In re Guardian Building & Loan Ass'n, 16266.
| Decision Date | 02 October 1931 |
| Docket Number | No. 16266.,16266. |
| Parties | In re GUARDIAN BUILDING & LOAN ASS'N (MOTT, Corporation Com'r, Intervener). |
| Court | U.S. District Court — District of Oregon |
John W. Kaste, of Portland, Or., for alleged bankrupt.
Wm. B. Layton and N. Ray Alber, both of Portland, Or., for petitioning creditors.
Barnett H. Goldstein, of Portland, Or., for intervener.
The association has an authorized capital stock of 100,000 shares, divided into 99,750 shares of contributing dividend stock (the owners of which are hereafter called shareholders), and 250 shares of noncontributing reserve-fund stock. The membership consists of 21,000 shareholders, who have paid in to the association the sum of $1,131,720.
On the 2d day of June, 1931, the circuit court of the state of Oregon for Multnomah county appointed a receiver of the assets of the association, and on the 23d day of the same month said court vacated the order of appointment upon the ground that it was made without cause.
On June 23, 1931, the corporation commissioner of the state of Oregon, acting in pursuance of statutory authority, took possession of the assets of the association for the purpose of liquidation.
On July 2, 1931, three general creditors filed a petition in this court praying that the association be adjudged a bankrupt, and alleging that it, while insolvent, had committed acts of bankruptcy by transferring property to creditors with intent to prefer such creditors, and by suffering a receiver to be appointed as herein stated.
The association, acting through its board of directors, with the approval of a majority of the reserve stockholders, filed an answer confessing the allegations of the petition and asking that it be adjudged a bankrupt.
On the 9th day of July, 1931, the corporation commissioner, by leave of this court, intervened and filed a motion, which is now before the court for consideration, to strike the petition upon the ground that it does not state facts sufficient to warrant the relief prayed for.
It has been stipulated that the court, in passing upon the motion, shall determine whether the shareholders are creditors of the association having provable claims in bankruptcy; and further stipulated that, if they are not such creditors, the association is not insolvent.
Under the laws of this state, the powers, privileges, and liabilities of a shareholder of an association are comparable to those of stockholders in other business corporations. The distinguishing features are that a shareholder has the right of withdrawal upon condition, and the right to return of his payments with profits upon maturity of his stock.
From the time a person becomes a shareholder in an association, he is its debtor, and is liable to the full extent of his unpaid stock subscription, and upon its dissolution he is a distributee. The statute (Or. Code 1930, § 25-301 et seq.), considered in its entirety, creates this relation, notwithstanding the declaration therein that the money paid by shareholders "shall be regarded as deposits."
Western Bond & Mortgage Co. v. W. E. Crews, Corporation Commissioner, 112 Or. 663, 231 P. 138; Curtis v. Dade County Security Co. (C. C. A.) 30 F.(2d) 325; In re Guaranty Building & Loan Ass'n (D. C.) 49 F.(2d) 776; In re Puget Sound Savings & Loan Ass'n (D. C.) 49 F.(2d) 922; Coltrane v. Blake (C. C. A.) 113 F. 785.
A shareholder may become a creditor of an association, as its failure to pay the matured value of his stock, or to permit its withdrawal when conditions are met, would create a cause of action and a provable claim in case of bankruptcy.
Counsel, insisting upon an adjudication, contend that, since the assets of this association have been taken over by the corporation commissioner for the purpose of liquidation, it has been unable to provide a fund for the withdrawal of its stock and the shareholders are its creditors on the theory of an anticipatory breach of an executory contract, and cite in support of their view Wilson v. Continental Building & Loan Ass'n (C. C. A.) 232 F. 824, and In re Western States Building-Loan Ass'n (D. C.) 50 F.(2d) 632.
Where a promisor renounces a contract or becomes unable to perform it, the promisee may declare a breach and base an action thereon, if an unconditional right to recover flows from the breach, for the reason that each party has a right to keep the contract open as a subsisting, effective agreement. But the privilege of these shareholders to withdraw their stock is dependent upon the accumulation of a fund, and it is therefore doubtful whether they could effectively declare a breach of that feature of their contract unless it were shown that the fund was available.
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Fuzy v. Dep't of Fin. Insts.
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