Treigle v. Acme Homestead Assn.
297 U.S. 189 (1936)

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U.S. Supreme Court

Treigle v. Acme Homestead Assn., 297 U.S. 189 (1936)

Treigle v. Acme Homestead Association

No. 287

Argued January 9, 1936

Decided February 3, 1936*

297 U.S. 189

Syllabus

Prior to the adoption of Act No. 140 of 1932 by the legislature of Louisiana, building and loan associations in that State were required, whenever the income ordinarily applicable to the demands of withdrawing members was insufficient to pay all such demands within sixty days from date of notice, to set apart fifty percent of the receipts of the association to pay such withdrawing members, and payments were to be made in the order of presentation of notices of withdrawal. Act No. 140 abolished this requirement, and the amount to be allocated to payment of withdrawing members was by that Act left to the sole discretion of the directors, who were authorized to apply the association's receipts to the making of loans, to payment of old or new debts, to dividends to continuing members, or to the creation of a cash reserve for future dividends. A stockholder who, prior to the adoption of the Act, gave notice of withdrawal, but whose demand had not been paid, although similar applications had been paid, challenged the validity of the Act under the Federal Constitution.

Held:

1. The Act impairs the obligation of the stockholder's contract and destroys his vested rights in violation of § 10 of Article I, and § 1 of the Fourteenth Amendment, of the Federal Constitution. P. 297 U. S. 194.

Page 297 U. S. 190

2. The Act is not justifiable control or regulation in the public interest of the operations of building and loan associations, and is not a valid exercise of the police power. P. 297 U. S. 190.

3. As the Act does not purport to deal with any existing emergency, and the provisions respecting the rights of withdrawing members are neither temporary nor conditional, it cannot be treated as an emergency measure. P. 297 U. S. 195.

4. The challenged sections of the Act are neither intended nor adapted to conserve the assets of building and loan associations, but affect merely the rights of members inter sese, and in this respect are unreasonable and arbitrary interferences with vested contract rights. P. 297 U. S. 195.

5. The Act cannot be sustained as within the power of the State to amend the corporation's charter. P. 297 U. S. 196.

6. While building and loan associations, like banks and public service companies, are peculiarly subject to the regulatory power of the State, yet legislation affecting them must be confined to purposes reasonably connected with the public interest, as distinguished from purely private rights. P. 297 U. S. 197.

7. Though the obligations of contracts must yield to a proper exercise of the police power, and vested rights cannot inhibit the proper exertion of the power, it must be exercised for an end which is in fact public, and the means adopted must be reasonably adapted to that end, and must not be arbitrary or oppressive. P. 297 U. S. 197.

181 La. 941, 971, 972, 973, 974; 160 So. 637, 646, 647, 648, reversed.

Appeals from judgments of the state supreme court reversing in five cases judgments of the civil district court holding certain provisions of Act 140 of 1932 unconstitutional and enjoining building and loan associations from compliance therewith.

Page 297 U. S. 191

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