UNIVERSITY 
 
 OF CALIFORNIA 
 
 LOS ANGELES 
 
 SCHOOL OF LAW 
 LIBRARY
 
 I
 
 THE LAW OF 
 
 BUILDING ASSOCIATIONS
 
 THE LAW 
 
 OF 
 
 BUILDING ASSOCIATIONS: 
 
 BEING A TREATISE 
 
 UPON THE PRINCIPLES OF LAW APPLICABLE TO MUTUAL AND 
 
 CO-OPERATIVE BUILDING, HOMESTEAD, SAVING, ACCUMULATING, 
 
 LOAN AND FUND ASSOCIATIONS, BENEFIT BUILDING 
 
 SOCIETIES, S.C., IN TELE UNITED STATES. 
 
 BY 
 
 G. A. ENDLICH. 
 
 JERSEY CITY: 
 
 FREDERICK D. LINN & CO. 
 1886.
 
 Entered according to Act of Congress, In the year 1882, by 
 
 QUSTAV A. ENDLICH, 
 In the office of the Librarian of Congress, at Wnshington.
 
 TO 
 
 GEOEGE F. BAEE, ESQ., 
 
 OF READING, PA., 
 
 EN CORDIAL, ACKNOWLEDGMENT 
 
 OF 
 
 CIS INTEGRITY AS A MAN, HIS KINDNESS AS A FR.KNt, 
 
 AND HIS GENIUS AS A LAWYER, 
 
 THIS WORK 
 
 IS DEDICATED.
 
 ADDENDA. 
 
 To Note 3, page 63, add 
 
 Berlin Building and Loan Association v. Clifford, 3 Stew. 482 (sheriff's 
 fees on sale, under second mortgage, to be deducted from proceeds). 
 Hoboken Building Association v. Martin, 2 Beas. 428 (misnaming cor- 
 poration in contract ; misnomer in bill amendable at bearing ; failure to 
 elect officers no dissolution ; premature dissolution ; loans ; compromise). 
 
 To Note 2, page 83, add- 
 Swift et ux. v. The Allegheny Building and Loan Association, 82 Pa. St. 
 142 (tci.fa. on mortgage; allegations of default in writ; pleading).
 
 PREFACE. 
 
 
 
 In preparing the present treatise, it has been my 
 endeavor to secure a statement of the entire law 
 applicable to Building Associations. 
 
 I have collected the authorities in all the States of 
 the Union, and the decisions of the English Courts so 
 far as they appeared pertinent to the system of Build- 
 ing Associations adopted in this country. From them 
 all, I have labored to construct a work of general and 
 particular usefulness, aiming at the elaboration of 
 fundamental principles of universal applicability, as 
 well as the statement, with precision and simplicity, of 
 the variances noticeable under the laws and decisions 
 of the several States. 
 
 In discussing the principles, and reviewing the 
 authorities, I have endeavored to give, in its proper 
 connection, every important case as fully as possible, 
 with its facts, contentions, and conclusion. I have 
 been particularly careful to do this, with a view to 
 perfect openness, where I have sought to make the 
 cases cited the basis of some general proposition, not, 
 perhaps, in them enunciated with the directness which 
 a mere reference to the case might lead the reader to 
 
 assume. In studying these cases, in all their bearings, 
 
 (vii)
 
 Vlll PREFACE. 
 
 I have spared neither pains nor labor. I am conscious 
 of no desire to have any statement I may have made 
 taken upon faith. But, whilst I do not, in any degree, 
 rely upon the generosity of the learned reader, I think 
 that I may count upon his fairness and candor. I 
 think I may expect that, where his judgment is in 
 suspense between his reading of an authority and mine, 
 between his interpretation of certain words used by a 
 Court, or his understanding of the relation of several 
 decisions to one another, and mine, the benefit of a 
 doubt should be given to that acceptation which is the 
 deliberate result of the patient and dispassionate study 
 of scores of similar cases, and of the familiarity it gives 
 with thoughts and phrases and relations innumerably 
 recurring. 
 
 I have, however, striven for completeness in yet 
 another direction, in touching upon and stating the 
 law concerning all obvious matters involved in the 
 management and business, the internal and external 
 relations of Building Associations. My purpose in 
 doing so, was to render the treatise not only useful to 
 the profession, but also, in a measure, a compendium in 
 the hands of laymen interested in and occupied with 
 the affairs of these institutions. In this endeavor, I 
 have frequently been obliged to trench upon branches 
 of the law not exclusively belonging to Building Asso- 
 ciations, the general law of corporations, of agency, of 
 usury, <fec. Cases upon these and like subjects, to
 
 PREFACE. li 
 
 which Building Associations are parties, have been 
 decided and constantly arise, and a succinct statement 
 of the principles governing in such matters appeared 
 to me indispensable, not only in order to preserve a 
 proper sequence and unity of treatment, but, more 
 particularly, to inform the general understanding of 
 the subject, and assist laymen in details of too frequent 
 recurrence or too trifling importance to require the aid 
 of a lawyer. 
 
 It is obvious that it would have been impossible for 
 me to devote the same time and study, in proportion, to 
 these, however numerous, still merely incidental points 
 as to those involved in the main purpose of the work, 
 which is distinctively a treatise upon Building Associa- 
 tions, and not upon corporation law in general, nor 
 upon any other independent branch of jurisprudence. 
 I have, therefore, as a rule, confined myself, in my 
 statements concerning general or incidental matters, to 
 the doctrines laid down in text-books. I have referred 
 the reader to them, and, where I thought it advisable 
 for the convenience of the practitioner who may not 
 have immediate access to the text-book quoted, or who 
 may desire a reference to decisions in his own State, I 
 have enumerated the authorities as cited by the writers 
 in support of their propositions. 
 
 In the second chapter I have attempted to collect the 
 laws in force in every State, touching the whole matter 
 of Building Associations, and have given, in one note
 
 X PREFACE. 
 
 at the beginning of each section, a list of the decisions* 
 in that particular State, with a brief indication of the 
 subjects touched upon by each, thus furnishing a sort 
 of digest of the law of Building Associations for each 
 State. The collection of the statutes was, in many 
 instances, a work of great labor and difficulty, and one 
 which I cannot hope to have accomplished to perfec- 
 tion; but, such as it is, it cannot fail to be of service for 
 purposes of convenient reference and comparison. I 
 have, in all instances, tried to retain the exact wording 
 of the statutes. 
 
 I may add, that I cordially invite any suggestions 
 from gentlemen of the profession, which may tend 
 towards remedying, in future editions, the imperfec- 
 tions and crudities which, in the nature of the case, 
 attach to a work upon a new subject in the literature 
 
 of jurisprudence. 
 
 G. A. K 
 BEADING, Pa., 
 
 July 1st, 1882.
 
 CONTENTS. 
 
 TABLE OP ABBREVIATIONS OP REPORTS CITED xiiii 
 
 TABLE OF CASES CITED xxix 
 
 TABLE OF DEFENDANTS IN CASES IN WHICH BUILDING ASSOCIATIONS 
 
 ARF, PLAINTIFFS Iv 
 
 ADDENDA lix 
 
 CHAPTER L 
 
 INTRODUCTORY. 
 
