Walsh v. New Tioga Leader Building and Loan Association
| Decision Date | 15 February 1932 |
| Docket Number | 13424 |
| Citation | 16 Pa. D. & C. 180 |
| Parties | Walsh v. New Tioga Leader Building and Loan Association |
| Court | Pennsylvania Commonwealth Court |
Abraham L. Friedman, for plaintiff
Harry E. Apeler, for defendant.
Rule for decree for amount admitted to be due.
A bill in equity was filed, in which the plaintiff avers that he is the owner of certain shares of stock in the Tioga Leader Building and Loan Association, on which he had paid in as dues the sum of $ 1080; that on or about December 9, 1930 the said association was merged with the Modern Tioga Building and Loan Association, under the name and style of New Tioga Leader Building and Loan Association, by virtue of which the defendant succeeded to all the assets and liabilities of the old Tioga Leader Building and Loan Association; that plaintiff did not consent to said merger, was unwilling that it be effected, and demanded payment of the value of his stock, which the defendant has failed to pay to him; that he is advised by defendant that the value of his stock at the date of the merger was 70 per cent. of the amount of dues paid in by him, but he believes, expects to be able to prove, and, therefore, avers that the value of his stock is in excess of that amount.
The prayers of the bill are that defendant answer each averment of the bill; that the merger and consolidation of the two associations and all proceedings thereunder be declared illegal and void; that the Modern Tioga and the New Tioga Leader Building and Loan Associations be ordered to return to the Tioga Leader Building and Loan Association all property transferred; that the New Tioga Leader Building and Loan Association be decreed to pay plaintiff the full value of his stock on the date of merger, to wit, December 9, 1930; and for general relief.
An answer was filed by the defendant association, stating that the plaintiff had paid in as dues the sum of $ 1054, and that on December 6, 1930, the directors entered into an agreement to merge and consolidate the Tioga Leader Building and Loan Association, the agreement previously having been ratified by the stockholders of the Tioga Leader Building and Loan Association. It is further averred that prior to the merger the Tioga Leader Building and Loan Association was hopelessly insolvent, and on July 14, 1930, had been so declared by the Secretary of Banking, who ordered the association to show cause why possession should not be taken of its property; that pursuant to this notice the directors held meetings and decided to liquidate the association under the supervision of the Department of Banking; that numerous stockholders complained of liquidation, as the value of the stock would be very small in liquidation, and the Department of Banking ordered the association to appoint a stockholders' advisory committee to study the situation; that said committee was appointed, of which the plaintiff was a member, and in pursuance thereof the Tioga Leader Building and Loan Association decided to merge under the supervision and assistance of the Department of Banking, and as a result the Department of Banking formed a dummy corporation for the purpose of merging with the Tioga Leader Building and Loan Association, said association being known as the Modern Tioga Building and Loan Association. The merger was effected under the supervision and control of the Department of Banking, and the value of the stock of the Tioga Leader Building and Loan Association was scaled down to between 65 and 70 per cent. of the paid-in value. The merger also provided that there should be no withdrawals for a period of two years. It is averred that the association could only remain solvent upon condition that stockholders did not receive their money for two years, receiving, meantime, full-paid stock certificates payable two years after the date of the merger. It is averred that the real value of the stock at the time of the merger was far less than 65 to 70 per cent. of the paid-in value, but its actual value was so conjectural and speculative as to be impossible of definite ascertainment. It is further averred that on July 15, 1930, the plaintiff started suit in the Municipal Court against the Tioga Leader Building and Loan Association, as of July Term, 1930, No. 469, for the withdrawal value of his stock; that the value of the plaintiff's stock at the time of the merger was $ 713.09, conditioned, however, on the stockholder waiting a period of two years for receipt of said money, as otherwise the value of his stock would be far less than that amount. The plaintiff has now filed a rule for a decree for the amount admitted to be due, averring that he is entitled to judgment in the amount of $ 713.09.
The answer contains two defenses to the plaintiff's action: First, the prior pending suit at law for the withdrawal value of the stock; and, secondly, the averment of hopeless insolvency, resulting in a reorganization and merger of the association under certain terms and conditions. At common law, the pendency of a prior suit could have been pleaded in abatement. Under our Equity Rules (15, 52 and 91), such matter must be pleaded in the answer. The defendant has so done. The pendency of a prior suit, if pleaded, constitutes a bar to a subsequent action: Findlay & Hay v. Keim, 62 Pa. 112. However, even after the plea the prior action may be discontinued: Findlay & Hay v. Keim, supra . See, also, Penn Bank v. Hopkins, 111 Pa. 328. The rule is well stated in Freeman v. Lafferty, 207 Pa. 32, 37, as follows: The comparatively recent case of Meenen v. Negley, 93 Pa.Super 591, affirms the stand of the court in the case of Findlay & Hay v. Keim, supra . The plaintiff, therefore, before proceeding with this action in equity should discontinue the action heretofore instituted: Freeman v. Lafferty, supra .
The question raised as to the right of a non-assenting stockholder of a building and loan association, which is insolvent and which has been reorganized under the supervision of the Department of Banking, to demand the value of his stock at the date of the merger presents a more difficult problem. In the recent cases of Stone v Schiller Building and Loan Ass'n, 302 Pa. 544, and Brown v. Victor B. & L. Ass'n, 302 Pa. 254, our Supreme Court draws a distinction between the rights of stockholders of a building...
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