Hammerslough v. Kansas City Bldg., Loan & Sav.

• Decision Date: 31 October 1883
• Citation: 79 Mo. 80
• Parties: HAMMERSLOUGH, Appellant, v. THE KANSAS CITY BUILDING, LOAN & SAVINGS ASSOCIATION.
• Court: Missouri Supreme Court

79 Mo. 80

HAMMERSLOUGH, Appellant,

v.THE KANSAS CITY BUILDING, LOAN & SAVINGS ASSOCIATION.

Supreme Court of Missouri.

October Term, 1883.

Appeal from Jackson Special Law and Equity Court.--HON. R. E. COWAN, Judge.

AFFIRMED.

J. D. Cook for appellant.

Tichenor & Warner for respondents.

MARTIN, C.

On the 31st day of August, 1875, the plaintiff filed his application for an injunction, the immediate object of which was to restrain a trustee from foreclosing a deed of trust under which he had advertised certain real estate for sale, which had been mortgaged in said deed to the building, loan and savings association made party to this suit. The plaintiff alleges that there is only due $450, or less, upon the debt which the deed of trust was given to secure, and that he had tendered payment of that amount, which had been refused by the parties holding the deed, who claimed a much greater amount. The plaintiff is not a party to the deed of trust, but, after its execution, he became the owner of the property covered by it. He relied on two points at the trial to sustain the injunction. One was that prior to his purchase of the property, and with a view of purchasing, he made inquiry of the holder of the debt and deed of trust as to the amount due upon them, and was answered that it was $450; that upon the faith of this information he purchased and took, from the vendor of the property, security to indemnify him in this amount only, and that the creditor, who is the principal defendant in this case, is estopped from claiming more. The other point was that the creditor has received enough of payments by way of usurious interest to reduce the debt to $450, if such payments were properly credited in reduction of the principal of the debt. The court found from the evidence that the creditor had given no information and made no declaration which would support the estoppel claimed. It also found that after allowing all payments and credits, there was due on the debt secured by the deed of trust $1,212.66; and upon this finding the injunction was dissolved and damages were assessed against plaintiff for bringing the suit.

It is proper to state somewhat more in detail the facts out of which the points in controversy have risen. It seems that in August, 1872, one Francis N. Buckingham became a stockholder in the Kansas City Building, Loan & Savings Association, one of the defendants in this case, to the extent of ten shares, which were rated at the par value of $200 per share; that on the 13th day of August, 1872, he executed his note to the association in the sum of $2,000, for the aggregate amount of his stock, to be paid as it recites “in monthly installments of $10, together with interest at the rate of ten per cent per annum, on the amount of said principal, on or before the 25th of each and every month, until the same is paid in accordance with article 13 of the constitution.” The deed of trust in controversy was given to secure this note as also all dues and fines which should become due and payable by him as a stockholder on account of his stock. The property covered by the deed of trust was, on the 6th day of December, 1872, sold to one Hinckley; on the 28th day of November, 1873, it was sold by Hinckley to James A. Alberry, and on the 19th day of January, 1874, it was sold by Alberry to the plaintiff, with covenants of warranty and against incumbrances.

1. USURY.

The building association is the growth of modern times. Its leading object is to enable persons of limited means and income to build homesteads and pay for them by small installments in keeping with their incomes. In this case, while Mr. Buckingham became the owner of ten shares of the capital stock of the par value of $200 per share, it seems that he paid little or nothing for them. Under the rules of the association these ten shares entitled him to borrow funds from the association not exceeding the par value of his stock. With a view to that end he executed his note which represented the amount of his stock and the extreme limit of the expected loan. He afterward disposed of two shares of stock, and received a credit on the note of $400, which reduced his stock obligation and loan expectations to $1,600. According to the evidence of the secretary, he secured from the association a loan in the full amount of $1,600. Whether there was a bonus included in this loan does not very clearly appear. The money representing the loan was ready for him, and he had been receiving it according to the usages of the association as he would require it in the erection of buildings. He had received $1,008.15 in cash, when the business of the association came to a stand-still. In compliance with his obligations as a debtor and stockholder he paid, while business was going on, ten per cent interest on $1,600, which was the amount of his loan, and $8 per month, which represented the monthly installment of $1 payable on each share of his stock, according to the by-laws of the association and the terms of his note.

I am unable to perceive any usury in this. Both the interest, which was legal, and the monthly dues, went into the common fund of the association in which he was to have a distributive share according to the amount of his stock, at the winding-up. When the common fund became equivalent to $200 per share of the capital stock, a distribution would take place, in which case the stock debtor would receive his ratable portion in money or the return of his notes for the loans due from him.

It seems that the affairs of the association were not prosperous, and that it became necessary to wind it up before the period contemplated for its termination. Accordingly, at a meeting of the stockholders held on the 4th day of May, 1878, it was resolved that all shares and loans on shares should be...