-::iss^
 
 
 UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 SCHOOL OF LAW 
 LIBRARY 
 
 Gift of 
 Howard 3uit
 
 A TREATISE 
 
 ON 
 
 BUILDING ASSOCIATIONS, 
 
 ADAPTED TO THE USE OF 
 
 LAWYERS AND OFFICERS. 
 
 WITH COMPLETE SET OF FOEMS. 
 
 By CHARLES N. THOMPSON. 
 
 CHICAGO: 
 
 CALLAGHAN & COMPANY. 
 
 1892.
 
 T 
 
 T 372^3 k 
 
 COPYEIGHTED BY 
 
 CALLAGHAN & COMPANY. 
 
 1892.
 
 t 
 
 
 PREFACE. 
 
 My purpose is to give an authoritative exposition 
 of tlie law of building associations, in such concise and 
 clear form as to be available in the hands of both lawyers 
 and persons interested in the subject matter. Consider- 
 ing it as the most logical and satisfactory method, I 
 have started with the building association in its prelimi- 
 nary organization, and examined its career through to 
 final settlement and dissolution, from both legal and 
 practical standpoints. It is my intention that the unpro- 
 fessional reader may disregard the notes, while the lawyer 
 may examine the authorities therein referred to as sup- 
 porting any given proposition. It is believed that any 
 work citing the law, to acquire the confidence of the 
 reader, must also refer to the authorities supporting the 
 propositions. The only law book in the United States 
 on the subject, was written ten years ago, and since 
 then, statutory enactments of the different states have 
 made such changes as to justify a new treatment. 
 
 A purpose auxiliary to the chief one has been to 
 simplify the legal status of a building association, and 
 to avoid the application of some more or less complicated 
 doctrines maintained by some courts. In sustaining this 
 purpose, parts of the book will appear elementary to the 
 lawyer. 
 
 306197
 
 IV PEEFACE. 
 
 Some years' connection with building associations, 
 in different capacities, has given me an opportunity to 
 observe their practical workings. Suggestions of remedies 
 for their needs, are, therefore, the outgrowth of these 
 observations. 
 
 No attempt has been made to give tables for 
 apportioning or declaring dividends. It is mathematics, 
 as in any other calculation, and while there have been 
 many ingenious labor saving tables invented, there is no 
 unanimity as to their perfect accuracy. Each secretary, 
 generally, has his own method, borrowing some, perhaps, 
 from other systems and adding his own notions, and the 
 variation in the results obtained is but slight. The forms 
 have been prepared after examining those in use in the 
 different states. I desire to acknowledge the kindly 
 assistance of Mr. Charles E. HoUoway, of Indianapolis, 
 in securing those forms, 
 
 0. K. T. 
 
 IlTOIANAPOLTS, 
 
 August 1st, 1892.
 
 TABLE OF CONTENTS. 
 
 CHAPTER I. 
 mTRODUCTIOK 
 
 Section 1. Origin of Building Associations .._.. 
 
 Section 2. Definition of Building Associations 
 
 Section 3. General Scheme.... .___ - ... 
 
 Section 4. Different Types i — . 
 
 CHAPTER II. 
 PKELIMINAEY ORGANIZATION". 
 
 Section 1. Preliminary Agreements ... 
 
 Section 2. Agreements Legally Considered 
 
 Section 3. Articles of Incorporation 
 
 Section 4. Corporate Name 
 
 Section 5. Preparation of Corporate Articles 
 
 Section 6. Conformity with Creative Law 
 
 Section 7. Procedure after Registration 
 
 CHAPTER III. 
 CHARTER. 
 
 Section 1. Importance of Charter. ._ 
 
 Section 2. Must generally adhere to Statute — 
 
 Section 3. What Constitutes Charter and its Legal Effect. 
 
 Section 4. Effect of Failure to Observe Statute 
 
 Section 5. Construction 
 
 Section 6. Amendment 
 
 Section 7. Corporate Seal 
 
 V
 
 VI 
 
 Section 
 
 1. 
 
 Section 
 
 2. 
 
 Section 
 
 3. 
 
 Section 
 
 4. 
 
 Section 
 
 5. 
 
 Section 
 
 6. 
 
 Section 
 
 7. 
 
 Section 
 
 8. 
 
 Section 
 
 9. 
 
 Section 10. 
 
 TABLE OF CONTENTS. 
 
 CHAPTER IV. 
 MEMBERS. 
 
 Effect of Incorporation 
 
 Membership Qualifications 
 
 Purposes of Membership .- 
 
 Purpose not Material 
 
 Right to Borrow — 
 
 Right to Withdraw 
 
 Certificate of Stock and Passbooks 
 
 Member Estopped to deny Incorporation -— 
 
 Illegal to invest Funds in Other Corporations ..-_. 
 
 Death of Stockholder * 
 
 Section 
 
 1. 
 
 Section 
 
 2. 
 
 Section 
 
 3. 
 
 Section 
 
 4. 
 
 Section 
 
 5. 
 
 Section 
 
 6. 
 
 Section 
 
 7. 
 
 Section 
 
 8. 
 
 Section 
 
 9. 
 
 CHAPTER V. 
 BY-LAWS. 
 
 Framing and Adoption 
 
 Definition. Power to Enact and Amend. 
 
 Notice of Amendment.... 
 
 Character of By-Laws 
 
 Construction of By-l^aws 
 
 Amendment of By-Laws 
 
 Resolutions and Amendment 
 
 Mode of Amendment 
 
 Provisions of By-Laws 
 
 Section 
 
 1. 
 
 Section 
 
 2. 
 
 Section 
 
 3. 
 
 Section 
 
 4. 
 
 Section 
 
 5. 
 
 Section 
 
 6. 
 
 Section 
 
 7. 
 
 Section 
 
 8. 
 
 Section 
 
 9. 
 
 Section 10. 
 
 Section 11. 
 
 Section 12. 
 
 CHAPTER VI. 
 GOVERNMENT AND OFFICERS. 
 
 Officers and Election 
 
 Pass-books and Dues 
 
 General Meetings - 
 
 Special Meetings 
 
 Quorum, Voting and Proxies 
 
 Objects of General Meetings 
 
 Character, Duty and Liability of Directors 
 
 General Guidance for Directors 
 
 Minutes of Meetings 
 
 Powers of Directors 
 
 Term of Election of Directors 
 
 Duties of President
 
 TABLE OF CONTENTS. 
 
 vn 
 
 Section 18. Duties of Vice-President . . . 
 
 Section 14. Duties of Secretary 
 
 Section 15. Duties of Treasurer . 
 
 Section 16. Duties of Attorney 
 
 Section 17. Appraising Committee 
 
 Section 18. Percentage of Value to be loaned . ...... 
 
 Section 19. Executive Committee - 
 
 Section 20. Auditing Committee . .. 
 
 Section 21. OflBcers' Bonds ... 
 
 Section22. Sureties on Official Bonds.. 
 
 Section 23. Resignation and Removal of Directors _ 
 
 Section 24. Officers' Relations and Responsibilities to the Association. 
 
 CHAPTER VII. 
 POWERS. 
 
 Section 
 
 1. 
 
 Section 
 
 2. 
 
 Section 
 
 3. 
 
 Section 
 
 4. 
 
 Section 
 
 5. 
 
 Section 
 
 6. 
 
 Seation 
 
 7. 
 
 Section 
 
 8. 
 
 General Powers , 
 
 Implied Powers.... 
 
 Powers of Agents... ... 
 
 Power to Sue 
 
 Power to Compromise with Shareholders 
 
 Power to Loan Money 
 
 Power to hold Real Estate 
 
 Power to issue Stock to Another Corporation. 
 
 CHAPTER VIII. 
 RIGHTS OF MEMBERS. 
 
 Section 
 
 Section 
 
 Section 
 
 Section 
 
 Section 
 
 Section 
 
 Section 
 
 Section 
 
 Section 
 
 Section 10 
 
 Section 11. 
 
 Section 12 
 
 Section 13. 
 Section 14. 
 
 Legal Status of Members __ 
 
 Preferential Stock 
 
 Paid Up Stock 
 
 Members and Officers must observe Rules 
 
 Member's Right to Inspect Books - 
 
 Member as an Investor 
 
 Payments 
 
 Right of Withdrawal 
 
 Manner of Withdrawal -- 
 
 Legal Status of Withdrawing Member.. 
 
 Liability of Withdrawing Members 
 
 Rights of Withdrawing Members of Insolvent Associa- 
 tion - - 
 
 Right to Withdraw Limited to Present Funds 
 
 Stock Pledged Cannot be Withdrawn
 
 VIII 
 
 TABLE OF CONTENTS. 
 
 Section 15. Amount Withdrawable ..... — — . 
 
 Section 16. Construction of B}'-Law3 Concerning Withdrawals.. . 
 
 Section 17. Transfer of Shares .. 
 
 Section 18. Forfeitures....... --• 
 
 Section 19. The Legal Status of Member as Borrower , 
 
 Section 20. Duty of Association to Loan its Money — 
 
 Section 21. Selection of Borrower 
 
 Section 22. Methods of Premium Charges 
 
 Section 23. Auction Premiums — - 
 
 Section 24. Premium Fixed, Unchangeable 
 
 Section 25. Premiums Chargeable to Maturity Only - 
 
 Section 26. Formal Application for Loan 
 
 Section 27. Appraisement — 
 
 Section 28. Abstract of Title 
 
 Section 29. Interest Not Collectible on Interest and Premium... 
 
 Section 30. Payment of Instalments 
 
 Section 31. Provisions of Note or Bond 
 
 Section 32. Provisions of Mortgage - 
 
 Section 33. Complaint upon Bond or Mortgage 
 
 Section 34. Loans to Outsiders 
 
 Section 35. Loans to Married Women 
 
 Section 36. Mortgage Covenants _. 
 
 Section 37. Application of Payments 
 
 Section 38. Assignment of Shares as Collateral Security 
 
 Section 39. Payments on Stock not ipso facto payments on lean. 
 
 Section 40. Paymenti on Re-assigned Stock 
 
 Section 41. Assigned Shares Cannot be Credited . 
 
 Section 42. Liability of Borrower under his Mortgage for Losses. 
 
 Section 43. Acknowledgment of Mortgage 
 
 Section 44. Leases by the Association 
 
 Section 45. Satisfaction of Mortgages 
 
 Section 46. Borrower Entitled to Set Oflf 
 
 Section 47. Amount Payable Upon Foreclosure 
 
 Section 48. The English Rule 
 
 Section 49. Rule Laid Down Upon Voluntary Re-paj-ment 
 
 Section 50. Uncertainty of the Foregoing Rules 
 
 Section 51. The Natural and Logical Rule 
 
 Section 53. By-Laws should Provide for Record Cancellations... 
 
 CHAPTER IX. 
 
 FINES. 
 
 Section 1. Necessity of Fines 
 
 Section 2. Must be Reasonable 
 
 Section 3. Stop After Foreclosure 
 
 Section 4. No Interest on Fines 
 
 Section 6. Are Lien on Stock
 
 TABLE OF CONTENTS. 
 
 IX 
 
 CHAPTER X, 
 USUIIY. 
 
 Section 1. Definition 
 
 Section 2. Premium not Usurious as Formerly 
 
 Section 3. Premiums Authorized by Statute 
 
 Section 4. Wlien Interest is not Usurious 
 
 Section 5. Illegal Interest not Recoverable by Association. 
 
 Section 6. May be Recovered Back by the Borrower 
 
 Section 7. A Personal Defense 
 
 Section 8. Rule for Officers 
 
 CHAPTER XI. 
 
 POWER OF THE ASSOCIATION TO BORROW 
 
 MONEY. 
 
 Section 1. A Practical Aspect 
 
 Section 2. English Authorities __. 
 
 Section 3. American Authorities 
 
 Section 4. Weight of American Authorities 
 
 Section 5. Implied Povrer to Borrow 
 
 Section 6. Overdrawing Bank Account is Borrowing 
 
 Section 7. Resolution to Borrow 
 
 Section 8. The Effect of Assigning Mortgages 
 
 Section 9. No Power to Sell Its Mortgages 
 
 CHAPTER XII. 
 DISSOLUTION AND SETTLEMENT. 
 
 Section 
 
 1. 
 
 Section 
 
 o 
 
 Section 
 
 3. 
 
 Section 
 
 4. 
 
 Section 
 
 5. 
 
 Section 
 
 6. 
 
 Section 
 
 7. 
 
 Section 
 
 8. 
 
 Section 
 
 9. 
 
 Section 
 
 10. 
 
 Section 11. 
 
 Dissolution when all Stock is Matured 
 
 Other Methods of Dissolution 
 
 What Acts Will Not Dissolve 
 
 Dissolution by Unanimous Agreement 
 
 Effect of Appointment of a Receiver 
 
 Final Settlement with Members and Creditors. 
 
 Settlement Before Maturity 
 
 Assignment for Creditors 
 
 Appointment of Receiver amd Winding Up... 
 
 Marshalling of Assets 
 
 Liability of Stockholders
 
 X TABLE OF CONTENTS. 
 
 Section 12. Liability of Borrowers for Debts ,,. 
 
 Section 13. No Liability for Losses under the Mortgages 
 
 Section 14. Liability of Withdrawing Member 
 
 Section 15. Assets to be Distributed among Borrowers and Non- Bor- 
 rowers alike 
 
 Section 16. Consolidation of Associations 
 
 CHAPTER XIII. 
 
 PRACTICAL RESULTS. 
 
 Section 1. The Character of a Building Association 
 
 Section 2. Method of Loans - 
 
 Section 3. Some Results - 
 
 APPENDIX. 
 STATUTES AND CONSTRUCTION. 
 
 FORMS OF 
 
 Agreement for Incorporation - 
 
 Application for Membership - 
 
 Articles of Association - 
 
 Act of Incorporation - 
 
 Stock Certificate - 
 
 Assignment --- - 
 
 By-Laws - 
 
 Application for a Loan - 
 
 Appraisers' Report 
 
 Rules - 
 
 Mortgage Note - -- 
 
 Bond 
 
 Mortgage - - — 
 
 Transfer for Loans - 
 
 Note 
 
 Trust Deed 
 
 Insurance Clause -- 
 
 Bond 
 
 Bond Used by Pennsylvania Associations - 
 
 Mortgage Used by Pennsylvania Associations - 
 
 Bond Used by New Jersey Associations - 
 
 Mortgage Used by New Jersey Associations 
 
 Mortgage Used by the Mutual Home Saving and Loan 
 
 Association of Dayton, Ohio — - 
 
 Bank Mortgage Used in Massachusetts -
 
 TABLE OF CONTENXa XI 
 
 FORMS OF 
 
 Stock Register 
 
 Warrant 
 
 Bank Check 
 
 Building Agreement . 
 
 Building Specifications 
 
 Indemnifying Bond Against Liens. 
 
 Contractor's Waiver of Liens 
 
 Sub-Contractor's Waiver 
 
 Bond for Secretary . 
 
 Bond for Treasurer . 
 
 
 ..x . ^^'7 '^
 
 TABLE OF CASES. 
 
 A 
 
 Page. 
 
 Abbott V Building Association, 1 Del., 397 156 
 
 Albright V Building Association, 102 Pa. St., 411 17-53 
 
 Allemania, etc., Association v Mueller, 8 Bull, 97 93 
 
 Allen V Curtis, 26 Conn., 456 38 
 
 Anderson V Cleburne, etc., Association, 16 S. W. Rep., 298 17 
 
 Archer v Harrison, 3 Jur., N. S., 194 94 
 
 Armitage vWalker, 2 Jur., N. S., 13 67 
 
 Ashland, etc., Co. v Centralis, etc.. Association, 9 Luz. Leg., Reg., 41 
 
 (Pa.,) 44 
 
 Association v Commonwealth, 2 Chest., 546 156 
 
 Association V Bollinger, 12 Rich., Eq., 124 102-108 
 
 Association V George, 3 W. N. C, 239 105 
 
 Association V Kribs, 7 Leg «& Ins. Rep., (Pa.,) 21 63 
 
 AsBOciation v Neurath, 2 W. N. C, 95 105 
 
 Association V Steele, 11 W.N. C, 204 83 
 
 Association V Wall, 7 Phila., 189 125 
 
 Athol, etc., Co. V Carey, 116 Mass., 471 ^ 11 
 
 Atkinson v Bradford, etc., Society, L. R., 25 Q. B. Div., 377 69 
 
 Atwood V Dumas, 149 Mass., 167 2-64 
 
 Auld V Glasgow, etc.. Society, 12 App. Gas., 197 81 
 
 B 
 
 Babcock v Middlesex, etc.. Bank, 28 Conn., 302 87-153 
 
 Baltimore, etc.. Society v Taylor, 41 Md., 409 81-103-104-106 
 
 Bank V Porter, 2 Watts, 141 91 
 
 Bank, etc., v St. John, 25 Ala., 566-611 39 
 
 Bank of Commerce's Appeal, 73 Pa. St., 59 70 
 
 Barker V Bigelow, 15 Gray, 130 86-87 
 
 Barndt V Gruel, 4 Leg. Gaz., 388 54 
 
 Barton V Enterprise, etc. Association, 114 Ind., 226. 116-129 
 
 Bates V Peoples', etc., Association, 43 Ohio St., 655 25-103-156 
 
 Bauer V Samson Lodge, 102 Ind., 262 29 
 
 Baxter V Mclnty re, 13 Gray, 168 2-98-154 
 
 Bechtoldv Brehm, 26 Pa. St., 269 71-77 
 
 Beoketv Building Association, 88 Pa. St., 211 157 
 
 XIII
 
 XIV TABLE OF CASES. 
 
 Page. 
 
 Bergman v St. Paul, etc., Association, 29 Minn., 275 15-29-68 
 
 Bexar, etc., Association v Robinson, 78 Tex., 1(53 105 
 
 Bibb Co., etc.. Association v Richards, 31 Ga., 592 2 13-77-103 
 
 Birmingham v Maryland, etc.. Association, 45 Md., 541 52-81-105 
 
 Blackburn, etc., Society, V Cunlifife, 20 Ch. D., 902 Ill 
 
 Blake V Buffalo Creek R. R. Company, 56 N. Y., 485 42 
 
 Blake v Wheeler, 18 Hun., 496 48 
 
 Booz'8 Appeal, 16 W. N. C, 365 128 
 
 Booz's Appeal, 109 Pa. St., 594 69 
 
 Borchusv Huntington, etc. Association, 97 Ind., 180 82 
 
 Border State, etc.. Association v Hayes, 61 Md., 597 ..96 154 
 
 Border State, etc. Association v Hilleary, 68 Md., 52 105 
 
 Boston, etc.. Company V Langdon, 24 Pick, 49 119 
 
 Bowker \? Mill River, etc.. Association, 7 Allen, 100 103-120-124 
 
 Brooks V Blackburn, etc.. Society, L. R. 9 App., Cas., 857 114 
 
 Brownlie V Russell, L. R., 8 App. Cas., 235 128 
 
 Bryant V Cowart, 21 Ala., 92 91 
 
 Bucklee V Lordonny, 56 L.J. Ch., 437 128 
 
 Buffalo, etc. Company v Gifford, 87 N. T, 294 11 
 
 Bu 
 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 Bu 
 
 ng Association's Appeal, 33 P. L. J., 324 122 
 
 ng Association's Estate, 12 W. N. C, 207 65 
 
 ng Association v Arbeiter Bund, 6 Bull, 823 25-62 
 
 ng Association V Bayley, 1 Kulp, 215 88 
 
 ng Association V Building Association, 100 Pa. St., 191 156 
 
 ng Association V Coleman, 89 Pa. St., 428 157 
 
 ng Association V Commonwealth, 98 Pa. St., 54 156 
 
 ng Association v Egger, 5 Bull, 752 93-97 
 
 ng Association v Eshelback, 7 Phila., 189 88-125-156 
 
 ng Association v Gallagher, 3 L. T. N S., 101 87 
 
 ng Association V George, 3 W. N. C, 239 .86 
 
 ng Association v Groesbeck, 41 L. I., Pa., 16 87-101 
 
 ng Association v Hanlen, 7 Luz. L. Re.ir., 165 157 
 
 ng Association V Henderson, 3 Bull, 386 ■ 70 
 
 ng Association v Hetzel, 103 Pa. St., 507 82 
 
 ng Association V Hoary, 8 Luz. L. Reg., 180 157 
 
 ng Association v Hungerbuehler, 93 Pa. St., 258 88 
 
 ng Association v Goldbeck, 13 W. N. C, 24 42 
 
 ng Association v Jones, 2 L. T. N. S., Pa., 17 29 
 
 ng Association V Kelley, 1 Kulp, 9. 119 
 
 ng Association v Leyden, 1 Bull, 126 93 
 
 ng Association v Lyons, 2 Kulp, 409 82 104 
 
 ng Association v Mangan, 2 Kulp, 210 88 
 
 ng Association v McDermott, 2 Kulp, 203 ..83 
 
 ng Association V Mixell, 81 Pa., St., 313 83 
 
 ng Association V Minnick, 1 Kulp, 513 62 
 
 ng Association v Morgan, 2 Kulp, 19 ....87
 
 TABLE OF CASES. XV 
 
 Page. 
 
 Building Association v Morganthal, 3 Pears, 343 17 
 
 Building Association v Raber, 11 Pliila , 546 86 
 
 Building Association v Rice, 8 W. N. C, 12 83 
 
 Building Association v Roan, 9W. N. C, 15 86 
 
 Building Association v Robinson, 46 L. 1., Pa., 5 22-30-82-156 
 
 Building Association vRood, 2 Kulp, Pa., 246 87-93 
 
 Building Association v Rowe, 15 L. I., 45 88 
 
 Building Association V Scliuller, 3 W. N. C, Pa., 431 81-100 
 
 Building Association v Semiller, 35 Pa. St., 225 50-156 
 
 Building Association v Silverman, 85 Pa. St., 394 65 
 
 Building Association v Sperring, 106 Pa. St., 334 66-69 
 
 Building Association V Taylor, 13 W. N. C, 13 85 
 
 Building Association v Timmins, 3 Phila., 209 77 
 
 Burbridge v Cotton, 8 Eng. L. & Eq. R., 57 76-103 
 
 Burke v Home, etc, Association, 7 Bull, 114 79 
 
 Burlington, etc., Association V Heider, 55 Iowa, 424. 77-106 
 
 c 
 
 Callahan's Appeal, 124 Pa. St., 138 98 
 
 Carmody V Powers, 60 Mich., 26 12 
 
 Cason V Seldner, 77 Va., 293 81-98-128 
 
 Central, etc., Association v O'Connor, 5 Bull, 853... 93 
 
 Chapleo V Brunswick, etc., Society, L, R., 6 Q. B. D., 696 109 
 
 Cheesebrough V Millard, 1 Johns. Ch., 409 ..126 
 
 Chester, etc.. Company v Dewey, 16 Mass., 94 24 
 
 Chicago, etc.. Society v Crowell, C5 111., 453 53-84 
 
 Chillicothe, etc., Association v Ruegger, 60 Mo., 218 58 
 
 Christian's Appeal, 102 Pa. St., 184 123-128 
 
 Christie v Northern Counties, etc.. Society, L. R., 43 Ch. Div., 62 31-33 
 
 Cincinnati, etc., Association v Flach, 1 Cin., S. C. R., 468 93 
 
 Clarksville, etc.. Association v Stephens, 26 N. J. Eq., 351 77-84-85-100 
 
 Citizens', etc.. Association v Goriell, 34 N. J., Eq., 383 39 
 
 Citizens', etc.. Association v Lyon, 29 N. J. Eq., 110 39 
 
 Citizens', etc., Association v "Webster, 25 Barb, 263 95-103-104 
 
 Citizens', etc.. Company v Uhler, 48 Md.,455 76 
 
 City Loan, etc., Association v Goodrich, 48 Ga.,445 120 
 
 City, etc., Company v Fattv. 1 Abb. App. Dec, 347 95-104 
 
 Coetmor, etc. Society, 51 L. T. 253 110 
 
 Colonial, etc.. Company v Home, etc.. Company, Lim., 33 L. J. Ch., 741. .12 
 
 Columbia, etc.. Association v Bollinger, 12 Rich. Eq., 124 77 
 
 Columbia, etc.. Association v Dobbins, 15 L. I., 45 88 
 
 Columbia, etc.. Association v Crumb, 42 Md., 192 54 
 
 Commonwealth v Association, 2 Chest., 189 156 
 
 Commonwealth V CoUeu, 13 Pa. St., 133 119 
 
 Concordia, etc.. Association v Read, 93 X. Y., 474 82-84-103 
 
 Conklin v' People, etc., Association, 41 N J., 20 —.42
 
 XVI TABLE OF CASES. 
 
 Page. 
 
 Connolly v Building Association, 6 W. N. C, 176 123 
 
 Conrow v Spring Garden, etc.. Association, 21 Leg. Int., 109 186 
 
 Cook V Henderson, 8 Rec. (Ohio.,) 429 38 
 
 Cook V Kent, 105 Mass., 246 120-154 
 
 Cooper V Asgociation, 100 Pa. St., 402-156 
 
 Craig V First Presbyterian Cliurch, 88 Pa. St., 42 38 
 
 Criswell's Appeal, 100 Pa. St., 488 113-124 
 
 Cross V Peach Bottom, etc., Company, 90 Pa. St., 392 19 
 
 Cullerne V London, etc.. Society, L. R., 25 Q. B., 485 39-40 
 
 Cunningham v Alabama, etc.. Company, 4 Ala., 652 70 
 
 Curry V Bank, 8 Port. Ala., 360 30 
 
 D 
 
 Dartmouth College Case, 4Wheat, 518 16 
 
 Davies V Creighton, 33 Grat, 696 157 
 
 Davis V West Saratoga, etc., Union, 32Md., 285 112 
 
 Delano V Wild, 6 Allen, 1 2-77-103 
 
 Delaware, etc.. Association v Keller, 2 W. N. C, 29 86 
 
 Delaware R. R. Company v Tharp, 1 Houst. Del., 149 18 
 
 Denny v West Philadelphia, etc., Association, 39 Pa. St., 154 _..72 
 
 Diemer v Egolf, 1 Chest., 55 - 86 
 
 Dilzer V Building Association, 103 Pa. St., 86 23 
 
 Dobinson v Hawks, 12 Jur., 10 37-24 
 
 Doe d Morrison V Glover, 15 Q. B., 103 63 
 
 E 
 
 Early's Appeal, 7 W. N. C, 184 .—.88 
 
 Eastern, etc., Company v Vaughan, 14N. Y.,546 -U 
 
 Eaton V American, etc.. Association, 49 N. W. R., 865 25 
 
 Economy, etc., Association v Hungerbuepler, 93 Pa. St., 2.58 125^ 
 
 Edelin V Pascre, 22 Grat., 326 80-124-128 
 
 European, etc., R. R. Company v Poor, 59 Me., 277. 42 
 
 Everham v Oriental, etc, Asscjciation, 47 Pa. St., 353 --84 
 
 Everman V Schmitt, 34 Bull, 56. 89-128 
 
 Eyre v Building Association, 17 L. I., Pa., 143 33 
 
 F 
 
 Farlow v Kemp, 7 Blkf., 544 H 
 
 Farmer V Smith, 4 H. & N.,196 89 94 
 
 Farmers', etc., Bank v Downey, 53 Cal., 466 42 
 
 Faulkner's Appeal, 11 W.N. C, 48 56
 
 TABLE OF CASES. XVII 
 
 Page. 
 Fleming v Self, 24 L. T. Rep., 101 94 
 
 Flounders V Hawley, 78 Pa. St., 45 79156 
 
 Flynn v Saving Fund, 37 L. I., (Pa.,) 336 86 
 
 Folger T Columbian, etc., Company, 96 Am. Dec, 757 119 
 
 Forrest City, etc.. Association v Gallagher, 25 Ohio St., 208 
 
 29-80-lGO-10I-103-105-15« 
 
 Fox V Cottage, etc.. Association, 81 Va., 677 93 
 
 Franklin, etc., Association v Marsh, 29 N. J. L., 225 103 
 
 Franklin, etc., Association, v Mather 4 Abb., Pa., 274 81-155 
 
 Franklin Avenue, etc., Institution v Board, etc., 75 Mo., 408 53 
 
 Frederick v Corcoran, 100 Pa. St., 413 156 
 
 Freeman v Ottawa, etc. Association, 114 111., 182 71-78-140 
 
 Friel v Association, 1 Leg. Rec. Rep., (Pa.,) 217 68 
 
 Fuller V Salem, etc.. Association, 10 Gray, 94 69 
 
 Fulton V American, etc., ABSOciation, 48 N. W. R., 781 25 
 
 G 
 
 Galbraith v Building Association, 43 N. J. Law., 3S9 70 
 
 Gerenfield's Estate, 1 Chest, 356 86 
 
 German, etc.. Association V Metzger, 9 W. N. C, Pa., 204 54 
 
 Germantown, etc., Association v Sendmeyer, 50 Pa, St., 67 24 
 
 Qermantown, etc., Company v Fitler, 60 Pa. St., 124 71 
 
 Glenn v'Statler, 42 Iowa, 107 48 
 
 Glynn v Home, etc.. Association, 22 Kans., 746 95 
 
 Goodrich V City, etc.. Association, 54 Ga. 98,123 124 
 
 Gordon v Winchester, etc.. Association, 12 Bush., 110 73-77-106 
 
 Gouchenour v Sullivan, etc.. Association, 119 Ind., 441 109 
 
 Grangers', etc.. Company v Kamper, 73 Ala., 325 IS 
 
 Grimes T Harrison, 28 L. J. Ch., 23 803 
 
 H 
 
 Hagerman v Ohio, etc.. Association, 25 Ohio St., 186 
 
 10-29-30-79-84-93-95-100-101 
 
 Haigh V United States, etc., Association, 19 W. Va., 792 65-98 
 
 Hamilton, etc.. Association v Reynolds, 5 Duer.,671 84 
 
 Hammerslough v Kansas City, etc.. Association, 79 Mo., 80 105 
 
 Hampstead, etc., Association v King, 58 Md., 279 120-121 
 
 Hand v Society, etc., 18 N. Y. Supl., 157 41 
 
 Handley v Farmer, 29 Beav., 362 67-89 
 
 Hanner v Greensboro, etc., Association, 78 N. C, 188 77-97 
 
 Hanney v Building Association, 16 W. N. C., 450 _ 67 
 
 Hansbury v Pfeifer, 35 L. L, 395 15ft
 
 XVIH TABLE OF CASES. 
 
 Page 
 
 Hardy v Metropolitan, etc., Company, L. R., 7 Ch. App., 427 57 
 
 Harris' Appeal, 18 W. N. C, 14 86 
 
 Haskett V Flint, 5 Blkf., 69 - H 
 
 Hawkeye, etc., Association v Blackburn, 48 Iowa, 385 105-106 
 
 Hayes V Brubaker, 65 Ind., 27 ■il 
 
 Hazel, etc.. Association v Groesbeck, 41 L. I., 16 84 
 
 Heckman v Building Association, 11 L. Bar., 110 156 
 
 Heggie V Building, etc., Association, 107 N. C, 581 55-121 
 
 Heintzelman v Driuds, etc., Association, 36 N. W. Rep., 10) 28 
 
 Hekelnkaemper v German, etc.. Association, 22 Kan., 549.. 32-86-93-95-120 
 
 Henderson etc. Association v Johnson, 88 Ky., 191 106 
 
 Henderson, etc., Association v Johnson, 10 S. W. llep., 787 71 
 
 Henninghausen T Tisher, 50 Md., 58J- 60-66-93 
 
 Herbert V Kenton, etc., Association, 11 Bush., 296 77-106 
 
 Herbert v Mechanic's, etc.. Association, 17 N. J., Eq., 497 86-124-126 
 
 Hinman v Ryan, 3 C. C, (Ohio,) 529.. 112-120-128 
 
 Hoboken, etc., Association v Martin, 18 N. J., Eq., 427 
 
 11-59-86-93-95-103-123 
 
 Hodges V New England Screw Company, 53 Am., Dec, 637 38-39-40 
 
 Holgate V Shutt, L. R., 27 Ch. D., 111. 47 
 
 Holmes V Smythe, 100 111., 413 71-78140 
 
 Holyoke, etc., Association V Lewis, 27 Pac R., 872 31 
 
 Home Association v Boning, 7 Bull, 174 76-79 
 
 Horton v Building Association, 6 Bull, 141 91 
 
 Hoskins v Mechanic's, etc.. Association, 84 N. C, 838 77-95 
 
 Houser v Herman, etc., Association, 41 Pa. St., 478 156 
 
 Howard, etc.. Association v Mclntyre, 3 Allen, 571 25 
 
 Howlett's Estate, 2 Chest, 511 8G-101 
 
 Hughes' Appeal, 30 Pa. St., 471 88 
 
 Hughes V Edwards, 9 Wheat, 489 01 
 
 Hughes V Lay ton, 10 Jur. N. S., 513 51 
 
 HughesvLayton, 33L. J., M. C, 89 56 
 
 Hughes V Littlefield, 18 Me., 400 48 
 
 Humboldt, etc.. Society v Wennerhold, 81 Cal., 528 30-48 
 
 Hunter V Sun, etc. Company, 26 La. Ann., 13 49 
 
 Huntington, etc.. Association v Melsoheimer, 14 W. N. C, 344 84 
 
 Huylar V Craigin, eie., Company, 40 N. J. Eq., 393 62 
 
 Illinois, etc.. Company v Zimmer, 20 111., 654 19 
 
 Ingolby V Riley, 28 L. T. N. 8., 55 101 
 
 In re Cefn Cilcen, etc. Company, 38 L. J., Ch., 78 114 
 
 In re Blackburn, etc. Society, 24 Ch. D., 431 66-69 
 
 In re Deveaux, 54 Ga., 673 , 154 
 
 In re Doncaster, etc, Society, L. R. Eq, 158 89
 
 TABLE OF CASES. XIX 
 
 Page. 
 
 In re Durham Co., etc., Society, 25 L. T., Rep., N. S ,83 57 
 
 In re Durham, etc.. Society, L. R., 13 Eq., 516 109 
 
 In re Estate National Association, 9 W. N. C, 79 123 
 
 In re German Mining Company, 23 L. J., Ch., 956 114 
 
 In re Jreffeison, 3 Kulp, 308. 86 
 
 In re Middlesbrough, etc.. Society, -54 L. J. Ch., 593 101 
 
 In re Mutual Societj', 24 Ch. D., 425 69 
 
 In re National, etc., Society, ex parte, Williamson, L. R., 5 Ch. App., 309 
 
 109 
 
 In re Sunderland, etc., Society, 24 Q. B. Div., 394 68 
 
 In re Victoria, etc.. Society, L. R.,9Eq., 605 109 
 
 In re West Riding Society, L. R., 43 Ch. Div., 407 128 
 
 Jackson V Cassidy, 68Tex., 283 105 
 
 Jaclcson V Myers, 43 Md., 452 112 
 
 Jarrett V Cope, 68 Pa. St., 67 103156 
 
 Johnson V Elizabeth, etc.. Association, 104 Pa. St., 394. 83-93 
 
 Jones V National, etc.. Association, 94 Pa. St., 115 53-113 
 
 Jungkuntz v Building Association, 6 Bull, 428 68-140 
 
 K 
 
 Kansas City, etc.. Company v Sauer, 65 Mo., 279 119 
 
 Kelly V Accommodation, etc.. Association, 2 Phila., 337 88 
 
 Kelly V Mobile, etc.. Association, 64 Ala., 501 _ 30 
 
 Kilpatrick v Association, 119 Pa. St., 30 63 
 
 King V Ashwell, 12 East, 22 31 
 
 KingSGSsing, etc.. Association v Roan, 9 W. N. C, 15 185 
 
 Kisterbock's Appeal, 51 Pa. St, 483 40 
 
 Knoblauck v Building Association, 25 P. L. J,. 39 68 
 
 Knoblauck v Robert Blum, etc.. Association, 25 Pitts. L. J., (O. S.,) 39.. 126 
 
 Knox V Childersburg, etc., Company, 86 Ala., 180 10 
 
 Koehler v Black River Falls, etc., Company, 2 Black, 715 39 
 
 Kreamer v Saving Fund, 6 W. N. C, 207 88 
 
 Kreamer V Springfield, etc.. Association, 6 W. N. C, 207 135 
 
 Kupfert V Uuttenberg, etc., Association, 30 Pa. St., 465 88 
 
 Laing T Reed, L. R., 5 Ch. App., 4 109 
 
 Lake v Security, etc.. Association, 72 Ala., 307 40
 
 XX TABLE OF CASES. 
 
 Page. 
 
 Latham v Washington, etc., Association 77 N. C, 145. 77-103 
 
 Laurel Run, etc, Association, v Sperring, 3 Kulp., 67 _ 66 
 
 Laurel Run, etc.. Association v JSperring, 106 Pa. St, 334 128 
 
 Licking Co., etc., Association v Bebout, 29 Ohio St., 252 103-156 
 
 Lime City, etc.. Association V Wagner, 122 Ind., 78 83 
 
 Lincoln, etc. Association v Benjamin, 7 Neb., 181 73-77 
 
 Lincoln, etc. , Association v Graham, 7 Neb., 173 1 7-77-103 
 
 Link V Building Association, 89 Pa. St., 15 86-100-125-156 
 
 Liquidators of the Blackburn, etc., Society^ v Cuuliffe52 L. J. Rep., Ch.,92 
 
 110-111-114 
 
 Lister v Log Cabin, etc.. Association, 38 Md., 115 73-76-89-95-124-120 
 
 Loan Company V Conover, 5Phila., 18 112 
 
 Looker v Wrigley, L. R., 39 Q. B. D., 397 110 
 
 Lord V Essex Building Association, 37 Md., 320 16 
 
 Low Street, etc.. Association V Zucker, 48 Md., 448 81-88-121 
 
 Lucaa V Greenville, etc.. Association, 22 Ohio St., 339. ..106 
 
 Lynn v Association, 117 Pa. St., 1 99-100 
 
 M 
 
 Maguire t State, etc.. Association, 63 Mo., 344 155 
 
 Manahan V Varnum, 77 Mass., 405 154 
 
 Manufacturers, etc.. Company v Conover 5 Pbila., 18 55 
 
 Marble, etc.. Association v Hocker, 3 Phila., 494 156 
 
 Martin V Nashville, etc.. Association, 2 Cold, 418 73-77-102 
 
 Ma.ssey V Citizens', etc., Association, 22 Kan, 624 55-77-81-88-108 
 
 Master Stevedore's Association v Walsh, 2 Daly, 14 71 
 
 MattersonvElderfield, 4L. R., Ch., 207 97 
 
 McCahan v Columbian, etc., Association, 40 Md., 226 16-30-93-95 
 
 McGannonv Central, etc.. Association, 19 W. Va., 726 70-100 
 
 McGowan V Savannah, etc.. Association, 80 Ga., 515 154 
 
 McGrath v Hamilton, etc. Association, 44 Pa. St., 383 68-89-128 
 
 McKenney v Diamond State, etc.. Association, 18 Atl. Rep., 905 28-64-67 
 
 McKeown v Building Association, 5 Bull, 52 20-33-122 
 
 McLaughlin v Citizens' Association, 62 Ind., 264 103 
 
 McNeall v Florence, etc.. Association, 13 Stew., 351 155 
 
 Meal v Hiil, 16 Cal., 145 48 
 
 Mechanics etc.. Association v Conover, 1 McCart, 219 88-86-87 
 
 Mechanics, etc.. Association v Meriden, etc., Company, 24 Conn., 159.. 83-105 
 
 Mechanics, etc.. Association V Wilcox, 24 Conn., 147 83-103 
 
 Melville v American, etc., Association, 33 Barb, 103 103 
 
 Memphis, etc.. Company v Woods, 88 Ala., 630 25 
 
 Merrill v Mclntire, 13 Gray, 157 2-84-103 
 
 Metropolitan, etc.. Association v Esche, 75 Cal., 513 48 
 
 Michigan, etc., Association v McDevitt, 77 Mich., 1 16-23-38-59-63-74-85
 
 TABLE OF CASES. XXI 
 
 Page. 
 
 Miller V Jefferson, etc., Association, 50 Pa. St., 32 '■^^ 
 
 Miller's Estate, 2 Pears, 348 157 
 
 Mills V Central, etc.. Company, 481 N. J. Eq., 1 15* 
 
 Milk V Salisbury, etc., Association, 75 N. C, 293 73-77-103 
 
 Minot V Curtis, 7 Mass., 441 H 
 
 Mobile, etc.. Association v Robertson, 65 Ala., 382 - 92 
 
 Montgomery, etc., Association v Robinson, 69 Ala., 413 26-76-103 
 
 Monumental, etc, Society v Lewin, 38 Md., 445 30-100 
 
 Morrison v Dorsey, 48 Md., 461 11-25-29 
 
 Morton, etc., Co. v Wysong, 51 Ind., 4 28 
 
 Moses V O'Coee Bank, 1 Lea , 398 39 
 
 Mosley V Baker, 12 Jur., 551 94 
 
 Mowbray V Antrim, 123 Ind., 24 44 
 
 Moxon V Berkeley, etc., Society, 59 L. J., Ch., 524 126 
 
 Moye V Sparrow, 22 L. T., Rep. N. S., 154 109 
 
 Murray V Scott, 9 App. Cas., 519 HI 
 
 Muth V Dolfield, 43 Md., 466 - 112 
 
 Mutual, etc., Association v Hammell, 43 N. J. L., 78 - 45 
 
 Mutual, etc., Association V Meriden, etc., Co., 24 Conn., 159 26-153 
 
 Mutual, etc.. Association v Tascott, 28 N. E. Rep., (111.,) 801 75-82 
 
 Mutual Savings, etc., Association V Wilcox, 24 Conn., 147 23-153 
 
 National, etc.. Association v Hubley, 34 Leg. Int., 6 lG8 
 
 Neath, etc.. Society, v Luce, L. R., 43Ch. D., 158 Ill 
 
 New Haven, etc.. Company v Chapman, 38 Conn., 56 19 
 
 Newm»n v Ligonier, etc., Association, 97 Ind., 295 82 
 
 Newton Tp., etc.. Association v Boyer, 15 Stew., 273 155 
 
 Nicely's Estate, 3 Kulp, 47 - 82-104 
 
 North Hudson, etc., Association v First National Bank, 47 N. W. R. 
 
 (Wis.,) 300 113 
 
 North V State, 107 Ind., 356 119 
 
 North American, etc.. Association, v Sutton 35 Pa. St., 463 25-86-125 
 
 o 
 
 Oak Cottage, etc., Association v Eastman, 31 Md., 556 104-105 
 
 Occidental, etc.. Association v Sullivan, 62 Cal., 39 1 34 
 
 Ocmulgee, etc.. Association v Thomson, 52 Ga., 437 95-99 
 
 Odd Fellow, etc.. Association v Hogan, 28 Ark., 2t)l 53 
 
 Oliver's Estate, 1 Del., 358 86 
 
 Orangeville, etc., Association, v Young, 9 W. N. C, 251 78 
 
 O'Rourke v Building Association, 8 W. N. C, 176 156 
 
 Overby v Fayetteville, etc., Association, 81 N. C, 56 77-95-98 
 
 Owen v Roberts, 57 L. T. N. S., 81 Ill
 
 XXII TABLE OF CASES. 
 
 Page. 
 
 Paffert V Building Association, 25 P. L. J., 40 68 
 
 Pangborn V Citizens', etc., Association, 1 Stock, o41 42 
 
 Parlier V Butcher, L. R., 3 Eq., 763 100 
 
 Parlier V Fulton, etc., Association, 46 Ga., 106 77-103 
 
 Parker V United States, etc., Association, 19 W. Va., 744 29-80-100 
 
 Patterson V Albany, etc.. Association, 63 Ga., 373 77 
 
 Patty V Pease, 8 Paige, 277 126 
 
 Payette V Free Home, etc.. Association, 27 111. App., 307 16-17 
 
 PeoplevLowe, 117N.Y., 175 23-42-60-98-128 
 
 People, etc.. Association, v Furey, 20 Atl. R., 890 60-87-155 
 
 People, etc., Associationv Wroth, 43 N. J. L., 70 45-48 
 
 People's, etc., Bank v Collins, 27 Conn., 143 86-106 
 
 Perrin v Granger, 30 Vt, 595 71 
 
 Peters, etc., Association, v Jaecksch, 51 Md., 198 120 
 
 Pfaff V Building Association, 6 W. N. C, 349 119 
 
 Pfeister v Wheeling, etc.. Association, 19 W. Va., 676 73-80-83-100-157 
 
 Philadelphia, etc.. Association v Moore, 47 Pa. St., 233 87 
 
 Philadelphia, etc.. Association V Moore, 21 Leg. Int., 109 156 
 
 Philanthrophic, etc.. Association v McKnight, 35 Pa. St., 470 105 
 
 Phillips V Columbia City, etc., Association, 53 Iowa, 719 105 
 
 Phillipsburg, etc., Associationv Hawk, 27 N. J. Eq., 355 86 
 
 Pooch V Lafayette, etc.. Association, 71 Ind., 357 51-83 
 
 Premium Fund Association's Appeal, 26 Pa. St., 156 71 
 
 Provident, etc., Society, v Greenhill, L. R., 9 Ch. D., 122 101 
 
 Q 
 
 Quakertown, etc, Association v Sorver, 33 Leg. Int., (Pa.,) 359 ..126 
 
 Quein V Smith, 108 Pa. St., 335 49-113 
 
 R 
 
 Red Bank, etc., Association v Patterson, 37 N. J., Eq., 223. .73-103-104-125 
 
 Redmond v Dickerson, 1 Stock, 507 42 
 
 Redwine v Gate City, etc.. Association, 54 Ga., 474 13-154 
 
 Reeve v Ladies, etc, Association, Ark. Supct. June 25, 1893 78 
 
 Reg. V Registrar of Friendly Society, L. R. Q. B., 741 37 
 
 Reg. V Grinishaw, 10 Q. B.. 743 37 
 
 Reg. V Pratt, 118 Eng. C L.. (6 B. & S. Q. B.,) 673. 37 
 
 Reilly V Mayer, 1 Beas, (N. J,) 55 126 
 
 Reiser V William Tell, etc, Association, 39 Pa. St., 137 77 
 
 Remington V King, 11 Abb. Pr., 278 155 
 
 Rhoads V. Hoernerstown, etc.. Association, 82 Pa. St., 180 56156 
 
 Richards v Bibb Co., etc.. Association, 24 Ga., 198 95
 
 TABLE OF CASES. XXIII 
 
 Page 
 
 Risk V Delphog, etc, Association, 31 OhioSt.,517 80-95 
 
 Roberts V Price, 16 L. J. C P., 169 48 
 
 Robertson v American, etc., Association, 10 Md., 397 76-83-93-95-103 
 
 Robertson V Homestead Association, 69 Am. Dec, 151 22 
 
 Robinson v Smith, 34 Am. Dec, 213 39 
 
 Rodgers V Building Association, 7 W- N. C, Pa., 95 39 
 
 Roseobaclc v Salt Spring, etc., Banli, 53 Barb, 506 71 
 
 Rosenberg V Northumberland, etc. Society, L. R., 23 Q. B., 373 128 
 
 Rushville Gas Company v City of Rushville, 131 Ind., .HiG 38 
 
 Rowland's Estate, 1 Del., 98 . 156 
 
 s 
 
 Salem V Mill Dam Co., 6 Pick., 23 18 
 
 Salina, etc, Association v Nelson, 23 Kans., 75 1 154 
 
 San Buenaventura, etc.. Company V Vassault, 50 Cal., 534 .37 
 
 Saving Fund v Cake, 3 Leg., Rec, Rep., 173 87 
 
 Saving Fund v Longshore, 8 Luz. L., Reg., 199 83-157 
 
 Saving Fund V Murray, 14 Leg., Int., 133 88 
 
 Savings Fund V Young, 9 W. N. C, 351 78 
 
 Savings Association V Vandervere, 3 Stock, 383. 155 
 
 Savings, etc., Association v Stevens, 5 Bull, 113 79 
 
 Schlesinger's Estate, 1 Law Times, N. S., 15 85 
 
 Schober V Accommodation, etc. Association, 35 Pa. St., 323 50-88-156 
 
 Schutte V California, etc., Association, 23 Atl., Rep., 836 63 
 
 Seagrave V Pope, 15 Eng. L. & Eq., 477 76 
 
 Seagrave V Pope, 22 L. J. Ch., 258 94 
 
 Second Manhattan, etc.. Association v Hayes, 3 Keyes, 192 155 
 
 Security, etc., Association V Lake, 69 Ala., 456 69-73-76 
 
 SeibelvBuilding Association, 43 Ohio St., 371 60-98-123-128 
 
 Seldenv Building Association, 2 W. N. C, 481 86 
 
 Selden V Reliable, etc.. Association, 33 P. F. Smith, 336 105-135-157 
 
 Shaefer v Amicable, etc.. Company, 47 Md., 126. 54 
 
 Shaffrey V Workingmen's, etc., Association, 64 Ind., 100.. 103 
 
 Shannon V Dunn, 43 N. H., 194 77-103 
 
 Shannon V Howard, etc, Association, 36 Md., 383 76-81-95-99-100 
 
 Sheldon V Mayor, etc., 30 Ala., 540 30 
 
 Sherman, etc.. Association v Hock, 9 Phila., 75 157 
 
 Shibley V Angle, 37 N. Y., 626 11 
 
 ShieldsvOhio, 95U. S.,319 18 
 
 Shinn V State, 32 Grat., 899 ..49 
 
 Siburn v Pearce, L. R., 44 Ch. D., 854 66 
 
 Silver V Barnes, 6 Bing., N. C, 180 76-103 
 
 Simpson v Building Association, 38 Ohio St, 349 17 
 
 Skinner's Estate, 4 Phila., 189 105 
 
 Small V Smith, L. R., 10 App., Cas., 119 50
 
 XXIV TABLE OF CASES. 
 
 Page. 
 
 Smith V Los Angeles, etc., Association, 78 Cal., 289 43 
 
 Smith V Mechanics, etc, Association, 73 N. C, 373 77-81-84 
 
 Smith V Pilkington, 4 Jur., N. S., 58 94 
 
 Smith V Plank Road Co., 30 Ala., 650 11 
 
 Snider's Estate, 34 Leg., Int, 49 156 
 
 Somerset Co., etc., Association, V Vanderv^ere, 3 Stock, 383 95 
 
 Stile's Appeal, 95 Pa. St., 133 78 
 
 Sparrow v Farmer, 36 Beav., 511 89 
 
 Sperring's Appeal, 71 Pa. St., 11 40 
 
 Spinning v Home, etc.. Association, 36 Ohio St., 483 18 
 
 Spring Garden Association v Tradesmen's, etc.. Association, 46 Pa. St., 493 
 
 86-125-156 
 
 Springviile, etc.. Association V Raber, 33 Leg., Int., Pa., 329 87-125-156 
 
 State V Bonnell, 35 Ohio St., 10 37 
 
 State V Building Association, 35 Ohio St., 2.58 50-55-113-156 
 
 State V Greenville, etc.. Association, 39 Ohio St., 93 78 
 
 State V McGrath, 95 Mo., 193 15-155 
 
 State V Oberlin, etc., Association, 35 Ohio St., 258 83 
 
 State V Redwood Falls, etc., Association, 45 Minn., 154 68-69-155 
 
 State V Rohlffs, 19 Atl. R., 1 .99-38 
 
 State V Washington, etc., Company, 11 Ohio, 96 18 
 
 State, etc., Association v Kellogg, 63 Mo., 540 90 
 
 Stebbins V Merritt, 10 Cush., 27 37 
 
 Stein V Indianapolis, etc., Association, 18 Ind , 337 53-106 
 
 St. Joseph, etc.. Association v Thompson, 19 Kans., 321. _ 83-105 
 
 St. Louis, etc., Association v Augustin, 3 Mo. App., 123 103-119 
 
 Stohr V San Francisco, etc., Society, 83 Cal., 557 31 
 
 Strohenv Association, 115 Pa. St., 373 124-12S 
 
 Sturges V Crowninshield, 4 Wheat, 123 19 
 
 Stuyvesant V Hone, 1 Sandf., (N. Y.,) 419 126 
 
 Sullivan V Lewiston Institution of Savings, 56 Me., 507 .'.39 
 
 Sunbury, etc.. Association v Martin, 1 Luz., L. Reg., 147 86 
 
 Swentzel V Penn. Bank, 23 Atl. 1 Rep., 405 39 
 
 T 
 
 Tanner's Appeal, 95 Pa. St., 118 83 
 
 Tascottv Mutual, etc.. Association, 37 111., App., 274 75 
 
 Taylor v Collin.s, 46 L. T., Rep., N. S., 168 63 
 
 Texas, etc.. Association v Kerr, 13 S. W. Rep., 1 20-66 
 
 Third Ward, etc.. Association v Lotze, 11 Bull., 285 9 
 
 Thompson Y Gillison, 38 S. C, 534 108 
 
 Thompson v Ocmulgee, etc.. Association, 56 Ga., 350 130 
 
 Tosh v North British, etc.. Society, 11 App., Cas., 489 138 
 
 Twin-Lick Oil Company v Marbury, 91 U.S., 587 43 
 
 Tyrrell, etc., Association v Haley, 30 Atl., R., 1 63-82
 
 TABLE OF CASES. XXV 
 
 Page. 
 
 Tyrrell, etc., Association v Haley, 139 Pa. St., 476 92 
 
 Tyrrell, etc., Association v Haley, 139 Pa. St., 657 73 
 
 u 
 
 Union, etc.. Association v Masonic Hall Association, 2 Stew.,389.. 04-55-81-101 
 Uniontown etc., Association's Appeal, 92 Pa. St., 200 126 
 
 Valley Bank, etc., Institution v Savings Society, 28 Kan., 423 119 
 
 Vann v Fayetteville, etc., Association, 75 N. C, 494 77 
 
 Vanneman v Swedesboro, etc, Association, 15 Stew., 263 155 
 
 Vermont, etc., Company v Whithed, 49 N. W. Rep., 318 105 
 
 Vos V Cedar Grove, etc., Association, 9 Bull., 194 56 
 
 w 
 
 Walker V British, etc.. Association, 21 L. J. Q. B., 257 45 
 
 Walker v General Mutual, etc.. Society, L. R., 36 Ch., Biv., 777 786-66 
 
 Walton V Edge, L. R., 10 App. Cas., 33 69 
 
 Wangerien v Aspell, 47 Ohio St., 250 18-20-55 
 
 Washington, etc.. Association v Beaghen, 27 N. J.. Eq., 98 SS- 125-126 
 
 Washington Association V Creveling, 10 Vr., 465 155 
 
 Waterlow v Sharp, L. R. 8 Eq., 501 114 
 
 Watkins v Building Association, 97 Pa. St., 514 87 
 
 Watkins v Workingmen's, etc.. Association, 10 W. N. C, 414 l 87 
 
 Watkins V Workingmen's, etc., Association, 97 Pa. St., 514 95-97 
 
 Watson V Aildn, 55 Tex., 536 105 
 
 Waverly, etc.. Association v Buck, 64 Md., 388 95-103 
 
 Weise v San Francisco, etc., Society, 82 Cal., 646 31 
 
 Weiss' Appeal, 5 W. N. C, (Pa.,) 42S 125 
 
 West Winstead, etc.. Association v Ford, 27 Conn., 282 103-153 
 
 Whilden V Broomall, 1 Del.,(Pa.,) 142 86 
 
 White V Mechanic's, etc.. Association, 22 Grat-, 243 .73-85-103-121 
 
 Wiggins' Appeal, 100 Pa. St, 158 83 
 
 Wilkowskiv Hall, 95 Am., Dec, 374 91 
 
 Wm. Tell, etc, A.ssociation, 39 Pa. St., 137 103 
 
 Williamson V Kokomo, etc.. Association, 89Md.,389 16-17 
 
 Williar v Baltimore, etc., Association, 45 Md., 546 77-103-105 
 
 Wilson V Tucker, 3Stark., 154 45 
 
 Wilson's Case, L. R., 12 Eq., 521 110 
 
 Winchester, etc , Association, V Gilbert, 23 Grat, 787 38-73-95-98 
 
 Windibch v Korman, 5 Bull., 364 93
 
 XXVI TAELE OF CASES. 
 
 Page. 
 
 Windhorst V Building Association, 7 Bull., 29 156 
 
 Winget V Quincy. etc., Association, 128 111., 67 17-25-40-140 
 
 Windsor v Bandel, 40 Md., 172 121-128 
 
 Winterer V Building Association, 44 L. I., (Pa.,) 122 38-60-98 
 
 Withers V Baird. 32 Am., Dec, 754 91 
 
 Wittman V Building Association, 7 W. N. C, 80 65-128 
 
 Wolbach V Lehigh, etc., Association, y4 Pa. St., 211 83 
 
 Wolbach V Lehigh, etc., Association, 4 W. N. C , 157 156 
 
 Wood V Hoskin, 63 Wis., 15 158 
 
 Wood V Union Gospel, etc.. Association, 63 Wis., 9 158 
 
 Woodman V York, etc., R. R. Company, 50 Me., 549 52 
 
 Wright V Deley, 4 H. & C, 209 66 
 
 z 
 
 Zabriskie V Hackensack, etc., Company, 18 N. J., Eq., 178 19
 
 INDEX. 
 
 Abstract of title should be furnished 81 
 
 Abstracter may be an officer 42 
 
 Acceptance formal, of resignation of director unnecessary 48 
 
 Acconnt, how stated when association in liquidation 120n 
 
 Acknowledginient of mortgage, who may take 90,91 
 
 Actual notice to association of subsequent incumbrance, effect of 126 
 Advancement on shares is a loan 76 n, 77 n 
 
 Agents, directors as 38, 89 
 
 Directors when may delegate to- ^"41 
 
 Contract of, when may be rescinded 49 
 
 When may be removed — — 49 
 
 Liability of association for acts of 53 
 
 When may delegate powers 53 n 
 
 Powers of, should be defined 52 
 
 general Powers to bind association 52, 53 
 
 Special how far may bind association 53 
 
 Agreement, see contract. 
 
 Unanimous, stockholders may wind up by 119 
 
 To take shares, nature of 10, 11 
 
 To take shares, not partnership 11- 
 
 Building form of 226 
 
 To waive liens form of 233, 234 
 
 Amendment, of charter by legislative authority 18 
 
 When legislature may amend 18 
 
 Limits of legislature power to amend — 19 
 
 Mode of amendment 19 
 
 Of by-laws 01,32,33 
 
 Of resolutions 32 
 
 Amonnt payable on foreclosure, natural and logical rule 96, 97 
 
 Recoverable on foreclosure under the English rule 94 
 
 Recoverable on foreclosure under rule of "possible duration " 98 
 
 Recoverable on withdrawal 66 
 
 To be paid on withdrawal 65, 69 
 
 XXVII
 
 XXVIII REFERENCES TO PAGES. 
 
 Application for loan 79 
 
 For loan, form of 170 
 
 Of payments 84 
 
 Of stock payments by borrower, eilect of b8 
 
 For membership, form of 158 
 
 Appraisers cannot delegate powers... 53 n 
 
 Sealed report of 46 n 
 
 Re port, form of 184- 
 
 May beoflScers 42 
 
 Appraising committee 3, 46, 80 
 
 Arbitration, by-laws may provide for 29 
 
 Articles of association, see charter. 
 
 Of incorporation 11, 12 
 
 Assessment on stock 127 
 
 Assets, what are 89, 126 n 
 
 To be distributed when 121 
 
 How distributed 129 
 
 Should be equally distributed 60 
 
 Distribution of, upon dissolution 120 
 
 Assignment of stock without transfer on books, effect of 70 
 
 Of stock as collateral security 85 
 
 Form of 193 
 
 Of shares as collateral security, effect of 85 
 
 For creditors -. 123 
 
 For creditors does not prevent judgment 123 
 
 Association plan of 5 
 
 Assigned, shares cannot be credited on loan 88 
 
 Assigning mortgages, effect of 115 
 
 Assignment of mortgage Ill, 112, 113 
 
 Attorney, duties of 45 
 
 Liability of 45 
 
 Auction sale of money 74, 77 
 
 Auditing Committee, appointment of 47 
 
 Character of - 47 
 
 Report of impeachable when 47 
 
 Avoiding usury. See Usury 
 
 Bailee, Treasurer is only 45 
 
 Bank, account, overdrawing 114 
 
 Check, form of • 225 
 
 Banking, Association should notengage in 50 
 
 Bidding - - 78 
 
 For preference 74 
 
 Bill to foreclose mortgage, fines do not stop upon filing 101
 
 REFERENCES TO PAGES. XXIX 
 
 Bond, Secretary and treasurer should give 36,47 
 
 Duty of directors in regard to 47 
 
 Sureties responsibility of, how ascertained 47, 48 
 
 Sureties discharge of 48 
 
 liability of 48 
 
 Effect of failure of surety to read bond... 48 
 
 Form of 188, 200, 202, 211,231, 234, 235 
 
 Not void for uncertainty 83 
 
 Provisions of ^ 48,81 
 
 May be deposited as collateral security 112 
 
 Books, Inspection of by members 62 
 
 Borro"friiig, Illegal prior to 1874 in English societies without a rule.. 
 109, 110 
 
 Unlimited borrowing held ultra vires _. 109 
 
 When limit exceeded, directors liable 109 
 
 For illegitimate purposes not enforceable 109 
 
 For legal liabilities, enforceable 109 
 
 Borro'vv'ing member entitled to pro rata part of profits 60 
 
 Status of 71, 72, 73 n 
 
 Selection of __ 74 
 
 Borrowing money by association ..107, 108, 109, 110, 111, 112, 113, 114 
 
 115 
 
 BorrOT^er, Member as 3 
 
 Liability of.... ..90, 127 
 
 Must pay interest during suspension 120 
 
 Not further obligated if association is unable to perform its contract 
 
 121 
 
 May set off against his mortgage 92 
 
 Defaulting, amount to repay 96,97 
 
 Repaying amount of repayment 96, 97 
 
 Cannot recover on mistake of law 98 
 
 Credit entitled to, on application of stock payments 125 
 
 Withdrawing, credit to be given 87 
 
 May pay off loan and retain stock 87 
 
 Not liable under his mortgage for debts unless so provided. 88, 89, 128 
 
 Liability of, for losses 89, 90 
 
 Cannot defeat loan as unauthorized 83 
 
 Borroirer's account when association in liquidation 120 n 
 
 Building agreement, form of 226 
 
 Specifications, form of 227 
 
 Building Association. 
 
 Origin of 1 
 
 Greenwich Union Building Society .1 
 
 Brookljm Building and Mutual Loan Fund Association 2 
 
 Definition of .. ..2
 
 XXX REFERENCES TO PAGES. 
 
 Building Association. 
 
 General scheme of 2 
 
 Transfer of stock 3 
 
 Maturing of stock 4 
 
 Revenues of 4 
 
 Expenses to be incurred 4, 10 
 
 Officers to be selected 4 
 
 Compensation of officers 4 
 
 Serial, plan of 5 
 
 Value of shares _ 5 
 
 Permanent, plan of . 6 
 
 Organization of 9 
 
 Agreement, preliminary 10 
 
 Contract, preliminary 10 
 
 May enforce stock subscriptions 10 
 
 Use of seal ..20 
 
 Modified type of corporations 21 
 
 DifEerent from ordinary corporations 23 
 
 Illegal to hold stock in another corporation 25 
 
 Cannot hold stock in another 25 
 
 Relation of stockholder to 21 
 
 Bound to lend to members 24 
 
 Estopped to deny membership 25 
 
 Power to enact by-laws ..28 
 
 Power to amend by-laws 31 
 
 Contract of, how signed 41 
 
 Relation of officers to 49 
 
 General powers of , 50 
 
 to have common seal 50 
 
 to contract 50, 52 
 
 to hold real estate 50, 56 
 
 to sue and be sued 50, 53 
 
 to make by-laws 50 
 
 to compromise debts or remit fines 42, 55 
 
 to loan money 55 
 
 to take mortgages 1 55 
 
 to borrow money. 107, 108, 109, 110, 111, 112, 113, 114, 115 
 
 Has incidental powers as are necessary 50 
 
 Should not engage in banking 50 
 
 Should not invest in securities not contemplated by statute 50 
 
 Estopped to deny ultra vires acts when 51 
 
 Not dissolved by ultra vires acts alone , ... 1.51 
 
 Contracts through officers and agents 52 
 
 How far bound by special agent 52, 53 
 
 Power of general agent to bind 52, 53 
 
 Liability for agent's acts 53 
 
 Complaint by, allegations of 63, 54
 
 REFERENCES TO PAGES. XXXI 
 
 Bailding Association. 
 
 Cannot traffic in notes 55 
 
 When may issue stock to another corporation 56, 57 
 
 May sue member for dues 63 
 
 Should make loans 74 
 
 May sue upon either bond or mortgage 83 
 
 May borrow for authorized purpose 109,114 
 
 Must repay unless lender knew purpose was unauthorized. .112, 114 
 
 No power to sell its mortgages 116 
 
 Unable to perform contract, borrower not obligated further 120 
 
 When must retire stock 121 
 
 May sell pledged stock as against purchaser 124 
 
 Consolidation of 129 
 
 Character of 132 
 
 By Bidding 74 
 
 By-Laws. 
 
 May be amended by directors 28 
 
 Notice of amendments should be given 28 
 
 Character of notice 28 
 
 Member not bound by, without notice 28 
 
 Association has power to amend 31 
 
 Having retroactive effect, apply fully unless vested rights are 
 
 impaired 33 
 
 Mode of amendment, as prescribed must be followed 33 
 
 Stockholders adopt 11 
 
 Charter should not invade 17 
 
 Selection of committee to frame 27 
 
 Report of committee, time and place of hearing 27 
 
 Character of, should be well understood 27 
 
 Each shareholder should have notice of 27, 62 
 
 Definition of - 28 
 
 Power of association to enact 28 
 
 Power to enact resides in stockholders 28 
 
 May provide for amendment by directors 28 
 
 Notice of amendments should be given 28 
 
 Character of notice 28 
 
 Member not bound by amendments without notice 28 
 
 When acted upon and enforced are binding ..28 
 
 Must be reasonable 29 
 
 Must not be contrary to public policy 29 
 
 Nor attempt to oust jurisdiction of courts 29 
 
 May provide for arbitration , 29 
 
 Must be consistent with articles of incorporation and statute 29 
 
 Cannot provide for unreasonable fines 29 
 
 Cannot compel stockholders to offer premium for priority of 
 
 payment after maturity of shares 29 
 
 Member cannot deny signing by-laws after enjoying benefits. ..29 n
 
 XXXII REFERENCES TO PAGES, 
 
 By-JLaws. 
 
 Requiring member to sign an obligation to obey are directory 2^ 
 
 Are part of contract between association and member 30 
 
 May be examined to determine wlien mortgage contract 
 
 terminated 30 
 
 Defining duties of secretary, part of surety's contract 30 
 
 Construction of, must be fair 80 
 
 Consisting of several distinct and independent parts, one may 
 
 be void and the others valid ...30 
 
 If waived by association, member violating them cannot com- 
 plain 30 
 
 Member holding a greater number of shares than allowed by 
 by-laws, but not by statute, cannot defend against a claim 
 
 thereon . » 30^ 
 
 A loan not in conformity with by-laws, but under an express 
 
 statutory power, is not void . .30 
 
 Association has power to amend -.31 
 
 May be amended so as to afEect future benefits but not vested 
 
 claims - — . . --31 
 
 Illustrations of rule -- 31, 32 n 
 
 Amendments having retroactive effect, apply fully unless 
 
 vested rights are impaired 32 
 
 Resolutions cannot be passed so as to impair vested rights 32 
 
 Unwritten regulations when acted on will govern if reasonable-. 33 
 
 Mode of amendment as prescribed must be strictly followed 33 
 
 Should not be incorporated in charter 33 
 
 Should be kept distinct from rules 33 
 
 Provisions of by-laws 33 
 
 Manner of election of officers and time of holding to be pre- 
 scribed by by-laws — 36 
 
 Should fix date of general meetings of stockholders.... ^...37 
 
 Should provide for call of special meetings 37 
 
 Manner of election of officers as fixed by by-laws to be strictly 
 
 observed 48 
 
 Should provide for removal of officers , 49 
 
 Power of association to make . — --50 
 
 May provide for custody of seal 51 
 
 Member after enjoying benefits cannot question legality of 63 
 
 Should provide for liability of withdrawing member 67 
 
 Construction of, concerning withdrawal 69 
 
 Should provide for penalty for failure to take loan 74 
 
 Should regulate fines - -.101 
 
 Form of - 165 
 
 California Associations 144 
 
 Call for special meeting 37 
 
 Cancelling stock, effect of 131
 
 REFERENCES TO PAGES. XXXIII 
 
 Certificate of stock, form of 165 
 
 How issued 13,24, 36 
 
 Cessation of all corporate acts and enterprises does not dissolve 
 
 the Association ._ - • 119 
 
 Change of permanent to serial 130 
 
 Serial to permanent ..130 
 
 Character of building associations 133 
 
 Charter. 
 
 Preparation of 11,12, 13,14,15 
 
 Signing of 12, 13 
 
 Importance of 14 
 
 Legal status of signers 14 
 
 Must adhere to statute - --15 
 
 General adherence to statute sufficient 15 
 
 Construed by patent intent 15 
 
 Corporate objects to be clearly specified 15 
 
 What constitutes charter ..15, 18 
 
 Charter amendable to the constitution 15 n 
 
 Relations created by the charter 15, 16 
 
 Effect of charter exceeding legislative authority 16 
 
 Effect of failure to strictly comply with statute 16 
 
 Strict compliance with statute not necessary 16 
 
 Defects in oranization cannot be collaterally attacked 16, 17 
 
 Effect of defects impairing legality of association 16, 17 
 
 State may withdraw charter for exceeded powers 16 
 
 When courts may interfere with exceeded powers — 17 
 
 Corporate functions not enlarged by assuming unauthorized 
 
 powers 
 
 17 
 
 Charter should not invade by-laws 17,33 
 
 Construction of, is one of intent 17 
 
 Amendment by legislative authority ..^ — 18 
 
 When legislature may amend 18 
 
 Limits of legislative power to amend 19 
 
 Mode of amendment 19 
 
 Impairment of contract... 19 n 
 
 Mode of amendment provided in charter must be followed 20 n 
 
 By issuance of charter, association is a corporation .-..21 
 
 By-laws must be consistent with — 29 
 
 Providing for removal of officers 48 
 
 When may be annulled — 51 
 
 Power to forfeit in state 119 
 
 Form of, by articles of association - 159 
 
 Form of, by special enactment 163 
 
 Collateral attack, when acts ultra vires are subject to 55 
 
 Collateral Security, assignment of shares as 82 
 
 Form of. 198 
 
 Mortgages and bonds may be deposited as ..Ill, 112
 
 XXXIV REFERENCES TO PAGES. 
 
 Colorado Associations 143 
 
 Compensation of officers .• 4 
 
 Committees 41, 42, 47 
 
 Complaint to recover on withdrawal, what must show 65 
 
 By associations, allegations of 53, 54, 83 
 
 To foreclose mortgage, fines do not stop upon filing 101 
 
 Compromise of debts 42, 55 
 
 Of debts in good faith, will not be set aside 55 
 
 Computation as to amount upon voluntary repayment 94 
 
 Of amount recoverable on foreclosure under rule of possible 
 
 duration _. 93 
 
 Consolidation of building associations 129 
 
 Constitution, charter amenable to 15 n 
 
 Construction of by-laws must be fair .30 
 
 By-laws consisting of several distinct and independent parts, 
 
 one may be void and the others valid ...30 
 
 Of by-law concerning withdrawal 69 
 
 Of charter, one of intent 17 
 
 Conting^ent fund 7 
 
 Continuous default, when averred 54 
 
 Contr ct. To take shares 10, 11 
 
 With married women 23 
 
 By-laws are part of, between association and member 30 
 
 Mortgage contract, by law may be examined to determine when 
 
 terminated 30 
 
 By laws defining duties of secretary, part of sureties' contract 30 
 
 Of association, how signed _ . — 41 
 
 Of agent may be rescinded, when.. >. . 49 
 
 Power of association to malse c50, 53 
 
 Requiring seal 53 
 
 Misnomer of association in, effect of 53 
 
 To insure, breach of 84 n 
 
 Co-operative banks 135, 139 
 
 Form of mortgage of — 216 
 
 Corporation. Relation of stockholders to 21 
 
 Association cannot hold stock in another _ 25 
 
 When stock may be issued to 56, 57 
 
 Corporate acts beyond corporate powers, void 50 
 
 name 11, 12 
 
 Courts. By-laws must not attempt to oust jurisdiction of 29 
 
 Cannot remove officers 48 
 
 Will not relieve against authorized forfeiture 48 
 
 When may interfere with exceeded powers 17 
 
 Covenants in mortgage 84
 
 REFERENCES TO PAGES. XXXV 
 
 Credit to be given withdrawing borrower, how ascertained 87 
 
 Creditors, assignment for - — 123 
 
 Cannot compel application of stock on loan 86, 125 
 
 Of association must be paid before members 126 
 
 Members withdrawing are 65 
 
 Entitled to be paid first -- 124 
 
 Members may be 60 
 
 Daytou Mutual Home Association 136, 137 
 
 Mortgage of, form of - 217 
 
 Death of stockholder 26 
 
 Dissolves membership 26 
 
 Of stockholder does not dissolve association 119 
 
 Debtor, member is to association 23 and n, 63 
 
 Debts, compromise of 42, 55 
 
 Liability of borrower for 127 
 
 Must be discharged before division 121 
 
 Liability of borrower for, under his mortgage 88, 89, 128 
 
 Deed, Trust, form of 194 
 
 Defaulting borrower amount to repay 96,97 
 
 Member may be sued on bond or mortgage 82 
 
 Member entitled to share in profits ..122 
 
 Member, disposition of 71 
 
 Member, tender by 54 
 
 Member cannot transfer stock.. 70 
 
 Default of other members does not relieve one 59 
 
 Deduction of premium 134 
 
 Defects impairing legality of association — 16, 17 
 
 In organization cannot be collaterally attacked 16,17 
 
 Definition of building association 2 
 
 Of usury 103 
 
 Delaware associations 140 
 
 Delegation of duties to agents by directors 41 
 
 Of powers by appraisers 53 n 
 
 Delinquent officers, fines against 99 
 
 Deposits authorized, rights of depositors over members 113 
 
 Devisees as members 25 
 
 Directors. To be selected.... 4 
 
 Should keep within corporate powers 25 
 
 Illegal action of, may be restrained by stockholders 25 
 
 May amend by-laws, when 23 
 
 Cannot defeat supreme powers of stockholders assembled in 
 
 general meeting 36 
 
 Should furnish stockholders with copy of report of association... 36
 
 XXXVI REFERENCES TO PAGES. 
 
