Montana Attorney General Opinion 15-601

Opinion No. 601 Building and Loan Associations-Stock -Loans-Set-Off of Assigned Stock Against Loan. HELD: The assignee of stock in a building and loan association which is not insolvent may set off his with- drawal stock yalue against his loan from the association. August 25, 1934. You have submitted the following question: May a withdrawing stock- holder assign his stock certificate to a borrower and the latter apply the cash value as part payment of his loan? Section 14, Chapter 57, Laws of 1927, prescribes the method of transfer of stock certificates. Und'oubtedly a mem- ber of a building and loan association may sell, assign or transfer his shares to another member or to a third per- son on compliance with such condi- tions as the statute or by-laws pre- scribe. (9 C. J. 937, Section 34). Upon a complete and regular transfer being made, the assignee assumes the assign- or's relation as a stockholder. (Id.) The assignee is entitled to all the privi- leges of membership and assumes all of its liabilities. (Sundheim, Building and Loan Associations, Section 46.) We have heretofore held that a mem- ber of a building and loan association in liquidation may not set off payments made for shares of stock in the asso- ciation against his indebtedness to the association for money borrowed. (Vol- ume 15, No. 369, Opinions of the Attor- ney General.) When a member pro- cures a loan from an association he assumes a dual relationship towards it and each one is separate and distinct from the other. (Sundheim, Building and Loan Associations, Section 114, and cases cited in Note 6. See also !) C. J. 981, Section 118.) The fact that the stock was acquired b~' purchase from another member would not alter the situation. If the association is not in liquida- tion and not insol\-ent, we see no good reason why the set-off may not be made subject to such restrictions, if any, as may be contained in the by- laws. Since a member may withdraw (Section 12, Subdivision 8, Chapter 57, Laws of 11)27, as amended b~' Chapter 11, Laws of 1933), he should be per- mitted to apply the withdrawal value against his loan. This is the rule in most jurisdictions. (I) C. J. 979, Sec- tion 115.)