Bibb County Loan Ass'n v. Richards

Decision Date31 January 1857
Docket NumberNo. 108.,108.
Citation21 Ga. 592
PartiesBibb County Loan Association, plaintiff in error. vs. Alexander Richards, defendant in error.
CourtGeorgia Supreme Court

Foreclosure of Mortgage, in Bibb Superior Court. Decision by Judge Allen, December Term, 1856.

This was a proceeding instituted by the Bibb County Loan Association, against Alexander Richards, a member of said Association, to foreclose a mortgage on a house and lot in the city of Macon.

The mortgage was executed to the Association, as security for the payment of a bond of which the following is a copy, to wit:

State of Georgia, Bibb County.

Know all men by these presents, That I, Alexander Richards, of the said State and county, am held and firmly bound unto William S. Williford, Treasurer of the Bibb County Loan Association, his successors in office and assigns, in the just and full sum of two thousand dollars, for the true payment of which, I bind myself, my heirs, executors and administrators, firmly by these presents. Sealed with my seal and dated the 20th day of June, 1854.

The condition of the above obligation is such, That whereas, I, the said Alexander Richards, have this day procured an advance of two thousand dollars on the ten shares of stock which I hold in said association, from the Bibb County Loan Association, under the Constitution and By- Laws thereof. Now, should I, the said Alexander Richards, my heirs and executors or administrators, well and truly pay to the said Association, so long as it shall continue to exist, the sum of ten dollars monthly, on its regular day of meeting, being installments due on said stock, on which an advance was so procured as aforesaid, and the further sum of ten dollars monthly as aforesaid, on the same day, as interest on said advance, then this obligation to be void, otherwise of full effect.

ALEXANDER RICHARDS. [L. S.]

Sealed and delivered in the presence of E. Massenet,

Geo. S. Oliver, Not. Pub.

The mortgage was of the same date with the bond; recited that it was made to secure the payment of the instalments and interest mentioned in this bond; and conditioned to be void upon the payment of said instalments and interest, as conditioned and provided for in said bond.

On the same day, Richards executed an assignment to the Association of his ten shares of stock as collateral security, for the payment of the bond and mortgage, but agreeing nevertheless, to pay the monthly instalments on said shares as required by the rules of the Association, and the interest on said advance.

The defendant pleaded:

1st. That the Association was not a body corporate, and could not as such institute and maintain this suit.

2d. That he had fully paid all that was legally due on said bond and mortgage.

3d. That the same were usurious.

Plaintiff first introduced in evidence the bond and mortgage and assignment.

Plaintiff next offered in evidence a printed copy of the Constitution and By-Laws of the Association, which by con-sent, was admitted in lieu of the originals: It was also admitted that the Treasurer had proved the organization of the Association as therein set forth, prior to their application to the Inferior Court for a charter, as authorized by statute; defendant\'s counsel reserving the right to except to the legality of this proving by oral testimony of such facts.

The following certificate of the Treasurer was by consent, received in evidence, to wit:

Macon, Ga., Nov. 22, 1856.

This is to certify that the actual advances made to the members of the Macon Building and Loan Association from its commencement to 3d November, 1856, have been at an average of 46 13-16ths per cent, premium; and to the members of the Bibb County Loan Association from its commencement to 20th November, 1856, at an average of a fraction over 483/8per cent, premium.

W. S. WILLIFORD, Treasurer of the Association.

                -------------------
                |Macon,|46 13-16. |
                |------|----------|
                |Bibb, |483/[8]   |
                -------------------
                

The records from the Inferior Court of Bibb county, showing the application of the association for a charter and the order granting it, were admitted in evidence, by consent; defendant reserving the right to except to the equity and relevancy of the testimony.

It was further admitted that the Constitution and By-Laws were printed by order of the association, and a copy furnished to each member, defendant among the rest, before they signed said Constitution and By-Laws.

Plaintiff also read in evidence the Act of the Legislature, passed at the session of 1855-6, incorporating the association.

