Goodman v. Durant Building & Loan Association

• Decision Date: 27 November 1893
• Citation: 71 Miss. 310,14 So. 146
• Parties: MARY T. GOODMAN v. DURANT BUILDING & LOAN ASSOCIATION
• Court: Mississippi Supreme Court

14 So. 146

71 Miss. 310

MARY T. GOODMAN v. DURANT BUILDING & LOAN ASSOCIATION

Supreme Court of Mississippi

November 27, 1893

October 1893

FROM the chancery court of Holmes county, HON. T. B. GRAHAM Chancellor.

On December 10, 1891, Mary T. Goodman borrowed from the Durant Building & Loan Association $ 2,362.50, and gave her note for $ 3,500, with interest thereon at the rate of ten per cent per annum, the interest, payable monthly on or before the fifteenth day of each month. The difference between the amount received by her and that for which the note was given represented the premium bid by her for the money. She subscribed for and received Shares of stock of the association, and to secure the loan she pledged 17 1/2 shares, and gave a trust-deed on certain real estate situated in Tchula, Holmes county, Miss. In addition to the interest she was obligated by the contract to pay one dollar per month on each share of the stock pledged by her, until the liquidation of the series to which the stock belonged. She paid, in all, the sum of $ 394, and made default, after which the property was advertised for sale under the trust-deed. The deed names no place of sale, but provides that the trustee shall advertise said property for sale, naming the time, place and terms of sale. The sale was advertised to take place at Durant, in Holmes county. Thereupon she filed the bill in this case January 9, 1893, to enjoin the sale alleging that the contract was usurious and illegal; that the association claimed an arrearage of $ 381, aggregating, with what she had paid, the sum of $ 797, for the use of $ 2,362.50 for eleven months; that at the time she borrowed the money it was her information and understanding that she was to have it on more reasonable terms than ten per cent. per annum; that the association is not entitled to the amount specified in the note in excess of what she had received; that if it is entitled to premiums, fines and compound interest, and she is a member, she is entitled to her proportion of the same, but that in borrowing the money she did not know that she was joining the association. She made several allegations as to misrepresentation and fraud practiced upon her in the execution of the note and trust-deed, but these are denied by the answer, and as the court makes no reference to the same, it is not deemed necessary to otherwise refer to them. It was also alleged that the trustee had no power to sell at Durant, it not being the county site.

The prayer of the bill was for an accounting; that usurious charges of interest be excluded; that fines and premiums be disallowed; that the amount legally due by complainant to the association be ascertained, and that she be allowed to pay the same, and for general relief. The trustee and the association were made parties defendant, and the writ of injunction was granted.

The defendants answered, showing that the charter of the association was granted under the general laws of the state April 7, 1887, and they filed with their answer a copy of the same, and of the by-laws. They deny all allegations as to misrepresentation; deny that appellant was informed or understood that she was borrowing money at the rate of ten per cent. per annum or less, and allege that it is a matter of estimation and judgment as to what rate of interest a borrowing member will pay, but aver that if complainant will comply with her contract the rate of interest will be less than ten per cent. per annum. They allege that complainant had been in default a long time, and was due the association the sum of $ 3,968.30 at the time the property was advertised for sale, this amount including interest and fines; admit that ten per cent. interest on $ 3,500, payable in monthly installments, was contracted for; allege that complainant, by her default, has forfeited all interest in the profits of the association under the by-laws, and is only entitled to a credit on the note for the amount she has actually paid. They aver that the association was organized April 15, 1887; that the par value of the stock is $ 200 per share; that under its plan and working the stock of the association will mature in seventy-five or eighty months; that complainant bid 32 per cent. premium for part of the money received by her, and 32 1/2 per cent. on the balance, and that the amount of the loan, less the premium, was paid to her when she delivered her note and trust-deed for $ 3,500, as stated. They allege that if complainant's obligation is complied with, the stock will mature and the debt be extinguished in seventy-five or eighty months; deny that the transaction was usurious or unlawful, and allege that the association has been and is in a prosperous condition, and that great benefits will accrue to borrowing members thereof who pay promptly.

