Fitzgerald v. State Mutual Building & Loan Assn. 76 Eq. it becomes necessary to ascertain whether certain stock is entitled to priority of payment over other stock. The present contest arises by reason of the claim of preferment made by the owners of stock who gave notice of withdrawal before the suspension of the business of the association, and also a like claim made by owners of certain stock known as "full paid stock" and certain other stock on which "advance payments" have been made. The advance payments are authorized by section 7 of the constitution of the association, which section permits any stockholder to pay in advance money on account of his installments of dues and entitles the person so paying to receive a certain discount for the advance payments. The "full paid stock” is authorized by section 8 of the constitution. That section authorizes a stockholder to pay $100 per share for his stock and entitles the person so paying to receive a certain rate of interest on the amount paid until the stock of that series matures. The right of withdrawal is conferred by section 9 of the constitution and the terms of withdrawal are set forth in article 4 of the by-laws, and in sections 38 and 39 of an act of the legislature approved April 8th, 1903. P. L. 1903 p. 457. Of the full paid stock there are nine hundred and forty-five shares; of these, thirty-eight owners of one hundred and twentyeight shares have given notice of withdrawal and two hundred and twenty-six owners of the remaining eight hundred and seventeen shares have not. Of the "advance payment stock" there are ten thousand one hundred and forty-one shares. Of these, two hundred and ninety-six owners of five thousand three hundred and five shares have given notice of withdrawal, and eight hundred and sixty-seven owners of the remaining four thousand eight hundred and thirty-six shares have not. Of the remaining stock of the association, that is, stock on which no advance payments have been made, there are seventeen thousand and fifteen and one-half shares. Of these, eight hundred and eighteen owners of two thousand one hundred and nine shares have given notice of withdrawal, and two thousand three hundred and sixtyseven owners of the remaining fourteen thousand nine hundred and six and one-half shares have not. The evidence discloses that some time prior to two years before the suspension of busi 6 Buch. Fitzgerald v. State Mutual Building & Loan Assn. ness the association began to receive a great number of withdrawal notices and that the withdrawals continued thereafter in such numbers that during the two years prior to suspension loans on real estate security were practically discontinued. During that period but three loans were made on real estate security: one in April, 1905, for $1,600; one in July, 1905, for $1,000, and one in August, 1905, for $250. The only loans made during that period, except as above stated, were what was known as "stock loans;" these are described as loans to members exercising the right to borrow ninety per cent. of the withdrawal value of their stock by pledging their stock as security. Many members borrowed in this manner because they could not procure their money by withdrawal without waiting a long time. During the two years referred to the withdrawal notices accumulated until at the date of suspension the withdrawal notices unpaid amounted in the aggregate to $232,143.88. Payments on withdrawal notices were made in the order in which the notices were filed and at the date of suspension applications for withdrawals to the amount of $172,779.22 had been on file more than six months. At the hearing an examination was also made of the assets and liabilities of the association as of the date of its annual statement about two years before its suspension of business. If the testimony of the receivers as to the value of the real estate can be regarded as reasonably accurate, the value of the assets of the association two years prior to its suspension had become less than the amount at that time paid in by its members. There appears to be no reasonable ground for the contention that either the "full paid stock" or the "advance payment stock" is entitled to preferment as such. Only one kind of stock is contemplated by the charter act or by-laws. The provisions above referred to touching full paid stock and advance payments of dues are mere privileges given alike to all stockholders. Such payments are payments on stock, and in no sense loans to the association. The consideration for the advance payments of dues and for the full payments on stock passes at the time of payment to the same extent as all other payments on stock. Nothing in either the statute or by-laws contemplates that the stock so issued shall become preferred stock in the sense that Fitzgerald v. State Mutual Building & Loan Assn. 76 Eq. such stock shall be entitled to preferment in the distribution of assets at dissolution or that its holders shall become general creditors of the association as distinguished from stockholder members. The decisions of the courts appear to be practically uniform in the adoption of this view. People v. New York B. & L. Ass'n, 110 N. Y. App. Div. 554; People v. Metropolitan Mut. B. & L. Ass'n, 103 N. Y. App. Div. 153; Forwood v. Eubank (Ky. App.), 50 S. W. Rep. 255; Solomons v. Am. B. & L. Ass'n, 116 Fed. Rep. 676; Hohenshell v. Home B. & L. Ass'n, 140 Mo. 566; Leahy v. National B. & L. Ass'n, 100 Wis. 555. Furthermore, the Building and Loan Association act of 1903 (P. L. 1903 p. 457) expressly forbids the issuance of preferred stock. Section 53 of that act provides as follows: "No such association (building and loan association) shall issue preferred stock or other than common stock, and all shareholders shall occupy the same relative status as to debts and losses of the association." It also seems entirely clear that no claim of preferment upon the part of stockholders who have given notice of withdrawal can be sustained, so far as such claim is based upon the