The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1897-03-23

1
down an opinion in the case of John
r. Sawtelle, appellant, vs. North Amer
lean Savings, Loan and Building COM
pany, in which the judgment of the
| lower court is reversed and the case
remanded with instructions to the court
below to modify the findings and dis
pose of the case in accordance with
the opinion. The opinion was written
by Justice Bartch, and concurred in by
Chief Justice Zane and Justice Miner
In this case. it appeared that Charles
j. HUMPHREYS on December 20, 1891,
subscribed for II shares of the capital
stock of the defendant company and
received his certificate for the same on
April II, 1892, by which he was to paw
60c Der share per month until, with
profits added, the shares would become
worth 800 each. On April IS of the
same year HUMPHREYS obtained a loan
OF SSoO from the company, giving as
security mortgage on certain real
estate and at the same time conveyed
to the company eight and one-half of
the IL shares of stock as a premium
for the loan, and the other eight and
one-half shares as additional security.
On April % of the same year
HUMPHREYS conveyed the property to
the plaintiff in this action, who as
sumed the mortgage and paid interest
to April, 1895, and dues, 1857 20, and on
June l, 1895, rendered the balances $500,
which defendant refused, whereupon
plaintiff began this action to compel
the defendant to accept the money and
release the mortgage.
The defendant answering, admitted
that the interest had been paid to
April, 1895, but denied that s367.20 had
been paid on the principal, but alleged
that only $1S3.60 had so been paid and
that the difference S1S3.60, was paid as
subscription to stock in the defendant
company. Defendant prayed for fore
closure of mortgage on the ground of
default in the interest.
Judgment was rendered by Judge Ro-
lapp, Diminishing plaintiffs complaint
and granting decree of foreclosure for
$626.70, from which the appeal was
taken
RULING OF THE COURT.
The opinion of the supreme court
says: Whatever may be the form by
which the stock of a borrowing mem
Der is transferred to the corporation,
the ultimate object of the monthly pay
mentS is the eXtinguishment of the
debt. This is true regardless of the eff
forts of the agents of such corporations
to obscure the relationship of the pay
ments to the principal sum. Whatever
may be their ingenious devices to show
to the borrower that the loan in some
way pays itself, without his |
knowledge, and that the monthly pay
mentS of dues are a profitable invest /
ment in stock, the fact is that the |
loans are paid by means of the monthly |
assessments on the stock. This kind of |
a contract for the lOaning of money is !
not such as to commend itself to the |
special favor of a court of equity.
Its complete performance would re- |
quire. and such appears to be the con-
tention of the corporation, the payment |
of 5000 dues and $4.25 interest per /
with such fines and penalties
as might be assessed for a period of
nine wears. or until the II shares of
stock became worth S1,700, or. in other
words, the borrower is to repay the
$3.50 loaned with per cent interest,
payable monthly, and in addition there
to give the corporation a bonus of $3.50
Or in the aggregate 81. 159, and then the
will call the business
square and the transaction at an end.
The mere statement of such propo-
sition shows the contract to be a hard
1ne, if not entirely unconscionable, and,
therefore,. we nave no hesitancy in de
,laring that under the facts of this
,ase as thew appear from the record,
he 1861 20 paid as dues on the stock.
must be applied in reduction of the
lebt"