100 Mo. App. 216 | Mo. Ct. App. | 1903
Victor Reitz, the respondent, was a stockholder and borrower in the Aetna Loan Company, with which company he negotiated a loan of five hundred dollars, March 9, 1894, and gave his note for said sum on said date, secured by deed of trust on a property he owned in the town of St. James, Missouri. The note provided that he should pay the company ten years after date, or sooner, said sum with interest at the rate of six per cent per annum, payable monthly on the fifth day of each month, in installments of two dollars and fifty cents.
Reitz owned two shares of stock in the Aetna company of the par value of five hundred dollars, which he had taken out. in July, 1893, and these were mortgaged along with his real estate to secure the loan. Besides the note for five hundred dollars, he gave a note for three hundred and thirty-three dollars, secured by deed of trust on the same property covered by the first deed, payable in monthly installments of three dollars each, as premium bid for the loan.
The company deducted from the amount of the loan ten dollars for an attorney’s examining fee, and $16.50 dues and premium for the months of March, April and May, and paid Reitz $473.50 in June when the loan was concluded.
Fred Steen owned a share of stock in the Aetna company of the par value of five hundred dollars, issued to him in June, 1893, which he assigned to Reitz April 23, 1898, the transfer being regularly made on the books of the company. Reitz paid dues, interest and premium on the loan and stock until November, 1898, as well as we can tell from the record. About that time he demanded a settlement with the company, tendering his stock and offering to take for it what he
The court struck the following balance:
Reitz, debit—
Amount cash received on loan..........$ 473 50
Interest thereon ...................... 127 71
Attorney’s fee ........................ 10 00
Total...........................$ 611 21
Reitz, credit—
Stock......................$ 140 00
Interest on same ............ 18 90
Premiums paid on loan....... 168 00
Interest on same ............ 30 14
Dividend on stock ........... 60 21
Amount due on account of installments paid on stock.... 153 60
Total......*...........$ 570 85 $ 570 85
Balance due company ................$ 40 36
Judgment was entered for the company for that sum and that on payment of it by Reitz the deed of trust be satisfied.
The decree recites that the premiums paid on the loan were one hundred and ninety-eight dollars, but this is obviously a clerical error; for the testimony shows one hundred and sixty-eight dollars were paid and that sum has to be accepted in order to make the court’s computation come out right.
It is evident the court only gave interest on the loan from March 9, 1894, to October 25,1898; we suppose on the theory that Reitz endeavored to pay his loan on the last date, so that thereafter it ceased to draw interest.
The respondent disputes the correctness of the decree but he submitted to it.
The appellant assigns these exceptions: first, the credit of $153.60 for monthly stock payments was wrongly allowed, because the evidence made it clear the company had been insolvent for a long time and the respondent was bound to share in the losses with the other stockholders; second, the credit of $18.90 allowed by the court as interest payment was erroneous because in effect it was giving the plaintiff compound interest; third, the court erroneously deducted $16.50 from the face of the loan when in fact the respondent had received credit for that sum on his monthly dues for March, April and May; fourth, the court computed interest on the loan to October 25, 1898, whereas the interest should have been computed to the date of the judgment; fifth, the credit of $61.20 allowed Reitz for dividends declared by the company while a going concern should not have been allowed, because the testimony showed said dividends were declared while the company was in fact insolvent.
It should be stated that after the institution of this action, to-wit, on March 17, 1900, the Aetna company made a general assignment to James Hayward for the benefit of creditors, and Hayward was afterwards substituted as defendant and filed an answer that the company had long been insolvent and Reitz was not entitled to charge against the defendant the amount paid by him for stock dues because he, as a stockholder, was liable for his proportion of the losses of the company.
That section means such sitares can not be withdrawn while the loan stands, so as to deprive the association of a lien on them, and does not mean that the loan may not be paid off and the value of the stock taken into account in settling it; otherwise it would be in conflict with section 1368, besides producing an unreasonable result. The theory on which loans are made (unhappily, too rarely realized in practice) is, that when the stock has been fully paid, according to the ordinary course of business, the stock at its matured value will discharge the loan. If, however, the losses are so heavy that the stock does not go to par, whatever value it has when the borrower pays he is entitled to have credited on his' indebtedness. Brown v. Archer, 62 Mo. App. (K. C.) 278; Clark v. Ass’n, 85 Mo. App. (St. L.) 388.
