Rickert v. Suddard

Mr. Justice Sears

delivered the opinion of the court.

It is conceded in the arguments of counsel that a perfected Iona fide withdrawal from a building and loan association, with payment to the shareholder of the amount allowed him, puts an end to the membership and to all rights and liabilities of member and association in relation to each other. Endlich on Building Associations, Secs. 82, 108.

It is also conceded that notice of withdrawal from an insolvent association does not entitle a member to priority of payment over fellow-shareholders. A member who has given notice of withdrawal from such an association, can not, if the association is found to have been insolvent when the notice was given, be permitted to receive any more than his just proportion of assets, and must share losses with other shareholders. Gibson v. Safety L. & H. Ass’n, 170 Ill. 44; Chapman v. Young, 65 Ill. App. 131; Canadian Bldg. Ass’n v. Quimby, 79 Ill. App. 105.

It is, however, questioned in the arguments of counsel, whether the evidence here warrants a conclusion that this association was insolvent in October, 1896, when the withdrawal notice was given by appellant.

This appeal lies from a decree upon an intervening petition. A decree entered in the cause in which this petition was filed upon December 22, 1897, finds that on July 1, 1897, the association was insolvent, and that its liabilities exceeded its assets by the sum of $284,000. Upon the hearing of the issues raised by this petition, evidence was produced to show that the association was also insolvent in October, 1896. E. A. Gore testified that he was experienced in examining into the condition of building and loan associations; that he had examined the condition of this association; that there were other withdrawal notices given prior to that of appellant; that one of such withdrawing shareholders had not been paid when it was sought to pay appellant; that he ascertained the true condition of the association on September 20, 1897; that it was insolvent at that date and also on June 22,1897, and that the deficit at such times amounted to $284,000; that in October, 1896, the association was insolvent, and that its condition was then better only to the extent of $40,000 than in September, 1897. This witness stated that in forming his opinion he had considered the cost of the real estate owned by the association, and also reports of expert appraisers. The witness was not wholly consistent as to his knowledge of real estate values. At one time he testified that he was not “ a real estate man,” and was ignorant of real estate values. At another time, later in his examination, he testified that he could very closely determine the value of such property by knowledge of its location, which is substantially all that a real estate expert can do.

Against- this testimony, unsatisfactory as it is, nothing whatever was offered. It appeared by the decree that the association was largely insolvent in July, 1897, and it appeared from the testimony that its condition was not better, except to the extent of $40,000, in October, 1896.

We think it clearly determinable from all the evidence, that the association was insolvent to the extent of a deficit of at least $244,000 in October, 1896, when appellant’s notice of withdrawal was given,and in February, 1897, when the stock of the forty-sixth series was declared matured.

It is claimed that payment here has been fully made by the giving of the check, and that such payment controls. We think not. Whatever might be said of the right of appellant ordinarily, as against the drawer of the check, to the fund upon which it was drawn, yet it remains a fact that the check, given on account of a supposed obligation, which obligation did not equitably exist, was not presented while funds were in bank, and has not yet been paid, nor has the supposed obligation been satisfied. In this suit upon the intervening petition here, such payment of the supposed'obligation is, in effect, sought to be enforced.

In Chapman v. Young, supra, it was held that although the shareholder seeking to withdraw had obtained judgment against the association, yet upon it being determined that the association was insolvent when his withdrawal notice was given, the collection of such judgment would be controlled by a court of equity, and that the character of his claim was not altered by the fact of obtaining judgment.

In this case, in view of the insolvency of the association when the notice of withdrawal was given, and when the check was drawn, we hold that a payment should not in equity be permitted. Having reached this conclusion, we find it unnecessary to consider other questions raised, except one, viz., as to the fees of the master in chancery. It is claimed by the appellant that the fees of the master in chancery are too large, and that the court below has failed to pass upon the propriety of them. We are unable, from this record, to determine whether they are proper. The decision here, affirming the decree, is made without prejudice to the rights of appellant to have a motion to fix the amount of the master’s fees hereafter considered by the trial court. The decree is affirmed.