State ex rel. Gray v. Active Building & Loan Ass'n No. 1

BIGGS, J. There are three cases included in this record. The controlling of material facts in each are the same. Lucy E. Gragg, Charles M. Buck and E. M. Estes, assignor of the Third National Bank of St. Louis, were at one time members and the holders of unpledged stock in the Active Building and Loan Association No. 1, the defendant herein. The association became insolvent, when by order of the circuit court its business was placed in the hands of the plaintiff as state supervisor of building and loan associations. The court appointed a commissioner to allow and classify demands against the association. The by-laws of the association contain this provision, to wit: “A member holding free shares in any series of the association may withdraw as to said shares by giving one month’s notice in writing at a regular meeting. At the next regular meeting or sooner at the option of the board of directors, he shall receive an order on the treasurer for the full value of said shares as shown by the books of the association at the close of the last preceding quarter.” This by-law conforms to the requirements of the statute. (R.S. 1889,sec. 2810.) Mrs. Gragg, Buck and Estes gave this notice long prior to the appointment of a receiver, and at a time when the association was solvent. The amounts due under the respective claims were ascertained by the officers of the association and the [588] parties were notified. In the settlement of the claims of Buck and Estes thé association gave its notes. The latter sold his note to the Third National Bank. The commissioner decided that these parties were creditors, and their demands were allowed and classified in preference to the claims of other stockholders. The circuit court confirmed the action of its commissioner. The supervisor has appealed to this court. The attorney for the appellant concedes that the applications of the respondents for the withdrawal of their shares were regular; that the withdrawals were allowed, and that at-that time the association was solvent. Notwithstanding these concessions the attorney makes the contention that in administering the assets of the association, which subsequently became insolvent, equity requires that the withdrawals should be disregarded and the holders thereof be treated as ordinary stockholders. It is claimed that, this is the ruling of the supreme court in Hohenshell v. Home Savings and Loan Association, 140 Mo. 566. It is clearly stated in the opinion in that case that at the time the withdrawal was allowed the association was insolvent. On page 511 Judge Burgess says: “The charter, and by-laws of the association do not, we think, create any such preference in favor of the withdrawing stockholders as against other stockholders, when the association is insolvent at the time, as in the case at bar, and it makes no difference whether the stockholder withdrawing knew of the insolvency at the time or not.” Solvency. In determining the right of preference in cases like we have here the important and pivotal question is, was the association solvent at the time the notice of withdrawal was given and accepted? If so, there can be no question either on principle or under the authorities that the acceptance of the notice terminates the membership, and the stockholder eo mstanU 'becomes -a creditor of the association. This is the plain contract made by the by-laws of the association and the statute. Nothing can [589] prevent this result, except the insolvency of the company at the time. (Moore v. B. & L. Ass’n, 50 S. C. 89.) It being conceded that the defendant association was solvent at the time the withdrawals were allowed and remained so for a longtime thereafter, the judgment of the circuit court confirming the report of the commissioner will be affirmed. All the judges concur.