El Paso daily herald. (El Paso, Tex.) 1881-1901, 1897-02-13
TROUBLES OF A CORP)RATIDN
Southern PuiIdipg & Loan Association
Failure Aualyzed.

hhOA Vic. vi " Ii IL IL
have been given by the press reports
from time to time in the past several
days, are set forth with considers bic
detail in the suit for the appointment
of a receiver filed in the federal district
and circuit court for the western dis
trict of Texas last week by Mr.. Nc. G.
Shacklett, of this city, says the San
Antonio Express.
Mr.. Shachlett, who is a stock FOLDER
in the concern to the extent of $40, 000
filed his suit on January %, and imme-
diately Circuit Judge A. p. Mccormick,
of New Orleans, granted the receiver
ship, appointing w. c. Il 'bards receiv-
err of the corporation within the juris-
diction of the court, the court in
question being that for the western
district of Texas.
1t is set out in the petition on which
the receiver is asked and granted,
"that several months ago general
want of public confidence in building
and loan associations began to be felt.
and since that time it has grown and
Increased until now it is almost impos-
sibly for any building and loan asso-
citation to conduct profitable business
in the south, however closely it may
ad here to the requirements of the law
in the conduct of its business, owing to
the incessant attacks made upon build
ing and loan associations through the
courts, and the failure and refusal of
borrowing stockholders to bserve and
pay their obligations to the associa-
tiOnS.
Several cases recently decided by
the supreme court of Tenne -see, at
Knoxville, releasing borrowing stock
holders from their obligations to build
ing and loan associations on account Of
some little informally in which the
loans were made, have imbued borrow
ers from such associations generally
with the idea that they are under no
obligations, legal or moral, to carry
out the contracts with the association.
The effect of these several influences
upon the affairs of the defendant, the
Building & Loan Association,
added to the general StriDgeGcy in mon
ey matters, has been disastrous. A
multitude of the borrowers have fallen
far in arrears in. the payment of
their dues, and many of them absolute
ly refuse to pay further; and the arrear-
age now due the defendant association
amounts to more than $500, 900 much of
which is uncollecta BILE. In addition to
this the defendant association has sold
and had TO buy in large quantity OF
re al estate, which is carried npOn its
books at the valuation of S34S. 600
sum far in excess of what could be
realized for it.
Some of The borrowing STOCK hold
ers have brOugh' suits against The
defendant asso .iatiOn for the pu~rose
of decl ring tn il contracts uSuriOus
aid invalid. and there ar "a great
number of Ofher b 5rrOwers who are
suit against the defend
at on the same ground. If these
suit- should be successful it would
result in a tremendous reduc ion in
the value of defendants as cts.
For Years past. up to almost six
mo tn ago. the defendant was in the
habit of lending to borroa ers from
$50. 0O0 to 500. zoo per h. but there
are now few. if any appH ations to
building and loan associations for loans
Of money. ana the defendal 1T has made
We few or no loans for moe than
three months past. and expects to
ceased to conduct a business of bJild-
ing and loan association. and does not
expect or intend 10 resume it in the
future. but it is now simply engaged in
the business of winding up it, affairs
and distributing its assets as fast as
they come in, among its Withdrawing
stock holders.
The losses resulting from the re-
fusal or inability of the borrowing
to pay: from the shrink
age in the value of real estate: from
the suits now pending against the
defendant, and the many suits that are
now threatened-all these things have
created panic among the investing
stock olders of defendant, and TIT re-
suit is that in the last six months more
than $3.50, 900 of money has been taken
out of the defendants treasury by
stockho ders, and there
are now on file in defendants offices
notices of Withdrawals of more than
$500, 900 more of stock"
The petition then sets out that some
Of these notices were filed more than
,hree months ago, but that there is no
money in defendants treasury with
" hich to pay the same; that the defend
ants bylaws requires that the So with
lrawing stockholders be paid in the
order of time in which they are pre-
septed.
The affairs of the association are
pound by the bylaws, one of which
provides that the Withdrawing stock
holder shall be entitled to receive the
ull amount paid into the loan and ex-
)ense fund, aud IN addition shall re-
.eive per cent annual profits for the
Iverage time on the full amounts paid |
nto said funds. less any losses to which
he stock Withdrawn may be subjected,
f W ,thdrawn during the first two years,
ma 10 per cent per annum profit if
With drawn after two years. Most of
he stock that has been Withdrawn in
he last six months. and that is now
landing Oh notice of withdrawal, has
,een in the assoc alton more than two !
ears, and although the association has
Iot made anything ike the 10 per cent
Ter annum profit call ID for, neverthe-
eSS the 10 per cent per annum has been
,aid on this stock, and u u large sums
# money are being daily paid out to
' i thdrawIng stock holders, wrongful /
nd to the great injury of the remain !
pg stockholders
A petition further points out that |
ne stockholders are growing im-
'atient and are threatening suit, that
f the 10 per cent pro fits are not paid
litigation is inevi table, while on the
Their hand if the 10 per cent per an
UNI profits continue to be paid, a. Is
Ow being done, the assets on final
will fall short from $780,
10 TO 800 900 of paying ont, or in 9th
r words the holders of the last $780,
90 OF stock will receive nothing on
heir stock