40 Misc. 339 | New York County Courts | 1903
In December, 1898, the defendant Mary A. Murray became a member of the Metropolitan Savings & Loan Association, incorporated under chapter 122, Laws of 1851, now in the hands of plaintiff as receiver. As such member there were issued to her sixty-two shares of class “A” stock. Under the by-laws of the association she was required to pay dues on this stock, amounting to $15.50 a month. Upon becoming a member she immediately made application to the association for a loan of $5,400. This application was granted. At the suggestion of some of the officers of the- association $4,240 of the amount asked for was .obtained by the defendant Mary A. Murray from the Miagara County Savings Bank, to secure which she gave her bond and a mortgage upon the real estate described in the complaint in this action. The balance of the $5,400 loan applied for, being the sum of $1,160, was advanced to her by the association, and she thereupon executed and delivered to the association her bond and a mortgage upon the same property covered by the bank mortgage as security for the full amount of the loan. This mortgage was made a junior lien to the bank mortgage. The defendant Sheldon T. Murray is the husband of the defendant Mary A. Murray and joined with her in the bond and mortgage last above described. By this bond and mortgage the loan, association assumed in a limited or conditional way the payment of the bank mortgage; and it appears that the interest on the bank mortgage has been paid by the association and receiver down to^ July 1, 1902, amounting to $890.40. The bond and mortgage given to the association, among other things, provided for the
The defendants have paid to the association in cash $1,375. Of this sum $403 represent dues paid on stock at the rate of $15.50 a. month for twenty-six months, and the balance, namely, $972,. represent interest and premiums for twenty-four months on the: $5,400 loan. Mrs. Murray, it seems, was required to pay dues for two months preceding the date when she became a member, whichi accounts for her having paid dues for twenty-six months and interest and premiums for only twenty-four months. The monthly payment of dues, interest and premiums amounted to $56, and the last payment was made in December, 1900. Defendants thereupon made application to the association for a discharge of their mortgage, claiming that their understanding of its provisions entitled them to such discharge. The association refused to give such discharge and its officers thereupon explained to defendants the nature of their contract and the extent of their liability. The defendants thereupon accused the association of fraud and of having through its officers and agents induced the defendant Mary A. Murray to become a member and to procure the loan in question by means of false representations. It appears that the defendant Sheldon T. Murray called at the offices of the association several times thereafter, and had interviews with its officers respecting the transaction. And it further appears that defendants finally gave their promissory note to the association for $392 to cover seven defaulted payments of dues, interest and
The transaction was not usurious. Concordia Savings & Aid Association v. Read, 93 N. Y. 474; Mutual Benefit, Loan & Building Co. v. Lynch, 54 App. Div. 559.
The fraud, if there was any (and I do not determine this point), was waived by defendants when they gave their note to the association for $392, with full knowledge of the real nature of the Transaction into which they had entered.
"The principal question remaining for determination is, with 'wLat sums shall defendants be charged in this action, and with what payments shall they be credited? Suppose the defendant Mary. A. Murray, as a member of this association, holding sixty-two shares of its stock, had not borrowed any money from the association, and had not given her note to the association as above stated, but had paid monthly dues on her stock as required by the by-laws down to the time she defaulted, what would have been her status when the institution went into the hands of the receiver? Clearly she would have paid into the association $403 as dues on her stock, and she would have a credit on the books of the association for this item, together with her share in any
Row as to her status as a borrower. The association having become insolvent is powerless to carry out its part of the contract, and the defendants are, therefore, absolved from a strict performance on their part. Under these circumstances substantial justice cannot better be done than by placing the parties on the plane of the ordinary borrower and lender of money. Defendants received in cash from the insolvent association $1,160. They agreed to pay the association, as a condition of this loan, interest thereon at the legal rate; also interest at the legal rate on the $4,240 loaned them by the Riagara County Savings Bank, the association to take care of the interest on this bank mortgage. They also agreed to pay premiums amounting to $13.50 per month. These, premiums computed down to the time when the receiver was appointed amount to $540-, Plaintiff now claims to be entitled to recover these several items consisting of principal, interest and premiums, amounting approximately to $2,872 (depending on the time to which interest is computed), less the $972 which defendants have paid as interest and premiums. That defendants are chargeable with the $1,160 advanced to them by the association, and with interest thereon from the date of the loan, and with $890.40 paid by the association and receiver as interest on the bank mortgage, seems perfectly plain. But I am unable to find any just or equitable principle upon which they can be charged with the $540 in premiums. Ro reason seems to be advanced why they should be so charged except that they agreed to pay it. This falls far short of a satisfactory reason under the circumstances existing in this case. There is no justice or.equity back of such reason. What does this $540 represent in value received by the defendants that they should be charged with it? Absolutely nothing. They received $1,160 from the association,
This agreement, in so far as defendants obligated themselves to pay these premiums, would seem to be unconscionable, and, as between individuals, or any other sort of a corporation, would have been usurious. And now that the association has become insolvent and cannot perform its part of such contract, those having its affairs in hand must be satisfied with such a recovery as will reimburse the association for all it has loaned or paid out for the benefit of defendants, with legal interest thereon. Such a recovery is manifestly equitable. It neither wrongs nor does injustice to either party to this controversy. But to charge defendants with this $540 in premiums, which represents nothing that the association has parted with for their benefit or otherwise, and which represents nothing of value received by them, would be anything but equitable, and cannot be sanctioned by a court of equity.
The note which defendants gave for $392 to cover seven defaulted payments represents $283.50 of interest and premiums on the loan and $108.50 dues on stock. In respect to the defaulted payments of interest, it has already been pointed out that defendants should be and are charged therewith in this action.
Defendants are only entitled to be credited in this action with the $972 paid' by them as interest and premiums on the loan. They "cannot be credited in this action with the $403 paid as dues on stock for the reasons hereinbefore pointed out.
Ho steps appear to have been taken by the association looking to a forfeiture of the stock issued to the defendant Mary A. Murray, although the by-laws of the association seem to. provide for such a proceeding. Her stock should not, therefore, be declared forfeited as demanded by the receiver, but must remain in her name to the end that she may receive any dividend thereon that may hereafter be declared.
This reasoning leads to the conclusion that defendants are chargeable in this action as follows: "With amount advanced to them by the association, $1,160; with interest thereon at 6 per cent, from the date of loan to entry of judgment, to be computed; with interest paid by the association and receiver on the underlying mortgage, $890.40; and that they should be credited with the $972 paid by them as interest and premiums on the loan, and that plaintiff is entitled to judgment of foreclosure and sale for the difference.
Plaintiff should be allowed his disbursements in this action incurred and to be incurred, but no costs.
Judgment accordingly.