The morning news. [volume] (Savannah, Ga.) 1887-1900, 1899-07-14
LOAN COMPANIES HARD HIT.
THEIR CONTRACTS ILLEGAL, SAYS
SUPREME COURT OF MISSISSIPPI.

Ground to Consent to IA Suit for In
junction and Observation-Disclosures
Its borrowing stockholders in Mis-
sfssippi Would Have Had All the
Profits and Assets and StOcShold-
ers in Other States neutrality-suspicious.
OF the Company Now in the Hands
of United states Courts.
Stockholders In Savannah of the New
South Building and Loan Association OF
New Orleans are awaiting in considerable
trepidation the result of the suits now
pending against the company by some OF
their number in other states. From pres
ent indications it would seem that their
uneasiness is not warranted, and that they
will eventually receive the greater part of
their holdings.
1t is estimated that the stock Of the as
ISOLATION is held in Savannah to the
amount of about $4,000. At one time a
much larger amount of stock was held
here but The stockholders have borrowed
from the company to the extent of the
stock held by them and have in this man
ner Withdrawn. Those that remain are
the ones who went into the company as
an investment, and who, up TO the time
of the final catastrophe, now some two
months since, had found it pleasant and
profitable. The company was in good con-
dillon, it was perfectly solvent and per
fectly reliable, and it is through no fault
of its officers that ii has been driven to
the wall and compelled to consent TO
suit to wind up its business and place it
in the meantime, in the hands OF re-
ceiver
The association was chartered under the
laws of the state of Louisiana IN May, 1880,
with a capital stock limited in amount TO
S5OooO.0oo 1t began at once successful OPP
Grafton and carried on its business In
several of the Southern states.
It's business spread and increased, and
in Mississippi a.one it had on May / of
the present year loans aggregating $3.50 600
1t was from the Supreme Court of that
state that the bOmbsheu emanated that
smashed the business and rendered It's
longer prosecution ruinous to the interests
Of the stockholders in the other states and
advantageous only to those who were DOM
iciied i'm Mississippi On May l a state-
ment of its assets and liabilities showed
the following result, most creditable GER
tainly to the officers of the association
| and proving conclusiVely its perfect soi~
| venCy:
Liablities-Bonds outstanding, $135 500;
scrip outstanding. $50 ,s53.26; installments,
| 1898 $780, full paid stock, $165 400; profits,
| Sl25 O3O.34-$S29 1910
Resources-Real estate, $257 762. As; loans,
| S524 30l; cash in bank, $35. 102.0S; bills re-
ceivable, SS,96429; insurance and taxes paid
account sundry borrowers, $2,979. 28-$S29, e.
| 1910.
Shortly afterwards the decision of the
! Supreme Court was rendered in the case
| of Sokolowski against the association in
| which il was decided that the contract in
| to which the association and its stock
! holders had entered was tainted with us
ury for the reason that the fixed premium
which was charged upon the stock must
! be regarded as interest and added TO the
! interest charged
| As the laws of the state of Mississippi
| provide that anyone who has paid usur-
| ious interest may within three years from
| the settlement of the account recover by
! suit the excess of the amount SO paid over
the legal rate and as loans aggregating
over $4,000 have been settled by the as
| ISOLATION within the past three years it
| is likely that suits would have been
| brought Immediately for the excess of in
! terest on these amounts and that it would
! have been harrassed by a multiplicity of
! SUITS. AOIG IMAM llliS tliO e19s'ONl1tiSt 4Ae'
| in Mississippi to-day loans aggregating
| over $3.50. coo. If suits be brought by these
| borrowing stockholders to recover the
| interest and premiums they have paid on
! these loans, these amounts under the re-
| cent decision of the Supreme Court Will be
credited on the principal, with the result
| that instead of having surplus of Sl60,O0J
| the associa ton will be more than $4,000 in
debt to these borrowing stockholders.
| In Alabama the Supreme Court of that
| state has rendered a decision analogous,
though not quite as bad, to that reached
| in Mississippi and it is Impossible for the
| association to continue in business with
any hope of protecting the interests of its
stockholders For this reason 1t has sub
mitted to q suit for a receiver, and the
| Circuit Court of the United States, sitting
at New Orleans, has appointed Mr.. john
ston Armstrong. In the other states In
which the association has carried on
its business ancillary suits have been filed,
and Armstrong has been appointed re-
| ceivcr in these states also.
The order appointing the receiver en-
| Joins the prosecution of suits in any other
| courts than those of the United states,
| and in this way the litigation In the state
courts of Alabama and Mississippi. that
| would have resulted otherwise, has been
prevented. The officers of the association
hope that the United States Court will
| take a broader view of the law than was
taken by the learned judges Of the Su-
preme Court of Mississippi. and that they
| will uphold contract that has been pro-
nounced valid by almost every distin-
guished court of last resort in the coun-
| try. It is assumed that the United States
| courts will do So and that the stockhold-
ers will not have to pay over to their
| brethren in Mississippi and Alabama all
of the surplus of the association and leave
nothing for themselves. If the law is in
truth and reality as propounded in the
| two decisions whose substance has been
| given. the building and loan associations
of the country will be forced to go out
| of business
Mr.. j. c. Walthour, local secretary OF
the association, was seen yesterday in ref
erence to the suits that have been brought
and the status OF the association at the
present time. He is of the opinion that the
company will be able 10 pay its stockholm
ers an or a very large part of what is duo
ana the United States Courts win not up
hold the decisions that have been rendered