Patterson v. Workingmen's Building & Loan Ass'n

Cooper, J., delivered the opinion of the court. Bill to be relieved from alleged usury in a transaction between the Workingmen’s Building and Loan Association and one of its corporators. The chancellor granted the relief sought, and the Association appealed. — 678 — The Association was organized under the act of the Legislature of 1875, chapter 142, sections 5 and 14 (new Code, section 1742, et seq). This act, after conferring the general powers conceded to all corporations created for profit, proceeds to grant certain special powers to Building Associations. “The funds of*said corporation,” it is enacted, “ may be loaned out to the stockholders in such manner, on such terms and conditions, and under such regulations as the said corporation, by its constitution and by-laws, may prescribe, 'provided the same be secured by real estate; and any funds of the said corporation, which may remain after the stockholders have borrowed all they desire, may be loaned out to other persons, the same being secured by a lien on real estate. The members of said corporation shall have the power to adopt a constitution, and the constitutiou, the by-laws and regulations shall have the force and effect of a. legal enactment on the members of said corporation, provided the same are not in conflict with the general law of the land. * * The by-laws may prescribe the amount of shares \and the time of payment thereof by instalments, but the monthly call for the payment of said instalments shall not exceed two dollars on each and every share. Every share of stock shall be liable for, and subject to a lien for the satisfaction of any unpaid instalments, and the by-laws may provide the mode and manner of enforcing said lien. New shares may be issued in lieu of any shares withdrawn or forfeited. The shares may be issued in one or successive series, in such amounts as the board of directors may determine, and — 679 — any stockholder wishing to withdraw, as he or she may have the right, shall give thirty days’ notice thereof, when said withdrawing stockholder shall be -entitled to receive the amount paid in, and such proportion of the profits as may have been accumulated; Provided, that at no time shall more than one-half the funds in the treasury be subject to the demands of withdrawing -stockholders without the consent of the ■board of directors, nor shall any stockholder be entitled to withdraw whose shares are pledged to the corporation. The personal representative, upon the death of a stockholder, shall be entitled to receive the full amount paid in by the deceased and any profits which have been realized, provided, that if said stock is pledged to the company, the same shall be redeemed by said personal representative. The board of directors •shall hold stated meetings at which the money in the treasury, if' over two hundred dollars, shall be offered for loan in open meeting at a -rate not in conflict with the laws of the State, and the stockholder who shall bid the highest premium for the preference or priority, shall be entitled to receive a^loan of two hundred dollars for each share held by such stockholder. * * In case of non-payment of instal-ments or interest by borrowing members for the period of six months, payment of principal and interest, without deducting the premiums paid or interest thereon, may be enforced by proceediug on their securities -according to the terms of the contract under which the same were pledged. The premiums bid by borrowing stockholders for the preference or priority of — 680 — loan shall be paid before the loan is consummated, not as part of the loan, not as interest, but as a means of determining which one of the stockholders 'shall receive the loan, whenever there are a number of stockholders who may simultaneously desire to effect a loan. * * Said corporation may determine, by an express provision of by-laws, that when each share-of stock reaches a certain value, to be specified thereby,' not exceeding two hundred dollars, the stockholders shall be paid such value for each share they respectively own, and that upon such payment the stock shall revert to the corporation.” The following provisions of the constitution of the Association are quoted as bearing upon the matters of controversy. The object of the incorporation is stated to be “the accumulation of a fund which may be loaned on good security to the members thereof to aid them in procuring homes, and such other investments as are provided in the constitution. The stock of the Association is to be issued in successive series of two hundred dollars per share. The members shall be white r^idents of the United States, who' shall have subscribed for one or more shares of stock and signed the constitution. No one person shall-'hold more than fifty shares of stock. * * Any member wishing to withdraw one or more shares of his or her stock, which is not pledged to the Association, shall give thirty days’ notice in writing, at the expiration of which time the withdrawing stockholder shall be entitled to receive the amount actually paid in on such stock and such proportion of profits that may have — 681 — accrued as the board of directors may determine to be just and equitable, deducting from the amount all dues, fines and penalties that are charged against the withdrawing stockholder. * * All stock upon which dues, fines, penalties or interest are unpaid, is hereby declared to be pledged to the Association to secure the payment of the same. * * In case of non-payment of instalments or interest by borrowing members for the period of six months, it shall be the duty of the board of directors to enforce the terms of the deeds of trust held as security in accordance with the provisions of the act. of the