Case Name: John Wolfe et al., Resp'ts, v. Courkey Avenue Savings, Aid and Loan Association, App'lt
Court: New York Supreme Court, General Term
Jurisdiction: New York
Decision Date: 1894-01-18
Citations: 58 N.Y. St. Rep. 656
Docket Number: 
Parties: John Wolfe et al., Resp’ts, v. Courkey Avenue Savings, Aid and Loan Association, App’lt.
Judges: 
Reporter: New York State Reporter
Volume: 58
Pages: 656–658

Head Matter:
John Wolfe et al., Resp’ts, v. Courkey Avenue Savings, Aid and Loan Association, App’lt.
(Supreme Court, General Term, Fifth Department,
Filed January 18, 1894.)
Loan association—Withdrawal.
A loan association, where its articles provide that, after notice of withdrawal of shares, the amount thereof “shall he refunded to such member as soon as the necessary funds are in the treasury,” cannot lend any of its funds while withdrawal notices are on file.
Appeal from a judgment in favor of the plaintiffs.
J. J. Snell, for app’lt; If. J. Stull, for resp’ts.

Opinion:
Dwight, P. J.
The action was first tried in the municipal court of Eochester, and, from the judgment there rendered for the plaintiffs, an appeal was taken to the county court. The action was brought to recover the amount standing to the credit of the plaintiffs on the books of the defendant association on the 18th day of March, 1891, on which day the plaintiffs filed with the association their notice of withdrawal of all their shares, with the dividends due thereon. The notice of withdrawal was filed under a provision of the articles of association of the defendant, as follows:
" Members not having received a loan may withdraw one or more of their shares from the association at any time by giving notice in writing to the board, and the liability to pay further dues, and the right to dividends, shall cease with the filing of such notice. Application for withdrawal shall only be received in the regular order of business, and the principal theretofore paid on such share or shares shall be refunded to such members as soon as the necessary funds are in the treasury. Dividends shall not be paid to any member except upon the final withdrawal of all his shares."1 Article 14, § 2.
The plaintiffs had never had a loan from the association ; and, having given notice of the final withdrawal - of all their shares, they were entitled to receive, with the principal paid on such shares, the dividends due or declared thereon down to the filing of their notice of withdrawal. The amount then standing to the credit of the plaintiffs, including dividends, was the sum of $771.25, for which sum, with interest, judgment was rendered in their favor. It seems apparent that the single test of the plaint-, iff's right to be paid the amount then standing to their credit, and, consequently, their right to recover in this action, is the question whether, at any time after the filing of their notice of withdrawal, and before the commencement of the action, there were the necessary funds in the treasury of the association to make such payment. Of course, applications for withdrawal were entitled to be honored in the order of their filing, and the necessary expenses of conducting the business of the association must have precedence of payment over any such application. But the undisputed evidence in the case establishes the fact (which is found by the court) that over and above all such previous applications, and the actual expenses of the association during the interval mentioned, there was a balance of moneys, received in the regular course of business, more than sufficient to pay the amount due to the plaintiffs. But the proofs also show that this balance, and much more, was exhausted by loans to members made during the same interval. And here arises the single question in this case, viz., whether the defendant had a right, under its articles of association, to appropriate any of its funds to the making of loans while withdrawal notices were on file which had not been honored. It seems very clear that this question must be answered in the negative. The only pretext for the contrary contention seems to be found in a resolution of the board of directors, adopted some time before the filing of the plaintiffs' notice, to the effect that only one-half of the receipts of the association should be applied to the payment of withdrawals, and the other half should be loaned to members. But the articles of association of every organization for mutual benefit, like the defendant, constitute the contract between the association and the individual member,and no provision of such contract is subject to be abrogated, or its obligation impaired, by any act of the board of directors which is not expressly empowered by the articles themselves. As we have seen, the articles in this case (article 14, § 2, supra), plainly give to applications of withdrawal precedence over all other appropriations of the funds, except, from necessity, the actual expenses of the association. The provision is that such applications shall be paid " as soon as the necessary funds are in the treasury ; " and this provision necessarily limits and controls the previous provision for loans, which is as follows: . 1 'Article 10, § 1. All moneys received by the association shall be loaned to members, except as hereinafter provided^" This, it seems to us, is all there is of this case. Under the provisions of the articles of association, it was not competent for the board of directors to prefer applications for loans to applications for withdrawals; and but for such preference, as the undisputed evidence shows, there were the necessary funds in the treasury, during the interval between the filing of the plaintiffs' notice and the commencement of their action, to pay all previous applications of the same character, as well as that of the plaintiffs. The judgment of the county court was therefore right, and must be affirmed.
Judgment of the county court of Monroe county appealed from affirmed, with costs.
All concur.