Kroeger v. Brody, 25686.

• Citation: 130 Ohio St. 559,200 N.E. 836
• Decision Date: 25 March 1936
• Docket Number: No. 25686.,25686.
• Court: United States State Supreme Court of Ohio
• Parties: KROEGER, Superintendent of Building & Loan Ass'ns, et al. v. BRODY.

130 Ohio St. 559
200 N.E. 836

KROEGER, Superintendent of Building & Loan Ass'ns, et al.
v.
BRODY.

No. 25686.

Supreme Court of Ohio.

March 25, 1936.

Error to Court of Appeals, Cuyahoga County.

Proceeding in the matter of the liquidation of the Mutual Building & Investment Company of Cleveland, in charge of William H. Kroeger, State Superintendent of Building and Loan Associations, wherein Ray Brody, trustee for Shirley Silverman, filed a claim. Judgment ordering priority of payment of claim was affirmed by the Court of Appeals, and the State Superintendent of Building and Loan Associations and the Mutual Building & Investment Company bring error.-[Editorial Statement.]

Judgment of the Court of Appeals reversed, and judgment entered for plaintiffs in error.

The Mutual Building & Investment Company of Cleveland, hereafter referred to as ‘the company,’ and William H. Kroeger, superintendent of building and loan associations of the state of Ohio, in charge of its liquidation, prosecute error to this court from a judgment of the Court of Appeals in favor of defendant in error, Ray Brody, trustee for Shirley Silverman, ordering priority of payment on her claim of $3,799.65, which the superintendent had rejected as a preference.

Under date of April 4, 1927, four named persons entered into a written agreement creating a trust frun for the benefit of Shirley Silverman, a minor. Each contributed an equal amount to make the total sum of $3,000. Among the provisions of the instrument were the following:

‘2. That said total sum of $3,000.00 shall be deposited with The Mutual Building & Investment Company of Cleveland, Ohio, or such other Bank in the City of Cleveland as mutually agreed between all of the parties hereto, in a Savings Account under the name of Rae Brody, Trustee for Shirley Silverman.

‘3. That subject to the terms herein stated, said sum together with all interest and dividends paid thereon from this date shall remain in said account until the said Shirley Silverman shall attain the age of 21 years when said entire sum then on deposit shall be paid to her unconditionally.’

Additional provisions relate to the disposition of the fund on the happening of certain contingencies, and to the appointment of successor trustees if the necessity should arise.

It appears that the company was a mutual building and loan association organized under the laws of Ohio. Its constitution and by-laws provided only for subscriptions to, and ownership of, its shares of capital stock on which dividends were payable from the earnings of the company, and contained no authorization for the acceptance of interest-bearing savings accounts.

According to the testimony produced by defendant in error, the then president of the company was given a copy of the trust agreement in the spring of 1927, and subsequently consented to accept the $3,000 as an interest-bearing savings account in the company payable on demand, representing that he had taken the matter up with the board of directors and intimating its approval.

On such understanding the money was paid over on June 30, 1927. At that time, pursuant to the direction of the president, the following notation was made on the margin of the trust agreement: ‘Accepted on the within conditions. (Signed) The Mutual Building & Investment Company, M. A. Mack, Secy.’

However, in connection with the transaction, there was executed a ‘Signature Card,’ as follows:

‘Account No. 15247 Date June 30th 1927

‘Subject to the provisions of its Constitution and By-Laws and of the laws of Ohio, now and hereafter in force, the undersigned hereby subscribes for shares in the capital stock of The Mutual Building & Investment Company of Cleveland, Ohio, to be known as Running Stock-Paid-up Stock to the amount of all sums paid in by me to, or credited to me by said company on said account; this subscription to cover such number of shares and fractions of shares at the price of $200.00-$500.00 per share as equals the...