Evening star., 1938-04-07
BACKSD|SSOLV|NC
LOAN COMPANY
Auditor in Report Suggests
Possibility of Suit Over
Certificates.

Dissolution OF the Montgomery
Building Il Loan Association, asked
February by its directors. was rec
commended to the court today by the
District Court auditor, A. Leftwich
Sinclair, in a 2s-page report.
The possibility of a suit against
those responsible for the sale and
issuance of S32O,5l843 of so-called
foundation surplus certificates was
suggested in the report
Under the heading, Rights of Ac-
ton" the auditor entered this un-
explained item: "A possible right Of
action of said corporation in the mat
ter of the sale and issuance of 'founda-
tion surplus certificates in the sum
of $320,51843 against those intrusted
with the management of its affairs
and the collection and preservation of
its assets
1t was explained, however, that the
highly controversial foundation sur
plus certificates we're not studied ex-
haustively following the brief hearing
before the auditor March %.
10 Days for Objections.
j. A. Marshall. one of the attorneys
for the Montgomery directors, said 10
days would be allowed for the filing
of objections to the auditors report
and that dissolution order probably
would be presented to the court on the
l1th day, which falls on April 49,
Chief opposition to tentative plans
put forward by the directors of the
association has come from foundation
surplus certificate holders, who have
expressed the fear that their interests
may not be protected in the dissolu-
ton There are 1900 such certificate
holders.
In connection with the suggestion
| Of a possible right Of action in re-
| Spect to the foundation surplus GER
! tificates, the auditor made reference
to testimony of Joseph R. Little.
| president of the association and its
temporary receiver According to the
transcript incorporated in the report,
Mr.. Little testified that S420 out of
! IS received for certificate went to
pay salesmen's commissions and over
head expenses of the association.
When certificates We're sold for So, Mr..
Little testified, the commission
amounted to $40. Under cross
examination by attorneys representing
certificate holders, he said sale of the
certificates was discontinued in
March, 1885, practically a year before
he became president.
Three Suits Pending.
Three suits brought by holders of
surplus certificates. which are now
pending, were listed as CONTINGENT
liabilities" One certificate holder
already has obtained a Judgment for
! $3.50.
1t is expected that the report will
be submitted to the court shortly by
attorneys for the directors and that a
date for public hearings will be set.
Should the court agree that dissolution
Is desirable, the matter will be sent
back to the auditor for determination
OF which creditors should receive pref
erence in the distribution of assets.
A prominent receiver also is expected
to be appointed at the court hearing.
The directors have proposed to sell
the associations assets to the Per-
petual Building Association Assets
total $564,916.79, while liabilities. ex-
Guiding the foundation surplus certif1-
Gates, amount to $560,02420.
During the auditors hearing, March
%. no objection was made to disso-
luton of the corporation. and the
auditor informed the court today he
was of the opinion that dissolution
would be beneficial to the stockhold-
ers and not injurious to the public
interests