Falls v. Anglo-Teutonia Bldg. & Loan Ass'n

• Decision Date: 06 June 1900
• Citation: 58 S.W. 325,105 Tenn. 18
• Parties: FALLS v. ANGLO-TEUTONIA BUILDING & LOAN ASS'N et al.
• Court: Tennessee Supreme Court

58 S.W. 325

105 Tenn. 18

FALLS v. ANGLO-TEUTONIA BUILDING & LOAN ASS'N et al.

Supreme Court of Tennessee.

June 6, 1900

Appeal from chancery court, Shelby county; F. H. Heiskell Chancellor.

Action by Mary C. Falls against the Anglo-Teutonia Building & Loan Association and others, asking for the appointment of a receiver for defendant corporation, and that it be dissolved. From a judgment in favor of plaintiff as to her petition for a receiver, said defendant appeals, and from a decree adjudging the plaintiff a debtor of defendant, plaintiff appeals. Modified and affirmed.

Pierson & Ewing, for appellant.

Malone & Malone, Jas. M. Greer, and Gantt & Patterson, for appellees.

BEARD J.

The complainant is a shareholder in the defendant building and loan association, a corporation organized under chapter 142 of the Acts of 1875 to carry on the business which its name indicates. Several years before the institution of this suit a loan was obtained from the association on the shares of stock now held by the complainant, and, to secure it in the monthly payment of dues and interest by the shareholder until the accumulation of interest and profits apportionable to these shares should equal their face value, a mortgage on real estate was executed. Many payments were made in discharge of this obligation by her predecessor in title and by complainant. Under the charter and by-laws of the association the loan of a borrowing shareholder was fully discharged when, through this accumulation, the shares of stock had matured or reached a face value, and such shareholder was then entitled to have a release of the mortgage security given for the loan. Complainant, in her bill, alleged the maturity of her shares of stock, and that upon a fair adjustment of her account with the association she not only was entitled, at the date of the filing of this bill, to a satisfaction of the mortgage on her property, but to a balance due from the association to her, as to which she claimed to stand in a creditor's relation to it. The bill alleged that, on making a recent demand upon the party having charge of the affairs of the association for a release of her property, the demand was denied, and a claim was made that she was still indebted on this loan in the sum of $909.55. This claim is averred to be unauthorized and oppressive. It is further alleged that for many months before the filing of this bill the association had made no loans, nor had it done any other business peculiar to such an organization; that, while thus having ceased all active operation, it still maintained a mere form of life, at a considerable expense, the burden of which fell upon herself and other shareholders of the association, without any corresponding profit to them. Much mismanagement and abuse of their trusts by the officers of the association is charged in the bill. Among other evidence of this violation of their trust obligations, it is alleged that they had turned over to an irresponsible committee all corporate assets, to be managed as its members might deem best, and that, thus having first ceased all building and loan business, the board of directors had then abandoned their duty, and sought to delegate their power to this unauthorized body. In view of all this, complainant, filing her bill both as an alleged creditor and as a shareholder, prayed that it be taken as a bill filed in the interest of creditors and shareholders, and so adjudged; that a receiver be appointed; and that the association be wound up under the order of the chancery court, and the rights of all parties in interest be established by proper decree. This bill was answered by the association, and by those of its officers and directors who were made defendants with it. This answer denied seriatim every material allegation of the bill, and then gave an elaborate history of the operations of the association. It denied that complainant was a creditor. It protested against the court taking charge of its affairs and placing them in the hands of a receiver, insisting that such a course would bring insolvency to a then solvent institution. Upon these pleadings the chancellor adjudged the bill to be a general creditors' bill, and directed the clerk and master to give notice by publication to creditors and shareholders of the pendency of the suit, requiring them to make themselves parties to it and set up their claims therein. He also appointed a receiver, and placed him in charge of all the books and other assets of the corporation. Publication was made as directed, and from time to time all persons interested filed petitions, setting up their respective claims, and, upon executing satisfactory cost bonds, were made parties to the cause. Much evidence was taken, and finally there was a reference to the clerk and master, who was ordered to state an account showing the condition of the association, and the rights and relations of all parties in interest. This was done. A full report was made, answering in detail every matter covered by the reference. Among other findings, the clerk reported that the complainant, instead of being a creditor of the association, was, to a large amount, its debtor. This report was, with immaterial changes, ultimately confirmed by the chancellor. From his decree of confirmation, as well as from the interlocutory order adjudging the present bill a general creditors' bill, and that the association should be wound up under the direction of the court, and appointing a receiver, the Anglo-Teutonia Building & Loan Association has appealed. The complainant has also perfected an appeal from the decree confirming, over her exceptions, certain portions of the report of the clerk and master.

We will first dispose of the assignments of error made by the defendant association. Those most earnestly pressed are directed to the action of the chancellor in entering the interlocutory...