Royal Trust Co. v. Culver

Mr. Presiding Justice Horton delivered the opinion of the court. The certificate of stock and the conditions in it recited, .and the assignment of said certificate, the by-laws of said company, said promissory notes and said trust deed, must all be considered and construed together, the same as though all contained in one instrument, and they must all be interpreted under and in connection with the statute relating to building and loan associations under and in pursuance of which said company was organized. The controversy in this case arises mainly from the fact that the company agreed to mature the stock as full paid at the end of six and one-half years. If the profits accruing to said company had been sufficient to make said stock full paid at the expiration of that period, it having been assigned to the company as collateral security, the cancellation thereof with the payment of said notes would have paid the loan in full, together with interest and premium upon said loan and all dues upon said stock. But the profits were not sufficient to pay m full the amount due upon said stock. We are not, however, advised as to what the amount of dividends was to the credit of said stock at the end of said six and one-half years. A stockholder in a building and loan association in this State is a member, a constituent part, of the association, and the officers thereof are his agents as well as the agents of the other shareholders. In some respects the principles governing the relative rights and duties of partners to each other is applicable to such shareholders. Any contract between the officers of such an association and one of the members, which gives to such member an advantage or preference over other members, can not be enforced in a court of equity. The advancing of money by said company to appellee Andrew Culver was not a loan in the sense in which that word is ordinarily understood. It is, more properly speaking, an advance upon the shares of stock of such appellee. The agreement to mature his stock at the end of six and one-half years should no.t be enforced or construed in such manner as to give to him a preference over other members of said association. He is not entitled to any greater dividends—any larger per cent of the profits— than any non-borrowing member would receive. He is not entitled to any special advantage over other members from the fact that he is indebted to the company. By the terms of the loan in question there should be paid to the association five per cent per annum premium, five per cent per annum interest and seventy-five cents per month on each share of stock. These payments computed for the term of six and one-half years and added to the principal sum of $1,000 would amount to $2,235 at the end of the term. If computed with monthly rests, as would be the result, in effect, if premium, interest and dues were paid monthly as contemplated, the amount would be double the amount of said notes given by appellees. Said statute provides in substance that dues shall be paid until the shares shall have reached maturity value. The same, in effect, is provided in the conditions forming a part of the certificate issued to appellee. In King v. International Building Union, 170 Ill. 135, 140, it is said : " All contracts and agreements of such corporations to the effect that the payment of periodical installments for a fixed period shall be accepted as payment in full of subscriptions to its stock are inconsistent with the statute under which the corporation has its existence, and antagonistic to the legal purposes and plans of such organization, and not enforceable as contracts merely.” It is also there held that by-laws providing for maturing-stock in a fixed period without regard to the earnings of the company, are not to be enforced. The case of Sullivan v. Spaniol, 78 Ill. App. 125, is, in all material respects, the same as the case at bar. It is there held that the receiver was entitled to a foreclosure, the objections by the defense being substantially the same as those here urged in support of the demurrer. The reasoning and conclusion in that case command our approval. The decree of the Circuit Court dismissing said amended bill of complaint for want of equity is reversed and the cause remanded for further proceedings not inconsistent with this opinion. Reversed and remanded.