Kadish v. Garden City Equitable Loan & Bldg. Ass'n

• Decision Date: 31 March 1894
• Citation: 151 Ill. 531,38 N.E. 236
• Court: Illinois Supreme Court
• Parties: KADISH et al. v. GARDEN CITY EQUITABLE LOAN & BLDG. ASS'N et al.

151 Ill. 531

38 N.E. 236

KADISH et al.

v.GARDEN CITY EQUITABLE LOAN & BLDG. ASS'N et al.¹

Supreme Court of Illinois.

March 31, 1894.²

Appeal from appellate court, first district.

Bill by Leopold J. Kadish against the Chicago Co-operative Brewing Association and others. A cross bill was filed by the Garden City Equitable Loan & Building Association and others. Cross complainants obtained a decree, which was affirmed by the appellate court. 47 Ill.App. 602. Cross defendants appeal. Affirmed.Kraft & Kraft, for appellants.

Julius Stern, for appellees.

WILKIN, J.

On the 5th day of July, Leopold J. Kadish and Ernest Kadish, being stockholders in the Pilsen Brewing Malting Company, became members of the Garden City Equitable Loan & Building Association, and each borrowed from it $10,000, giving their individual bonds therefor. The money so borrowed was used for the benefit of the Pilsen Company, and it gave the loan and building association a deed of trust on all its real estate to secure said bonds. Subsequently the Chicago Co-operative Brewing Association, an Illinois corporation, became the successor of the Pilsen Company, acquiring all its property, and assuming the payment of the above-mentioned bonds. On August 30, 1887, this latter corporation subscribed for certain shares of stock in the loan and building association, and borrowed from it $5,000, giving its bond therefor, signed by its president and secretary, secured by a second deed of trust on the real estate obtained by it from the Pilsen Company. The payment of this bond was further secured by the personal guaranty in writing of Leopold J. Kadish, George Heinzman, J. E. Buehrer, Herman Nathan, Joseph Schroeder, Herman Fink, Thomas Nalipinski, and Louis Groskopf, the then directors of the co-operative association. On the 18th of September, 1888, appellant Albert Florus took judgment by confession on a promissory note executed to him by the co-operative association while he was one of the directors. Two days later, Leopold J. Kadish, as a stockholder, filed his bill in the circuit court of Cook county for the purpose of winding up the affairs of the corporation, making the loan and building association and Albert Florus parties defendant. The loan and building association filed a cross bill to foreclose the trust deeds held by it as above stated, claiming priority over the general creditors of the corporation, and the circuit court decreed accordingly. The mortgaged property having sold for less than the amount found due, a deficiency decree was entered against the said guarantors, who had been made parties to the cross bill, and they, together with Florus, appealed, first to the appellate court, and now to this.

Albert Florus insists that the circuit court erred in holding the trust deeds in favor of the loan and building association valid prior liens to his judgment; and the other appellants,that it erred in holding them liable on the deficiency decree as guarantors. In support of both of these contentions it is claimed that the trust deeds sought to be foreclosed were void because taken in violation of our statute authorizing the organization of ‘homestead loan associations.’ This position is based upon the following propositions:

1. The loan of the Kadishes was in fact a loan to the Pilsen Company, and therefore it, as well as the $5,000 loan to the co-operative association, was to a corporation.

But loans can only be made under the statute by homestead loan associations to members, and, as one corporation cannot become a member of another, neither the Pilsen Company nor the co-operative association could become members of the loan and building association.

2. Both loans were for general business purposes, whereas homestead loan associations in this state can only lawfully loan money to build homes.

In our view of the law applicable to this case, all that is here claimed may be conceded, and still the trust deeds in question would not be void. There was in the transaction of loaning money to the corporations, and taking these trust deeds to secure the repayment of the same, no violation of the express provisions of the statute regulating the loaning of money by homestead loan associations. The only sections of that act bearing upon the question are in the following language. 1 Starr & C. Ann. St. p. 631, c. 32, par. 74, § 7: ‘Married women may become subscribers to the capital stock of such association, and hold, control and transfer their stock in all respects as femmes sole, and their stock shall not be subject to the control of, or liable for the debts of their husbands. Minors may become subscribers to and owners of the stock of such associations by guardian or trustee, and such guardian or trustee may withdraw the stock of such minor as provided in section 6 of this act: provided, however, that such guardian or trustee shall have given bonds to the probate court in double the amount of the withdrawal value of such stock, for the use of such minor on his or her becoming of age; but it is hereby provided, that no person as owner or legal representative of the stock of such association shall by himself or by proxy, vote at any election, when the stockholders are called upon to vote, on more than forty shares of stock.’ Id. § 8: ‘The board of directors shall hold such stated meetings, not less frequently than once each month, as may be provided by the by-laws, at which the money in the treasury, if $100 or more, shall be offered for loan in open meeting; and the stockholder who shall bid the highest premium for the preference or priority of loan shall be entitled to receive a loan, of $100 less the premium bid, for each share of stock held by said stockholder: provided that no loan shall be made by said corporation except to its own members, nor in any sum in excess of the amount of stock held by such members borrowing: and provided, that such stockholder may borrow such fractional part of $100 as the by-laws may provide. Good and ample real estate security unincumbered except by prior loans of such association shall be given by the borrower to secure the repayment of the loan: provided, however, that the stock of such association may be received as security to the amount of the withdrawal value of such stock.’ It is not denied that these loans were made to actual members. All that is insisted upon in that regard is that the borrowers,...