Court Opinion

ID: 7277133
Source: CourtListenerOpinion
Date Created: 2022-07-25 20:01:29.710883+00
Date Added: 2024-06-11T16:18:54.746066
License: Public Domain

Mr. Chief Justice Shepard
delivered the opinion of the Court:
Although the Anglo-American Savings & Loan Association, whose rights have passed by assignment to the appellee, does not appear to have been organized as the ordinary building and loan association, it has been treated as one of that type by both *546parties, on account of the similarity of its practices in respect of stocks and loans, and the requirement as to dues, premiums, and interest.
In the case'of the insolvency of a building association, three different views appear to have been taken by the courts of the several States respecting the rights and obligations of borrowing stockholders.
“The first view is that the relation between the society and the borrowing shareholder has been changed by the circumstances to one subsisting between an ordinary creditor and debtor, and that the borrowing shareholder is to be charged with the amount actually received by him, with interest at the legal rate, and credited with all payments made, whether by way of dues, interest, or premium, according to the rule, governing partial payments. The second view is that the borrowing shareholder is entitled to credit upon his loan for the amount of interest and premium paid by him, but is not entitled to have the amount of the dues paid by him on account of stock applied upon his loan. The third view differs from the second in that, instead of crediting the borrowing shareholder with the whole .premium, it credits him with only the part estimated as unearned.” 6 Cyc. Law & Proc. p. 155.
The first of these views is substantially maintained in this jurisdiction. Armstrong v. United States Bldg. & L. Asso. 15 App. D. C. 1; Eastern Bldg. & L. Asso. v. Olmsted, 16 App. D. C. 387.
The second was adopted by the auditor in stating the balance due on the loan, and is claimed to be the rule prevailing in the State of New York, where the said Savings & Loan Association was incorporated. The decisive question of the case, therefore, is whether the contract between the original parties thereto is to be governed, in respect of its interpretation, by the law of the State of New York, or of the District of Columbia. The appellee contends that the law of New York must control because the Anglo-American Association was incorporated in that State, and the payments stipulated to be made there.
The place of incorporation is immaterial, as it establishes the *547status of tbe corporation merely as a resident or inhabitant of the State of New York permitted, by comity, to do business in the District of Columbia.
The general principle is that a contract is to be governed by the law with a view to which it was made, and this is a question of intention, to be deduced, when not expressly declared, from the place, terms, character, and purposes of the transaction. The place provided for payment is therefore sometimes of controlling importance when the question in controversy relates to the rate of interest, which may be legal in one jurisdiction and usurious in the other. Miller v. Tiffany, 1 Wall. 298, 310, 17 L. ed. 540, 543; Bedford v. Eastern Bldg. & L. Asso. 181 U. S. 227, 243, 45 L. ed. 834, 845, 21 Sup. Ct. Rep. 597. No such question occurs.in the case at bar. The general nature of the transaction between the parties shows that the place of payment was a mere incidental and unimportant feature of the contract. This appears plainly from the uncontroverted statement of the answer, that each and every payment, from first to last, was made in the District of Columbia to the representative of the corporation therein. The doctrine is settled that “contracts are to be governed as to their nature, their validity, and their interpretation by the law of the place where they were made, unless the contracting parties clearly appear to have had some other law in view.” Liverpool & G. W. Steam Co. v. Phenix Ins. Co. 129 U. S. 397, 453, 32 L. ed. 788, 796, 9 Sup. Ct. Rep. 469; Scudder v. Union Nat. Bank, 91 U. S. 406, 413, 23 L. ed. 245, 249. Apparently, the stock subscriptions were obtained by the agents of the corporation in the District of Columbia, and the certificate sent there for delivery. Beyond question, the loan was arranged in the District of Columbia, the bonds and mortgages executed and delivered therein, and the stock reassigned therein, and transmitted to the principal office of the corporation. The obligation of the bonds and mortgages could only be enforced in this jurisdiction.
There being no provision in any one of the numerous instruments evidencing the contract, declaring that its interpretation shall be governed by the laws of any particular jurisdiction, we *548think it clear that the conditions stated require it to be governed by the laws of the District of Columbia. Equitable Life Assur. Soc. v. Clements (Equitable Life Assur. Soc. v. Pettus) 140 U. S. 226, 232, 35 L. ed. 497, 500, 11 Sup. Ct. Rep. 822.
