Court Opinion

ID: 3944385
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:07:30.857898+00
Date Added: 2024-06-11T14:17:05.391785
License: Public Domain

The International Building and Loan Association asks for a rehearing in this cause for several reasons, which we will briefly examine.
First. It is claimed that the court below entered judgment against it for more than plaintiff claimed in his petition. Biering alleged in his petition, among other things, that he had paid on his seven shares of stock a given amount, and had given the notice of withdrawal required by the by-laws; that the directors of the defendant had failed to ascertain the withdrawal value of his stock to which he was entitled, and that under the by-laws he was in any event entitled to the full amount he had paid, for which he prayed judgment, and for general relief.
Defendant answered, setting up its by-laws, from which the right of plaintiff to withdraw and the terms upon which such withdrawal could be made appeared. In a trial amendment defendant set up that it had under the by-laws ascertained the value of the series of stock in which plaintiff owned the seven shares to be $99.50 per share; that plaintiff was owner of six and one-half shares of that series, and asked that in case plaintiff was entitled to recover, the ascertained value of his stock be credited upon the debt due to defendant, which was alleged to be $1260. It also alleged, that after deducting the value of the stock, defendant was entitled to judgment for $613. To subtract the amount claimed as balance on the debt from the amount of the debt gives the admitted value of the stock at $647. The court found the value to be $646.75. The defendant having pleaded the act of the directors in declaring the value, and the maturity of the stock and its ascertained value, the court rightly entered judgment upon the answer. Bourks v. Vanderlip, 22 Tex. 221.
It is likewise claimed that the defendant association was entitled to a credit for the installments which plaintiff failed to pay upon the stock. Nowhere in the answer does it appear that any unpaid installments upon stock were claimed against plaintiff. On the contrary, the several items are specifically stated, and do not include such claim; besides, the court found that plaintiff had paid all the installments accruing before the time that the stock was declared matured. By the terms of the by-laws, when the stock was matured it was to be cancelled, and plaintiff was entitled to the value of the stock, less any indebtedness due from the shareholder to the association. Certainly after plaintiff was entitled to withdraw the money and the stock was cancelled, he could not be required to pay upon it.
Second. It is urged that the premium embraced in the note was not to be paid for the use of the money loaned, but that the "method of business is to advance a member the present value of the shares, that he may build a house for his family, which shall not cost him more than the ordinary rent." The same contention was made in Jackson v. Cassidy, 68 Tex. 283. Chief Justice Willie, for the court, so clearly exposed the *Page 484 
fallacy of the proposition that it is only necessary to quote from that opinion to show its want of plausibility. The court said: "In the ordinary affairs of life money advanced upon securities with the understanding that both the principal and interest may be collected by realizing upon the securities, is considered a loan. A debt is created; otherwise the party advancing the money has no right to recover principal together with interest on the amount advanced. Having the full effect of a loan, it must be so considered with reference to our usury laws, otherwise the features of the transaction which give it a different appearance would furnish a device by which these laws might be evaded altogether."
In Mitchell v. Napier, 22 Tex. 120, the court said, with reference to the evasion of the usury law: "It is quite immaterial in what manner or form, or under what pretense it is cloaked, if the intention was to reserve a greater rate of interest than the law allows for the use of money, it will vitiate the contract with the taint of usury."
It needs no argument to apply these principles to the facts of this case. It is not claimed that the $700 was not loaned to Biering, which he was to repay with interest. This transaction was nothing but a loan, by which a price was to be paid in addition to the interest expressed for the use of the money.
Biering derived no advantage from the transaction except the use of the money borrowed, and he agreed to pay in addition to that sum and interest the sum of $560. What was the $560 to be paid for? It is urged that the premium was paid for theprivilege of borrowing. The privilege of borrowing is nothing more nor less than the right to use the money. The highest bidder at an auction sale has the privilege to own the property sold, but the consideration of the price paid is the ownership of property. It is quite too clear for argument that the plan adopted was but a device by which it was attempted to secure for the use of money loaned a price greater than that allowed by law, and no disguise will be sufficient to hide this purpose from the investigation of courts under the plain rules established for their government.
Counsel ask the question, "Why should not the owners of a series of stock compete with each other for the priority of taking the first money coming into the treasury?" The answer is, that when it assumes the form of a cloak for usury, it is forbidden by law. The motive of the lender and the purposes of the borrower are not matters for consideration by courts.
Third. It is claimed that the pleadings were not sufficient to justify the court in holding that the agreement to release the credit to which Biering was entitled on account of usurious interest paid was void. Plaintiff, in his supplemental petition, charged that the supplemental contract was usurious, and therefore that it could not have the effect to cure the vice of the first. Defendant set up the supplemental contract, which upon its *Page 485 
face showed that it was tainted with usury, and under the decision in Building Association v. Lane, 81 Tex. 369, it could have no effect on the transaction. What appeared from defendant's pleading need not be alleged by the plaintiff.
Fourth. Objection is made to that part of the opinion of this court which refers to the article of the by-laws allowing a borrower to redeem his stock by paying the money borrowed and one-eighth part of the premium for each year that he had the use of the money. An examination of the opinion will show that it does not rest upon that proposition, but merely states that if that rule is to govern the contract is usurious.
The motion for rehearing is overruled.
Delivered April 9, 1894.