The charter of the association conferred upon it the powers usually belonging to such associations. Section 2 provides for the issuance of a certain number of shares of stock of $ 200 per share in each series. Section 7 provides for the payment in advance of a monthly installment of $ 1 per share. Section 8 provides that every stockholder who shall neglect to pay his monthly interest as the same becomes due, shall forfeit and pay, in addition, the sum of ten cents per month on every dollar of dues owing by him, dues of each month to be taken separately. Section 20 provides for monthly meetings, at which the funds of the association on hand shall be offered for loan, and that the stockholders who shall bid the highest premium for the preference of the loan shall be entitled to receive a loan of $ 200 for each share of stock, to be secured by trust-deed on real estate for stock of the association. This section also provides as follows: "In case of nonpayment of installments or interest by borrowing stockholders for the space of four months, payments of principal and interest, without deducting the premium paid or interest thereon, may be enforced by proceeding on their securities according to the terms of the contract under which the loan is made."

The trust-deed executed by complainant provided that she should keep the buildings on the property therein described insured against loss by fire. There is nothing in the trust-deed or elsewhere as to repaying the loan other than what is contained in section 16 of the by-laws, which is as follows: "A loan may be repaid by a borrowing stockholder at any time, or he may repay a loan on (or withdraw) one or more shares, and continue entitled to the privilege of a stockholder for other shares in his possession and not withdrawn."

The evidence showed that complainant had been in default in the payment of interest and dues for more than four months before the property was advertised for sale. The complainant made no tender with the bill of any amount due by her on account of the loan.

At the February term, 1893, of the court below, soon after the injunction was granted, defendants made a motion to dissolve the same, which motion was based principally upon the ground that complainant had not tendered the amount or amounts due the association under her obligation, although the bill showed that she was in arrears. This motion was taken under advisement by the chancellor, who, in vacation, ordered the clerk to state an account between complainant and the association, and this was done. The cause coming on for final hearing at the next term of court, the decree complained of was rendered. The complainant was charged with monthly dues on the stock she had subscribed for, and with interest she had agreed to pay, and was credited with the amounts she had paid. Upon the balance due by her at the end of each month, she was charged ten per cent. for fines, but fines were not charged upon fines.

After the foreclosure proceedings had been commenced, and the bill of injunction had been filed, the buildings embraced in the trust-deed were destroyed by fire, and, on April 29, 1893, the association received $ 1,014.75, proceeds of insurance on such buildings, and this was brought to the attention of the court by a supplemental bill. The decree confirming the report of the commissioner adjudged that complainant was in default in the sum of $ 298.48 on December 15, 1892, and $ 1,118.24 August 15, 1893. She was charged with the $ 3,500 and monthly interest thereon to the date of the decree, and was allowed credit for payments of $ 1 per share for twenty-two months, aggregating $ 440. She was also allowed credit for the $ 1,014.75 insurance money, with ten per cent. interest thereon from April 29, 1893, date of payment. It was decreed that she was due $ 3,986.82, less unearned premiums for fifty-eight months at $ 14.21 per month, which were credited to her, aggregating $ 824.18, leaving a balance due by her to the association of $ 2,272.64. The final decree directed that she should pay this amount, but that the injunction should be made perpetual in so far as it prevented a sale of the property at Durant. In all other respects, the injunction was dissolved. From this decree the complainant appealed, and the association prosecuted a cross-appeal.

The appellant assigns for error generally that the court erred in stating the account and in rendering the decree. Cross-appellant assigned for error (1) that the court erred in allowing complainant credit for unearned premiums; (2) in perpetuating the injunction as to the sale of the property at Durant; (3) in refusing to dissolve the injunction on motion of defendant, because no tender was made.

Reversed and remanded.

A. M. Harlow, for appellant.

Charging interest with monthly rests amounts to compounding, and that is usurious and illegal. If the defendant, knowingly made a contract which is usurious, it cannot be...