Opinion
December Term, 1902.
W.F. Hickey, for the appellant.
G.D.B. Hasbrouck and Russel S. Johnson, for the respondents.
The appellant and respondents are not simply debtor and creditors. The relation between them is different from the usual relation between mortgagor and mortgagees. Appellant first became a member of the association, and as a member he was obligated to pay certain dues and was subject to certain fines. His stock was payable at maturity. Its maturity depended upon the profits of the association, some portion of which was derived from premiums paid by borrowing members. When appellant gave his bond and mortgage the association simply advanced money to him on account of the maturity value of his stock, and he agreed to pay interest thereon and also a premium for the privilege of obtaining the loan. The mortgage was given to secure payment of the interest and premium and also the other payments required of appellant as a member. The advance to him on account of the maturity value of his stock did not change his relation to the association as a member. There is no dispute in regard to the payments of interest or as to the same being properly applied upon the mortgage. When the association went into the hands of receivers and was no longer able to carry out the contract with appellant, he was relieved from compliance with the terms of the contract, and an equitable adjustment between them must be made. ( Hall v. Stowell, 75 App. Div. 21. See Breed v. Ruoff, 54 id. 142; Hannon v. Cobb, 49 id. 480.)
The receivers represent all the members of the association, and for the purpose of an equitable adjustment the members should all be relieved from their contracts at the same date, and such date manifestly should be the date on which the receivers were first appointed.
The payments of interest seem to be the only ones made by appellant referable to the loan itself. The appellant along with the other members obtains credit for all other payments by such payments swelling the general assets of the association. Had the association continued in business, appellant would have received his return for such payments when the stock matured. The trial court did not charge the appellant with unpaid dues, and it is not necessary for us to consider any question relating thereto. The mortgage by express terms was given to secure among other things the payment of premiums and fines. At the time the temporary receivers were appointed the unpaid fines and premiums were due and owing under the terms of the mortgage, and payment thereof must be made or in some manner adjusted to put the appellant on the same basis as the other members of the association who have paid their premiums and fines to the time of the receivership.
The appellant is undoubtedly entitled to receive his proportionate share of the net assets of the association when the same shall be divided. It may well be that equity would require that the value of his stock should be at least approximately determined in this action to the end that the appellant should be relieved from his mortgage to the extent of his interest in the assets of the dissolved corporation.
Referring to this subject, it is said in Breed v. Ruoff ( supra): "On the other hand, here may well be a hardship worked by a disregard of the equity that should strike a balance between his debt and his dividend. If the receivers, by marshalling assets and liabilities and by allowing for expenses, cannot determine, they can at least approximate the prospective value of each share of stock, and hence the probable dividend due each shareholder sufficient for the purpose at hand." The trouble in this case is that the appellant did not present to the court any facts whatever relating to the dissolved corporation or the assets remaining in the hands of the plaintiffs applicable for distribution among the members. In the absence of any proof upon the subject or any request in regard thereto, the court was not required to adjust such equity as between the parties hereto.
The judgment of the trial court must, therefore, be affirmed, and the appellant, instead of having such dividend, if any, applied upon his mortgage, must await its payment at some future time.
Judgment unanimously affirmed, with costs, CHESTER, J., not sitting.