Pearce, J.,
delivered the opinion of the Court.
The Emmet Perpetual and Mutual Building Association of Baltimore City having been adjudged insolvent by a decree of the Circuit Court of Baltimore City, receivers were appointed ; its property and assets have been converted into money and the fund brought into Court -for distribution, there being three classes of claimants interested therein ; first, creditors of the corporation ; second, free shareholders who have given notice of withdrawal ; and third, shareholders who have not given notice of withdrawal. . Upon the application of the auditor for instructions as to the rule of distribution, the Court decreed that the general creditors
of the defendant corporation, as distinguished from all shareholders, are first entitled to be paid their claims in full, and that the shareholders of the defendant corporation who had given notice of their withdrawal, are not entitled to share with said general creditors
pari passu.
The relative rights of withdrawing»and non-withdrawing shareholders were by the decree expressly reserved for the future action of the Court, so that upon the appeal from that decree now before us and taken by withdrawing shareholders the sole question is, whether in the distribution of the assets of an insolvent building association, the general creditors of the association are entitled to priority over shareholders of the association, who, in accordance with the by-laws of the association gave notice of withdrawal before the judicial declaration of insolvency, though the association was in fact insolvent when notice was given, and we cannot doubt that the learned Judge of the Circuit Court was correct in holding the general creditors entitled to such priority, The by-law of the defendant corporation regulating withdrawal is as follows : “ By giving at least two weeks written notice to the board of directors, any member holding or owning completed shares may withdraw such shares, and the par value thereof shall be repaid to such member
as soon as sitjficient funds are in the treasury of the
association, • less fines,
Sec.,
if any due and owing by such member,
and his or her share of any loss or expense the associatio?i may have incurred, not already provided for from the profits of the association.”
Obviously, this by-law was framed with reference to the doing of the regular business of the association rather than with reference to the closing up of its affairs, and the exercise of the right of withdrawal thereunder contemplates the association as a going concern. It was so held as to a similar by-law in
Rabbitt
v.
Wilcoxen,
103 Iowa, 35, and in
Strohen
v.
Franklin Savings Association,
115 Pa. St. 273. The principle upon which Courts proceed in winding up the affairs of an insolvent building association is to treat the
changed condition of affairs as equivalent to a rescission and as terminating the contract between it and its members, .releasing thereafter all mutual obligations, cancelling all mutual privileges and subordinating all adjustments between shareholders to the equity of the creditors of the association.
Curtis
v.
Granite State Provident Association,
69 Conn. 6. The giving of the required notice of withdrawal entitled the appellants, as against the association itself, as a going concern, to payment of the withdrawn shares, subject to the terms of the by-law, but not as against the creditors of the association whose insolvency has been judicially established. It is in a qualified sense only that withdrawing stockholders can be regarded as creditors. Their rights, as creditors, can be asserted only against the association, or those other shareholders with whom they are associated in it for the purposes of profit. As against the creditors of the association whose claims are based upon outside transactions, and whose money has been used for the common benefit of those who in fact constitute the association, withdrawing stockholders can assert no rights. This is not denied in those cases which most broadly state the position that a withdrawing stockholder ceases to be a member, and becomes a creditor.
In
Eversman
v.
Schmidt,
53 Ohio St. 174, it is said ; “ When the aggregate dues, with the credited earnings, equal in amount the par value of the stock, it is paid up, and the owner of that share ceases to be a stockholder. His relation then becomes simply that of a creditor until he is paid.” But it is added : “ Of course what is here said is subject to the qualification that no losses have been sustained, for he who participates in the benefits of a business must assist in bearing the burden.” And in
U. S. Association
v.
Silverman,
85 Pa. St. 394, relied on by the appellants, where it was held that a withdrawing stockholder ceases to be a member after due notice of withdrawal, and may upon refusal of payment sue and recover judgment just as any other creditor, without regard to the
provisions of the by-law, the Court was driven, after thus putting him squarely into the category of ordinary general •creditors, to suggest that the same Court might, if it seemed equitable, restrain execution in order that the association might have time to get in the money. Ordinary general •creditors cannot be thus restrained from reaping the profits of a judgment lawfully and regularly obtained, and even if so restrained, there would remain the lien of the judgment, which would antedate that of any subsequent judgment, obtained by a general creditor. These considerations should suffice to show the fallacy of the reasoning in the
Silver-man case.