 Introduction of the subject of the present treatise, 1-3. 
 Early history of building associations, \ 4. 
 
 Account of the Greenwich Union Building Association, founded 1809, \ 5. 
 Growth of building associations in America, \ 6. 
 
 Primary design and general description of the operation of the building asso- 
 ciation scheme, \\ 7-11. 
 
 Terminology of building associations, \\ 12-15. 
 
 (pp. 1-13.) 
 
 CHAPTER IL 
 
 STATUTORY PROVISIONS OP THE SEVERAL STATES OP THE UNIOHV 
 
 General observations, \\ 16-17. 
 
 Alabama, \ 18. 
 
 California, \ 19. 
 
 Illinois, \ 20. 
 
 Indiana, \ 21. 
 
 Iowa, g 22. 
 
 Kansas, \ 23. 
 
 Maryland, \ 24. 
 
 Massachusetts, \ 25. 
 
 Michigan, \ 26. 
 
 Minnesota, 27. 
 
 Missouri, \ 28. 
 
 Nebraska, \ 29. 
 
 New Jersey, \ 30. 
 
 New York, \ 31.
 
 xii CONTENTS. 
 
 North Carolina, J 32. 
 Ohio, | 33. 
 lYimsylvania, J 34. 
 Virginia, $ 35. 
 West Virginia, 5 36. 
 Wisconsin, 37. 
 
 States in which building associations are incorporated by special acts. Con- 
 necticut, $ 38. 
 
 (pp. 13-107.) 
 
 CHAPTER IIL 
 
 DEFINITION AND VARIETIES OF BUILDING ASSOCIATIONS. 
 
 Definition of building associations, 39-40. 
 
 Terminating societies, 2 41. 
 
 Method of obtaining loans, \\ 42-43. 
 
 Bowkett societies, 44. 
 
 Starr-Bowkett societies, \ 45. 
 
 Permanent societies, strictly so called, \ 46. 
 
 Serial societies, gg 47-49. 
 
 (pp. ^108-117.) 
 
 CHAPTER IV. 
 
 FORMATION OF BUILDING ASSOCIATIONS. 
 
 Preliminary expenses, \ 50. 
 
 Choice of the society's name, \ 51. 
 
 Framing of rules, articles or constitution, \\ 52-53. 
 
 Matters to be provided for in rules, &c., \ 54. 
 
 Various methods of incorporation, \ 55. 
 
 Incorporation bj letters-patent from the Executive, \ 56. 
 
 Incorporation by special act of Legislature, $2 57-58. 
 
 Latitude in framing rules, &c., where incorporation is by patent or special act, 
 
 59. 
 
 Incorporation by decree of court, \ 60. 
 Incorporation by voluntary association, \\ 61-62. 
 Necessity in every case of substantially complying with requirements of statute, 
 
 63. 
 Powers contained in articles, in excess of statute, void, and cause of forfeiture, 
 
 264. 
 
 Power of Legislature to modify charter by subsequent enactments, \ 65. 
 Retroactive and expository statutes, 66. 
 Btatuu* affecting remedies only, \ 67. 
 
 (pp, 117-128.)
 
 CONTENTS. X11J 
 
 CHAPTER V. 
 
 MEMBERSHIP IN BUILDING ASSOCIATIONS. 
 
 Mode ol acquiring membership, 68. 
 
 Persons capable of acquiring membership, $ 69. 
 
 Powers of infante and married women under enabling statutes, \\ 70-71. 
 
 Status of husband of feme sole member at common law, 72. 
 
 Status of executor and administrator of deceased member, \\ 73-74. 
 
 Building association cannot, of course, become a member in another building 
 
 association, \ 75. 
 
 A person may become member merely to obtaining loan, \ 76. 
 Depositors, \ 77. 
 
 Stock book primary evidence of membership, $ 78. 
 Society estopped from denying a person's membership, \\ 79-80. 
 Borrower estopped from denying his membership ; exception, 81. 
 Termination of membership, 82. 
 
 (pp. 128-138.) 
 
 CHAPTER VI. 
 
 DUTIES OF MEMBERS. 
 
 Obedience to rules and assent to lawful corporate acts, \ 83. 
 
 Duty of members as to stock-payments, \ 84. 
 
 No absolute liability for stock-payments until the whole capital subscribed 
 
 exception, \ 85. 
 
 Society may maintain assumpsit for dues, without notice, \ 86. 
 Statutory lien on stock for arrears, &c., \ 87. 
 
 Borrower's liability upon his obligation, after repayment of loan, \$ 88-90. 
 Liability for dues, &c., not suspended by entry of suit, \ 91. 
 Liability to fines imposed on default, \ 92. 
 
 Necessity and legal aspect of fines in building associations, \\ 93-95. 
 Rules to be observed in relation to fines, \\ 96-98. 
 Forfeitures, \\ 99-102. 
 
 Duty of members to render personal services, \ 103. 
 
 Duty of members to contribute pro rota to losses and expenses of society, 104 
 Members cannot withdraw to evade liability to contribute, 105. 
 Liability to contribute not affected by taking loan, \\ 106-107. 
 Termination of liability to contribute, \\ 108-109. 
 Personal liability of stockholders for debts of society, $ 110- 
 Corporate property may be followed into hands of stockholders, { 11L 
 
 (pp. 138-155.)
 
 XIV CONTENTS. 
 
 CHAPTER VII. 
 
 RIGHTS OF MEMBERS. 
 
 Classification of rights of members, J 112. 
 
 General rights as corporators, \\ 113-114. 
 
 Nature of the right to receive loan, \\ 115-116. 
 
 Right of members applying for loan to be preferred over outside investments ; 
 
 purpose of building associations, || 117-121. 
 Highest bidder to receive loan ; minimum premiums, \ 122. 
 Right to claim loan depends upon ability to furnish security, 123. 
 Member cannot maintain assumpsit for promised loan, 124. 
 Society need not inquire into purpose or application of loan, 125. 
 Proportion of loan grantable to applicant's stock-interest, \ 126. 
 Right of withdrawal ; its foundation, nature and extent, $ 127. 
 Right to withdraw does not involve right to account of profits, \\ 128-129. 
 Amount withdrawable by any member, \ 130. 
 Statutory terms of withdrawal, 131. 
 Charter and by-law provisions, as to withdrawal, inconsistent with statute, void, 
 
 132. 
 Terms of withdrawal, deviating from prescribed rule, may become binding on 
 
 society, \ 133. 
 
 Regulation of withdrawals by charter or by-laws, construction, $ 134. 
 Officers cannot exercise discretion in approving withdrawals arbitrarily, 135. 
 Withdrawing member becomes a mere creditor of the society, \ 136. 
 Withdrawing member may proceed to judgment against society for amount due 
 
 him, \ 137. 
 
 Discretion of courts as to execution against society, \ 138. 
 Society to keep funds available for withdrawing members, \ 139. 
 Statutory limitation of funds available for withdrawing members, \ 140. 
 Effect thereof upon right to enforce payment by suit, \\ 141-143. 
 Stockholder cannot, qua stockholder, sue society at law for value of paid-up 
 
 stock, $ 144. 
 
