Columbia Bldg. & Loan Ass'n v. Lyttle

• Decision Date: 10 June 1901
• Citation: 66 P. 247,16 Colo.App. 423
• Parties: COLUMBIA BUILDING & LOAN ASS'N v. LYTTLE. [1]
• Court: Colorado Court of Appeals

66 P. 247

16 Colo.App. 423

COLUMBIA BUILDING & LOAN ASS'N v. LYTTLE. ^[1]

Court of Appeals of Colorado

June 10, 1901

Appeal from district court, Rio Blanco county.

Action by James Lyttle against the Columbia Building & Loan Association to enjoin the foreclosure of a trust deed. From a judgment for plaintiff, defendant appeals. Reversed.

J Norman and Rising & Marshall, for appellant.

John T Shumate and Thomas, Bryant & Lee, for appellee.

GUNTER J.

Appellant a building and loan association incorporated under the laws of Colorado, by a soliciting agent Williams, requested appellee to become one of its shareholders. He gave appellee a circular, which contained information in detail as to the terms of membership. This appellee read through carefully before subscribing. A copy of appellant's by-laws was also left with appellee. Thereafter, March 19, 1890, appellee, on a printed form, signed by him, made application for membership in appellant corporation. In this application he promised to comply with all the rules and regulations of the association. March 31, 1890, a certificate of stock was issued to appellee for 10 shares of the capital stock of appellant, reciting that it was "subject to all conditions, rules, regulations, and by-laws" of appellant. June 26, 1890, appellee, as a shareholder in appellant, by application, signed by him, solicited of appellant a loan of $1,000. The application stated that loans were only made to shareholders; further, that "when the stock matures it pays the loan." The loan was approved, and on July 29, 1900, appellee executed his note, promising thereby to pay appellant on or before six years "one thousand dollars, with interest and installments according to the by-laws of the association, payable on or before the fifth day of each and every month." The 10 shares of stock were assigned to secure the loan, and as additional security a trust deed given upon real estate of appellee. Appellee contends that appellant represented to him that the payment of a definite number of installments and a definite amount of interest at fixed times would mature the 10 shares of stock hypothecated to secure the loan, and that such stock, when matured, would work a satisfaction of the loan; that, induced by and relying upon such representations, he subscribed for the stock, and took the loan; that he has since made the payments required by such representations. Having so performed, appellee asks a decree canceling the note, the certificate of stock, and that a foreclosure of the trust deed be enjoined. This relief the lower court granted. Appellant denies that he made these representations, and says:

1. That it represented to appellee that the maturity of the stock subscribed by him would work a satisfaction of the loan; that such stock would be matured when such stock, through payments made the association by shareholders, and profits of its business should be of the value of $1,000,--that is, when the amount in the loan fund to the credit of each of the 10 shares of stock held by the appellee is $100; that, as the stock has not reached such value, the loan is not paid. Further, that, as appellee declines to make further payments on the loan, appellant is entitled to foreclose the trust deed securing the same. The circular, carefully read by appellee, advised him of the limitations on the powers of the soliciting agent, Williams, in this language: "No representative, agent, or officer of the association has any power to waive or alter any of the conditions or terms expressed in the printed literature of the association." Endlich on Building Associations says (at section 232) "Where the limits of an agent's authority are set forth in a manner necessarily coming under the observation of the other party to a contract in which the agent exceeds those limits, the party dealing with the agent is bound to take notice of such limits." The printed literature, other than the circular, which came into the hands of appellee before the loan, consisted of by- laws, application for membership, certificate of stock, application for the loan, note, and the trust deed. This literature did not contradict or add materially to the representations in the circular. Does this circular state as a fact that a definite number of payments made at fixed times will mature the stock? On the contrary, does it not appear therefrom that the stock will mature when the monthly payments of the shareholders and the profits of the business render the amount in the loan fund to the credit of any share equal to $100? It appears from the history of the negotiations leading up to appellee's subscription for stock and the subsequent loan that appellee had ample means of acquainting himself with the enterprise into which he was embarking. The law charges him, as a shareholder, with notice of the articles of incorporation and the by-laws. "One who becomes a member of an association becomes chargeable with the knowledge of the provisions of its charter and by-laws, and is bound by them." Bertche v. Association, 147 Mo. 343, 48 S.W. 954, 71 Am.St.Rep. 571. The circular states that appellant association "is a mutual co-operative society incorporated under the laws of...