Christian's Appeal

• Decision Date: 26 March 1883
• Citation: 102 Pa. 184
• Parties: Appeal of Christian et al.
• Court: Pennsylvania Supreme Court

102 Pa. 184

Appeal of Christian et al.

Supreme Court of Pennsylvania.

January 23, 1883.

March 26, 1883.

January 23rd 1883.

Before MERCUR, C. J., GORDON, PAXSON, TRUNKEY, STERRETT, GREEN and CLARK, JJ.

APPEAL from the Court of Common Pleas No. 4, of Philadelphia county: Of July Term 1882, No. 199.

COPYRIGHT MATERIAL OMITTED

Edward H. Weil, for appellants.—The notice of withdrawal given by the stockholders in adopting their resolution at the meeting of February 9th 1879, was a legal notice, within the provisions of the Act of April 12th 1859 (P. L. 544.) The association must be bound by the acts of its board of directors, not by the separate acts of its individual members: Stoystown Road Co. v. Craver, 9 Wright 386; Allegheny Co. v. Moore, 14 Norris 412. The Auditor's ruling introduces a preference in the distribution of an insolvent estate, whereas a just distribution gives an equal share to all stockholders. Notice of withdrawal does not give one stockholder preference over another in cases of insolvency; this case therefore is not governed by the United States Building and Loan Association v. Silverman, 4 Norris 394. That case decided that a withdrawing stockholder could not be put off indefinitely. The award by the Auditor, in the present case, of their full claim to some stockholders, and of nothing to others, is in direct conflict with the principle of that decision; a withdrawing stockholder is a quasi partner, who must share the losses in case of insolvency, and is entitled only to a pro rata distribution of the funds in the hands of an assignee: Estate of the National Savings Loan and Building Association, 9 W. N. C. 79. Order holders, for withdrawn stock in an insolvent building association, are entitled to no preference in distributing its assets, over stockholders who have not withdrawn their stock; Appeal of Criswell et al., 12 W. N. C. 489.

Robert P. Dechert (with whom was J. Quincy Hunsicker), for appellees.—The notice of withdrawal of the stockholders given at the meeting in February 1879, was not legal because it did not comply with article 7 of the charter of the association. They could not by mere resolution alter the fundamental law. They waived their right also by acting as stockholders at subsequent meetings. The association was not insolvent at the time they gave notice of withdrawal, for the losses on its loans did not occur until months after the date of the execution of the assignment. The appellees, on the other hand, gave proper notice of withdrawal, under the charter, and thereby became creditors of the association, under the decision in Building Association v. Silverman, supra, and the orders for payment were prima facie acknowledgments of the amounts due them as such.

Mr. Justice STERRETT delivered the opinion of the court, March 26th 1883.

The fund for distribution represents the assets of a confessedly insolvent building and loan association which executed a voluntary assignment of all its property and effects for the benefit of creditors. Those claiming to participate in the fund were classified by the auditor as follows:

1st. The late treasurer of the association, who claims, as a general creditor, to be reimbursed for moneys paid on orders drawn upon him before the assignment and for which the assignee refused to allow him credit in the settlement of his account as treasurer, amounting to $789.74.

2d. Holders of orders on the treasurer, issued to withdrawing stockholders more than six months before the date of the assignment; and also stockholders who gave notice of their intention to withdraw several months prior to the assignment, but received no orders for the amount of their stock.

3d. All other stockholders not included in the second class.

For reasons given at length by the learned auditor, the items of claim embraced in the first class were rightly allowed and scheduled as preferred claims. The several payments, for which credit was claimed by the treasurer, were made on orders regularly drawn upon him as such. His...