Pioneer Savings & Loan Co. v. Nonnemacher

127 Ala. 521 | Ala. | 1900

DOWDELL, J.

The relief sought by the bill as originally filed was the injunction, of the defendant’s proceedings to foreclose the mortgage, and to have the mortgage decreed satisfied and cancelled. The prayer for relief was based upon the averment in the bill that the mortgage debt had been fully paid off and discharged. After the testimony in the cause had been taken, the bill was amended. A careful analysis of the amendment does not disclose a repugnancy between it and the original bill as to the relief sought. The most that can. be said of it is, that it contains alternative averments as to how the mortgage indebtedness had been settled. The relief sought, viz., a decree of satisfaction of the mortgage indebtedness, cancellation of the mortgage, and perpetual injunction of its foreclosure by the defendant, remained unaffected by the amendment. The amendment of the prayer for a decree over against the defendant, under one of the phases presented by the averments in the amendment, for any balance that might be ascertained to be due the complainant, was not inconsistent with the relief sought in the original prayer. The bill, as amended, was not open to the objection raised by the defendant’s demurrer, and the same was properly overruled by the court.

The complainant was a borrowing shareholder in the defendant company, a mutual building and loan association, incorporated under the laws of the State of Minnesota, with its headquarters and home office in the city of Minneapolis, tie subscribed for sixty shares of stock of the par face value of $100, paying a membership fee of two dollars per share. By the terms of the subscription contract, this stock was to mature at the end of five years, at which time the shareholder was to be paid its face value of $100 per share, he having complied with his part of the contract in the payment of the dues and assessments for which he as such stockholder under his contract was liable. On the day after subscribing for the sixty shares and paying the membership fee, he made application to the association for a loan ■which was subsequently obtained, and to secure the said loan the complainant executed the note and mortgage in question, and also placed with the defendant association his sixty shares of stock as collateral security for the ioan. The mortgage debt was made' due and payable at the time fixed for the maturity of the sixty shares of stock subscribed for and taken by complainant. The note provided for the payment of five per cent, interest and five per cent, premium per annum on the loan, payable monthly, and by the terms of the contract of loan, the note and mortgage were payable at the home office of defendant in Minneapolis.

One of the contentions of the complainant is that the subscription for the shares of stock and the borrowing constituted a single transaction, and ivas simply a con-, tract of borrow and loan, and that the form the transaction assumed, was a mere scheme and device to evade the usury laws, and that being' such a transaction, the case comes within the influence of the Falls Case, 97 Ala. 417. This contention, however, is not supported by the evidence. In the construction of the contract in the Falls Case, the facts which led the court to the conclusion that the transaction was that of a loan simply, the shareholder having no participation in the profits and no voice in the management and control of the association, are widely different from the facts in the case before us. In the present case the shareholder not only participated in the profits with other shareholders of his class, but also had equal voice with other shareholders, whether borrowing or non-borrowing shareholders, in the management and control of the affairs of the concern. The evidence we think clearly and satisfactorily establishes the dual contractual relations of shareholder and borrower borne by the complainant to the respondent, and that the respective duties and obligations of -shareholder and borrower resting upon him are separate and distinct, and upon this question, we fail to discover -anything that distinguishes this case in principle from the case of the So. B. & L. Asso. v. Anniston, etc. Co., 101 Ala. 582, which latter case was approved by this court in the recent case of Sheldon v. Birmingham B. & L. Asso., 121 Ala. 278.

It is tbo well settled to admit of controversy, that where a contract is made in one State to be performed in another State the parties may contract for the payment of the highest legal rate -of interest allowed by either State without offending against the usury laws of the other; the exception to the rule being, that this may not be done as a subterfuge and device, and where the purpose and intention of the parties is simply to evade the usury laws. — Hayes v. B. & L. Asso. 124 Ala. 663; McGarry v. Nicklin, 110 Ala. 559-566; Am. F. L. M. Co. v. Sewell, 92 Ala. 163-171; Hanrick v. Andrews, 9 Port. 9; Hitchcock v. U. S. Bank, 7 Ala. 433; Hunt v. Hall, 37 Ala. 702; Cubbedge v. Napier, 62 Ala. 518. There is nothing in the evidence from which it could be reasonably inferred that there existed any sinster motive in making the note given for the loan payable in Minnesota. This being the place of respondent’s home office, through which the loan was negotiated, and from ■which the money was sent, it was not unreasonable to stipulate for the performance of the contract as to payment at the home of the lender. ■ It was lawful, and being lawful, of itself, could not be subject to imputation of bad faith. Besides, the form of the contract was the usual and customary one employed by the defendant in the transaction of the business for which it was organized, in the various States in which it did business, as well as in its home State, before and since the making of the contract with the complainant, and no exception, to what the evidence shows to have been universal practice in making loans to its members, was made in the complainant’s case. The legal rate of interest in the State of Minnesota at the date of the contract, as shown by the statute of that State offered in evidence, was ten per centum per annum. This being true, it is immaterial whether the 5 per cent, denominated as premium, be regarded as additional interest or not, the total not exceeding ten per centum per annum on the loan, leaves the contract as to interest legal and non-offending as to the usury laws of that State.