 Directors. 
 
 Meetings of 87 
 
 Have supervision and management 38 
 
 As agents and trustees -.38, 39 
 
 Duties of - 39 
 
 Liability of 
 
 For fraud 89 
 
 For gross negligence - 39 
 
 For ultra vires acts 39 
 
 For misapplication of funds - 39 
 
 Not liable for acts of co-director when not present 39, 40 
 
 Not liable for mistake in opinion .39,40 
 
 Rule for guidance of 40, 41 
 
 Minutes of meetings 41 
 
 Powers of 41 
 
 Contracts of 41 
 
 Right to delegate to agents 41 
 
 Personally interested, incompetent to vote - 42 
 
 Cannot speculate in funds 42 
 
 Cannot purchase property for resale to association at a higher 
 
 figure - 43 
 
 Cannot make secret agreements for their own profit 42 
 
 Duty in granting loans - -> 42 
 
 May remit fines or compromise debts 42 
 
 Term of election of 42, 43 
 
 Percentage of value to be loaned in discretion of 46 
 
 May appoint executive committee 47 
 
 Should require bond, when - 47 
 
 Duty of, in regard to bonds 47 
 
 Election of, as prescribed by by-laws, to be strictly observed 48 
 
 Resignation of „.. - 48 
 
 Cannot be removed by stockholders - — 48 
 
 Cannot be removed by courts 48 
 
 May remove agent holding at pleasure 48, 49 
 
 May remove agent under contract, when 49 
 
 Removal of, should be provided for in by-laws 49 
 
 Should understand scheme of association 51 
 
 Should make equal distribution of assets 60 
 
 Liability of, for distributing profits contrary to law 60, 62 
 
 Should not invest funds to defeat withdrawals 68 
 
 May give dividends to stockholders shown by the books 70 
 
 Grant loans on appraisement 80 
 
 Dissolution. Ultra vires acts alone do not work 51, 56 
 
 Rights of withdrawing members on 68, 69 
 
 Dues cease upon 81 
 
 Upon maturity of all stock 118 
 
 Method of 119
 
 REFERENCES TO PAGES. XXXVII 
 
 Dissolution. 
 
 Neglect to elect officers does not dissolve association 119 
 
 Cessation of all corporate acts and enterprises does not dissolve. 119 
 
 Non user of franchise does not dissolve - ..119 
 
 Insolvency of association does not dissolve 119 
 
 Death of stockholders does not dissolve 119 
 
 May be by unanimous agreement 119 
 
 Agreement of 122 
 
 Tosuspend and close up business is not dissolution 119 
 
 Upon agreement must be unanimous 119 n 
 
 Distribution of assets upon .- ..120 
 
 Appointment of receiver operates as dissolution as to pa3'ments-120 
 If association is unable longer to perform its contract it is in 
 
 effect dissolved as to borrower 121 
 
 Dividends, How credited 121, 122 
 
 May be given stockholders shown by books 70 
 
 Division of assets 121, 129 
 
 of profits 7 
 
 of profits in serial 122 
 
 Distribution of assets 129 
 
 of assets upon dissolution 120 
 
 Dnes are partial payments on stock 24 
 
 Payment of at secretary's place of business when valid 63 
 
 Payment of, to authorized officer , 63 
 
 Suit for, by association 63 
 
 Cease on appointment of receiver 120 
 
 Cease if association dissolves before maturity ..81 
 
 When payable 36 
 
 Payable to maturity ..81 
 
 Payable as stipulated 81 
 
 Dnties of directors 39 
 
 of president 43 
 
 of vice-president .43 
 
 of secretary 43 
 
 of treasurer 44 
 
 of attorney .45 
 
 Election of officers, manner of to be strictly observed 48 
 
 of directors, term of 42, 43 
 
 Embezzlement, when secretary or treasurer guilty of 49 
 
 Enabling statute, powers conferred by 83 
 
 Engllsb societies, see borrowing, permanent society 6 
 
 Terminating society 6, 118 
 
 Entrance fee prerequisite to membership 21
 
 XXXVIII REFERENCES TO PAGES. 
 
 Estoppel. Members estopped to deny incorporation 25 
 
 One receiving membership benefits, estopped 25 
 
 A ssociation estopped to deny membership 25 
 
 Embezzling officers estopped to deny corporate existence . 49 
 
 Association's right to contract. ,... . . 51 
 
 Of association to deny its right to make contract ..51 
 
 When member estopped to deny... 
 
 Member when estopped to deny legality of by-laws 62 
 
 Borrower cannot defeat loan as unauthorized 83 
 
 Association estopped to allege want of power to borrow for 
 
 legitimate purposes 112 
 
 Association cannot defeat recovery of money borrowed as applied to 
 
 unauthorized purposes, unless lender knew of it 112 
 
 Exclnsive right to name 12 
 
 Executive committee, appointment of .47 
 
 Committee, duties of 47 
 
 Committee, powers delegated to 41 
 
 Expenses to be incurred 4, 10 
 
 Expert accountants selected as auditors 47 
 
 Failure to transfer stock on books, effect of 70 
 
 Fees of appraising committee 46 n 
 
 Final division and settlement, when required 121 
 
 Fines. Amount must be reasonable _ 29, 100 
 
 Delinquent cannot be fined twice for same offense 29 
 
 Must be provided for in unambiguous language 34 n 
 
 Directors may remit 42 
 
 Covenant to pay enforceable 84, 100 
 
 Necessity of 99 
 
 Against delinquent oflScer 99 
 
 May be recovered as stipulated damages 99 
 
 Without statutory authority, not enforceable 100 
 
 Can only be collected from members _ 100 
 
 May be charged against land 101 
 
 Stop after decree of foreclosure 101 
 
 Do not stop on filing bill to foreclose 101 
 
 No interest on _ 101 
 
 After decree part of principal 101 
 
 Are lien on stock 101 
 
 Foreclosure of Mortgage. 
 
 Just computation ditiicult . 93 
 
 Amount recoverable under the rule of "possible duration" 93 
 
 English rule 94 
 
 American modification 94 
 
 Uncertainty of above rules 95 
 
 The natural and logical rule 96
 
 REFERENCES TO PAGES. XXXIX 
 
 Forfeitores. Must be created by unambiguous language 34 
 
 yiiould be omitted when --34 
 
 Must be autliorized by charter or statute _ --71 
 
 In declaring, law must be strictly complied with 71 
 
 If authorized, courts will not relieve against 71 
 
 No notice is necessary unless prescribed 71 
 
 Forfeiting membership, effect of 71 
 
 Forfeiture of charter, power instate 119 
 
 Stockholder has no power to sue for forfeiture of charter. 119 
 
 Franchises not forfeited by agreement to suspend and close 
 
 up business 119 
 
 Forms. 
 
 Preliminary agreement for incorporation 1-^8 
 
 Application for membership 158 
 
 Charter 159 
 
 Special act of incorporation - 163 
 
 Of stock certificate -165 
 
 Of by-laws - 165 
 
 Of application for loan 179 
 
 Of appraiser's report - 184 
 
 Of rules 185 
 
 Of mortgage note - — 187 
 
 Of bond 188, 200, 203, 311 
 
 Of mortgage 139,206,313 
 
 O f collateral transfer 193 
 
 Of stock note - 194 
 
 Of trust deed - 15>4 
 
 Of insurance clause 199 
 
 Of Dayton Mutual Home Association mortgage 217 
 
 Of co-operative bank mortgage 219 
 
 Of stock register 224 
 
 O f warrant - -- 235 
 
 Of bank check 225 
 
 Of building agreement — 226 
 
 Of building specifications 227 
 
 Of indemnifying bond ^ 231 
 
 Of waiver of liens - • 283,234 
 
 Of bond of secretary , - 234 
 
 Of bond of treasurer 235 
 
 Of resolution to borrow 115 
 
 Franchise, non user of does dissolve 119 
 
 Not forfeited by agreement to suspend and close up business. ..119 
 
 Fraud, liability of director for 39, 40 
 
 Fraudulent satisfaction of mortgage, relief for 98 
 
 Funds, misapplication of, liability of directors for 39
 
 XL REFERENCES TO PAGES. 
 
 General agent, powers to bind association 52, 53 
 
 General Meetings. Supreme power in management vested in 
 
 stockholders assembled in general meeting 36 
 
 Directors cannot defeat this power. 36 
 
 When they should occur 36 
 
 Date of, should be fixed by by-laws 37 
 
 When shareholder entitled to personal notice _ 37 
 
 Unless held pursuant to notice, of no validity 37 
 
 Must be held in the locality of the shareholders •. 37 
 
 Special or unusual matters require notice -37 
 
 Acts of majority present, binding.. 37 
 
 Objects of 38 
 
 Gross negligence, liability of directors for 39 
 
 Guidance for directors 40, 41 
 
 Heirs as members 25 
 
 Horizontal premiums 78 
 
 Idiot cannot be member 22 
 
 Illegal action of directors may be restrained by stockholders 25 
 
 Illinois associations .' 140 
 
 Implication, name acquired by 11 
 
 Implied powers _ 52 
 
 to borrow money 113 
 
 of association to take mortgage 55 
 
 Incapacity of agent, contract may be rescinded for. 49 
 
 Incidental powers, association has ...50, 53 
 
 Incorporation, averment as to 53 
 
 Form of special act for 163 
 
 Form of agreement for 158 
 
 By letters patent ' 13 
 
 By special legislative act 12, 13 
 
 One receiving membership benefits estopped to deny ..25 
 
 Members estopped to deny 25 
 
 Right to deny in the stats . 25 
 
 Indemnifying bond, form of 231 
 
 Indiana Associations ^ 144 
 
 Infants as members „ 23 
 
 Inspection of books by members... 63 
 
 Insolvency does not dissolve association 119 
 
 Insolvent association should have receiver. 123 
 
 Officer of, cannot discharge his indebtedness by his stock 49 
 
 Rights of withdrawing membersof 67 
 
 Insurance, Covenant to pay, enforceable 84 
 
 Breach of contract to carry 84 n
 
 REFERENCES TO PAGES. XLI 
 
 Carrying by borro'wer -- — l''"^ ^ 
 
 Clause, form of - - - 1^^ 
 
 lOTTR Associations 1^^ 
 
 .Interest, None on fines - - 101 
 
 Ceases on appointment of receiver 130 
 
 Cliarges, how fixed by officers 106 
 
 Illegal cannot be recovered 105 
 
 Usurious measure, of damages on recovering back 105 
 
 Usurious, may be recovered back 105 
 
 Usurious, Refunded clears of taint 105 
 
 May be charged on the principal without regard to the 
 
 weekly or monthly reductions... — 104 
 
 Payable during suspension of business 120 
 
 Should be on the sum advanced... - 104 
 
 Payable weekly or monthly not usurious ..104 
 
 Not collectible on premium or interest 80, 105 
 
 l^nTCsting member liability for losses 89,90 
 
 May be without borrowing... 63 
 
 Investor, liability of 00> 137 
 
 Issue of stock, see Re-issue of stock 56, 57 
 
 J nd j^nient against association binds shareholders 54 
 
 Junior Incumbrancer may compel application of stock 
 
 payments on loan .- - 80, 88, 124, 125 
 
 Must notify association of his claim 126 
 
 "Kansas associations 143 
 
 Kentucky, statutory interest allowed 106 n 
 
 I^eases, elfect of 91, 93 
 
 Legal status of member 59 
 
 of stockholder defined 66 
 
 X«egislature may amend charter 18 
 
 lienders to associations entitled to payment over members Ill 
 
 Where society exceeds statutory limit, remedy of Ill 
 
 I^etters patent, incorporation by.._ 12 
 
 I>iability of attorney 45 
 
 Of association foragent's acts - 53 
 
 Of directors 39 
 
 Of secretary - --44 
 
 Of treasurer - 45 
 
 Of- withdrawing member 66, 128 
 
 On stock, measure of - 90 
 
 Of borrower for debts of association under his mortgage.. 88, 89, 128 
 
 Of investor 90, 127 
 
 Of association must be discharged before division 121
 
 XLII REFERENCES TO PAGES. 
 
 Liiability. 
 
 Of borrower 90, 127 
 
 Of stockholder 90, 127 
 
 fiien on stock, fines are 101 
 
 Waiver of, form of 233, 234 
 
 lioaii. 
 
 Not in conformity with by-laws but under express statutory 
 
 power, not void 30 
 
 Duty of directors in granting 42 
 
 Per centage of value to be loaned 4& 
 
 Association has power to make 55 
 
 Duty of association to make -74 
 
 Advancement on shares is - — 77 n 
 
 Ap pi ic ation for 80 
 
 Note or bond, provisions of 81 
 
 Mortgage, provisions of _. -- . 81 
 
 To outsider not grantable unless authorized 88 
 
 Cannot be defeated by borrower as unauthorized 83 
 
 To married women 83 
 
 Shares as collateral security for 85, see form, 193 
 
 Payments on stock not ipso facto payments on .-75 
 
 Creditor cannot compel application of stock on S& 
 
 Applications of stock payments are compellable by junior 
 
 incumbrancer, or purchaser, or surety - - ..86,88 
 
 Withdrawing borrower may pay off and retain stock 87 
 
 Assigned shares cannot be credited on 88 
 
 Leases for 91,92 
 
 Amount payable on foreclosure -.93, 94, 95, 96 
 
 Amount payable on voluntary repayment - 96, 97 
 
 Interest should be charged on the sum advanced 104 
 
 Premium only enforceable against members .'.-105 
 
 Not paid at one time, but receiving legal interest, not usurious.. 105 
 
 Form of application for - 179 
 
 Method of - 133, 134, 135, 136 
 
 liOans, character of security for 3 
 
 Stock 3 
 
 Mortgage 4 
 
 liOSSes, liability of investor and borrower for 89,90 
 
 Liability of borrower for . 127 
 
 Ulaine Associations - 141 
 
 Majority acts of, at meeting, binding - 37 
 
 Iflaking loans - —80 
 
 Malfeasance of agent, contract may be rescinded for 49^ 
 
 Manner of withdrawal - 64.
 
 REFERENCES TO PAGES. XLIII 
 
 lIKarried. woman as member. 
 Loans to . 
 
 .22 
 
 .83 
 
 Loans enforceable against husband of 83 
 
 Marish ailing of assets ^24 
 
 When doctrine of, applies 126 
 
 Maryland, associations. - 1^^ 
 
 Massachnsetts associations 139 
 
 Matured value of stock not recoverable on withdrawal 66 
 
 Ifatnrity of series 1^1 
 
 Retiring of stock before 68 
 
 Of stock premium chargeable to, only 79 
 
 Of stock in serial - - 122 
 
 • Stockholders may wind up before - H^ 
 
 Measure of Damages on recovery of usurious interest 105 
 
 Of liability on stock 90 
 
 Member. See Stockholders. 
 
 M ay borrow - 3, 23 
 
 May withdraw 3, 8, 24 
 
 May transfer stock - - 3 
 
 M ay pledge shares 3 
 
 Pays entrance fees 3,21 
 
 Should pay additional cost when 6 
 
 How constituted 10 
 
 Relation to corporation -- 21 
 
 Relation to state — 21 
 
 Entrance fee prerequisite of membership 21 
 
 Non compos cannot be a member -- 22 
 
 Becomes a member by subscribing for stock 22,30 
 
 Not compelled to accept illegal conditions 22 
 
 Married women and infants as members .22 
 
 Contracts with married women 22 
 
 Purposes of membership - 22 
 
 Purposes not material - 23 
 
 Is debtor to the association 2o and n, 59, 63 
 
 Jlntitledto be credited with profit 23 
 
 Association bound to lend to members 24 
 
 Withdrawal of, terminates membership 24 
 
 Issuingof pass book - - 24 
 
 Payments, how credited on pass-books 24 
 
 Pass books prima facie evidence of membership 24 
 
 Procedure when pass-books are lost 24 
 
 Certificates of stock how issut^d 24 
 
 Rules concerning when upheld 24 
 
 Estopped to deny incorporation 25 
 
 Illustration of rules ^ 25 n
 
 XLIV REFERENCES TO PAGES. 
 
 Member. 
 
 Rightto deny incorporation in the state 25 
 
 One receiving membership benefits estopped 25, 29 n 
 
 Directors should lieep within corporate powers 25 
 
 Stoclvholders may restrain illegal action of directors 25 n, 39 
 
 Association when estopped to deny membership 25 
 
 Death of stockholder ..26 
 
 Death dissolves membership 26 
 
 Heirs or devisees as members _ 26 
 
 Becomes such by owning stock without signing any agreement 30 
 
 Not bound by amendment of by-laws without notice 28 
 
 By-laws requiring members to sign obligation are directory 29 
 
 Bylaws are part of contract between member and association 30 
 
 Violating by-laws cannot complain if waived by association 30 
 
 Cannot complain if holding shares contrary to by-laws, but 
 
 not contrary to statute 30 
 
 Has but one vote 38 
 
 Not relieved from duties by acts ultra vires 51 
 
 Effect of tender when sued 54 
 
 Default of other members will not relieve him 59 
 
 May be shareholder and creditor 60 
 
 Pro rata interest in reserve fund 60 
 
 Borrowing entitled to pro rata part of profits 60 
 
 After enjoying benefits of by-laws cannot question legality of 62 
 
 May inspect books of association . 62 
 
 May invest without borrowing 63 
 
 Formerly denied in England _ _. 63 
 
 May be sued for dues 63 
 
 Should give written notice of withdrawal _. 64 
 
 Member withdrawing is creditor of association 65, 68 
 
 Amount member may recover on withdrawal 65 
 
 Legal status of withdrawing, defined 66 
 
 Withdrawing, liabil ityof ..66 
 
 Withdrawing not bound by new rules. 66 
 
 Withdrawing may sell his interest 67 
 
 Withdrawing from insolvent association, rights of ..67 
 
 Withdrawing must show funds in treasury to enforce demand... 66 
 
 Defaulting cannot transfer stock 70 
 
 Forfeiting membership, effect of 71 
 
 Defaulting, disposition of 71 
 
 Borrowing, status of 71, 73, 73 n 
 
 Borrowing, selection of 74 
 
 Not deprived of ordinary benefits by mortgage in ordinary form. 82 
 
 Should be accommodated before outsiders on loans 83 
 
 Cannot be compelled by creditor to apply stock payments on 
 
 loan 86 
 
 Withdrawing borrower's manner of repayment 86
 
 REFERENCES TO PAGES. XLV 
 
 Member. 
 
 Withdrawing borrower, credit how ascertained . 87 
 
 Losses, liability for 89, 90 
 
 Liability on stock 90, 127 
 
 Fines only collectible from members 101 
 
 Lenders to association entitled to payment over — 111 
 
 Defaulting entitled to share in profits 123 
 
 When may compel settlement 124 
 
 Cannot participate in assets until creditors are paid 126 
 
 Memberi^hip fee 3 
 
 Form of application for 158 
 
 Method of loans inS, 134, 135, 136 
 
 Of charging premiums 75,76,135 
 
 Of dissolution 119 
 
 Meetings. See General and Special Meetings. 
 
 Of directors 37 
 
 Michigan associations 140 
 
 Minimnm premium 78 
 
 Minnesota associations 142 
 
 Minntes of meetings _ 41, 47 
 
 Misapplication of funds, liability of directors for 39 
 
 Misnomer 11 
 
 Mississippi associations 142 
 
 Missouri associations 142 
 
 Mistake of law 98 
 
 Mode of Amendment as prescribed must be strictly followed.. 33 
 
 Of charter 19 n 
 
 Money of association should be loaned _ 74 
 
 Mortgage Foreclosure, See Foreclosure of Mortgage. 
 
 Loans -.-.4 
 
 Association has implied power to take 55 
 
 Association has no power to sell 116 
 
 Assignment effect of 116 
 
 Registration of -.91 
 
 Acknowledgment of 90 
 
 Of borrower does not secure liability for debts of association, 
 
 unless so provided 88, 89, 128 
 
 Not void for uncertainty... , 83 
 
 May be deposited for collateral security Ill, 112, 113 
 
 In ordinary form does not deprive member of benefits ..82 
 
 Provi.sions of 81 
 
 Satisfaction of 92 
 
 Release of by association when there is a second mortgage 88 
 
 Preparation of 84
 
 XLVI REFERENCES TO PAGES. 
 
 Mortgage Foreclosnre. 
 
 Satisfaction of by president 98 
 
 Note, form of , 187 
 
 Form of 189, 206, 213, 219 
 
 Mntnal Home and Savings Association 136, 137 
 
 Form of mortgage of 217 
 
 Name 11, 12 
 
 Nebr a !^ka associ ations 144 
 
 K^ecessity of fines. •. 99 
 
 Jfeglect to elect officers does not dissolve association 119 
 
 Negligence gross, liability of director for 39 
 
 New Hampshire associations ...140 
 
 New Jersey associations 139 
 
 Bond 211 
 
 Mortgage 213 
 
 New Yorlt associations _ 138 
 
 Non compo!^ cannot be member 22 
 
 Non nser of franchise does not dissolve 119 
 
 North Carolina associations 141 
 
 North Dakota associations I44 
 
 Notary Public, when disqualified 90,91 
 
 Note, provisions of 81 
 
 Form of mortgage note 187 
 
 Form of stock note I94 
 
 Notes, association cannot trafllc in 55 
 
 Notice, 
 
 Of amendment of by-laws should be given 28 
 
 Character of notice.. .•. 28 
 
 When shareholder entitled to personal notice of general meeting. 37 
 
 General meeting must be held pursuant to notice ..37 
 
 Required for special meeting 37 
 
 For special meeting, how served 37 
 
 Of withdrawal should be written __ 64 
 
 Of withdrawal, how served 65 
 
 Notice of forfeiture not necessary unless required 71 
 
 Of junior incumbrancer to association 126 
 
 Recording subsequent incumbrance, is not notice 126 
 
 Actual, efliectof 126 
 
 To stockholders, when not necessary 13 
 
 Nnl tiel corporation, plea of 53 
 
 Office, association should have .._.36
 
 REFERENCES TO PAGES. XLVII 
 
 Officers. 
 
 Compensation ..... - - — * 
 
 To be selected - - * 
 
 Stockholders elect H) 35 
 
 Consist ordinarily of president, vice-president, secretary, 
 
 treasurer and attorney , 35, 36, 42 
 
 Election of, by ballot 36 
 
 Election to be provided for by by laws 36 
 
 Secretary and treasurer should givebond 36 
 
 May include abstracter and appraisers 42 
 
 Manner of election as fixed by by-laws to be strictly observed.. -4» 
 
 Cannot be removed by stockholders 48 
 
 Cannot be removed by courts --48 
 
 Removal of, should be provided for in by-laws 49 
 
 Cannot use position for personal benefit 49 
 
 Relation of ofllcers to association 49 
 
 Liability of, in distributing funds 60, 62 
 
 Fines against delinquent 99 
 
 Rules for, in fixing interest charges -.106 
 
 Neglect to elect, does not dissolve association _ 179 
 
 Oliio associations 137 
 
 Opinion, directors not liable for mistake in 39, 40 
 
 Oregon associations 144 
 
 Organization 9 
 
 Promoters of association 9 
 
 Services of promoter, proof of — 9 n 
 
 Preliminary contract 10 
 
 Expenses of 10 
 
 Stockholder, how constituted 10 
 
 Subscription for stock 10 
 
 Stock subscription for 10 
 
 Association may enforce stock subscription 10 
 
 Articles of incorporation 11, 12 
 
 Preparation of articles of incorporation 11, 12, 14, 15 
 
 Preparation of charter of incorporation . 12, 14, 15 
 
 Name 11, 13 
 
 Signing of articles of incorporation 12 
 
 Charter, preparation of 11, 12, 13, 14, 15 
 
 Registration of articles of incorporation 13 
 
 Shareholders adopt by-laws 11 
 
 Shareholders elect officers 11 
 
 Certificates of stock 13 
 
 Defects in organization cannot be collaterally attacked 16, 17 
 
 Form of agreement for incorporation 158 
 
 Outsider, when may borrow 83 
 
 Overdrawing bank account 114
 
 XL.VIH REFERENCES TO PAGES. 
 
 Paid up stock, issue of , 60,'61 n 
 
 Partnership 76 n, 77n 
 
 Pass Book, issuing of 24,36 
 
 When must be produced on ■withdrawal ..6i) 
 
 Prima facie evidence of membership 24 
 
 Procedure when lost 24 
 
 Payment of lenders to association before members 111 
 
 Of dues cannot be required except as stipulated 81 
 
 Of dues at secretary's place of business, when valid 63 
 
 Of dues ceases when association is in hands of receiver 81 
 
 Of dues should be to authorized officer 63 
 
 Payments. 
 
 Application of 84 
 
 Credited on pass books 24 
 
 On re-assigned stock 87 
 
 On stock not ipso facto payments on loan 85 
 
 On stock application, effect of 88 
 
 Penalty for failure to take loan 74 
 
 Pennsylvania associations 138 
 
 Bond ■ , - 202 
 
 Mortgage 206 
 
 Per centage of value to be loaned 46 
 
 Permanent association, retiring stock in 121 
 
 Change of to serial ..130 
 
 Plan of 6 
 
 Perpetual succession 50, 51 
 
 Plea of nul tiel corporation 53 
 
 Pledging shares 3 
 
 Pledged stock cannot be withdrawn .- 69 
 
 Preminm charges 3 
 
 Stockholders need not pay for priority of payment of matured 
 
 shares -.29 
 
 Paid as a preference 74 
 
 Methods of charging 75, 76 
 
 When usurious. 76, 102, 103 
 
 When not usurious 77, 78 notes 
 
 Have general legislative authority.... 77, n, 104 
 
 Auction premiums when must be complied with 77 
 
 Fixed unchangeable 78 
 
 Horizontal or uniform 78 
 
 Minimum premium 78 
 
 Chargeable to maturity only 79 
 
 One premium only chargeable 79 
 
 Interest not chargeable on 80, 105
 
 REFERENCES TO PAGES. XLIX 
 
 Prcminm. 
 
 Not usurious as formerly - 
 
 When authorized by statute, recoverable 103 n 
 
 Effect of disregarding statute ^^^ 
 
 Enforceable only against members l"^ 
 
 Methods of charging 1^*' ^^^ 
 
 Unearned ^'^^' ^*'^ 
 
 Powers. _ 
 
 When courts may interfere -with exceeded powers i* 
 
 Corporate functions not enlarged by assuming unauthorized 
 
 powers ......... -•- *"" 
 
 Association has power to amend by-laws 31 
 
 Supreme power of management vested in stockholders assem- 
 bled in general meeting **" 
 
 Of special meetings ^'^ 
 
 Of directors to remit fines or compromise debts 42, 55 
 
 Of courts to remove officers — -4S 
 
 Of stockholders to remove officers 48 
 
 Of directors to rescind contract of agent 49 
 
 General powers of association "^ 
 
 Tohave a common seal ^^ 
 
 To contract ^^ 
 
 To hold real estate ^50, 56 
 
 To sue and be sued ^^' 
 
 To maki^ by-laws - ^^ 
 
 Incidental association has such as are necessary ...50, 52 
 
 or agents should be defined • ^^ 
 
 Of special agent • "" 
 
 Of general agent ^2, 53 
 
 Delegation of, by secretary or appraisers 53 n 
 
 To loan money ^^' 
 
 To take mortgages '^^ 
 
 When may issue stock to another corporation 56, 57 
 
 To borrow money 107, 108, 109, 110, 111, 112, 113, 114, 115 
 
 To sell mortgages ■^^"' 
 
 Poirer of building associations to borrow money 
 
 Act of Parliament 1874 HO' 
 
 American authorities HI 
 
 English authorities - ^^^ 
 
 1 1 «> 
 Implied power. - '■'■'' 
 
 Legislative intention 108 
 
 Necessary to meet demands for loans 108^ 
 
 Necessary to pay off a series 107 
 
 Necessary to cancel matured stock 107 
 
 Remedy of lenders where statutory limit is exceeded HI 
 
 To borrow for authorized purpose 114 
 
 Of state to withdraw charter lor exceeded powers 16-
 
 L, REFERENCES TO PAGES. 
 
 Preference, bidding for 74 
 
 Preferential stocli, issue of 60 
 
 Preliminary contract 10 
 
 Preparation of articles of incorporation 11, 12, 14, 15 
 
 For loan 80 
 
 President. 
 
 Should issue call for special meetings 37 
 
 Duties of 43 
 
 Should appoint auditing committee 47 
 
 Should make record cancellations 98 
 
 Profits, Division of 7 
 
 Division of in serial 122 
 
 Members entitled to be credited with 23 
 
 Promoter, services of... 9ii 
 
 Provisions of agreement to take shares 11 
 
 Of mortgage 81 
 
 Of note or bond 81 
 
 Proxies, when may be used 38 and n 
 
 Public Policy. By-lavrs must not be contrary to 29 
 
 Purchaser of property may compel application of stock pay- 
 ments on loan . 86, 88 
 
 Purposes of membership 23 
 
 Quorum, how estimated 87, 38 
 
 Ratification of agent's unauthorized act, effect of 53 
 
 Beal Estate holding beyond power, effect of 56 
 
 Holding beyond power does not dissolve association 56 
 
 Power of association to hold 50, 56 
 
 Receiver, Appointment of, for insolvent association 123 
 
 Dues and interest cease on appointment of 120 
 
 Payments of dues, etc., cease when association is in hands of 81 
 
 Recording subsequent incumbrance not notice to association 126 
 
 Refusal of association to transfer shares, remedy for 70 
 
 Registration of incorporation 13 
 
 of mortgage^ 91 
 
 Reissue of stock 131 
 
 Relation of officers to association 49 
 
 Remission of fines 42, 55 
 
 Removal of directors 48 
 
 Of officers 48 
 
 •«» Of officers should be provided for in by-laws 49 
 
 Repayment by withdrawing borrower 86 
 
 Report of auditors, impeachable when... 47
 
 REFERENCES TO PAGES. LI 
 
 Reserve Fnnd, each member has pro rata interest in 60 
 
 Resignation of director 48 
 
 Resolution to borrow, form of 115 
 
 Retiring series 12 1 
 
 Stock before maturity . . 68 
 
 Retroactive Amendments of by-laws apply fully uuless 
 
 vested rights are impaired 32 
 
 Reven nes of association _ 4 
 
 Rhode Island associations 141 
 
 Rules. 
 
 Concerning issue of stock certificate 24 
 
 Needed by the association 33 
 
 May be amended as by-laws 33 
 
 Unwritten will govern when acted on, if reasonable 33 
 
 By-laws should be kept distinct from 33 
 
 For general guidance of directors 40, 41 
 
 Withdrawing member not bound by new rules 67 
 
 Form of 185 
 
 tSale of money by auction 74 
 
 Satisfaction of mortgage 93 
 
 of mortgages by president 98 
 
 Seal. 
 
 Use of, by statutory corporations... 20 
 
 When seal should be attached 20 
 
 Any device or form will answer 20, 52 
 
 Common, power of association to have 50 
 
 Custody of - - - 51 
 
 Contracts requiring 52 
 
 Secretary. 
 
 By-laws defining his duties part of sureties' contract.. 30 
 
 Should give bond _ 36 
 
 Receiving dues at his oflice 36 
 
 Duties of 43 
 
 Liability of 44 
 
 When guilty of embezzlement 49 
 
 Estoppel --49 
 
 May delegate power 53 n 
 
 Payment of dues at place of business, when valid 63 
 
 Should enter notices of withdrawal 65 
 
 Form of bond of 234 
 
 Security, character of - 3 
 
 Securities, association should not take unlawful 50 
 
 Selection of borrower 74
 
 L.II REFERENCES TO PAGES. 
 
 Serial, division of profits... 123 
 
 Maturity of stock . 123 
 
 Change of, to permanent 130 
 
 Series, maturity of 121 
 
 Of stoclc, association may borrow to pay off 113 
 
 Service of notice of withdrawal -.05 
 
 Services of promoter, proof of 9n 
 
 Set off, borrower entitled to - 92 
 
 Settlement, when member may compel 124 
 
 When required — 121 
 
 Sbares. See Stock 
 
 Pledging 3 
 
 Shareliolders. See Stockholders. 
 
 Sig^ning; of articles of incorporation .. 13 
 
 Special Agent, how far may bind association 53 
 
 Special legislative act, incorporation by 13 
 
 Special Meetings. 
 
 Notice required 37 
 
 Call for, how made ^ 37 
 
 Notice for, how served 37 
 
 Power of 37 
 
 Acts of majority present, binding ..37 
 
 Specifications building, form of 227 
 
 State has power to forfeit charter _ 119 
 
 May annul charter, when 51 
 
 Powers of, to withdraw charter for exceeded powers 16 
 
 Status of borrowing member 71, 72, 73 n 
 
 Statutes. 
 
 By-laws must be consistent with 29 
 
 Eight of withdrawal usually defined by 64 
 
 Effect of failure to strictly comply with 16 
 
 Strict compliance with, in charter unnecessary 16 
 
 Statutory References. 
 
 Alabama, 163 
 
 Arkansas, . 153 
 
 California,... 153 
 
 Colorado, 153 
 
 Connecticut, 153 
 
 Dakota, 153 
 
 Delaware - 153 
 
 Florida, 154 
 
 Georgia, - 154 
 
 Illinoia, -,. 154
 
 REFERENCES TO PAGES. LIH 
 
 Statntory References. .^^ 
 
 Indiana, ^^^ 
 
 lo^^' ;;i54 
 
 Kansas, ,_. 
 
 ^ , 154 
 
 Kentucky, . 
 
 Louisiana, -- — - ,_. 
 
 -, . 154 
 
 Maine,, ^g^ 
 
 Maryland, . 
 
 Massachusetts, ' 
 
 -.-154 
 Michigan, - ^^^ 
 
 Minnesota, -- 
 
 Mississippi, 
 
 Missouri, ' 
 
 Montana, — -- " " ikk 
 
 Nebraska, " -[^k 
 
 New Hampshire, - 
 
 New Jersey, 
 
 New Mexico, 
 
 ; New York, 
 
 North Carolina, 
 
 ^,. 156 
 
 Ohio, ^_„ 
 
 „ ..156 
 
 Oregon, ^^g 
 
 Pennsylvania, 
 
 Rhode Island, 
 
 South Carolina, 
 
 Tennessee, ^._ 
 
 _, 15" 
 
 ^«""^■ 157 
 
 Virginia ^^^ 
 
 Wyoming, - 
 
 Utah JJ; 
 
 Washington, - 
 
 West Virginia, - 
 
 Wisconsin, - 
 
 ^tock, dues are partial payments on • 
 
 Transfer of 
 
 Pledging of .- 
 
 Maturing of 
 
 Value of "^ 
 
 Loans ' 
 
 Subscription for.. V 
 
 Association may enforce o/qr 
 
 Certificates of ^'^' H 
 
 Association cannot hold stock in another corporation 25 
 
 Become members by subscribing for 22 
 
 After maturity of, stockholders need not offer premiums for 
 
 priority of payment — ~^- 
 
 When may be issued to another corporation 56, 57
 
 LIV REFERENCES TO PAGES. 
 
 Stock. 
 
 Preferential, issue of 60 
 
 Paid up, issue of 60, 61 n 
 
 What may be recovered on withdrawal 66 
 
 Retiring of before maturity 68 
 
 Right to withdraw limited to present funds 68 
 
 Pledged cannot be withdrawn 69 
 
 Transfer of 69 
 
 Must be transferred on books 70 
 
 Certificates should be surrendered on retirement 70 
 
 Transfer of, effect on member's liability 70 
 
 Transfer cannot be made by defaulting member 70 
 
 Assignment of, as collateral security 85 
 
 Payments on stock not ipso facto payments on loan b5' 
 
 Withdrawing borrower may retain and pay ofl loan 8T 
 
 Value of, on withdrawal, how ascertained 8T 
 
 Re-assigned payments on 87 
 
 Assigned cannot be credited on loan 88 
 
 Fines are lien on 101 
 
 Association may borrow to cancel 111 
 
 Cancelling, effect of 121 
 
 When to be retired 121 
 
 Maturity of 122^ 
 
 Pledged may be sold as against purchaser 124 
 
 Assessm ent on 127 
 
 Certificate of, forra of 165 
 
 Reissue of 131 
 
 Form of stock register 224 
 
 Stockholders. 
 
 How constituted 10, IS 
 
 Adopt by-laws , 11 
 
 Elect officers _.ll 
 
 When notice not necessary _ IS 
 
 May restrain illegal action of directors 25, 51 
 
 Death of 26 
 
 Should have notice of by-laws 27, 63 
 
 Power to enact by-laws resides in .28 
 
 Need not pay premium for priority of payment after maturity 
 
 of shares 29" 
 
 Assembled in general meeting have supreme power 36 
 
 Should have copy of report of association 36 
 
 When entitled to personal notice of general meeting 37 
 
 General meetings must be held in locality of 37 
 
 Cannot remove directors 48 
 
 Cannot take advantage of acts ultra vires when 51 
 
 Bound by judgment against association 64 
 
 Liability of, not terminated by withdrawal 64
 
 REFERENCES TO PAGES. LV 
 
 Stockholders. 
 
 Legal status of, defined 66 
 
 Shown by book, entitled to profit .-..70 
 
 Liability on stock.. 90, 127 
 
 Death of, does not dissolve association 119 
 
 Cannot maintain suit to forfeit charter 119 
 
 Account of, when association is in liquidation 120 n 
 
 Stock register form of 224 
 
 Subscription for stock 10 
 
 Sait by withdrawing member, necessary allegations 66 
 
 To foreclose mortgage, constitution and by-laws not proper 
 
 exhibits under Indiana Code _. 82 
 
 Maybe on bond or mortgage . 82 
 
 For dues by association 63 
 
 Sureties. 
 
 By-laws defining secretary's duties part of sureties' contract 30 
 
 Sureties, Responsibilities of , how ascertained ....47, 48 
 
 Surety may compel application of stock payments on loans 88 
 
 Discharge of . 48 
 
 Liability of 48 
 
 Effect of failure to read bond 48 
 
 Surrender of certificate of stock 70 
 
 Suspension of business, borrower not relieved from interest 
 
 during 120 
 
 Systems of loaning 133, 134, 135, 136 
 
 Tables 146, 147, 148, 149 
 
 Taxes, covenant to pay enforceable 84 
 
 Tender effect of, by sued member 54 
 
 Tennessee associations 139 
 
 Texas associations 144 
 
 Transfer. 
 
 Of stock 3,69 
 
 Of stock, effect on member's liability 70 
 
 Of stock on books, effect of failure to 70 
 
 Cannot be made by defaulting member 70 
 
 Fee enforceable.. 70 n 
 
 Shares, refusal of association to, remedy 70 
 
 Treasurer. 
 
 Should give bond 36 
 
 Duties of 43 
 
 Warrant of, not negotiable 44 n 
 
 Liability of 45 
 
 Is only a bailee 45 
 
 When guilty of embezzlement 49
 
 LVI REFERENCES TO PAGES. 
 
 Treasurer. 
 
 Estoppel 4» 
 
 Form of bond 236 
 
 Trustees, directors as 38, 39 
 
 Trust deed, form of 194 
 
 Ultra Tires, Unlimited borrowing is, in English societies 109 
 
 Acts, effect of 50,51 
 
 Liability of directors for • 89 
 
 When stockholder cannot take advantage of 51 
 
 When association estopped to deny its acts 51 
 
 When charter may be annulled for 51 
 
 Do nut relieve members from their duties 51 
 
 Do not of themselves end corporate existence 51 
 
 When subject to collateral attack 5^ 
 
 Unauthorized transaction void 50 
 
 Unearned premium 135,143 
 
 Uniform premium '3'* 
 
 Unwritten Kegulations. 
 
 Will govern when acted upon, if reasonable 33 
 
 Use, name acquired by 11,12 
 
 Usurious interest, measure of damages on recovering back 105 
 
 Interest may be recovered back.. . 105 
 
 Refunded clears of taint 105 
 
 Charged against outsider 105 
 
 Not as formerly 102 
 
 When premium is not ''"''> 78 notes 
 
 Usury definition of - 102 
 
 Not avoided by complicated transactions 103 
 
 Combination of interest and expenses at a higher than a legal 
 
 rate is tainted with 102 
 
 If the arrangement makes higher than the legal rate it is 103 
 
 Avoided on the partnership theory 103 n 
 
 When cost of money, not usurious -- 103,104 
 
 Interest payable monthly or weekly, not usurious 104 
 
 Charging interest on the principal without regard to weekly 
 
 or monthly reductions, is not 104 
 
 A personal defense - 105 
 
 When loan not subject to 105 
 
 When premiums are usurious "^6, 77 n 
 
 Value of shares -5 
 
 Of shares upon withdrawal, how ascertained 87 
 
 Of stock not recoverable on withdrawal 66 
 
 Per centage of, to be loaned - 4& 
 
 Tested Rights, amendments of by-laws cannot affect 81
 
 REFERENCES TO PAGES. LVIl 
 
 Vice President, duties of.. - ---43 
 
 Voluntary repayment, amount of 96, J7 
 
 Repayment, under English Rule, computation for --94 
 
 Repayment, natural and logical rule for 96, 97 
 
 Repayment, rule as to computation for 94 
 
 Vote, member has but one - -..38 
 
 Waiver of liens, form of - - ~33, 234 
 
 Washington, D. C. associations 137 
 
 Warrant of treasurer not negotiable «•- 44 n 
 
 or treasurer, form of. 225 
 
 West Virginia associations 14- 
 
 W^inding up. Bee Dissolution 
 
 Rights of withdrawing members on -68, 69 
 
 Stockholders may wind up by unanimous agreement 119, 1 22 
 
 Wisconsin associations - - 141 
 
 Witlnlrafving borrower, manner of repayment - 80 
 
 Credits entitled to- -- 6, 87 
 
 Not compelled to make application of stock -b7 
 
 Member of insolvent association, rights of 67 
 
 Liability of 66, 128 
 
 May sell his interest - 67 
 
 Rights of, against other members 68 
 
 Rights of, on winding up - 68,69 
 
 Not bound by new rules 67 
 
 Is creditor of association — 65, 66 
 
 Withdrawal. 
 
 Of members - 3,8,64 
 
 Terminates membership ..-24 
 
 Should be attended with restrictions 64 
 
 Does not terminate all liability 64 
 
 Right usually defined by statute 64 
 
 "Written notice of, should be given _ 64 
 
 Notice of, how served 65 
 
 Amount payable on 65, 69 
 
 Amount recoverable on - -66 
 
 Limited to present funds 6b 
 
 Directors should not invest funds to defeat 68 
 
 Pledged stock not subject to 69 
 
 When pass book must be produced 69 
 
 Wyoming assrociations 143
 
 BUILDING ASSOCIATIONS. 
 
 CHAPTER I. 
 INTRODUCTION. 
 
 Section 1. Origin of Building Section 3. General Schema. 
 Associationg. Section 4. Diflerent Types. 
 
 Section 2. Definition of Build- 
 ing Associations. 
 
 Section 1. Origin of Building Associations. The 
 
 origin of building associations is involved in much doubt, and 
 no practical purpose will be served in devoting much time to 
 that line of investigation. The Earl of Selkirk is given the 
 credit of founding the building association about the year 
 1809'. The Greenwich Union Building Society was its name, 
 with the object of raising by monthly subscription a fund or 
 capital to be laid out in building houses, and of dividing the 
 same amono- members, under rules created in a deed of rules 
 and reirulations". A mention of " building clubs " occurs ini 
 Birmingham, England, in 1772. Some writers have given, 
 their origin to Germany, connecting the frugal and accumulative 
 dispositions of this people, probably, with the institution; 
 
 'Davis Building Society.' objects of this association as ex- 
 
 *The author states at length the pressed in the deed. 
 
 1 (1)
 
 2 BUILDING ASSOCIATIONS. 
 
 but there is no authentic support of the claim.' The first 
 building association in America is generally conceded to have 
 been The Brooklyn Building and Mutual Loan Fund Asso- 
 ciation.' However, the earlier associations found existence in 
 the city of Philadelphia, about 1840; their spread was south 
 and west. Frequently, they were put into operation as unin- 
 corporated societies', flourishing in some states and failing in 
 others. Generally they have become the subject of statutory 
 creation and regulation, and being independent corporations, 
 they have become vast depositories of savings and controllers 
 of enormous property. Their influence upon economic affairs 
 is far reaching and the multiplicity of their interests invites 
 the attention of the lawyer, legislator and jurist. 
 
 Sec. 2. Definition of Bnilding Association. The 
 building association as now existing, is a private corporation, 
 designed for the accumulation by the members of their money 
 by periodical payments into its treasury, to be invested from 
 time to time in loans to the members upon real estate for home 
 purposes, the borrowing members paying interest and a pre- 
 mium as a preference in securing loans over other members, 
 and continuing their tixed periodical installments in addition, 
 all of which payments, together with the non-borrower's pay- 
 ments, including fines for failure to pay such tixed install- 
 ments, forfeitures for such continued failure of such payments, 
 fees for transferring stock, membership fees required upon the 
 entrance of the member into the society, and such other 
 revenues, go into the common fund until such time as that the 
 installment payments and profits aggregate the face value of 
 all the shares in the association, when the assets, after payment 
 of expenses and losses are prorated among all members, which 
 in leo-al effect, cancels the borrower's debt, and gives the non- 
 borrower the amount of his stock. 
 
 Sec. 3. General Sclieme. The periodical installment 
 is called dues, and is a partial payment on the certificate of 
 
 'Endlich Building Associations 'Merrill v. Mclntire, 13 Gray, 157 ; 
 
 p. 3. Baxter v. Mclntire, 13 Gray, 168; 
 
 •Bibb Co. etc. Association v. Rich- Delano v. Wild, 6 Allen, 1 ; Atwood 
 
 ards, 21 Ga. 592. v. Dumas, 149 Mass. 167.
 
 GENERAL SCHEME. 6 
 
 stock issued to the member'. When the share reaches face 
 value, it is matured. Shares are commonly for $200.00, some- 
 times for $100.00 or $500.00. Fines are imposed for failure 
 to pay the dues at the fixed time. The stock is sometimes 
 forfeited after a certain time for continued non-payment of 
 dues. AVhen shares of stock are assigned by a member to any 
 person, they have to be transferred on the books, and it is 
 usual to charge a small fee for that trouble. 
 
 The membership fee is to cover the expense of issuing the 
 stock. When a member desires to build a home, he takes 
 from the association the amount needed, and assigns shares of 
 the face value of the loan, as collateral security, and agrees to 
 keep up his payments thereon. This is pledging shares. He 
 pays a premium for the loan. The amount of the premium 
 is reached by offering money to the highest bidder, and the pro- 
 posed borrower bids a few cents on each share, payable with 
 the dues, or a lump amount to be deducted, for the right to 
 have the money. Upon securing that right, he designates his 
 security, and a committee appointed by the association, values 
 it, and if it is sufficient security for the proposed loan, the 
 borrower submits his abstract of title to the attorney of the 
 association, who upon pronouncing it perfect, prepares the 
 necessary papers for the loan. The borrower thereafter pays 
 an additional sum into the association by way of premium and 
 interest. The association, through its proper officers, keeps an 
 account of the receipts and disbursements. Members, except 
 those pledging their shares, may withdraw upon certain notice, 
 and receive the withdrawal value of their shares, which is 
 sometimes fixed by statute, and is the lawful interest. The 
 rest of the profits attaching to those shares, goes into the com- 
 mon fund. Each member may borrow if he can give security. 
 The association usually requires a note or bond secured by mort- 
 gage on unincumbered real estate, or a trust deed, or any sum 
 not exceeding the withdrawal value of the shares may be 
 borrowed, and their assignment is taken as a collateral se- 
 curity. A loan secured by pledge of shares, is a stock loan, 
 
 *The words " members," " share- used synonymously throughout, this 
 holders " and " stockholders " are work.
 
 4 BUILDING ASSOCIATIONS. 
 
 and when secured by mortgage on real estate, it is a mortgage 
 loan. 
 
 When the time arrives that the assets are sufficient to mature 
 the stock, a division must be had, after payment of losses and 
 expenses. The controlling rule of this division is that the 
 assets must be divided equally according to the stock holdings. 
 The non-borrowing member receives the value of his stock, 
 and the borrower's debt is satisfied. The stock is thus ma- 
 tured and cancelled. But a borrower is usually given by 
 statute the privilege of repaying his loan at any time, and 
 thereupon withdrawing. So that he is not compelled to stay 
 in to maturity. 
 
 The revenues of the association usually consist of member- 
 ship fees, dues, premium, interest, fines, and transfer fees. 
 The gross profits consist of membership fees, interest, prem- 
 ium, share of profits left by withdrawing shareholders, fines 
 and transfer fees. Dues are not profits, as they are partial 
 payments on the capital stock. The association will have 
 expenses. They are sometimes provided for by statute; if not, 
 they should be paid out of the general profits from time to 
 time, before any division is made. The directors should only 
 incur such expense as is necessary to the proper conduct of the 
 business. The same care used in private business should be 
 exercised here, for if the directors extravagantly and need- 
 lessly make expenses they grossly violate their trust: 
 
 This is the general design of a building association, but 
 there are different modifications of this general scheme. 
 
 This corporation, just as any other, must have officers, who 
 usually consist of directors, president, vice-president, secretary, 
 treasurer, attorney and appraisers. The business of the asso- 
 ciation may call for assisting officers to manage a great volume 
 of business. Compensation of the officers depends, as in any 
 other business, upon their work and the amount of business. 
 The borrowers usually pay the attorney for his services in 
 examination of the title and preparation of papers for loans. 
 The scheme is so simple that it almost carries itself, and 
 attached as it is primarily to land security, which after all is 
 the basis of all security, it does not include so many uncertain
 
 DIFFERENT TYPES. 
 
 problems in its management as does a bank, and unless grossly 
 mismanaged, will show the finest results of financial co-opera- 
 tion. 
 
 Sec. 4. DiflFerent Tyi^es. In this country we have two 
 distinct and prevailing types; one, serial, and the other per- 
 manent. The general plan of the serial association is to issue 
 a certain portion, say one-tenth of its capital stock in one 
 series, providing that it shall be paid in weekly or monthly 
 dues, and that whenever such payments, with accumulated 
 profits, equal the face value of the shares, each share shall be 
 retired and the holder thereof shall receive the amount thereof 
 in cash; provided that if he is an advanced or borrowing 
 member, i. e., one receiving the face value of his shares before 
 maturity, his debt shall be considered paid and cancelled. 
 When one series is full or the demand is satisfied, then a sec- 
 ond series is issued, and so on until the entire capital stock is 
 exhausted. The plan of issuing in series is only for conven- 
 ience of persons desiring membership, who for any reason do 
 not care to pay dues back to the formation of the association. 
 The profits are the total profits, divided by the number of 
 shares in all series having regard to the age of the shares. The 
 serial association does not credit the profits on the shares to 
 any farther extent than to keep ^the assets in solido for the 
 benefit of all the shares. The value of the shares is ascer- 
 tained from the assets by calculating, though not making, a 
 division. The fundamental principle in ascertaining this value 
 is equalizing all shares. The total net profits, excluding dues, 
 losses and expenses, when there is one series, should be divided 
 by the number of shares. The result is the value of the shares. 
 When there is more than one series, the profits to be appor- 
 tioned to each series must be ascertained, and then the division 
 of the apportioned profits by the number of shares in the 
 series. The calculation simply proceeds upon the theory that 
 a sum representing the net profits of the association is to be 
 divided among certain series of different ages, and the quo- 
 tients again divided by the number of shares in each series or 
 class. All shares in any one series have the same value and 
 mature at the same time.
 
 BUILDING ASSOCIATIONS. 
 
 Very frequently an applicant for membership will enter a 
 series of some months standino^, and pay back to the begin- 
 ning. In such cases, the rules should provide for an additional 
 cost of shares, equal to the present value, as it is readily to be 
 seen his shares would be entitled to profits from the date of 
 the series, whereas the association had not had the benefit of 
 his money. Fines for default in payment of dues, a small 
 expense charge, interest and premium charges and withdrawal 
 privileges are provided for. These associations resemble the 
 English terminating society, differing in that the former makes 
 only a part instead of an entire issue of its stock. In some of 
 these associations, the premium on advancement on stock is 
 deducted at the time the money is loaned; in others, it is 
 charged with the payment of dues. The permanent associa- 
 tion imitates the English permanent society in allowing 
 entrance at any time without back payment of dues. These 
 societies are said by an authority, to be " decidedly the best of 
 all societies, as they contain more of the elements of certainty 
 and equity, if the rules are properly drawn and observed.'" 
 The chief distinction between the two kinds is that a person 
 may enter the permanent association at any time, without the 
 back payments. So far as the names are concerned, one is not 
 more permanent than the other. The " serial " by issuing new 
 series continues, as does the " permanent " by issuing new 
 stock. The permanent association has another irnportant 
 difference from the serial, and that is by the system of 
 crediting dividends on the pass books of members, it 
 actually divides up the profits of the association annually 
 or semi-annually as the case may be. The withdrawing 
 member thus can ascertain the amount he is entitled 
 to; the borrowing member, the amount of his debt, and 
 the investor, the value of his shares. As the permanent 
 system is practiced in England, it is said it holds out the 
 greatest inducements to the borrower, for by enabling him to 
 extend his repayments over any fixed number of years the 
 present cost is not so burdensome, and he has in addition the 
 
 ' Davis Building Society 69.
 
 DIFFERENT TYPES. 7 
 
 right of withdrawal of his shares with an ascertained value, 
 and may thus at any time free his pro]>erty of incumbrance.' 
 With us the [)ermanent is not of greater advantage to the 
 borrower than tlie serial, unless it is in the ascertainment of 
 the value of his stock by the crediting of his profits on his 
 pass book. But in one respect it is of decided disadvantage. 
 And that is in the system of permanent societies in crediting 
 dividends at stated periods, with privilege of withdrawing the 
 full amount of payments and dividends. 
 
 Of all the members the borrower is most likely a contin- 
 uing member. Under the system of dividing up the profits 
 at stated times, any member desiring to withdraw receives 
 not only his payments, but carries away a pro rata part of the 
 profits. This is a decided innovation upon the original scheme 
 which may result in injustice. The association is endeavoring 
 to mature its stock,^ yet it permits withdrawing stockholders 
 to take away a part of its ability to do so. Then the profits 
 might only be apparent. An association running over a series 
 of years may properly expect some vicissitudes. These may 
 eat into the profits, which having been distributed, the burden 
 must fall upon the members who have been the sustaining 
 force of the association. The seeming profits which had been 
 handed out, were then actually losses. In Ohio, this defect is 
 undertaken to be remedied by requiring associations to carry 
 5 per cent, of the net earnings to a contingent fund to bear 
 these possible losses. This is a step in the right direction, 
 but in our judgment does not go far enough in justice to stay- 
 ing members. The Ohio law provides that after the payment 
 of expenses and setting aside a sum for contingent fund, the 
 the entire remainder of such earnings shall be transferred as 
 a dividend to the credit of all members. Under this statute, 
 the bureau of building associations has decided that after the 
 payment of expenses and the setting aside of the contingent 
 fund, the entire amount left, even to the fraction of a per 
 cent, must be credited on the members' stock. In dividing 
 
 * Davis 70; compare Davis Si-Td 
 for description of English societies.
 
 8 BUILDING ASSOCIATIONS. 
 
 the profits, it very often happens that a small sum is left 
 over after fixing the dividend, and as it would only amount to 
 a fraction of a per cent., the work in calculating each mem- 
 ber's share would be very laborious. It is customary, gen- 
 erally, to carry this amount over as undivided profits. But 
 the Ohio bureau holds such action contrary to the statute. It 
 Beems to us that the greater benefits should be given to the 
 continuing member. While the withdrawing member should 
 not be a loser, he should not be a gainer. The association in 
 its relation to him should endeavor to keep him whole as long 
 as it does not infringe the rights of the other members. But 
 if he is unable to comply with his contract and carry out his 
 promises to the end, because a liberal statute has given him 
 the right to terminate it, the equities are pushed too far in his 
 favor, by bestowing upon him, besides his full payments, a 
 pro rata part of the profits. It is foreign to a proper con- 
 ception of the scheme, and while the Ohio statute provides 
 some protection, it does not compensate the continuing mem- 
 ber, and the bureau, it would seem, should have resolved the 
 doubt in favor of the continuing member, rather than against 
 him. This would not only be justice, but save minute divi- 
 sions. The withdrawing member will be justly dealt with by 
 payment to him of the amount of his installments and adding 
 thereto legal interest. The borrower then whose property is 
 charged with the profit bearing mortgage, will have compen- 
 sation and protection for his continuing support of the asso- 
 ciation, as will the staying non-borrowing member, who has 
 shared with him the burdens and responsibilities of the associ- 
 ation's career. The association as any other institution, must 
 conserve its strength and should offer inducements to mem- 
 bers to continue instead of offering compensation for their with- 
 drawal. If the withdrawing member receives legal interest, 
 he is compensated, and if there is a remaining profit, it should 
 go to the staying member.
 
 CHAPTER II. 
 
 PRELIMINARY ORGANIZATION. 
 
 Section 1. Preliminary Agree- 
 ments. 
 
 Section 5. Preparation of Cor- 
 porate Articles. 
 
 Section 3. Agreements Legally Section 6. Conformity with Cre- 
 Considered. ative Law. 
 
 Sections. Articles of Incorpo- Section?. Procedure After Reg- 
 
 ration, istration. 
 
 Section 4. Corporate Name. 
 
 Section 1. Preliminary Ag^reements. When a 
 number of persons have decided to organize a building asso- 
 ciation, a first step must be taken, and that is a preliminary 
 organization. 
 
 The promoters of the association should be very careful of 
 the expenses incurred in organizing/ providing for their 
 
 ' The implied liability of a cor- 
 poration for the services of a pro- 
 moter may be rebutted by proof 
 that they were gratuitously given, 
 and when the services are those of 
 an attorney in organizing a building 
 association, there being no express 
 contract as to services, it is proper 
 to show in rebuttal of the implied 
 contract, that the attorney had ren- 
 dered like services gratuitously in 
 
 getting up other building associa- 
 tions when the same persons were 
 among the promoters, and the proofs 
 should not be limited to what was 
 said and done at the time of service. 
 Subsequent admissions also may be 
 shown, but it is proper to reject a 
 question as to the understanding of 
 the parties. Third Ward, etc., asso- 
 ciation V. Lotze 11, Bull. 285. 
 
 (9)
 
 10 BUILDING ASSOCIATIONS. 
 
 payment, as they are liable individually, for the amount of 
 expenses. To attach liability to each proposed incorporator, 
 they should also carry the preliminary steps to a legal con- 
 tractual obligation between the organizers, for each to bear his 
 part of the expenses incurred in the preliminary organization. 
 There should also be an agreement that the preliminary 
 arrangement will become binding for incorporation. That 
 arrano-ement takes the form of an agreement to subscribe for 
 shares in the association to be incorporated. No particular 
 form is required, unless prescribed by statute, and as it is a 
 matter of simple contract, it rests more upon general principles 
 than statutory requirement. These two simple contracts, for 
 all to bear the expense and to take shares in the new associa- 
 tion, are the only contracts needed until incorporation is ready. 
 If the association is incorporated and does business, all proper 
 expenses may be charged against it. The agreement to bear 
 expenses is intended to have effect when there is a failure tO' 
 incorporate. 
 
 Sec. 2. Agreements Legally Considered. From 
 a legal standpoint, the agreements may be said to be supported 
 by two considerations; mutual promises and the stronger oner 
 of benefit received by the promissor and detriment to the 
 promisee'. Until a charter is obtained, or incorporation 
 otherwise perfected, an agreement to take shares is a mere 
 offer, revocable or not, as the nature of the agreement may de- 
 termine. When it rests on a valuable consideration, such a& 
 a promise for a promise, then as a rule it becomes an irrevoc- 
 able option, provided, incorporation according to the terms of 
 the offer is perfected within a reasonable time. This would 
 constitute the offerer in substance a stockholder. So if an 
 offer which has no valuable consideration to rest on, be per- 
 mitted to stand until it is accepted by incorporation according 
 to its terras, this it seems would be an irrevocable subscription 
 of stock'. The corporation may enforce the agreement, 
 although it is not a party to it, on the ground that it was made 
 
 »See Taylor Priv. Corp. sec. 92. Knox v. Childersburg, etc.,Coinpany» 
 
 «MoraweU P. C. seca. 47, 128; 86 Ala. 180.
 
 AGREEMENTS LEGALLY CONSIDERED. 11 
 
 for its benefit.' The mere entering into a valid agreement to 
 take shares, does not constitute the persons as partners; there 
 must be some agreement showing an intention to divide and 
 share profits and losses before there is a partnership.' The 
 agreement to take shares should be one to take a certain num- 
 ber of shares of designated face value in the association to be 
 thereafter formed, to be paid for in weekly or monthly install- 
 ments, as the by-laws may provide, with the further provision 
 that if the incorporation never took place, the expenses of the 
 attempt should be equally borne by promoters.' 
 
 Sec. 3. Articles of Incprporatioii. The promoters 
 of the association having entered into a binding arrangement 
 to take shares in the association, and bear the expense of the 
 organization, the next step is to examine the requirements 
 of the statute on incorporation. A certain number of incor- 
 porators and a certain amount of stock subscribed may be re- 
 quired. The statute should be consulted as to any precedent 
 requirements and if there are any, they must be adhered to. 
 These provisions, if any, being observed, the preparation of the 
 articles of association follows. This should be entrusted to a 
 competent attorney. 
 
 Sec. 4. Corporate Name. Before the articles are 
 drawn, however, a corporate name must be selected. It is 
 necessary for purposes of identification, at least to the existence 
 of a corporation, and is usually given by the charter, but where 
 not expressly given, may be acquired by implication and use.* 
 The misnomer of a corporation in contracts or pleadings has 
 an effect similar to the misnomer of an individual. If from 
 the body of a written contract, in which a corporation is mis- 
 named the corporation intended can be ascertained, the mis- 
 nomer is immaterial.* 
 
 ''Haskett v. Flint, 5 Blkf . 69 ; Far- *No notice is necessary in refer- 
 low v Kemp, 7 Blkf. 544; Eastern, ence to calls on subscriptions: Mor* 
 etc., Company v. Vaughan, 14 N.Y. rison v. Dorsey, 48 Md. 461. 
 546; Athol, etc. Company v, Carey, *Smith v. Plank Road Company, 
 116 Mass. 471; Buffalo, etc., Com- 30 Ala. 650; Minot v. Curtis, 7 
 pany v. Gifford, 87 N. Y. 294. Mass. 441. 
 
 'Shibley v. Angle, 37 N. Y. 636. 'Hoboken etc. Association v. Mar- 
 tin, 13 N. J. Eq. 427.
 
 12 BUILDING ASSOCIATIONS. 
 
 A building association cannot by user, acquire an exclusive 
 right to use in its title of incorporation, a general term, 
 descriptive merely of the locality with which its business is 
 connected.* The name should have some significance as a 
 matter of policy and should not resemble existing corpor- 
 ate names to prevent confusion. 
 
 Sec. 5. Preparation of Corporate Articles. The 
 name having been selected, the attorney prepares the arti- 
 cles of association. The incorporating statute usually 
 defines what the articles shall state, so it is a matter of 
 sticking closely to the statute. Wherever the statute is 
 general in its definitions as that " the articles shall state 
 the objects of such association," it becomes a matter of 
 care to define the objects broad enough to meet the 
 requirements of the association, and yet limited enough 
 to be clearly within the spirit of the statute. When the 
 articles are drawn the organizers sign in manner prescribed 
 by statute before some oificer capable of taking acknowl- 
 edgments. The latter is for the purpose of procuring their 
 registration. 
 
 The beginning of the corporate existence is signing, 
 acknowledging and filing in the places prescribed by 
 law, the articles of association.* The injunction should be 
 strong, that the articles be prepared with great care by 
 an experienced draughtsman. Unskilled work here, will 
 bring on endless trouble and embarassment. The English 
 courts, in several cases, have observed that the articles 
 were so drawn as to perplex the understandings of the 
 ablest men.3 American courts have patiently endeavored to 
 untano-le some serious complications rooted in unintelligible 
 charters. 
 
 Sec. 6. Conformity with Creative Laws. If the 
 incorporation is by letters patent from the Chief Executive, 
 the articles must conform to the statute vesting the authority 
 in the executive to issue letters ; in the case of special legis- 
 
 'Coloaial, etc., Company v. Home, 'Carmody v. Powers, 60 Mich. 26t 
 
 etc., Company, Lim., 33 L.J. Ch. 741. 'Davis Building Society 17.
 
 PROCEDURE AFTER REGISTRATION. 13 
 
 lative act,» the charter is the constitution and the by-laws 
 must not subvert the intention of the legislature. If the in- 
 corporation is by general statute, the provisions therein must 
 be given substantial adherence. Too often does the charter 
 invade the province of the by-laws, and prescribe rules belong- 
 ing legitimately to the by-laws. If they prove unwise, amend- 
 ment or repeal is difficult. 
 
 The charter should be general in its character, adhering to 
 the letter and spirit of the creative law, and leave to the by- 
 laws the proper limitations as they may be needed. 
 
 Sec. 7. Procedure After Registration. Wlien the 
 charter is signed, as required by statute, and the signers duly 
 acknowledge the execution of the instrument, it is then to be 
 filed in the places provided by law for registration. Thereupon 
 the association becomes a body corporate with all the duties 
 and liabilities of a corporation. The individuals who were 
 active in its promotion have changed character, and are now 
 stockholders. They become so by operation of law, and are 
 not entitled to any notice by the association that they are 
 stockholders, subject to its rules and to the payment of dues. 
 The first act of the new corporation after the adoption of by- 
 laws and the election of oflicers, is to issue certificates of stock 
 to the members. They are shareholders from the date of in- 
 corporation, and they should adopt by-laws and elect officers.* 
 The certificates are not issued until after the officers are chosen. 
 Their issue does not change their legal status, as the certificate 
 only evidences the holder's interest, as a promissory note is 
 not the debt itself, but evidence of it. 
 
 Before discussing the member as he is thus created, the im- 
 portance of understanding the charter and its legal signifi- 
 cance should not be overlooked. 
 
 ' An act of the legislature incor- petition failing to specify the ob- 
 
 porating an association by its con- jocts, it was competent for the court 
 
 stitution and bylaws, without em- to do so: Red wine v. Gate City, 
 
 bodying the same in the act, ia etc., Association, 54 Ga. 474. 
 
 valid and constitutional: Bibb * The adoption of by-laws and 
 
 Co., etc.. Association v. Richards, election of officers are discussed at 
 
 21 Ga. 592. ; and where incorpor- chapters V. and VL 
 ation was by decree of court, the
 
 CHAPTER III, 
 CHARTER. 
 
 Sectiow 1. Importance of char- Section 4. EfEect of failure to 
 
 ter. observe statute. 
 
 Section 2. Must generally ad- Section 5. Construction, 
 
 here to statute. Section 6. Amendment. 
 
 Section 3. What constitutes char- 
 ter and its legal effect. 
 
 Section 7. Corporate seal. 
 
 Section. 1. Importance of Charter. After the preli- 
 minarj organization, a charter is necessary, and as was stated in 
 the preceding chapter, it should be drafted carefully and by an 
 experienced person. Its preparation should be referred to the 
 attorney of the association. 
 
 This fundamental instrument largely gives and measures the 
 powers of the association. The promoti ng persons by its execu- 
 tion, have changed character and have been merged into the body 
 corporate. As individuals their identity is gone, but as parts 
 of the corporation, it is preserved, so far as rights and liabili- 
 ties are concerned. The law has invested them with new 
 duties and new rights, and ignorance of them will not serve as 
 an excuse to stay the consequences of ignoring them. It is 
 important to know something of the charter and the legal 
 «tatus of the association and the member, when a charter is 
 issued and the corporation first has a legal existence. 
 
 (14)
 
 WHAT CONSTITUTES CHARTER. 15 
 
 Sec. 2. Must Generally Adhere to Statute. The 
 
 state statutes generally deiiue the provisions of the charter. 
 In drawing it, substantial adherence to the statute must be 
 observed. As has been previously stated, it is unwise to say 
 too much in the articles of association. They should not par- 
 ticularize too much, for subsequently it may be found neces- 
 sary to change some material provisions, and serious difficulty 
 is then encountered. As a suggestion, the provisions of the 
 statute should be given a general observance, and while adher- 
 ino- to the letter of the statute, it should be construed by its 
 patent intent. The articles must keep within the scope of the 
 statute, but where it makes no specification, for instance as to 
 the face value of the shares, it is best to leave that to the by- 
 laws as they may be adopted by the stockholders. Experience 
 may show the ailvisability of changing the denomination of 
 shares after incorporation, which may be readily done under 
 such a charter. Other matters, such as the internal govern- 
 ment of the association, for instance, as to the number of 
 directors, may be treated in the same way ; but the corporate 
 objects should be clearly and amply specitied so that the asso- 
 ciation may be able to perform its natural functions without 
 question. 
 
 Sec. 3. What Constitutes Charter and its Legral 
 Etfect. The articles of incorporation of an association formed 
 under the general laws of the state, are its charter and subject 
 to the constitution and general laws of the state, its funda- 
 mental and organic law.' They fix the rights of the stock- 
 holders, and are in the nature of a fundamental contract in 
 form between the corporators, and in practical effect between 
 the association and its stockholders, which neither party is at 
 liberty to violate.' By the filing of the articles of association 
 and the passing to the incorporators of a legislative grant of 
 incorporation, there arise contractual relations which are said 
 
 • The constitution of the state is association with righta conflicting 
 
 the higher law of course than the with the constitution: State v. 
 
 legislative enactments, so that a McGrath, 95 Mo. 193. 
 
 charter is amenable first to that law. * Bergman v. St. Paul, etc., Asso- 
 
 The legislature can not invest an elation, 29 Minn. 275.
 
 16 BUILDING ASSOCIATIONS. 
 
 to have a triple character, being one between the state and the 
 corporation, between the corporation and the Btockholders, 
 and between the stockholders and the state.* In determining 
 the rights of these contracting parties, reference must be had 
 to the creative law.* It is the primary source of these con- 
 tractual rights, but the articles of incorporation and constitu- 
 tion and by-laws may be examined for the purpose of deter- 
 mining some of these rights.' 
 
 Sec. 4. Effect of Failure to Observe Statute. 
 The charter should conform to the statute; as to powers, it 
 must conform, for if it wantonly exceeds the legislative 
 authority, the state may exercise its inherent right to with- 
 draw the charter and from that source lies danger. The safe 
 course is to follow the statute, but failure in strict compliance 
 will not always defeat incorporation,* as where the certificate 
 of incorporation was acknowledged before a wrong ofiicer, it 
 was held that upon correction, the corporation was de jure 
 from the date of its organization, not only as against persons 
 dealino- directly with the association, but as against all others.* 
 And the defects in organization can not be attacked in a col- 
 lateral suit.' The courts generally declare that if there has 
 been a bona fide attempt to organize a corporation, persons as 
 members and borrowers will not be allowed to say the asso- 
 ciation can not enforce its contracts, because it is defectively 
 organized.' The refusal of the courts to assist persons in 
 defeating their agreements with associations, extends only to 
 imperfections in organization. If the association is so defec- 
 tively organized that it can not legally carry on its corporation 
 
 » Cook Stock, etc., sec. 492 ; it has * Lord v. Essex Building Associa 
 
 long been settled that as between tion, 87 Md. 320. 
 
 the state and the corporation the ' Spinning v. Home, etc., Associa- 
 
 charter is a contract: Dartmouth tion, 26 Ohio St. 483. 
 
