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Kanengiser v. First Savings and Loan Association of Jersey City

Decided: June 9, 1958.

GEROLD KANENGISER, ET AL., PLAINTIFFS-APPELLANTS,
v.
THE FIRST SAVINGS AND LOAN ASSOCIATION OF JERSEY CITY, N.J., ET AL., DEFENDANTS-RESPONDENTS



Goldmann, Freund and Conford. The opinion of the court was delivered by Goldmann, S.j.a.d.

Goldmann

Plaintiffs appeal from a judgment of the Superior Court, Law Division, dismissing their complaint on defendant's motion for lack of jurisdiction over the subject matter.

Defendant, The First Savings and Loan Association of Jersey City, N.J., was formed in October 1943 under the then savings and loan statute of this State (L. 1903, c. 218;

R.S. 17:12-1 et seq. , as amended and supplemented), and is presently subject to the Savings and Loan Act of 1946 (L. 1946, c. 56, as amended). Plaintiffs, who were unsuccessful candidates for positions as directors of the association, instituted the present action on February 27, 1958, pursuant to N.J.S.A. 14:10-16, by verified complaint and order to show cause in the Law Division, R.R. 4:85, demanding judgment declaring illegal the actions of the association, its officers, executive committee and board of directors in using association facilities and funds to employ professional proxy solicitors to obtain proxies for the management slate of candidates for the four directorships voted upon at the election held at the annual meeting on February 20, 1958; declaring void the proxies so obtained; enjoining the association from continuing the annual meeting, which had been adjourned to March 6, 1958 to permit the counting of the proxy ballots; and restraining defendants from using association facilities and funds to procure any future proxies. It is unnecessary for the purposes of the present appeal to set out all the details of plaintiffs' complaints.

Upon the filing of the complaint the Law Division issued an order to show cause restraining defendants from conducting the adjourned annual meeting until further order of the court. The order further directed defendants to show cause on March 5, 1958 why the restraint should not be continued pending determination of the issues involved, the challenged proxies declared void, and the relief requested in the complaint granted. On the return day defendants filed affidavits in opposition to the order to show cause, and the court thereupon vacated the temporary restraint granted on plaintiffs' ex parte application. Thereafter, defendants filed their answer denying the allegations of impropriety or illegality directed toward their efforts to secure the election of their slate of candidates, and asserting that their nominees had been duly elected. By way of separate defense they claimed that (1) they acted properly and lawfully in employing professional proxy solicitors and in charging the costs to the association; (2) the expenses so incurred were

fair and reasonable; (3) the complaint fails to state a cause of action; and finally, (4) the complaint should not be entertained by the court because the Commissioner of Banking and Insurance had exclusive jurisdiction to hear the matter. By way of counterclaim defendants demanded judgment ordering plaintiffs to return a list of the association membership allegedly wrongfully acquired by plaintiffs and converted to their own use.

Shortly thereafter defendants moved for dismissal of the complaint on the ground asserted in the fourth defense -- that the Superior Court lacked jurisdiction over the matter, jurisdiction being vested exclusively in the Commissioner of Banking and Insurance. Following oral argument the court entered its order dismissing the complaint as well as the counterclaim, citing DeFazio v. Haven Savings and Loan Ass'n. , 22 N.J. 511 (1956), as controlling.

Only plaintiffs appeal, asserting that the Law Division did not lack jurisdiction and that this court should, in any event, assume original jurisdiction and dispose of the matter in the interests of justice. Defendants maintain that the trial court properly held that the Savings and Loan Act of 1946, as amended, vests exclusive jurisdiction in the Commissioner of Banking and Insurance, under the "broad language" of the court in the DeFazio case.

The Savings and Loan Act of 1946, N.J.S.A. 17:12 A -1 et seq. , represented the first complete revision of the law governing such associations since the act of 1903, which had several times been amended and supplemented and twice partially revised. The 1946 statute, as defendants point out, is a comprehensive regulatory enactment covering all savings and loan associations. It created "an all-embracive system for the government of a quasi -public agency, placing it under the control, supervision and protection of a state official [the Commissioner of Banking and Insurance], giving him power and imposing upon him a duty as to every item of action performed in its transactions of business, even to terminating its existence, * * *." DeFazio v. Haven Savings and Loan Association , above, 22 N.J. at page 519.

A complete reading of the act bears out the DeFazio characterization in large part. The formation, fiscal operations, investments, reorganization, dissolution and other administrative aspects of savings and loan associations are strictly regulated and subject to control by the Commissioner. But the legislation does not contain any provision which grants to this state official any general authority to adjudicate all controversies involving associations. Instead, throughout the act, there appear many separate and distinct provisions requiring approval and review of certain specific association actions. See, for example, N.J.S.A. 17:12 A -15 to 18 (hearing and approval by Commissioner of certificate of incorporation and original by-laws); N.J.S.A. 17:12 A -23 (same, change in by-laws); N.J.S.A. 17:12 A -24 (same, change of office location); N.J.S.A. 17:12 A -65 (empowering Commissioner to establish uniform rules and regulations for the operation of reward profit plans); N.J.S.A. 17:12 A -100 (review by Commissioner of association's failure to provide information requested by a member). Under Article XII (N.J.S.A. 17:12 A -92 to 100), entitled "Supervision," the Commissioner is authorized to issue orders to associations to discontinue "illegal or unsafe practices"; N.J.S.A. 17:12 A -94 authorizes him to revoke the association's authority to transact business, on a number of grounds therein set forth; and N.J.S.A. 17:12 A -95 to 97 provides for conservation orders and possession ...


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