
    Sarah Morrow vs. Henry B. James et al.
    Equity.
    No. 7758.
    Decided December 10, 1883.
    The Chief Justice and Justices Hagneb and Cox sitting.
    A payment by a stockholder of a building association, of his dues to one of its officers not having authority to receive them does not discharge the stockholder if the officer so receiving the money fails to payjt over; nor can the association charge the loss against its asserts in its account with the stockholders so as to diminish the value of their shares.
    The Case is stated in the opinion.
    Wm. Henry Broavne, for plaintiff, cited the following authorities :
    Bray vs. Harwell, 81 N. Y., 608; Bowman vs. Close, 44 Iowa, 428; Burnes vs. Pennell, 2 H. L. C., 521; Logan vs. McNaugher, 88 Pa., 103; Ex parte Lawes, De G-. M. & G., - 421; Burnside vs. .Dogrell, 3 Ex., 224; Bennie vs. Wynn, 4 Ex., 691; Chapler vs. Brunswick*Building Society, VI L. E., Q. B. Div., 710; Conway vs. Log Cabin Building Ass., 52 Md., 136; Bramah vs. Boberts, Bingham's Neiv Cases (1836-7); Wyman vs. Hollowell Bank, 14 Mass., 58; Hay vs. Noble, 12 Cush., 17; In re County Life Assurance Co., L. B., 5 Ch., 288; 39 L. J. Ch., 471.
    Elliot & Bobinson, for defendant, cited:
    Endlich on Building Ass., § 104; Ibid., §§ 517, 519; Mc-Grath vs. Hamilton Building Ass., 44 Penn. St., 383. taining that a suitable case for action is presented. Thus, the Secretary of the Interior is not bound to sign a land patent brought before him in the usual routine of business as a patent for an invention; nor a register of wills to register a deed; nor a recorder of deeds to record a promise to pay; nor the Commisioner of Patents to record a contract for the sale of a machine, as an assignment of a patent right.
   Mr. Justice Cox

delivered the opinion of the court.

The case of Morrow vs. James and others, is an action brought by one stockholder in the Territorial Savings, Loan and Building Association of the District of Columbia, against the officers, in their character of officers, and as representatives of the other stockholders of the same association. The case made by the bill is, that the treasurer of the association is the officer designated to receive payment of all the dues which the members have to contribute monthly, article six of the Constitution providing that, “ Each stockholder, or trustee, for each and every share of stock held by him. in this association, shall pay into the treasury, in lawful money, at each and every stated meeting of this association on the second Friday of each month, the sum of one dollar; ” and it is made the duty elsewhere of the treasurer to receive all moneys so paid in; that the complainant, as a stockholder of the association, regularly paid in her dues every month ; that quite a number of the members of the association, instead of paying into the treasury, entrusted their dues to the secretary of the association, a man named Seth A. Terry, to pay in on their account, and that Terry, instead of paying the money into the treasury, appropriated it to his own use; that in the settlement and winding up of the association, the officers proposed to charge this loss to the association and deduct it from the assets of the association, so that the distributive shares of the several members should be thereby reduced, including that of the complainant; whereas she maintains that this was not a loss by the association, but a loss of the individual members who paid their dues to the wrong person, who had no authority to receive them, and that the dues are to be considered as not having been yet paid by those members — ■ not lost by the association, but still a part of their assets, and to be charged against the members by whom they were payable, and that they ought not to be charged as a loss against the shares of this complainant in the assets of the concern. That is really the only question presented in the case.

The answer does not deny any of the substantial averments of the bill, but it avers certain propositions which are really conclusions of law. They aver the fact to be, that by reason of the heavy defalcation of the secretary of the asssciation (Terry), the assets of the association were so reduced that it became impracticable to divide among the shareholders more than forty per cent, of the value of their stock as it existed prior to the said defalcation; that said Terry was a member of said association and partner therein, and the complainant and all other shareholders or partners were equally bound to contribute to any losses sustained-by the partnership by reason of the defalcation aforesaid.”

