Evening star. [volume] (Washington, D.C.) 1854-1972, 1884-11-15
LEGAL STATUS OF BUILDING As.
SOCEATIONS.
Their Operations Discussed by tssc
Court ian General Term.

ACT THE METROPOLITAN BUILDING ASSOCIATION
TIE COURT sUsTAISs THE CONTRACT MADE BETWEEN
TIE ASSOCIATION AND THE BoRRowER-cuIEFyCs-
TIcs CAETr.R cRITrcisrs THE METHODS FOLLOWED
BY Recommendations M4caRTHCR MAINTAINS
THAT THE BUILDING ASSOCIATION coSrR ACTS AIRS
NOT UsuRfous
The following is the full text OF the opinion de-
| lfvered by Judge James In the Court in General
Term last Monday. I'm the case OF John Burns agt.
the Metropolitan Building association, and the re-
marks mace by Chief Justice Cartier and Judge
Macarthur. Judge James said:
am authorized TO deliver the opinion Of the
cour! la the case Of Joan Burns agt the NeJropoil
Tan Building Association or Washington, u. c, and
seven members OF the board OF directors
This transaction was OF the ordinary Kind, under
wE:ch the borrower or advapcee. whichever IL may
be called, receives certain amount OF money pro-
portoned 20 the stock held by him under the rules
OF the ASSOCIATION. and gives bond. not 70: the
payment or tnat amount. but binding him TO Go Il
certain specific thing, namely, to paw upCn each
share OF his stock 50 monthly and 10 10 80 int tle
| stock OF the association reaches second STAKE,
that is until there shah have been realized a GER
tain profit on IL In addition 10 that, he gives a
deed OF trust providing FOR the performance OF this
obligation, ana authorizing The trustee Ia case ~
default In performance. 10 sell aaa when he shall
come 10 make his distribution to retain out OF the
proceeds the amount OF this advance or loan. The
only positive and absolute obligation entered into
Is TO pay 80 month, SO far as person obligation
goes until the state of things shall have accrued
which have spoken or.
In this case the plaintiff who las filed bin 10
RESTRAIN the trustees OF the association from selling
MS property, had received a certain advance and
had made considerable payments He then ceased,
on the assumption, on his part, that the time had
relieve him OF further payments one OF his grounds
was that the contract was usurious, and that he
was not bound TO perform it beyond the payment Of
the principal
1t was admitted that this court had twice held
that similar contracts, contracts similar this,
were not usurlous, but II was pointed out with a
Of a
expression OF that opinion was obiser; that the
question was not really located in the case, and
that as precedent
For that reason we looked into that question,
under the influence, however, OF strong feeling
that unless the ground for holding IL 10 be in1pr-
Gus were very plain, we would not undertake 10
disturb what was supposed TO be the attitude OF
this court. Whether that was expression BY
the judge who delivered the opinion simply, or b.
the court obiter, was immaterial, we thou yht,
AFTER It had stood SO long Nevertheless we did
or two about that. We take IL that
UsURY Is INVOLVED
only when there is an absolute undertaking bind
Ing the person to DO certain thing, namely TO
pay back the principal OF the loan, and whether by
contract-statement or By some artifce, usurious
interest. Here there is no undertaking 10 pay the
principal OF this loan; TO repay IL at all. The
undertaking is TO pay two dollars month on this
STOCK; one or them, it is admitted dues, and the
other for some other purpose, might say admitted
to be profits. But that Undertaking is not con-
tnue for any specific length or time Its perform
ance may continue longer or shorter period OF
time, and II all OF the borrowers or parties whose
stock money is advanced III you may please to call
1t SOY, keep their promises the period Is shortened
because just so much sooner does the period arrive
when the profits on the stock amount to forty OF
nifty per cent, whichever IL was.
