Bell v. Southern Home Building & Loan Ass'n

SHARPE, J. The contract from which the complainant seeks to he relieved is in all respects similar to that which was under consideration in Hayes v. Southern Home Building & Loan Association, reported in 124 Ala. 663, wherein, following the decision made in Southern B. & L. Association v. Anniston, etc. Co., 101 Ala. 582, it was held that a member of a building and loan association by becoming a borrower under such a contract, assumed an interest bearing debt to the association, separate from the debt created by his subscription for stock therein, and that such member is not entitled [376] to have payment made on account of stock, treated as payments on the sum borrowed. This doctrine though denied by some courts in treating of usury, has, by this court, been upheld in several cases, other than those above mentioned. See Sheldon v. Birmingham B. & L. Association, 121 Ala. 278; Pioneer Savings & Loan Co. v. Nonnemacher, 127 Ala. 521; Interstate B. & L. Association v. Brown, 128 Ala. 462; Johnson v. National B. & L. Association, 125 Ala. 465; National B. & L. Association v. Ballard, 126 Ala. 155; Farmers’, etc. B. & L. Association v. Kent, 131 Ala. 246. It has also been held in this State in accordance with authorities elsewhere, but not universally prevailing, that the obligation on the part of a borrowing member of a building and loan association to pay premiums is separate from his obligation to pay interest on a loan when the contract and the by-laws of the association so provide and no statute is thereby contravened.—Beyer v. National B. & L. Association, 131 Ala. 369; Thornton & Blackledge on Building & Loan Associations, § 224. In Johnson v. National B. & L. Association, supra, it was held, upon a direct presentation of the question and a review of the authorities, that in the absence of legislative prohibition, a building and loan association may lawfully issue paid up stock. This being true, it follows under like conditions, it is within the legitimate scope of the business of such an association to include among its stockholders a non-borrowing class, paying stock subscriptions by installments, and exempted from interest and premium charges to which borrowers are subject. There was not at the making of the -loan to complainant any statute which forbade such associations incorporated elsewhere to operate here upon the plan of the defendant, after observance of the conditions imposed upon the right of foreign corporations to do business in this State, nor does the bill show that in so operating, the defendant was exceeding the powers given it by the State of its creation. That which was agreed upon as interest on this loan being six per cent was not in excess of the legal rate. By the plans of the association its receipts from all sources were, after deducting [377] expenses of the business, to be treated as profits in which complainant and the other members shared by having the same applied to the maturing stock, and it was possible for such profits, under favorable conditions to have extinguished complainant’s liability before the payments required by her contract amounted to the sum she borrowed with legal interest. If by reason of either intentional mismanagement or of merely improvident management, the non-borrowing membership of the association has become so disproportionate to the borrowing class as to decrease profits and thereby postpone the maturing of stock beyond the expected period of maturity, the complainant, if not choosing to withdraw from the association in accordance with its by-laws, should have sought a remedy through the association’s governing board or agents before resorting to the court.—Johnson v. National B. & L. Association, supra. Fraud when sought to be made a ground for relief must be so alleged as to disclose the facts constituting fraud; an averment of fraud as a conclusion being insufficient.—Flewellen v. Crane, 58 Ala. 627; Pickett v. Pipkin, 64 Ala. 250; National B. & L. Association v. Ballard, supra. What length of time and what number of payments would be required to mature complainant’s stock and so terminate the obligations assumed by her contract, were matters necessarily dependent upon the exigencies of business, and that this was so, appeared from the association’s by-laws which embodied its plans and whereof the complainant was chargeable with notice since they entered into her borrowing contract, which contract was made more than four years after she became a member of the association. The alleged representations of the defendant and its agents as to the time, and the amount, that would be required to mature its stock, were and ought to have been received by complainant as expressions of opinion about what would thereafter occur, and such expressions are not deemed fraudulent though they be not verified.—Johnson v. Association, supra. [378] If tbe defendant has so perverted its powers as to give cause for forfeiting its charter, or if from any cause it has become incapable of performing the functions for which it was created, it may be that by appropriate proceedings its business as a whole including complainant’s contract with it could be terminated and settled; but to procure such general settlement does not appear to be within the scope or purpose of this bill. In adherence to principles declared by this court in cases above cited it must be held that the bill is without equity. Its insufficiency lies in the absence from its statements of facts such as, whether taken as well or illy pleaded, could form a basis of relief and in such case a bill may properly be dismissed on motion though the result be to cut off.further right to amend the same.—Gardner v. Knight, 124 Ala. 273. Affirmed.