A rehearing was granted on this appeal after decision in Department. That decision, written by Justice Angellotti and concurred in by Justices Shaw and Sloss, is as follows:

It is earnestly insisted by respondent on this rehearing that the rule declared and adopted in the foregoing opinion as governing the settlement of the indebtedness of a borrowing stockholder to a building and loan association of which he is a member, is contrary to the decided weight of prevailing American authority. Under this insistence we have given that matter further consideration. It is conceded in the Department decision that there are some authorities which declare a rule different from the one there adopted and it is this line of decisions which counsel for respondent claims announces the more equitable rule to be applied in the adjustment of indebtedness between the borrowing member and the insolvent association and is the one which he further insists is sustained by the decided weight of authority.

The growth of building and loan associations throughout the Union in recent years has been attendant with a vast amount of litigation and the decisions of the courts have not been harmonious with respect to the rule to be applied in settlements between the association and its borrowing members. This diversity has arisen in a large measure through differences in statutory provisions governing the associations in the several states, differences in the rules or by-laws of respective associations, and the varied forms of contracts which have been entered into between the association and its members and which have come before the courts for construction. No great difficulty has been experienced in applying an «quit-able rule of settlement where the questions have arisen between a borrowing member and an association which is solvent. It has arisen principally where the association has become insolvent and in an effort by courts under such circumstances to formulate a rule which may be applied so as to operate equitably as to the creditors and likewise between the borrowing and nonborrowing members of the association. It is well settled by all the authorities that when insolvency intervenes the borrowing members must pay up their mortgage indebtedness to the insolvent association at once, notwithstanding such debts by the contract of loan have not matured. It is to such a situation that the courts- in the different states have endeavored to apply a rule which would be equitable under the changed conditions produced through the insolvency, and it is in such an endeavor that the inharmony arose in the decisions. This diversity of opinion resulted in the early formulation and application in different jurisdictions of two general rules referred to in the authorities as the Maryland and Pennsylvania rules respectively; the former so called because laid down by the supreme court of Maryland; the latter because announced by the supreme court of Pennsylvania.

The Maryland rule as early declared in that jurisdiction and which to a limited extent has been applied in other states is that on the insolvency of the association the borrowing member should be charged with 'the amount" loaned him by the association with interest thereon, and credited with all sums paid as dues upon his stock and the premium and interest paid upon his loan. It is this Maryland rule which respond- ent contends should be applied here and which he insists is sustained by the weight of authority. In support of this claim he cites a line of cases from Maryland of which Waverly etc. Assoc. v. Buck, 64 Md. 338 , [ 1 Atl. 561 ], will alone be particularly mentioned: Buist v. Bryan, 44 S. C. 121, [ 51 Am. St. Rep. 787 , 29 L. R. A. 127, 21 S. E. 537 ] ; Butson v. Home Sav. & Trust Co., 129 Iowa, 370 , [ 113 Am. St. Rep. 463 , 4 L. R. A. (N. S.) 98, 105 N. W. 645 ] ; Cook v. Kent, 105 Mass. 246 ; Randall v. Nat’l. Building Assoc., 42 Neb. 809 , [29 L. R. A. 133, 60 N. W. 1019 ] ; Building Assoc. v. Tinsley, 96 Va. 322 , [ 31 S. E. 508 ] ; Snyder v. Fidelity Sav. Assoc., 23 Utah, 291 , [ 64 Pac. 870 ] ; Interstate S. & L. Soc. v. Cairns, 16 Wash. 215 , [ 47 Pac. 509 ] ; Hale v. Stenger, 22 Wash. 516 , [ 61 Pac. 156 ] ; Fidelity Sav. Assoc. v. Shea, 6 Idaho, 405 , [ 55 Pac. 1023 ] ; Western Sav. Bank v. Houston, 38 Or. 377 , [ 65 Pac. 611 ] ; Brownlie v. Russell (Eng.), H. L. 8 App. Cas. 235.

A number of cases from the federal courts are also cited by respondent, but of these cases it may be said (and this will apply equally to a number cited from said courts by appellant) that they need not be considered, as they follow the decisions of the state courts in applying either rule "as it is adopted by the higher courts of the states and as the decisions of these state courts are cited and relied on by either side, the federal cases, therefore, can aid nothing in determining the prevailing rule.

