APPEAL from the Circuit Court of Cook County; the Hon. ARTHUR
L. DUNNE, Judge, presiding.
MR. JUSTICE EGAN DELIVERED THE OPINION OF THE COURT:
Rehearing denied November 20, 1975.
The plaintiffs, First Federal Savings and Loan Association of Maywood and Martin W. Sheade, M.D., trustee of the association's retirement plan and trust, brought this action for declaratory judgment seeking a determination of the defendant Edgar M. Elbert's claims for salary against the association and for retirement benefits against the trustee.
Indictments had been brought against Elbert in the United States District Court on February 28, 1969, charging that he had made false statements in connection with payouts by the association with respect to collection loan proceeds in violation of 18 U.S.C. § 1014 (1964). On March 3, 1969, the supervisory agent of the Federal Home Loan Bank Board ("Board") wrote the association requesting that Elbert be granted a leave of absence from his duties as director, president and managing officer of the association, pending final determination of the charges in the indictment. The letter further requested that during this period Elbert perform no duties nor act in any capacity in behalf of the association and that the association not expend its funds to defray any of Elbert's expenses in defending the charge.
Also on March 3, Elbert advised a special meeting of the association's directors of the indictment and requested a leave of absence pending the final determination of the charges. Unanimous resolutions were adopted granting the leave of absence and further providing that Elbert perform no duties nor act in any capacity in behalf of the association and that the association not extend any of its funds to defray his expenses. It was resolved that Irving Braun be designated vice chairman of the board, executive vice president and managing officer of the association.
On March 11 the Board advised the association that it would be improper for Elbert to be paid any compensation during his leave of absence. In compliance with this letter, the board of directors of the association adopted a resolution to that effect.
On March 12 Elbert was indicted for a second time in the United States District Court on charges of receiving approximately $4600, a Chris-Craft motorboat and accessories of a value of approximately $4000 in return for causing the association to make at least 23 construction loans.
On May 29 the Board, pursuant to the Home Owners' Loan Act and the Rules and Regulations for the Federal Savings & Loan System, entered an order suspending Elbert from further service as a director, chairman of the board, president and managing officer of the association until disposition of the indictments.
On October 15, at a regular monthly meeting of the board of directors, Irving Braun was elected chairman of the board, president and managing officer of the association. At the annual meeting of the board of directors on January 28, 1970, Braun was again elected chairman, president and managing officer.
On November 9, 1970, the first of the indictments was dismissed; and the second was dismissed on March 29, 1971. Both were dismissed on motion of the United States' Attorney.
Elbert then made a demand for salary from March 1, 1969, the date he requested the leave of absence, until April 30, 1972, the day he would normally have gone on retirement; he also demanded retirement benefits beginning May 1, 1972. The plaintiffs refused and filed this law suit. After a hearing, the court entered judgment that Elbert was due salaries from the date of the leave of absence, March 3, 1969, to January 28, 1970, the expiration date of his term of office; and that he was entitled to retirement benefits from May 1, 1972, which the court found to be Elbert's "early retirement date." The court also found that while Elbert might have been removed from office as president on January 28, 1970, the association had no right to terminate his employment in any other capacity and thus deprive him of retirement benefits since this absolute termination was contrary to the order of suspension "pending the outcome of the charges."
We first consider the ruling granting the defendant retirement benefits. The defendant was a co-founder of the institution and had been its president and board chairman for 12 years before his suspension. Under the terms of the pension plan, his normal retirement date would have been May 1, 1972, the first day of the month following his 70th birthday. The plan also provided for an early retirement date which required at least 180 calendar months' service. The defendant's employment began in February, 1957. Thus, his early retirement date would have been March 1, 1972. It is the defendant's position that he remained president and managing officer beyond March 1 or May 1 of 1972. In effect, he contends that the alleged removal by the association on October, 15, 1969, and the election of Braun as president at the annual meeting on January 28, 1970, were nullities.
The Home Owners' Loan Act provides, in part, as follows (12 U.S.C. § 1464 (5) (A) (1964)):
"Whenever any director or officer of an association, * * * is charged in any * * * indictment * * * authorized by a United States Attorney, with the commission of or participation in a felony involving dishonesty or breach of trust, the Board may by written notice served upon such director * * * suspend him from office and/or prohibit him from further participation in any manner in the conduct of the affairs of the association. A copy of such notice shall also be served upon the association. Such suspension and/or prohibition shall remain in effect until such * * * indictment, * * * is finally disposed of or until terminated by the Board. In the event that a judgment of conviction with respect to such offense is entered against such director, officer, or other person, and at such time as such judgment is not subject to further appellate review, the Board may issue and serve upon such director, officer, or other person an order removing him from office and/or prohibiting him from further participation in any ...