Sumter Building & Loan Ass'n v. Winn

45 S.C. 381 | S.C. | 1895

Lead Opinion

The opinion of the Court was delivered by

Mr. Justice Pope.

It is made to appear by the “Case” that, in the year 1883, the defendant, D. James Winn, along with certain other citizens, induced the legislature of this State to incorporate them, their associates and successors, into what was called the Sumter Building and Toan Association, whose declared purpose it was to buy and sell real estate in the county of Sumter, in this State; to make loans of money secured by mortgage of real estate, and the hypothecation of bonds, stocks, and other choses and personal property, to its members and stockholders and others in its corporate name, whose capital stock should be 1,000 shares; said shares to be paid by successive monthly instalments of $1 on each share as long as the said, association shall continue. The holders of such shares to be subject to such fines, penalties, and forfeitures for default in this payment as the regulations and by-laws of such corporation may prescribe. Among other things, the charter prescribed that, whenever the funds and assets of the association shall have accumulated to such an amount that upon a fair division thereof each stockholder, for each and every share of stock held by him or her, shall have received $200 on the value thereof in property or assets, and such division shall have been made, the said association shall cease and determine: Provided, however, That in case the said association shall not have closed its operations and affairs as above provided for within a shorter period, then this act shall not continue in force beyond ten years. See 18 Stat. at Targe, 604. The plaintiff organized under its charter in the year 1885, the defendant being a shareholder. In December, 1885, the sum of $1,600 was sold, and he became the purchaser at a little more than forty-one cents to the dollar as a premium; hence he received $960 in cash, leaving a deferred payment of $640. To secure this loan he pledged eight shares of his stock in said association, and mortgaged ten acres of land, whereon was his residence, to secure said loan. This shareholder, borrower, paid, on the 15th of each month, $8 on his eight shares and $8 as interest, which was regularly done until the 15th May, 1893, when he refused to make further payments, because on that day the association passed a resolution by which they ordered all non-borrowers to cease making their monthly payments on their shares, and also to receive $128 per share of their stock, while the borrowers were required to pay $1 per share until December 15, 1893, when they should then cease such paj'ments.

According to the by-laws, three months of default should happen before suit should be brought against a borrower,, so that on September 19, 1893, an action for foreclosure was brought against Mr. Winn. This relief, in his answer, he denied the plaintiff was entitled to, setting up, in his answer, that the loan to him was usurious, and also setting up a counter-claim for the usurious interest he claimed he had already paid. Under an order of Court, testimony was taken by the master. The action came on then to be heard before his Honor, Judge Townsend, whose decree should be .reported, as well as the exceptions thereto by both plaintiff and defendant. The decree of Judge Townsend overruled the plea of usury, but decided that the plaintiff had broken its contract with defendant, and, therefore, had no right to foreclose its mortgage. Of course, the exceptions of the plaintiff seek to reverse so much of the decree as decides that it has no cause of action; while the defendant, on the other hand, assails the decree for overruling the defense of usury, and denying the counter-claim for usurious interest.

1 We find no difficulty in reaching a conclusion on either .of the contentions. By the charter, as well as the by-laws of this association, its life for ten years was to be devoted to the mutual benefit of its members, whether borrowers or non-borrowers, to the end that each share of the par value of $100 should by its earnings be worth in money, or money’s worth, $200. Within the period of ten years, therefore, the association could not voluntarily close up its business until each share of stock was worth $200. In May, 1893, when the resolution was passed to divide out its cash assets among its non-borrowing members, said shares, according to the testimony, were only worth $128, and, if all the paper was collected, such shares could not exceed the value of $140 per share. This resolution, which was carried into effect by the plaintiff association, was a palpable infraction of its contract. Thereby the plaintiff lost its right to sue the defendant for non-payment of monthly instalments and interest, and to foreclose this mortgage. The principle decided in Buist v. Bryan, 44 S. C., 121, is applicable here.

2 So far as defendant’s contention as to usury is concerned, he is in no plight to ask a court of equity to enforce his claim of usury. But we understand the defendant, as appellant, to contend that, inasmuch as his stock (eight shares) is worth more than the debt of $960, the Circuit Judge erred in dismissing the action without giving him a judgment against plaintiff for this difference. No such question was raised by the pleadings or seems to have been presented to the Circuit Judge. We cannot entertain a proposition imputing error to the Circuit Judge, when his decree is silent on such propositions, or the pleadings are silent thereon, or when it does not appear that the question was submitted to the Circuit Judge for his decision. It seems to me that the Circuit judgment should be affirmed generally, and that it should be the judgment of this Court that the judgment of the Circuit Court be affirmed; but the majority of the Court think that the plaintiff is entitled to no relief,'but that the Circuit Judge should have retained the cause, to the end that the defendant might obtain judgment upon his counter-claim for damages growing out of the usurious interest charged by the plaintiff on its loan of money to the defendant, and to this extent the Circuit judgment should be reversed. I cannot hold with this last view, for, in my judgment, the defendant in equity is entitled to no such relief. He has obtained from others this usurious interest, which has entered into the value of the shares he holds of the capital stock of this building and loan association. He should be required to do unto others as he now claims this association should do unto him, before the latter should be allowed unto him. Hence I dissent as to this conclusion of the majority of the Court.

It is the judgment of this Court, that so much of the judgment of the Circuit Court as denies a right of action herein to the plaintiff be affirmed, but as much thereof as denies to the defendant a judgment against the plaintiff for usurious interest, be reversed, and that for this purpose the cause be remanded to the Circuit Court.

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Concurrence Opinion

Mr. Chief Justice McIver.

I concur in so much of this opinion as adjudges that there was no error on the part of the Circuit Judge in holding that the plaintiff has no cause of action against this defendant; but I am unable to agree that there was no error in rejecting defendant’s counter-claim for double the sum paid by him as interest in excess of the lawful rate. It seems to me clear that the transaction, let it be disguised as it may be, was usurious. The sum actually loaned was only $940, and upon that sum more than the lawful rate of interest has been paid by the defendant, and for that excess it seems to me that defendant should, under the statute, have judgment on his counterclaim. I think, therefore, that to this extent the judgment below should be reversed and the case remanded, for the purpose of enabling defendant to obtain judgment for the sum to which he is entitled.

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Concurrence Opinion

Mr. Justice Gary.

I concur in the opinion of Chief Justice Mclver. But the reason why I think the plaintiff has no cause of action against the defendant is because the contract is usurious, and more than the sum actually loaned, without interest, has been paid.