After the decision of the Commission of Appeals shown in the opinion of Justice Critz in Connally v. Continental Southland Savings & Loan Association, 121 Tex. 565, 51 S.W.(2d) 293, that association, hereinafter designated as the Continental Association, organized and procured a charter of another building and loan association in the name of the Metropolitan Building & Loan Association, hereinafter designated as the Metropolitan Association, with the same officers and directors as in the Continental, to which it transferred a part of its assets. Apparently that proceeding was under the provisions of article 881a — 21a, Vernon’s Annotated Texas Civil Statutes.
.Upon petition of the Continental Association therefor, the Banking Commissioner ordered a reduction of 15 per cent, of its liability to its members, except upon juvenile shares, under, the -provisions of. article 881a — 56. That reduction was designated in all the proceedings as a “write down” of liabilities to its shareholders. ,.The assets *430of the association were then divided into two groups, which for convenience we will here designate as Group A and Group B. The assets in Group A were considered solvent and included mortgage and stock loans, etc. The assets in Group B were deemed to be of uncertain values, consisting of .mortgage and stock loans and real estate foreclosed.
The Continental then transferred and assigned the assets in Group A to the Metropolitan Association and retained the assets in Group B.
Pursuant to the plan that had theretofore been submitted to the various stockholders of the Continental, the contract of assignment by that company to the Metropolitan embodied agreements to the following effect: The Continental would withdraw and cancel the stock theretofore issued by it, and in lieu thereof would reissue to those stockholders 25 per cent, of the book value of said stock. The Metropolitan would issue to those holders 75 per cent, of the book value of the stock according to the Continental’s books. The Continental agreed to distribute to the stockholders the amount of cash then on hand, to wit, some $500,000, as their interest might appear from the by-laws of the association. The Continental agreed to execute to the Metropolitan its promissory note in the sum of $1,814,849.85, with a chattel mortgage on the assets reserved by the Continental, all to secure the. Metropolitan against any losses accruing against any claim arising against the assets assigned to the Metropolitan. The stock to bé so issued by the Metropolitan was designated as Class A. It was to be issued to the stockholders in the Continental as payment thereon to the extent of $63.75 per each $100 book value of stock owned by the holder in the Continental before the 15 per cent, write down in the stock liability had been applied; that sum being stated as “the exact and proper proportion which the assets purchased and the note received by the Metropolitan Association less reserve for dividends from July 1, 1932 to September 1, 1932, and other necessary reserves aggregating $90,000 bears to the book value of the stock'held by such Continental Association shareholders,” with the further stipulation that, “should any Continental Association shareholder refuse to accept such Metropolitan stock and the terms of the proposal mailed on October 10, 1932, then an amount representing- the proportion at the rate of $63.74 per $100 of the cash- payments -on 'such shares before the 15% write-down of stock liability of any and all of such shares so refused, shall be applied as a credit on the principal of the above mentioned note.”
That contract of sale of assets to the Metropolitan was in accord with the plans proposed by the Continental mailed to all of its stockholders and the resolution authorizing and adopting the same passed at a special meeting of the shareholders which had been duly called and notice of which had been given to all the stockholders in accordance with the by-laws of the Continental. And such action by the shareholders was approved by the vote of more than 98 per cent, of all the stockholders.
Accompanying the notice mailed to the various stockholders of the forthcoming special meeting of stockholders was a letter addressed to them reading as follows:
“Dallas, Texas, August 10, 1932.
“To the Investing Shareholders of the Continental Southland Savings & Loan Association :
“The enclosed call for the special stockholders’ meeting is, of necessity, long because the Association’s plan is set out in detail. In order to assist you in the interpretation of the plan, we give below a brief, practical summary of it:
“We have had our books .audited and our assets appraised. Based upon that audit and appraisal, we think your stock is unquestionably worth eighty-five dollars on the hundred of its paid-in value and that you have reasonable chance to receive the other fifteen dollars on the hundred. The plan divides your investment as follows, the example being based on one hundred dollars:
$ 7.00.Cash
63.75.Stock in new dividend paying association
14.25.Stock in liquidating association
15.00.Participation interest in reserves
$100.00.Total
“The $7.00 is to be paid upon acceptance of this plan, and the stock will be delivered to you immediately thereafter or as soon as the shareholdérs are notified to send their old stock in for transfer. The $15.00 participating interest in the reserves will not be evidenced by a certificate but will be set upon the accounts of the Association in the liquidating company to the credit of the stockholder.
*431“The stock in the new Association in the amount of $63.75 will commence to. earn dividends as of July 1, 1932, and the dividends are to be paid in cash immediately after January 1, 1933. The stock which you will get in the liquidating company in the amount of $14.25 will be subject to further liquidating dividends as soon as enough of the assets can be sold to make a distribution of the cash.
