Meroney v. Atlanta Building & Loan Ass'n

• Court: North Carolina Supreme Court
• Writing for the Court: CLARK, J.
• Citation: Meroney v. Atlanta Building & Loan Ass'n, 116 N.C. 882, 21 S.E. 924 (N.C. 1895)
• Decision Date: 14 May 1895
• Parties: MERONEY v. ATLANTA NATIONAL BUILDING & LOAN ASS'N

21 S.E. 924

116 N.C. 882

MERONEY v. ATLANTA NATIONAL BUILDING & LOAN ASS'N

Supreme Court of North Carolina

May 14, 1895

Appeal from superior court, Cherokee county; Armfield, Judge.

Action by J. S. Meroney, Jr., against the Atlanta National Building & Loan Association to enjoin foreclosure of a mortgage and for an accounting. Judgment for plaintiff. Defendant appeals. Affirmed.

In the enforcement of a mortgage on land, the usury law of the state in which the land lies will govern, the security having been given for money to be used in the state, though payment of the loan in another state was provided.

J. W Hinsdale, for appellant.

J. W. & R. L. Cooper, for appellee.

CLARK J.

The following full and convincing opinion, prepared by Mr Justice BURWELL at last term, is adopted by the court:

"The question between these parties is, what sum is legally due to the corporation called the 'Atlanta National Building & Loan Association ' from the plaintiff on account of a loan of $300 made by it to him on September 11, 1890, the payment of which was secured by a deed in trust made by the plaintiff and his wife to the defendant Goldsmith, by which they conveyed to him, as trustee, a certain town lot in Murphy, Cherokee county? What the defendant corporation contends for as its dues, under its contract with the plaintiff, is clearly set out in the letter of its able counsel, which has been made by it a part of its answer. This letter is dated March 10, 1892, is addressed to the plaintiff, and, after telling him that he is instructed 'to foreclose said deed of trust, ' gives him 'an opportunity to settle' without a sale of his property, as follows: 'You were a subscriber to five shares of the common stock, class B, of said association, upon which you have paid the dues of 60 cents per month on each share from March, 1890, to January, 1891 inclusive, eleven months, at $3 per month, $33. See by-law No. 3. On September 11, 1890, you borrowed $300 from the association, and made your note and deed of trust to secure the same, according to the charter and by-laws of the company. By this contract you agreed to pay the association, in addition to the dues or monthly installments upon your stock which you contracted to pay upon becoming a stockholder, the sum of $3 per month as interest and premium on said advance, until the stock should reach its par value; and you stipulated that, if you failed to pay promptly when due and payable the said monthly interest or premium, fines, and monthly payments on said stock for a period of three months after the same became due, or any installment thereof became due, then, at the option of the said association, the whole indebtedness shall at once become due and collectible. You owe interest and premium for the same time, according to your contract, $3 per month, for 14 months, $42. The association has exercised its option, and now requests due payment of the whole indebtedness. You owe, under your contract of subscription to five shares of stock, dues from February, 1891, to March, 1892, 60 cents per share per month, for 14 months, at $3 per month, $42. You likewise owe for 14 months, at 10 cents a share per month, or 50 cents per month, for 14 months, $7. See by-law No. 8. This makes a total of $91 to be added to the principal of your note, $300, which makes a total of $391. By-law 22, paragraph 22, provides: "After a member has made not less than 11 successive monthly payments of dues, exclusive of the admission or entrance fee, provided he has paid dues for every month up to the date of withdrawal, and all fines or other charges against him, he may withdraw the amount of dues paid by him, less that part of the same apportioned to the expense fund," as prescribed in by-law No. 25, with interest at 6% per annum for the average time on the amount withdrawable. Paragraph 4 of the same by-law provides: "No withdrawal of shares which are in arrears will be allowed until such arrears, with all fines and other charges, have been paid. Payment of dues must be continued until the month of actual withdrawal. The admission or entrance fee and the ten cents per share per month appropriated to the expense fund cannot be withdrawn. Sixty days' notice in writing, to be signed by the shareholder, is required for all withdrawals. A withdrawal fee of $3 must be paid on each certificate. Each notice to withdraw will have attention in order in which it is received. Dues are the monthly installments paid on shares, and do not include the admission or entrance fee of one dollar per share." By-law 25 provides: "There shall be retained and reserved from the monthly dues paid on the shares the sum of ten cents per month per share for the payment of expenses, to be known as the 'expense fund'; the excesses over and above expenses to go to the profit account." In this settlement the company will concede to you the withdrawal value of your shares as if you were not in arrears. Your dues on stock from March, 1890, to March, 1892, at $3 per month, would be $75, less expense fund, ten cents a share, fifty cents a month, for 25 months, $12, leaving due $62.50. Add interest at 6% for average time, 12 months and a half, $3.40, making $65.90, less withdrawal fee, $3, leaving $62.90. So, deducting from $391 the credit of $62.90, we have $328.10 as the amount which the association is now claiming to be due by you. If the same shall be paid without foreclosure, you will be relieved of the additional expense of 10% of $32.10, attorney's fee, and expense of sale. Unless you shall at once pay to me the amount due by you to said association, I shall, under my instructions, proceed to foreclose the deed of trust according to law. I will call your attention to the fact that this contract is solvable in Georgia, and is made with reference to its laws. The courts of Georgia have decided such a contract to be valid and binding.'

