Wheeling register. [volume] (Wheeling, W. Va.) 1878-1935, 1900-04-23
Special to the Register.

CHARLESTON, w. Va, April o.
The Supreme Court in its opinion de-
livered yesterday in the CASE of M. L..
Gray against the Baltimore Building
& Loan Association, from Kanawha
county, practically knocked out all
building and loan associations doing
business in this State which do not, in
their bylaws, provide for a definite
and fixed premium to be paid by the
borrower. In other words. the build
ing and loan association cannot charge
a borrower a premium in addition to
legal interest to be paid monthly in
definitely, but it must be stipulated IN
the contract that the payment of dues,
interest and premium must cease after
a definite number of payments have
been made.
This decision is, in a measure, a re-
versal of the courts decision delivered
about a year ago in the case of Archer
against the Baltimore Building & Loan
Association, brought up from Wood
county. In that case the court held
that building and loan associations
were allowed, under the statute, to
charge a premium of six per cent in
addition to the six per cent interest,
ever if the number of payments to be
made was not stipulated.
Section 26 Of chapter 81 of the code
provides that Every such association
shall have power to provide by its by
laws for selling to the stockholders
who shall bid the highest premiums
therefor the money in the treasury, or
in default of bidders at or above a
minimum premium award a member
the value of any shares held by him,
less such minimum premium, the mini
mum premium and the mode OF max
ing the award to be fixed by the by
laws: or such association may charge
and receive the premium bid by the
stakeholder for the priority of the right
to such loans in periodical instruments;
but the bylaws of every association
shall set forth whether the premium
bid for the prior right to a loan shall
be deducted therefrom in advance or
paid in periodical instruments"
Discussing this provision of the sta
tute, Judge Dent, who wrote the opin-
ion in this case, says:
This provision does not authorize
the minimum premium to be fixed at
a percentage on the amount borrowed
to be paid during an indefinite period,
for such would be nothing more than
increasing the rate of interest of the
premium so fixed. In this case it would
be simply increasing the rate OF in
terest from six to twelve per cent. But
the law requires that the premium
should be fixed at a lump sum COM
monty k6own as a bonus, and Their it
may be deducted in advance from the
principal or paid in periodical install
ments. For instance, if such premium
is fixed at $40 on the $500 it can be
deducted or divided into ten equal
monthly instalments of 81 each, or one
hundred equal instalments at 10 cents
each; thus the borrower knows just
what premium is required of him.
"In the case of Archer against this
same association (45 W. Va, 80 this
court held that building associations
are authorized to adopt bylaws fix
ing a minimum premium at which to
award loans to their members, to be
deducted from the loans in advance or
paid in periodical instruments. This
is merely d~eclarative of the statute
and does not in any wise conflict there
with. In the opinion l sought to hold
that the premium could only be
charged once and that Mrs. Archer
could not be required to pay the
monthly premiums assessed. My asso-
ciates were of a different opinion and
held her bound for such payments.
The question did not then present it
self in the exact form that it does in
the present "a or the court would
have probably viewed it in the same
light. The question then being wheth-
er the association had the right to fix
the minimum premium to be paid in
instruments, the answer was in the
affirmative. The question is, has the
association the right to fix a minimum
premium at a certain percentage on
the amount borrowed payable indef-
inately at fixed periods? If such is
the case the association would not be
guilty of taking usury. 1t matters not
how high its rates of interest might
be fixed so the word premium is SUBJ
stituted for the word interest To
demand twelve per cent interest would
be usury, but to demand six per cent
interest and six per cent premium
would not be usury. Such an evasion
is too transparent to escape condem-
nation and cannot for a moment be
upheld. &nd II there is any language