Court Opinion

ID: 5007457
Source: CourtListenerOpinion
Date Created: 2021-10-01 02:17:32.156814+00
Date Added: 2024-06-11T08:17:18.726353
License: Public Domain

On Motion for Rehearing.
In our original opinion we made this statement with reference to the organization of the Metropolitan Association: “Apparently that proceeding was under the provisions of article 881a — 21a, Vernon’s Annotated Texas Civil Statutes.” Appellants call attention to the fact that that article did not go into effect until September, 20, 1932, which was twelve days subsequent to the reorganization occurring on September 8, 1932. Accordingly, that statement in the opinion is withdrawn.
*435We quote from the original opinion as follows: “The minutes of the meeting of the shareholders recite that votes of those interveners were cast in favor of adopting the proposed plan, and no testimony is cited by appellant controverting that recital.”
The announcement that no testimony was cited by appellants controverting that recital is challenged, and in the interest of entire accuracy we will say that, while the minutes so recite, it further appears that some of the appellants were present and did cast their votes, but others were not present and affirmative votes were cast for them by the secretary, in accordance with the authority therefor given in the by-laws of the Association.
In order to meet several other complaints of inaccuracy in the opinion in which an attempt was made to give the substance of the contract of reorganization between the Continental Association and the Metropolitan Association, we will here quote from the contract itself as found in the statement of facts:
“I. For and in consideration of the sum of One Hundred ($100.00) Dollars cash in hand paid each to the other, the receipt whereof is hereby acknowledged and confessed, and the mutual advantages flowing each to the other, the said Associations do severally agree, bind and obligate themselves to do and perform each and every covenant, stipulation and prerequisite condition as hereinafter specifically set forth.
“II. The said Continental Association agrees, binds and obligates itself to transfer and assign, and to secure the transfer and assignment of its engagements, funds and properties, aggregating Four Million Thirty-five Thousand Two Hundred and Fifteen and 83/100 ($4,035,215.83) Dollars, as fully set forth and described in Exhibit ‘A’ hereto attached, the same as if fully written and described herein, to the Metropolitan Association.
“III. The said Continental Association further agrees, binds and obligates itself to guarantee and hold harmless the said Metropolitan Association from any loss accruing or occurring by, through or under any claim, debt or demand, now or hereafter arising or accruing against such engagements, funds and properties so assigned, as well as any losses that may occur by and through any suits now pending or that may hereafter be brought, debts, claims or demands affecting the engagements, funds and properties so assigned, including all costs, expenses and attorneys’ fees, and to secure the Metropolitan Association in such guarantee by a second lien upon all of the remaining assets, reserves and earnings of said Continental Association.
“IV. The Continental Association further agrees to execute and deliver to the Metropolitan Association its certain Deed of Trust First Mortgage Note of even date with said transfer, in the principal sum of One Million Eight Hundred Fourteen Thousand Eight Hundred and Forty Nine and 85/100 ($1,814,849.85) Dollars due and payable on or before five years after date, to the order of Metropolitan Building & Loan Association, bearing interest at the rate of six (6%) per cent per annum, payable monthly, both principal and interest payable at the offices of the Metropolitan Building & Loan Association in Dallas, Texas, as and when conversions of assets into cash justify partial payments, but in any event, in five equal installments, the first installment of, one-fifth being due and payable on or before the 8th day of September, 1933, and one installment of one-fifth, to become due and payable on or before the 8th day of September, 1934, and one installment of one-fifth to become due and payable on or before the 8th day of each succeeding September thereafter until the whole principal sum is paid; and all past due interest shall bear interest from maturity at the rate of ten (10%) per cent per annum; and secured by Deed of Trust constituting a first lien upon all the remaining assets, reserves and earnings of the Continental Southland Savings & Loan Association, other than those transferred to Metropolitan Association, and providing for accelerated maturity and attorney’s fees; such Deed of Trust to carry all the usual terms and conditions as to insurance, taxes, and other like covenants.
“V. The Continental Association further agrees to execute and deliver to the Transfer Agent, its several drafts and/or checks, drawn in favor of its respective shareholders for the sum and in the amount of their respective cash dividend payments, provided for in the plan of August 10, 1932, at $7.00 per $100.00 paid in on said stock, for early distribution, to be delivered to such shareholders as and when/their old stock is delivered for cancellation, and to further deliver to such Transfer Agent either its new certificates in lieu thereof, or its' certificates and the certificates of the Metropolitan Association, dependent upon whether such shareholders accept under the pro*436posed plan or whether they remain as shareholders solely in the Continental As? sociation, all as hereinafter fully provided, and to assist in every way such Transfer Agent in effecting, as speedily as possible, the consummation of the plan.
“VI. The Continental Association further agreed that in the event any shareholder or shareholders of the Continental Association ‘should fail or refuse to submit their stock for transfer, thereby failing and refusing to accept the Metropolitan Building & Loan Association stock and the terms of the proposal plan mailed to all stockholders of record of said Continental Association on August 10, 1932, on or before September 1, 1933, that in each and all of such cases the Metropolitan Building & Loan Association shall cancel any such undelivered stock and credit the amount thereof on the note above described, provided, however, that all stockholders of the Continental Association as of September 1, 1932, to whom the Metropolitan issues its stock shall be entitled to and shall receive any dividends declared on the Metropolitan stock so issued to them, until they have ■specifically refused to accept such stock.