It will be observed on an examination of the authorities cited by respondent from Nebraska, Utah, Washington, Oregon, and Idaho that in none of the cases in those jurisdictions (save Hall v. Stenger) was there any question as to what rule should be applied between borrowing members and” insolvent associations. The question whether the Maryland rule or the Pennsylvania rule shall be applied can only arise when the association has become insolvent. In these western cases cited the actions were either brought by the association to foreclose mortgages accompanied with assignments of their stock given to the association by borrowing members, or were suits brought by such members seeking a cancellation of their mortgages under a claim that a credit on their loans of the withdrawal value of their stock in the association, but which the association refused to make, was sufficient to satisfy their indebtedness. In all those cases the association was solvent and as is common to building and loan associations it was provided in the by-laws that a member thereof might at any, time upon the payment of his indebtedness to the association surrender his stock and be paid its withdrawal value. The right to have such withdrawal value applied on the loan was the question involved in those cases, the claim of the association being that the borrowing members by forfeiture of their stock through nonpayment of dues or for other reasons, had lost their interest in the stock and hence were not entitled to have such withdrawal value applied on their indebtedness. The courts- held that these claims of the association which were directed against the right of ownership of the stock by the borrowing members were untenable and that as the latter had a right according to the by-laws of the association to be paid the withdrawal value of their stock, they were entitled to have it applied in payment on the loan. There was no discussion of the Maryland rule or any other equitable rule to be applied in eases of insolvency of the asociation. Of course, where the association is solvent and a member who obtains a loan partially secured by an assignment of his stock is accorded under the rules of the association the right of severing his membership therewith at any time on payment of his indebtedness and to be paid the actual value of his stock, there ought to be little room for questioning but that he has the right to have all that he has paid in—at least the dues on his stock—which goes to make up its withdrawal value applied in satisfaction of his loan, and this is all that the eases in the various states referred to decided. But where the association becomes insolvent a different situation is presented. A stockholder may not then withdraw. All that remains to be done is to wind up the affairs of the association. The actual value of its shares cannot be determined until this has been done; its assets collected and its indebtedness paid. Until then it cannot be said that the stock has any withdrawal value. It is to such a situation as this, proceeding from the insolvency of the association, that the courts have endeavored to apply some equitable rule with a view to fairly conserving the rights of creditors of the association and adjusting the rights of its borrowing and nonborrowing members between themselves which has resulted in the formu lation of the respective Maryland and Pennsylvania rules, and only cases which involve the insolvency of the association and where one or the other of these views have been considered and applied can be of any value in determining which rule is sustained by the better reasoning and is the one more generally applied. In this view the authorities just referred to as they deal solely with the right of borrowing members in solvent associations can aid nothing in determining that’ question.

As to the other authorities cited by respondent, they do, as claimed by him, announce and apply the Maryland rule in cases of insolvency, but an examination of those authorities will disclose that the contract of loan was essentially different from that involved in the case at bar. Either the loan was an advancement in anticipation of the value of the member’s stock at maturity and was to be satisfied by a surrender of such stock when it matured, or the contract of loan in express, terms or the by-laws which were made part of the contract, provided that the monthly payments on the mortgage loan and the monthly payments on the stock assigned as collateral security should be made until the stock matured and that upon such- maturity the stock should be surrendered to the association in payment and cancellation of the debt.

In Buist v. Bryan, 44 S. C. 121, [ 51 Am. St. Rep. 787 , 29 L. R. A. 157, 21 S. E. 537 ], the contract of loan provided that interest and dues should be paid until the shares of stock matured and said shares were then to be surrendered to the association in satisfaction of the loan. In Waverly etc. Assoc. v. Buck, 64 Md. 338 , [ 1 Atl. 561 ], and Buston v. Home Sav. & Trust Co., 129 Iowa, 370 , [ 113 Am. St. Rep. 463 , 4 L. R. A. (N. S.) 98, 105 N. W. 645 ], the contracts called for the extinguishment of the loan upon the maturity of the shares of stock. In Cook v. Kent, 105 Mass. 246 , the contract provided that the borrowing member was to pay dues “until the payment of the dues amounted to the principal sum of the loan.” In Hale v. Stenger, 22 Wash. 516 ; [ 61 Pac. 156 ], it does not appear what the particular contract was, the court saying that “the loan was made in the usual terms and conditions common to loans by building and loan associations to their subscribers.” In Brownlie v. Russell (Eng.), H. L. 8 App. Cas. 235, the contract provided that the dues should he credited on the loan and the House of Lords in that case, while conceding that the contract was clearly to the advantage of borrowing members and hard upon the nonborrowing members, sustained a right to the application of the dues to the payment of the indebtedness because “it was the contract.”

It was the existence of these express contractual relations as to the loan and its repayment which doubtless entered as an important factor in inducing the Maryland court to the original announcement of the rule by it and its acceptance in the limited number of jurisdictions which have followed it, the reasoning of the American courts being that as the payment of the mortgage debt was by the contract between the borrowing member and the association to be accomplished only by the maturity of the shares, and this was rendered impossible through the insolvency of the association, the contract between them was abrogated ab initio, and that being so abrogated the simple relation of debtor and creditor between the borrowing stockholder and the association existed from the beginning, and the former was entitled accordingly under the rule of partial payments to a credit on his loan for all payments made to the association prior to the insolvency.