 College Case, 4 Wheat. 518. 'Williamson v. Kokomo, etc., 
 
 * McCahan v. Columbian etc.. Association, 89 Ind. 389. 
 Association, 40 Md. 226; Michigan, ' Hagerman v. Ohio, etc., Asso 
 etc., Association v. McDevitt, 77 elation, 25 Ohio St., 186 ; Payette v 
 jlich. 1. Free Home, etc., Association, 27 111 
 
 * McCahan v. Columbian etc., As- App. 307. 
 Bociation, 40 Md. 226.
 
 EFFECT OF FAILURE TO OBSERVE STATUTE. 17 
 
 business, it should re- incorporate and transfer the property to 
 the new corporation or wind up its atfairs and paj its debts 
 and distribute its assets. 
 
 The corporation may be so defective as to render the fran- 
 chise whollj invalid in a proceeding against it by the state, 
 still its corporate existence when acting under color of a 
 franchise, cannot be questioned in a suit where it would arise 
 collaterally.' But if the association steps beyond its corporate 
 authority and clearly violates its charter, the remedy may not 
 be alone with the state. The court fully cognizant of its ex- 
 ceeded authority, and having no equities of third persons to 
 preserve, will pronounce its contracts void and leave the asso- 
 ciation stripped of all rights assumed by the transaction.* 
 And the association cannot enlarge its functions by incorpo- 
 rating powers in its charter that are not authorized or con- 
 templated by statute.' 
 
 Sec. 5. Construction. Care should be taken that in 
 framing the charter, the domain of the by-laws is not invaded. 
 The by-laws yield readily to amendment, while the charter is 
 an inflexible compact, changeable only by the power granting 
 it. The inflexible character of the charter and its importance 
 as the instrument of corporate existance, are too often over- 
 looked. It is frequently framed without care, regardless of 
 the duties and rights that spring from it. Considered as a 
 contract, its construction is one of intent of the parties, the 
 state and the incorporators. This intent is discoverable by the 
 legislative utterance on the part of the state and from the 
 instrument itself on the part of the incorporators. So lono- as 
 the instrument is the subject of construction, the work is a 
 possible one. but when its amendment is considered, the rio-hts 
 of both contracting parties intervene and must be carefully 
 adjusted without legal injury. 
 
 'Lincoln, etc., Association v. etc., Association, 27 111. App. 807. 
 Graham, 7 Neb. 173; Williamson 'Anderson v, Cleburne, etc., As- 
 
 V Kokomo, etc.. Association, 89 sociation, 16 S. W. Rep 298; Simp- 
 
 Ind. 389; Building Association v. son v. Building Association, 88 
 
 Moreanthal, 2 Pears. 343; Winget Ohio St. 349. 
 
 V. Quincy, etc.. Association, 128 111. 'Albright v. Building Associ- 
 
 <{7; Tayette, etc., v Free Home, ation, 102 Pa. St. 411. 
 
 2
 
 ,18 BUILDING ASSOCIATIONS. 
 
 Sec. 6. Anieiiclmeiit. The power to amend, pre-sup- 
 poses legislative authority. All powers rightfully exercised 
 by corporate bodies, being conferred by the government, either 
 in express terms or by clear implication, authority for every 
 corporate act must be found in the grant or requirement of 
 some legislative act.* In determining whether or not the 
 charter, the creative instrument, may be amended, it is neces- 
 sary to examine the legislative act under which it is given. 
 Ko vote or act of a corporation can enlarge its chartered 
 authority, either as to subjects on which it is intended to 
 operate, or the persons or property of the corporators. If 
 created with a fund limited by the act, it cannot enlarge or 
 diminish the fund, and if the capital stock is divided into a 
 fixed number of shares, this number cannot be changed with- 
 out authority from the legislature.' The legislature has the 
 inherent right to amend where no vested rights are impaired, 
 with the consent of the majority of the stockholders', but no 
 material amendment can be made, except by unanimous consent 
 of the stockholders.* The legislature may reserve power tO' 
 amend. When the legislature reserves power to amend, it 
 may do so in a way reasonable and consistent with the scope 
 and object of incorporation.* 
 
 Of every corporation formed under the general law, the law 
 itself becomes the charter, defines and enumerates the pow- 
 ers which are to be exercised, the nature and extent of cor- 
 porate franchises and privileges. The declaration of incor- 
 poration, the constitution and by-laws adopted for corporate 
 government, do not form the charter or define or enum- 
 erate the corporate powers. These are the acts of the incor- 
 porators. The charter is the grant from the sovereign power 
 of the state; and by that source only can be amended or 
 enlarged.* 
 
 > State V. Washington, etc., Com- Tharp, 1 Houst. Del., 149. 
 ipany, 11 Ohio, 96; but see Wange- *Cook Stock, sec. 495. 
 
 irien V. Aspell, 47 Ohio St. 250. » Shields v. Ohio, 95 U. S. 319. 
 
 ' Salem Mill-Dam Corp. v. Ropes 'Grangers, etc.. Company v. Kam- 
 
 6 Pick. 23. per, 73 Ala. 325. 
 
 'Delaware R. B. Company v.
 
 AMENDMENT. 19 
 
 "The power to alter and modify does not give power to 
 make any substantial addition to the work."' Within these 
 limits the len^islature may exercise reserved power without the 
 consent of the corporation." If the amendments exceed these 
 and alter contract relations, the consent of the stockholders 
 must be had.' If the amendment be merely auxiliary, that is 
 merely an assistance to carry out the original plan, the consent 
 of the majority of the stockholders is sufficient.* But if the 
 amendment is fundamental, materially changing the original 
 plans unanimous consent is necessary.* 
 
 If the incorporation is under a general statute, the legisla- 
 tive amendment may be by a general enactment, and if the in- 
 corporation is by special enactment the amendment of the 
 charter would be by special statute. 
 
 When it is proposed to amend the charter, legislative author- 
 ity is prerequisite. The legislature can amend with consent of 
 stockholders; if the amendments are material, unanimous con- 
 sent is necessary; if incidental, a majority consent is sufficient. 
 If the statute authorize amendments they may be made, 
 
 'Zabriskie v. Hackensack etc. leges, which do not change essen- 
 
 Company, 18 N. J. Eq. 178. tially the nature and character of 
 
 *Cross V. Peach Bottom, etc., Com- the corporation, or the purpose for 
 
 pany, 90 Pa. St. 392. which it was created, and have for 
 
 'Illinois, etc.. Company v.Zimmer, their object the promotion of the 
 
 20 111. 654. enterprise originally contemplated, 
 
 ^Illinois, etc.. Company v.Zimmer, fall within the second class. All 
 
 fiupra. amendments which work a radical' 
 
 *Mill8 V. Central, etc.. Company, change in the nature and character 
 81 N. J. Eq. 1 ; Cook Stock, sec. 500. of a corporation, or the purpose for 
 In a Connecticut case, the court said : which it was created, are within the 
 "Some amendments or laws affect- third class." New Haven, etc.. Com- 
 ing corporations are binding with or pany V. Chapman, 38 Conn. 56. It 
 without their assent. Others bind should be observed that there is a 
 the corporation and every member distinction between the obligation 
 thereof, if assented to by a majority of a contract and the remedy given 
 of the stockholders. And others are by the legislature to enforce that 
 not binding upon non-consenting obligation. Without impairing the 
 members, although assented to by obligation of the contract, the rem- 
 the majority. All general laws, and edy may be modified or changed as 
 mere matters of police regulation, the legislature may direct; Sturges 
 are embraced in the first class. Ad- v. Crowninshield, 4 Wheat 122. 
 ditional powers, duties and privi-
 
 20 
 
 BUILDING ASSOCIATIONS. 
 
 although the charter is silent on the subject,' but under such 
 power, a majority of stockholders cannot make a fundamental 
 chancre and bind a non-consentins: stockholder. Where the 
 amendments are merely auxiliary, a majority may consent and 
 make them binding. The application of the law to the facts of 
 each particular case, renders the subject full of difficulties, 
 and the right to amend the charter should be carefully inves- 
 tigated before any attempt is made, or the whole corporate 
 existence may be involved in confusion. 
 
 Sec. 7. Corporate Seal. Building Associations can 
 better carry on their business with a regular corporate seal. 
 The ancient rule applied to corporations existing by the com- 
 mon law was that they could only act by their common seal; 
 the rule has no application to corporations created by statute.* 
 The rule is however, that the corporate seal need not be at- 
 tached to a corporate contract, unless a similar contract, when 
 made by an individual, would require a seal.' Thus, a build- 
 ing association in a deed, would need to use a seal as required 
 of an individual; however, any device or form will operate as 
 a seal if there was an intent to bind the association and a seal 
 of some kind was used.* This rule would not apply in states 
 where the statutes require a corporate seal to be used. 
 
 'Wangerien v. Aspell, 47 Ohio St. 
 250. If the charter itself provides 
 a mode of amendment, it must be 
 adhered to: McKeown v. Building 
 Association, 5 Bull. 62. 
 
 'Curry v. Bank, 8 Port Aia. 861. 
 *Cook Stock, etc., sec. 721. 
 *Cook Stock, etc, sec 723 and 
 cases cited.
 
 CHAPTER IV. 
 
 MEMBERS. 
 
 Section 1. 
 
 tiOD. 
 
 Section 2. 
 fications. 
 
 Section 3. 
 bership. 
 
 Section 4. 
 rial. 
 
 Section 5. 
 
 Effect of incorpora- 
 Membership Quali- 
 Purposes of Mem- 
 Purpose not mate- 
 Right to borrow. 
 
 Section 0. Right to withdraw. 
 
 Section 7. Certificate of stock 
 and pass-books. 
 
 Section 8. Members estopped 
 to deny incorporation. 
 
 Section 9. Illegal to Invest 
 funds in other corporations. 
 
 Section 10. Death of Stock- 
 holder. 
 
 Section 1. Effect of Incorporation. By the issuing of 
 the charter, the association is erected as a corporation. Con- 
 sidered either as an artificial person or as a body of stock- 
 holders, in law it is a legal entity in that it remains a whole, 
 although its component parts may change. The stockholders, 
 as the persons to whom the corporation belongs, have, by be- 
 coming stockholders, assumed contractual relations with each 
 other, with the corporation and with the state. The building 
 association, being a modified type of private corporations, to 
 perform its peculiar functions embraces a variety of unusual 
 rights and liabilities for the stockholder. Upon his subscription 
 for stock he pays an entrance fee. There are no other pre- 
 requisities of membership unless they are the legal disabilities 
 of infancy and coverture, which are Bometimes removed by 
 
 (21)
 
 22 BUILDING ASSOCIATIONS. 
 
 statute. Of course, a non-compos could not be a member. 
 The law does not recognize him except by its guardianship. 
 
 Sec. 2. Membership Qualifications. A person be- 
 comes a member of a building association by subscribing for 
 and holding stock/ He acquires status as a stockholder in this 
 way. The incorporating statute usually provides for the 
 manner of the holding, and the by-laws, in accordance there- 
 with, give the rules governing his membership ; but he is not 
 compelled to accept any conditions of membership imposed by 
 the by-laws, and not authorized by statute.' Any person, ca- 
 pable of entering into a binding contract, may become a 
 member of a building association; although, in some states, 
 this ability is extended by statute to married wumen and in- 
 fants, who, at common law, are unable to enter into 
 contracts, they are not thereby given the power to bor- 
 row money and execute a valid mortgage therefor, unless 
 the statute expressly enables them to do so. The association^ 
 when authorized by statute, may receive them into member- 
 ship; but further contracts, entered into without express legis- 
 lative authority, will be taken at its peril. In some states, 
 general married women enabling acts have been passed, where- 
 by they may contract for certain purposes; under these stat- 
 utes, the association may safely enter into contracts beyond 
 the membersliip agreements, but, as the statute is in deroga- 
 tion of the common law, it must be strictly construed.^ Any 
 contract thus made must strictly adhere to the statutory im- 
 provements. In making contracts with married women, as in 
 loaning money to theiu, it should be carefnlly understood in 
 writing that the money is going for the purposes for which 
 they are enabled to contract. 
 
 Sec. 3. Purposes of Membership. A person enters 
 a building association for one of two purposes; to deposit his 
 
 ' Robertson v. Homestead Asso- ling act, but continued payinj^ 
 
 ciation, 69 Am. Dec. 151, note. monthly installments after its pas- 
 
 * Building Association v. Robin- sage, she cannot set up her disa- 
 6on, 46 L. I. Pa. 5. bility at the time she entered into 
 
 * But where a married woman the contract; Dilzer v. Building 
 purchased stock prior to an enab- Association, 103 Pa. St. 86.
 
 RIGHT TO BORROW. 23 
 
 money or to borrow. His deposits, generally of required 
 periodical svinounts, are applied by the association as payments 
 on his stock. The dues are nothing but partial payments on 
 stock. Thus the depositing member by his small payments is 
 enabled to accumulate and put his accumulations at work. 
 The association adds those accumulations to his stock pay- 
 ments — dues — and when the aggregate is equal to the face of 
 the stock it is retired, the membership ceases. In thus re- 
 receiving stock subscriptions and distributing the earnings 
 thereof in part payment of the subscription debt, to itself, the 
 association occupies a position between a private corporation 
 and a partnership. The statute thus conceives it and for con- 
 venience has endowed it with a corporate character. Out of this 
 process correlative rights grow. The association is entitled to 
 require the payment of dues as agreed by the member, and if 
 they are not paid, to enforce a penalty.* The member, on the 
 other hand, is entitled to have the net profits pro-rated and 
 so credited on his stock.' No other corporation is given suchl 
 powers and no other stockholder has such rights. In ordinary 
 corporations, the stock subscriptions are presently due, and the 
 profits are declared as dividends, and are withdrawable interest 
 on the investment. 
 
 Sec. 4. Purpose not Material. The purpose of the 
 member's stockholding is not material to the association. He 
 may invest for profit or to meet debts or to acquire a fund for 
 business or to get a loan.^ His status us a stockholder is not 
 affected by his purpose of entering. For him it i^ merely a 
 savings institution in which he places his money and holds 
 stock. 
 
 Sec. 6. Rig-ht to Borrow. One of his important rights 
 is to borrow money from the association. Whenever the dues 
 and other revenues create a surplus in the treasury, he has the 
 
 ' From the moment a member * People v. Lowe, 117 N. Y. 175. 
 
 joins, until he withdraws or his stock 'Mutual Savings etc. ABSociation 
 
 matures, he is a debtor to the asso- v. Wilcox, 24 Ck>nn. 147. 
 elation for the unpaid balance of his 
 stock; Michigan, etc., Association 
 V. McDevitt, 77 Mich. L
 
 24 BUII.DING ASSOCIATIONS. 
 
 right to take it npon such reasonable terms as the association 
 may fix. The legislature invests the association with the 
 power to loan money, in fact it imposes upon it the duty of 
 lending it to the members who have a right to compel its 
 loaning. He takes on additional rights and burdens by bor- 
 rowing money, but he has the right to borrow as he has also 
 the liability of the debt. and its cost in the shape of prem- 
 ium and interest. 
 
 Sec. 6. Right to Withdraw. The member may ter- 
 minate his membership, stop future payments and liabilities 
 upon notice to the association. He is invested with the right 
 to surrender his stock upon equitable terms with or without 
 the consent of the association. In this he differs from an 
 ordinary stockholder, and is somewhat like a partner, who by 
 retiring, dissolves the partnership. The withdrawing member 
 does not affect the corporation or the other stockholders, but 
 'be effectually terminates his membership, as does the retiring 
 partner his partnership. The member has the legal attributes 
 of both partner and shareholder so adapted as the purposes of 
 his existence require, yet he holds legal status as a stockholder 
 and must be so considered. 
 
 Sec. 7. Certificates of Stock and Pass-Books. 
 When a person has entered an association, a pass book is issued 
 to him upon which his periodical payments are to be credited. 
 The pass book is accompanied by a certificate of stock. The 
 pass books are prima facie evidence of membership.* But the 
 holding of a pass book and certificate of stock is not necessary 
 to constitute membership.* If lost, the association may 
 replace it upon proper indemnity that it will suffer no loss 
 thereby.' Keasonable rules concerning the issuing of certifi- 
 cates will be upheld, so where the by-laws provide that a 
 defaulting member might take a new certificate for a less 
 number of shares, and the payments on the old were to 
 be applied on the new, the court held that all arrears on 
 
 •Qermantown, etc., Association, v. 'Chester, etc., Co. v. Dewey, 16 
 
 Sendmeyer, 50 Pa. St. 67 ; Dobin- Mass. 94. 
 son V. Ha-wks, 12 Jur. 1037. «0ook Stock, etc., sec. 870.
 
 MEMBERS ESTOPPED TO DENY INCORPORATION. 25 
 
 the old must be paid before the member was entitled to the 
 privilege.' 
 
 Seo. 8. Members Estopped to Deny Incorpora- 
 tion. It is the rule well established, that a party dealing with 
 the association and receiving the benefits of a contract, cannot 
 claim that the association is defectively organized or that the 
 creative law is unconstitutional. This right is in the state; 
 and a person receiving membership benefits from the associa- 
 tion may become estopped to deny his membership.^ The 
 result of this rule is that contracts of the association beyond 
 its power may be sustained as against a benefitted party or a 
 stockholder, yet the directors should not knowingly venture 
 beyond the corporate scope,* as their acts might invoke 
 remedies with a different result.* 
 
 The association by receiving dues is likewise estopped to 
 deny the existence of stock.* 
 
 'Fulton V. American, etc, Associa- 
 tion, 48 N. W. R.781 ; Eaton v. Am- 
 erican, etc.. Association, 49 N. W. 
 R. 865. 
 
 'Winget V. Quincy, etc., Associa- 
 tion, 128 111. 67. 
 
 *Bate3 V. People's, etc., Associa- 
 tion, 42 Ohio St. 655. So one whose 
 mortgage recites that he is a mem- 
 ber, cannot deny membership in an 
 action for foreclosure. Howard, 
 etc., Association v. Mclntyre, 3 
 Allen 571 ; a borrower can- 
 cannot deny the right of the asso- 
 ciation to loan on more than the 
 number of shares limited by law, 
 and his creditors are likewise es- 
 topped: Building Association v. Ar- 
 beitur Bund, 6 Bull. 823. And where 
 it is required tliat the whole capital 
 stock be taken in an association 
 where the amount of capital stock 
 is fixed and the number of shares 
 ascertained, yet if a shareholder 
 knowing the full stock has not been 
 
 taken, attends meetings, votes for 
 the expenditure of money, and the 
 purchase of property, or does other 
 acts from which it may fairly be 
 inferred that he intends to waive 
 such right, he will be estopped to 
 set it up as a defense upon his stock 
 subscription: Morrison t. Dorsey, 
 48 Md. 461. 
 
 *The "corporate scope" is the 
 purpose of the association as ascer- 
 tainable from the articles of asso- 
 ciation, together with such purposes 
 as are necessarily implied in pro- 
 perly conducting the business. 
 
 'A minority of the stockholders 
 may maintain a bill in equity to 
 prevent illegal action on the part of 
 the majority after request to the 
 proper ollicers to interfere, and 
 their failure or refusal so to do. 
 Memphis, etc., Co. v. Woods, 88 
 Ala 630. 
 
 *North America, etc.. Association 
 V. Button, 35 Pa. St. 468.
 
 26 BUILDING ASSOCIATIONS. 
 
 Section 9. Illegal to Invest Funds in Other Cor* 
 porations. It may be taken as a general proposition that ai 
 building association has no power unless authorized by statute 
 to hold stock in another association or corporation.* The 
 reason of this is patent, as it was intended by the legislature 
 that the corporate resources should be entirely applied to 
 furthering the objects of the corporation. 
 
 Section 10. Death of Stockholder, In case of death 
 of the stockholder, the by-laws should make some provision 
 for the retirement of the stock or the manner by which it may 
 be carried on. 
 
 When it is provided that in the event of the death of a 
 stockholder, his heirs or legal representatives were entitled to 
 continue the relation of stockholder, the death of the member 
 operates a dissolution of his membership, terminating his con- 
 nection with the association; and upon his heirs or devisees 
 and not upon his personal representatives is conferred the 
 privilege of succeeding to or continuing the membership; and 
 if such privilege is exercised by the heirs or devisees, they 
 become members not in a representative capacity, but in their 
 own right, and they are subject individually to the duties and 
 liabilities of membership.' 
 
 'Mutual, etc., Association v. ' Montgomeiy, etc., Association 
 
 Meriden, etc., Co., 24 Conn. 169. T. Bobinson, 69 Ala. 418.
 
 CHAPTER V. 
 
 BY-LAWS. 
 
 SROTioir 1. Framing and adop- 
 tion. 
 
 Power 
 Notice of amend- 
 
 Sbction 2. Definition 
 to enact and amend. 
 
 Section 3. 
 ment 
 
 Section 4. Character of by-laws. 
 
 Section 5. Construction of by- 
 laws- 
 
 Sectioit 6. Amendment of liy- 
 
 laws. 
 
 Resolutions and 
 Mode of amend- 
 
 Section 7. 
 amendment. 
 
 Section 8- 
 ments. 
 
 Section 9. Provisions of by- 
 laws. 
 
 Section 1. Framing- and Adoption. The iiicorporator& 
 should select a committee to frame the by-laws and fix a time 
 wheu its report is to be heard. Notice should be given of the 
 time and place of the meeting. The discussion of the by-laws 
 should be full, and their character well understood, as the by- 
 laws being the law arranged for the internal government of the 
 association, and affecting the stockholder's rights throughout 
 he should know what they mean. The suggestion applies with 
 equal force to the association, as in the case of litigation, the 
 result is most often dependent upon the construction of the by- 
 laws. The by-laws, upon their adoption by the incorporators, 
 should be printed and circulated among the stockholders. 
 Each stockholder should have actual notice of their contents. It 
 may be said as much particularity should be exercised in 
 framing by-laws as the charter, 
 
 (87)
 
 28 BUILDING ASSOCIATIONS. 
 
 Sbo. 2. Definition — Power to Enact and Amend. 
 
 A bj-law is a rule by which the affairs of the association are 
 fto be conducted. The power of corporations to enact by-laws, 
 exists independent of statute, but the incorporating statute 
 usually gives the power. The power to make by-laws resides 
 in the stockholders; the directors have no inherent right to 
 make them.' Usually, in the promotion and incorporation of 
 an association, part of the promoters and incorporators act as 
 the first board of directors. The by-laws should not be 
 adopted by them as directors, but as stockholders, unless the 
 charter expressly confers on the directors such power. Yery 
 often it is inconvenient for the stockholders to be called 
 together to amend the by-laws, and when it is done, it is gen- 
 erally a perfunctory matter, so it is convenient to have the 
 power of enacting and amending by-laws delegated to the 
 directors by the stockholders. This may be done in the by- 
 laws.' But the exercise of this right by the directors does not 
 dispense with the necessity of giving full notice of the amend- 
 ments to each stockholder. 
 
 Sec. 3. Notice of Amendment. Notice should be 
 given, as provided in the by-laws, or, in the absence of any 
 provision it may be given by mail, or by posting up the 
 amended by-law in the ofBce of the association, and calling 
 €ach niember's attention to it. The safest course is by mail, as 
 the member may not be in the office. A person has the right 
 to treat the by-laws, given him on his becoming a member, as 
 all the by-laws of the association, and he is not bound to take 
 notice of modifications of such by-laws on the record 
 of the company simply, without further notice to him.^ And 
 the burden of showing that notice was given is upon the asso- 
 ciation, so it should adopt the method that_is a sure convey- 
 ance of notice to each stockholder. But a member cannot 
 resist payment of stated dues, fines, etc., on the ground that 
 by-laws of the association have not been adopted by a vote of 
 
 ' Morton, etc. Co. v. Wysong, 51. • McKenney v. Diamond State, 
 
 Ind. 4. etc., Association, 18 All. Rep. 905. 
 
 ' Heintzelman v. Druids', etc., As- 
 sociation, 36 N. W. Rep. 100.
 
 CHARACTER OF BY-LAWS. 2^ 
 
 the members or directors, where it appears that they have 
 been recorded, acted upon and enforced as the by-laws of the 
 association.' 
 
 Sec. 4. Character of By-Laws. Too much care can- 
 not be exercised in their construction, for the association, as 
 well as the member, is bound. In framing by-laws, assistance 
 "will be had in consulting the by-laws of other associations, 
 adopting a clear, concise and explicit expression. Nothing 
 should be left in doubt as to meaning. As a general rule for 
 guidance, the by-laws must be reasonable, equitable, and con- 
 sistent with the purposes of the association. They must not 
 be contrary to public policy or the established law of the land. 
 Neither must they attempt to oust the jurisdiction of the 
 courts by prohibiting an aggrieved party from seeking legal 
 remedies beyond the jurisdiction of the corporation.' There is 
 no objection to the rules providing for settlement of disputes 
 between the association and its members by arbitration, a prac- 
 tice common to English societies, but, if adopted, it should be 
 considered only a means of ascertainment, and not the final 
 determination of the dispute. The authority to pass by-laws is 
 an authority to pass such only as are consistent with the 
 articles of incorporation and the statute.' There are limits 
 beyond which the corporation, by its by-laws, cannot go. For 
 instance, the amount of fines must be reasonable. The delin- 
 quent cannot be fined twice for the same offense.* A building 
 association cannot, by a by-law, compel its stockholders to offer a 
 premium for priority of payment after its shares have become 
 worth par.' A by-law providing that each member shall sign 
 
 ' Hagerman v. Ohio, etc., Associ- * Hagermaa v. Ohio, etc., Asso- 
 
 ation, 25 Ohio St. 1S6 ; Morrison v. ciatioti, 25 Ohio St. 186 ; Forest City, 
 
 Dorsey, 48 Md., 461. After enjoy- etc.. Association v. Gallagher, 25 
 
 ing benefits for years, member can- Ohio St., 208. 
 
 not Bay he did not sign bylaws: * Rodgers v. Building Association, 
 
 Parker v. United States, etc., Asso- 7 W. N. C, (Pa) 95; see Building 
 
 ciation, 19 W. Va., 744. Association v. Jones, 2 L. T. N. S., 
 
 « Bauer v. Samson Lodge, 102 (Pa.) 17. 
 Ind., 262. 
 
 » Bergman v. St. Paul, etc., Asso- 
 ciation, 29 Minn., 275.
 
 30 BUILDING ASSOCIATIONS. 
 
 a certaiQ instrument containing an obligation to obey the 
 charter and laws, is only directory. If a person becomes the 
 owner of stock, he acquires membership without signing any 
 agreement whatever.' These are examples showing a violation 
 of the general principles cited as those guiding framers of by- 
 laws. The by-laws, by operation of law, become a part of the 
 contract between the association and the members. They may 
 be examined, for instance, for the purpose of determining when 
 the mortgage contract terminated.' So by-laws defining the 
 duties of a secretary become a part of the contract of the sure- 
 ties on his bond.' This fact exerts an important influence 
 upon the right to amend as a vested right cannot be impaired. 
 
 Sec. 5. Construction of By-laws. The construction 
 of by-laws must be a fair one, and a construction which would 
 operate with harshness and oppression upon the party in 
 default, will not be indulged by the Courts.* 
 
 If a by-law consists of several distinct and independent 
 parts, although one or more of them may be void, the rest 
 are equally valid, as though the void clause had been omitted.* 
 If the association waive the rule of its by-laws, the member 
 violating it has no right to complain, nor has any other person 
 standing in the relation of surety for him, any cause of com- 
 plaint. So a member holding a greater number of shares than 
 is allowed by its by-laws, but not in excess of the numbw 
 limited by statute, cannot defend against a claim the associa- 
 tion has on account of such shares.' And if the association, 
 having an express power to loan money upon real estate, upon 
 terms prescribed in the by-laws, a loan not in conformity with 
 and in contravention of the by-laws is not void as ultra vvr6%? 
 
 Sec. 6. Amendment of By-IjaTVS. The amendment 
 of by-laws is an important matter, and should be carefully 
 
 * Building Association v. Robin- ^Monumental, etc., Society v. 
 
 Bon, 46 L. I.. (Pa.) 5. Lewis, 38 Md. 445. 
 
 'McCahan v. Columbian, etc., Aa- *Shelton v. Mayor etc., 30 Ala. 540. 
 
 Bociatlon, 40 Md. '';26. *Hagerman v. Ohio, etc., Associa- 
 
 *Humboldt, etc.. Society v. Won- tion, 25 Ohio St. 186. 
 
 nerhold, 81 Cal. 528. ^Kelly v. Mobile, etc, Aesociatlan, 
 
 64 Ala. 601.
 
 AMENDMENT OF BY-LAWS. 31 
 
 done. Power to make by-laws implies power to repeal them.' 
 By-laws may be amended so as to effect future benefits but not 
 vested claims.' Plaintiff in a case became a member of de- 
 fendant building association at a time when a by-law thereof 
 provided that all non-borrowing stockholders wishing to with- 
 draw, shall be privileged so to do, upon giving notice to the 
 directors of his or her intention, and shall be entitled to re- 
 ceive the amount of installments actually paid in without in- 
 terest. Held that plaintiff's right of withdrawal was a vested 
 right, of which defendant could not deprive him without his 
 consent by a subsequent repeal of the by-laws.* 
 
 When a member has contracted upon the faith of a by-law, 
 and has acquired rights under it, the association has no power 
 to change the by-law so as to affect him. The by-law became a 
 part of his contract, and the association can no more rescind 
 that part of his contract without his consent, than it can any 
 other part; and amendments or rules made after the contract, 
 cannot by any construction have an ex post facto effect, when 
 his rights would be thereby impaired.* Suppose the by-laws 
 provided that upon the payment of a certain amount, the 
 mortgagor should be entitled to a reduction of his mortgage 
 interest and premium. The association has no legal right to 
 subsequently repeal or amend that by-law, so as to deprive the 
 mortgagor of his beneht thereunder. He had executed his 
 mortgage with that right in contemplation; it had become 
 vested in him, and the association cannot, without his consent, 
 wrest it from him. This is a fair illustration of the rule.s 
 
 'King V. Ashwell, 12 East, 23. credit. Auld v. Glasgow etc. So- 
 
 *Stohr V. San Francisco, etc., 8o- ciety, 12 App. Cas. 197. So where 
 ciety, 82 Cal. 557 ; Weise v San a by-law provided that "all non-bor- 
 Francisco, etc.. Society, lb. 646. rowing members wishing to with- 
 
 "Holyoke etc. Association v. Lew- draw shall be privileged so to do 
 in, 27 Pac. R. 873. upon giving notice to the directors 
 
 ^Christie v. Northern Counties, of his or her intention, and shall be 
 etc.. Society, L. R , 43 Ch. Div. 62. entitled to receive the amount of in- 
 
 *Other illustrations: Where ma- stallments actually paid in without 
 jority of members in a depreciated interest. Held, that the member's 
 association passed a rule that a cer- right of withdrawal was a vested 
 tain amount should be deducted, it right of which defendant could not 
 has held ultra vires, and members deprive him without his consent by 
 who had given notice of withdrawal a subsequent repeal of the by-law: 
 after the resolution, were entitled to Holyoke, etc., Association v. Lewis, 
 be paid the whole amount at their 27 Pac. R. 872.
 
 32 BUILDING ASSOCIATIONS. 
 
 But amendments having a retroactive effect, apply fully, 
 unless a right vested under prior laws is impaired. A 
 constitution originally provided that a member whose shares 
 were unpledged for loans, might give notice of withdrawal, at 
 any time, and that from and after such notice, all dues on such' 
 shares should cease. In June, 1876, all holders of unpledged 
 shares gave notice of withdrawal, and thereupon the section of 
 the constitution requiring the payment of dues on shares, was 
 amended so as to provide that no dues be thereafter required 
 from the unpledged shares. Another amendment was also 
 then adopted, changing the manner in which withdrawal 
 shares were to be paid off, instructing the directors to close 
 the business of the association. Held, by the court, that these 
 amendments in no manner changed the contracts evidenced' 
 by the note and mortgage or released either party from any 
 obligation thereon.' While amendments not impairing 
 vested rights may be made to have a retroactive effect, yet 
 they must be brought to the knowledge of each member to 
 bind him. 
 
 Sec. 7. Resolutions and Amendments. The rule 
 
 that a by-law cannot be passed so as to impair a vested right, 
 applies to resolutions of a board of directors.* A resolution 
 of a building association providing that the value of all stock 
 borrowed on to a certain amount, should be allowed to such 
 holders as wished to redeem, can not be rescinded to the pre- 
 judice of a member who has made application to withdraw 
 and had refrained from paying his monthly dues in the belief 
 that his application had been accepted.' A resolution permit- 
 tin o- borrowers to withdraw on certain terms, the stock to be 
 cancelled, when acted on by a member, is conclusive on the 
 
 • Hekelnkaemper v. German, etc., Northern Counties, etc., Society, L. 
 
 Association, 22 Kan. 549. R 43 Ch. D. 62. 
 
 « Neitiier rules nor resolutions can « Eyre v. Building Association, IT 
 
 have an ex post facto effect, when l. I. (Pa.) 148. 
 rights are impaired: Christie v.
 
 PROVISIONS OF BY-LAWS. 33 
 
 association; it amounts to an accord and satisfaction.' The 
 rules must be in conformity with the by-laws and charter. In 
 the management of the association, unwritten regulations 
 sometimes govern, simply because they are reasonable and 
 have been acted on by the members, but, if they are inequit- 
 able, the courts will not enforce them.' 
 
 Sec. 8. Mode of Amendments. The mode of 
 amendment prescribed in the statute, charter, or by-laws, 
 themselves, must be strictly followed, or the amendment is 
 nugatory.* The by-laws usually provide how and when thej 
 may be amended; in such case, the procedure, as defined, 
 must be followed. 
 
 The by-laws should not be incorporated in any part of the 
 charter, and the rules of the association should be kept dis- 
 tinct from the by-laws. This is especially necessary, as 
 amendment of the by-laws may be attended with delay. The 
 association needs a simple code of rules, governing the man- 
 ner of making loans, and their payment, and such other mat- 
 ters as relate to its routine business. The directors may 
 amend these rules upon the principles that by-laws are 
 amended. 
 
 Sec. 9. Provisions of By-Laws. In its by-laws, 
 the association should specify the character of its shares 
 and the manner of their issue; its officers, the mode of 
 election, term of office, and the manner of tilling' vacan- 
 cies; the duties of the officers; the place and time of 
 annual meetings of shareholders, and regular meetings of 
 stockholders; the manner of calling special meetings of 
 stockholders and directors; the number necessary to con- 
 stitute a quorum; the appointment of an auditing com- 
 mittee, and such other committees as may be nec- 
 essary; the seal to be used by the association; the fine 
 
 •Miller V. Second Jefferson, etc., interest on money bid, when th<? 
 
 Association, 50 Pa. St. 32. loan is subsequently refused, is not 
 
 * Winterer v. Building Associa- a binding custom, 
 
 tion, 44 L. I. (Pa.) 122. la this case *McKeown v. Building Associa- 
 
 it was held that a custom to charge tion, 5 Bull. 52. 
 3
 
 34 BUILDING ASSOCIATIONS. 
 
 and other charges'; transfer fees; dividends and manner of de- 
 claring and paying; the place and time of paying dues ; the man- 
 ner of making loans and the security; the granting of with- 
 drawals, with the notice required, and manner of payment; 
 the replacing of lost or stolen pass-books; the disposition of 
 the stock of a deceased member, and making of amendments. 
 These are generally the subjects covered by the by-laws. 
 
 ' The fine, charges and forfeitures can protect itself sufficiently against 
 
 against delinquent members must be the acts of defaulting members 
 
 created by unambiguous language, without applying increased penal- 
 
 or they will not be upheld: Occi- ties or forfeitures of stock, their 
 
 dental, etc , Association v. Sullivan, omission from the by-laws in an 
 
 62Cal. 394. When the association equitable one.
 
 CHAPTER VI. 
 
 GOYERNMENT AND OEFICERa 
 
 Officers and election. 
 Pass-books and dues. 
 General meetings. 
 Special meetings. 
 Quorum. Voting and 
 
 Objects of general 
 
 Section 1. 
 
 Section 3. 
 
 Section 3. 
 
 Section 4. 
 
 Section 5. 
 proxies. 
 
 Section 6. 
 meeting. 
 
 Section 7. Character, duty and 
 liability of directors. 
 
 Section 8. General guidance for 
 
 directors. 
 
 Section 9. Minutes of meetings. 
 
 Section 10. Powers of direc- 
 tors. 
 
 Section 11. Term of election of 
 directors. 
 
 Section 13. Duties of president. 
 
 Section 13. Duties of vice-pres- 
 ident. 
 
 Section 14. Duties of secretary 
 
 Section 15. Duties of treasurer. 
 
 Section 16. Duties of attorney. 
 
 Section 17. Appraising com- 
 mittee. 
 
 Section 18. Per centage of value 
 to be loaned. 
 
 Section 19. Executive commit- 
 tee. 
 
 Section 30. Auditing commit, 
 tee. 
 
 Section 31. Officers' bonds. 
 
 Section 22. Sureties on official 
 bonds. 
 
 Section 23. Resignation and re- 
 moval of directors. 
 
 Section 24. Officers' relations 
 and responsibilities to the associ- 
 ation. 
 
 Section 1. Officers and Election. The association 
 after incorporation and adoption of by-laws, should, in share- 
 holders' meeting, elect officers to serve until the next general 
 meeting. The officers to be elected are, ordinarily, president, 
 
 (35)
 
 36 BUILDING ASSOCIATIONS. 
 
 vice-president, secretary, treasurer and attorney. If the busi- 
 ness requires, assistant officers may be elected. Tlie mode of 
 election is by ballot. The manner of election and time of 
 holding should be prescribed in the by-laws. After the elec- 
 tion of the officers, two of them at least should give bond, the 
 secretary and treasurer, with sureties satisfactory to the direc- 
 tors. This is pre-requisite to their entering upon the discharge 
 of their duties. 
 
 Seo. 2. Pass Books and Dues. The association then 
 issues its pass books and certificates of stock, and is ready for 
 receiving dues. The by-laws should fix the time in the week 
 or month when dues are to be paid, having reference to the 
 time when shareholders can best pay them. In factory towns, 
 Monday evening may be the best time, and in railroad centers 
 a monthly payment would be convenient. By adjusting these 
 pay times, the association will accommodate its members and 
 strengthen its membership. If the person selected as secretary 
 has a convenient office, the association might receive dues at 
 all times, with the express stipulation that they must be paid 
 before the expiration of the week or month, as the case may be. 
 Whenever the business will justify, the association should 
 have its own office, a place where the shareholder feels he 
 may come at any time and have inquiries answered and make 
 such examination of the workings of the society as he desires. 
 
 Sec. 3. General Meetings. The supreme power in the 
 management of the affairs of the association is vested by law 
 in the stockholders assembled in general meeting. This power 
 must be exercised with regard to the statute, but it cannot be 
 defeated by rules adopted by the corporate directors. The 
 general meetings should be held annually and properly occur 
 shortly after the end of the fiscal year, allowing time enough 
 for the officers, after the close of the year, to balance their books 
 and submit their annual reports. If the association makes 
 semi-annual reports, the general meeting can be held after the 
 last half of the year. The stockholders do not generally attend 
 these meetings as they should, and the directors should place 
 in the hands of each shareholder a copy of the report of the 
 affairs of the association. The date of the general meeting
 
 QUORUM VOTING AND PROXIES. 37 
 
 should be lixed by the by-laws, when the business to be done 
 by the stockholders may be transacted. Then all members are 
 affected with notice of the general meeting and are bound by 
 the acts of the meeting,' but the by-law^ must fix, also, the 
 hour of tlie meeting.' If the by-law make no such provision, 
 the shareholder is entitled to personal service.' Unless the 
 meeting is held at the proper place, as indicated by the by-laws, 
 the measures taken will be of no validity.* The meeting must 
 be held in the locality of the shareholders.' 
 
 Sec. 4. Special Meeting's. If the meeting is a special 
 one, or there are special and unusual matters to be considered 
 at the general meeting, notice specifying the time (giving the 
 hour), place and nature of the business of the meeting, should 
 be giv^en to each stockholder and the by-laws should pro- 
 vide for such notice and the manner of its issuing, as the 
 notice is absolutely essential to the validity of the meeting. 
 The by-laws should provide that the president and secretary 
 shall issue a call for special meetings, upon the request of a cer- 
 tain number of stockholders. The notice must then be issued, 
 as provided by the by-laws, and served on each stockholder a 
 reasonable time before the meeting. The notice may be served 
 in any manner that will reach the shareholders, as by mail, 
 which is the usual method. A special meeting can only do the 
 business for which it was called, and, upon adjournment, the 
 shareholders may do those things which they were authorized to 
 do at the original meeting,* but no new business unless notice is 
 given.'' The same rules apply to the meetings of directors. 
 
 Sec. 5. Quorum — Votiugr aud Proxies. Where there 
 is no provision in the statute or by-laws to the contrary, the 
 acts of the majority present, at a properly called meeting, are 
 binding, if there is a quorum present. And in estimating 
 a majority of the quorum present, a majority of those voting 
 will be counted, so that members cannot by abstaining from 
 
 ' • State V Bonnell, 35 Ohio St. 10. ' Reg. v. Registrar of Friendly So- 
 
 'San Buenaventura, etc , Company ciety, 7 L. R., Q. B. 741. 
 
 V. Vassault, 50 Cal. 534. «Cook Stock, etc., Sec. 601. 
 
 »Stebbins v. Merritt, 10 Cush. 27. 'Reg v. Grimshaw 10 Q. B. 747. 
 *Reg V. Pratt,118E. C. L.6B.&S. 
 
 Q. B.) 672.
 
 38 
 
 BUILDING ASSOCIATIONS. 
 
 voting, defeat the power of the meeting. If they refuse to vote, 
 the majority of those voting will determine the question involved 
 and be binding on the association. If members are present but 
 refuse to vote or take any part, yet they will be counted for the 
 purpose of having a quorum.' The vote must be cast in person 
 unless proxies are authorized by the by-laws. It requires special 
 authority in the by-laws for the use of proxies, unless the statute 
 authorizes them.' It is a tacitly accepted custom in absence of 
 any regulation on the subject, that a member has but one vote, 
 independently of the number of shares he holds, a custom which 
 seems to be founded on the strictly co-operative character of 
 the scheme.' In those states where the borrower's stock 
 interest is extinguished, he then loses his right to vote.* 
 
 Sec. 6. Objects of General Meeting. The usual 
 objects of a general meeting are to elect officers, to receive 
 statement of the association's condition, to pass by-laws 
 and to determine upon the general policy of the association. 
 
 Sec. 7. Character, Duty and Liability of Direc- 
 tors. The Board of Directors has the supervision and man- 
 agement of the affairs of the association, and as a body, acts 
 as its agent.' It is elected by the stockholders, and, in a sense, 
 the members are trustees for the stockholders.' The rules 
 
 •Rushville Gas Company v. City 
 of Rushville, 131 Ind. 206. 
 
 ■■'Craig V. First Presbyterian 
 Churcli, 88 Pa. St. 43 : Davis Building 
 Society, 101. A duly incorporated 
 church, owning shares which it is 
 entitled to vote at an election of 
 officers, may do so by proxy duly 
 authorized by the Board of Trus- 
 tees: State V RohlfEs, 19 Atl. R. 
 1099. 
 
 sEndlich Building Associations, 
 sec. 113. 
 
 ♦Mechanics, etc., Association v. 
 Conover, 1 McCart. 219. In Vir- 
 ginia he loses his vote : Winchester, 
 etc., Association v. Gilbert, 23 Grat. 
 7b7. While in Michigan, the statute 
 divests him of the right, although 
 
 he remains a member and debtor. 
 Mich. etc. Association v. McDevitt, 
 77 Mich 1. 
 
 *Allen V. Curtis, 36 Conn. 456. 
 
 ^Thompson's Liabilities of Officers 
 and Agents 351; Hodges v. New 
 England Screw Company, 53 Am. 
 Dec. 637, note. Officers of a build- 
 ing association, although trustees of 
 the property of the association do 
 not occupy that relation toward one 
 to whom they sell their individual 
 stock, and therefore if they make 
 representations to him as to its 
 value, which do not turn out as ex- 
 pected and represented, they are 
 not liable in the absence of an alle- 
 gation of deceit: Cook v. Henderson, 
 8 Rec. (Ohio) 439.
 
 DUTY AND LIABILITY OF DIRECTORS. 39 
 
 shonld prescribe their duties. Generally the directors elect the 
 officers of the association and pass upon loans and transact 
 whatever business is of interest to the association. While the 
 board is, in a sense, trustee and agent, it can only bind the 
 association in the scope of the corporate business, and this is 
 true of officers. The directors are only held to the exercise 
 of reasonable care and diligence in the management of the 
 corporate affairs, as it is conferred on them.' If they act 
 beyond the corporate power' or fraudulently,' or misapply the 
 funds,* or are guilty of gross negligence and inattention to 
 duty,' they may be personally liable either to stockholders or 
 creditors of the corporation, when injury results.* Thus, man- 
 agers of an association are not personally liable for losses result- 
 ing from an honest mistake in estimating the value of the 
 Btockholder's lands on which they loaned money, nor for a 
 defect in the ackowledgement of a mortgage which rendered 
 it worthless. But, they are liable for losses from loans made 
 on personal security of the stockholders, in violation of a by- 
 law limiting the amount of such loan.'' Any member mav 
 compel the directors to keep within the corporate powers.' 
 Certainly, a director is not liable for a breach, or act beyond 
 the corporate power, or improvident act, committed by his co- 
 directors, when he was not present when it was decided upon, 
 
 'Sullivan v. Lewiston Institution the powers given to him by the rules 
 for Savings, 56 Me. 507. It has of the society. Held that this rule 
 been recently held that -where their did not apply to acts, ultra vires and 
 services are gratuitous, they do not beyond the powers which the soci- 
 owe creditors of the corporation such ety itself could confer: Cullernev. 
 care as a reasonably prudent man London, etc.. Society, L. R. 35 Q B. 
 exercises in his own business, but Div. 485. 
 
 are liable only for such gross neg- ^Koehler v. Black River Falls, etc., 
 
 ligence as amounts to fraud : Swent- Company, 2 Black, 7, 715. 
 Kel Penn. Bank, 23 At 1 Hep 405. '*Bank,etc., v. St. John,2o Ala. 5(56, 
 
 This decision relaxes the rule here- 611 ; Citizens, etc.. Association v. 
 tofore applied. Lyon, 29 N. J. Eq. 110. 
 
 *Moses V Ocoee Bank, 1 Lea, 398. *Robinson v.Smith,24 Am Dec.213. ' 
 A rule of a building association *Hodges v. New England Screw 
 
 provided that a director should not Company, 53 Am. Dec. 637, note, 
 be answerable for, and might reim- 'Citizens, etc., Association v. Cori- 
 
 burse himself for, any loss which ell, 34 N. J. Eq 3:^3. 
 m^ight happen in the execution of *Davis Building Society, 120.
 
 40 BUILDING ASSOCIATIONS. 
 
 took no part in it and had no knowledge of it, unless he might 
 have prevented it by ordinary attention to his duties.* He 
 cannot, by absenting himself from his duties, avoid the respon- 
 sibilities of them. If he has been guilty of a legal fraud on 
 the association, whether intended or not, he cannot share in the 
 assets with other members.' The directors cannot bind the 
 association by mere expression of opinion concerning its work; 
 as, when, in a laudatory statement they set out the advantages 
 of the association, one claiming to be misled thereby, who had 
 a copy of the by-laws, in which were fully stated the rights 
 and obligations of members, cannot rescind his contract on 
 the ground of fraud;' nor do expressions of opinions as to the 
 maturity of shares amount to a fi"aud entitling the party relying 
 thereon to relief in equity.* 
 
 Sec. 8. General Guidance for Directors. The 
 plain rule for the guidance of the board of directors is, that it 
 must act at a regular or legally called meeting, within the 
 powers conferred on it, and each director must exercise honesty 
 and ordinary care in attending to the corporate business. No 
 liability will then attach to him. Tlie chief difficulty that a 
 director encounters is to determine what powers are conferred 
 upon him, as a director. Each member of the board, in order 
 that he may properly interpret the by-laws touching his duties, 
 should study the scheme of building associations and 
 
 'Sperings Appeal, 71 Pa. St. 11. ful act of those directors only who 
 
 Directors of a building association made the advance: Cullerne v. 
 
 passed a resolution authorizing ad- London, etc., Society, L. R. 25 Q. B. 
 
 vances to members on the security Div. 485. As to who may enforce 
 
 of their shares An advance was the liability against a delinquent di- 
 
 accordingly made to a member, and rector, see Hodges v. New England 
 
 the society incurred a loss thereby. Screw Company, 53 Am. Dec. 637, 
 
 Held that a director who concurred note. 
 
 in the resolution, but was not a * Kisterbock's Appeal, 51 Pa. St. 
 
 party to the making of the advance, 483. 
 
 could not be held liable to the so- * Winget v. Quincy, etc. Associa- 
 
 ciety for the loss, on the ground tion, 128 111. 67 ; See also Quincy, etc. 
 
 that the advance was tiUra vires and Association v. Winget, 29 IlL App. 
 
 was not attributable to the illegal 173. 
 
 resolution which authorized it, as *Lake v. Security, etc., Associa- 
 
 the cause of the loss was the wrong- tiou, 72 Ala. 207.
 
 POWERS OF DIRECTORS. 41 
 
 particularly, that of his association. lie will, then, better under- 
 stand his duties. Generally speaking, the directors have the 
 management of the affairs of the association through its 
 officers. That management is to be conducted by such rules 
 us will accomplish the purposes of the association. They are 
 entitled to exercise such powers as are given them by statute 
 and by-laws and such other incidental powers as are necessary to 
 accomplish its lawful purposes. A legal meeting implies that 
 a quorum is present. If the number constituting a quorum 
 is fixed by the by-laws, and it should be, that determines it. 
 If there is no provision, a majority, usually, constitutes a quo- 
 rum, and when a quorum is present, a majority of the quorum 
 voting binds the association. 
 
 Sec. 9. 3Iiiiutes of 3Ieetinjj:s. Minutes of the direc- 
 tors' meetings should be kept b}' the secretary, signed by him, 
 and attested by the president. It is essential, that the official 
 acts of the directors be thus recorded, as in case of any litiga- 
 tion, the minutes may become important evidence. The value 
 of permanent recording of corporate acts can not be over- 
 estimated. 
 
 Sec. 10. Powers of Directors. The directors having 
 the power to make such contracts as are authorized by the 
 statute and by-laws, the}'' should in such contracts make it 
 clearly appear that they act as the agent of the association. 
 So a note signed by individuals, as directors or officers, is the 
 individual note of the makers.' The contract should be signed 
 by the corporate name by the proper officers. Then, it is the 
 contract of the association. The right of the directors to 
 ■delegate to agents the transaction of the ordinary and routine 
 business of the corporation, is unquestioned, and is absolutely 
 necessary. But, in matters involving discretion, the decisions 
 are in some conflict, but the better weight of authority is that 
 the powers of the board may be delegated to an executive com- 
 mittee of the board, and the acts and contracts of such 
 
 'Hayes v. Brubaker, 65 Ind. 27. by defendant corporation, it was 
 
 But where a contract not under seal held enforceable against it: Hand 
 
 was signed "8. Mathor, President," v. Society, etc., 18 N. Y., Supl. 157. 
 at being alleged that it was executed
 
 42 BUILDING ASSOCIATIONS. 
 
 committee are binding on the association.' It very often 
 expedites business of the association for committees to attend 
 to certain branches of it, and it is within the power of the 
 board to create such committees. 
 
 Directors, personally interested in a resolution, are not com- 
 petent to vote thereon," nor can they speculate in the funds 
 for their own beneiit,^ nor purchase property for resale to the 
 association at a higher figure,* nor enter into any secret agree- 
 ments for their personal profit.' The director's individual 
 transactions with the corporation are viewed with suspicion 
 and to be upheld by the courts must be clear of any advantage 
 taken by reason of his official connection.' 
 
 The directors must grant loans conformable to the by-laws 
 and rules, and where they do not specify, the conditions are 
 much within their discretion. If the attorney pronounces the 
 title defective, the association, declining the loan for that 
 reason, cannot be compelled to grant it.' They have power, 
 within reasonable discretion to remit and condone tines, and to 
 compromise with a borrowing member, who is unable to pay.* 
 
 Sec. 11. Term of Election of Directors. After 
 the election of directors, at the general meeting, the board or- 
 ganizes by electing ofiicers. They are president, vice-presi- 
 dent, secretary, treasurer and attorney. Some societies will 
 have other ofiicers, as, abstracter and appraisers. They are, 
 however, more properly employes of the board. The director* 
 may be elected annually, or for a longer term. The advan- 
 tage of an annual election is that unsatisfactory members of 
 
 1 Cook Stock, etc., sec. 715. * Twin- Lick Oil Company v. 
 
 * Smith V. Los Angeles, etc., Asso- Mai bury, 91 U. S. 587. 
 
 ciation, 78 Cal. 289. ' Conkliu v. Peoples, etc., Asso- 
 
 * Redmond v. Dickerson, 1 Stock. ciation, 41 N. J Eq. 20. If the action 
 507. of the board in contracting with aa 
 
 ■* Blake v. Bullalo Creek R. R. officer outside of his duties is rati- 
 
 Compan}', 66 N. Y. 485; European, fied by the stockholders and no one 
 
 etc., R. R. Company v. Poor, 59 Me. else is affected, it will become valid : 
 
 277. Building Association v. Goldbeck,, 
 
 5 Farmers', etc., Bank v. Downey, 13 W. N. C 24. 
 
 53 Cal. 4G*i; P.inL:boin v. Citizens, "People v. Lowe, 117 N. Y. 175. 
 etc., Association, 35 N. J. Eq. 341.
 
 DUTIES OF SECRETARY. 43 
 
 the board, or any officer, may be dropped without any trouble. 
 Building association officers, if they attend to their duties, are 
 usually kept in charge, year after year. The stockholders are 
 averse to changes so long as the affairs of the association are 
 properly managed. Sometimes, one part of the directors is 
 elected for one year, another for two years, and a third for 
 three years. The advantage of this is, that outgoing directors 
 always leave directors in charge who are familiar with the 
 business. Any vacancy in the directory should be tilled by the 
 directors, the appointee to hold until the next general meeting. 
 
 Sec. 12. Duties of President. The duties of the presi- 
 dent arc to preside at all meetings of the stockholders, and of 
 the board of directors; to call special meetings, unless the by- 
 laws otherwise provide; to sign all certificates of stock, and all 
 drafts drawn on the treasurer for whatever purpose; to execute 
 all satisfactions of mortgages when paid; to make all convey- 
 ances of property owned by the association, M'hen sold by order 
 of the board of directors; and to sign all contracts. He should 
 be custodian of the bonds of the officers of the association. He 
 should, also, appoint an auditing committee to serve at such 
 times and in manner prescribed by the by-laws, and also 
 appoint such other special or standing committees as theboard 
 may designate from time to time. He is also custodian of 
 the corporate seal, if one is used. 
 
 Sec. 13. Duties of Vice-President. The vice-presi- 
 dent should perform all the duties and have all the powers of 
 the president, during the absence or disability of the latter. 
 
 Sec. 14. Duties of Secretary. The secretary is often 
 the real manager of the association; and the supervision of 
 the board of directors is too often nominal. It follows, that 
 his office is the important one in the association, and should be 
 occupied by a fit person. The general duties of the secretary 
 are 1o attend to the correspondence, keep the minutes and the 
 accounts of the association, sign all certificates of stock and 
 other instruments provided in the by-laws, submit reports of 
 the affairs of the association, sign all drafts drawn on the 
 treasurer for the payment of money belonging to the associa- 
 tion, and act as the custodian of all notes, bonds, mortgages,
 
 44 BUILDING ASSOCIATIONS. 
 
 deeds, and other legal papers belonging to the association. 
 Sometimes, as a matter of convenience, he will pay money on 
 loans, especially, on loans where periodical paj^ments are made. 
 This is merely for the convenience of the member or the treas- 
 urer, and should not be declared a part of his duties by the 
 by-laws. In thus acting without the scope of his duties, he 
 cannot bind the association, without authority of the directors. 
 When a loan has been granted, upon the appraisement, and upon 
 the opinion of the attorney that the title is sufficient, and all 
 papers have been executed by the borrower, the secretary issues 
 a warrant,' signed by the president, upon the treasurer, direct- 
 ing him to pay out the money on the loan. Care must be 
 exercised, that all liens on the property mortgaged are dis- 
 charged and satisfied of record, before any money is paid to 
 the borro\yer; or if the loan is a building one, the proper 
 application of the money will have to be attended to. This 
 work naturally falls within the province of the secretary. . 
 
 The directors should examine the books, at frequent times, 
 however much confidence they may have in the officer. The 
 secretary should give a bond, for the faithful performance of 
 his duties, payable to the association, and approved by the 
 directors. The secretary of a building association is only 
 required to use ordinary care — that is, such as a prudent man 
 wouM exercise in his own business — as to money, or property 
 coming into his hands, as such officer, and if he uses such 
 care, he will not be liable for the loss of any such money, or 
 property." 
 
 Sec. 15. Duties of Treasurer. The treasurer should 
 have charge of the funds of the association, and be responsible 
 for their proper disbursement- He should disburse the funds 
 upon warrants issued to him, duly signed by the President, 
 and attested by the secretary, or, as authorized to be issued by 
 the by-laws. When he is directed by the by-laws to pay out 
 money upon warrants bo issued, he is, thereby, protected. If 
 
 'This warrant is not a negotiable lia, etc., Association, 9 Luz. Leg. 
 
 Becurity but subject in any holder's Reg. (Pa.) 41. 
 
 hands to all the equities of the asso- •Mowbray v. Antrim, 123 Ind. 24. 
 ciation : Ashland, etc., Co. v. Centra-
 
 DUTIES OF ATTORNEY. 45 
 
 the warrant was improperly issued, the liability attaches to 
 the issuing officer. He should deposit the money of the asso- 
 ciation not ready for disbursement, in a bank selected by the 
 directors as the depository, and, if a loss follows, as, by failure 
 of the bank, no liability will then attach to him. In accepting 
 payments from members, or remittances from the secretary on 
 account of such payments, he should require cash, and not any 
 other form of payment; for, if there is a loss, he has exceeded 
 his authority to that extent, and the loss falls upon him.' He 
 should submit a report, at stated times, of the finances of the 
 association and he should, also, give bond for the faithful 
 discharge of his duties and accounting of the funds in his 
 hands. The treasurer is only bailee of money he receives 
 on account of the society, and does not become a debtor of the 
 society, and, consequently, if he is robbed of its money, he is 
 discharged from liability to repay the amount of the robbery. 
 Sec. 16. Duties of Attorney. The attorney is the 
 examiner of the abstracts of title of property offered as 
 security, and other papers relating thereto. It is his duty to 
 prepare all mortgages, bonds, affidavits and other instruments 
 necessary in making loans, and, in substance, attend to all 
 legal business of the association. He must do his work bona 
 fide to the best of his skill and with an ordinary degree of dili- 
 gence, or he will be answerable in damages; for example, if he 
 rely on an extract from a will, in examining the abstract, 
 instead of examining the whole will, lie is guilty of gross 
 negligence and is liable.* The fees of the attorney are usually 
 paid by the borrowing member, and are not as large as are, 
 usually, charged for like services in a professional way, but 
 there is a certainty of pay and the quantity of work is often 
 considerable,, so that the fees are compensatory. The legal 
 
 'People's, etc., Afisociation v. damage sustained by the dues and 
 
 Wroth, 43 N. J. L. 70. And the fact fines not being received : lb ; Mutual, 
 
 thatthe executive officers were pres- etc., Association v. Hammell, lb. 78. 
 
 ent and consented to payment other 'Waiker v. British, etc., Associa- 
 
 than by cash, will not relieve the tion 21 L J., Q. B. 257. 
 
 treasurer's sureties. The rule for "Wilson v. Tucker, 3 Stark. 154; 
 
 making the assessment would be the see Davis Building Society, 126.
 
 46 BUILDING ASSOCIATIONS. 
 
 contracts, sucli as bonds and mortgages, are usually printed, 
 and there being only blanks to fill in, much work is saved. 
 
 Sec. 17. Appraising Comraittee. The President 
 should appoint an appraising committee. Very much of 
 the association's safety depends upon the wise and careful 
 judgment of the appraisers. They should be selected with 
 special reference to their caution and knowledge of values. If 
 appraisements are loosely or ignorantly made, the keystone of 
 the association is weakened, and the entire superstructure is 
 endangered. The appraisers are, usually, paid a small fee by 
 the proposed borrower 
 
 Sec. 18. Percentage of Value to be Loaned. A 
 buildinff association can loan more on real estate than an ordi- 
 nary lender, because the principal is in effect being repaid 
 weekly or monthly. The percentage of value to be loaned is 
 not settled. Circumstances may safely vary any rule, as 
 property in one locality is of a more stable character, or the 
 proposed borrower is a person of more thrift and financial 
 ability. An association should not loan in excess of 75 per 
 cent, of the value, in any case. If there is a default, and fore- 
 closure, the marginal 25 per cent, may be soon taken up in 
 costs and loss of premium. Sixty-six and two-thirds per cent, 
 is a safe rule, when the character of the property is established ; 
 or where it is of some fluctuating value, 50 per cent is a pru- 
 dent per cent. The by-laws need not provide for any. rule on 
 this subject. It is better for the matter to be left to the dis- 
 cretion of the board of directors. The appraisers, by swelling 
 the valuation, could easily bring a loan within the rule if they 
 were corruptly disposed, so that their report should be received 
 in an advisory way, and the decision of the matter left to the 
 board of directors, upon all the facts of the case. 
 
 •This is deemed unwise by Mr. have a sealed report from the ap- 
 
 Davis (Building Society p. 128) as praisers for confidential use. The 
 
 there might be a collusion between borrower would not then know what 
 
 the appraisers and borrowers. In valuation was placed on his proper- 
 
 the writer's opinion there is not ty and he could not know the result 
 
 so much danger from that source as of his influence for high appraise 
 
 ihere is from the personal relations ments. 
 of the parties. It would be wise to
 
 . SURETIES ON BONDS. 47 
 
 Sec. 19. Executive Committee. Sometimes the di- 
 rectors delegate to an executive or financial committee the 
 work of passing on the securities offered. This committee 
 should organize with a chairman, and the secretary of the asso- 
 ciation should act as ex-o-fficio secretary of the committee, and 
 keep minutes of the committee's meetings, and prepare the 
 report of their work for the approval of the board of directors. 
 This committee is useful when the board holds its meetings at 
 some intervals, and loans are needing attention at more fre- 
 quent times. There should be, in addition, a sj^ecial inspection 
 of building loans, as the work progresses. 
 
 Sec 20. Auditin*? Committee. The next important. 
 committee to be appointed by the president, is the auditing one 
 It should act at least once a year. The persons selected for 
 this position should be expert accountants, without any rela- 
 tionship to the officers whose books are to be placed under 
 examination. While the report of the auditors \i lyrima facie 
 evidence of the condition of the books of the officers, yet their 
 accounts may, after a report has been made, be impeached for 
 fraud.' 
 
 Sec. 21. Oflicers' Bonds. The directors should re- 
 quire, of the secretary and treasurer, bonds with sufficient sure- 
 ties, conditioned that those officers will faithfully perform the 
 duties required of them. The duty of approving these bonds 
 is upon the board of directors, and it should exercise care in 
 a,ccepting sureties. The board should exercise care in this 
 matter to avoid personal liability, in the event sureties prove 
 irresponsible. It does not follow that the board, in law, guar- 
 antees the responsibility of the bondsman, it must simply be 
 prudent. This is the obligation the law imposes, generally, on 
 the members, and, when they have performed their duties in 
 that manner, they have discharged the obligation. 
 
 Sec. 23. Sureties on Official Bonds. The manner of 
 ascertaining the financial responsibility of the sureties offered, 
 is either by an examination of the public records, or by a 
 statement of the sureties. The former method will not always 
 
 •Holgate V. Shutt, L. R., 27 Ch. D. 
 Ill; S. C, L. R., 28 Ch. D. 111.
 
 48 BUILDING ASSOCIATIONS. 
 
 produce an accurate statement, as there may be unrecorded 
 and valid conveyances or liens affecting their property. If the 
 latter method is adopted, it is best pursued by requiring an 
 affidavit, by each surety, as to what he is worth. 
 
 A surety is not discharged by the negligence of other 
 officers of the association, nor, because the by-laws are not 
 complied with.* If the officer's holding is general and unlim- 
 ited by the statute or by-laws, the fact that he was appointed . 
 by directors who held but one year, will not limit the liability 
 of the sureties to that year, but it will continue throughout 
 the term of the officer's actual holding.' And, if the bond is 
 for a particular and " any succeeding terms," the bondsmen 
 are liable for a subsequent defalcation,' but, if the term is fixed, 
 the sureties are not liable beyond that term.* The surety will 
 be bound, although he signs, in the absence, and, without the 
 knowledge, of the principal.' If the surety has had an oppor- 
 tunity to read the bond, but did not, and signed it, he is guilty 
 of such gross negligence, as will prevent him from having relief 
 against the bond.' The bonds of the officers should provide 
 that they are to faithfully perform their duties during the par- 
 ticular term, and until successors are elected and qualified. 
 
 Sec. 23. llesigiiatiou and Removal of Direc- 
 tors. If the manner of electing officers is prescribed by by- 
 law, it must be strictly observed,^ unless it be waived by the 
 , stockholders, at a legal meeting. 
 
 A director may resign and no formal acceptance or entry 
 thereof is necessary to effect his resignation.' The stock- 
 holders have no power to remove directors, before the expira- 
 tion of their term of office, unless the charter expressly gives 
 that power.' Courts have no power to remove corporate 
 officers.'" The directors may rescind the contract of an agent 
 
 'Brandt Suretyship, etc., sec. 425. *Hnghes v. Littlefield, 18 Me. 400. 
 
 'Humboldt, etc., Society v. Wen- 'Glenn v. Statler, 42 Iowa, 107. 
 
 nerhold, 81 Cal. 528. 'Roberts v. Price, 16 L. J. C. P. 
 
 'Metropolitan, etc., Association v. 169. 
 
 Esche, 75 Cal. 513. «Blake v. Wheeler, 18 Hun. 496. 
 
 ♦People's, etc., Association v. 'Cook Stock, etc., sec. 620. 
 
 Wroth, 43 N. J.'L. TO. "Neall v. HiU, 16 Cal. 145.
 
 officers' relations and responsibilities. 49 
 
 holding at the pleasure of the directors,' and he may be 
 removed for incapacity or malfeasance, when he is under con- 
 tract; but unless these things exist, they cannot remove him 
 during his contract, or term, without paying the amount of his 
 salary.* 
 
 As the decisions are somewhat in conflict, as to the power of 
 directors to remove ofiicers, the by-laws should, to avoid 
 controversy, provide for removals from office, for cause, speci- 
 fying the mode of procedure. 
 
 Sec. 24. Officers* Kelations and Responsibili- 
 ties to the Association. An officer of a building asso- 
 ciation holds a confidential relation to it, and will not be per- 
 mitted to take advantage of any knowledge acquired by him 
 by virtue of his position, for his personal benefit; therefore, 
 where lie knew it was insolvent, he was not allowed to discharge 
 his indebtedness to it with stock held by him.* 
 
 He must treat it as a trust, preserving its property and 
 advancing its interests whenever he can. The funds that come 
 into his hands must be held, like life insurance funds, with 
 sacred fidelity. The courts will not tolerate negligence or 
 omission. 
 
 So, if the secretary or treasurer receives money, as by check, 
 belonging to the association, and appropriates it to his own 
 use, though, probably, with the intention of returning the money 
 at some future time, he is guilty of embezzlement," and he will 
 not be heard to say, the association has no legal existence.* 
 
 'Hunter v. Sun, etc., Company, 26 ^Quein v. Smith, 108 Pa. St. 325. 
 
 La. Ann. 13. *Shinn V. State, 32 Grat. 899. 
 
 •Morawetz Priv. Corp., aec 544. 'lb.
 
 CHAPTER VIL 
 
 POWERS. 
 
 Section 1. General powers. 
 
 Section 2. Implied powers. 
 
 Section 3. Powers of Agents. 
 
 Section 4. Power to sue. 
 
 Section 5. Power to compro- 
 mise with shareholders. 
 
 Section 6. Power to loan money 
 
 Section 7. Power to hold real 
 
 estate. 
 
 Section 8. Power to issue stock 
 to another corporation. 
 
 Sec. 1. General Powers. Generally speaking, a build- 
 ing association has the usual attributes of a corporation, such 
 as, perpetual succession, to have a common seal, to contract, to 
 hold real estate consistent with its objects, to sue and be sued, 
 to make by laws ; and, in addition to have such other privileges 
 as may be conferred by the incorporating statute, together 
 with such incidental powers as are necessary to effect the cor- 
 porate objects. The corporation must, therefore, pursue its 
 legitimate purposes, for, if it passes beyond the scope of those 
 purposes, its acts amounts to a mere nullity. A transaction 
 not authorized by the statute, or the rules, and not incidental to 
 the conduct of the society's business is void.* It should not 
 engage in banking,' or invest its money in transactions, or secu- 
 rities, unauthorized by the statute, and not contemplated by the 
 scheme of its organization. In some instances, the law will 
 
 'Small V. Smith, L. R., 10 App. 
 Cas. 119. 
 
 ^Schobpr V. Accommodntion, etc., 
 Association, 35 Pa. St. 223 ; Build- 
 
 ing Association v. Semiller, 35 Pa. 
 St. 2i5n ; State v. Building Associa- 
 tion, 35 Ohio St. 253. 
 
 (50)
 
 GENERAL POWERS. 51 
 
 not permit advantage to be taken of tliose ultra vires acts, 
 because, such permission will promote, rather than prevent, 
 injustice. If the association exceeds its authority, and the 
 stockholder has consented to such act, or, has reaped a benefit 
 therefrom, the law will not permit him to say the association 
 could not enforce any obligation against him arising out of the 
 transaction,' and the rule applies with equal force to the asso- 
 ciation, so that its mouth is closed to deny its right to make a 
 contract when an innocent party would suffer and when it has 
 received a benefit from the contract. These instances repre- 
 sent cases, where the law will not enforce the consequences of 
 the acts exceeding the corporate powers of the association, but, 
 if an association departs from the authority conferred by 
 statute, and assumes new or enlarged powers, the state, as the 
 other party to the contract of corporate existence, would have 
 the right to annul, through its proper ofScers, that contract 
 represented by the charter; and any stockholder not a benefi- 
 ciarv of the illegal acts, may invoke this power of the state or 
 apply to a court of equity to restrain their farther commission. 
 And the mere act, -wZ^r^ vires, will not, of itself , end the corpo- 
 rate existence, nor relieve the members from their duties, so 
 lonir as the association continues in existence." 
 
 The directors to intelligently exercise the powers of the 
 association, must have an understanding of its scheme, as 
 expressed in the statute and by-laws, and they should keep 
 within the pale of its corporate objects in order to avoid com- 
 plicated and uncertain results attending a contrary course. 
 
 The association continues, uninterruptedly, its existence, 
 notwithstanding there may be changes in officers and members, 
 and, thus, it has, in contradistinction to persons, unchanged 
 existence, although the component parts may change. It is, 
 thus, given the attribute of perpetual succession by the law. 
 The power to have and use a seal is a corporate function. Its 
 custody, if one is required by statute, is impliedly with the 
 president, and the affixing is, usually, by him, but the by laws 
 
 'Poock V. Lafayette, etc., Asso- 'Hughes v. Layton, 10 Jur. N. S- 
 
 ciation, 71 Ind. 857. 513.
 
 52 BUILDING ASSOCIATIONS. 
 
 may provide for other custody and usage, or the g;eneral 
 powers of another othcer may give him power to affix the 
 seal. Ordinary contracts do not require a seal; only those 
 require a corporate seal which would require a seal if they 
 were the instruments of an individual. Any device.will serve 
 as seal if intended as such.* 
 
 The association has the power to contract, as a part of its 
 corporate existence. It is invested by statute with unusul 
 and extraordinary privileges and rights, and, with reference 
 to those powers, any contract executed by it, to be brought 
 within their operation, should strictly conform to the very 
 terms of the law;' and such powers, if unauthorized by statute, 
 but contained in the charter, if invoked by the association, will 
 be considered inoperative, even when the attack is a collateral 
 one.' 
 
 Sec. 2. Implied Po^vers. Besides these -usual powers, 
 expressly enumerated in the statute, there are, implied powers 
 as may be necessary to carry out the object of the corporate 
 existence. The defining of these incidental powers is some- 
 times troublesome, and, especially is this true, in regard to 
 building associations considered as a peculiar type of corpora- 
 tions; therefore, the incorporating statute and by laws should 
 be explicit and comprehensive enough to meet their necessary 
 requirements as savings and building corporations. 
 
 Sec. 3. Powers of Agents. The association exercises 
 its power to 'contract through its officers and agents, including 
 the diiectors, and when they act within the apparent scope of 
 authority conferred on them, the association is bound by their 
 contracts. It becomes important, then, that all limitations on 
 the authority of an agent be defined, as well as the authority 
 itself, so that persons dealing with the association, through 
 him, have knowledo^e thereof. 
 
