117 Pa. 1 | Pa. | 1887
Opinion,
We are clearly of opinion that the literal meaning of the bylaw of this plaintiff, which imposes fines upon members for non-payment of dues or interest, is, that the fine of ten per cent, is imposed upon the aggregate amount of all money due at the end of each month no matter for what cause. This would include fines previously imposed, as well as the amount previously owing for dues and interest. The question then arises whether such a by-law is a valid exercise of the legislating power of the association.
It is not claimed that the general law of 1859, under which the plaintiff Avas incorporated, confers any special power to impose fines, and hence we assume that the right to enact the by-law in question is merely the general right, which all corporations possess, of enacting suitable by-laAvs for their government. The provision of the sixth section of the act of 1859 that no premiums, fines or interest on such premiums that may accrue according to the provisions of the act shall be deemed usurious, must be held, so far as fines are concerned, to be limited to such fines as are imposed under by-laAvs which are lawful. Is then the by-law in question a valid by-law? That depends upon a consideration of its meaning and effect.
We haire stated the meaning of this by-law to be that the
The fines in this case were imposed by means of a corporate
The question has been before other courts than ours and has been adjudged in accordance with the principles stated. Thus in Ohio, the legislature of the state expressly authorized building and loan associations to levy and collect from their members, “ such suifis of money by rate of stated dues, fines .....as the corporation by its laws may adopt.” Here would seem to be an unlimited authority to the associations to impose any amount of fines they might see fit, but the Supreme Court of Ohio said, in a case arising under its provisions: “ It is to be regretted that the legislature was not more specific in making the grant of power thus intended to be conferred. .....That there are limits, however, beyond which the corporation by its by-laws cannot go, is undoubted. (1) The amount of the fine must be reasonable. (2) It can be imposed only by way of punishment for some delinquency in the performance of a duty which the member may owe to the corporation by reason of his membership. (3) It is unreasonable, and therefore, we assume that the legislature did not intend that more than one fine should be imposed for the same delinquency: ” Hagerman v. The Ohio B. & S. Ass’n, 25 Ohio 186; Forest City United Land and Build. Ass’n v. Gallagher, 25 Ohio 208.
In Endlich on Building Associations, § 412, the writer says: “But the courts have been unanimous in discountenancing a repeated imposition of the same fine increased every time, upon the principle of arithmetical progression. Thus, where the fine upon each share’s dues in arrear was for the first
The argument that only one fine could be imposed, because the legislature could not be presumed to have intended to authorize more than one, is not applicable in the present case, because we are construing not a legislative enactment, which must be enforced as far as may be, but a by-law of a corporation, which is plainly in violation of the principles we have stated and therefore of no effect whatever. In Maryland the same ruling appears to have been made in the cases of Shannon v. Howard Building Ass’n, 36 Md. 383, and Monumental Building Ass’n v. Lewin, 38 Md. 445.
The general rule that by-laws of corporations must be reasonable and must not be oppressive on peril of invalidity is such familiar doctrine that a citation of authorities in support of it is unnecessary. ' In Endlich on- Build. Ass’n, at § 271, it is said: “ and all by-laws to be binding, must be in conformity (1) with existing and supreme laws.....; (2) with the charter, its letter and spirit; (3) with reason and equity:”
It is argued, however, that the fines or some of them were voluntarily paid by the defendant and therefore cannot be recovered back. This is not an action to recover back the illegal fines, but a scire facias by the association on the mortgage given by the defendant; and the question is, for what amount shall judgment be entered, or, rather, how much is legally due on the mortgage. There is a clear distinction between a suit to recover back moneys which have been paid by mistake either of law or fact, and interposing as a defence such payments as could not have been recovered on account of their illegality. In the latter class of cases, the payments as a rule are credited on the amount legally due. This is always done in cases of usurious payments where the obligation is still outstanding. We can see no difference in principle between that class of cases and the present. While it may be true that the fines are no part of the mortgage debt, it is also true that they are moneys paid by defendant to plaintiff in consequence of a relation of debtor and creditor existing between them; and if the creditor have no right to receive them as fines, he has no right to receive them in any other capacity than as creditor. Being received by a creditor it is obvious the moneys thus paid must be applied to whatever was legally due. Even if the question depended upon whether the defendant made the payments distinctively as for fines, the evidence is not at all clear that such was the fact. A gross sum was paid of which the fines were a part, but no specific receipt was given and the credits entered in the account were in aggregate sums. But we think this feature of the case quite immaterial; since the payments, so far as the fines are concerned, were for illegal demands which the plaintiff could not claim, and having received them, cannot either in law or in conscience retain them. The question in this proceeding is only how much is legally due upon the obligation in suit, and in determining
Judgment reversed and record remitted with directions that the amount due, if any, upon the mortgage in suit, be determined in accordance with the foregoing opinion.