This brings us to the consideration of the question of the alteration of the original stock contract as made by the agreement of June 29th, 1891. It might be here, stated, that while the original stock contract entered into by the parties, was in a sense an executed contract,' it was nevertheless in the performance of conditions attached to it continuing in its nature, and its completion dependent upon the performance of these conditions by the shareholder extending over a number of years. This rendered the- contract as to the payment by the company of the face value of the shares at the date fixed for their maturity; as well as the payment by the shareholder of the assessments imposed upon his shares, in its character executory. We think there can be no doubt that such a contract may be modified or changed by the parties without requiring a, new consideration to support the alteration; the mutual assent of parties being all that is necessary. — Robinson v. Bullock, 66 Ala. 548; Cooper v. McIlwain, 58 Ala. 296; Burnham v. Martin, 54 Ala. 122; Lea v. Cassen, 61 Ala. 312. Moreover, the change or alteration of the original contract made by said agneement of June, 1891, was not without a consideration. In the making of this agreement the respondent parted with a valuable right which it had, and the complainant released from a liability imposed upon him, under the original contract. By this agreement, the period for the maturity of the stock was changed from a fixed and definite term, to an indefinite time, and until the profits arising and appropriated for the purpose were sufficient to mature the stock, or until the value of the stock was sufficient to pay off the mortgage debt, when the same might be applied in discharge of said debt and all liabilities between the parties can-celled, and in consideration of this change, the complainant was relieved of certain assessments for which he was liable under the original contract. This liability the complainant recognized, and it was immaterial whether at the time of the alteration of the contract as per said agreement, these particular assessments had been actually levied and by the proper authorities, or not, as the fact of the existence of the liability, and a release therefrom, formed a sufficient consideration to support the new contract.

Under this new contract the complainant made all payments on his stock up to the 1st of September, 1894, as well as the monthly premium and interest on the loan, when he ceased to make any further payments either upon the stock or the loan. At this time the respondent held the sixty -shares of complainant’s -stock as collateral security for the loan, and also by the statute of Minnesota offered in evidence was given a lien upon the same to secure the loan made to the complainant. That the -stock had a cash withdrawal value at the time of and subsequent to the default in payments ■by the ■complainant, cannot be questioned, since this is settled by tlie 'Statute of Minnesota, under the law of •which. State said corporation was chartered. Section 28 of an act of the legislature of Minnesota relating to building, loan and savings associations, approved April 22d, 1889, as certified and copied in the record, reads as follows: “Whenever any such association shall declare any of its stock forfeited for non-compliance of the holder with any of its by-laws or regulations the said stock shall, if one year old, be sold by said association at a monthly meeting thereof to the highest bidder, and it is made the duty of such association at any such sale to bid in the stock so offered at its then withdrawal value and thereupon said stock shall be cancelled, but if a higher bid is received, the person making the highest bid shall have said stock assigned to him, and upon such sale said association shall pay to the member so forfeiting his stock the withdrawal value thereof as fixed in section twenty-seven of this act, less all of the fines and arrearges assessed against him.” By the provisions of this statute it was put beyond the power of the association to deprive the holder of stock añore than one year old, of its withdrawal value, for any non-compliance by saich holder with any of its by-laws or ordinances. — 4 Am. & Eng. Ency. Law (2d ed.), 1046. As shown by the coiuespondence between the parties, this right of the complainant to the withdrawal value of his stock, at the time he ceased making payments on the same was recognized by the respondent association, and also after the time that the association claims that the stock was forfeited by the general resolution passed by the board of directors. The facts in this case as to this question distinguish it from the case of the Southern Building & Loan Association v. Anniston Loan & Trust Co., 101 Ala. 582, where it was held that the forfeiting stockholder was not entitled to credits on the loan debt on account of payments made by him on his stock. There was no statute in that case giving withdrawal value to stock in the event of forfeiture by the holder of such stock, nor was there any recognition of such right by the association. We think an accounting should be had between the parties, and the withdrawal value of the 69 shares at the time of the default in payments by complainant, which were held by the respondent as collateral security for the loan, be ascertained, and when so ascertained should be credited upon the loan or mortgage debt, and the balance, if any, with interest, would constitute the amount to be paid by the complainant.

The decree of the city court being contrary to the views herein expressed must be reversed, and the cause will be rmanded for further proceedings’to be had in accordance with the conclusions above stated.

Beversed and remanded.