Sokoloski v. New South Building & Loan Ass'n

77 Miss. 155 | Miss. | 1899

Turbal, J.,

delivered the opinion of the court.

The appellee company was organized under the revised statutes of 1870 of the state of Louisiana, in which there is no reference to building associations. The statute authorizes any six persons to subscribe themselves into a corporation, with the ordinary powers of a corporation, and with power “to make by-laws for the proper management and regulation of the affairs of the corporation as may be necessary.” In pursuance of such statutory authority, the subscribers, Jules A. Blane and nine others, on the 10th of May, 1890, formed themselves into a corporation under the name of the New South Building and Loan Association, with power, among other things, to hold, receive, lease, purchase, improve, sell, convey, mortgage, and pledge property, real and personal, to borrow money, lend money on security, and to make and alter its by-laws at pleasure. . Said subscribers constituted' said corporation “to carry on business, and to establish branches in any parish of Lo-’-;-'-iana, or in any county of the United States.” They provided that the series stock fund of said corporation shall be used for the purchase and sale of real estate, for the building, renting, and selling of homesteads and other real estate, and for effecting loans upon mortgage security within the United States of America. They fixed the capital stock of said corporation at fifty million dollars, of which one thousand shares, at one hundred dollars per share, shall be guaranty stock, to be issued only for money, property, or services rendered. The by-laws o.f the corporation provided, among other things, that a series stockholder could borrow money at the rate of one hundred dollars for every share of stock of the par.value of one hundred dollars held by him, and should pay as a membership fee one dollar for each share of stock taken, ten dollars for expense on receiving his loan, and should pay monthly stock dues of seventy cents per month for each share of stock held by him, and six per centum per annum interest on the amount received as a loan, both payable monthly. For the trial of "the case it was agreed, among other things, that the company had borrowed the sum of one hundred and thirty-seven thousand and five hundred dollars, for which it gave its bonds, and that one hundred thousand dollars of said sum bore interest at the rate of seven per centum per annum, and thirty-seven thousand five hundred dollars bore interest at the rate of six per centum pqr annum. Sokoloski joined this association, and borrowed of it eight hundred dollars, to secure which sum he gave a mort-. gage on his homestead. He has paid the association nine hundred and twenty, dollars and seventy-nine cents, and this bill is to cancel said mortgage and for a decree against the association for the sum of money paid to the corporation .above what, he alleges, it is entitled to retain in satisfaction of said mortgage.

The contract of Sokoloski with the New South Building & Loan Association provides for premiums, not for one gross sum in consequence of open bidding for the advancement, but for a fixed montly premium of six per centum, to be paid each successive month until the loan shall be liquidated, and which fixed premiums, at the rate which the association’s answer shows the loan is being liquidated, must, in the aggregate, at the maturity of the stock, exceed fifty per centum of the loan. We find it hard to perceive how the taking of six per .centum per annum interest and six per centum premium monthly through the whole period the loan is to run, can be anything less than twelve per centum interest for the first stated period of forbearance, and a progressively increasing rate of interest for each subsequent period, until the liquidation of the loan. It is said by End. on Bldg. Ass’ns, sec. 394, that the taking of fixed premiums, unless authorized by distinct legislative authority, where the premium and interest together exceed the legal rate of interest, is usurious. . If the New South Building & Loan Association be authorized by the legislature of the state of Louisiana to take fixed premiums, yet such legislation could not have any operation in the state of Mississippi, and the taking of a fixed premium of six per centum, with interest at the rate of six per centum per annum added, is usurious. A domestic building and loan association is authorized by our law to exceed the legal rate of interest, but such is not allowed to a foreign building and loan association, and comity would not authorize an association of the last named kind to make contracts here, which, under our jurisprudence, are held to be usurious. The contract for the taking of six per centum premium and six per centum interest is opposed to our public policy, and is usurious and void. McCauly v. Association (Tenn.), 37 S. W. Rep., 212; Bank of Newport v. Cook (Ark.), 46 Am. St. Rep., 200-202, note, s.c. 30 S. W. Rep., 35; Association v. Wilcox, 24 Conn., 147.

The decree of the chancery court is reversed, and the case is remanded, to he proceeded in according to the principles herein announced.