 If the agent is only a special one, the person dealing with him 
 is bound to take notice of his limited powers, and, if he mani- 
 festly exceeds them, the association is not bound; while, if the 
 
 'Imprint in red lines held to have ''Birmingham v. Maryland, etc., 
 
 such effect: Woodman v. York, etc., Association, 45 Lid- 54 1. 
 R. U. Company, 50 Me. 549. 'Albright v. Building Association, 
 
 103 Pa. St. 411.
 
 .POWER TO SUE. 53 
 
 powers are general, one without knowledge of any limitation 
 can hold the association. It is important for the assocation 
 to define clearly, in the by laws, the powers of its officers, 
 and, in case of special agents, to draw the lines of authority 
 strictly to the objects of their appointment.' However, if the 
 association accept and hold the benefits of an agent's unauth- 
 orized act, it will be considered as having ratified the same, 
 and will be bound.' 
 
 The association is liable to third parties for whatever the ao-ent 
 does or says, whatever contracts, rejjresentations, or admissions 
 he makes, whatever negligence he is guilty of, and whatever 
 fraud or wrong he commits; provided, the agent acts within the 
 scope of his apparent authority , and, provided, a liability would 
 attach to the principal, if he was in the place of the ao-ent.' 
 
 The contracts made by the agent, if executed in the name of 
 the association, and on its behalf, and, it appearino- so on the 
 face of the instrument, if authorized, will bind the association. 
 A misnomer of the association in a contract is immaterial if 
 the association was intended, and that it was, may be shown, if 
 it cannot be ascertained from the face of the contract.* 
 
 Sec. 4. Power to Sue. The association may, without 
 any allegation as to incorporation, other than a mere state- 
 ment of its name, sue a stockholder or other person or corpo- 
 ration,* unless the plea oinul tiel corporation is filed.' If the 
 
 'The rule is that ordinarily an ^Swell's Evans Agency, p. 440. 
 agent cannot delegate the power en- ''Franklin Avenue, etc, Institu- 
 trusted to him, but there are excep- tion v. Board, etc., 75 Mo. 408. 
 lions as he may do so when it is the ^Odd Fellows, etc.. Association v. 
 lawful custom or usage, or the act Hogan, 28 Ark. 261 ; Stein v. Indian- 
 is purely ministerial, or where the apolis. etc.. Association, 18 lad. 237. 
 object of the agency cannot lawfully See also Chillicothe, etc., Associa- 
 be attained otherwise, or where the tion,60 Mo.218,where it was held that 
 principalis aware that his agent will averment that an association was 
 appoint a deputy. See Swell's Evans "duly incorporated under and by 
 Agency, p. 42. An appraiser could virtue of the act of the General As- 
 not delegate his duty, as it is in sembly of the State of Missouri," 
 nature judicial, while the secretary was sufficient, 
 may, as it is merely ministerial. "Odd Fellows, etc., Association v. 
 
 *Jones V. National, etc., Associa- Hogan, Supra, 
 tion, 94 Pa. St. 21.5; Chicago, etc., 
 Society, v. Crowell, 65 111. 453.
 
 54 BUILDING ASSOCIATIONS. 
 
 action is upon a mortgage, and the continuance of default, fur 
 a specified time, is a condition precedent to a decree of fore- 
 closure, such continuance should be averred.' The defendant 
 member may tender in cash the amount due the association 
 and it is bound to accept it, and, if it refuses, further interest, 
 premium, and costs cannot be collected. If the tender is, after 
 suit is brought, it is bound to accept it, or be liable for costs, 
 and it will be unable to, thereafter, collect interest and 
 premium.' The refusal by the association of a tender of the 
 amount due does not relieve the member from paying his dues, 
 although it suspends the association's right to collect interest 
 and premium until it is accepted, or, if it rejects the tender, 
 and secures a decree paying the costs, of course, the right to 
 collect further premium and interest is ended. The dues 
 being payments on the stock and not on the loan, while con- 
 tinuous defaults in their payment, as the stock is pledged, will 
 render the loan due, yet the member is required, even upon 
 refusal of the tender, to continue his stock payments, for that 
 is a separate liability upon which the association could if it 
 chose, predicate a separate action. The bringing of the suit 
 outside of the question of tender, does not relieve the member 
 of the necessity of continuing his stipulated payments in the 
 way of dues, premium, and interest, or suspend his liability to 
 .fines for delinquency in his regular payments.^ The associa- 
 tion represents the shareholders in defending action involving 
 
 'Schaefer v. Amicable, etc., Com- Gaz. 388. Generally, the legislativo 
 pany, 47 Md. 126. In computing the intention is that the default should 
 period fixed by the statute or by- be for a continuous period, and if 
 laws as thft limit allowed before the during that period there were any 
 whole debt becomes due.partial pay- payments, they would bo applied 
 ment of dues, it has been held in on the first of the defaults, thus cut- 
 Pennsylvania, are not to be allowed, tin;? down the period of defaults to 
 For instance, whfn the period of six that extent. 
 
 months was fixed as the tim^^ of de- "Columbian, etc., Association v. 
 
 fault, before the association could Crumb, 42 Md. 193. 
 
 proceed on its mortgage, it was held ^German, etc .Association v. Metz- 
 
 that payment of part of January ger, 9 W. N. C. (Pa.) 201; Unioa, 
 
 dues was made, this did not make etc.. Association v. Masonic Hall, 
 
 the judgment rendered in July pre- etc., Association, a Stew. 389. 
 mature: Barndt v. Gruel, 4 Leg.
 
 POWER TO LOAN MONEY. 55 
 
 their rights, and a judgment against it, in the absence of fraud, 
 binds them.^ 
 
 Sec. 5. Power to Compromise Avith Sharehold- 
 er. An association has incidental power to compromise with 
 shareholders and retire stock unless prohibited by law. The 
 power must be fairly and reasonably exercised.' It may com- 
 promise with him, whether the debt arose from loan or on sub- 
 scription for stock, and, when the parties to the transaction 
 have acted in good faith, the transaction will not be rescinded, 
 because the released member was paid a greater sum than he 
 would have received upon a pro rata distribution of the assets 
 of the association.' The association, if solvent, may appropriate 
 and apply the proceeds of a mortgage owing to itself in pay- 
 ment of a debt that it owes to a withdrawing stockholder. The 
 power to compromise debts includes the power to remit fines. 
 
 Sec. 6. Power to Loan Money. The power of the 
 association to loan money, to hold real estate, and the rates of 
 interest to be charged, and security to be taken, are usually 
 detined by the creative statute, but, in the absence of the 
 statute defining the security, they would have the implied 
 power to loan money on the same security as individuals, not- 
 withstanding, the usual mode is to require the borrower to 
 assign liis own stock as collateral to his mortgage.* And, 
 where they are authorized to loan money but not expressly 
 authorized to take a mortgage or any other security, the asso- 
 ciation has power by implication to take a mortgao-e to 
 secuie repayment to it of the funds loaned in regular course 
 of business.* But, if authorized to invest surplus funds in 
 notes, this would not give the association the power to buy 
 notes to sell for gain, as that would be clearly beyond its 
 scope.' The association would, however, have the ri<>-ht to 
 sell the notes to change its investment. The power to buy 
 implies, to that extent, the power to sell. 
 
 'Heggiev. Buildin;^, etc., Associa- *Union, etc., Association v. Ma- 
 
 tion, 107 N. C. 581. sonic Hall Association, 2 Stew. 389. 
 
 ^Wangerien v. Aspehl,47 Ohio St. s^j^ssey v. Citizens, etc., Associa- 
 
 SiO. tion, 22 Kan. 624. 
 
 'lb; State V. Building Associa- "Manufacturers', etc., Company v. 
 
 ciation, 35 Ohio St 258. Conover, 5 Phila. 18.
 
 56 BUILDING ASSOCIATIONS. 
 
 Sec. 7. Power to Hold Real Estate. The power 
 
 to hold real estate is, generally, deMned by statute, and the asso- 
 ciation cannot go beyond the limits there fixed without incur- 
 ring the risk of doing an invalid thing. An association, with- 
 out statutory authority for holding land, might be compelled 
 to take it for payment of a debt, and, in such case, the trans- 
 action would not be annulled, as it is necessary to the manage- 
 ment of its business,^ but the duty of the association would be 
 to dispose of it, as soon as practicable. If land is purchased by 
 •the association beyond its authority, the effect is rfot to dis- 
 Bolve the association,' but the court will declare the contract 
 void, unless it has gone into the hands of a person protected, 
 by law, as an innocent purchaser.' If the transactions still 
 remains between the original parties, they are left by the law 
 as if there had been no contract, but if the rights of an inno- 
 cent purchaser have intervened, he will be protected, and if a 
 loss falls upon the association, a personal liability therefor may 
 attach to its officers and agents.* 
 
 The scheme of a building association does not contemplate 
 that it become a land company, engaged in buying, selling, or 
 speculating, in land, as apart of its business. If it is invested 
 with those powers by statute, then, of course, it can lawfully 
 avail itself of them, but, unless expressly granted, they cannot 
 be exercised;"* however excepting from this general proposition 
 involuntary con's^yances, such as, titles invested by court 
 decree, or compromise of debt, which, necessarily, follow in the 
 legitimate line of its business. 
 
 Sec. 8. Power to, Issue Stock to Another Cor- 
 poration. Whether or not a building association has. the' 
 right to issue stock to another corporation and advance money 
 thereon, is not settled by the courts. In England it has been 
 
 'Morawetz Priv. Corp. sec. 327. sonal obligation, Taut a purchase 
 
 'Hughes V. Layton, 33 L. J. M. C. money lien will be restricted, to 
 
 89. the land itself: Faulliner's Appeal, 
 
 8Vos V.Cedar Grove, etc., Asso- IIW. N. C ^8. 
 
 elation. 9 Bull. 194. ^MJHer's Estate, 2 Pearson, 848; 
 
 *Ia Pennsylvania it is held that Rhoads v. Hoernerstown, etc, As- 
 
 the curative act of 1878 -will not sociation, 83 Pa. St. 180. 
 validate such a contract as a per-
 
 ISSUING STOCK TO ANOTHER CORPORATION. 57 
 
 held, that one society has no power to invest its funds with 
 another society,' and it was, also, held that the society had no 
 power to advance money to a joint stock company.' A corpo- 
 ration cannot hold shares in another company as an invest- 
 ment, unless this be the usual method of carrying on its 
 proper business.* The statutes in some of the states provide 
 generally, that no corporation shall purchase and hold stock in 
 another corporation. The reason of this is, that the legisla- 
 ture does not intend, that the capital of a company shall be di- 
 verted from its declared purposes by investment in stock of 
 other corporations. In building associations, the reason of the 
 rule fails, and, therefore, the rule will not apply unless the 
 statute, specilically, prohibits the association from receiving 
 other corporations into membership. The issuing of stock is' 
 a device in a building association by which a loan is made. 
 The stock is one of the instruments of the loan. Onl}' by 
 holding it, unless there is special statutory authority, can the 
 loan be granted. Stock is therefore taken for that purpose. 
 If the other corporation has power to borrow, it has the rio-ht 
 tQ do those things needed to perfect the loan. If it borrow 
 from a building association, one of those things is to hold 
 stock. None of its capital is thereby withdrawn, its pay- 
 ments on the stock are payments practically on the loan and 
 its cost. For the purpose of borrowing, it would seem upon 
 sound reasoning, that a corporation may, lawfully, take shares. 
 If shares are taken for investment, an entirely different ques- 
 tion is presented, and the reason of the statute would apply, 
 and its operation would be invoked. The association would 
 then have no power to issue the stock. 
 
 'Iq re Durham Co., etc, Society, ^Morawetz Priv. Corp. sec. 431. 
 
 25 L. T. Rep. N. S 8 5. 
 
 *Hardy v. Metropolitan, etc., Com- 
 pany, L. R., 7 Ch. App. 427.
 
 CHAPTER Vin. 
 EIGHTS OF MEMBERS. 
 
 Section 1. Legal status of mem- 
 bers. 
 
 Section 2. Preferential stock. 
 
 Section 3. Paid up stock. 
 
 Section 4. Members aud offi- 
 cers must observe rules. 
 
 Section 5. Members' rights to 
 inspect books. 
 
 Section 6. Member as an in- 
 vestor. 
 
 Section 7. Payments. 
 
 Section 8. Right of withdrawal. 
 
 Section 9. Manner of with- 
 drawal. 
 
 Section 10. Legal status of 
 withdrawing member. 
 
 Section 11. Liability of with- 
 drawing members. 
 
 Section 12. Rights of withdraw- 
 ing members of insolvent associa- 
 tion. 
 
 Section 13. Right to withdraw 
 limited to present funds. 
 
 Section 14. Stock pledged can- 
 not be withdrawn. 
 
 Section 15. Amount withdraw- 
 able. 
 
 Section 16. Construction of by 
 laws concerning withdrawals. 
 
 Section 17. Transfer of shares. 
 
 Section 18. Forfeitures. 
 
 Section 19. The legal status of 
 member as a borrower. 
 
 Section 20. Duty of association 
 to loan its money. 
 
 Section 21. Selection of bor- 
 rower. 
 
 Section 22. Methods of pre- 
 mium charges. 
 
 Section 23. Auction premiums. 
 
 Section 24. Premium fixed, un> 
 
 changeable. 
 
 Section 25. Premium charge- 
 able to maturity only. 
 
 Section 26. Formal application^ 
 for kian. 
 
 Section 27. Appraisement. 
 
 Section 28. Abstract of title. 
 
 58
 
 LEGAL STATUS OF MEMBERS. 
 
 59 
 
 Section 39. Intert^at not collect- 
 able on interest and premium. 
 
 Section 30. 
 ments 
 
 Section 31. 
 or bond. 
 
 Section 33. 
 gage. 
 
 Section 33. 
 
 Payment of instal- 
 
 Provisions of note 
 
 Provisions of mort- 
 
 Complaint upon 
 
 bond or mortgage. 
 
 Section 34. Loans to outsiders. 
 
 Section 35. Loans to married 
 women. 
 
 Section 30. Mortgage covenants. 
 
 Section 37. Application of pay- 
 ments. 
 
 Section 38, Assignment of 
 shares as collateral security. 
 
 Section 39. Payments on stock 
 not to ipso facto payments on loan. 
 
 Section 40. Payments on re-as- 
 signed stock. 
 
 Section 41. Assigned shares 
 cannot be credited. 
 
 Section 43. Liability of borrow- 
 er under his mortgage for losses. 
 
 Section 43. Acknowledgement 
 of mortgage. 
 
 Section 44. Leases by the asso- 
 ciation. 
 
 Section 45. Satisfaction of mort- 
 gages. 
 
 Section 46. Borrower entitled 
 to set off. 
 
 Section 47. Amount payable 
 upon foreclosure. 
 
 Section 48. The English rule. 
 
 Section 49. Rule laid down 
 upon voluntary repayment. 
 
 Section 50. Uncertainty of the 
 foregoing rules. 
 
 Section 51. The natural and 
 logical rule. 
 
 Section 53. By laws should pro- 
 vide for record cancellations. 
 
 Section 1. Legal Status of Member. In consider- 
 ing the lescal status of a member, we have reo^arded him as 
 occupjin^^ the general position of stockholder in a corpora- 
 tion, with moditied rights and liabilities to suit the peculiar 
 nature of the institution. As a stockholder he is either an 
 investor or a borrower. Every member of the association, 
 from the moment he joins, becomes a debtor to the associ- 
 ation, and every member remains a debtor until the full 
 amount of the shares for which he subscribed, and became the 
 holder of, is paid, unless his membership is terminated in a 
 legal manner.' And default by any other member will not 
 relieve him from his liability.' Being iixed as a debtor, he 
 remains such until his stock is matured, unless he chooses to 
 
 'Michigan, etc., Association v. 
 JIcDevitt, 77 Mich. 1. 
 
 'Hoboken, etc., Association ▼. 
 Martin, 3 Beas., N. J. 427.
 
 60 BUILDING ASSOCIATIONS. 
 
 terminate his membership. And a person can be both a 
 shareholder and creditor of the association; as shareholder he 
 is liable for his proportion of losses, but as creditor, he is 
 entitled to recover the amount due him, independently of all 
 losses.' 
 
 Sec. 2. Preferential Stock. The building associ- 
 ation idea implies absolute co-operation. In the absence of 
 statutory authority, there should be no preferential members. 
 Common strength is increased strength, and by the plan of 
 depositing in one treasury the savings of many people for the 
 common benefit of all, any one depositor receives benefits not 
 attainable by his own unaided efforts. It is a part of the scheme 
 that all members shall share equally in the profits, according to 
 their stockholdings; unless the statute provides otherwise, the 
 net profits should attach pro rata to all the shares. In event 
 of dissolution, the assets must be distributed equally among 
 the members, subject, of course, to the payment of debts, and 
 if there is a reserve fund, each member is entitled to a pro- 
 rata share upon distribution, whether he is a borrowing mem- 
 ber or not.^" If the directors distribute profits in any other 
 way than contemplated by law, they become personally liable 
 to an injured member. 
 
 Sec. 3. Paid-up Stock. In England, and in some of 
 the States, building associations are permitted under restric- 
 tions, to issue paid-up stock; i. «., stock where the full face 
 value is paid up at the time of issue, or has matured by the 
 periodical payments and the profits, and upon this stock fixed 
 interest dividends are paid.' The issue of this stock depends 
 upon the creative statute. If it is authorized, and no interest 
 is fixed by statute, it should receive only a limited share of 
 
 'Henninghausen v. Fishor, 50 1., Pa., 123. When the constitution 
 
 Md. 583. provided for payment to a non bor- 
 
 ^People V. Lowe, 117 N. Y. 175; rower specified rates of interest on 
 
 Seibel v. Building Association, -IS -withdrawals, -without including the 
 
 Ohio St. 371. A by-law giving to borrower; held the borrower -was 
 
 •withdra-wing stock 5 per cent inter- entitled to the same rate of interest: 
 
 est, applies to borrowing as well as People's, etc.. Association v. Furey, 
 
 non-borrowing stockholders: Win- 20 Atl. R 890. 
 
 terer v. Building Association, 44 L. -Davis Building Society, 18.
 
 PAID UP STOCK. 61 
 
 the profits, and it should be kept in a safe ratio with the 
 assets. The only motive in the issue of this stock should be 
 to acquire money to meet the demands of proposing borrow- 
 ers. In some associations, where the borrowers are numer- 
 ous, directors may be com])elled to go into bank, and get a 
 temporary loan to satisfy demands that exhaust the ordinary 
 receipts. They may have to do this in order to remove dis- 
 satisfaction amona: the members. In associations accumulatinor 
 idle money, paid up stock would be superfluous and it should 
 not be issued. An income to the association is secured by this 
 stock from* another class of shareholders, and the rules should 
 be so drawn that if at any time the demand from borrowers be 
 light, the association may compel a withdrawal by paying off 
 the stock in the order of its issue. The rule is a safeguard to 
 the association and entirely just. Paid up stock should not be 
 allowed as the predominating stock. It is a source of strength 
 to the association if limited by the demands upon the associa- 
 tion, but its unlimited issue might prove a weakness. Stock 
 of this character forms an exception to the rule of equal dis- 
 tribution and should not be entitled to share in the proHts be- 
 yond the lixed dividends.* 
 
 'There is an honest diversity of ed some equitable features, testify 
 opinion among building association to its value as the present act of 
 managers as to the propriety of an Parliament authorizing its issue is 
 association issuing paid up stock. the result of their efforts. 
 The objection urged by its oppon- In the early history of building 
 ents is, that it allows capitalists to associations, the borrowing demands 
 invest their money at oppressive in- were not heavy. The members will- 
 terest rates, to be paid by the poor ingly waited their turns to receive 
 home-seekers. This objection would money, and, in fact, the receipts 
 be forcible when an association often exceeded the loans. But in 
 placed such stock on the same foot- present day associations the constant 
 ing so far as profits are concerned, pressure of borrowing members 
 as other stock, and paid its pro rata compels elasticity of the original 
 part in cash. But its issue is cer- scheme. When the association is 
 tainly helpful to an association unable to supply the demands from 
 when temporarily in need of money its ordinary receipts, it must either 
 at a cost not exceeding the legal satisfy them by borrowing, or secur- 
 rate of interest, under the restric- ing, investing mcmey or lo^e an op- 
 tions given in the text. English so- portunity to secure a borrower who 
 cieties, from whom we have borrow- may not apply when the money ac-
 
 62 
 
 BUILDING ASSOCIATIONS. 
 
 Seo. 4. Members and Officers Must Observe 
 Rules. "When a person becomes a member, he thereby 
 obh'gates himself to conform to the laws of the society. He 
 shonld be given a copy of all by-laws and rules in force, and 
 that is notice to him of their contents. Thereafter he cannot 
 excuse himself of his ignorance of the regulations. And after 
 acting as a member and enjoying the benefits of the association 
 under its bylaws, the law will not permit him to question the 
 legality of its by-laws.* The members being subject to the 
 regulations have a right to expect and compel the officers of the 
 association to observe the regulations. If the officers fail or 
 refuse to carry out the rules, they are blameable and a personal 
 liability may attach to them. So if the officers act contrary to 
 the rules and expend the money of the society in an unauthor- 
 ized manner, they may be compelled to replace the money.' 
 
 Sec. 5 Members' Rig^hts to Inspect Books. Mem- 
 bers are entitled to inspect the books of the association for 
 proper purposes, at proper times, and they are entitled to such 
 inspection though their only object is to ascertain whether 
 their affairs have been properly conducted by the directors or 
 managers. The right exists, although its exercise may be 
 inconvenient to the officers^. 
 
 Sec. 6. Member as Investor. Although the original 
 plan of a building association contemplated that each member 
 should ultimately become a borrower and in some states it is 
 still made obligatory for relief therefrom to be purchased, by a 
 penalty,* yet a member is to be regarded as an investor. He, 
 thereby, assumes duties and acquires rights that are not 
 
 cumulates. If this relief is prohib- 
 ited, premiums naturally go exor- 
 bitantly high, and the borrower is 
 the sufferer, and it is unlawful to 
 stifle competition in bidding, by lim- 
 iting the premium. See sec. 23 
 post. So by letting in this money 
 under safe restrictions, the con- 
 gested condition of the associa- 
 tion is relieved without injury to 
 
 any member and with great benefit 
 to many. 
 
 'Building Association v. Arbeiter 
 Bund, 6 Bull, 823 ; Building Associa- 
 tion V. Minnick, 1 Kulp, 513 
 
 ^Grimes v. Harrison, 28 L. J. Ch. 
 823. 
 
 ^Huylar v. Cragin, etc., Company, 
 40 N. J. Eq. 392. 
 
 •*In Maryland this is required by 
 some associations.
 
 PAYMENTS. 63 
 
 removed, though modified and increased by the fact that he 
 becomes a borrower. 
 
 When a person becomes a member, he is a debtor to the 
 association until his stock matures,* and suit may be main- 
 tained against him for monthly dues.^ Some doubt was 
 expressed in England as to whether it was lawful for an asso- 
 ciation to receive money from members who did not wish to 
 lake loans, but merely wished to allow their monthly pay- 
 ments to accumulate at compound interest until the dissolu- 
 tion of the association, but it has since been decided to be 
 lawful.* The practice is general throughout the United 
 States, to provide for the investing class, persons who never 
 contemplate borrowing, but who deposit their surplus in the 
 association for safety and profit. The rights of an investor 
 are different in different associations. In the serial and per- 
 manent associations their rights are unlike, and in associations 
 of the same type they may vary. In some states, paid up 
 and deposit shares are issued; while, in other states, but 
 one kind of installment stock is issued. It would be futile 
 to enter into an investigation of the different rules for invest- 
 ing: members under these varied conditions. Their rights 
 acquired in such societies are determinable from the laws and 
 rules of each particular association as authorized by the incor- 
 porating statute. 
 
 Sec. 7. Payments. Payments of money by the mem- 
 bers should be made to an officer authorized to receive them;' 
 otherwise if there is loss the association is not bound to credit 
 the payment in favor of the member. If the by-laws make it 
 the duty of the secretary to receive money, payment at his 
 place of business is valid.' 
 
 •Michisran, etc., Association v. Mc- cer of the association to apply to a 
 
 Devitt, 77 Mich. 1. member for his subscriptions at the 
 
 ^Association v. Kribs, 7 Leg. & proper time and in accordance with 
 
 Ins Rep. (Pa.) 21. the rules, will not excuse default in 
 
 ^Davis Building Society, 264. the payment by the member: Tay- 
 
 *Doe d Morrison v. Glover, 15 Q. lor v. Collins, 46 L. T. Rep. N. S. 
 
 B. 103. 16S. 
 
 *Kilpatrick V. Association, 119 Pa. *Schutte v. California, etc., Asso- 
 
 St. 30. And the neglect of an offi- elation, 23 Atl. Kep. 336.
 
 64 BUILDING ASSOCIATIONS. 
 
 Sec. 8. Right of Withdrawal. One of the most im- 
 portant rights conferred upon a stockholder is the right of 
 withdrawal. This right is incorporated in all statutes. A 
 distino-uishing difference between the stockholder of a build- 
 ino- association and the stockholder in an ordinary private 
 corporation is the right of the former upon giving notice to 
 terminate future liability on his stock. He can arbitrarily 
 divest himself of his membership, cut loose from the associa- 
 tion, and end his duties and liabilities. In an ordinary cor- 
 poration, a subscriber for stock cannot obtain a cancellation of 
 his subscription except by the unanimous consent of the other 
 subscribers, and then he could not do it if there were credit- 
 ors whose rights would be jeopardized. Even a majority of 
 the stockholders cannot withdraw and refuse to proceed fur- 
 ther in the corporate enterprise; and these rules are said to be 
 just and based upon a sound public policy.' The liberality of 
 the legislative policy can be readily seen, in making such a 
 radical change in the law of corporations by investing the 
 building association stockholder with the personal right of 
 withdrawal. It being considered in other corporations highly 
 essential to retain the stockholder, it would seem that the 
 legislature never intended to permit a full, unconditional with- 
 drawal and consequent termination of all liabilities. Such 
 important modification of established rules must necessarily^ 
 even in a building association be attended with some wise 
 restrictions. 
 
 Sec. 9. Manner of Withdrawal. The by-laws should 
 prescribe the manner of withdrawal, and in this they generally 
 but re-enact the statute, as it usually defines the right. The 
 withdrawing member should be required to give a written 
 notice" of his intention to withdraw. That notice should be 
 
 »Cook Stock, etc., sec 169. cess as the trustee of a member at 
 
 "The written notice may be the withdrawal value of his shares, 
 
 waived by the association and an although he has given it no notice 
 
 oral notice accepted: McKenney of his desire to withdraw such 
 
 V. Diamond State, etc , Association, shares: Atwood V. Dumas, 14J> 
 
 18 Atl. K. 905. A co-operative Mass. 167. 
 bank is chargeable in a trustee pro-
 
 LEGAL STATUS OF WITHDRAWING. 65 
 
 served npon the secretary some time before the money is ex- 
 pected, and should be entered by hira on a book kept for that 
 purpose. The amount to be paid upon withdrawal is a diffi- 
 cult question, unless the statute determines it, since the enter- 
 prise has no certain prolits until It is wound up, as there may 
 be losses, idle money, unforeseen expenses or lower premiums 
 or interest, while the association may be completely successful 
 and yield a larger return than calculated. It is inequitable to 
 allow him to take out all the profits accruing upon his shares, 
 as the continuing members take' all the burden of the loans 
 upon which the retiring stockholder has received his full share 
 of profits. The association should, therefore, retain a part of 
 the profits. The withdrawal value should be adjusted by the 
 directors upon the time of the membership. If the member 
 retires early in the life of the association, his share should be 
 small, with proper increase as the time of the withdrawal more 
 nearly approaches maturity of stock. In ascertaining the 
 withdrawal value, another element, is to be considered, and 
 that is the earning capacity of the association. An arbitrary 
 rule might be unjust in some societies, as approaching too 
 close to the per cent, of earnings. A general rule might, 
 therefore, be unjust when applied. If one coald be formu- 
 lated it would be to repay the dues paid in, less expenses and 
 losses, with the legal rate of interest for the average time. 
 This rule might militate against the association in early with- 
 drawals, but it w;ould be compensated when the withdrawals 
 were late and left a large surplus profit. 
 
 Sic. 10. Legal Status of Witlidrawingr Member. 
 When a member gives notice of withdrawal he stops paying 
 dues. He has determined that he will no longer carry hisi 
 payments, and the association is bound by that determination. 
 His character as debtor is at once reversed, and he becomes a 
 creditor to the amount of his legal claim and is entitled to 
 recover as such.' But he is not entitled to recover the value 
 
 'Builf]ing Association v. Silver- ation, 19 "W. Va. 792. See Wittman 
 
 man, 85 Pa. St 394; Building Asso- v. Building Association, 7 W. N. C. 
 
 ciation'3 P:state, 12 W- N. C. 207; 80. 
 Haigk V. United States, etc., Associ-
 
 66 BUILDING ASSOCIATIONS. 
 
 of the stock,' nor its par value even thons^h it has matured,' 
 but only the withdrawal value as fixed by the by-laws or rules. 
 A complaint to recover thereon must show a compliance with 
 the by-laws in withdrawing, and that payment was refused. 
 And he cannot enforce his demand without showing funds in 
 the treasury, or that the directors consented to such applica- 
 tion.' The authorities are somewhat confusing in their views 
 of him as he stands in this position. Some hold him as a 
 member; others divest him of membership and qualify him 
 as a plain creditor. In truth he has the attributes of both. 
 As ar^ainst the other members he is a creditor of the associa- 
 tion; but he is not an ordinary creditor, since he cannot come 
 in competition with outside creditors. Their claims must ba 
 satisfied before his; but as against the continuing members he 
 is entitled to be paid the amount due him before they can di- 
 vide the assets. 
 
 Sec. 11. Liability of Withdrawing Member. In 
 the sense given in the last section, the withdrawing member 
 is a creditor,* but so far as the by-laws and rules are con- 
 cerned, he is in a sense a member until payment' and he is 
 bound by them. So that he is held under the by-laws for all 
 liability incurred prior to the notice, coming to the knowledge 
 of the society after the notice had been given. But lia- 
 bilities incurred after the notice is received by the association 
 cannot be imposed upon him. While he continues a member 
 and subject to the by-laws for some purposes, yet he is not 
 
 'Laurel Run, etc., Association v. is liable for his proportion of losses^ 
 
 Sperring, 3 Kulp, 67. but as creditor he is entitled to re- 
 
 "Building Association v. Sperring, cover the amount due him indepen- 
 
 106 Pa St. 3i4. dently of all losses, as the babinces 
 
 'Texas, etc.. Association v. Kerr, assigned by ^vithdra-wing members 
 
 13 S. W. Rep. 1020. must be presumed to have been 
 
 ^See also //ire Blackburn, etc., So- ascertained, after allowing all de- 
 
 ciety, L. R. 24 Ch. D. 421; Sibun v. ductions to which the withdrawing 
 
 Pearce, L. R , 44 Ch. D. 354; Wright mfmber, assignors, were then sub- 
 
 V. Deley 4 11. & C. 209. In Hen- ject or liable. 
 
 , ningliausen,et al.,v. Tischer,50Md. 'Walker v. General Mutual, etc., 
 
 583, it was held that a person can be Society, L. R , 36 Ch. Div. 777, 786; 
 
 both shareholder and a creditor of Biburnv. Pearce, L. R., 44 Ch.D. 35i 
 the corporation; as shareholder he
 
 RIGHTS OF WITHDRAWING MEMBERS. 67 
 
 subject to dues and fines after notice to withdraw. The society 
 retains his membership until he is paid, for readjusting of any 
 liability that may legally attach to the stock before the actual 
 retirement. After he has been paid off, on his withdrawal, and 
 there is a final settlement between him and the society, in the 
 absence of mutual mistake or fraud, he cannot be compelled 
 to make good a deficiency occurring before the withdrawal 
 and discovered before the winding up of the association'. In 
 order to remove any doubt as to the liability of withdrawing 
 members for losses, the by-laws should explicitly and clearly 
 define it. Where a by-law provided that a withdrawing mem- 
 ber was "entitled to receive the amount actually paid in by 
 him, less all fines, interest, insurance, due from him with aver- 
 age interest at the rate of 6 per cent per annum," the court 
 refused to allow losses because they did not come under any 
 of the heads mentioned in the by-laws." While he would be 
 equitably chargeable with all losses incurred prior to the not- 
 ice, the amount withdrawable is a proper subject for the by- 
 laws and the liability for such losses should be carefully pro- 
 vided for. The withdrawing member is not bound by new 
 rules made after he has given notice to withdraw.' He may 
 sell and assign his shares, or rather his claim, and the pur- 
 chaser takes them subject to all liabilities, just fts a purchaser 
 before withdrawal becomes liable to the duties of a share- 
 holder.* 
 
 Sec. 13. Rig^hts of Withdrawing' ^leinbers of 
 Insolvent Association. While a withdrawing member 
 is in a sense described a creditor of the association and can 
 obtain judgment, yet when the association was insolvent at 
 the time of his withdrawal, he cannot compel payment of the 
 money due from the association to the exclusion of claims of 
 general creditors, or those of his fellow stockholders,* for if the 
 
 '/ti re West Riding, etc.. Society, *Handley v. Farmer, L'9 Beav. 362. 
 L. K., 45 Ch. Div. 463. *Hanney v. Building Association, 
 
 *j\IcKennpy v. Diamond State, IG W- N. C. 450. 
 etc., Association, 18 Atl. Bep. 90.1. 
 
 'Armitage v. Wallier, 2 Jur. N. S. 
 13.
 
 68 BUILDING ASSOCIATIONS. 
 
 society is known to be insolvent althonfrh proceedings may not 
 have been taken to wind it up, the withdrawing rules cannot 
 be invoked.' But the association cannot withhold a part of 
 his withdrawal on the ground of apprehension of ultimate 
 insolvency of the association, because of the liability of the 
 member to contribute,' yet he cannot withdraw without 
 considering losses,^ though they are probable,* nor necessary 
 expenses.^ The association ordinarily has no right to retire 
 stock before the terminating period and force out the stock 
 holder against his will, so long as he performs his duties.' 
 
 Sec. 13. Kiglit to AVitlidraw Limited to Present 
 Funds. The right of members to presently withdraw depos- 
 its, is practically limited to funds on hand.^ And the with- 
 drawino' member must show that there are funds for that 
 purpose before he can enforce his demand, but it is an abuse of 
 discretion for the directors to so invest the entire funds in real 
 estate so as to leave none applicable to the payment of with- 
 drawing members, and thus defeat their rights.* When notice 
 of withdrawal is given the association, it should arrange 
 the disposition of its receipts so as to meet its pay- 
 ments when due. "While the right to withdraw is only grant- 
 able out of fund-s designated for that purpose, it is not intended 
 that ri<>-htful lack of funds shall defeat the right as against the 
 members. So, if the association is solvent and a member gives 
 notice of withdrawal, and the notice had matured- before the 
 association is being wound up, he is entitled to be paid out of 
 the assets, after outside creditors, in priority to those mem- 
 bers who had not given notice, notwithstanding the fact that 
 
 '/n re Sunderland, etc., Society, 24 *McGrath v. Hamilton, etc., Asso- 
 
 Q 33 uiv 394. ciation, 44 Pa. St. .383. 
 
 ''Junskuntz v. Building Associa- ^Ber'^man v. St. Paul, etc., Asso- 
 
 tion, G Bull. 428. tiation, 29 Minn. 275. 
 
 sFriel V. Association, 1 Leg. Rec. 'State v Redwood Falls, etc Asso- 
 
 Rep. (Pa.) 217- ciation, 45 Minn. 154. 
 
 ^Knoblanck v. Building Associa- ^National, etc, Association v. 
 
 tion, 25 P. L. .J. 89 ; PatJert v. Build- Hubley, 34 Leg. Int. 6. 
 ing Association, 25 P. L. J. 40 
 The probable loss may be ascer- 
 tained by an appraisement. 
 
 I
 
 TRANSFER OF SHAREb. 69 
 
 after he had given the notice, there were no funds for pay- 
 ment,' The intention of the rule is to prevent the application 
 of the funds to withdrawals to such an extent that its operations 
 will be crippled; and when it winds up, the reason of the rule 
 does not apply, which readily defeats the application of the 
 rule itself. 
 
 Sec. 14. Stock Pledged Cannot be Withdrawn. 
 When a loan is made to the member his stock is pledged as 
 collateral security. The right to withdraw is thereby curtailed 
 to the extent that he pay off his loan before he can with- 
 draw.' 
 
 Sec. 15. Amonnt Withdrawable. The withdrawal 
 by the member includes only his credits on his stock. So, under 
 an ordinary by-law for withdrawals, he is not entitled to have 
 premium, interest, lines, transfer fees or charges of that char- 
 acter refunded to him.* 
 
 Sec. 16. Construction of By-Laws Concerning 
 Withdrawal. Tiie by-laws providing for withdrawal, are 
 favoral)ly construed for the member, but any privileges therein 
 given, if not taken advantage of by the member as therein 
 specihed, are forfeited." And if the by-laws provide that no 
 money is to be paid on a withdrawal unless the pass book is 
 produced, its production is a condition precedent to pay- 
 ment.' 
 
 Sec. 17. Transfer of Shares. The by-laws should pro- 
 vide for transferring of stock by a shareholder. The certificate 
 of stock should have a blank assignment indorsed on it, to be 
 acknowledged before the secretary, or a power of attorney to 
 the transferee to make the transfer, and the by-laws usually 
 provide that upon payment of a transfer fee, the secretary shall 
 
 'Walton V. Edffe, L. R. 10 App. ^Socurity, etc., Association v. 
 
 Cds. ;i3; lire J\Iid(llesbroui,^h, etc., Lake, 00 Ala. 45 (i. 
 
 Society. 53 L. T N. S. 203; In re ^Fuller v. Salem, etc., Association, 
 
 Blackburn, etc.. Society, L. R , 24 10 Gray 94; Booz's Appeal, 109 Pa. 
 
 Ch. Uiv 4'?1 ; In re Mutual Society, St 592. 
 
 24 ('h D. 42.i. 'Atkinson v. Bradford, etc., 8o- 
 
 *Building Association v. Sperring, ciety, L. li., 25 Q. B. Div. 3?7. 
 106 Pa. St. 334; State v. Red Falls, 
 etc., Association, 45 Minn. 154.
 
 70 
 
 BUILDING ASSOCIATIONS. 
 
 enter the transfer upon the books of the association.* The 
 title will pass by an assignment of stock, without transfer on 
 the books of the association, but until the transfer is so entered 
 the transferrer as against the association, and creditors of the 
 association, is liable on the stock.' The association, with 
 knowledge of the assignment, may choose to accept the trans- 
 ferree as a member, but the legal liability to do so, does not 
 attach until there has been a transfer on the books. The offi- 
 cers of an association are not liable where they divided the 
 assets among those whom the books show to be stockholders, 
 to one whose name does not appear on such books, but who 
 held certificates assigned to him with power of attorney to 
 transfer.' However, the directors should not, as a matter of 
 precaution retire any stock without the certificates being sur- 
 rendered to the association, but in declaring dividends, they 
 would be justified in giving them to the stockholders shown 
 by the books. A transfer of stock properly effected, will not 
 relieve from accrued liability, but only from future liability. 
 A by-law that no stockholder shall be permitted to transfer 
 his stock while he is in default, is valid.* A building associa- 
 tion's rule that each member on transferring his shares to 
 another shall pay to the association a transfer fee on each 
 share, has no application where one who has subscribed to a 
 number of shares in his own and others' names, and seeking to 
 exercise his right of withdrawal on all, produces proper vouchers 
 from such others for payment.* When the association refuses 
 to transfer shares, the general weight of authority is that 
 mandamus will not lie to compel its transfer, and that the 
 proper action is for damages." 
 
 'The transfer fee is enforceable : 
 McGannoa v Central, etc., Associa- 
 tion, 19 W. Va. 726. 
 
 'Cook Stock, etc., 260. 
 
 •Bank of Commerce's Appeal, 73 
 Pa. St. 59 In a case where the reg- 
 istered holder of shares held in trust 
 for plaintifl: who held the certifi- 
 cates and such trustee was allowed 
 to withdraw the shares without pro- 
 'ducing the certificates, it was held 
 
 the society was not liable to transfer 
 the shares to plaintiff: Nolloth v. 
 Simplified, etc. Society, 58 L. T. N.3. 
 859. 
 
 •'Cunningham v. Alabama, etc, 
 Company, 4 Ala. 65'i. 
 
 ^Building Association v. Hender- 
 son, 3 Bull. 3S6. 
 
 «GalbrHith v. Bldg. Ass'n, 43N. J. 
 Law, 3S9 ; Cook, Stock, etc., sec. 289.
 
 THE LEGAL STATUS OF MEMBER. 71 
 
 Sec. 18. Forfeitures. Almost all associations provide that 
 in case of a certain number of defaults in his payments, the mem- 
 ber shall forfeit his membership. The right of an association 
 to declare a forfeiture of stock for non-payment of dues, etc., 
 must be clearly authorized by the charter or general incor- 
 poration laws;' it cannot be created by by-law.' A power of 
 this character must be constructed strictly, and the validity of 
 the forfeiture depends upon a strict compliance with the law.' 
 Forfeitures are not favored in law, and the right must be ex- 
 pressly conferred and exercised in accordance with the granted 
 power. But if the forfeiture is authorized, the courts will not 
 relieve a member for a willful neglect of his duties,* and he 
 cannot recover back the money paid on his stock after it has 
 been forfeited for non-payment of dues, and assessments, 
 where such forfeiture is authorized by the charter of the 
 association.* No notice, unless there is one prescribed by the 
 charter or by-laws, is necessary' before declaring the forfeiture." 
 
 When the association holding the bond of a member forfeits 
 his membership and proceeds upon the bond, it can only 
 recover the amount actually advanced with interest, deducting 
 payments.'^ The association having declared the borrower no 
 longer a member, can only enforce against him as though he 
 were a stranger. 
 
 The most' equitable plan in case of default, after the imposi- 
 tion of tines becomes ineffective, is to provide, after a certain 
 time upon failure to pay all back charges, for a compulsorj 
 withdrawal, deducting such charges. 
 
 Sec. 10. The Legal St at vis of Member as a Bor- 
 rower. When the association has accumulated funds suffi- 
 
 'Cook Stock, sec. 123; Perrin v. *Freemanv. Ottawa, etc., Associa 
 
 Granger, 30 Vt. 595 ; Henderson, etc. tion, 114 111. 183. 
 
 AssociMtion v. Johnson, 10 S. W. "Holmes v. Smythe, 100 Dl. 413; 
 
 Rep. 787. Freeman v. Ottawa, etc., Association, 
 
 'Master Stevedores' Assnv "Walsh, 114 111. 182. 
 
 2Daly, 14 ; Rosenback v Salt Sprinsjs, 'Ibid 
 
 etc., Bank, 53 Barb 506 ; In re Long 'Bechtold v. Brehm. 26 Pa St. 269 ; 
 
 Island, etc., Company, 19 Wend. 37. Denny v. We.st Philadelphia, etc., 
 
 ^Germantown, etc, Company v. Association, 39 lb- 154; Premium 
 
 Filler, 60 Pa. St. 124. Fund Aasociation's Appeal, lb. 156.
 
 72 
 
 BUILDING ASSOCIATIONS. 
 
 cient to loan, a member under its rules may become a 
 borrower. Upon receiving a loan, the member has increased 
 obligations. In order that the rights and duties of the 
 borrower may be understood, his legal status should be defined. 
 The borrower is sometimes called an advanced, prepaid or 
 redeemed shareholder. It matters little by what name he is 
 known so long as it is kept in mind that his act of borrowing 
 money does not in law divest him of membership. By bor- 
 rowing, he takes advantage of a right as a member which is 
 vouchsafed to him by the statute. The right to borrow is 
 inseparately connected with his membership; it flows naturally 
 from that endowment. To say that he loses his membership 
 upon becoming a borrower is to assert that the assumption of 
 a right effectually destroys its source. And it is equally 
 untenable to say that his status as a member is modified by 
 borrowing. When a member bids for an advance on his shares, 
 he asks for a loan. Stripping the transaction of all devices as 
 "advance on" or "redemption of" shares, it is the act of the 
 association lending to its member a sum of money to secure 
 the repayment of which the member gives a mortgage and 
 assigns his stock as collateral security. What change is 
 effected in the member's condition? He is to pay dues; that 
 he is already bound to do; he is to pay premium and interest 
 which represent the cost of the loan. So the borrower has not 
 modified his contract, as a member, but he has added ta it the 
 cost- of a right he has chosen to exercise, and has secured the 
 repayment of the money gotten by the exercise of that right. 
 He has not surrendered his interest in the society's assets; 
 neither has he parted title with his stock; he has pledged it 
 with the full right reserved to redeem it at any time. The bor- 
 rower's interest in the assets of the society are unmodified 
 but it is burdened with the pledge. His substantive rights, 
 as a member, remain unchanged, except, he has agreed not to 
 exercise his right of withdrawal as long as the loan is unpaid. 
 His stock matures as the stock of the non-borrowers, "and he 
 shares in losses and expenses. Regarding the borrower as 
 such, in legal effect, simplifies his position and enables us to 
 clearly understand it. So when his stock has matured, the
 
 THE LEGAL STATUS OF MEMBER. 
 
 73 
 
 debt or the loan is still due the association in the full amount, 
 but if he chooses, or the association elects, the stock may be 
 used to cancel the debt. Until that application has been made, 
 his debt is entirely unpaid and he remains the owner of the 
 stock with the lien upon it. But he can compel the association 
 in equity,' if not by the rules, to resort to that lien and exhaust 
 his stock, representing his interest in the distributive assets 
 of the association, before reaching the security given by him, 
 as, if it satisfied the debt, the association must then release the 
 mortgage.' This is the legal status of the member who 
 secures the face value of his shares from the association in 
 advance of their maturity.^ 
 
 'Red Bank, etc , Association, v. 
 Patterson, 27 N. J. Eq. ?23. 
 
 'Tyrrell, etc., Association v. Haley, 
 139 Ha. St. 657. 
 
 "Tlie writer is aware that this 
 view is not in accord with all the 
 courts. In Virginia it is held that 
 borrowing extinguishes the mem- 
 bersliip. and, coosequentiy, the bor- 
 rower is not entitled to participate 
 in the final division of the funds: 
 White V. Mechanics, etc , AsstKua- 
 tion, 22 Grat. 233; Winchester, etc, 
 Association v. Gilbert, 23 Grat. 787. 
 But he is yet held by the court 
 to his covenants as a party to the 
 articles of association, and to make 
 his regular monthly payment of 
 dues and tines, obligations secured 
 by his mortgage. As has been said: 
 "Observe th»j inconsistency; he has 
 lost his membership but is bound 
 as a mt mber to the duties of mem- 
 bership, and has even put himself 
 under bonds to be a good member.'' 
 Eadlich Building Associations, p. 
 18.J. Ttie better rule sustained by 
 the courts is to regard the advance 
 as a loan: Pfeister v. Wheeling, 
 etc.. Association, 19 W. Va. C76; 
 Mills V Sali>bury, etc, Association, 
 75 N. C 292; Lincoln, etc.. Associa- 
 tion v. Benjamin, 7 Neb. 181; Mar- 
 
 tin V. Nashville, etc., Association, 3 
 Cold. 418; Gordon v. Winchester, 
 etc.. Association, 12 Bush 110; 
 Securit}', etc. Association v. Lake, 
 09 Ala 456. In a Maryland case it 
 is held that advanced or prepaid 
 members are obliged to pay inter- 
 est on the sum advanced besides 
 their weekly dues — they have not 
 ceased to be members by the pre- 
 payments, but continue to hold an 
 interest in the management and 
 success of the association, as upon 
 thatdependstheir earliest relief, not 
 only from the payment of the 
 weekly dues, but their final release 
 from their mortgage. Tlie unpaid 
 memtiers are not absolved from the 
 punctual payment of weeklj' dues. 
 They are entitled to any residium 
 of profits, the exclusive interest in 
 which has been devolved upon 
 them by virtue of the contract, 
 Willi the prepaid members, through 
 the act of the coinpan}'^ lurnishing 
 the equivalent consideration. Both 
 are interested and under mutual ob- 
 ligation to contribute to the accu- 
 mulation of the common fund by the 
 payment of their weekly dues, until 
 the time provided for iis final distri- 
 butii m and settlement : Lister v. Log 
 Cabin, etc., Association, 38 Md. 120.
 
 74 BUILDING ASSOCIATIONS. 
 
 The member as a borrower is still a member with all his 
 rif^hts, except as pledged. He may vote,' hold office, transfer 
 his shares subject to the lien, and in fact do everything an- 
 other shareholder may do. 
 
 Sec. 20. Duty of Association to Loan its Money. 
 When the association accumulates the amount of a share it 
 then becomes its duty to loan it, and not only is it a duty to 
 the state that created it for the purpose of lending to 
 its members, but it is a duty to the members, as through 
 the earning power of its accumulations does the association 
 expect to realize the profit which is to assist in maturing 
 its stock. 
 
 Sec. 21. Selection of Borrower. The next step 
 is to select a borrower among its members." The most 
 equitable way to make this selection, as determined by 
 experience, is by providing for bidding among the mem- 
 bers for preference of the loan. The method, is usually, 
 to offer a sum upon the auction plan, and the highest 
 bidder pays whatever amount he feels justified in pay- 
 ing for the privilege of getting the money. This he 
 pays in addition to interest. Evenings are most conven- 
 ient to the shareholders for the sales of money, who are 
 generally employed during the day. The president of 
 the association is the officer who acts as auctioneer, but 
 any officer present may do so. Upon a bid being, received 
 which is the highest, the secretary takes a memorandum of 
 it with the name of the bidder; additional sums, if any 
 are offered, in the same manner. The by laws should provide 
 for a penalty in a small amount for failure to take a loan after 
 bidding it in. These sales should be conducted upon fair 
 principles; by-bidding, especially from a director, should not 
 
 'In Michigan, by statute the ri,£;lit «In some states associations are 
 
 to vote is withheld, although he re- permitted to make Joans outside of 
 mains otherwise a member: Mich- their membership, but from the na- 
 igan, etc. Association v. McDevitt, ture of the scheme, all borrowing 
 77 Mich. 1. memb-Ts should be satisfied before 
 
 loans are made to other persons.
 
 METHODS Of PREMIUM CHARGES. 75 
 
 be tolerated. If the member feels such tmfairness is being 
 practiced upon him, he can injure the society before its mem- 
 bers and outsiders. 
 
 Sec. 22. Methods of Preinium Cliarg^es. The pref- 
 erence so paid is called (generally the premium, and the man- 
 ner of its payment varies in different associations. 
 
 The manner of chai-ging premiums has been measurably 
 changed since the earlier societies. Tlie old plan of de- 
 ducting the full amount of premium at the time of making 
 the loan was the prevailing method at one time, and ia 
 still practiced in some localities. For instance if a bor- 
 rower paid 25 per cent, on a $2,000 loan, he received $1,500 
 in cash and paid full interest on the $2,000.' In some states 
 this method was invalidated as usurious, while in others it was 
 upheld. These associations, to prevent inequality in the cost 
 of money, adopted the minimum premium plan, requiring all 
 bidders to pay at least a certain premium. When the bor- 
 rower desired to repay his loan the face value was not re- 
 quired, i. e. from the $2,000 he was allowed a rebate of pre- 
 mium having reference to the unexpired time. The system 
 has generally been found so complex in the keeping of its ac- 
 counts and so uncertain in its earnings that it has been modi- 
 lied in many states, and entirely superseded in others.' One 
 modification of this plan was to give the borrower the face of 
 the loan, less his bid, and to charge interest on the net loan 
 only. It involved the same intricacies as the other plan, and 
 has not been generally adopted. The most popular system 
 throughout the United States is that by which the borrower 
 pays with his installments his interest and premium. If the 
 borrower desires to repay his loan, he only pays premium up to 
 the time of repaying his loan. This system is simple to the 
 
 ^It has been recently held that etc., Association v. Tascott, 28 N. E. 
 
 in an association operating under Rep. (Ill) 801; Affirming Tascott v 
 
 this plan, a stockholder who had Mutual, etc., Association, 37 111. 
 
 bid 25 per cent premium for a loan App 274. 
 
 of $100 was entitled to receive .$80, ''The statute of Indiana in force 
 
 since the per centage of the pre- contemplates this style of an asso- 
 
 mium is to be computed on the act- ciation,butthey are not received with 
 
 ual sum. received by him : Mutual, as much favor as the newer plans.
 
 76 
 
 BUILDING ASSOCIATIONS. 
 
 borrower, which is a strong point, and it lays a less heavy bur- 
 den on him, lessening the amount of the premium and making 
 its payment easy. In T^ew York, the premium is charged aa 
 a bonus, is so understood by the borrower, and is then deducted 
 from the loan. He gives security for the face of the loan and 
 pays interest on that. The premium is settled; there are no 
 rebates, and with this understanding the borrower governs his 
 bidding, and there is a consequent tendency to lower the bids. 
 The merit of the plan is in impressing upon the borrower that 
 the premium is a bonus for the preference in the use of 
 money. That is the true function of premiums. Primarily, 
 the association uses the method of charging premiums to make 
 an equitable selection of a borrower; and secondarily, to make 
 aprotit; but premiums should be bid by borrowers on the 
 theory that they are paying that much for the right to have 
 the money over fellow stockholders. There are many differ- 
 ent schemes for charging premiums indigenous to different 
 localities, but those outlined are the general ones.^ To an un- 
 informed mind, this additiorial cost of money, in the charge of 
 premiums, seems an exorbitant cost, but in view of the profit 
 attaching to the borrower's stock with which he can pay the 
 debt, the apparent cost is materially reduced and it is not op- 
 pressive. In charging premiums the association should be 
 guided by the statute. If the premium charge is not author- 
 ized by the statute, and it increases the cost of the loan be- 
 yond the rates of interest fixed by statute, it is usurious and 
 void,^ but if the statute authorizes the charge, then usury laws 
 do not apply .^ 
 
 'An invest! fjator in this line will 
 consult Dexter's Co-operative iSav- 
 ings and Loan Association, pp. 70 
 et spq. 
 
 'Citizens', etc Company v. Utiler, 
 48 Md. 455. 
 
 ^H(mie, etc , Association v. B'^ning, 
 7 Bull. 174; Montgomery, etc. As- 
 sociation v. Robinson, (19 Ala. 413; 
 Security, etc. Association v. Lake, 
 63 Ala. 45a. 
 
 Note. In some courts the trans- 
 action of an advancement is treated 
 as of a partnership character: Sil- 
 ver v. Barnes, 6 Bing N. C 180; 
 Burbridge v. Cotton, 8 Eng. L- & 
 Eq. R. 57; Seagrave v. Pope, 15 
 Eng. L. & Eq. 477; Robertson v. 
 American, etc. Association, 10 Md. 
 397; yhannon v. Howard, etc Asso- 
 ciation, 36 Md. 3S3; Lister v. Log 
 Cabin, etc. Association, 38 Md. 115;
 
 METHODS OF PREMIUM CHARGES. 
 
 77 
 
 Sec. 23. Auction Premiums. Tlie manner of chare:- 
 ing the premium by auction of monej- is the one usually 
 contemplated by the statute, and is more in harmony with the 
 general scheme. The power of determining its cost is thus 
 placed with tlie borrowers themselves, and the managers can- 
 not impose upon them an arbitrary rate. If the statute shows 
 that this method was the one intended by the legislature, the 
 courts require compliance with it. So, under statutes providing 
 that money on hand shall be sold to the member who will pay 
 the highest premium for the preference in taking the loan, 
 the bidding must be competitive and the directors cannot 
 
 Williar v. Baltimore, etc. Associa- 
 tion, 45 ]\ld. 54f); Massey v. Citi- 
 zens, etc Association, 23 Kans (j24; 
 Delano v. Wild (i Allen, 1; Clarks- 
 ville,etc. Associati nv. btephens, 26 
 N.J. Eq 351; Shannon v. Dunn, 43 
 N. H. 191; Bibb County, etc. Asso- 
 ciation V. Richards, 21 Ga. 51)2; Par- 
 ker V. Fulton, etc., Association, 4G Ga. 
 166; Patterson v. Albany, etc, Asso- 
 ciation, 63 Ga. 373. In these cases it 
 was held the question of usury is to 
 be left to the jury, and if it is found 
 that the organization is not intended 
 to evMde the u.-.ury laws, but has for 
 its purpose the accumulation of 
 montlily savings to procure homes, 
 there is no usury in the charge. In 
 other courts the advancement is re- 
 garded as a mere loan: JNIills v. 
 Sidisbury, etc. Association, 75 N. C 
 292; Overby v. Fayetteville, etc 
 Association, 81 N. CM; Vann v. 
 Fayetteville. etc, Association, 75 N. 
 C. 494; Ltitham v. Washington, etc. 
 Association, 77 N. C .145; Hanner 
 V. Greensboro, etc., 78 N. C. 1»8; 
 Hoskins v. Mechanics, eti".. Associa- 
 tion. 84 N. C. 338; Smith V. Me- 
 chanics, etc.. Association, 73 N. C 
 372; Columbia, etc., Association v. 
 Bollinger, 13 Rich. Eq. 124; Lin- 
 coln, etc., Association v. Graham, 7 
 
 Neb. 173; Lincoln, etc., Ass(iciation 
 V. Benjamin, 7 Neb. 181; Mariin v. 
 Nashville, etc., As'^ociation, 2 Cold. 
 418; Herbert v. Kenton, etc. Asso- 
 ciation, 11 Bush. 296; Gordon v. 
 Winchester, etc.. Association, 13 
 Bush, 110; Bechtold v. Brehm, 
 26 Pa.. St. 269; Reiser v. Wil- 
 liam Tell, etc Association, 39 Pa. 
 St. 137 ; Burlington, etc.. Associa- 
 tion V. Heider, 55 Iowa, 424; Build- 
 ing Association v. Timmins, 3 Phila. 
 209. In these ca:ses the premium 
 charge is held usurious, being unau- 
 thorized by statute. In unincorpo- 
 rated associations, or in associations 
 without statutory permi.ssion to 
 make a premium charge, it would 
 become a qucNtion whether the 
 transaction was to be regarded as a 
 j.artner!^hip in character so as to 
 take it out of the usury law, or that 
 it was a mere loan falling withia 
 the pale of that law. 
 
 Thp partnership theory sustained 
 by courts with a liberal and friendly 
 disposition, enabled associations 
 without legislative sanction, to en- 
 force premiums. Premiums have 
 now a more geneJ-al lesri'^lative au- 
 thority, and the transaction is more 
 regarded as a loan In building as- 
 sociation parlance, it is treated as
 
 78 
 
 BUILDING ASSOCIATIONS. 
 
 refuse a bid if the secnrity is properly tendered;' hence 
 they hav^e no right to fix a minimum rate of premium,' but 
 the loan made by the association having a by-law to that effect, 
 but not made in pursuance of such by-law, and unaffected 
 there!)}', is binding on the borrower.' It often happens in 
 actual jiractice where there is a steady demand for money, that 
 horizontal or uniform premiums based upon a just profit to 
 the association, are of advantage to the association, and of 
 more fairness to the members, as all are paying the same cost. 
 In that case, a member's bid at the uniform rate without 
 deceit or compulsion by the association, would be binding, 
 even if the statute contemplated bidding, but if he refused to 
 make a bid so high, the directors have no discretion with sur- 
 plus funds on hand, but to loan him if his bid is the highest 
 offered, and his security sufficient. 
 
 Sec. 24. Premiums Fixed, Uncliang-eable. But 
 the premium once fixed cannot be afterwards changed. The 
 proportion of premiums which shall be paid each week cannot 
 be increased by subsequent action as to existing mortgages, 
 
 such, and in law it is logically a 
 loan, since there is a fixed interest 
 and premium charge, with security 
 for full repayment. These condi-. 
 tions are absolute, and their per- 
 formance is required until tlie stock 
 security increases in value sufficient 
 to satisfy the debt, when the associ- 
 tion obligates itself to take it in full 
 satisfaction. It is merely a mode of 
 payment, and if it fails the debt re- 
 mains unpaid and enforceable. The 
 proposition laid down in the text 
 seems to be safe for observance. 
 The conflict in the cases upon the 
 Bubject of premium as usurious has 
 led to the opposite theories of the 
 transaction represented in the two 
 lines of cases cited, but since pre- 
 miums latterly are authorized in 
 nearlj'' all of the states, the views of 
 the courts in those cases cannot ap- 
 ply to associations operating under 
 
 such statutes. The directors of the 
 association should be guided by the 
 statute in charging premiums, as 
 the power is safely statutory, not- 
 withstanding the partnership theory 
 supported bj^ some courts, and this 
 is the tendency of the recent cases 
 
 In Illinois, premium is regarded 
 as liquidated damages and not usu- 
 rious: Holmes V. Smythe, 100 111. 
 413; Freeman v. Ottowa, etc., Asso- 
 ciation, 114 111., 182. 
 
 It was recently held by the Arkan- 
 sas Supreme Court that as it was un- 
 certain how^much would be paid as 
 interest until winding up, premiums 
 are not usurious : Reeve v. Ladies', 
 etc.. Association, June, '^5, 1893. 
 
 'State V. Greenville, etc. Associa- 
 tion, 29 Ohio St. 92. 
 
 "Stiles Appeal, 95 Pa. St. 123. 
 
 'Orangeville, etc., Association v. 
 Young, 9 W.N. C. 251.
 
 FORMAL APPLICATION FOR LOAN. 79 
 
 unless the constitution and by-laws of the association clearly 
 and unmistakably confer such authority. And where the 
 constitution provides that the installments of premium shall 
 be 50 cents per week for four years, and after that time the 
 directors shall determine the amount to be paid weekly, this 
 lano^uage does not clearly give such authority and will be con- 
 strued prospectively and to authorize a larger weekly install- 
 ment only as to loans made after the change.' 
 
 Sec. 25. Preiniuni Chargeable to Maturity 
 only. A premium bid for the right of precedence in taking 
 a loan, cannot be collected after the maturity of the loan. So 
 held in a case where the loan was for a specified time, and the 
 premium a percentage on the amount payable periodically." 
 And this is true though the time of payment be extended by 
 renewal or forbearance.' 
 
 But one premium can be charged upon a loan, so that where 
 after a sheriff's sale on a mortgage, the stockholder received a. 
 second loan, at a higher premium, he is entitled to be repaid 
 his first premium.* 
 
 Sec. 26. Formal Application for Loan. The 
 amount of premium to be paid by the proposed borrower being 
 determined, it is advisable for formal application for the loan 
 to be made to the association. The application should give 
 the interest and premium the applicant is to pay; the num- 
 ber of shares to be pledged, a description of the real estate 
 offered as securit}'-, including a description of the improve- 
 ments thereon or those proposed to be placed thereon, the 
 market value of the property, its rental value, description of 
 liens, the purpose of borrowing,' the age, residence and occu- 
 pation of applicant. These are chief points to get the security 
 before the directors and the value of reducing this prelimi- 
 
 'Burke v. Home, etc., Association, *Tho association is flot required to 
 
 7 Bull. 114; Home, etc, Associa- ascertain the use of the proposed 
 
 tion V. Boning, 7 Bull. 174. loan : Ilagerman v. Ohio etc. Asso- 
 
 •c^avings, etc., Association v. Stev- elation, 25 Ohio St. ISO, but it is ad- 
 ens, 5 Bull. 113. visable and even necessary in some 
 
 '^^- states T.'hcre the borrowers are mar- 
 
 ^Flounders v. Ilawley, 78 Pa. St. ried women. 
 45.
 
 80 
 
 BUILDING ASSOCIATIONS. 
 
 nary contract to writing, cannot be overestimated, as iu con- 
 troversies between the association and the borrower, it may be 
 the vital point of the whole transaction. 
 
 Sec. 27. Appraisement. The application should be 
 submitted to competent appraisers, appointed by the directors, 
 and the property personally viewed by them. They should 
 give their written opinion as to its value. The application 
 thereupon becomes a subject of investigation by the board. 
 The report of the api)ralsor3 is merely advisory. The direc- 
 tors then decide upon the facts thus presented, whether or not 
 to grant the loan. 
 
 Sec. 28. Abstract of Title. Upon the acceptance of 
 the loan, an abstract of the title to the property oifered as 
 security should be placed in the hands of the attorney of the 
 association by the proposed borrower. If the title is reported 
 sufficient by the attorney, then the papers, usually consisting 
 of a note or bond, secured by mortgage or a deed of trust, and 
 such affidavits as may be necessary, should be prepared by the 
 attorney or a skilled draughtsman, and executed by the borrow- 
 er. The association is then ready to pay the money, seeing 
 that all existing liens are paid and satisfied of record. If the 
 loan is a building one, the association must use precaution to 
 see that all mechanics' liens against the property are satisfied 
 and that there are no enforceable claims superior to its mort- 
 gage arising out of the improvements. The surest precaution 
 is to take an indemnifying bond, with sufficient surety, at the 
 time the loan is made. 
 
 Sec. 29. Interest not Collectible on Interest 
 and Preminm. Building associations cannot collect in- 
 terest on premiums or interest and thus compound it; so 
 under a statute authorizing a deduction of premiums at the 
 time of the loan, interest cannot be charged upon the par 
 value of the shares but upon the money actually advanced.' 
 
 'Forrest City, etc., Associntion v. 
 Gallagher, 25 Ohio St. 20-5; RL<k v. 
 Delphos, etc.. Association, 31 Ohio 
 St. 517; Pfeister v. Wheeliug, etc., 
 
 Association, 19 W. Va. 670; Parker 
 V. United States, etc. Association, 
 19 W. Va. 7(39; Edelin v. Pascoe^ 
 22 Grat. b26. .
 
 PROVISIONS OF MORTGAGE. 81 
 
 Sec. 30. Payment of Tiistalments. Instalments 
 must be paid as stipulated until tlie accumulated fund sutiices 
 to pay the sum agreed, which cancels the debt. If, however, 
 the association is dissolved by a vote of the shareholders before 
 maturity the instalments cease.' And where the borrower is 
 required to pay mouthl}'- instalments and interest thereon, he 
 cannot be required to pay in a different manner as in solido. 
 If the association is unable to perform its contract, as when it 
 fi-oes into the hands of a receiver, a borrovver is not liable to 
 pay further dues, etc.^ 
 
 Sec. 31. Provisions of Note or Bond. Building 
 associations, with power to loan money, have the right to take 
 security therefor, as provided by statute, and this generally is 
 first mortgage on real estate.* The bond or the note is the 
 principal debt and it usually provides for an indefinite num- 
 ber of small periodical payments in the shape of dues on the 
 stock, together with the premium and interest charges on the 
 loan and for the payment of tines and assessments, if any, on 
 the stock assigned. The mortgage is given to secure the per- 
 formance of this bond as authorized by statute^ and the by- 
 laws,' Consequently, the mortgage must conform to them.^ 
 
 Sec. 82. Provisions of Mortg-iij^e. If the statute 
 prescribes the conditions and covenants to go into the mort- 
 gage, it must strictly be adhered to, but if the statute merely 
 gives the general scheme of the association without making 
 any requirements, any form which will accomplish the pur- 
 poses of the statute will be sufhcient. But when the statute 
 makes no provisions for covenants and conditions in the mort- 
 gage, and the association uses a note or bond, as is commonly 
 
 'Cason V. Seldner, 77 Va. 293. 'Shannon v. Howard, etc., Associa- 
 
 'CasoD V. Selduer, supra. lion, MO Md. 383. 
 
 ^Low Street, etc., Association v. 'Building Association v. Schuller, 
 
 Zucker, 48 Md. 448. 3 W. N. C , Pa 431 ; Smith v. Me- 
 
 *Uui()n, etc., Ast,ociation V. Masonic chanic's, etc.. Association, 73 N". C 
 
 Association, 2 Stew. 389; Massej'v. 372; Baltimore, etc , Society v. Tay- 
 
 Citizens', etc., Association, 22 Kans* lor, 41 Md. 409; Birmingham v. 
 
 6. '4. Maryland, etc., Association, 45 Md. 
 
 'Franklin, etc.. Association v. 541. 
 Mather, 4 Abb. Pr. 274. 
 
 6
 
 82 
 
 BUILDING ASSOCIATIONS. 
 
 done in the different states, those instruments really express 
 the contract between the association and its borrowers. The 
 provisions necessary to accomplish the results, contemplated by 
 the statute, are incorporated in them, and the mortgage secur- 
 ing their performance merely incorporates and identities them 
 as the provisions of the bond which it secures. In such cases, 
 in drafting a bond, the statute should be consulted, that the 
 objects of the association may be carried out, and in draft- 
 ing the mortgage, the bond and its provisions should be incor- 
 porated and identified, adding such other provisions as may be 
 necessary to effectuate the purposes of the mortgage as security, 
 and as the statutes of the state may generally require con- 
 cerning mortgages of real property. The association cannot 
 deprive the member from the ordinary privileges of the asso- 
 ciation by making the mortgage in the ordinary form.' 
 
 Sec. 33. Complaint upon Bond or Mortgage. 
 The association may sue upon either the bond or mortgage or 
 upon both,' and the complaint should show the necessary 
 defaults to render the debt due. The amount due the associa- 
 tion should be alleged in the suit, as no greater sum can be 
 recovered.' When the association has shown in evidence that 
 there are shares outstanding, the burden is on the defendant 
 to show the shares had matured and that he is entitled to have 
 his mortgage discharged.* If he seeks to take advantage of 
 any failure by him to comply with the charter, as by signing a 
 paper, the burden is upon him to show that he did not sign it. 
 
 ^Building Association v. Robin- 
 son, 46 L. I, Pa. 5. 
 
 ^Building Association v. Hetzel, 
 103 Pa. St 507. In a suit on a note 
 given to an association, wherein the 
 payment of the note depends on the 
 payment of assessments, the man- 
 ner of mailing the assessments need 
 not be particularly described in a 
 complaint on the note: Borchusv. 
 Huntington, etc., Association, 97 
 Ind. 180. 
 
 'Mutual, etc.. Association v. Tas- 
 
 cott, 28 N. E. Rep. 801. Under the 
 Indiana code, in a suit tu foreclose 
 a mortgage, the constitution and by- 
 laws of the association are not 
 proper exhibits to the complaint: 
 Newman v. Ligonier, etc., Associa- 
 tion, 97 Ind. 295. 
 
 *Concordia,etc.Association,v.Read, 
 93 N. Y. 474; Tyrell, etc , Associa- 
 tion, .v. Haley, 20 Atl. R-I0()3. 
 
 ^Nicely'sEstate, 3Kii]p,47; Build- 
 ing Association v. Lyons, 2 Kulp 
 409.
 
 MORTGAGE COVENANTS. 83 
 
 Sec. 34. Loans to Outsiders. The association may 
 take the mortgage of a third person to secure a loan to a mem- 
 ber, and it need not notify snch third person of the failure of 
 the member to pay the obligation,' and the surety is liable to 
 the same extent as his principal,' and this is true where a 
 member becomes surety for another member.^ Unless it is 
 authorized by statute, the association cannot loan money to 
 outsiders,-* but a loan so made cannot be defeated by the bor- 
 rower on that ground.s Even if outside loans are authorized, 
 members should be first accommodated. 
 
 Sec. 35. Loans to Married Women. The mortgage 
 of a married woman cannot be enforced beyond the powers 
 conferred upon her by an enabling statute,* since at common 
 law she has no riglit to make such contracts, but where her 
 husband joined in the bond and has full benefit of the loan, 
 he is not within the rule.^ Extreme care should be exercised 
 in drawing papers where married women are under legal dis- 
 ability or where it is partially removed. The matter should 
 come under the immediate supervision of the association's 
 attorney, who by custom is the custodian of the legal blanks 
 used by the association. 
 
 Sec. 36. Mortgage Covenants. The mortgage run- 
 ning durino" the association's existence without fixed termina- 
 tion is not void for uncertainty," nor is the bond, although 
 
 'Pfeister v. Wheeling, etc., Asso- 'Building Association v. Rice, 8 
 
 ciation, 19 W. Va. 676. W. N. C 12; Building Association 
 
 'Saving Fund V. Longshore,8 Luz. v. Mixell, 84 Pa. St. 3Io; Associa- 
 
 L. Reg. "99. tion v. Steele, 11 W. N. C. 204. 
 
 "Johnson V. Elizabeth, etc., Asso- 'Tanner's Appeal, 95 Pa. St. 118; 
 
 ciation, 104 Pa. St 394. Wiggins Appeal, 100 Pa. St. 155; 
 
 *Stalev. Oberlin, etc., Association, Building Association v. McDer- 
 
 35 Ohio St. 258; Wolbach v Lehigh, mott 2 Kulp. 203. 
 
 etc., Association, 84 Pa. St. 211. «Robertsonv. AmericaD,etc.,Asso- 
 
 See Mechanic's, etc , Association v. ciation, 10 Md. 397. If the by-laws 
 
 Wilcox, 24 Conn. 147; Mechanics, fix a time for the maturity of the 
 
 etc., Association v. Meriden, etc., mortgage debt and the borrower 
 
 Company, lb. lo9; St Joseph, etc., pays dues to that time the mortgage 
 
 Association v. Thompson, 19 Kans. obligation is then extinguished: 
 
 321. Lime City, etc., Association v. Wag- 
 
 *Poockv. Lafayette, etc., Associa- ner, 122 Ind. 78. 
 tion, 71 Ind. 357.
 