Indeed, in
Christian's Appeal,
102 Pa. St. 189, it was admitted that there was manifest error in
Silverman’s case
in putting withdrawing stockholders in the position of general creditors. In
Chapman
v.
Young,
65 Ill. Appeals, 131, a withdrawing stockholder, had obtained judgment against the association, but upon the insolvency of the association, the Court held that the general creditors were entitled to priority of payment, and after them, withdrawing and non-withdrawing shareholders
pari passu,
using the following language: “The right of withdrawal, which is a peculiar feature of such associations, is not conferred upon a member for the purpose of enabling him to escape his just proportionate responsibility for losses incurred by an insolvent association, but for the purpose of securing to •each member, the privilege of withdrawing his proportionate share of the accumulated funds.” Obviously, there can be rno “accumulated funds” which are not subject to the payment of the debts of the association. In
Davis v. Gemmell,
73 Md. 530, where a stockholder, owning a majority of the stock, sought to appropriate to his own use .an asset of the corporation, a judgment, which though recovered in the name of the majority stockholder, was in fact the property of the corporation, this Court said: “ A •stockholder is not,
as
stockholder, a creditor of the corporation whose stock he owns. * * * The rights of the .stockholder are all subordinate to the rights of the corpor
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Pearce, J.,
delivered the opinion of the Court.
The Emmet Perpetual and Mutual Building Association of Baltimore City having been adjudged insolvent by a decree of the Circuit Court of Baltimore City, receivers were appointed ; its property and assets have been converted into money and the fund brought into Court -for distribution, there being three classes of claimants interested therein ; first, creditors of the corporation ; second, free shareholders who have given notice of withdrawal ; and third, shareholders who have not given notice of withdrawal. . Upon the application of the auditor for instructions as to the rule of distribution, the Court decreed that the general creditors
of the defendant corporation, as distinguished from all shareholders, are first entitled to be paid their claims in full, and that the shareholders of the defendant corporation who had given notice of their withdrawal, are not entitled to share with said general creditors
pari passu.
The relative rights of withdrawing»and non-withdrawing shareholders were by the decree expressly reserved for the future action of the Court, so that upon the appeal from that decree now before us and taken by withdrawing shareholders the sole question is, whether in the distribution of the assets of an insolvent building association, the general creditors of the association are entitled to priority over shareholders of the association, who, in accordance with the by-laws of the association gave notice of withdrawal before the judicial declaration of insolvency, though the association was in fact insolvent when notice was given, and we cannot doubt that the learned Judge of the Circuit Court was correct in holding the general creditors entitled to such priority, The by-law of the defendant corporation regulating withdrawal is as follows : “ By giving at least two weeks written notice to the board of directors, any member holding or owning completed shares may withdraw such shares, and the par value thereof shall be repaid to such member
as soon as sitjficient funds are in the treasury of the
association, • less fines,
Sec.,
if any due and owing by such member,
and his or her share of any loss or expense the associatio?i may have incurred, not already provided for from the profits of the association.”
Obviously, this by-law was framed with reference to the doing of the regular business of the association rather than with reference to the closing up of its affairs, and the exercise of the right of withdrawal thereunder contemplates the association as a going concern. It was so held as to a similar by-law in
Rabbitt
v.
Wilcoxen,
103 Iowa, 35, and in
Strohen
v.
Franklin Savings Association,
115 Pa. St. 273. The principle upon which Courts proceed in winding up the affairs of an insolvent building association is to treat the
changed condition of affairs as equivalent to a rescission and as terminating the contract between it and its members, .releasing thereafter all mutual obligations, cancelling all mutual privileges and subordinating all adjustments between shareholders to the equity of the creditors of the association.
Curtis
v.
Granite State Provident Association,
69 Conn. 6. The giving of the required notice of withdrawal entitled the appellants, as against the association itself, as a going concern, to payment of the withdrawn shares, subject to the terms of the by-law, but not as against the creditors of the association whose insolvency has been judicially established. It is in a qualified sense only that withdrawing stockholders can be regarded as creditors. Their rights, as creditors, can be asserted only against the association, or those other shareholders with whom they are associated in it for the purposes of profit. As against the creditors of the association whose claims are based upon outside transactions, and whose money has been used for the common benefit of those who in fact constitute the association, withdrawing stockholders can assert no rights. This is not denied in those cases which most broadly state the position that a withdrawing stockholder ceases to be a member, and becomes a creditor.
