Beso v. Eastern Building & Loan Association of Syracuse

• Decision Date: 14 February 1901
• Docket Number: 64-1900
• Citation: 16 Pa.Super. 222
• Parties: Beso v. Eastern Building and Loan Association of Syracuse, New York
• Court: Pennsylvania Superior Court

16 Pa.Super. 222

Beso v. Eastern Building and Loan Association of Syracuse, New York

No. 64-1900

Superior Court of Pennsylvania

February 14, 1901

Argued April 30, 1900 [Syllabus Matter]

Appeal by defendant, from decree of C.P. No. 2, Allegheny Co.-1898 No. 533, on bill in equity in case of Josephine Beso and Anthony Beso v. The Eastern Building & Loan Association of Syracuse, New York.

Bill in equity to restrain a suit on a mortgage and for cancelation of notes secured by the mortgage. Before White, P. J.

From the record it appeared that plaintiff, Josephine Beso, was a member of the Eastern Building & Loan Association of Syracuse, New York. On August 8, 1891, plaintiff made an application for a loan for $ 2,500. This application was duly accepted, and plaintiff gave seventy-three promissory notes payable at the office of the association at Syracuse, secured by a mortgage of her land in Wilkinsburg, Pa. By the terms of the mortgage she had a right to anticipate the payment of the notes. After paying sixty-two of the notes, on August 30 1897, she tendered to the association $ 450, which was more than enough to pay the six notes then due, with interest, and the other five not due, and demanded a surrender of the notes. The association refused to accept the money and surrender the notes, claiming that the mortgage covered not only plaintiff's liability as a borrower, but also her liability as a shareholder. The covenants of the mortgage and the provisions of the by-laws of the association are stated in the opinion of the Superior Court.

The court below entered a decree in accordance with the prayers of the bill.

Error assigned among others was the decree of the court.

Chester M. Elliott, with him R. E. Stewart, for appellant. -- The contract must be construed and controlled according to the laws of the state of New York: National B. & L. Assn. v. Ashworth, 91 Va. 706; 22 S.E. 521; Nickels v. People's B., L. & S. Assn., 93 Va. 380; Bennett v. Eastern B. & L. Assn., 177 Pa. 233; 35 A. 684; B. & L. Assn. of Dakota v. Logan, 66 F. 827; Equitable B. & L. Assn. v. Vance, 49 S.C. 402; 27 S.E. 274; Tobin v. McNab, 53 S.C. 73, 30 S.E. 827; People's B., L. & S. Assn. v. Tinsley, 96 Va. 322; Ware v. Banker's Loan & Investment Co., 95 Va. 680; Liverpool & Great Western Steam Co. v. Phenix Ins. Co., 129 U.S. 397; New England Mortgage Security Co. v. McLaughlin, 87 Ga. 1; 13 S.E. 81; Lanier v. Union Mortgage, Banking & Trust Co., 64 Ark. 39; 40 S.W. 466; Dugan v. Lewis, 79 Tex. 246; 14 S.W. 1024; Caesar v. Cappell, 83 F. 403; Scudder v. Union National Bank, 91 U.S. 406; Bigelow v. Burnham, 83 Iowa, 120; 49 N.W. 104; Smith v. Parsons, 57 N.W. 311; Andrews v. Pond, 13 Pet. 77; Watson v. Lane, 52 N.J. Law, 550; 20 A. 894; Central Trust Co. v. Burton, 74 Wis. 329; 43 N.W. 141; Equitable Building & Loan Association v. Hoffman, 50 S.C. 303; 27 S.E. 692.

The application for shares, the certificate of shares, application for advance, application for loan, the notes, bond, mortgage, articles of incorporation and the by-laws of the appellant, constituted the contract between the plaintiff and the appellant, and the plaintiff's rights and liabilities are measured by the terms of such contract: O'Malley v. People's Building, Loan & Savings Assn., 92 Hun, 572; Daley v. People's Building, Loan & Savings Assn., 172 Mass. 533; Heslin v. Eastern B. & L. Assn. of Syracuse, 28 Misc. (N.Y.) 376; Martin v. Zellerbach, 38 Cal. 300; Lockhart v. Van Alstyne, 31 Mich. 76.

The plaintiff and the defendant never sustained toward each other the ordinary relation of debtor and creditor: Eversmann v. Schmitt, 53 Ohio, 174; 41 N.E. 139; Leahy v. National B. & L. Assn., 100 Wis. 555; 76 N.W. 625; Endlich on Building Associations, secs. 77, 79, 122, 124.

