Setliff v. North Nashville Bldg. & Sav. Ass'n.

• Decision Date: 09 January 1897
• Citation: 39 S.W. 546
• Parties: SETLIFF v. NORTH NASHVILLE BLDG. & SAV. ASS'N.
• Court: Tennessee Supreme Court

39 S.W. 546

SETLIFF v. NORTH NASHVILLE BLDG. & SAV. ASS'N.

Court of Chancery Appeals of Tennessee.

January 9, 1897.

Appeal from chancery court, Davidson county; Thomas H. Malone, Chancellor.

Bill by A. Setliff against the North Nashville Building & Savings Association. From a decree for defendant, complainant appeals. Affirmed.

Whitman & Gamble, for appellant. M. T. Bryan, for appellee.

WILSON, J.

The bill in this case was filed April 16, 1895, to enjoin the sale of a lot of land in civil district 18, of Davidson county, which the complainant and his wife conveyed in May, 1889, to a trustee for the benefit of the defendant association, and which the trustee had advertised for sale under the powers and according to the terms of the deed of trust to enforce the payment of the balance of $691.80, claimed to be due from complainant to the association. The deed of trust was made to secure an advance on 20 shares of the stock of the association, of the nominal value of $4,000, which advance was to be repaid or canceled by the payment of dues and interest, in installments, until the shares of stock matured under the charter, by-laws, and regulations of the association. The bill, in effect, avers that, if usury and illegal fines assessed were eliminated from its charge, the complainant had overpaid the loan he received from the association, and it is asked that he be given a decree for the excess so paid by him. The association, in its answer, denied all the material allegations of the bill, or the deductions made from those not denied. The depositions of the complainant and of Mr. Floeresh, the secretary of the association, were taken, and read in evidence.

The cause was heard by Chancellor Malone June 29, 1896, when he dismissed the bill, with costs. From his decree the complainant prayed and obtained an appeal to the supreme court, and has assigned 14 formal errors. These errors as assigned are as follows: First. The chancellor erred in not sustaining the bill and granting the relief prayed for. Second. Error in not holding that the premium of $1,000 taken from the loan that complainant applied for was usury. Third. Error in holding that the association was entitled to recover of complainant $230, being dues, interest, and fines claimed to have accrued between January 1, 1889, and May 25, 1889, when, on the latter date, complainant became a member of the association. Fourth. Error in holding that the defendant was a building and loan association, and that, the dealings between its members being mutual, the bonus paid for the loan, and the interest and dues charged, did not constitute usury. Fifth. Error in refusing to decree that the association was not entitled to charge more than one fine for the nonpayment of one installment of dues and interest. Sixth. Error in decreeing that the premium of 25 per cent. computed on $4,000 was permissible, whereas he should have been charged this per cent. on a sum which, with the premium added, would make $4,000, to wit, $3,200. Seventh. Error in holding that the association was authorized to impose fines for the nonpayment of interest on the debt of complainant. Eighth. Error in holding that the association could charge 6 per cent. on the $4,000 for the whole time, without allowing complainant interest at the same rate on his payments from the time they were made. Ninth. Error in not holding that, when the association closed out the non-borrowing or free shareholders, January 1, 1894, and settled with them, it thereby released complainant from his obligations as a member of the association, and from all further liability to pay dues, interest, and fines. Tenth. Error in refusing to decree that, when the association settled with the nonborrowing shareholders, January 1, 1894, it should have settled with complainant, by charging him with the money actually received by him, and 6 per cent. interest thereon, and crediting him by all dues, interest, and fines of the dates when paid, with interest thereon. Eleventh. Error in refusing to decree that, in forcing out the non-borrowing members, the association violated and terminated its contract with complainant. Twelfth. Error in refusing to hold that the association was not entitled to charge complainant with dues, interest, and fines from October 10, 1894, to January 10, 1895, inasmuch as his shares of stock matured on the former day. Thirteenth. The sum secured by the deed of trust, and under which a sale of his property is sought to be made, is so uncertain and indefinite that the exact amount due from complainant should have been ascertained before permitting a sale of his property, and it was error not to so decree. Fourteenth. The deed of trust given to the association by complainant does not authorize a sale of the property conveyed to secure the payment of fines imposed, and the chancellor erred in not so holding.

