| S.C. | Apr 23, 1888
Lead Opinion
The opinion of the court was delivered by
We agree with the Circuit Judge and the special master, Mr. James Aldrich, who, in his able and elaborate report, has shown conclusively that there is no usury in the contract here brought in question. It would be very difficult to add anything to what is so well said in the report, and we shall not attempt to do so, further than to illustrate his views by two calculations based upon two different views of the case.
It seems that the appellant was not one of the original stockholders in the association, but after it had been in operation for more than a year he became a purchaser of fourteen shares, for which he paid the sum of f308.ll, and when the association had but seven years and five months of the nine years for which it was permitted to run by the terms of its charter, the appellant borrowed from the association, or bid off, as it is termed, at a discount of seven hundred dollars, the whole amount which he was permitted to do under the regulations, to wit, the sum of twenty-eight hundred dollars, so that after deducting the discount he received in cash the sum of twenty-one hundred dollars. Thereupon he executed the bond and mortgage upon which this controversy arises. The bond is in the penal sum of twenty-eight hundred dollars, conditioned for the payment to the said association of “the
Now% as the association could unquestionably loan to the appellant, or any one else, the amount received by him for the remainder of the term for which the association was to run, to wit, seven years and- five months, at ten per cent, interest, we will first see whether the amount which the appellant would have actually paid, assuming that he complied with the terms of the contract at the winding up of the association, would exceed the amount which he could have been legally required to pay under an ordinary contract for the borrowing of money with the rate of interest at ten per cent, per annum:
1st Calculation.
Amount borrowed for 7 years and 5 months at. 10 per cent, interest,- $2,100 00
Interest on same at 10 per cent, per annum, 1,557 50
Total amount due at maturity, $3,657 50
Amount which appellant actually pays under the contract under consideration as follows:
Amount paid when shares were bought, $ 308 11
“ “ per month, $28.00 for 89 months, 2,492 00
Amount of discount (so-called) surrendered, 700 00 $3,500 11
Difference in favor of appellant, $157 39
If, however, we make, a different calculation, based upon the
2nd Calculation.
Amount of interest to be paid by appel- • ■ lant according to the contract, $14 per month for 89 months, $1,246 00
Assumed value of shares to be surrendered, 2,800 00 $4,046 00
The sum actually borrowed, $2,100 00
.Interest on same at 10 per cent, for 89 mos., 1,557 50 3,657 50
Which would make an excess over ten per cent, of $388 50
But if this assumption should prove to be well founded, and each share at the winding up should be found to be worth two hundred dollars, then, under the terms of the contract, the appellant could not be required to surrender the whole of his shares, but only so much thereof as with the amounts actually paid in cash would be sufficient.to repay the sum actually borrowed with interest at the rate of ten per cent, per annum ; for that is the necessary effect of the provision of the constitution of the association above referred to, and was, doubtless, inserted for that very purpose.
Of course, when this contract was entered into, it could not possibly be known, with any degree of ’certainty, whether the shares would be worth-at the winding up as much as two hundred dollars each, and if they should not be worth that amount, as seems quite likely from the testimony of the secretary in this case, then it might become necessary for the appellant to surren
This case, it seems to us, differs very materially from the cases cited by the counsel for appellant. In Bollinger's Case (12 Rich. Eq., 124), the borrower executed his bond conditioned for the payment of two thousand dollars, with interest thereon at the rate of six per cent, per annum, while the sum actually received by him was only thirteen hundred dollars. This was clearly usurious, for the rate of interest then being limited to seven per cent., the borrower could only have been required, legally, to pay ninety-one dollars per year, whereas his contract required him to pay one hundred and twenty dollars per year. In Dorsey's Case (15 S. C., 462), the borrower received one thousand dollars, for which he contracted to pay interest at the rate of six per cent, per annum, and also an additional premium (as it was called) of seven 25-100 dollars per month, amounting to $87 per year, so that the borrower, for the use of $1,000, agreed to pay each year the sum of $60 as interest, plus the sum of $87, as premium (so-called), making in all the sum of $147, which he had to pay each year for the use of $1,000; whereas he could, legally, have only been required to pay $70 per year for the use of that sum of money, as the law then stood. So that, beyond all question, the contract in that case was usurious. In this case, as we have seen, the contract was of a very different character, and under it, in no view of the case, could the appellant be required to pay
As to the counsel fees, we see no reason why the appellant should not be required to pay them, as by his contract he expressly agreed to do.
The judgment of this court is, that the judgment of the Circuit Court be affirmed.
Concurrence Opinion
I concur in the result in this case, upon the ground that section 5, art. 6, of the constitution and by-laws, which forbids the collection of more than ten per cent, upon final settlement, being regarded as a part of the contract wdien money is borrowed by a stockholder, controls this case, and prevents it from being usurious.