The daily gazette., 1880-01-23
From the Reading Eagle Jan22.
Interesting to Building .Asso-
Citations.

THE PAYMENT OF BONUS OR PREMIUMS
BY INsTALLMENEs-A TEST CASE
ARGUED IN SUPREME COURT,
A very interesting test case, affecting
the uniform custom Of building associa-
lions, was argued In the supreme court,
In actions on mortgages brought by the
Harmony building association against
property belonging to Elizabeth Yous, a
stockholder.
The acts Of assembly relating to build
ing associations authorize the offering of
money at auction to the stockholders
who may desire to effect loan, and de-
clare that no bonus or premium bid for
such money shall be deemed usurions.
A majority of associations incorporated
under the acts OF 1870 or of 1874 have
been in the habit of deductng the
bonus from the face of the amount bid
for, and delivering the balance over to
the borrower. This plan was found TO
be unpopular, because the borrowing
stockholder who had given a mortgage
to the association was In receipt of but
portion of the amount of money he
needed, and for which he had distanced
competition in his bid, and also because
he was compelled TO pay interest on the
the face Of his mortgage, which, of
course, included interest on money he
had never received, the bonus or prem
ium having been previously deducted.
Hence fully 100 building associations
in Philadelphia made an important
change in this particular, and paid to the
borrower the full amount of the sum bid
for, for which sum mortgage was given,
and allowed him to pay the amount OF
the bonus or premium he had promised
the association by installments from
time TO time. This change was, OF
course, in the interest of the borrower,
and obviated the objections which exist
ed to the original man.
In 1879 new act was passu containing
sections relating to the rights and
liabilities of married women stockholder,
and containing also clause legalizine
the payment of bonus or premiums by
installments by borrowing stockholders.
The act concludes by authorizing old
associations to accept of the provisions
ofthe act by giving certain notice of their
intention.
The position taken by the borrowing
stockholder in the present case, as
argued by her counsel, was that, in the
absence of any direct provision in the
acts of 1859 and 1874 that q bonus uf
premium could be paidRby installments,
and the provision in the acts of 1879 that
II can be SO paid to associations who ex-
press their willingness to come under
its provisions, which had not been done
by this association, this building associa.
tion should have deducted the bonus be.
fore paying over the money to the mort.
cages, and has no legal right to receive
the same by installments and hence the
laws relating to nsury should be strictly
enforced.
Counsel for the building association
contended that the act of 1879 was mere
ly explanatory as to this section, and
designed to set forth more fully the
mode of payment by installments, which
the previous acts virtually sanctioned
but had not specifically set forth.
That the defense to the mortgage had
| no basis either in law or equity; not In
law, because the act of 1840 aud also that
| of 1874, sustained by repeated decisions
| of the Supreme Court, allowed usnrious
premiums to be paid building associa-
tions for money loaned, and did not spe-
| city how such premiums were to be
| paid; nor in equity, because the sole
party hbenefited by the payment Of such
Donus or premiums by installments was
the mortSagor herself, who comes here
| for relief.
The court below decided In favor oi
the building association, and entered
judgment upon the mortgage for wan
of a sufficient affidavit of defense, &c
which judgment the mortgagor tool
this writ of error. Decision reserved.