The Stark County Democrat. [volume] (Canton, Ohio) 1833-1912, 1874-11-26
BUILDING ASSOCLA TONS OF
CLEVELAND

CIA~ @A~NAAN -
An bWbortaNf Decision of 9pdge Barter
Of the SH6SyiO, CoHyt-7hS Right Of
Building and Loan associations as
Regards Extra Interest.
A decision second in importance to
very few that have been rendered by
the Courts in the State, was rendered
yesterday by Judge Barber, speaking
the sentiments of the general term ofthe
Superior Court. In 1867 the Legislature
of the State passed law incorporating
building societies, with the ostensible OBJ
ject of enabling the working classes to
combine together to procure homes for
themselves. Under that law some one
hundred building associations have been
organized in the State having somewhere
near 400, 900 members. AS usual, large
number became members with the pur.
pose of obtaining the benefits which the
law conferred, but very large number
Joined these societies with speculative
motives.
There are fourteen of these associa-
tons in this city, and among one is call
ed "The Forest City Land and Building
Association" 1t appears, the custom
was in this society to put up sum of
money for competitive bidding, and to
the member who offered to give the high
est premium the loan was made. As
soon as the loan was made the stock of
the borrower was cancelled or redeemed
by the society, and he ceased to have
any further interest in the profit. In
some cases the premium offered by some
of the members was fifty per cent, and
where he received $500 he had to give
his note and mortgage for 81, 900.
The society before referred to had had
among its members a Mr.. Farrell E. Cal
lagher; It appeared that in July, 1867, he
made loan and bid for the right of pre-
cedence 493 per cent. and received in
cash from the society s3o3 on three
shares, and had to give the society his
note and mortgage for 5000. He con-
tlnuIed to pay into the society until he
had paid $40, In consequence of de-
fault the society commenced suit in Oc-
tober last, against him on his note for
1000 and to foreclose his mortgage. The
case was tried at the May term of the
Superior Court before Judge Griswold,
Messrs. Estep & Burke, and Kerruish
appearing for the Building Society, and
Messrs. Slutz & Laven appearing for
Gallagher. On the hearing Of the case
the court gave judgment for the Society
in the sum of $27o, and dec ded that he
should pay them SO a month during its
existence. The counsel for Mr. Gala
CHER excepted, and it was taken on bill
OF exceptions before the General Term of
the Court, Slutz & Laven appearing for
Gallagher and Messrs. Estep & Burke,
and Kenuish appearing for the Forest
City Building Society, Judge Barber de-
livered the following propositions.
Flrst-That for the purpose for which
the society was organized, the law under
and by virtue of which was organized
should be literally construed.
Second-That so far as the law confer
red usual privileges and extraordinary
powers it should be strictly construed.
Third d-That these associations have
four modes of raising money.
I. BY stated dues.
?. BY fines.
8 By interest on loans to its mem
bers.
Forth-The law gives no power to
collect as interest more than the legal
rate.
Flith-These associations cannot COL
lect interest under the name ofhnes.
Sixth They cannot discount their
loans, or can they charge interest on
premiums paid for precedence in making
loans.
Seventh-The amounts acually paid
by the association to the borrower con-
stitute the loan.
The decision Of the Court was that the
judgment Of the court below should be
reversed. That when suit was com.
menced by the Association against Gal
lagher he had overpaid them sI7o, and
that the case against him should be dis
missed. Judges Jones and Griswold
conceded in opinion with Judge Barber,
Judge Griswold remarking that in his
decision in the court below he felt con-
strained to accept for his guidance de-
cision ofthe District Court, and not be-
cause he had expressed his own opinions,
but as the Supreme Court had allowed
a writ Of error in the case tried before the
District Court, he felt that the case was
left open, and he also concurred in the
opinion Of Judge Barber
Mr.. Estep, on behalf Of the society,
took exception to the ruling of the
Court