Steinberger v. Independent Loan & Savings Ass'n

Citations

• 84 Md. 625
• 36 A. 439
• 1897 Md. LEXIS 13

Syllabus

<p>Building and Loan Associations—Proof of Insolvency Requisite fo? Appointment of Receiver—Free Shareholders—Withdrawal— Insolvency of Corporation.</p> <p>A bill was filed by certain free shareholders in a building association, i. e., subscribers to the capital stock, who were not borrowers from the association, alleging that the corporation was insolvent, and praying for the appointment of a receiver, &c. The evidence showed that the only indebtedness of the association was on a note to one of the plaintiffs, which was paid after the filing of the bill, and about $5,000 on bills payable, none of which were held by the plaintiffs ; that none of the plaintiffs had given notice as required by the constitution of the association, of their intention to withdraw their shares; that the association had about $50,000 in assets applicable for the payment of the above mentioned indebtedness, and that the owners of over $74,000 of free shares desired the business to be continued, the holdings of the plaintiffs amounting to only $544. Held,</p> <p>1st. That since the plaintiffs as free shareholders had not given the notice required to terminate their membership, they are not creditors, and the amount of their holding cannot be considered as an indebtedness due by the association.</p> <p>2nd. That since the association had ample funds with which to pay its existing indebtedness, there was no ground for declaring it to be insolvent and appointing a receiver.</p> <p>The relation of free shareholders in a building association to the corporation is one of partnership for a definite time; they are entitled upon its expiration to the profits of their investments with the right to withdraw upon notice, according to the constitution of the body. As shareholders they do not stand upon an equal footing with creditors. Their claim begins only after every creditor has been satisfied.</p> <p>The Act of 1894, chap. 263, relating to the insolvency of corporations, has not changed the relation