Interstate Building & Loan Ass'n v. Brown

SHARPE, J. It appears from the bill that the contracts. which are complained of as being usurious were made pursuant to by-laws of the defendant association, which required its borrowing members to pay in monthly installments interest eo nomine on loans at the rate of six per cent, per annum and also to pay monthly stated sums on stock subscribed for until the stock matured. In addition to such monthly payments such members were required to pay membership fees and also fines in case any were imposed for defaults in making payment. Receipts from such sources were to go into a fund which after deducing expenses of the association were to be divided as profits and the share apportioned to a borrowing member was to be. applied to maturing his stock. The accumulation of such dividends to an amount equal to the par value of the stock had the effect of maturing it and of cancelling the member’s obligation to pay and of discharging mortgages given to secure the same. Except where default in making payments rendered the mortgage presently collectible, the. borrower was never to individually pay the principal sum borrowed, but for that the association could look alone to profit dividends accruing under the plan stated. This court has several times decided, that in contracts of this class the obligation to pay on [469] stock in [the association is to he regarded as separate from the obligation to pay interest. — Southern B. & L. Asso. v. Anniston Loan & Trust Co. 101 Ala. 582; Sheldon v. Birmingham B. & L. Asso., 121 Ala. 278; Johnson v. B. & L. Asso. 126 Ala. 672. Complainant's contracts with the defendant association are shown to have been made in accordance with the by-laws referred to, and [treating stock dues as distinct from interest, they do not call for interest exceeding the legal rate. That the association derives its powers from another State does not affect the question since the right of foreign associations of this character to do business here upon compliance with the conditions prescribed by law is recognized. — Eslava v. N. Y. Nat. B. & L. Asso. 121 Ala. 480. The general allegations of the bill to effect that complainant was never a member of the association and that issuance of stock to him was a scheme to exact more than legal interest and that the loan .with interest was paid, are controlled and rendered nugatory by more specific allegations which show that complainant under his contract became a shareholder in the association with the right to participate in its profits by having his share thereof applied to the maturing of his stock, and [that his payments have 'been not on the principal of the loan but on account of his stock, membership fees and fines together with interest at six per cent, on the loan. No facts are alleged to show that the defendant has refused to credit complainant according [to the. terms of his contracts or that there is any difficulty in accounting which necessitates retention of the bill as one for an account, nor do we construe the bill as seeking relief except upon the ground of usury. The decree appealed from must be reversed and one will be here rendered sustaining the demurrer to the whole hill.. The. cause will be remanded with leave to complainant to apply for amendment to the bill within thirty days. Beversed and rendered and remanded.