87 Md. 59 | Md. | 1898
delivered the opinion of the Court.
The appeal in this case is taken from a decree of the Circuit Court No. 2, of Baltimore City, perpetually enjoining the appellants, its officers and agents, from paying, in the future, to the withdrawing members of the appellant association the ten cents per share per month, which it is contended is provided in the by-laws of the appellant shall be devoted to the operating expenses of the appellant, and that the surplus, if any, of the expense fund of said appellant, shall be treated as profits, and as such shall remain in the appellant for the benefit of the members thereof, who shall continue therein until the maturity of their stock. The question presented by this appeal is, whether the decree, from which the appeal is taken, correctly interprets the bylaws of the appellant relating to the rights of those who are denominated the withdrawing members. The appellant was incorporated on the 26th of March, 1891, under the provisions of the General Incorporation Law of this State. By an amendment of its charter, dated the 31st of January, 1893, its aggregate capital stock is declared to be “represented by such number of shares of stock, not exceeding 250,000 shares, as the members of the appellant may from time to time subscribe for, and that the par value of said shares of stock shall be $100 per share.” The appellant is engaged in a very extensive business enterprise, involving
Before proceeding to announce our views as to the meaning and effect of the by-laws of the appellant, which have been adopted for its management and government, it is important that we should ascertain the principles which lie at the foundation of an enterprise of this character; not so-much its declared purposes as its actual meaning demonstrated in the conduct of its affairs. From a careful examination of its charter and by-laws found in the record, it is. quite apparent that it is an association incorporated under the provisions of the Code, Art. 23, sections 95—104, inclusive, title, “ Corporations,” sub-title-, “ Building or Homestead Associations,” and is thereby entitled to exercise all the powers and attributes which property pertain to- or flow from the various provisions of the Code referred to. Its primary object is the investment of money for profit and gain, whilst its secondary effort should be its division and. distribution in such manner as to secure to each shareholder his just and fair proportion of its profits. As a mutual association based on the mutual plan it is bound to treat its.
As illustrative of the effect of the appellees’ contention, we submit the following calculation based upon the theory advanced by the learned counsel who presented the appellees’ case to this Court in a most ingenious and forcible argument. Take for consideration ten shares of stock in the appellant association, which had been withdrawn at the end of the first year, as follows :
Admission fee, $1.00 per share................. $10.00
Amount paid on ten shares for 12 months........ 72.00
Total amount paid in..........................$82.00
In withdrawing the admission fee is retained.......$10.00 .
Appellees claim that on a proper construction of bylaws ten cents per share per month on monthly payments on stock should be retained...........$12.00
$22.00
Amount of principal due withdrawing member.....$60.00
Interest at six per cent, for average time.......... 1.80
*66 Total receipt.......'..........................$61.80
Without taking into consideration interest not allowed
on amount paid in, the loss is................ 20.20
$82.00
Hence it follows, as shown by this statement, that the withdrawing member loses on each ten shares of his stock the sum of $22.00.
It may be as well for us at this point to revert to the fact, heretofore mentioned, that from its inception, and so far as the record discloses, down to the present period, the appellant has not in a single instance retained “ ten cents per share per month from the monthly payments on stock,” but has always paid the holder of stock, that which by the express terms of Art. VI, sec. 2 of the by-laws, “ the amount paid on such shares, less the admission fee, together with interest thereon at the rate of six per cent, per annum,” and this the by-law says in terms “ he will be entitled to receive.” But it is contended by the appellees that as against this construction stands section 3 of Art. VIII, which reads : “ The payments on each share shall be sixty cents per month for each and every month until maturity, or withdrawal of stock, commencing the month following that in which the certificate is dated. Fifty cents per month per share shall be paid into the loan fund, and ten cents per month shall be devoted to operating expenses,” and sections 1, 2 and 3 of Art. X, which read, “the receipts of this association shall be divided into two classes, which shall be known respectively as the Loan Fund and Expense Fund. The expense fund shall consist of all admission, transfer fees, together with ten cents per' share per month from the monthly payments on stock, five dollars per share on paid-up stock during the first year, and $2 per share each thereafter, and this fund so constituted shall be devoted to the payment of operating expenses. The loan fund shall consist of all receipts which do not go to the expense fund, as hereinbefore provided. ’ ’ In contrasting these several sections
For the reasons assigned, we think there was error in the passage of the pro forma decree appealed from, and it is hereby reversed, and the bill of complaint dismissed.
Decree reversed and bill dismissed.