of the drum. This problem he solved by making a coil of such shape that the lesser half of one coil may pass into and through the larger halves of other coils. By this means, the ends were economically disposed of in a minimum space alongside the ends of the armature core, and other advantages obtained which are set out in the patent. In his specification Eickemeyer recognizes the state of the art and the scope of his invention. He says:

"In certain prior multipolar machines the armature coils have been capable of ready attachment to and removal from the armature drum or core, and several of the coils in each armature have been counterparts in size and form, but several different sizes and forms have been necessary in each machine: but I know of no prior multipolar or bipolar machines in which the several armature coils were counterparts in size and form, or any prior bipolar machine which has had coils capable of being applied to or removed from the drum or core without actually unwinding the wire, although, in certain prior machines having bar conductors, the bars could be readily applied to and detached from the drum or core by separating the bars from such disks or other radial conductors. Regardless of the character of the armature with reference to its polar arrangement, I believe it to be broadly new to cover a drum or core with a series of coils which are counterparts in size and contour, and which are therefore interchangeable, one with another, with reference to their positions on the armature drum or core."

The defendant contends that the prior art was in advance of this statement, in that the Alioth German patent of 1885 and the Vincent British patent of 1882 disclose an armature drum with a series of coils which were counterpart and interchangeable. But it is unnecessary to enter into this field of controversy, for, taking Eickemeyer's statement of the prior art and of his invention as correct, we find that all he invented was an armature coil for drum armatures having a certain structural form and a mode of operation by virtue of such form; and, this being true, his invention cannot cover other armature coils of an essentially different form, and with a different mode of operation.

As all the coils used by the defendant (which we assume are like the exhibits in evidence) have equal halves, so that one half of one coil cannot pass into and through the halves of other coils, they do not contain the Eickemeyer invention, and therefore do not infringe either the first, second, or fourth claims of the patent in suit.

The decree of the circuit court is reversed, and the case is remanded to that court, with the direction to dismiss the bill of complaint with costs; and the costs of this court are awarded to the Webster & Dudley Street Railway Company.

(113 Fed. 785.)

COLTRANE et al. v. BLAKE et al.

(Circuit Court of Appeals, Fourth Circuit. February 4, 1902.)

No. 425.

1. BUILDING AND LOAN ASSOCIATIONS-LAW GOVERNING CONTRACTS-DUAL RELATIONS WITH BORROWING STOCKHOLDERS.

The relations between a building and loan association and its stockholders, as such, are the same as between other business corporations and their stockholders, and their respective rights and obligations under the contract are governed by the general law, unless modified by statute. As to matters arising out of such relations, the decisions of the courts of the state are not binding upon the federal courts, but when a stockholder becomes also a borrower his contract as such is governed by the local law, and upon the question of his rights and liabilities thereunder the state decisions are controlling.

2. SAME

DISTRIBUTION OF ASSETS IN INSOLVENCY-STATUS OF HOLDERS OF FULL-PAID STOCK.

Holders of full-paid stock issued by a building and loan association as authorized by its by-laws, and which differs from the common or installment stock only in the fact that the holders are paid interest or a fixed dividend at stated periods instead of their proportionate share of the profits of the association, are stockholders, and not creditors, and on the winding up of the corporation in insolvency are entitled to no preference over other stockholders.

A matured notice of withdrawal given by a stockholder of a building association, as permitted by the terms of his contract, does not operate to terminate his membership, and convert him into a creditor entitled to preference of payment over other members in the distribution of the assets of the association in insolvency, contrary to the express provisions of the by-laws.

4. SAME.

Where certificates of paid-up stock issued by a building association gave the holder the right to withdraw and have his stock redeemed subject to the provisions of the by-laws, which required 30 days' notice of intention to withdraw to be given, the status of a holder of such a certificate as a stockholder is not affected by a notice of withdrawal, given less than 30 days before the commencement of proceedings in insolvency against the association.

