Decided July 24, 1940.
Building and loan associations — Reorganization plan disapproved by state superintendent — Reversal by Court of Common Pleas — Section 693-1, General Code — Writ of prohibition not issued, when.
Where an Ohio building and loan association submits a plan of reorganization upon order of the state Superintendent of Building and Loan Associations, and the same is disapproved, the Supreme Court will not issue a writ of prohibition to prevent a Court of Common Pleas from exercising the jurisdiction conferred by Section 693-1, General Code, to reverse the action of disapproval for good cause, when it does not clearly appear that such court is without jurisdiction over the subject-matter.
In this original action in prohibition, the relator, Charles S. Merion, as Superintendent of Building and Loan Associations of the state of Ohio, seeks a writ prohibiting the Court of Common Pleas of Tuscarawas county and E.E. Lindsay, as the judge thereof, from exercising jurisdiction in cause No. 24649 filed in that court by The Citizens Building Loan Company of Uhrichsville, Tuscarawas county, Ohio, as plaintiff, against the Superintendent of Building and Loan Associations of the state of Ohio, as defendant.
The petition herein alleges that an examination of The Citizens Building Loan Company, of Uhrichsville, in 1937 disclosed such potential losses as would cause a substantial impairment of capital. Wherefore, the company was formally restricted in its activities by the superintendent, and ordered to correct the existing condition.
Continuing, the petition avers that in February of 1938 a plan of reorganization purporting to be within the terms of Section 693-1, General Code, was submitted by the company to the superintendent and was by him disapproved and rejected for the reason that it changed the Uhrichsville institution from a building and loan association to a real estate and mortgage company, under a scheme contemplating self-liquidation over a period of years free from supervisory control.
Further allegations of the petition are that the company then commenced its action No. 24649 in the Court of Common Pleas of Tuscarawas county, to secure a reversal of the order of disapproval, the petition in that action containing a prayer for a temporary injunction, subsequently allowed, restraining the superintendent from interfering with the company or its activities or from filing any certificate in the office of the Secretary of State, pending the final determination of the cause.
A writ of prohibition is requested from this court by the superintendent, on the ground that the Court of Common Pleas of Tuscarawas county and its judge "do not, under the laws of this state, have any jurisdiction in said cause (No. 24649) over the facts pleaded and matters alleged in the petition filed therein or of the subject-matter of the action, and do not have general chancery or equitable jurisdiction" in such action, and that prohibition is the only adequate remedy available to the superintendent.
After certain formal admissions, the answer herein of E.E. Lindsay, judge, sets out that cause No. 24649 was purportedly filed in the Court of Common Pleas of Tuscarawas county by the building and loan company in accordance with the provisions of Section 693-1, General Code, and for the sole purpose of attempting to obtain in such court a reversal of the action of the superintendent disapproving the plan of reorganization.
Such answer further alleges that the petition in cause No. 24649 stated that the company had made no loans for nine years, was without depositors and had practically no debts; that the only persons in interest were its stockholders; that pursuant to the direction of the superintendent the company tendered a plan of reorganization later sanctioned by over seventy-five per cent of the stockholders, whereby numerous parcels of real estate in which nearly its entire capital was invested would be so disposed of as to permit the stockholders to hold and save their investments; and that disapproval of such plan and liquidation by the superintendent would be detrimental and injurious to the company and its stockholders, the petition closing with a prayer that the action of the superintendent in disapproving the plan of reorganization be reversed.
In addition, the answer herein alleges that the superintendent filed an answer in cause No. 24649, admitting disapproval of the plan, asserting it was not within the contemplation of the statutes, and that it was against the best interests of the stockholders.
Further answering, the respondent Lindsay says that the only purpose of the restraining order issued by him as judge was to preserve the company's right to have a final adjudication of its petition, and to protect the court in the authority given it by Section 693-1, General Code; he denies that under the issues in cause No. 24649 he will proceed to hear and determine such cause as a general chancery suit.
After certain admissions and denials, the reply in the pending action asks for a writ of prohibition in accordance with the prayer of the petition.
The controversy is before this court for decision upon a demurrer to the reply.
Mr. Thomas J. Herbert, attorney general, Mr. Crary Davis and Mr. D.C. Van Buren, for relator.
