Monroe v. Broening

Adkins, J., delivered the opinion of the Court. This appeal is from an order of court sustaining the receiver’s exceptions to the allowance of a claim for $4,000 on a note for that amount from the First Lithuanian Building Association of Baltimore City to John Monroe, the appellant. On January 19th, 1932, he deposited $4,000 in the association, and it was credited on his free share passbook. On August 31st, 1932, the association applied to him for a temporary loan of $3,000 and assured him he would be paid out of money to be borrowed from the Reconstruction Finance Corporation.

He promised to lend the money, but on meeting the officers that evening refused to make the loan unless the $4,000 deposited on January 19th, 1932, on his free share account should be trans ²⁴¹ ferred to a note account, so that he would become a creditor instead of a free shareholder. This put the officers in an embarrassing position, as they had paid out over $2,000 relying on appellant’s promise of a loan of $3,000. On the advice of the president, who was a brother of appellant, the association yielded to appellant’s demand, and in consideration of his new loan of $3,000 gave him a note for that amount, and also a note for $4,000, with a memorandum on the latter, “Transferred from f. s. acct. No. 310,” and at the same time making an entry on his free share account No. 310, “Transferred to Note 782 — $4,000.” About a week later a bill was filed by certain free shareholders alleging insolvency of the association and asking for the appointment of a receiver to liquidate the association and distribute the assets among the creditors, depositors, and all other persons entitled, in the order of their priority, under the direction of the court, and also asking for an injunction to restrain the association and its officers and directors from paying out any of its assets pending the further order of the court.

On September 23rd, 1932, answer was filed denying insolvency and other material allegations of the bill, and it does not appear from the record that anything further was done until December 15th, 1932, when another petition for injunction was filed by the plaintiffs, in which it is alleged that, contrary to the verbal agreement made with the court that no more money would be paid out to free shareholders without the consent of counsel for plaintiffs, defendant has continued to pay out money to such of its depositors or free shareholders as may be favored by the management; that defendant owes.more than $25,000 in taxes on properties which it has repossessed, and has failed to use for the payment of taxes considerable sums of money paid in by mortgage borrowers for that purpose, and that a considerable sum is due for taxes on property on which defendant holds mortgages, and that defendant cannot pay any of these taxes, because, according to the statement of its counsel, it has little, if any, money on hand; that several of the prop ²⁴² erties upon which defendant holds mortgages have been advertised for sale by the city collector for nonpayment of taxes; that defendant is insolvent. The prayer of the petition was for the appointment of a receiver and for an injunction as in the original bill. On this petition an injunction was granted. On April 24th, 1933, an answer was filed again denying insolvency and alleging that the appointment of a receiver would be disastrous to the interests of its free shareholders, and with the answer were filed resolutions adopted at the annual meeting of shareholders on January 9th, 1933, expressing confidence in the board of directors and officers of the association, and disapproving of any attempt to throw the affairs of its association into receivership, but authorizing the directors in their discretion to take the necessary steps to liquidate the affairs of the association out of court, if they deem such liquidation necessary or advisable, and directing that no shareholder shall be permitted to withdraw his free shares in the association except at such times and in such amounts as the directors shall determine, but authorizing them to make payments in small amounts from time to time to such free shareholders as they shall find to be actually in need.

After that the proceedings seem again to have remained dormant