Legislature of 1875. * * On each share of stock there shall be paid an instalment of $1 per month in advance, and any per■son wishing to subscribe for stock subsequent to the issue of a series shall pay up instalments which have becorhe due in the series in which said stock may be taken or issued, and such premiums as the board of directors may require. * * At the stated monthly meetings of the directors, the funds on hand not otherwise appropriated, shall be offered for loan. Every member shall be entitled to a loan not exceeding the par value of any number of shares held by him or her; provided, however, that no member shall be entitled to a loan on more than fifteen shares at one bidding. Choice of priority of loan shall be by bid of premium, and the member bidding the highest premium for priority or privilege shall have the first choice of loan, when the remaining funds, if any, shall be loaned in like manner. Interest on all loans shall be at the legal rate of • interest from the time of mak — 682 — ing said loans, and shall be paid in monthly instal-ments in advance, and at the same time that the ■regular dues are paid; and such loans shall be for the purpose of enabling the borrower thereof to secure •a home, or for the purchase of other real estate, or for the improvement of the same, and for no other purpose whatever, and the loan shall be secured by ■deed of trust on unencumbered real estate. * * All claims for dues, interest, fines, expenses and penalties shall be held as a lien against the stock of delinquent members, and when there are six months’ dues remaining unpaid the stock shall be, declared forfeited, and revert to the Association; provided, the holder of said stock shall be entitled to receive the same amount that would be paid to stock withdrawn at the time payments ceased to be made, less all claims held by the Association against said stock. * * When the stock of the oldest series shall reach its ultimate or par value, and all losses and gains adjusted thereto, there shall be paid to each member holding unpledged shares the sum of two hundred dollars per share; and all securities held in trust or stock pledged for loans shall be quit-claimed and satisfied, and the said shares revert to the Association; provided, that all claims of whatever kind against the stock or securities of any member must be fully paid up before such stock shall be redeemed or securities cancelled. If, after the liquidation as thus provided, there shall be a surplus still remaining, the same shall be divided pro rata to their respective interests among all the members of ■such series.” — 683 — The complainant, according to the agreed statement of facts, is the only child and heir of Julia S. Chester, deceased, and as such the owner of eight shares of stock in the defendant Association, originally taken or subscribed by her mother, and of the land conveyed in trust to secure to the Association certain dues and liabilities therein mentioned. On February 5, 1878, when $1,200, money then on hand belonging to the Association, was offered for loan in open meeting, a number of members being then present and competing, Julia S. Chester became the successful bidder by bidding for the preference or priority of loan $66 premium on each of six of her shares of stock, or thirty-three per cent, on the amount offered, aggregating $396. The premium was deducted from the $1,200, and the residue of the money paid to her, she executing a note at one day for $1,200, and making a trust conveyance of realty to secure the Association as hereinafter' mentioned. On April 2, 1878, Julia S. Chester in like manner became the successful bidder for $400, at a premium of $68 on each of her two remaining shares, and executed her • note for $400, and making another trust conveyance of the same realty for the security of the Association. The first loan was applied for to pay off tax and other encumbrances on the realty, and refit the premises, and the second loan to build a tenement house. The premiums so bid were among the highest premiums ever bid . by a member of the Association, the premiums varying from time to time, the lowest being $25 a share. The biddings were opened and — 684 — conducted by the Association under and in pursuance-of the charter, constitution and by laws of the corporation. Julia S. Chester paid on her shares the monthly dues, and one dollar per month on each share as interest on her notes, until she had paid the amount specified in the agreement. It is also agreed, “that it is the theory that under -the methods adopted by the Association in the loaning of its money and effecting the object of its organization, it will work out for its members the full payment of their stock within a period of ten years, and that the borrowing stockholder pays off his entire indebtedness within the same period, and that a large number in the Association have so worked out the payment of said loan and stocks.” The note given on the first loan is in these words: “ One day after date, I promise to pay to the 'Workingmen’s Building and Loan Association of Memphis, Tennessee, twelve hundred dollars for value received, with interest from date at the rate of six per cent, per annum, payable monthly in advance. This noté • is secured by a trust deed on house and lot particularly described in said trust deed, which is of record in the register’s office of Shelby county, Tennessee. Memphis, February 5, 1878.” The condition of the deed of trust is as follows: “ Whereas, the said Julia S. Chester has become indebted to the Workingmen’s Building and Loan Association in the sum of twelve hundred dollars, as is evidenced by my promissory note, signed by me, for said sum, and due one day after date, with interest from date at the — 685 — rate of six per cent, per