#### George B. Davies, Appellant, *v.*The Millinery Building and Loan Association, Respondent.

(Supreme Court, Appellate Term,

June, 1900.)

Corporation. — Construction of by-law as to payment to be made a stockholder who withdraws — Priority.

Where a by-law of a solvent domestic corporation, regarding the payment to be made a stockholder who desires to withdraw therefrom, provides that not more than one-half of the funds in the treasury shall be applicable to such a purpose, unless the board of management consent, a vote of the board that the withdrawing stockholder be paid the withdrawal value of his shares is a consent which abso*736lutely entitles him to payment, no matter what may be the state of the funds in the treasury. The contention that withdrawing stockholders ought to be paid in the order of their withdrawal is not maintainable where the by-laws do not contain any such provision.

Appeal from ai judgment of the Municipal Court of the city of New York, borough of Manhattan.

H. A. Geney, for appellant. •

Judge & Durack, for respondent.

*Per Curiam.*

The by-law (No. 21) of the defendant, relative to the payment to withdrawing, members of the moneys coming to them under such circumstances, provides that “ at no time shall more than one-half of the funds in the treasury be applicable to the payment of withdrawing stockholders without the consent of the Board of Management * * * and such withdrawing stockholder may receive his money within ten days after the following regular meeting of the Board.” There is no evidence that the condition of the defendant’s treasury was such that one-half of the funds therein is not sufficient to meet the plaintiff’s claim. But, apart from this, it will be observed that the condition expressed in the by-law in question is operative only where the consent of the board of management referred to therein has not been obtained. "We are of the opinion that the vote of the board directing plaintiff’s claim to be paid was unqualified in its character, and must be deemed to be such consent.

There is no by-law or provision in the articles of association requiring that withdrawals of other members of the defendant, which are prior in point of time to that of the plaintiff, must first be paid. The defendant-association, having adopted rules with respect to the payment of withdrawals which are silent on this subject, must be deemed to have adopted all provisions, respecting the matter, which it considered necessary or advisable for its protection. The only limitation upon payment is with respect .to one-half of the funds in the treasury, and that payment may be deferred until ten days after the regular meeting of defendant’s board following the filing of the notice of withdrawal.

The decision in the case of Engelhardt v. Fifth Ward Loan Ass’n, *737148 N. Y. 281, dealt solely "with a case where the articles of association provided for payment to the withdrawing stockholder of the amount to which he was entitled *“*when the necessary funds are collected.” The court there held that this was “ a material and substantive part of the obligation assumed by the association, and that it constitutes a good answer to the suit of a withdrawing member, that neither at the time that he withdrew, nor subsequently, before the action was brought, were there in the treasury of the association any funds collected, out of which the claim could be paid.” There is nothing in the decision in question which is in any way inconsistent with the right of the plaintiff to succeed in this action.

If it is deemed to be desirable that withdrawing members shall be paid only in the order in which their withdrawals take place, the directors or managers of the defendant can readily accomplish this by securing an appropriate amendment of the by-laws; but until this is done there seems to be no reason for importing into the contract between the defendant and its members a provision which cannot now be found therein upon any reasonable construction.

We do not assert that where such an association is insolvent equity might not regard the priority of withdrawing members in the liquidation of their claims, but no such condition exists here, and it is, therefore, unnecessary to pass upon the question.

As the proofs stand, we think it was error to dismiss the complaint. Judgment reversed and a new trial ordered, with costs to the appellant to abide the event.

Present: Beekmajt, P. J., Giegerioh and O’Gormah, JJ.

Judgment reversed and new trial ordered, with costs .to appellant to abide event.