Meares v. . Improvement Co.

Furches, J. Tbe plaintiffs axe tbe receivers of tbe “Carolina Interstate Building & Loan Association,” and tbe defendants are tbe Land and Improvement Company — J. M. Eairley, J. W. Townsend, S. S. Brown, O. W. Carr, E. C. Beard, S. A. Burke, and A. P. Bbyne. Tbe facts are found by' tbe Judge by consent of plaintiffs and defendants, and among other facts, be finds that tbe plaintiffs are tbe duly appointed receivers of tbe Carolina Interstate Building and Loan Association, wbicb bad become insolvent, and that Tbe Monroe Land and Improvement Company is a corporation; that tbe defendant J. M. Eairley is tbe trustee of said corporation, bolding tbe title to tbe land' hereinafter mentioned, for tbe benefit of tbe defendant corporation; that tire defendant corporation being in need of money, by resolution, authorized its trustee, Eairley, hr borrow for its benefit, $3,000; that under tbe authority conferred by this resolution, tbe said Eairley, as trustee and agent of tbe defendant corporation, on the. 11th day of April, 1892, made arrangements with tbe Building and Loan Association to borrow that amount. In order to enable him to get this money, be bad to subscribe for thirty shares of stock in tbe Building and Loan Association, and become a member-of tbe same. In other words, he bad to become one of tbe ■ incorporators of tbe said Association, wbicb he did, and tbe Association issued to him a certificate for thirty shares of stock of tbe par value of $100 per share, aggregating tbe sum of $3,000. And upon this certificate tbe Building and Loan Association loaned him $3,000. To secure tbe payment of this money, tbe certificate of *664 stock was assigned to the Association, and deposited with it -as collateral security. The defendant, the Land and Improvement Co'., J. W. Townsend, J. M. Eairley, S. S. Brown, O. W. Carr, E. C. Beard and L. A. Burke, on the 5th day of May, 1895, made and executed their bond and obligation to the Building and Loan Association for the $3,000. And on the same day (May 5) the defendant corporation, the Land and Improvement. Company, executed its mortgage upon the land heretofore mentioned as being held in trust by the defendant Eairley for the benefit of said Land and Improvement Company, as additional security for the payment of this loan. A large balance of the money so borrowed remains due and unpaid, and this action is brought tu foreclose the mortgage. These are substantially the facts in the case necessary to be considered in determining the rights of the parties. The defendants admit that the Land and Improvement •'Company is liable for the balance of the $3,000 at 6 per cent interest, giving it credit for all it has paid thereon; and defendants admit that the mortgage is liable as security for what the Land and Improvement Company is liable for. But the defendants contend that the Land and Improve^ ment Company is not an incorporator in the Building and Loan Association, and therefore, is not liable for the 30 per •cent of lossage, which it has been found to be necessary to restore the capital and equalize the losses sustained by the Building and Loan Association. The defendants say that the Land and Improvement Company is not, as a matter of fact, one of the Building and Loan incorporators. But as there is no express provision in its charter authorizing it to take stock in another corporation, it could not in law do so, if it had attempted to do so. And while this seems to be the -general rule, one of the authorities cited by the defendants *665 in support of this position, holds that where a corporation in the course of its business has become the holder of such stock, it may be held to be liable on the same, in case of insolvency of the company issuing the stock. California Bank v. Kennedy, 167 U. S., 362. And it would seem that under the authority of this case, treating Fairley as the agent, the Land and Improvement Company could be held liable for this loss of 30 per cent. And it is admitted that the mortgage is liable for whatever sum the Land and Improvement Company is liable. But there is another principle involved in this action, which, to our minds, clearly makes the defendant corporation and the mortgage liable for the demand of the plaintiffs, including the 30 per cent. The defendant corporation, by resolution, authorized and empowered its trustee, who held the legal title to its land, to borrow this money for its use and benefit. Under this power and authorization, he borrowed the money, and the defendant corporation received and used it. And we must suppose that it was properly borrowed and legitimately used. To enable the trustee and agent of the defendant to borrow this money, he had to subscribe for thirty shares of stock in the Building and Loan Association, and thereby become one of the corporators of said Association, and he and the defendant- company, and a number of other persons, executed a bond obligating and promising to pay the Building and Loan Association this debt. It therefore became the debt of the defendant Fairley as well as that of the defendant company. And as he is one of the corporators and liable for his part of the loss, this must be accounted for before he can be credited with the payments that have been made. Meares v. Duncan, 123 N. C., 203. This being a debt of the defendant Fairley (though as be *666 tween, the defendants be is a surety), makes no difference so far as the plaintiff is concerned; and the mortgage is bound for whatever he is bound for. Meares v. Butler, 123 N. C.,206. The matter of usury, as between the corporators of this Building and Loan Association, has been discussed and decided by this Court so many times that we can not afford to enter upon a discussion of the matter again. This must be considered as settled. If there are any errors in the computation of interest or the equalization of the losses, they should of course, be corrected. AVe think every principle involved in this case has been settled by the various opinions of this Court, in- cases arising out of the settlement of the insolvent Building and Loan Association of Wilmington. It is claimed that the Supreme Court of South Carolina, in the case of Meares v. Finlayson, 32 S. E. Rep., 986, has decided this question, or one similar to it, different from what we have held in the cases of .Meares v, Duncan., and Meares v. Butter, supra, and other cases referred to-. But upon examining the case of Meares v. Finlayson, we find that it is principally put upon a South Carolina statute, and may be correct as a South Carolina decision. But the case of Meares v. Finlayson is not the case we have under consideration, and it is not our purpose to- review that case. It can not have the authority of a precedent, but only such weight' as it is entitled to as the opinion of the highest court of a sister State. We can- not adopt it in this case, without overruling at least a half dozen of our own decisions, which we do not care to do, as they seem to us to be based upon justice, equity and sound reasoning. The judgment appealed from is Affirmed. Douglas, J’., dissents.