Mills v. The Salisbury Bldg. and Loan Ass'n
| Decision Date | 30 June 1876 |
| Citation | 75 N.C. 292 |
| Court | North Carolina Supreme Court |
| Parties | WILLIAM J. MILLS and wife, and others v. THE SALISBURY BUILDING AND LOAN ASSOCIATION. |
There is no device or cover, by which “Building and Loan Associations” can take from those who borrow their money, more than the legal rate of interest, without incurring the penalties of our usury laws. Calling the borrower “a partner,” or substituting “redeeming” for “lending.” or ““premium” for “bonus,” for an amount they profess to have advanced, and yet withhold; or ““dues” for interest, or any like subterfuge will not avail. The Court look at the substance.
This was a CIVIL ACTION heard before CLOUD, J., at Chambers, in FORSYTHE County, on the 24th day of May, 1876.
The summons was issued on the 12th day of May, 1876, returnable to the Superior Court of Rowan County. On that day the plaintiff filed an affidavit substantially as follows:
1. That the defendant is a corporate body duly created under an Act of the General Assembly of North Carolina.
2. The plaintiff, W. J. Mills, took three shares of stock in said corporation, of the nominal value of six hundred dollars, and by the terms of said contract said plaintiff was paid in cash the sum of $300, and in the time of eight months he was required to pay the sum of $69.69, by way of interest and fines. Said shares of stock were taken on the 1st day of June, 1874, when said advancement was made, and that by reason of this exorbitant interest, it greatly exceeded eight per cent., and is more than 20 per cent. upon said shares of stock. Apart from the fines and dues imposed plaintiff was charged $48.00, as interest for eight months, commencing Sept. 7th, 1775, and ending in April, 1876, whereas the rate of interest is sixteen per cent., or thereabout.
3. On the ____ day of ______, 1874, the plaintiffs executed to the defendant a mortgage upon a lot situated in the town of Salisbury, to secure the payment of the sum of $300, advanced as aforesaid. The defendant has advertised said lot, to be sold on the 15th inst., to pay off and satisfy said mortgage, and plaintiffs say that said sale will take place, unless defendant is restrained therefrom by an order of this court.
4. That the plaintiffs are advised and believe that the demand of the defendant is based upon a grossly usurious contract.
Upon motion based upon the foregoing affidavit, and without notice, his Honor directed an order to be issued restraining the defendant from selling the said land until the further order of the court.
The cause was heard before his Honor on the 24th day of May, 1876, upon a motion by the defendant to dissolve the restraining order theretofore granted. The following facts were admitted:
The defendant is a corporation duly created and organized on the 2d day of March, 1874, under an Act of the General Assembly authorizing the incorporation of “Homestead & Building Associations in this State,” ratified the 25th day of March, 1872. The plaintiff, W. J. Mills, joined said association at its organization, and at that time subscribed for and became the owner of five shares of the stock thereof, of the ultimate par value of $200 per share, by agreeing to pay one dollar per month on each share, until the dissolution of said corporation; but according to the by-laws, said plaintiff, in November, 1874, withdrew two of said shares, and received the cash value thereof from the defendant. Said plaintiff is now and has always been a member and stockholder of said corporation, and is entitled to all the privileges of such member, and to a full participation in the profits of the association.
On the 1st Monday in June, 1874, the plaintiff attended the regular monthly meeting of the stockholders, when three shares of the stock of the corporation, of the ultimate par value of six hundred dollars were offered for redemption, and put up at auction to the highest bidder among the members of the corporation. None but members were allowed to bid. The plaintiff bid the sum of $221 as a premium or bonus for the privilege of having an advance of $600, made by the corporation to him, on account of the redemption of his stock, and the defendant did advance said sum of $600, the ultimate par value of said three shares, and the amount which the plaintiff would ultimately have been entitled to receive from said corporation at the maturity of said shares. In consideration of these facts, the plaintiff, as he had agreed to do, paid to the defendant said premium of $221, and executed to the defendant a mortgage, signed by all of the plaintiffs, upon the real estate aforesaid, for the purpose of securing the payment of the unpaid instalments, thereafter to be paid, at the rate of one dollar per share upon each of said shares so redeemed, together with interest at the rate of six per centum per annum, upon the sum of six hundred dollars, payable monthly, and also to secure the payment of such fines and penalties, for the non-payment of said dues and interest as should at any time be prescribed by the Articles of Association of said corporation. The plaintiff promptly paid the regular instalments and interest up to and including the first Monday night in August, 1875, the same being three dollars per month for dues and three dollars per month for interest. Since that time the plaintiff has failed to pay either the interest or dues upon said shares of stock. For the eight months ending April 4th, 1876, the plaintiff is charged on the books of the defendant, as follows:
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¦To monthly dues on three shares of stock, ¦$24 00¦
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¦To interest on advancement, ¦24 00 ¦
+-----------------------------------------------+------¦
¦To fines for non-payment of fines and interest,¦21 60 ¦
+-----------------------------------------------+------¦
¦ ¦$69 60¦
+------------------------------------------------------+
At that time his account with the defendant stood thus:
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