22 Wash. 516 | Wash. | 1900
The opinion of the court was delivered by
The appellant is the receiver of the American Savings & Loan Association, a corporation incorporated under the laws of the state of Minnesota, and was appointed by an order of the district court of Hennepin county, in that state. The action is to foreclose a mortgage given to secure the sum of $1,850 loaned by the association to the defendant Stenger in December, 1892. Accompanying the mortgage was an assignment to the association of thirty-'seven shares of stock of said association, of the par value of one hundred dollars per share. The loan was made upon the usual terms and conditions common to loans by building associations to their subscribers. The defendants duly and regularly made their monthly payments from the date of their stock subscription, until August, 1894, the aggregate amount of such payments being $1,554, and in addition thereto they paid the interest on the loan calculated at the rate of six per cent, per annum (that being the contract rate) until August, 1894,
The mortgage in question was executed prior to the enactment of the statute just referred to, and the record does not disclose whether since its passage the corporation has done business in this state. But, conceding that it is lawful for the legislature to specify the terms and conditions upon which a foreign corporation may do business in the state, the enactment under consideration could not affect mortgages or other contracts theretofore lawfully entered into. This mortgage was lawful when made, and the act is not to be regarded as applying to mortgages and securities taken prior to its passage. To hold otherwise would be to violate the constitutional provision against the impairment of contracts. Paul v. Virginia, 8 Wall. 168; Bank of Augusta v. Earle, 13 Pet. 519; Edwards v. Kearsey, 96 U. S. 595; Seibert v. Lewis, 122 U. S. 284 (7 Sup. Ct. 1190).
This necessitates a reversal of the judgment, and it becomes important to determine the amount for which the plaintiff is entitled to judgment and decree of foreclosure. The current of authority is not uniform as to the application to be made of sums paid by a borrower under similar contracts with such corporations, but we think the tendency of modern authority is in the direction of holding that all such payments, under whatever name made, whether as premiums, dues, fines, or otherwise, are payments upon the loan. In equity the mortgagor is entitled to have them credited accordingly. Interstate Savings & Loan Ass’n v. Cairns, 16 Wash. 215 (47 Pac. 509); Stevens v. Home Ass’n, 51 Pac. 986; Fidelity Savings Ass’n v. Shea, 55 Pac. 1022; Waverly Loan Ass’n v. Buck, 64
There is much authority to the contrary. We think, however, considering the nature and character of the contract, that the true rule applicable to their adjustment is expressed in the Idaho case (Fidelity Savings Ass’n v. Shea, supra), where it is said:
“ We construe the entire contract to be one of loan; that it was entered into for the purpose solely of borrowing money by one of the parties, and lending by the other; that the relation of corporation and stockholder exists, not in fact, but purely in fiction; and that the object of the plaintiff in entering into the contract was purely for the purpose of increasing its capital by obtaining large returns for the use of its money. In no case where the two relations are blended together as in this case, and the stock and debt are both contemporaneously extinguished by monthly payments upon the debt or upon the so-called stock, will the contract be treated by this court other than a contract of loan.”
And we think the authorities above cited abundantly support the doctrine of that case.
We conclude that the judgment of dismissal must be reversed, and that the plaintiff is entitled to judgment
Dunbae, Fullebton and Reavis, JJ., concur.