Mr. Morris Lopper and Messrs. Crabbe, Garek Sillman, for respondents.
Section 693-1, General Code, authorizes the reorganization of a building and loan association, with the written consent of the Superintendent of Building and Loan Associations. It provides that "The board of directors may adopt a plan of reorganization which may include any change in its articles of incorporation," etc. (Italics ours.) The last paragraph of such section reads:
"An association whose plan of reorganization is disapproved by the superintendent may within thirty days thereafter file in the Common Pleas Court of Franklin county, or in the county wherein the association in question has its principal place of business, a petition against the superintendent officially, as defendant, alleging the facts upon which it relies for a reversal of the action of the superintendent and praying for a reversal thereof. The action of such court under this section shall be final."
In essence, the relator-superintendent contends that the plan of reorganization submitted by the Uhrichsville company is one beyond the contemplation of the pertinent statutes, and hence the Court of Common Pleas should be summarily restrained by a writ of prohibition from exercising the jurisdiction conferred by the final paragraph of Section 693-1, General Code.
Is this contention valid and should this court proceed to issue the writ prayed for?
A perusal of the pleadings in cause No. 24649, pending in the Court of Common Pleas of Tusearawas county as outlined in the pleadings in the present case would suggest that both questions of fact and law are there involved. Such considerations as the soundness and feasibility of the plan offered, whether it is for or against the best interests of the company stockholders, and whether it was disapproved in May 1938, as claimed by the superintendent, or in September of 1938, as claimed by the company, are patently questions within the jurisdiction of the Court of Common Pleas.
Certain propositions are elementary. It is recognized that the writ of prohibition is extraordinary in character, the purpose of which is to prevent an inferior court or tribunal from assuming jurisdiction over a matter beyond its cognizance. Of course the writ cannot be invoked to circumvent an erroneous decision on questions within the jurisdiction of the lower court or tribunal. State, ex rel. Garrison, v. Brough, 94 Ohio St. 115, 113 N.E. 683; Kelley, Judge, v. State, ex rel. Gellner, 94 Ohio St. 331, 114 N.E. 255; State, ex rel. Carmody, v. Justice, Judge, 114 Ohio St. 94, 150 N.E. 430.
Because of its nature, the writ of prohibition is to be used with care and caution. The right thereto must be clear, and in a doubtful or borderline case its issuance should be refused. State, ex rel. Garrison, v. Brough, supra; State, ex rel. Kriss, v. Richards et al., Judges, 102 Ohio St. 455, 132 N.E. 23.
Upon the pleadings in cause No. 24649 as they have been presented to us in this proceeding we are not prepared to say under the circumstances peculiar to the case that the company's plan of reorganization clearly transcends the purpose and design of the law dealing with the subject of the reorganization of a building and loan association and we are therefore unwilling to deny the Court of Common Pleas the right and opportunity of exercising the jurisdiction accorded it by Section 693-1, General Code.
"It was contended by the Industrial Commission that the Court of Common Pleas had no jurisdiction of the cause in question. In order to determine the question of jurisdiction that tribunal would be obliged to consider the character of the claim which might necessitate an examination of the record of the proceedings had before the Industrial Commission. It appears further that only after the consideration of several motions by the Court of Common Pleas and its rulings thereon adverse to the Industrial Commission, did the relator file the instant proceedings in prohibition. The Court of Common Pleas is competent to determine its own jurisdiction and a writ of prohibition will not issue to prevent an anticipated erroneous judgment."
It is to be noted that in cause No. 24649 the superintendent filed an answer challenging the jurisdiction of the Court of Common Pleas and also denying allegations of the petition which raised issues of fact within the jurisdiction of that Court.
If upon a full hearing before the Court of Common Pleas of Tuscarawas county it should be apparent that the plan does not constitute a true reorganization within the purview of the applicable statutes, it is to be assumed that such court will recognize its illegality and act accordingly.
If Section 693-1, General Code, confers broad jurisdiction upon the Court of Common Pleas and unwisely makes its determination a finality, that is a fault chargeable to the General Assembly which enacted the legislation.
For the reasons given, the demurrer to the reply is sustained.
WEYGANDT, C.J., DAY, WILLIAMS, MATTHIAS and HART, JJ., concur.