 Member may, under circumstances, compel settlement in equity, \ 145. 
 Foundation of the principles applicable to borrowers ; mutuality of the scheme ; 
 
 membership of borrowers, \\ 146-148. 
 
 Elements of contract between borrowing members and society, \\ 149-150. 
 Borrowing member cannot withdraw, \ 151. 
 Right of voluntary repayment, \\ 152-153. 
 Terms of, and rules for, voluntary repayment in the absence of special by-law 
 
 or statutory provision, \\ 154-157. 
 Voluntary repayment under the provisions of the articles, English decisions, 
 
 22 158-164. 
 
 Importance of English cases in America; exceptions, \\ 165-166. 
 Construction of provisions favoring right of repayment, \\ 167-168.
 
 CONTENTS. XV 
 
 Rights as to repayment at time of loan cannot be varied ; but special airange- 
 ments, agreed to by member, conclude both parties, \\ 169-170. 
 
 Member cannot claim benefit of special arrangement unless he consent to and 
 carry out its terms ; except where value of stock changed with a view to 
 dissolution, &c., \\ 171-172. 
 
 Borrowing members, being a majority, cannot force terms upon investors, 
 involving discontinuance of society, \ 173. 
 
 Repayment upon decease of borrowing member, and judicial sale of property, 
 174. 
 
 Rights of member upon forced repayment on default, \ 175. 
 
 Borrower's membership not necessarily forfeited by suit upon default; state- 
 ment of account in equity, \\ 176-177. 
 
 Tender ; effect of refusal to accept by society, \ 178. 
 
 Costs in redemption and foreclosure suits, \ 179. 
 
 Redemption in permanent societies ; liability of members, \ 180. 
 
 (pp. 155-211.) 
 
 CHAPTER VIII. 
 
 GOVERNMENT OF BUILDING ASSOCIATIONS. 
 
 Supreme power vested in corporate meeting, \ 181. 
 Of the corporate meetings; general meetings, \\ 182-183. 
 Special meetings ; officers' duty in calling ; notice, 184. 
 Acts of special, adjourned or irregular meetings, \ 185. 
 Quorum ; proxies, \\ 186-187. 
 
 Principal function of corporate meeting ; election of officers, \\ 188-190. 
 Rights of inspectors and judges as to candidacy and holding of election, 191. 
 Courts will not look into regularity of election collaterally, \ 192. 
 Management of society entirely in hands of its officers, \ 193. 
 
 (pp. 211-216.) 
 
 CHAPTER IX. 
 
 FUNCTIONS, DUTIES AND LIABILITIES OF OFFICERS. 
 
 Usual officers in building associations, and their general powers, 194. 
 
 President, \ 195. 
 
 Treasurer, \ 196. 
 
 Secretary, \ 197. 
 
 Directors, \\ 198-199. 
 
 Limits of the powers of directors, \ 200. 
 
 Meetings of directors ; notice ; quorum, \\ 201-20S. 
 
 Discretion of directors cannot be controlled nor delegated ; committees, | 204. 
 
 Minutes of directors' transactions, \\ 205-206. 
 
 Director may become party to contract with society, \ 207.
 
 XVI CONTENTS. 
 
 Modified sense in which directors are officers in the society, g 208. 
 
 Personal liability of directors for losses, &c., S| 209-210. 
 
 Directors who were parties to fraud upon society, whereby it was ruined, cannot 
 
 share in its assets; presumptive fraud, \ 211. 
 Liability of directors to account to society for waste or misapplication of funds, 
 
 {212. 
 Right of individual stockholders to sue delinquent directors for protection of 
 
 society ; qualifications, \ 213. 
 Trustees, \ 214. 
 
 Officers' bonds; when prerequisite to entering upon office, \ 215. 
 Discretion and responsibility in, and method of, approving bonds, \ 216. 
 Sureties not discharged by negligence of society, \ 217. 
 If Officer's election void, surety not bound, \ 218. 
 Liability of sureties strictly confined to terms of bond, \ 219. 
 Liability of officers to fines and amotion, \ 220. 
 Criminal liability of officers in certain cases, \\ 221-222. 
 Compensation of officers, \\ 223-225. 
 Implied liability of society for compensation, \ 226. 
 A director cannot claim extra compensation for acts done in the line of his 
 
 duty ; services before organization, \ 227. 
 DC facto officer cannot claim salary, 228. 
 Salaried officer, improperly removed, may sue for salary, $ 229. 
 Officers must look to society's funds for compensation, 230. 
 
 (pp. 217-249.) 
 
 CHAPTER X. 
 
 OENKHAL POWERS OP BUILDING ASSOCIATIONS. 
 
 General corporate powers of building associations, 231. 
 
 Powers defined by statute and limited to purposes of incorporation, $ 232. 
 
 Perpetual succession, \ 233. 
 
 The common seal ; its custody, use, effect, \\ 234-235. 
 
 Proof of the common seal ; estoppel upon association, \ 236. 
 
 Necessity and significance of seal in contracts of corporation, \ 237. 
 
 Liability of association upon implied contracts, \ 238. 
 
 Contracts entered into, &c., by association directly, \\ 239-240. 
 
 Contracts entered into by association through agents ; officers are agents, \ 241 
 
 Appointment of agents, and persons capable of becoming such, \ 242. 
 
 Acts of agents binding upon society, 243. 
 
 Presumptions as to existence of agency, \ 244. 
 
 Persons dealing with agents bound, to a certain extent, to take notice of limits 
 
 of powers; estoppel upon society, \\ 245-246. 
 Unauthorized contracts of agents ; ratification, \ 247. 
 Form of execution by agent to bind society ; personal liability, \\ 248-249. 
 Notice to agent or officer is notice to society, \ 250.
 
 CONTENTS. XV11 
 
 Delegation of authority by agents, survival, \ 251. 
 
 Society's liability for torts and misrepresentations of agents, \ 252. 
 
 Agents' liability for interest on moneys collected, 253. 
 
 Eight and liability to suits and actions ; employment of attorneys ; forms, Ac., 
 of proceedings, \\ 254-256. 
 
 Society may sue on obligation executed to it by wrong name ; misnomer 
 abbreviations, \ 257. 
 
 Necessary averments as to default in suits against borrowing members, \ 258. 
 
 Computation of period of default, \ 259. 
 
 Certainty required in defendant's allegations of payment, and proof; agency 
 I 260. 
 
 Averment of and pleas to incorporation ; tender, g 261-263. 
 
 Suits by members against the society ; withdrawal-balances, promised loan 
 refusal to transfer shares, \\ 264-268. 
 
 Society must be party to bill in certain causes, \ 269. 
 
 Judgment obtained after dissolution in action pending against society, \ 270. 
 
 Nature and qualifications of the right of ordaining by-laws, g 271. 
 
 By-laws must conform with constitution and laws of Union and State, \ 272. 
 
 By-laws must conform with charter and purpose of incorporation, else void ; 
 instances, \\ 273-277. 
 
 By-laws must be reasonable and equitable, \ 278. 
 
 By-laws cannot have retroactive efficacy as against rights under subsisting con- 
 tracts, \ 279. 
 