annum, and the said Julia S. Chester is desirous to secure and make certain the payment of the said note according to the tenor thereof, and the stipulations and conditions hereinafter •set forth. Now, then, if the said Julia S. Chester shall pay, or cause to be paid, the full amount of interest on said note monthly in advance, as required by the rules, regulations and by-laws of said Association, and, in addition thereto, shall pay all assessments, •dues and fines that may be assessed or imposed upon me by virtue of my ownership of stock as aforesaid, regularly and promptly,' as required by the rules, regulations, by-laws and constitution of said Association, until the assets of said Association shall reach the par value of all shares of stock taken and subscribed for, or until she ceases to be a stockholder of said Association, and shall in all other respects fully comply with the rules, regulations, by-laws and constitution of ■said Association, then and in that event, this deed to be void and of no effect.” Then, after certain stipulations in regard to keeping the premises insured, the deed authorizes the trustee, upon the failure of the grantor to comply with its terms for six months, to sell the land at public • sale for cash, and appropriate the proceeds thus: “First, to the payment of the necessary expenses and costs of said sale; second, to the satisfaction of said debt of twelve hundred dollars, with all the interest and accumulated expenses •as hereinbefore set forth, whatever these may be, and the balance, if any there be, to me or my legal ■representatives.” — 686 — Building Associations were first sustained by the courts in England as private, individual enterprises, and were afterwards sanctioned by act of Parliament. They exist in Great Britain and most of her colonies, have spread over the continent of Europe, and have found favor with the legislatures and the people of most of the States of this Union. There must be something in them which meets a popular want, and commends them to the law-making power. That something is not hard to find. The idea which first gave rise to their institution, which furnishes their ostensible and legitimate raison d’etre, and which secured to them their popularity and their, in many respects, exceptionally favored existence before the law, is that of enabling persons belonging to a class whose earnings are small, and with whom the slowness of accumulation discourages the effort to become, by a process of gradual saving, either at the end of a certain period or by anticipation of it, the owners of homesteads: Endlich on Build. Ass., sec. 7. They are another form of the savings bank system, with, as experience has shown, even more safety against loss, and with the advantage of allowing the member to anticipate the eventual profit. They have labored under the disadvantage of having no well-defined nomenclature applicable to their modes and operations exclusively. Facts, says M. DeTocqueville, occur faster . than words are invented to define them. The Associations were compelled to use words already having a well-defined meaning in a different. sense. For the dividends expected to be made when the Association was closed, and the subscription for those dividends, — 687 — they adopted the words stocks and shares. For the advance upon the dividends by way of anticipation, and the amount which the member was willing to give out of the final dividend for the preference' of an advance the words “ loan ” and “ premium ” or “bonus” were used. The difficulty of the courts has-often "been to get below these words to the real thing, and not to be led astray by them. The law-maker has been compelled to adopt the same nomenclature used by the Associations in drawing up their own constitutions and by-laws. In one of the early English cases Lord Chancellor Truro had occasion to note the fact in his efforts to properly construe the act of Parliament under which the litigant Association was organized, the constitution and by-laws of the Association drawn up under the act, and the mortgage taken in the course of the operations of the company. “Unfortunately,” he says, “ each of them is very inaccurately framed, with little attention to the consistency of language in the different parts of them, not always using the same words in the same sense, nor considering the applicability and correctness of the expressions in reference to the subject-matter to which they refer”: Seagrave v. Pope, 1 DeG., M. & G., 783. The remark, “unfortunately,” is still applicable to more recent legislation, and rules, regulations and instruments drafted thereunder, and, as we shall see, is not altogether amiss to the case before us. Over thirty years ago special charters were granted in this State to building associations, all drawn on the same model. These charters were held not to justify the constitu — 688 — tion and by-laws which the associations felt authorized to adopt under them: Martin v. Nashville Building Association, 2 Cold., 418. The general law of 1875, under which the existing associations are organized, does expressly authorize the acts which were held to be illegal in that case, and therefore gives rise to an entirely different question. The law has been in force for ten years, and the agreed facts in the case before us show that there are eleven associations organized under it in Memphis. Our docket shows the existence of similar associations in this city, and we know as matter of current history that like associations have been formed, and ar§ operating in many of the cities and towns in the. State. The interests involved in any decision we may make are very large, and it is ■our duty, in view of these facts, to give the whole subject a careful consideration. The points made and argued