Hohenshell v. Home Savings And Loan Association

• Decision Date: 06 July 1897
• Citation: 41 S.W. 948,140 Mo. 566
• Parties: Hohenshell et al.; Pirscher, Appellant, v. Home Savings and Loan Association, Brown, Receiver
• Court: Missouri Supreme Court

41 S.W. 948

140 Mo. 566

Hohenshell et al.; Pirscher, Appellant, v. Home Savings and Loan Association, Brown, Receiver

Supreme Court of Missouri

July 6, 1897

Appeal from Jasper Circuit Court. -- Hon. Edward C. Crow, Judge.

Affirmed.

Fisse & Kortjohn for appellant.

(1) The notice of withdrawal of March 7, 1893, accepted as it was by the officers of the association, gave the claimant a preference over other stockholders who had not withdrawn. In re Sunderland, etc., Building Society, 24 Q. B D. 394; Kemp v. Wright, 2 Ch. 462; Walton v Edge, 10 App. Cas. 33; Barnard v. Thompson (1894) 1 Ch. Div. 374; McKenny v. Loan Ass'n, 18 A. 905; Endlich on Building and Loan Ass'ns [2 Ed.], sec 109; Decatur Building & Investment Co. v. Neal, 12 So. Rep. (Ala.) 780; U. S. Building & Loan Ass'n v. Silverman, 85 Pa. St. 394; Hartford v. Cooperative Homestead Co., 128 Mass. 494; National Building Ass'n v. Hottenstein, 10 Pitts. Leg. J. N. S. (Pa.) 225. (2) By withdrawing his running stock on April 7, appellant became entitled to a preference over other stockholders who had not withdrawn the same before the appointment of the receiver. (3) Claimant is entitled to receive back everything that he has paid on account of his paid up stock in excess of the amount which he could have been required to pay. Munhall v. Bordecker, 44 Ill.App. 131; Murray v. Scott, 9 App. Cas. 519; Seibel v. Victoria Bldg. Ass'n, 43 Ohio St. 371; People v. Lowe, 117 N.Y. 175; R. S. 1889, sec. 2810. (4) Claimant is entitled to recover back everything that he has paid on account of his running stock in excess of the amount which he could have been required to pay. (5) Under the laws of Missouri in force in 1889 the association had no right to issue paid up stock, and hence the holders of such stock became creditors for all payments in excess of the amount of current monthly dues.

E. O. Brown for the receiver.

(1) The association had a right to issue "prepaid" and "paid up" stock. Endlich on Bldg. Ass'ns, sec. 464, p. 440; sec. 465; Davis on Bldg. & Land Societies, p. 18; In re Guardian Permanent Benefit Bldg. Society, 23 Ch. Div. 446. (2) The appointment of a receiver by reason of the insolvency of a building and loan association ipso facto changes the character of the stock as among the stockholders themselves, and it is no longer liable to assessments or fines and penalties except for the benefit of creditors. As among the stockholders themselves the stock is absolutely extinguished. Endlich on the Law of Bldg. Associations [2 Ed.], secs. 502, 522 to 525; Blakely v. El Paso Bldg. & Loan Ass'n, 26 S.W. 492; Thompson on Bldg. Ass'n, sec. 30; Towle v. American Bldg. Loan & Investment Society, 75 F. 938; Cook v. Kent, 105 Mass. 246; Bowker v. Mill River Loan Ass'n, 7 Allen, 100; Windsor & Applegarth v. Randall, 40 Md. 170. (3) The rule of distribution is that each shareholder should receive from the funds in the receiver's hands such pro rata part thereof upon his contribution as the total fund bears to the total contributions of the persistent shareholders. Criswell's Appeal, 100 Pa. St. 488; Davis on Bldg. & Land Societies [3 Ed.], 408; Endlich on Bldg. Ass'ns [2 Ed.], p. 505, sec. 515; Christian's Appeal, 102 Pa. St. 184; Thompson's Commentaries on the Law of Corporations, sec. 7042. (3) The mere fact that the claimant or any other stockholder may have advanced payments on account of their stock does not entitle him to preference over the claims of other stockholders who did not make such advanced payment. Criswell's Appeal, supra; Towle v. Am. Bldg. & Loan Ass'n, supra; Post v. Mechanics Bldg. & Loan Ass'n, 37 S.W. 216; Price v. Kendall, 36 S.W. 810. (4) The mere fact of giving notice of withdrawal on the part of a stockholder of a building and loan association does not render such holder a creditor so as to entitle him to any priority over holders of stock who have not given such notice of withdrawal or whose stock is not yet matured. All shareholders, whether their stock is paid up, matured, unmatured or withdrawn, upon the insolvency of a building and loan association, share pro rata without preference or priority. Endlich on Bldg. Ass'ns, sec. 514; In re Assigned Estate Nat. Sav. Loan & Bldg. Association, 9 W. N. C. (Pa.) 79; Criswell's Appeal, 100 Pa. St. 488; Christian's Appeal, 102 Pa. St. 184; In re Alliance Society, 49 L. T. Rep. 73; Davis on Bldg. & Land Societies [3 Ed.], p. 408. (5) The right of withdrawal exists and may be exercised only while the association is a going concern. It can not be exercised in the event of insolvency. Christian's Appeal, 102 Pa. St. 184; Criswell's Appeal, 100 Pa. St. 488; In re Alliance Society, 49 L. T. Rep. (N. S.) 73; Endlich on Bld'g Ass'n [2 Ed], secs. 108, 514.

