Court Opinion

ID: 6999768
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:39:55.724114+00
Date Added: 2024-06-11T16:09:53.415433
License: Public Domain

Mr. Presiding Justice Freeman delivered the opinion of the court. An injunction was granted restraining the levy of the execution, according to the prayer of the bill. Appellant seeks to set aside this order, and urges as ground for reversal that the matters sought to be adjudicated by the bill were determined against the association in the action at law when judgment was recovered, and that the association was negligent in not setting up its defense then; that the association has been guilty of laches, and that it is not the proper party to maintain the bill. The statute provides that any member may withdraw the dues paid on his shares of stock, provided “ that at no time shall more than one-half of the funds in the treasury of the association be applicable to the demands of withdrawing members or the payment of matured shares without the consent of the board of directors.” It has been held that the withdrawing member can not maintain his action until funds are in the treasury applicable to the payment of the claim. Englehardt v. Fifth Ward Loan Association, 148 N. Y. 281; Heinbokel v. National Savings, Loan & Bldg. Ass’n, 58 Minn. 340. In the last mentioned case the court states the question thus: “ Can a non-borrowing member of a mutual building association, who has brought himself within the rules by hotice of withdrawal, be permitted to bring an action and take judgment against the association, when, by reason of the statute and the by-laws, there is no money in the treasury legally applicable to the payment of his claim ? ” And it is said that “ until there is money available for the purpose, no cause of action exists;” that a withdrawing stockholder “ can not properly be regarded as having the rights 'of the ordinary creditor.” Appellant contends that proof of the existence of the facts required by the statutory proviso is a necessary prerequisite to recovery by the plaintiff; that it must therefore be presumed, when a judgment is rendered against an association in favor of a withdrawing member, that such facts were alleged and proved, and the court found accordingly in rendering judgment; and, hence, the judgment is entitled to preference. But in this State the requirements of the statute are, notice of intention to withdraw, and funds in the treasury, half of which can be thus applied. The bill in this case alleges that the association was insolvent at the time of the notice of withdrawal and has been ever since. We agree with appellee that the solvency of the association is not required to be proved in the first instance, under the statute, by the plaintiff suing to recover as a withdrawing member in a suit at law, and the judgment establishes no presumption in this respect. It has been expressly held in this State that “ though judgments may be obtained against the association by members upon notice of intention to withdraw, yet the collection of such judgments may be controlled by courts of equity. Upon this point it is said in Endlich on Building Associations, Sec. 112: ‘ The execution may be stayed temporarily if proper equities are shown, or permanently where it turns out the association was insolvent at the time of the actual withdrawal.’ ” Chapman v. Young, 65 Ill. App. 131. The association in the present case appears, from the bill, to have been thus insolvent at the time of the withdrawal, and, according to the authority last referred to, the execution against it may be permanently stayed. In Gibson v. Safety Homestead Association, 170 Ill. 44, it is said that “notice of withdrawal from an insolvent society does not entitle members to priority of payment over their fellow stockholders.” It is contended, however, that the association can not avail itself óf these equities and invoke the aid of the court to enforce them; that the stockholders themselves are the proper parties to complain, if any one may. In Endlich on Building Associations, Sec. 138, page 176, it is said: “ But the court has the power, and the building association has the right to invoke that power, of restraining the immediate issuing of execution against the building association for the collection of the judgment, when proper equities are shown by the society, in order to give it a reasonable time to make up the money without undue embarrassment of its affairs.” In the presentcase the bill is presented in the name of the corporation, and it states that trustees have been appointed pursuant to law, who had not yet qualified (Rev. Stat., Chap. 32, Sec. 91 M). Such trustees are designated in the next section of the statute (91 ISTjas a “special committee,” appointed by the stockholders for carrying out the resolution providing for voluntary liquidation, and it seems to be supposed that the bill should have been brought by them when qualified. If we concede this for the sake of the argument, yet the delay for the trustees to qualify might have enabled the mischief to be done which the bill seeks to prevent. In Hersey v. Veazie, 24 Maine, 9, a case where a bill was brought by certain stockholders to recover against an agent of the corporation, it is said: “ The court could not rightfully assume the control of the corporation and exercise its rights in this respect without its being a party to the suit, and having an opportunity to justify its own course of proceeding.. * * * And until it has been shown to have been incapable of doing it, or to have been faulty, no corporator can assume its right to obtain redress for such wrongs, and to settle for them with the person who has committed them.” In Angelí & Ames on Corporations, Sec. 370, it is said: “It is indeed now, as it has ever been, perfectly well established that corporations, whether public or private, may commence and prosecute all actions upon all promises and obligations, implied. as well as expressed, made to them, w-hich fall within the scope of their design, and the authority conferred upon them. The suit must generally be brought in the corporate name. * * * It is equally well settled that corporations may sustain actions for all injuries done to the body corporate; as if an injury is done' to one of the members by which the body at large is put to any damage, it may sue on that account.” A suit in equity against officers or agents of the company may be brought by and in the name of the corporation, although, as a court of equity never permits a wrong to go unredressed merely for the sake of form, if the officers of the corporation should refuse to prosecute, the stockholders may in that case sue, making the corporation a party defendant. Angell & Ames, Sec. 312. The same reasoning is, we think, applicable in the present case. Inasmuch as the collection of a judgment in favor of a withdrawing stockholder may be controlled by a court of equity, and may be stayed permanently where it turns out that the association was insolvent at the time of withdrawal, because such a stockholder is not entitled to priority of payment over his fellow-stockholders, the attempt to collect such a judgment by levy and sale is an injury to the body corporate, as well as to the stockholders, and the corporation itself may invoke the protection of a court of equity. “ It is an elementary rule that, in equity proceedings, all persons whose rights may be injuriously affected by the proposed decree should be made parties.” Campbell v. Morgan, 4 Ill. App. 100-104. The object of the proposed levy and sale would be to appropriate property of the corporation to satisfy the judgment. The corporation is the trustee, the guardian and representative of all its stockholders, and is bound to protect them against any withdrawing member seeking a priority to which he is not entitled. We do not regard the alleged delay in filing the bill as laches. It does not appear that appellant has been prejudiced in any manner by the delay, and no necessity existed for asking the protection of equity so long as appellant made no effort to use his judgment for the purpose of securing a priority to which he is not entitled. The order of the Circuit Court is affirmed.