 By-laws manifestly contrary to interests of society, &c., void, \ 280. 
 
 By-laws restricting member from pursuing legal remedies ; arbitration, \ 281. 
 
 (pp. 249-285.) 
 
 CHAPTER XL 
 
 LEGALITY AND EFFECT OF CERTAIN ACTS AND CONTRACTS OF BUILDING 
 ASSOCIATIONS. 
 
 Meaning of the term "ultra vires" \ 282. 
 
 Criterion of legality of acts of building associations, \ 283. 
 
 Acts merely in excess of power may be made good as against society ; liability 
 
 of agents and directors, \ 284. 
 Acts and contracts in excess of power merely, and in defiance of statutory, &c., 
 
 prohibition ; effect of either upon tne rights and liabilities of either party 
 
 estoppel, \\ 285-292. 
 
 Power of building associations to borrow money ; English cases, \\ 293-299. 
 Mere overdrawing of bank account is not borrowing, \ 300. 
 Rule in America as to borrowing powers. $$ 301-302. 
 Power of building associations to acquire and hold lands, \\ 303-304. 
 English decisions on power to acquire land ; liability of directors acting ultra 
 
 vires, \\ 305-307. 
 
 American rule as to power to acquire and hold land, \ 308. 
 
 B
 
 CONTENTS. 
 
 Effect upon corporation of unlawful departure from proper functions, 2 309. 
 
 Misuse of the power of lending money, | 310. 
 
 Nature of security to be lawfully taken ; sureties, \\ 311-312. 
 
 Loans to strangers and persons not sui jturit ; mortgages of married women, 
 
 \\ 313-318. 
 
 Loan* to other corporations, \\ 319-321. 
 Power to reserve interest, $ 322. 
 Power to compromise with members, \ 323. 
 Declaring dividends, \ 324. 
 
 Liability to state for unlawful departure from powers granted, { 325. 
 
 (pp. 285-321.) 
 
 CHAPTER XII. 
 
 LOANS OB ADVANCEMENTS TO MEMBERS. 
 
 Analysis of the transaction and contract of loan or advancement between society 
 
 and borrowing member, \\ 326-327. 
 Interpretation by the various courts of the nature of loans or advancements in 
 
 building associations, \\ 328-353. 
 Decisions in England, 338. 
 
 Maryland, \ 339. 
 
 Kansas, \ 340. 
 
 Massachusetts, \ 341. 
 
 New Jersey, \ 342. 
 
 Virginia (and District of Columbia), \ 343. 
 
 New Hampshire, | 344. 
 
 New York, \ 345. 
 
 Georgia, \ 346. 
 
 North Carolina (and South Carolina), J 347. 
 
 Nebraska, \ 348. 
 
 Tennessee, g 349. 
 
 Kentucky, 350. 
 
 Pennsylvania, $ 351. 
 
 Indiana, 352. 
 
 Connecticut; Iowa; Ohio, \ 353. 
 
 Result of examination of all decisions, \\ 354-356. 
 Two cardinal principles concerning loans and borrowers, { 357. 
 
 (pp. 321-352.) 
 
 CHAPTER XHL 
 
 INCIDENTS TO LOANS OK ADVANCEMENTS. 
 
 Usury may become an element in a building association loan, \ 358. 
 Right of borrower to recovery of usury ; qualifications, \\ 359-360.
 
 CONTENTS. XIX. 
 
 Rule as lo recovery of usury paid in North Carolina and Georgia where bor 
 
 rowers are members, \ 361. 
 Limitation in suite for recovery of usury, $ 362. 
 Who may set up the defence of usury, \\ 363-365. 
 Usury merged in judgment cannot be recovered, \ 366. 
 Plea of usury must conform to statute, \ 367. 
 
 ?harges incidental to negotiation of loan, when not usurious, $ 368. 
 Lawful incidents to building association mortgage, \\ 369-370. 
 Significance of stipulation for stock-payments or dues, \\ 371-372. 
 "Dues" practically including interest, or redemption money, | 373. 
 Right and extent of interest reservation, \ 374. 
 
 Interest, in any form, ceases upon re-imbursement of society, $\ 375-376. 
 Running of interest not suspended by bringing and during pendency of suit ; 
 
 but by tender, g 377. 
 Premiums, \ 378. 
 Fines, \ 379. 
 
 Security, its nature and kind, \\ 380-381. 
 Joint security of members and outsiders, \ 382. 
 Reservations legalized in the several states, \ 383. 
 "Loan" construed to mean "amount actually advanced," $ 384-385. 
 Binding force of contract of loan, &c., made in pursuance of charter and 
 
 statutory powers, \ 386. 
 
 Practical results of building association loans, \ 387. 
 
 (pp. 353-386.) 
 
 CHAPTER XIV. 
 
 PREMIUM. 
 
 Definition of premium generally, \ 388. 
 
 Its true nature and method of payment, \\ 389-390. 
 
 For purposes of computation must be treated as a deduction, \ 391. 
 
 Premium must ordinarily be a gross amount per share, not merely increased 
 
 interest, \\ 392-393. 
 
 Premium must be fixed by free competition ; minimum premium, \\ 394-397. 
 Interest upon premium, \ 398. 
 
 Abatements, discounts and remissions on premiums, \\ 399-400. 
 
 (pp. 387-398.) 
 
 CHAPTER XV. 
 
 FINES. 
 
 Purpose of fines in building associations, \ 401. 
 Legal aspect of fines in building associations, \ 402-403. 
 Submission to fines an essential part of building association loans ; married 
 women, &o, \ 404.
 
 XX CONTENTS. 
 
 Power to impose fines depends upon authority conferred by statute and charter, 
 {405. 
 
 Regulation of fines belongs to by-law ; rules to be observed, $ 406. 
 
 Fines must be notorious, certain, and fixed by by-law ; construction of ambigu- 
 ous provisions favors member, \\ 407-409. 
 
 Fines must be reasonable ; fines upon fines, or in progression, \\ 410-412. 
 
 Proper measure of fines, $ 413. 
 
 Fines must be imposed for dereliction in duties incident to membership; 
 depositors, \ 414. 
 
 Fines upon interest, \\ 415-416. 
 
 Interest upon fines, 417. 
 
 Discretion of directors in remitting fines, $ 418. 
 
 (pp. 399-413.) 
 
 CHAPTER XVI. 
 
 MORTGAGES. 
 
 Right to take mortgage security involved in power to make loans or advance- 
 ments ; mortgageable estates, \ 419. 
 
 Validity of mortgage as a security under statute and by-laws, \ 420. 
 
 Examination of the various forms of mortgages used in building associations ; 
 their relative propriety and adequacy, \\ 421-422. 
 
 Covenants as to stock payments, Ac., \ 423. 
 
 Effect and validity of building association mortgage ; equity jurisdiction, \ 424 
 
 Covenants as to default, \ 425. 
 
 Propriety of court's looking at rules to ascertain amount due, \ 426. 
 
 Rule for ascertaining amount presently due upon mortgage, \ 427. 
 
 Same rule applicable in courts of law and equity ; basis of equity jurisdiction 
 in foreclosure ; preliminary account ; decree, 428. 
 
