Evening star. [volume] (Washington, D.C.) 1854-1972, 1881-01-05
An Important Building Association
DeCiSiOn.

ence to the case OF Forsyth vs. The Hibernia
Building Association, wherein Mr. Justice Cox.
holding the Equity Court, announced his I'M
pressiobs, to the effect, that tue contract be-
tween the complainant and the building asso-
citation was usurious. The case however, was
not formally decided until the 9th ult, when
the court delivered the suDjoined opinion fully
SUSTAINING the claim OF the association and re-
During the complainant to pay in accordance
with me constitution Of the society il he elected
to withdraw therefrom. The court said:
Ihe question presented by the excep-
In the settlement between an advanced
member of the building association and the as
ISOLATION he is to be credited. as against the ad-
Vatce with the additional dollar paid monthly
On each share. or that is to be deemed lawful
premium or compensation to the association for
lhe ADVANCE Now, In order to resolve this
question. It VIII be necessary to go back to first
principles and ascertain upon what grounds the
scheme of these associations Is sanctioned BY
the courts. The theory Of such associations Is
SIMPLY THIS, viz: that number OF individuals
say OF the nominal par value OF 800 per share
and each individual is to pay one dollar per
month on each share that he holds until the
accumulated fund shall divide 5000 to each
share
1t is optional, under the scheme OF the pres
ent association, whether any individual mem
Der VIII continue his connection with it, b.
cause he Is privileged at any time to withdraw
and get repayment Of the money he has pad
l. II this were the whole scope OF the scheme
{ would be very simple. But it is obvious unat
Is vastly to the advantage OF any member to
receive his dividend OF 5000 In hand. Instead OF
having 1t In prospec; after a lapse OF s 10 or II
years or more. and the scheme really contem-
plates the advancement Of the shares to me n.
0eTs OF the association before they are due
they will. naturally, be willing to pay pre-.
MUM for this privilege. And there is nothing
IN this intr1nsicalG wrong, Or in conflict with
the law against uSury.
Ifaman owes ne one thousand dollars nav
able at any time hereafter, and l agree to &C.
cept much less sum In hand and release the
he can purchase his debt at sum mucn short
OF the principal ]f the debt, there Is no law
Wnlch rorblds himto do 1t. may pay or allow
this premium or discount In any one OF several
ways. may be willing, In the first place. to
receive the whole amount OF money and pay
premium for 1t in some other thing OF value or
may De willing 10 deduct largely from the
receiving the balance or 1 may agree
to pay interest upon the money
receive up to the time 1t would become
due to me absolutely. or l may be willing to
deduct some amount from the principal OF the
debt due me AID besides that to pay interest up
to the time that 1t would become due to me-
Ihe authorities have gone extremely far In
cipal sum advanced is not to be repaid, interest
may be paid at much higher than the legal rate
without infringing the law against usury
el3O for and during twenty-three years, the
defendant had accepted e129 for the FIRST year
and upon Information against him in the Kings
B E1noh,, fo o usuary 1t was held not usuTy.
Again. where one gave s10O for annuity of
ego per annum 1t was held no usury. De
Goads case Triv., 10 Eliz, In the Exchequer.
SO, In Fuiler'5 case. Mich. 80 E!lz 4 Leon. 0D3.
Where one gave -e30o to another for an annuity
OF ESQ, assured TO him for one hundred years.
II he. his wife and four children should so long
live, 1t was held not be within the statute Of
usury.
So, where the defendant had given plaintiff
fl0o and for that he granted the defendant
GATOR eight years annually, as a rent charge,
men liveso long, it was held that ii the original
contract was for rent charge1t was not usury.
Simond VS.. Cockerill. No. ISL. See these and
ot9eT cases tSsrn IN Comy yn. on usuy 4s ct
from the English theory, of these transactions
according to which the premium for these ad-
vances were PAID. One is called the gross plan
paid to him ultimately, but pays interest on
that amount annually, which Is one dollar
month per share. That Is to say he pays legal
interest on the whole amount and receives less.
Another Is called the net plan, as when party
receives less than the 5000 and pays interest on
the amount which he receives. And another is
called the installment plan, as where he re-
ceives the whole $500 and pays the monthly
installment OF interest, and also an installment
or the agreed premiums so that In the course OF
time he Will have paid up the whole interest
ana premium
l am not discussing the legality of these asso-
c1at1cns as an original question, but am simply
endeavoring to get at the grounds upon which
they have been sustained.
rtn arks is, that the additional payment OF 81
per motif on the advance is just as much
part Of the premium as the percentage bid and
eserv ed upon the principal sum.
An important feature In this scheme Is that
If a party desires to settle advances, as it is
expressed in article Is OF the constitution Of
this association, he may cancel the transaction,
IN Which case he snail be charged with certain
amounts and credited with certain amounts.
He may cancel the whole OF the advances In
other words, and put himself and the aSsocia-
tton where they were before. Now. find that
by tie English statutes regulating building
associations, II party has paid premiums for
advances, and he proposes settlement OF ad-
VanceS before the time runs ont 1t Is enacted that
proportionate part OF that premium shall be
refunded to him: In this case, If party
pays the monthly instruments of say So
per month on each share until the asso-
citation winds up its affairs. he will have paid
but until he has paid beyond the amount he
has actually received he has paid none OF that
part OF the premium which consists OF the per-
centage reserved. He has not yet paid 1t into
the association and consequently they have
not received it from him. He has paid no part
OF the premium which constitutes the reserved
percentage-the oHly thing that ne has paid as
premium Is this monthly inStalment OF one
dollar additional per share. In fact the only
part of that which can be properly considered
premium Is the excess over legal interest for
the use Of the money.
Now, If this contract is legal In its inception;
that Is, II a man may contract to pay these
monthly instruments, to continue until the end
OF the association, which assume to be settled
by this court In general term. / am unable to see
why he may not contract that II he chose to
settle advances he may pay e rateable proper
ton OF that premium up to the time when the
advance Is settled; and do not see why con-
tract to pay this additional dollar per month up
to the time OF that settlement Is not such
contract to pay rateable part OF the premium
during the time for which he has the use OF that
money or advance. 1t may be said that he
simply had the use OF the money, and can only
be compelled to pay interest 1t seems to me
that he has had more than that He has had
the privilege all the time he has had the money
to treat 1t as absolutely his and TO continue his
monthly payments only till the association
winds up Its affairs.
before he was entitled to It., 80 thet he has had
the time intervening between the advances
and the time OF the settlement Of the advancea
Then II he could contract to pay legal interest
for the use OF the money, and could contract
also for the additional premium with the special
privilege attached to this advance, / do not see
that there Ia anything illegal II at the time OF
the settlement he shall be charged with the ad-
dit1ODal dollar per month as the rateable pro-
portion of the premium which he was to pay.
The language OF article Is Is: ''Any StockhoIdsr
desiring to settle advances shall ce Oh arged
with the actual amount advanced to him and
With all unpaid dues, fines. insurance. taxes