on behalf of the complainant are: First. That the loan of money to Julia S. Chester, the highest bidder, in pursuance of the charter and by-laws of the defendant company, was violative ■of the interest laws of the State, and the premium so' charged and received therefor, was invalid and unlawful, and as such cannot be collected from' the complainant or her property. Second. The charter of the defendant Association requiring that “the premium paid by borrowing stockholders for the preference or priority of loan shall be paid before the loan is consummated,” makes the loan to Julia S. Chester, as a building association con — 689 — tract void; for the loan was not made as prescribed by the charter, .the premium not having been paid before the loan was consummated, but deducted from the amount thereof. The law and the courts requiring in such eases a strict conformity with statutory requirements, the contract is not protected by the charter, but becomes one of simple borrowing. - Third. In no event can the Association claim interest on the premium charged, because, by the charter, the premium is not embraced in the loan, but paid before the loan is consummated. All of these propositions turn upon the letter of the general act of incorporation, and depend for their cogency upon the conclusions we may come to upon the substance' of the legislation. The first and third may be considered together, for they both present the-issue of usury. The second point is not sustained by the facts, for the premium was paid or deducted before the loan was consummated, ’and, in that view, the proposition is resolved into the first and third, that is to say, did what was done, the retention of the premium, and receiving monthly payments on the whole sum bid off in the form of interest, make the transaction usurious? The sole issue in reality is usury or no usury. And here it may be conceded at once that if the substance of the transaction be a mere loan of money for a bonus, the contract would 'be usurious. The State Constitution expressly provides: “ The Legislature shall fix the rate of interest, and the rate so established shall be equal and uniform throughout the — 690 — .State”: Const., Art. XI., sec. 7. And, consequently, the Legislature caunot grant to a corporation-or class of corporations the right to charge a higher rate of interest than the rate fixed by the general law: McKinney v. Hotel Co., 12 Heis., 104. It may also be conceded that if the facts made out the case of a fraudulent and corrupt device^ to avoid the statute of usury, under the pretense of legislative authority, the complainant would be entitled to relief. There are no such facts in this •case, the particular transaction being in strict accord with the authority conferred by the charter. And the idea that the Legislature intended to create a corrupt device to avoid the usury laws cannot of course be entertained. The question is therefore narrowed down to the point whether what was done, under legislative authority, is nevertheless illegal because in violation of an express provision of the Constitution. The Association, by its contract with its borrowing member, required security by note and trust deed for the payment of monthly dues, equivalent to interest at the rate of six per cent, per annum on the whole amount offered and bid off, until the accumulations of funds would bring all the shares up to par/ and the Association paid over to its member, by satisfying his indebtedness to that extent, the net sum left after deducting the bonus bid from fhe amount offered and bid. This contract is authorized by the act of the Legislature, which, after directing the money in the treasury to be offered for loan to the stockholder who will bid fhe highest premium for the preference or priority, .-proceeds thus: “In case of non-payment of instalments — 691 — or interest by borrowing members for the period of sis months, payment of principal or interest, without deducting the premium paid or interest thereon, may be enforced by proceedings on their securities according to the terms of the contract under which the same were pledged. The premium bid by. borrowing stockholders for preference or priority of loan shall be paid before the loan is consummated, not as a part of the loan, not as interest, but as a means of determining which one of the shareholders shall receive the loan, whenever there are a number of stockholders who may •simultaneously desire to effect a loan.” The plain meaning is that the premium shall not be taken into the account in determining the instalments or interest to be paid on the amount bid off, but the payment •of such instalments as interest may be enforced “ by proceeding on "their securities according to the terms of the contract under wh’ich the same were pledged.” The terms of the contract are that the payments of instalments or interest shall continue until the stock-of the particular series reaches its par value, when, as the constitution of the Association says, “ all securities held in trust or stock pledged for loans shall be quit-■claimed and satisfied.” And the note and deed of trust of the borrowing member, which form parts of the same transaction, equally embody the contract by stipulating for the payment of interest on the note “as required by the rules, regulations and by-laws of said Association,” “ until the assets of said Association shall reach the par value of all shares of stock taken,” or until the member “ceases to be a stockholder.” — 692 — And the proceeds of a sale under the trust, if a sale be made, are to be applied to sthe satisfaction of the debt “as hereinbefore set forth.” That is to say, to the satisfaction of the instalments or interest on the loan for the period of the estimated life of the Association. The