Lime City Building, Savings And Loan Association v. Wagner

• Citation: 23 N.E. 689,122 Ind. 78
• Decision Date: 05 February 1890
• Docket Number: 14,192
• Parties: The Lime City Building, Savings and Loan Association v. Wagner et al
• Court: Supreme Court of Indiana

23 N.E. 689

122 Ind. 78

The Lime City Building, Savings and Loan Association v. Wagner et al

No. 14,192

Supreme Court of Indiana

February 5, 1890

From the Huntington Circuit Court.

Judgment affirmed.

J. T Alexander and J. M. Hatfield, for appellant.

J. B Kenner and J. I. Dille, for appellees.

OPINION

Elliott, J.

The appellant, an incorporated building, loan fund and savings association, sues the appellee Frederick Wagner upon three promissory notes executed by him, and charges that he conveyed real estate of which he was the owner for the purpose of defrauding his creditors. Copies of the notes and of the by-laws of the association are filed with the complaint, and it is alleged that the notes became due by reason of the failure of Wagner, who was a member of the association and the holder of one share of capital stock, to pay the weekly dues and weekly instalments of interest due on the notes. It is provided in each of the notes that, upon the failure to pay such weekly dues and instalments for a period of three months the note shall become due, and the by-laws are made part of the notes by reference. Section 5 of the by-laws requires dues and instalments to be paid weekly, and section 32 reads as follows: "All loans shall become due in six years from the date of this corporation, or on the stock of the association becoming of par value, in either of which cases the note given by the borrower, and the stock upon which the loan was made, shall be set off against each other." The association was organized in April, 1879 and this action was begun in January, 1886.

The contract between the borrower and the association makes the by-laws a part of their agreement, and by the terms of section 32, the borrower who pays weekly dues and instalments for a period of six years discharges his obligation to the association. The liability of the borrower does not extend beyond that period, for, at the expiration of that time the stock extinguishes the note, and it is not an asset in the hands of the corporation. Barton v. Enterprise, etc., Ass'n, 114 Ind. 226, 16 N.E. 486. The theory upon which the parties proceeded in organizing the association, as the by-laws declare it, was that the borrower who paid the required dues and instalments for a period of six years paid the equivalent of the loan which he obtained, and when this was done his obligation was extinguished. Lister v. Log Cabin, etc., Ass'n, 38 Md. 115; Cason v. Seldner, 77 Va. 293; Hagerman v. Ohio, etc., Ass'n, 25 Ohio St. 186.

This is the only reasonable construction that can be given the by-laws, and it is the only one consistent with the doctrine of the authorities. It is, moreover, the only rule that will prevent gross injustice to the member who borrows money from the association, for, no matter for what length of time he pays dues and...