Court Opinion

ID: 6237168
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:35:19.342577+00
Date Added: 2024-06-11T08:58:05.105147
License: Public Domain

Mr. Justice Sterbett
delivered the opinion of the court October 2d 1882.
The Lewisburg Building Association was incorporated by act of April 21st 1858, P.' L. 487, to which was afterward added the supplement of March 29th 1859, P. L. 291. At the expiration of twenty years the Association was re-chartered under the provisions of the act of April 29th 1874, but no new business was done thereafter. The object of the re-charter appears to have been to enable the Association to wind up its affairs. In pursuance of a resolution previously adopted, a general assignment for the benefit of creditors was executed in November 1879. In 1880, the assignee filed a partial account showing a balance of $2661.03 in his hands. The claimants on the fund who appeared before the auditor may be conveniently classified as follows, to wit:
1st. Depositors, who may be subdivided as follows: (A) Those who were not stock-holders; and (B) those who were ' stock-holders.
2nd. Holders of matured stock, consisting of (A) Holders of stock regarded by the Association as actually matured in regular course, including all the stock of series Nos. 1 to 30 inclusive; (B) Holders of stock reported as matured, but the maturing of which was afterward disputed, including series Nos. 31 to 34 inclusive; and (C) Gash matured stock, for which payment was made in advance.
*4943rd. Holders of unmatured stock consisting of (A) Those who had withdrawn their stock; (B) Those who had not withdrawn their stock.
The Association had issued in all forty-four scries of stock, of which the first thirty-four had been marked on its books as matured, and much of it either paid out or applied in liquidation of loans. Nearly all the stock of series No. 34 had been borrowed out and none of the unincumbered stock of that series had been paid.
The different classes aggregated $101,947.90, including deposits of non-stockholders, $12,508.59, and deposits of stockholders, $15,367.94.
It was claimed by the depositors who were not stock-holders that they alone, of all the different classes of claimants, were creditors of the insolvent corporation, and therefore entitled to the whole fund.
The stock-holding depositors claimed that they as well as those who owned no stock were, as to their deposits, creditors, and as such entitled to a prior claim on the fund.
Some of the withdrawing stock-holders claimed that they alone were creditors, and therefore entitled to priority. It was contended by other claimants that the fund should be distributed pro rata among all classes.
The auditor held that depositors of both classes were alike creditors, and he accordingly awarded the fund to them; but the court came to a different conclusion, and distributed the fund pro rata among all the claimants.
The principal question presented by the assignments of error is, whether depositors of either or both classes are properly creditors of the Association, and as such entitled to priority.
The fifth section of the charter provides that “ Stock-holders may deposit money from time to time under such regulations as shall be prescribed in the by-laws. The interest on such deposits shall not exceed six per centum per annum.”
The first section of Article XI. of the by-laws declares that “ Stock-holders may deposit money in the Association, which shall bear interest at a half per cent, per month, and can be withdrawn at any regular meeting.” These provisions evidently contemplated that stock-holders, and they alone, should bo entitled to make interest-bearing deposits; but in fact the Association received deposits from strangers as well as from its own members. The money thus received passed into the treasury of the Association, and was used in its business. Members of the Association who enjoyed the benefit of these deposits cannot be permitted to say that those from whom the money was received are not creditors of the Association. To permit them to do so would be grossly inequitable and unjust.
*495The stock-holding depositors, also, as to their deposits, occupy the relation of creditors to the Association. They, as well as non-stockholding depositors, are in fact lenders of money to the Association, and whether it makes or loses they are entitled to receive their money with the interest thereon at the rate established by .the charter and by-laws. As depositoi’s they have no right to participate in the management of the Association. That right springs from their relation to the Association as stockholders alone. The two-fold relation of corporator and creditor of the corporation is by no means unknown to the law : Gordon v. Preston, 1 Watts 385; Insurance Co. v. Connor, 5 Harris 136. It is said in the former case, That a corporator may sustain the relation of debtor or creditor in regard to the corporation, and in the latter capacity receive a security, is a proposition that requires not the aid of argument.” The provision in the charter which authorizes stock-holders to deposit money and receive interest thereon, establishes between them and the corporation the relation of debtor and creditor as to such deposits. The conclusions of the learned, auditor, as' to both classes of depositors, are so fully vindicated in his report that nothing further need be said on that subject. The fund should have been distributed pro rata among both classes of depositoi’s.
As to the other classes of claimants, in case the fund had been sufficient to reach them, we think the learned judge of the Common Pleas was right. In marshalling the assets of the insolvent corporation, neither of these classes is entitled to priority over any of the others.
Decree reversed at the cost of the appellees ; and it is now adjudged and decreed that the fund be distributed in accordance with the first report of the auditor.