Le Mars Bldg. & Loan Ass'n v. Burgess

• Decision Date: 18 January 1906
• Citation: 105 N.W. 641,129 Iowa 422
• Court: Iowa Supreme Court
• Parties: LE MARS BUILDING & LOAN ASS'N v. BURGESS ET AL.

129 Iowa 422

105 N.W. 641

LE MARS BUILDING & LOAN ASS'N

v.BURGESS ET AL.

Supreme Court of Iowa.

Jan. 18, 1906.

Deemer and Weaver, JJ., dissenting.

Appeal from District Court, Pottawattamie County; O. D. Wheeler, Judge.

Suit to foreclose a mortgage. Judgment for the defendants. The plaintiff appeals. Reversed.Struble & Struble and L. G. Scott, for appellant.

Flickinger Bros. for appellees.

SHERWIN, J.

Appellant is a building and loan association organized under the laws of this state. In May, 1895, it issued to the appellee Matilda A. Burgess a certificate for nine shares of Class D installment stock, on which she agreed to pay 50 cents per share per month. In September of the same year she borrowed of the appellant $900, giving her note therefor, and securing it by a mortgage on real property and by pledge of her shares of stock. The note stipulated for the payment of interest at the rate of 8 per cent. in the manner provided by the articles of incorporation and by-laws of the association. In addition to securing the loan, the mortgage recited that the borrower was to pay 50 cents per share per month on the stock issued to her and the further sum of 50 cents per share per month as “premium on the loan.” The appellee made 100 payments of dues, interest, and premiums, aggregating the sum of $1,248 in round numbers, and upon her refusal to pay further interest on the loan this suit was brought; the petition claiming a balance of $393.97 alleged to be due on the 1st day of November, 1903. The defendant pleaded usury and that by the terms of the by-laws her stock was matured and her debt satisfied. The case was tried on these pleadings, and was orally argued and submitted on the 24th day of March, 1904. On the 9th day of April, 1904, the defendant filed an amendment to her answer pleading an estoppel. The appellant had no notice of the filing of this pleading until the 16th day of June, 1904, when a copy thereof was sent to it by the trial judge. On the next day the appellant filed a motion to strike the amendment, which was afterwards submitted with the case, and was overruled.

Code, § 3600, provides that amendments may be permitted at any time when the amendment does not change substantially the claim or defense; and it has been held that the statute is to receive a liberal construction, and that amendments may be allowed as a general rule. It has further been held that the matter rests largely in the discretion of the trial court. Notwithstanding these general rules, we are constrained to hold that the amendment in this case should have been stricken out. An estoppel to be effective must be pleaded. It was not pleaded until two weeks after the case had been submitted, and it then tendered a new and very material defense. In her original answer the defendant relied on the provisions of the by-laws, and claimed that she had discharged her debt by the payments made in accordance therewith, while in her amendment she alleged as facts upon which she based an estoppel that the appellant through its agent had guarantied the maturity of the stock when not to exceed 100 payments were made. If this was true, the defendant knew it at the time she bought the stock, or at least when she made the loan, and no excuse is shown for not sooner pleading it. The statute does not authorize a material change in the issue after a case is submitted, and it is a practice which should not be encouraged. It is not fair to the trial court nor to the other side. McNider v. Sirrine, 84 Iowa, 58, 50 N. W. 200;Denzler v. Rieckhoff, 97 Iowa, 75, 66 N. W. 147;Thoman v. Railway Co., 92 Iowa, 196, 60 N. W. 612;Greenlee v. Home Ins. Co., 103 Iowa, 484, 72 N. W. 676.

Section 5 of article 15 of the by-laws provides: “Class D installment stock shall be payable 50 cents per share per month on the 1st day of each and every month, in advance, beginning with the date of the certificate, until such time as the total amounts of the installments paid in (less the sums credited to the expense account) and the earnings accredited to the shares of stock amount to the par value of $100 per share, when interest and profits shall cease, and the holder be entitled to receive $100 per share for the same. Not to exceed 100 payments shall be required to be made upon this stock, when payment shall cease, and no further assess ment can be made against this stock.” The appellee contends that under the last clause of the section the stock was matured when 100 payments thereon had been made. If this be true, nothing more is due on the loan, because the by-laws also provide that the maturity of the shares fully repays and cancels the loan. Neither the certificate issued to the defendant nor the note and mortgage executed by her contain any provision as to the time when the stock shall mature further than by reference to the by-laws. The controversy over this question must therefore be settled by the by-laws alone. It will be noticed that the first clause of the section of the by-laws under consideration states just when the stock shall mature--that is, when it shall become worth par or $100 per share; and that is when the total amount paid in thereon (less the sums credited to the expense account) and the earnings accredited to the shares of stock amount to the value of $100 per share. Standing alone, it is a plain statement of what shall be necessary to mature the stock so that it shall cancel the loan. It matures when the payments of 50 cents per share, less expense, together with the earnings accredited to the shares shall amount to $100 per share, and not until then.

