Welling v. Eastern Building & Loan Ass'n

The opinion of the Court was delivered by Mr. Justice Gary. This action was brought for the purpose of recovering the penalty under sections 1894-1895 of the Revised Statutes, for not entering satisfaction in the proper office on the mortgage executed 'by the plaintiffs in favor of the defendant. The complaint and the defense set out in the fourth paragraph of the answer, state the facts out of which the controversy has arisen. That part of the mortgage which is material to the consideration of the questions raised by the exceptions is as follows: “This grant is intended as a security for the payment of the sum of $6,175.60, the same being the principal, interest and premium of a loan from said association, which said loan was made pursuant to and accepted under the provisions , of the by-laws of said association, and which said by-laws have been read b}7 the mortgagors and are hereby made a part of this contract, which said loan is evidenced and secured to be paid by seventy-eight certain promissory notes of even date herewith, executed by the said Lawrence S. Welling and Marion Bonnoitt, payable to the said association, at its office in Syracuse, as follows: one of each of said notes is to- be paid on or before the last Saturday of each and every month until all of the seventy-eight notes are fully paid, together with interest on each of said notes after maturity at the rate of six per cent, per annum, payable semi-annually until said notes are fully paid. And the said mortgagors, for themselves and their heirs, executors, administrators and assigns, hereby covenant * * * and agree *' * * with the party of the second part, its successors and assigns, to pay said principal, interest and premiums at maturity, and the interest accruing- on said notes after maturity, and all fines and penalties that may be imposed pursuant to the provisions of the constitution and by-laws of said association, and also keep and perform all promises and engagements made and entered into with said association, according to the true intent and meaning of its by-laws and articles of association.” The plaintiffs introduced in evidence a circular letter [294] entitled “The Definite Contract Plan,” which among other ■things contained the following: “For the Investor — This association issues three classes of certificates, designated as instalment, paid up, and fully paid. All of which are guaranteed to mature in 61-2 years. Amply secured by first mortgages on real estate. Paid up stock doubles in 6 1-2 years; fully paid certificates; guaranteed quarterly dividends, seven per cent, per annum. “For the Borrotver — This association has no auction sales, no 'bidding for loans, and a definite time for repaying a loan. “Liabilities Inserted Flere — The only association making a contract definite in every particular; withdrawal value clearly stated, and never less than the amount paid in instal-ments. “Stock Matures in 78 Months — Borrowers know the exact amount required to cancel their mortgage. No auction system, no lapses, no forfeitures.” The plaintiffs also¡ introduced in evidence another circular which, among other things, contained the following statement : “Illustration — Showing costs and profits to the investor of ten shares of $1,000 in six and one-half years, at time of maturity: He pays a membership fee of $1.00 per share. . . . $10 00 He pays monthly instalments of $7.50' per month for 78 months, $7.50x78. 585 00 Total amount invested.$595 00 He receives in cash at maturity.1,000 00 His net gain is.$4°5 00 “Illustration — Showing the cost of $1,000 loan on ten shares of stock for six and one-half years. Pie bids ten per cent. ($100), which is deducted from the $1,000 borrowed: He pays $15.84 per month for 78 months.$1,235 52 He paid for stock. 10 00 Total.$1,245 S2 [295] “It will be seen from the above that $345.52 is the amount paid in excess o-f the actual amount received on loan. This for the use of the money for six and one-half years. Thus the borrower pays less than six per cent, per annum.” 1 The first and main question that will be considered is whether there is error on the part of the Circuit Judge in his construction of the contract. In the casé of Williamson v. B. & L. Association, 54 S. C., 582, the Court says: “The agreement alleg-ed intheplaintiff’saffidavitand'the bylaws present schemes for maturing the shares of stock that are radically different. The provisions of the said agreement and of the by-laws for maturing the shares of stock are repugnant and in irreconcilable conflict. The question is thus presented for this Court to decide which shall prevail * * * It is a well known fact that comparatively few people that become shareholders in such associations are familiar with their by-laws. They rely upon the honesty, integrity and fair dealing of those who' manag'e the affairs of the association. It is also a well known fact that the by-laws are frequently intricate, and almost unintelligible to the average