Court Opinion

ID: 6679533
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:19:27.812268+00
Date Added: 2024-06-11T16:00:48.219456
License: Public Domain

The opinion of the Court was delivered by
Mr. Justice Gary.
The facts of this case are set forth in the decree of his Honor, Judge Klugh, which, together with the appellant’s exceptions, will be set out in the report of the case.
1 We will first consider whether the plaintiff had the right to restrict the defendant in the participation of the profits to the extent of those made by only one-half of his shares of stock. Neither the contract entered into between the parties nor the by-laws of the association, of force when the loan was made, conferred any such right. Bylaws were afterwards adopted, in 1894, giving the association the right to retire one-half of the shares of stock of a shareholder, when a loan was made to him, but these bylaws did not have the effect of destroying the right of this defendant to one-half the number of his shares of stock. The appellant’s attorneys, in their argument, thus set forth the operation of the two-share plan: “The member desiring to anticipate the ultimate value of his shares, receives from the association an advance of $50 a share in full liquidation and final redemption of the share. The member undertakes to pay interest at the rate of six per cent, on the sum actually advanced, and to continue payments of dues until the share matures. The association, however, having redeemed the share at $50, only undertakes to mature it to that value, and when the share reaches the value of $50, the loan is repaid. The effect of this transaction is strictly to reduce the maturity value of shares loaned upon from $100 to $50; but for the sake of convenience in the distribution of payments and profits, and otherwise, one-half of the number of shares loaned upon are treated as being practically dead; in other words, the member in obtaining an advance is considered as having converted the number of shares advanced upon into one-half that number of loan shares. It will be seen that the effect is the same, whether the maturity value of the whole number of shares advanced upon be reduced to $50, or whether one-half that number of shares are allowed to stand *221as of the full maturity value of $100. Under the plan adopted, the association, instead of maturing the full number of shares to the value of $50 each, undertakes to mature one-half of that number to the full value of $100. All profits which would be apportioned to the full number of shares are apportioned to half the number, so that the member actually receives on these shares the full benefit of all profits earned. The dues paid on the extra shares are distributed as profits to all participating shares in the series, so that the member, receives his proportionate share of all such payments, whether made by him or by other borrowers. In this way, while the actual cost of the advance may be more or less than six per cent., depending upon the success of the association’s business, no premium is paid by the borrower, If there is any lack of strict mutuality in the plan, it must inhere in the favor shown the borrower; in that, under the contract, he cannot be required to pay in the aggregate more than the sum actually advanced, with interest thereon at the rate of eight per cent.” The plaintiff’s testimoney shows that a series of stock was issued every month since the organization of the association. The following appears in the testimoney of Mr. C. E. Beach, the secretary of the association : “Q. The payments made by him, that would mature fifteen shares of stock, and the payments made by an investor, that would mature fifteen shares of stock, would be the same, would it not, except for the interest paid by the borrower ? A. It would; the difference being that the borrower gets his money in advance.” From this statement, and other circumstances in the case, the Court has reached the conclusion that a series is composed of both loan stock and investment stock. Such being the case, it is at once apparent that it would work a great hardship, to require a borrower to pay dues on all his shares of stock, and to allow him profits on only one-half thereof, while the non-borrower would be entitled to profits on all his shares of stock, especially when, as in this case, there was no such by-laws in *222existence when the loan was made. The defendant was, therefore, entitled to profits on all his shares of stock.
2 We will next consider the manner in which the amount alleged to be due under the mortgage should be determined. It was the intention of the parties to the contract, that the defendant’s indebtedness under the mortgage should be extinguished, whenever his payments of dues and the profits on his shares of stock equalled the amount of the loan with interest at the rate of eight per cent per annum. The plaintiff’s testimony shows that the defendant made 72 payments on account of dues on his shares of stock, amounting to $648, and 60 payments on account of interest on the advance, amounting to $225. The Circuit Judge finds that the profits earned by this stock, up to July, 1895, was $20.79 Per share, which on fifteen shares amounted to $311.83, two-thirds of which is $207.90. These three sums aggregate $1,080.90. The loan was $750. Interest at the rate of eight per cent, per annum, up to 18th December, 1895, when default was made, amounts to $304. These two sums aggregate $1,054. It thus appears that the defendant paid to the plaintiff an amount more than sufficient to extinguish his indebtedness. The Circuit Judge, therefore, properly dismissed the complaint.
These views practically dispose of all the questions raised by the exceptions, and render unnecessary a consideration of the additional grounds upon which the respondent relied to sustain the judgment of the Circuit Court.
It is the judgment of this Court, that the judgment of the Circuit Court be affirmed.
Justices Pope and Jones concur in the result.