The Columbia herald. [volume] (Columbia, Tenn.) 18??-1935, 1898-01-14
OF INTEREST TO MANY.
Case Of Hughes vs.. Farmers b. Il l..
Association Decided.
Court of Chancery Appeals Affirmed
History of Case and Points of
Law Involved.
[NashviIIe Amerlcan.l

Nashville Americana
The affirmation by the Supreme
Court on Saturday of the decision
of the Court of Chancery Appeals in
the case of Hughes and wife VS.. the
Farmers Building & Loan Associa-
tion, settles a point of building and
loan law in which great many
persons in the State are interested.
A brief history of this case is as fol-
lows:
In August, 1892, Hughes and wife
borrowed from the association in
question a sum of money on the
plan known by the association as its
farmers plan" According to this
plan the first installment of
premium, interest and dues was to
be paid at the time the loan was
taken out, as an advance payment,
and subsequently at the expiration
of every six months until the stock
should be matured. The Court of
Chancery Appeals held, constituting
this part of the contract, that the
first payment covered the first six
ms from Aug. 10, 1892, to Feb.
10, 1898, and that therefore at the
latter date nothing was due and no
other payment due until Aug. 10,
1893. On the latter date Hughes
and wife paid $l00-all that was due
except $l4. No other payment, as
constructed by the court, was due
until February, 1894; but in Novem-
Der, 1898, the secretary of the build
ing and loan association demanded
the installment of premium, in
terest and dues which would not
fall due until the following Feb
ruary, and threatened to close the
mortgage that had been executed to
secure the debt unless payment was
made. Hughes and wife failed to
make the payment, and thereupon
the association advertised the
property for sale. The bill to enioin
this sale was then filed by Hughes
and wife.
The court held that inasmuch as
the Secretary of the association had
illegally demanded the sum above
referred to, and threatened to sell
the property unless it should be
paid, that Hughes and wife could
properly refuse to go further in the
vi NilU OOnbl anu
would be entitled to settlement on
basis of ascertaining the amount
due under the contract up to that
time, with simple interest from that
time on; also, that no fines should
be allowed 70 the association.
This form of settlement, however,
was not the one desired by Hughes
and wife. 1t was insisted by them
that the whole transaction was
usurious. One point made by their
attorney was that the contract was
not in accordance with building and
loan law and was, therefore, usuri-
GUS because the premium was not
/ payable in weekly or monthly in
stallments of six months. The court
held that this point was not we'll
taken. The old law of 1875 provided
that the whole premium should be
paid at the time the loan was taken
out The act of 1889 provided it
might be made payable in weekly
or monthly installments. The court.
held that this provision was made
in the interest of the borrower to
enable HIM to realize more money
at the time of the loan and to pay
his premium gradually. 1t was held
that payments six months apart
would fall fairly within the mean
ing of the old term, monthly in
stallmeDts."
Another point raised by Hughes
and wife was that the loan was ille-
gal and therefore usurious because
they did not appear in person and
bid for the money at the meeting of
the Board of Directors of the asso-
citation. The act of 1893, chapter IL,
provides that the Board of Direc-
tors shall have power to loan the
funds of the association to stock
holders either in open meeting or by
action on written applications and
| bids. The court said that this writ
ten application must be used as a
bid in an open meeting, under the
act of 1898, but the loan in the case
was made before the passage of that
act, ald it was contended that bid
in writing could not be lawfully
made prior to the act Of 1898. In
this case it appeared that the writ
ten bid of Hughes and wife was sub
mitted to the Board of Directors in
an open meeting Of the association,
and in competitive bidding. This
was held sufficient, even though the
transaction occurred prior to the
act of 1898, holding that the bid in
writing was in all respects equal 70
an oral bid, the chief condition be-
ing that there must be a competi-
tive bidding in an open meeting.
In the opinion the court discussed
at some length the subjects of pre-
miums, interest and dues, and their
mutual relations in building and
loan law.
The opinion of the Court of Chan
Gerry Appeals was delivered by
Judge Neil and was affirmed by the
Supreme Court, Justice Wilkes de-
llvering an oral opinion.
STATE NEWS.