shareholder, and those in charge of the affairs of the association usually become exceedingly expert in the interpretation of them, thus giving the association a decided advantage in the way of information over the shareholders. Public policy, in order to prevent the perpetration of fraud, and to prevent just such a case as we now have before us, in which the olaintiff alleges that he was induced by the express promises and the literature of the defendant to part with his money in purchasing its shares of stock, demands that the defendant should not be allowed to elect whether it will be bound by its by-laws or its express agreement as to- the time when t'he shares would mature. * * *” The circular will next receive consideration. The construction of a written instrument is a question of law to> be decided by the Court. This Court has the right, therefore, to1 construe the circular. It unquestionably shows that the defendant interpreted the contract to mean that the shares [296] would mature at a ;fixed and definite 'period. It is a well settled principle that when the construction to- be given a contract is rendered doubtful by the language thereof, the interpretation of the contract by the parties themselves is entitled to great weight. Chicago v. Sheldon, 9 Wall., 50; Railroad Co. v. Trimble, 10 Wall., 367; Steinbach v. Stewart, 11 Wall., 566; Lowber v. Bangs, 2 Wall., 728. Our conclusion as to' the proper construction of the contract is in harmony with the interpretation placed upon it by the defendant, and this is an additional reason why the by-laws should not prevail against the express agreement fixing the time when the shares would mature. From the foregoing it will be seen that 'the express agreement set forth in the mortgage and the by-laws óf the association are inconsistent and in ■irreconcilable conflict. As they are repugnant, the express agreement, and not the by-laws, must prevail. 2 The appellant, however, contends that the said agreement and the by-laws are to> be construed under the laws of New York. In the case of Gooch v. Faucette (N. C.), 39 L. R. A., 835, the Court uses this language in speaking of comity: “This is not a right of either State, but is permitted and accepted by the States from mutual interest and convenience, from a sense of the inconvenience which would otherwise result, and from a moral necessity to do justice in order that justice may be done in return. Without this rule, the law of one State can have no force in another. But there is no comity among .the Courts of the different States. They administer the law in the same wáy and by the same reasoning by which all other principles of the municipal law are ascertained and guided. It is the duty of every State to look to1 the interests of its own subjects. Comity being voluntary and not obligatory, can not super-cede all discretion on the subject. Vattel, at page 61, says: ‘It belongs exclusively to each nation (State) to form its own judgment of what it prescribes to it- — what is proper or. improper for it to do; and it will examine and determine what it can do for another, without neglecting the duty [297] which it owes to itself.’ No State can demand the recognition of its laws in another, if they are deemed by the latter to be impolitic or unjust, of bad morals, or injurious to the rights and interests of its citizens, or against its public policy. In Bank of Augusta v. Earle, 38 U. S., 13 Pet., 519, 589, 10 L. ed., 274, 308, Chief Justice Taney said: ‘And Courts of justice have always expounded and executed them (contracts) according to the la.ws of the place in which they were made, provided that law was not repugnant to the laws or policy of their own country. The comity thus extended to other nations is no impeachment of sovereignty. It is the voluntary act of the nation by which it is offered, and is inadmissible when contrary to its policy or prejudicial to its interests * * *’ Story Confl., p. 32, section 38, says: T11 the silence of any positive rule * * * Courts of justice presume the tacit adoption of them (foreign laws) by their own government, unless they are repugnant to its policy or prejudicial to its interests.’ Many other authorities to the same effect might be cited.” In the case of Pope v. Hanke, (Ill.), 28 L. R. A., 568, the Court says: “Comity between different States does not require a law of one State to be executed in another, when it would be against the policy of the latter State. No State is bound to recognize or enforce contracts which are injurious to the welfare of its people, or which are in violation of its own laws” (citing a number of authorities). It thus appears that the State is not compelled from mere comity to recognize the laws of New York, for the'reasons stated. The agreement herein is, in our opinion, injurious to the interests of our people, and whatever may be the laws of New York, we do not think they should be enforced in this State. It is the judgment of this Court, that the judgment of the Circuit Court be affirmed.