138 Ga. 128 | Ga. | 1912
The Thomasville Beal Estate and Improvement Company brought suit against T. M. McIntosh and Mrs. Clifford Williams to recover the balance of principal, interest, fines, and attorney’s fees alleged-to be due on a certain contract attached to the petition, the nature of which will be hereafter set forth. The defendant McIntosh pleaded, that the plaintiff was not a building
In Cook v. Equitable Building & Loan Association, 104 Ga. 814 (30 S. E. 911), it was held that a building and loan association, “as such organizations usually exist to-day, is a private corporation designed for the purpose of accumulating into its treasury, by means of the gradual payment by its members of their stock subscriptions in periodical installments, a fund to be invested from time to time in advances made to such shareholders on their stock as may apply for this privilege on approved security; the borrowing members paying interest and a premium for .this preference in securing an advancement over other members, and continuing to pay the regular installments on their stock in addition; all of which funds, together with payments made by the non-borrowing members, including fines, forfeitures, and other like revenues, go into the common fund until it, with the profits thereon, aggregates the face value of all the shares in the association, the legal effect of which is to extinguish the liability incurred for the loans and advancements, and to distribute to each non-borrowing member the par value of his stock.” As defined by the code: “The name ‘ building and loan association,’ as-used in this article, shall include all corporations, societies, or organizations or associations doing a savings and loan or investment business on the building society plan, viz., loaning its funds to its members, whether issuing certificates of stock which mature at a time fixed in advance or not, except those which restrict their business to the county of their domicile and not more than two other adjacent counties.” It is the mutual participation in profits and losses by borrowers and non-borrowers which is the basic principle on which contracts between this class of associations and its members have been saved from the consequences attached to other usurious loans. Rooney v. Southern Building & Loan Association, 119 Ga. 941 (47 S. E. 345). The original conception of building and loan associations confined the loans to its members, but in the course of evolution
The defendant, McIntosh, subscribed to 20 shares of stock of the par value of $100, and was the owner of this stock at the time he applied for and received from the company a loan of $6,000, and entered into a contract with the company whereby he agreed to pay them the sum of $9,600, according to the constitution of the company, as rent for the land and premises thereinafter described. He 'agreed to pay 120 monthly installments of $80 per month, on the 8th day of each and every month until the whole was paid. Each monthly installment unpaid was to bear interest at the rate of eight per cent., and any default of payment was to be subject to such fine or penalty as the constitution and by-laws prescribed. He agreed to pay all taxes, repairs, and premiums of insurance, and all monthly or other dues in the shape of installments, interest, premiums, fines, and arrearages that might be due to the company, or that might be paid out by the company for him, and perform every duty imposed upon him by the company, and to pay every charge therein required, and all costs and expenses, including attorney’s fees, incurred in the enforcement of any claim or duty against him. He further agreed that default for three consecutive months in the payment of monthly installments would mature the entire balance; and that after the sale of the property held by the company, the proceeds should be applied first to the payment of expenses and the balance to the debt, and agreed to pay any deficiency remaining unpaid, and, in case of default, to surrender possession" to the company, and, upon his failure so to do, the company had the right to proceed against him as tenant in arrears or holding over, or in any other legal way to sell or dispose of the premises as provided by its constitution; that no alteration or amendment to the constitution should affect the validity of his obligation; and that he would pay any sum or sums of money to discharge any obligation that might be demanded or required by the amended constitution, and his obligation should be held and construed to be binding under the same and in conformity therewith. In order to secure the payment of his obli
It appeared that the borrower was a stockholder at the time the loan was made to him, and acted as a director of the company from September 13, 1898, to May 3, 1909, when he sold his stock. He-paid for his stock by monthly installments, just as other stock was paid for. No loans were made by the company except loans payable in' installments. Very few of the stockholders borrowed money; 'and when they did borrow, it was upon real estate security. The company made no loans except upon real estate security. Prior to the adoption by the company of the act of 1888 (Civil Code, § 2878) no loans were made to any persons not stockholders.
These are the essential features of the character of the plaintiff company and of the contract which it is seeking to enforce as a building and loan association obligation. The defendant, by motion to dismiss and by plea, raised the point that the plaintiff-was not a building and loan association, and was not entitled to aggregate the principal and interest of the loan into one sum and divide it into monthly installments, if, by so doing, the amount contracted to be paid is in excess of the maximum legal rate of interest. Stress is laid on the fact that the charter and the constitution provide for the collection of fines in case of certain defaults in payments. The provision of the charter is that the company may impose reasonable penalties for a failure to make prompt payment of subscriptions to stock or of; installments on property, such as it may fix by its by-laws, but it is not provided that the company may impose fines on its borrowers for default in the payment of loans. The imposition of a penalty for breach of contract in paying stock subscriptions and installment ■ payments on purchases of property seems to be more in the nature of liquidated damages. It has not the remotest reference to premiums to be paid by stockholders for an advance of money, or fines incurred because of the non-payment of a loan installment. The charter permits the company to deal indiscriminately with- stockholders and the public in the matter of loans,- as well as in sales of
It has been held that a company whose name imports that it is a building and loan association will be presumed to be such until the contrary is made to appear. Rooney v. Southern Building & Loan Association, supra. The name of the Thomasville Beal Estate and Improvement Company does not import a building and loan association; and the burden was upon the plaintiff to make it appear that it was either a building and loan association or 'an association of like character. The charter of the company contains no essential feature of a building and loan association. It has no provision looking to the division of the aggregate principal and interest into monthly installments, no provision in the way of premiums for the privilege of an advance on a member’s stock, nor any reference that it proposes to do a building and loan association business. We have compared the charter of this company and the contract which it is seeking to enforce with that of other associations which have been held to escape the infection of usury because of their building and loan feature, and we find no such essential points of agreement upon the cardinal principle as will bring this company and its contract within their provisions, so as to allow it to charge more than the legal rate of interest.
Having reached the conclusion that the plaintiff corporation is not a building and loan association, nor of like character to such, and that the contract which it is seeking to enforce stipulates for interest in excess of the maximum legal rate, it becomes unnecessary to deal with the other assignments of error in the main bill of exceptions.
Error is assigned in the cross-bill of exceptions on the refusal of the court to strike, on oral motion, the defendant’s answer as insufficient to raise the issue of usury, or to state any defense. It averred that the plaintiff was not a building and loan association entitled to make the contract sued on, which reserved more than the maximum legal rate of interest. It also averred payment,
Judgment reversed on the main MU of exceptions, and affirmed on the cross-bill.