Bowker v. Mill River Loan Fund Ass'n

We do not understand that in this bill the plaintiff seeks a redemption of his mortgage by paying whatever may be found due upon it. It alleges that the funds of the defendant association are sufficient to pay on each unredeemed share the par value thereof, and that the plaintiff is therefore entitled to have his bond and mortgage discharged without further payment. If the funds are not now sufficient, it avers that they are nearly so ; and that the plaintiff will be entitled to such discharge as soon as they have accumulated so as to reach the requisite amount; and he therefore seeks to restrain the defendants from such management of their business, and especially from redeeming other shares at such a rate, as will postpone the time at which he would otherwise receive a discharge. If these positions are not tenable, and the bond and mortgage constitute an absolute debt, then it is claimed that the bond is usurious; that the plaintiff is entitled to the deduction of the statute penalty for the usury; and that on payment of the small sum which would then remain due, and which is all that he offers to pay, he is to be restored to his rights as an original member of the defendant association, and allowed to share its profits. The prayer for relief by winding up the affairs of the association, the appointment of a receiver, an injunction, See., rests upon the case thus stated.

The defendants deny that the contract was usurious, and deny that the plaintiff has any interest in their association, or any relation to it except as a debtor for the full amount of his bond which remains unpaid.

There is not such entire clearness in the by-laws of the asso ciation as would be desirable; and some parts of them, taken by themselves, undoubtedly present difficulties of construction. *107But regarding them as a whole in relation to the contract of the parties, we think the position taken by the defendants is correct. The bond clearly obliges the plaintiff to continue his payments until the whole sum advanced to him shall be refunded. These payments are indeed said to be made “ as monthly dues,” according to the by-laws of the association, but are to be continued till the whole principal sum is repaid. The argument for the plaintiff maintains that this provision is a qualification of the absolute promise-of payment; and that whenever, according to the by-laws, monthly payments are to cease, these payments upon the bond will cease also. But the provision can have its full effect, and without conflicting with the plain and express terms of the contract, if it is interpreted as having reference to the times and mode of payment under the by-laws. The payments are to be made “ as monthly dues, to be applied in liquidation of the said principal sum; ” and monthly interest is to be paid “ until the said payments of monthly dues ” “ amount to the said principal sum ” “ according to the by-laws of the association.” By the 16th, 17th and 18th articles of the by-laws, a mortgagor may obtain a discharge from his obligations by a transfer or payment made in a different manner from that expressed in the bond. By article 30th, the entries made by the secretary in the books, unless corrected on appeal, are made binding and conclusive upon the members. These articles may have an important effect upon the direct stipulations of the bond and mortgage.

But further, in looking through the by-laws, it is manifest that the redemption of shares by the continuance of monthly payments until a fixed sum should be repaid, and then discharging the person whose shares are redeemed from the obligation to make further payments, which seems to have been the plan practically adopted by this association, was not expressly contemplated. There is nothing in the by-laws showing that the payment of monthly dues is in any case to cease until the final closing of the affairs of the association, unless in those special cases where a member withdraws upon terms allowed by the directors. The by-laws of all associations of the kind which *108have been brought to our notice appear to have been formed on substantially the same model, and with reference to the payment of monthly dues on redeemed shares for an indefinite period. But there is nothing in these by-laws which prohibits such a contract as these parties have made, nor which is inconsistent with its literal execution when it is made. According to the rules of the association, there is no more express authority for an agreement that “ monthly dues ” on redeemed shares shall cease at any period before the closing of its affairs, than that they shall continue payable until a fixed sum is realized. We think thé contract, as stated in the bond, was one which the parties were competent to make ; and that, under it, the plaintiff ceased to have any interest in the property of the association by virtue of his redeemed shares, and has no relation to it except that of a debtor.

The other ground taken by the plaintiff, that his bond and mortgage are usurious, is equally untenable, for reasons which were fully given in the recent case of Delano v. Wild, 6 Allen, 1, and which it will therefore be sufficient briefly to restate.

By joining the association and subscribing for shares therein, the plaintiff became bound to make a monthly payment upon ♦each share, and incurred a liability for certain fines for noncompliance with his obligations as a member. In consideration of these undertakings on his part, he became entitled to the privileges of a member, the principal of which was the right to participate in the final distribution of an accumulating fund, the value of which right would be contingent upon the success of the business of the association, and might be increased or diminished by the estimate which other members might make of its value, and their consequent willingness to dispose of their interest on more or less favorable terms. The period to which his monthly payments would continue is of course indefinite. Whether, if he continues a member, he will ultimately receive more or less than the amount which he has paid, with interest, is uncertain. In view of these facts, it was held in Delano v. Wild that it was not a usurious contract to agree to continue his payments as if he had remained a member, and to receive *109any agreed sum in hand for the sum to which a member would be entitled on the final settlement of the affairs of the association. In the present case, the only difference is that the payment of monthly dues is limited to a fixed time and amount. But be is thereby released from an obligation to continue to make it for an indefinite time and to an unlimited amount. The value of this release cannot be computed, and is therefore the subject of lawful agreement by the parties. The contract is not a mere advance or loan of money, to be repaid with more than lawful interest, as it would be if made with a stranger ; but the parties, having a subsisting contract by which the member is to pay certain sums monthly for a period of time that is contingent, and the association being then bound to repay him a certain sum, which may be more or less than they have received from him, substitute for this contract a new one, by which a limit is placed to the member’s payments, and a smaller sum received by him in advance in exchange for the right to a larger at some doubtful time in the future. There is nothing usurious in such a contract. It would be a contract on sufficient and lawful consideration if the plaintiff received nothing, and is none the less so that he is induced to make it by a payment to him in money.

Bill dismissed, with costs, without prejudice to the righ* to redeem.