36 N.Y.S. 1016, O'Malley v. People's Building, Loan & Savings Ass'n

• Judge: Argued before LEWIS, BRADLEY, and WARD, JJ.
• Parties: O'MALLEY v. PEOPLE'S BUILDING, LOAN & SAVINGS ASS'N.
• Date: 28 December 1895
• Citation: 36 N.Y.S. 1016
• Docket Number: .

Page 1016

36 N.Y.S. 1016

O'MALLEY

v.

PEOPLE'S BUILDING, LOAN & SAVINGS ASS'N.

Supreme Court of New York, Fifth Department.

December 28, 1895

Appeal from circuit court, Ontario county.

Action by John O'Malley against the People's Building, Loan & Savings Association to recover the sum of $500, alleged to be due on a certificate of five shares of stock issued by defendant to plaintiff. From a judgment in favor of plaintiff (35 N.Y.S. 14), defendant appeals. Reversed, unless plaintiff stipulates to reduce recovery.

Chester M. Elliott, for appellant.

George L. Bachman, for respondent.

Argued before LEWIS, BRADLEY, and WARD, JJ.

LEWIS, J.

This action was brought to recover the sum of $500, claimed to be due upon a certificate of five shares of stock issued by the defendant to the plaintiff, of the par value of $100 a share. The principal question presented is whether the plaintiff is entitled to recover the par value of the shares, or whether his recovery shall be limited to the sum of $371, that being the amount, as claimed by the defendant, which the shares had earned at the time this action was commenced.

The defendant is a building, loan, and savings association. It was organized in the month of December, 1887, under chapter 122 of the Laws of 1851, entitled " An act for the incorporation of building, mutual loan, and accumulating fund associations," and the acts amendatory thereof and supplemental thereto. Its principal office is in the village of Geneva, Ontario county, N.Y. Its capital stock is $5,000,000, represented by 50,000 shares of the par value of $100 a share. It is provided by section 1 of the act of 1851 that any number of persons, not less than nine, may associate in forming an incorporated company for the purpose of accumulating a fund for

Page 1017

aiding its members in acquiring real estate, making improvements thereon, and removing incumbrances therefrom, and for the further purpose of accumulating a fund to be returned to its members who do not obtain advances upon their shares of stock when the funds of the association shall amount to a certain sum per share, to be specified in the articles of association. The act provides for the filing of articles of association, which are to be subscribed by the members, in which shall be stated, among other things, the amount of the entrance fee of new members and new shares, the monthly or weekly dues per share, the redemption fee on shares on which advances shall be made, the fines and penalties for nonpayment of dues, fees, or other violations of the articles of association, the manner of redemption of shares by advances made thereon, the mortgage security to be taken on such advances, how same may be redeemed or changed, and the ultimate amount to be paid to the owners of unredeemed shares. It was further provided by said act that corporations formed under it shall have the power to borrow money for temporary purposes, not inconsistent with the objects of their organization, but that no loan for such purposes shall have a longer duration than two years.

Articles of association were duly subscribed and filed by the defendant. It is provided therein that persons, on becoming members of the association, shall duly subscribe a written application for shares desired to be purchased, and pay an admission fee of $1 on each share, and thereafter pay $1 a month on each share, and in addition thereto the sum of 25 cents every three months. The scheme or plan of the association is, briefly, to issue its shares of stock to persons desiring to purchase the same, and with the moneys paid by the shareholders, and the fines and penalties which may be imposed upon the members, to accumulate a fund which, after paying the expenses of the association, is to be loaned or advanced to the holders of the shares of stock who may make application therefor, to the amount of the par value of the stock. The moneys advanced are to be secured by the bond of the applicant, and by a mortgage upon unincumbered real estate, conditioned to pay on the amount borrowed annual interest of 5 per cent., and in addition thereto a premium of 5 per cent. per annum, the interest and premium to be paid in weekly installments, until the mortgage...