"The defendant is organized under the laws of the state of Georgia, and an examination of its charter, a copy of which is filed with the brief of its counsel, discloses the fact that the scope of its power is very extensive. 'The object of said association,' it is said, 'shall be pecuniary profit for its stockholders, to encourage the saving of small sums of money, to aid persons of limited means in obtaining homes, the accumulation of a fund which shall be paid in monthly installments by its stockholders, and lending the same on real estate, personal, or other acceptable security, to members of said association, or to persons not members thereof, or to corporations, and to take and hold deeds, mortgages, executions, or other liens, or personal security therefor; to sell, assign, transfer, or otherwise dispose of all such securities or any part thereof; to make, issue, and sell bonds or other obligation based on the security and property held by the association; to buy, sell, own, and deal in any real or personal property; to improve any such real estate by erecting buildings, machinery, or other appliances for increasing the value thereof, to lease or rent the same, and to sell the same for cash or on installments; also to act as agent or trustee for the investment and management of funds for persons, corporations, administrators, executors, guardians, and trustees. To carry out all of which objects, as well as to do any and all other acts or things necessary and lawful in the prosecution and management of said business and businesses, petitioners pray to be invested with full power and authority.' And by its charter it is given full power and authority to carry out all these objects of its organization.

"Now if we leave out of our consideration, for the present, all questions about the alleged special powers and privileges of this corporation, and all questions that pertain to the intricacies of the business of building and loan associations, and the application of payments made by the borrower from such an association on stock in indicating his indebtedness, we have here a loan of money made by a foreign corporation to a citizen of this state, and secured by mortgage on land in this state, at a rate that is plainly usurious under the law here, 12 per cent. (6 per cent. as interest, and 50 cents per month as premium), and an insistence by the foreign lender that, because it stipulated in the contract that it is 'solvable' in the foreign state, and is made with reference to its laws, and those laws allow the taking by it of that rate of interest for the loan of money, the courts of this state are bound to enforce such a contract by a decree of foreclosure. The proposition challenges careful attention. It is important that foreign capital invested within our borders shall have, to the very utmost, its just dues, and that it shall find our courts ready now, as they have always been, to protect its interest and enforce all its lawful rights. But it is important, also, that the settled policy of the state should be upheld by its courts, and that schemes which to them seem manifestly adopted merely to evade its usury laws should not be allowed to bring about a virtual abrogation of those statutes. If a foreign bank or other lender of money may establish local branches or offices in this state, and through its agents solicit and take application for loans on mortgages of land here to be sent to the home office to be passed upon and allowed there, and if, because of such arrangement and the insertion of a statement put in the note or mortgage that the contract is 'solvable' in the foreign jurisdiction and is made 'with reference to its laws,' the courts of this state are required to enforce such contracts, and decree a foreclosure of the mortgage and a sale of the land, that the foreign usurer may have his usury, then...