Mechanics' Building & Savings Ass'n No. 2's Assigned Estate

Citations

• 202 Pa. 589
• 52 A. 58
• 1902 Pa. LEXIS 570

Syllabus

<p>Building and loan associations — Purchase of real estate — Directors— Creditors— SlockhoIders— Redemption bonds.</p> <p>Where a building and loan association purchases real estate and gives its notes in payment therefor, and secures its notes by a mortgage, and the association and the stockholders receive the benefits of the transaction, and acquiesce in it for many years, subsequent creditors cannot object on the distribution of the proceeds of the sale of the purchased property after the insolvency of the association, that the mortgage was unauthorized, that the debt was unlawfully increased, that the corporate funds were tied up in a manner not consistent with the legitimate purposes of building associations, and that the contract was made with another corporation of which the directors of the association at the time composed the governing body.</p> <p>The redemption bonds issued by one building association to another assoeiation holding its stock and in cancelation thereof are legitimate evidence of debt against the association issuing them, and the payees in such obligation become mere creditors of the obligors therein.</p>