
    John Burns vs. The Metropolitan Building Association.
    Equity. No. 7445.
    < Decided June 5, 1882.
    i The Chief Justio k ana Associate Justices Cox ana James sitting.
    1. Where, by the constitution-of a building association, it is provided that “the association shall continue until the unsold stock is worth fifty peí’ cent, premium and shall then proceed to close,” if the value of the association’s real estate and other assets aggregate the fifty per cent, of profit contemplated by this clause of the constitution, then the association cannot make the stockholders keep on paying dues while it holds its real estate for some further advance, but it must close up.
    2. Where the real estate held by the association consists of property bought in by it at public auction in competition with other bidders, the price bid by the association must be taken, as against it, as conclusive of the value of the property for the -purpose of ascertaining if •the time has arrived when the association should close; but the value, if greater, may be shown by witnesses, for the association cannot, with an all-sutficient amount of property in its hands to enable it to close up, go on collecting dues.
    STATEMENT OE THE CASE.
    Complainant, a member of the defendant association, obtained from it several loans or advances of money on his shares of stock, giving a deed of trust to secure the payment by him of two dollars a month on each share until the close of the association, or, in the alternative, the return of the money advanced. Complainant paid regularly all that was required of him until about the 30th of March, 1880, when he ceased his payments. The association then, after the lapse of several months, threatened to foreclose the deed of trust, claiming that, according to its mode of settlement, a balance of $980 was due it. Whereupon complainant filed this bill, alleging that under the provisions of article 17 of the constitution of the association the time had arrived for it to close, and that on the settlement of accounts between him and the association nothing would be found due from him. The 17th article of the constitution was as follows:
    
      “ Art. xvii. The association shall continue until the unsold stock is worth fifty per cent, premium, and shall then proceed to close, and each stockholder shall receive a prorata share of profits as above on all shares upon which no advance has been made.”
    The bill concluded with a prayer for an injunction against a foreclosure of the deed of trust and for an account.
    On the coming in of the answer a temporary injunction was granted and the cause referred to the auditor for a statement of an account between complainant and the association.
    Exceptions to the report were filed by both parties, one of the complainant’s being that the auditor had erred in not. establishing from the evideuce before him the time when the association should have closed its existence as an association. The exception was overruled by the court below.
    B. B. Lewis and T. Jesup Miller for complainant:
    "We contend, that on any theory of construction of the-constitution, it is unconscionable and unjust to keep-stockholders who have borrowed money on their shares paying in two dollars a month per share after the time when the association should have closed, simply to await the sale of real estate or the collection of notes outstanding. This requirement on the part of the association would be simply to-demand that one set of stockholders should take money out of their pockets and put it into the pockets of the others. The officers and managers of the association are principally those who would profit by the transaction, and the longer the real estate remained unsold the larger the profits and percentage the “ unadvanced ” stockholders would receive.
    William H. Browne for defendants:
    The auditor could not fix the time for closing the association.
    This is manifest from the evidence, which is all one way.
    
      “ Q. 166. Then I understand that this association is to be kept alive until the assets are disposed of and turned into cash?”
    “ A. There is no other way.”
    “ Q. 187. Has it not been for a long time endeavoring to turn that [bought in] real estate into cash?”
    “ A. It has and is.”
    See also answers 184 and 189, the latter showing that, but for the delinquencies of members who obtained advances, it might have closed long ago.
   Mr. Justice Jambs

delivered the opinion of the court.

The complainant, Burns, as a stockholder of the Metropolitan Building Association, obtained loans from it on 25 shares of stock held by him. The loans made by the association are carefully described in its charter as an advance of the proceeds of the stockholder’s stock in anticipation of what he would have had at the final distribution if he had not borrowed from the association.

It appears that the terms of such an arrangement are that the stockholder shall go on paying the dues upon his stock just as a non-borrowing stockholder, and in addition thereto one dollar a month on each share, and that he shall make these payments until either of two events, in the alternative, may come to pass, viz., until the expiration of the terra of the association by reason of its being able to divide fifty per cent, or a certain amount on its stock, or, in case he shall discontinue or default, then he shall be charged with the amount advanced him, which amount is to be treated as a debt, upon which he shall be credited with one-half of the money that he has paid in, and the profits which may have accrued upon the use of that money.

Our conclusion, which is not final, relates to the first proposition. If the time has arrived, it is one of the rights of the advancee to have the association close up. It might happen, for example, that after the expiration of five years the assets of the company, whether they choose to sell them or not, amount to just fifty per cent, of the stock. In that case we ai’e clearly of the opinion that a man is not to be compelled to go- on making payments into the treasury, especially as he has no interest in these assets. They are not tobe distributed to him, because under this management he takes his advances once for all. The final distribution is among the non-borrowers. The complainant alleges in his bill that the time for closing up the association had arrived when he made his last payment. The reply is, “'We have not closed up because we cannot sell our real estate to a proper advantage.” But we are of opinion that it is not for the association to hold real estate with a view to some advantageous advance, and continue to keep the stockholder paying his dues. If its real estate and all its assets aggregate in value the fifty per cent, of profit contemplated by the constitution when the association should close up, then the time has ai’rived when the stockholders should no longer be compelled to continue the payment of dues. But how is this to be ascertained ?

The real estate owned by the association consists altogether, as we are informed, of property bought in at foreclosure sales. It was bought, of course, at public auction, and the price bid at such a sale is one of the best wa\s of ascertaining the value as against the purchaser. When a purchaser bids in competition with others a certain amount of money at public auction, as to Mm the value is ascertained, and it may be, for aught that we know, that valuing the property at the price bid for it by the present holder — the association, that and its other assets will amount to what this complainant alleges. If that be the case then the time has arrived when the association should close up and cease compelling this complainant to contribute further payments.

We think, therefore, that this case should be referred to the auditor, with directions to ascertain in the first place what that amount of money is, in order that the complainant may show, if he can, that the time has come when he is no longer under any obligation to pay anything further.

The conclusion of the court is, that the case be referred to the auditor with directions to ascertain the value of the property in the way indicated, that is to say, to ascertain the value of the property by the price at w'hich it -was bought in, and then to ascertain the value, if -greater, by witnesses ; the reason being that it is not for theca, with an all-sufficient-amount of property to enable it to close up in their hands to go on collecting these dues. Still we are to regard the bids made by the association as conclusive evidence against it as to the value of this property for the purpose of closing up. If it has bid in a piece of property for a thousand dollars it is to be taken as worth a thousand dollars as against the bidder. The association cannot turn to the complainant and say, “ although we have paid a thousand dollars for this property we are not going to let you have the benefit of that price as one of the elements of letting you get out ; you will have to keep on paying.” When they made an offer at a public auction for the property and bought it at that- price they ascertained its value as against .themselves in their dealings with this complainant.

We do not, at this stage of the case go into the question of usury raised on the argument of the case, but direct the ■case to be referred as indicated. . *  