Summary
In Concordia Savings Aid Assn. v. Read (93 N.Y. 474) the court decreed the validity of a bond and mortgage similar to the one here under foreclosure, and held that although Meier, the mortgagee, did not receive the entire amount named in the mortgage, the company retaining the amount of the premiums, this did not render the loan usurious, and that it was lawful for the company to provide that default in the payment of dues, fines and penalties would mature the mortgage.
Summary of this case from Mut. Benefit Loan Building Co. v. LynchOpinion
Argued October 1, 1883
Decided October 16, 1883
O.O. Cottle for appellant.
Adelbert Moot for respondent.
The complaint alleges that the plaintiff is a corporation, created by and under an act of the legislature of this State, entitled "An act to incorporate mutual loan and accumulating fund associations," passed April 10, 1851, and the several acts amendatory thereof, and supplementary thereto. The answer in reference to these allegations simply alleges that the defendant has no knowledge or information sufficient to form a belief, as to whether the plaintiff is a corporation or not created by or under the laws referred to. This was not sufficient to put plaintiff upon proof of its corporate existence. The language used certainly has no greater force than a general denial of the whole complaint would have. It is not tantamount to an affirmative allegation that the plaintiff is not a corporation. The statute (Chap. 508 of the Laws of 1875) in force when this action was commenced, provided that, "in suits brought by or against a corporation created by or under any statute of this State, it shall not be necessary to prove, on the trial of the cause, the existence of such corporation, unless the defendant shall have alleged in the answer in the action, that the plaintiffs, or defendants, as the case may be, are not a corporation, nor unless the allegations in the answer" are verified. The Code (§ 1776) now prescribes that before a plaintiff shall be required to prove its corporate existence, the answer must contain "an affirmative allegation" that it is not a corporation. This section is simply a re-enactment of the prior law.
The proof was ample to show that Meier was a member of the corporation. The bond and mortgage both describe him as a member. He paid his dues as a member, and, under the constitution of the association, and the statute under which it was organized, he could not have received the money for which the bond and mortgage were given unless he had been a member. It was not necessary for him to subscribe the original articles of association to become a member; but he could become a member after the original articles had been filed. (Laws of 1851, chap. 122, § 3.) The constitution of the association provides that "its members shall be such persons who have signed the constitution, and have subscribed for one or more shares, or who have received loans from the association." Meier had signed the constitution, and received a loan, and hence he was a member.
Article 7 of the constitution provides, that "every member receiving a loan from the association binds himself to pay a weekly contribution of twenty-five cents, and fifteen cents interest for every share so received, and for such a time as shall be required to pay the holder of every share $125, including the premium allowed by such shareholder;" and article 23 provides that "if each and every member shall have received for each and every share the sum of $125, deducting therefrom the premium paid by his own consent, then this association shall cease and determine, and all mortgages and other securities shall be discharged." The claim on behalf of the defendant, therefore, is that Meier was bound to pay upon his bond and mortgage his weekly dues and interest, only until the association had received money enough to redeem all the outstanding shares, and that it was incumbent upon the plaintiff to prove that there were shares outstanding and the amount required to redeem them. We think the proof was prima facie sufficient. The plaintiff was organized April 1, 1876, and the number of its shares was limited to one thousand at $125 each. A number of persons signed the articles of association and they must have been shareholders. The association had received money enough from the dues of its members to make the advance to Meier, secured by his bond and mortgage in August thereafter, and hence there must have been a large number of members who paid dues upon shares held by them. To furnish a fund for the redemption of the shares, each member paid for each share held by him the weekly sum of twenty-five cents. Thus there would be paid upon each share $13 every year, and if nothing but the dues were paid by members, it would take more than nine years to accumulate funds sufficient to redeem all the shares. If the interest, premiums, fines and penalties received amounted to more than sufficient to pay the losses and expenses of the association, the shares could be redeemed in a less time. Here Meier stopped making any payments on his bond and mortgage, or as a member of the association, on the 11th day of June, 1877, less than one year after he obtained the money; and this suit for the foreclosure of the mortgage was commenced in July, 1878, less than two years after he obtained the money. Hence by no possibility could money enough to redeem the shares have been received by the association from its members in June, 1877, or July, 1878. The evidence was, at least, sufficient to throw upon the defendant the burden of showing, if she could, that all the outstanding shares had, in some way, been redeemed so as to entitle Meier to have the mortgage discharged.
It matters not whether the money secured by the bond and mortgage be called, as it is in the constitution of the company, a loan to Meier, or simply an advance upon his shares. The bond and mortgage were given to secure the repayment of the money in the manner and upon the terms therein mentioned, and it is clear that the money became payable.
No material error was committed by the trial court in the computation of the amount due upon the mortgage. The mortgage was given to secure the payment of the precise sum advanced or loaned to Meier, to wit, $1,875. It is true, that at the time the mortgage was given, Meier did not carry away with him the full sum of $1,875. The constitution of the association provided that "in case there are several members applying for a loan at the same time said loan shall be given to the member paying the highest premium therefor, to the benefit of the association." The taking of a premium in such case is sanctioned by the act of 1851, as amended by chapter 564 of the Laws of 1875, and does not render the loan usurious. Meier paid for this loan a premium of $630, and that sum was paid out of the $1,875, and the balance only was actually paid to him. But the whole sum was loaned or advanced, and, out of it, he paid the premium which went into the treasury of the association for the benefit of all the shareholders, Meier included. The scheme of the association as embodied in the law of its creation and in the bond and mortgage, was that this sum could be paid back by payments of weekly dues of twenty-five cents per share to apply on the principal, and fifteen cents per share for interest; and if these payments were made, and also all fines and penalties imposed upon him as a member, then his bond and mortgage were to be void; and all payments were, in any event, to cease so soon as enough money had been contributed by all the members to redeem all the shares. But in order to have the benefit of these gradual, deferred payments, it was incumbent on Meier to make them as they fell due, and to remain a member of the association by the payment of his dues, interest, fines and penalties. If he did not make these payments then he was to pay back the money which was advanced to him, and so it is provided in the bond and mortgage.
This is not a case where a larger sum is made payable in consequence of the non-payment of a smaller sum, and payment of a larger sum is not imposed as a penalty. But this is a case where the whole of a specified sum becomes due because the partial payments are not made as stipulated, and the principles of law which authorize courts of equity sometimes to relieve from forfeitures do not apply to such a case as this.
It is stipulated in the mortgage that, "if the contributions, interest, dues or penalties herein specified shall at any time remain due and unpaid for the space of three months, then and in that case the whole sum of $1,875, and the interest due thereon and all dues, fines and penalties owing by the said Meier to said association by the terms of the constitution, rules and regulations thereof shall be deemed due and may be collected." Therefore the trial court did not err in taking the sum of $1,875 as the basis of its calculation, and no substantial error was committed in arriving at the sum for which the judgment was ordered.
We have thus, we think, covered the main allegations of error on the part of the appellant, and we reach the conclusion that the judgment should be affirmed, with costs.
All concur.
Judgment affirmed.