 Discharge of mortgage by sale of property does not necessarily discharge debt : 
 remedy in such cases, \ 429. 
 
 Terms of mortgage preclude withdrawal ; right of repayment, \ 430. 
 
 Sale upon mortgage, and application of proceeds of sale and value of stock to 
 debt, extinguish membership of debtor, \ 431. 
 
 Mortgage (or decree after preliminary account), after payment of amount due, 
 stands as security for future membership duties ; rights of mortgagee in 
 possession, 432. 
 
 Fjrors and omissions in mortgages, \\ 433-434. 
 
 Purchaser subject to building association mortgage, \ 435. 
 
 Building association, mortgagee, may exercise all the powers given it concur- 
 rently, notwithstanding its rules, \ 436. 
 
 Tender upon building association mortgage, \ 437. 
 
 Taxation of mortgages held by building associations ; power of Legislature to 
 remit, $ 438.
 
 CONTENTS. Xil 
 
 Exemption of building association mortgages in England held to include mort- 
 gages by strangers, \ 439. 
 
 Members' mortgages held by building associations are not assets for the purpose 
 of winding up. but for taxation of its personal property, \ 440. 
 (pp. 414-437.) 
 
 CHAPTEK XVII. 
 
 THE STOCK OP BUILDING ASSOCIATIONS. 
 
 . 
 
 Definition of stock ; implied condition in subscription ; deficiency in stock- 
 subscription, $ 441. 
 
 Implied condition in subscription may be waived ; estoppel, \ 442. 
 
 Increase of stock, \ 443. 
 
 Property in shares of stock, \ 444. 
 
 Transfer and assignment of shares of stock, \\ 445-446. 
 
 Restraints upon transfer ; regulation by by-law, g 447. 
 
 Remedy for improper refusal to transfer; measure of damages, \\ 448-449. 
 
 Lien of society upon shares for arrears, &c. ; levy on stock covered by lien, 
 450. 
 
 Right of society to enforce stock-payments by suit, \ 451. 
 
 Relation of borrower's stock-payments to his debt to the society, $ 452. 
 
 Borrower's right to apply stock-payments to extinguishment of his debt, $ 453. 
 
 Society's right, being pledgee, to apply stock-payments of borrower to extin- 
 guishment of his debt ; character of such application, \ 454. 
 
 Value of stock for purposes of application to debt, \\ 455-457. 
 
 Borrower's right of application lost by assignment of shares to third party, \ 458. 
 
 Right of borrower's representative or surety to apply stock to debt ; judgment 
 creditors, \ 459. 
 
 Marshalling of assets, as to stock assigned as collateral and property mortgaged, 
 \\ 460-466. 
 
 Standing of judgment creditors, as to marshalling of assets, \ 467. 
 
 Effect of rights of third parties upon claim for marshalling of assets, \ 468. 
 
 Notice of subsisting rights to compel resort to one of two funds, \ 469. 
 
 Taxation upon capital stock, \ 470. 
 
 (pp. 438-476.) 
 
 CHAPTER XVIII. 
 
 DISSOLUTION AND EFFECTS OF DISSOLUTION. 
 
 Methods of termination of building associations, \ 471. 
 
 Events whose happening ipso facto ends corporate existence, \\ 472473. 
 
 Dissolution by voluntary agreement of stockholders and surrender of franchise, 
 
 \\ 474-475. 
 
 Surrender may be inferred under certain circumstances, \ 476. 
 Dissolution by act of legislature, \ 477.
 
 Mil CONTENTS. 
 
 Dissolution by decree of court, 2 478. 
 
 Grounds of forfeiture of franchises ; who entitled to ask it, 55 479-481. 
 
 Right* of and grounds for appointment of receiver by court, 55 482-484. 
 
 Insolvency ; distribution of assets, 55 485-487. 
 
 Persons entitled to ask for appointment of receiver, 55 488-489. 
 
 Right of members to ask interposition of court to wind up society when shares 
 
 at par, \\ 490-491. 
 Financial condition which must be shown to exist; mortgages of members not 
 
 assets for winding up, 5 492. 
 Effect of expiration of charter limitations upon society's corporate existence, 
 
 55 493-494. 
 
 Subsisting liabilities of society, \ 495. 
 Effect of dissolution upon obligations of borrowing members; exceptions, 
 
 55 496-603 
 
 (pp. 476-509.) 
 
 CHAPTER XIX. 
 
 THE PLEA OF NUL TIEL CORPORATION. 
 
 Corporate existence de facto with prima facie title shown cannot be questioned 
 collaterally ; state alone can question incorporation, \ 504. 
 
 Same rule obtains under all methods of incorporation, 505. 
 
 Irregularities in obtaining charter which cannot be taken advantage of collater- 
 ally, 5 506. 
 
 Unlawful provisions in by-laws, 5 507. 
 
 Illegal acts subsequent to incorporation, \ 508. 
 
 Lapse by charter limitation ; denial of specific powers ; curative acts, 55 509-511 . 
 
 Exceptions to rule that corporate existence cannot be collaterally inquired into, 
 5512. 
 
 Admission of corporate existence estops from denying it subsequently ; pur- 
 chaser from mortgagor to society, \\ 513-515. 
 
 Estoppel arising by behavior, 5 516. 
 
 (pp. 510-520.) 
 
 CHAPTER XX. 
 
 UNINCORPORATED BUILDING ASSOCIATIONS. 
 
 General nature and legal status of unincorporated building associations, 5 517. 
 Unincorporated associations cannot claim benefit of statutes designed to protect 
 
 societies incorporated under them ; by-laws, \ 518. 
 
 Management and contracts of unincorporated building associations ; agents, $ 519. 
 Effect of incorporation upon rights acquired whilst unincorporated, 5 520. 
 Incorporation of association by its existing constitution and by-laws, 5 521. 
 
 (pp. 520-526.) 
 INDFZ p. 527.
 
 TABLE OF ABBREVIATIONS 
 
 OF REPORTS CITED. 
 
 Abb. App. Dec. Abbott's Appeal Decisions, New York, 1850-69. 
 
 Anstr. Anstruther's Exchequer Reports, 1792-97. Engl. 
 
 Atk. Atkyn's Reports, Chancery, 1736-55. Engl. 
 
 B. & Ad. Barnewall & Adolphus' King's Bench Reports, 1830-33. Eng 
 
 B. & A. (or Aid.) Barnewall & Alderson's King's Bench Reports, 1818 23 
 
 Engl. 
 
 B. & C. Barnewall & Creswell's King's Bench Reports, 1823-30. Engl. 
 B. & S. Best & Smith's Queen's Bench Reports, from 1861. EngL 
 Barb. Barbour, New York Supreme Court, 1847-77. 
 Beas. Beasley's Reports, New Jersey Chancery, 1858-60. 
 Beav. Beavan's Reports of Cases in th Rolls Court, 1838-66. EngL 
 Bell, C. C. Bell's Reports of Crown Cases Reserved, 1858-60. EngL 
 Bingh. Bingham's Reports, Common Pleas, 1822-34. Engl. 
 Binn. Binney's Reports, Pennsylvania Supreme Court, 1799-1814. 
 Blackf. Blackford, Indiana Supreme Court, 1817-47. 
 Bligh, N. S. Bligh's House of Lords Reports, New Series, 1827-37. EngL 
 
 B. Mon. (or Monr.) Ben. Monroe's Reports, Kentucky, 1840-58. 
 
 Bos. & Pul. Bosanquet & Puller's Common Pleas Reports, 1797-1807. Engl. 
 Bosw. Bosworth, New York City Superior Court, 1857-63. 
 Burr. Burrow's Reports, King's Bench, 1759-70. Engl. 
 
