Bird v. Kendall

• Decision Date: 05 December 1901
• Citation: 40 S.E. 142,62 S.C. 178
• Parties: BIRD et al. v. KENDALL et al.
• Court: South Carolina Supreme Court

40 S.E. 142

62 S.C. 178

BIRD et al. v. KENDALL et al.

Supreme Court of South Carolina

December 5, 1901

Appeal from common pleas circuit court of Richland county; Townsend Judge.

Bill by William M. Bird & Co. against F. D. Kendall and others. From the decree, plaintiffs appeal. Affirmed.

The circuit decree, omitting formal parts, is as follows:

"This is an action brought by the plaintiffs, the holders of a junior incumbrance, against F. D. Kendall, the mortgagor, to which action prior incumbrancers and also subsequent incumbrancers are made parties. The cause was referred to the master of Richland county, by an order of reference of date October 16, 1900, 'to compute the amount due upon the plaintiffs' mortgage and judgments and to ascertain and report the amount due upon the several liens set up in the answers, together with their priorities with leave to report any special matter.' The master made his report, and the matter came on to be heard before me upon various exceptions to the master's report. These exceptions all raise practically one question namely, what is the amount properly due by the defendant F D. Kendall to his codefendant the Georgia State Building & Loan Association. There was no contest as to the order of the priority of the several liens set up in the pleadings and offered in evidence, and there were no exceptions to the master's report upon this question, which report sets forth the respective rank and priority of the various liens upon the mortgaged premises. The nature and character of the contract entered into by and between F. D. Kendall and the Georgia State Building & Loan Association, and the proper method of calculating what is due under that contract, as against the rights of the plaintiffs and certain of the defendants as subsequent incumbrancers, and the question of the right of said association to charge an attorney's fee under its mortgage, were the questions argued before me. The arguments on both sides were full and elaborate.

I find the following facts: On December 28, 1894, the defendant Kendall became a member of the Georgia State Building & Loan Association, and, having paid the membership fee required, received from the association a certificate for fifty shares, the matured value of each share being $100, under the terms of which he agreed to pay to the association '60 cents per month, for each share held, until such share matures or is withdrawn.' The certificate provides that whenever the monthly payments on any shares, together with the profits apportioned to such shares, amount to $100 per share, the holder shall be entitled to withdraw $100 per share upon the surrender of his certificate; and it also provides for ascertaining the value of the stock in case of withdrawal at any time before maturity. On June 26, 1895, Kendall obtained an advance or loan of $5,000 from said association upon said fifty shares of stock, which shares were thereupon assigned over and delivered to said association; and at the same time, and as additional security, Kendall made and executed his bond in the penal sum of $10,000, in which it is recited that Kendall is the holder of said fifty shares of stock, upon which he has obtained an advance of $5,000, subject to the by-laws, rules, and regulations of said association,--the condition of the bond being that he 'shall well and truly pay, or cause to be paid, to the said association, on or before the last Saturday in each and every month, until the said stock shall mature to the par value of $100 per share, the sum of $30 as installments upon said stock, and the further sum of $50 as interest and premium on said advance, etc.,'--and at the same time made and executed a mortgage upon the property on Plain street, in city of Columbia, mentioned in the complaint. The mortgage recites the condition of the bond as above set forth, and proceeds: 'Said bond being distinctly made and to be construed according to the statutes and laws of the state of Georgia, and the final settlement of said advance at the time of maturity of said stock to be based upon the repayment of said advance, with interest, not to exceed the rate of eight per cent. per annum.' The mortgage further provides: 'Upon condition, nevertheless, that if the said party of the first part shall well and truly comply with and perform all the covenants and conditions in the said bond mentioned, according to the by-laws, rules, and regulations of said association, then this present indenture, as well as the said obligation, shall be void; else to remain of full force and virtue. But if the said party of the first part for the space of three successive months during the period to maturity of said stock fails or refuses to pay the installments on the same, or the interest and premium as stipulated in the said bond, or shall further fail to insure or keep insured the improvements on said premises, or shall fail to pay promptly all taxes and assessments which may be chargeable against said premises, or any part thereof, that then and from thenceforth, in the option of the said party of the second part, it shall and may be lawful for the said party of the second part to treat the entire debt due and payable; and it may grant, bargain, sell, and dispose of the said hereby granted premises, and all benefit and equity of redemption of the said party of the first part therein, according to the directions of the act of the legislature of the state of South Carolina in that case made and provided, rendering the overplus of the purchase money to be obtained for the same, after full satisfaction of the principal and interest to be due on said obligation in manner aforesaid, and the charges of advertisement and sale and foreclosing the same, and ten per cent. upon the amount of indebtedness recovered in such proceedings as attorney's fees and commissions (if any overplus there shall be), unto the said party of the first part, his heirs, executors, administrators, or assigns.' It is provided in the by-laws that borrowers shall pay a fixed premium of 50 cents per month on each $100 borrowed, and that the rate of interest charged shall be six per cent. per annum on the money actually loaned. By-Laws, art. 7, § 1. The by-laws provide for two funds, to wit, the loan fund and the expense fund; and they also provide that the class A stock, which is the class to which the stock in this case belongs, may, after a certain number of payments have been made, be withdrawn, and thereupon the holder will be entitled to the amount paid into the loan fund as dues (i. e. 50 cents out of each 60 cents per month), with interest not in excess of six per cent. per annum for the average time on the said loan fund payments. By-Laws, art. 3, § 3. The same by-law provides for a withdrawal fee, which is $3 upon 50 shares of stock. The by-laws also provide for a fine of 10 cents per share when monthly payments are not made. By-Laws, art. 4, § 1. The by-laws also provide that upon the repayment of loans the withdrawal value of the stock may be applied as a credit upon the principal debt. By-Laws, art.