constitution of the Association makes this plain by another provision as follows: “All claims for dues, interest, fines, expenses and penalties shall be held a lien against the stock of delinquent members, and when there are six months’ dues remaining unpaid, the stock shall be declared forfeited and revert to the Association; provided, the holder of said stock shall be entitled to receive the same amount that would be paid to stock withdrawn at the time payments ceased to be made, less all claims held by the Association against said stock.” The statute givés a withdrawing stockholder the amount he has paid into -the Association, “ and such proportion of the .profits as may have been accumulated.” The borrowing stockholder, therefore, .whether he pays or defaults, gets the benefit of his payments on stock and loan, is never required to pay the principal of the loan, and only held liable for the instalments or interest on the loan during the life or estimated life of the Association. Is such a contract usurious ? In a contract of loauing of money between individuals, if the lender ohai’ge and receive a bonus for the loan of money to be repaid with interest, whereby the one would pay and the other receive more than the legal rate of interest for the use of the money, it would be usury. If we treat the advance by a Build — 693 — ing Association to one of its members of the anticipated value of his stock as a loan, and the premium bid therefor as a bonus, and the instalments agreed to be paid on the advance as interest, the analogy between the two transactions is very striking, and a similar conclusion as to the character of the latter seems, to follow of course. And the fact that the words loan, bonus and interest are used in describing the steps in, or the elements of, the contract tends to strengthen the analogy. ' It will aid us in distinguishing the two transactions if we consider the latter transaction as a contract between two persons working out a common object for the benefit of all the associates, and not in antagonism, and if we substitute for the ordinary terminology of a loan the proper words advance, premium and instalments. A Building Association, organized under an act of the Legislature, is created for the accumulation, from fixed periodical contributions of its shareholders or members and the profits of their investment, of a fund to be used in making advances to the members for the purpose of building houses and acquiring or securing homesteads, upon terms and under regulations sanctioned by experience and prescribed by the Legislature, upon principles of mutuality and equality of benefits and obligations, with the effect of gradually extinguishing the liability incurred for the advancements simultaneously with the prescribed continuance of the periodical contributions of the members; the periodical contributions being so calculated as to amount, in the aggregate at compound interest, to the value of all the shares as agreed upon at the forma694 lion of the society and fixed by the charter, within the period allowed for the anticipated duration of the Association, after deducting- the necessary expenses of the business: Endlich on Build. Ass., sec. 39. These associations, like those for the insurance of property and lives, are founded on mathematical calculations. “Their fundamental idea,” says the Supreme Court of New Jersey, “is that one, who has the privilege of paying money advanced to him in small sums monthly,, can, in consequence of the slight strain the payment makes on his resources each month, pay a large per cent, for the usé of that money, and the whole scheme is based upon fairness and equity to all parties ”: Franklin Building Association v. March, 5 Dutch., 225. The premium bid by a borrowing member, says Mr.. Endlich, is the conventional difference between the par value of the share advanced, and the amount actually received by the borrower. It is not, therefore, a cash payment which he is obliged to make upon obtaining, his preference, nor can it properly be said to be a deduction made at the time from any money belonging to him. What the Association . sells is the right of anticipating the fixed value of the shares by receiving what, in the borrower’s opinion, may presently be equal to that future dividend. The difference between these two values, the premium, the member promises to make up in raising his share, for the benefit of all the members of the society, to its par value. When that is accomplished, the society absorbs the whole, and then, only is the premium paid: Endl. on Build. Ass., secs. 388, 390n; Watkins v. Workingmen’s Building and Loan Association, 97 Pa. St., 514. The borrowing — 695 — member continues to be a member, and shares in its profits. The advantage of borrowing from the Association, outside of the facilities afforded for the gradual-discharge of the indebtedness, constituting the consideration for the premium, arises largely from the uncertainty as to the precise amount the borrower will be obliged to lay out in the eventual return of the loan. If the society is successful, it may be, in the whole, a sum much inferior to the face of the obligation, and very slightly, if at all, in excess of the amount actually received with interest. The transaction of an advancement partakes both of the character of a loan and of dealing in partnership funds, either element giving its color to the transaction accordingly as the form, substance and results of the same are or are not within the intentiou and protection of legislative enactment: End!, on Build, Ass., sec. 357. In England the courts have held, both in the case of voluntary associations and of associations organized under act of Parliament, that the transaction of an advance of money to a member upon a premium