Bertche v. Equitable Loan & Investment Ass'n.

Citation147 Mo. 343,48 S.W. 954
CourtUnited States State Supreme Court of Missouri
Decision Date23 December 1898
PartiesBERTCHE v. EQUITABLE LOAN & INVESTMENT ASS'N OF SEDALIA et al.

1. Rev. St. 1889, §§ 2812, 2813, empower directors of building and loan associations to loan money to members at stated meetings, and provide that a borrower may repay a loan at any time, and, in case of a repayment within 100 months, the borrower shall receive a refund of 1 per cent. of the premiums paid for each month of the 100 then unexpired. The by-laws of an association prescribed certain monthly dues on each share, "until dissolution of the association and maturity of the series"; that at the monthly meetings the shareholder bidding the highest should receive the par value of the stock, less the premium; that he should execute his note for the par value of the stock, conditioned for payment of monthly dues on the shares and interest on the note, and should execute a deed of trust to secure the note and "performance of all obligations imposed on him by the rules of the association." Held, that the statutes and by-laws confer no power to contract that shares should mature at 100 months, regardless of what they had earned, and such a contract and release of the deeds of trust at 100 months, when the shares had not then matured, was ultra vires.

2. Loans made at a premium by a building association to its members on competitive bids, in open meeting and in conformity to the bylaws, are not usurious.

In banc. Appeal from circuit court, Pettis county; Geo. F. Longan, Judge.

Action by Hannah A. Bertche against the Equitable Loan & Investment Association of Sedalia, Mo., and others. From a judgment for plaintiff, defendants appeal. Affirmed.

This is a proceeding in equity brought in the Pettis county circuit court by the plaintiff, as a stockholder, against the Equitable Loan & Investment Association of Sedalia, and the directors of said association, to enjoin the defendants from carrying out a resolution of the board of directors made in April, 1898, directing the release of certain deeds of trust given to the association by some 20 borrowing or advanced stockholders, to secure the payment of loans or advancements on their shares. There was a trial in the court below, resulting in a judgment enjoining and restraining defendants from carrying out said resolution, and directing the annulment and rescission thereof. Defendants, having unsuccessfully moved for a new trial, bring the case here by appeal.

J. H. Rodes and Ross & Bohling, for appellants. Barnett & Barnett, for respondent.

ROBINSON, J.

