Rogers v. Ogden Bldg. & Sav. Ass'n
| Citation | 83 P. 754,30 Utah 188 |
| Decision Date | 02 December 1905 |
| Docket Number | 1637 |
| Parties | ROGERS v. OGDEN BLDG. & SAV. ASS'N. DRIVER v. SAME (CROSSMAN et al. Interveners) |
| Court | Supreme Court of Utah |
APPEAL from District Court, Weber County; Chas. H. Hart, Judge.
Actions by L. R. Rogers and by Jesse J. Driver against the Ogden Building & Savings Association. In the latter action W. W Crossman and L. R. Rogers intervened, after which the actions were consolidated and tried together. From a judgment rendered in favor of Rogers, Driver and Crossman appealed.
AFFIRMED.
A. G Horn for appellants.
APPELLANT'S POINTS.
A corporation, such as the one at bar, the holder of matured or paid up stock, cannot maintain an action at law against the association to recover the value of his stock. This doctrine is elementary. (Endl. on Bldg. Ass'n, par. 118; Thornton on Bldg. Ass'n, sec. 330; O'Rourke v. B. A., 8 W N. Cases 176, 93 Pa. 308; Thompson on B. A., par. 107; Chrisswell's Appeal, 100 Pa. 488.
We contend that in cases where a building association is insolvent and there exists no agreement or statute by which one stockholder shall be preferred in the payment of his stock as against another stockholder, that the rule of law is in the absence of creditors, that they shall pro rata their claims and that no one is entitled to a preference in the payment of his claims as against the other. (Crisswell's App., 100 Pa. 488; Gibson v. Loan Co., 170 Ill. 44, 39 L.R.A. 202; Ass'n v. Stolz, 93 Ill.App. 164; Hohenshell v. Ass'n, 140 Mo. 506, 41 S.W. 948; Leahy v. Ass'n, 100 Wis. 555, 76 N.W. 625; Towle v. B. A., 75 F. 938; Coltrane v. B. A., 110 F. 272; Rabbitt v. Wilcoxen, 103 Iowa 35, 72 N.W. 306; Price v. Kendall [Tex.], 36 S.W. 810; Post v. Loan Co. [Tenn.], 37 S.W. 216, 6 Cyc. 165-6.)
It will also be contended that unmatured stock was a fund in equity to pay off respondent's claim and the unpaid part should be so applied. In reply we claim that the appointment of a receiver terminates all stock payments.
In speaking of preferential agreements the court says, "All such attempts are absolutely void as contrary to the natural law of such associations." (King v. Co., 170 Ill. 135; Trowbridge v. Hamilton, 18 Wash. 686; Wierman v. Loan Co., 67 Ill.App. 550; Latimer v. Loan Co., 81 F. 776; Summeral v. Trust Co. [Ky.], 44 L.R.A. 659.)
John A. street for respondent.
RESPONDENT'S POINTS.
When Mr. Roger's stock was declared "matured" and payable and he accepted the declaration of the corporation to that effect, he at once became affected with a different relation than any other person not in like position. The term "matured" is equivalent "to be suable." (20 Am. & Eng. Ency. of Law [2 Ed.], page 236, note; United States v. Union Pacific R. Co., 91 U.S. 85.) "A creditor is one who has a right to require the fulfillment of an obligation or contract." Bouvier's Law Dictionary. Quite in point upon the contention that Mr. Rogers is a creditor is the case of Blalock v. Kernersville Mfg. Co., 110 N.C. 99, 14 S.E. 501, (3 Cook on Corporations [4 Ed.], sec. 863, and cases cited; W. P. Noble Mer. Co. v. Mt. Pleasant Co-op., 12 Utah 213.)
"When a party with full knowledge or at least with sufficient notice or means of knowledge of his rights and of all material facts freely does what amounts to a recognition of the transaction as existing, or acts in a manner inconsistent with its repudiation or lies by and for a considerable length of time and knowingly permits the other party to deal with the subject-matter under the belief that the transaction has been recognized, or freely abstains for a considerable length of time from impeaching it so that the other party is thereby reasonably induced to suppose that it is recognized, there is acquiescence and the transaction although originally impeachable, becomes unimpeachable in equity." (Raht v. Sevier M. & M. Co., 18 Utah 303 and cases cited; 2 Pomeroy's Eq. Juris., sec. 965 [citing many cases]; Sheldon Hat B. Co. v. Eickemeyer H. B. M. Co., 90 N.Y. 616.)
