100 Tenn. 121 | Tenn. | 1897
The complainant is a building and loan association regularly organized under the laws of this State. The defendant, Woods, was a shareholder in the association, and, as such, borrowed from it $2,500. Thereafter he paid to it in monthly installments the premium charged for the loan, as well as interest upon it at the rate of six per cent, per annum. These payments he continued to make for a number of years, when he returned to the association the exact sum which he had originally received, and took up the note executed by him at the time of the loan. While thus its debtor, he at the same time carried his stock in the company, paying monthly the dues which accrued upon it. This he did for about twelve months after he had' discharged his debt, and then, as was his right under the law of the association, he turned over his shares of stock to it, and, upon a settlement, received from it the sum of $742, which was paid by it and received by him as their surrender value. The statement upon, which this settlement was made was as follows:
Dues paid_$675 00
Deduct therefrom one-sixth expense fund_113 50
Leaving balance of___$503 50
Add eight per cent, of apportioned profits. 179 50
Total amount paid Woods on withdrawal_$743 00
So far as the record discloses, no complaint was made by the defendant, Woods, at the time, that he did not get full value for his stock, nor does he now insist that any advantage was taken of him in the settlement. On the contrary, if he is right in his present contention, then, as a matter of fact, upon the agreed statement on which this cause was tried, he received, as its result from the complainant company, at least $235.75 more than his stock was worth, and to this extent the association, rather than the defendant, was the victim of the settlement.
Some time thereafter, in Post v. B. & L. A., 97 Tenn., 408, and in McCauley v. B. & L. A., Id., 421, it was held by this Court that loans made by a building and loan association at a fixed premium, in excess of the legal rate of interest, without free and competitive bidding, were usurious. As the loan to Woods was in this category, upon being advised of this holding, he instituted an action to recover the monthly premiums paid by him on his loan, upon the ground that they constituted usury. In the meantime, the association having become insolvent, its affairs passed into the hands of a receiver. Assuming its defense to be embarrassed at
We entirely agree with that Court in its disposition of this cause. It is true we have held on more than one occasion that there is a “ distinction well settled between the borrower’s relation to the association as a borrower and as a stockholder,” yet while not “indissolubly connected,” we have recognized that the ‘ ‘ one is clearly dependent on the other.” Post v. B. & L. A., supra. It is also true that, under oxxr statute, usury paid may be recovered by the borrower or his representative from the party receiving it (Shannon’s Code, § 3504); and, further, that as a general rule, a settlement of the debt not only does not preclude an action for its recovery, but, on the contrary, is a condition precedent to its maintenance. Turney v. State Bank, 5 Hum., 406.
But we are not dealing now with the ordinary case of lender and borrower, where, though each is a participant in an agreement inhibited by the statute, yet out of tender consideration for the latter,
The decree of the Court of Chancery Appeals is affirmed.