Evening star. [volume] (Washington, D.C.) 1854-1972, 1874-04-22
IMPORTANT TO sUIIDIEG ASSOCIATIONS.
Decision Of the District Supreme
Court I'm the Pabst Case


decision Of the Supreme Court Of the District
OF Columbia in the case of Matthias Pabst
against George II. Plant ct al. in its bearing on
the management OF some other building asso-
Citations here in which eur citizens have q heavy
interest, We reprint from the Washington Ldo
Reporter said decision in full, as follows:
MATTHIAS PABsT rs. GEORGE III. PLANT ct al.
i. The advance Of money made by building
association to one OF the stockholders upon
the shares which he owns, is not q loan OF
money, but q purchase OF such stock, aud IL
therefore not affected by usury, and an &C
count rendered by the association in which
such advance is charged q loan, is erro-
neous.
2. Where the constitution of the association
provides that no stool holder shall be permit
ted TO withdraw " no has received any portion
of his stock In advance until the same has
been fully repaid, he IL entitled to withdraw
on paying up any ba,aDce due by him on a
settlement of the account and il Is repugnant
10 equity, IN making such settlement, to aid
In enforcing fines aud penalties of an opprss-
sive character, such as are found in the con-
stitution OF the association aud these NAV
properly be excluded from the account
court. - WIZ
F. schmidt and j. j. johnson, with whom
was W. +. Mattingly. for complainant; W. ID.
Davidge and W. 5. Cox for defendants.
Cor plainant was a member, ana the defend
ants were either Off GERS of, or trustees for s'fhs
economical Building Association" OF this Dis
ulct. The controversy If as to the amount due
Dy the CON plainant to the association; the lat
Ter claiming that on the 18th OF February. 1872,
Pabst was it, debtor to the amount o: 81 80. TO-
In the year 1865, complainant became first
member OF the association, and in the course
OF the following year was the owner of I2O
shares, the value of which was 500 a share,
after all the payments should have been mads
up. The shares were to be paid for, at the rate
OF one dollar on each, per month, or sl20 for the
120 shares. At This rate his shares would all
have been paid for at the end of sixteen wears
eight months. huf he I'm oil linz
shares at any intermediate date depended upln
the amount OF payments which had previously
been made on their account, and the business
OF the association and its future propects.
At different periods during the year 1869,
Pabst was advanced money by the assOci alton
to the amount of s10,770. This was a much
time, on account of his shares, and of course, a
much larger sum than the share. were actually
worth of themselves. But for the purpose OF
securing the association, he executed deeds OF
trust upon valuable lot and its improvements
In this city, and entered into oblig atoms there
after to pay to the association $40 q month, or
two dollars on each share held by him. until the
whole amount of 500 share had been fully
paid up, or the association brought to q close
The security given was not for the purpose of
protecting debt of any ascertained sum- but
10 compel the member obtaining the advance
to meet his monthly payments. The money adj
Vanced was not q loan by the association, bnt a
purchase of the members shares leaving him
without further interest in the association, ex.
most farthing, by monthly instalments to the
END. III the association should not be able TO
close up its business until the full completion of
the period of sixteen years and eight months
the member who was advanced on 100 shares
would have paid spa ,000.O 90 into the treasury
months.
But BY means Of the rapid compoundinp of
interest by means of monthly loans and the
FUND derived from fines for default OF members
IN paying up their monthly dues, the perloi
N ~ nGfv ftta I-V1ft
be greatly abridged. For at whatever period
the funds of the association will enable IL 10
"dlvlde TO each share OF stock the sum of two
hundred dollars, less thirty per centum. the as
ISOLATION shall determine and close" The
more prosperous. therefore. is the association,
the briefer its existence. IL cannot be told for
what length of time member who takes an ad
vance upon his stock may be required to paw
rom compoundng interest AZ high rates, aud
short intervals, and from fines, are large. this
period will be short. IL these profits are not
arge, il will be more remote. III the period he
short, the member advanced will have the BEN
eft, for by the close of the associ alton he is re-
ieyed from making his monthly payments; and
70. although no longer member of the associs-
ton, beis q shsrer In its erohts. If the time for
closing up the business be more protrac ted. the
member advanced loses that advantage; but
lnder no circumstances is he required to nav
)eyond the nominal value OF his stock
Whether the arrangement shall turn out to be
favorable to the member advanced, or other
wise, depends upon the success of the assocja-
tion- II 1t be successful, although no longer a
member for some purpo. es. he shares in the
profits; If unsuccessful, he may be a loser, but
oDly to a limited extent.
We discover nothing, therefore, In the nature
'f this association which is unlawful, or In any
wise necessarily more Objectionable than other
associations whose object Is TO make profit for
heir members. On the contrary so far 1t holds
but encouragement 70 its members to save their
earnings instead of sqlanderiDg them IN idle
ness deserves tod
encouraged.
Ii, however, persons will join these sssocia-
ions In the expectation OF borrowing money at
pleasure, with no oblig ever to repay it, or
subscribe for an amount of stock on which thew
ire unable to meet the monthly dues and thus
ubJect themselves to fines at the rate of 100 per
,ent per annum interest on the sums in arrear
disappointment and bankruptcy are to be ex.
)ected.
There is another class. also, for whom these
associations are improbable, namely, those
Who, having subscribed tor shares and received
advances for which they have mortgaped their
are afterwards overtaken by sick
pess. or other inevitable calamity, depriving
hem OF the power to meet their payments
But for the laboring man, blessed with health
frugal, temperate, and resolute
hese associations, If controlled by men like
himself, are admirable institutions. Such a
nan, however, may win his fortune without
heir aid; aid by joining them, takes the risk
" wasting his time, and forming a connection
with those who may defraud him of his prom
associations in general.
In respect to the particular matter in contro-
Fersy in the present case, the facts seem to be
" follows: In MaTch, 1863, Pabst was the owner
II l20 shares OF stock in this company, on which
he, or those OF whom he purchased, had been
making monthly payments. at that time he
obtained advances from the ASSOCIATION amount
ng to SOTO. These advances, be IL remem-
,ered, were not loans. In order to secure the
association for these advances, he executed two
lee ds Of trust upon certain impro we'd real estate
N this city, both Of the same form, from one OF
fbleh the following is an extract
Whereas, heretofore, to 49, 49,, On the DAY !
II =, in the year 81 our Lord one thousand
light hundred and sixty nine, the said party
hereto OF the first part, by his writing obliga-
DRY OF that date, Acknowledged himself to Sc !
ndeoted TO Nicholas Csilap, tae treasufer Of
ald ASSOCIATION, In re sum or TWENTY-FIVE thou-
siiu uousrs, ara delivered the same to the said
I'D whereas the said writing obIiya-
% sp-c1ect to a certain condition thereucder
-.tten 10 the effect that he, the said Matthias
I abst and his heirs, executors and administra-
ors, shall well and truly pay, or cause to be
paid, to the treasurer of the association, AMI to
his successor Ia Office, the sum of two dollars
current money per month for every share OF
stock which he, the said Matthias Pabst holds
N said association, commencing from the date
hereof, and to be paid on The first WEDNESDAY Of
each month thereafter, ana also all d mes aud
Iorteits vi ich may be imposed upon, or incurred
by him, by virtue of the provisions contained an
the constitution, bylaws, and obligations OF tue