Evening star. [volume] (Washington, D.C.) 1854-1972, 1873-11-24
Largest Circulation in the District
Reading Matter on Every Page.
WASHINGTON CITY:
MONDAY.,,...N November RI. 1873
The Building Associations I'm Court


The learned Judge may sustain his ruling, but
at present the illegal mind" of the Washington
bar has been taken by surprise, as, indeed, have
been the building associations. One or two
lawyers Of repute have, indeed, shaken their
heads ominously, and said the Judge has pro-
mulgated good law" The building associa-
ton question has been announced once or twice
from the bench as "a muddle," and both judges
and lawyers seem somewhat to have made a
merit of their obfuscstOn on the sub
ject of their practical working, or fuan-
c al system. This foggy condition has
been much increased by the practice OF
those lawyers who clients have been defendants
in building association suits. Their custom has
been to describe building associations as fnan-
eial coTmoTants, ShylOcks in the guise of bene-
factors ,desPOilers Of poor mems homes, and other
pathetic phrases calculated to enlist the sympa-
thies OF judge and jury on the side of the de-
faulter in building association. This style of
presenting the case OF the delinquent in a yolun-
tary contract may 90 very well as the orna-
mentation of a speech to the gentlemen of the
jury or TO an easy going judge, but really
what difference can there be between the obi
CATION to fulfill a voluntary contract made with
an association of persons, and a voluntary CON
tract made with one person? Auditor Walter
). Cox, in his report in the Halter case, July
10, 1859, sums up the conditions under which
building associations operate, as follows:
Upon the general question, how far the faint
OF usury AFFECTS tho operations OF these building
associations, there was much discussion in the
late circuit court of this District, and one or
MORE decisions. Itmay now be regarded as settled
Jaw, thlnk that the principle OF these societies
Is not at all In conflict with the usury laws The
theory IL, that the members make monthly con-
trlbuuons prOporti0ned to the amount of stock
subscribed by them, which are to be invested,
re-inyested, and compounded, until a certain
amount can be divided to each share. But in
order to realize the benefit of the association
immediately' the members are willing to dis
count these future dividends, to receive them
now at their present value. This val ue is as
certalned by exposing them TO competition.
When the amount of one OF more shares are
received from the monthly contributions, 1t is
offered and bid for, and whoever is willing to
allow the largest discount, o., as il is called
the highest premium, gets it. IL is, in short a
mere sdvance TO a partner OF his share in the
partnership assets. When the adv ance is made
the partner continues TO pay his monthly con-
ulbuti0ns, and, in fact, doubles them where he
buys the whole amount to which he is entitled.
He Is also bound to pay a stipulated fine for
every default in the payment OF his dues. This
subject was examined at considerable length
by W. Redin, the late auditor of the court in
2 case In the late circuit court, Sweeny e al. rs
rowing heirs, 1ot9 equity. His report contains
tull examination OF the English authorities
ana the validity of the transaction in that case
was sustained. He, however. rejected the fines
clalmed. The bill was filed in that case by the
treasurer OF the Northern Liberties Building
Association They sought the active aid of the
court 10 enforce their claim, which consisted in
Part OF penalties, and the auditor rejected the
lines UPON the general ground of the unwilling
ness OF the court to enforce penalties. [ believe
his views were sustained by the court In
another case, John johnson rs. Trust res Potc
mac Building Association, the debtor was COM
Piainant, and filed his bill to enjoIn the sale of
the property mortgaged TO secure the payment
OF his dues. The same question of usury was
reviewed and decided by the court in favor of
the association, and they further refused to
interfere 10 protect him from the collection of
the fines by sale, on the ground that there ap-
peared nothing oppressive in the fines, aud
equity would, in such case, leave the complain
ant to his legal rights and remedies. The fires
or penalty, IN fact, Is merely an additional sum
which the debtor Is TO pay in case of defaultin
the payment OF his dues. The Supreme Court
OF the L nited States decided this TO be not
usuriOus. The present is the identical case of
debtor endeavorlng TO prevent the enforce
hent OF his deed Of trust aad is within the
ruling referred to.
This is a very clear and concise statement of
the case, and the auditors report, from which
the above Is an extract was on the very next day,
July l6, ls69. "duly ratified and confirmed By
Judge Onn, justice of the Supreme Court of the
District of Columbia, sitting in bankruptcy.
building associations are sometimes alleged to
DC nolaers and disbursers of the capital OF the
wealthy. The facts are precisely the reverse
L ne funds OF building association are the con-
tioutions, and often the only savings, OF
tnose who have no bank accounts,
OF the laboring man, the stipendiary clerk,
of business men with small capital, and of
women and minors, who are thus induced
to set aside frcm one to twenty dollars per
month in order to provide for "s rainy day." or
TO obtain small homesteads that they can pay
for by advancing each month q small percent
age beyond the hoUse-..ent which otherwise
"ousd es "~pOsited, never to return in the
poSkets OF a landlord. As the contributions are
voluntary and recoverable with interest at
tnlrty days notice, so the purchases, confined
exclusively to members, are likewise voluntary,
and are made under printed regulations, which
each member has ample time to study. After
funds are obtained he can settle his account any
time he has the ability and desire to sever his
connection with the institution. 1t is true that,
as the funds are sold at auction, a purchaser
may, in the excitement and rivalry of bidding,
oyerstep the bounds Of prudence and make rash
and expensive purchases. But is he not liable
70 the same blunder in any other purchase?
suppose a bidder at our city horse bazaar gives,
a hundred dollars for a horse not worth fifty; liz
the suctioneer to be cited before the
CouIts Ier violation of law or equity?
The purchaser Of money in a building associ-
alton has this advantage over the bidder on
hOrsenesh or other property, he is not Obliged .
TO take his purchase on the terms he has, it NAV
" AaeNAiNI dtACtN Vs. nc can OCtAinc MS
chase altogether, but he Is charged with one
months Interest or premium. II Judge Hum
phrey decision i, sustained in the higher courts,
the effect viii be to unsettle the affairs of about
twenty-five building associations in this Dis
uict, comprising membership of several thou
sand persons, and affecting the status of money
and property to the amount of more than million
OF dollars. Thus IL will be seen that the large
interests at stake are likely to be maintained by
a thorough canvass of the whole question, and
prompt resort to the appellate courts.
AltnOGsa unfortunate or fraudulentIy delin
queht purchasers Of money from building asso-
Citations may sometimes subject their property
to the SuctOueer's hammer, yet IL is fact,
wellestablished, that they contribute to the
prosperity OF city in various ways They fur
nish a large amount of work for the mechanic,
they encourage thrift and economy in classes of
the community that would not other wise be
either thrifty or economical, and they make
thousands posSesSors of homes that, without
this. or a similar cooperative principle, would
be constant debtors to landlords