Folk v. State Capital Savings & Loan Ass'n

63 A. 1013, 214 Pa. 529, 1906 Pa. LEXIS 695

• Court: Supreme Court of Pennsylvania
• Decided: March 19, 1906
• Docket: Appeal, No. 34
• Status: Published

Opinion

Opinion by

Mr. Justice Fell,

The general purpose of building associations is the accumulation of funds to be loaned to their members and to be repaid in small periodical payments. The accumulation from tbe payment of installments on stock is so slow as often to hamper their practical operations and different methods have been adopted to provide funds to meet the demands of borrowing members promptly and thus to promote the general purpose. Building associations are authorized by the Act of June 25, 1895, P. L. 303, to borrow money for temporary use when applications for loans exceed the accumulations in the treasury, and when a series of stock has matured. The issuing by these associations of full paid stock to serve the same purpose as borrowing is an enlargement of their scope of operations not inconsistent with their original design, if properly restricted. While it has not been expressly authorized by the legislature, there is a distinct recognition of the practice by the Act of June 22, 1897, P. L. 178, which subjects such stock to taxation. We find nothing unlawful in the issuing of full paid stock, the dividends of which are not guaranteed but are limited in amount and payable only out of- the profits, and the holders of which are entitled to no preference and have no advantage over other stockholders upon distribution in case of loss or insolvency; provided that the issue is incidental to the main business of the association and is intended to provide a fund from which loans may be made to the holders of installment stock. To this extent and for this purpose its issue is within the implied powers of such associations.

The reasons stated by the learned judge of the common pleas amply support the decree dismissing the bill, and upon them the decree is affirmed at the cost of the appellant.