In that case an insurance policy was issued to an applicant therefor living in Missouri. The application was sent to New York, and the policy was sent to Missouri, and there delivered to the applicant. The nncontroverted allegation in the pleading showed that the premium was actually paid in Missouri to the agent of the company. “Upon this record,” said the court, “the conclusion is inevitable that the policy never became a completed contract binding either party to it, until the delivery of the policy and the payment of the first premium in Missouri; and consequently that the policy is a Missouri contract and governed by the laws of Missouri.” This conclusion could only have been avoided, if at all in the particular case, by an express provision making it determinable by the laws of New York. Mutual L. Ins. Co. v. Phinney, 178 U. S. 327, 338, 44 L. ed. 1088, 1093, 20 Sup. Ct. Rep. 906.
Applying the rule of law obtaining in the District of Columbia to this contract, made and apparently intended to be performed therein, the appellants should have been credited with the money paid by Croissant nominally as dues upon stock. Armstrong v. United States Bldg. & L. Asso. 15 App. D. C. 1, 13; Eastern Bldg. & L. Asso. v. Olmsted, 16 App. D. C. 387, 408, 409.
Here, as in those cases, whatever may have been the relations of the contracting parties through a subscription to and receipt of the so-called stock, these relations were substantially changed by the surrender of the stock and the substitution of the loan. There is, however, nothing to show that Croissant ever contemplated becoming a mere stockholder, and there was no evidence whatever to sustain the allegation of the bill that he transferred the stock to the corporation as collateral security for the loan, and the allegation to that effect was expressly denied in the answer. In addition the answer also alleged that “as part of the system or scheme by which said stated instalments *549were to be repaid, all borrowers from said association, including said deceased defendant, were required to have allotted to them one share of stock for every $100 borrowed, so that, when all of the stated instalments should be paid, said shares of stock would be matured and the loans thus canceled. Accordingly, and simultaneously with the making of said loans of $1,300 and $1,200 respectively, and as part of the transaction, as hereinbefore stated, said association issued said thirteen shares and said twelve shares, aggregating twenty-five shares of stock, to him. It was never understood, contemplated, or agreed that deceased defendant should be the owner or holder of any stock in said association. On the contrary, it was the distinct understanding of deceased that all of the money paid such association or its agents by him in said instalments should go towards the liquidation and extinguishment of said loans of $2,500 and the legal rate of interest thereon.” No evidence was offered to controvert this explicit charge of the sworn answer; and the transfers of the certificates were of the same date, and absolute in their terms.
This state of facts would seem, moreover, to render immaterial the question, By the laws of which jurisdiction shall the interpretation of the contract be governed?
It is contended by the appellees that the case of Armstrong v. United States Bldg. & L. Asso. supra, is differentiated from the case at bar by the fact that in that case the bonds and mortgages required the borrowing member to make not to exceed in any event more than eighty-four monthly payments. In that case the charters and by-laws of the corporation, disclosing the entire scheme of the corporation, were in evidence. The same is true of the other case (Eastern Bldg. & L. Asso. v. Olmsted). In the case at bar these were not produced, and their provisions can only be inferred from the recitals in the several instruments constituting the contract. And in the bond it is recited that the payments on account of interest, premium, and dues are to be made monthly for nine years, or until the maturity of the shares,- — a period of one hundred and eight months, instead of eighty-four.
*550Tbe decision in Bedford v. Eastern Bldg. & L. Asso. 181 U. S. 227, 242, 45 L. ed. 834, 844, 21 Snp. Ct. Rep. 597, is not, as contended by appellee, in conflict with tbe rule declared by this court in tbe cases before referred to. In that case it appeared as a fact that tbe stock subscribed for by Bedford'bad not been taken over or canceled by tbe corporation, but bad been assigned to it as additional security for tbe payment of bis loan. Tbe question determined by this court was not raised. Tbe defense involved two questions only, one in relation to tbe application of a statute of tbe State of Tennessee, and tbe other whether tbe transaction was usurious.
In accordance with these views as to tbe legal effect of the contract, tbe decree must be reversed, with costs, and the. cause remanded, with direction to require tbe auditor to allow tbe appellants credit, in addition to those given in bis account, for all sums of money paid by said John D. Croissant as so-called dues. It is so ordered. Reversed.