Strauss v. Carolina Interstate Building & Loan Ass'n

• Decision Date: 20 December 1895
• Citation: 23 S.E. 450,117 N.C. 308
• Parties: STRAUSS et al. v. CAROLINA INTERSTATE BUILDING & LOAN ASS'N.
• Court: North Carolina Supreme Court

23 S.E. 450

117 N.C. 308

STRAUSS et al. v. CAROLINA INTERSTATE BUILDING & LOAN ASS'N.

Supreme Court of North Carolina

December 20, 1895

Appeal from superior court, New Hanover county; Graham, Judge.

Action by William H. Strauss and others against the Carolina Interstate Building & Loan Association. From the judgment on petition by Iredell Meares and another, receivers, for instructions, they and the non-borrowing members appeal. Modified.

A receiver will not be instructed as to the distribution of the funds until he has them in court.

E. S Martin and Ricaud & Weill, for appellants.

W. R Allen and Jacob Battle, for appellees.

FURCHES J.

The defendant is what is called a "building and loan association," organized as a corporation under the laws of North Carolina. Defendant becoming insolvent, the plaintiffs brought an action in the superior court of New Hanover county to close out and wind up the concern. The petitioners, Iredell Meares and P. B. Manning, were appointed receivers, and filed their petition, and asked instructions from the court, in which they say: "Your receivers respectfully report to the court that, in the attempt to collect the debts due to the defendant association by its members, that they are met with the difficulty of how to adjust the balances that may be due the association, between the amount of the debt and the amount which may have been paid in by the borrowing members on their shares of stock. The complication arises from the fact that the borrowers, who are indebted to the association, are likewise stockholders therein, and, as stockholders, liable for their pro rata share of whatever losses may have been incurred in the failure of the association. If the relationship between the borrower and the association was simply that of debtor and creditor, the balance could be easily ascertained. The association, however, under its plan, loaned money only to its members; and these members made monthly payments on their stock, which, when amounting, with accruing profits, to the par value of their stock, were expected to be applied to the extinguishment of their loan, the stock being then canceled. The failure of the association, however, eliminates the possibility of maturing the stock, and necessitates an equitable adjustment between its members for the collection and distribution of the assets." Upon the hearing, Judge Graham made the following order: "This action coming on to be heard before his honor, A. W. Graham, judge presiding in the Sixth judicial district, at chambers at Clinton, North Carolina, on the 11th day of October, 1895, by consent of all parties thereto, upon the petition of Iredell Meares and P B. Manning, receivers of the defendant, the Carolina Interstate Building & Loan Association, praying the court for direction and instruction as to the winding up and settlement of the affairs of said corporation with and among the members and shareholders thereof, and the same being argued by counsel for said receivers and borrowing members of said defendant corporation, respectively, and considered by the court, the court rejects all of the plans of settlement suggested in the petition of said receivers, and now orders adjudges, and decrees, and the said receivers are hereby advised and directed to wind up, adjust, and settle the affairs of said corporation defendant, and distribute the assets thereof among the respective members or shareholders of said corporation upon the principles and in the manner following, that is to say: In the settlement with members of said corporation who have borrowed money therefrom, and secured the said loan either by a pledge of stock, or by pledge of stock and mortgage on property, and who are now indebted to said association, the said receivers shall charge the said borrowing member with the amount of money loaned to him by said association, charging interest thereon from the date of said loan to the 24th day of July, 1895, at the rate of 6 per cent. per annum. And said member shall be credited with all sums of money paid in by him, whether paid as dues, fines, premiums, or in any other manner, and also with interest on all of said payments from the respective dates thereof until the said 24th day of July, 1895, and the sum so ascertained shall be deducted from the amount of the loan to said member by the association; and the balance remaining shall be the debt due and owing by said member to the said association, and shall bear interest from the said...