But in the case at bar we have no such peculiar contract as was involved in the several cases just referred to. In the case here under consideration there is nothing in the note or mortgage, the certificate of stock assigned as collateral security, or the by-laws .of the association which, as is said in the Department decision, comprehended, all the written contract between the parties, which provided that the payment of dues on the stock should be applied to the credit of the loan, or that the stock was anything else than a pledge as collateral security for the payment of the amount borrowed. This is clearly pointed out in the Department decision and if it be conceded that the Maryland rule for which respondent contends should prevail, even to the extent that it has been applied to particular contracts such as were under consideration in the cases which adopted or followed it, it certainly is not the more generally prevailing or accepted rule which governs contracts and loans between borrowing members and associations such as is here involved.

While it is contended by appellant that the Maryland rale is in toto opposed now to the current of recent authority, we perceive no occasion for determining that matter. The whole subject is discussed and considered in many of the cases presently to be cited. That rale certainly has not been extended so as to apply to a contract such as we have here.

In more recent years as building and loan associations have largely expanded throughout the United States they have become a source of extensive litigation; their objects and purposes have been more plainly understood and the courts in the large field of litigation which they have afforded have had occasion to more thoroughly consider than in earlier years the rights of creditors and the relation of borrowing and non-borrowing members to the association, between themselves when a condition of insolvency, which was never anticipated, has occurred. As a result the great weight and prevailing current of authority is that where insolvency occurs the dual relation which the member occupies to the association—that of stockholder and borrower—should be kept separate and distinct. As a borrower he is required to pay back to the association the amount loaned him, with interest. As a stockholder he has subscribed for capital stock of the association upon which he has agreed to pay monthly dues and has assigned such stock as collateral security for the loan. Under this contract of loan the payment of dues on his stock is not credited as a payment "on his loan. Such payment is on his purchase of the stock. In relation to such stock he is a stockholder and not a debtor. Upon the insolvency of the association his contract to make further payments on his stock subscription has ended but his relation as a stockholder continues until the liquidation of the association. What he has paid in on his stock, in common with what has been paid in by the other members, with such other sources of revenue, have gone to make up the capital stock of the association, which is a trust fund for the benefit of the creditors thereof. From this fund the debts of the association must be paid and the value of the shares of the insolvent association will be just what the assets of the association amount to after liquidation, and cannot be ascertained until the debts and losses of the association are paid. As a stockholder the borrowing member is liable for his proportion of such outstanding indebtedness. Whatever losses are sustained must be borne by all the stockholders, both borrowing and nonborrowing members. If, however, the borrowing stockholders are to have credited, on their loans as a payment thereon of the amounts which they have paid in as dues on their stock, such members escape the burden of paying any of the indebtedness or losses of the association. They get back the full benefit of everything they have paid in as a satisfaction toward their loans, while the nonborrowing members who have paid in the same dues bear all the losses and consequently get not only no benefit from the dues which have been paid in by the borrowing members but necessarily, as in every case of insolvency, get less than they actually paid in as their stock dues. To prevent what would thus be obviously unfair, the courts have generally adopted as the equitable rule to be applied in such cases the one early announced by the supreme court of Pennsylvania. Under that rule of settlement the borrowing stockholder of the insolvent association must repay to it at once the amount loaned with interest. Payments of dues on his stock will not be allowed as credits on his loan. As to stock payments he is to be treated as a nonborrowing member. After the assets are collected and the indebtedness of the association paid, the fund which may remain is to be distributed pro