We might not be willing to agree fully to the definition of insolvency of a building and loan association given in the last cited case;-but according to any conceivable definition appellant company was insolvent; for the evidence shows its assets fell below its liabilities forty or fifty per cent. And, indeed, it will be seen the circuit court found it was then insolvent.
Reitz gave no notice, as the statute requires, of an intention to pay off his loan and surrender his stock; but it is contended notice was waived, and we think it was waived so far as a settlement of the loan account and surrender of the pledged stock was concerned; for the only dispute between the company and Reitz was as to the amount he owed the company and no objection
But the law is settled that if a member of a building and loan association serves notice of an intention to withdraw, that step gives him no right to a preference in the distribution of the company’s assets if its activity is terminated by insolvency proceedings before the withdrawal is accomplished. In re Progressive Building Society, 54 L. T. 45; Hanney v. Ass’n, 16 N. W. 450. A member is not entitled to surrender his shares and be paid their full value if the corporation is insolvent; as has never been doubted, provided the insolvency is known or notorious. In re Sunderland, 24 Q. B. 394. And according to the better view, it seems to us, and the one adopted in this State, it is immaterial that the withdrawing member was ignorant of the association’s financial condition. Hohenshell v. Ass’n, 140 Mo. 566; Christian’s Appeal, 102 Penn. St. 184.
The point of difficulty is not whether the court erred in refusing to credit Reitz with the full amount he had paid on his shares and in crediting him instead with their withdrawal value in October, 1898, but whether he was entitled to be credited with any part of his stock payments after the corporation had become insolvent and its assets had passed into the hands of an assignee; and this point turns, we think, on whether Reitz’s rights were fixed by the institution of his suit for a settlement or by the company’s subsequent assignment for the benefit of creditors. 'Well-considered cases relied on by the defendant hold that a borrowing member of a defunct association is not entitled to have any part of the dues paid on stock credited on the loan, but must wait for dividends until final distribution of its assets. Meanwhile, the assignee or receiver may recover the amount of the loan without any credit being allowed for stock payments. The company’s assignment, receivership, or cessation of business because of insolvency, puts an end to or greatly modifies the contract between the borrower and the company, so that the latter’s responsi
This ease does not fall within the above-, rule; for the plaintiff instituted his action while the company was still going, and that circumstance puts him, in a different position with reference to obtaining credit for stock payments and dividends from what he would occupy if no suit had been instituted prior to the failure. An assignment does not prevent the plaintiff, in a pending litigation against the assignor, from obtaining judgment just as he would have done if no- .assignment had been made. The court which first obtained jurisdiction of the litigation proceeds to judgment in that particular
The statute provides that a borrowing member may repay his loan at any time, by giving thirty days ’ notice in writing, on the terms, and conditions prescribed by the by-laws of the association; and that in the absence of a by-law the member, on settling, shall be charged with the full amount of the loan as originally made to
The withdrawal value of the shares must he computed, therefore, and the shareholder allowed a credit for what they are actually worth; for the underlying idea of building and loan associations is mutuality of-losses and profits by all shareholders, who are, in a sense, partners, as has been many times decided. Hohenshell v. Ass’n, 140 Mo. 566; Bertche v. Ass’n, 147 Mo. 343; Shell v. Ass’n, 150 Mo. 103. As stated, the learned trial judge recognized this rule and endeavored to ascertain and credit Reitz with the cash value of his stock and thus force him to bear his proportion of the company’s losses.
The evidence introduced by the assignee, which was all the evidence on the subject, showed that not more than fifty-five or sixty cents on the dollar of what had been paid by stockholders would remain in solvent assets after discharging the company’s outside liabilities. In other words, the course of its business had been such that, instead of earning a profit, there had been a loss of from forty to forty-five per cent. The court took the view of the evidence most favorable to Reitz, and allowed him sixty per cent of what he had paid on his shares.
No scheme for fixing the amount to be returned to a withdrawing stockholder of a building and loan corporation which /will not prove unjust if the company fails to mature its stock, has been devised or can be, as far as we can see, and for this reason: The withdrawal of stock and payment of loans before the shares mature, are privileges not contemplated in the scheme of a building and loan association, but are departures from it tolerated for practical reasons. Members are permitted
Tbe refusal of the court to compute interest on tbe full face of tbe note was error as was its resultant action in allowing Reitz credit for interest on the interest paid. Those two items being changed, the balance due tbe appellant is $88.05, and witb a modification of tbe judgment to that effect, it is affirmed, the respondent to pay tbe costs of the appeal.