In re State Mut. Bldg. & Loan Ass'n of N.J.

• Decision Date: 16 November 1908
• Citation: 71 A. 251,74 N.J.E. 807
• Parties: In re STATE MUT. BUILDING & LOAN ASS'N OF NEW JERSEY.
• Court: New Jersey Supreme Court

71 A. 251

74 N.J.E. 807

In re STATE MUT. BUILDING & LOAN ASS'N OF NEW JERSEY.

Court of Errors and Appeals of New Jersey.

Nov. 16, 1908.

(Syllabus by the Court.)

Appeal from Court of Chancery.

Petition for instructions by the trustees in voluntary liquidation of the State Mutual Building & Loan Association. From a decree of the Vice Chancellor (68 Atl. 108), the receivers of the association appeal. Reversed.

Harvey F. Carr, for appellants.

William N. Clevenger, Eli H. Chandler, and William S. Casselman, for respondents.

GARRISON, J. In Fitzgerald v. State Mutual Building & Loan Association, 69 Atl. 564, we held that trustees elected by stockholders under the provisions of chapter 24 of the Laws of 1904 (Act March 7, 1904; P. L. 1904, p. 44) were not the proper officers to wind up an insolvent building and loan association and that a receiver for the defendant should forthwith be appointed. This decision was carried into effect in the Court of Chancery by the appointment of three receivers, who are the appellants in the proceeding that is now before us, which was instituted by the trustees while engaged de facto in winding up the affairs of the insolvent association. In that capacity the trustees filed a petition which is the basis of the present proceeding, and before being displaced they also took an appeal from the order made by the Court of Chancery on their said petition. This appeal the receivers, upon assuming the duties of their office, adopted, and hence they now appear, and properly so, as appellants in the proceeding thus set on foot by the petition of the late trustees. The petition was filed by the trustees to obtain the direction of the Court of Chancery with respect to what credits upon the principal sum secured by mortgages should be allowed for premiums paid by the shareholding mortgagors, first, in cases called in the petition "Class No. 1," where the borrowing shareholder had fully paid all dues, interest, and premiums up to and including those for the month of April, 1907, that being the date of liquidation stated in the petition; and, secondly, in cases called "Class No. 2," where the borrowing shareholders prior to such date of liquidation had defaulted in the payment of said dues, interest, and premiums, so that by the conditions of their mortgages and under the by-laws of the association the principal sum of said mortgages had become due and payable. The petition further set out the facts of three concrete cases, one falling under class No. 1 and two falling under class No. 2, with respect to which latter cases the petition states that "under the terms of said bonds and mortgages the association has exercised its option of declaring the full principal sums of the said mortgages as due and payable." By a stipulation all of the facts stated in the petition are admitted to be true, which includes the date of liquidation. There is, furthermore, a general statement that a large part of the assets of the association consists of mortgages that fall within one or the other of the two classes, and the brief of counsel for the appellants contains the unchallenged statement that mortgages aggregating $125,000 fall within class No. 2, and that as to these mortgages the item of premium alone amounts to $45,000. But whether the concrete facts respecting these mortgages are identical with those of the two specified cases set forth in the petition we are not informed, nor are the shareholding mortgagors other than those in the two specified cases brought into court as parties defendant.

It is evident, therefore, that apart from the two specified cases the direction sought by the petition was of a general character, and it is equally evident that what the petition sought to ascertain was whether the rule laid down in the Court of Chancery in the case of Weir v. Granite State Provident Association, 56 N. J. Eq. 234, 38 Atl. 643, and approved by this court in Harris v. Nevins, 68 N. J. Eq. 684, 63 Atl. 172, was applicable to class No. 1,...