Court Opinion

ID: 6239164
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:40:06.003241+00
Date Added: 2024-06-11T08:58:08.761394
License: Public Domain

Opinion,
Mr. Chief Justice Paxson :
At the time the plaintiff’s mortgage was satisfied the stock of the first series had not matured. I do not understand this to be disputed. It is true, the secretary on March 3, 1885, reported to the board of directors that it had matured, and it is probable they believed him, and passed the resolution authorizing the satisfaction of the appellant’s mortgage in entire good faith. It subsequently appeared that the secretary was a rogue, and had been systematically robbing the company for years; that in consequence thereof, the stock, instead of being worth two hundred dollars per share, was not worth half that sum. The appellant, Callahan, was not only a member or stockholder of this building association; he was a borrower, as his mortgage shows, and he was also one of the directors; he was present when the secretary made his report, and voted on the resolution to satisfy his own mortgage. If we concede that he acted in good faith, and was himself deceived by the secretary, I am unable to see how it can change his position. Bad faith might perhaps make his position worse than it is, but I fail to see how good faith could make it any better. We must consider the case as it affects an insolvent corporation. The appellant was entitled to have his mortgage satisfied whenever the stock had matured, that is, whenever it was worth two hundred dollars per share. Is it material to the rights of other members of this insolvent association whether the premature satisfaction was the result of a fraud, or of an innocent mistake ?
There is no virtue in the satisfaction of a mortgage, except, perhaps, as to purchasers or other mortgagees without notice, that prevents either a fraud or mistake in the satisfaction from being corrected. The appellant cannot complain of the cor*145rection of a mistake which lifted the whole burden of this fraud from himself and placed it upon the shoulders of his at least equally innocent co-members. He has the less occasion to complain from the fact that he was a director of the association, and as such had certainly a duty to perform in the way of looking after its affairs, and protecting the interests of other members. The satisfaction of his mortgage, if allowed to stand, would give him an advantage over other stockholders and borrowers to which he is not entitled. It was held in West’s App., 88 Pa. 341, that where the entry of satisfaction of a mortgage is shown to have been entered by mistake, it is not conclusive as between the parties to the transaction; in Quein v. Smith, 108 Pa. 325, that an officer of a building association who knows that it is insolvent cannot discharge his indebtedness to it with stock held by him; and, in Strohen v. Franklin Saving and Loan Association, 115 Pa. 273, that the insolvency of a building association puts an end to its operations as such association, and nothing remains but to wind it np in such a manner as to do equity to the creditors and between the members themselves. Aside from the rights of creditors, the equities between the members of this association will not allow the appellant to escape his share of the common burdens, by shielding himself behind this improvident satisfaction of his mortgage. The court below was right in ordering it to be stricken off.
Decree affirmed, and the appeal dismissed at the costs of the appellant.