95 Va. 686 | Va. | 1898
delivered the opinion of the court.
The only question to he considered in this case is whether the transactions between Smoot and the People’s Perpetual Loan and Building Association were usurious. The Circuit Court held that they were not.
This Association was organized under the charter granted by the judge of the Corporation Court of the city ol Roanoke in 18S7. By it the Association was authorized to make loans to its members, or others, and to receive as security for loans thus made their shares, either by way of redemption or hypothecation, and to take deeds of trust or mortgages on any real or personal estate or collateral security for the repayment of the loans or advances in such instalments as might be agreed upon. In the case of a redemption, the shares so redeemed were to be can-celled, but the members were in no wise relieved from their obligation to perform all the duties they had assumed to the Association, and for their failure to discharge them could be subjected to like fines and penalties as though their shares of stock had not been redeemed. It was made lawful for the Association to receive in advance interest on its loans, and to charge and deduct, upon the redemption of shares, such premiums for the privilege of having them redeemed as- might from time to time be fixed by the board of directors, or agreed upon between the corporation and the parties so having their shares redeemed.
In the preamble to an Act of the Legislature, approved January 23, 1896, p. 170, the charter granted by the court is set out in full, and it then proceeds as follows:
"And, whereas, said charter was duly accepted, and has been acted under by said Association; and, whereas, some doubt has
“Be it enacted by the General Assembly of Virginia, that said charter be, and the same is hereby, declared to be, as to all contracts entered into by said Association in accordance with the provisions of the aforesaid certificate, as valid to all intents and purposes as if originally granted by the General Assembly of Virginia.”
The contention on the part of the appellant is that the dealings between himself and the Association were usurious; that they cannot be maintained upon the theory that rhe relations existing between the company and its members were those pertaining to partnership; that a charter granted by the court will not relieve transactions entered into under it of the -imputation of usury; and that the act, approved March 1, 1894, entitled “An act to define the powers and limitations of Building and Loan Associations,” has no retroactive effect.
All these positions are well taken in the judgment of this court. In support of them we are content to refer to the cases of Crabtree v. Building Association, and Ware v. Building Association, just decided. Ante, pp. 670, 680.
It is further contended on behalf of the appellant that the act of January 23, 1896, in the first place, does not undertake to validate the contracts under investigation; and, secondly, that if such were the purpose of the act, it would be unconstitutional and void.
The charter granted by the Corporation Court confers power upon the Association thereby created to receive in advance interest on loans, and to charge and deduct upon the redemption of shares such premiums for the privilege of having them redeemed as may from time to time be fixed by the board of dir-ectors, or agreed upon between the corporation and the parties so having their shares redeemed. The Association was authorized to pass by-laws, and create such fines and forfeitures as might be
These provisions in the charter seem sufficient to warrant the dealings which took place between Smoot and the Association. A doubt was entertained as to the efficacy of the charter granted by a court to protect a transaction which could be questioned upon the ground of its usurious nature, and in order to put that doubt at rest resort was had to the legislature. The mischief which it was intended to remedy by the act under consideration is apparent. The purpose of those who sought legislative intervention was to remove the taint of illegality from contracts theretofore made by the People’s Perpetual Loan & Building Association. The charter was recited in the preamble of the act. The motive of the act is declared upon its face to have been to quiet doubts that had arisen with respect to the powers conferred upon this Association by the charter granted by the court; therefore, it was enacted that “the charter be, and the same is hereby declared to be, as to all contracts entered into by said Association in accordance with the provisions of the aforesaid certificate, as valid to all intents and purposes as if originally granted by the General Assembly of Virginia.” There are some things so clear that the attempt to elucidate them serves rather to obscure, and we find ourselves confronted by this difficulty in the endeavor to render more plain and certain the meaning and scope of this act. The charter and all contracts made in accordance with its provisions are declared to be as valid to all intents and purposes as if originally granted by the General Assembly of Virginia. The question, therefore, resolves itself into one of power upon the part of the legislature, for the intent seems to be too manifest to be a subject of real controversy.
