The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1881-01-08
An Important Building -AssOcia ton
Decision.


reference 10 the case Of Forsyth Us. The
Hibernia Building Association, wherein Mr.
Justice Cox, holding the Equity Court. an.
nounced his impressions, to the effect that
the contract between the complainant and
the Building Association was usuriOus.
The case. however, was not formally de-
cided until the 9th utimo, when the
Court delivered the subioiDed opinion,
| fully sustaining the clam Of the AssOcla-
tiOn and requiring the complainant TO pay
in accordance with the constitution OF the
society, II be elected TO withdraw there.
from. The Court said:
The question presented by the exceptions
TO the auditors report Is whether in the
settlement between an advanced member OF
the Building Association and The Association
he is 10 be credited. as against the advance.
with The additional dollar paid monthly on
each share. or that is 10 be deemed lawful
premium or compensation 10 the Association
for The advance. Now, in order 10 resolve
this question, it will be necessary to 90
back 10 first principles and ascertain upon
what grounds the scheme OF these assOcia.
tions is sanctioned by the. courts. The
theory OF sucn associations is simply this
VIZ. that q number of individuals associate
themselves together and issue stock say OF
the nominal par value of 500 per share, and
each individual is u paw one dollar per
month on each share that he holds until the
accumulated fund shall divide 5000 to each
share.
1t i optional, under the scheme CT the
present Association, whether anv individual
member will continue bis connection with
it, because he is privileged at any time TO
withdraw aud get repayment OF the money
| h. k.e ;x IL hn 10
scope OF the scheme it would be very sim
pie. But il is obvious that ii is vastly TO
the advantage Of any member TO receive his
dividend of 5000 in hand, instead OF having
| il in prospect after lipSe OF eight, ten, or
| twelve years or more, and the scheme really
contempates the advancement of the shares
| to members OF the Association before they
are due They will naturall, he willing to
| pay a premium for tbis privilege. And
| there is nnlhing in thi. ntrinsicaly wrong
or 10 conflict with the law against usury.
| If man owes me one III )u>and dollars,
payable at any time hereafter. and | agree
to accept a much less sum in hand and re-
lease he debt am at liberty To do it. IL be
finds that he can purchase his debt at a sum
much short OF the principal OF the debt,
there Is no law which fOrbids him TO do il.
may pay or allow this premium or dis
count in any one OF several ways. | may be
willing, in the first place, to receive The
whole amount OF money aud pay 4 premium
for 1t in some Other thing OF value. or may
be willing to deduct largely from the prIn-
cipal amount and give release upon re-
ceiying the balance, or | may agree
to pay interest upon the money
receive up to the time it would become
due to me absolutely, or may be willing to
deduct some amount from the principal OF
the debt due me, and besides that TO pay in
teresr up TO the time that it would become
due TO me. The authorities have gone eX-
tremely far in The direction OF holding that
when the principal sum advanced is not TO
be repaid interest may be paid at much
higher than the legal rate without infring-
ing The law against usury. Thus. where
one gave E566 TO have annually El30 for and
duriDg twenty-three years, the defendant
bad accepted El20 for the first year, and
upon informailon against him in the Kings
bench for uSury it was held not usury.
Flnch's case and l2l.
Again, where one gave Gl00 for annuliy
OF go per anDum it was held no usllTy.
De Goad's case Triv., 10 ElIZ., in the EXche-
quer.
SO, in Fuller's case, Mich, 80 Eliz.,
Leon 20S. where one gave G300 10 another
for an annuity OF ESQ, assured to him for
one hundred years, II be, his wife and four
children should so long live. 1t was held not
to be within the statute OF usury.
So, where the defendant had given plain
tiff Gl00. and for that he granted the defend
AM E20 FOR eight years annually, as a rent
charge, and after that for two years more.
if three men live so long, it was held that
If the original contract was for a rent
charge it was not u>ury. Simond U.s. Cock
erill, No. 15l. See these and other cases in
ComyD on UsuTy, 43 et seq.
Now there are three scuemeS. as gather |
from the English theory Of these lransac-
tious, according to wtrcb The premium for
these advances were paid. One is called |
the gross plan, as when man receives less |
than The 5000 TO be paid to him ultimately, |
but pays interest on tbat 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 |
he net plan, as when party receives less
han the $500 and pays interest on tue
amount which he receives. And another Is
,alled the instalment plan, as where he re-
,eives the whole $500 al d pays the monthly
nstalment Of interest. and also an install
nent OF the agreed premiums so that in the
'Ourse OF time he will have paid up the
whole interest and premium.
| am not discussing the legality OF these
ssOciations as an original question, but am
imply eDdeavOriDg to get at The grounds
lpon which they have been sustained.
The principal point to which / direct
hese remarks is that the additional paw
nent OF 81 per month on the advance is Just
s much port OF the premium as the per.
entage bid and reserved upon the principal
I'm.
An important feature ia this scheme is 8
BAT il party desires 10 settle advances. as
lis expressed in article 13 OF the constitu- !
on of this Association, he may cancel the
2saction, 10 which case he shall be s
aarged with certain amounts and credited a
uh certain amounts. He may cancel the @
boie OF the advances, in other words, and q
ut himself and the Association where they C
ere before. Now, find that by the Eng 4
ia statutes regulating building associa- II
Dns. if a party has paid premiums for K
vanees, and he proposed settlement
advznces before the time runs
u, IL H. enacted thai a propOrtioDate " y
rt OF that premium Shall be re- a.
nded to him. In this case II partv !.
Us the monthly iustalDeGts OF say e. y
\ month 90 each share Until the AssOcia- ~ ~
N winds up It's affirs, hp VIII have paid | ~ ~
z whole Of the premium bid for the ad- | ., a.
nee, but until he has paid beyond toe ~ ~
ouDt he has actually received he has paid 'e
ne OF that part OF the premium which
insists OF the percentage reserved. He has m
yet psid 1t into the Association. and con. OF
Iuentiy they have not received 1t from 81
D. lie bas paid no part Of the premium ca