Farmers Saving's & Building & Loan Ass'n v. Kent & Sabotka

131 Ala. 246 | Ala. | 1901

TYSON, J.

Notwithstanding the opinion in this case, on former 'appeal, in which the equity of the bill is fully discussed and correctly sustained, it is insisted that the bill is without equity, and that we a°uin review the demurrer interposed to it.' — Farmers Sav. & B. & L. Asso. v. Kent & Sabotka, 117 Ala. 624. This insistence grows out of the latitude of the writ of injunction, rather than any defect in the averments of fact in the bill. By the writ, the association was prevented, not only from selling the lot belonging to the complainants, but those belonging to the mortgagor, about which it is contended the complainants have no concern and in which they have no interest. It is upon the theory that the complainants have no interest in, and, therefore, can have no concern about what becomes of the lots belonging to the other parties conveyed by the mortgage that the insistence in argument is based attacking the equities of the bill or rather the injunction prohibiting the mortgagee from exercising the power of sale contained in the mortgage as to any of the lots conveyed by it.

The equity of exoneration invoked by complainants entitles them to have their lot sold last to pay the excess, if any, of the mortgage debt over the value of’ the other lots. If the other lots should be sold for enough to pay the entire mortgage debt, theirs would be completely and entirely exonerated from all claims by the mortgagee. — 3 Pom. Eq. Juris., § 1226. They are, therefore, interested in the 'amount of the mortgage debt, as well as in having the lots primarily liable to its satisfaction, pay it to the exoneration of theirs. To the end, therefore, of protecting and enforcing their equity, they are entitled, under the averments of the bill, to an accounting for the purpose of having the amount of the debt ascertained and to an injunction restraining a sale under the power of any of the lots, without regard to whom they may belong, until this has been done. This is substantially what was decided on former appeal. See also Hinson v. Brooks, 67 Ala. 491; 10 Am. & Eng. Ency. Law (1st ed.), 814 and notes.

On a return of the.cause to the court below, the bill was answered by the mortgagor and his answer made ■a cross-bill attacking the mortgage for usury. And upon final submission upon the pleadings and evidence, the chancellor found that the mortgage was an Alabama contract and that it was usurious. In consonance with his findings, he charged the mortgagee with all money paid to it by the mortgagor, treating the subscription of stock and the loan as a single transaction— a simple contract of borrow and loan.

In the first place, the mortgage contract was not an Alabama but a Tennessee contract, and for that, neither was the subscription for the shares of stock, of which the mortgagor became the owner, an Alabama contract. The mortgagee was a mutual building and loan association incorporated under the laws of Tennessee with its place of business in Nashville. The application for membership in the association was sent to its office in Nashville, it was accepted there and the stock issued to the mortgagor there. The application for the loan was made to the association at its office. The note secured by the mortgage given for the loan is dated at Nashville and payable at the office of the association. All monthly dues are payable at the office of the association and all that were paid, were paid by the mortgagor there. The note and mortgage were delivered in Nashville and after their delivery the check drawn for the amount of the loan on the treasurer of the association payable to 'the mortgagor, after being mailed to him and indorsed by him, was paid by the association, through its treasurer in Nashville to his indorsee, the First National Bank of that city.

On this state of facts, there can be no doubt that the contracts are Tennessee contract® and are governed by the laws of that State. — Pioneer Sav. & Loan Co. v. Nonnemacher, 127 Ala. 521.

The contracts complained of as being usurious were made pursuant to by-laws of the association, requiring its borrowing members to pay in monthly instalments interest eo nomine on loans at the rate of ®ix per cent per annunij and also- to pay monthly stated sums on stock subscribed for, which must be transferred to the association as collateral security for the loan until the 'stock matures. In addition to such monthly payment®, borrowing members were required to pay membership fees and also fines, in case any were imposed, for default in making payments. Receipts from such sources were to go into a fund, which after deducting the expenses of the association, 'were to be applied as profits and the share apportioned to a borrowing member was to be applied to maturing stock. The accumulations of such dividends to an amount equal to the par value of the stock had the effect of maturing it and of cancelling the member’s obligation to pay and of discharging mortgages given to secure the same. Except where default, in making payments rendered the mortgage presently collectible, the borrower was never to individually pay the principal sum borrowed, but for that the association could look alone to profits or dividends accruing under the plan stated.

It has been frequently decided by this court, that in contracts of this -class, the obligation to pay on stock in the association is to be regarded as -separate from the obligation to pay interest. In other words, the contract with the association as a stockholder and member is -distinct from that of a borrower. The obligation of a member of the association i-s to pay certain dues and assessments for the privileges and benefits to which he is entitled, while, that of a borrower is to repay the loan with interest and premiums. — Southern Building & L. Asso. v. Anniston L. & T. Co., 101 Ala. 582; Sheldon v. Birmingham B. & L. Asso., 121 Ala. 278; Interstate B. & L. Asso. v. Brown, 128 Ala. 462; Pioneer Sav. & L. Asso. o. Nonnemacher, supra; Johnson v. Nat. B. & L. Asso., 125 Ala. 465.

The rate of interest charged upon the loan in this ease was six per -cent., which was the legal rate under the laws of Tennessee. — § 2701 of Code of Term. (1884). The premium -charged for the loan was -the amount bid by 'the mortgagor, he being the highest bidder for the preference, and was expressly authorized by the statute, -section 1751 of the 'Code of Tennessee. Nor was it of consequence that he was not present and made the bid in person. Every purpose -of the statute was met by his written bid filed with the company. So, too, it was of no -consequence under the statutes of Tennessee, whether the premium “be deducted from the amount bid and only the balance paid to the borrowing stockholder, or wiiether the borrowing stockholder take out of his pocket the amount of the bid and pay it over to the association and the association at the same time pass oyer to him the amount of money bid off, or whether a separate note or obligation be given for the premium. * * * The real transaction was that the borrowing stockholder got the amount bid off, and gave a separate obligation for the premium.” The above quotation is taken from an opinion in the case Hughes against this association delivered -by the Court of Chancery Appeals of Tennessee, in which substantially the same contract as the one before ns, was 'attacked for usury upon substantially the same grounds. That court after a thoroug'h discussion of the terms of the contract with reference to the statutes of that State, held, it was not usurious. — Hughes v. Farmers Savings and Building and Loan Asso., 46 S. W. Rep. 362.

I is scarcely necessary, in conclusion, to say that the association being authorized by the laws of Tennessee to make the contracts — securing the payment of interest and premium upon the loan — and the dues, etc., upon the stock — that they cannot be assailed successfully upon the ground that they wmre entered into as a mere device to avoid the usiuary laws.

Reversed and remanded.