maturity of its stock, the members is necessary.'

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limited for its existence, or the unanimous assent of all the A surrender by unanimous consent may be inferred from the fact that one member has been permitted to unite in his hands all the unborrowed shares and all the securities held by the association.'

If not prohibited by the constitution, the legislatures of the several states may dissolve building associations by repealing their charters.

The only other way in which a building association can be dissolved is by decree of court declaring the forfeiture or expiration of its charter, or handing its affairs over to an officer appointed by the court to wind up the association.

A serious departure from its corporate duty, or a serious defect in the proceedings preliminary to its incorporation, are grounds of which the state alone may avail itself in instituting proceedings to forfeit the charter of a building association.12*

Where it appears that the affairs of the association are being managed in such a manner as to jeopardize the interests of its members, or that, though the shares have matured, the association is not being wound up, the members may apply to court for the appointment of a receiver.15

The effect of the dissolution of a building association on the duties of members, and the obligations of borrowers, is as follows: (1) The duty to make regular stock payments ceases upon dissolution; (2) fines cannot be imposed after membership in the association has ceased by virtue of its dissolution; (3) the duty of all members to contribute ratably to the debts and losses of the corporation remains; (4) the advanced members may be compelled to pay forthwith the balance due from them on their securities, although these securities were given in terms only for the payment of instalments of dues and interest. In determining the exact amount of such balances, the clear weight of authority is opposed to the enforcement of any part of the premium; but,

in a few jurisdictions, the premium is apportioned according to the number of years which have elapsed since the making of the advance to the borrowing member, and he is compelled to pay a proportionate part of it.

DISTRIBUTION OF ASSETS

48. Where a building association is being wound up, either voluntarily, or through the medium of a receiver appointed by the court, upon the maturity of its shares, no difficulties in distribution arise. Creditors are first paid the full amount of their claims; all losses and running expenses that have accrued against the society are settled in full, and the balance is distributed among the unadvanced members in proportion to the number of shares held by them. The same rule applies to some extent where a building association is dissolved by mutual agreement prior to the maturing of its stock. But, as in such case the loans of borrowing members are not canceled, it becomes necessary to ascertain the amount actually due thereon. This is done by charging the borrower with the amount actually received by him, with interest, and crediting him with all payments made, whether as dues, interest, or premiums, with interest on or after date when made, according to rules for partial payments.

Where the funds of the society are not sufficient to pay outside creditors and to refund the stock payments of the members, where the association is being wound up because of its insolvency, the question of distribution is more difficult of solution. The insolvency of a building association is not an insolvency in the usual sense of the term. It does not mean that the funds of the association are not sufficient to meet the demands of outside creditors; for, from the nature of the association, the manner in which periodical stock payments are being continually made by its members, and the limited number of such creditors, it would be remarkable if the funds should ever shrink to such a degree as not to be sufficient to pay them. It is the inability

of the association to satisfy the demands of its own members that is recognized as an insolvency. Where it appears that the shares of a building association will not mature within the time intended by the original plan of the association, or within a reasonable time thereafter, so that it can only be carried on at a serious disadvantage or loss to the members, any member so desiring may petition a court of equity for the appointment of a receiver.

49. On the distribution of the funds of an insolvent association, outside creditors are entitled to payment of their claims in full, in preference to all claims based on holdings of stock, whether the stock be unmatured, matured, prepaid, or preferred. Persons who claim as depositors with the association rank as outside creditors where their character as depositors does not involve that of members and is unaffected by the incidents of membership. Stockholders may at the same time be outside creditors, and may, therefore, be entitled to share in the distribution, both preferentially as such and also as members, on the same footing with other stockholders. Holders of prepaid stock, under an arrangement securing to them repayment of the amount in excess of dues actually accrued, are entitled to repayment of such amount in advance of the ordinary members, and holders of priority, or preference, stock are to be preferred to the latter. The balance is to be distributed among the ordinary shareholders, borrowers and non-borrowers alike, the former receiving credit upon their loans for the amount due them. But where all cannot be paid in full, there are ordinarily several classes of members who advance contradictory claims; to wit, members who have given notice of withdrawal, and the period of whose required notice has expired before the proceedings to wind up were instituted, may claim that they have thereby become creditors of the association, and that they should be paid in full before the members, who have given no such notice, receive anything; and the holders of matured stock may make the same claim as against the holders of unmatured

stock. In some jurisdictions, these claims are allowed, but the better view is to compel all these classes of members to come in and share pro rata in what is left after satisfying outside creditors, and other preferred claimants.

The rule adopted, generally, is to charge each borrower with the face of the loan, with interest from the date of its receipt, and all charges in arrears, with interest, and to credit him with the sums paid in as interest and premium, and also with instalments actually paid in on account of the loan, with interest from their respectiye dates; to treat the result thus obtained as an asset in estimating the total assets of the association; and then, having calculated from those assets the actual value of the stock, to deduct that from the balance previously found due upon the loan, and the balance thus found is the actual debt the borrower must discharge by payment.

FOREIGN AND UNINCORPORATED

ASSOCIATIONS

FOREIGN BUILDING ASSOCIATIONS

50. A building association cannot do business in any state other than that of its incorporation without establishing in the state wherein it intends to do business an office or offices, and appointing an agent or agents for the transaction of its business in such state, the purpose being to protect the citizens of such state by providing some one, in case the association contracts debts within that state, upon whom the services of process directed against the association may be made.

In order to do business in any state other than that of its incorporation, the association must, as a general rule, file in the office of some state official a statement under seal, duly signed, setting forth its name and object, the location of its office or offices, and the name or names of its authorized agents in such offices. A certificate of the filing of such statement, obtained from the proper state officer, must be preserved for public inspection by each of such agents.

In order that a building association incorporated under the laws of one state may become domestic in another, it is necessary that it should have a certain number of stockholders who are citizens of the latter state; that it should renounce its original charter, and file a certificate in general similar to that filed as preliminary to the original incorporation, which certificate must be duly acknowledged, certified, and recorded as if it were original.

In some states, a foreign building association is required to deposit securities to a certain amount with a state officer,