 84 
 
 BUILDING ASSOCIATIONS. 
 
 the articles provide for the termination of the association 
 when its funds attain a certain sum.' Covenants on the part of 
 the mortgagor to pay taxes,' lines,^ insurance* are enfo)-ceable, 
 but unless incorporated in the mortgage, it is not security for 
 them.s These are usual provisions in mortgages of this char- 
 acter/ And a stipulation that the borrower is to re-pay the 
 principal sum with interest and penalties, if there is default, 
 is not a provision for a penalty that equity will relieve 
 from, and may be enforced.^ The mortgage should, con- 
 form to the provisions of the charter or by-laws, and 
 where it was taken for too much money in violation of 
 such provisions, a conveyance of land under it will be 
 enjoined * 
 
 Sec. 37. Application of Payments. Payments by a 
 defaulting borrower not appropriated to any portion of his 
 several sources of indebtedness, were directed by a court of 
 equity to be applied (a) in payment of monthly lines, (b) dues, 
 
 •Merrill v. IMcIntire, 70 Mass. 157. 
 
 *Hnntington, etc, Association v. 
 Melsheimer, 14 W. N. C 3il. 
 
 ^Hagerman v. Ohio, etc., Associa- 
 tion, 23 Oliio 8t. 186. 
 
 ^Chicago, etc.. Society v. Crowell, 
 65 111. 454. It was held in this case 
 that an action will lie against the as- 
 sociation for breach of an agree- 
 ment to insure. The measure of 
 damages would be the dividend the 
 insurance company would be able 
 to pay in case the insurance had 
 been perfected before loss and not 
 the sum agreed upon. The associa- 
 tion would be estopped to deny it 
 had the right to make such contract. 
 The secretary, having made simiar 
 contracts without personal intere&t, 
 and the company received the per- 
 sonal benefits of them, the court held 
 it would be inferred that he acted 
 with knowle(ige of directors and 
 was authorized to so act. 
 
 'Hamilton, etc.. Association, v 
 Reynolds, 5 Duer, 671 ; Hazel, etc., 
 Associationv. Groesbeck, 41 L 1. 16; 
 but where fines were not provided 
 for in the mortgage, but were paid 
 by the borrower, it was held he 
 cuuld claim no credit on the mort- 
 gage debt: Clarkville, etc. Associa- 
 tion V. Stephens, 26 N. J. Eq 351. 
 *But if the parties iucorpoi ate unus- 
 ual but lawful provisions, the courts 
 will uphold the contract,as where a 
 mortgage provided for paj'ment of 
 the principal in one year and inter- 
 est monthly and one dollar per 
 month for monthly contribution, it 
 was held that the mortgaae remains 
 as security for the monthly dues : 
 Everham v. Oriental, etc., Associa- 
 tion, 47 Pa. St. 352. 
 
 'Concordia, etc.. Association v. 
 Eead, '(3 N. Y. 474. 
 
 *Smith V. IMechanics', etc., Associ- 
 ation, 73 N. C. 372.
 
 PAYMENTS ON STOCK 85 
 
 (c) interest.' But upon the principle that a creditor may 
 Apply payments upon such items of the debt as he may elect, 
 it would seem that the association in justice to itself and with- 
 out injury to the borrower, might apply his payments when 
 not directed by himself to the discharge of (a) lines, (b) inter- 
 est and premium, and (c) the balance on his stock. This 
 application would seem forcibly right when it is considered 
 that he is debtor to the association in two ways, first on his 
 Btock, and second on his loan, and the association should have 
 the right to treat a payment as discharging the cost of the 
 loan debt, since it cannot enforce interest on that cost if 
 delinquent, whereas, it may protect itself on the stock debt by 
 tines. The application we have given is the just one. 
 
 In case of non-borrowers, the same application is to be 
 made, omitting, of course, the interest and premium. 
 
 Sec. 38. Assig-nmeiit of Shares as Collateral 
 Security. Usually in borrowing money, the shares of the 
 borrower are assigned to the association as collateral security. 
 This assignment does not relieve him from his covenant to 
 make monthly payments on his stock or on account of fines." 
 Upon such assignment, the association is invested with their 
 ownership for all purposes of dominion of the debt secured.' 
 After a sale to the association in liquidation of the shares, a 
 member cannot again sell the shares,* as he has thereby lost 
 membership. 
 
 Sec. 39. Payments on Stock IVot Ipso Facto Pay- 
 ments on Loan. The borrower's liability on his stock and 
 his liability on his loan being different, payments on his stock 
 are not ipso facto payments on the mortgage debt or loan. 
 The distinction is not clearly kept in the practical manage- 
 ment of the association, but the law holds the distinction, and 
 requires ajipropriation by the association or application by the 
 
 'Clarksville, etc., Association v. 'Schlessinger's Estate.lLawTimes 
 
 Stephens, 26 N. J. Eq 351. But, see, N. S lo. 
 
 Building Association V. Taylor, 13 *M ichignn, etc., Association, v. Mc- 
 
 W. N C. 13. Devitt, 77 Mich. 1. 
 
 *White V. Mechanic's, etc., Asso- 
 ciation. 23 Grat. 233.
 
 86 
 
 BUILDING ASSOCIATIONS. 
 
 member, to effectuate that purpose. A member may, then, at 
 any time apply his stock payments as a credit on his debt by 
 paying in cash the balance, if any. A creditor of the member 
 cannot compel such application to reduce the mortgage,' but 
 the law regards a person holding a second mortgage on the 
 property mortgaged to the association,' or a purchaser of the 
 property,* as holding more favored positions, and to be 
 equitably entitled to have the application made by the associ- 
 ation, so as to reduce the lien on the property. 
 
 When a borrower desires to withdraw, he gives the associa- 
 tion such notice as may be provided in the by-laws. He may 
 then elect to have the withdrawal value of his shares applied 
 on his loan, by paying the balance, and his shares of stock will 
 be cancelled, which will terminate his membership. Or if he 
 has defaulted in his payments, he may elect to have the value 
 of his stock applied on his debt and the society is entitled to 
 recover the balance.' The borrower is, therefore, not entitled 
 
 'Conrow v. Spring Garden, etc., 
 Association, 21 Leg. Int , 109; Build- 
 ing Association, v. Eaber, 11 Phila. 
 546; Kehler v. Miller, 4 Leg. Goz. 
 125; Spring Garden Association 
 V. Tradesmen's, etc, Association, 46 
 Pa. St. 493; Sunbury, etc., Associa- 
 tion v. Martin, 1 Luz. L.Reg. 147; 
 Delaware, etc.. Association v. Keller, 
 2 W. N. C. 29; Selden v. Building 
 Association, lb. 481 ; Building Asso- 
 ciation v. George, 3 lb. 239; North 
 America, etc, Association v. Sutton, 
 35 Pa. St. 463; Barker v. Bigelow, 
 15 Gray, 130; Mechanics, etc. Asso- 
 ciation V. Conover, 1 McCart (N. J.), 
 219; Hoboken, etc, Association v. 
 Martin, 2Beas. (N. J.),4i7; Hekeln- 
 kaemper v. German, etc , Asso- 
 ciation, 22 Kfins. 549; Houlette's 
 Estate, 2 Chest. 511 ; Link v. Build- 
 ing Association, 89 Pa. St. 15; and 
 see Building Association v. Roan, 9 
 W. N. C. 15; Flynn v. Saving Fund, 
 37 L. I. (Pa.) 333; Diemer v. Egolf, 
 
 Chest. 55; Greenfield's Estate, lb. 
 356; Whilden v. Broomall, 1 Del. 
 (Pa) 142; Harris's Appeal, 18 W. 
 N. C. 14; In re Treffeison, 3 Kulp, 
 308; Oliver's Estate, 1 Del. (Pa) 
 358. 
 
 * Hoboken, etc, Association, v. 
 Martin, 3 Beas. (N. J ) 427. 
 
 ^Herbert v. Mechanics, etc., Asso- 
 ciation, 17 N. J. Eq. 497; People's, 
 etc., Bank v. Collins, 27 Conn. 142 ; 
 Phillipsburg, etc., Association v. 
 Hawk, 27 N. J. Eq. 355. See 
 Authorities, p. 88 n. 4. 
 
 *\Vhen the by-laws provided that 
 if the mortgagor desired to redeem 
 from his mortgage he should apply 
 to the directors, " who should decide 
 the amount to be paid," it was held 
 the borrower should pay the sum 
 advanced, adding unpaid interest, 
 deducting the amount of dues al- 
 ready paid, without interest, and 
 making no deduction for entrance 
 fee: Barker v. Bigelow, 15 Graj,
 
 PAYMENTS ON REASSIGNED STOCK. 
 
 87 
 
 to any credit for payment of dues, unless the association 
 chooses to make such application; or, unless he elects for the 
 association to make such application,* And the credit is the 
 withdrawal value of the shares' to be ascertained by the char- 
 ter and by-laws without regard to the improper withdrawal of 
 shares by other stockholders.' The "value," it is held, is to be 
 ascertained by the number of stock payments (dues) excluding 
 interest or profit and less expenses,* J3ut he is not entitled to 
 the value of shares in another series," 
 
 The borrower is not compelled to make this application of 
 his stock; he may pay off the loan and retain his stock.* 
 When the borrowing stockholder elects to apply his stock in 
 payment of his loan, the proper course is to deduct from the 
 ascertained value of the stock all arrearages thereon, and to 
 credit the balance on the loan.^ 
 
 Sec, 40. Paynients on Reasslg-ned Stock. Where 
 stock is reassigned on a second loan, payments thereon are to 
 be applied to such loan in the absence of any specific appro- 
 priation,* If the association with knowledge of a second 
 
 180; but see People, etc., Associa- 
 tion v. Furey, 20 Atl. R. 890, where 
 it was held, on foreclosure, as be- 
 tween the society and member, the 
 former is not bound to apply the 
 etock payments on the debt as the 
 member is not injured, as he will 
 receive the benefits of those install- 
 ments on the increased value of the 
 shares. 
 
 'Assignments of shares to a third 
 person will prevent such applica- 
 tion. 
 
 'Saving Fund v. Cake, 2 Leg. Rec 
 Rep. 172 ; Watkins v. Building Asso- 
 ciation, 97 Pa. St. 514; Building As- 
 sociation V. ilorgan, 2 Kulp, 19, 
 
 'Building Association v, Galla- 
 gher. 3 Law Times, N. S. 101. 
 
 ^Building Association v. Groes- 
 beck, 41 L. I. 16; Mechanics, etc, 
 Association v. Conover, 1 McC.irt. 
 
 219; Watkins V, Workingmen's, etc., 
 Association, 10 W. N. C. 414. Under 
 a by-law providing upon the death 
 of a member, his legal representa- 
 tive might upon notice receive the 
 net value of his shares, it was held 
 the proper moae of determining that 
 value was to ascertain the market 
 value of the shares: Babcock v. 
 3Iiddlesex, etc., Company, 28 Conn, 
 302. 
 
 ^Saving Fund v. Cake, supra. 
 
 ^Springville, etc., Association v. 
 Raber, 3 J Leg. Int. Pa. 329. 
 
 'Building Association v. Rood, 2 
 Kulp., (Pa ) 24'?. 
 
 ^Philadelphia, etc.. Association v. 
 Moore, 47 Pa. St. 233.
 
 88 BUILDING ASSOCIATIONS. 
 
 mortgage, releases its mortgage, its debt, so far as the subse- 
 quent mortgage is concerned, is satisfied to the extent of the 
 value of tlie stock;' if the borrower elects to have such appli- 
 cation made, only the balance, if any, over such application, 
 can be reached by creditors,^ for it is an absolute payment. 
 
 Skc. 41. Assigned Shares Cannot be Credited. 
 The right to have such application, if not directed by the 
 member, cannot be had by his creditors,' but a purchaser at 
 sheriff's sale is entitled to have the value of the shares cred- 
 ited,* and a surety of the member is entitled to have such 
 stock applied.* But a borrower who has assigned his shares to 
 a third person as collateral security, is not entitled to a credit 
 for the value thereof." 
 
 Sec. 42. Liability of Borrower under his Mort- 
 gage for Losses. The mortgaged property of a borrowing 
 member cannot be charged under his mortgage, to make up 
 general losses for the benetlt of the non-borrower. Unless the 
 mortgage so provides, that is a personal liability. When a 
 covenant is to pay weekly dues and tines until such time as the 
 association might have sufficient funds to pay all the holders 
 of unredeemed shares, the par value thereof, clear of all losses 
 and liabilities, it was held that the mortirao-ors could be 
 required to contribute to losses and liabilities only by the 
 prolonged payment of weekly dues in the continued operation 
 of the association.'' So where the conditions of the borrower's 
 mortgage have been wholly fulfilled by him in good faith, 
 whilst the building association was in actual operation as a 
 
 'Washington, etc. Association, v. Building Association v. Eshelbach, 
 
 Beaghen, 27 N. J. Eq. e»S. 7 Phila. 189; Kelly v. Accommo- 
 
 'Eariy's Appeal, 7 W. N. C. 184; dation, etc, Association, 2 Hhila. 
 
 and see Building Association v. 237; Saving Fund v. Murray, 
 
 Bayley, 1 Kulp, 315. 14 Leg. Int. 13.3; Columbia, etc., 
 
 ^Kreamer V. Saving Fund, 6 "W.N. Association v. Dobbins, 15 lb. 45; 
 
 C 267; Building Association v. Building Association v. Rowe, lb. 
 
 Hungerbueliler, 93 Pa. St. 2")8; ^Massey v. Citizen's, etc., Associa- 
 
 Buildlng Association v. Maniran, 2 tion, 22 Kan. 634. 
 
 Kulp,210. See authorities p. 8611.1. *Schober v. Accommodation, etc., 
 
 •*Kupfert V. Guttenberg, etc.. As- Association, 85 Pa. St. 2i3. 
 
 fiociation, 30 Pa. St. 465; Hughes's 'Low Si. etc., Association v. Znck- 
 
 Appeal, 30 Pa. St. 471; Overruling er, 48 Md. 448.
 
 LIABILITY OF BORROWER. 89 
 
 going corporation, and before its being placed in the h mds of 
 a receiver, the borrower is entitled to a cancellation of his 
 mortgage, although his personal lialjility to share in the losses 
 continues.' This rule would apply to associations having a 
 fixed period of termination or crediting dividends at stated 
 times. In a serial association, that does not make a tangible 
 division of its profits until it matures its stock, as long as there 
 were losses, thej would, in effect, postpone the maturity of 
 the stock, and, thus, necessarily the cancellation of the mort- 
 gage. But where the by-laws provided that on payment of an 
 amount equal to the sum advanced, with interest and other 
 charo^es, the mortorarje should be released, and the mort^awor 
 should should " at once cease to be a member," he was not 
 liable to contribute as his memebrship was terminated.' 
 
 "When there is a loss, it is deducted from the profits, and 
 the effect is to postpone the maturity of the shares, and there- 
 fore the payment of the debt. But, suppose the loss exceeds 
 the profit fund, and there is immediate necessity to extinguish 
 the claim against the society, the next resort is to the assets. 
 Building associations, legally speaking, seldom have available 
 assets of any consideration, since mortgage debts are not 
 regarded as such, as they are only a source of revenue which 
 constitutes what little available assets they may have.^ An 
 assessment on the stock then becomes necessary, and questions 
 may arise as to whether or not the mortgage secures such 
 assessment. If the mortgage contemplates securing such 
 assessment then it is an essential part of the indebtedness. If 
 it is not provided for by that instrument, it is hard to see why 
 the borrower should be discriminated against, by requiring 
 the mortgage given by him to secure a loan, should also hold 
 his property for an assessment, when the investor escapes with 
 only a personal liability. The logical rule would seem to be, 
 in the absence of a mortgage contract, the borrower and 
 
 ^Evermanv. Schmitt, 24 Bull. •'36; ^Lister v. Log Cabin, etc.,Associa- 
 
 Sparrow v. Farmer, 26 Beav. 511; tion, 38 Md. 115. 
 
 Fiirmer v. Smith, 4 H. & N. 196; ^McGrath v. Hamilton, etc., As- 
 
 llandley v. Farmer, !i9 Beav. 362; sociatiou, 44 Pa. St. 1583. 
 ""• 'Iti re Doncaster, etc., Society, L. 
 n., 3 £q. 158.
 
 90 
 
 BUILDING ASSOCIATIONS. 
 
 investor are precisely in the same situation and are personally 
 liable for losses up to the par value of the stock held by them. 
 Each has subscribed for stock in the corporation upon which 
 each is indebted. The investor is paying his with the inten- 
 tion of securing a lump sum as the result of his savings; the 
 borrower is maturing his stock for the farther expectation of 
 cancelling a debt. Both have contracted with the association 
 to make an indefinite number of payments until the stock i& 
 fully paid up. So, by their contracts, they are debtors until 
 that time is reached and the measure of their liability is the 
 amount of their stock subscription.' The fact that one is a 
 borrower, cannot change this liability. This liability would 
 be enforceable in favor of creditors upon insolvency, as in 
 ordinary corporations; but the liability may be usually termi- 
 nated under the statute by notice of withdrawal, providing the 
 stockholder is not in arrears to the association, does not owe 
 it or there are no losses. 
 
 Sec. 43. Acknowledgment of Mortgajre. The bor- 
 rowing member must, of course, give some evidence of his- 
 indebtedness to the society and this generally takes the form 
 of a bond or note comprehending his contract. This follows 
 the certification of the title by the attorney of the society. 
 To secure payment of the bond or note, the mortgage is given^ 
 but the contracts are separate. 
 
 Upon signing the mortgage, it should be acknowledged by 
 the mortgagors before a competent officer, usually a' notary 
 public. An acknowledgment is an authentication of an 
 instrument that enables it to be used for purposes of evidence 
 in a manner different from what it could have been previously. 
 The duties of an officer taking an acknowledgment seem to 
 be at the same time judicial and ministerial. Judicial in that 
 the officer has to determine upon the identity of the parties 
 etc., and ministerial in that he has to give a certificate of the 
 facts found. Regarding his duties as judicial, no officer may 
 take an acknowledfrment of a deed in which he is interested. 
 
 'State, etc., Association v. Kellogg, 
 63 Mo. 540.
 
 LEASES BY THE ASSOCIATION. 91 
 
 for no one maj be a jndore in his own case; besides it would 
 be an attempt to create evidence in one's favor, an attempt, 
 too, which must in the majority of cases, be altogetlier una- 
 vailing. It lias even been held, a notary public who is a 
 etockholder in a bank, cannot protest a note.' 
 
 The general rule seems to be when a notary is a party in 
 interest, he is disqualified to take the acknowledgement.' 
 However, an inferior court in Ohio has held the secretary of 
 an association who was a stockholder, may take the acknowl- 
 edgement of parties to a mortgage.^ The taking of the 
 acknowledgment by an officer of the association is, to say the 
 least, improper, and in view of the conflicting authorities, it 
 is wiser to have work of that character performed by persons 
 not having connection with the association, as stockholders or 
 officers. Upon the execution of the mortgage, it should be 
 registered in the proper office to give notice of the associa- 
 tion's claim as to all persons dealing with the mortgat'-ed 
 property. 
 
 Sec. 44. Leases by the Association. The officers of 
 the association in loaning money sometimes realize that the 
 margin is close for security and deeds are taken and leases 
 given for a rental equal to the dues, premium and interest, so 
 as to vest the title in the association, and avoid, in case of 
 default, expensive foreclosure and delay in perfecting title and 
 recovering the money invested. It should be borne in mind, 
 that every conveyance of land without regard to its form, 
 which is, in fact, a security for an antecedent debt, or for a 
 contemporaneous loan in the contemplation of a court of 
 equity, is a loan.* In considering such a transaction, the im- 
 portant inquiry v.'ith a court is, was the form of contract adopted 
 intended to secure the payment of money loaned or advanced? 
 And that inquiry is to be determined by considering the con- 
 tract, the relations of the parties, and all the attending circum- 
 
 'Bank v. Porter, 2 "Watts, 141; 'Horton v. Building Association, 
 
 Withers v. Baircl, 32 Am. Dec. 754, 6 Bull 141. 
 
 note. ^Bryant v. Cowart, 21 Ala. 93; 
 
 -Wilkowski v. Halle, 95 Am. Dec. Huglies v. Edwards, 9 Wheat. 489. 
 374, note.
 
 92 
 
 BUILDING ASSOCIATIONS. 
 
 Btances. Where the circumstances show that the parties 
 contemplated and intended no more than security to the asso- 
 ciation for the money loaned or advanced, and tliat being the 
 intention, they stand in relation of mortgagor and mortgagee,' 
 So, where a building association having power to loan money 
 to its stockholders, and also to purchase and lease property to 
 them, advanced money to one of its stock-holders, or at his 
 instance, in the purchase of a house and lot, taking the title to 
 itself, and leasing it to him at a stipulated annual rent, payable 
 monthly, and the association covenanted to keep the premises 
 insured to the amount of money advanced, and in case of a loss, 
 to apply the proceeds of insurance to re-building or repairing, 
 for the benefit of the stockholder, who covenanted to pay taxes 
 and repairs; and the stock holder was to be entitled to a con- 
 veyance in fee, daring the continuance of the lease, on making 
 payment of the money advanced, the contract was held to be 
 a mortgage.' 
 
 Sec. 45. Satisfiiction of Mortgagee. Upon the pay- 
 ment of the mortgage, either by money or maturity of the 
 stock, the association should enter satisfaction of the mortgage 
 upon the proper records.^ 
 
 Sec. 46. Borrower Entitled to Set Off. A borrower 
 may not only settle his debt by his stock, or actual money, but 
 he is entitled, as an ordinary debtor, to pay it all, or any part, by 
 set-off. A shareholder who had made a mortgage to the asso- 
 ciation can set off, or have applied, as against the amount due 
 from hiin to the association, under the mortgage, claims held by 
 him, these claims consisting of balances due from the associa- 
 tion to members, who had withdrawn from the association and 
 assio-ned them to the mortgagor; and there being nothing in 
 the constitution or by-laws of the association which made it 
 inequitable to allow the set-off or application, having regard 
 
 'Mobile, Ptc, Association V. Rob- 
 ertson, 65 Ala. 3i;9. 
 
 «Ib. 
 
 'And the borrower when sued 
 upon his mortgage, may show tliat 
 a proper application of the profits 
 
 would mature the stock and leave 
 his mortgage satisfied: Tyrrell, etc., 
 Association v. Haley, 139 Pa. St. 
 476. lie may set up the maturity of 
 the stock as an equitable defense to 
 the suit on his morLgage : lb.
 
 AMOUNT PAYABLE ON FORECLOSURE. 93 
 
 to the rights of others;' bat he cannot set off stock assigned 
 to him after maturity of his loan." And lie cannot prove as 
 a set off, loss suffered by him by reason of suspension of busi- 
 ness by the association.' 
 
 Sec. 47. Ainoviiit Payable Ui)oii Foreclosure. 
 Whenever a mortgage is foreclosed, the amount payable 
 by the mortgagor is a question upon which there has been 
 a wide divergence of opinion. The peculiar character of 
 the mortgage, calling as it does for an indefinite number of 
 small payments, for an uncertain time, is likely to cause per- 
 plexity in establishing a just computation of the amount re- 
 coverable in a foreclosure suit, when partial paj'ments have 
 been made on the borrower's stock. 
 
 The manner of estimating the amount recoverable against a 
 defaulting borrower, may be statutory, or provided for in the 
 by-laws; in either case, the manner designated must be fol- 
 lowed.* In the absence of any method being provided by the as- 
 sociation, some courts have adopted a rule requiring the proba- 
 ble or possible duration of the society, to be approximated by 
 proof, and the aggregate of all the subscriptions stipulated for 
 in the mortgage, to be calculated as they would accrue during 
 that period; to this sum must be added the arrearages and 
 fines standing against the mortgagor, and the whole amount 
 thus found is wd)at the association is entitled to recover; re- 
 bating, however, a just sum for interest on the future pay- 
 ments, so that the association will not recover interest on 
 the loan after it has been repaid to it.* 
 
 •Ilennighausen v. Tisher, 50 3td. Mueller, 8 rull. 07; Hagerman v- 
 
 583. Ohio, etc., Associiuion, 25 Ohio 
 
 "Building Association V. Rood, 2 State, 18(j; Windisch v Korman, 5 
 
 Kulp, 210. Bull. (iG4; Cincinnati, etc., Aspocia- 
 
 Uohnsfon v. Building Association, tion v. Flach.lCin. S. C. R. 4(i8; Ho- 
 
 104 Pa. St 304. boken, etc. Association v. Martin, 
 
 *Hekelnkaemper v. German, etc., 2 Beas (N J ) 427 ; Central, eic ,As«o- 
 
 Association, 23 Kan. 549. ciation v. O'Connor, 5 Bull S.W; Fox 
 
 •Robertson v. American, etc., As- v. Cottage, etc.. Association 81 Va. 
 
 Bociition, 10 Ml 3'.)7; McCahan v. 677; and see Building Association v. 
 
 Columbian, etc.. Association, 40 Md. Leyden, 1 Bull. IJG; Building Asso- 
 
 226; AUemania, etc., Association v. ciation v. Eggen, 5 Bull. 732. In the
 
 94 
 
 BUILDING ASSOCIATIONS. 
 
 Seo. 48. The English Rule. The rule adopted in 
 England, is, that unless the rules provide otherwise the mem- ^ 
 ber can only redeem upon the terras of paying all the sub- 
 scriptions hereafter to become due, taking into account the 
 longest possible estimated duration of the society; such sub- 
 scriptions to be taken to be a debt presently due from him;' 
 adding lines, arrearages, and assessments, if there be any, and 
 taking into account the dues paid by him.^ It will be noticed 
 that the rule of the American courts is substantially the one 
 supported by the English courts, basing the calculation upon 
 the " possible duration " of the society, modifying it, however, 
 by rebating interest on the future payments. 
 
 Sec. 49. Kules Laid Down Upon Voluntary Re- 
 payment. The statute usually provides for, and it is gen- 
 erally considered, a right of a borrower to repay his loan. The 
 society has loaned its funds to him, with the expectation that 
 he will keep them until the maturity of the stock, but the 
 statute, by its liberal interposition, gives him the right to re- 
 pay his debt, just as he may terminate his membership, yet 
 seldom has the legislature defined the method of computing 
 the amount to be repaid by him. That has been left to the 
 associations, and in the absence of a definition by them, the 
 courts adopting the rule of " possible duration," have said 
 that where such member is not a defaulter, charged with vio- 
 lating the association's rules, but is exercising a right- vested 
 in him, he is entitled to more consideration than if he had 
 been sued, and to his dues, considered as credits on his debt, a 
 certain proportion of the profits, by way of interest, should be 
 added.* And they make the calculation upon voluntary re- 
 
 last case it was held that a defeas- 
 ance clause in the mortgage, provid- 
 ing in the event of foreclosure the 
 amount due shall be ascertained by 
 taking the whole amount of the 
 loan, and deducting credits paid in, 
 is void, as depriving the member of 
 the benefits he is entitled to as a 
 member. 
 
 ■Davis Building Society, p. 293. 
 
 ^Mosley v. Baker, 12 Jur. 551 ; 
 Seagrave v. Pope, 22 L. J., Oh. 258; 
 Fleming v. Self, 24 L. T. Rep. 101 ; 
 Archer v. Harrison, 3 Jur. N. S. 194; 
 Smith V. Pilkington, 4 Jur. N. S. 
 58; Farmer v. Smith, 4 H. & N. 
 196. These are the leading English 
 cases on the subject. 
 
 'See authorities, supra and p. 95. 
 post.
 
 UNCERTAINTY OF THE FOREGOING RULES. 95 
 
 payment upon the same theory, adding, however, the same in- 
 terest on the stock payments, as the non-borrower receives npon 
 withdrawal. These rules underlie the American cases, where 
 the statute or by-laws do not clearly define the manner of cal- 
 culating the amount of repayment, but they may be, and should 
 be, superseded by by-law provisions for a method.' 
 
 Sec. 50. Uncertainty of the Foreg-oiiig- Rules. The 
 English rule of estimating the amount due upon voluntary 
 repayment, and upon default by "probable duration," is fol- 
 lowed in those jurisdictions which regard the transaction as 
 an advancement on the shares and redemption of those shares. 
 But it seems by retaining the proposition that the transaction 
 is merely a loan, and it certainly defines itself very clearly as 
 such, that the rule of the English courts, or as modified by 
 the American courts, cannot fitly be invoked. In computing 
 the amount to be paid upon voluntary repajnnent, and upon 
 default, an important distinction, suggested by the different 
 situations of the members, should be observed; but in either 
 case it is of but little effect on the computation, how long the 
 society will possibly run. The fact is fixed and certain, that 
 the member obtained a certain sum; another fact is equally 
 as demonstrable, that he has paid a certain amount on his 
 stock. If he is in default the society may foreclose, and, at 
 his instance, it is bound to apply the value of the pledged 
 stock, measured by the dues paid, on its debt. If he is not in 
 
 ■Hoboken, etc., Association v. ciation, 31 Ohio. St. 517; Richards 
 
 Martin, 2 Beas. 427; Somerset Co. v. Bibb Co., etc., Association, 24 Ga. 
 
 etc., Association v. Vandevere, 3 198; Ocmulgee, etc , Association v. 
 
 Stock, 382; Citizens', etc., Associa- Thomson, 52 Ga. 4S7; Winchester, 
 
 tJon V. Webster, 25 Barb. 263; City, etc. Association v. Gilbert, 23 Grat. 
 
 etc.. Company v. Fatty, I Abb. 787; Waverly, etc.. Association v. 
 
 App. Dec. 317; Shannon v. How- Buck, 64 Md. 338; but see Overby 
 
 ard, etc.. Association, 36 Md. 383; v. Fayetteville, etc.. Association, 81 
 
 Lister v. Log Cabin, etc., Associa- N. C 56; Iloskins v. Mechanics', etc., 
 
 tion, 38 Md. 115; Robertson v. Association, 84 N. C. 83;^; Hekeln- 
 
 American, etc.. Association, 10 j\Id. kaemper, v. German, etc., Associa- 
 
 397; McCahan v. Columbian, etc, tion, 22 Kans. 54U; Glynn v. Home, 
 
 Association, 40 Md. 226; Hagerman etc., Association. 22 Kans. 746; Wat- 
 
 V. Ohio, etc., Association, 25 Ohio kins v. Workingmen's, etc., Associ- 
 
 St. 186 ; Risk v. Delphos, etc., Asso- ation, 97 Pa. St. 514.
 
 96 
 
 BUILDING ASSOCIATIONS. 
 
 default, the value of his stock, on the basis of its withdrawal 
 value, should be credited on the debt. The debt and credits 
 are certain in figures and enforceable in law. Then, it seems 
 to us, that a rule so complex in its practical application, and 
 including a great element of uncertainty in estimating proba- 
 ble duration, is likely to miscarry justice, and especially is this 
 true where interest is charged to the estimated end. The du- 
 ration depends upon several conditions, none of which can 
 with any certainty be foretold. For instance, if tliere is an 
 accumulation of idle money, a financial stringency or loss, the 
 maturity of the shares is postponed. The prosperity may be 
 unbroken, and earlier maturity reached. No proof in prae- 
 senti can surely establish an intangible matter absolutely in 
 futuro^ and no one can say how much will be required by dues, 
 to mature shares, unless the margin of profits is excluded. If 
 that margin is excluded, and interest is rebated for the proba- 
 ble duration, under the American modifications of the English 
 rule, it is simply repaying the loan, and the transaction would 
 be simplified by so terming it. 
 
 The rule as applied to the repaying or defaulting borrower 
 lacks certainty, and therefore may be productive of injustice. 
 Sec. 51. The Natural and Los:ical Rule. The ad- 
 vancement of money on the shares is simplified, in considering 
 its legal aspect, by regarding it as a loan. The rules governing 
 repayment follow naturally and logically. 
 
 The incorporating statute usually permits the borrower to 
 withdraw, upon repayment of the debt, prescribing the basis of 
 withdrawal, but if it is silent, the by-laws should provide for 
 a withdrawal value to be credited on the debt." If the statute 
 is silent on the subject, the by-laws should provide for the 
 computation of the amount to be paid by the default- 
 ino- or repaying borrower. The association, granting that 
 the right of repayment to the borrower is just, must, 
 however, protect itself. If, upon the exercise of a with- 
 drawal right, the member is returned his dues, with in- 
 
 'Borden State, etc., Association v. 
 Hayes, 61 Md. 597.
 
 THE NATIONAL. AND LOGICAL RULE, 97 
 
 terest, there is no reason for any discrinnination ap^ainst 
 the repaying borrower, and he should be given interest on 
 repayment; but if the society is likely to suffer loss by an 
 inability to reloan the money paid back, it should protect it- 
 self by by-law, requiring the payment of such additional inter- 
 est as will cover the time the money remains unloaned. If 
 the borrower is in default, having violated the rules, he has 
 forfeited his right to any interest profit,' but he has not 
 thereby forfeited his stock', and he can apply that as a credit 
 if he chooses. The transaction thus readily resolves itself into 
 a loan, and the association is entitled to recover the balance 
 with any fines and proper charges.^ The association, then, can 
 make an equitable settlement with the defaulting borrower, by 
 recovering the amount of his loan, with all arrearages and 
 fines, crediting, however, the stock payments; and if the mem- 
 ber voluntarily repays his loan, the association may credit on 
 his debt the withdrawal value of his shares, if the member so 
 elects, and desires to withdraw his membership. If the stat- 
 ute provides for voluntary repayment at the option of the bor- 
 rower, the association could not impose any conditions upon 
 the repayment, as the charging of interest for the time, suffi- 
 cient to reloan the money, except on the ground that the reg- 
 ulation isexercised as a reasonable one. If repayment is granted 
 by the association, without statutory compulsion, additional in- 
 terest may be added without question, to protect it from any loss. 
 
 If interest or premium is deducted from the loan, there 
 should be a rebate from the whole amount so deducted, as the 
 unexpired time bears to the past time. 
 
 This rule avoids intricate calculation, and places the mem- 
 bers upon a certain and just footing. 
 
 'Watkins v. Workingmens', etc., sociation, supra. So it mny bo 
 
 Associaiion, 97 Pa. St. 514; Matter- waived by implication: North 
 
 son V. Elderfield, 4 L R. Ch. 207; America, etc., Association v. Sutton, 
 
 but, see, Building Association v. Eg- 35 Pa. St. 4G3. 
 
 gen, 5 Bull. 75^-. 'flanner v. Greensboro, etc., As- 
 
 *Unless there is ■ a forfeiture sociation, 78 N. C. Ib8. 
 allowed by statute and it must then 
 be so declared by the Association: 
 Watkinsv. Workingmens', etc., As- 
 
 7
 
 98 
 
 BUILDING ASSOCIATIONS. 
 
 Of course, if the statute provides for a method of compnta- 
 tion, that course must be pursued. These suggestions are only 
 available in case no other method is pointed out. 
 
 It has been assumed that a borrower is entitled to share in 
 the profits of the association as well as the investor. It is only 
 in those jurisdictions where the transaction is regarded as a 
 redemption of the shares, that it is held that he is not entitled 
 to share in the earnings, while the better weight of authority 
 is to regard it as a loan, and both kinds of members stand so 
 far on the same footing." 
 
 Sec. 52. By-Laws Should Provide for Record 
 Cancellation. The by-laws should prescribe the manner of 
 making record cancellations, and vest that authority in an offi- 
 cer, usually the president. Unless the assent of the associa- 
 tion is ac(|uired in some such way, it is not bound by the can- 
 cellation.* If the satisfaction is fraudulently procured, as 
 where the secretary falsely reported the maturity of the shares, 
 and upon such information the board of directors directed 
 satisfaction to be entered, a court of equity will strike off the 
 entry.* If the borrower vohintarily pays in, to get a release of 
 the mortgage, more money than is required by the by-laws, if 
 he knew all the facts, but was mistaken in his legal rights, he 
 cannot recover it back.' 
 
 'Overby v. Fayetteville, etc., Asso- 
 ciation, 81 N. C St) ; Winchester, etc., 
 Association v. Gilbert. 23 Grat. 787; 
 Cason V. Seldner, 77 Va. 293. 
 
 ''Winterer v. Building Associa- 
 tion, 44 L. I. 122; People v. Lowe, 
 117 N. Y. 175; Seibel v. Building 
 Association, 43 Oiiio St. 371. 
 
 ^Baxter v. Mclntire, 13 Gray, 16S. 
 
 ^Callahan's Appeal, 124 Pa. St 
 138. 
 
 *Haigh V. United States, etc., As- 
 sociation, 19 W. Va. 792.
 
 CHAPTER IX. 
 FINES. 
 
 Sectiott 1. Necessity of Fines. Section 4. No Interest on Fines. 
 
 Section 2. Must be Reasonable. Section 5. Are Lien on Stock. 
 
 Section 3. Stop after Foreclos- 
 ure. 
 
 Section 1. Necessity of Fines. Fines are necessarily 
 a part of the plan of an association. The carrying forward of 
 its purposes, conceived of strict mutuality, requires of each 
 member punctuality. Upon that, largely depends the suc- 
 cess of the association. If a member neglects his payments, 
 he does an injury to the other members, who are faithfully ob- 
 serving their obligations; it therefore becomes necessary to 
 compensate those injuries by compelling the delinquent to 
 pay a small additional sum each week for the profit of the as- 
 sociation. This is, in principle, liquidated damages, and takes 
 the form of lines. Or, if an officer fails to do his duty, a pen- 
 alty by the way of lines might be assessed against him, if pro- 
 vided for in the by-laws. So while the statute generally au- 
 thorizes their charge, yet it has been held that lines slightly 
 in excess of the real damages, are recoverable as stipulated 
 damages.' 
 
 'Shannon v. Howard, etc., Asso- Association, 117 Pa. St., 1 where it 
 ciation, 36 Md. 383; Ocmulgpe,etc., was held that such a fine was un- 
 Association V. Thomson, 53 Ga. 427. reasonable, and the by-law provid- 
 The fine in this case was 10 per ing therefor was void, 
 cent, on the dollar; and see Lynn v. 
 
 99
 
 100 
 
 BUILDING ASSOCIATIONS. 
 
 In some other courts it is held that where statutory author- 
 ity is wanting, they cannot be enforced.' 
 
 Sec. 2. Must be Keasoiiable. Fines should be assessed 
 in the exercise of statutory power, and must be reasonable." 
 They may, however, be assessed upon the theory of stipulated 
 damages, in the absence of a statute. If they are oppressive and 
 extortionate, the association is hurt as well as the delinquent 
 member. If based on the real damage, or slightly in excess of 
 it, to the association, justice is well measured to all concerned.' 
 They can be imposed only byway of punishment, for some de- 
 linquency in the performance of a duty, wliich the member 
 may owe to the corporation by reason of his membership. It 
 is unreasonable to assess more than one fine for the same de- 
 linquency; that is, dues payable on June 16, cannot on June 
 23, be fined for again.* Under a power to fine for non pay- 
 ment of dues, fines cannot be charged on delinquent interest;' 
 the authority to assess fines for unpaid interest must appear 
 from the by-laws, where the statute does not limit their impo- 
 sition to dues, and they then may be enforced.* 
 
 A by-law, which imposes a fine of ten cents monthly, on 
 each dollar due, has been held to be unreasonable, extortionate 
 and oppressive, and therefore void/ but a fine of ten cents on 
 each $200, where power is given to impose fines of limited, 
 amount, is valid.^ A fine of five per cent of the total amount 
 
 'Lincoln, etc, Association v. Gra- 
 ham, 7 Neb. 173; Link v. German- 
 town, etc (Association, 89 Pa. St. 15. 
 
 'Lynn v. Freemansburg, etc., As- 
 sociation, 1 17 Pa. St. 1. 
 
 *Hagerman v. Ohio, etc., Associa- 
 tion, 35 Ohio St. 186; Forrest City, 
 etc , Association, v. Gallagher, 25 
 Ohio St. 208; Building Association 
 V. Schuller, 3 W. N. C 431; Pfeister 
 V. Wheeling, etc., Association, 19 W. 
 Va. 676. 
 
 ^Hagerman v. Ohio, etc., Associa- 
 tion, supra; Forrest City, etc.. Asso- 
 ciation V. Gallagher, supra; Mc- 
 Gannon v. Central, etc., A'ssociation, 
 
 19 W. Va. 726 ; Monumental, etc., 
 Society v. Lewin, 38 Md 445; see, 
 also, Gouchenour v. Sullivan, etc., 
 Association, 119 Ind. 441. 
 
 ^Parker v. United States, etc., As- 
 sociation, 19 Va. 744; Shannon v. 
 Howard, etc.. Association, 36 Md. 
 383; Clarksville, etc., Association 
 V. Stephens, 26 N. .T. Eq. 351. 
 
 «Parker v. Butcher, L. R, 3 Eq., 
 762. 
 
 'Lynn v. Freemansburgh, etc. 
 Associaiion, supra. 
 
 "Clarksville, etc., Association ▼. 
 Stephens, supra.
 
 ARE LIEN ON STOCK. 101 
 
 in arrear, was held not unreasonable, and that it included five 
 per cent on the amount of previous fines and other payments, 
 as well as the principal and interest, in arrears, does not make 
 it unreasonable.' Fines can only be collected from members.' 
 The mortgage may embrace lawful fines, and they may be 
 charged against the land,3 if they are not included in the mort- 
 gage, it will not be considered as security for their payment/ 
 
 Sec. 3. Stop After Foreclosure. When fines are se- 
 cured by the mortgage, of a borrowing member, after assign- 
 ment as collateral security for the mortgage money, they do 
 not cease on filing of a bill to foreclose the mortgage, to which 
 the stock is collateral,' but after decree of foreclosure, the as- 
 sociation cannot assess fines." 
 
 Sec. 4. No Interest on Fines. The fines should be 
 regulated by the by-laws, which should be explicit and certain 
 on the subject. Interest cannot be charged on fines,^ but 
 after decree for foreclosure, they become a part of the princi- 
 pal and bear interest.* 
 
 Sec. 5. Are Lien on Stock. The association holds a 
 lien on the stock of a member, for the payment of the fines 
 legally assessed, and he cannot withdraw or apply his stock in 
 cancellation of his debt, until that lien is satisfied, or cannot 
 sell his stock free from the lien. 
 
 ^In re Middlesbrough, etc., So- *Building Association v. Groes- 
 
 ciety, 54 L. J. Ch. 592. beck, 4 L. I. (Pa) 16. 
 
 'Hagerman v. Ohio, etc., Associa- ^Union, etc., Association, v. Ma- 
 
 tion 2i Ohio St. 186; Forrest City, sonic Hall Association, 2 Stew. 389. 
 etc.. Association, v. Gallagher, 25 'Houlette's Estate, 2 Chest. 511. 
 
 Ohio St. 208. 'Ingoldby v. Riley, 28 L.T. N.S. 55. 
 
 'Hagerman v. Ohio, etc., Associar ^Provident, etc., Society v. Green- 
 
 tion, supra. hill, L. R., 9 Ch. D. 123.
 
 CHAPTER X. 
 
 USUKY. 
 
 Sectiok 1. Definition. 
 
 Section 2. Premium not Usu- 
 rious as formerly. 
 
 Section 3. Premiums Author- 
 ized by Statute. 
 
 Section 4. When Interest is not 
 Usurious. 
 
 Sections. Illegal Interest not 
 
 Recoverable by Association. 
 
 Section 6. May be Recovered 
 Back by the Borrower. 
 
 Section 7. A Personal Defense. 
 
 Section 8. Rule for Officers. 
 
 Section 1. Definition. The mortgage, bond or note of 
 
 the association to be valid must be free from the taint of usury. 
 Usury is defined as the taking of more for the use of money than 
 the law allows, or the extortion of a sum beyond what is legal.' 
 Seo. 2. Premium Not Usurious as Formerly. The 
 question of usury is not involved in the transactions of associ- 
 ations so much now as formerly. In the earlier associations, 
 the legislature was unwilling to grant the privilege of adding 
 a premium charge, thus increasing the cost of money beyond 
 the legal rate. The usury question, in the reported cases, in 
 nearly each instance, arose in the endeavor of the association 
 to make a charge for preference to the right in having a loan. 
 It was held that usury cannot be avoided by complicated 
 transactions." So a combination of interest and expenses at a 
 
 •Tyler Usury, p. 35 ; see Associa- 'Martin v. Nashville, etc. Associa- 
 tion V. Bollinger, 12 Rich. Eq. 124. tion, 2 Cold. 418. 
 
 102
 
 PREMIUM NOT USURIOUS AS FORMERLY. 
 
 103 
 
 higher than a legal rate is tainted with usury;* if the borrower 
 pays more than the legal rate by arrangement, no matter what 
 its form is, it is usury,' but it is not every transaction increasing 
 
 'Waverly, etc., Associatioa v. 
 Buck, 64 Md. 338. Expenses of 
 loan do not effect the transaction as 
 usurious : Iloboken, etc., Association 
 V. Martin, 2 I>as. 437. 
 
 *Williar v. Baltimore etc., Associ- 
 ation, 45 Md. 546; Bates v. Peoples, 
 etc.. Association. 42 Ohio St. 655; 
 Association v. Bollinger, supra; Lin- 
 coln, etc., Association v Graham, 7 
 Neb., 173; Mills V.Salisbury, etc., 
 Association, 75 N. C 292; Melville 
 V, American, etc.. Association, 33 
 Barb. 103; Thompson v. Gillison, 
 28 S. C. 534. But, see Delano 
 V. Wild, 6 Allen 1; Bowker v. Mill 
 River, etc.. Association, 7 Allen, 
 ICO ; however, it was held in a North 
 Carolina case that a borrowing 
 member paying usury, would not 
 be aided, being considered in ^arj 
 delicto: Latham v. Washington, etc.. 
 Association, 77 N. C 145; but this 
 doctrine is generally denied. In or- 
 der to sustain the premium charge 
 not authorized by statute, the Eng- 
 lish courts considered associations 
 as partnership arrangements and 
 such charge not to be within the 
 usury laws: Silver v. Barnes, 6Bing. 
 N. C. 180; Burbidge v. Cotton, 8 E. 
 L. & E 57 ; see, also, Shannon v. 
 Dunn, 43 N. H. 194; Montgomery 
 etc., Association v. Robinson, 69 
 Ala. 413; Franklin etc.. Association, 
 V. Marsh, 29 N. J. L. 225; Concor- 
 dia, etc.. Association v. Read, 93 N. 
 Y. 474; Merrill v. Mclnlire, 13 
 Gray, 157; St. Louis, etc.. Association 
 V. Augustin, 2 Mo. App. 123 ; Contra, 
 Reiser v. Wm. Tell, etc.. Associa- 
 tion V. 39 Pa. St. 137; Mechanic's 
 
 etc., Association v. Wilcox, 24 
 Conn. 147; Baltimore, etc. Society, 
 V. Taylor, 41 Md; Mills v. Salis- 
 bury, etc.. Association, svpra; 
 Fcrrest City, etc.. Association 
 V. Gallagher, 25 Ohio St., 208. In 
 Parker v. Fulton, etc., Association 
 46 Ga. 166, it was held as the scheme 
 involved risk of losing the whole or 
 getting less than the legal rate of 
 interest, there was no usury. See, 
 al.»o, Bibb Co., etc., Association v. 
 Richards, 21 Ga. 592. As the stat- 
 utes generally authorize the fi.xing 
 of premium charges, they are taken 
 out of the usury laws and the prin- 
 ciples laid down in the above cases 
 have no application. Premiums 
 when authorized by statute are held 
 lawful and recoverable : Jarrett v. 
 Cope, 68 Pa. St. 67; Franklin, etc., 
 Association v. Marsh, supra; 
 Hoboken, etc., Association v. Mar- 
 tin, supra; Red Bank, etc, Associa 
 tion V. Patterson, 12 C. E. Green, 
 223; Citizens', etc., Association v. 
 Webster, 25 Barb. 263; West Win- 
 Bted, etc.. Association v. Ford, 27 
 Conn. 282; Licking Co.. etc.. Associ- 
 ation V. Bebout. 29 Ohio St. 252; 
 Robertson v. American, etc., Associ- 
 ation, 10 Md. 397; Bowker v. Mill 
 River, etc.. Association, supra; 
 Shannon v. Dunn, supra; Massey 
 V. Citizens, etc., Associa'ion, 22; 
 Kans. 624; McLaughlin v. Citi- 
 zens Association, 63 lud 264: Shaff- 
 rey V. Workingmen's, etc., A.ssocia- 
 tion, 64 Ind. (iOO; White v. Mechan- 
 ics, etc., Association, 22 Grat. 233. 
 If there were any precedent condi- 
 tions to a recovery, as that the bor-
 
 104 BUILDING ASSOCIATIONS. 
 
 the cost of money that will involve nsury; so, where there was 
 an agreement that retiring members of a building association 
 may take out the money they had paid in, and interest thereon, 
 at a certain rate above the legal rate, it was held that it is not 
 open to the objection of usury. Such addition is not interest 
 on money loaned, but an adjudged profit on the money put 
 in/ 
 
 Sec. 3. Premiums Authorized by Statute. The 
 statutes in nearly all the states, now exempt building associa- 
 tions from usury in charging premium, so that when the cost 
 of the money by the addition of the premium to the interest 
 is increased beyond the legal rate, there is no nsury, but this 
 privilege extends only to premiums, and the association has 
 no authority to increase, by any device or system, the distinct- 
 ively interest charge on the loan, beyond that lixed by statute 
 as the lawful rate. The legislative intention in allowing pre- 
 miums, was to confer on the association an equitable and 
 profitable method of selecting its borrowers, by requirino- of 
 them a bonus. So if the association disregards this intention, 
 and by any form increases the interest, the courts promptly 
 restrain any such practice, and compel it to refund any such 
 over charges. 
 
 Sec. 4. When Interest is not Usurious. Interest 
 at the lawful rate may be charged on the principal of the 
 loan, without regard to the weekly or monthly reductions/ and 
 because the interest is payable monthly or weekly, does not 
 render it usurious.^ Interest should be on the sum advanced 
 and not upon the par value, where the premium is deducted/ as 
 
 rower should sign an agreement, it ''Red Bank, etc., Association v- 
 
 must have been complied with be- Patterson, 12 C. E. Green, 223. 
 
 fore there can be a recovery : Build- ''Baltimore, etc., Society v. Taylor, 
 
 ing Association v. Lyons: 2 Kulp. 41 Md. 409; Oak Cottage, etc., Assc* 
 
 409. See cicely's Estate, 3 Kulp, ciation v. Eastman, 31 ]\[d. 556; Con- 
 
 47- tra : Citizens', etc, Association v. 
 
 'Jungkuntz v. Building Associa- 'Webster, 25 Barb. 2C3. 
 tioD, 6 Bull. 428. 
 
 'City, etc.. Company v. Fatty, 1 
 Abb. Ct. App. 847. 
 
 1
 
 MAY BE RECOVERED BACK BY BORROWER. 105 
 
 it is unlawful to charge interest upon premiums unless per- 
 mitted by statute.' 
 
 Sec. 5. Illegal Interest not Recoverable by the 
 Association. Mortgagors are only liable for the true amount 
 due on the mortgage, excluding all excessive interest exacted 
 or paid in the shape of bonus or otherwise.' A loan to a per- 
 son not a member, at a premium, in addition to interest, is 
 usurious,^ as the legislative privilege is intended to apply to 
 the members only. A borrower paying legal interest and 
 dues, cannot claim usury, because he did not receive his entire 
 loan, but which was ready for him at all times.* 
 
 Sec. 6. May be Recovered Back by the Borrovrer. 
 If usurious intei*est is refunded and accepted under an ao-ree- 
 ment that only legal interest shall thereafter be collected, it 
 frees the note from the taint of usury .s Usurious interest paid 
 may be recovered back, not being considered voluntary.* The 
 measure of damages depends upon the statutes of the different 
 states; in some, it would be the difference between the debt, 
 with legal interest added, and the amount of payments made 
 thereon, computed as partial payments on such debt,' 
 
 Sec. 7. A Personal Defense. Usury is generally con- 
 sidered a personal defense and the purchaser of mortgaged 
 
 •Hawkeye, etc, Association v. Company v. Whithed, 49 N. W. 
 
 Blackburn, ^8 Iowa, 385; Oak Cot- Rep. 318. 
 
 tage, etc , Association v. Eastman, 31 ^Ilammerslough v. Kansas City, 
 Md., 55G; Jackson v. Cassidy, C8 etc., Association, 79 JMo. 80. 
 Tex. 283; Watson V. Aiken, 55 Tex. ^Phillips v. Columbia City, etc., 
 536 ; Forrest City, etc., Association v. Association, 53 Iowa, 7 1 9. 
 Gallagher, 25 Ohio St. 208. Author- ^Border 8tate, etc , Association v. 
 ized in Pennsylvania; Association V. Hilleary, 68 Md. 53; Williar v. Bal- 
 Neurath, 2 \V. N. C. 95 ; Associa- timore, etc.. Association, 45 Md. 
 tion V. George, 3 lb. 239; Selden v 546; Bexar, etc.. Association v. Rob- 
 Reliable, etc.. Association, 32 P. F. inson, 78 Tex 163; Philanthrophic, 
 Smith, 3 !6. etc., Association v. Mc. Kulght, 35 
 
 'Birmingham v. Maryland, etc., Pa. St. 470; Skinner's Ehtate, 4 
 
 Association, 45 Md. 541. Phila. 189. 
 
 'Mechanics, etc.. Association v. ''Bexar, etc., Asflociation v. Robin- 
 
 Meriden Company, 24 Conn. 1.^)9; Bon, supra. 
 Joseph, etc., As.'^ociation v. Thomp- 
 fion, 19 Kans. 321 ; Vermont, etc.,
 
 106 BUILDING ASSOCIATIONS. 
 
 property, assuming the mortgasje debt, cannot set it up in an 
 action to foreclose the mortgage.' 
 
 Sec. 8. Rules for Officers. The officers of the associ- 
 ation sliould be governed in fixing tlie interest charges on 
 loans by the statute. If premium is authorized, there is no 
 question that such authority takes its charge out of the usury 
 statute. If not authorized, the officers should safely confine 
 the interest rates within those allowed by law. 
 
 'People's, etc., Bank V. Collins, 27 Bush 110; Henderson, etc., Associ- 
 
 Conn. 142; Stein v. Indianapolis, at ion v. Johnson, 88 Ky. 101; see» 
 
 etc.. Association, 18 Ind. 237. als^o Hawkeye, etc. Association v. 
 
 *In Kentucky, no more than stat- Blackburn, 48 Iowa, 3S5; Burling- 
 
 utory interest is allowed, and the ton, etc. Association v. Heider, 55 
 
 charging of more invalidated the Iowa, 424; Baltimore, etc.. Society 
 
 contract. Herbert v. Kenton, etc., v. Taylor, 41 Md. 409; Lucas v. 
 
 Association, 11 Bush. 296; Grodon, Greenville, etc., Association, 22 
 
 V. Winchester, etc, Association, 13 Ohio St. 339. 
 
 I
 
 CHAPTER XI. 
 
 POWER OF THE ASSOCIATION TO BORROW 
 MONEY. 
 
 Section 1. A Practical Aspect. 
 
 Section 2. English Authorities. 
 
 Section 3. Americaa Authori- 
 ties. 
 
 Section 4. Weight of American 
 Authorities. 
 
 Section 5. Implied Power to 
 Borrow. 
 
 Section 6. Overdrawing Bank 
 Account is Borrowing. 
 
 Section 7. Resolution to Bor- 
 row. 
 
 Section 8. The Effect of As- 
 signing Mortgages. 
 
 Section 9. No Power to Sell 
 its Mortgages. 
 
 Section 1. A Practical Asi>ect. In the course of ita 
 business, an association will often find itself short of monej 
 to supply the demands made upon it. The applications of 
 borrowers exceed the receipts, both temporary and for some 
 time prospective; or a series should be paid off, or some por- 
 tion of the stock has matured and should be cancelled 
 
 • 
 
 In the building season, the association Unds itself linan- 
 cially cramped. This stringency may be temporary, as 
 in the winter season, money will naturally accumulate. With 
 these conditions confronting it, should the association borrow 
 money to relieve its embarrassment ? The original idea was, 
 strictly, that of enforced accumulations of members as the 
 source of revenue. Borrowers were not so numerous, and 
 were educated to wait, until the loan fund thus created 
 was sufficient to satisfy each member, in the order of pri- 
 
 107
 
 108 BUILDING ASSOCIATIONS. 
 
 ority. Bat the latter day association, with ns, having an en- 
 larged membership, and fliictnating demands, which are at 
 times beyond its funds, is differently situated. The associa- 
 tion should have money to meet these demands. Very often 
 the member has joined to secure a loan. Some provision 
 must be made to suppress the discontent of disappointed mem- 
 bers. The association is thus threated with a crippling of its 
 membership and diminution of its profits. An association 
 surrounded by these conditions, unless prohibited by statute, 
 may borrow money for the purpose of relieving them. It 
 may be considered as necessary to accomplish the purposes of 
 the association, but this disposition to borrow must not con- 
 flict with the legislative intention in incorporating the associ- 
 ation, and it becomes important to discover tliat intention. 
 The legislature rarely defines that right to borrow, as it is 
 considered incidental to ordinary corporations, and its exercise 
 is left to the control of the courts. But a building association 
 is not an ordinary corporation; in fact, it exercises some ex- 
 traordinary privileges, particularly in not being amenable to 
 the usury laws. It is created for the declared purposes of ac- 
 cumulating money, and lending the accumulations to its mem- 
 bers to build or acquire homes for themselves. The legislature 
 devised this plan of co-operative accumulations for the pur- 
 pose of assisting each member to become his own landlord. 
 The state has a selfish motive in the promotion of a building 
 association, as through its workings, it is planting deeply the 
 roots of citizenship. The drifting, thriftless classes are offered 
 a school of economy, and the earnest and economical classes 
 are given an opportunity. There is, then, a formation of a 
 steady, energetic and accumulating citizen. The cares of the 
 state are lessened by decreasing poverty, and its prosperity is 
 increased by growing material wealth. We may clearly con- 
 ceive, then, that the intention of the legislature in the creation 
 of building associations is, first, to encourage savings; second, 
 to secure homes for the savers. The accomplishment of these 
 objects may be dependent, partly, upon the ability to borrow. 
 Such an assumption is not an undue one, or foreign to the 
 legislative conception of the association. By its silence, the
 
 ENGLISH AUTHORITIES. 109 
 
 creative power left the association with the limited right to 
 borrow as its legitimate necessities might require. This prop- 
 osition is sustained by the weight of authoi-ity. 
 
 Sec. 2. English Authorities. In England, the ques- 
 tion was frequently before tlie courts prior to the act of par- 
 liament of 1874, Borrowing to a limited extent was held 
 valid,' but when there was no rule of the association authoriz- 
 ing borrowing, it was held illegal to borrow, and a person who 
 had advanced money to the trustees of a society under such 
 circumstances, was held not to be a creditor, legal or equitable, 
 of the society, and, therefore, not entitled to a winding up 
 order;' and if the rule did not fix a limit of the amount to be 
 borrowed, it was held illeojal.3 So a rule authorizino: unlim- 
 ited borrowing was held ultra vires.* Where the limit was 
 exceeded, and the society derived no benefit from the loan, it 
 was held that it was not liable, but that the directors were 
 personally liable, as they had held out the treasurer as the 
 agent of the society, although there was no fraud on their 
 part.' 
 
 "Where there was a rule authorizing the borrowing of money 
 for the special purpose of making advances to members who 
 might have applied for them, and tlie society having borrowed 
 a sum of money not actually required, to meet applications at 
 the time of the loan, it was held that the society had no power 
 to take the loan.* And where the rules authorized the trustee 
 to borrow money, and spend it in a way that was held not to 
 be for the legitimate purposes of the society, payment was not 
 allowed to be enforced ag;iinst the society.' Where there was 
 no rule authorizing borrowing, there was no power, but money 
 advanced by a bank which was the depository of the society, 
 
 'Laing v. Reed, L. R. 5 Ch. App. 'Chapleo v. Brunswick, etc, So- 
 
 4. ciety, L. R , 6 Q B. D., GOG. 
 
 '/ft re National, etc., Society, ex 'oSIoye v. Sparrow, 22 L. T. Rep. 
 
 parte, Williamson, L. K., 5Ch. App. N. S., 154. 
 3u9. '//i re Durham Society, etc., 
 
 '■'la re Victoria, etc., Society, L. Society, L.R., 12 £q., 610. 
 R. 9 Eq. GOrj. 
 
 *Jn re Liverpool, etc., Society, 15 
 
 5. J., 177.
 
 110 BUILDING ASSOCIATIONS. 
 
 which went to pay legal liabilities of the society, the claim 
 was allowed. The rules gave the directors power to arrange 
 for advances and their payment,' But where a lender has 
 deeds belonging to some of the members deposited with him, 
 the court refused to compel him to surrender the deeds with- 
 out payment of the money for which they were held as secu- 
 rity." Unless the rule containing the power was certified by 
 the registrar, a person loaning upon the faith of it could not 
 enforce his claim against the society .3 
 
 Parliament, in 1874, enacted a statute which expressly 
 empowers a society to borrow under prescribed limits. Under 
 that act, any society may receive deposits or loans at interest 
 within the limits of the section, from the members or other 
 persons, or from corporate bodies, joint stock companies, or 
 from any terminating building society, to be applied to the 
 purposes of the society. In a permanent society, the total 
 amount so received on deposit or loan, and not repaid by the 
 society, shall not at any time exceed two-thirds of the amount 
 for the time being, secured to the society by mortgages from 
 the members. In a terminating society, the total amount so 
 received and not repaid, may either be a sum not exceeding 
 twelve months' subscriptions on the shares for the time being 
 in force. This statute gives the society power -to borrow 
 within the limit fixed* and is evidently the result of experi- 
 ence among English societies, that their purpose can better be 
 accomplished by limited authority to borrow ; and it is a powerful 
 argument in favor of the right of a building association to bor- 
 row. As will be observed by the decisions prior to this act, the 
 courts permitted them under certified rules within a reasonable 
 limit, to borrow, if the provisions of the rules were strictly ob- 
 served, but as statutory authority more fully established the con- 
 fidence of the lender in such securities, the right was incorpo- 
 rated in an express statute, substantially as the courts had been 
 
 •Liquidator ofthe Blackburn, etc., »Coetmor, etc., Society 51 L. T. 
 
 Society V. CunlifEe, 52 L. J. Rep. 253. 
 Ch., 92. *Cut if the limits are fixed small- 
 
 "Wilson's case, L. R., 12 Eq. 521. er, they must be observed : Looker 
 
 V. Wrigley, L. R., 9 Q. B. D., S97.
 
 AMERICAN AUTHORITIES. Ill 
 
 holding dnring the prior half century. And it has been 
 receutlj held that where a society borrowed money to an 
 extent greater than authorized by statute, which was applied 
 by it as advances to members, who gave the society mortgages 
 to secure repayment of the advances, the persons from whom 
 the society borrowed the money were entitled to follow it into 
 the hands of the members to whom it was advanced, and 
 claim against the mortgages held by the society for the amount 
 secured thereby, notwithstanding the society had deducted 
 premiums from such amounts, when making the advances to 
 the members.* 
 
 When authorized to borrow, mortgages may be deposited 
 with lenders as security, who, thereupon, are entitled in the 
 winding up, to payment out of the assets, after satisfaction 
 of the outside creditors, and in priority to all claims of mem- 
 bers. But the lenders are to have the benefit equally and 
 paripassu of a first charge upon the general funds and prop- 
 erty.' 
 
 When the rules authorized borrowing, the lenders are 
 entitled, on the association being wound up, to be lirst paid 
 out of the assets, in priority, to any of the members.' 
 
 If borrowing is unauthorized, it cannot be upheld on the 
 the ground that the directors mistook the law, but, where the 
 money went to the legitimate purposes, the lenders could 
 recover.* When the society directed the issue of paid up or 
 deposit stock, at a fixed rate of interest, witli tlie right of 
 withdrawing it in preference to all other shares, it was held 
 the stockholders were entitled to be paid before the unadvanced 
 members.' 
 
 Sec. 3 American Authorities. The principles 
 underlying the English cases are recognized and athrmed in 
 this country. The implied power to borrow, within restric- 
 
 'Neath, etc., Society v. Luce.L. R., ^In re Mutual, etc., Society 30 
 
 43 Ch. D., 158. Ch. D. 434. 
 
 •Murray v. Scott, 9 App. Gas. ■'Blackburn, etc.. Society v. 
 
 519, overruling Laing v. Reed, Cunliffe, 29 Ch. D., 902; Owen v. 
 
 L. R., 5 Ch. 8. Roberts, 57 L. T. N. S. 81. 
 
 'Murray v. Scott, supra.
 
 112 BUILDING ASSOCIATIONS. 
 
 tions, has never been denied, except in a case in Ohio/ In 
 that case, the court considers that associations are not affected 
 bj the doctrine that corporations possess the" power to borrow 
 money which may be needed in the transaction of necessary 
 business, but that the money to bo loaned by associations can 
 only be properly accumulated in the manner contemplated by 
 statute, that is, by dues, fines, premium and interest. In 
 other courts it has been held that associations have implied 
 power to borrow money for legitimate purposes.' So that an 
 association, not being prohibited, either by statute or by 
 by-law, from borrowing money, may, on maturity of a series 
 of stock, borrow money to pay the shares of the non-borrow- 
 inc members of such series, instead of accumulating funds to 
 pay off such series.' And the association having the implied 
 power to borrow, has, in the absence of express prohibition, 
 the implied power to assign its mortgages and bonds as secu- 
 rity for the loan.* The association would be estopped by the 
 receipt and application of the money to a legitimate purpose 
 of the corporation, from setting up in an action to recover it, 
 a want of power in the corporation to make the loan. The 
 corporation cannot reap the benetit of the money loaned, and, 
 then allege a want of power to make it.' The directors of the 
 association being, by its by-laws, empowered to manage its 
 affairs, the corporation cannot defeat the recovery of money 
 borrowed, by direction of the directors, on the ground' that the 
 directors applied the money to an unauthorized purpose, 
 unless the lender knew such purpose was unauthorized.' 
 
 'State V. Bui'dlng Association, 35 'North Tludson, etc , Association, 
 
 Ohio St. 2o8. The opinion in this v. First National Bank, 47 N. W. R. 
 
 case is not founded upon reasoning (Wis) 300. 
 
 or authority, and absolutely ignores *Ib. But an assignment of mort- 
 
 the English cases. It is not entitled gages after proceedings to wind up 
 
 to much weight as an authority. is void as against the receiver ; Hin- 
 
 »Davi3 V. West Saratoga, etc man v. Ryan, 3 C C. (Ohio) 529. 
 
 Union, 32 Md. 285 ; Jones v. Build- 'lb; Jones v. Buildina; Associa- 
 
 ing Association, 94 Pa. St, 215 ; Jack- tion, supra; Loan Company v. Con- 
 
 8on v. Myers, 43 Md. 452; MuLh v. over. 5 Phila. 18. 
 
 Dolfield, 43 Md. 466. *North Hudson, etc., Association 
 
 Y. First National Bank, supra.
 
 IMPLIED POWER TO BORROWER. 113 
 
 It was held in Pennsylvania that when the association is 
 authorized by its charter to receive money on deposit from it8 
 stockholders, to bear interest, in case of insolvency, such stock- 
 holders are creditors as to their deposits, and are entitled to 
 ehare pro rata with other outside creditors in preference to 
 stockholders. This was also held to be true when money has 
 been received from persons who were not stockholders, though 
 the association had no authority to so receive the money.* 
 
 In another case it was held that a solvent buildinf^ associa- 
 tion may assign a mortgage in payment of, or as collateral for, 
 a debt; and in an action on a mortgage assigned as collateral, 
 for the payment of an order given to a member on his with- 
 drawal, it is unnecessary to determine whether the consent of 
 the directors to such assignment is legal under the statute, pro- 
 viding that at no time shall one-half of the funds in the treas- 
 ury be applicable to the demands of withdrawing members 
 without the consent of the directors.* 
 
 Sec. 4. Weight of American Authority. The 
 unquestioned weight of authority in America, is to give build- 
 ing associations the incidental right to borrow. The question 
 of the right to borrow is to be determined by enquiring into 
 its objects and purposes. It has conferred upon it those inci- 
 dental rights that are consistent and reasonably necessary to 
 carry on its business. The vital question is: Is borrowing 
 necessary to accomplish its objects? If it is, then upon prin- 
 ciple and authority, it may borrow. 
 
 Sec. 5. Implied Power to BorroTT. The current of 
 English decisions, prior to the act of 1874, is that it has a 
 restricted right. The American cases, excepting the Ohio 
 case, draw the same conclusions. Those courts consider the 
 borrowing power necessary from the nature of its business, and 
 hold it granted by implication of law. It may be necessary 
 to protect its interests as a junior lien holder, or to satisfy the 
 demands of borrowers. If the association is unable to supply 
 borrowers from its regular fund, a temporary loan wiU satisfy 
 
 'Criswell's Appeal, 100 Pa. St. » Queiu vs. Smith, 108 Pa. St. 325. 
 488. 
 
 8
 
 114 BUILDING ASSOCIATIONS. 
 
 the members, and when idle money accumulates, the associa- 
 tion can pay its debt. Borrowing is only intended as an 
 expedient. To become a permanent borrower, is not a part of 
 the corporate plan of an association and is not contemplated 
 by the decisions investing the power to borrow in the associa- 
 tion. Under proper limitation, it is sanctioned by the courts. 
 That limitation is, that the money is to be ap])Iied to an 
 authorized purpose, yet under the decisions, the association 
 cannot escape its obligation to repay, because it applied the 
 money to an unauthorized purpose, unless it can show that the 
 lender had knowledge of this. The rights of the association to 
 borrow is thus settled upon authority, and it rests further 
 upon sound reasoning. It rests upon the doctrine of implied 
 power, and there is no substantial variance between the appli- 
 cation by the courts of that doctrine to building associations 
 and other corporations. 
 
 Sec. 6. Overdrawing' Bank Acconnt is Borrow- 
 ing. Prior to the act of Parliament of 1S74, the English courts 
 were disposed to indulge associations in overdrawing their 
 bank accounts, by consent of the bank, without applying the 
 rule of borrowing as limited by the courts, so they uniformly 
 held that overdrawing is not borrowing.' This distinction is 
 hardly maintainable. The association thus uses money of the 
 bank and pays interest upon it. The relation of creditor and 
 debtor arises and it is difficut to conceive why overdrawing would 
 be legal, if borrowing is illegal. The truth is, if borrowing is 
 unauthorized, such overdrawing is a mere device and is ultra 
 vires and cannot be enforced.' So held in a recent English 
 case, but the bank permitted the bank to hold deeds as security 
 for money advanced to pay proper debts of the societj^ pre- 
 sumably on the ground that the society could not dispute 
 its right to make a contract from which it had reaped ben- 
 efits.' 
 
 ' In re German Mining Company, Blackburn, etc.. Society, v. Cunlifie, 
 
 23, L. J. Ch., 956. In re Cein Cil- 52 L J. Hep. Ch 93 
 cen, etc, Company, i38 L. J. Ch. 78; * Brooks v. Bhickbiirn, etc., So- 
 
 Waterlow v. Sburp, L. R, 8 Eq. ciety, L. R., 9 App. Ch.s., 857. 
 501, doubted in Liquidators of * lb.
 
 THE EFFECT OF ASSIGNING MORTGAGES. 115 
 
 Seo. 7. Resolution to Borrow. In making loans by 
 the association, the directors of course are to be governed bj 
 the creative statute. If there is no prohibition upon borrow- 
 ing, the directors may borrow for the legitimate purposes of 
 the association. If the by-laws or rules make no provision for 
 borrowing, the directors at a legal meeting, with a quorum 
 present, should pass a resolution authorizing the loan. That 
 resolution may read as follows: 
 
 "Whereas the Association is in need of money to 
 
 . . state object of borrowing — therefore; Be it resolved, that 
 the President and Secretary of this association are authorized 
 and empowered to borrow the sum of $. . . . for .... at the 
 rate of — per cent, per annum, and to deposit with the lender, 
 bonds and mortgages of the association, as collateral security 
 for such loan." 
 
 Sec. 8. The Effect of Assigning Mortgages. As 
 heretofore cited, the decisions both in this country and Ensr- 
 land, authorize the assignment of mortgages as collateral 
 security for the re^^ayment of a loan, or even to secure a with- 
 drawing member, who, by that act, has become a creditor. 
 Such assignments extend only to the association's interest in 
 the security. No right of the mortgagor can thereby be affected. 
 The security, as any other security, is not available so long as 
 the mortgagor complies with his contract. As he complies 
 with his contract, by paying his weekly dues, he is decreasing 
 the association's interest in the mortgage and consequently, 
 diminishing the security. If the mortgagor thus continues 
 in compliance with his contract and the association still owes 
 the debt, it will have to supply other mortgages as collateral, 
 in which its interest is large enough to be sufficient for pur- 
 poses of security. And so, if the moitgagors in the collaterals 
 carried out their agreements, the association is bound to 
 mature their stock, but if their loan still remains unpaid, the 
 payment and cancellation of the stock cannot take place until 
 their debts are paid to the association. The mortgagors may 
 however, pay those debts by their matured stock. They have 
 the right to apply their matured stock in full satisfaction of 
 their mortgage debts. Wiiil© the loan in that event has lost
 
 116 BUILDING ASSOCIATIONS. 
 
 its specific security bj these continued weekly mutations and 
 the maturity of the stock, yet the assets which have come out 
 of the mortgage into the general fund for distribution, are sub- 
 ject to the lien of the debt, and must satisfy it before cancella- 
 tion of the members' stock can take place. 
 