On appeal only such parts of the judgment or decree of the subordinate court as are appealed from can be reviewed. (Kelsey v. Western, 2 N.Y. 500-505; Matter of Davis, 149 N.Y. 548.)
It is inability to meet the debts due its creditors which constitutes the insolvency of the general corporation. (Hagenbeck v. Hagenbeck Z. A. Co., 59 F. 14; Hazelton v. Allen, 85 Mass. (3 Allen) 114; Ridge v. Turnpike Co., 4 Pa. 490; 16 Am. & Eng. Ency. Law (2 Ed.), p. 636, and cases cited.
1. The Ogden Building & Savings Association was a corporation organized in 1893 under the general incorporation act of the then territory of Utah and, while not technically known as a building and loan association, to some extent it partook of the nature of such associations. The purpose of this organization, as stated in its articles of incorporation, was "the accumulation of a fund by the savings of the members thereof sufficient to enable each shareholder to invest his savings safely and speedily, and to purchase real estate, or to invest the same as may be deemed by him most profitable, and that each shareholder may have the benefit of the aggregate capital which co-operation produces, and loaning money to shareholders for the purpose of enabling them to erect buildings, and otherwise loaning and investing money, and the purchasing and holding real estate for the purposes and benefits of the association." It was also provided by its constitution and by-laws that "each and every shareholder, for each and every share of stock that he had subscribed for, paid the sum of fifty cents subscription fee, and the sum of one dollar each and every month thereafter, until the value of the stock in which the series to which the subscription was made became sufficient to divide to each share of the said stock the sum of one hundred dollars." It was also shown that the association had separate, distinct, and consecutive series of stock numbered from 1 to 37. Subscribers purchased of said corporation shares of its capital stock, paying therefor in monthly installments until the amount paid, as aforesaid, together with the natural earnings of said association, equaled the sum of $ 100 or more per share, when, as is conceded by all parties, and as is alleged in their pleadings by the appellants, "the said shares of stock should be fully matured, and the association agreed to and with such stockholders to then and there pay them in lawful money of the United States the amount at which said shares of stock had matured.". About the year 1890 respondent Rogers took out and was the holder of thirty-five shares of what is known as the "Fifteenth Series" of said capital stock, and from thence on continuously made monthly payments thereon until the 30th day of September, 1898, when said stock was fully paid and matured. All previous series having been therefore matured and paid for by the association and retired, the association, on the day last aforesaid, by resolution of its board of directors in a regular meeting, declared the said thirty-five shares of stock matured and then and there payable to the said Rogers at $ 102 per share, amounting in the aggregate to $ 3,570. Thereafter the association made partial payments thereon, leaving on June 26, 1903, a balance due and unpaid of about $ 2,700. Upon repeated demands made by respondent Rogers for his money, and upon failure of the association to pay it, on October 3, 1903, he commenced his suit against said association for the collection of the same. The defendant association appeared and demurred to the complaint, and, its demurrer being overruled, on November 19, 1903, it answered. In the meantime, and on the 2d day of November, 1903, the appellant Driver commenced an action against the defendant association, alleging its insolvency, and asked for the appointment of a receiver. On the same day the defendant association, through appellant Crossman, its president, filed an answer admitting all the allegations of Driver's said complaint, appeared in court, and consented to the appointment of a receiver, and on said day last named one Kelly was appointed receiver for said association. On November 9, 1903, respondent Rogers was given leave to file a complaint in intervention in said suit, which was done by him. Later appellant Crossman, who was a stockholder in a series subsequent to the fifteenth, for himself, and on assigned claims to him of stockholders also in series subsequent to the fifteenth, except one Tracey, who was of the fifteenth series, also filed a complaint in intervention in the said action. The actions were consolidated and brought on for trial before the court. It appears from the record that, in the filing of the various pleadings in said causes, the defendant association, the plaintiff Driver praying for the appointment of a receiver, the intervener Crossman, and the receiver himself were all represented by one and the same counsel. The principal contest at the trial was as to whether respondent Rogers was a creditor or mere stockholder of the association, and as to whether, by reason of the premises, his claim should be preferred, and therefore should be paid out of the assets of the association before paying members in series subsequent to the fifteenth. There were no so-called general or outside creditors. The constitution and the by-laws of the association were put in evidence, and evidence was also given with respect to its series of stock, and as to the manner in which prior series were treated and preferred by the association and its members over subsequent series.
Among other things the court found as follows:
To continue reading
Request your trial