“As soon as the assets are all sold out of the liquidating company and the stockholder has been paid his $14.25 in full as per the above illustration, the further distribution of cash will be paid out of the $15.00 participation account referred to above.
“It can be seen from the foregoing that each shareholder will, in the end, receive the full benefit of the stock that he now owns, and it is our opinion that this plan will enable us to give you your money more quickly than any other plan known to us. It also has the added advantage of separating the good assets from the bad assets, and in that way enabling us to place the majority of your investment on a good, sound dividend-paying basis.
“If you agree to these plans, we urge you to sign the enclosed card and return it to us at once so that the secretary of the Association may record your vote at the stockholders’ meeting in case you ■ cannot be there.
“Very truly yours,
“W. C. Barns,
“Secretary.”
The Metropolitan Association was incorporated on the 1st day of September, 1932, with its principal office and place of business in Dallas, Tex., with the same directors and officers as the Continental, and for the same purposes and subject to the same statutory provisions as the Continental. Its authorized capital was $50,000,000, divided into 500,000 shares of the par value of $100 each. The charter contains these provisions :
“Art. VIII, Sect. 2: The Class A Stock shall be limited and restricted to Continental Southland Savings & Loan Association shareholders becoming members of this Association as part consideration of the transfer of certain of its assets' to this Association. Such stock shall not be subject to application for withdrawal for a period of two years, unless in the direction of the Board of Directors they may determine to apply thereon fifty (50%) per cent of its net receipts and then only on a pro rata basis to all shareholders, share and share alike.”
“Art. IX, Sect. 1: Withdrawal value of shares shall be all payments made thereon, plus dividends credited, less all lawful charges.”
The Continental Association was incorporated under the provisions of Revised Statutes of 1925, with an authorized capital stock of $60,000,000 divided into 600,-000 shares of face value of $100 each, and, prior • to and at the time of the transaction with the Metropolitan above noted, Miss Rena M. Graham held 20 permanent shares of its capital stock, for which she paid $2,000, the certificate for which was numbered 1697, dated July 1, 1930, and 10 shares of Class A Investment stock in the Continental, evidenced by certificate No. 851, of the par value of $1,000, which was fully paid for and fully matured. The certificate for the permanent stock contained the stipulation, “not subject to withdrawal and nonassessable.”
The by-laws of the Continental Association in force at the time contain these provisions :
“Section 2. Members shall be classified as shareholders, with classification of shares as follows.
“Classes ‘A’, ‘B’, ‘C’, ‘D’ and Permanent Shares.
“Classes ‘A’ and. ‘B’ shares shall be in the sum of One Hundred ($100.00) Dollars and multiples thereof, evidenced by a pass book and certificate executed by the President or Vice-President and Secretary of this Corporation, and issued upon payment of the initial installment of 50⅜ per share on Class ‘A’ and upon payment of $50.00 per share on Class ‘B’. Such payments and all subsequent payments and dividends credited on Class ‘B’ shall be entered in the’ pass book issued each shareholder. Class 'C shares, evidenced by a certificate executed by the President or Vice-President and Secretary or Assistant Secretary, shall be issued in the sum of $100.00 per share, with dividends payable as and when earned and declared, as the series shall provide.
' “Class ‘D’ shares shall be evidenced by a pass book in which shall be credited all payments as and when made by the holder, on which sums the holder shall be credited with dividends as the series may provide.
“Permanent Stock or Reserve Fund, which when sold may not be withdrawn, *432until after all liabilities of the Association have been satisfied in full, including- the full book value of all other classes of stock, and which shall receive as dividends all the earnings of the Association after expenses have been paid and the maximum dividends provided for other classes of stock have been paid or credited. Permanent Stock must be fully paid for in advance, and against which the Association may not make any loans.”
“Article 7. Shares not pledged for security of loans may be withdrawn in whole or in part by giving' thirty days’ notice and upon withdrawal the holder shall receive such amount as may be to his credit, less all fees, impositions, membership, cancellation or withdrawal fees, if any, which remain the property of the Association, provided, however, the Association will not be bound to pay out upon withdrawal more than one-half of its receipts that month, nor to impair its capital, such withdrawals and payments to be honored only as and when justifiable. The withdrawing member shall surrender his pass book and Certificate of stock at the time of withdrawal. Shares filed for withdrawal shall be paid in the order in which filed and notice given. Shall there be on hand funds that the corporation is unable to safely loan, the Board of Directors may, at its discretion in such order as it deems best, call in Class ‘B’ and Class ‘C’ shares and redeem and cancel same by paying therefor the amount to the credit of such respective shares.”