bid is not a loan of money, but a dealing with the partnership or joint fund, and therefore not usurious: Silver v. Barnes, 8 Scott, 300; Burbridge v. Cotton, 8 Eng. L. & Eq., 57; Seagrave v. Pope, 1 DeG., M. & G., 783; In re Building Society, L. R., 12 Eq., 516. In Seagrave v. Pope, Lord Chancellor Truro, notwithstanding the' language of the Society’s rules, which, like our act of 1875 and the rules of the company before ns, treated the advance as a loan, held, in an elaborate opinion, that the transaction was not a loan, — 696 — but an anticipatory payment, by way of discount, of the shares the members would otherwise be entitled to claim payment of at the termination of the Society. The English rule of decision has been followed in Massachusetts, New Jersey, and other States. And the Supreme Court of New Jersey held that the principle declared in relation to voluntary associations would equally apply to incorporated associations: Clarksville Building Ass. v. Stephens, 11 C. E. Green, 351. The relation of the members of both classes of Association, as between themselves, being the same, the purposes and mode of operation of both classes being similar, and the funds paid in for the benefit of all, it is difficult to see why the principle should not equally apply to both. The corporation and its officers, in the ease of chartered associations, are only the means of doing the same thing and accomplishing the same ends which are done, and attained by the firm and its managers in the other case. Precisely the same working force is required in each. If, however, the intervention of the corporate entity operates to take the case out of the general rule of the English eases, a large majority of the American courts have held the contract under consideration not usurious, partly upon the ground that it amounted to a purchase or redemption of the stock by the Association, and partly because of the uncertainty in the payments by which the principal of the advance, treated as a loan, is put at hazard: Delano v. Wild, 6 Allen, 1. “ We take it,” says the Supreme Court of the District of Columbia, in a recent case identical — 697 — in principle with the one before us, “ that usury is involved only when there is an absolute undertaking binding the person to pay back the principal pf the loan, and either by contract or some artifice to pay usurious interest. Here there is no undertaking at all to repay the principal of this loan. The undertaking is to pay two dollars a month on this stock, one dollar of which it is admitted is payable as dues, and the other as a contribution to the profits upon the stock. But the undertaking is not to continue for any specific length of time. Its performance may continue a longer or shorter period, and if all the borrowers, or parties upon whose stock money is advanced or loaned, keep their promises, the period is shortened, because just so much sooner does the time arrive when the profits on the stock amount to the stipulated sum. To the extent that the period is shortened by the performance of the contract, the amount to be paid is reduced, and the borrower ’ receives in that way the benefit of his payments. There are. two elements, therefore, for consideration. The borrower takes, in one case, a part of the benefit in the execution of the contract, not because the proceeds are distributed to him, but by shortening the period during which he shall pay. The other is, that the form of the contract does not oblige him to continue paying for any specific length of time, and does not amount in itself, therefore, to an undertaking to pay the advance. It may happen that he may be discharged from the obligation to continue these payments before he shall have paid back the principal and the — 698 — legal interest. Tire probability may be the other way, but the undertaking does not make it so. The result then is that the contract is not usurious”: Burns v. Metropolitan Building Assooiation, Nov. 10, 1884. The transaction between the Association and one of its members upou an advance on stock is not in fact a Joan of money, although so-called in the act of the Legislature, and in the constitution of the Association, and even in the instruments executed in completion of the contract. It is in substan'ce a sale by the member to the company of his expected dividend on his subscription at the winding up of the Association-for a money advance, he agreeing to. continue to pay his dues on the stock subscribed, and to pay, in addition, upon the par value of the stock monthly instal-ments, equivalent to six per cent, interest on that value, until the accumulations of the Association shall enable it to pay or settle all the stock of the same series at par. There is no contract to pay the advance at all, which is essential to constitute usury in the loan of money: Delano v. Wild, 6 Allen, 1. If a per centage per annum be adopted as an easy mode of adjusting profits upon a settlement between partners, or persons engaged in a joint venture, it will not be usury: Gilliam v. Moore, 8 Hum., 468. The principal is put at hazard by being made to depend upon a contingent event, as in the case of bottomry and respondentia, or loans on post obit bonds, in which cases the' stipulation for the payment of extra interest is not usury: 2 Pars. on Con., 415; Thorndike v. Stone, 11 Pick., 183; Delano v. Wild, 6 Allen, 1. — 699 — Our conclusion is that the contracts under consideration were authorized by the act of the Legislature under which the defendant Association was organized,, and are not usurious. The chancellor’s decree must be reversed, and the-Assoeiation may take a decree, under the agreement in the record, for the enforcement of the contracts-with the costs of the cause, upon the principles settled by this decision.