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Matter of Veloso

Decided: December 19, 1966.

APPLICATION OF ALFRED B. VELOSO AND JOHN D. GODINHO, MEMBERS OF PENN SAVINGS & LOAN ASSOCIATION OF NEWARK; UNDER N.J.S.A. 17:12B-118 TO 125, ETC. ALFRED B. VELOSO AND JOHN D. GODINHO, APPELLANTS, AND PENN SAVINGS & LOAN ASSOCIATION OF NEWARK, RESPONDENT


Sullivan, Kolovsky and Carton. The opinion of the court was delivered by Sullivan, S.j.a.d.

Sullivan

This is an appeal from the decision of the Commissioner of Banking and Insurance upholding the refusal of a state savings and loan association to grant an application filed with the association by one of its members to have the association mail to its membership a proposed communication. The proposed communication, in substance, notified the membership that four persons had been nominated as candidates for directors of the association and solicited voting proxies on behalf of such candidates.

Respondent Penn Savings & Loan Association of Newark (association) is a duly incorporated state association operating

under the Savings and Loan Act (1963), N.J.S.A. 17:12B-1 et seq. Inter alia, the act provides that each director of a state association shall be a citizen of the United States and shall be a member of the state association; he shall have such other qualifications and meet such eligibility requirements as this act and the by-laws provide; members of the association may vote by written proxy if the by-laws so provide.

The revised by-laws of the association provide that directors shall be elected at the annual meeting of members in each year; no director shall be eligible for election unless he shall have been nominated in writing by a member and the nomination filed with the secretary at least 30 days before the annual meeting; members may vote at any meeting of the association, either in person or by proxy; the date of the annual meeting shall be the second Tuesday of February in each year at 3 P.M. at a place to be designated by the board of directors.

The instant litigation has the following background.

The 1966 annual meeting of the association was scheduled to be held on February 8, 1966, at which time the terms of four directors of the association, Harry C. Wuethrich, Arthur P. Musialowicz, Charles Grimm and Frank Pachana, were due to expire. On December 4, 1965 these four directors were nominated to succeed themselves as the management slate for directors. Along with the notice of the 1966 annual meeting, which was sent to each member, was enclosed a solicitation of proxies for the election of the management slate.

On January 7, 1966 Rose A. Leonardis, a member of the association, nominated in writing James P. Lordi, Anthony Pazos, John Padavano, Jr. and John D. Godinho as candidates for the four directorships and filed such nomination with the association.

Under the Savings and Loan Act (1963), N.J.S.A. 17:12B-117, the relation of a state association to its members is considered confidential and no state association shall

disclose or be required to disclose a list of its members. Section 118 provides that a member desiring to communicate with other members of his association shall file an application in writing with the association stating the reasons for and the purpose of his request, which request shall be accompanied by a complete copy of the proposed communication. Section 121 provides that if the state association fails to grant the request within ten days, the applicant may, within an additional ten-day period, apply to the Commissioner of Banking and Insurance for an order requiring the state association to do so. Sections 122 through 124 establish a procedure for a hearing before the Commissioner and a decision by him. If the Commissioner finds that the application is made in good faith and that to grant the application would be in the best interests of the state association and its members, the Commissioner shall order the state association to prepare and mail the communication in whole or in part at the applicant's expense. There is no specific provision in the act relating to communications concerning candidacies and elections.

By letter dated January 17, 1966 Alfred B. Veloso, a member of the association, filed an application with the association to have a proposed communication sent to its members. The proposed communication read as follows:

"Dear Member:

As you probably know there are four vacancies on the Board of Directors of Penn Savings & Loan Association. These vacancies are to be filled at an election to be held on February 8, 1966.

Four candidates have been nominated who are well known to you, who live in the Ironbound and who are equipped by training and experience to ...


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