 Thus, it is readily seen that the assignee of a building asso- 
 ciation mortgage can only claim the society's interest, which in 
 in the process of time may be reduced to nothing. To make 
 such mortgages available as collateral security, the association 
 must replace those when its interest has become extinguished, 
 by others where its interest is sufficient for the purposes 
 intended. 
 
 Sec. 9 No Power to Sell its Mortgages. The con- 
 tract of the mortgagor being in a sense personal, and not to be 
 defeated by any assignment by the association, it would be 
 beyond the power of the association to sell absolutely his 
 morto-ao-e. So Ions as the association has an asset in the 
 morto-age, it may assign it as collateral, so long as it does not 
 conflict with its corporate objects, but it cannot infringe upon 
 the rio-lits of the mortgagor, and if the association undertakes 
 to absolve itself from the contract and not only part with its 
 interest in the mortgage, but transfer rights therein in favor 
 of the mortgagor, and against itself, it is doing a wrong for 
 which the injured member may obtain redress against the asso- 
 ciation, in whatever amount he has been damaged by the 
 action of the association, in placing beyond its power its ability 
 to keep its contract with him. The courts uphold an assign- 
 ment as collateral security, upon the theory that it is only the 
 association's interest in the mortgage that is affected. The 
 assignee can in no way interfere with the mortgagor's interest. 
 So that if the mortgagor defaults, he is entitled to credit the 
 value of his stock and if he does not default he is entitled to 
 continue his payments and cancel his mortgage,' disregarding 
 the assignment, for he has extinguished the association's inter- 
 est in the mortgage. The assignee's lien as against the mort- 
 
 ' Barton v Enterprise, etc., Asso- 
 ciation, 114 Ind. 226.
 
 NO POWER TO SELL ITS MORTGAGES. 117 
 
 gage is eo instanti extinguished, but it then attaches to other 
 corporate assets. 
 
 In selling outright his mortgage, the association undertakes 
 not only to sell its own interest, but to transfer the rights of 
 the mortgagor. It is plain, upon principle, that it cannot do 
 this without his consent. And, as the association is a mutual 
 affair, it becomes a question whether or not such a sale would 
 not require the unanimous consent of the shareholders, as all 
 are interested in auj tiual disposition of its assets, or anj part of 
 them.
 
 CHAPTER XII. 
 
 DISSOLUTIOJ^ AND SETTLEMENT. 
 
 Section 1. Dissolution when all 
 stock is matured. 
 
 Section 2. Other methods of dis- 
 solution. 
 
 Section 3. What acts will not 
 dissolve. 
 
 Section 4. Dissolution hj unan- 
 imous agreement. 
 
 Section 5. Effect of appoint- 
 ment of a receiver. 
 
 Section 6. Final settlement with 
 members and creditors. 
 
 Section 7. Settlement before 
 maturity. 
 
 Section 8. Assignment for credi- 
 tors. 
 
 Section 9. Appointment of re- 
 ceiver and winding up. 
 
 Section 10. Marshalling of as- 
 sets. 
 
 Section 11. Liability of stock- 
 holders. 
 
 Section 12. Liability of bor- 
 rower for debts. 
 
 Section 13. No liability for 
 losses under the mortgage. 
 
 Section 14. Liability of with- 
 drawing member. 
 
 Section 15. Assets to be distri- 
 buted among borrowers and non- 
 borrowers alike. 
 
 Section 16. Consolidation of as- 
 sociations. 
 
 Section 1. Dissolution When all Stock is Ma- 
 tured. When the association has matured all of its slock, it 
 then dissolves. The old terminating society, with its one series, 
 entered voluntary dissolution when it had paid oS the series. 
 Under the present systems, the serial and the permanent, there 
 is no dissolution by the maturing of a series or part of stock. 
 The association is constantly receiving a new infusion of blood 
 and continues its corporate existence by reason thereof. But 
 
 118
 
 DISSOLUTION BY UNANIMOUS AGREEMENT. 119 
 
 the dissolution of the association may take place from otlier 
 causes. 
 
 Sec. 2. Other 3Tetliocls of Dissolution. The disso- 
 lution of a corporation mav be brought about bj reason of (a) 
 the forfeiture of its franchises bj the adjudication of a court, 
 (b) tbe loss of its charter by a charter provision to the effect in 
 case the corporation fails to do certain things within a certain 
 time, (c), the repeal of its charter under the reserved power of 
 the state, (d) the voluntary surrender of the franchises by the 
 stockholders, or (e) the expiration of the time limited for its 
 existence in the charter.' 
 
 Sec. 3. What Acts will not Dissolve. Except 
 when the charter is lost by reason of the second provision, the 
 corporation does not dissolve of itself. For instance, neglect to 
 elect officers while the capacity remains in the members to 
 elect, will not dissolve it,' nor by a cessation of all corpo- 
 rate acts and business,' nor by mere nonuser of its franchise, 
 nor by insolvency,^ nor by death of its stockholders.* 
 Only the state by its proper officer can sue to forfeit the 
 charter, and whenever it misuses its powers, the state has this 
 right. A stockliolder cannot maintain the suit.'' 
 
 Sec. 4. Dissolution by Unanimous Agreement. 
 The- stockholders may, by unanimous agreement, wind up the 
 association before the time prescribed by statute, and such 
 agreement is binding, not only on the member, but on the 
 assignee of such member,* but an agreement to suspend opera- 
 tions and close up the affairs of the company is not in any fair 
 
 » Cook Stock, etc., sec. 63S. » North v. State, 107 Ind. 356. 
 
 •Commonwealth V. Cullen, 13 ' Building Association vs. Kelley, 
 
 Pa. St. 18; St. Loui«, etc, Association 1 Kulp, 9. A majority cannot force 
 
 V. Augustin, 2 Mo. App. 123. the rest against their will to wind up 
 
 * Kansas City, etc., Company v. before the time of maturity. So 
 Sauer, 65 Mo , 279. held in a case where borrowers tried 
 
 * Folger v. Columbian, etc., Com- to compel non-borrowers to accept 
 pany., 9(5 Am. Dec. 757, note. a sum per share less than the 
 
 * Valley Bank, etc. Institution v. amount fixed by charter; Pf ;ifi v. 
 Sewing Society, 28 Kan. 423. Building Association, 6 W. N. O. 
 
 * Bo>ton, etc.. Company v. Lang- 349. 
 don, 24 Pick. 49.
 
 120 BUIi^DING ASSOCIATIONS. 
 
 sense, either a present forfeiting or laying down of the franchises 
 or corporate rights of the association.* If the members unani- 
 mously agree to cease business before maturity of the stock, 
 the assets should be reduced to a distributive basis. The non- 
 borrowing members should pay their dues to the date of dis- 
 solution as should the borrowing members, while the latter 
 should repay their loans, less the surrender value of their 
 stock, if they choose to so apply it.* Unless there has been an 
 intention to dissolve the corporation, accompanied by the sur- 
 render of the charter, the association will not by this distribu- 
 tion of assets, be considered defunct so far as its chartered 
 existence is concerned. Sometimes, the association in times 
 of depression or misfortune, may determine to suspend until 
 its condition is determined, and this the members may do; but 
 a borrower is not thereby relieved from the payment of inter- 
 est on the loan during the suspension.^ 
 
 Sec. 5. Eifect of Appointment of a Receiver. 
 However, when the association goes into the hands of a 
 receiver, the borrower is not chargeable with weekly dues and 
 interest, for this is equivalent to a dissolution as to him"* 
 
 The appointment of a receiver to wind up the associa- 
 tion and distribute its assets, operates as a discontinuance of 
 
 ' City Loan etc. Association v. ment made by the mortL'^agor, ac- 
 
 Goodrich, 48 Ga. 445. cording to the rule applicable to 
 
 s The following holding as to an account between debtor and 
 
 computation was made in a Mary- creditor; Hempstead, etc., v. King, 
 
 land case: 58 Md. 271). 
 
 When the affairs of a building "Thomson v. Ocmulgee, etc., As- 
 
 association are in course of liquida- sociation, 50 Ga. 350. 
 
 tion the original purposes having ^Peter's etc Association v Jaecksch, 
 
 been abandoned by mutual consent 51 Md., 108; Bowker v. Mill River 
 
 the proper mode of stating an ac etc., Association, 7 Allen, 100; Cook 
 
 count between such association and "^^ Kent 105 Mass., 24^^ ; In Hinman 
 
 a shareholder who has obtained ad- v. Kyan 3 C. C (Ohio) 529, it was held 
 
 vance on his shares of stock, on a that while the dues stop, the mort- 
 
 mort<racre, is to charge the mort<rag. ga.se remains in force, and interest 
 
 or whh'the sum actually advanced continues. As to the continuance 
 
 to him by the association, and inter- "f interest, the court took a diffe- 
 
 est thereon at the rate of six per rent view. See also Hekelnkaem- 
 
 ... ,*u 1 1 >„»«\ ^^^ or,„,Tm Aa per V. German, etc. Association, 23 
 cent, (the legal rate) per annum, ae- ' ' 
 
 ducting from time to time, the pay- Kans. 549.
 
 FINAL SETTLEMENT WITH MEMBERS. 121 
 
 all future payments; or, if the association be notactnally dis- 
 solved, if there can be no chance of paying the unredeemed 
 8hares their par value, and the association be unable to carry 
 out its contract with the mortgagor, so as to enable him to get 
 a release of the mortgage, according to the terms of its cove- 
 nants, then tlie contract as originally contemplated is termi- 
 nated, and the mortgagor occupies the same position as if the 
 association were dissolved' 
 
 Sec. G. Final Settlement with Members and 
 Creditors. Final division and distribution of the assets of 
 the association are required to be made when the accumulated 
 fund is sufficient to pay the par value of the shares after the 
 payment of all debts and liabilities of the association.' The 
 shareholders must wait until the debts and liabilities are dis- 
 charged before taking the assets. Any agreement for a con- 
 trary arrangement will be held void by the courts as to credi- 
 tors.3 Unless the association has distributed all pf its assets 
 and matured all of its stock, there is no dissolution of the 
 corporation, merely a termination of the membership of those 
 holding cancelled and retired stock. In the old societies issuing 
 but one series, or all of their stock at one time, there was no 
 settlement with the members until dissolution, but under the 
 plan of associations as existing in the United States, they 
 issue stock in series, one after the other, or as it is applied for, 
 so that the effect is to continue the existence of the association. 
 Whenever the payments on stock, together with its pro rata 
 share of profits above debts, equal its face, the association 
 is bound to retire it, and thereupon the association sets 
 to work to retire the next issue and so on. If the stock is 
 issued in classes or series, the entire series is retired; if it is 
 issued at different times, as in the permanent, each issue is 
 retired separately. In the former, the profits are credited to 
 each series on the books of the association, as it may be entitled 
 to them, and in the latter, the profits are credited each divi- 
 
 'Hampstead, etc., Association v. 'White v. Mechanics etc., Associa- 
 
 King, 5» Md. 279 ; Windsor v. Ban- tion, 22 Grat. 26d. 
 
 del, 40 Md. 17'3 ; Low Street, etc., 'ileg,s;ie v. Building Association, 
 
 Association, v. Zucker, 4S Md. 448. 107 N. C 581.
 
 122 BUILDING ASSOCIATIONS. 
 
 dend day, on the member's stock, in his pass book. "When the 
 maturity is reached in the serial, it is determined by a division 
 of the profits, attaching to that series, by the total number of 
 shares in the series, and in the permanent, it determines itself 
 by adding together the payments and credited dividends. If 
 in its computation, the association made an error in extin- 
 guishing stock, the shareholder may maintain a bill in equity 
 to correct the error,' or, if the association made a settlement 
 contrary to its constitution, by which a stockholder received 
 more than bis share, he may be made a party to a bill in 
 equity, for the purpose of having all questions arising in the 
 transaction adjudicated, one of which is their liability to refund 
 such excessive amount,' and though such settlement is in good 
 faith, the overpaid members will not be released, where it turns 
 out that there will be a deficiency as to non-retiring members.* 
 In assuming a basis for the distribution of its earnings, the 
 association should not regard so much the time of its issue of 
 stock, or its series, as the amount of dues received on the stock.* 
 The association has been able to realize a profit on account of 
 money paid into its treasury by the members, and the profits 
 thereon justly attach to those paying. If a member is delin- 
 quent in his payments for a short period, and the association 
 is compensated for such delinquency by the fines, the mem- 
 ber's share of profits should attach notwithstanding, but if the 
 default is long, without any prospect of removal, the association 
 should in its by-laws provide for some disposition of such 
 stock. It may be by forfeiting it after a long continued 
 default, but the more equitable method is to retire it, and after 
 deducting the proper charges, place it at the member's disposal 
 in the treasury. The association has been, in this way, pro- 
 tected and receives the use of the money. 
 
 Sec. 7. Settlement Before Maturity. The mem- 
 bers may agree unanimously to wind up the association, before 
 maturity of the stock, and any fair and equitable agreement 
 
 'Building Association's Appeal, ^jyicj^pown v. Building Associa- 
 
 33 P L. J. 324. tion, 5 Bull. 52. 
 
 'Goodrich v. City, etc., Associa- ^Seibel v. Building Association, 
 
 tion, 54 Ga., 98. 43 Ohio St., 371.
 
 APPOINTMENT OF RECEIVER. 123 
 
 made between tlieiii, as to the mode of settlement and dissolu- 
 tion, will be upheld. Thus, an agreement to wind up an asso- 
 ciation by paying the owners of the unredeemed shares the 
 sums they had advanced, with interest, and that the owners of 
 the redeemed shares who had given mortgages for the price of 
 the redemption, should be discharged upon paying the amount 
 of their mortgages with interest, was held valid and enforce- 
 able" 
 
 In order to make any such agreement valid, there are two 
 cardinal points to be observed, to-wit: The discharge of all 
 of the society's debts and, the equal distribution of all the 
 remaining profits among the stockholders, according to their 
 stock- holdings. 
 
 Sec. 8. Assig^iiment for Creditors. When a build- 
 ing association has become insolvent, it has been held in 
 Pennsylvania, it may make an assignment for the benetit of 
 its general creditors," but not for the benefit of its members,* 
 but if an assignment has been made for general creditors, the 
 treasurer of the association is entitled to be reimbursed as a 
 general creditor, for moneys paid by him on orders drawn 
 before the assignment, in priority to the claim of withdrawing 
 stockholders.* The fact, that an association has made an 
 assignment for the benetit of creditors does not prevent the 
 recovery of a judgment against it.s The usual method is for 
 a receiver to be appointed for an insolvent association, and the 
 rights of creditors and members are protected and adjusted 
 through the receivership. 
 
 Sec. 9. Appointment of Receiver and Winding- 
 up, In regard to the appointment of a receiver, it is under 
 the control of the statutes of the state, and, to some extent, 
 within the discretion of the court, considering the application 
 for the receiver. Insolvency of an association is seldom, and 
 so rarely do the assets shrink, so that creditors are unable to 
 
 'Hoboken, etc.. Association v. 'lb. 
 
 Martin, 2 Beas., 428. *Christ5an'sAppea1,102Pa.St..l84. 
 
 '/« re Estate National, etc., Asso- 'Connolly v. Building Association, 
 
 ciation, 9 W. N. C, 79. 6 W. N. C HtJ.
 
 124 BUILDING ASSOCIATIONS. 
 
 enforce their claims without a receiver, that the courts have 
 not often been called upon to exercise that authority. 
 
 A member, when he believes the assets are sufficient to dis- 
 charge the stock, may invoke the aid of a court of equity to 
 compel a settlement, if it is established one should be made. 
 But in order to have the right of such aid, the petitioner 
 must be a full member and not a creditor.' 
 
 Sec. 10. Marshalling' of Assets. When there is in- 
 solvency and dissolution, the adjustment of the rights of bor- 
 rowers, non-borrowers and creditors, becomes a question of 
 nicety and importance. Equity must be done to all,' and this 
 is true, no matter what preferences as to payment are made by 
 the charter and by laws among different classes of stockhold- 
 ers.* If the parties unanimously agree upon an equitable set- 
 tlement upon dissolution, it will be upheld in a court of 
 equity.* 
 
 The rights of the different classes will be considered in the 
 invene order as stated. 
 
 The creditors, whether lien holders or general, are entitled 
 to be first paid in full, before any distribution is made to the 
 stockholders. And, while payments on stock are not consid- 
 ered, ipso facto, payments on mortgages, to such an extent that 
 any one except the parties can make such application of them 
 yet the rule is varied, so a junior mortgagee may, in equity 
 compel the association, as holder of the lirst mortgage, to resort 
 first to stock held by it as collateral security, before enforcing 
 the mortgage lien,' and the association must sell the stock or 
 retire it, in either case crediting the proceeds or value on the 
 debt. The association h.as the right to sell or apply this stock 
 on the mortgage debt, as against any subsequent purchaser of 
 
 'Lister v. Log Cabin, etc., Asso- 'Criswell's Appeal, 100 Pa. St. 
 
 ciation, 38 Md. 115; Edelin v. Pas- 488. 
 
 coe, 2i Grat. 826. 'Goodrich v. City, etc., Associa- 
 
 '^Bowker v. Mill River, etc.. As- tion, 54 Ga. 98. 
 
 Bociation, 7 Allen, 100. ^Herbert v. Mechanics, etc., As- 
 
 'Strohen v. Association, 115 Pa. sociation, 2 C. E. Gr. 497. 
 St. 273.
 
 APPOINTMENT OF RECEIVER. 125 
 
 the stock. He takes it subject to the lien and cannot prevent 
 its enforcement.' 
 
 Giving the junior mortgagee the right to compel the asso- 
 ciation, as a first mortgagee, to resort to collateral security, in 
 the shape of stock, before reaching the land held as common 
 security, is but an expression of the equity rule, that if one 
 party has a lien on, or interest in, two funds for a debt, and 
 another party has a lien on, or interest in one only, of the 
 funds, for another debt, the latter has the right, in equity, to 
 compel the former to exhaust the other fund in the first instance 
 for satisfaction, if that course is necessary, for the satisfaction 
 of the claims of both parties, whenever it will not trench upon 
 the rights, or operate to the prejudice of the party entitled to 
 the double fund.' 
 
 "While this right of the junior mortgagee would more often 
 be called into exercise in foreclosure proceedings, it is likely 
 in any settlement of the corporate affairs where the security is 
 of questionable sufficiency for all liens. 
 
 In the event of the application of stock payments, under 
 such circumstances, to the mortgage debt, the simplest manner 
 is for the association to give the borrower credit on his debt to 
 the amount of the withdrawal value of his stock. But the 
 right to require application of stock does not extend to a iudg- 
 
 'Weiss's Appeal, 5 W. N. C. (Pa.) able, etc.. Association, 33 P. F. 
 
 423 It would seem upon principle Smith 830; Kremer v. Springfield, 
 
 that when the mortgagor sold his etc.. Association, 6 W.N. C. 267; 
 
 stock as against him, the assignee Association v. Wall, 7 Phil a. 240; 
 
 could compel the association to first Kingsessing, etc., Association v 
 
 restart to the mortgage before re- Roan, 9 W. N. C. 15; North Ameri- 
 
 sorting to the stock. ca, etc , Association v. Sutton, 35 Pa. 
 
 'Redbank, etc.. Association V.Pat- St. 4G3; Spring Garden, etc., Asso- 
 
 terson, 12 C E. Gr. 223; Washing- elation v. Tradesmen's, etc., Associa- 
 
 ton, eic, Association v. Beaghen, 13 tion, 46 Pa. St. 493; Link v. Ger- 
 
 C E. Gr. 98. Contra: Economy, mantown, etc., Association, 89 Pa. 
 
 etc., Associaticm v. Hungerbuehler, St. 15. The Pennsylvania cases are 
 
 93 Pa. St. 258 ; Springville, etc., As- out of harmony with other courts 
 
 Bociation v. Raber, 33 Leg. Int. and conflict with, principles of 
 
 329; Building Association v. Eshel- equity, 
 bach, 7 Phila. 189 ; Selden v. Keli-
 
 126 
 
 BUILDING ASSOCIATIONS. 
 
 ment creditor.' "WTien the rights of a second mortgagee and 
 the assignee of stock must be adjusted, the doctrine of mar- 
 shalling assets applies, and the repayments by the mortgagor 
 to the society must be apportioned ratably between the mort- 
 gaged property and the stock.' But the doctrine will not be 
 applied in any case where third parties, over whom the person 
 seeking benefit of the doctrine has no superior equity, will be 
 injured.* Any subsequent incumbrancer to compel the asso- 
 ciation to make the application of stock payments, must 
 notify it of his claim,* and, unless so notified, the association 
 will not, by releasing one of its funds, prejudice its right as to 
 the other.' The recording of a subsequent encumbrance, is 
 not notice," but where there was actual notice of a subsequent 
 morto-asre, and the association released stock held as collateral 
 security, its mortgage was deemed satisfied to the extent of 
 the stock as against the second mortgage.^ 
 
 In the event of insolvency, or dissolution of the association, 
 the creditors must be paid in full, or the assets exhausted,' 
 before the rights of the members to participate can be exer- 
 cised. 
 
 'Herbert v. Mechanic's, etc., As- 
 Bociation, 2 C. E. Gr. 497. 
 
 »Moxon V. Berkeley, etc., Society 
 59 L. J. Ch. 524. 
 
 'Reilly v. Mayer, 1 Beas. (N. J.) 
 55. 
 
 *Uniontown, etc., Association's Ap- 
 peal, 92 Pa., St. 200. 
 
 »Quakertown, etc., Association v. 
 Sorver, 33 Leg. Int. (Pa), 359; Patty 
 V. Pease, 8 Paige, 277 ; Stnyvesant v. 
 Hone, ISandf. (N.Y.),419; Cheese- 
 brough V. Millard, 1 Johns Ch. 
 409. 
 
 «Ib. 
 
 ' "Washington, etc Association v. 
 Beaghen, 12 C. E. Gr. 98. 
 
 * Mortgages of advanced mem- 
 bers, it has been held, cannot be 
 treated as assets for the purpose of 
 paying the liabilities of the associa- 
 
 tion. The revenue from them is an 
 available asset. This revenue, with 
 other revenues of the association, 
 creates the assets, the common fund 
 which is used to pay off the stock 
 of all shareholders: Lister v. Log 
 Cabin, etc.. Association, 38 Md. 115. 
 It seems to the writer that, in a 
 sense, a mortgage to the extent of 
 the amount due thereon is an asset. 
 It represents a part of the accumu- 
 lations of the society, in fact it is a 
 loan and subsisting debt in the 
 society's favor. Until application is 
 made of stock payments, it is a debt 
 for the full amount. It is not an 
 available asset however, so long as 
 the mortgage contract is in force. 
 In case of insolvency, the amount 
 due on the mortgage is available as 
 a paying or distributing asset.
 
 LIABILITY OF BORROWER FOR DEBTS. 127 
 
 Sec. 11. Liiability of Stockholders. If the assets 
 do not pay out the debts to outsiders, the etockholders must 
 respond to the extent of the deficiency, and the limit of their 
 iability is the amount of their stockholding. Building asso- 
 ciation stock, just as stock in any other corporation, must be 
 paid for, and the distinguishing difference between it and 
 other corporations, is the manner of payment. The building 
 association undertakes to make a profit by use of its accumu- 
 lations, to be applied in reduction of the inember's subscrip- 
 tion. It requires partial payments up to the period when 
 these profits upon a pro rata division among the membera 
 will make the stock worth face. The stock is then paid for. 
 If it contracts debts in excess of the earnings and stock pay- 
 ments, the receiver, just as in ordinary corporations, would bo 
 entitled to enforce 2^ prorata assessment against each member 
 to cover the debt. The assessment, so long as it did not exceed 
 the amount of the association's assets, would only have the 
 effect of postponing so long the maturity of the stock, but if it 
 exceeded the assets, then each member would be liable to an 
 assessment, not exceeding an amount equal to the difference 
 between his dues paid in and the amount of stock held by 
 him. 
 
 In distributing the assets or in assessing liabilities, there is no 
 distinction between investor and borrower, so far as their stock 
 is concerned. "Whatever profits accrue to the investor's stock, 
 attach in the same proportion to. the borrower's stock. If the 
 society dissolves before maturity, the investor is relieved from 
 further payments and this is true of the borrower. The 
 association has placed itself beyond the power of perform- 
 ing its part of the contract, and the courts will not require 
 either class of shareliolders to longer perform their agree- 
 ments. 
 
 Sec. 12. IJability of Borrower for Debts. But this 
 does not release the borrower from the payment of his debt 
 The association settles with theinvestor by paying him the value 
 of his stock; it settles with the borrower by collecting the 
 amount of the loan, less the value of his stock. In the event] 
 of loss, the borrower must bear his proportion with the in-
 
 128 
 
 BUILDING ASSOCIATIONS. 
 
 vestor.' This is the rule established by the American cases, bat 
 in Eiiirland, it is held the borrower cannot be held to that iia- 
 bility/ unless the rules imposed it.* 
 
 Sec. 13. No Liabilities for Losses under the 
 3Iortg'age. The liability against the borrower for losses, a& 
 has been stated, is a personal one, just as that of the investor 
 is, and cannot be enforced against the mortgaged property, 
 unless the mortgage clearly includes it. So, that when the 
 mortgagor has paid off his mortgage, he is entitled to have it 
 released, although he may be liable for debts of the associa- 
 tion. His personal liability continues. That is a matter aris- 
 ing out of his stock transaction and an entirely separate con- 
 tract. 
 
 Sec. 14. Liability of Withdrawing Member. 
 When a member gives notice of withdrawal, his membership 
 ceases and he is creditor of the association, so that he cannot 
 be held to losses from bad investments made after he with- 
 drew.* But if any shareholder has been illegally released, as 
 by receiving an amount which should have been subject to a 
 loss, his liability can be enforced in a proceeding to wind up, 
 by making him a party.* 
 
 ' Hinmin v. Ryan, 3 0. C (Ohio) 
 529; Edelinv. Pascoe, 23 Grat. 8i(3; 
 Windsor v. Bandel, 40 Md. 173; 
 Stroliea v. Franklin, etc, Associa- 
 tion, 115 Pa. St. 273; Laurel Run, 
 etc. Association v. Sperrins;, 106 Pa. 
 St. 334; Booz's Appeal, 16 W. N. C. 
 865; People v. Lowe, 117 N. Y. 175 
 reversing 47 Hun, 577. In the 117 
 N. Y. case, it was held that each 
 member for each share held by him 
 was entitled to the same amount, i. e., 
 a proportionate share of the assets, if 
 a debtor, and if he owed more than 
 his distributive share, he was bound 
 to pay the balance and upon such 
 payment was entitled to a di.-^charge 
 of his mortgage; see also, Everman 
 V. Schmitt,"24 Bull. (Ohio) 50; i\Ic- 
 Grath v. Hamilton, etc.. Association, 
 
 44 Pa. St. 883 ; Knobiauck v. Robert 
 Blum, etc, Association, 25 Pitts L. 
 J. O. S. 39; Wittman v. Building 
 Association, 7W. N.C. 8U;'Seibel v. 
 Building Association, 43 Ohio St. 
 371. 
 
 ' Buckle V. Lordonny, 56 L. J. 
 Ch. 437 ; Brownlie v. Russell, L R., 8 
 App. Cas. 235 ; Tosh v.North British, 
 etc., Society L. R., 11 App Cas 489. 
 
 ' Rosenberg vs. Northumber- 
 land, etc.. Society, LR., 22 Q B.373, 
 But see the case of In re "West Rid- 
 ing society, L. R , 43 Ch. Div. 407, 
 where it was held that borrowers 
 and non-borrowers must contribute 
 equally to losses. 
 
 * Christian's Appeal, 102 Pa. St. 
 184. 
 
 « Cason vs. Seldner, 77 Va. 293.
 
 CONSOLIDATION OF ASSOCIATIONS. 129 
 
 Sec. 15. Assets to be Distributed Amoiij? Bor- 
 rowers and Non -Borrowers Alike. After the credi- 
 tors are satisfied, or if there be none, and the payment of all 
 expenses, the method of distribution of the assets of an asso- 
 ciation, solvent or insolvent, is to pro rate them among the 
 shareliolders, borrowers and non-borrowers alike. If the asso- 
 ciation is insolvent and the winding up is voluntary or invol- 
 untary, 80 that the distribution will not mature the stock and 
 discharge the mortgages, the payment of the difference may 
 be enforced ao^ainst the morto:a"ors and the sum thus realized 
 passes to the common fund for like distribution. Confusion 
 will be avoided in these matters, by holding fast to the fact 
 that the borrowing has no effect on the membership of the 
 borrower, and its only effect upon his stock, is to subject it to 
 a collateral lien. The debt remains in law undiminished, 
 although the stock may have reached maturity, and then the 
 member of the association has the privilege of applying it in 
 satisfaction of the debt. Until such application is made, it 
 remains in full force, unaffected, except by the lien, and it is 
 subject to all liabilities and rights accorded any other stock. 
 
 Sec. 16. Consolidation of Associations. It some- 
 times happens, in the management of associations, that by 
 union of their interests, two associations can accomplish more 
 than either can do singly. But how to unite their interests 
 when it is wise, is a question of some difficulty. Without 
 legislative authority, they have no power to consolidate, and 
 if they had such power, the actual union would be full of 
 unadjustable points. The clearest way is for the stockholders 
 of one association to unanimously agree to dissolve. This 
 right is vested in them.' The manner of dissolving should be 
 by agreement to that effect signed by each stockholder, and a 
 resolution duly entered on the minutes record of the associa- 
 tion reciting that as it is the expression and consent of each 
 stockholder that the corporation dissolve, such action be taken, 
 and that the value of the assets of the association be ascer- 
 
 'Barton v. Enterprise, etc., Asso- 
 ciation. lU Ind., 220.
 
 130 
 
 BUILDING ASSOCIATIONS 
 
 tained, and a pro rata distribution thereof liad. If there are 
 borrowers, their debts should be repaid and such repayment 
 should go into the common fund. The assets realized from 
 the various sources are then divided up among all the mem- 
 bers J9r6> r<2to, and the society is dissolved. This is the way it 
 is done theoretically, but in case of practical amalgamation, the 
 surviving society receives the applications of the borrowing 
 members of the other society, for loans in amount as held by 
 them in such society, and if the security and titles are satis- 
 factory, the surviving society grants loans upon the properties 
 in the full amount as theretofore held, and then ascertains the 
 value of the stock of such society, and issues stock to all the 
 members of the old society, according to their old holdings, 
 entering credits on their passbooks as entered by the old 
 society, and the stockholders become members of the surviving 
 association. The absorption is then complete. A serial may 
 be changed into a permanent, or vice versa, by the unanimous 
 action of the stockholders. If a serial is changed to a perma- 
 nent, the only changes to be made would be to issue stock at 
 any time, instead of in classes, and then to credit upon the pass 
 books the profits of the entire preceding time, or in other 
 words, divide the profits after all proper deductions as expen- 
 ses, the amount carried to the reserve fund and other charges. 
 Thereafter, the profits are divided up every six months and 
 stock is issued at any time. These are the two important 
 distinguishing characteristics of the permanent. It virtually 
 makes a division of profits every six months, or annually, 
 instead of at the maturity of the stock as with the serial. If 
 the change is from the permanent to the serial, the profits 
 credited as dividends are withdrawn from the division and 
 lumped in the treasury, to be held until they aggregate suffi- 
 cient to pay off the stock. The difficulty in this part of the 
 change would be to throw the separate issues of stock into 
 different classes. It could only be done if some of the issues 
 were near enough to each other to form classes. It would not 
 matter as to the size of the classes, as such division is only for 
 convenience of issuing stock, and does not create an indepen- 
 dent and distinct part of the association. It is a part of the
 
 > 
 
 CONSOLIDATION OF ASSOCIATIONS. 131 
 
 association entitled to its share of the entire profit. If the 
 shares issued in the permanent can be so classified, the change 
 is then easily effected as indicated. 
 
 If permitted by statute, the association, upon paying off 
 stock, may provide for reissuing the same as new stock. 
 Thus, when a share is paid off, a new certificate therefor may 
 be issued to a new member, upon his entrance into the asso- 
 ciation-
 
 CHAPTER Xm. 
 PRACTICAL EESULTS. 
 
 Sfctton 1. The character of a Section?. Method of loans, 
 building association. Sections. Some results. 
 
 Section 1. The Character of a Building Associa- 
 tion. Having considered the building association in various 
 phases, it remains to look at its results. 
 
 The simplicitj and comparative certainty of the scheme, 
 inspire contidence, and its successful growth and substantial 
 achievements have enlisted a very strong support. The scheme 
 is simple, as a proposition, to receive and loan money for the 
 common profit of all members, and to return the receipts with 
 the accumulations, to the members, whenever they reach a 
 certain amount. The principle of co-operation has but 
 received another application. The only element of uncertain- 
 ty in its business is in its securities. Unless they are 
 depressed by unforeseen causes, so as to impair them, or render 
 them worthless, the association can foretell with almost mathe- 
 matical accuracy what it can do. And whatever would affect its 
 securities, consisting of real estate, would, unless it were some 
 local trouble, disturb directly or indirectly all securities. The 
 assets of the association are in the hands of the earning classes 
 of the land, the wageworkers, who are contributing daily to 
 the substantial and material wealth of the country. There is 
 no element of speculation or hazard to be considered, as in 
 most large moneyed interests. The successful mastery of those 
 elements have built up large financial institutions, but talents 
 
 132
 
 METHOD OF LOANS. 133 
 
 of that character find no field in the operations of building 
 associations. So simply, and yet so certainly, are they con- 
 structed, that they almost carry themselves. They do not deal 
 with men whose financial security is their personal responsi- 
 bility, which may be lost in a day. Whatever financial disa- 
 ster closes the factories, shops and stores, and stops the rail- 
 roads, threatens the future usefulness of the associations, but 
 not their solvency, so long as real estate is not greatly 
 depressed. But when this result is reached, larger but less 
 stable securities have been impaired before the building asso- 
 ciation has been reached. Besides the ordinary security, the 
 association has bound its borrower by the strong tie of home 
 interests. A member will give his best energies to save his 
 home. It is the instinct of self preservation. All hie capital 
 outside of his home may be involved, his note in bank may 
 be protested and he philosophically regards these things as 
 culminations of misfortunes, but he does not look so calmly 
 upon the creditor of his home. The building association 
 mortgage, resting upon it, is protected, if possible. With the 
 home maker, all energies bend to its payment. Thus, it be- 
 comes apparent why the building association is prosperous 
 and secure. 
 
 Sec. 2. Method of Loans. It loans its money upon 
 first mortgage on real estate. In addition, it requires the bor- 
 rower to be a member, to take an active interest and hold stock. 
 It pledges the stock as additional security and appeals to his 
 sense of accumulation by offering him a share of the profits. 
 The borrower, in addition to interest, pays a premium, which 
 generally increases the interest at least two or three per cent. 
 This would seem oppressive, were it not for the fact that he 
 shares in all the profits, which, when applied on the debt, 
 decrease the interest. The source of the great profit to asso- 
 ciations, by which they are enabled to show great earnings, 
 compared with other money lenders, is the weekly repay- 
 ments. 
 
 A borrower pays in a certain amount each week or month, 
 as the case may be, on his stock, which is pledged. These 
 amounts are reloaned at once and are being repaid in the same
 
 134 BUILDING ASSOCIATIONS. 
 
 manner, and so on, that one dollar loaned to A, is partlj 
 repaid and reloaned to B, who repays part of it, which is 
 loaned to 0, and each loan is earning for the full amount, as 
 no credit is made upon repayment to stop interest. A as a bor- 
 rower has, in fact, repaid part of his debt, and the society has 
 reloaned it to B for the benefit of A and the other members. 
 Thus, money by this method, assumes a manifold earning 
 capacity, attainable nowhere else. The burden on the bor- 
 rower is not heavy, for while he is paying interest on his full 
 debt and making repayments, those repayments are earning a 
 good profit and his accumulations, secured in this way, are mak- 
 ing a sure sinking fund to discharge his debt. The security 
 of the association is thus weekly being increased. The debt 
 is growing gradually smaller by the weekly repayments. The 
 borrower has obligated himself to make them or the whole 
 debt becomes due and collectible. He understands this, and 
 that by his payments he is substituting for a rent cost, on 
 most favorable terms to himself. 
 
 The money paid in as dues, as it accumulates to a size 
 large enough, is at once loaned. The experience of associa- 
 tions is an inability to supply the demand. The home-getters 
 are not limited to any particular business or locality, so the 
 field of building associations is, almost, as wide as humanity 
 itself. So long as other businesses thrive, this institution's 
 operations are practically unlimited. 
 
 Several methods have been tried in loaning money, but there 
 are three generally recognized systems. Nearly all associa- 
 tions charge a premium in addition to interest. In some, the 
 premium charge is deducted from the face of the loan and 
 interest is charged on the full amount. Suppose the shares 
 are $200 each and the member owns five shares. He desires 
 to borrow $1,000, and his bid is 25 per cent. The association 
 pays to him $750 and charges him interest on $1,000, to be 
 paid quarterly,' and takes an assignment of his shares as col- 
 
 'Whilfl this is generally done, it has 
 been held, as has been stated, u.sur- 
 ious. See pp. 104, 105.
 
 METHOD OF MAKING LOANS. 135 
 
 lateral security, besides a mortj^age on real estate, to secure all 
 the payments. Some associations modify this plan by only 
 charging upon the amount received by the borrower. The 
 borrower continues his payments until his stock has matured, 
 when the association will cancel his mortgage and retire his 
 stock, by applying the latter to the former. If he withdraws 
 before maturity, a per cent of the premium is refunded to 
 him. Tliis introduces a great element of uncertainty in the 
 association's profits. These systems of loaning are practiced 
 in some of the oldest societies. 
 
 In Massachusetts, building associations known as co-opera- 
 tive banks, may, by law, provide instead of bids for premium, 
 a rate of annual interest upon the sum desired, payable in 
 montlily instalments. In New York, the premium is charged 
 as a bonus, and is deducteJ at the time of the loan without 
 any rebate on withdrawal. Interest is charged on the full 
 amount. 
 
 The most popular and prevailing system is to loan the mem- 
 ber the full amount of each share held by him and make the 
 payment of premium and interest in instalments with the 
 dues. For instance, a borrower of $i, 000 holding five shares 
 of $200 each, bids twelve cents premium per share per week. 
 He would be required to pay with his dues of lifty cents on 
 each share, a premium of twelve cents and interest. If the 
 latter were six per cent per annum, his total payments would 
 be, dues $2 50, premium 60 cents, interest $1.20, making a 
 total weekly payment of four dollars and thirty cents, of 
 which one dollar and eighty cents is a profit to the association. 
 The other $2.50 is a credit on his stock payments. The bor- 
 rower on this basis pays 9.3t) per cent interest for the first 
 year, but on his payments he receives a profit. Assuming 
 that the association is receiving on an average the same pre- 
 mium, and is able to make an annual net profit of 8 per cent, 
 which would be a conservative estimate, the borrower's inter- 
 est is net 8.8Jr per cent for the first year of his loan. The 
 method of the computation is: He pa)'s to the association 
 during the year in wei3kly instalnlents $180. The association 
 has the use of all of it for half the time, and would, therefore,
 
 136 
 
 BUILDING ASSOCIATIONS. 
 
 pay to him a profit of .$5.20, or 8 per cent on $65.00. The 
 second year, bis net interest would be 7.8 per cent; the third 
 year, 6.7 per cent; the fourth year, 5.72 per cent; the fifth 
 year, 4.68 per cent; the sixth and last year, 3.64, or an average 
 of 6.23 per cent for the whole time. During that time be has 
 paid in $780, which, with his dividends, will mature bis stock 
 calling for $1,000. The amount he has paid weekly exceeds 
 but slightly the rent cost, and he is thus enabled to discharge 
 a debt he probably never could have met if he had to pay it 
 all at one time. By distributing the payments over a series 
 of years, the borrower is able by constant and successive efforts 
 to dispose of a task, that were he to confront at one time would 
 render him discouraged and hopeless. If he were to discharge 
 the entire debt at one time in the future, its maturity would 
 find him as unprepared as when it was contracted. The build- 
 ing association marshals his forces for him and conducts him 
 through to a place of safety. He becomes trained in his 
 observance of its laws, and he is regular in his payments. The 
 association has involved his greater interests and his watchful 
 and persevering thrift strengthens it. 
 
 In some associations the premium is charged as a whole 
 and divided into a certain number of instalments, generally as 
 many months as the estimated maturity of the association, and 
 each fixed instalment is payable each month. 
 
 There is still another manner of lendino;, ori'^inatino' with 
 an Ohio association, the Dayton Mutual Home. This associa- 
 tion has many imitators throughout the country and has itself 
 achieved wonderful success. The shares in associations of this 
 type are usually $100 and the dues are 25 cents on each share. 
 The profits are distributed semi-annually, by crediting them on 
 the pass-books of the members. Loans are made upon inter- 
 est and premium payable weekly. The chief distinction 
 between it and other associations is the opportunity of a mem- 
 ber to extend the time of repaying his loan as he may desire 
 from a period of six 3'ears to approximately fourteen years. 
 The association gives him the privilege of paying the amount 
 named as dues only, instead of adding thereto the premium 
 and interest. That is, if his interest amounts to 12 cents per
 
 SOME RESTTLTS. 137 
 
 ■week and his premium to 6 cent» per week, 18 cents will be 
 deducted from the 25 cents for the cost of the loan, and the 
 balance will be credited on his stock. The advantage 
 to the member is that he can regulate his payments accord- 
 ing to his income, and \n%y, if he choose, take the longest 
 time, about 11 years, by paying only the amount required as 
 dues. 
 
 Sec. 3 Some Results. Building associations have 
 become enormous accumulators of money. Their growth is 
 marvelous and attention is everywhere attracted to them. It 
 is safe to say their assets exceed the combined capital stock of 
 the National banks of the country. Tlieir profits are large and 
 .«afe. People who have not investigated them are surprised at 
 these statements, yet the facts support them. To give some 
 idea of the workings and profits of associations in different 
 states, the following figures collected from some of the sssocia 
 tions will serve: 
 
 The report of the Ohio state inspector of building associa- 
 tions, just issued, states that there are 465 associations in the 
 state. The total deposit of these associations on December 
 31, 1891, aggregated ^59,690,236. Of this sum $59,302,299 
 has been invested in mortgages. The total earnings of the 
 associations for the year were $2,905,755, and the average of 
 dividends declared, was 6.88 per cent. The total member- 
 ship in the state is 233,100. 
 
 One of the largest associations in the country is the Mutual 
 Home and Savings Association, of Dayton, Ohio. It was 
 organized April 19, 1873, with an authorized capital stock of 
 $10,000,000. According to its report of December 31, 1891, 
 it had mortgage loans of $1,489,980.26. The association 
 earns 6 per cent interest for its paid ^lp stockholders and 7 
 per cent for its running shares. It has had $5,628,200 of its 
 capital stock subscribed, and now has $3,056,500 in force, the 
 difference having been retired or withdrawn. 
 
 The Equitable Co-operative Building Association, of "Wash- 
 ington, D. C, was organized in 1879, and its total receipts to 
 March 15, 1892, were $7,403,899.50, with assets, October 15, 
 1891, of $1,272,311.01 and 5,338 shareholders, owning 15,371
 
 138 BUILDING ASSOCIATIONS. 
 
 shares. The association has had but two foreclosures since 
 oro-anization, without any losses. It has matured considerable 
 stock at a handsome profit. There are are about 45 associa- 
 tions in the District. 
 
 The Erie Savings and Loan Association, of Buffalo, New 
 York, was organized in ISS-t, and, at the close of December, 
 1891, its receFpts had been $1,276,193.67; 14,301 shares are in 
 force, held bj 1,673 shareholders. No dividends are 
 declared, the stock being retired as it is matured. Three 
 series have been paid since organization, showing a large 
 profit. The association reports assets of $162,133.35 to mature 
 the other 13 series. It has had but one foreclosure and no 
 losses. The Homestead Savings and Loan Association, of 
 Albany, New York, incorporated May 7, 1888, has assets of 
 $261,324.39 and pays six per cent interest on paid up stock 
 certificates. The other members receive a larger per cent. 
 
 In Pennsylvania, there are invested in building associations, 
 upwards of $65,000,000, and the outstanding shares number 
 more than $1,000,000. In a recent report of secretaries to the 
 Chicago Building Association News, and the Building Asso- 
 ciation and Home Journal, of Philadelphia, the folllowing 
 profits are shown: 
 
 Norris Square, Philadelphia 8 per cent per annum. 
 
 The Phoenix, " 9 " " 
 
 The Solar, « 112-3 " « 
 
 German Central, (2d) " 6.22 « « 
 
 Allegany Avenue, " 10.76 " « 
 
 The Daniel O'Connel " 14.38 « " 
 
 The Lessing, " 12.95 « « 
 
 Richmond Mutual, " 9.5 « « 
 
 West End, " 9.S4 « « 
 
 Carpet and Hosiery, " 10.46 « « 
 
 Union, McKeesport, Pa., 13.67 " " • 
 
 North Star, Philadelphia, 11 " " 
 
 The Republic, " 10.5 '< " 
 
 The Active, " 8.15 « « 
 
 Ark, " 7.96 « 
 
 The Ben Franklin , " 7.57 '■' "■
 
 bOME KESUI^TS. 139 
 
 Energetic, Philadelphia 11.23 per cent per annum. 
 
 Northern National, " 8.7G " " 
 
 The Joseph B.Clausen," 9.73 " " 
 
 Philadelphia, « 8.5 " « 
 
 Model, Roxborongh, Pa., 9.58 " "' 
 
 In New Jersey there are over 200 associaiicns, avid their 
 average profit is 9.5 per cent. The Artisans, of Camden, 
 reported net assets in its eighteenth statement, issued in May, 
 1891, of $110,087.98. Its profits are 9 per cent per annum 
 on the investment. 
 
 Tennessee Building Associations average 20 per cent profit. 
 The Tennessee Mutual Building and Loan Association isi 
 one of the leading associations in the state, and has morto-ao-e 
 loans of $50,000 as the result of one year's operations, andi 
 realized a profit of 22.8 per cent on the total capital paid in to 
 the association. 
 
 The associations in Maryland are generally good and work- 
 ing very successfully. One of the largest, is the Provident' 
 Building Association of Baltimore, which was organized in| 
 October, 1887. Its trial balance of April 19, 1892, showed I 
 assets of $562,255.47, and it has paid 6 per cent cash each 
 year during its existence. 
 
 Building Associations in Massachusetts are known as Co- 
 operative Banks, and number about 110, with shares in force 
 353,069, and 49,441 members. The sum of $3,980,475,00' 
 were paid in last year as dues, and the net profits were $G05,- 
 129.09. They have accumulated assets of $11,874,530,14, 
 representing loans on real estate of $10,791,168,02 and cm 
 shares of $520,800.67. In handling their loans, they have 
 acquired real estate by foreclosure of $67,556,86. They have 
 a surplus of $41,314,44 and a guaranty fund of $39,195,51. 
 The average dividend is about 6.y per cent.' 
 
 There are large banks in Boston, Maiden, Worcester, Camp 
 bells, Taunton and Fitchbury. The Guardian Co-operative 
 Bank of Boston began business August 6th, 1886, and has 
 
 The figures -vvpre taken from Octo- 
 ber last report by the state inspector.
 
 140 BUILDING ASSOCIATIONS. 
 
 assets of $169,749.04. The Homestead, began September 12, 
 1877, and ha3 assets of $333,172.82. The Pioneer started 
 Anp^nst 6, 1877, and has assets of $355,112.74. 
 
 The Maiden Co-operative Bank commenced May *9, 1887, 
 and has assets of $126,580.67. It pays 7 per cent dividend 
 and has never had any losses or a foreclosure. 
 
 The Equitable Loan Association, of Wilmington, Delaware, 
 was organized February 22, 1878, and has assets of $183,- 
 729.09. Its receipts have been $191,510.46 and it Las 
 matured three series. Tlie last series represented a profit of 
 of $51.41 on a share of $200.00. 
 
 In Michigan, the associations earn about 20 per cent per 
 annum for the average time. The Marquette Buildino- & Loan 
 Association, organized in 1889, has assets in the sum of $118,- 
 677.49 without foreclosures or losses. The Northern Michi- 
 gan Building and Loan Association of Hancock, organized in 
 the same year, has assets of $131,116.05, its real estate loans 
 consisting of $121,342.60. 
 
 There are fifteen associations in New Hampshire, and their 
 combined assets, $1,287,000. They have about 13,500 mem- 
 bers. The profits are about 20 per cent. The Granite State 
 Provident Association of Manchester, organized in 1888, has 
 $813,000, invested in loans, with 11,000 shareholders, no los- 
 ses and two foreclosures. The Concord Building & Loan 
 Association begun in 1887, has real estate loans of $79,200, 
 with 2,922 shares issued. 
 
 Building Associations have grown very rapidly in Illinois 
 in the past eight or nine years. The associations were con- 
 fronted with constitutional objections that threatened their 
 existence, but these were finally and favorably disposed of by 
 the Supreme Court,* and these obstacles removed, they have a 
 prosperous career. 
 
 The Equitable Savings and Loan Homestead Association of 
 Chicago, organized seven years, reports March 31, 1892, assets 
 of $411,312.00. Its profits are about 11 per cent. The Dan- 
 
 •Holmes v. Smythe, 100 111. 413; tion, 114 111. 183; Winget v. Quincy, 
 Freeman v. Ottawa, etc., Associa- etc.. Association, 128 111. 67.
 
 SOME RESULTS. 141 
 
 ville Building A.ssociation received last year $220,754.85. It 
 hfis been organized eleven years and represents the new growth 
 of associations in the state. Its assets are $362,431.74 and it 
 pays a fraction above 9 per cent profit. 
 
 Associations are not numerous in AVisconsin, but they are 
 steady earners. There are in the neighborhood of 100 associa- 
 tions in the state. The Home Bnilding and Loan Associa- 
 tion of Milwaukee, in four years, has accumulated assets of 
 $105,334.81, and makes a profit of 12 per cent per annum, 
 pajing 10 per cent cash, and carrying 2 per cent to the reserve 
 fund. During its fourth year, to October 24, 1891, its receipts 
 were $141,143.37. 
 
 Associations are of recent development in Maine. The 
 York Loan & Building Association of Biddeford, was orga- 
 nized January 21, 1889, and has $31,295.02 in assets. It has 
 had no foreclosures or losses and pays 8 per cent on the 
 investment. 
 
 A large association in Rhode Island is the Roger Williams 
 Building and Loan Association. The other associations are 
 at Newport, "Westerly and Woonsocket. The Roger Williams 
 has been organized eleven years and reports assets of $582, 
 974.64. It has met with no losses and has had three fore- 
 closures. Its profits have averaged a trifle over 7 per cent. 
 The Homestead Association under the same management, is 
 the second one in the City of Providence, and has been in 
 business nine months and has received and loaned abouti 
 $10,000. 
 
 In North Carolina, the Wilmington Daily Review says: 
 "We have seen here in Wilmington, some of the excellent 
 effects derived from the establishment here of buildino- 
 associations. There are six in operation. The consequence 
 ,has been that real estate has held its own, even in strincrent 
 times, and that new dwelling houses are going up continuously 
 in every section of the city." The Wilmington Homestead 
 and Loan Association, starting August 14, 1886, has assets of 
 $104,809.61, with no losses or foreclosures, and a profit of 
 10 2-5 per cent net. The Mechanics' has had no losses or 
 foreclosures and began 3 years ago. According to its second
 
 142 
 
 BUILDING ASSOCIATIONS. 
 
 annual statement, it had assets of $37,613.62 and paid a profit 
 of llf per cent net. 
 
 In West Virginia, the Eagle Building Association of Wheel- 
 ing, is in its fourth year, and has assets of $83,672.31, showing 
 a profit of about 10 per cent. 
 
 In Minnesota, the assets of building associations reach into 
 the millions of dollars, the great bulk being in St. Paul and 
 Minneapolis. The state law requires a rigid inspection. The 
 associations are prosperous and earn heavy profits. The 
 Kice Street, of St. Paul, organized 9 years, has assets of $103,- 
 385.34, with no losses and a profit of 17 per cent for the aver- 
 age time. The Seven Corners, organized in 1884, has assets of 
 $66,790.39. The Globe organized in 1887, has assets of $31,- 
 567.32. The Columbia, starting November, 1880, has assets of 
 $70,167.01. These associations are all under one management 
 and show about the same results. In Minneapolis are located 
 what are known as "J!^ational" Associations, i. e. associations 
 making loans in the different states. They have accumulated 
 enormous amounts of money, as for example. The Pioneer, 
 organized six years, reports $1,632,400.60 assets and a profit 
 of 8 per cent on the investment for the paid up shareholder 
 and a larger return for its other members. 
 
 In Mississippi, the Vicksburg Building Association is one 
 of the largest. It was organized in 1870, and up to date has 
 retired eleven series. Its monthly receipts are about $10,000, 
 and it now has assets of $519,900.74, to help mature the 
 remaining sixteen series. Its last year's profits jvere about 20 
 per cent. It has had no losses and not a foreclosure in the 
 last ten years. 
 
 Missouri associations are growing with great rapidity. The 
 Prudential Building and Loan Association, of Kansas City, in 
 three years has received deposits of $73,651.31 and has 
 averaged a profit of 10 1-2 per cent per annum. 
 
 In Kansas, their early history was a disappointment to their 
 
 friends, and their prospects were discouraging, but since they 
 
 * have become better understood, their advantages are receiving 
 
 appreciation. The Leavenworth Mutual Building, Loan and 
 
 Savings Association, organized three years, reports $68,218.72
 
 SOME RESULTS. 143 
 
 of assets. The profits average about 15 per cent per 
 annnm. 
 
 Iowa associations, while not large, are snccessful. One of 
 the oldest is the Council Bluffs Savings, Loan and Building 
 Association, incorporated in 1877. It has never suffered a 
 loss and has accumulated assets of $130,311.68, realizing a 
 profit of about 12 per cent per annum. 
 
 Building associations in Colorado are a growth of the past 
 ten years. A few institutions had been working quietly prior 
 to that time, " but to-day they have," so says the liepublican 
 of Denver, "an acknowledged place, like the banks, among 
 the financial institutions of the city." In Denver, there are 
 about 15,000 shareholders in 31 associations, with combined 
 resources of $5,500,000, and undivided profits approximating 
 $2,000,000. During 1891 they loaned $1,750,000 in spite o"f 
 a stringent money market. The profit realized is from 8 to 
 10 per cent. The Denver Home and Savings Association, in- 
 corporated July 1, 1890, has assets of $108,013.65. The Peo- 
 ple's Building and Loan Association, four years old, reports 
 assets of $462,871.25. The Capital, of the same duration, has 
 assets of $210,211.11. The Standard, during the same time, 
 has accumulated $564,501.82 for its stockholders. The Home 
 Mutual, organized in 1880, has assets of $403,082.43. The 
 serial plan is the one usually adopted, and the instalment pre- 
 mium is growing in favor, although most of the older associa- 
 tions use the gross premium plan, and consequently, deduct 
 the entire premium at the time of the loan, with a rebate on 
 withdrawal. This has led to the " unearned premium," which 
 unsatisfactorily creates uncertainty in the ultimate profits. 
 The first of the above named associations is on the " Dayton 
 plan," called such from the Mutual Home, Dayton, Ohio. 
 There are a number of smaller associations outside of Denver, 
 probably a dozen, all prospering. 
 
 The Wyoming associations are not numerous, but profitable. 
 Interest rates are high, and when premiums are tacked on, the 
 profit is enormous, as is shown by the results of the Home 
 Building and Loan Association, of Cheyenne, which, after one 
 year of operations, accumulated $18,540.02 and paid its stock, 
 holders 41 1-2 per cent.
 
 144 
 
 BUILDING ASSOCIATIONS. 
 
 In Oregon, in the principal cities and towns, building asso- 
 ciations are becoming established. Their net profits average 14 
 per cent, per annum. The Franklin Building and Loan Asso- 
 ciation, of Portland, is eiglit years old, has assets of $448,352.- 
 95, with 1,000 shareholders and has sustained no losses. 
 
 There are about 135 associations in California, with assets of 
 about $4,000,000. Six per cent, interest is paid on paid up 
 stock, while running stock averages 10 per cent. The Home 
 Security Building and Loan Association, of San Francisco, in- 
 incorporated July 20, 1875, has assets of $573,804.87. The 
 Home Mutual, organized six years, has assets of $170,171.- 
 95. The Commercial, five years old, has $95,347.05. The 
 Homestead, six years old, has $206,568.00 and the Citizen's, in 
 its seventh year, has assets of $109, 901.40. 
 
 The Pioneer association, of Omaha, Nebraska, is the Omaha 
 Loan and Building Association, organized in April, 1883. In 
 about nine years it has handled $337,636.30 and paid off its first 
 series, wherein the shareholder received $200 for $105 paid in. 
 
 In Texas, the Dallas Homestead and Loan Association, 
 organized in December, 1879, has assets of $400,000, without 
 a loss and has averaged 18^ per cent per annum profit. The 
 Mutual Building Association, of the same place, started in 
 October, 1887, and has assets of $300,000, no losses, and has 
 made 15 1-2 per cent. 
 
 In North Dakota, The Fargo Building Association, com- 
 menced business in March, 1880, and has assets of $19,308.39 
 and realizes a profit of about 10 per cent per annum. There 
 are other associations at Grand Forks and Lisbon, all prosper- 
 ing. 
 
 In Indiana, the greater number of the associations are in the 
 city of Indianapolis, there being about 120, with total weekly 
 deposits of about $36,600. There are about 35,000 sharehold- 
 ers, and the associations have loaned, within the past four 
 years, it is estimated, $4,243,344, having collected $4,210,901. 
 *The deposits, last year alone, it is estimated, were $1,600,000. 
 The profits vary from 8 to 18 percent. The Star Savings and 
 Loan Association has assets of $144,169.26 and realises an 
 average profit of 15^ per cent per annum.
 
 SOME RESULTS. 145 
 
 The Aetna Saving and Loan Association, fonr years old, has 
 assets of $179,284.52 and pays 18 per cent per annum. The 
 German American Building Association, twenty months in 
 business, has assets of $120,691.49 and pays eight per cent to 
 paid up shareholders and a larger profit to installment stock. 
 The Indiana Savings and Investment Company, three years 
 old, has assets of $108,771.73 and pays its paid up sharehold- 
 holders 8 per cent, per annum. Its running shares receive 
 additional profit. 
 
 Foreclosures are comparatively few and losses trifling. The 
 same record is borne by associations throughout the state. 
 They have the confidence of the people and are building up 
 solidly. The variance in the profit showings, in the foregoing 
 illustrations, is explainable where it is less by such causes as 
 accumulated idle money or a dull demand for funds; however, 
 some associations adopt low premiums as a policy and discour- 
 age hio'h biddinsr. 
 
 The figures above given do not include all the large and 
 profitable associations in the different states. There are many 
 others equally or more prosperous. The results illustrated by 
 these associations were available and have been used to show 
 the growth, security and profit of the building associations in 
 the different parts of the country.* 
 
 To readily understand the quick and increasing profits of 
 an association, through the compounding of its interest, a 
 glance at the four following tables will serve, 
 
 'The above figures arc taken from fused. Building associations should 
 
 reports of the various associations, be compelled by law to publish at 
 
 procured with care, but in a few least annual reports of their con- 
 
 Btatea requests for reports were re- dition. 
 
 10
 
 146 
 
 BUILDING ASSOCIATIONS. 
 
 TABLE No. 1. 
 
 Showing the accumulations of one dollar per month at 10 per 
 cent interest, compounded monthly, for any number o£ 
 months, from one to one hundred and twenty : 
 
 o 
 6 
 
 o 
 
 a 
 
 CD 
 
 o 
 6 
 
 31 
 
 Amount. 
 
 1 
 
 CO 
 -I-' 
 
 a 
 o 
 
 d 
 
 a 
 
 53 
 O 
 
 a 
 
 DQ 
 
 •5 
 
 o 
 6 
 
 o 
 
 O 
 
 a 
 
 1 
 
 1.01 
 
 35.50 
 
 61 
 
 79.74 
 
 91 
 
 136.49 
 
 2 
 
 2.03 
 
 32 
 
 36.80 
 
 62 
 
 81.41 
 
 92 
 
 138.64 
 
 3 
 
 8.05 
 
 33 
 
 38 . 12 
 
 63 
 
 83.10 
 
 93 
 
 140.80 
 
 4 
 
 4.08 
 
 34 
 
 39.44 
 
 64 
 
 84.80 
 
 94 
 
 142.98 
 
 5 
 
 5.13 
 
 35 
 
 40.78 
 
 66 
 
 86.52 
 
 95 
 
 145.18 
 
 6 
 
 6.18 
 
 36 
 
 42.13 
 
 6Q 
 
 88.25 
 
 96 
 
 147.40 
 
 7 
 
 7.24 
 
 37 
 
 43.49 
 
 67 
 
 89.99 
 
 97 
 
 149.64 
 
 8 
 
 8.31 
 
 38 
 
 44.86 
 
 68 
 
 91.75 
 
 98 
 
 151 89 
 
 9 
 
 9.38 
 
 39 
 
 46.24 
 
 69 
 
 93.52 
 
 99 
 
 154.17 
 
 10 
 
 10.47 
 
 40 
 
 47.64 
 
 70 
 
 95.31 
 
 100 
 
 156.46 
 
 11 
 
 11.67 
 
 41 
 
 49.04 
 
 71 
 
 97.11 
 
 101 
 
 168.77 
 
 12 
 
 12.67 
 
 42 
 
 50.46 
 
 72 
 
 98.93 
 
 102 
 
 161.10 
 
 13 
 
 13.78 
 
 43 
 
 51.89 
 
 73 
 
 100.76 
 
 103 
 
 163.45 
 
 14 
 
 14.91 
 
 44 
 
 53.33 
 
 74 
 
 102.61 
 
 104 
 
 165.82 
 
 15 
 
 16.04 
 
 45 
 
 54.78 
 
 75 
 
 104.47 
 
 105 
 
 168.21 
 
 16 
 
 17.18 
 
 46 
 
 56.24 
 
 76 
 
 106.36 
 
 106 
 
 170.62 
 
 17 
 
 18.33 
 
 47 
 
 57.72 
 
 77 
 
 108.25 
 
 107 
 
 173 05 
 
 18 
 
 19.49 
 
 48 
 
 69.21 
 
 78 
 
 110.16 
 
 108 
 
 175.50 
 
 19 
 
 20.67 
 
 49 
 
 60.71 
 
 79 
 
 112.08 
 
 109 
 
 177.94 
 
 20 
 
 21.85 
 
 50 
 
 62.23 
 
 80 
 
 114.03 
 
 110 
 
 180.47 
 
 21 
 
 23.04 
 
 51 
 
 63.75 
 
 81 
 
 115.98 
 
 111 
 
 182.98 
 
 22 
 
 24.24 
 
 52 
 
 65.29 
 
 82 
 
 117.96 
 
 112 
 
 185.51 
 
 23 
 
 25.45 
 
 53 
 
 66.85 
 
 83 
 
 119.95 
 
 113 
 
 188.07 
 
 24 
 
 26.67 
 
 54 
 
 68.41 
 
 84 
 
 121.96 
 
 114 
 
 190.64 
 
 25 
 
 27.90 
 
 55 
 
 69.99 
 
 85 
 
 l!^3.98 
 
 115 
 
 193.24 
 
 26 
 
 29.14 
 
 56 
 
 71.58 
 
 86 
 
 126.02 
 
 116 
 
 195.86 
 
 27 
 
 30.39 
 
 57 
 
 73.19 
 
 87 
 
 128.08 
 
 117 
 
 198.50 
 
 28 
 
 31.65 
 
 58 
 
 74.81 
 
 88 
 
 130.16 
 
 118 
 
 201.16 
 
 29 
 
 32.92 
 
 59 
 
 76.44 
 
 89 
 
 132.26 
 
 119 
 
 203.84 
 
 30 
 
 34.21 
 
 60 
 
 78.08 
 
 90 
 
 134.36 
 
 120 
 
 206.55
 
 BUILDING ASSOCIATIONS. 
 
 TABLE No. 2. 
 
 147 
 
 Showing the accumulations of sixty cents per month at 10 per 
 cent interest, compounded monthly, for any number of 
 months, from one to one hundred and twenty: 
 
 ID 
 
 a 
 o 
 
 '^ 
 6 
 
 O 
 
 s 
 
 -G 
 C 
 
 o 
 d 
 
 a 
 
 1=1 
 o 
 
 a 
 
 CO 
 
 O 
 
 d 
 61 
 
 -*-5 
 
 PI 
 !=! 
 O 
 
 CO 
 
 O 
 
 d 
 
 (3 
 O 
 
 a 
 < 
 
 1 
 
 .61 
 
 31 
 
 21.30 
 
 47.84 
 
 91 
 
 81.89 
 
 2 
 
 1.22 
 
 32 
 
 22.08 
 
 62 
 
 48.85 
 
 92 
 
 83.18 
 
 3 
 
 1.83 
 
 33 
 
 22.87 
 
 63 
 
 49.86 
 
 93 
 
 84.48 
 
 4 
 
 2.45 
 
 34 
 
 23.67 
 
 64 
 
 50.88 
 
 94 
 
 86.79 
 
 6 
 
 3.08 
 
 35 
 
 24.47 
 
 65 
 
 51.91 
 
 95 
 
 87.11 
 
 6 
 
 3.71 
 
 36 
 
 25.28 
 
 66 
 
 52.95 
 
 96 
 
 88.44 
 
 7 
 
 4.34 
 
 37 
 
 26.09 
 
 67 
 
 53.99 
 
 97 
 
 89.78 
 
 8 
 
 4.98 
 
 38 
 
 26.92 
 
 68 
 
 55.05 
 
 98 
 
 91.13 
 
 9 
 
 5.63 
 
 39 
 
 27.75 
 
 69 
 
 56.11 
 
 99 
 
 92.50 
 
 10 
 
 6.28 
 
 40 
 
 28.58 
 
 70 
 
 57.19 
 
 100 
 
 93.87 
 
 11 
 
 6.95 
 
 41 
 
 29.42 
 
 71 
 
 58.27 
 
 101 
 
 95.26 
 
 12 
 
 7.60 
 
 42 
 
 30.27 
 
 72 
 
 59.36 
 
 102 
 
 96.66 
 
 13 
 
 8.27 
 
 43 
 
 31.13 
 
 73 
 
 60.46 
 
 103 
 
 98.07 
 
 14 
 
 8.94 
 
 44 
 
 32.00 
 
 74 
 
 61.67 
 
 104 
 
 99.49 
 
 15 
 
 9.62 
 
 45 
 
 32.87 
 
 75 
 
 62.68 
 
 105 
 
 100.93 
 
 16 
 
 10.31 
 
 46 
 
 83.75 
 
 76 
 
 63.81 
 
 106 
 
 103.37 
 
 17 
 
 11.00 
 
 47 
 
 34.63 
 
 77 
 
 64.95 
 
 107 
 
 103.83 
 
 18 
 
 11.70 
 
 48 
 
 35.53 
 
 78 
 
 66.09 
 
 108 
 
 105.30 
 
 19 
 
 12.40 
 
 49 
 
 36.43 
 
 79 
 
 67.25 
 
 109 
 
 100.78 
 
 20 
 
 13.11 
 
 50 
 
 37.34 
 
 80 
 
 68.42 
 
 110 
 
 108.28 
 
 21 
 
 13.82 
 
 51 
 
 38.25 
 
 81 
 
 69.69 
 
 111 
 
 109.79 
 
 22 
 
 14.54 
 
 52 
 
 39.18 
 
 82 
 
 70.78 
 
 112 
 
 111.31 
 
 23 
 
 15.27 
 
 53 
 
 40.11 
 
 83 
 
 71.97 
 
 113 
 
 112.84 
 
 24 
 
 16.00 
 
 54 
 
 41.05 
 
 84 
 
 73.17 
 
 114 
 
 114.38 
 
 25 
 
 16.74 
 
 55 
 
 41.99 
 
 85 
 
 74.39 
 
 115 
 
 115.94 
 
 26 
 
 17.48 
 
 56 
 
 42.94 
 
 86 
 
 75.61 
 
 116 
 
 117.51 
 
 27 
 
 18.24 
 
 57 
 
 43.91 
 
 87 
 
 76.84 
 
 117 
 
 119.10 
 
 28 
 
 18.99 
 
 58 
 
 44.88 
 
 88 
 
 78.10 
 
 118 
 
 120.70 
 
 29 
 
 19.75 
 
 59 
 
 45.86 
 
 89 
 
 79.35 
 
 119 
 
 122.31 
 
 30 
 
 20.52 
 
 60 
 
 46.85 
 
 90 
 
 80.62 
 
 120 
 
 123.93
 
 148 
 
 BUILDING ASSOCIATIONS. 
 
 TABLE No. 3. 
 
 Showing the accumulations of one dollar per month, at eight 
 per cent interest, compounded monthly, for any number of 
 months, from one to eighty: 
 
 00 
 
 ■*-> 
 
 c 
 o 
 
 ;^ 
 
 d 
 
 PI 
 pi 
 o 
 
 a 
 
 tn 
 
 C 
 
 o 
 6 
 
 -•■3 
 
 PI 
 
 pi 
 
 o 
 
 a 
 
 en 
 
 o 
 d 
 
 41 
 
 PI 
 pi 
 o 
 
 a 
 
 46.92 
 
 CO 
 
 O 
 
 d 
 
 d 
 
 PI 
 o 
 
 a 
 
 1 
 
 1.01 
 
 21 
 
 22.42 
 
 61 
 
 74.88 
 
 2 
 
 2.04 
 
 22 
 
 23.58 
 
 42 
 
 48.23 
 
 62 
 
 76.38 
 
 3 
 
 3.04 
 
 23 
 
 24.75 
 
 43 
 
 49.54 
 
 63 
 
 77.88 
 
 4 
 
 4.07 
 
 24 
 
 25.90 
 
 44 
 
 50.87 
 
 64 
 
 79.41 
 
 5 
 
 5.10 
 
 25 
 
 27.08 
 
 45 
 
 52.22 
 
 65 
 
 80.94 
 
 6 
 
 6.14 
 
 26 
 
 28.24 
 
 46 
 
 63.57 
 
 66 
 
 82.47 
 
 7 
 
 7.19 
 
 27 
 
 29.46 
 
 47 
 
 54.94 
 
 67 
 
 84.03 
 
 8 
 
 8.24 
 
 28 
 
 30.64 
 
 48 
 
 56.27 
 
 68 
 
 85.78 
 
 9 
 
 9.31 
 
 29 
 
 31.86 
 
 49 
 
 57.66* 
 
 69 
 
 87.12 
 
 10 
 
 10.37 
 
 30 
 
 33.04 
 
 50 
 
 59.02 
 
 70 
 
 - 88.72 
 
 11 
 
 11.45 
 
 31 
 
 34.27 
 
 51 
 
 60.62 
 
 71 
 
 90.32 
 
 12 
 
 12.53 
 
 32 
 
 35.49 
 
 52 
 
 61.85 
 
 72 
 
 91.90 
 
 13 
 
 13.62 
 
 33 
 
 36.76 
 
 53 
 
 63.24 
 
 73 
 
 93.52 
 
 14 
 
 14.72 
 
 34 
 
 38.07 
 
 54 
 
 64.65 
 
 74 
 
 95.14 
 
 15 
 
 15.83 
 
 35 
 
 39.24 
 
 55 
 
 66.09 
 
 75 
 
 96.78 
 
 16 
 
 16.94 
 
 36 
 
 40.47 
 
 56 
 
 67.55 
 
 76 
 
 98.43 
 
 17 
 
 18.06 
 
 37 
 
 41.76 
 
 57 
 
 69.00 
 
 77 
 
 100-20 
 
 18 
 
 19.18 
 
 38 
 
 43.05 
 
 58 
 
 70.45 
 
 78 
 
 101.73 
 
 19 
 
 20.32 
 
 39 
 
 44.31 
 
 59 
 
 71.91 
 
 79 
 
 103.43 
 
 20 
 
 21.46 
 
 40 
 
 45.61 
 
 60 
 
 73.40 
 
 so 
 
 105.00
 
 BUILDING ASSOCIATIONS. 
 
 149 
 
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 APPENDIX.
 
 STATUTES AND CONSTRUCTION. 
 
 The following references show where the statutes, and deci- 
 sions construing them, which relate to building associations in 
 the different states, may be found. 
 
