Hennighausen v. Tischer

Bowie, J., delivered the opinion of the Court. The appellee being a shareholder in the West Saratoga Building Association, on or about the 7th of November, 1875, executed and delivered to that institution, a mortgage, which was duly recorded among the Land Records of Baltimore City. The appellants, some time afterward, by a decree of the Circuit Court of Baltimore City, in a cause therein depending between Joseph Litz, et al. vs. The West Saratoga Building and Savings Institution were appointed receivers of said association, with power, among other things, to ⁵⁸⁶ release mortgages to it, and make distribution of the assets among its creditors. The appellee, on the 5th of February, 1877, filed his petition in the Circuit Court, in the above entitled cause, alleging the execution and delivery of the mortgage, that he had since complied with all the conditions stipulated for in the same, and made such other payments as entitled him to have the same released; that the petitioner is a creditor of the corporation, by virtue of certain claims held by him against it, which should be credited on said mortgage, and which, if so applied, were more than enough to pay off said mortgage.

The petitioner charges that he had applied to the receivers to release his said mortgage, but they denied the right of the petitioner to the credits claimed, and to a release, and claimed there was a balance due them on the mortgage, etc. The answer of the respondents admits the execution of the mortgage by the petitioner, to secure the payment of the dues, interest, and fines incident to a loan of eight hundred dollars, which he received from the association, until the loan shall have been fully repaid; and it admits that the petitioner has paid by way of weekly dues a part of his said mortgage debt; but denies that he has fully discharged the same. They disclaim all knowledge of petitioner’s claims marked Exhibits A. T., No. 1 and 2, but say, if the petitioner, as a member of the association, has paid any money on unredeemed shares of stock of the association held by him, or purchased amounts from other members of the association, which said members had paid in on their respective unredeemed shares, he may file said claims with those of other creditors, but cannot claim the benefit of such payments or purchases as credits on his mortgage. The respondents allege, they have reason to believe, the assets of the association will not be sufficient to pay the ⁵⁸⁷ judgments against it, and the promissory notes passed hy it, so that the members who are holders of unredeemed shares, are not creditors, but debtors to the judgment creditors and note holders. The petition, exhibits and answer were referred by order of the Court, to the auditor, to state an account between the petitioner and receivers, as to their respective claims.

In pursuance of which order, accounts A and B, were stated and filed by the auditor, together with certain depositions taken before him by the parties, in support of their respective pretensions. In connection with and in addition to which, the parties by their counsel, agree that Exhibits A. T., No. 1, and A. T., No. 2, may be taken and used as evidence in this Court, as if copied into the record. These exhibits contain printed copies of the constitution of the association, and entries made by the secretary of the society, of the money paid in by the members, to whom the books belonged, or sums due to them respectively. The appellants excepted to auditor’s account B, and the appellee to account A; these accounts being the converse of each other, the one, presenting the claim of the petitioner according to his pretensions, the other representing the respondents’ claims.

The Court below after argument ratified account B and rejected account A; from which decree this appeal is taken. The right of the appellee to a release of his mortgage depends upon the fact whether the credits he claims are properly applicable to the mortgage as payments, or set-offs to the claim of the mortgagee. These credits consist of balances due from the association to certain members who had withdrawn from the association and assigned them to the mortgagor. The principal items of credit claimed by the petitioner, are not payments strictly speaking, but matters of set-off, ⁵⁸⁸ which is a peculiarly equitable defence and they should be allowed unless there is something in the constitution of the association which makes it inequitable to allow it, having due regard to the rights of others.

The object of the association professedly was “ to procure for its members by their savings a capital, and deposit the same in a safe