Polly v. Camden Building & Savings Ass'n

Adkins, J., delivered the opinion of the Court. The bill of complaint alleged: “That the defendant is incorporated as a building and savings association and is engaged in the business of accepting money from depositors to whom it agreed to pay six (6%) per cent interest, and lending money to borrowers from whom it accepted mortgages on real estate * * * to be paid in ⁵⁷⁹ small installments.” That its place of business has a bank front, “and the appearance thereof is in the nature of a bank with a large sign over its window reading 6% paid on savings account.” That complainant believes she is the largest depositor and has about one-tenth of the total assets. That all of her life savings were deposited with the association “as savings,” and that on August 6, 1930, the sums she had on deposit were put in the following names: Book No. 5074 — Mrs. Gertrude Messner — Terms “Trust fund subject to order of Mrs. Martha Polly” Balance ....... $2,500.00 Book No. 5075 — Mrs. Anna L. Jones — Terms “Trust fund subject to order of Mrs. Martha Polly” Balance ................. — ...............................- $2,500.00 Book No. 5076 — Mrs. Mathilda Dressel — Terms “Trust fund subject to order of Mrs. Martha Polly” Balance ...................................................... $2,500.00 Book No. 5073 — Account in name of Mrs. Martha Polly Balance of which is.......................... 676.25 $8,176.25 That the association held itself out to pay 6 per cent, and as ready and willing to pay out the money on demand. That plaintiff was promised 6 per cent, interest, but no interest has been paid on said accounts since July, 1933.

That plaintiff should be classed and designated as a general creditor and preferred to free shareholders. The bill further alleges inefficient management, diversion of assets, improper preferences, payment of dividends out of capital, and practically every violation of duty of which directors of such a corporation could be guilty; that the institution has been run in the interest and for the benefit of the officers and directors, and not in the interest of the depositors and free shareholders; that the corporation ⁵⁸⁰ is insolvent; that said officers remaining in charge will further injure said association and destroy public confidence; that the affairs of the association have become hopelessly confused; and that the creditors and shareholders will suffer irreparable damage unless a receiver is appointed. The prayer of the bill is: A. For the appointment of a receiver. B. That the corporation be liquidated.

C. That the defendant and its officers, directors and employees be restrained from disposing of any of the funds. D. For general .relief. The answer denies all the material allegations of the bill. It denies that it accepted money from depositors at any fixed rate of interest, or that it ever had a sign reading “6% on savings account,” or that it held itself out as a bank; it denies that there has been any negligent, inefficient, or wrongful management of the association; it avers that the association has been conducted for the benefit only of the shareholders and that all shareholders are of one class, and that no profits have been used except to pay dividends to shareholders; it refers to the passbook of complainant in refutation of the charge that the association held itself out to pay 6 per cent, interest or to pay on demand; that plaintiff is not entitled to any preference over any other shareholder; it denies that the association is insolvent, and alleges that it has paid, and is paying, its debts in the regular course of business, and that the fair value of its property is in excess of its debts; that, pursuant to Acts 1933, ch. 47, it is proceeding to collect its assets and make ratable distribution to all free stockholders, and the plaintiff and her attorney have been kept advised of the proceedings being taken; that the association is willing that the plaintiff shall have an examination of its books for the purpose of determining the truth or falsity of the statement in the answer.

This appeal is from a decree dismissing the bill of. complaint. In the view we take of this case, it is not necessary to determine here whether the plaintiff is a general creditor or a free shareholder, as in either event, on the whole ⁵⁸¹ case, in our opinion there is no necessity for the appointment of a receiver. If plaintiff desires, she can have her status determined in a suit at law. In the matter of the appointment of a receiver, we said in Polish-American Building & Loan Assn. v. Dembowczyk, ante. p. 259, 173 A. 254 , 157: “The appointment of a receiver is within the sound discretion of the court, and this power should be exercised with caution and circumspection.

The appointment of a receiver should never be made because it could do no harm, and the facts alleged or proven in order to bring into action this extraordinary and far-reaching power, should show in a clear and convincing manner that without such an appointment there would be danger of great damage to the party asking for the receiver, that it is necessary for the protection and preservation of the rights of the parties in interest. * * * And by the Acts of 1933, chapter 531, it is expressly provided: ‘Notwithstanding any allegation or proof of insolvency, the appointment of a receiver shall remain in all cases within the sound judicial discretion of the court’.” In this case the chancellor, after hearing all the testimony and after giving the plaintiff a rehearing, reached the conclusion that the appointment of a receiver was not necessary for the protection of the rights of the plaintiff; and, after a careful examination of the record, we find no cause to disturb