Amberg v. Aldrich

• Decision Date: 06 May 1913
• Docket Number: 2,318,2,319.
• Citation: 205 F. 498
• Parties: AMBERG v. ALDRICH.
• Court: U.S. Court of Appeals — Sixth Circuit

205 F. 498

AMBERG v. ALDRICH.

Nos. 2,318, 2,319.

United States Court of Appeals, Sixth Circuit.

May 6, 1913

The Michigan Savings & Loan Association was organized under Michigan laws after the usual plan of building and loan societies. It had different classes of members or stockholders. One class subscribed for a $100 share of stock made weekly payments thereon, and when the payments, with interest and profits earned, less operating expenses amounted to $100, the stock was called 'matured,' and the subscriber was entitled to withdraw the full sum. Another class subscribed for a share of stock, and paid in the full face value, $100, in cash. The stock such subscriber received therefor was called 'fixed dividend' stock, was transferable, was payable at a fixed date, and, in the meantime, drew semiannual dividends at the rate of 7 per cent. per annum; and the holder was entitled to withdraw his money at any time after 90 days' notice in writing. This right of withdrawal was modified only by the proviso that not more than 50 per cent. of the current installment receipts could be devoted to such withdrawals.

The association became in fact insolvent in 1895, and so continued thereafter; but this insolvency was concealed from the stockholders and from the public generally. Before 1895 Amberg had paid into the association $9,000, and had received nine certificates representing $1,000 each, of this fixed dividend stock. These certificates matured, and he exchanged them for new ones of the same kind. In 1900 he decided to withdraw his money, and took to Wemple, the secretary and practically the general manager, a written notice to that effect. He was told by Wemple that, owing to the 50 per cent. limitation, there would be considerable delay in paying off these certificates, and, if Amberg wanted his money more speedily, he better sell the certificates, instead of surrendering them for cancellation. Finally Amberg did not serve his notice to withdraw, but Wemple undertook to make such sales for Amberg, and later Amberg received from Wemple the full amount, $9,000. Amberg had no notice that the association was insolvent.

In 1901 a receiver for the association was appointed by the Circuit Court of the United States for the Eastern District of Michigan. The controversy was brought to this court, and it was held, in Aldrich, Receiver, v. Gray, 147 F. 453, 77 C.C.A. 597, 8 Ann.Cas. 832, that upon the insolvency of the association the members' right to withdraw capital became suspended, and that a member who had withdrawn his money after such insolvency must refund, in order that there might be a ratable distribution of all the assets among all rightful claimants.

Amberg was made defendant to a bill seeking such refund, and upon final hearing decree was entered against him for the amount of six certificates, $6,000, and interest, and the receiver was denied any recovery as to the other three certificates. Both parties appealed.

De Forest Paine and M. B. Whittlesey, of Detroit, Mich., for Aldrich.

Lucking, Emmons & Helfman, of Detroit, Mich., for Amberg.

Before WARRINGTON, KNAPPEN, and DENISON, Circuit Judges.

DENISON Circuit Judge (after stating the facts as above).

We assume, without deciding, that Amberg is in no better position than the defendants whose rights were considered in the Gray Case, and we come to the critical question, as one of fact, whether the transactions which took place relating to the different certificates were in truth and in fact surrenders of stock by Amberg to the association,...