Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1889-01-12
A BIG B. & L. FINDING.
That Defunct Merchants and Mechan.
les Association is Revived.
BORROWING SHAREHOLDERS HELD
As Losers, Together With Those Who Could
Not Desert the Ship.
no LIABILITY FOR PREMIUMS BY THEM

John Rodgers, assignee of the Merchant
and Mechanics Building and Loan Asso
citation of Allegheny, VS. Henry Brooks e
al, is the title of a suit which has beer
heard at great length before the Master
John II. Kerr, Esq, and Mr.. Kerr has com
pleted his report in the case. 1t is of en-
crossing interest to all members of such as
sociations who have any suspicion that theil
affairs are not wisely conducted. The asso
citation was incorporated July 16, 1869
under the law OF 1859, and continued to dc
business for seven years. The pal
value of the shares was $500, and
it was expected to run its
course in eight years. But it stranded, and on
July q, 1881, an assignment for the benefit OF
creditors was made to William Walton, who
was subsequently relieved of the trust, and
John Rogers was appointed by court assignee
instead, August i2 1882
Now on June 25 1876 resolution was passed
by the Board of Directors, and assented to by
some stockholders, and dlssented from by
Others, by which borrowing stockholders were
allowed to anticipate payment of their loans,
and non-borrowing stockholders to withdraw
and receive half of their accumulated profits,
earned or supposed to be. A large number of
borrowers and stockholders did so, and the as
sociation surrendered securities and paid out
funds until it was discovered that it had lost
about $1,000
LIABLE WITH THE OTHERS.
Prior to making the deed of assignmentmany
of the stockholders had given notice of with
drawal, and, as the association at the date of
many of such notices had ceased to hold meet
ings or keep records, no record was kept of
such Withdrawals. Some seceders had been
paid, and thus had prior to the assignment
brought suit.
1t is held that as matter of law all losses
should be borne proportionately by all stock
holders, and that the amounts due the associa-
tion by withdrawers, as well as whatw due
from borrowers are dependent upon the pres
Ient value of the stock. There was snarl.
that they were present or assented TO the reso-
luton of June, $50, or were responsible for the
results. Some non-borrowing defendants
neither admitted nor denied, but virtually ad-
united all the other averments in the plaintiffs
bill, and Joined in the prayer to have the mat
ter adjudicated by court of equity.
As is frequently the case, the association
sold loans and the borrowers paid premiums
fhereon. The master cites much law and many
rulings ON similar cases. and decides that it
would not be equity to compel these borrowers
TO pay the premiums, as the association did not
perform its part of the contract and in brief
his finding is that all should share equally in
profits and losses, and some, who ought to be
made contribute, cannot be made do so, as the
Statute of limitations would intervene.
William Walton filed his account July Is
,1SS2, which shows that all the large creditors
were paid. and a balance of s., ,325 40 was paid
over to his successor, Rodgers.
GOVERNED BY CIRCUMSTANCES
AS the association practically ceased to do bus
fness after January = 1873 the question arises
whether withdrawn stockholders, unpaid at the
date of the assignment be treated as general
creditors, and be paid the value of their stock
at time of withdrawal, or have any prior
1ty of claim over stockholders who
stuck to the ship. The Withdrawals
were made at a time when the association was
in the throes of dissolution and withdrawers
should not he allowed any preference and it is
held that non-borrowe1s are not entitled to any,
thing more than borrowers, although, as con-
tended the borrowers were in the majority
and had control. The ground taken is that the
Board of Directors represented all the members
of the association, and beside the assignee is a
and his acceptance of the trust
If ratification. is at least sanction of the
validity of the assignment
Stripped of the premium question, ETC., the
due from borrowers will meet non
borrowers claims and still leave profit, or
surplus, OF 81 VI per share to each of the 29S
shares of stock The value of the stock jan
uary / 1875, was Sl06 l6, all expenses paid, and
its value now is Sl25 81 per share. 1t is recon-
mended that borrowers account for money
actually received, and that among those who
are caught and cannot escape, the best thing to
do is the right thing. There are no general
creditors.
The master therefore recommends that de-
cree be made that the borrowing stockholders
shall pay to John Rodgers, assignee of the
association, the balances owing by them re-
spectively, and that upon such payments being
made, the said assignee shall satisfy mortgages
l1Ven by them, respectively. to the association