Pollock v. Carolina Interstate Building & Loan Ass'n
| Decision Date | 01 March 1898 |
| Citation | 29 S.E. 77,51 S.C. 420 |
| Parties | POLLOCK et al. v. CAROLINA INTERSTATE BUILDING & LOAN ASS'N et al. |
| Court | South Carolina Supreme Court |
Appeal from common pleas circuit court of Chesterfield county; J. C Klugh, Judge.
Action by W. P. Pollock and another, as assignees of Mrs. R. J Pollock, against the Carolina Interstate Building & Loan Association and another, to recover back an excess payment on a loan. Judgment for plaintiffs, and defendants appeal. Affirmed.
R. T Caston and W. F. Stevenson, for appellants.
Edward McIver and W. P. Pollock, for respondents.
On the 5th day of February, 1892, Mrs. R. J. Pollock subscribed for 15 shares of stock in the Carolina Interstate Building & Loan Association. From the 5th day of February, 1892, to the 10th day of September, 1892, she paid the association, in the way of admission fees and monthly installments of $10.50 each, the sum of $88.50. On an assignment of her shares she borrowed from the association, the 5th day of October, 1892, the sum of $1,500. As part of the same transaction, she mortgaged her house and lots. The condition of her bond was that she shall pay to the association the monthly sum of $25.50 (the sum of $10.50 being the monthly installments on said shares; the sum of $7.50 as interest on the sum borrowed; and the sum of $7.50 as premium), on the 5th day of each month; until the said shares of stock shall have reached to their par value of $100 each. This was followed by a proviso that, if the said A. J. Pollock failed to pay said monthly installments for 90 days from the time the same became due, then the whole sum borrowed ($1,500) should become due, with interest at the rate of 6 per cent. per annum. On the 8th day of February, 1893, Mrs. R. J. Pollock conveyed the mortgaged premises and assigned her stock to the plaintiffs, who assumed her contract with the association. The mortgaged property was insured by the plaintiffs for $2,500, the loss, if any, payable to the association as its interest might appear. From the 5th day of October, 1892, to the 15th day of June, 1894, Mrs. Pollock and her assignees, the plaintiffs herein, paid to the association, in 21 monthly payments of $25.50, on the said debt, the sum of $535.50, making in the aggregate, with the $88.50 previously paid, the sum of $624. After the destruction of the house (part of the property mortgaged) by fire, which occurred on the 10th day of October, 1894, some question arose between the parties as to whom the insurance money should be paid to, and the amount that should be paid to the association. The association, it seems, claimed that $1,293.43 was still due under the mortgage, and refused to release the policy of insurance until this sum was paid. The plaintiffs denied that so much was due. The plaintiffs could get no part of the insurance money until the policy was delivered up, and, as the association would not give up the policy until the amount of $1,293.43 claimed by it was paid, the plaintiffs agreed to pay the whole amount of $1,293.43 claimed by the association to the defendant the Bank of Cheraw, under an arrangement agreed to by the bank that the whole amount claimed by the association was to be held by it until the amount due by the plaintiffs to the association could be adjusted and ascertained. The sum was paid over to the bank. On the same day the plaintiffs gave the bank written notice forbidding it to pay more than $876 to the association. The bank, however, did pay over to the association the full amount claimed by it, it is charged, without plaintiff's knowledge, and without waiting to ascertain what was due on the mortgage debt. Indemnity was taken by the bank from the association to protect itself in its action. This payment was made on the 14th day of January, 1895. The association had thus collected on its mortgage debt the sum of $1,917.43 not including interest on the payments made, although the contract rate of interest was 6 per cent. The money was borrowed on the 5th October, 1892, and the last payment was made two years, three months, and nine days thereafter. The plaintiffs began this action on the 29th day of July, 1895, to recover the excess paid the defendant association. Both of the defendants demurred to the complaint, among others, upon the ground that the plaintiffs, not being parties to the original contract, could not plead usury. It was held by the court that, while this was true, nevertheless the allegations were sufficient to maintain an action for money collected in excess of the contract, and also that the Bank of Cheraw was properly joined as a party to the suit. This ruling was sustained on appeal. 48 S.C. 65, 25 S.E. 977. The issues were referred by the order of his honor, Judge W. C. Benet, to Mr. G. J. Redfearn, to take the testimony and report. The cause came on to be heard before his honor, Judge Klugh, at the June term, 1897, of court for Chesterfield county. The case was heard upon the pleadings, testimony taken before the referee, and exceptions taken to the same. In due time a decree was filed in favor of the plaintiffs' contention, from which an appeal to this court was taken. The exceptions, several in number, relate really to (1) what is a proper construction of the contract between Mrs. R. J. Pollock and the association, and what was due under the contract on the 24th day of December, 1894; and (2) was the finding of fact by the circuit judge that the Bank of Cheraw agreed to hold the money paid by the plaintiffs till it could be ascertained what was due borne out by the facts, and, if true, did such cashier have the authority so to bind the bank, and was the promise, if made, without consideration? These grounds, presented on behalf of the defendants, will now be considered.
