People v. Mechanics & Traders' Savings Institution

Learned, P. J :

A savings institution is incorporated for the purpose of managing and investing the small savings of persons of moderate means, who cannot well invest for themselves. The only property which it has is that to which the depositors are pro rata entitled. It has no capital. Although each depositor has a claim against the corporation for the amount standing to his name; yet, on the other hand, the aggregate of the property of the corporation belongs to no one else than the depositors. "When the corporation is dissolved and closed,- the depositorsare entitled to all that the institution honestly owns. The question is whether they are entitled to anything more.

The charter of this corporation says (and the law would be so even if this were not expressed), that the depositor shall receive his prorata, after deducting the necessary expenses. Now expenses, unless paid the very moment they are incurred, would create a debt, and such a debt would, by the very terms of the charter, be paid before the depositors received their money.

Again, let us suppose that the savings institution had purchased and received government bonds from Mr. Sistare, but had not paid for them, would it be just that the depositors should share in the assets thus received', and yet should require Mr. Sistare to take a pro rata dividend on his debt ? Certainly not. The management of the institution is really a management of the depositors’ money for their benefit. Unless there be some statute, or some positive decision to the contrary, the depositors should'share only in the assets, after the debts are paid.

~We are cited to section 79, article 3, title 4, chapter 8, part 3, Revised Statutes. (2 R. S., p. 470.) But that is under the head of voluntary dissolution. And the preceding section (§ 69, p. 469) shows that the article refers to stock corporations. Chapter 336 of Laws of 1855, is also cited. But that was repealed by. chapter 371, Laws of 1875. Section 44 of that last chapter was amended by chapter 422, Laws of 1879. That requires the receiver to make distribution of the assets, not specifying the manner.

In Matter of Franklin Bank (1 Paige, 249), to which we are cited, was a case in regard to depositors in a bank of issue and deposit, not a savings bank. And the difference is, that in such a bank the depositors are nothing but creditors. They have no share in the profits and are not to bear the losses. The-stockholders in such a bank are the persons who benefit by the profits, and who therefore, should lose by the losses. It is their property which is to pay the expenses and debts. The contrary is the case in a savings bank. The depositors in such an institution are like the stockholders in a bank of issue and deposit. They share the profits, they bear the losses and they pay the expenses. (Huntington v. Savings Bank, 96 U. S., 388.) We are also cited to the case of People v. Security Life Insurance Company (78 N. Y., 122), to show that policyholders are not partners, but creditors, in a mutual life insurance company. But it is to be noticed that many companies, called mutual, are yet stock companies; and such was the case with the Security company. The head note to the case shows that the decision is qualified by limiting the language on this point to stock companies. It is not, however, necessary to say that these depositors arc partners. It is enough that the savings institution is only, an organization to manage their money for their benefit, and that Mr. Bistare’s claim, is a debt contracted in such management. It should then be chargeable on the fund. To this effect is Stocton v. M. and L. Savings Bank (32 N. J. Eq., 163).

We are of the opinion that the part of the order appealed from should be reversed, with ten dollars costs and printing disbursements, and the motion of Mr. Sistare, to be paid in full his claim, should be granted, with ten dollars costs.

Present — Learned, P. J., and Bocees, J.; Westbrook, J., not acting.

That part of the order appealed from reversed, with ten dollars costs and printing disbursements,, and motion of Sistare granted, with'ten dollars costs.