Pine Bluff Building & Loan Ass'n v. Thalheimer

Hill, C. J., (after stating the facts.) The series of the association of which Thalheimer was a member was prematurely wound up by the secretary before the stock matured. The board of directors did not act in the matter, and the actions of the other officers in assenting thereto and attempting to effectuate the closure were perfunctory. About a year later it was discovered that the secretary was short” in his settlements, and the series matured five or six months before it was entitled to have been matured. It was then impossible to rehabilitate this series into a going concern. The premature closure of it relieved the stockholders in it from fulfilling their obligation to pay until the stock was worth its face value, and thereby reduced, pro tanto, their burden of the expenses and losses of the association. This is contrary to the mutuality in profits and losses which is the dominant feature in building and loan contracts. The action of the officers in doing this was the action of the agents of all the stockholders, and the stockholders in this series could not profit by the mistakes of their agents in giving them a preference over other stockholders. Therefore it follows that equity.. which works equality, would compel these stockholders to make restitution. It is insisted that the action of the officers in cancelling the stock and satisfying the mortgage cut off Thalheimer from his rights as a stockholder, and relieved him from further obligations to either mature his stock or pay his mortgage. This is a mistake. When the association demanded further payments of him, that was equally a recognition of his continued status as borrower and stockholder, so far as winding up this series was concerned, and he was entitled to all his rights as stockholder until he discharged his stock by paying its face value. The association would have been estopped from questioning his status as stockholder, had he asserted his rights and privileges. It is contended that the association lost its rights by negligence and laches, and especially its rights to a cancellation of the entry of satisfaction, which was not specifically claimed until the amendment to the complaint was filed at the hearing, about five years after the entry was made. It seems the association demanded payment as soon as it discovered the situation, and enforced repayment, so far as it could, without suit, and this suit was brought within a year thereafter. There is no showing why the suit was so long continued in court, but no rights could be, or were, built up during its pendency which rendered the repayment an injustice, or changed the status of any party. The amendment, while coming late, presented np new phase of the controversy, and it was not an abuse of discretion to allow it to be made at that time. It follows that the judgment must be reversed. It does not satisfactorily appear that the correct amount is demanded of Thalheimer. It seems that the amount is ascertained from a computation based entirely on payments to become due from borrowing members, and it does not appear that the series was not to be responsible for losses and expenses after it prematurely terminated. The court on a retrial must ascertain the exact status of the series at the time it was mistakenly closed. The amount short of full payment to mature the stock is the amount which Thalheimer should pay, which amount should bear 6 per cent, interest from that date until judgment. No possible profits can enter into it, for the series was disabled from earning profits from that time. This excludes any burdens accruing after the time when the series was mistakenly closed, because it had gone out of existence, and its members had no further control or voice in the management until the error was discovered, and then only for the purpose of winding up properly what had been improperly wound up. The case is reversed and remanded, with directions to proceed to ascertain the amount due, as herein directed, and to foreclose in satisfaction of the same. Battue, J., did not participate.