29 N.J. Eq. 389 | New York Court of Chancery | 1878
A number of building loan associations in the city of New Brunswick agreed to lend money to the Masonic Hall Association of that place, on security of mortgage of the real estate of the borrower. The mortgages were to be concurrent liens on the property. The mortgages by which the repayment of the loans was secured were in the form usual among such associations, and in accordance with their well-known methods. That which was given to the complainants acknowledged that the Masonic Hall Association owed to the building loan association the sum of $50,000, and “ for the better securing and more sure payment of” that money, and in consideration of one dollar, conveyed the premises to the latter association, with the following proviso: “ that if the party aforesaid of the first part (the mortgagors), or their successors, do and shall well and truly pay, or cause to be paid, to the said pai’ty of the second part (the mortgagees), or their assigns, the interest on the said principal sum of $50,000, together with the regular monthly installments of one dollar on each share of stock owned by the said The Masonic Hall Association of New
The Masonic Hall Association borrowed the $50,000 on the basis of their ownership of two hundred and fifty shares of the stock of the building loan association, and they made an assignment to the latter, accordingly, of that number of shares, as collateral security for the payment of the money intended to be secured by the mortgage; but, in fact, they owned only two hundred and fifteen shares, and never acquired any more.
The Empire Building and Loan Association in like manner failed to obtain, as collateral security, the full number of shares of stock which the assignment .to them of stock as collateral security purported to transfer.
It is insisted by the defendant mortgagees that.the stcck held as collateral to the loans secured by the building loan association mortgages should net be sold, but that the associations holding it should be permitted to take it cn account of the money due on their mortgages at the amount which the Masonic Hall Association would, by the regulations of the associations, be entitled to receive for it on withdrawal
The question is not between the association and the delinquent stockholder, but between the association, as mortgagee, and the 'other associations holding mortgages on the same property. These latter associations have the right to have the stock sold in the market. The purchaser, as before suggested, must take it burdened with the obligation, on his part, to pay all dues and fines thereon,, and when these shall have been paid the delinquency will have ceased.
A further question was discussed on the hearing, whether the fines, the payment whereof was intended to be secured by the mortgage, are recoverable for the time which has elapsed Since the filing of the bill to foreclose. The obligation to pay the monthly installments and interest did not cease with the commencement of the suit; neither did the obligation to pay fines in case of default to make these payments. Though they arc penalties, they are lawful, and it is an important part of the contract that they shall be paid in ease of default in the payment of the interest.