And they repeat that in the language following:

“That the money paid hy the members or partners who did pay to the said Terry, was paid hy them to an officer of the association . . . and a partner therein, and these defendants are advised, and accordingly aver, that in so far as money was paid to him in that capacity, they were paid to the association.”

The’n they further aver, that an amendment was made to the constitution, in the following terms:

“For the purpose of ascertaining the amount due on withdrawal, the board of directors shall, at a regular meeting, once in three months, report the value of each share of stock as shown by the assets and liabilities of the association.” •

The answer seems to rely, first, upon this amendment. But we are unable to perceive how that amendment affects the case, or how it advances us one step towards the solution of the question which is really involved. The amendment directs that the assets shall be ascertained periodically; but what the assets are, is the very question, and whether this loss is to be deducted from the assets as a loss of the association. So that we are only brought back by this amendment to the question stated in the outset, as the question involved in the case. s

Then the answer seems to rely on the general law regulating the relations of partners or third persons. It is undoubtedly true that ordinarily a person dealing with a partner m&j pay money to any member of the concern, because, presumptively, each member is agent of the others. He may make contracts and give receipts and acquittances in the name of the firm, and they will bind the firm. But this presumption is rebutted, if it appears by the articles of copartnership that one or more members of the firm are the only persons designated to make contracts and give acquittances, and that is known to the party dealing with the firm. Still less would that apply to the case of a joint stofck association like this, where the membership is large, and where each member is not presumed to be authorized to act for the whole concern, but the business of the concern is to be transacted by officers elected for that very purpose.

Now, it seems to us very plain, that if one of these stockholders had paid his dues to another stockholder, who did not happen to be an officer, for the purpose of having it paád into the association, and that stockholder so receiving the money had become a defaulter, such payment would not have been by any means a discharge for the first stockholder, for it would not have been, in construction of law, received by the association. Can it make any difference that the other stockholder happens to be an officer who is not charged with the duty, or clothed with the authority to receive the money? It does not seem so to us. We have not had a single authority cited in favor of such a proposition. On the contrary, the whole tenor of the authorities seems to be in the other direction. We need not refer to more than one or two. Thus, in Burnes vs. Pennell, 2 H. L. C., 521, Lord Campbell says, among other things:

. “Although a joint stock company is a partnership, it is a partnership of a different description, and attended with different incidents and liabilities from a partnership constituted between a few individuals who carry on business jointly with equal powers and without transferable shares. All who have dealings with a joint stock company know that the authority to manage the business is conferred upon the directors, and that a 'stockholder, as such, has no power to contract for the company. For that purpose, it is wholly immaterial whether the company is incorporated or unincorporated.”

In another case, Burnside vs. Dogrell, 3 Ex., 224, it was held that the receipt of deposits by one member of a joint stock company is not equivalent to a receipt of them by the others. Pollock, C. B., said, át nisijprius, that “the parties who paid the money must look to those who received it.” On review, the same judge said: “No authority can be implied from the mere fact of the party being secretary.” Eolfe B.: said; “I am entirely of the same opinion," And Platt, B.: “I quite agree ... no general authority can be implied from the relationship which existed between the parties.”

The third proposition relied on by the answer, is, that the payment by one of the stockholders to any officer of the association, is a discharge to him, and is a payment to the association. But in the light of these authorities, we think that unless it be shown that the officer in question has authority to receive it, it is no payment to the association at all. It seems to us, therefore, very clear on the authorities, and according to the common sense view of the matter, that if these stockholders chose to trust their dues to a man who had no authority to receive them, and he chose to appropriate them to his own use, the stockholder is not discharged, and the association is not charged with the receipt of that money, and therefore the directors in this case had no right to charge that as against the assets of the association, and thereby diminish the share of the complainant in those assets. Therefore, we think she is entitled to relief in the shape of a decree for the amount she •claims in which the directors will be enjoined from reducing her share by charging against if a proportion of these lost dues.  