It is claimed by appellant that the construction which we have given to the act renders it unconstitutional, the legislature being without power to confer such privileges.
In support of this position he relies upon sec. 6, Art. 1, of the
This Commonwealth, on the 29th day of June, 1776, adopted a Bill of Rights and Constitution and proclaimed herself a sovereign and independent State, five days before the birth of these United States, a circumstance, it may be observed in passing, which should fix the date of our independence, and be kept in perpetual memory by being embodied in the writs of courts, and the formal acts of the various departments of our State government. In the paragraph quoted from that Bill of Rights we have the statement of a general proposition followed by an illustration which shows beyond peradventure the evil at which the provision under consideration was directed. Our forefathers were wise and practical men. They were neither political speculatists, nor dreamy enthusiasts. They did not strive for an impossible equality, such as has never existed in any society where men have ceased to be equally savage or equally wretched. They did not seek to establish a government theoretically perfect, but, guided by the light of experience, it was their aim to found institutions under which their descendants, secured in the enjoyment of life, liberty, and property, might be free, prosperous, and happy so long as they possessed the wisdom and virtue essential to the preservation of their glorious heritage. They knew the wrongs by which they had been oppressed, and the evils which they had endured under a government of hereditary magistrates and rulers, and it was to shield themselves and posterity from their recurrence that the immortal Bill of Rights was adopted, which was, is, and will remain, the noblest and most comprehensive declaration of the rights of man.
Ror more than a century we have lived under that great charter of freedom. During that time corporations without
A different view, however, has been taken by other courts. In Loan Association v. Robinson, 69 Ala. 413, it is said: “The General Assembly ordained the statute against usury, and its power to designate transactions which shall be deemed offensive to, or which shall be excepted from, the influence of the statute, cannot be questioned. When that body lends express sanction to a particular transaction, that transaction is withdrawn and excepted from the operation of the statute.”
The Court of Appeals of Mississippi, in the case of Williams v. Cammack, 27 Miss. 209, held that “The clause in the constitution which declares that ‘no man or set of men are entitled to
In Town of Danville v. Pace, 25 Gratt. 1, a statute was considered wbicb took away from corporations tbe right to make tbe defence of usury. It was retroactive in its operation, but was beld to be constitutional by this court in a luminous and convincing opinion delivered by Judge Staples.
If a corporation may be denied tbe right to plead usury as to existing contracts, is it a greater stretch of authority upon tbe part of tbe legislature to create a corporation to which individuals may by their voluntary contracts bind themselves to pay more than tbe rate of interest allowed by law? In tbe one case tbe legislature was beld to bave tbe power to deprive corporations of a right conferred by existing law; in tbe other case tbe power of the legislature is invoked to remove a disability to contract which it bad imposed.
Statutes wbicb validate contracts, otherwise invalid, are sustained wben “they go no farther than to bind a party by a contract wbicb be bas attempted to enter into, but wbicb was invalid by reason of some personal inability on bis part to make it, or through neglect of some legal formality, or in consequence of some ingredient in tbe contract forbidden by law.” Cooley on Con. Lim. (6 ed.), p. 460.
We are of opinion tbat tbe act of January 23, 1896, is constitutional; tbat it suffices to remove any doubt tbat may bave existed as to tbe authority of tbe Association to contract and deal with its members in tbe manner disclosed by this record; and tbat therefore tbe transactions here complained of are not usurious.
Tbe arguments wbicb we bave considered, wben addressed to courts, call for a decision upon tbe constitutional powers of tbe
These wise and pregnant observations were delivered more than twenty-five years ago, and during all of the intervening period legislatures and courts have continued to recognize and foster Building Associations.
We find no error in the decree of the Circuit Court, and it is affirmed.
Affirmed.