United States Building & Loan Assn' v. Silverman

Mr. Justice Gordon

delivered the opinion of the court, November 12th 1877.

Had the affidavit of defence filed in this case set forth losses incurred by the association, whether resulting from the depreciation of its property or otherwise, occurring before the time of the plaintiff’s withdrawal, no doubt a proper set-off to the claim in suit would have been exhibited; herein, however, is the material defect in that it does not state that such losses did happen before the withdrawal. On trial, without such showing, the defence would clearly amount to nothing, for the plaintiff could not be charged with losses which occurred after he ceased to be a member of the company, and we must take it for granted that what a defendant cannot state in his affidavit of defence he cannot prove in court. A like defect is found in the allegation concerning the indebtedness of the company contracted in the purchase of lands, for neither is it stated when that indebtedness arose nor for what purpose the lands were bought. Then, with regard to the statement that there was no money in the treasury to meet the plaintiff’s claim, this also is open to the objection that is, at best, only inferentially that we can learn that this deficit occurred before Silverman withdrew. It is said that the board of managers never authorized the appropriation of more than fifty per cent, of the money in the treasury, to the payment of withdrawing stockholders, and that the full amount required by the statute had been applied to the liquidation of the claims of such stockholders, in the order of their withdrawal, and the plaintiff had not been reached. We may infer, from all this, that, at the time Silverman withdrew there was no money in the treasury which could properly be appropriated to the liquidation of his claim either in whole or in part. But why could not this have been positively stated and thus have prevented the necessity of mere inference ? Giving, however, this part of the affidavit the full force of a positive statement, is it a good defence made out? We think not. The Act of April 12th 1849, Pamph. L. 544, provides : “ That any stockholder wishing to withdraw from the said corporation, shall have power to do so, by giving thirty days’ notice of his or her intention to withdraw, when he or she shall be entitled to receive the amount paid in by him or her, and such proportion of the profits as the bylaws may determine, less all fines and other charges; Provided, that at no time shall more than one-half of the funds in the trea *397 sury of tho corporation be applied to the demands of withdrawing stockholders without the consent of the board or directors.”

It will be seen from the above, that after thirty days’ notice tho membership of the stockholder is determined, and he becomes a creditor of the corporation to the amount he has paid, less fines and charges. That he may, upon the refusal of the company to pay him, sue it, and recover judgment, just as any other creditor, is not doubtful. It is urged, however, that he is estopped by the proviso, from legal process, for the recovery of his money, until the treasury has funds sufficient to meet his claim. If this be the true interpretation of the statute, then is this creditor in a most unfortunate position ; for the corporation may never choose to make the necessary provision for such purpose, and therefore he can never have process to compel it so to do.

It is a fact now alleged that this company has no money to apply to the claim in suit. When will it have ? in one, six or ten years, or ever ? And will the Statute of Limitations be suspended in the meantime? To these questions the defendant but answers : the proviso interposes to prevent the plaintiff from all compulsory process, though his claim is recognised, in the body of tho statute, as just and proper, as long as the corporation manages to maintain an empty treasury, or, what is the same thing, as long as prior drafts leave no money to be applied to his debt.

Looking at the statute as a whole, we are not prepared to adopt an interpretation so contrary to its spirit and the plain dictates of justice. Whilst it is certainly intended that the operations of the corporation shall not be embarrassed by having the whole amount of its cash assets taken, in order at once to pay withdrawing stockholders, yet it as certainly does not intend that no provision shall be made for their payment, and that they may be indefinitely postponed, even from judgment, by a plea of quasi insolvency.

We think the design of the act can be better met by giving the plaintiff judgment, and then, should it seem equitable to the court below, it may restrain execution, in order that the defendant may have a reasonable time within which to raise the money for the payment of such judgment, so that there may be no undue derangement of its affairs.

Judgment affirmed.