“Should any stockholder or stockholders ■of the Continental Association as of September 1, 1932, specifically refuse to accept such Metropolitan stock, then and in that •event, dividends declared on the Metropolitan stock so refused, shall be either paid to the Continental Association or applied as a credit on the above mentioned note, as ■determined by the Board of Directors of said Metropolitan Association.
“Should any shareholder of the Continental refuse to accept stock in the Metropolitan Association, as outlined in plan of August 10, and as per copy attached and marked Exhibit ‘B’ for identification, then said shareholder shall participate in distribution made to shareholders from the proceeds of assets converted into cash on the basis of the write-down value of his shares, less the cash dividend paid, as herein provided, as compared with the $14.25 interest in said shares, after payment of dividend .and write-down to shareholders accepting said plan. In such wise all payments to •Continental shareholders shall be equally pro rated and neither accepting nor refusing shareholders enabled to receive a preference, but to share and share alike.
“VII. The Metropolitan Association agreed to accept the above assets and note .and.to issue its Class ‘A’ stock therefor in the amount of Three Million Nine Hundred Forty-five Thousand Two Hundred Fifteen and 83/100 ($3,945,215.83) Dollars, which said stock shall be issued to each of the members of the Continental Association as of September 1, 1932, who do not refuse to accept same, and show credit as payments thereon, to the extent of $63.75 per each $100.00 book value of stock owned in the Continental Association before the 15% write-down in the stock liability has been applied, as ordered by the Banking Commissioner of Texas, on September 1, 1932, the $63.75 being the exact and proper proportion which the assets purchased and the note received by the Metropolitan Association, less reserve for dividends from July 1, 1932, to September 1, 1932, and other necessary reserves aggregating Ninety Thousand ($90,000.00) Dollars, bears to the book value of the stock held by such Continental Association shareholders. Should any Continental Association shareholder refuse to accept such Metropolitan stock and the terms of the proposal mailed on August 10, 1932, then an amount representing the proportion at the rate of $63.75 per $100.00 of the cash payments on such shares before the 15% write-down of stock liability of any and all of such shares so refused, shall be applied as a credit on the principal on the above mentioned note.
“VIII. The Dallas Bank & Trust Company of Dallas, Texas, shall be appointed Transfer Agent for all purposes contemplated under the plan and/or under this contract, and the Continental Association shall forthwith deliver to such Transfer Agent check for the cash payment and its new certificate, per copy attached and marked Exhibit ‘C’ for identification, reflecting the remaining interest of each Continental Association shareholder in its Association, and the Metropolitan Association shall deliver to such Transfer Agent the stock in the Metropolitan Association, all as provided for in the call of shareholders and plan submitted, dated August 10, 1932, and under this contract, so,that each Continental Association member shall receive the following amounts upon each $100.00 withdrawal value of stock in the Continental Association before the division or the write-down of the Continental Association stock accounts of both investor and borrower, as ordered by the Banking Commissioner. To illustrate—
“$7.00 cash;
“$63.75 Stock.in Metropolitan Building & Loan Association;
*437“$14.25 Stock in the Continental South-Land Savings & Loan Ass’n;
“$15.00 participation interest in the reserve of the Continental Southland Savings & Loan Association.
“The $15.00 participation interest in the reserve mentioned above is to be included in the stock certificate of $14.25. The Metropolitan Association will also deliver to the Bank Signature cards to be signed by each shareholder accepting stock. The Metropolitan Association shall also deliver to the Transfer Agent printed copies of its ByLaws, one of which shall be delivered to ■each shareholder accepting the cash and stock, and who signs the signature card, all the above to be delivered to the shareholder only upon proper endorsement and delivery of the stock now outstanding in the Continental Association.
“IX. The Continental Association further agrees that its assets, reserves and earnings shall and will be distributed to its shareholders on and after the full consummation of this transfer and assignment, in the following mode and manner:
“(a) To the payment of all ordinary and necessary expenses of operation and maintenance, including repairs, insurance and taxes on all properties owned, as well as the setting aside of all necessary and/or legal reserves;
“(b) To the payment of the above described note;
“(c) To the payment, or thru deposits or reserves set aside in a special account therefor, to the satisfaction of any debts, claims, demands; suits or judgments under the guarantee to the Metropolitan Association, including all expense, court costs, charges, impositions and attorney’s fees; ■
“(d) Ratably to its shareholders, so that they may share and share alike until such shareholders, including investors and borrowers, shall receive par value on their stock prior to the write-down, subject to the terms herein set forth relative to shareholders who refuse to accept under the 'plan of August 10, 1932, and of the provisions ■of this contract.
“(e) Ratably to permanent stockholders.
“X. The Continental Association specially agrees, binds and obligates itself to take up all stock loans affected by the transfer and assignment, by charging same to the credit balances paid in on shares by said borrowers, and further specially agrees to pay cash as and when required for dividends to be paid out by the Metropolitan Association from July 1, 1932, to September I, 1932, on all re-issu< d shares represented by Class ‘A’ stock un ler this contract.
“XI. The said Continental Association specially recognizes, acknowledges and guarantees that this contract is entered into upon the express representation by the said Continental Association through its officers and directors, that there are no unknown or undisclosed liabilities as to the assets transferred hereunder, and that all liabilities are supported by proper bona fide assets to be verified by audit if requested or necessity requires, otherwise, sufficient additional assets will be likewise transferred to cover any shortage so obtaining.”
Any statements in our original opinion which are not in accord with the terms of that contract are hereby withdrawn.
Giving full force and effect to the terms of that contract as copied, we perceive no reason why our original judgment should be disturbed, and therefore appellants’ motion for rehearing is overruled.