 C. B., or Com. B. Common Bench Reports, 1845-56. Engl. 
 
 C. B., N. S., or Com. B., N. S. Common Bench Reports, New Series, 1856-65. 
 
 Engl. 
 
 Car. & M. Carrington & Marshman's Cases at Nisi Prius, 1840-42. EngL 
 Car. & P. Carrington & Paine's Cases at Nisi Prius, 1823-41. Engl. 
 C. C. R. Crown Cases Reserved, Engl. Law Reports, 1865-1875. EngL 
 C. E. Gr. C. E. Green's Reports, New Jersey Chancery, New Jersey Equity 
 
 16-27, 1863-76. 
 
 C. L. R. Common Law Reports, 1854-55. Engl. 
 Cold, or Coldw. Coldwell's Reports, Tennessee, 1860-70. 
 Com. Dig. Comyn's Digest of the Laws of England. 
 Cow. Cowen, New York Supreme Court and Court of Errors, 1823-1829. 
 Cowp. Cowper's Reports, King's Bench, 1774-1778. EngL 
 Cox, C. C. Cox's Criminal Law Cases, from 1843. EngL 
 
 (xxiU)
 
 XXIV TABLE OF ABBREVIATIONS. 
 
 Craig A Ph. or Cr. A Ph. Craig & Philips' Chancery, 1841. 
 Cranch Cranch's Reports, U. S. Supreme Court, 1800-1815. 
 Cro. Eliz. Croke's King's Bencli and Common Pleas Reports during th reign 
 
 of Elizabeth. 
 
 Cruise Cruise's Digest. Engl. 
 < usL- -dialling's Reports, Massachusetts, 1848-53. 
 D x. S. Dowling's New Series, Bail Court Reports, 1841-1842. Engl. 
 
 D. & L. Dowling & Lowndes' Reports in the Bail Courts, 1846-49. E~gl. 
 Day Day, Connecticut Supreme Court of Errors, 1802-1813. 
 
 Dears. & B., C. C. R. Dearsly & Bell's Crown Cases Reserved, 1856-58. EngL 
 
 De Gex De Gex's Reports in Bankruptcy, 1836-39. Engl. 
 
 De G. & J. De Gex & Jones' Reports in Chancery, 1857-60. Engl. 
 
 De G.. F. & J. De Gex, Fisher & Jones' Reports in Chancery, 1860-61 . EngL 
 
 De G., J. & S. De Gex, Jones & Smith's Reports in Chancery, 1862-65. Engl. 
 
 De G., M. & G. De Gex, Macnaghten & Gordon's Reports in Chancery 1851- 
 
 57. Engl. 
 De G. & Sm. De Gex & Smale's Reports in the Courts of Knight Bruce, V. C. 
 
 & Parker, V. C., 1846-52. Engl. 
 Des. (Desau.) Desaussure, South Carolina Court of Chancery and Court of 
 
 Appeals, 1784-1813. 
 
 Doug., or Dougl. Douglass, Michigan Supreme Court, 1843-47. 
 Dow & Cl. Dow & Clark's House of Lords Cases, 1827-1832. Engl. 
 Dr. & S. Drewry & Smale's Chancery Reports, 1860-65. Engl. 
 Dutch. Dutcher, New Jersey Supreme Court, 1855-62. 
 
 E. & B. Ellis & Blackburn's Queen's Bench Reports, 1852-59. Engl. 
 East East's Reports, King's Bench, 1801-12. Engl. 
 
 Edw. Edwards' New York Vice-Chancellor's Court, and Supreme Court, 
 
 1831-50. 
 
 Esp. Espinasse's Reports or Digest, N. P., 1793-1807. Engl. 
 Exch. Exchequer Reports, 1847-57. Engl. 
 
 F. & F. Foster & Finlason's Cases at Nisi Prius, 1853-67. Engl. 
 Freem. Ch. Freeman, Mississippi Superior Court of Chancery, 1839-43. 
 
 G. & D. Gale & Davidson's Queen's Bench Reports, 1841-43. Engl. 
 
 G. & J., or Gill & J. GUI & Johnson, Maryland Court of Appeals, 1829-43. 
 
 Green, N. J. Green, New Jersey Supreme Court, 1831-36. 
 
 Green, N. J. Ch. Green, New Jersey Chancery and Court of Error and 
 
 Appeals, 1833-45. 
 
 Greenl. Greenleaf's Reports, Maine, 1820-32. 
 
 H. & N. Hurlstone & Norman's Exchequer Reports, 1856-61. Engl. 
 II. L. C. House of Lords' Cases, 1847-66. EngL 
 Hall & T. Hall & Twell, Chancery Reports, 1848-50. Engl. 
 Halst., or Hals. Halsted, New Jersey Supreme Court, 1821-3. 
 Halst., or Hals. Ch. Halsted, New Jersey Court of Chancery, 1845-52. 
 Hare Hare's Chancery Reports, 1841-53. 
 Hair., or H. (Pa,) Harris, Pennsylvania State Reports, 13-24.
 
 TABLE OF ABBHEVIATIONS. XXV 
 
 Hill Hill, New York Supreme Court and Court of Appeals, 1841-44. 
 
 Hob. Hobart's Reports, King's Bench, 1603-1625. Engl. 
 
 How. Howard's Reports, U. S. Supreme Court, 1843-60. 
 
 How. Pr Howard's Practice Reports, New York, 1844-79. 
 
 Ind. Reports of Indiana Supreme Court. 
 
 Ired. Law Rep. IredelPs Law Reports, North Carolina, 1840-52. 
 
 Jr. Com. Law Rep. Irish Common Law Reports, 1850-66. 
 
 Ir. Eq. Rep. Irish Equity Reports, 1850-66. 
 
 J. P. Justice of the Peace, Reports in all the Courts, from 1838. Engl. 
 
 Johns. Johnson, New York Supreme Court and Court of Errors, 1806-23. 
 
 Jur. Jurist, Reports in all the Courts, 1837-54. Engl. 
 
 Jur. N. S. Jurist, New Series, Reports in all the Courts, 1855-66. Engl. 
 
 K. & J. Kay & Johnson's Chancery Reports, 1854-58. Engl. 
 
 Kay Kay's Chancery Reports, 1853-54. Engl. 
 