We have thus set out at length the numerous formal errors assigned by the appellant, so that all his contentions, in all their phases, may be seen. It is obvious, however, that all of them may be treated under five heads, in so far as the controlling principles of law applicable to a proper solution of the case are concerned. First. Does the scheme of the association, under which it lets its members have money secured by mortgage upon their property, constitute a usurious contract, under the laws of this state? Second. Under its charter and by-laws and contract with the complainant, was it authorized to impose successive fines upon the complainant, upon his successive defaults in the payment of dues and interest called for in the contract? Third. Was the sum, if anything, due from the complainant to the association, so uncertain in amount as to call for a judicial ascertainment, previous to a sale under deed of trust he executed to the association? Fourth. Did the association, in settling with nonborrowing members, January 1, 1894, violate its contract with complainant, and thereby release him therefrom, and thus put him and it in such relation that the law will sanction and compel a settlement between them on the basis of the actual sum received by him, with interest, to be credited by his payments with interest from their respective dates? Fifth. His shares of stock having matured October 10, 1894, was the association authorized to charge dues, interest, and fines until January 1, 1895?

It is proper to state that the defendant is a building and loan association, chartered under the laws of this state, and that the complainant, in May, 1889, subscribed for 20 shares of its stock, of the par value of $4,000. The shares so subscribed for by him belonged to what is known as its "Eighth Series," which had been running since the 1st of January, preceding. He applied for a loan, and, at a competitive bidding for its funds at one of its regular meetings, bid 25 per cent. premium, as it is called, for $4,000, to be paid for by the maturing of his shares under the association's rules, by the payment, at designated intervals, of dues and interest. His bonus of $1,000 and the sum of the dues, interest, and fines previously accruing on these shares, from January 1 to May, 1889, were deducted or repaid from the $4,000 he bid for. This left the actual amount received by him less than $3,000. When he subscribed for the shares, and became a "borrowing" member, he was furnished with a pass book, containing, in print, information as to when the regular meetings of the association occurred, and when dues and interest were payable. Printed rule No. 3, on the first inner page of this book, is as follows: "Any member failing to pay his monthly dues will be fined 5 cents per share for the first default, and five cents per month for each month's dues for which he may remain in default; and any one failing to pay interest on borrowed money shall pay a fine of five cents for each month, as above provided for fines on dues." The rules for "borrowers," furnished with and made a part of the pass book, also prescribe the fees that are to be paid an attorney for examining the title to the property proposed to be given as security for the loan and for preparing the mortgage, and the fees of the appraising committee, for registration, etc., all of which are to be deducted from the loan, or to be paid before the loan is consummated. Rule No. 4, governing "borrowers," provides that, if any borrower shall fail to pay dues, interest, and fines for a period of six months, the association may proceed to collect the loan according to the terms of the contract under which the money was paid. The printed rules furnished with the pass book also state that a new series of stock will be issued every six months, and prescribe the basis, method, and terms of ascertaining the withdrawal value of shares, and how, and upon what terms, loans repaid previous to the termination of this series of stock to which they belong are adjusted. This complainant was delinquent in the payment of dues and interest for more than six months, when his property mortgaged to the association was advertised for sale. We may say here that in making this "loan," as it is called, the association followed strictly its charter, rules, and by-laws, and the laws of this state governing such institutions; and the complainant, as a member thereof, is chargeable with knowledge of its charter, rules, and by-laws, inasmuch as there is no pretense, in the proof, that any fraud or imposition was practiced upon him unless it is to be said that results not being what he expected constitute such fraud and imposition.

Now, let us see just what he complains of in his bill. Briefly stated, his complaints are these: First. That he got only $3,000, and the $1,000 charged therefor, or that in charging him with $4,000, when he only got $3,000, the $1,000 was usury, as well as the 6 per cent. on the $1,000 that he did not, in fact, receive. Second. That the association had no right to...