Roberts v. American Building & Loan Association

• Decision Date: 08 July 1896
• Citation: 36 S.W. 1085,62 Ark. 572
• Parties: ROBERTS v. AMERICAN BUILDING & LOAN ASSOCIATION
• Court: Arkansas Supreme Court

36 S.W. 1085

62 Ark. 572

ROBERTS v. AMERICAN BUILDING & LOAN ASSOCIATION

Supreme Court of Arkansas

July 8, 1896

Appeals from Carroll Circuit Court in Chancery, Western District EDWARD S. MCDANIEL, Judge.

STATEMENT BY THE COURT.

The appellee brought this suit to foreclose a mortgage which was given to secure the following note, to-wit:

"$ 2000.00 MINNEAPOLIS, MINN., Dec. 11th, 1888.

For value received, on or before nine years from date, I promise to pay to the order of the American Building & Loan Association, at its home office in Minneapolis, Minnesota the sum of two thousand dollars, with interest at the rate of six per cent. per annum on the sum of one thousand dollars payable monthly. It is understood that this note is given for a loan obtained on twenty shares of stock of said American Building & Loan Association, and if the maker hereof fails to make any monthly payments on the said stock, or to pay any installment of the interest for a period of six months after the same is due, then the whole amount of this note shall at once become due and payable. But if the maker hereof shall pay all installments of the interest which become due hereon and all fines and monthly payments which become due on said stock until said stock becomes fully paid in, and of the value of $ 100 per share, and before any of said installments of interest or monthly payments shall have been past due for a period of six months, then, upon the surrender of said stock to said association, this note shall be deemed to be fully paid and cancelled. This note is understood to be made with reference to and under the laws of the state of Minnesota.

[Signed.] MARY A. ROBERTS,

LEONIDAS ROBERTS."

On the margin of the face of the note is the following: "If this note is paid before seven years from date, there shall be allowed such rebate from the amount of the premium as the board of directors of said association shall deem equitable.

Premium $ 1000.00.

Loan $ 1000.00."

The mortgage executed at the same time by appellants recites that the conveyance of the land therein described is upon a consideration of two thousand dollars paid to appellants by the appellee. The mortgage contains the following conditions viz.: "This mortgage being given to secure a loan made on twenty shares of stock in said American Building & Loan Association, the monthly payments of which amount to $ 12 per month, said party of the first part does further covenant and agree to make the said monthly payments on said stock as they shall become due until said stock shall become fully paid in. Provided, nevertheless, that if the said party of the first part * * * shall pay to the party of the second part, at its home office, one thousand dollars and interest, according to the conditions of one certain promissory note, bearing even date, payable after three years from, and before nine years from, date for the sum of one thousand dollars, with interest on the same at 6 per cent. per annum before and after maturity until paid, interest payable monthly, then this deed shall be null and void; otherwise, to remain in full force and effect. But if default be made in the payment of said sum or sums of money, or of any installment of interest thereon, or of any monthly payment on said stock for a period of six months after the same shall fall due, or any part of either, * * * * or in any condition in this mortgage contained, then in either or any such case the whole principal sum or sums secured by this mortgage, and the interest thereon accrued up to the time of such default, shall, at the election of said second party, its successors or assigns, or his or their agent, become thereupon due and payable immediately upon said default, and the said party of the first part does hereby authorize and empower the said party of the second part, its successors or assigns, the owner hereof, its agent and attorney, at its or their election, and without notice of such election, to foreclose at once this mortgage for the whole of said principal sum or sums and accrued interest as herein provided, or to foreclose for such sum or sums and interest and money paid as may be due and payable by the terms of said note hereby secured, and sell the said hereby-granted premises at public auction, and convey the same to said purchaser in fee simple, agreeably to the statutes in such case made and provided, and out of the moneys arising from such sale to retain the principal and interest then accrued on the sum or sums so elected to be foreclosed for, together with any and all costs and charges of such foreclosure, including one hundred dollars attorney's fees for foreclosing this mortgage; paying the overplus, if any, to the said party of the first part," etc.

The complaint alleged that the by-laws of the association provide that each member should pay his share of capital stock in monthly installments of sixty cents upon each share, beginning thirty days from the date of his certificate of stock, and that every member neglecting to pay such installment when due and payable should forfeit and pay to the association ten cents per month as a fine for each share of stock so owned by him, and so in default.