 Alabama. See Code 1886, sections 1553, et seq.; Statutes 
 1888-9, p. 31. 
 
 Arkansas. Organized under general stock company statute 
 of 1869; Digest Stat. 1884, sees. 960, et seq.; See Acts 1883, p. 
 227; Statutes 1884, sections 5644, et seq. 
 
 California. See 2 Deering's Codes, sections 283, 571, 679. 
 Colorado. See Laws 1889. p. 41, et seq. 
 
 Connecticut. See Gen. Stat. 1888, sec. 1, where it is 
 provided that the term "saving banks" shall inchide savings 
 societies, and see chapter CX., concerning "Savings Banks." 
 Construction of the act of 1850; Mutual Savings, etc.. Asso- 
 ciation V. Wilcox, 24 Conn. 147, 154; Id. v. Meriden, etc., 
 Company, 24 Conn, 159; and see West Winsted, etc.. Associa- 
 tion V. Ford, 27 Conn. 282; Id. v. Kice, lb. 293; Babcock v. 
 Middlesex, etc., Bank, 28 Conn., 302. 
 
 Dakota. See Compiled Laws, 1887, sections 3166, et seq. 
 
 Delaware. See Laws 1875, p. 188; Special Incorporations, 
 
 see Acts 1877, 1891. 
 
 (153)
 
 154 BUILDING ASSOCIATIONS. 
 
 Florida. See Act of May 31, 1887; also Acts 1889, p. 115. 
 
 Georgia. Incorporated by decree of court; See Code 1882, 
 sections 1674, 1676; Construction; See Eedwine v. Gate City 
 etc., Association, 54 Ga. 474; see also In re. Deveaux, lb. 673; 
 See R. S. 1882, section 3968; Acts 1888, p. 47; Acts 1889, p. 
 180; Acts 1890-1 part 1, p. 176; Construction; See 
 McGowan v. Savannah, etc., Association, 80 Ga. 515. 
 
 Illinois. See Starr & Curtis, Ann. Stat.. Yol 1, pp. 629, et 
 seq. ib., Yol. 3, p. 282. Former Statutes; Laws 1869, p. 105; 
 1871, p. 173; 1879, p. 83. 
 
 Indiana. See Elliott's Supp. Sections, 840, et seq. 
 
 Iowa. See McClain's Ann. Code, Sections 1290, 1784-87. 
 
 Kansas. See General Statutes 1889, sections 1424, et seq. 
 Statutory Construction; see Salina etc., Association v. Nelson, 
 22 Kans. 751. 
 
 Kentucky. Incorporation by special enactment. 
 
 Lousiana. See Acts 1888, pp. 177, 212. 
 
 Maine, See E. S. 1883, p. 435, sec. 132 ; Acts 1889, p. 146 ; 
 Acts 1891, p. 64. 
 
 Maryland. See Pub. Gen. Laws 1888, p. 312; Statutory 
 Construction; See Border State, etc., Association v. Hayes, 61 
 Md. 597. 
 
 Massachusetts. See Pub. Stat. 1882, pp. 134, 572, 667, 
 1004. Suppl. Publ. Stat. 1888, pp. 63, 64, 103, 276, 648, 
 549; Acts 1889, pp 893, 1177; Acts 1890, pp. 60, 71, 213, 
 262; Acts 1891, pp. 722, 1010. Statutory Construction; 
 See Baxter v. Mclntire, 79 Mass. 168; Manahan v. Yarnum, 
 77 Mass. 405; Cook v. Kent, 105 Mass. 246. 
 
 Michigan. See Howell's Ann. Supl. Statute 1890, Sections 
 3981, et seq.
 
 APPENDIX. 155 
 
 Minnesota. See Statutes 1891, sections 1421, et seq., and 
 2409 et seq. Statutory Construction; see State v. Eedwood 
 Falls, etc., Association, 45 Minn. 154. 
 
 Mississippi. Incorporation by special enactment; see Acts 
 1886 pp. 20, 35; Acts 1888, p. 17; Acts 1890, p. 10. 
 
 Missouri. See R. S. 1889, Sections 2808, et seq.; Acts 
 1891, p. 74. Statutory Construction; See Ma^uire v. State, 
 etc., Association, 62 Mo. 344; State v. McGrath, 95 Mo. 193. 
 
 Montana. See Comp. Statutes 1888, pp. 795, et seq. 
 
 Nebraska. See (^orap. Statutes 1887, p. 258; Stat. Laws 
 1891, Chap. 14, p. 200. 
 
 Kew Hampshire. See Public Statutes, 1891, pp. 204, 205, 
 459, 460, 472, et seq. 
 
 New Jersey. See E. S. Suppl. 1886, pp. 69, 70, 138, et seq. 
 R. S. 1877, pp. 92, et seq. and p. 1272; Acts 1887, p. 62; Acts 
 1888 p. 36; Acts 1889, p. 299; Acts 1890, pp. 420, 427, 441. 
 Statutory Construction; Savinojs Association v. Vandervere, 
 3 Stock, 382; People's, etc., Association v. Furey, 20 Atl. Rep. 
 890; Vanneman v. Swedesboro, etc.. Association, 15 Stew. 263; 
 Newton Tp., etc.. Association v. Boyer 15 Stew. 273; Washing- 
 ton Association v. Creneling, 10 Yr. 465; Id. v. Horn baker 
 12 Vr. 519; For bill in equity held defective, see McNeal v. 
 Florence, etc.. Association, 13 Stew. 351. 
 
 New Mexico. See Acts 1887, pp. 22, et seq., also amendatory 
 act of 1889; Acts 1889, pp. 266, et seq. 
 
 New York, xiuthorized by manufacturing acts 1879, 1880, 
 1884. See P. S. 1889, pp. 1587, et seq.; See also P. S. 1890, 
 (Birdseye Ed.) pp. 343, et seq.; Laws 1891, p. 318. Statutory 
 Construction; see Franklin etc., Association v. Mather, 4 Abb. 
 Pr. 274; Second Manhattan etc., Association v. Ilayes, 2 Kejes 
 192; Remington v. King, 11 Abb. Pr. 278.
 
 156 
 
 BUILDING ASSOCIATIONS. 
 
 North Carolina. See Code, "Vol. 2, Chap. 7, Sec. 2,294, et 
 seq; Battle's Kevisal, pp. 105, et seq. Laws 1881, p. 604; 
 Laws 1891, p. 1,041. 
 
 Ohio. See 1 E. S. 1890, sections 3,81T, 3,883, et seq and 
 3,935.; Laws 1891, pp. 469, et seq. Statutory Construction; 
 Windhorst v. Building Association, 7 Bull. 29; Licking 
 County, etc., Association v. Bebout, 29 Ohio St. 252; Forrest 
 City, etc.. Association v. Gallagher, 25 Ohio St. 208; State v. 
 Building Association, 35 Ohio St. 258; Bates v. People's, 
 etc.. Association, 42 Ohio St., 655. 
 
 Oregon. For incorporation, see general statute for private 
 corporations, 2 Hill's Ann. Laws, sees. 3,217, et seq; also. Laws 
 1891, p. 131. 
 
 Pennsylvania. See Brightley's Purdon's Digest, pp. 223, et 
 seq. Acts 1891, p. 174. Statutory Construction ; See Cooper 
 V. Association, 100 Pa. St. 402; O'Rourke v. Building Asso- 
 ciation, 8 W. N. C. 176; Houser v. Herman, etc., Association, 
 41 Pa. St. 478 ; Marble, etc.. Association v. Hocker, 3 Phila. 
 494; Building Association v. Eshelbach, 7 Phila. 189; Spring 
 Garden Association v. Tradesmen's, etc.. Association, 46 Pa. St. 
 493; Springville, etc.. Association v. Raber, 33 Leg. Int., 329; 
 Snider's Estate, 34 Leg. Int. 49; Schober v. Accommodation, 
 etc., Association, 35 Pa. St. 223; Building Association v. See- 
 miller, 35 Pa. St. 225 ; Philadelphia, etc.. Association v. Moore, 
 21 Leg. Int., 109; Flounders v. Hawley, 78 Pa. St. 45; Wol- 
 bach V. Lehigh, etc.. Association, 4 W. N. C. 157; Jarrett v. 
 Cope, 68 Pa. St. 67; Rhoads v. Hoernerstown, etc., Associa- 
 tion, 82 Pa. St. 180; Building Association v. Building Asso- 
 ciation, 100 Pa. St; 191; Commonwealth v. Association, 2 
 Chest. 189; Association v. Commonwealth, lb. 546; Building 
 Association v. Commonwealth, 98 Pa. St. 54; Abbott v. Build- 
 ing Association, 1 Del, 397; Building Association v. Robin- 
 son, 46 L. I. 5; Hansbury v. Pfeiffer, 35 L. I. 395; Heckman 
 V. Building Association, 11 L. Bar. 110; Link v. Building 
 Association, 89 Pa. St., 15; Rowland's Estate, 1 Del. 98; Fred- 
 ericks V. Corcoran, 100 Pa. St. 413; Building Association v.
 
 APPENDIX. 157 
 
 Hanlen, T Lnz. L. Keg. 165; Becket v. Building Association, 
 88 Pa. St. 211; Selden v. Building Association, 32 P. F. 
 Sm. 336; Building Association v. Iloarj, 8 Luz. L. Reg. 180; 
 Saving Fund v. Longshore, lb. 199; Sherman, etc., Association 
 V. Rock, 9 Phila., 75; Building Association v. Coleman, 89 Pa. 
 St. 428; Miller's Estate, 2 Pears. 348. 
 
 Rhode Island. Incorporated by special enactment. 
 
 South Carolina. Special incorporations; Bee Acts 18S3, 
 1886, 1887, 1888, 1889; General Statute, Acts 1885, p. 40, 
 Act8l888, p. 46. 
 
 Tennessee. Incorporation by special enactment. See Code 
 1884; Sections 1742 et seq.. Acts 1891, p. 17. 
 
 Texas. Incorporated under Clause 17, Article 566, Sayle's 
 Civil Statute concerning " Corporations." 
 
 Utah. See Acts 1890, p. 7. 
 
 Virginia. See Statues 1852, pp. 81-3; see also Code 1887, 
 Sees. 1145, et seq. The Richmond Perpetual Building, Loan, 
 and Trust Company was incorporated by special enactment. 
 See Act of March 30, 1875, amended March 2, 1888. Statu- 
 tory Construction ; Davies v. Creighton, 33 Grat. 606. 
 
 Wisconsin. See Sanborn <fc Berryman's Ann. Stat., pp. 
 1,204, et seq., Statutory Construction; Wood v. Union Gospel, 
 etc.. Association, 63 Wis. 9; Wood v. Hoskin, 63 Wis. 15. 
 
 Washington. See Acts 1891, p. 199. 
 
 West Yirginia. See Chapter 26, R. S. 1879; Code 1891, 
 pp. 514, et seq. 
 
 Statutory Construction; see Pfeister v. Wheeling, etc.. Asso- 
 ciation, 19 W. Ya., 676.
 
 158 
 
 BUILDING ASSOCIATIONS. 
 
 Wyoming. For incorporation of Saving Associations, see 
 Laws 1888, pp. 193, et seq. The association contemplated ifl 
 of a savings bank character. 
 
 FORMS. 
 
 PEELIMINARY AGREEMENT FOR INCOR- 
 PORATION. 
 
 "We, the undersigned, do each of us hereby agree to form 
 ourselves into a building association, under the laws of the 
 State of , and to take the number of shares in said asso- 
 ciation set opposite our respective names, and pay the dues 
 thereon, as may be required by said association. In the event 
 such association is not incorporated, we and each of us, agree 
 to bear our proportionate part of the proper expense incurred 
 in the efiPort to organize and incorporate such association. 
 
 APPLICATION FOR MEMBERSHIP. 
 
 No. of Shares No 
 
 I being desirous of obtaining shares in the 
 
 Association, of , , each of the matur- 
 ing face value of $ , do hereby make application there- 
 for. I do hereby agree to abide by all the terms and condi- 
 tions contained or referred to in the certificate of shares, and 
 I hereby certify that I have carefully read the printed litera- 
 ture of the Association, and make this application to become a 
 member from the facts set forth in said literature, and from 
 said facts only,' and I hereby agree to abide by the same. 
 
 *I hereby appoint , or his successor in ofBce, to 
 
 vote in my place and stead, as my proxy, and authorize him in 
 my name and during my absence, to vote at any election of 
 officers and directors, and on any and all matters which, at any 
 meeting of the members may properly come before them ; said 
 appointment is made and such proxy is to be held and vote to 
 be cast in all respects in accordance and conformity with Sec- 
 tion of the By-Laws of the Association. I will also com- 
 ply with all the Articles of the Association, By-Laws, Rules 
 and Regulations of said Association, and hereby make the 
 same a part of this contract with said Association,
 
 APPENDIX. 
 
 159 
 
 Name in full 
 
 Age Married or single.. Occupation. 
 
 
 STREET AND 
 NUMBKR 
 
 TOWN OR 
 CITY. 
 
 COUNTY. 
 
 STATE. 
 
 Residence, 
 
 
 
 
 
 Post-Office Address' 
 
 
 
 
 
 If Trustee, 
 Fob Whom 
 
 rName in full. 
 
 Residence. 
 
 I^Relationship and Age 
 
 Kind of shares desired, whetlier installment or paid up. 
 Are you a member of this Association? 
 
 If so, How many shares do you hold ?. 
 
 If Application is Made for 
 
 Transfer from Whom 
 
 Dated at 
 
 TName. 
 
 <| Number of book or certificate 
 
 [^Number of shares transferred 
 
 this day of 189 
 
 Signature of applicant 
 
 Witness. 
 
 rOEM OF ARTICLES OF ASSOCIATION". 
 
 The form of the incorporating articles will depend, to some 
 extent, upon the statute of the state. It must be consulted to 
 conform with it, but the general character may be seen from 
 the following articles, incorporating an Oregon association: 
 
 Akticles of Incorporation of the Franklin BuiLDiNa and 
 Loan Association, of Portland, Oregon, 
 Know all Men by these Presents, that we, the under- 
 signed, John A. Child, Robert Newcomb, J. II, Lyon, Wil- 
 liam Stokes, W. M. Gregory, N. Yersteeg, Alfred Thompson, 
 have this day associated ourselves together for the purpose of 
 establishing a private corporation, under the general laws of 
 the State of Oregon, and for that purpose do hereby make and 
 iBubscribe in triplicate the following articles.
 
 160 
 
 BUILDING ASSOCIATIONS. 
 
 AETICLE I.« 
 The name assumed by this corporation, and by which it 
 shall be known, is " The Franklin Building and Loan Asso- 
 ciation;" and the duration of the said corporation shall be 
 unlimited. 
 
 ARTICLE II. 
 
 The enterprise or business in which the said corporation 
 proposes to engage is — 
 
 1. To raise a capital fund in shares of two hundred dollars 
 each, payable by monthly installments; such payments to 
 accumulate at interest and prolit until the par value shall be 
 attained, when the amount shall be paid to the shareholders 
 and the stock revert to the Association. 
 
 2. To grant loans of money to members, upon the security 
 of freehold or leasehold properties, upon United States bonds, 
 or upon the shares of this corporation only. 
 
 3. To buy, improve, and sell real estate. 
 
 4. To receive money on deposit, at interest or otherwise, 
 repayable at call or fixed periods. 
 
 ARTICLE IIL 
 The said corporation shall have its principal office and place 
 of business in the city of Portland, in the county of Multno- 
 mah, and State of Oregon. 
 
 ARTICLE lY. 
 The capital stock of the incorporation shall be the sum of 
 four hundred thousand dollars, divided into two thousand 
 shares. 
 
 ARTICLE y. 
 The amount of each share shall be two hundred dollars. 
 
 ARTICLE YI. 
 The sums to be paid by shareholders on their respective 
 shares, the time when such payments shall be made, the pen- 
 alties for delay or neglect in making such payments, and also 
 the manner and terms upon which shareholders shall be 
 
 •The part following the formal parts should adhere closely to the statute.
 
 APPENDIX. 161 
 
 entitled to withdraw their shares from the Association, shall 
 be determined by the Bj-Laws, which the stockholders shall 
 have power to make, in accordance with the Constitution and 
 Laws of the United States and of the State of Oreiron. 
 
 AETIOLE YII. 
 
 The number, titles, functions and compensation of the offi- 
 cers of this corporation, the time and manner of their election, 
 and the time for the periodical meetings of this corporation 
 shall be determined by the said By-Laws. 
 
 ARTICLE YIII. 
 
 The officers of this corporation shall hold stated meetings at 
 which the money i]\ the treasury of the corporation, or such 
 portion thereof as they shall deem advisable, shall be offered 
 for loan, upon such terms and conditions as shall be directed 
 in the said By-Laws. 
 
 In Witness Whereof, we have hereunto set our hands and 
 seals this seventh day of April, one thousand eight hundred 
 and eighty-three. 
 
 JOHI^ A. CHILD, [SEAL. 
 
 R. NEWCOMB, [SEAL. 
 
 J. H. LYOJ^, [SEAL. 
 
 WM. STOKES, [SEAL. 
 
 W. M. GREGORY, [seal. 
 
 N. 7ERSTEEG, [SEAL. 
 
 A. THOMPSON, [SEAL 
 
 Signed and sealed in presence of 
 J. B. Scott, 
 W. A. Gkadon. 
 
 STATE OF OREGON", ) 
 County of Multnomah, f * 
 Be it remembered, that on this seventh day of April, A. D. 
 1883, before me, the undersigned, a Notary Public, in and for 
 said county of Multnomah, and State of Oregon, personally 
 appeared the within named John A. Child, Robert Newcomb, 
 J. H. Lyon, William Stokes, W. M. Gregory, N. Yersteeg 
 and A. Thompson, to me known to be the identical persons 
 described in and who executed the foregoing Articles of Incor-
 
 162 BUILDING ASSOCIATIONS. 
 
 poration, and severally acknowledged to me that they executed 
 the same freely and voluntarily and for the uses and purposes 
 therein mentioned. 
 
 In testimony whereof, I have hereunto set my hand and 
 aflSxed my notary seal. 
 
 Done in triplicate, on the day and year in this certificate 
 above written. ^ 
 
 J. B. SCOTT, 
 [l. 8.] Notary Public in and for Oregon. 
 
 Office Secretary of State, ) 
 Salem, April 10, 1883. f 
 Articles of Incorporation of the " Franklin Building and 
 Loan Association," of Portland, Oregon, were recorded and 
 filed in this oflice on the 10th inst. 
 
 K. P. EAEHAKT, 
 
 Secretary of State. 
 
 If the incorporation is by special enactment of the Legisla- 
 ture, the following act incorporating the " Guardian," of 
 Wilmington, Delaware, may be consulted. 
 
 ACT OF INCORPORATION. 
 
 An Act to Incorporate " The Guardian Savings and 
 Loan Association. " 
 
 Be it enacted hy the Senate and House of Representatives 
 of the State of Delaioare, in General Assembly met, (two- 
 thirds of each branch concurring herein^ 
 
 Section 1. That Daniel H. Kent, James H. Semple, 
 Robert McCaulley, Henry R. Pennington, John H. Simms, 
 B. Frank McDaniel, Henry P. Scott, Samuel C. Pierce, Henry 
 F. Pickels, John B. Price, Edwin W. Jackson, Henry 
 Evans, Samuel C. Penrose, Solomon H. Staats, Samuel 
 H. Baynard, and William E. Harkins, and such other persons, 
 as are now or hereafter may be associated with them, and 
 their successors, be, and they are hereby created a body
 
 APPENDIX. 163 
 
 politic and corporate, by the name, style, and title of " The 
 Guardian Savings and Loan Association," for the purpose of 
 accumulating a fund from monthly contributions and fines, 
 premiums on loans and interest on investments, for the benefit 
 of its members, and by the said name, style and title, shall 
 have succession for twentj' years, and be able and capable in 
 law to sue and be sued, plead and be impleaded in all courts 
 of law and equity in this State and elsewhere; to have and use 
 a common seal, and the same to alter and renew at pleasure; 
 to ordain, establish, and enforce by-laws not repugnant to the 
 Constitution and Laws of the United States, and of this State; 
 and, generally, to exercise and enjoy all the powers, privileges, 
 and franchises of a corporation aggregate, except banking 
 powers. 
 
 Sec, 2. The said corporation shall, by the name, style and 
 title aforesaid, be able and capable of purchasing, receivino-, 
 having, holding, and enjoying to itself and its successors and 
 assigns, lands, tenements, hereditaments, annuities, money, 
 securities, goods, chattels and effects, of what nature or kind 
 soever, real, personal, and mixed; provided, the same shall 
 not exceed the sum or value of six hundred thousand dollars; 
 and the same, from time to time, at pleasure to sell, grant, 
 demise, bargain, alien, and dispose of; and, also, to make such 
 laws, rules, regulations, and contracts, and the same to alter, 
 amend or repeal as the said Corporation shall deem proper 
 and expedient, for conducting the affairs and business of said 
 Corporation ; and, generally, to do all and singular the matters 
 and things necessary and proper for the good government 
 and well being of said Corporation; provided, the same be not 
 contrary to the provisions of this Act or the Constitution and 
 Laws of the United States, and the State of Delaware. 
 
 Sec. 3. The affairs and business of said Corporation shall 
 be conducted by a President, Vice President, Secretary and 
 Treasurer, and nine Managers, who shall constitute a Board of 
 Directors, seven of whom shall be a quorum. The President, 
 Yice President, Secretary and Treasurer, shall be elected
 
 164 BUILDING ASSOCIATIONS. 
 
 annually. At the first regular meeting, after the passage of 
 this Act, there shall be nine Managers elected, who shall, 
 within ten days thereafter, meet and divide themselves into 
 three classes, and draw lots, for one, two or three years, and 
 at every annual meeting thereafter, three managers shall be 
 elected to serve three yearS; The said Board of Directors 
 shall have power to fill all vacancies that may occur in their 
 own body during the year. 
 
 Sec. 4. The funds of said Corporation, as they accumulate 
 in the Treasury, shall be offered and loaned by the Board of 
 Directors, to the highest bidder among the stockholders. In 
 case no stockholder offers to borrow said funds at the rate 
 fixed by law, then the Board of Directors shall have power to 
 loan to persons not members or stockholders of the said Cor- 
 poration, at a rate of interest not exceeding that fixed by law. 
 
 Sec. 5 This act shall be deemed and taken to be a private 
 Act, and the power to revoke the same is hereby reserved to 
 the Legislature. 
 
 Passed at Duver^ Del., Feb. 20, 1883. 
 
 GEO. H. BATES, 
 Speaker of the House of Representatives, 
 
 SAMUEL B. COOPER, 
 
 Speaker of the Senate.
 
 APPENDIX. 
 
 165 
 
 rOKM OF STOCK CEKTIFICATE. 
 
 Certificate No 
 
 For Shares 
 
 Issued to 
 
 Date 18.. 
 
 Received this 
 
 Certificate 
 
 18.. 
 
 Tranferred from 
 
 to 
 
 Date 18.. 
 
 Reissued 
 
 See Certificate 
 No 
 
 Stock Certificate — Non-Foefettable. 
 No Shares, ^100.00 
 
 Building Association. 
 
 This Certifies, that of the County 
 
 of State of is the owner 
 
 of., 
 the. 
 par 
 
 . . Shares of the Capital Stock of 
 ...Building Association, of the 
 value of One Hundred dollars 
 each, subject to the provisions 
 of the by-laws of the said Asso- 
 ciation. Transferable on the 
 [seal.] books of the Association only 
 on the surrender of this Cer- 
 tificate. 
 
 Given under the seal of the 
 
 Association, at this 
 
 day of 18.. 
 
 , Secretary President. 
 
 ASSIGNMENT. 
 
 For value received, I hereby assign the within Certificate of 
 
 Stock to of the County of State of 
 
 this day of , 18 . . , and I hereby authorize 
 
 the Secretary to transfer the same on the books of the Asso- 
 ciation. 
 
 Witness my hand and seal this day of 
 
 18.. 
 
 Witness 
 
 The following by-laws incorporate the essertial points to be 
 observed by the association and have been prepared with spe- 
 cial reference to the avoidance of legal contentions. 
 
 BYLAWS. 
 
 Section 1. The name of this association shall be the.... 
 .... association of
 
 166 
 
 BUILDING ASSOCIATIONS. 
 
 Sec. 2. Tlie object of this association is to provide for its 
 members a safe and profitable investment of their savings, and 
 to loan money on easy terms to its members in manner 
 provided by law. 
 
 Sec. 3. The capital stock of this association shall be ... . 
 
 .... dollars, divided into shares of $ each, to be issued 
 
 (whenever applied for, or (in series of shares), at discre- 
 tion of the board of directors. 
 
 Sec. 4. Every share of stock shall be subject to lien for the 
 payment of unpaid instalments and other chai-ges incurred 
 thereon. 
 
 Sec. 5. Ko member in arrearages to the association in any 
 manner whatever, shall be allowed to vote at the meetings of 
 the association, until all such arrearages shall have first been 
 paid. 
 
 Sec. 6. No member who is indebted to the association as a 
 borrower shall be allowed to vote upon any matter affecting 
 the claim of the association against himself. 
 
 Sec. 7. Any person taking shares in any series after the 
 same has been started, shall pay in addition to dues thereon 
 
 to the beo-inning, interest on such dues at the rate of per 
 
 cent for the average time.' 
 
 Sec. 8. Whenever the shares of stock, (in any given series),' 
 of this association, shall have been redeemed by loans or 
 advances thereon, or whenever the funds and property of the 
 association in any given series shall be sufficient to pay all of i 
 the debts of the association, and to pay upon the unredeemed 
 
 shares of such given series the par value thereof, 
 
 hundred dollars, then the debts of the association shall first be 
 paid and the deeds of trust or mortgages of borrowers in such 
 series shall be released of record, and their bonds or other 
 evidence of indebtedness delivered to them, and their stock 
 shall be cancelled, and the free or unborrowed shares shall be 
 redeemed or paid off. When all the stock of a series (or share 
 if the association is a permanent) is matured, then each holder 
 of stock shall be notified thereof, in writing, by mail, to the 
 
 •Omit if permanent. 
 
 ^Insert this clause if the associa- 
 tion is a serial one.
 
 APPENDIX. 167 
 
 residence of such stockholder, as shown by the books of the 
 association. Payment of unpledged stock, shall be in the 
 order of presentation of notice from such holders, that they 
 desire to be paid. The holders of matured stock, not desiring 
 to be paid, may leave the amount thereof, with the association, 
 if the directors so elect, and receive thereon such interest as the 
 directors may see fit to allow, and the amount so left by any 
 series, shall be considered a debt against the series, having the 
 use of the money, which may be paid whenever the directors 
 elect. Such holder shall be considered a creditor, and not a 
 member of such association, from the time of notice by the 
 association of the maturity of his stock. 
 
 !N^ew shares of stock may be issued in lieu of all shares 
 redeemed, forfeited or matured. 
 
 Sec. 9. 'Should any member desire to pay in the full face 
 value of his shares at the time of subscribing for the same, or 
 at any time thereafter, or should any member whose shares 
 have become paid up, as provided in section 8, prefer to allow 
 the money due thereon to remain in the association, the Board 
 of Directors, may, if they think best, and upon such terms as 
 they may prescribe, accept said money, and issue to such 
 member a certificate of paid up stock, for the shares so 
 paid up. 
 
 Sec. 10. Each and every shareholder, for each and every 
 
 share he or she may take, shall pay the sum of 
 
 into the treasury, on the in every until each 
 
 share (of the series) shall reach the value of 
 
 hundred dollars, and dues not paid in before 
 
 shall become delinquent, and fines accrue on the same. The 
 payments of dues on a series of stock shall commence at the 
 date of the issue of the same. 
 
 Sec. 11. Each member shall be entitled to a certificate of 
 the stock for each share held by him or her, to be issued in 
 the name of and under the seal of the association. 
 
 Each shareholder shall also be entitled to a pass book, marked 
 
 *If authorized by statute this section Is proper.
 
 168 BUILDING ASSOCIATIONS. 
 
 with his name and residence, also numbered, and designating^ 
 the number of shares owned, the number of series and date of 
 issue in which all payments of dues, interest and fines shall be 
 entered; and no money shall be received without the pass book. 
 
 Any stockholder may sell or transfer his share or shares, or 
 any number of them, to any stockholder or any other person, 
 the said person to have the right and obligations of the person 
 from whom he purchased, and said purchase shall make him 
 
 a stockholder and every person purchasing shal] pay 
 
 cents for each and every share so transferred. Shares are 
 transferable only on the books of the association and in the 
 presence of the secretary. Transfers of stock, to enable the 
 holder to vote, must be made, at least, thirty days previous to 
 an election. Holders of certificates authorized to be so issued, 
 shall be members of the association, enjoying the rights and 
 privileges thereof and participating in all the profits and 
 losses, on the ssune^ro rata, from the date of the certificate, 
 whether borrowers or non-borrowers. 
 
 Sec. 12. All dues, premiums, interest, fines and other 
 charges must be promptly paid off by the shareholder when 
 due, and payments made shall be applied in the following 
 order: first, upon charges; second, upon fines; third, upon 
 premiums; fourth, upon interest, and fifth upon dues. 
 
 Sec. 13. Stock on which the holder shall fail to pay the 
 monthly payments of dues, fines or charges, for six months, 
 may be declared forfeited by the board of directors, and if 
 such dues, fines or other charges shall remain delinquent and 
 unpaid for the space of twelve months, then such shares shall 
 ipso facto be cancelled, and such delinquent shareholder, 
 whether at the expiration of six or twelve months, shall be 
 credited with the same amount as if he had voluntarily with- 
 drawn, less all dues, premiums, interest, fines, or other charges 
 that may be due to the date of cancellation, and the stock- 
 holder, whose shares shall have been thus cancelled, shall at 
 once cease to be a member of the association. 
 
 The amount so placed to his credit, either at six or twelve 
 months, shall be paid to him or his legal representative on. 
 demand, but shall not bear interest.
 
 APPENDIX. 169 
 
 Sec. 14. All stock shall be voted bj shares, one vote being 
 allowed each member, without reference to the number of 
 shares held by him; any member, may authorize another per- 
 son by written proxy to vote his stock, provided, that all prox- 
 ies shall be filed with the secretary, at or before the hour of the 
 meeting at which they are to be used, provided, that no per- 
 son shall be allowed to vote more than proxies.' (See 
 
 sections 5 and 6). 
 
 At the annual meetings, the election shall be by written or 
 printed ballot. All other questions at such meetings, or any 
 weekly or special meeting, shall be decided by a viva voce 
 vote, unless a ballot be demanded by ten shareholders present, 
 •entitled to vote, in which event the question shall be decided 
 by ballot. 
 
 Sec. 15. Upon the death of a stockholder, his legal repre- 
 sentatives shall be entitled to receive the full amount paid in 
 by him on all shares not borrowed upon or pledged to the asso- 
 ciation as collateral security, and legal interest thereon, first 
 •deducting all charges that may be due on the stock; but no 
 fines shall be charged to a deceased member's account, from 
 and after his decease, unless the legal representatives of such 
 decedent assume the future payment of the dues on the 
 stock. 
 
 Sec. 16. The officers of this association shall consist of a 
 
 President, Yice-President, Treasurer, Attorney and 
 
 Directors, They shall be stock-holders, and be elected at the 
 
 annual meeting to be held on the first after 
 
 . . . ., and every succeeding year thereafter. 
 
 Sec. 17. At the first annual meeting for the election of 
 
 •directors, held on the day of 18 there 
 
 shall be elected three directors to serve for one year, three 
 directors for two years, and three directors for three years ; and 
 
 annually thereafter, on the day of of each year, 
 
 there shall be elected three directors, to take the place of 
 those retiring for that year. 
 
 'This last clause should only be 
 used in case proxies are iutendod.
 
 170 
 
 BUILDING ASSOCIATIONS. 
 
 Sec. 18. The directors shall at the close of each annual 
 meeting, or as soon thereafter as a full board has been 
 elected, choose from their number, by ballot, a president 
 and vice-president, and shall in a like manner choose from 
 the stock-holders or from their own number, a secretary, 
 treasurer, attorney and abstracter, all of whom shall serve 
 for one year or until their respective successors are elected 
 and qualified; provided, that any officer may be removed for 
 neglect or malfeasance in his duties, by a two third vote of 
 the board of directors. 
 
 Sec. 19. The board of directors shall have the general 
 management of the affairs of the association, including the 
 granting of loans and the acceptance of securities therefor. 
 They may employ the money of the association, subject to the 
 control of the stockholders, in any way consistent with the 
 objects of the association. The board of directors may estab- 
 lish rules, with regard to • loans, and with regard to the pay- 
 ment, by the association, of money to borrowers, upon mort- 
 gage securities, which rales shall be printed and furnished by 
 the secretary to stockholders, onapplication. Such rules shall 
 be binding upon all. Compensation for services, excepting- 
 those provided for, shall be fixed by the board of directors. 
 
 Sec. 20. The directors shall till all vacancies in their num- 
 ber. 
 
 Sec. 21. A majority of the directors shall constitute a 
 quorum of the board. The office of any director who shall 
 be absent for four successive meetings of the Board, without 
 sufficient excuse, may be declared vacant. 
 
 Sec. 22. It shall be the duty of the president, or in his 
 absence, the vice-president, or in the absence of both presi- 
 dent and vice-president, any director who may be elected pro 
 tem, to preside at the meetings of the stockholders and of the 
 board of directors, and to sign all orders for the payment of 
 money authorized by the board. 
 
 Sec. 23. The president shall represent the association in 
 the execution of all deeds, mortgages and other contracts in 
 writino-, and also in the release of mortgages made to the asso- 
 ciation. He shall have the custody of all bonds given to the
 
 APPENDIX. 171 
 
 association by its officers, except his own, if any, which shall 
 be deposited with the treasurer. In the absence of the presi- 
 dent, all his duties shall devolve upon the vice-president. 
 In the absence of the president and vice-president, the direc- 
 tors may select one of their number to preside, with all the 
 powers of the president. 
 
 Sec. 24. It shall be the duty of the secretary to attend all 
 stockholders' meetings and meetings of the board of direc- 
 tors, and enter minutes of such meetings in a book of records 
 kept for that purpose, and to receive all moneys due to the 
 association, and pay over the same to the treasurer, taking his 
 receipt therefor. 
 
 He shall keep a correct account between the association and 
 the stockholders, draw and sign all orders on the treasurer, and 
 attend to all publications. He shall be the custodian of all 
 papers and documents pertaining to the business of the asso- 
 ciation, except the bonds of its officers. He shall make, to the 
 board of directors, a statement of the affairs of the association, 
 quarterly, and to the stockholders annually. He shall keep 
 insured, for the beneiit of the association, its interest in any 
 building or property liable to loss by lire, and for this purpose 
 is authorized to draw on the treasurer, without awaitintr the 
 action of the directors. Upon retiring from office, he shall 
 turn over to his successor, within one week, all moneys, books 
 and papers in his possession, belonging to the association. 
 The secretary shall give to the association such bond as the 
 board of directors may require. 
 
 Sec. 25. It shall be the duty of the treasurer to receive 
 from the secretary all moneys paid into the association, giving 
 his receipt therefor, and pay the same out only upon orders 
 signed by the president and secretary, or in absence of the 
 president, the vice-president, or president jpro tem^ except as 
 provided in Section 24. He shall keep a correct account of 
 all money received and paid by him. At the close of each 
 semi-annual term, and at each annual term, and at each 
 annual meeting of the stockholders, or oftener, if requested by 
 the board of directors, he shall render a full statement of the 
 business of his office. His books shall be open to inspection
 
 172 
 
 BUILDING ASSOCIATIONS. 
 
 bj the board of directors at all time3. At the expiration of 
 his term of office, he shall, within one week, turn over to his 
 successor, all moneys, books, papers and other documents in 
 his possession belonging to the association. .He shall execute to 
 the association such bond as the qoard of directors may require. 
 
 Sec. 26. It shall be the duty of the attorney to examine all 
 abstracts of title to real estate offered to the association by 
 way of mortgage, as security for loans, and after such exami- 
 nation, to certify to the board of directors, his opinion in writ- 
 ing as to the title of such real estate, and in his certificate to 
 state any facts within his knowledge, touching the acceptabil- 
 ity of the security offered. 
 
 He shall prepare all bonds, notes, mortgages and other 
 papers incident to the making and securing of loans, and 
 cause them to be properly executed and to deliver the same to 
 the secretary. He shall represent the association in all its legal 
 proceedings in which it is a party or is interested, and shall 
 have power to enter the appearance of the association therein. 
 In general, it shall be his duty to counsel and advise with the 
 directors and officers of the association therein, and give 
 proper attention to all its business of a legal nature. His com- 
 pensation shall be such as may be agreed upon by him and the 
 board of directors. 
 
 Sec. 27. The annual meeting of the stockholders of the 
 
 association shall be held on the , and annually 
 
 thereafter, at 7:30 p. m., at the office of the association. 
 
 Special meetings of the stockholders may be called by the 
 president or the board of directors, or by the secretary, upon 
 the application of ten (10) members of the association in writ- 
 ing, stating the time and object of such meeting, provided that 
 none of said ten members are in arrears on any account, and 
 provided further that each of them shall have been sharehold- 
 ers one month. Shareholders representing not less than one 
 tenth (1-10) of the subscribed capital stock of the association, 
 shall constitute a quorum at any meeting of the stockholders, 
 for the transaction of business. 
 
 Sec. 28. The regular meetings of the board of directors 
 shall be held on the day of every month, special meet-
 
 APPENDIX. 17'^ 
 
 ings may be called by the president, whenever the business of 
 the association may require. Upon the request of any three of 
 the directors, the president shall call a special meeting of the 
 directors at any time. 
 
 Sec. 29. On the first and third Monday nights of each 
 month, the moneys of the association shall, so far as any other- 
 wise needed, be loaned to its members, at the rate of six per 
 cent, interest per annum, payable weekly in advance, the loan to 
 
 be secured by first mortgage on real estate in county, 
 
 state of , and by tlie transfer to the association, as col- 
 lateral of, one share of stock for each three hundred dollars, or 
 fractional part thereof, loaned, and by a transfer of any insur- 
 ance to the association, that the board of directors jnay 
 require, or on pledge of stock alone. 
 
 The order of preference in granting loans shall be deter- 
 mined by auction sale, the person bidding the highest pre- 
 mium per share, to be paid weekly,' during the continuance of 
 the loan, to secure the preferance, and be entitled to have a 
 loan, to the aggregate face value of the number of shares 
 named in his bid. 
 
 Sec. 30. Bidders for preference in loans must state the 
 number of shares they are bidding upon and the premium per 
 share they are willing to pay. 
 
 Sec. 31. Loans may be made to stockholders in sums not 
 exceeding the par value of the stock held by the borrower. 
 Special loans may be made to others than members, on first 
 mortgage security, but loans to members shall have the prefer- 
 ence. No loans will be made on personal security except as 
 provided in section 36. 
 
 Sec. 32. The directors may require from successful bidders 
 for loans, a deposit of money, in amount sufficient to meet the 
 probable expenses incident to meet the examination of the 
 security offered and consummation of the loan. The securities 
 must be submitted to the board of directors by the proposed 
 borrower, within two weeks from the date of the acceptance of 
 the bid, unless the time be extended by the board of directors. 
 
 'In Bome associations the pre- loan. In such associations a change 
 mium is deducted at the time of the to that efiect should be made.
 
 174 
 
 BUILDING ASSOCIATIONS. 
 
 Sec. 33. In case any successful bidder for a loan shall 
 refuse to perfect the same, he shall pay, as tine for such 
 refusal, $2 per share, and all expenses that may have been 
 incurred, and such tine and expenses shall be a lien upon such 
 member's stock. All the expenses incident to the making of 
 abstracts of title, the examination of the same, appraisement of 
 property, execution and recording of instruments, etc., shall be 
 paidby the borrower, and shall constitute a lien upon his shares. 
 
 Sec. 34. Shareholders obtaining loans from the association 
 must rejrularly and punctually pay to the secretary, all fees, 
 instalments, tines and interest that shall accrue upon the 
 shares pjedged to the association, and if the same, or any por- 
 tion .thereof, shall remain unpaid for the period of 
 
 months, it shall be the duty of the board of directors either 
 to sue for the recovery of such fees, instalments, fines and 
 interests, or such portion thereof as shall be unpaid, or to com- 
 pel payment of all principal, interest to date, fees and tines 
 due; and in either case the delinquent shareholder shall pay 
 all expenses incurred by the Board in relation thereto. No 
 shareholder, who is in arrears for instalments or fines, shall be 
 entitled to a loan. And in the event of suit upon such loan, 
 the amount recoverable shall be the amount of the loan, 
 together with all arrears and costs, less instalments paid on 
 the member's stock, which shall be applied on said debt. No 
 interest shall be paid on such instalments. 
 
 Sec. 35. Borrowers on improved real estate must insure 
 the said improvements to an amount satisfactory to the 
 board of directors, (unless the real estate, irrespective of the 
 improvements, be sufiicient security,) at their own expense 
 and have all policies of insurance endorsed with a mortgage 
 clause to the association, and deliver said policies to the secre- 
 tary, and also the receipts for the current year's premium 
 thereon. Such policies must be filed with the secretary, at 
 least three days prior to the expiration of the same, and if not 
 so filed, the association shall renew such insurance, and the 
 cost thereof shall be charged to the borrower, and shall also 
 operate as a lien against the property loaned upon, and bear 
 interest at the rate of per cent, per annum until paid.
 
 APPENDIX. 175 
 
 Sec. 36. Any member may borrow on his stock its sur- 
 render value, the association deducting the interest and pre- 
 mium in advance. Such loans to be made for such time as 
 the directors may see fit. 
 
 Sec. 37. Any stockholder wishing to withdraw from the asso- 
 <iiation, may do so by giving . . months notice in writing to the 
 secretary, and the liabilities to pay further dues, and the right 
 to dividends shall cease with said notice, and he shall be 
 entitled to receive the amount of dues paid in on the stock 
 
 withdrawn, together with per cent, interest, for theaverao-e 
 
 time accruing fiom the date of such notice. Provided, how- 
 ever, he shall not be released from any liability as a stockholder, 
 for losses accrued at the date of such notice. Provided fur- 
 ther, that atnotimeshallmorethanone-half of the funds m the 
 treasuryof theassociationbe applicable to the demands of with- 
 drawing stockholders, without the consent of the board of direc- 
 tors, and further, that no stockholder be permitted to withdraw, 
 whose stock is held in pledge as security. The board of 
 directors shall have the power to provide for involuntary 
 withdrawals of stock, whenever, in their opinion, the best 
 interests of the association require it, but the stockholders 
 thus compelled to withdraw, shall receive the full profits, as 
 shown by the statement of the association next preceding 
 such action, with all instalments of dues on stock. This shall 
 not apply to pledged stock. 
 
 Sec. 38. Upon the death of a stockholder, his legal lep- 
 resentatives shall be entitled to receive the full amount paid 
 in by him as dues on his stock, and such dividends as may 
 have been declared upon such stock, first deducting all charges 
 that may be due on the stock. No fines shall be charged on a 
 deceased member's account, unless the legal representatives of 
 such decedent assume the future payment upon such stock. 
 
 Sec. 39. A borrowing stockholder, who is not in arrears 
 for dues, interest, fines or assessments, may repay his loan at 
 any time, and at the same time withdraw from the association, 
 upon paying the amount of his loan, less the surrender value 
 of his stock, as fixed in section 37, and upon surrendering to 
 the association for cancellatiou, the stock held by him. And
 
 176 
 
 BUILDING ASSOCIATIONS. 
 
 thereupon he shall receive from the association the surrender 
 of his note and mortgage, or other evidence of his loan, and a 
 satisfaction and release of mortgage. 
 
 Sec. 40. The president shall appoint an appraising 
 committee from among the stockholders, consisting of three 
 members. It shall be the duty of the committee to visit 
 property offered to the association as security for loans, to 
 acquaint themselves with the cash value of such property, and 
 make report thereof in writing, to the board of directors, at 
 their next meeting. 
 
 The appraisers shall receive such fees as the board of direc- 
 tors may determine upon. Ko fee shall be paid to an 
 appraiser who has not personally visited the property. 
 
 Sec. -it. The president shall appoint two persons, who 
 shall constitute an auditing committee, who shall make an 
 examination of the books, accounts and affairs of the associa- 
 tion, semi-annually, and whose services, in making the exam- 
 ination, may be properly compensated. 
 
 Sec. 42. The president shall appoint a building inspector. 
 It shall be the duty of this inspector to exercise a general 
 supervision over all buildings erected with funds borrowed 
 from the association, and to make such reports to the board 
 of directors as may be required by the board. The building 
 inspector may be paid such fees by the association as may be 
 fixed by the board of directors. 
 
 Sec. 43. Every member neglecting to pay regularly the 
 dues shall pay a fine of . . . . cents per share for each. . . . week 
 (or month) of such neglect. 
 
 Sec. 44. 'The secretary shall, at the end of every six (or 
 twelve) months, calculate the earnings of the association, and 
 said earnino:3 shall be used as follows: 
 
 ' This section is proper if the 
 association is a permanent one. 
 
 Otherwise omittod.
 
 APPENDIX. 177 
 
 (a) For the payment of all expenses. 
 
 (b) Such an amount as the board of directors shall deter- 
 mine to be placed in the reserve fund. 
 
 (c) The balance shall be credited to the account of the 
 members, according to their average investment, whether they 
 have drawn money or not, and shall be paid upon with- 
 drawal. 
 
 (d) No dividends shall be declared on dues paid in 
 advance. 
 
 ^Sec. 45. When, and so soon as the shares of any series 
 shall have attained the value of two hundred dollars, the Di- 
 rectors shall call a meeting of the stockholders of that series, 
 at which meeting stockholders who have not pledo-ed their 
 shares shall receive the value thereof, after deducting any 
 fines that may be due thereon, and stockholders who have bor- 
 rowed shall have their securities released and returned to them 
 and shall surrender their stock to the association : Provided 
 that no stockholder shall be entitled to have his or her secur- 
 ities released, or liens against him or her satisfied until he or 
 she has fully paid all fees, instalments, fines and interest, and 
 all charges that he or she may owe to the association. 
 
 'Sec. 46. Any member of this association who shall 
 make a loan with the association for the purpose of build in o- 
 or purchasing improved property, and who shall pass a satis- 
 factory examination for life insurance, in a life insurance com- 
 pany named by this association, by paying as a part of the 
 monthly premium upon liis loan, the amount necessary to pay 
 the premium upon his policy of life insurance on his life, and 
 in favor of the association, shall receive from the association 
 
 'Used if association is serial; bers on the instalment premium 
 
 otherwise omitted. plan is popular and it presents 
 
 *If lifo insurance is desired, this strong advantages of security for 
 
 section is proper. In some places the family of the borrower and the 
 
 life insurance for borrowing mem- association. 
 
 12
 
 178 
 
 BUILDING ASSOCIATIONS. 
 
 an agreement or guarantee, that in case he shall keep np his 
 monthly payment of dues, premiums, interest, lines and other 
 charges, from month to month, when due, including the 
 amount necessary to keep up his policy of life insurance as 
 stated herein, that if he shall die before the repayment of the 
 loan or the maturity of the shares loaned upon, the association 
 will pay oS the loan upon his shares, and will cancel the 
 mortgages or deeds of trust securing the same, leaving to the 
 estate the share or shares of stock owned by such shareholder 
 at the time of his death, unpledged and continuable, or with- 
 drawable at the option of the heirs, said loan not to be can- 
 celled, however, until such proof of death has been made as 
 shall be satisfactory to the life insurance company holding the 
 policy of insurance upon the life of the shareholder aforesaid. 
 The conditions of the foregoing section are to be embodied 
 in the mortgage or deed of trust, given by the borrower to 
 secure the loan made to him, and the faithful fulfilment of 
 all of the conditions of same on his part, to be made a condi- 
 tion precedent to the guarantee of the association. 
 
 Sec. 47. The expenses shall be ....cents per week per 
 share (or shall be deducted from the profits before any divis- 
 ion is made), and shall be incurred only by authority of the 
 board of directors. 
 
 Sec. 48. The seal of the corporation shall consist of the 
 name and location of the association, and the date of its char- 
 ter, the whole to be surrounded by an ornamental circular 
 border. It shall be produced by a single impression of an 
 embossing press. It shall be in the custody of the President, 
 and he shall see that it is afiixed to all ofiicial papers that re- 
 quire it. The president may delegate custody of the seal to 
 the secretary. 
 
 Sec. 49. In case a deposit book is lost or stolen, immediate 
 information of the same must be given to the secretary. As 
 the officers of this association may be unable to identify every 
 shareholder, when the shareholder fails to notify the officers 
 that his deposit book has been lost or stolen, the association
 
 APPENDIX. 179 
 
 will not be responsible for loss sustained, if his shares shall be 
 fraud aleutl J withdrawn by another, provided, that incase of 
 the alleged theft or loss of a deposit book, the Executive Com- 
 mittee may at their discretion authorize the issue of a dupli- 
 cate, or may authorize the payment of the shares without the 
 deposit book, if withdrawn in full, but shall in either case re- 
 quire a bond to indemnify the association for any loss it may 
 sustain on account of the lost or stolen deposit book. 
 
 Sec. 50. The by-laws may be amended by a two-thirds vote 
 of the directors present and voting at a regular or special 
 meeting, provided that the proposed amendment shall have 
 been submitted by the association in writing, at a meeting 
 neld at least four weeks previous to action on the same. 
 Notice of each amendment given to each member at his last 
 place of residence, as shown on the books of the association, 
 by mail, shall be sufficient. 
 
 The following application completely presents a loan before 
 the directors. The vital point in the life of the association is 
 in its securities, and too much care cannot be exercised in 
 guarding all points, one of which is the application. Too 
 many societies are careless in this matter, and if trouble fol- 
 lows, it is often traceable to this as its source. 
 
 Application for a Real Estate Loan from the 
 Association. 
 
 I do hereby make application for a loan of 
 
 Dollars, to bear interest at the rate of . . . .per cent per annum, 
 
 and a premium of payable on or before the day 
 
 of ; all payments to be at such place as the lender 
 
 may direct; and to secure the same. . . .hereby agree to assign 
 and transfer shares of the capital stock of said associa- 
 tion, owned by as collateral security, and to give a first
 
 180 
 
 BUILDING ASSOCIATIONS. 
 
 mortgage on the real estate set forth in the following qnes- 
 tions and answers: 
 
 1. Name of applicant (State surname and christian name 
 in full) 
 
 2. "What is your Post Office address ? 
 
 3. Are you married ? 
 
 4. Give full name of husband or wife 
 
 5. What is your occupation? 
 
 6. How long has this been your occupation? 
 
 7. What was your occupation previous to this time?.,.. 
 
 8. State acre of each husband .... wife 
 
 9. What is your regular monthly income, and from what 
 source do you obtain it 
 
 State full particulars as to source and amounts. 
 
 10. How many persons are dependent upon you for 
 support ? 
 
 11. In whom is the title to the real estate on which the 
 loan is asked? 
 
 12. What is the description of the property according to 
 the deed ? 
 
 13. What is the size of the ground?. . . .ft. by ft., on 
 
 Street, between Street and Street. 
 
 14. Is the ground above or below grade?. 
 
 15. How much? 
 
 16. What is the distance from the business center of the 
 town?
 
 APPENDIX.. 181 
 
 17. Improvements now on the premises. Foun- 
 dation, wood, brick, or stone? Solid wall or pillars? 
 
 Building on foundation; frame, brick or stone?. . . . 
 
 Stories hiirb?. .. .How long built? How many rooms? 
 
 Bath room? Hard or soft wood finish? 
 
 Size of house on the ground ? .... ft by .... ft Well ? .... 
 
 Cistern? City water? Sewer? Furnace? 
 
 Gas? Grates? Shutters? Kind of 
 
 roof? Size and description of cellar? Is house 
 
 all finished? ...In what repair? Is the house 
 
 painted? How many coats?. . . .Fence?. . ..Side- walk? 
 
 Out house? Stable? Yalue? Other im- 
 provements? Give date of last improvement and what 
 
 they were For what purpose is the property used? 
 
 In what direction does the house front?. ....... 
 
 18. Improvements to be built. Kind of foundation. 
 
 Wood, brick or stone? Solid walls or pillars? 
 
 Fuilding on foundation; log, frame, brick or stone? 
 
 stories high? Is the house painted? How many 
 
 coats?. . . .Plastered? No. coats and skim coat? 
 
 No. of rooms ? Bathroom ? Hard or soft wood 
 
 finish? Well? Cistern? City water? 
 
 Sewer? Furnace? Shutters? 
 
 For what purpose is the property to be used? Gas? 
 
 Grates? Size of cellar? Kind of walks? 
 
 Good fence? Size of house on ground? 
 
 ft. by.... ft 
 
 19. What kind of flues in the house? In what 
 
 direction does the house front? 
 
 20. Have you a barn? Size on the ground? 
 
 Height of corner posts ? 
 
 21. Yalue in cash of the barn? $ 
 
 22. Of what material and in what repairs are the fence?. ,
 
 182 BUILDING ASSOCIATIONS. 
 
 23. Sidewalks? ^ 
 
 24. What other buildings or improvements are there 
 besides those already mentioned? 
 
 25. Give date of last improvements and what were 
 thej? 
 
 26. State particulars as to trees and shrubbery?. 
 
 27. How long have you owned the property?. . . 
 
 28. How much did you pay for it? 
 
 29. Did you pay cash or did you trade for it?. . , 
 
 30. Is it all paid for? 
 
 31. If not, state how much is unpaid? 
 
 32. Do you agree to carry approved lire insurance equal 
 in'lamount to the loan? > 
 
 33. Is the property rented?. 
 
 34. How much per month?. 
 
 35. Have you ever applied for a loan on this property? 
 'If BO, from whom ? What result ? 
 
 36. If occupied by a tenant how much would it bring per 
 month ? 
 
 37. What is the value of the ground without the improve- 
 ments? What is the value of the improvements in 
 
 their present condition?. 
 
 38. What is the estimated cost of the improvements to be 
 made? 
 
 39. Is the title perfect in applicant? 
 
 40. The property is assessed for taxes ; ground $
 
 APPENDIX. 183 
 
 Improvements $ Are taxes all paid to date? 
 
 41. Is the sidewalk in front of the property curbed and 
 paved? 
 
 42. Is the bed of the street paved? 
 
 43. Are gas pipes laid in the street? 
 
 44. Are water pipes laid in the street? 
 
 45. Is the property incumbered in any way by mortgage or 
 mechanic's liens, unpaid taxes, judgments, suits pending or 
 liens of any kind? If so, state the nature, date, maturity, and 
 amount of incumbrance and by whom held. 
 
 46. Can the liens on the property be paid now? 
 
 47. For what purpose is the money borrowed? 
 
 48. Do you wish this loan to be made in installments as 
 the building progresses or on completion of the improve- 
 ments? 
 
 49. Does your wife consent to join in the bond and 
 mortgage? 
 
 50. What could the property be sold for now in cash ? 
 
 51. What would it bring at forced sale now? 
 
 52. What is the cash value of all the property owned by 
 you? Real estate personal 
 
 53. What are your total liabilities at this time? 
 
 If this application is accepted, I will furnish, at my own 
 expense, a com])lete abstract of title to the land proposed as 
 security, and have the same certified to be correct by the 
 proper party, which abstract shall be brought down to a date 
 subsequent to the approval of my application for the loan, and
 
 184 
 
 BUILDING ASSOCIATIONS. 
 
 show a clear and perfect title in the applicant. I agree to pay 
 the expenses of examination and appraisement of the property 
 and for examining the title and recording the mortgage and 
 making of the papers. 
 
 The secretary of the association is hereby authorized to 
 procure an abstract of the property herein offered, as security, 
 and a policy of insurance on the buildings thereon, unless the 
 same shall be furnished by me as soon as required by the 
 board of directors, or the rules of the association, and to deduct 
 the cost of the same from the proceeds of the loan, together 
 with all other costs or indebtedness connected therewith, and 
 to pay therefrom any judgments, taxes, liens or incumberances 
 of any kind whatever, which may exist against the property at 
 the time of closing the loan; and if this is a building loan, I 
 ao-ree, before any payments are made on the same, to furnish 
 the secretary a complete list of all contractors, or sub-contrac- 
 tors, or parties furnishing material or work for the said build- 
 ino-s, too-ether with the amounts of their several claims, and 
 their signatures, waiving all senior rights of Ilea, for any 
 amounts, in excess of the same, unless my contractor furnishes 
 a satisfactory idemnifying bond to the said association. I also 
 ao-ree to be governed by rules in force, concerning loans, a copy 
 of which I acknowledge receipt. 
 
 The applicant herein warrants that the representations above 
 made are true, and agrees that they shall form a part of the 
 consideration of a mortgage, which may hereafter be executed 
 by said applicant to said association, to secure such loan as 
 may be granted, and if there is any misrepresentation in said 
 application, it shall operate as a default in conditions of said 
 mortgage, and render the debt due and the mortgage may be 
 foreclosed. 
 
 APPRAISER'S REPORT. 
 
 '^ ' {-83. 
 
 (JOUNTY ) 
 
 We, the undersigned, do solemnly swear that we are all well 
 
 State of
 
 APPENDIX. 185 
 
 acquainted with the value of real estate, described in said appli- 
 cation, and with the property described in the within appli- 
 cation, and that the ground without improvements is worth 
 
 in cash $ , and the buildings are worth iacash $ , and 
 
 the improvements to be made will cost dollars. The 
 
 property would bring at forced sale, in cash, at the present 
 
 time, ^ We are also personally acquainted with 
 
 , mentioned in the within application, and 
 
 believe him to have good standing and credit. AVe regard 
 as a prompt, upright, reliable person, pecuniarily respon- 
 sible for contracts, and we believe that he will prompt- 
 ly meet all payments of principal and interest on the loan 
 herein applied for. AVe believe this property is adequate 
 security, with improvements, present and proposed,. for a loan 
 
 of $ We are not interested in said premises, nor in the 
 
 result of this application for a loan. 
 
 Signed, 
 
 , [SEAL.l 
 
 (Notarial Certificate.) , [seal.] 
 
 Rules of Saving: and Loan Association, governing 
 the bidding for loans, the manner of making payments to 
 builders and other information for borrowing stockholders. 
 
 1. The regular periods for the sale of money are the nights 
 in each month, prescribed in the by-laws. 
 
 2. Bidders for preference in loans mnst state the number 
 of shares they are bidding upon and the amount per share 
 they are willing to pay. 
 
 3. Immediately upon the acceptance of his bid, each appli- 
 cant shall pay into the hands of the secretary the sum of ... . 
 dollars, to be paid to the members of the ap])raising com- 
 mittee, for services in appraising property within the corpo- 
 rate limits of ... .or. .. .dollars for like services outside of 
 said limits: The proposed borrower should promj)tly call at 
 the office of the attorney of the Association, taking with him 
 his abstract to title to the real estate to be offered as security;
 
 186 
 
 BUILDING ASSOCIATIONS. 
 
 in case he has no abstract of title he should take his deed; at 
 the attorney's office a written application and all necessary 
 legal papers will be prepared. 
 
 4. The fees of the attorney, notary, abstracter, county 
 recorder, and insurance premiums, shall be noted on the first 
 warrant drawn in favor of the borrower, and be retained for, 
 and paid to them by the treasurer from the amount so drawn, 
 unless sooner paid from the private funds of the borrower. 
 
 6. The payment of premium and interest shall begin with 
 the date of execution of bonds and mortgages to the Association. 
 
 5. On the receipt of the written certificate of the attornev, 
 that title to security offered for a loan is perfect, and all legal 
 requirements having been complied with by the borrower, the 
 secretary shall draw warrants in favor of the person to whom 
 the loan is made, for amount not exceeding cash in hands of 
 the treasurer, and be subject to the conditions preceding and 
 following this rule. 
 
 7. Should the borrowing member desire to build upon or 
 improve his property, the money may be advanced in install- 
 ments as the work progresses; but no money shall be paid 
 until the plans and specifications for the work have been 
 submitted and approved, and a contract or contracts have been 
 made with responsible parties, said parties in all instances to 
 execute a good and satisfactory bond, conditioned to indem- 
 nify the Association' from any and all loss that may arise 
 from said improvements, by reason of mechanics or other 
 liens. Should the borrowing member however, desire to make 
 more extensive improvements than called for by the amount 
 of money borrowed, he will be at liberty to do so by pajing^ 
 the said extra improvements, prior to any payment made by 
 the board of directors, and shall furnish receipts showing 
 proper expenditure of the same to the secretary. 
 
 8. The money shall be advanced in installments as follower 
 The first payment when the property is secured and foundatioa
 
 APPENDIX. 187 
 
 completed and the contract or contracts are signed as 
 above, and indemnifying bond given as above provided. The 
 second payment when the frame is up and the building en- 
 closed. The third payment when the plastering is on. The 
 last payment when the house is finished. 
 
 9. No building shall be considered finished until a good 
 supply of water is provided. 
 
 10. The manner of making payments, however, may he 
 changed by the board of directors so as to meet the require- 
 ments in special cases. 
 
 11. The payments must be so arranged that at least one 
 fourth of the whole amont of the loan shall be retained for 
 the last payment. 
 
 12. A bidder failing to perfect his loan for a period of 
 thirty days after the date of his bid, shall incur the penalties 
 provided for in Section 33 of the by-laws of this Association. 
 
 13. Borrowers on stock securities will be governed in all 
 respects by the provisions of Sec. 36, of the by-laws of this 
 Association. 
 
 14. Loans shall not in any case exceed 66f per cent of the 
 value of the security offered, after completion of all contracts 
 on the part of the borrower. 
 
 15. The board of directors reserve the right to strike out, 
 amend, modify or change any of their rules, whenever deemed 
 by it advisable so to do. 
 
 MORTGAGE NOTE. 
 
 189.. 
 
 For value received, I, we, or either of us, promise to pay to 
 
 the Association, of , the sum of 
 
 dollars, with interest at the rate of .... per 
 
 cent per annum, from date until paid, and attorney's fees.
 
 II 
 
 BUILDING ASSOCIATIONS. 
 
 The said interest and premiums to be paid in instal- 
 ments, on or before tlie .... day in each . . . ., from and after 
 this date. And as collateral security for this note, . . hereby 
 transfer and assign .... shares of the capital stock of said 
 association and agree to pay dues, lines and other charges on 
 said stock, as provided in the by-laws of said association. 
 
 This note to be due when such stock matures, as provided 
 in the by-laws of said association, and such matured stock may 
 be applied in full payment thereof. 
 
 BOND. GENERAL. FORM. 
 
 This form of bond may be used in those states where a form 
 is not herein given for a state, and has been prepared after con- 
 sulting bonds used in different states. 
 
 Know all men by these present, that 
 
 , of county, in the State of , 
 
 held and firmly bound unto the Association, of 
 
 , in the sum of .... hundred dollars, together with 
 
 ten per cent attorney's fees, which well and truly to be paid, 
 
 bind .... heirs, executors and administrators firmly by 
 
 these presents. 
 
 Sealed with 
 189... 
 
 seal and dated this 
 
 day of 
 
 The conditions of this obligation are such; That whereas, 
 
 the above bounden obligor, , has subscribed 
 
 for shares of the capital stock of $ , each in said 
 
 association, for which share. . of stock. . he received from said 
 
 association the sum of hundred dollars, as a loan, 
 
 which shares of stock are hereby transferred as collateral 
 security for the payment of this bond, with agreement on ... . 
 part that . . he . . will continue to pay .... dues on the said 
 shares of stock, at the rate of .... cents per .... on each 
 share, together with a premium of per .... on each
 
 APPENDIX. 189 
 
 share of stock,' and interest on said loan at the rate of ... . 
 per cent per annum, all payable on or before the .... day of 
 . . . . , until such share . . mature, as provided by the by-laws of 
 said association ; also, pay all lines and assessments on such 
 shares, as provided for in said by-laws. All payments of 
 money hereunder shall be made at the office of the association, 
 in the city of 
 
 Now, if the above bounden obligor shall, well and truly 
 keep and perform said bond in every part, without fraud 
 or delay, then the above obligation to be void and of no 
 effect, but if default be made in any part thereof, then the 
 above bounden obligor is to forfeit all the premiums, fines, 
 assessments and intei-est so paid into said association, and pay 
 back said loan, less all such dues credited' thereon.^ 
 
 All payments of money hereby secured, shall be made with- 
 out relief, from valuation or appraisement laws. 
 
 MORTGAGE. GENERAL, FORM. 
 
 The following form of mortgage may be used in the states, 
 other than those where the forms are hereinafter given. It has 
 been prepared after consulting the forms in use in the differ- 
 ent states: ■ 
 
 This indenture witnesseth; That 
 
 'In associations in New York, bond, to appear for the said... 
 
 where the premium is deducted at heirs, executors or ad- 
 
 the time of making the loan, this ministrators, at the suit of the said 
 
 clause is omitted. corporation, its successors or as- 
 
 *0r the surrender value of the signs, on the above obligation, as of 
 
 stock. any term prior or subsequent to the 
 
 »In Delaware the following clause date hereof, and thereupon to con- 
 is added: fess judgment for the above sum of 
 
 And do hereby authorize and dollars debt, besides 
 
 empower any clerk, prothonotary or cost of suit, by non sum informntus, 
 attornpy of any court of record, in nihil (licit, or otherwise, with stay 
 America, or elsewhere, in case of of execution until the day of pay- 
 default in the conditions of said ment.
 
 190 
 
 BUILDING ASSOCIATIONS. 
 
 (or do grant, bargain, sell, convey and confirm unto)* of 
 county. State of , mortgage and war- 
 
 rant to the Association, a corporation incorpo- 
 rated and existing, by virtue of the laws of the State of , 
 
 the following real estate, situated in county, State 
 
 of , and described as follows, to wit: 
 
 together with all and singular the tenements, hereditaments 
 and appurtenances thereunto belonging, or in any wise apper- 
 taining, for its own use, benefit and behoof forever. 
 
 This mortgage is intended and executed as security for the 
 performance of the stipulations and agreements of a certain 
 
 bond'' of eveii date, herewith executed by said , 
 
 as obliofor to said association, in the sum of hundred 
 
 dollars, which is a just and full loan, made to said , 
 
 under the rules and by-laws of said association, at an author- 
 ized meeting of the board of directors, upon a certain written 
 application therefor, by said . . . . , which application is made a 
 
 part of this mortgage. Conditioned, that the said 
 
 shall continue to pay monthly dues upon .... share., of 
 
 $ , each of the capital stock of said association, at the 
 
 rate of .... cents per on each share of stock, and .... 
 
 premium per .... on each share of stock, and interest, od 
 said loan, at the rate of .... per cent per annum, all payable 
 
 on or before the day of each , until such share. . 
 
 mature, as provided by the by-laws of said association ; also 
 pay all fines and assessments on said shares, as provided in 
 said by-laws, and to pay all money herein provided for, at the 
 office of the association, in the city of 
 
 And it is further agreed, if the said obligor .... shall well 
 and truly keep and perform said bond in every part, then 
 
 'Instead of "mortgage and war- 
 rant'' this clause is used in the fol- 
 lowing states: North Carolina, 
 Kansas, Oregon, North Dakota, 
 Arkansas, Connecticut, Nebraska, 
 Wisconsin, Maine, Florida, Rhode 
 Island and Wyoming. 
 
 *If a note is used as in California, 
 Oregon and New Mexico.the clauses 
 identifying the bond should be 
 omitted and the note (see form) in- 
 corporated in full.
 
 APPENDIX. 191 
 
 said bond to be void and of no effect, and tliis mortgage shall 
 be cancelled; but if default be made in any part thereof, the 
 above obligor. .. .to forfeit all the premiums, fines, assess- 
 ments and interests so paid into said association and pay back 
 said loan, less all dues credited thereon. 
 
 The mortgagor. ., further agree, .to keep such mortgaged 
 premises in good repair, to pay all taxes, assessments and 
 charges thereon as the same become due, not commit or suffer 
 any waste of said property, and to keep the improvements on 
 said real estate insured in some responsible insurance com- 
 pany, to the satisfaction of the board of directors of said 
 
 Association, in the sum of $ for the benefit of said 
 
 Association, and to transfer such insurance to said association, 
 and deliver the policies for said insurance to said association, 
 to be held as collateral security until the loan is fully paid. 
 In the event said mortgagor . . . fail . . to pay said taxes or assess- 
 ment, or keep said property insured, said association may do 
 so, and the cost thereof, with .... per cent interest, shall be 
 collectible under this mortgage. 
 
 The mortgagor .... further agree. .. .that upon default of 
 any of the conditions of this mortgage, or of said bond, in any 
 part thereof, for a period of ,said bond shall with- 
 out notice (notice being hereby expressly waived), at the option 
 of the board of directiors of said association, be and become 
 'due and collectible, either by suit upon said bond, or by the 
 ■foreclosure of this mortgage; and upon such default occur- 
 ring, it is agreed that the mortgagee shall have possession of 
 the said premises during the redemption year, and a receiver 
 .may be appointed to take possession of the said premises, for 
 •the purpose of applying the rents and profits thereof to the 
 payment of the debt secured by this mortgage, which receiver- 
 ship shall continue from date of such default until the said 
 premises shall be redeemed according to law, or until such 
 year expires. 
 
 It is further agreed, that all of said payments herein men- 
 tioned, shall be made without relief from valuation and ap- 
 praisement laws, waiving and releasing homestead exemption
 
 192 BLriJLDING ASSOCIATIONS. 
 
 laws. All moneys payable under this mortgage may at any- 
 time be required in gold coin of the United States. No failure 
 to exercise this right by the mortgagee shall operate as the 
 waiver thereof. 
 
 ^ And the said mortgagor for heirs, executors and 
 
 administrators, covenant .... and agree that he ... . 
 
 well seized of the premises conveyed, as of a perfect, absolute 
 and indefeasible estate of inheritance in fee simple absolute, 
 
 and ha good right, full power, and lawful authority to 
 
 grant, bargain, sell and convey the same in manner and form 
 aforesaid, and that the same are free and clear of all incum- 
 brances, and that . . . , he . . . will forever warrant and defend said 
 land, unto said mortgagee or its assigns, against all claims to 
 the same. 
 
 The said wife of said mortgagor, by join- 
 ing in this mortgage, relinquishes all her interest in said prop- 
 erty, as against the said association. 
 
 In witness whereof, said mortgagor., ha., hereunto Bet 
 hand . . and seal . . this day of 18 . 
 
 The acknowledgment by the mortgagors should follow, and, 
 as its form depends upon the law of each state, governing 
 acknowledo-ments to instruments for record in such state, and 
 differs in many states, no form is here given." It is easilj 
 ascertainable from any conveyancer. 
 
 'This clause is added in the forms shire, Minnesota, South Carolina, 
 
 used in the following states : North Oregon, Ohio, Georgia, New York, 
 
 Carolina, Kansas, Oregon, North North Carolina, (Alabama and Penn. 
 
 Dakota, Arkansas, Connecticut, sylvania, where party is unable to 
 
 Nebraska, Wisconsin, Maine, Flo- -write), Colorado, Connecticut, Flori- 
 
 rida, Rhode Island and Wyoming. da, Idaho, Lousiana, Michigan, Ne- 
 
 *In the following states and terri- braska, Rhode Island, for married 
 
 tories the signing of a mortgage woman, Utah, Vermont, "Virginia, 
 
 must be attested by witnesses, in Washington, Wisconsin and Wy- 
 
 addition to acknowledgment, bo- oming. 
 fore it can be recorded : New Hamp-
 
 APPENDIX. 193 
 
 In the following states and territories, North Carolina, Ala- 
 bama, Arkansas, Montana, Rhode Island, Wyoming, Michi- 
 gan, Maryland, JSTevv Mexico and California, this clause is to 
 be added: 
 
 It is farther understood and agreed, that if any default, as 
 
 aforesaid, shall be made by said or his grantee, 
 
 then it shall be lawful for said association to sell said real 
 estate at public (or private)' sale in said county, for cash or 
 upon such other terms as said association may deem best, after 
 
 notice, by publishing in a proper newspaper, 
 
 published in said county, and thereafter said association may 
 convey in fee simple, such land to the purchaser or purchasers 
 thereof, freed from any claim, title or right of redemption of 
 said mortgagors, or either of them; and out of the proceeds of 
 such sale to retain the amount due said association, on account 
 of said loan, together with all costs incident to such sale and 
 conveyance, and the balance, if any, remaining, shall be paid 
 to said 
 
 The association may loan its shareholders on their stock up 
 to its surrender value. In such cases, the following form is 
 used: 
 
 Association. 
 
 Collateral Transfer for Loans. 
 
 I, the undersigned, shareholder in the above named Asso- 
 ciation, do hereby assign, transfer, and set over to the said 
 Association, all my right, title and interest in and to the num- 
 ber of shares (in the particular series) of the capital stock of 
 said association, indicated below, said shares to be held by 
 said association as collateral security, (in addition to note 
 given) for payment of loan made to me by said association. 
 I hereby bind myself to continue to pay the monthly dues 
 upon each of the several shares, and all lines, if any, and to be 
 governed in all respects by the by-laws of said association. 
 13 *Just as the statute may provide.
 
 194 BUILDING ASSOCIATIONS. 
 
 Loan. 
 
