The Irish standard. [volume] (Minneapolis, Minn. ;) 1886-1920, 1894-02-10
AN IMPORTANT DECISION.
By the Supreme Court in re Fitzgerald VS..
c. g. e. l.. A.

BY the Supreme Court in re Fitzgerald vs.
G. B. & L. A.
1 Last Monday Judge Mitchell Of the
supreme Court rendered the following
decision upon test case in which it was
sought to be established that bnilding
and loan associations were unconstitu-
tional and could not take premiums for
preference In loan to members, and IN
which it was claimed that associations
should settle with borrowing members
within a specified time. The decision
being of great interest, it is given in full
rs follows:-
State of Minnesota Supreme Court.
| Maurice Fitzgerald, respondent, VS..
Fhe Hennepin County Catholic Building
and Loan Association, defendant.
| AS this case was submitted on agreed
statement OF facts, which constitute the
findings of the court, the only question
is whether the findings justified the con-
illusions of the law.
There is nothing in plaintiffs conten-
ton that defendant is not building So
ciety and hence not authorized to take q
premium for preference or priority OF
loans. 1t is true that building societies
are the creatures Of statute. 1t is also
true that title 2 Oh. "a G. s. 1878, under
which defendant was organized, does not
outline the powers of building associa-
l d. ALo 1,o~ovol ohio ronfor md
purpose of such associations have been
so long matter of common knowledge,
that the term building society" has &C
quired we'll defined meaning. The sta
tute referred to authorizes the forma-
ton of building associations" and also
provides that the premium for prefer
ence or priority taken by any mutual
building association for any loan OF it's
funds shall lot be deemed usury within
the meaning of any law of this state, nor
shall any excess Of such premiums over
any rate of interest permitted by the
laws Of this state be deemed or held to be
! usury. This clearly authorizes the for
nation of what have long been known as
building societies. The articles of asso-
citation and bylaws OF defendant show
that it is mutual building society" as
that term is commonly understood, al
though adopting some details for carry
ing out the scheme peculiar to itself.
In order to determine whether plain
tlf's mortgage has been paid in full or If
not how much remains to be paid in case
he desires to settle up and obtain re-
lease OF his property, it is necessary to
examine and construe the provisions
of the bylaws of the association on shat
ubject.
It is now very common for building
societies to make provision for members
withdrawing, and for borrowing members
paying back the loan or advance, il they
desire, before the maturity OF their
stock. Tn the absence of any statute on
the subject it is competent for the asso-
citation itself, in it's articles or by laws, to
fix the terms on which this may be done.
| OF course in advance of settlement and
accounting on the maturity of the stock
or Termination of the association it can
never be determined with exactness what
members stock is actually worth.
Hence it is usual to adopt some fixed
basis for settlement with the retiring
member or paying borrower which, from
experience, the association has found
will approximate exact justice and at the
same time be on the safe side for the
association. This is just what We think
the association has provided for by the
amendments to it's bylaws which, 80 far
as relate to borrowing members who de"
sire to pay up before maturity OF their
stock, are as follows:
l. Resolved, that we adopt nine years
for basis instead of eight.
4. Resolved, that in settling with mem
bers DESTROYS of paying back their loans,
they be charged with total amount OF loan
and premium, and credited with one
ninth of the premium for each whole un-
expired year, up to the ninth year, to-
QoG0oT Will uOo6 huO AAO0A0oo Va PAo1"S
on said dues, as the case may be.
s. Resolved, that rebate Of one
ninth of the premium he allowed bor-
rowing members, for each year expired
of the series in which they loan; and that
said rebate instead of being deducted
from the bonus as heretofore, be placed
to the credit of said members until said
series natures or loan is paid back"
These bylaws are not very happily
worded but it seems to us clear that the
plan adopted for settlement with Dor
rowing member proceeds upon the basis
that time earns the premium" at the
rate of one ninth each full year.
But it also seems to us that in balanc-
ing accounts interest must be charged
on all amounts Of such premiums not
thus earned, otherwise the payments OF
premium for loan would amount to
mere bookkeeping. Our view is that in