Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1902-05-24
Supreme Court Rules on Catch
Contract OF Building and
Loan Company.
Holds for Reasonable Interpre.
tation of Terms-By.Laws
Can't Change a Contract.
"All the Tracks Lead In" Says
Judge Weaver in His Sar-
castle Opinion.

tne supreme court on i lludS PAU Us
respects to a building and loan con-
Germ" which secured specific contracts
from investors and tries to change
them afterwards by adoption of sup
Elemental "by laws" and to that class
which masquerade as ''mutuals' when
the whole control is forced into the
hands of the officers by requiring
shareholders to give their proxies tc
certain officers before they are issued
their certificates. Incidentally the
plaintiffs claim of S292.5O against the
Eastern Building and Loan Associa-
ton OF Syracuse, was increased to $l0o
a share for her five shares, according
to the terms of her original contract
| with the concern.
/ Under the rules of the concern the
supreme court says, the officers fig
ured the value" OF the womans' five
shares to be the $2S2.50 she had paio
in in monthly installments during sew
enty- eight months, plus six cents, tc
| be paid at an indefinite time In the
future. The contract she had signed
and which was issued to her said she
should be paid 500 a share at the end
of seventy eight months il she paid
| in monthly the $3.15 or Whereabouts
necessary to mature the stock. She
paid in the monthly sum fixed and the
| supreme court says 1t is up to the
company to perform its part of tht
contract.
| 1t pleaded that it was mutual
concern, and if she was paid the con
tract price the other share holders
would not be equitably treated. The
court grows sarcastic about the "mu-
tuality' of concern which requires
share holders to deliver proxies With
each payment, preserves the control
of the concern wholly within the hands
Of a few officers and during period
of seventy-eight months or six and q
half years finds the book value" OF
1--WE shares of 500 face on which
s29250 has been paid in in monthly
installments is but $292.56. It's like
the lions cave" says the court All
the tracks lead in"
But. said the company, the contract
with the woman didn't mean what 1T
said. 1t didn't mean that she was to
be paid $500 share at the end of sew
enty-eight months unless the earn
ings" matured the stock. The supreme
court says a contract is contract. |
This one had no conditions in it There |
was no estimate about it. 1t spefifcal-
ly agreed to pay 500 a share at the end
uf seventy eight months There was no
reference in it to other conditions. Ii
it was desired to make it an estimate
and not a contract the language could I
have been changed without violating
the prophecies. The language Is spe-
citic and the promise to pay, in consid-
Grafton, is definite. The investor per-
formed her contract; it is the COM
pany's move.
But, contended the concern, the con-
tract was altered by subsequent
to the "by-laws." The SUI
preme court has no patience with this,
ror with the plea of ultra wires, that is
defined as Reputation. 1t is a policy
which is dangerous. If the court eHer-
cises it it would lead to appalling re-
suits 1t would be method of repudl-,
alton so easily adopted that all corpora
lions might be induced to practice 1T.
Such scheme can not be endorsed,
said the court. The original contract
nothing giving the company
the right to alter the contract The
court can not undertake to inject into
the law that corporations may alter
contracts of obligation in which no res
aryation Of right to do SO is made, or
declare it legal for concern to escape
obligation because q plain contract was
beyond its power to make. The COM
pany's plea that the New York law
differs from Iowa's is hardly tenable.
Whatever contracts are made subse-
1uent to the new bylaws" may be
subject thereto, but contracts made be-
.ore are inviolable.
The court makes use Of some unusu :
Ally significant language; pregnant
language. For instance. it says:
1.-The fact, If 1T is a fact, that in the ;
md it (the company may not be able
q pay the claims of other members is
, matter we can not consider. We are
Tot charged with the duty of winding .
Up the affairs of the corporation or of
settling the rights of members upon
inal distribution of it's assets If any. /
Dur only duty at this time is to con- ]
;true the contract on which suit is Ii
and to enforce it accordingly. j
ut is proper also to add that the ex- /
ressed objects and purposes of this u
association are much broader than is L
included in the idea of build
ng and loan associations and there is G
DOM to doubt whether the company is h
Untitled to claim all the privileges and Il
mmunities which pertain to such cor
,orations"
The court holds that the agreement
o bring no suit against the company :,
Except in New York is void. =
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