The petition alleged, in substance, that the association was organized under the Revised Statutes of 1879, relating to building and loan associations, and that plaintiff is the owner of 25 shares of free and unredeemed stock of said association, of the par value of $200 per share, issued in April, 1894, upon which the dues have been regularly paid, and that she has not received any advancements thereon; that, under the statutes of Missouri governing associations of this character, the association loaned its accumulated funds to divers members thereof, upon the pledge of their several shares of stock; or, in other words, that the association redeemed the shares of such members in advance, before they were fully paid up, by advancing to such borrowing members, who successfully bid in open meeting for the right of such priority or advancement, the full face value of their shares, upon such borrowing members pledging their shares of stock to the association, and executing their obligation in writing, whereby they agreed to pay the dues on their several shares of stock, and the interest and premium on the same so advanced, together with all fines and penalties, and thereupon such borrowing members secured the payment of their obligations by executing to the association their deeds of trust upon unincumbered real estate owned by them. Plaintiff further alleges that the board of directors have unlawfully and wrongfully, and in violation of the rights of plaintiff and other free shareholders, caused to be made and entered of record the following resolution, to wit: "Whereas, certain members, shareholders of the Equitable Loan & Investment Association, have received loans or advancements upon their shares of stock in the sum of $200 each, and upon which, by the terms of their respective deeds of trust, they have paid the full amount of their dues, interest, and premiums, the same being for the full term of one hundred months from the date of their respective certificates of stock, as in their respective deeds of trust provided; and whereas, each and all of said members, hereinafter mentioned, have fully complied with the requirements as set forth in their obligations and agreements made with this association, and have complied with the provisions of their deeds by payment of the amounts set forth therein, as due thereunder; and whereas, each and all of said members, after said compliance with the terms of the respective obligations, have formally demanded of this association a release of their respective deeds of trust, and cancellation of their stock in satisfaction thereof, and have made tender of the proper funds for the release thereof: Therefore, be it ordered by the board of directors of said Equitable Loan & Investment Association that the president of said association be, and he is hereby, ordered forthwith to execute quitclaim deeds to each and all of the hereinafter mentioned members, or to enter satisfaction on the margin of the record as required by law, releasing their respective deeds of trust given to secure each and all of said obligations, and in full discharge thereof. And be it further resolved, that the loss, if any, sustained by said association on account of said shares of stock not having earned their face or maturity value, upon which said loans or advancements were obtained, be, and the same is hereby ordered to be, equally charged to all of said nonborrowers or free stockholders in said association and such borrowing members who do not hold definite contracts for the maturity of their loans, and that the same be borne by, and equally distributed and apportioned to, all the free and nonborrowing stockholders in said association, in proportion to the number of shares held by each." The plaintiff next alleges that the directors of the association propose and intend to carry out said resolution, and release the deeds of trust therein referred to, notwithstanding the shares of such borrowing members have not earned the full face or maturity value thereof. The petition further alleges that the shares of such borrowing members have only earned, and consequently are only worth, the sum of $141.15 per share; and that if the deeds of trust given by such borrowing members are released, and their notes canceled, then such borrowing shareholders would receive upon their shares $58.86 per share in excess of their actual value, thereby causing a resulting loss to the association in the amount of such excess, which loss would fall upon, and be borne wholly by, the plaintiff and other free shareholders similarly situated; and that the contemplated act of the directors is an unjust and unwarranted discrimination in favor of such borrowing shareholders, and against the rights of the free and nonborrowing stockholders, and violative of the rights of mutuality between the respective members of said association. It is further alleged that all of the deeds of trust sought to be released contain clauses providing that the same shall be released at the end of 100 months, providing the dues, interest, and penalties thereon shall have been paid for the full period of 100 months, which provision, it is claimed, is ultra vires and void, and in violation of the principles of mutuality between members, and in violation of the statutes of this state governing building and loan associations; and that the directors had no power to make such contracts with its borrowing stockholders; and that there was no by-law of said association authorizing the making of such contracts; and that, in causing such provisions to be inserted in the deeds of trust in question, the directors acted beyond the scope of their authority, to the injury and prejudice of the plaintiff and other nonborrowing members of the association. The petition prays that the defendants be enjoined and restrained from carrying out the provisions of said resolution, and releasing the deeds of trust and other obligations of such borrowing stockholders, until their shares of stock shall have reached their full face or maturity value, notwithstanding their deeds of trust provide that their shares of stock shall be deemed to have matured at the end of 100 months. After admitting that the shares of stock pledged by the borrowing members had not reached their full face value at the expiration of the 100-month period, the answer, among other things, avers, in substance, that, if said contracts were beyond the power of the association to make, then, and in that case, the contracts made and entered into as aforesaid would, under the statute, be usurious, and subject the association to a greater loss than to carry out the same according to their terms. It was further averred that, if the association is enjoined from releasing the deeds of trust in question, it will be compelled to defend a great number of suits in different circuit courts in this state, and put to great expense and cost of litigating with a large number of borrowers who hold like definite contracts. The answer further avers that, if said contracts were not valid and binding upon the association, then the loan in question was usurious, for the reason that the by-laws of the association provided that the accumulated funds of the association should be loaned at a minimum premium, and that all of the loans or advancements in...

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27 cases
  • Anglo-American Land, Mortgage & Agency Co. v. Lombard
    • United States
    • U.S. Court of Appeals — Eighth Circuit
    • July 16, 1904
    ... ... creditors of the Lombard Investment Company, a Kansas ... corporation (called herein the ... sought by plaintiffs is equitable in character, and cannot be ... had in actions at law. (2) ... 523, ... 35 L.Ed. 147; Wilson v. Merchants' Loan & Trust ... Co., 183 U.S. 121, 126, 22 Sup.Ct. 55, 46 ... 35 S.W. 1132, 34 L.R.A. 369, 56 Am.St.Rep. 515; Bertche ... v. Equitable, etc., Ass'n, 147 Mo. 343, 359-362, 48 ... ...
  • State ex rel. Wagner v. Farm & Home Savings & Loan Ass'n of Missouri
    • United States
    • Missouri Supreme Court
    • January 4, 1936
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  • Hough v. Maupin
    • United States
    • Arkansas Supreme Court
    • January 14, 1905
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