16 Pa. Super. 222 | Pa. Super. Ct. | 1901
Opinion by
Josephine Beso, one of the plaintiffs, was a married woman residing with her husband in the state of Pennsylvania. She became a member of a New York building and loan association and subsequently applied for and received a loan from the association. The application for membership and the application for loan recited the name of the association and the city in New York where it did business. The loan was evidenced and secured to be paid by seventy-three negotiable promissory notes, executed by Josephine Beso and her husband, and payable to the said association at its office in Syracuse, in the State of New York. Each note was for the sum of $39.60, except the three last maturing, which, were each for $20.85, aggregating the sum of $2,834.55. The payment of these notes was secured by a mortgage executed by the plaintiffs, upon certain property in the county of Allegheny and state of Pennsylvania. This was a contract to pay money in New York; the primary contract creating the indebtedness was subject to the law. of New York which permitted building and loan associations to charge usurious interest. The validity of the promise to pay and the legality of the rate of interest, fines and fees charged are to be determined in accordance with the law of the state of New York: Bennett v. Eastern Building & Loan Association of
This is not a suit by a stockholder to recover the value of his stock, nor a suit by an association to collect an assessment or dues from a shareholder. With the duties of Josephine Beso to the association, as a shareholder therein, we have nothing to do, unless under the covenants of the mortgage the land was pledged as a security for the performance of those duties. The plaintiffs here assert that the covenants of the mortgage have been performed, and, upon the ground that the defeasance has been accomplished, pray that the conveyance be canceled and satisfied. The plaintiffs paid, as they fell due, sixty-two out of the seventy-three notes recited in the mortgage, and the same were surrendered to them by the defendant association. The association then sent to the plaintiffs an agent, for the purpose of inducing them to enter into some new arrangement on the subject; the plaintiffs declined to enter into any new arrangement and they were then notified by the association that it would not receive the money on the eleven remaining notes and surrender them and satisfy the mortgage. The plaintiffs subsequently duly tendered to the association the sum of $450, alleging the same to be in full of the eleven notes remaining unpaid, and demanded a surrender of the notes. The learned judge of the court below found as a fact that this sum was more than sufficient to pay said eleven notes, with the interest thereon, and to this finding of fact error is not assigned. Under the by-laws of the association, the plaintiffs had the right to anticipate the payment of these notes, and, as the notes were negotiable, they had the unquestionable right to demand their
There is nothing which appears upon the face of the mortgage which can, by any reasonable construction, be held to covenant that the land was conveyed as a security for anything further than a specific sum of money, payable at certain definite periods, with interest and such fines as might be imposed, in accordance with the by-laws of the association, in case of delay in payment, together with the usual covenants as to the payment of taxes and insurance, unless such covenant arises out of the references to the by-laws of the association which occur in the instrument. The references to the by-laws are in the following language, viz: “ This grant is intended as a security for the payment of the sum of $2,884.55, the same being the principal, interest and premiums of a loan from said association, which said loan was made pursuant to and accepted under the provisions of the by-laws of said association, and which said by-laws have been read by the mortgagee, Josephine Beso, and are hereby made part of this contract; which said loan is evidenced and secured to be paid by seventy-three promissory notes of even date herewith.” Then follows a recital of the amounts of the various notes, and the times at which they become due, and a recital that the debt is also secured by bond
The clause of defeasance in the mortgage is'in these words: ‘‘ And this convejrance shall be void if full payment of the aforesaid moneys, principal and interest be made as hereinbefore speci
The by-laws provide, article 14, section 1: “ The terms and conditions expressed in the certificate of stock, in connection with the application for membership and the by-laws of this association, form the contract between the association and each shareholder therein.” The certificate of stock which the association issued to Josephine Beso was dated May 1, 1891, and it began with the words, “ Series No. B-5, maturing Nov. 1st, 1897.” It certified that Josephine Beso was the holder of twenty-five shares of the stock of said association, and “ in consideration of the membership fee and agreements and stipulations contained in the application for membership in the association, and full compliance with the terms, conditions and by-laws printed on the front and back of this certificate, which are hereby made a part of this contract, the said Eastern Building & Loan Association of Syracuse, New York, agree to pay said shareholder, her heirs, etc., the sum of $100 for each of said shares, at the end of seventy-eight months from the date
The conditions and the by-laws, printed upon the certificate, provided that there should be taken out of all loans a gross premium of ten per cent, and that the borrower should pay five per cent interest, and five per cent premium per annum, on the loan, and that in case of default in payment he should pay a fine of twenty cents per month on each $100 borrowed. In article 14, section 3 of the by-laws, it was provided that “ all loans made by this association shall be upon satisfactory note and first mortgage security on real estate, together with fire insurance policy in some approved company, if upon improved property, and for every $100 of loan made to a shareholder, he shall, in addition thereto, transfer and pledge to the association one share of the stock held by said shareholder as a collateral security on all loans by the association to the shareholder. . . . All interest and stock payments shall be paid on the last Saturday of each month during the continuance of said loan.” It will be observed that the payments here provided for are to be made during the continuance of the loan; not until the stock shall have become worth $100 per share. Subject to the provisions of the by-laws hereinbefore recited, the purpose of the articles of incorporation and the by-laws seems to have been to impress upon the minds of shareholders the conviction that directors of the association had full power to make any contract, with shareholders and borrowers, that they might deem expedient. In the articles of incorporation we find this provision : “ Article 6. The management of all the business of the association shall be vested in a board of nine directors, who shall be chosen at each regular meeting; said board shall have full power and authority to fill all vacancies and make such bylaws, rules • and regulations for the general management and conduct of the business of this association as they may deem necessary.” And again, article 18: “ The stock of this association may be issued in series if the board of directors may so
This association, acting through its board of directors, entered into an agreement with Josephine Beso that her shares of stock should mature and become fully paid at the end of seventy-eight months, upon conditions with which she has complied. The application for a loan which she made to them, and which they approved and accepted, was based on this agreement, and expressly provided that the loan should mature at the end of six and one half years. The amount to be paid by Josephine Beso, for which the notes secured by the mortgage were given, was based upon this primary agreement between the parties, and the amount of the mortgage was determined in accordance therewith. There is nothing in the by-laws or articles of incorporation which forbade the board of directors of the association to enter into such a contract. There is nothing-in the articles of incorporation or the by-laws which can be held to enlarge the express covenants of the mortgage so as to
In this respect a corporation differs nothing from a natural person; if it would enforce the contracts of its agents it must first agree to adopt and be bound by them: Pittsburg & Connellsville Railroad Company v. Stewart, 41 Pa. 54; Caley v. Phila. & Chester Railroad Company, 80 Pa. 363.
The decree of the court below is affirmed, and the appeal dismissed at costs of appellant.