rata among all the stockholders on the basis of the amounts paid by them respectively as dues on their stock, whether they are borrowing or nonborrowing stockholders. Under this rule the rights of the creditors of the association are protected and the members, both borrowing and nonborrowing, are placed upon an equally equitable footing. In laying down this rule it is said in Strohen v. Franklin etc. Assoc., 115 Pa. St. 273, [ 8 Atl. 843 ], (from which decision the rule is known as the Pennsylvania rule) : “The insolvency of the company puts an end to its operation as a building association. To a certain extent it also ends the contracts between it and its members, and nothing remains but winding it up in such manner as to do equity to the creditors and between the members themselves. As regards the latter care should be taken to adjust the burden equally and not throw upon either the borrowers or non-borrowers more than their respective shares. This result may be reached by requiring the borrower to pay what he actually received with interest. He should then be entitled, after the ¡debts are paid, to a pro rata dividend with the nonborrower ■of what he has paid on his stock. He will thus be obliged to bear his proper share of loss. To allow him to credit upon 'his mortgage his payments on his stock would enable him to ¡escape responsibility for his share of the losses and throw them wholly upon the nonborrowers. In other words, the borrower would escape without loss. It will not do to administer the affairs of an insolvent corporation in this manner.” The ¡rule as thus laid down is now generally accepted by the text-writers and in the adjudicated1 cases as sustained by clear ■equitable considerations. It is the rule laid down in Endlieh ■on Building Associations, 2d ed., sec. 477, and Thompson on Building Associations, 2d ed., sec. 171, p. 344, where the ■author declares that the rule laid down in Buist v. Bryan, 44 S. C. 121, [ 51 Am. St. Rep. 787 , 29 L. R. A. 127, 21 S. E. 537 ], (the case principally cited in support of the Maryland rule), is “an exception to the recent trend of authorities,” ■and which he further declares is against allowing dues on the stock to be credited on the loan as an unjust preference. ■Several cases are cited in the Department decision sustaining this rule in its application to the case at bar which it would be unnecessary to again cite save as an orderly enumeration of the decisions in the several states showing how extensively the rule is being adopted and applied. These authorities are Southern B. & L. Assoc. v. Anniston L. etc. Assoc., 101 Ala. 582 , [ 46 Am. St. Rep. 138 , 29 L. R. A. 120, 15 South. 123 ] ; Taylor v. Clark, 74 Ark. 220 , [ 85 S. W. 231 ] ; Curtis v. Granite State etc. Assoc., 69 Conn. 6 , [ 61 Am. St. Rep. 17 , 36 Atl. 1023 ] ; Ottensoser v. Scott, 47 Fla. 276 , [ 110 Am. St. Rep. 137 , 4 Ann. Cas. 1076, 66 L. R. A. 346, 37 South. 161 ] ; Dooling v. Smith, 89 Ill. App. 26 ; Wohlford v. Citizens’ Bldg. etc. Assoc., 140 Ind. 662 , [29 L. R. A. 177, 40 N. E. 694 ] ; Marion Trust Co. v. Trustees, 153 Ind. 96 , [ 54 N. E. 444 ] ; Rogers v. Rains, 100 Ky. 295 , [ 38 S. W. 483 ] ; King v. Brewer, 121 Mich. 343 , [ 80 N. W. 238 ] ; Clark v. Lopp, 80 Mo. App. 542 ; Gary v. Verity, 101 Mo. App. 586 , [ 74 S. W. 161 ] ; Knutson v. N. W. L. Assoc., 67 Minn. 201 , [ 64 Am. St. Rep. 410 , 69 N. W. 889 ] ; Weir v. Granite State etc., 56 N. J. Eq. 234, [ 38 Atl. 643 ] ; Meares v. Duncan, 123 N. C. 203 , [ 31 S. E. 476 ] ; Hale v. Cairns, 8 N. D. 145 , [ 73 Am. St. Rep. 746 , 44 L. R. A. 261, 77 N. W. 1010 ] ; Anselme v. American B. & L. Assoc., 63 Neb. 525 , [ 88 N. W. 665 ] ; Monier v. Clark, 12 N. M. 118, [ 75 Pac. 35 ] ; People v. New York B. & L. Assoc., 101 N. Y. App. Div. 484, [ 92 N. Y. Supp. 62 ] ; Eversmann v. Schmitt, 53 Ohio St. 174 , [ 53 Am. St. Rep. 632 , 29 L. R. A. 184, 41 N. E. 139 ] ; Strohen v. Franklin etc. L. Assoc., 115 Pa. St. 273, [ 8 Atl. 843 ] ; Carpenter v. Richardson, 101 Tenn. 176 , [ 46 S. W. 452 ] ; Price v. Kendall, 14 Tex. Civ. App. 26 , [ 36 S. W. 810 ] ; Leahy v. National B. & L. Assoc., 100 Wis. 555 , [ 69 Am. St. Rep. 945 , 76 N. W. 625 ] ; Young v. Bldg. Assoc., 48 W. Va. 512 , [ 38 S. E. 670 ] ; Building & Loan Assoc. v. McPhilamy & Hawks, 81 Miss. 61 , [ 95 Am. St. Rep. 454 , 59 L. R. A. 743, 32 South. 1001 ].

All these cases just referred to deal with the rule of settlement to be applied where the association has become insolvent, and, in connection with those cited in the Department opinion, fully sustain the conclusion there reached that respondent was not entitled to have his mortgage debt credited with the dues paid on his stock pledged as collateral security •for the loan.

The judgment is reversed and the cause remanded for a new trial.

Angellotti, J., Shaw, J., and Melvin, J., concurred.

Rehearing denied.