National Building & Loan Ass'n v. Ballard

SITALPE, J. No irregularity appears in the decree pro confesso, and the case must be considered upon the merits of the bill of complaint. The bill appears to have been framed in a double aspect, first, to rescind the alleged contract for fraudulent misrepresentation inducing its execution; second, to avoid the contract as to usury. A rule which has been often stated because often neglected, requires that fraud, when relied on as a ground for relief in equity, shall be distinctly alleged by stating the facts essential to constitute fraud independent of •alleged 'conclusions.—Pickett v. Pipkin, 64 Ala. 520; Flewellen v. Crane, 58 Ala. 627; Bailey v. Litten, 52 Ala. 282; Story’s Eq. Pl., 251. The rule is of general application, and is not relaxed though the bill be taken as confessed, and no defense is made in the chancery court. The complainant’s title to relief lies in the facts alleged in his bill, and if they be insufficient to show such title they are likewise insufficient to justify a decree.—Flewellen v. Crane, supra. No essential fact will be supplied by intendment to a bill which has been taken as confessed. — 5 Am. & Encvc. of Law, (1st ed.) 505. To show fraud this bill alleges that prior to the contract defendant issued a prospectus stating its objects, the cost of its loans per month, and that its shares would mature in about six years; and the prospectus is made an exhibit. It then avers “that by reason of the representations made in said prospectus of the time in which said Stock would mature, and by such representations held out and made by the agents of said association, which they knew to be false and uttered with intent to deceive orator and others, he invested in 20 shares of stock, and made a borrow of fl,000, and entered into said contract and executed the mortgage above referred to,” etc. Omitting the question of laches, which is generally of importance in suits of rescission, and merely calling attention to the indefinite and indirect character of these charges of fraud, we note their insufficiency in the lack ¡of any averment that a longer period than that stated in [161] defendant’s prospectus was required to mature its share. As to time actually required for that purpose, the bill is silent. If the representations were false in overstating rather than understating that period, obviously they could not have injured the complainant. The contract exhibited in the bill is not shown to be usurious, nor is it shown that the dues and assessments secured in the mortgage, have been fully paid. It is alleged that the defendant is a corporation, organized under the laws of this State; but whether organized under a private act or the general statutes is not shown, and the court cannot judicially know. If the association’s power to legally make the contract was limited by a special charter, it should have been so alleged. If its poAvers were derived from the general laws pertaining to building and loan associations in force at the time of the contract, then it is not shown to have been usurious. Those general laws provided that building and loan associations organized thereunder, might make loans to their shareholders upon real estate mortgage security “on such terms as may be prescribed by their by-laws.” — Code, 1886, § 1556, subdiv. 9. In Sheldon v. Birmingham B. & L. Asso., 121 Ala. 278, the statute was uncle]’ consideration, and it avus held in effect that such associations in issuing stock and lending money to its members on the building and loan plan were not restricted by the statute' regulating the rate of interest generally. We need not restate the reasoning by which that conclusion was reached. •In the absence of averment to the contrary, it is presumed that the contract aavus made pursuant to by-laws of the association, and within its chartered powers. The decree must be reversed, and the cause will be remanded to the chancery court.