 L. & C. C. C. Leigh & Care's Crown Cases, 1861-65. Engl. 
 
 L. J. Law Journal Newspaper, from 1866. Engl. 
 
 L. J., Bank. Law Journal Reports in Bankruptcy. 
 
 L. J., Ch. Law Journal Reports in Chancery. 
 
 L. J., C. P. Law Journal Reports in the Common Pleas. 
 
 L. J., M. C. Law Journal Reports of Magistrates' Cases. 
 
 L. J., P. C. Law Journal Reports of Privy Council Cases. 
 
 L. J., Q. B. Law Journal Reports in the Queen's Bench. 
 
 L., M. & P. Lowndes, Maxwell & Pollock's Bail Court Reports, 1850-6L 
 
 Engl. 
 
 L. R., C. C. R. Law Reports, Crown Cases Reserved. 
 L. R., Ch. App. Law Reports, Chancery Appeal Series. 
 L. R., C. P. Law Reports, Common Pleas Series. 
 L. R., Eq. Law Reports, Equity Series. 
 L. T. Law Times Newspaper, from 1845. 
 L. T. Rep. Law Times Reports, 1845-59. 
 
 L. T. Rep., N. S. Law Times Reports, New Series, 1859 to present time. 
 Lane. B. Lancaster Bar, Pa. 
 
 Ld. Ray. Lord Raymond's Reports, King's Bench, 1660-84. Engl. 
 Leg. Chron. Legal Chronicle, Pa. 
 Leg. & Ins. Rep. Legal and Insurance Reporter. 
 Luz. Leg. Reg. Luzerne Legal Register, Pa. 
 
 M. & G. Manning & Granger's Common Pleas Reports, 1840-45. Engl. 
 M. & S. Maule & Selwyn's King's Bench Reports, 1813-17. Engl. 
 M. & W. -Meeson & Welsby's Exchequer Reports, 1836-47. Engl. 
 M. C. C. R. Moody's Crown Cases Reserved, 1824-44. Engl. 
 Mag. Cas. Cox's Reports of Cases Connected with the Duties of Magistrate* 
 
 Engl. 
 
 Macph. Macpheraon's Scotch Reports. 
 
 McArth. McArthur, District of Columbia Supreme Court, 1873-76. 
 McCart. McCarter, New Jersey Equity, 1861-62.
 
 XXVI TABLE OF ABBREVIATIONS. 
 
 Mete. Metcalf 's Reports, Massachusetts, 1840-47. 
 
 Monr., Mon., or T. B. Monr. (Ky.) T. B. Monroe's Reports, Kentucky, 1824-28* 
 
 Moo. Moore's Common Pleas Reports, 1817-27. Engl. 
 
 Moo. & M. Moody & Malkin's Cases at Nisi Prius, 1827-30. EngL 
 
 Mun. Mumford, Virginia Court of Appeals, 1810-20. 
 
 N. J. Eq. New Jersey Equity Reports. 
 
 N. & M. Neville & Manning's King's Bench Reports, 1831-36. EngL 
 
 N. R. New Reports, comprising all the Courts, 1862-64. Engl. 
 
 N. V. W. D. New York Weekly Digest. 
 
 New Seas. Cas. Carrow, Hamerton & Allen's New Sessions Cases, 1844-51. 
 
 Engl. 
 
 P. F. Sm. P. F. Smith's Reports, Pennsylvania State Reports, 51-81.* 
 P. Wras. Peere Williams' Chancery Reports, 1695-1734, Engl. 
 Pars. Parsons' Equity Cases, Court of Common Pleas, 1st Jud. Distr., Pa., in 
 
 Equity, 1841-51. 
 
 Par., or Park. Parker's Reports, Exchequer, 1743-67. EngL 
 Pa. St. Pennsylvania State Reports, from 1844. 
 Pet. Peter's Reports, U. S. Supreme Court, 1827-42. 
 Pick. Pickering's Reports, Mass., 1822-40. 
 Pittsb. Leg. Journ. Pittsburgh Legal Journal, Pa. 
 Price Price's Exchequer Reports, 1814-34. EngL 
 Q. B. Queen's Bench Reports, 1841-52. Engl. 
 Rand. Randolph, Virginia Court of Appeals, 1821-28. 
 Rep'r Cine. Sup. Ct. Cincinnati Superior Court Reporter (Ohio), 1870-72. 
 Rol. Abr. Rollin's Abridgment. EngL 
 Russ. Russell's Chancery Reports, 1823-29. Engl. 
 Russ. & Ry. Russell & Ryan's Crown Cases, 1799-1823. EngL 
 S. & R., or Serg. & R. Sergeant & Rawle's Reports, Pa., 1814-28. 
 Salk. Salkeld's Reports, 1689-1712. EngL 
 
 Sand., or Sandf. Sandford, New York City Superior Court, 1847-52. 
 Sand, (or Sandf.) Ch. Sandford, New York Court of Chancery, 1843-47. 
 Saxton's Ch. New Jersey Court of Chancery, 1830-32. 
 Sc. Scott's Common Pleas Reports, 1834-40. EngL 
 Sc. Jur. Scotch Jurist, Court of Sessions, 1829-73. 
 Sel. C. C. Select Cases in Chancery. P>ngl. 
 
 Sim. Simon's Reports, Chancery, 1826-49 ; New Series, 1850-52. Engl. 
 Shaw & Dunlop's Reports. Scotch. 
 Skin. Skinner's Reports, King's Bench, 1681-98. Engl. 
 Stark., N. P. Starkie's Reports, Nisi Prius, 1815-22. 
 Stew. Stewart's Reports, New Jersey Chancery, New Jersey Equity, from 
 
 vol. 28 (1877). 
 
 Stock. Stockton's Reports, New Jersey Chancery, 1852-58. 
 T. R Term Reports in the King's Bench, 1785-1800. EngL 
 Taunt. Taunton's Reports, Common Pleas, 1808-19. EngL 
 U. S. R. United States Reports, Supreme Court.
 
 TABLE OF ABBREVIATIONS. XXV11 
 
 Vern. Vernon's Chancery Cases, 1680-1718. Engl. 
 
 Ves. Vesey's (jun.) Reports in Chancery, 1789-1817. Engl. 
 
 W. N. C. Weekly Notes of Cases, Pa. 
 
 W. R. Weekly Reporter, all the Courts from 1852. Engl. 
 
 Wall. Wallace, United States Supreme Court, 1863-75. 
 
 Wend. Wendell, New York Supreme Court and Court of Errors, 1828-41. 
 
 Wheat. Wheaton's Reports, United States Supreme Court, 1816-27. 
 
 Wh., or Whart. Wharton's Reports, Pennsylvania Supreme Court, 1835~11 
 
 N. B. S. O. means " Same Case ; " 8. P. " Same Principle."
 
 TABLE OF CASES CITED 
 
 The References are to Pages. 
 
 Adams v Hefferman, 9 Watts (Pa.) 529 475 
 
 .Etna Im. Co. v. Weiss, 28 Vt. 93 273 
 
 African Soc'y v. Varick, 13 Johns. (N. Y.) 38 269 
 
 Agricultural Bank v. Burr, 24 Me. 256 443 
 
 Agricultural Bank v. Wilson, 24 Me. 273 443 
 
 Alexander v. Worman, 30 L. J. Ex. 198 ; 3 L. T. Rep., N. S., 477 ; 25 J. P. 
 