5. SAME-ACCOUNTING WITH BORROWING STOCKHOLDERS.

Where a stockholder in a building and loan association becomes also a borrower, his contract as such is governed by the local law, and where by such law it is usurious, in a settlement on the winding up of the association in insolvency before the maturity of his loan he should be charged with interest on the sum borrowed at the legal rate, and credited with all sums paid as premiums and interest, but the local law does not govern as to payments made by him as dues on his stock which are made under his contract as a stockholder, and the principles of equity require that as to such payments he be placed on an equality with nonborrowing stockholders, and share ratably with them in the assets remaining after the debts of the association are paid; and he is not entitled to credit on his loan for such payments where the proceedings are in a federal court, whatever may be the rule of the courts of the state.

Appeals from the Circuit Court of the United States for the District of Maryland.

See 10 Fed. 272, 281, 293.

Wm. Hepburn Russell (Wm. Beverly Winslow, Morton Schaeffer, Randolph Barton, and Archibald R. Watson, on briefs), for appellant receivers.

Richard S. Culbreth, for appellant Coltrane.

Fielder C. Slingluff, for appellant Baltimore Building & Loan Ass'n. William Pinkney Whyte, for appellee Powhatan Improvement Co. Thos. Foley Hisky and M. N. Packard, for appellee Blake and others.

E. S. Douglass and George H. Lamar (Joseph D. Wright, on briefs), for appellees Cummin and Gulliver.

Edwin J. Farber (David Stewart and E. Stanley Toadvin, on briefs), for appellee Wilkins and others.

Henry C. Kennard (Henry A. Whitaker, on briefs), for appellees Eunice R. Pearce and others.

Before GOFF and SIMONTON, Circuit Judges, and PURNELL, District Judge.

SIMONTON, Circuit Judge. This case comes up on appeal from the circuit court of the United States for the district of Maryland. There are now before us three separate appeals growing out of the settlement of the affairs of the Baltimore Building & Loan Association. The Baltimore Building & Loan Association is a corporation created under the laws of the state of Maryland. It conducted a large business for several years, had members, and had placed loans in North Carolina, Virginia, West Virginia, Pennsylvania, and the District of Columbia, as well as in the state of Maryland. The association having become embarrassed, proceedings were instituted in the circuit court of the United States for the district of Maryland by Daniel B. Coltrane, in behalf of himself and all other stockholders against the association, praying for the appointment of a receiver, and for the administration of the affairs of the corporation in that court. The cause coming on to be heard, Bird M. Robinson was appointed receiver, and subsequently Randolph Barton, Esq., was associated with him as co-receiver. Auxiliary suits were instituted in the circuit courts of the United States for the states above mentioned, and in the supreme court of the District of Columbia, and the assets of the association were put in process of collection. The receivers having made progress in this collection, and a goodly part of the assets having been realized, the court entered an order providing for the intervention in the cause of all stockholders and investors in the association for the purpose of ascertaining and protecting their rights. At the same time John C. Rose, Esq., was appointed special master for the purpose of receiving proofs of claims, and he was instructed to report thereon, with his conclusions of law and findings of fact. A large number of interventions have been made. The special master has made his report. The claimants are all holders of stock in the association. Some have paid up their stock subscription entirely, and have been enjoying fixed semiannual dividends at the rates of 8 per cent. per annum with some, and 6 per cent. per annum with others. Some, having paid up their stock

in full, have attempted to exercise the privileges of withdrawal given by the by-laws, and have in accordance with them given the required notice. The insolvency of the association defeated the payment of this withdrawal value. All of these two classes claim to occupy the position of creditors. Others are stockholders who have obtained an advance from the funds of the association and have given security therefor. They claim that in settling, ascertaining, and repaying this advance they are entitled to credit for all sums paid in by them by way of dues, premiums, and interest, and that on an adjustment so made they will be discharged from any further obligation as stockholders. Others are stockholders who have paid their dues regularly up to the insolvency of the association, and have never had any advance. They claim that they are entitled to be paid out of the assets of the association, realized and to be realized, the value of their stock, in equal proportion with all the other holders of stock certificates.

