Evening star. [volume] (Washington, D.C.) 1854-1972, 1876-11-27

The fact that the eases of Yates agt the
Eighth Building Association and Mulloy
agt. Finn Ward Building Association were
being argued before the Supreme Court of
the District i'm general term, has been men
In the first case the appeal Is from the de-
cree OF the Equity Court sustaining excep-
tons to the auditors report allowing fines,
and overriding exceptions as to allowing in
surance, and the defendants claim that the
decree sustaining the first exception Should
be reversed. They claim that there is no die
CAVITY ga, IN the contract between the complain,
10y The statutes against usuIy; that a build
ing association Is not lender of money 10
It's members; II Is a joint stock company
ana resembles closely an ordinary copartner-
ship, having a common fund. There is no
absolute undertaking on the part of a stock
holder who has received advances of money
amount so received. The liability is purely
contingent; hence IL is not usury to paysmore
Perchance In the way of dues than could law
fully be charged by way Of interest, since IT
is well settled that usury cannot be predl-
Gated of a contingent liability to repay the
principal sum. The agreement IN that regard
must be absolute. The record shows that
complainant is a stakeholder in defendant
association. and obtained advances amount
ing in the aggregate 70 s2 .4o0 upon his bid at
100, the maximum allowed by the associa-
ton ON one share. His obligation under the
constitution, after receiving these advances
upon his stock, was N pay 20 per month on
each share thereof until the association closed.
If complainant had not received an advance
upon his stock, his monthly dues would have
been one dollar on each share. The addi-
tional dollar per share each mOntft3onstitutes
be enabled to close wherever the last share OF
stock not advanced on is cancelled. He al
leges that he received 50 400; had paid i'm some
II 40; and that the association claimed as
due some $780, or more. He charges that
this sum, except some Al 200, il made up Of
fines and fOrfeitures. The error into which
he has fallen il, that he claims credit for two
dollars per month on each share, instead of
one dollar. The fines for default in the regu-
lar payment OF the monthly dues, claimed by
the defendant and allowed by the auditor,
are prescribed by the constitution of the So
ciety. They swell the common fund by which
all stockholders are benefited, more es-
pecially those who have received advances
upon their stock, for the reason that the
will close, and thereby those who have OBJ
tanned such advances will be relieved from
further payment of dues, whether they have
repaid all they received or not The fact,
therefore, is, in the practical operation of a
building association, such as the defendant,
each stakeholder in effect pays to himself and
receives from himself. There are no lenders
or borrowers. IL is commercial venture or
speculation, and may turn out good, bad, or
indifferent for the Individual stakeholder but
IS not obnoxious 10 any rule of law or equity.
The stockholder who receives money in ad
vance upon his stock, according to the rate
OF discount or premium he may bid with re-
ference to the nominal value of such stock,
retains all his rights as a member of the So
ciety, excepting, as a matter of course, the
right TO get the money again, the same as
though he had not received ii in advance. He
shares, however, in common with his fellows
in the benefits resulting from an early close
of the association, and Ii frequently occurs
that he repays less than he receives. For ex-
ample: A stakeholder purchasing an adj
vance At moderate discount on Is shares,
would receive 81 500. II such purchase were
made three years prior to the close of the as
he would pay but 81 ,0s0; il six
years prior to the close, he would repay over
$1,000. The complainant's case assumes the
existence of an unlawful contract, affected
by the statutes against usury and the consci-
ence OF a court of equity. Neither has any
thing TO do with ii. Parties are sui jIris and
as the contract is lawful, a court of equity
has no Jurisdiction to declare it otherwise.
The court is not called upon TO enforce
fines" or penalties" Application made by
the bill is, 10 aid delinquent stakeholder in
the non performance OF his lawful Obliga-
lions. In such case, although "flnes" are
charged in the record, equity will. and ought
TO. refuse relief, aud leave the parties TO their
remedy at law or otherwise.
The appellants say .'the decision of this
court i'm Pabst VS.. Blake ct al, Ost MacAr-
thur, 3s5,) is much relied on at the bar in sup
port OF bills of this kind, and IL is often
claimed that the ruling in that case is author
lty for the proposition that the contracts of
building associations with their stockholders
are unlawful. Such is undoubtedly the effect
OF the decisions; but, in the light OF the opinion
upon which IL is based, it would appear that
the judgment Of the court was erroneous. The
decree ofthe special term disallowed the claim
ofthe association, upon the following grounds
stated In the exceptions TO the report of the
auditor. which exceptions were sustained by
The Justices holding that term, viz: The con-
tIact is void. because its conditions are
Q 2ainst law and violated the law of usury.
The contract contemplated loan, and was
not an advance of partnership fund
The fines should not have been allowel .:
The opinion OF the General Tern iisi Mae
Arthur. p. 4o0.) says: I'VE di,scover nothing
therefore, in the natr:e OF this association
which Is unlaWr.i.D "Now as we
have seer, there was no loan in the case,
ptueh less any loan securd by either these
deeds of trust eff they certain
debits) constitute the advance which were
intended 10 be, and which in fact were, so
secured, they ought 10 appear in the account
so long q s the property rem aims unSOld )" and
the conclusion is that complainant was
court below, namely, that The advances shall
be treated loans and his payments as
credits upon them.r They say IL is not very
clear upon what principle the court held that
there was nothing unlawful in the nature of
the association" and that there was no loan
in the case" and yet affirmed decree which
declared the contract ''rOid, because its
conditions were against law and violated the
law Of usury," and that ''the contract con-
templated "A loan was not an advance of
partnership fund" The appellant, in sup
port of his positions. refers to the authori-
Ties cited by defendants in case of Pabst VS..
Blake ct al, and TO ten other cases, and they
conclude: The foregoing are the principal
cases decided by the old Circuit Court and by
The special terms of this court, involving the
validity of building association contracts in
this District. and i'm each case the contract
was sustained, with a disallowance of fines
in several instances, where IL was necessary
To let in the claims of other creditors upon
the corpus of the estate
In the other case the complainant obtained
at various times 81 AS, and he charged that
he has repaid these advances. When the trus-
tees threatened TO sell the property in default
of payment an injunction was prayed and a
temporary order was made, and when the
case came on to hearing the bill was dis
missed and an appeal taken.
Messrs. Merrick and Perry appear for the
complainants and Messrs. Elliott and Cassin
for defendants.
THE WOMAN FRANCHISE ASSOCIATION
met SATURDAY afternoon at the parlors of the
Y. Nj. c. A, 10 take action for cooperation
with the National Woman's Suffrage Asso-
citation in preparing petition TO Congress
~