 Book ITo Shares of Ser iea On Shares $ . . 
 
 Shares of Series Monthly Interest 
 
 ', Shares of Series Monthly Premium 
 
 Dated. 
 
 Signature of Witness. Signature of Shareholder. 
 
 Note. 
 
 $ 18... 
 
 Having this day pledged and transferred to the. . . .a corpo- 
 ration duly established by law shares of its capital 
 
 Btock, said shares being.... in the ....series as collateral 
 security, for the payment of the suras herein mentioned, upon 
 
 which shares the sum of dollars ($ ) has been 
 
 advanced to me, by said association, for value received, on 
 demand after date, I promise to pay to said association, or 
 
 order, t)ie sum of dollars (S ) and until the 
 
 payment of said sum of dollars ($ ), to 
 
 pay to said association, or order, the sum of 
 
 dollars ($ ) at or before the stated meetings 
 
 of the board of directors of said association on the 
 
 second of each and every hereafter, being the 
 
 amount of the dues on said shares of the 
 
 interest and premium upon said loan or advance of 
 
 dollars ($ ) for which said shares are pledged and this 
 
 note given, together with all fines chargeable by the by-laws 
 of said association, upon arrears of such (monthly) payments. 
 Signed in the presence of 
 
 rorm of Trust Deed. 
 
 Trust deeds are used in the following States and Territories: 
 Missouri, Mississippi, Utah, Tennessee, Yirginia, West 
 Yirginia, New Mexico, and also District of Columbia.
 
 APPENDIX. 195 
 
 This indenture made and entered into this day of 
 
 , A. D., 18 bv and between 
 
 of the County of State of 
 
 part of the first part, and County 
 
 of , State of.... part of second part, 
 
 and the Association, a corporation 4uly 
 
 organized under the lawB of the State of part 
 
 of the third part. 
 
 "Witnesseth: That the said part of first part, in consid- 
 eration of the debt and trust hereinafter mentioned and 
 
 created, and the sum of One Dollar to paid by said part 
 
 of the second part, the receipt of which is hereby ac- 
 knowledged, do by these presents grant, bargain and sell, 
 convey and confirm, (or convey and warrant), unto the second 
 party of second part, the following described real estate, sit- 
 uated in the County of , State of 
 
 . , and possession of said premises, now de- 
 liver unto said party of second part. 
 
 To have and to hold the same, with the appurtenances to 
 said party of the second part, and to his successors hereinafter 
 designated, and to the assigns of him and his successors for- 
 ever; in trust, however, for the following purposes: 
 
 Whereas, the said part of the first 
 
 part, by certain bond (or note) duly executed and 
 
 delivered, bearing even date herewith, are bound unto said 
 association, party of the third part, in the sura of dol- 
 lars ($ ) lawful money of the United States of America, 
 
 loaned by said association to said part of the first part, 
 
 on shares of stock owned by (in 
 
 series ) of said association, being at the rate of 
 
 dollars on each share, conditioned that said part. — 
 
 of the first part heirs, executors and administrators, 
 
 do., well and truly payor caused to be paid, unto the said 
 association, its successors or assigns, in lawful money, the 
 
 interest to accrue on said sum of dollars; at the rate 
 
 of .... per cent per annum, payable on the....
 
 196 BUILDING ASSOCIATIONS. 
 
 of each and every hereafter, and shall also 
 
 well and truly pay, or cause to be paid, unto said association or 
 
 assigns, the sum of dollars on the 
 
 day of each and every hereafter, for the 
 
 contribution or dues on shares of the capital 
 
 stock of said association now owned by said 
 
 until the value of said stock shall be suthcient to divide to 
 each and every share thereof, the sum of two hundred dollars, 
 ($200.00), and shall also well and truly pay, or cause to be paid, 
 to the said association, its successors or assigns, the sum of. . 
 
 . dollars on said of each and every 
 
 hereafter, for the premium upon the amount of said loan, and 
 shall fully indemnify and save said association from all losses 
 by reason of said loan, according to the by-laws, rules and 
 regulations that are or may be made by the said association, 
 
 and also that will promptly pay all taxes or liens 
 
 of whatsoever nature, levied or assessed upon said real estate, 
 described in this deed of trust, within the limited time by law 
 
 for the payment thereof, and also that will keep 
 
 the buildings upon said real estate as herein described, con- 
 stantly insured in some responsible insurance company or 
 companies, to be approved by the directors of said association, 
 
 in a sum not less than dollars, and the 
 
 policy or policies of such insurance duly assigned and de- 
 livered to said association; and also pay all lines and assess- 
 ments asainst said shares. Said bond further contains an 
 
 express covenant and agreement on the part of said part 
 
 of the first part to and with said association, that if, at any 
 time, default shall be made in the payment of said interest on 
 
 said sum of dollars, or in the payment of 
 
 the monthly contributions or dues on said stock, or in any 
 monthly payment of the sum provided in said bond, and herein 
 to be paid as premium on said loan, or tines or assessments, 
 the same or either of said sums shall remain unpaid for the 
 space of six months after any payment thereof shall fall due, 
 then, and in such case, the whole principal debt aforesaid shall, 
 at the option of said association, their successors and assigns, 
 immediately thereupon become due and payable and recover- 
 
 I 
 
 i
 
 APPENDIX. 197 
 
 able; and the payment of said principal sum and all interest 
 
 thereon, as well as contributions on said shares 
 
 of stock, whatsoever due, may be recovered by sale, under said 
 deed of trust, or other legal proceedings, as provided by law, 
 and also if any taxes or liens whatsoever lawfully levied or 
 assessed on said real estate remain due and unpaid, or if said 
 real estate shall be advertised for sale for the payment of taxes, 
 
 or if the said shall fail or neglect to keep 
 
 said buildings constantly insured, and the policy or policies 
 of insurance duly assigned to the said association, then the 
 said association, may at its option, proceed to recover the 
 whole amount due by the provisions of said bond; or the said 
 association may pay said taxes or liens, or redeem said real 
 estate from sale for taxes or liens, and cause said buildings to 
 be insured for the amount above specified, and the amount of 
 taxes or liens paid and amount of premiums paid for said 
 insurance, by said association, shall be added to the record 
 as a part of the amount secured by said bond in this deed 
 
 of trust; and the same shall bear interest at the rate of 
 
 per cent per annum, until repayment shall be made to said 
 
 association, and also that the part of the first part, 
 
 shall pay all necessary and proper costs and expenses of 
 whatsoever nature, incurred about the collection of this trust, 
 including a reasonable attorney's fee, costs of sale, or other 
 legal proceedings thereunder. 
 
 Now, therefore, if the said part.... of the first part shall 
 fully and faithfully comply with the conditions, provi- 
 sions and agreements contained in said bond, and, in this deed 
 of trust, according to the true tenor and effect thereof, then 
 this deed shall be void, and the property hereinbefore conveyed 
 shall be released at the cost of said part .... of the first part. 
 
 But should the said part. . . .of the first part, fail or refuse 
 to comply with such conditions, provisions and agreements 
 contained in said bond, and in this deed of trust, then this deed 
 shall be and remain in full force and effect, and the said 
 party of the second part, or is case of his absence or death, or 
 refusal or disability to act in anywise, the then acting sheriff
 
 lyb 
 
 BUILDING ASSOCIATIONS. 
 
 of County at the request of said association, 
 
 its successors and assigns, may proceed to sell the property 
 hereinbefore described, or any part thereof, at public vendue, 
 to the highest bidder, at in 
 
 County for cash, first giving day's notice 
 
 of the time, place and terms of sale, and all the property to 
 be sold, by advertisement in some newspaper, printed and 
 
 published in County and upon such sale 
 
 shall execute and deliver a deed of conveyance of the property 
 sold to the purchaser or purchasers thereof, and any statement 
 or recital of fact in such deed, in relation to the nonpayment 
 of money hereby secured to be paid, existence of the indebted- 
 ness so secured, notice of sale by advertisement, sale, receipt 
 of money, and the happening of any of the aforesaid events, 
 whereby the sheriff may become successor as herein provided, 
 shall be 'prima facie evidence of the truth of such statement 
 or recital; and the said trustee shall receive the proceeds of 
 said sale, out of which he shall pay, first, the cost and expen- 
 ses of executing this trust, including compensation to the 
 trustee for his services, and legal expenses to the attorney for 
 his services; and next he shall apply the proceeds thereof, 
 remaining over, to the payment of said debt and interest, and 
 the premium and so much thereof as remains unpaid, and the 
 remainder, if any, shall be paid to the said part. . . .of the first 
 part or. . . .legal representatives. 
 
 The said party of the third part may become the purchaser 
 
 at the sale of said land, made by said as trustee, or 
 
 any person acting in his stead as trustee, as aforesaid, just as 
 if such sale were made by a trustee in whose trust said asso- 
 ciation had no interest. 
 
 In witness whereof, the said part,... of the first part, 
 
 ha . hereunto set ... . hand .... and seal . . . . , this day and 
 
 year first above written. 
 
 Executed in the presence of [seal] 
 
 [seal] 
 
 [seal] 
 
 « [seal]
 
 APPENDIX. 199 
 
 Form of Insurance Clause. 
 
 The following insurance clause should be used. Under the 
 ordinary "loss if any payable" clause, the rights of the asso- 
 ciation may be jeopardized by some act of the mortgagor. 
 
 Union Mortgage Clause. 
 
 Loss, if any, payable to mortgagee or trustee, as 
 
 hereinafter provided. 
 
 It being hereby understood and agreed, that this insurance, 
 as to the interest of the mortgagee or trustee, only herein, 
 shall not be invalidated by any act or neglect of the mortgagor 
 or owner of the property insured, nor by the occupation of 
 the premises for purposes more hazardous than are permitted 
 by the terms of this policy. Provided, that in case the mort- 
 gagor or owner neglects or refuses to pay any premium due 
 under this policy, then, on demand, the mortgagee or trustee 
 shall pay the same. Provided, also, that the mortgagee or 
 trustee shall notify this company of any change of ownership, 
 or increase of hazard, which shall come to his, or their know- 
 ledge, and shall have permission for such change of owner- 
 ship or increase of hazard, duly endorsed on this Policy. And, 
 provided, further, that every increase of hazard not permitted 
 by the policy to the mortgagor or owner, shall be paid for by 
 the mortgagee or trustee, on reasonable demand, and after 
 demand made by this company upon, and refusal by the mort- 
 gagor or owner to pay, according to the established schedule 
 of rates. It is, however, understood that this company 
 reserves the right to cancel this policy, as stipulated in the 
 printed conditions in said policy; and also, to cancpl this 
 agreement on giving ten days' notice of their intention to the 
 trustee or mortgaiice named therein, and from and after the 
 expiration of the said ten days, this agreement shall be null 
 and void. It is further agreed, that in case of any other 
 insurance upon the property hereby insured, then this com- 
 pany shall not be liable under this policy for a greater pro]-»or- 
 tion of any loss sustained than the sum hereby insured bears 
 to the whole amount of insurance on said property, issued to
 
 200 
 
 BUIl^DIiNG ASSOCIATIONS. 
 
 or held by any party or parties having an insurable interest 
 therein. It is also agreed, that whenever this company shall 
 pay the mortgagee or trustee any sum for loss under this 
 policy, and shall claim that as to the mortgagor or owner, no 
 liability therefore existed, it shall at once, and to the extent of 
 such payment, be legally subrogated to all the rights of the 
 party to whom such payments shall be made, under any and 
 all securities held by such party, for the payment of said debt. 
 But such subrogation shall be in subordination to the claim 
 of said party, for the balance of the debt so secured. Or said 
 company may, as its option, pay the said mortgagee or trustee 
 the whole debt so secured, with all the interest which may 
 have accrued thereon, to the date of such payment, and shall 
 thereupon receive from the party to whom such payment 
 shall be made, an assignment and transfer of said debts, with 
 all securities held by said parties for the payment thereof. 
 
 To attach to Policy No of the 
 
 Dated at this day of 189 ... , 
 
 Agent. 
 
 Form of Bond. 
 
 Where the whole premium is deducted from the loan at the 
 time of making it, this form may be used with the general 
 form of mortgage hereinbefore given, identifying it in the 
 body of such mortgage. 
 
 Know all men by these presents, that of.... County 
 
 State of held and firmly bound unto the 
 
 Building and Loan Association, of a corporation 
 
 duly organized and doing business under the laws of the State 
 
 of in the sum of dollars, 
 
 for the payment whereof, well and truly to be made, 
 
 bind sel heirs, executors, adrainistrators 
 
 and assigns, jointly and severally, hrmly by these presents. 
 
 Witness hand and seal, this day of, 
 
 A. D. 18....
 
 APPENDIX. 201 
 
 The condition of the above obligation is sach, that whereas, 
 
 on the day of A. D. 18 , the said 
 
 being a member of said association, by bidding. . . .per cent 
 
 premium on^ the par value of shares of the series 
 
 of the capital stock of the said association, obtained jirecedence 
 
 of an advanced loan, to the amount of dollars, and 
 
 has, after deducting the premium bid as aforesaid, received 
 
 dollars, it being the full value and in full payment of 
 
 said shares of stock. 
 
 Now, if the above obligor, heirs, executors, admin- 
 istrators and assigns, or any of them, shall well and truly pay, 
 or cause to be paid, unto the above obligee, its successor or 
 
 assigns, the sum of dollars, said sum to be paid in 
 
 monthly installments of dollars each, the first pay- 
 ment or installment due and payable A. D, 18 . . . , 
 
 and dollars monthly thereafter, being the monthly 
 
 dues on said shares of stock, together with interest at 
 
 the rate of per cent per annum, on said dollars, 
 
 said interest due and payable in monthly installments of 
 
 dollars and cents, the first of said interest installment, 
 
 due and payable A. D. 18 said dues and interest 
 
 payable on the first day of each month thereafter; said install- 
 ments of principal and interest to be paid promptly, as they 
 become due, during the existence of said association, or until 
 
 €ach shareholder in the series thereof, has received on 
 
 each of his shares one hundred dollars, including any pre- 
 mium which he may have bid on his share or shares, and shall 
 also pay all fines assessed on said stock, and all taxes, insur- 
 ance or incumbrances of any kind, which may be imposed upon 
 the property conveyed by mortgage deed to secure the above 
 indebtedness, without delay, then the above obligation to be 
 void, otherwise to remain in full force and virtue. 
 
 Provided, however, and it is expressly agreed, if at any time 
 default shall be made in the payment of said installments of 
 principal money, when due, or of said interest, or of fines due 
 imder the by-laws of said association, for the space of six
 
 202 BUILDING ASSOCIATIONS. 
 
 months after any payment thereof shall fall due, the said 
 
 shares of stock of series, on which the said 
 
 loan is obtained and herewitli transferred, may at any time 
 thereafter be declared forfeited, as for non-payment of dues, 
 and therefrom revert to said obligee, its successors or assigns, 
 as forfeited stock, and the withdrawal value thereof, less one- 
 eighth of said premium bid for said loan for each year, said 
 
 series of stock shall have run, at the option of the 
 
 obligee, its successors or assigns, be applied to the satisfaction 
 of the above indebtedness, and in such case or cases, the whole 
 principal debt aforesaid, and interest shall, at the option of the 
 obligee, its successors or assigns, immediately become due and 
 recoverable, and payment of said principal sura and all the 
 
 interest thereon, as well as any contribution on said 
 
 shares of stock, and all lines and taxes as aforesaid then due, 
 may be enforced and recovered at once, anything herein con- 
 tained to the contrary notwithstanding; and it is further 
 understood and agreed, that all lines and penalties for non- 
 payment of dues are agreed, assessed and liquidated damages 
 for such non-payment of installments due on said stock. 
 
 [seal.] 
 
 , [SEAIi.] 
 
 The following is the form of bond in use by associations in 
 Pennsylvania : 
 
 Know all men by these presents, that (hereinafter 
 
 called the obligor), is held and firmly bound unto (herein- 
 after called the obligees), in the sum of dollars, law- 
 
 ful money of the United States of America, to be paid to the 
 said obligees, their certain Attorney, successors or assigns. 
 
 To which payment well and truly to be made, do bind 
 
 heirs, executors and administrators, and every one of 
 
 them, firmly by these presents. Sealed with seal 
 
 dated the day of in the year of our Lord one 
 
 thousand eight hundred and
 
 APPENDIX. 203 
 
 The condition of this oblii^^ation is such, that if the above 
 
 bounded obligor heirs, executors and administrators, 
 
 or any of thera, shall and do well and truly pay, or cause to 
 be paid, unto the above-named obligees, their certain attorney, 
 
 successors or assigns, the just sura of dollars, such as 
 
 above said, at any time within one year from the date hereof, 
 
 together with interest, for the same, and together with 
 
 all fines imposed by the constitution and by-laws of the afore- 
 said association, in like money, payable monthly, on the 
 
 of each and every month hereafter, and shall also 
 
 well and truly pay, or cause to be paid, unto the said obligees, 
 their successors or assigns, the sum of . . . .dollars, on the said 
 .... of each and every month hereafter, as and for the monthly 
 
 contribution on share of the capital stock of the said 
 
 obligees, now owned by the said obligor, without any fraud 
 or further delay; and shall also deliver to the said obligees, 
 
 their successors or assigns, on or before the day of 
 
 of each and every year, receipts for all taxes of the 
 
 current year, assessed upon the premises described in the 
 accompanying indenture of mortgage. Provided, however, 
 and it is hereby expressly agreed, that if at any time default 
 shall be made in the payment of the said principal money 
 when due, or of the said interest, or of the said fines, 
 or the monthly contribution, on said stock, for the space 
 of six months after any payment thereof shall fall due, or 
 in such delivery to the said obligees, their successors or 
 
 assigns, on or before the day of of each and 
 
 every year, of such receipts for such taxes of the current year, 
 upon the premises mortgaged, or if the said obligor shall not 
 
 well and truly pay, or cause to be paid, the and taxes, 
 
 on the premises particularly described in the mortgage accom- 
 panying this obligation, when the same shall become due and 
 payable, and also shall not well and truly pay, or cause to be 
 paid, all and every sucli sum or sums as shall liereafter be 
 assessed by any public authority upon the said principal debt 
 or sum, or upon the interest thereof, then, and in such case, 
 the whole principal debt aforesaid shall, at the option of the 
 eaid obligees, their successors and assigns, immediately there-
 
 204 BUILDING ASSOCIATIONS. 
 
 upon become due, payable and recoverable, and payment to 
 said principal sum, and all interest, and all fines, thereon, as 
 
 well as any contribution on said share of stock then 
 
 due, may be enforced and recovered at once, any thing here- 
 in before contained to the contrary thereof notwithstanding. 
 And it is hereby further agreed, that if the same, or any part 
 thereof, has to be collected by process of law, that an attor- 
 ney's fee of .... per cent shall be added to and collected 
 
 as a part of the costs of such proceedings. And the said obli- 
 gor, for heirs, executors, administrators and assigns, hereby 
 
 expressly waive and relinquish unto the said obligees, their 
 
 successors and assigns, all benefit that may accrue to 
 
 by virtue of any and every law, made or to be made, to exempt 
 the premises described in the indenture of the mortgage here- 
 with given, or of any other premises or property whatever, 
 from levy and sale under execution, or any part of the proceeds 
 arising from the sale thereof, from the payment of the moneys 
 hereby secured, or any part thereof, and the cost of such action 
 and execution, then the above obligation to be void, or else to 
 be and remain in full force and virtue. 
 
 Sealed and delivered, ) 
 in the presence of us, ) 
 
 To Esquire, Attorney of the Court of Common 
 
 Pleas, at in the County of in the State of . ■ 
 
 or to any other Attorney, or to the Prothonotary of the said 
 Court, or of any other Court, there or elsewhere. 
 
 Whereas, in and by a certain obligation, bearing even 
 
 date herewith, do ... . stand bound unto in the sum of 
 
 lawful money of the United States of America, conditioned for 
 the payment of the just sum of dollars, such as above- 
 said, at any time within one year from the date thereof, to- 
 gether with interest, for the same, and together with 
 
 all fines imposed by the constitution and by-laws of the afore- 
 said association, in like money, payable monthly,<on the.... 
 of each and every month thereafter, and should also well and 
 truly pay, or cause to be paid unto the said obligees, their 
 successors or assigns, the sum of dollars, on the
 
 APPENDIX. 205 
 
 of each and every month thereafter, as and for the monthly 
 
 contribution on share of the capital stock of the said 
 
 obligees, now owned by the said obligor, without any fraud 
 or further delay; and should also deliver to the said obligees, 
 
 their successors or assigns, on or before the day of 
 
 of each and every year, of receipts for all taxes of 
 
 the current year assessed upon the premises described in the 
 mortgage accompanying said obligation. Provided, however, 
 and it is thereby expressly agreed, that if at any time default 
 should be made in the payment of the said principal money 
 when due, or of the said interest, or of the said fines, or the 
 monthly contribution on said stock, for the space of six months 
 after any payment thereof should fall due, or in the delivery 
 to the said obligees, their successors or assigns, on or before 
 
 the day of of each and every year, of such 
 
 receipts for such taxes of the current year, assessed upon the 
 mortgaged premises, or if the said obligor shall not well and 
 
 truly pay, or cause to be paid, the and taxes, on the 
 
 premises particularly described in the mortgage accompanying 
 this obligation, when the same shall become due and payable, 
 and also shall not well and truly pay, or cause to be paid, all 
 and every such sum or sums as should thereafter be assessed 
 by any public authority upon the said principal debt or sum, 
 or upon the interest thereof, then and in such case the whole 
 principal debt aforesaid should, at the option of the said obli- 
 gees, their successors and assigns, immediately thereupon be- 
 come due, payable and recoverable, and payment of said prin- 
 cipal sum, and all interest, and all tines thereon, as vi-ell as 
 
 any contribution on said share of stock, then due, 
 
 might be enforced and recovered at once, any thing therein- 
 before contained to the contrary thereof notwithstanding. 
 And it is thereby further agreed, that if the same, or any part 
 thereof, has to be collected by process of law, then an attor- 
 ney's fee of per cent should be added to the amount 
 
 so collected, as a part of the costs of such proceedings. And 
 
 the said obligor for heirs, executors, administrators 
 
 and assigns, thereby expressly waived and relinquished unto 
 the said obligees, their successors and assigns, all beuelit that
 
 206 BUILDING ASSOCIATIONS. 
 
 might accrue to bj virtue of any and every law, made 
 
 or to be made, to exempt tiie premises descriLei in the 
 indenture of mortgage therewith given, or of any other pre- 
 mises or property wliatever, from levy and sale under execu- 
 tion, or any part of the proceeds arising from the sale thereof, 
 from the payment of the moneys thereby secured, or any part 
 thereof. These are to desire and authorize you, or any of you, 
 
 to appear for heirs, executors, or administrators, in 
 
 the said Court or elsewhere, in an action of debt, there or 
 
 elsewhere brought, or to be brought, against heirs, 
 
 executors, or administrators, at the suit of the said obligees, 
 their successors or assigns, on the said obligation, as of any 
 term or time past, present, or any other subsequent term or 
 time, there or elsewhere to be held, and confess or enter judg- 
 ment thereupon, against heirs, executors, or admini- 
 strators, for the sum of dollars, lawful money of the 
 
 United States of America, debt, besides costs of suit, by non 
 sum iiiforrnatus, nihil dioit^ or otherwise, as to you shall seem 
 meet; and for your, or any of your so doing, this shall be your 
 sufficient warrant. And .... do hereby for heirs, exe- 
 cutors and administrators, remise, release, and forever quit 
 claim unto the said obligees, their certain attorney, successors 
 and assigns, all and all mannerof error and errors, misprisions, 
 misentries, defects and imperfections whatever, in the entering 
 of the said judgment, or any process or proceedings thereon 
 or thereto, or anywise touching or concerning the same. 
 
 In witness whereof, .... have hereunto set . . . .hand and seal, 
 
 the day of in the year of our Lord one thousand 
 
 eight hundred and 
 
 Sealed and delivered, ) 
 
 in the presence of us, f 
 
 The following is the form of mortgage used by associations 
 in Pennsylvania: 
 
 This indenture. Made the day of in the 
 
 year of our Lord one thousand eight hundred and 
 
 between of the one part (mortgagor), of the 
 
 other part mortgagees).
 
 APPENDIX. . 207 
 
 Whereas, the said mortgagor, in and by obligation, 
 
 or writing obligatory, under. band and seal, duly executed, 
 
 bearing even date herewith, stand bound unto the said mort- 
 gagees, in the sum of dollars, lawful money of the 
 
 United States of America, conditioned for the payment of the 
 
 just sum of dollars, at any time within one year from 
 
 the date thereof, together with interest, for the same, 
 
 in like money, payable monthly, and together with all fines 
 imposed by the constitution and by-laws of the aforesaid asso- 
 ciation, on the of each and every month thereafter, and 
 
 should also well and truly pay, or cause to be paid, unto the 
 
 said mortgagees, their successors or assigns, the sum of 
 
 dollars, on the said .... of eadi and every month thereafter, 
 
 as and for the monthly contribution on share of the 
 
 capital stock of the said mortgagees, now owned by the said 
 mortgagor, without any fraud or further delay; and should also 
 deliver to the said mortgagees, their successors or assigns, on or 
 before the .... day of .... of each and every year, receipts 
 for all taxes of the current year assessed upon the hereinafter, 
 described premises. Provided, however, and it is hereby 
 expressly agreed, that if at any time default should be made 
 in the payment of the said principal money when due, or of 
 the said interest, or of the said fines, or the monthly contribu- 
 tion on said stock, for the space of six months after any pay- 
 ment thereof should fall due, or in such delivery to the said 
 mortgagees, their successors or assigns, on or before the .... 
 day of .... of each and every year, of such receipts for such taxes 
 of the current year, upon the premises mortgaged, or if the 
 said mortgagor should not well and truly pay, or cause to be 
 
 paid, the and taxes, on the hereinafter described 
 
 premises, when the same should become due and payable, and 
 also should not well and truly pay, or cause to be paid, all and 
 every such sum or suras as should thereafter be assessed by any 
 public authority upon the said principal debt or sum, or upon 
 the interest thereof, then, and in such case the whole principal 
 debt aforesaid should, at the option of the said mortgagees, 
 their successors and assigns, immediately thereupon become 
 due, payable and recoverable, and payment of said principal
 
 208 BUILDING ASSOCIATIONS. 
 
 sum, and all interest, and all fines thereon, as well as any con- 
 tribution on said share of stock then due, maj be 
 
 enforced and recovered at once, anything therein before con- 
 tained to the contrary thereof notwithstanding. And it was 
 therein further agreed, that if the same or any part thereof 
 has to be collected by proceedings at law, then an attorney's 
 collection fee of .... per cent should be added to the amount 
 so collected as a part of the costs of such proceedings. And 
 
 the said mortgaofor for heirs, executors, administra- 
 
 tors and assigns, thereby expressly waived and relinquished 
 unto the said mortgagees, their successors and assigns, all bene- 
 fit that might accrue to by virtue of any and every 
 
 law made or to be made, exempting the premises hereinafter 
 described, or of any other premises or property whatever, from 
 levy and sale under execution, or any part of the proceeds aris- 
 ing from the sale thereof, from the payment of the moneys 
 thereby secured, or any part thereof, and the cost of such 
 action and execution, as in and by the said above recited obli- 
 gation and the condition thereof, relation being thereunto had 
 may more fully and at large appear. 
 
 Now this indenture witnesseth, that the said mortgagor, as 
 well for and in consideration of the premises, as of the afore- 
 said debt or principal sum of dollars, and for the 
 
 better securing the payment of the same, with interest, 
 too-ether with all fines, and together with the monthly contri- 
 bution of dollars, on the said share of 
 
 stock owned by the said mortgagor, unto the said mortgagees, 
 their successors and assigns, in discharge of the said above 
 recited obligation, as of the further sum of one dollar, lawful 
 
 money, unto in hand well and truly paid, by the said 
 
 morto-ai-ees, at the time of the execution hereof, the receipt 
 
 whereof is hereby acknowledged, granted, bargained, 
 
 sold, aliened, enfeoffed, released and confirmed, and by these 
 
 presents grant, bargain, sell, alien, enfeoff, release and 
 
 confirm unto the said mortgagees, their successors and assigns. 
 
 Together with all and singular the buildings, streets, alleys, 
 passages, ways, waters, water-courses, rights, liberties, privi-
 
 APPENDIX. 20y 
 
 leges, improvements, hereditaments and appurtenances, what- 
 soever, thereunto belonging, or in any wise appertaining, and 
 the reversions and remainders, rents, issues and profits thereof. 
 
 To have and to hold the said hereditaments and 
 
 premises hereby granted, or mentioned and intended so to be 
 
 with the appurtenances, unto the said mortgagees, their 
 
 successors and assigns, to and for the only proper use and behoof 
 of the said mortgagees, their successors and assigns forever. 
 
 Provided, always, nevertheless, that if the said mortgagor . . . 
 heirs, executors, administrators or assigns, do and shall well 
 and truly i)ay, or cause to be paid, unto the said mortgagees, 
 their successors or assigns, the aforesaid debt or principal sum 
 
 of , dollars, together with interest, and together 
 
 with the fines aforesaid, on the days and times hereinbefore 
 mentioned and appointed for the payment of the same; and 
 shall also well and truly pay, or cause to be paid, to the said 
 morto-atJ-ees, their successors or assigns, the above mentioned 
 
 sum of dollars, on the of every month, as 
 
 and for the contribution on the said share of stock as ' 
 
 above mentioned; and shall on or before the day of 
 
 of each and every year, deliver to the said mortgagees, 
 
 their successors or assigns, receipts for all taxes of the current 
 year, assessed upon the mortgaged premises, according to the 
 condition of the said above recited obligation, without any 
 fraud or further delay, and without any deduction, defalcation 
 or abatement, to be made of anything, for, or in respect of any 
 taxes, charges or assessments whatsoever, that then, and from 
 thenceforth, as well this present indenture, and the estate 
 hereby granted, as the said above recited obligation, shall 
 cease, determine, and become void, anything hereinbefore con- 
 tained to the contrary thereof, in anywise notwithstanding. 
 Provided further, in case of default in the payment of the 
 principal, interest or fines as aforesaid, or any part thereof, or 
 in default of the payment of the monthly contribution on the 
 
 siiid share of stock, as above particularly recited and 
 
 mentioned, or any part thereof, for the space of six months 
 14
 
 210 BUILDING ASSOCIATIONS. 
 
 after any payment thereof shall fall due, or in such delivery to 
 the said mortgagees, their successors or assigns, on or before 
 
 the .... day of of each and every year, of such receipts 
 
 for such taxes of the current year, assessed upon the mortgaged 
 premises, or if the said mortagor shall not well and truly pay, 
 
 or cause to be paid, the and taxes, on the above 
 
 described premises, when the same shall become due and pay- 
 able, and also shall not well and truly pay, or cause to be paid, 
 all and every such sum or sums as shall hereafter be assessed 
 by any public authority, upon the said principal debt or sum, 
 or upon the interest thereof, then, and in such case, the whole 
 principal debt aforesaid shall immediately thereupon become 
 due, payable and recoverable; and it shall and may be lawful 
 for the said mortgagees, their successors or assigns, to sue out 
 forthwith a writ of scire facias^ upon this present indenture of 
 mortgage, and to proceed at once thereon to recover the princi- 
 pal money hereby secured, and all interest, and all fines 
 
 thereon, as well as any contribution on said share of 
 
 stock then due, according to law, without further stay, any law 
 or usao-e to the contrary notwithstanding. And it is hereby 
 agreed, that in case the same or any part thereof has to be col- 
 lected by process of law, that an attorney's fee of .... per 
 cent, shall be added to and collected as a part of the costs of 
 
 such proceedings. And the said mortgagor for heirs, 
 
 executors, administrators and assigns, hereby waive and relin- 
 quish unto the said mortgagees, their successors and assigns, 
 
 all benefit that may accrue to by virtue of any and every 
 
 law made, or to be made, to exempt the said above described, 
 premises, or any other property whatever, from levy and sale 
 under execution, or any part of the proceeds arising from the 
 sale thereof, from the payment of the moneys hereby secured, 
 or any part thereof. 
 
 In witness whereof, the said parties to these presents have 
 hereunto interchangeably set their hands and seals. Dated the 
 day and year first above written. 
 
 Sealed and delivered 
 in the presence of us,
 
 APPENDIX. 211 
 
 On the day of A. D., 18 . . before me 
 
 personally appeared the above named and in due 
 
 form of law acknowledged the above or aforegoinci; indenture 
 
 of mortgage to be act and deed, and desired the same 
 
 might be recorded as such 
 
 Witness my hand and seal the day and year afore- 
 said. 
 
 Recorded in the office for recording of deeds, in and for. . . . 
 .... in mortgage book No page .... &c. 
 
 Witness my hand and seal of office, this day of 
 
 Anno Domini 18 . . 
 
 Form of Bond used by New Jersey Associations. 
 
 Know all men by these presents : 
 
 That . . . .held and firmly bound unto a . . . .body corporate, 
 
 of the State of New Jersey, in the sum of dollars, 
 
 lawful money of the United States of America, to be paid to 
 the said Association, its successors or assigns, for which pay- 
 ment well and truly to be made bind heirs, 
 
 executors and administrators, firmly by these pres- 
 ents. Sealed with seal, dated the day of 
 
 one thousand eight hundred and eighty .... 
 
 The condition of the above obligation is such that if the 
 
 above bounden heirs, executors or administrators, 
 
 shall well and truly pay or cause to be paid, unto the above 
 named Association, its successors or assigns, the just and full 
 
 sum of dollars, in the manner following, viz.: by the 
 
 payment of dues of per on of each 
 
 on each of shares of the capital stock of said 
 
 Association, owned by said and standing in name. 
 
 on the books of said Association, and assigned to it as collateral 
 security for the payment hereof, and on which this loan is 
 based, during the period of this loan, together with interest on 
 said sum of dollars, to be computed from the date
 
 212 BUILDING ASSOCIATIONS. 
 
 hereof, at the rate of six per cent per annum, and payable as 
 follows, at the expiration of three months from the date hereof, 
 on the whole principal sum aforesaid, and at the expiration of 
 each succeeding three months, on the amount of said prin- 
 cipal found to be due at the beginning thereof, after deducting 
 all previous payments made on account of said principal, 
 
 being the amount of dues paid on said shares during 
 
 said three months, as provided for by the constitution and 
 by-laws of said Association, which have been duly assented 
 to by said obligor, and made a part hereof, without any fraud 
 or other delay, then the above obligation to be void, otherwise 
 to remain in full force and virtue. 
 
 Provided, however, that when the funds of said Association 
 
 shall equal two hundred dollars per share, over and 
 
 above all liabilities of the Association, no further payments 
 shall be required hereon, except arrearages, if any, and there- 
 upon a proper satisfaction piece for the cancellation hereof 
 and of the mortgage given to secure this bond shall be duly 
 executed and delivered to said obligor, heirs, execut- 
 ors, administrators or assigns, and said .'.shares shall 
 
 thereupon also be cancelled. 
 
 And it is hereby expressly agreed, that should any default 
 be made in the payment of the said interest or any of said 
 dues or installments on said shares, or of any part thereof, on 
 any dav whereon the same is made payable, as above expressed, 
 or should any tax, assessment, water-rent, or other municipal 
 or governmental rate, charge, imposition, or lien, be hereafter 
 imposed or acquired upon the premises described in the mort- 
 gage accompanying this bond, and become due and payable; 
 and should the said interest or any of said dues or install- 
 ments on said shares remain unpaid and in arrear for the 
 
 space of or said tax, assessment, water rent, or other 
 
 municipal or governmental rate, charge, imposition or lien, or 
 any or either of them, remain unpaid and in arrear for the 
 
 space of then and from thenceforth, that is to say, 
 
 after the lapse or expiration of either of the said periods, as
 
 APPENDIX. 213 
 
 the case may be, the aforesaid principal sum of or 
 
 the balance thereof reiniining unpaid, with all arrearage of 
 interest thereon, shall at the option of the said Association, or 
 its legal representatives, become and be due and payable 
 immediately thereafter, although the period hrst above lim- 
 ited for tlie payment thereof may not then have expired, any- 
 thing hereinbefore contained to the contrary thereof, in any- 
 wise, notwithstanding. 
 
 Sealed and delivered in presence of 
 
 Form of Mortgage Used by New Jersey Association. 
 
 This indenture, made the day of in the 
 
 year of one thousand eight hundred and ninety 
 
 Between of the first part and a body corporate 
 
 of the State of New Jersey, located at in said State, 
 
 party of the second part: 
 
 Whereas, the said j^^^stly indebted to the said party 
 
 of the second part, in the sum of dollars, lawful money 
 
 of the United States of America, secured to be paid by 
 
 certain bond or obligation, bearing even date with these 
 
 presents, in the penal sum of dollars,lawful money as 
 
 aforesaid, conditioned for the payment of the said first men- 
 tioned sum of dollars, lawful money as aforesaid, to 
 
 the said party of the second part, its successors or assigns, in 
 
 the manner following, viz: by the payment of dues of 
 
 per on of each on each of 
 
 shares of the capital stock of said association, owned by said 
 
 .-of the first part, and standing in name on 
 
 books of said association, and assigned to said party of the 
 second part, as collateral security for the payment hereof, and 
 on which this loan is based, during the period of this loan, 
 
 together with interest on said sum of dollars, to be 
 
 computed from the date thereof, at the rate of six per cent 
 per annum, and payable as follows: At the expiration of 
 three months from the date hereof, on the whole principal 
 sum aforesaid, and at the expiration of each succeeding 
 three mouths, on the amount of said principal, found to
 
 214 BUILDING ASSOCIATIONS. 
 
 due at the beginning thereof, after deducting all previous 
 payments made on account of said principal, being the amount 
 
 of dues paid on said shares during said three months, 
 
 as provided for by the constitution and by-laws of said asso- 
 ciation, which have been duly assented to by said party of the 
 lirst part, and are made a part hereof. 
 
 Provided, however, that when the funds of said association 
 
 made shall equal two hundred dollars per share over and 
 
 above all liabilities of the association, no further payments 
 shall be required hereon, except arrearages, if any, and there- 
 upon a proper satisfaction for the cancellation hereof, and 
 of said bond, shall be duly executed and delivered to said 
 
 party of the first part, heirs or assigns, and said 
 
 shares shall thereupon also be cancelled. 
 
 Audit is thereby expressly agreed, that should any default be 
 made in the payment of the said interest or any of said dues 
 or installments on said shares, or any part thereof, on any day 
 whereon the same is made payable, as above expressed, or 
 should any tax, assessment, water rent, or other municipal or 
 other governmental rate, charge, imposition, or lien be here- 
 after imposed or acquired upon the premises described in this 
 mortgage, and become due and payable, and should the said 
 interest or any of said dues or installments on said shares're- 
 
 main unpaid and in arrear for the space of or said tax, 
 
 assessment, water rent, or other municipal or governmental 
 rate, charge, imposition or lien, or any or either of them, re- 
 main unpaid and in arrear, for the space of then and 
 
 from thenceforth, that is to say, after the expiration of either 
 of the said periods as the case may be, the aforesaid principal 
 
 Bum of dollars, or the balance thereof, remaining 
 
 unpaid, with all arrearage of interest thereon, shall, at the 
 option of the said party of the second part, or its legal repre- 
 sentatives, become and be due and payable immediately there- 
 after, although the period above limited for the payment 
 thereof may not then have expired, anything therein before 
 contained to the contrary thereof, in anywise notwithstanding:
 
 APPENDIX. 215 
 
 as by the said bond or obliojation, and the condition thereof, 
 reference being thereunto had, may more fully appear. 
 
 Now this indenture witnosL-eth, that the said part . . of the first 
 part, for the better securing the payment of the said sum of 
 money, mentioned in the condition of the said bond or obliga- 
 tion, with interest thereon, according to the true intent and 
 meaning thereof, and also for and in consideration of the sum 
 
 of one dollar, to in hand paid by the said party of the 
 
 second part, at or before the ensealing and delivery of these 
 presents, the receipt whereof is hereby acknowledged, ha. . . . 
 granted, bargained, sold, aliened, released, conveyed and con- 
 firmed, and by these presents do. . . .grant, bargain, sell, alien, 
 release, convey and confirm^ unto the said party of the 
 second part, and to its successors and assigns, forever, 
 
 all 
 
 DESCKIPTION". 
 
 Together with all and singular the tenements, hereditaments, 
 and appurtenances thereunto belonging, or in anywise apper- 
 taining, and the reversion and reversions, remainder and 
 remainders, rents, issues and profits tliereof, and also, all the 
 estate, right, title, interest, property, possession, claim, and, 
 demand whatsoever, as well in law as in equity, of the said 
 part. .. .of the first part, of, in and to the same, and every 
 part and parcel thereof, with the appurtenances: To have 
 and to hold the above granted and described premises, with 
 the appurtenances, unto the said party of the second part, its 
 successors and assigns, to its and their own proper use, 
 benefit and behoof forever. Provided always, and these 
 presents are upon this express condition, that if the said part 
 
 . . ..of the tirst part, heirs, executors or administrators, 
 
 shall well and truly pay unto said party of the second part,, 
 its successors or assigns, the said sura of money mentioned in 
 the condition of said bond or obligation, and the interest 
 thereon, at the time and times, and in the manner mentioned 
 in the said condition, according to the true intent and mean- 
 ing thereof, that then these presents, and the estate hereby 
 granted, shall cease, determine and be void.
 
 216 BUILDING ASSOCIATIONS. 
 
 And the said for lioirs, executors and admin- 
 istrators, do covenant and agree, to pay unto the 
 
 said party of the second part, its successors or 
 
 assigns, the said sura of money and interest, as mentioned 
 above, and expressed in the condition of the said bond. 
 
 And it is also agreed, by and between the parties to these 
 presents, that the said part .... of the first part shall and will 
 keep the buildings erected, and to be erected, upon the lands 
 above conveyed, insured against loss or damage by fire, by 
 insurers ; and in an amount approved by the said party of the 
 
 second part, its successors or assigns, and assign the 
 
 policy and certificates thereof, to the said party of the second 
 part ; and in default thereof, it shall be lawful for the said 
 party of the second part to effect such insurance, and the 
 premium or premiums paid for effecting the same, shall be a 
 lien on said mortgaged premises, added to the amount of the 
 said bond or obligation, and secured by these presents, payable 
 on demand, with interest at the rate of six percent per annum, 
 from the time of payment of such premium or premiums. 
 
 And the said the owner of the lands above described^ 
 
 for heirs and assigns, do ... . further covenant andj 
 
 agree to and with the said party of the second part, its sue-' 
 cessors and assigns, that they will not hereafter apply for any 
 deduction by reason of any mortgage from the taxable value 
 of the lands embraced in this mortgage. 
 
 And it is further agreed, that in case the said heirs, 
 
 or assigns shall claim any deduction from the taxable value of 
 said lauds, in violation of this agreement, then and in that case 
 this mortgage shall become and be immediately due and pay- 
 able, and the amount of tax paid by the mortgagee shall be 
 added to the principal of the debt secured hereby, and recover- 
 able therewith, with interest thereon from time of payment. 
 
 In witness whereof, the said part. . . .of the first part ha. . . 
 
 hereunto set hand and seal, the day and year first 
 
 above written
 
 APPENDIX. 217 
 
 Sealed and delivered in the presence of 
 
 State of ) 
 
 > es. 
 County of ) 
 
 On this day of eighteen hundred and .... 
 
 before me personally appeared who, I am 
 
 satisfied, .. ..the mortgagor in the within mortgage named; 
 
 and I haying first made known to the contents thereof, 
 
 .... did acknowledge that signed, sealed and 
 
 delivered the same as voluntary act and deed. 
 
 And the said being by me privately examined, separate 
 
 and apart from .... said husband did further 
 
 acknowledge that signed, sealed and delivered the 
 
 same as ... . voluntary act and deed, freely, without fear, threats 
 or compulsion of said husband. 
 
 Form of mortgage used by the Mutual Home and Savings 
 Association, of Dayton, Ohio, which is the parent of a class 
 of popular associations: 
 
 Know all men by these presents, That 
 
 in consideration of dollars, in hand paid, 
 
 by the Mutual Home and Savings Association, of Dayton, 
 Ohio, ha. . bargained and sold, and do .... hereby grant, bar- 
 gain, sell and convey unto the said Mutual Home and Savings 
 Association, its successors and assigns forever, the following 
 premises, situated in the City of Dayton, County of Mont- 
 gomery, in the State of Ohio, and described as follows: .... 
 
 To have and to hold said premises, with the appurtenances, 
 unto the said Mutual Home and Savings Association, its suc- 
 cessors and assigns forever. And the said grantor. . for 
 
 and heirs and assigns, do ... hereby covenant with the said 
 Mutual Home and Savings Association, its successors and 
 
 assigns, that . . he lawfully seized of the premises 
 
 aforesaid, and that the premises are free and clear from all 
 incumbrances whatsoever, and that he . . will forever
 
 218 BUILDING ASSOCIATIONiJ. 
 
 warrant and defend the same, with the appurtenances, nnto the 
 said Mutual Home and Savings Association, its successors 
 and assigns, against the lawful claims of all persons whomso- 
 ever. 
 
 Provided, nevertheless, and these presents are upon this 
 
 condition: That, whereas, the said ha. . entered into 
 
 contract, in writing, with said association, in the words and 
 figures following, to wit: 
 
 $ Dayton, Oliio, 189 . . 
 
 Received of the Mutual Home and Savings Association, of 
 
 Dayton, Ohio, dollars, as a loan on shares 
 
 of stock No owned by in said association. 
 
 ao-ree to pay to said association weekly, not less 
 
 than dollars, which shall be applied as follows: 
 
 First. To the payment of any fines or other assessments 
 made against in pursuance of the by-laws of said associa- 
 tion. 
 
 Second. To the payment of the premium for precedence 
 due on said loan, amounting to dollars per week. 
 
 Third. To the payment of the interest due on said loan, 
 amounting to per week. 
 
 Fourth. The balance of said payments shall be credited as 
 dues on said stock. Said payments shall be continued until 
 the dues so credited on said stock, together with the dividends 
 declared thereon, shall equal the amount loaned. 
 
 Should .... fail for eight weeks to pay said weekly pay- 
 ments, then the whole amount of said loan shall at once 
 become due and payable. 
 
 Now, if the said shall pay to said association, its 
 
 successors or assigns, the said suras of money when due, as set 
 forth in said contract, then these presents shall be void.
 
 APPENDIX. 219 
 
 In testimony whereof, tlie said ha. . hereunto set! 
 
 , . . . . hand , . tliis day of 189 . . 
 
 Executed in presence of 
 
 State of Ohio, Montgomery County, ss: 
 
 Before me, a Notary Public, within and for said county, 
 personally appeared the above named and acknow- 
 ledged the signing of the foregoing conveyance to be 
 
 voluntary act and deed, for the uses and purposes therein 
 expressed. 
 
 "Witness ray hand and notarial seal, this day of 
 
 A. b., 189.. 
 
 Notary Public, 
 
 Montgomery County, Ohio. 
 
 Stock No Mortgage to Mutual Home 
 
 and Savings Association, of Dayton, Ohio. 
 
 Borrowed, $ Date, Received for record, 
 
 at .... o'clock M. and recorded 
 
 in book .... page .... 
 
 Recorder of Montgomery County. 
 
 Dayton, Ohio I hereby release this mortgage. 
 
 President Mutual Home and Savings Associa- 
 
 tion, of Dayton, Ohio. 
 
 Co-operative Bank Mortgrag-e used in Massachu- 
 setts. 
 
 Know all men by these presents, that I , in 
 
 consideration of dollars, paid by the Co- 
 operative Bank, a corporation duly established by law, in 
 , in the county of , and commonwealth of
 
 220 BUILDING ASSOCIATIONS. 
 
 Massachusetts, the receipt whereof is hereby acknowledged, 
 do hereby give, grant, bargain, sell and convey unto the 
 
 said corporation, its successors and assigns To 
 
 have and to hold the granted premises, with all the privileges 
 and appurtenances thereto belonging, to the said corporation, 
 and its successors and assigns, to their own use and behoof for- 
 ever. 
 
 And hereby, for and heirs, execu- 
 tors and administrators, covenant with the said grantee and 
 its successors and assigns, that lawfully seized in fee- 
 simple of the granted premises; that they are free from all in- 
 cumbrances, that have good right to sell 
 
 and convey the same as aforesaid, and that will and 
 
 heirs, executors and administrators shall warrant and 
 
 defend the same to said grantee and its successors and assigns 
 forever, against the lawful claims and demands of all per- 
 sons 
 
 Provided, nevertheless, that whereas ha. . this 
 
 day pledged and transferred to the said corporation shares 
 
 of its capital stock, said shares being in the series as 
 
 collateral security for the performance of the terms, covenants 
 and conditions of this mortgage, and of the note hereinafter 
 
 mentioned, upon which shares said sum of dollars 
 
 has been advanced to by said corporation, now, there- 
 fore if or heirs, executors, administrators, or 
 
 assigns, shall pay unto the said corporation, its successors or 
 
 assigns, the sum of monthly, at the stated meet- 
 
 ino-s of said corporation, on the of each month here- 
 after, being the amount of the monthly dues on said 
 
 shares, and of the monthly interest and premium upon said 
 
 loan or advance of dollars, for which said shares 
 
 are pledged, and said note and mortgage given, together with 
 all lines chargeable by the by-laws of said corporation, upon 
 arrears of such payments, until said shares shall reach the 
 
 ultimate value of two hundred dollars each, or if or 
 
 heirs, executors, administrators or assigns, shall
 
 APPENDIX. 221 
 
 otherwise sooner pay nnto the said corporation, its successors 
 
 or assigns, said sum of dollars, together with the said 
 
 interest, premiums and fines as aforesaid, to the time of such 
 payment, and, until such loan shall be paid, or cancelled by 
 
 the ultimate value of said shares, if shall pay without 
 
 charge to said corporation, all taxes and assessments levied or 
 assessed on the granted premises, including those assessed 
 upon said corporation's interest therein, as holder of this mort- 
 gage, and, if said corporation's loans on mortgages of taxable 
 real estate shall not at any time be exempt from a state tax on 
 
 the amount of its monthly dues, if shall on demand 
 
 pay unto said corporation such percentage on the debt hereby 
 secured, as it shall from time to time be required to pay as 
 such state tax, shall keep the buildings thereon insured against 
 
 fire, in a sum not less than dollars, for the benefit of 
 
 the grantee, its successors or assigns, at such insurance office 
 as it or they shall approve, or, in default thereof, shall, on 
 demand, pay to said corporation all such suras as it shall 
 reasonably pay for such taxes, assessments and insurance, with 
 interest, and shall not commit or suffer any strip or waste ot 
 the granted premises, or any breach of any covenant herein 
 contained, then this deed, as also a note of even date herewith, 
 
 signed by whereby promise to pay to the 
 
 grantee, or order, the said sums, at the times aforesaid, shall 
 be void. 
 
 But in case of non-payment of the aforesaid monthly dues, 
 interest, premium for fines for the period of six months after 
 any payment thereof shall be due, or upon any other default 
 in the performance or observance of the foregoing condition, 
 the grantee, or its successors or assigns, may sell the granted 
 premises, or such portion thereof as may remain subject to 
 this mortgage, in case of any partial release hereof, together 
 with all improvements that may be thereon, and all benefit 
 and equity of redemption of . . . .or . . . .representatives therein, 
 
 at public auction, in said , first publishing a notice of 
 
 the time and place of sale, once each week, for three consecu- 
 tive weeks, in one or more newspapers published in said
 
 222 BUILDING ASSOCIATIONS. 
 
 , . . .and may convey the same by proper deed or deeds to the 
 purchaser or purchasers absolutely, and in fee simple; and 
 
 such sale shall forever bar and all persons claiming under 
 
 from all right and interest in the granted premises, 
 
 whether at law or in equity. 
 
 And do hereby, for heirs and assigns, further 
 
 covenant and agree with the grantee, its successors and assigns, 
 that on such sale, and they will, upon request, exe- 
 cute and deliver such further deeds and instruments as may 
 be necessary or proper to confirm such sale, and to vest the 
 title to the premises sold in the purchaser thereof, and will 
 execute and deliver to the purchaser an assignment of all 
 policies of insurance on the buildings upon the land covered 
 by this mortgage. 
 
 And out of the money arising from such sale, the grantee, 
 or its successors or assigns, shall be entitled to retain all sums 
 then secured by this deed, whether then or thereafter payable, 
 including all costs, charges and expenses, incurred or sustained, 
 
 by reason of any failure or default on the part of or of 
 
 representatives to perform and fulfil the condition of 
 
 this deed, rendering the surplus, if any, to or 
 
 heirs or assigns. 
 
 And it is agreed that the grantee, or its successors or assigns, 
 or any person or persons in their behalf, may purchase at any 
 sale made as aforesaid, and that no other purchaser shall be 
 answerable for the application of the purchase money; and 
 that until default in the performance of the condition of this 
 
 deed, and heirs and assigns may hold and enjoy 
 
 the granted premises and receive the rents and profits thereof. 
 
 And for the consideration aforesaid, I, wife of the 
 
 said do hereby release unto the said grantee, and 
 
 its successors and assigns, all rights of or to both dower and 
 homestead in the granted premises.
 
 APPENDIX. 223 
 
 In witness whereof, the said hereunto 
 
 set hand and seal, this day of in the 
 
 year one thousand eight hundred and 
 
 Signed, sealed and delivered in presence of 
 Commonwealth of Massachusetts ss 18 . . 
 
 Then personally appeared the above named and 
 
 acknowledo-ed the foregoing instrument to be free 
 
 act and deed, before me, Justice of the peace, 
 
 18. ., at o'clock and minutes, M. 
 
 Keceived and entered with Deeds, libra folio 
 
 attest: 
 
 , Kegister.
 
 224 
 
 BUILDING ASSOCIATIONS. 
 
 Form of Stock Register. 
 
 Bj adding enough weeks downward to constitute a year, 
 the stockholder's account with the association appears in 
 compact form, and like columns may be increased to the 
 right, next to the "Total" column, and the latter will 
 prove the footings. If the accounts are to be cast up but 
 once a year, this form may easily be adapted, by omitting 
 the six months' summary, or, if the association declares no 
 dividends, that much of the form may be omitted. This 
 form is used by permission of Mr. L. G. Dynes, its inventor. 
 
 
 M 
 
 
 O) 
 
 
 a> 
 
 
 ^ 
 
 .a 
 
 
 a 
 
 o 
 
 o 
 
 ^ 
 
 ^ 
 
 Balances. 
 
 May 
 
 Jun. 
 
 July 
 
 Auff 
 
 Sep. 
 
 Oct 
 
 7 
 
 14 
 21 
 28 
 
 4 
 11 
 18 
 25 
 
 2 
 
 9 
 16 
 2i 
 30 
 
 6 
 18 
 2'i 
 27 
 
 3 
 10 
 17 
 24 
 
 1 
 
 8 
 15 
 22 
 29 
 
 Totals, 
 
 Book 
 No. 
 
 Ent. 
 
 and 
 Trans. 
 Fees. 
 
 NAME OF STOCKHOLDER. 
 Address 
 
 Cr. 
 
 Dues. 
 
 Prem 
 
 Int. 
 
 Fines 
 
 and 
 
 Disc'ts 
 
 No. 
 Shares 
 
 Dr. 
 
 (Loan) 
 (Pay- 
 ments) 
 
 Totals. 
 
 Balance, $ 
 
 Dividend, Total, S 
 
 ..percent. Current Term, S , . 
 
 The association will only need to keep an expense accoont m addition to the above.
 
 APPENDIX. 
 
 225 
 
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 T-l 
 
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 03 
 
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 3 
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 J
 
 226 BUILDING ASSOCIATIONS. 
 
 Form of Building Agreement. 
 
 Articles of agreement. It is hereby mutually agreed, this . . 
 
 day of ... . 189 . . by and between part . . of the fii-st part, 
 
 and part.. of the second part, all of Marion County, 
 
 State of Indiana, as follows, to wit: 
 
 Part .... of the second part, for heirs, executors and 
 
 administrators, hereby covenant .... and agree. ... to and with 
 said part .... that .... will erect, construct and fully complete 
 in a good, substantial and workmanlike manner, on or before 
 
 the day of 189 . . for the consideration hereinafter 
 
 named, the following described improvements upon the rea} 
 estate described in the specitications hereto attached, to wit: 
 
 in the manner, in all respects, set forth in the plans 
 
 and specifications hereunto attached and made a part; that 
 second party shall furnish, at his own expense, all the labor 
 and material used in such erection, construction and comple- 
 tion of said improvements, and will carry a builder's insurance 
 risk on same while in progress; in consideration for all which 
 the party of the first part hereby agrees to pay unto second 
 
 party the sum of dollars, in the manner following, to 
 
 wit: Provided, that second part .... shall have 
 
 fully paid for all material and labor furnished to date of pay- 
 ment, so that there shall not be a lien therefor on the said real 
 estate; that second party shall execute a bond in the suhi of 
 
 dollars, with sureties to the satisfaction of first party 
 
 and mortgagee, conditioned to idemnify first party 
 
 and mortgagee from loss bv reason of mechanics liens. 
 
 "O o 
 
 It is further mutually agreed by and between the partiea 
 hereto, that the said plans and specifications shall co-operate; 
 that is to say, that any work or works set forth in the plans, 
 and not mentioned in the specifications, and vice versa, are to 
 be executed as fully as though set forth in both the plans and 
 specifications. 
 
 That nothing shall be built, erected, charged and paid for as 
 extras, until after all agreements in relation thereto have been
 
 APPENDIX. 227 
 
 first reduced to writing and signed by the parties hereto; that 
 first party shall not be liable for any damage that shall occur to 
 any part of said work and improvements and to any person or 
 persons employed in or about said premises ; that second party 
 
 .... shall pay unto first party .... the sura of dollars 
 
 per day for each day the completion of said improvements 
 shall be delayed beyond the date hereinbefore fixed for their 
 completion; that first party. . . .shall have the right to control 
 the location of closets, mantels, shelves, brackets, chandeliers, 
 bracket lights, stove pipe holes in flues, and colors of paint, 
 beyond those mentioned in the specifications; and that first 
 party. . . .shall not be responsible for any material and labor 
 used in the improvements aforesaid 
 
 In witness of all which, the parties have hereunto sot their 
 hands on the day and date hereinbefore written. 
 
 First party. 
 
 Second party. 
 
 Form of Building Specifications, 
 
 Specifications for improvements. Specifications for improve- 
 ments on the following described real estate, situated in 
 
 County, State of 
 
 Excavation, a. Outside trenches. ...inches deep. b. 
 Cellar by feet in size, and. . . .feet deep in the clear. 
 
 Foundation, a. Quality of brick , inches 
 
 in ground and inches above ground, inches thick; 
 
 outside walls of cellar to be nine inches thick, and inside walls 
 to be four inches thick, b. The studding shall rest upon tim- 
 bers placed upon foundation of dimensions and constructed as 
 
 follows: c. Yentilators of in foundation 
 
 shall be used as follows: d. Piers will be used as 
 
 follows: and of following dimensions: 
 
 Joists, a. Quality, and kind of timber b. 
 
 Dimensions of joist shall be by inches, placed 
 
 inches from center to center, with rows of truss brido-- 
 
 ing, and joists shall be accurately sized at the top. c. Second
 
 «_)28 BUILDING ASSOCIATIONS. 
 
 story joists shall be .... by inches, placed inches from 
 
 center to center, with .... rows of truss bridging, and accur- 
 ately sized both at top and bottom, d. Joists shall be spiked 
 
 with penny nails, and bridging nailed securely with 
 
 penny nails, e. Studding shall be double at all corners and 
 all openings. 
 
 Studding", a. Quality and dimension of studding, b. 
 How fastened at top. c. Kind of nails and how many used 
 in spiiving studding, d. How far from center to^center. 
 
 Rafters, a. Quality and dimensions of rafters, b. 
 
 Eafters shall be placed -inches from center to center. 
 
 c. Pitch shall be. . . . d. Rafters shall project inches ' 
 
 outside of outer walls, and shall be finished as follows: 
 
 Lining', a. Paper of quality, and fastened as. 
 
 follows, b. Timber as follows and put on diagonally, 
 
 in following manner, with penny nails in each stud- 
 ding. 
 
 Weatherboarding. a. Quality and kind of weather- 
 
 boardino- shall be and securely nailed to each studding| 
 
 with one. . . .penny nail ; free from windshakes, bad knots and 
 placed. . . .inches to the weather, b. Corner boards shall be 
 
 of lumber .... by inches, c. The finish around the. 
 
 doors and windows shall be as follows: 
 
 Porticoes, a. Shall be built, having turned columns 
 
 resting upon iron stands, piers by inches; 
 
 feet wide, and with roof, necessary brackets and scroll 
 
 work, shall be built as follows: 
 
 Roof. a. Sheathing shall be . . . .inches apart, nailed with 
 
 penny nails in each rafter, and shall be of lumber des- 
 
 cribed as follows, b. Shingles of ..quality, placed 
 
 inches to weather, and nailed with two penny nails 
 
 to each shingle, c. Comb boards of following kind and 
 quality:
 
 APPENDIX. 229 
 
 Floors, a. Kind and quality of flooring shall be as fol- 
 lows and each plank shall be nailed to each joist with 
 
 . . . .penny nails. . 
 
 Windows, a. Frames shall be of following description. 
 
 b. Sash of following description will be used. c. Glass 
 
 shall be of doable strength and of following dimensions 
 
 fastened with tin points and well puttied, d. Weights, cords, 
 pullies and locks will be put on all windows, except 
 
 Doors, a outside doors, of ... . style and of fol- 
 lowing size and description b inside doors 
 
 of panels and of following size and description will be 
 
 used. c. Transoms of following size, and hung on pivots, 
 will be used over each door, (except closet doors), d. Hard- 
 ware for doors will be of following kind and sizes, e. Bump- 
 ers will be provided for each door. 
 
 Plastering, a. Lath of quality shall be used. b. 
 
 .... coats of brown mortar, made of lime, best hair and 
 
 sharp sand, shall be put on with true surface and corners, b. 
 One skim coat of white shall be put on the brown coat (when 
 dry), with like accuracy of surface and corners. 
 
 Finish, a. Kind and quality of lumber for inside finish 
 shall be as follows: b. Style of finish shall be 
 
 c. Baseboard shall be by inches, with moulding 
 
 on top and quarter round on floor, d. Finishing shall be 
 
 - ... by inches round each door and window, with 
 
 moulding as follows e. Picture moulding shall 
 
 be put in the following rooms: 
 
 Closets, a. Where placed and dimensions, b. Doors 
 of following kinds shall be used for each closet, to wit. 
 c. Shelves shall be placed in each closet as follows, d. Closet 
 hooks of best quality shall be placed in each closet. 
 
 Pantry, a. Shelving, b. Bread box of following con- 
 struction shall be provided, c. Other furnishings for pantry 
 shall be as follows.
 
 230 BUILDING ASSOCIATIONS. 
 
 Staii'Avays. a. Location and kind of finish, b. Ban- 
 isters shall be. c. Newel posts shall be. d. Landings. 
 e. Manner of construction shall be. f. Stairway for cellar 
 shall be constructed as follows: 
 
 Plumbing'. Shall be put in as follows, and of best ma- 
 terial and workmanship: 
 
 Tinwork. Shall be as follows and of best quality of tin 
 for long wear: 
 
 Paint, a coats of best boiled linseed oil ^and best 
 
 brands of lead, of color to suit owner, for outside, b 
 
 coats of for all inside finish, after finish has been 
 
 thoroughly sandpapered, except, c. Eoof, tinwork and comb 
 boards shall be painted with two coats of paint. 
 
 Flue. a. Shall be located as follows: b. Brick shall 
 be of best hard burned where exposed to the weather, with 
 
 foundation thereof resting on ground, starting inches 
 
 below surface, well plastered on the inside, and provided with 
 holes for stove pipe and best sheet iron thimbles and tin caps 
 wherever directed by owner; all flues and chimneys to extent 
 
 feet above roof, and well supplied with tin flashings, to' 
 
 prevent leaks where they pierce the roof. 
 
 Ventilators. Shall be made of ornamental scroll work 
 . . . .by . . . .inches in size and placed as follows: 
 
 Ornamental Scroll work shall be placed as follows and 
 of following description: 
 
 Outside steps at each outside door shall be constructed as 
 follows: 
 
 Outside door and stairway to cellar shall be constructed 
 as follows: 
 
 Fencinar. a. Picket, b. Tight boards, c. Paint.
 
 APPENDIX. 231 
 
 Well. a. Kind. b. Furnishings. 
 
 Cistern, a. Size. b. Furnishings, c. Connection 
 with down spout, d. Overflow pipe. 
 
 Sink. a. Kind. b. Covering. 
 
 Outbuilding's, a. Kind. b. Kind and quality of 
 material to be used therein, c. Size. d. Foundation. 
 e. Hoof. f. Paint, g. Vault shall be. .. .feet deep, and 
 walled with whole brick, burned sufficiently hard not to 
 crumble. Its location shall be 
 
 Extras. 
 
 Plans for buildings for which the foregoing specifications 
 are made are as follows: 
 
 Form of Indemnifying^ Bond Against Liens. 
 
 Know all men by these presents, that we of Marion 
 
 County, and State of Indiana, are held and firmly bound unto 
 
 the association of Marion County, Indiana, in the 
 
 sum of ....... .dollars, to be paid to said association, well 
 
 and truly, we bind ourselves, our heirs, executors and admini- 
 strators, firmly by these presents. Sealed with our seals and 
 dated the day of A. D., 18 
 
 The conditions of this obligation are such, that whereas, 
 
 the above bounden ha. . . .heretofore entered into a 
 
 contract with the owner of certain real estate in 
 
 County, Indiana, to make certain improvements thereon, which 
 real estate is described as follows, to- wit 
 
 And whereas, said association has agreed to lend the owner 
 of said real estate S with which to make said improve- 
 ments, such loan to be secured by a first mortgage upon said 
 i-eal estate. 
 
 Now, therefore, should said obligors, their heirs, executors, 
 administrators, successors and assigns, construct and fully 
 complete according to contract, said improvements, in all their
 
 232 BUILDING ASSOCIATIONS. 
 
 parts, in a manner satisfactory to the owner of said real estate, 
 and to the board of directors of said association, and furnish 
 and pay for all materials of every description used in improv- 
 ino^ said real estate, and fully pay all salaries, wages, compen- 
 sations and moneys, which are or hereafter may be due and 
 owing to any and all employes and laborers, who have been, 
 now are, or hereafter may be employed upon, about or in con- 
 nection with said improvements, and keep and preserve said 
 premises free from any liens for materials furnished, or work and 
 labor done; or, in case any such lien or liens, be taken against 
 said real estate, should said obligors cause each lien so taken, 
 to be satisfied, removed, released and fully discharged, within 
 thirty days from the filing of such lien, and hold and save said 
 association harmless, by reason of such improvement of said 
 real estate, or by reason of any loss, damage or injury grow- 
 ing out of, or, directly or indirectly, resulting therefrom, so 
 that said mortgage shall be and remain a first lien npon said 
 real estate, then this obligation shall be void and of no effect; 
 otherwise, it shall remain in full force. 
 
 These obligors hereby agree that changes and additions, if 
 any, in said contract for improvements, shall not operate to 
 release them herefrom, but this bond shall apply to such addi- 
 tions and changes, if any, to the same extent that it would 
 apply were they in existence at this time. 
 
 The said obligors hereby agree, jointly and severally, to pay 
 said several sums, and to perform all the conditions of this 
 bond and of said mortgage, and to pay ten per cent attorneys' 
 fees, upon any sum which may be recovered upon this bond, 
 all without any relief from valuation or appraisement laws. 
 
 Signed and delivered in presence of ) 
 
 [seal] 
 [sp:al] 
 . [seal]
 
 APPENDIX. 233 
 
 State of ) 
 
 >6S. 
 
 County of ) 
 
 , being duly sworn upon oath says; that he is 
 
 the person who signed the attached indemnifying bond as 
 surety thereon; that he is the owner in hia own name and 
 
 right, of unincumbered real estate, situated in County, 
 
 State of Indiana, worth double the penalty of the attached 
 bond, over and above all debts, liens and exemptions of law. 
 
 Subscribed and sworn to before me, this day of 
 
 ........A. D. 189.. 
 
 .Notary Public. 
 
 (Note. — An exemption as allowed by law should be exclusive 
 of the sworn valuation. The surety should be worth double 
 the penalty of bond. Write in ink.") 
 
 Form of Contractor's Waiver of Liens. 
 
 189.. 
 
 To the Association: In consideration of the 
 
 loan of $ , made by you to on the following 
 
 real estate in County, State of , to wit: .... 
 
 I, as contractor, for making improvements on said real estate, 
 agree to waive any claim or right I may have to take or hold 
 any mechanic's lien on said real estate, or the building or build- 
 ings to be placed thereon, and I agree to idemnify you against 
 any lien for labor done or material furnished to make said 
 improvements. 
 
 State of .... 
 County 
 
 ' [ss. 
 
 being duly sworn, on his oath says that the fol. 
 
 lowing is a complete list of the persons who have performed 
 any labor or furnished any material in making the improve- 
 ments on the real estate belonging to and described
 
 234 BUILDING ASSOCIATIONS. 
 
 in the above agreement, and I authorize the Associa- 
 tion to pay said persons, out of the loan made by 
 
 from said association, the amounts due them severally, to th© 
 extent of said loan: 
 
 NAME. I WHAT FOR. | AMOUNT. 
 
 I I 
 
 Signature 
 
 Subscribed and sworn to before me this day of 
 
 189.. 
 
 N.R 
 
 I authorize said Association to pay, out of a 
 
 loan made by me from it, amounts due contractors, sub-con- 
 tractors, laborers, or for material as per list furnished by. . . . 
 as above. Witness Signature 
 
 Form of Sub -contractor's Waiver. 
 
 "We severally acknowledge the receipt of the amounts set 
 opposite our respective names, for work done or material fur- 
 nished for building, on lot County, State of 
 
 being on street side, between 
 
 and streets, for being property upon which 
 
 the Association has made a loan of $ 
 
 And we hereby certify that no part of the material furnished 
 or work done was for or on any other property. And we here- 
 by release all our rights to a mechanic's lien on said real' 
 estate, or improvements thereon, for any amount now or here- 
 after to become due. 
 
 NAME. WHAT FOR. AMOUNT. RECEIPT. 
 
 General form of Bond for Secretary. 
 
 Know all men by these presents. That as principal 
 
 and as surety, are held and firmly bound unto the
 
 APPENDIX. 235 
 
 Association, in the penal sum of dollars, to 
 
 pay which thej bind themselves, their heirs, executors and 
 administrators, firmly by these presents. 
 
 The conditions of this obligation are such, as that, whereas, 
 
 on the day of. .. .. . ...189. ., the said was 
 
 duly elected secretary of Association aforesaid, by the 
 
 directors thereof. 
 
 Xow, therefore, if the said shall faithfully perform 
 
 his duties as such secretary, during the term for which he was 
 elected, and during any succeeding term, until his successor is 
 duly elected and qualified, as such duties are now, or hereaf- 
 ter may be imposed by the by-laws of said association, andl 
 during such time shall faithfully and accurately account' 
 for all moneys, books, notes, mortgages and other instru- 
 ments of indebtedness, in favor of said association, and 
 upon surrendering his said office, deliver to his successor in 
 office, all money or other property of value in his hands, as 
 such secretary, belonging to the said association, then this 
 bond to be void and of no effect whatever; otherwise to be and 
 remain in full force and effect in law. 
 
 In witness whereof, we have hereunto affixed our hands andi 
 seals, this day of A. D., 189.. 
 
 , [seal.] . 
 [skat..] , 
 
 General form of Bond for Treasurer. 
 
 Know all men by these presents, That as principal 
 
 and as surety, are held and firmly bound unto the 
 
 Association, in the penal sum of dollars, to pay which 
 
 they bind themselves, their heirs, executors and administra- 
 tors firmly by these presents. 
 
 The conditions of this obligation are such, as that, whereas, 
 
 on the day of 189 . . the said was duly elected,' 
 
 treasurer of the said association.
 
 236 BUILDING ASSOCIATIONS. 
 
 TTow, therefore, if the said shall faithfully perform 
 
 his duties as such treasurer, during the term for which he was 
 elected, and for any succeeding term, until his successor is 
 duly elected and qualified, as such duties are now, or hereafter 
 may be imposed by the by-laws of said association, and during 
 such time faithfully and accurately account for all moneys, 
 books, papers and other property belonging to the said associa- 
 tion in his hands as such treasurer, and upon the surrender- 
 ing of his office, deliver to his successor all moneys and other 
 property in his hands as such treasurer, then this bond to be 
 void and of no effect whatever; otherwise to be and remain in 
 full force and effect. 
 
 In witness whereof, the said and have here- 
 unto set their hands and seals, this day of 
 
 A. D. 189.. 
 
 [seal.] , . 
 
 [seal.]
 
 UNIVERSITY OF CALIFORNIA LIBRARY 
 
 Los Angeles 
 
 This book is DUE on the last date stamped below. 
 
 NOV -^ ■ 
 
 UCLA L/:. 7 LIBRARY 
 
 JUL 2 2001
 
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