Court Opinion

ID: 6999770
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:39:55.727203+00
Date Added: 2024-06-11T16:09:53.417051
License: Public Domain

Mr. Presiding Justice Freeman, on petition for rehearing. We are strongly urged in the petition for rehearing, filed herein, to reconsider this case upon the ground that “it was the duty of the defendant to bring forward all its defenses,” including insolvency, in the suit at law, where ' the appellant recovered his judgment against the association. It may be conceded that, as claimed by counsel, the association, after such judgment, was “ estopped to use anything against the judgment which it was its duty to have brought forward as a defense, and which was then or could then have been adjudicated.” The facts required by the statute, namely, notice of intention to withdraw, and funds in the treasury available for the purpose, must be presumed to have been found in favor of appellant when the judgment was rendered. But, unless the officers of the association knew, or had reason to know at that time, that it was insolvent, it could not properly set up such a defense. It is conceded by appellant’s counsel that “ if the association had, since the judgment, become insolvent, then, perhaps, another question would have arisen.” If the knowledge of insolvency was acquired only since the judgment, the situation is practically the same. The bill in this case alleges ownership by the association of real estate. Building associations are organized to make loans to their members, which are generally secured upon real estate. They may acquire title by foreclosure, and may be frequently compelled to take property upon which loans have been made. In times when land values are declining, they may be compelled to acquire real estate to such an extent that a large part of their assets are tied up in land for the time unsalable, and, if compelled to realize, they may thus be found insolvent. The knowledge of such insolvency would only exist, perhaps, when the effort to realize on such assets becomes a necessity. If not compelled to force its property on the market at a sacrifice while the depression in values continues, such an association might, finally, be.able to pay all its debts, If sued by a withdrawing stockholder before it has been compelled to make an effort to realize, the association could not, in all probability, prove insolvency, although it is subsequently ascertained that such insolvency did then in fact exist. We hold, therefore, to the view already expressed, that as the solvency of the association is not required, under the statute, to be proved by the plaintiff suing at law as a withdrawing member, in order to make out a prima facie case, it was not the duty of the association to interpose in such suit the defense of insolvency—at least unless it should appear that such insolvency not only existed but was then known or should have been known, to exist by the association and its officers; and that the judgment at law establishes no presumption “ res adjudicata ” in respect to solvency. It is true, as urged, that the bill is not as full in its allegations as might be desired. We think, however, that the averments are sufficient to justify the interlocutory order granting the injunction, and that is the question presented on this appeal. Further than this we express no opinion. The petition for rehearing is denied.