Court Opinion

ID: 6685824
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:32:30.680246+00
Date Added: 2024-06-11T16:00:57.886191
License: Public Domain

Fuller, P. J.
I cannot concur in the conclusion reached by my associates. The avowed character and object of this *646mutual building and loan association is stated in its articles of incoi-poratiou as follows: . “The general nature of its business shall be to assist its members in saving and investing money and in buying and improving real estate, and for procuring-money for other purposes, by loaning or advancing, under the mutual building society plan, to such of them as may desire to anticipate the ultimate value of their shares, funds accumulated from the monthly contributions of its stockholders, and also such funds as may from time to time come into its hands.” Dues on stock issued to members must be paid monthly, at the rate of 60 cents per share, the greater portion of which goes into a fund to be loaned, upon satisfactory security, to such members, respectively, as may offer, by way of a sealed bid, to pay the highest premium, in addition to interest at 6 per cent, per annum, on the amount advanced. The persuasive feature of the plan is that the profits arising from these loans of monthly dues paid into the treasury on stock are for the mutual benefit of and equally participated in by, all members of the association. According to the requirements of the association, responnent has paid $824 dues on his six shares of stock, and the action of the trial court in applying the entire amount thus paid as monthly dues, together with interest thereon, in satisfaction of the mortgage indebtedness, constitutes, in my opinion, the firmest ground for complaint. Although by the failure of this mutual enterprise a li teral fulfillment of the original contract between the association and its borrowing members .is rendered impossible, nothing has occurred to change the relation of respondent Gullick to that of an ordinary debtor, entitled to credit upon the mortgage indebtedness for all he has paid in the way of dues, regardless of the *647rights of all other innocent persons constituting the membership. In consideration of the right to share in the profits equally with his associates, respondent voluntarily bound himself to contribute with them towards the losses, if any, andtheexpenses of the business, whether a success or failure. No good reason has been or can be given for placing him in the attitude of a preferred creditor, by transferring his membership liability to other borrowers or persons of which the association is composed. Consequently he should bear a just proportion of the additional hardship and increased expense of marshaling the assets of the corporation in order to make an equitable distribution thereof among all the members, and he would then be entitled, after the debts have been paid, to a pro rata dividend, alike with the borrowing and nonborrowing stockholders of the association. The courts almost uniformly hold that money paid as dues cannot be applied in payment of a note or in satisfaction of a mortgage given by a member of such association. Russell v. Pierce (Mich.) 80 N. W. 118; Phelps v. Association, Id. 120; Hale v. Cairns (N. D.) 77 N. W. 1010; Leahy v. Association (Wis.) 76 N. W. 625; Knutson v. Association (Minn.) 69 N. W. 889; Rogers v. Raines (Ky.) 38 S. W. 483; Price v. Kendall (Tex. Civ. App.) 36 S. W. 810; Post v. Association (Tenn. Sup.) 37 S. W. 216, 34 L. R. A. 201; Curtis v. Association (Conn.) 36 Atl. 1023; Weir v. Same (N. J. Ch.) 38 Atl. 643; Southern Building & Loan Ass’n v. Anniston Loan & Trust Co., 101 Ala, 582, 15 South, 123, 29 L. R. A. 120; Brown v. Archer, 62 Mo. App. 277; Strohen v. Association, 115 Pa. St. 273, 8 Atl. 843; Wohlford v. Association, 140 Ind. 662, 40 N. E. 694, 29 L. R. A. 177; Eversmann v. Schmitt, 53 Ohio St. 174, 41 N. E. 139, 29 L. R. A. 184. By requiring the payment of *648what was actually received by the borrower, with interest, and by leaviug to his credit all dues paid on stock until the final adjustment, when he and all other stockholders will be paid pro rata from the fund gathered for ultimate distribution, the burden, whatever it may be, will be equally apportioned, and none will escape the liability inherently assumed with membership. ’ Both the weight of reason and authority impel me to the conclusion that, as presented by the record, this case should be disposed of according to the foregoing system of computation, so that the final adjustment may be made upon the basis of mutuality, equality and fairness. When, from the evidence before the court, introduced under proper pleadings, losses and liabilities may be compared with receipts and profits, and the expense of final settlement be ascertained, so that an equitable adjustment of assets may be had, credit for dues paid in might be given in an action to foreclose a mortgage; but, as this case stands, the method by which my associates reach their conclusion seems inequitable.