Appeal from district court, Grayson county; Don A. Bliss, Judge.
Suit by Charles Crenshaw against Julian G. Hedrick and others to restrain a sale under a deed of trust. From a judgment for defendants, plaintiff appeals. Reversed.
Head, Dillard & Muse and Brown & Crenshaw, for appellant. Dudley G. Wooten and J. W. Finley, for appellees.
FINLEY, C. J.
On July 10, 1896, the appellant filed his suit in the district court of Grayson county against appellee, in which he alleged that he was the owner of 50 shares of stock in the defendant corporation; that on May 12, 1891, he borrowed of appellee $2,500, for which he executed to it his note for the sum of $5,000, of same date, due six months from date, with interest at $12.50 per month, and calling for the payment of $35 per month as monthly assessment upon stock. The note was secured by deed of trust on property described in plaintiff's petition, situated in Grayson county, Tex., and further secured by lien on stock and installments paid in, and to be paid in, when the said contract was made in Grayson county, Tex. The question of the homestead was waived upon the trial of the said cause, and the issue confined to the question of usury, which was pleaded by plaintiff, alleging facts showing its usurious character. The writ of injunction was issued, restraining sale under the deed of trust. The defendant answered by general denial, and pleaded that the contract was not usurious under the laws of the state of Louisiana, where the appellee was incorporated, and where the obligation was payable. Defendant asked for a judgment for its debt, foreclosure of its lien, etc. The plaintiff filed a supplemental petition, in which he alleged the fact that there was a branch office in Sherman, Grayson county, Tex., and a local treasurer thereof elected, to whom all payments were made by this plaintiff, in said state and county. Judgment was rendered by the court against plaintiff for the sum of $3,648.75, foreclosing the lien upon the land described in plaintiff's petition, and upon the stock, and ordering the same to be sold in satisfaction of said judgment; and further ordering that upon payment by plaintiff of $3,462.50, interest and costs, he shall be entitled to withdraw said stock at its withdrawal value. Plaintiff excepted in open court, and gave notice of appeal, and has duly prosecuted his appeal to this court.
There is no statement of facts in the record, the case being brought up on conclusions of fact and law filed by the trial judge. The said conclusions are as follows:
"(1) On June 10, 1890, plaintiff subscribed for ten shares of stock of the defendant, and paid one dollar membership fee on each share. On the same date S. M. Luckett subscribed for forty shares of stock in the defendant corporation, and paid membership of one dollar per share. About July 1, 1890, before the said Luckett had paid anything to the defendant corporation, except membership fee, he sold and transferred his said stock to plaintiff for $20.
"(2) The defendant corporation, the Southwestern Building & Loan Association, is and was on June 10, 1890, a corporation duly incorporated under the laws of the state of Louisiana, and had its domicile and principal office for business in the city of New Orleans, in said state.
"(3) The object and purpose for which the said defendant corporation was established were as follows: (a) To assist members who held stock in said corporation in building and purchasing homes; (b) to enable stockholders in said corporation to save and accumulate money, and obtain a reasonable interest thereon; and (c) to give to cities and towns where branches of said corporation should be established the advantages and benefits of local building and loan associations. The charter of said corporation provides that a fund shall be accumulated from the monthly installments paid in on account of subscriptions to the capital stock, and from rentals, discounts, and interest on loans and other sources, and that this fund, after deducting the expense fund provided for in its charter, shall be used for the purchase and sale of real estate, for the building, sale
and rental of homesteads and real estate, and for effecting loans upon mortgage securities within the United States of America; and as shares of stock in said corporation shall mature for paying off and liquidating the same, the defendant corporation's charter provides that each share of stock therein shall be of the face value of $100. Under said charter the said shares were divided into two classes,—current shares and single-payment shares. Current shares were to be paid up in monthly installments of seventy cents per share. Single-payment shares were to be issued on the payment of such sum as, when properly invested, would produce, in the opinion of the board of directors of said corporation, the full face value of said shares at the maturity of the series to which such shares belonged. At the close of each fiscal year the profits were to be proportioned, and a dividend credited to the value of each share in force in such manner as the board of directors might determine; provided that such dividend should not exceed the earned proportion of the profits belonging to, and withdrawable by, said share. Whenever any shares, by reason of the payment of account of subscription thereto, together with the addition of the profits, accumulations, and dividends, should be worth the par value of $100 each, the charter of said corporation provided that the shares so arrived at par or maturity should, on the surrender of the certificate of stock, be liquidated in a manner consistent with the best interest of the corporation. The charter provided that payments on current shares, installments, and interests should be due and payable at such times and dates as might be fixed by the board of directors. Any shareholder who should fail or omit to pay the installment on his shares, for the period of one month after the same shall become due, should forfeit and pay as a penalty the sum of ten cents a share on each share upon which such stockholder failed or omitted to pay the installments due, and such shareholder should pay the same penalty on each share for each subsequent similar default, said fines to be paid before any other installments or interests could be received, but any shareholder owing fines could have the same remitted by paying all arrearages, and also by paying in advance a sum equal to the amount of said arrearages. The charter provided that shareholders should be entitled to withdraw their stock under such terms and conditions as might be provided in the by-laws of said corporation. Under the charter, the receipts of said corporation were to be divided into two classes, which should be called, respectively, the `Capital Fund' and the `Expense Fund,' which were to be kept entirely separate and distinct one from another. The capital fund consisted of all receipts which did not go into the expense fund, and no part thereof could be used for the operating expenses of the association or any expenses except taxes. The expense fund consisted of admission, transfer, and withdrawal fees, together with $10 per share per annum on each and every share; and the charter provided that said expense fund should constitute no part of the capital stock of the association, but the amount belonging to the expense fund of each year was appropriated by the charter to be used by the board of directors to pay and liquidate all operating expenses of the association for said year, paying salaries of officers and agents, for paying commissions, for services of whatsoever kind, for meeting and defraying the expenses incident to printing, advertising, stationery, rent, and all other expenses of the association, except taxes, and neither the capital fund, nor any of the branches or series of the association, had any right, claim, or participation in said expense fund at any time. The charter provides that the corporate powers of the defendant corporation shall be exercised by a board consisting of ten directors, to be elected by the shareholders. Said directors have and had the power to enact by-laws for the corporation. Said charter gave and gives said corporation the right to carry on business and establish branches in any county or district of any other state of the United States. Each of such branches was to be controlled by the local board of directors, under the management, supervision, and direction of said corporation, and subject to the by-laws, rules, and regulations adopted by the board of directors of the association.
"(4) The defendant corporation had elected a board of directors under its charter, who had enacted by-laws for the government of the association, and had established branches of the corporation in various counties in other states, including one at the city of Sherman, in Grayson county, Tex. The by-laws provided that the members holding stock in said corporation in each town might organize a local board, consisting of a president, vice president, secretary, treasurer, and attorney, and a board of not less than three, nor more than nine, directors, all of whom had to be stockholders. The defendant Julian G. Hedrick was the elected secretary and treasurer, and plaintiff, Crenshaw, was elected local attorney of the board at Sherman. Other persons holding shares were elected as members of the local board at Sherman, among them defendant Carpenter, who was president of the local board.
"(5) The plaintiff, Crenshaw, subscribed for the first ten shares of stock of the defendant, held by him for the purpose of enabling him to hold the position of local attorney for the local board at Sherman, but he purchased the said forty shares from Luckett, for the purpose, and with the view, of obtaining a loan from the defendant.
"(6) Among...