The special master, in an exhaustive and able report, discussed the claims of all these classes, and disallowed those of the first three set out above. He held that all holders of certificates of stock were stockholders, entitled to share in equal proportion the remaining assets of the association, the proportion to be measured by the number of shares held by each. And with regard to the third class, the advanced shareholders, he held that they were not entitled as a credit on their advances to the amount of dues on stock subscription paid by them. Exceptions were taken to his report, and the cause was heard by the circuit court. All the exceptions were overruled, except those to his conclusion as to the third class, the advanced stockholders. As to these the court differed with the special master, and held that they were entitled to credit their advance with the dues as well as with all other money paid by them into the association, by way of premium and interest. Appeals and cross appeals were allowed to the decree of the circuit court, and the whole case is here on many assignments of error.

Before entering in detail into a discussion of these assignments of error, a question underlying all of them must first be met. The court below felt itself bound by the decisions of the court of last resort in Maryland in the solution of all questions arising in the administration of the assets of this insolvent Maryland corporation. It held that these decisions led inevitably to the conclusion reached by it. On the other hand, it is earnestly contended that the questions involved in this case, establishing the relations between stockholders. and the corporation the Baltimore Building & Loan Association, are questions of general law, determining the nature and obligation of the contracts growing out of these relations, to be solved according to the principles of equity governing the federal courts, and in no wise controlled by decisions of the state courts.

Building and loan associations differ from an ordinary corporation created to deal in money in this: They are allowed to lend out their money, and, under certain restrictions, as such, are exempted from the usury laws of the state. In many other respects they are as other corporations. Their stockholders, in their relations with the

corporation as stockholders, enter into the same character of contracts, come under the same character of obligations as do stockholders in other business corporations. And these are regulated by the general law, unless modified by statute. The statute law of Mary land has not modified this relation in these respects. The Maryland statutes, so far as building and loan associations are concerned, have special provisions as to the lending of money by them. In this respect do the Maryland decisions control. A corporation of this character is in one aspect a limited copartnership. Each stockholder ventures a certain sum of money, the amount of stock purchased or subscribed by him. His liability is measured by the stock held by him. Usually, if the enterprise fails, and its assets are exhausted in the payment of debts, the stockholder loses the stock, then valueless, and his liability ends. Sometimes as stockholder he is subject to an additional liability, measured always by the stock held by him. As stockholder he shares in the profits of the association, and, of course, to the extent of his stock and any fixed liability beyond it, he must share the losses. "Qui sentit commodum sentire debet et onus." Each stockholder stands on the same footing with regard to each share of his stock, and each is liable equally and in the same respect with every other for his subscription, according to the form in which he contracts to pay it, whether it be in an entire sum in cash or whether it be in installments at fixed intervals. All these are governed by general law, the law merchant.

But when a building and loan association begins to exercise the purpose of its creation, becomes a lender of money, and any person― a stockholder-gets any of that money, such stockholder assumes a new relation to the association. Whether such a transaction is called an advance from the common fund, or whether it is called a loan, the transaction makes the corporation the creditor, and such person, though a stockholder, the debtor. He incurs a liability which. must be discharged. This feature in the business of a building and loan association is regulated and controlled by the local law. Is such a loan or the incurring of such a liability legal? Does the question of usury arise ? Are the general statutes against usury modified with respect to this building and loan association? Are the securities given in this transaction valid? All of these questions must be determined by the local law. Provisions as to such matters vary with the states in which they are made.

In the case at bar, each stockholder-every stockholder in the Baltimore Building & Loan Association-bound himself to pay his stock subscription. This was a contract in which every creditor and every other stockholder of the corporation was interested. He had the option of paying it in cash at once, or he could pay it in certain installments at certain fixed times. All the money so paid under these contracts of subscription went into the common treasury, in which every stockholder had an interest. This transaction is perfectly legal,. and not dependent for its legality on any local law. It comes within the general law of contracts. If any one, being a stockholder, because he is a stockholder, concludes to get from the common treasury money in it, and gets it, call it a loan or call it an advance, it has