provision of the by-laws touching withdrawals. The by-laws provide that "at no time shall the association be required to pay out on withdrawals more than one-half of the monthly receipts of dues." The evidence discloses that in every month during the last two years of the life of the association more than one-half of the dues were paid for withdrawals, and in almost every month the amount paid for cash withdrawals exceeded the amount received for dues, and this is also true even when advance payments on stock and payments for full paid stock are treated as dues of the month in which such payments were received. The aggregate amount received during the two years named for dues, including advance payments and payments for full paid stock, was $342,447.72, whereas the amount paid for cash withdrawals during the same period was $142,368.07. These payments were made on withdrawal notices in the order of their dates. It thus appears that at the time of dissolution no payment was due under the terms of the by-laws on any withdrawal notice. It has, I think, been uniformly held that the right of withdrawal does not exist 6 Buch. Fitzgerald v. State Mutual Building & Loan Assn. except as conferred by a by-law or statute, and when so conferred the right will be restricted to the terms of the by-laws or statute. Miers v. Columbia Mut. B. & L. Ass'n, 157 Fed. Rep. 940; Rabbitt v. Wilcoxen, 103 Iowa 35; Heinbokel v. National S. L. & B. Ass'n, 58 Minn. 340. But in the year 1903 a general act was passed touching building and loan associations. P. L. 1903 p. 457. Sections 38 and 39 of that act relate to the subject of withdrawals. The latter section provides: "Withdrawals shall be paid in the order in which the notices thereof are received, but not more than one-half the receipts of any one month shall be required to be used for payment of withdrawal claims, without the consent of the board of directors, until the oldest of such claims then unpaid shall have been on file for a period of six months; but in no case shall payment be postponed for a period longer than six months from the date of such notice, and any shareholder who has given the said notice may sue for and recover the withdrawal value of his shares in any such association in any court of competent jurisdiction, if the same is not paid in six months from the date of the giving of said notice of withdrawal." As already stated a part of the withdrawal notices in question had been on file over six months at the time of suspension, while others had not. It is not easy to determine what this statute may contemplate by the use of the word "receipts." The inquiry, however, does not appear to be material, because the statute requires all notices on file six months to be paid irrespective of the amount of receipts, and the notices on file less than six months would not have been reached had one-half of all receipts from all sources, including dues, interest, premiums, fines, advance payments on stock, moneys received for full paid stock and loans repaid to the association been applied to the payment of the withdrawal notices. More than one-half of the moneys received from all sources was, in fact, applied to the payment of withdrawals, although it does not appear that any resolution was adopted by the board of directors consenting thereto. As none of the notices of withdrawals which had been on file less than six months were payable either under the terms of the by-laws or the terms of the statute, it follows, as is shown by the cases last above cited, that they cannot be regarded as preferred claims. Fitzgerald v. State Mutual Building & Loan Assn. 76 Eq. The only doubt which I entertain is touching rights which may have arisen under notices which had been on file over six months at the date of suspension; but independently of the considerations already stated, I am convinced that neither the claim based on notices filed less than six months nor those based on notices filed more than six months can be now properly treated as entitled to preferment in the distribution of assets. There may be some question as to whether the statute of 1903 can be regarded as superseding the by-laws so far as the rights of stockholders prior to that date are concerned, for rights accruing under the by-laws partake of the nature of contractual rights between the several members; but I think the conclusion just stated must be reached even though the statute be regarded as controlling as to all stockholders. As already stated the right of a stockholder to "withdraw" by surrendering his shares and withdrawing money in lieu of them and in that manner to terminate his membership, is derived from the by-laws of an association, or from a statute if the subject is controlled by statute. In either case the rights, privileges and liabilities flowing from the proceeding must be ascertained from the by-law or statute controlling the subject. The question is therefore essentially one of statutory construction. The English decisions construe a by-law or rule which confers the right of withdrawal with peculiar strictness, and while they recognize that the notice of withdrawal does not terminate the membership of the stockholder giving notice nor constitute him a creditor of the society in an unrestricted sense, yet they treat his claim as entitled to preferment at dissolution. See Walton v. Edge, 10 App. Cas. 33; Sibun v. Pearce (1890), 44 Ch. Div. 354; In re Sunderland Society (1890), 24 Q. B. Div. 394; In re Ambition Building Society (1896), 1 Ch. 89. The Sunderland Case, however, gives recognition to the rule of construction that the by-law or statute conferring the right of withdrawal may not contemplate the exercise of the right except while the society "was or was believed to be" still solvent. While the decisions in this country cannot be said to be uniform, the view appears to be generally adopted that upon the distribution by a court of equity of the assets of an insolvent building association among its stockholders the by-laws or |