Omaha daily bee., 1899-05-26
BORROWERS MUST STAY IN
Cannot Retire from Loan Associations Until
Their Stock Natures,
RULING OF WYOMING SUPREME COURT
IL Those Who Borrow DO Not Pay
In Their stock Can lie Sold
ana Proceeds Applied to
Amount Due.

CHEYENNE, wyo., May 25.-(special)-
In the United States court for the district
OF Wyoming Judge Riner has rendered a de-
cision Of great Importance to building and
loan associations and those connected with
them. The case was that of the Columbia
Building and Loan Association OF Denver
against William Jungquist and Marie jung
quist OF Rawllns, Wyo.
On June 4, 1890, the defendant became a
member of the loan association by su5scrib-
ing for thirty shares of its stock On De-
cember II, 1890, he borrowed from the as
sociation the sum of $4,000. due six years
after date with interest and installments
tt .reon according to the bylaws and rules
OF the association: these amounts to be
paid on or before the fifth day Of each and
every month, or to be counted as principal
1t was contended by the defendant that, after
having paid the regular instal1ments for six
years he was released from further payment
upon his loan, although the stock of the
association had not matured.
In rendering his opinion Judge Riner
stated that the principle underlying the
method of transacting the business of build
ing and loan associations is mutually. the
object being to raise funds from their men,
bers to be loaned among themselves, or to
such as may desire to avail themselves of
the privilege. This is done by the payment
monthly, OF certain amounts of interest and
installments, and the stockholders, whether
borrowers or non-borrowers, participate alike
in the earnings of the association and alike
must assist in bearing the burden of any
loss 1t may sustain. All of the stock is ma
tured and all Of the loans are made from
what Is called the loan fund; indeed this
necessarily follows from the fact that there
is no other fund from which the stock can
be matured. All members receive the same
per cent of profit for the reason that
the dividends are declared on the
entire business and all payments made
by every member go into the common fund
the profits of which are divided among the
shareholders and they must continue to pay
until the stock is in due course matured.
To allow payments to be applied to mature
the loan of borrowing member by a def
mite and fixed number of payments would
destroy the essential principle upon which
the business is transacted, that of mutual
ity. A true test in the determination of
questions of this character is very clearly
stated by the supreme court Of Ohio in the
words:
"And the exact test of the right to call
for a cancellation of the mortgage given
to secure obligations as a borrower is the
inquiry whether the borrower would have
been entitled to receive from the association
the par value of the shares on which the
loan was made had he not become a bor-
rover"
Mr. Jungquist became member of the
association in June and it was not until De-
cember that he secured his loan. He was
bound as a member of the association to
take notice of the law under which the as
sociation was incorporated and also of the
bylaws of the association, and as / under
stand the bylaws If his stock matured
within the six years, or seventy-two months,
and was worth 100 cents on the dollar, his
loan would be paid, If not he would be
obliged to continue his payments until that
result was attained. 1t this case at the
expiration of the six years the stock had
not matured and therefore the debt was not
paid, and having failed to continue his
monthly payments until the maturity of the
stock the right of the plaintiff to resort
to its security for the collection Of the
balance became perfect.
decree was entered finding the de-
PENDANTS indebted to the association in the
sum of $4,000, with interest and dues, ac
cording to the bylaws of the association,
and providing If the sum so found to be
due be not paid within thirty days then
the shares of stock issued by the plaintiff
to the defendant to be sold and the pro-
ceeds applied toward the payment so found
to be due, and for any deficiency, the prop
erty covered by the trust deed to be sold
in the manner provided by law.
In the case of A. H. Junod of Los Angeles
against The Commissioners Of Sheridan
County, Wyoming, a judgment was entered
for the plaintiff for $2,75s, the amount due
on an unpaid warrant issued to the Pauly
Jail company of St. Louis and held by the