What is the proper construction of the contract entered into by Mrs. R. J. Pollock with the Carolina Interstate Building & Loan Association? What was due under the contract on December 24, 1894? The assignees of Mrs. Pollock are the plaintiffs here, and their rights are to be measured by the rights of Mrs. Pollock under the contract. They stand in her shoes, and must comply with her contract. If they are to receive anything, it is to be the same in amount that would have been received by her. What is the nature of the transaction? In this state, from the time of the decision of Bollinger's Case (Association v. Bollinger [1860] 12 Rich. Eq. 124), our courts have held that such a dealing as considered here was a loan, not a partnership transaction. Chancellor Carroll, who last heard the case on circuit, was impressed with the view that it was a transaction between parties. Chief Justice O'Neall, writing the opinion in the appeal court, speaking for the court, overruled this view, and laid down the rule, still followed, that the matter was to be treated as a loan. This rule was admitted as settled in Association v. Dorsey, 15 S.C. 462, and the late case of Buist v. Bryan, 44 S.C. 121, 21 S.E. 537. In the last case cited Mr. Justice Gary, in a carefully considered opinion, speaks of the above authorities as having established the rule that "the money advanced was a loan"; that "the borrower is entitled to a credit, not only for the amount paid as interest, but also for the amount paid for subscription on the shares of the stock, in ascertaining the amount due on the mortgage." "It will thus be seen that, in determining the amount due under the mortgage, the association was required to detach, not only the amount of the dues paid after the execution of the mortgage, but also the amount of those paid before the execution of the mortgage." Again: "That upon the determination of his contract with the association, as originally contemplated, the mortgagor is entitled to credits on his mortgage, both for the amounts paid as interest and also as dues on his stock; that when the amounts paid by the mortgagor, as interest and dues, aggregate a sum equal to the amount the mortgage was given to secure, a complaint for foreclosure of the mortgage will be sustained." Continuing, he says: "The assignment and transfer of the shares of stock by the mortgagor as collateral security for the loan, and consolidating the interest and dues in the mortgage, show that the amount paid monthly, consisting of interest and dues, is to be regulated, as what is called 'redemption money' raises an implied agreement that such payment shall be credited on the mortgage." The syllabus to the case lays the rule down as follows: "All former payments of monthly dues and interest shall be credited on the mortgage debt, and, if they are sufficient at the contract rate of interest to extinguish the debt, a complaint for foreclosure cannot be sustained; but, if insufficient, the payment of dues and interest must be applied as credits on the bond."
Now, in the light of this decision, what was the contract? What are the rights of the plaintiff here, and was the debt to the association overpaid? On the 5th day of February, 1892, Mrs Pollock subscribed for 15 shares of the stock of the association. Up to the 5th day of October, 1892, she had paid $88.50, when she borrowed from the association the sum of $1,500. On the 8th day of February, 1893, the conveyance of the property and her assignment of her stock in the association was made by Mrs. Pollock to the plaintiffs. From the time she borrowed the money ($1,500) up to the 15th day of June, 1894, she and her assignees paid $535.50, aggregating in all $624. The plaintiffs then defaulted, and paid no more. The obligation of the bond required Mrs. Pollock, and her assignees who took her place, to pay each month, after she borrowed, the sum of $25.50; the sum of $10.50 being the monthly installments due on the shares of stock, the sum of...
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