Court Opinion

ID: 3810611
Source: CourtListenerOpinion
Date Created: 2016-07-06 07:49:25.280676+00
Date Added: 2024-06-11T07:38:13.791085
License: Public Domain

On petition for rehearing plaintiff in error urges that by section 5, chapter 9, Sess. Laws 1895, same being section 1315, Rev. Laws 1910, every building and loan association doing business in Oklahoma Territory was entitled to loan its funds in the manner which should be specified in its by-laws, and that by reason of said section it was authorized to arbitrarily fix the amount of premiums charged, so long as the combined rate of interest agreed upon and the premium thus fixed did not exceed the legal rate of interest. This section was in force at the time the contract involved in Aetna Building   Loan Association v. Rouch et al., 32 Okla. 735, 124 P. 24, was entered into, and it was held in that case that the association was not authorized to arbitrarily fix the premiums to be paid by a borrower for *Page 260 
moneys loaned, and because the premium had been so fixed that same must be credited on the amount of the loan.
It is also urged that section 7, art. 5, c. 10, Sess. Laws 1905, being section 1326, Rev. Laws 1910, authorized plaintiff in error to arbitrarily fix the amount of premium charged. We cannot agree with this contention. The primary purpose of enacting said chapter was to regulate building and loan associations, and prescribe the requirements under which they might be permitted to transact business in Oklahoma Territory. Said chapter also provided that when any resident of Oklahoma Territory purchased stock in any foreign building and loan association with the object and purpose of obtaining a loan of money at the time of subscribing for such stock executed an application therefor he should, upon complying with the by-laws, rules, and regulation of such association, be entitled thereto, and compelling such association to execute such loan within 60 days from the date of application, or repay to such proposed borrowing stockholder all moneys paid by him for stock in such association. Prior to the passage of this legislation many prospective borrowers who subscribed for stock with the intention of procuring a loan failed in securing such loan, and in many instances forfeited the amount paid in, and it was the purpose of this legislation to prevent occurrences of this kind.
The word "premiums," as originally used in building and loan statutes and contracts, contemplated a payment for the use of money in excess of the rate of interest agreed upon, and did not necessarily mean a payment for the use of money in excess of the highest legal rate of interest that might be charged. The rate of interest was fixed by agreement of the parties, and premiums were determined by the amount bid; the person offering the highest rate of premium being entitled to preference in obtaining a loan. When competitive bidding was abolished, and the amount charged was arbitrarily fixed by the by-laws, as was the case here, at a rate not less than the highest legal rate of interest allowed by law, then there was in fact no such thing as a premium, and the use of such word was misleading. The rate of interest was fixed in the contract, and the law required premiums to be fixed by competitive bidding, which it is admitted was not done, and we still adhere to the view that all payments in excess of the rate of interest agreed upon must be credited upon the loan.
The petition for rehearing is overruled.
All the Justices concur.