The case was, by agreement of counsel, submitted to the presiding Judge to pronounce judgment, without the intervention of a jury, who sustained the pleas, and granted therule absolute only for the sum of $975, being the amount of the bond, less the amount paid by defendant as instalments and interest.

And plaintiff's counsel excepted to said judgment and decision, and assigns the same as error.

Lanier & Anderson; and Bailey, for plaintiff in error.

Nesbits, for defendant in error.

By the Court.—Lumpkin, J., delivering the opinion.

My first purpose was to consider two questions only, viz.: 1st. Is the act of incorporation constitutional and valid? And, 2d. Did the charter authorize the contract from which Richards seeks to be relieved?

Reflecting, however, upon the novelty and importance of the matters involved in this case, and the learning exhibited in its discussion, I have concluded to take a more extended view of the points in controversy.

From a work published in 1854, by Mr. A. Cummings, Jr., Boston, upon Building Associations, it seems that these associations originated with the Earl of Selkirk, in Scotland, in 1815. The motives of their founder were purely benevolent, and the experiment was eminently successful on account of the beneficial influence they exerted upon the industrious classes; they soon attracted the attention of the British public; and they have spread and multiplied in that country, to an incredible extent. In 1836, the British Parliament passed an Act, affording the most ample facilities for their formation and control.

In the year 1836, twenty-one years after the first one was established in Great Britain, the first association of this kind, called "The Brooklyn Building and Mutual Loan Fund Association, " was organized in Brooklyn, New York; and from that time they have continued to spread from State to State, and city to city, until at present, they pervade everyportion of the Union. They number already some sixteen in Georgia. That they have improved our towns by leading to the erection of a number of new buildings, furnished many families with homes of their own, that could not otherwise have possessed them; given a considerable impulse to mechanical enterprise, and in many other ways promoted the prosperity and welfare of the communities where they exist, is undoubtedly true. But whether they will continue to be entitled to the epithet of the "poor man\'s exchequer, " and whether they will, as they promise to do, enable every man to become his own landlord, will depend entirely upon the manner in which they conduct their business. Under existing regulations, I have been led seriously to doubt this. The interest of the borrower, as well as the accumulator, will have to be sedulously regarded and protected; otherwise they will forfeit the public confidence and cease to prosper. If all the members were borrowers, and such was the original idea upon which these associations were founded, the plan would work well. But in every such association, a large number of the stockholders do not join with the view of taking loans, but for the purpose of investing their money where it will yield a profitable return. These are called accumulators; while they share in the profits of the institution, they contribute nothing to produce them; and as a necessary consequence, the borrowers have to pay a larger interest to make a given rate of dividends, than they would, if they produced these dividends only for themselves.

To those who feel curious to investigate this subject more thoroughly, I would refer them to a small volume published in Charleston in 1852, on the "Mutual Benefit of Building and Loan Association;" and also to a book recently published in Connecticut, which is replete with all the learning upon this mysterious scheme. And to which is added by the author who was two years a director of one of those associations, a model plan for their management; the opera-tions of which he confidently believes, will secure results uniformly equitable to all parties.

This is a brief outline of the origin of Building and Loan Associations. Their friends and advocates who claim for them an antiquity older than the Christian era, insist that they are peculiarly propitious to the poor, by stimulating them to save small sums from the grog-shop and the gambling house, and to purchase with their hoarded earnings, happy homes for themselves and families; and that the terms upon which they procure help for this purpose, are such as they could get nowhere else; and not so hard as those exacted by monied men who will not give long indulgence to any, especially those in straightened circumstances. That another object which they subserve is, to supply a place of safe deposit for the savings of the stockholder in which they are entitled to receive lawful interest, which is not allowed by banking and other corporations.

On the other hand, it is asked, why so much complication and mystery about a system designed for the benefit of the masses, especially the poor and the humble? That it is all for the purpose of concealing the repulsive interest which they charge. That nothing can be understood of its workings, except that it produces most gratifying gains to the capitalist who invests his money in it to accumulate. That the borrower once in the web may, like the little fly, struggle in vain, to escape the entanglement. That the roof...

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