St. John v. Iowa Business Men's Building & Loan Ass'n

• Decision Date: 20 November 1907
• Citation: 113 N.W. 863,136 Iowa 448
• Parties: CARLISLE ST. JOHN and SALINA A. ST. JOHN, Appellees, v. THE IOWA BUSINESS MEN'S BUILDING & LOAN ASS'N., Appellant
• Court: Iowa Supreme Court

113 N.W. 863

136 Iowa 448

CARLISLE ST. JOHN and SALINA A. ST. JOHN, Appellees, v. THE IOWA BUSINESS MEN'S BUILDING & LOAN ASS'N., Appellant

Supreme Court of Iowa, Des Moines

November 20, 1907

Appeal from Polk District Court.--HON. A. H. MCVEY, Judge.

SUIT for an accounting by plaintiffs, who were borrowers from defendant, a building and loan association; for a decree that plaintiff's obligations had been extinguished and their indebtedness paid; and for the cancellation of a mortgage given to secure the loan upon the record of Polk county. Defendant filed an answer and cross-bill, in which it asked the foreclosure of the mortgage. Decree for plaintiffs, and defendant appeals.

Affirmed.

J. L Carney, for appellant.

St John & Stevenson, for appellees.

OPINION

DEEMER, J.

Plaintiffs became borrowing members of defendant, a building and loan association, March 24, 1899, and they gave a note and a mortgage securing the same for $ 1,700, and had issued to them seventeen shares of stock in the association. Plaintiffs made eighty-six payments of dues, interest, and premiums, aggregating $ 2,412.30, and it is claimed that these payments matured the stock, and satisfied the loan. Defendant contends that by the terms of the agreement there is yet due it something like $ 300, and it asked for judgment in this amount, with a decree of foreclosure of the mortgage. The case was determined upon plaintiff's motion for a decree on the pleadings, and the appeal involves nothing save the proper construction of the pleadings and the law applicable to the admitted facts.

The contracts entered into in this case were similar to those involved in Berlau v. Building & Loan Association, reported in 125 Iowa 22. By the terms of plaintiff's obligations, they were to make monthly payments of $ 15.30 on the first day of each month, provided that, when ninety-six full months had been duly paid, no further payments were to be required. The association guaranteed that the withdrawal value of its stock would be $ 100 per share in ninety-six months if all payments were regularly made. The seventeen shares of stock issued to plaintiff were known as "Class G" under defendant's articles of incorporation and by-laws; and the articles of incorporation at the time of issue of this stock contained the following with reference thereto:

Section 7. Deposit stock, class "G," may be issued to be paid for in monthly payments, which shall be either ninety (90) cents per share, or some fractional multiple thereof, to be fixed in the application. On this stock there shall be no membership fee charged. This stock shall draw interest at the rate of 6 per cent. per annum for the average time of the investment, and shall not participate in the profits of the association to any greater extent. The interest shall be credited to the stock semi-annually on the first days of January and July each year, and when the payments made and interest credited, less the expense, amounts to one hundred dollars ($ 100.00) per share, it will be deemed matured, and no further interest shall be credited to said stock, and it may be withdrawn. Loans made upon this stock are presumed to continue until the stock is matured, but the board of directors may permit the borrower on application to pay off his loan previous to that time, in which case, he shall receive the amount paid into the loan fund together with 6 per cent. interest, compounded semi-annually. If any other payment than ninety cents per share be selected by the borrower, the settlement on the payment of a loan, shall be on the same pro rated basis, as on the ninety cents payment. The application for loans made on deposit stock, class "G," shall set forth plainly the manner of settlement, in case a repayment of the loan is allowed, by inserting the same in the application, or attaching thereto a slip which shall be signed by the borrower, and which shall be a part of the contract.

They also contained the following provision as to profits:

Article 7. Profits. After providing for the payments of the interest on full paid stock, and the 6 per cent. on deposit stock, class "G," the net profits arising from the receipts of premiums, interest, fines, withdrawals, and other sources shall be apportioned semi-annually on the first days of January and July each year, to all the shares of installment and prepaid stock entitled to dividends, in proportion to the amount standing to the credit of the shares.

The Twenty-Eighth General Assembly passed an act known as chapter 69 of the enactments of that session, which went into effect May 3, 1900, a little more than a year after plaintiff became a member of defendant association, containing the following, among other provisions: "Section 1 forbids certain kinds of stock and requires all associations which have theretofore issued such forbidden stock to retire the same by January 1, 1901."

Section 4: Loans--Premium and Interest. Such associations shall have power to loan money to their members at such rate as may be agreed upon, and may collect premiums and interest thereon, but in no case shall the amount of premium and interest paid exceed eight per cent. per annum, but nothing herein shall be construed as prohibiting the payment of such interest and premium monthly, or at such time as may be provided for in the articles of incorporation.

Section 10: Articles Amended -- Maximum Rate -- Appointment of Receiver. The provisions of this act shall apply to all building and loan and savings and loan associations hereafter incorporated as well as those now incorporated under the laws of this State or doing business herein, and all such associations shall amend their articles of incorporation so as to conform to the provisions of this act. No such association shall be authorized or empowered to collect or receive premiums and interest from a borrower at a greater rate than eight per cent., and in case of an amendment to the articles of incorporation so that a lower rate of interest or charge for the use of money loaned to the borrowing member is authorized than the rate of interest charged upon loans, to members who have theretofore borrowed, shall in like manner be reduced to the same rate as that permitted to borrowers after such amendments to the articles of incorporation, so that the interest charged under whatever name, whether charged as premium or interest to all members of the same association, shall be the same, all reductions of the rate of interest or premium charge to new borrowers shall be made and apply equally to those who have theretofore borrowed. In case any such association doing business in the State shall fail to amend its articles of incorporation in conformity herewith prior to July 15th, 1900, its authority to do business in this State shall be revoked by the executive council, and under the direction of the executive council application by the Attorney-General shall be made to the proper court for the appointment of a receiver to wind up the affairs of the association, and in such proceedings the amount due from the borrowing member on mortgages shall be ascertained in the manner provided in section 7 of this act, and the balance due on such mortgages shall be treated and considered as due within a reasonable time to be fixed by the court after the appointment of a receiver.

Pursuant to this act, defendant amended its articles of incorporation, and in its amended articles we find the following: "The rate of interest shall be eight per cent. per annum, payable monthly, at the office of the association, in Marshalltown, Iowa at the same time and in the same manner as the monthly payments on the shares of stock become due. Delinquent payments shall draw interest at the rate of eight per cent. per annum. . . . Loans may be repaid at two years from date of mortgage or any anniversary thereafter, and the borrower shall be entitled to be credited with the total amount of all payments made on the stock to said association during the preceding year, and such payments shall be treated as a payment upon the mortgage." With reference to class "G" stock, we find this provision: "In order to secure to the borrower a level payment each month, the monthly payment of this class of stock shall increase each anniversary from date of said loan an amount equal to one-twelfth (1/12) of the total sum of decrease in annual interest." And the provision with reference to the distribution of profits reads in this wise: "After providing for the expenses of conducting the business of the association as provided in article 10 hereof and the amount necessary for the maintenance of the contingent fund as provided in article 8 hereof, the balance or net profits arising from the receipts of interest, fines, withdrawals, and other sources of profits shall be apportioned semi-annually on the first days of January and July each year pro rata among the shareholders, according to the amount standing to the credit of each share."

Plaintiffs have made...