Englehardt v. Fifth Ward Permanent Dime Savings & Loan Ass'n

Hatch, J. I think this judgment should be reversed for the following reasons: The articles of association provide that a member may withdraw when he chooses, upon complying with certain conditions. These requirements have-been complied with by the plaintiff, and he became, when that event happened, a creditor of the association and no longer a member. The association then presently owed him this money which, by the articles of association, he was entitled to receive from it. The fact that he was to be paid from the funds when collected does not change his status and cannot affect his legal rights; he is still a creditor, his debt is due, and he has the legal right to have that debt established. If the association should fail to collect money and fail to have funds on hand, is the creditor to be prejudiced thereby, and is the failure to collect to be an answer to his claim, and a defense when he seeks to assert his rights % If this is his status, then he can never maintain an action at law so long as the association is without funds in the treasury, and then we have the anomaly of a creditor with a debt due denied his legal right. This precise question was the subject of decision by the courts of Pennsylvania (U. S. Bldg. Assn. v. Silverman, 85 Penn. St. 394), and it was there held, for satisfactory reasons, that the action could be maintained. Endlich Bldg. Assn. §§136, 137, 141, 143, 266. Doubtless the creditor has an equitable right which may be enforced by appropriate remedies, but his right is not so lim. ited, nor is his legal right prejudiced thereby. I see no dis tinction between a case where the statute provides for with [520] drawal, and where the statute relegates to the association the right of making such provision in its articles. Here the provision in the articles is as broad as the provision of the statute in the Pennsylvania case, and certainly can have no greater force or'effect. It is quite likely that upon proper application a court would stay the i&suing of an execution or the prosecution of actions in order to protect the rights of all the members,if such protection seemed necessary, but such fact does not militate against the right of plaintiff to have his claim established by judgment. When plaintiff’s withdrawal was perfected, funds sufficient were on hand to pay his claim, but there were not sufficient funds on hand to pay his claim and those of other members who preceded him in point of time in perfecting their withdrawal. I doubt much the power of the trustees to provide by resolution, after plaintiff became a member, a preference of payment in favor of members who should first file their claims. To the extent of the amount paid in each withdrawing member stands upon an equal footing to participate in the fund collected. When the member perfects his right of withdrawal, he is then the equal of any other member who has perfected such right, and is entitled to be paid. It is here that the resolution becomes operative, for it creates a preference in favor of those who have first perfected their withdrawal. It has been held that such a rule was inoperative when the association had ceased to be a going concern (In re Blackburn & District Benefit Building Society, L. R. [24 Ch. Div.] 421; In re Sunderland Building Society, L. R. [24 Q. B. Div.] 394), and by implication that the rule found force when the society was solvent. But in both of these cases the rule was in existence as part of the by-laws when the association was formed. It is well settled that it is, not within the power of the trustees to destroy the equality of shares in a stock company, or to take away a right which originally existed, and this even though the power exists.to amend, alter or repeal by-laws. Kent v. Quicksilver Mining Co., 18 N. Y. 159. [521] In the present case plaintiff’s original right was to be paid equally with all others when his withdrawal became perfected; by the operation of the resolution his right is postponed and others preferred. This is something more than a mere regulation ; it is the creation of preference in payment where all are equal. This right to be paid equally with the others is a substantial right, and when the withdrawal is perfected all persons therein must be treated alike, and a resolution which gives the whole fund then to one, in exclusion of the others, is the destruction of such right, which I believe to be beyond the power of the trustees to accomplish. Holyoke Assn. v. Lewis, 1 Col. App. 127. In either view, the judgment appealed from must be reversed.