Opinion by

The Globe Refining Company, Limited, was organized on the ninth day of September, 1887, under the provisions of the act of June 2, 1874, and its supplements. It entered at once upon the business for which it was organized and continued to carry it on as a joint stock association until February, 1890, when it failed and made a general assignment for the benefit of its creditors.

The assignee converted the assets into money and filed his account. An auditor was then appointed to distribute the fund. His report was confirmed by the court below and this appeal is from the decree of distribution so made.

*561There is therefore no doubt about the character of the fund; the question is one of distribution only. Among the claimants was the appellant to whom the company was indebted for a part of the purchase money of the property used and occupied by it, and for a loan the bona fides of which was not questioned.

The auditor excluded him from the fund, holding that the joint stock association had been dissolved as matter of law on the day on which it was organized, and that its members had been thereby made liable to creditors as general partners. This conclusion rests on a finding “ That there has not been, by the members of this association, even a substantial compliance with the act of June, 1874.” This finding is a conclusion of law drawn from the fact that after the organization of the company “ C. D. Gaylord, one of the three parties to the statement, transferred all his shares to Lucetta Gaylord on the same day that he signed the statement; ” and that she was never elected a member of the association.

The statement was properly signed and acknowledged by the requisite number of persons. The shares were paid for in full. The instrument was recorded. The organization was therefore in full compliance with the law. Could one of the shareholders sell his shares ? The act of 1874 declares such shares to be personal estate, and authorizes their transfer under such rules as the association may provide; but it restricts the right of the transferee to participate in the business until he or she shall be elected or admitted as a member. It recognizes the fact that involuntary transfers may take place also, and provides that “ any change of ownership, whether by sale, death, bankruptcy or otherwise, which shall not be followed by an election to the association, shall entitle the owner only to his interest in the association at a price and upon terms to be mutually agreed upon, and in default of such agreement the price and terms shall be fixed by an appraiser appointed by the court of common pleas of the proper county, subject to the approval of said court.”

The assignee of C. D. Gaylord was his mother. Under the section just cited she could not have insisted on being admitted to participate in the management against the will of the remaining shareholders. The reason for this is that it would not be just to them to allow one of their number to introduce into the *562management, bjr his simple assignment of bis shares, a person who was bankrupt, of bad repute, or for any reason unsatisfactory to his associates. But in tbis case the remaining shareholders seem to have waived a formal election, and to have continued the son as the representative of his mother in the board of management and in the employment of the association. This was an informal but an effectual consent to the assignment and admission into the association of the assignee.

The relation of the holders of ' the shares to each other and to the business of the association enabled them to continue their operations without interruption, under the same management, and.as a properly organized joint stock association.

The appellant’s debt was an honest one and it was unpaid. He should therefore have been allowed to receive his prorata share of the fund with the other creditors of the association. For this reason the decree of the court below is reversed and a procedendo awarded.