7, § 14. There is no dispute as to the amounts paid by Kendall since he became a member of this association. It appears that he made 47 monthly payments of stock dues, of 60 cents per share ($30), aggregating $1,410, of which 50 cents per share, or $25 per month, went into the loan fund, aggregating $1,175; 41 monthly payments, installments of interest and premiums, of $50 each, aggregating $2,050; and also payments of fines incurred under the by-laws for nonpayment of dues, aggregating $115.18. The evidence shows, and I so find, that these payments were respectively applied by the association, when received by it, to the several different accounts as stated above, in accordance with the by-laws (article 7, § 13). I do not see upon what principle the plaintiffs can now object to the application of the payments of the sums paid to it by Kendall. As long as Kendall complied with his contract and continued to pay his dues, the association had the right to receive the money, and it seems to me that neither Kendall nor the plaintiffs here can now object to the application which the association then made of these funds. Thompson v. Gillison, 28 S.C. 539, 6 S.E. 333. The payments made by Kendall were made at various times, and during the years 1899 and 1900 were made in varying amounts and at irregular intervals. The last amount paid by Kendall was the sum of $150, paid and received by the association as late as April 11, 1900, only a little more than three months before the commencement of this action; the summons and complaint having been lodged on July 19, 1900. It further appears, and I so find, that the series of stock to which the certificate issued to Kendall belongs has not matured, and said series of stock, including said certificate, has not reached the par value of $100 per share. It also appears, and I so find, that the said association, prior to this proceeding, waived any right it may have had under its contract with Kendall, or under its by-laws, to declare his entire debt due and payable, and to treat him as in default. Under the express words of the bond and mortgage in this case, it is provided that the bond was distinctly made and was to be construed according to the laws of the state of Georgia. There was no plea of usury, and no question as to usury was raised. The Georgia statute, approved October 19, 1891, was in evidence in this case. It provides, ' that no fines, interest or premiums paid on loans in any building and loan association shall be deemed usurious.' 1 Laws 1890-91, p. 181, § 8.

Let us, therefore, in the first place, ascertain what was the contract entered into by Kendall, and what was the nature of that

...