Overby v. The Fayetteville Bldg. and Loan Ass'n

• Decision Date: 30 June 1879
• Citation: 81 N.C. 56
• Court: North Carolina Supreme Court
• Parties: W. OVERBY and wife v. THE FAYETTEVILLE BUILDING AND LOAN ASSOCIATION.

81 N.C. 56

W. OVERBY and wife

v.THE FAYETTEVILLE BUILDING AND LOAN ASSOCIATION.

Supreme Court of North Carolina.

June Term, 1879.

CIVIL ACTION heard upon Exceptions to the report of a Referee at Spring Term, 1879, of CUMBERLAND Superior Court, before McKoy, J.

The plaintiff was a shareholder in defendant corporation, and upon the redemption of his stock by the association, he and the feme plaintiff joined in the execution of mortgage deeds to defendant to secure the performance of certain covenants and agreements. The plaintiff alleged that the defendant had advertised the mortgaged premises for sale, and asked for an order to restrain the same, upon the ground that the contract set out therein was usurious; and also asked for an account and settlement with the association. The case was subsequently referred to the clerk of the court to state an account, and upon the coming in of his report, exceptions were filed by the plaintiff, which are sufficiently set out by THE CHIEF JUSTICE in delivering the opinion. The court below overruled the exceptions, confirmed the report, and gave judgment for the defendant, and the plaintiff appealed.

Messrs. Guthrie & Carr and T. H. Sutton, for plaintiffs .

Messrs. Hinsdale & Devereux and McRae & Broadfoot, for defendant :

In the argument, cited and commented on Green v. Jones, 78 N. C., 265; Atkinson v. Whitehead, 77 N. C., 418; Armfield v. Brown, 70 N. C., 27; Lippard v. Roseman, Ibid, 34, and 72 N. C., 427. On hearing exceptions to report of referee, no evidence can be received to support an exception which was not offered before the referee. Nash v. Taylor, 2 Hay., 174. All the evidence must be stated. Mitchell v. Walker, 2 Ire. Eq., 621; Green v. Castleberry, 70 N. C., 20; Cain v. Nicholson, 77 N. C., 412. The account is stated according to the rule established by this court in Bunn v. Moore, 1 Hay., 323. The contracts are not upon their face usurious, and in this action the plaintiff seeks equitable relief; he must therefore do equity. Beard v. Bingham, 76 N. C., 285; Ballinger v. Edwards, 4 Ire. Eq., 449; Simonton v. Lanier, 71 N. C., 498.

SMITH, C. J.

The plaintiff, W. Overby, became the owner at different times of eleven and of eight shares of stock in the defendant corporation which were subsequently redeemed by the association at the price of $1,210 for the first, and $800 for the last lot of shares. The contract of redemption, under the regulations of the association, requires the continued payment of monthly instalments on the shares and other dues from stockholders, and the payment of interest on $200, the full par value of each share of stock, at the rate of eight per cent. per annum, until by the accumulated profits that sum can be distributed among the holders of the unredeemed shares, when all further payments are to cease, and the former owner of the redeemed shares is permanently disconnected from the association and the business between them closed. These payments from holders of stock redeemed or purchased by the association, to be ultimately extinguished, and kept in existence only to maintain in force the obligation to make the regular payments, are required to be secured by mortgage; and in this case were secured by two conveyances of land, executed by both the plaintiffs, of which copies are annexed to the pleadings.

When the decision of the court in the case of Mills v. The Salisbury Building and Loan Association, 75 N. C., 292, and in the similar case of Vann v. The Fayetteville Building and Loan Association (this defendant), 75 N. C., 494, made at the same time, was known, the defendant determined in conformity to the opinion in those cases, to close up its business and divide its funds among the shareholders, and was proceeding to do so, by selling the mortgaged premises of the plaintiffs, when this action was instituted and further progress arrested by injunction.

The matters in dispute between the parties were referred to the clerk, who has stated an account upon the basis of giving the plaintiffs credit for all moneys paid by them to the association for instalments, fines or otherwise, and charging them with the money actually received with interest To this end monthly computations with deductions for monthly payments have been made, and the referee reports to be due upon both transactions from the plaintiffs the sum of $1,134.31, with interest on $969.87, principal, from January. 29th, 1877, the day to which the interest is computed.

The plaintiff appeared before the referee, when he took the account, and objected to certain parol evidence of payments by the association for insurance on the property, which is set out in the referee's report, but made no other objection until the report was returned to court. He then filed several formal exceptions in addition to that taken before the referee, and demanded a jury trial of all of them. The court permitted an issue to be drawn up and submitted to the jury as to the plaintiff's failure to insure, and the insurance and payment by the association of the premiums therefor, which were both found in favor of the defendant, and His Honor declined to submit other issues for reasons mentioned in the record, and which will hereafter appear. The exceptions were taken to the report after its return, and the correctness of the rulings of the court thereon are before us for consideration. They will be disposed of in their proper order:

1. For that the plaintiff is not credited with a payment of $185, alleged to have been made by him.

No such claim seems to have been asserted before the referee, nor any evidence offered in its support. He has, therefore, made no ruling either on the admission or rejection of the claim. Its character is not pointed out in the exception itself, nor any reason suggested why it should be allowed. It would defeat all the desirable objects and advantages of a reference, if a party may slumber upon his rights, or if present, fail to assert and sustain them by proof before the referee, and then complain of the omission of the latter to pass upon a claim of which he had no notice and no information. This cannot be allowed. Green v. Jones, 78 N. C., 265.

2. For that the plaintiffs have no credit for the value of their stock.

It does not appear that this claim was made before the referee, and, if it had been, it should have been disallowed. The proposed adjustment between the parties, the proper mode of doing which is intimated in the opinion in the cases cited, is upon the basis of an actual loan of money and subsequent partial payments therefor by the plaintiff, and, upon the settlement of the balance due, of the retirement of the redeemed shareholder from the association. It is unreasonable to permit him to retain his original stock and participate in the profits of a business equally with those who have made their required and regular contributions to the common fund, while he withdraws and appropriates his own to the discharge of a debt, and actually pays nothing. To retain the property in his stock, he must conform to the general regulations and contribute, as others are required to do. Instead of this, he prefers to put an end to his relations with the association, and ceases to have any further interest in its affairs. He is thus, by his own voluntary act, a shareholder no longer.

3. That interest is not allowed on the plaintiff's succescessive payments.

Interest is allowed upon the items of an independent account when used as a set-off or counter-claim to extinguish or reduce a debt, but is not to be computed upon payments, as such, whose effect is to reduce pro tanto the sum due, interest being first discharged. This rule of computation is laid down in Bunn v. Moore, 1 Hay., 279, and in North v. Mallett, 2 Hay., 151, and has been recognized and followed since. Same rule laid down in Story v. Livingston, 13 Peters Rep., 359.

4, 5 and 6 Exceptions: For that the plaintiff is charged with premiums paid the defendant for insurance on the buildings upon the mortgaged land.

The jury find upon issues...