The breaches of the condition of the mortgage alleged were that the monthly installments of dues on said twenty shares of stock due and payable on the 11th day of May, 1890, and for each subsequent month, amounting to $ 84.00, and the installments of interest for the same period, amounting to $ 35.00, and the fines accruing for the same period, amounting to $ 14.00, had not been paid. The amount claimed to be due at the institution of the suit was two thousand dollars, with interest on one thousand dollars at six per cent per annum from the 11th day of April, 1890, and an attorney's fee of $ 100.00; and plaintiff elected to claim for the two thousand dollars, with interest at 6 per cent on one thousand, and for $ 100.00 attorney's fee, and asked judgment accordingly, and for sale of twenty shares of stock to satisfy same, and for sale of property mortgaged, and the proceeds to be applied to the payment of the remainder of said judgment, if any, after application of proceeds of sale of stock. The bill was filed 18th of November, 1890. The answer admitted the execution of a note for one thousand dollars, but denied that a note of two thousand was executed. It admitted the execution of the mortgage, but alleged that it was to secure the note for one thousand dollars. The execution of the note sued on is denied.

Usury, and a failure to comply with the law authorizing foreign corporations to do business in the state, were set up, but these defenses have been abandoned here.

The case was tried upon the pleadings, exhibits, and depositions of witnesses, and the court found the issues for the plaintiff, and that the note sued on was executed, and the mortgage also, for the purpose of securing it according to its terms; that monthly dues to the amount of two hundred and sixty-four dollars had been paid; that interest on the advancement had been paid to April 11th, 1890, and that $ 84 in monthly dues, $ 35 in interest to November 11th, 1890, and $ 14 in fines were in arrears at the institution of the suit; that there had been default in the payment of monthly installments for more than six months; that appellees were entitled to monthly dues on stock for nine years, amounting to twelve hundred and ninety-six dollars, less two hundred and sixty-four dollars paid thereon, leaving a balance of one thousand and thirty-two dollars, with interest on the advancement from April 11th, 1890, to November 18th, 1890, amounting to thirty-six and 15-100 dollars, and fourteen dollars in fines, making an aggregate of one thousand eighty-two and 15-100 dollars due at the institution of the suit. To this sum was added interest at six per cent. from November 18th, 1890, the time of the institution of the suit, to August 17th, 1893, the date of the decree, and judgment was rendered for $ 1260.70. Appellants were allowed thirty days to pay off and satisfy the decree, surrender their stock, and have mortgage satisfied and cancelled. Upon failure to do so, the equity of redemption was foreclosed, and sale of the property ordered. From the decree this appeal was taken.

Affirmed.

C. D. James, for appellant.

1. The most appellee can claim under the note and mortgage was $ 1,000 and six per cent. interest to the date of filing the suit, less the payments made, amounting to $ 900.31.

2. It was error to give judgment for fines. We have no statute authorizing the imposition of fines, nor does the statute of Minnesota authorize it. They are a penalty, and cannot be enforced. 2 Am. & Eng. Enc. Law, p. 620; 7 Neb. 173; Ib. 181; 68 Pa.St. 167; 82 id. 180; 89 id. 15. Nor is interest chargeable on fines. 28 L. T. Rep. (N. S.), 55; 2 Am. & Eng. Enc. Law, p. 612; 5 Duer, 671.

3. The proof shows that the note was only for $ 1,000, and that it was changed to $ 2,000, and the decree should be reversed. 41 Ark. 294; 17 S.W. 706. The alteration was material, and avoided the note. 49 Ark. 140. The note being void, the security cannot be enforced. 34 Ill. 100; 19 S.C. 264; 1 Spear, Eq. 142; 65 Me. 195; Parsons, Bills and Notes, 572; 2 Barb. Ch. 135.

L. H. McGill, for appellee.

1. The obligation was for $ 2,000.00. There is ample evidence to support the finding of the chancellor on this point. There was no spoliation. The burden was on appellant.

2. The mortgage secured the payment of all dues, interest, and fines, as expressed in the contract. A simple repayment of the advance with interest would not be a compliance with the contract. Endlich, B. Ass'ns (2 Ed.), secs. 124, 129, 133, 434, 435, 442-3, 149; 56 Ark. 335.

3. The court...