Eastern Building & Loan Ass'n of Syracuse, N.Y. v. Welling

• Decision Date: 25 July 1900
• Citation: 103 F. 352
• Court: U.S. District Court — District of South Carolina
• Parties: EASTERN BUILDING & LOAN ASS'N OF SYRACUSE, N.Y., v. WELLING et al.

103 F. 352

EASTERN BUILDING & LOAN ASS'N OF SYRACUSE, N.Y., v. WELLING et al.

United States Circuit Court, D. South Carolina.

July 25, 1900

This is a bill filed for the foreclosure of a mortgage given by Lawrence S. Welling and Marion Bonnoitt to the Eastern Building & Loan Association of Syracuse, N.Y. The bill, after the usual averments as to persons and citizenship, alleges That complainant is a building, mutual loan, and accumulating fund association, organized under the laws of the state of New York for corporations of that character, with certain by-laws, rules, and regulations binding upon the corporation, its stockholders and members, and all persons contracting with it, and which are incorporated in, and printed upon, and form a part of the several stock certificates in the corporation, and in those issued to the defendants in this suit. That on 28th January 1891, defendants made application to complainant for 50 shares of installment capital stock of complainant, and so became subscribers thereto, and at the same time agreed to abide by all the terms, conditions, and by-laws contained or referred to in the certificate, and comply with all rules and regulations of the corporation. That the application was received and accepted and the certificates of stock issued to defendants in the state of New York. That on 8th April, 1891 defendants, as members and stockholders in said corporation applied in writing for an advance of $5,000 by way of loan for 6 1/2 years, to bear interest at the rate of 5 per cent. per annum, and a premium of 5 per cent. per annum, and as security for said loan or advance to them as stockholders to give a mortgage of the real estate described in the application. That this application was considered and granted by the board of directors of the corporation on 27th April, 1891, upon certain conditions precedent, in performance of which defendants made a further application in writing to the complainant, and thereby expressly bound themselves to comply with the charter and by-laws of the corporation and all requirements of its board of directors. That at the same time defendants delivered to the corporation a certain mortgage to indemnify and secure the corporation for the advance of the $5,000, the same representing the par or maturity value of the shares of stock, the said mortgage having been executed in pursuance of the application for the advance, and in pursuance of and subject to the articles of incorporation and by-laws of the corporation and the laws of the state of New York. The bill then describes the lands mortgaged, which are situate in the county of Darlington and the state of South Carolina. That at the same time, and by way of collateral, defendants assigned to complainant their certificates of stock, upon which certificates their monthly dues or installments only had been paid, leaving the defendants bound to pay on said stock monthly dues of $37.50 until said stock attained its par value. That at the time of the execution of this mortgage the officers of the corporation were of the opinion that the shares of stock held by defendants would attain their par value in 78 months, which estimate was not authorized or guarantied by the articles of incorporation, nor by its by-laws, nor by the laws of the state of New York; and that these officers, without such authority, undertook to accept from defendants 78 notes, payable from month to month, extending over a period of 78 months from date of the mortgage, 75 of which notes were for the sum of $79.20 each, and three of them for the sum of $41.70 each, the first maturing on or before the last Saturday in May, 1891, and the last maturing on the last Saturday in October, 1897; these notes being for payment of dues and premium only, and in no sense applicable to the principal of the loan or advance. Any other construction of the transaction would not bind the corporation, but would be ultra vires under the articles of incorporation, the by-laws, and the laws of New York. That defendants, by their mortgage, bound themselves to pay the said 78 notes, and also bound themselves, or intended to bind themselves, to faithfully meet and discharge all the obligations as members and stockholders in the corporation, and particularly to pay to the corporation from month to month, by way of installments, dues, or calls, $37.50 per month on their shares, until such stock should attain its full par value. That defendants paid all of the notes but one, and tendered payment of that one,-- the last,--but only on condition that the complainant refused to do, because, although the notes were paid, no part of the advance had been repaid. That the true contract between the parties was the repayment of the full sum of $5,000 advanced; the premium at the rate of 5 per cent. per annum and interest at the same rate per annum to continue until the said advance was paid in full; the payment of the monthly calls of $37.50 each until the stock was paid in full to its par value; the payment of all fines, penalties, and obligations provided in the by-laws. That by mistake of both complainant and defendants the mortgage did not express the full contract, but is defective in particulars stated, and the bill prays that these mistakes be now corrected. That there has been a breach of the condition of the mortgage on the part of defendants. The bill then recites: That the defendants, upon the refusal of complainant to satisfy the mortgage, brought an action against complainant in the court of common pleas of the state of South Carolina sitting in the county of Darlington, under an act of the legislature of the said state giving a cause of action and damages to any mortgagor who has satisfied his mortgage against any mortgagee who, after such satisfaction, shall for three months neglect or refuse to enter such satisfaction on record. That complainant duly appeared and defended said action. That its defenses were overruled at nisi prius, and that on appeal to the supreme court the appeal was dismissed, and the judgment of the court below and the verdict therein were confirmed. That both of these courts based their conclusions upon the sole ground that the only matter before them was the construction of the mortgage, and the effect upon the mortgage of the payment of the 78 notes mentioned therein; but the meaning, construction, and effect of said notes and of the contract between the defendants and the complainant were not considered adjudicated, or determined by either of the said courts, nor were the debts and obligations of defendants as stockholders in and members of complainant corporation adjudicated or determined. That by reason of the judgments of the said courts the complainant has been denied the equal protection of the laws of the ...