Opinion
October 6, 1930.
December 12, 1930.
Association — Building and loan — Stockholder — Withdrawal notice — Insolvency of association — Merger — Effect — Judgment for want of a sufficient affidavit of defense.
In an action of assumpsit by a stockholder of a building and loan association to recover the withdrawal value of his stock, the statement of claim averred that the plaintiff had given the association a withdrawal notice and that he had demanded the withdrawal value of his stock. The plaintiff further alleged that subsequent to the withdrawal notice and demand, the association merged with another building and loan association and a reorganization was effected. The association, in its affidavit of defense, admitted the receipt of the notice and demand but averred that prior to the date of the notice the Secretary of Banking had determined, by an examination of the affairs of the association, that it was insolvent and had so notified the officers. It also alleged that the merger was effected with the consent and approval of the Secretary of Banking. Held: (1) That the notice of withdrawal was of no effect, (2) that the reorganization of the association did not operate to give force and effect to the withdrawal notice and (3) that the judgment entered against the defendants for want of a sufficient affidavit of defense will be reversed.
The right of a stockholder to withdraw from the building and loan association and become entitled to the withdrawal value of his stock as fixed by the by-laws of the association, is confined to solvent associations. If the association is insolvent a notice of withdrawal is of no effect and gives the member no rlght of action against the association.
Appeal No. 89, October T., 1930, by defendants from judgment of C.P., No. 1, Philadelphia County, September T., 1929, No. 510, in the case of Sydney K. Allman, also known as Sidney K. Allman, Sidney J. Allman, Sidney Allman and Sydney J. Allman v. David Berg Building and Loan Association, a corporation, and The Garrick Building and Loan Association, a corporation.
Before TREXLER, P.J., KELLER, LINN, GAWTHROP, CUNNINGHAM, BALDRIGE and WHITMORE, JJ. Reversed.
Assumpsit to recover the withdrawal value of building and loan association stock. Before McDEVITT, P.J.
Rule for judgment for want of a sufficient affidavit of defense.
The facts are stated in the opinion of the Superior Court.
The court made absolute the rule. Defendant appealed.
Error assigned, among others, was the order of court.
Gilbert J. Kraus of Levinthal and Kraus, for appellant.
D.H. Felix of Felix Felix, for appellee.
Argued October 6, 1930.
The right of a stockholder to withdraw from a building and loan association and become entitled to the withdrawal value of his stock as fixed by the bylaws of the association, is confined to solvent associations. If the association is insolvent a notice of withdrawal is of no effect, and gives the member no right of action against the association: Christian's App., 102 Pa. 184; Criswell's App., 100 Pa. 488.
Appellee's notice of withdrawal as a stockholder of the David Berg Building and Loan Association was given on November 15, 1928. Prior to that date, it is alleged in the affidavit of defense, the Secretary of Banking had determined by an examination of the affairs of the association that it was insolvent within the meaning of "insolvency" as applied to building and loan associations (Kurtz v. Bubeck, 39 Pa. Super. 370, 371), and had so notified the officers of the association.
If this is true, — and for the purposes of this case we must assume it to be so — then the plaintiff's notice of withdrawal of November 15, 1928 was of no effect, and was not validated or given life by the subsequent merger proceedings with the Garrick Building and Loan Association, effected with the consent and approval of the Secretary of Banking. Those proceedings provided for a scaling down of the values of the stock of the David Berg Building and Loan Association to two-thirds of the actual amount paid in as dues, and that there should be no withdrawal of such shares until February 1, 1931.
The reorganization of the affairs of the David Berg Building and Loan Association on the basis just mentioned did not operate to give force and effect to the plaintiff's vain and futile withdrawal notice filed when the association was insolvent. The plaintiff's status was not affected by such notice.
Plaintiff has not founded his action upon any right he might possess, by virtue of his dissent from and dissatisfaction with the merger between the David Berg Building and Loan Association and the Garrick Building and Loan Association — if such was the case — to have the value of his stock ascertained and an order, judgment or decree entered for its payment, (see Act of June 14, 1923, P.L. 778), but solely upon his right to withdraw the value of his stock in consequence of his withdrawal notice of November 15, 1928.
As that notice was filed at a time when the authority having supervision of its affairs had determined that it was insolvent, it follows that the plaintiff is not entitled to judgment for any amount against either the David Berg Building and Loan Association or the merged association because of it.
The judgment is reversed with a procedendo.