Cook v. Equitable Bldg. & Loan Ass'n
| Decision Date | 19 July 1898 |
| Citation | 30 S.E. 911,104 Ga. 814 |
| Parties | COOK v. EQUITABLE BUILDING & LOAN ASS'N. |
| Court | Georgia Supreme Court |
Syllabus by the Court.
1. A building and loan association, as such organizations usually exist to-day, is a private corporation, designed for the purpose of accumulating into its treasury, by means of the gradual payment by its members of their stock subscriptions in periodical installments, a fund to be invested from time to time in advances made to such shareholders on their stock as may apply for this privilege, on approved security, the borrowing members paying interest and a premium for this preference in securing an advancement over other members, and continuing to pay the regular installments on their stock in addition; all of which funds, together with payments made by the nonborrowing members, including fines, forfeitures, and other like revenues, go into the common fund until it, with the profits thereon, aggregates the face value of all the shares in the association, the legal effect of which is to extinguish the liability incurred for the loans and advancements, and to distribute to each nonborrowing member the par value of his stock.
2. The fact that the charter incorporating such a company gives it power to enter into other business not strictly within the usual scheme of such association does not destroy the building and loan character of the association, where there has been no attempt on its part to exercise any of such powers.
3. A member of such association who has been advanced money on his shares may undertake, in addition to paying the legal rate of interest on such money, to pay dues and premiums for such advancement on his stock, and also fines, in the event of a failure to comply with his obligation. When such dues and premiums, paid for the privilege granted the advanced member go into the common fund of the association, and are so applied as to aid in the maturity of the stock upon which the advancement was made, they do not constitute interest upon the money advanced, and such a contract is not, therefore usurious.
4. The provision of the act approved October 19, 1891 (Acts 1890-91 p. 176), as embodied in section 2401 of the Civil Code, is, in effect, simply declaratory of what was law before the passing of the act; and the act, so construed, is not violative of that paragraph of the constitution of this state which declares that "no special law shall be enacted in any case for which provision has been made by an existing general law."
5. Where such an association issues what is known as "coupon stock," which bears interest at 6 per cent. per annum, payable semiannually, and upon which the holder of such stock pays to the association its full face value, with the privilege, after 90 days' notice, of receiving back the money thus paid for the stock, and with a like privilege on the part of the association of calling in the stock and refunding the money paid therefor, it is simply a borrowing of money by the association. Such association has power to borrow money to further the ends of its incorporation, unless prohibited from so doing by its charter.
6. This court cannot consider an assignment of error based upon a refusal to allow a witness to answer a given question propounded during his examination, when it does not appear from the record in the case what was the testimony sought to be elicited by such question.
7. The fact that the jury found for the plaintiff a verdict for an amount less than what was authorized by the testimony can afford no cause of complaint to the defendant.
8. Whether the particular transaction under investigation is within the general scope of a building and loan association plan, or is a plan devised by schemers to make money for themselves under the form of building and loan contracts, with the view of evading the usury laws of the state, is a question of fact for the jury.
9. The issues upon the plea of usury were fairly submitted to the jury under the charge of the court, and there was ample evidence to sustain the verdict in favor of the plaintiff. The court, therefore, did not err in overruling the motion for a new trial.
Error from superior court, Fulton county; J. H. Lumpkin, Judge.
Action by the Equitable Building & Loan Association against Mary E. Cook. Judgment for plaintiff. From an order denying a new trial, defendant brings error. Affirmed.
J. Howell Green, Ellis & Gray, and W. E. Jackson, for defendant in error.
The Equitable Building & Loan Association was incorporated by the superior court of Richmond county, and among other provisions contained in its charter is the following: "The object of said association shall be pecuniary profit for its stockholders, to encourage the savings of small sums of money, and to aid persons of limited means in obtaining homes." "The capital stock of said association shall be the monthly payments on the shares of stock as fixed by the by-laws, not including the separate payments for the expenses of the association referred to herein as the 'Expense Fund,' and shall consist of five thousand shares, and said association may commence business whenever ten per cent. of said number of shares, to wit, five hundred shares, shall have been subscribed, and shall have the privilege of increasing said capital stock from time to time, in the discretion of the board of directors, to an amount not exceeding two hundred thousand shares." The charter further provided "that the expenses of the association shall not be paid out of the fund of money raised by subscription to the capital stock, but that all the expenses of this association, including the salaries of all officers and agents, shall be paid out of the separate fund to be raised for that purpose by a monthly payment to be made by each stockholder, known as the 'Expense Fund,' which shall be fixed in the by-laws," etc. The charter further conferred upon the association such general powers of suing and being sued, contracting, and holding real and personal property, as are usually conferred upon private corporations; and also conferred upon it the power "to act as agent or trustee for the investment and management of funds for persons, corporations, administrators, executors, guardians, and trustees."
Under its charter the company was organized, and adopted by-laws which provided that the objects of the association were "to assist its own members in saving and accumulating money, and obtaining the largest possible earnings on same, buying and improving real estate, by advancing to shareholders the maturity value of their shares, under the Mutual Building Society plan, on terms, conditions, and in such a manner, and on such security, as may be acceptable to the board of directors; to enable members of the different branches to build or purchase homes upon plans less burdensome than paying rents; to give cities and towns in which this association has an established branch the benefits and advantages of a local building and loan association, combined with the advantage of safe and accumulative investment." The by-laws further provided for the issuing of what is known as "Series Stock," to be This stock was issued only to investors. Others stock was also provided for, known as "Loan Shares," the monthly installments on which were $1.20 per share, of which 50 cents constituted the loan fund, 50 cents the premium fund, and 20 cents the expense fund. Another set of by-laws was introduced, under which this loan was probably made, providing for two classes of loan shares, the monthly installments on the same to be $1.20 and $1, respectively, which were to continue until payments and accumulated dividends amounted to $100 for each share in the series to which the borrower's invested stock originally belonged, when it should be declared to be matured.
Under this set of laws there were also two classes of investment stock, on which were to be paid monthly installments of 60 and 50 cents per share, respectively. At maturity of the serial stock, the shareholder had a right to withdraw the full face value of his stock, to wit, $100 for each share. These members also had the right to withdraw their shares before maturity, after a stipulated length of time, receiving back moneys paid into the loan fund, with a stipulated interest for the average time, but the amount withdrawn should in no case exceed the book value of the stock at the time of withdrawal. Members were allowed to receive advancements upon their stock, in the nature of loans, upon approved security given by them, as might be required by the board of directors. For each $100 advanced, the member is required to first own two shares of class A serial stock of the association, which when the application, and the title to the property offered as security, are fully accepted by the association, will be assigned to the association for half the number of loan shares, the installments on which were to be paid as hereinbefore set forth. Provision is also made that the loan may be repaid at any time after one year, on 30 days' notice, upon certain conditions, among which were that the shares should be in good standing, there should be no arrears in interest, and the shareholder to whom advances had been made should be charged with the full amount of the advances, from which would be deducted the withdrawal value of his...
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