Smyrna times., 1875-05-19
Building Associations.
,NTEr!IEN PEARL ANDREWS


\ decision OF Judge Brown in the BaIti-
more city Court in the case Of Rdgaway Is.
The Baltimore Permanent Building and
Land Society, while it enunciatcs no new
principle of law, is we'll calculated to direct
the attention of those most concerned to
the principles upon which too many build
ing associations are conducted, and the
Price which their members. who are bor-
r"wers, have to pay ior their benefits. The
suit was brought by member of Il build
mg society. who had received a nominal
loan from the society Of S2,400 upon mort
gage. 70 recover back the sum Of $500 oG
lalu IN excess Of the legal interest u,0n
the amount borrowed during period Of
SIX years. The plaintiff. it appears. was n
m"mber Of tie society. and the ustriou.
interest was claimed to have been paid in
the form OF weekly dues and assc,~mont,
uHon the shares held by him. and which
We're transferred 10 the society at tli. ti,nr
the loan wd~ effected. tbeingwr.l settled
Law IN thi State that the borrower who has
paij u~uriouS interest i. entitled to recover
back whatever he may have paid in excess
OF tn" legal rate, and further. that for tLo
purpos" Of a.certa;ning whether a contract
IS uNunou$ or not. the courts will look a.
the substance rathci. than at the form Of
the transaction, and not suffer the law
against u~ury to be Graded by any ingeniou,
device otthc parties. Judge Brown decided
that IN the case before him the rl.intiG
was entitled to recover back from tI,..
society the Si30.9G. His mpmbcship wa.
but the cloak for the uStlious transaction
II" became memhcr, according to the les
t!mony, for the purpose of obtaining loan.
ana ms hr>t act - member was 10 eyp.
cute mortgage, and his entrance fec, 70.
demption fee and first weekly dues were. I'll
deducted from hi, shares. which were, trans
i"rr"d to til" dissertations 1t is further oh-
served by II" judge that, although nonj.
h9IIy member the plaintiff. having TINS
parted with hi. shares, wa< not entitled "a
vote at til" meetings Of the l..ocia,;nn 81,
to share IN it profits. Will, lie wa. sin
compelled to I.y his weekly durs. in adds.
ton to intrr",, on the loan. a, well - a,,y
fines he might ~ ~uhirctoa toa+ a..ern,h,r
He was thus subjected to ali the lr,r,I,.r.
incident to membership. but wa ett,tlrI
to noneof its benefits. How many building
associations in this city, it may be- rrofitllIz
asked. are conducted upon precisely the
same principles, and how many borrower.
from such associations are compelled 10 ,.ov
precisely til" same term. for the loan. thry
receive?
The utility and even beneficial valr, Of
building societies. when properly conducted
upon the common or mutual benefit plan.
cannot be called in question. When
managed in the interest of the member
ship at large they have proved to b. Of
lhcalcu.3ble assistance to person, of small
means, enabling them to procure loan,
which they could only repay in small IN
stallmentS out Of week and limited savings.
Thus poor men have been cncouraord to
save and invest and aided to pIrcras,
homes for their families, while labor in turn
has been benefited and property risen in
value IN consequence of the impetus given
to improvements. Thus individuals rs we'll
as the public have rcapcd the advantage Of
the wonderful growth and Development Of
these associations during the past few wears.
rs Is shown by the "asc in the CITY Court.
however, and still more stiikingly lr the
docket of the Equity Court. with its long
list of foreclosures and sales under mort
cages held by these ~ .ia;ion.. the nd-
vantaSeS have not been chased without
the risk OF corresponding evils and abuses.
The flcid has proved an inviting one for
Spectators and money.lcndcrS. Beside.
the associations organized and conducted
upon the ''mutual benefit" plan. of a diy;.
SION OF benefits and of profits, others have
been started avOWcdly in the interest of a
few capitalists who own all o.. nearly all the
shares, who use the corporate name and
privileges but 05 cover for their uhlrious
loans, and who, with the solicitors who pre-
pare and toreclose their mortgages, apnro.
I'i'e'N 'ii tiiC 'IplllS IllSiciltt OI DOll0 an
association Of persons, all of whom in turn
are or may be borrowers, such societies are
composed of two distinct tclasscs-the capita
lists who lend the money and the needy !
borrowers who pay the interest. Not un- |
irequntly the same persons will be found to
be interested in half dozen or more of
such societies, finding lucrative employ
ment in each for their idle capital, loaning |
1t out at eXtravagant rates and upon real |
estate security. The men who Join such |
associations for the purpose of becoming
borrowers, instead of being aided thereby
to save and invest, are more apt to fall into
improvidencc, debt, and sometimes peeu. |
mary ruin. Against such an abuse of n
system which in its inception and when
properly managed is both benevolent and
beneficial, it would seem that the ntervan.
ton OF the Legislature as well as of the
Judiciary may properly be invoked-Bah |
SIM.