Tutwiler v. National Building & Loan Ass'n

SITAKPE, J. If a contract be not usurious at its inception it does not thereafter become so. To make it usurious it is not sufficient that a sum greater than the principal with legal interest may become demandable, but to have such effect it must appear that the borrower is bound to make return of the principal certainly, or subject to no probable hazard and that the interest will, or may, exceed the legal rate. — Tyler on Usury, 172; Webb on Usury, § 24; Van Beil v. Fordney, 79 Ala. 76. By the mortgage contract which is here alleged to .b.e usurious it is stipulated that the debt secured was to be paid in installments of $28.50 per month, to be applied $10.50 to dues on stock held by complainant in [108] the defendant association, $10.50 to premium, and $7.50 to interest on t'lie loan, and it is also agreed that the complainant should pay all fines and assessments levied against her pursuant to by-laws of the'association. No definite time is fixed in the mortgage as its law day, or for the Cessation of payments- provided for, except by a stipulation that “said payments shall-be continued until the dues so credited on said stock, together with the dividends declared- thereon shall equal the par value of said stock.” It was further provided that failure for six months to make the monthly payments should at the defendant’s option make the whole amount of the loan due. Without the happening of the last named contingency, the time during wliich the payments were to continue, and consequently the number of such payments made necessary to discharge • complainant’s obligation, is determined alone by the event of the stock’s maturity, to be wrought by the allowance of credits for payments on stock and for dividends declared. • • ■ - Presumably if the dividends contemplated' were to be derived froin profits of a business conducted by the association and participated in by its stockholders, credits on the stock from that source must have depended largely upon the character and conduct of the business transacted. Under' conditions of prosperity arising from wise management and favoring circumstances such dividends, together with the regular payments provided to be credited on stock dues, might have been sufficient in amount to mature the stock and extinguish the complainant’s liability before the installments accruing against her could together amount to the sum borrowed. The bill does not set out by-laws or charter provisions of the association, nor does it otherwise disclose a plan adopted or pursued by the association for doing business-or for earning and declaring dividends. It contains no ground for equitable relief unless for usury. The mortgage contract exhibited does not by its terms purport to bind the' complainant to- pay more than the sum borrowed, with legal interest. Lacking • averment of extraneous facts, existing when [109] the contract was made and rendering it usurious in effect, the hill was subject to the demurrers. Decree affirmed.