Does the provision of the last clause of the section contradict or render ambiguous the first clause? We think not. Nothing is said therein about the maturity of the shares; it simply provides that no more than $100 monthly payments of 50 cents each shall be required. It does not say that the stock shall not thereafter be accredited with its share of the earnings of the association. If the 100 monthly payments have been made, and the stock has not reached the value of $100 per share, no further payments will be required; but the stock may be matured by the future earnings of the association. That this limitation in the number of payments is not a guaranty that such payments shall mature the stock is apparent from a consideration of the entire section. When construed as above, it gives force and effect to all of the language of the section, while to construe it otherwise would be to completely nullify the first clause thereof. A similar contract is construed in Union Mut. Bldg. & Loan Ass'n v. Aichele (Ind. App.) 61 N. E. 11, and the same conclusion is reached.

Again, in section 5 of article 20 of the by-laws it is provided that if the stock shall not mature in 100 months, stock payments shall cease, and only interest and premium be paid thereafter. If any explanation of the meaning of article 15 is necessary, it is furnished in article 20; for that clearly declares that if the stock is not matured in 100 months interest and premium shall thereafter be paid on the loan. The appellee relies on Field v. Building & Loan Ass'n, 117 Iowa, 185, 90 N. W. 717, and on Iowa Business Men's Bldg. & Loan Ass'n v. Berlau (Iowa) 98 N. W. 766. But in both of these cases the facts were different. In the former, the certificate expressly provided that the stock should mature and be paid in a certain number of months; and in the latter, the certificate was designated as 84 payment certificate. In addition to this, the note itself provided for only 84 payments of interest, premium, and dues. And, further, an estoppel was also pleaded, and there was evidence showing the company's representations that the stock should mature in that time. There was an attempt to bring the instant case within the rule of the Berlau Case by evidence as to the representations of an agent, and by filing the amendment to which we have referred; but, without the aid of an estoppel, or a plea of fraud, the evidence is incompetent, and cannot be considered. The appellee says that the loan is usurious, because of the interest provided for, and because of the arbitrary premium charged. It is enough to say that the statute has excepted building and loan contracts from the operation of the general law relating to usury. Code, § 1898; chapter 48, p. 32, Acts 27th Gen. Assem.; Iowa Savings & Loan Ass'n v. Heidt, 107 Iowa, 297, 77 N. W. 1050, 43 L. R. A. 689, 70 Am. St. Rep. 197;Edworthy v. Association, 114 Iowa, 220, 86 N. W. 315.

The remaining question in the case relates to the manner of ascertaining the amount due on the loan. The appellant contends that computation is to be made under section 1898 of the Code, while the appellee says that it must be made under section 6, c. 69, p. 52, of the Acts of the 28th General Assembly, which provides as follows: “In case of foreclosure, the mortgagor shall be charged with the rate of interest agreed upon, not to exceed 8 per cent. per annum, and shall be entitled to be credited as of any anniversary of said mortgage, with the total amount of all payments made on the stock to the association during the preceding year, and such payments on the stock shall be treated as a payment upon the mortgage, anything in the articles of incorporation or the by-laws of such association to the contrary notwithstanding.” The loan was made in 1895, and section 1898 of the Code, as amended by chapter 48, p. 32, of the Acts of the 27th General Assembly, will determine the basis of computation, unless the repeal of chapter 48 by chapter 69, p. 51, of the Acts of the 28th General Assembly, brings the matter under the latter chapter. Iowa Sav. & Loan Ass'n v. Heidt, supra; Edworthy v. Association, supra. This question is decided against the appellees' contention in Edworthy v. Association, supra, and in Briggs v. Ass'n, 114 Iowa, 232, 86 N. W. 320. Both cases presented the precise question involved here, and it is...