Ferrell v. Evans
| Citation | 65 P. 714,25 Mont. 444 |
| Parties | FERRELL v. EVANS et al. |
| Decision Date | 15 July 1901 |
| Court | Montana Supreme Court |
Appeal from district court, Missoula county; Frank H. Woody, Judge.
Action by Van R. Ferrell against J. M. Evans and others. From a judgment for defendants and an order denying a new trial plaintiff appeals. Reversed.
The plaintiff brought this action against the defendants, as trustees of the Missoula Building & Loan Association, a corporation, to obtain a judgment requiring them to cancel upon the records of Missoula county as fully paid three several mortgages executed to the corporation by one Cain B Mahoney, plaintiff's grantor. Judgment is also demanded for a balance which is alleged to have been paid by plaintiff and Mahoney in excess of the amounts secured by the mortgages. As incidental relief, the court is asked to appoint a receiver to take charge of the assets of the corporation and wind up its business. The answer of defendants denies the material allegations contained in the complaint, and then, by way of separate counterclaims alleges a breach of the conditions of each of the mortgages and demands a decree of foreclosure to enforce the payment of the respective amounts secured by them. The facts, as they appear from the evidence, are: On May 6, 1886, the Missoula Building & Loan Association was incorporated under the provisions of an act of the legislative assembly of the territory of Montana approved March 7, 1883, for the purpose of enabling its shareholders to erect buildings and improve land. The corporation conducted its business successfully and profitably until May 6, 1896, the date on which the 10-years limitation fixed in its charter expired, and the corporation was dissolved, whereupon the defendants, its then acting directors, under the authority vested in them by law, assumed control of all the property and assets belonging to it, and proceeded to wind up its affairs. At various times after its organization the corporation had issued five different series of shares of the par value of $200 each, designated as Series A, B, C, D, and E. Of these the first two series had matured prior to May 6, 1896, and were then in process of redemption. The remaining three series had been issued on June 4, 1888, November 3, 1890, and June 8, 1895, respectively; and it was estimated by the directors at the time they assumed control, the estimate being based upon the time required to mature Series A and B, that each of these series would have matured in 101 months from the dates of issuance, or in 6 and 35 months, respectively, after the date of dissolution. Upon the assumption of their duties as trustees, the directors were of the opinion that they were empowered to continue the collection of dues, fines, premiums, and interest until the maturity of the outstanding shares, and proceeded to do so. Subsequently, however, they changed their views, and on August 22, 1896, issued a circular to the shareholders, in which they set forth in detail the condition of affairs, and announced that thereafter no dues or fines would be collected from nonborrowing shareholders, and that upon application all payments made by such shareholders after May 6, 1896, would be refunded, but that borrowing shareholders would be required to keep up their monthly payments as theretofore until the maturity of their shares. It was also stated that on May 6, 1896, the shares of Series C had an earned value of $182.82, of Series D $113.42, and of Series E $23.62, and that, as fast as the assets could be turned into money, payments would be made to nonborrowing shareholders until they had received full earned value of their shares fixed at these amounts. Thereafter they proceeded upon this idea of the extend of their powers, collecting dues and fines from the borrowing shareholders, until their regular monthly meeting in December, 1896, when, by resolution, they declared all shares of Series C fully matured, and thereupon executed releases of all mortgages given by the borrowing shareholders of this series. On June 4, 1888, Mahoney purchased of the association eight shares of Series C, and on November 3, 1890, four shares of Series D. On the first Monday in September, 1888, the association having money in its treasury, under the provisions of its by-laws offered to loan $1,200 thereof to the shareholder who would pay the highest premium thereon. Mahoney having offered 30 1/2 per cent. premium, became the borrower, and, in accordance with the requirements of the by-laws of the association, executed a bond to the association under the terms of which he agreed to repay the amount so borrowed on or before 10 years from date, unless the association should sooner terminate, and then upon such termination, with interest at the rate of 9 per cent. per annum payable monthly on the 1st day of each and every month thereafter. He also agreed to keep up the monthly dues of one dollar a share upon six of the shares of Series C belonging to him until he had fully repaid the said sum of $1,200, and to assign these six shares to the company as security for the repayment of the loan. It was further provided in the bond that the principal sum mentioned therein, with interest, should become immediately due and payable upon default in payment of interest, or if the taxes due on the property of the premium upon not less than $900 of insurance thereon should be due and unpaid for six months, or in case the shares of stock should at any time be sold for the nonpayment of dues or fines, or become forfeited to the association for reason. At the same time, as further security for the repayment of the sum borrowed, Mahoney executed to the association a mortgage upon the real estate in controversy. This instrument contained the same conditions as those in the bond, and further provided that all insurance stipulated for should be effected for the benefit of the association, and that, in case of default in this particular or in the prompt payment of taxes, the association might advance such sum or sums as might be necessary to meet these charges, and that they should, upon foreclosure, be deemed secured by the mortgage, and bear the same rate of interest as the principal sum secured thereby. Subsequently, and on July 3, 1889, a similar transaction took place between Mahoney and the association, by which, upon paying a premium of 21 per cent, Mahoney obtained a loan of $400, and to secure the same assigned to the association the remaining two shares of Series C, and executed his bond, with a second mortgage, upon the property on the same terms and conditions as those contained in the first mortgage. Again, on May 2, 1892, by a similar transaction, Mahoney secured a third loan of $800 on his four shares of Series D, but at a premium of 20 per cent., and thereupon executed to the association his third bond and mortgage, with terms and conditions identical with those upon which the other loans had been obtained. In case of each loan the premium was paid in advance, the association deducting the amount from the face of the loan; the bond and mortgage being executed to the full amount for which each bid was made. Mahoney made all payments of interest, dues, and fines when they were assessed under the by-laws of the association until November 6, 1893, when the plaintiff purchased the mortgaged property from him, assumed the payment of the mortgages, and became substituted to all his rights and liabilities as a borrowing shareholder in the association. After this date, and until May 6, 1896, the plaintiff met all the obligations assumed by him as a shareholder, kept paid up the monthly installments of interest, and observed all the conditions of the several mortgages, but after that date failed and refused to make any other payments of dues or interest, except that on August 1, 1896, he paid the dues for June, July, and August on the four shares of Series D, and the interest due for those months upon the loan secured upon these shares, amounting together to the sum of $30. He also failed to keep the property insured, insisting that the payments already made had more than discharged the various loans, and that he was entitled to have the mortgages released. On November 6, 1897, the trustees had the property insured at a cost of $25.60.
Upon these facts the district court found that the association was dissolved, and that the directors had properly assumed control of its affairs as trustees of the shareholders and creditors, and that the plaintiff...
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