Steinberger v. Independent Loan & Savings Ass'n

Russum, J., delivered the opinion of the Court. Frederick Keller filed his bill in the Circuit Court No. 2, of Baltimore City, against the appellee, alleging that it had issued notes, under its -corporate powers, for the purpose of borrowing money to carry on its business of lending money to its members ; that some of said notes'were overdue and unpaid; that the said corporation had become greatly embarrassed, and was without means to meet them; that it was indebted to the complainant in the sum of $1,800.00, on its promissory note, which was past due and unpaid; ⁶³³ that the said corporation was embarrassed at the time of the loan by him, and afterwards became still further embarrassed ; that the said corporation was insolvent; that the secretary had defaulted to a large amount, and that unless its affairs were taken out of the hands of its officers by the Court, the available assets would be wasted and dissipated. The prayer of the bill was for an injunction, and a receiver and for general relief. Afterwards, Joseph Steinberger, John Krepp, Joseph Bitzelberger, Mary Krepp and Jesse Marsden, the appellants, were made parties complainant.

The answer avers that Frederick Keller had, by an order filed in the cause, dismissed the bill; denies the insolvency of the corporation ; denies that the then complainants were creditors; and avers that they are free shareholders, who had failed to give notice in writing of their withdrawal, as required by Article 12 of the constitution of the association. A number of witnesses were examined, and the facts proven by the testimony are (1) that the claim of Frederick Keller had been settled and that he had dismissed the bill, as to him; (2) that the alleged indebtedness consisted in the subscriptions of the “ free shareholders,” and five thous and dollars owing to “ bills payable,” none of which were held by the complainants ; and (3) that an overwhelming majority in number and in value of the free shareholders desired that the business of the association should be continued. At the hearing of the cause below the complainants prayed leave to amend the prayer of the bill, so that, in addition to the relief prayed for therein, they should have the benefit of the prayer “that the said corporation shall be adjudged to be insolvent, and to have surrendered its corporate rights, privileges and franchises and may be adjudged to be dissolved,” which was granted, and the amendment ordered to be “ treated as made, in the form and words set forth” in the petition. The contention of the appellants is that they have proven all that is necessary to absolutely entitle them to a decree determining that the corporate rights, privileges and fran ⁶³⁴ chises of the appellee have been forfeited; to have it adjudged to be insolvent and dissolved; to have an injunction restraining its officers and agents from further conducting its business, and to have a receiver appointed to take charge of its affairs—and this, too, without regard to the consequences.

With this contention we cannot agree. In our opinion the proof is legally insufficient to establish, the insolvency of the appellee, in the absence of which such action by a Court of Equity would be unwarranted by reason or authority. It is conceded that the appellee is incorporated under the laws of this State governing building associations, and the proof is that the relations of the appellants were those of “free” shareholders—that is to say, subscribers to its capital stock, who were not borrowers from the association— and that they had not given notice of their withdrawal, as required by Article 12 of its Constitution. Their relations to the association were essentially one of partnership for a definite time, entitled upon its expiration to the profits of their investments, and with the right to withdraw upon notice in writing to the directors as required by Art. 12 of its Constitution.

Their membership does not terminate until the notice has been given and accepted, and, until then, they could not assume the position of creditors. As shareholders' they do not stand