Coggeshall v. McGrath

Headnote

1. Building and Loan Associations—Insolvency—Bobbowing Member-Withdrawal—Effect.

A borrowing member of an insolvent building and loan association, by giving notice of withdrawal, does not ipso facto become a creditor of the association for the value of his shares or the excess thereof over his in-indebtedness to the association, so as to exempt his shares from their proportionate share of the general liabilities of the company.

Action by Henry J. Coggeshall and others against Francis Mc-Grath. Judgment for plaintiff.

Trial before the court without a jury of an action by the plaintiffs as receivers of the Mutual Benefit Loan and Building Company (appointed to liquidate the company for insolvency) against the defendant on a promissory note for $400 made by the defendant to the said company.

The answer pleads as a defense and counterclaim that the defendant being a member of the said company owning 15 shares became a borrowing member, and borrowed from the company $400, for which he gave his said note; that a by-law permitted borrowing members to withdraw from the company, applying the withdrawal value of their shares to the payment of their debts to the company; that the defendant gave the required notice of withdrawal, the withdrawal value of his shares at the time being $335 in excess of his said indebtedness of $400.

Afterwards, and before the defendant’s withdrawal was acted upon and carried out (as appeared by the evidence), the action-in which the plaintiffs were appointed receivers was brought by the state to liquidate and dissolve the company for insolvency, and the company was then insolvent, and had been, as found by the judgment of dissolution, at least since May 1, 1900, which was four months before the defendant’s notice of withdrawal.