The Ottawa free trader. [volume] (Ottawa, Ill.) 1843-1916, 1881-10-08

this case we were under mlSapprenenSlOn To
sulting from the meagrcness OF statement In
regard to the facts. We then assumed that the
propissory note was payable at all events Tor
the amount expressed upon its face, together
with 10 per cent. per annum interest thereon,
and that the premiums bid had also in good
faith been paid, and we thereupon concluded
that the transaction was usuriOus, and In go
far rs any law, applicable alone to such cor
poration purported to give sanction to and le'
galize, it should be held void because in con.
tiict with certain clauses Of section % article
4 OF our constitution. That conclusion can
not be sustained upon what we now under.
stand to be the facts. The appellant associa-
ton was organized under general law au-
thorizing the formation OF such associations,
approved April 4, 1872, and IN force July /,
1872. e. Gross, Statutes, p. go Section OF
that act provides that shares of stock shall be
800 each; that subscriptions therefor shall
be made payable TO the association in such
periodical installments, and at such times as
shall be determined by the charter and laws,
but no payment to be made exceeding W ON
each share, and that every share of stock shall
be subject to a lien for unpaid installments
and other charges incurred thereon under pro-
visions OF the charter and bylaws; section 8
provides that the board OF directors shall hold
such stated meetings as shall be provided by
the bylaws, at which the money in the treas
ury over 800 shall be offered for loan In open
meeting, and the stockholders who shall bid
the highest premium for the preference OF pri.
ority of the loan shall be entitled to receive a
loan of 500 for each share of stock held by
such stockholders, and that in cases of non.
payment of the installments or interest by the
borrowing stockholders for the space of SIX
months the payment of the principal and in.
terest without deducting the premiums paid
in interest thereon, may be enforced by pro-
ceeding against their securities according to
law The section provides that the borrower
may repay the loan at any time and in the
case of the payment thereof before the expira-
ton of the eighth year after the organization
of the corporation there shall he refunded to
such borrower One-eigth of the premium paid
for every year of the said eight years then un-
leXplred Smythe became member OF the as.
soclation in February, 1875, subscribing for
eight shares of stock, and on Oct. 4, 1870, de-
sirlng 10 obtain money on six OF his shares OF
stock, lie bid as premium therefor $50 on
each share. This bid was accepted by the as
sociation, and the par value of his six shares
of stock, less the premium bid on each share,
$40 on each share $3.50, in all, was ad-
vanced to him, aud he thereupon executed the
note and mortgage in controversy.
This note, ii is expressly shown, although
tor 5000 is only to secure payment OF the in
terest To accrue upon the par value OF the
shares and dues Of 80 cents on each share
monthly, as also the fines penalties, forfeit
ures, etc. and upon liquidation to the assocla-
ton the note was to be surrendered to Smythe
and be accepted by him IN full for his SIX
shares OF stock. This would happen when
shares of stock would reach par value, SO the
transaction was IN fact an advancement by the
association IN anticipation of that time. The
transaction is IN the nature of sale by Smythe
of his shares of stock to the association, and 1t
has been so held by other courts (Hoboken
Building Association vs. Martin, 2 Beasley,
427; Cla-ksville Building Association vs..
Stephens, 26 N. j., 80; Delano v. Wild, 6
Allen; Merrill '.Mclntyre, 10 Gray, 159)
But if the transaction be treated as loan, it Is
not, from what here appears, necessarily us
urious When the money was obtained the
company had but five years and seven months
to continue under the statute, 1t having been
organized two years and five months previous
to that time, and its duration beng limited to
! eight years. The dues and interest which tht
note secured amount to IS per month, 81 dues
and S. interest. At the end of five years and
seven months, siXty-seycn months-thls would
amount to only 1896. The rate of interest then
authorized for money loaned was 10 per cent
II.
per cent, IN five years and seven months woulC
bring $23450 Added to the principal tins
would make $6545 that would have had tc
have been paid, treating the money received
as a loan at 10 per cent THIS, of course, re
qulres that Smythe should have kept his con
tract, but that is what we must assume was the
intention of the parties when the contract was
made 1t was his duty to keep his contract
1t was legally within his power to have done
so. Beng compelled to pay the face OF tht
note as well as accumulating interest, etc, II
simply the result of Smythe's failure to com
ply with his contract, and for which 1t would
seem he had reasonable time; and this obi
CATION may be regarded as one IN the natur
of lquidated damages, such as all parties ar
at liberty to annex as condition of the non
performance of their contracts; and it Is in NJ
sense a regulating of interest upon money o
obnoxious as usury under principles laid dow
on this subject In previous decisions OF thu
Icourt. Lawrence vs. Cereles, 13 III. 81
Gould vs.. Bishop Hill Colony, 30 III. 800
Davss vs. Reeder, SO Ill., 4l6; WithertOn VI
Briggs, 81 Ill. 96) This is still further man
fest by reference to the 9th section OF the char
ter, which, it has been seen, authorizes til
borrower to rebay the loan at any time whicl
would restore his shares of stock to him, AM
!, have refunded oneeighth of the premium b
; for each year OF eight years uneXpired OF III
life of the association, and for like reason a
, has been held by this court IN Bone VS.. Gro
lev, g. H. 39S, the case is not one in whlc
relief will be granted by u court Of equity a
= against penalty. In other respects we pei
ceive no valid objection to the transaction. tn
= statute under which the association was OF
gained is general law, applicable to all tn
cItIZcns Of the state who choose Ia bring then
= selves within the relations and circumstance
provided for by 1t. We are of opinion 1t l
: free of constitutional objections in so far,
least, as it has any bearing upon the facts nol
: before u.s. The decree OF the court below
, reversed. and the case remanded for turtle
proceedings not inconsistent with this opInlor
} Reversed and remanded. Walker and Dicl
= ey, JJ, dissent