delivered the opinion of the court, March 26th 1883.
The fund for distribution represents the assets of a confessedly insolvent building and loan association which executed a voluntary assignment of all its property and effects for the benefit of creditors. Those claiming to participate in the fund were classified by the auditor as follows :
1st, The late treasurer of the association, who claims, as a genera] creditor, to be reimbursed for moneys paid on orders drawn upon him before the assignment aud for which the assignee refused to allow him credit in the settlement of his account as treasurer, amounting to $789.74.
2d. Holders of orders on the treasurer, issued to withdrawing stockholders more than six months before the date of the assignment; and also stockholders who gave notice of their intention to withdraw several months prior to the assignment, but received no orders for the amount, of their stock.
3d. All other stockholders not included in the second class.
For reasons given at length by the learned auditor, the items of claim embraced in the first class were rightly allowed and scheduled as preferred claims. The several payments, for which credit, was claimed by the treasurer, were made on orders regularly drawn upon him as such. His relation to the association was therefore similar to that of a general creditor ; and, in the absence of any other claimants of that class, he was entitled to be fully paid in preference to either of the other classes, whose claims were founded upon the relation which they sustained to the association, as stockholders thereof. The propriety of the decree, in that particular, has not been seriously questioned, nor indeed can it be. The principal ground of complaint is that after satisfying the treasurer’s claim, the residue of the fund was distributed pro rata among claimants of the second to the exclusion of the third class. That result was reached by holding that members of the association who had given the requisite notice of withdrawal, thereby ceased to be stockholders and became creditors to the extent of the withdrawal value of their stock as evidenced either by orders on the treasurer or by the books of the association, and consequently their claims are superior to those of their fellow stockholders who had not given the requisite notice of withdrawal. In this we think there was manifest error. While, in a qualified sense, withdrawing stockholders may be considered creditors of the association, their rights, as against those with whom they have *189been associated, are very different from tho e of general creditors whose claims are based wholly on outside transactions. If the association- has been prosperous, they.have a right, under certain limitations and restrictions, to demand and receive their proportionate share of the accumulated fund, but if bad investments have been made or losses have been sustained before actual withdrawal, they must bear their just’proportion thereof. That right, as was held in United States Building and Loan Association v. Silverman, 4 Norris 394, may be enforced by ap: propriate proceedings at law. But, the right of withdrawal and the extent to which it may be exercised presupposes that at least a relative proportion of the assets will remain for the benefit of those who continue to be active members of the association.
When a building association has failed to fulfill the object of its creation and has become hopelessly insolvent, it cannot be justly or equitably wound up on any other principle than that above suggested. After expenses incident to the administration of its assets are deducted, the general creditors, if any, should be first paid in full, and the residue of the-fund should be distributed, pro rata, among those whose claims are based upon stock of the association, whether they have withdrawn and hold orders for the withdrawal value thereof, or not. Both classes are equally meritorious, and in marshaling the assets-neither is entitled to priority over the other. The claims of each are alike based upon their relation to the association as. members thereof. Orders issued to withdrawing stockholders are merely evidence of their .interest in the assets remaining after paj'ing general creditors. As was well said by the learned president of the Common Pleas in the Assigned estate of National Savings, Loan and Building Association, 9 W. N. C. 79 such an organization is, in fact and in law, a partnership, with corporate rights, in which every stockholder is a member ; and while it may be true that a stockholder may recover judgment against the corporation, and thus become, in a certain sense, a creditor thereof, he is nevertheless not a creditor within the meaning of our assignment laws. There is also great, force in his suggestion that the appropriate method of administering the assets, remaining after payment of general creditors, would be through a receiver. While such a course would be strictly regular, the same result may be more directly and equally as well attained, by the course pursued in this case.
It may be observed that claimants of the second class should not be required to share losses resulting from bad investments made after they withdrew from the association as active members thereof ; but it does not appear that any such investments were made after they gave notice of their intention to with*190draw. On the contrary it appears that the injudicious investments, which afterwards developed and in the end resulted in heavy losses and consequent bankruptcy, were made before.
In view of what has already been said, it is unnecessary to consider several minor questions which arise upon the assignments of error.
We are of opinion that the residue of the fund, remaining after paying the claims of the treasurer, should be distributed pro rata among the claimants of the second and third classes.
Decree reversed, as to that part of the fund distributed to the second class of claimants, and record remitted with instructions to distribute the same in accordance with this opinion. Costs to be paid out of the fund.