Ocmulgee Building & Loan Ass'n v. Thomson

McCay, Judge. 1. The principal question in this case is, what is the amount the plaintiff is entitled to recover, and what is the status of the defendant in the association, according to its charter and [432] by-laws, when the judgment is satisfied. We have little to say that is not contained in the masterly argument of Mr. Bacon, the counsel for the defendant. It is said that this question is decided by the case of the Bibb County Loan Association vs. Richards, 24 Georgia, 198. But though the association then set up the same claim they do here, the only question decided was the right to recover, and that the recovery was regulated by a section in the charter, like the fourteenth of this. The amount of the recovery and the status of the defendant, as to his shares, was not considered by the court; that, however, is the very question in this case, and it depends entirely on a construction of the by-laws and charter. There is absolutely no provision of the charter to justify the rule of adjustment adopted by the company — it is entirely arbitrary. The provisions of sections five and six apply strictly, and in terms, to stockholders who have not received any advance, and who fail to pay. The case of the defendant here, when he pays the judgment, is that of one who has got an advance, paid it back, with all its incidents, and all his arrears. These associations are founded on mathematical calculations, and a close scrutiny of their charters will show that their rules are based upon the highest principles of equity and fairness. Their fundamental idea is that one who has the privilege of paying money advanced to him in small sums, monthly, can, in consequence of the slight strain the payment makes on his resources each mouth, pay a large per cent, for the use of that money, and the whole scheme^ adopting this as its fundamental idea, is based upon fairness and equity to all parties. The charters have, most of them, come here through the northern states from England and Germany, and they have been perfected by experience, so that there is scarcely a word in them that is superfluous or without a definite meaning. The measure of the amount due by one who has got an advance, as fixed by section fourteen, is exactly the sum he would have paid the company had he promptly complied with his engagements and paid back the money he got, together with a measure — the fines — of what the company would have made according to its ordinary work [433] ings, on his dues, had he paid them promptly, and when he pays this the company is whole. It is precisely in the situation of one who has discharged his property from the mortgage under section twenty-four of the by-laws. When he took the money he undertook to do the very thing the judgment makes him do, and he pledged to the association his stock as collateral security for the faithful performance .of his undertaking, and when he performs it by payment, as prescribed by section fourteen of the charter, this stock is released from the pledge, and he holds it as though he had never got an advance — which, in fact, he has not, for he will have returned it. There is nothing in any portion of the charter or by-laws which declares he is no longer a member. He is exactly in the situation of one who has discharged his property from the mortgage by section twenty-four of the by-laws. He pays back the money he got, with such an advance upon it as will enable the company, at the lower rates at which money is selling, to get the same monthly interest upon it as the defendant ought to pay at the rates he got it at. He pays up all arrears and dues, and he pays up all fines due the company for his failure — why should he not now be the owner of his stock? Why should he not stand exactly like a man who has got no advance. The company is, as to him, precisely in the situation it is to a man who has got no advance. Why should he not stand in the same way as to the company? It is the harsh, unjust, outrageous and oppressive demand which the companies, as they have worked here, make on one who has failed to pay, which has cast on these companies the odium in which so many persons hold them. We think in this oppression they are violating their own rules, and that it has thus far been borne with because the subject has been misunderstood. As to the amount the defaulter is due, except as to the fines, Jliat, we think, is very plain. The point sought is, what will make the company whole; what will put it precisely in the situation it would have been in had the defaulter never got any money, or promptly paid his dues, as he agreed to do. Obviously such' [434] a sura as, at present rates, will produce to the company the same dues as he pays, or rather, the same number of dollars on each share. Money has fallen since he sold his interest or borrowed — the time of winding up has got nearer, and it will take more money to be sold to pay $20 00 at f 1 00 per share than it did wheu he got his advance. This he must make up. .2, 3. Next he must pay all back dues. But it is obvious that these dues would have been making money, since, as they were paid, they would have been sold. It would be possible to ascertain accurately what this ought to be by seeing what money sold for each month, but the calculation would be intricate, and as it is intended and expected that these societies will be managed often by men who do not understand their principles, and who are unable to make calculations, this profit is ordinarily met by what is called a fine. By the words of the by-laws, it is perhaps the fairest meaning to be put upon them, that the fine shall be but once laid, and laid each month, not on the whole amount then due, but on the amount due for that month. On making a calculation it will be found that this is about what would be the average profits on the dues paid, and we think that not unfair. To- take the view taken of it by the counsel for the plaintiff in error, would be to make these fines, not liquidated damages, but penalties, and not enforceable by law. 4. As it is said this company has quit business and is winding up, we think, if its assets are ascertainable, the defendant would be entitled to a credit for the value of his stock. If that be not so, he ought, if the company still goes on, to pay the whole sum, holding his stock as the other non-advanced members do. We leave this an open question, according to the facts. We are compelled to reverse the judgment, because, whilst we agree with the judge as to the principles on which the matter is to be adjusted, we think he clearly erred in applying section fourteen to the. case in hand. Judgment reversed.