“Article 5. Each member shall be entitled to cast one vote, and one additional vote for each One Hundred ($100.00) Dollars paid on shares, at any and all meetings and elections. In the event any member does not attend and vote in person in any election, or meeting of the members, the Secretary is specifically authorized and may' cast the vote of such member.”
A like provision is shown in article 881a— 54, Vernon’s Ann.Civ. Statutes.
Article 860, Vernon’s Annotated Civil Statutes, reads as follows: “By the term ‘withdrawal value’ as used herein is meant: The then value of the stock at the time indicated in the connection in which the words are used, less the lawful charges against such shares in favor of the corporation.” ■
Miss Graham instituted this suit against both associations, alleging the transfer of §ssets by the Continental to the Metropolitan and the proceedings leading up thereto. She alleged in her petition that she consented to the proposed plan and assented to the contract of sale by the Continental, surrendered to the Metropolitan her certificate No. 851 of capital stock in the Continental, and in lieu thereof accepted certificates of stock in both associations and $71.91 in cash, in accordance with the terms of the contract of sale by the Continental to the Metropolitan. She further alleged that she tendered to the defendants her certificate No. 1697 for permanent shares in the Continental and demanded certificates of stock in the two associations on an equal basis and with the same rights as she had received for her certificate No. 851, which demand was refused. That demand was based on allegations that her permanent stock was of the par value of $2,000, and that the carrying out of the proposed plan as evidenced by the contract would exclude such permanent stock from participation in any of the assets and would amount to a confiscation of such shares.
Her petition concluded with a prayer for a decree establishing her right to a certificate of the capital stock in the Metropolitan for the face value of $1,275, which she alleged was the withdrawal value of her certificate No. 851, plus accrued interest, and for $2,000, the face value of her certificate No. 1697 for permanent stock.
She further alleged that the plan of operation that was adopted by the shareholders was prepared by counsel and auditors with the view and express purpose of concealing from the holders of the permanent stock the true purposes and conditions of the plan, and “that such counsel and auditors so framed and worded such plan that same is misleading, confusing and intentionally designed to lead the holders of certificates of permanent stock of said Association to believe that they would be entitled to participate in the consummation of the plan by being given equal rights with all other investing shareholders of the defendant, Continental Southland Savings & Loan Association. That as a result of such conspiracy and collusion on the part of the duly authorized counsel and auditors of the defendant, Continental Southland Savings & Loan Association, and the ingenious form in which said plan was formulated, this plaintiff was led to believe, and did believe, because of the statements contained in said plan and explanatory statement herein-above referred to as Exhibits A and B, that she wciuld participate in said plan in respect *433of her shares of permanent ⅝ stock on the same basis as any other investing shareholder of said Association.”
There was a further allegation that the officers of the two associations were the same persons.
More than 200 other members of the Continental Association holding certificates of permanent shares in that association filed pleas of intervention, seeking the same relief sought by the plaintiff, and adopting the allegations of her petition on which her claim was founded. The minutes of the meeting of the shareholders recite that votes of those interveners were cast in favor of adopting the proposed plan, and no testimony is cited by appellant controverting that recital.
A general demurrer and numerous special exceptions were addressed to the pleadings of plaintiff and interveners, but the court reserved ruling thereon until the conclusion of the evidence. After hearing the evidence, judgment was rendered denying plaintiff and interveners the relief prayed for by them “without prejudice, however, to the rights of the plaintiff, the above mentioned interveners, and all owners and holders of such permanent stock to receive their pro rata distribution out of the assets remaining in the-Continental Southland Savings & Loan Association, after the payment of the full book value, including the fifteen (15%) per cent write-down of all other classes of investors’ stock,’ as contemplated and provided in the plan of liquidation of Continental Southland Savings & Loan Association and/or reorganization approved by shareholders, directors and officers and the Banking Commissioner of the State of Texas, all as set forth in the contract executed by and between Continental South-land Savings & Loan Association, under date of April 8, 1932; that as and when such final distribution is made, as above set forth, then the balance remaining to be paid to permanent shareholders.”
This appeal is prosecuted by the plaintiff and interveners.
The proceeding taken was not for the purpose of liquidating and dissolving the Continental, within the meaning of article 881a — 55, nor was it a proceeding by the Banking Commissioner to force a liquidation, under the provisions of articles 867, 868, 869, and 870, Vernon’s Ann.Civ.Stat-utes. Nor was it a proceeding for consolidation of the Continental with some other building and loan association, within the meaning of article 881a — 54. But it was a proceeding to transfer its assets to another building arid loan association within the provisions of the last noted article.
