Chattanooga National Building Loan Association v. William Denson
Decision Date | 27 April 1903 |
Docket Number | No. 206,206 |
Citation | 189 U.S. 408,23 S.Ct. 630,47 L.Ed. 870 |
Parties | CHATTANOOGA NATIONAL BUILDING & LOAN ASSOCIATION, Petitioner , v. WILLIAM H. DENSON and Rosa E. Denson |
Court | U.S. Supreme Court |
Suit to foreclose a mortgage given by the respondents to the petitioner to secure a note for the sum of $5,000, given as evidence of a loan made by petitioner to respondents. The petitioner is a building and loan association, and a corporation of the state of Tennessee; the respondents are citizens of Ala- bama. One of the defenses of respondents is that the transactions were illegal because petitioner had not complied with the laws of Alabama in regard to foreign corporations doing business in the state. This is the only defense with which we are concerned. The circuit court rendered a decree foreclosing the mortgage, which was reversed by the circuit court of appeals, and the bill was directed to be dismissed. 46 C. C. A. 634, 107 Fed. 777. The case was then brought here by certiorari.
The Constitution of the state of Alabama provides as follows:
The material parts of the Code of the state, passed in execution of the Constitution, are as follows:
(Ibid.)
(Ibid.)
There was no point made on the by-laws of the association, any by agreement they were omitted from the record on appeal to the circuit court of appeals, and are also omitted here. And it was also stipulated 'that the complainant is a corporation chartered and organized under and in accordance with the public statutes of the state of Tennessee, authorizing the creation of corporations for carrying on the business of building and loan associations; that its principal office and place of business is, and was at the time the loan involved in this case was made, and has ever since continuously been, in the city of Chattanooga, state of Tennessee; and that the loan to defendant, William H. Denson, involved in this case was made in accordance with the power and authority conferred on complainant by its charter, and in the manner prescribed by its by-laws.'
The note executed by respondents was as follows:
$5,000.00.
Chattanooga, Tennessee, June 10th, 1895.
On or before nine years from date I promise to pay the Chattanooga National Building and Loan Association, at its home office, Chattanooga, Tennessee, five thousand dollars with interest on the sum of twenty-five hundred dollars, at the rate of six per cent per annum, payable monthly.
* * * * *
It is further understood that this note is made with reference to and under the laws of the state of Tennessee, and if paid before seven years from this date such rebate from the premium included herein will be allowed as the board of directors of said association shall deem equitable.
The omitted part recited that the note was for money borrowed on fifty shares of stock, and expressed certain conditions of the nonpayment of the note when due, or the nonpayment of premiums or assessments; and also expressed the right of petitioner, in case of such nonpayments, to collect the debt, though not due, and to foreclose the mortgage. The mortgage covered lots in the city of Gadsden, Elowah county, state of Alabama. It repeated the note and its conditions, and contained others. The facts connected with the execution of the note and mortgage are stated by the circuit court of appeals as follows:
'The complainant below, the Chattanooga National Building & Loan Association, is, and was at the time the loan to Mr. Denson was made, a corporation under the laws of the state of Tennessee, with its principal office in the city of Chattanooga, in that state. Among its corporate functions was the authorization, and, so far as we are advised, its sole business was, to loan its funds to its stockholders on real estate security. It had no local office or agent in Alabama, but it had a traveling agent whose business it was to solicit subscriptions to its stock, and to obtain applications for loans, and submit the same to the home office of the association at Chattanooga.
'On the 25th of April, 1895, appellant, Denson, who was a resident of Gadsden, Alabama, on the suggestion and at the solicitation of the agent, signed at that place a written application for fifty shares of stock in the association, complainant below, appellee in this court. This application was forwarded by the agent, to whom Mr. Denson delivered it, to the home office, where the stock was issued and returned to the agent, to be by him delivered to Mr. Denson. On the same day on which he applied for his stock, Mr. Denson signed a written application to the association for a loan of $2,500 on the fifty shares of stock he had applied for. He offered a premium of $2,500 for the loan, and proposed to secure the loan and premium, if his application should be granted, by a mortgage on certain real estate in Gadsden, Alabama, which he represented to be of the value, in all, of about $9,000. This application was accompanied by the report of two parties, selected by the associa- tion, fixing the value of the property which Denson proposed to mortgage at $8,000, and the certificate of an attorney, also selected by the association, with reference to the condition of the title. This application was forwarded by the agent to the home office in Chattanooga, where it was submitted, along with other applications, to the board of directors, by whom the application was granted and the loan directed to be made in accordance with the charter and by-laws of the association. Thereupon a note and deed of trust were prepared at the home office and were sent to the agent by whom Mr. Denson's application had been taken and forwarded; and at the same time the check of the association of the Chattanooga National Bank of Chattanooga, Tennessee, in favor of W. H. Denson for the sum of $2,367.50 was sent to one D. P. Goodhue, of Gadsden, with instructions to him to deliver said check to Mr. Denson when he should have executed and delivered the note and deed of trust. Upon the execution of the note and deed of trust by Denson...
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