In
Eversman
v.
Schmidt,
53 Ohio St. 174, it is said ; “ When the aggregate dues, with the credited earnings, equal in amount the par value of the stock, it is paid up, and the owner of that share ceases to be a stockholder. His relation then becomes simply that of a creditor until he is paid.” But it is added : “ Of course what is here said is subject to the qualification that no losses have been sustained, for he who participates in the benefits of a business must assist in bearing the burden.” And in
U. S. Association
v.
Silverman,
85 Pa. St. 394, relied on by the appellants, where it was held that a withdrawing stockholder ceases to be a member after due notice of withdrawal, and may upon refusal of payment sue and recover judgment just as any other creditor, without regard to the
provisions of the by-law, the Court was driven, after thus putting him squarely into the category of ordinary general •creditors, to suggest that the same Court might, if it seemed equitable, restrain execution in order that the association might have time to get in the money. Ordinary general •creditors cannot be thus restrained from reaping the profits of a judgment lawfully and regularly obtained, and even if so restrained, there would remain the lien of the judgment, which would antedate that of any subsequent judgment, obtained by a general creditor. These considerations should suffice to show the fallacy of the reasoning in the
Silver-man case.
Indeed, in
Christian's Appeal,
102 Pa. St. 189, it was admitted that there was manifest error in
Silverman’s case
in putting withdrawing stockholders in the position of general creditors. In
Chapman
v.
Young,
65 Ill. Appeals, 131, a withdrawing stockholder, had obtained judgment against the association, but upon the insolvency of the association, the Court held that the general creditors were entitled to priority of payment, and after them, withdrawing and non-withdrawing shareholders
pari passu,
using the following language: “The right of withdrawal, which is a peculiar feature of such associations, is not conferred upon a member for the purpose of enabling him to escape his just proportionate responsibility for losses incurred by an insolvent association, but for the purpose of securing to •each member, the privilege of withdrawing his proportionate share of the accumulated funds.” Obviously, there can be rno “accumulated funds” which are not subject to the payment of the debts of the association. In
Davis v. Gemmell,
73 Md. 530, where a stockholder, owning a majority of the stock, sought to appropriate to his own use .an asset of the corporation, a judgment, which though recovered in the name of the majority stockholder, was in fact the property of the corporation, this Court said: “ A •stockholder is not,
as
stockholder, a creditor of the corporation whose stock he owns. * * * The rights of the .stockholder are all subordinate to the rights of the corpor
ation’s creditors. The stockholders are entitled to none of the company’s assets or property, until all just debts due by the corporation are paid. * * * The stockholder does not stand on equal footing with a creditor, and is not jointly entitled with him to the fund.
His claim to it begins only after every creditor has been satisfied.”
This language is equally applicable to withdrawing stockholders in a building association, as to stockholders in such a corporation, as was considered in
Davis v.
Gemmell, and it was so treated by this Court in
Steinberger
v.
Savings Association,
84 Md. 634. There is nothing in
Southern Building Association v. Price,
88 Md. 155, in conflict with these views. There the withdrawing stockholder sued in Maryland, but the association had been adjudged insolvent by a Tennessee Court whose decree has no extra-territorial force. There was thus no question in that case between the withdrawing stockholder and the creditors of the association, and the case was the simple exercise of the right of withdrawal, unaffected by the question of insolvency, with which this Court had no concern. It is unnecessary to prolong this opinion by citation from other American cases,, or from the English cases which sustain the views we have expressed. Reference may be had for this purpose to
Heinbokel
v.
Nat. Loan Ass.,
58 Minn. 340;
Knutson
v.
N. W. Assn.,
67 Minn. 201;
Post
v.
Building Assn.,
97 Tenn. 408;
Towle
v.
American Assn.,
75 Fed. Rep. 938 ;
In re Mutual Aid Building Society,
29 Ch. Div. 189 ;
In re Blackburn Building Society,
24 Ch. Div. 42 ;
In re Walton v. Edge,
L. R. 10 App. 33, in all of which it was held that in all cases, the general or outside creditors of the corporation must first be paid before any stockholder can participate in any distribution of the assets.
(Decided December 9th, 1899).
Decree affirmed with costs above and belovu.