The evidence showed conclusively that, before proceeding with the plan, the Continental had ceased to function as a solvent or going concern, and had ceased to carry out the purposes for which it was created, in that it had ceased to make loans, sell new stock,'pay dividends, or even to accept withdrawal ndtices. Its assets were depreciating in value; 50 per cent, of its members had filed withdrawal notices; its loans were not being repaid, because of its insolvency borrowing members had refused to pay their loans, and the Banking Commissioner was threatening to place it in receivership. The board of directors of the Continental, with the advice and assistance of the Banking Commissioner, had been attempting for more than a year to work out some plan to relieve its embarrassment. One of the attempts so made is reflected by its acceptance of the proposal by Maco Stewart, which was condemned in the opinion of Justice Critz in Connally v. Continental Southland Savings & Loan Association, noted above.
The legal purport of this suit was to cancel the agreement of the stockholders of the Continental and the contract between the Continental and the Metropolitan pursuant thereto, on the ground of fraud. The allegations of fraud have been copied above. Those allegations of fraud were conclusively refuted and overcome by undisputed testimony showing that the proposed plan was prepared by the association’s general counsel and certified public accountants, with the assistance of counsel and advice of the Banking Commissioner and his attorney, Judge Goodwin; that the proposal itself, together with all letters and contracts, were submitted to and approved by the Banking Department and its attorneys before mailing to the shareholders, and before such mailing that proposal was further submitted to the board of directors and presidents of several large banks in Dallas, and a group of the shareholders and approved by them.
Nor did appellant, Miss Rena M. Graham, offer to return the stock certificates and money she had received in exchange for her certificate No. 851, surrendered to the Metropolitan, as a condition precedent, ,to her right of rescission. Nor *434was there any pleading or evidence to show that the withdrawal value of that stock certificate was $1,027.28, as,alleged by her, when determined in accordance with the provisions of article 7 of the by-laws of the Continental; nor that she had given the notice of withdrawal therein required. Furthermore, her election to retain what she had voluntarily received as the proceeds of that stock, in the absence of any fraud practiced to induce such action on her part, would amount to an estoppel to.now claim that she was entitled to credit for more than what she had received.
The “write-down” of 15 per cent, of the liabilities of the Continental to. its stockholders, recited above, was by virtue of the provisions of article 881a — -56 reading as follows: “Whenever the losses of any building and loan association, resulting from depreciation in value of its securities or otherwise, exceed its contingent reserve fund, undivided profits and current earnings, so that the estimated value of its assets is less than the total amount due its members, the Banking Commissioner of Texas upon petition of such building and loan association, may order a reduction of its liability to its members, except upon juvenile shares, in such manner as to distribute the loss equitably among such members. If thereafter, such association shall realize from such assets a greater amount than was fixed in the order of reduction, such excess shall be divided among members whose credits were so reduced, but to the extent of such reduction only.”
Those provisions of the statutes clearly show that the “write-down” of liabilities by the directors of the Continental could not be construed as a discharge of the association’s liabilities to its stockholders, in whole or in part. That action had the effect only of suspending liabilities to the extent of 15 per cent, for the time being, in order to partially restore solvency of the association. As shown by the plan adopted by the shareholders, the holders of permanent stock would participate in any residue for funds collected by both associations after all other stockholders had been fully paid, and it was expressly stipulated in the by-laws of the Continental that the permanent stock could not be withdrawn until after all liabilities of the association had been satisfied in full, including the full book value of all other classes of stock. And, according to the pleadings of appellants, their permanent stock has not been surrendered but is still held by them, with the right to such participation in the contingency provided for.
It is our conclusion that the proceedings by the Continental, recited above, were warranted by the provisions of that portion of article 881a — 54, permitting the transfer of its “engagements, funds and property” to another building and loan association.
The assent of plaintiff and inter-veners to the plan adopted at the meeting of the shareholders estopped them from seeking the relief sought in this suit, and the action of the plaintiff in accepting stock in lieu of her stock certificate No. 851, surrendered to the Metropolitan, was a further ground of estoppel against her. Fletcher on Corporations, vol. 7, p. 8521, par. 4901, p. 8523, par. 4903, and authorities cited in support of the text; Ecker v. Kentucky Refining Co., 144 Ky. 264, 138 S.W. 264; Symmes v. Union Trust Company of New York (C.C.) 60 F. 830; Rabe v. Dunlap, 51 N.J.Eq. 40, 25 A. 959, 962.
It cannot be said that the plan adopted in accordance with the provisions of article 881a — 54 would have the effect of impairing the rights of holders of permanent stock theretofore existing, and was therefore violative of the constitutional rights of holders, since under the by-laws of the Continental such stock could participate in the residue only, after the liquidation of all other stock, and they had the same rights under the plan that was adopted.
Nor was there pleading or proof that the two associations are failing to carry out the plan of operations adopted in the meeting of the shareholders.
For the reasons noted, all assignments of error are overruled and the judgment of the -trial court is affirmed.