Co. (C.C.) 81 F. 776; Towle v. American Building & Loan Association (C.C.) 75 F. 938. That paid-up shareholders are a different kind of shareholder from that of the installment shareholder clearly appears in section 74 of the act of 1925, chapter 65, 'that no member shall hold paid-up shares in any such association of a value in excess of two per centum of the liability of such association for dues on installment shares, and in no case shall a member hold paid-up shares in any such association of a value in excess of twenty-five thousand dollars.' From this limitation, however, are excepted 'paid-up shares that are received by a person by will or under the statute of distribution, or held as collateral security.' No such limitation is imposed upon installment shareholders.
"The complainant association in the instant case, by authority of the statute and under its constitution, entered into agreement with its paid-up shareholders whereby these members waived participation in the general profits of the association in consideration of the payment of interest at the rate of 5 per cent. per annum. They had no interest in the profits set up on the books which were transferred to the reserve account."
The court has not overlooked the fact that complainant argues that the foregoing decision is affected by the amendment to the building and loan law of 1935, P.L.1935, c. 59 (N.J.St.Annual 1935, § 27 -- R (1) et seq.). I cannot, however, agree with this argument in the face of the fact that the income shares outstanding in this association in this case were of the very kind described by Vice Chancellor Stein and not in accordance with those authorized to be issued under the 1935 act.
In any event, the test here is not of the efficacy of the method used by the commissioner, but rather has be acted in good faith? Is he acting to protect this association? Does it appear that he has not diligently and honestly administered the property for the benefit of the interested parties?
Furthermore, this entire question (the application of recaptured dividends) cannot furnish in this suit the foundation for an equitable action enjoining the administration of the affairs of the association by the state agency created for that purpose.
The court must also note that no other of the 3500 members of this association has sought to voice an interest in these proceedings. This consideration should ordinarily play no part in a determination of the substantial legal rights of an individual complainant, but there was made in the argument of this cause an intimation, nay, more than an intimation, a definite statement that the commissioner was ready and willing to restore this association to its shareholders. Under the present-day economic conditions, it would seem all-important to this association that such occur. The complainant alleges that the willingness of the commissioner to restore the association to its owners has been prompted by the filing of this bill. In so far as the owners are concerned, it makes little difference what has inspired the action. The important objective to be accomplished is to have this association, never alleged to have been insolvent, once again riding the financial sea under its own power, with confidence restored in its owners and the necessary wheels of business revolving so that it may once more be a vessel of profit to its owners.
This will not be accomplished by extending the jurisdiction of this court to encompass the affairs of this association at this time, with the incidental appointments and expenses. None of the charges in the bill warrant such action.
Before concluding, the court adverts to a motion by counsel for complainant to suppress certain of defendants' affidavits. In view of the opportunity offered to complainant and his attorneys to place on file counter affidavits and the fact that advantage was fully taken of such right, it seems wiser to hold the record intact. Therefore, that motion will be denied.
The bill itself will be dismissed for the reason that there has not been a showing that this court should displace the possession of a state officer lawfully administering property for the benefit of interested parties where it has not appeared that the procedure afforded by the state law is inadequate, or that it will not be diligently and honestly followed.