People's Building, Loan & Saving Ass'n v. Berlin
| Decision Date | 08 November 1901 |
| Docket Number | 80 |
| Citation | 50 A. 308,201 Pa. 1 |
| Parties | People's Building, Loan and Saving Association, Appellant, v. Berlin |
| Court | Pennsylvania Supreme Court |
Argued May 7, 1901
Appeal, No. 80, Jan. T., 1901, by plaintiff, from judgment of Superior Court, Oct. T., 1899, No. 213, reversing judgment of C.P. McKean Co., Feb. T., 1896, No. 193, on case tried by court without a jury in suit of People's Building and Loan Association v. George T. Berlin and Sarah E. Berlin. Reversed.
Appeal from Superior Court. See 15 Pa.Super. 393.
The facts appear by the opinion of the Supreme Court.
Error assigned was the decree of the court.
It is therefore, ordered that the judgment of the Superior Court be reversed, and that of the trial court be reinstated, and that judgment be entered in favor of the plaintiff, for the sum of $269.68, with interest from March 28, 1899, and costs.
Chester M. Elliott and E. R. Mayo, with them G. B. Mayo, for appellant. -- There was no doing of business in Pennsylvania Mearshon & Co. v. Pottsville Lumber Co., 187 Pa. 12; Clark on Corporations, 625; Blakeslee Mfg. Co. v. Hilton, 5 Pa.Super. 184.
Where a contract is made by correspondence through the mails it is of the place where the party receiving the proposition puts into the mail his answer accepting it, or does an equivalent act, and generally, "the place of payment or performance is the place of the contract:" Mills v. Wilson, 88 Pa. 118; Hyde v. Goodnow, 3 N.Y. 266; Holder v. Aultman, 169 U.S. 81; 2 Parsons on Notes and Bills, 324.
The appellant was not doing business in Pennsylvania within the meaning of the act: Kilgore v. Smith, 122 Pa. 48; Leasure v. Union Mut. Life Ins. Co., 91 Pa. 491; Caesar et al. v. Capell, 83 Fed. Repr. 403; Eastern Building & Loan Assn. v. Bedford, 88 Fed. Repr. 7.
The contract was not usurious under the laws of the state of New York; Laws of New York of 1851, chap. 122, sec. 7, and of 1875, chap. 564, sec. 1.
George A. Berry, with him Robert L. Edgett and Edwin E. Tait, for appellees. -- The act of April 22, 1874, which requires every corporation undertaking to do business in the state of Pennsylvania to establish an office and appoint an agent, etc., is mandatory. When a foreign corporation does not comply with the 2d section of the act, its business transactions are illegal and all contracts pertaining to it are unlawful: Citizens' Trust & Surety Co. v. McCanna & Frazer Co., 6 Pa. Dist. Rep. 25 (U.S. Circuit Court of Appeals).
The employment of a portion of the capital of a foreign corporation doing a building and loan business, in making loans within the commonwealth of Pennsylvania, such loans being secured by mortgages on real estate in Pennsylvania, is a doing of business within the state of Pennsylvania, within the meaning of the act of April 22, 1874: Mearshon & Co. v. Pottsville Lumber Co., Ltd., 187 Pa. 12; Milsom Rendering & Fertilizer Co. v. Kelly, 10 Pa.Super. 565; West Jersey Ice Mfg. Co. v. Armour & Co., 12 Pa.Super. 443; Swing v. Munson, 191 Pa. 582.
Before McCOLLUM, C.J., MITCHELL, FELL, BROWN and POTTER, JJ.
It appears from the record in this case, that a citizen of Pennsylvania executed a mortgage, to a foreign building and loan association, upon property in Pennsylvania. Default having been made, a scire facias was issued, and, by agreement of the parties, the case was tried without a jury. The validity of the mortgage was sustained, and judgment entered for the amount found due. On appeal to the Superior Court, the judgment was reversed, on the ground that the transaction involved an investment of part of the capital of the plaintiff company within the state of Pennsylvania, through an agency within the state, for the prosecution of the company's corporate business, in violation of the act of April 22, 1874.
The plaintiff is a building and loan association, incorporated under the laws of the state of New York with its principal office at Geneva, in the said state. It had not complied with the provisions of our act of assembly of April 22, 1874, with reference to foreign corporations, at the time of the execution and delivery of this mortgage, but, shortly afterwards, an attempt was made to comply with the act. Under the view which we take of the case, we do not deem this important. The mortgage contains the following recital:
"This grant is intended as a security for the payment of the sum of $500, in the manner following, that is to say, the sum of $5.00 contribution or principal, and $2.08 interest, and $2.09 premium each and every month from the date hereof, for such term as will secure to the said, the People's Building, Loan & Saving Association, the payment of the full sum of $100 on each and every one of the mortgagor's shares thereby secured to be paid, such payments to commence on or before Saturday, November 30, 1889, and to be continued and made on or before the last Saturday of every month thereafter, until the said five shares are fully matured, and also for the payment of all dues, fines and penalties that may be imposed upon the said George T. Berlin, as member of said association, pursuant to the articles of association and the by-laws thereof, to be paid into the treasury of the said association, according to the conditions of a bond this day executed and delivered by the said George T. Berlin, to the party of the second part," etc.
The bond and mortgage and the defendants' subscription to the stock of the association, were practically parts of one transaction, intended to secure the payment of a loan of money, upon which the rate of interest was greater than the legal rate in Pennsylvania, but which did not exceed that of New York.
The whole arrangement was in accord with the regular and authorized course of business of the plaintiff association.
The eighth paragraph of the terms and conditions of the defendants' certificate of stock, is as follows: "The articles of association, by-laws, terms and conditions, together with the application, are to be construed together as the contract between the shareholder and the association."
The first inquiry, then, is, as to whether the agreement was a New York or a Pennsylvania contract. If the former, then the usury laws of Pennsylvania do not apply. This is clearly settled in Bennett v. Building & Loan Association, 177 Pa. 235.
As stated in the opinion in that case:
The proposition cannot be disputed that contracts are to be governed by the law of the place where they are to be performed. Where was this contract to be performed? Turning to the articles of association, we find that they provide for the organization of the plaintiff as a body corporate, with its principal office at Geneva, New York, with the usual executive officers, together with trustees, and a board of managers or directors. With regard to the funds, it is made the duty of the secretary, "To receive all moneys paid into the association, and to pay the same over to the treasurer." Loans can only be made by the board of directors, for, by article 8, section 2, "It shall be the duty of the board of directors to judge of the sufficiency of all property offered as a security for advances and loans, and attend generally to the financial affairs of the association." Provision is also made for the payment of all installments upon the shares, and all fines and penalties, "to the association." The transfer and withdrawal of stock can only be made by giving the secretary notice, and procuring an entry to be made upon the books of the association.
All these provisions go to show that the fundamental intent, was to conduct and control the business at the home office. The by-laws are equally explicit. For instance, article 5 "All applications for loans shall be examined and accepted or rejected by the board of directors." By article 16: "All remittances for admission, weekly and quarterly installments, fines, penalties, interest and premiums, and all other payments, shall be made to the secretary of the association at their principal office in Geneva, New York." And by article 24, "No payment of any kind shall be credited to a shareholder until received by the secretary at the...
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