R. A. Balph, with him James Balph, for appellees. -- The covenant is not to keep and perform all requirements of the by-laws, but to keep all promises and engagements made and entered into with said association, according to the true intent and meaning of the by-laws. These " promises" and " engagements" all have reference to matters looking to the security of the loan and its repayment.

Before Rice, P. J., Beaver, Orlady, W. W. Porter and W. D. Porter, JJ.

OPINION

W. D. PORTER, J.

Josephine Beso, one of the plaintiffs, was a married woman residing with her husband in the state of Pennsylvania. She became a member of a New York building and loan association and subsequently applied for and received a loan from the association. The application for membership and the application for loan recited the name of the association and the city in New York where it did business. The loan was evidenced and secured to be paid by seventy-three negotiable promissory notes, executed by Josephine Beso and her husband, and payable to the said association at its office in Syracuse, in the State of New York. Each note was for the sum of $ 39.60, except the three last maturing, which were each for $ 20.85, aggregating the sum of $ 2,834.55. The payment of these notes was secured by a mortgage executed by the plaintiffs, upon certain property in the county of Allegheny and state of Pennsylvania. This was a contract to pay money in New York; the primary contract creating the indebtedness was subject to the law of New York which permitted building and loan associations to charge usurious interest. The validity of the promise to pay and the legality of the rate of interest, fines and fees charged are to be determined in accordance with the law of the state of New York: Bennett v. Eastern Building & Loan Association of Syracuse, N.Y., 177 Pa. 233. The mortgage was a conveyance of real estate in Pennsylvania, as security for the debt, and the legality of the execution thereof, the extent and character of the lien thereby created and the construction of the instrument must be governed by the law of Pennsylvania. A married woman can, in Pennsylvania, only create a lien by a mortgage upon her real estate when her husband joins in the instrument, which must be acknowledged in the form required by our act of assembly: Bingler v. Bowman, 194 Pa. 210, 45 A. 80. Any charge which was imposed upon the real estate of this plaintiff by the mortgage out of which this litigation arose must be found in the express covenants of the mortgage, or arise out of the same by necessary implication.

This is not a suit by a stockholder to recover the value of his stock, nor a suit by an association to collect an assessment or dues from a shareholder. With the duties of Josephine Beso to the association, as a shareholder therein, we have nothing to do, unless under the covenants of the mortgage the land was pledged as a security for the performance of those duties. The plaintiffs here assert that the covenants of the mortgage have been performed, and, upon the ground that the defeasance has been accomplished, pray that the conveyance be canceled and satisfied. The plaintiffs paid, as they fell due, sixty-two out of the seventy-three notes recited in the mortgage, and the same were surrendered to them by the defendant association. The association then sent to the plaintiffs an agent, for the purpose of inducing them to enter into some new arrangement on the subject; the plaintiffs declined to enter into any new arrangement and they were then notified by the association that it would not receive the money on the eleven remaining notes and surrender them and satisfy the mortgage. The plaintiffs subsequently duly tendered to the association the sum of $ 450, alleging the same to be in full of the eleven notes remaining unpaid, and demanded a surrender of the notes. The learned judge of the court below found as a fact that this sum was more than sufficient to pay said eleven notes, with the interest thereon, and to this finding of fact error is not assigned. Under the by-laws of the association, the plaintiffs had the right to anticipate the payment of these notes, and, as the notes were negotiable, they had the unquestionable right to demand their surrender. The association declined to accept this money and surrender the notes. After the last note had become due the plaintiffs filed this bill, continuing their tender of $ 450, and praying that upon the payment of the same the mortgage be decreed to be marked satisfied. After a final hearing the court below decreed the satisfaction of the mortgage, upon payment of the amount tendered. It is conceded by the appellant that if the payments for which the mortgage is a security are to be limited to the discharge of the debt evidenced by the notes, then the sum decreed by the court below to be paid as a condition precedent to the satisfaction of the mortgage is sufficient to discharge the indebtedness represented by the notes. The contention of the appellant is, however, that the notes recited in the mortgage did not represent the whole obligation of the plaintiff for which the mortgage is a security, and that the association is entitled to hold the mortgage as a security for the payment of dues, interest and premiums by Josephine Beso, until the stock held by her in the association shall have attained the value of $ 100 per share.

There is nothing which appears upon the face of the mortgage which can, by any reasonable construction, be held to covenant that the land was conveyed as a security for anything further than a specific sum of money, payable at certain definite periods with interest and such fines as might be imposed, in accordance with the by-laws of the association, in case of delay in payment, together with the usual covenants as to the payment of taxes and insurance, unless such covenant arises out of the references to the by-laws of the association which occur in the instrument. The references to...