Huntington County Loan & Sav. Ass'n v. Fulk

• Decision Date: 25 February 1902
• Citation: 63 N.E. 123,158 Ind. 113
• Parties: HUNTINGTON COUNTY LOAN & SAVINGS ASS'N v. FULK.
• Court: Indiana Supreme Court

158 Ind. 113

63 N.E. 123

HUNTINGTON COUNTY LOAN & SAVINGS ASS'N

v.FULK.

Supreme Court of Indiana.

Feb. 25, 1902.

Appeal from circuit court, Huntington county; James C. Branyan, Judge.

Action by Mary E. Fulk against the Huntington County Loan & Savings Association. From order appointing a receiver, defendant appeals. Reversed.

W. S. Lesh and Eben Lesh, for appellant.

MONKS, J.

This is an appeal from an interlocutory order appointing a receiver, made in vacation on application of appellee. It appears from the record that appellee was the holder of 12 “prepaid” shares of the capital stock of appellant association, and brought this action to recover the amount thereof, and for the appointment of a receiver to sell the property of said association, collect and convert its assets into cash, pay its debts, and distribute the remainder to the shareholders. It is alleged that the appellant association is insolvent, and there is a general allegation of mismanagement. The remedy sought is a dissolution of the corporation, and a distribution of its assets among the shareholders. The complaint was filed on December 17, 1900, and summons issued returnable on January 14, 1901. Said summons was served on December 18, 1900, on which day, in vacation, the judge of the court below appointed a receiver for said association without notice. On December 20th, on appellant's motion, the appointment of said receiver was set aside and vacated. By agreement of the parties, the application for the appointment of a receiver was set for hearing on December 22d, at 2 o'clock p. m. The parties appeared by counsel on said day before the judge of said court in vacation, and said application was heard, and on December 31st the judge of said court granted said application and appointed a receiver. On December 19th, before the appointment of said receiver, the board of directors of appellant association adopted a resolution, under section 4463h, Burns' Rev. St. 1901 (section 3406h, Horner's Rev. St. 1901), declaring the intention of said association to go into liquidation and discontinue business, and filed a copy thereof in the office of the auditor of state, and said auditor, on December 20, 1900, issued a certificate reciting the filing of said resolution, and that said association was in liquidation.

Courts of equity have no power to dissolve an insolvent corporation and wind up its affairs, in the absence of an express statute. Order of Iron Hall v. Baker, 134 Ind. 293, 309, 33 N. E. 1128, 20 L. R. A. 210; High, Rec. (3d Ed.) § 288; Beach, Rec. (Alderson's Ed.) § 425; Gluck & B. Rec. (2d Ed.) § 17. It has been held that the fifth clause of section 1236, Burns' Rev. St. 1901 (section 1222, Rev. St. 1881; section 1222, Horner's Rev. St. 1901) does not give such jurisdiction to the courts of this state. Order of Iron Hall v. Baker, 134 Ind. 293, 309-314, 33 N. E. 1128, 20 L. R. A. 210.

We think, however, that the statutes concerning building and loan associations make full provisions for actions to dissolve such associations, and for winding up their business, and for a distribution of their assets. Building and loan associations in this state are created by statute, and their manner of organization and method of transacting business are prescribed by statute. They are subject to the supervision and control of the auditor of state to a certain extent. Sections 4463h, 4476-4483, Burns' Rev. St. 1901 (sections 3406g, 3420hh-3420oo, Horner's Rev. St. 1901). Such associations are required to file with the auditor of state a verified statement each year of their condition. Sections 4464, 4476, Burns' Rev. St. 1901 (sections 3420b, 3420hh, Horner's Rev. St. 1901). Section 4477, Burns' Rev. St. 1901 (section 3420ii, Horner's Rev. St. 1901), supra, provides that “if it appears from any such statement that such *** association *** is doing an illegal and unsafe business, the auditor of state may make or cause to be made, under the provisions of this act, an examination into the affairs of such *** association, *** or when, upon petition of any shareholder or shareholders setting forth that such petitioner or petitioners believe said *** association *** to be conducting its business contrary to law, or that its affairs are in an unsound condition, or that they believe its statements are not correct, then said auditor of state shall make, or cause to be made, an examination into the affairs of such *** association: *** provided, that any such shareholder or shareholders, before such auditor shall make such examination, shall file with such auditor a bond to his approval, conditioned that if such examination shall disclose that such *** association *** so examined is doing a lawful business, then such shareholder or shareholders will pay the costs of such *** examination as are hereafter provided for in this section. Such examination shall be full and complete and in making the same the examiner may put any officer of such *** association *** or any person under oath to answer truthfully any question that may be asked them, and all books, papers and records of such *** association *** and all securities held by it shall be subject to his inspection.” If the auditor of state, or the inspector appointed by him, find such association conducting its business, in whole or in part, contrary to law, or that such association is failing to comply with the law, he is required to notify the board of directors thereof in writing; and if after 30 days such illegal practices or failure to comply with the law continue he shall report to the attorney general, whose duty is, on such notice, to bring the proper proceedings in court to revoke the charter of such association. Section 4478, Burns' Rev. St. 1901 (section 3420jj, Horner's Rev. St. 1901). Should the auditor or inspector find, upon examination, that the affairs of any such association are in an unsound condition, and that the interests of the public demand the dissolution of such association, and the winding up of its business, he shall so report to the attorney general, who is required to institute proceedings for that purpose. Section 4479, Burns' Rev. St. 1901 (section 3420kk, Horner's Rev. St. 1901). The failure to make the report required by said act is punishable by fine, and it is made the duty of the auditor to notify the president and secretary of such...