the title of this Act. Neither Article 9, nor Section 46 1/2 as a part of this Article, is violative of Section 45 of the Constitution. Ballentyne v. Wickersham, 75 Ala. 533; First Nat. Bank of Eutaw v. Smith, 217 Ala. 482, 117 So. 38; Heck, State Comptroller v. Hall et al., 238 Ala. 274, 190 So. 280; Yeilding et al. v. State ex rel. Wilkinson, 232 Ala. 292, 167 So. 580; Lindsay v. United States Savings Association et al., 120 Ala. 156,24 So. 171, 42 L.R.A. 783.
Touching inquiry No. 1, a further question is raised as to Legislative Power to put out of business corporations legally organized and in business before the passage of this Act upon failure of such associations to qualify under the new Act. No authority is cited in support of such contention.
This Jefferson County Building and Loan Association was admittedly chartered since Article XIV, Section 10, Constitution of 1875, now Section 238, became a part of our State Constitution.
The power to amend or repeal corporate charters, preserving a right of control by the creator over his creature, was thus written into charters thereafter granted. Building and Loan Associations are quasi public institutions. This furnishes the occasion for legislative regulation as experience shall dictate in the common interest. Skinner's Alabama Constitution, § 238; Alabama Traction Co. et al. v. Selma Trust  Savings Bank,213 Ala. 269, 104 So. 517; Mayor, etc., of Mobile v. Stonewall Insurance Company, 53 Ala. 570; Randle v. Winona Coal Co. et al., 206 Ala. 254, 89 So. 790, 19 A.L.R. 118; 9 Am.Jur. p. 101, § 8; 13 Am.Jur. p. 233, § 90; 12 C.J.S., Building and Loan Associations, p. *Page 464 
406, § 7 b; 19 C.J.S., Corporations, p. 1428, § 1654.
It is implied, as of course, that the corporate agencies set up under Section 46 1/2 shall undertake, as part of their purpose, a lawful liquidation, in which the property rights of all parties in the assets liquidated shall be conserved.
It is within legislative power to authorize the disposition of all the corporate assets by consent of stockholders holding two-thirds in value. It is not essential there should be unanimous consent. The rights of minority stockholders are to be protected the same as majority stockholders. Maben v. Gulf Coal  Coke Co. et al., 173 Ala. 259, 55 So. 607, 35 L.R.A., N.S., 396; 12 Am.Jur. p. 1113, § 1216; Note 79 A.L.R. 626; 19 C.J.S., Corporations, 1414, § 1642.
There was no want of legislative power to insert in Section 46 1/2 the following provision:
"The new body corporate shall by operation of law be vested with all the property and assets of such Building and Loan Association." Carpenter et al. v. First Nat. Bank of Birmingham, 236 Ala. 213, 181 So. 239; 13 Am.Jur. 1099, § 1196.
We limit our consideration, as always to constitutional questions presented by the record and briefs of counsel. Statutes are enacted by a co-ordinate department of the government, charged with the same duty to uphold the Constitution. Legislative acts are presumed to be constitutional.
The onus is on him who challenges their constitutionality to point out wherein some definite constitutional safeguard has been ignored, or some constitutional right infringed. Courts will not assume the role of legal adviser, search out, and consider every constitutional question which may be raised.
With this limitation, the decree or declaration of the trial court is affirmed as to all inquiries, 1, 2 and 3, above set out.
No question as to a justiciable issue being presented by the record was raised by either party. Without question this court, of its own motion, should determine any question of jurisdiction.
One of the most useful fields for the Declaratory Judgment Act is to settle questions touching the constitutionality of statutes. The consequences of proceeding under void enactments is thus avoided.
When one party is proceeding under the statute and the other has property rights which will be gravely affected by such proceeding, and the parties have a bona fide divergence of opinion as to the constitutionality of the Act, a justiciable controversy is presented. It is not a question of bold and dogmatic allegations of unconstitutionality.
At most these are matters of opinion between litigants, or their counsel, and can add nothing to the allegations of the pleading.
We are of opinion a justiciable issue is here presented, that the court below properly entertained the suit, and this court on appeal should consider and settle the constitutional questions duly presented. Declaratory Judgment Act, Section 2, Acts of 1935, p. 778; 16 Am.Jur. p. 296, § 24; Herbert v. Perry et al., 235 Ala. 71, 177 So. 561; Thompson v. Chilton County et al., 236 Ala. 142, 181 So. 701; Tuscaloosa County v. Shamblin,233 Ala. 6, 169 So. 234; Montgomery v. Montgomery, 236 Ala. 161,181 So. 92.
Affirmed.
GARDNER, THOMAS, and FOSTER, JJ., concur.
ANDERSON, C. J., and BROWN, J., dissent.
KNIGHT, J., not sitting.