32 A.2d 221 | Pa. | 1943
This was a proceeding under the Act of June 11, 1879, P. L. 141, as amended by the Act of May 13, 1931, P. L. 123, to compel the satisfaction of a building and loan association mortgage.
Charles I. Wetmore and Elsie M. Wetmore, husband and wife, became borrowing shareholders of Peoples Mutual Building and Loan Association on August 22, 1927. On that date they were granted a loan by the association in the sum of $4,500. and gave as security their bond and mortgage on premises owned by them in New Castle, Lawrence County. At the same time they assigned 22 1/2 shares of stock in the association "as collateral security for the payment of said principal debt and interest thereon, the monthly dues, fines, premiums of insurance, or arrearages of any kind that may *400 become chargeable to said Charles I. Wetmore and Elsie M. Wetmore, his wife, under the Constitution and By-Laws of said Association." Monthly payments of $45. were made to the association and credited in the passbook and the association's individual ledger, $22.50 to dues and $22.50 to interest, until August, 1937, when the payments were increased to $50, made up of $27.50 dues and $22.50 interest.
On August 20, 1938, Charles I. Wetmore inquired of the secretary of the association why the loan "hadn't been paid out" and was advised that "the reason it hadn't been paid out was because they had gone through a period of depression and there wasn't enough, wasn't as much earnings in the organization as they thought there would be, that they had lost some property, and for that reason it had run a little bit longer." He then requested "a statement of how much I owed them, the balance on it," and was furnished a statement, on a printed withdrawal form, indicating $3,748.25 as the withdrawal value of the shares and a balance of $751.75 plus a satisfaction fee of $.25 if paid on or before September 17, 1938. The Wetmores made no request to withdraw or cancel their shares, but continued to make monthly payments as before, until appointment of liquidators for the association on June 5, 1939. On receiving notice of liquidation Charles I. Wetmore "went down immediately and asked them, told them I wanted to pay the balance on it before getting out, before liquidation; they said they wouldn't take it . . ." The Wetmores were never in default and the total of the payments made by them to the association exceeds the face amount of the mortgage plus interest.
On September 11, 1941, more than two years after insolvency, the Wetmores filed this petition under the Act of 1879, asking the court to compel satisfaction of their mortgage. They contended that under the language of the bond demanded and received from them by the association it was obligated to regard all payments *401 on the stock as payments in reduction of the loan, with the result that the indebtedness has been paid in full, or, in the alternative, that irrespective of the terms of the bond they had the right to compel the association to apply the value of their shares as payment on account of the loan, and that the request of Charles I. Wetmore for a statement and its issuance by the association implied an exercise of such right which was not affected by the association's later insolvency. After hearing on the petition and answer, the trial judge entered a decree nisi as follows: ". . . due proof having been made that the full amount for which the mortgage in suit was given has been paid, it is ordered, adjudged and decreed that the mortgage . . . shall be satisfied of record and the bond given therewith and any judgment entered thereon be cancelled and marked satisfied . . ." Exceptions filed by the liquidating trustees were dismissed, after argument, and a final decree was entered in favor of the Wetmores. This appeal by the liquidating trustees was then taken.
In York Trust, Real Estate Deposit Co. v. Gallatin,
Here the facts are not the same as in the York Trust case. There the language of the bond was that "all moneys paid or hereafter paid by me into the association on the stock . . . shall be taken and considered as payments on and in liquidation of this bond"; in the present case, that "if at any time default be made for the space of six months in the payment of monthly dues, interest, or fines for the nonpayment thereof, then, and in such case, the credit given on such principal sum shall cease and determine . . ." The court below conceded this language is "ambiguous" and may have been *403
intended to mean simply "that any allocation of payments by the officers of the association shall be liable to be divested" in case of a default, but held it should be construed to mean "that payments as made shall be credited on the mortgage" and that "the language of the bond regarding appropriation, as thus interpreted, is decisive: York Trust, etc. Co. v. Gallatin,
Even if the facts of the present case were the same as those of the York Trust case, appellees would not be entitled to prevail. While recognizing the right of appropriation, our recent decisions on the subject indicate its exercise will not be permitted in such a way as to enable borrowing members to obtain a preference over non-borrowing members in the event of a future insolvency. In Sullivan Sons Mfg. Co. v. Ideal B. L. Assn.,
The decree of the court below is reversed and the record is remitted with instructions that the petition be dismissed. Costs to be paid by appellees.