OPINION

In Banc.

Burgess J.

-- In August, 1889, the Home Savings and Loan Association was a corporation organized under article 9, chapter 42, of the Revised Statutes of 1889, entitled "Mutual Savings Fund, Loan and Building Associations." The stockholders of said association were required to begin paying dues from the time they became members thereof. The by-laws of said association provided for so-called running stock, on account of which the holder thereof should pay sixty-five cents per month on each $ 100 share. Section 34 of the by-laws provided that any member might pay to the association $ 50 per share in advance, in lieu of all installments, and receive therefor a prepaid certificate of stock of $ 100 par value at maturity. This was known as Class A. stock. The same section also provided for Class B. stock, on account of which the holder thereof was required to pay $ 65 per share in advance, in lieu of all installments, and receive a prepaid certificate of stock of $ 100 par value at maturity with partial dividend coupons payable semiannually in cash out of the profits earned, at the rate of six per cent per annum on the cost thereof. It is further provided in said section that any member may pay in full the face value of the shares at the time of subscription for the same, or at any time thereafter, and receive therefor a certificate of paid up stock, and shall be entitled to receive in cash on the fifteenth day of July and the fifteenth day of January of each year the full amount of all dividends declared thereon. No monthly installments were to be paid on account of said stock, but said stock was to be governed by the same rule as to withdrawals, and otherwise be subject to the same liabilities, as other stock.

Section 35 provided that the board of directors might at any time limit the issue of certificates of paid up stock and might require any and all members holding such certificates to surrender them on sixty days' notice in writing and receive therefor the amount for which they were issued, together with all dividends declared and still remaining unpaid thereon, with an equitable share of the gains of the association since the last dividend was declared, less a pro rata share of losses, such gains or losses to be determined by the board of directors. Said section also further provides that all right to further share in the earnings of the association shall cease sixty days after written notice has been mailed to the post office address of the owner of the certificate.

Appellant on the twenty-third day of April, 1892, became the owner of seven shares of paid up stock, represented by certificate number 47, and paid therefor the sum of $ 100 each, or $ 700, and on the same day he became the owner of twenty shares of paid up stock, represented by certificate number 46, and paid therefor $ 100 per share, or $ 2,000. On the eighth day of March, 1892, he became the owner of ten shares of paid up stock of the said association, represented by certificate number 42, and paid therefor $ 100 per share, or $ 1,000, and on the twenty-second day of December, 1892, he became the owner of three shares of paid up stock of the said association represented by certificate number 61, and paid therefor $ 100 per share, or $ 300. Besides the said paid up stock, appellant was the owner of ten shares of running stock, represented by certificate and book number 16042. He subscribed for this stock on the twenty-third day of April, 1892, and on the said day he paid to the said association the sum of $ 100. On the twenty-ninth day of September, 1892, he paid the further sum of $ 310.50, making a total paid in by him on account of the said ten shares of stock of $ 410.50.

At the time when appellant purchased the paid up stock he wanted to deposit the money on interest at six per cent per annum, and on call, but Mr. Frye, the secretary, told him that he had better take the paid up stock because he could withdraw that at any time he might want the money, and that on it he could get more interest than on a deposit. He then told Frye that he expected to buy real estate, and wanted to save this money for that purpose. Thereafter, on the seventh day of March 1893, he went to the office of the Home Savings and Loan Association where he met Frye and said to him that he now wanted to draw his $ 4,000, which he had invested in paid up stock, and asked him for a piece of paper so that he might put his notice of withdrawal in writing. The secretary wrote out the notice of withdrawal, laid it before the appellant for his signature and he signed the same, and Frye kept it and told him that he could get his $ 4,000 by the seventh of April, 1893. A few days after March 7, 1893, appellant again went to the office of the association and asked the secretary, Frye, to give him some certificate to show that he had withdrawn his stock, and had in writing given notice of withdrawal. Frye answered that they never gave such certificates, but that he had entered it up and everything was...