McGovern v. Cosmopolitan Savings & Loan Association
| Decision Date | 10 October 1910 |
| Docket Number | 15-1910 |
| Citation | 44 Pa.Super. 212 |
| Parties | McGovern v. Cosmopolitan Savings & Loan Association, Appellant |
| Court | Pennsylvania Superior Court |
Argued April 13, 1910
Appeal by defendant, from order of C.P. No. 4, Allegheny County First T., 1909, making absolute rule for judgment for want of a sufficient affidavit of defense in case of Louisa McGovern v. Cosmopolitan Savings & Loan Assn.
Assumpsit by a withdrawing stockholder of a building and loan association. Before Cohen, J.
The facts are stated in the opinion of the Superior Court.
Error assigned was order making absolute rule for judgment for want of a sufficient affidavit of defense.
T. S Brown, of Brown & Stewart, for appellant. -- The rule in the Silverman case was abrogated, as to all building and loan associations incorporated under the act of 1874, by the Act of assembly of April 10, 1879, P. L. 16, 1 Purd. Dig. (13th ed.), 551, par. 15.
Sidney J. Watts, for appellee.
Before Rice, P. J., Henderson, Morrison, Head, Beaver and Porter JJ.
The question involved in this case is whether the plaintiff, a withdrawing stockholder whose notice had been filed but not otherwise acted upon by the association and whose turn had not been reached for payment in the regular order of application for the same, had the right to sue the association and obtain judgment for the undisputed amount of his claim, subject to the power of the court to restrain execution until his turn should be reached. Section 2 of the Act of April 12, 1859, P. L. 544, relative to building and loan associations, provided that any stockholder wishing to withdraw could do so by giving thirty days' notice of his intention, when he should be entitled to receive the amount paid in by him and such proportion of the profits as the by-laws may determine, less all fines and other charges. But the section contained a proviso that at no time should more than one-half of the funds in the treasury of the corporation be applicable to the demands of withdrawing stockholders, without the consent of the board of directors. Clause 2 of sec. 37 of the corporation Act of April 29, 1874, P. L. 73, contains a literal copy of the clause and proviso of the act of 1859, above referred to, except that it makes no mention of the right of the withdrawing stockholder to a part of the profits, but provides that after the expiration of one year after the issuing of the series he should be entitled to legal interest on the amount paid in by him. This difference between the two acts does not affect the question before us and need not be alluded to further. In an action brought in 1876 by a withdrawing stockholder of a building and loan association incorporated under the act of 1859, it was averred as a defense that one-half of the money in the treasury had been applied and paid to withdrawing stockholders in the order in which they gave notice and plaintiff had not been reached; and it appears to have been argued there, as it is here, that the action, if an action at law was maintainable at all, was prematurely brought. Upon writ of error to the judgment in plaintiff's favor for the full amount of his claim the Supreme Court fully considered the clause of the act of 1859 above referred to, and particularly the proviso, and held that after thirty days' notice the membership of the stockholder is determined and he becomes a creditor of the corporation to the amount he has paid, less fines and charges, and may, upon the refusal of the company to pay him, sue it and recover judgment. The interpretation of the proviso that would postpone his right to sue and recover judgment until one-half the money in the treasury should be sufficient to meet his claim and those of withdrawing stockholders who had previously given notice, was rejected. We quote the language of the court's opinion upon this subject. " It is a fact now alleged that this company has no money to apply to the claim in suit. When will it have? in one, six or ten years, or ever? And will the statute of limitations be suspended in the meantime? To these questions the defendant but answers: the proviso interposes to prevent the plaintiff from all compulsory process, though his claim is recognized, in the body of the statute, as just and proper, as long as the corporation manages to maintain an empty treasury, or, what is the same thing, as long as prior drafts leave no money to be applied to his debt. Looking at the statute as a whole, we are not prepared to adopt an interpretation so contrary to its spirit and the plain dictates of justice. Whilst it is certainly intended that the operations of the corporation shall not be...
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