To that extent, to the extent that the period is
shortened by the performance OF the contract the
amount to be paid is reduced and the borrower re-
ceives In that direct way the benefit OF these pay
mentS. There are TWO elements. therefore. that he
takes part OF the benefit OF In the execution OF
the contract not because the proceeds are dis
tributed to him, but he takes the benefit directly
by shortening the period during which he Shall nav
at all The otheris, that the form of contract does
not obige him to continue paying for any specific
length OF time, and does not amount in itself an
undertaking therefore TO pay this advance back
Mathematcally ii is possible that he may be dis
Charged from the obligation to continue these pay
lnents before he shall have paid back the principal
and the legal interest. The probability may be the
other way, but the undertaking does not make It
The result then Is that that contract is not uSu-
rous, and that Is The only absolute obligation
which he enters into The other is an alternative
which he is not bound to take. He has the choice
to discharge himself from his absolute obligation
to pay two dollars month until the period OF
luton, by coming forward to settle. He is not
obliged TO do the latter, end the argument that
this was uSuriouS contract was rested chiefly on
the theory that that settlement contained usury.
suppose that the settlement would involve the
payment or more than the principal and legal in
terest? IL is not settlement which he is bound
to make. He has the choice to perform an obliga-
ton, which is not In itself usurious, by selecting
another mode OF settlement As said, an alterna-
tive, which person may adopt from choice, not
being an obligation, cannot itself be an usurious
contract 1t Is method OF discharge from another
contract
It is immaterial, therefore, we think, whether
that settlement would involve the payment OF an
amount Of money which would exceed the original
advance and legal interest. II he chooses to con-
diton that he may get out Of another contract not
In itself uSurouS by doing that it is his choice and
not his obligation The latter then
CANNOT CONSTITUTE AN usURIous CONTRACT.
Again, he comes here for equitable relief, and
asks this court to interpose to help him, and /
think we all agree that the principle fairly applies
that he must perform his contract first. II he says
81 want to SETTLE" as he does say, or he informs
this court that he proposes to discharge himself
from the obligation TO pay two dollars month by
adopting the alternative that had been offered to
him. he cannot ask US to relieve him unless he
does perform IL So that the account has to be
the association as exhibited in the constitution
which Is referred TO In Ills deed OF trust part OF
the contract, and certainly does furnish the EVIL
dence OF III.
The conditions on which he may offer that set
Element are expressed In article Is OF the articles
OF association, which provides that ANY stock
holder desiring TO settle an advance shall be
charged with the actual amount advanced to him,
and credited with the amount OF dues paid in upon
the stock upon which such advance has been made
thereby canceling said stock, and shall be allowed
the same amount OF interest on said payment OF
dues as Is allowed to those shares withdrawn Oh
which no advance has been made; and upon pay
ment OF the balance found to be due the assocla-
tlon, nc SHALL Ue entitled 10 OeeO OF release"
AT the time when this transaction was Initiated
the constitution provided by the next article that
stockholders might withdraw, receiving back their
dues and 10 per cent profit. The constitution, as
1t is called although II is only the articles of agree
ment between the members OF q voluntary assOcia-
ton. and not the members Of corporation. these
articles OF agreement provide for the amendment
OF those very articles OF agreement, and further,
that that amendment shall be made by the vote or
twoth1rdS OF all the stockholders present at OF
the regular monthly meetings. This was under
taken, 1t is said, at monthly meeting held on the
however. This proof OF amendment was not pro-
duced but by assent OF the parties given in order
to avoid further delay in the the minutes
produced and an affidavit along with the minutes
TO help them out The minutes merely set out the
general fact that the amendment reducing this 10
per cent profit on the dues paid in to per cent had
been passed. The AFFIDAVIT set up that 1t was done
by unanimous vote, and therefore, OF course, by
vote OF twouh1rds OF all the stockholders present
That was admitted, subject to any objections as TO
the force OF the testimony or the evidence.
Let 1t be conceded that the amendment was
proven by competent testimony TO have been
adOpU d. Our construction OF the effect of that
amendment Is that 1t would not alter the contract
that had already been entered into The language
OF the 18th article itself Is against giving it any
upon mere verbiage. But It says he shall have
the same amount OF interest on the payment of
dues as Is allowed to those shares withdrawn. No
matter about that, however, the contract had been
entered into, and this article allowing amendments
10 be made In future Is not to be construed as
authorizing twothtrds of the stockholders to alter
the contract which had already been entered into.
They might make future Arrangements under IL,
but not change the existing rights OF parties.
Moreover, II is observed that the amendment was
cally relating TO persons who wish TO withdraw en-
trely nom the association. We conStrue this 18th