 312; 6H. &N. 100 247 
 
 Allan v. Miller, 22 L. T. Rep., N. S., 825; 6 Mag. Cas. 472 264 
 
 Allard v. Bourne, 15 C. B., N. S., (109 Engl. C. L. Rep.) 468 ; 3 N. R. 46... 219 
 
 Allen t>. Curtis, 26 Conn. 456 229 
 
 Allen v. Dykers, 3 Hill (N. Y.) 593 447 
 
 Amherst Bank v. Root et al., 2 Mete. (Mass.) 534 234, 236 
 
 Anderson v. Sanderson, 2 Stark. N. P. 204 258 
 
 Appeal of Sec'd Nat'l Bank of Titusville, 85 Pa. St. 528 358 
 
 Archer v. Harrison, 7 D G., Mac. & G. 404 ; 21 J. P. 515; 29 L. T. Rep. 
 
 71; 3 Jur., N. S., 194 172, 197, 284 
 
 Armitage v. Walker, 2 Jur., N. S., 13 ; 20 J. P. 53 ; 26 L. T. Rep. 182 ; 2 
 
 Kay & J. 211 174, 199, 274 
 
 Arnold v. The Mayor, &c., of Poole, 5 Scott, N. R. 741 ; 2 D., N. S., 574 ; 
 
 4 M. & G. 860; 12 L. J., C. P. 97 ; 7 Jur. 653 232, 269 
 
 Arthur v. Homer, 6 Otto (96 U. S.) 137 83, 96 
 
 Ashland Banking Co. v. Centralia Mut. Sav. Fund Ass'n, 9 Luz. Leg. Reg. 
 
 (Pa.) 41 251, 275, 309 
 
 Association v. Gibson, 6 W. N. C. (Pa.) 502 85 
 
 Association v. Kribs, 7 Leg. & Ins. Rep. 21 87, 141, 450 
 
 Association v. Neurath, 2 W. N. C. (Pa.) 95 86, 178, 378, 397 
 
 Association p. Steele, 11 W. N. C. (Pa.) 204 85, 311, 315 
 
 Association . Wall, 7 Phila. 240 86, 130, 271, 451, 469 
 
 Att'y Gen'l v. Davy, 2 Atk. 212 214 
 
 Att'y Gen'l v. Utica Ins. Co., 2 Johns. Ch. 371 229 
 
 Att'y Gen'l v. Wilson, 1 Craig & Ph. (18 Engl. Ch. Rep.) 1 ; 10 L. J, N. &, 
 
 53 227, 229 
 
 Alwood v. Merryweather, L. R. 5 Eq. 464 n. 158 
 
 (nix)
 
 TABLE OP CASES CITED. 
 
 Auditor Curie's case, 11 Co. 36 265 
 
 Await v. Eutaw Build'g Ass'n, No. 4, 34 Md. 435 35, 355 
 
 Ayres v. Hustard, 15 Conn. 504. 473 
 
 Ayres v. South Australian Building Co., L. R.3 P. C. 548 310 
 
 Babcock et al. r. The Middlesex Sav. Bank and Build'g Ass'n, 28 Conn. 
 
 302 106, 170, 278, 446 
 
 Badger v. Bank if Cumberland, 26 Me. 428 259 
 
 Badlam v. Tucker, 1 Pick. (Mass.) 389 .! 448 
 
 Baker v. Adm'r of Backus, 32 111.82 329,513 
 
 Baldwin v. Bank of Newburgh, 1 Wall. 234 259 
 
 Baltimore Perm't Build'g and Land Soc'y v. Taylor, 41 Md. 409 35, 39, 335, 
 
 378, 382, 397, 416 
 
 Bank r. Wister, 2 Pet. (U.S.) 318 256 
 
 Bank of Alabama v. Comegys, 12 Ala. 772 222 
 
 Bank of Augusta v. Earle, 13 Pet. 587 260 
 
 Bank of Columbia v. Patterson's Aclm'rs, 7 Cranch 299 25G 
 
 Bank of Commerce's App., 73 Pa. St. Rep. 59 84, 135, 225, 443, 444 
 
 Bank of Gallopolis v. Trimble, 6 B. Monr. (Ky.) 599 520 
 
 Bank of Manchester v. Allen, 11 Vt. 302 273 
 
 Bank of Michigan r. Williams, 5 Wend. 478 272 
 
 Bank of Middlebury v. Rutland, <&c., R. Co., 30 Vt. 159 225 
 
 Bank of New York v. Bank of Ohio, 29 N. Y. 619 264 
 
 Bank of Pennsylvania v. Winger, 1 Rawle (Pa.) 295 474 
 
 Bank of United States v. Dandridge, 12 Wheat. 68 253 
 
 Bank of United States v. Dunn, 6 Pet. 51 259 
 
 Bank of Utica v. Smalley, 2 Cow. (N. Y.) 770 272, 273 
 
 Bank of Waterville v. Beetser, 13 How. Pr. 270 278 
 
 Barclay v. Tallman, 4 Edwards Ch. (N. Y.) 123 488 
 
 Barker r. Bigelow, 15 Gray (Mass.) 130 39, 172, 201, 325, 
 
 337, 379, 451, 455, 456, 524 
 Barnard v. Pilsworth, 6 C. B. 692 n, ; S. C., 18 L. J., C. P. 330 n. ; 14 L. T. 
 
 Rep. 132 4.15 
 
 Barndt v. Greul, 4 Leg. Gaz. (Pa.) 388; 1 Luz. Leg. Reg. 737 86, 371 
 
 Bartlett v. King, 12 Mass. 545 s; 
 
 Baxters Mclntire, 13 Gray (Mass.) 168 39, 261, 337, 524, 526 
 
 Bayard v. Farmers' and Mechanics' Bank, 52 Pa. St. 232 444 
 
 Baylors v. Orne, Freem. Ch. 161 229 
 
 Bechtold v. Brehm, 2 Casey (Pa.) 269; 26 Pa. St. 269 84,344, 346 
 
 Becket r. Uniontown Build'g and Loan Ass'n, 88 Pa. St. 211 84, 165, 252, 
 
 349, 484, 485, 513, 515, 518 
 
 Beete v. Bidgood, 7 B. & C. 453 354 
 
 Beneficial Ass'n of Brotherly Unity, 38 Pa. St. 299 147
 
 TABLE OF CASE& CITED. XXXI 
 
 Bennington Iron Co. v. Rutherford, 3 Harr. (N. J.) 105 272 
 
 Bentley v. Phelps, 27 Barb. (N. Y.) 524 247 
 
 Berlin Build'g and Loan Ass'n v. Clifford, 3 Stew. (N. J.) 482 64 
 
 Berry v. Thompson, 17 Johns. (N. Y.) Ch. 436 361 
 
 Bibb County Loan Ass'n v. Richards, 21 Ga, 592 5, 107, 122, 
 
 340, 341, 379. 526 
 
 Bill r. Dareuth Valley R. Co., 1 H. & N. 305 ; 37 Engl. Law and Eq. 539.. . 244 
 Birmingham et al. v. The Md. Land and Perm't Homestead Ass'n of 
 
 Balto. County, 45.Md. 541. 35, 39, 335, 378, 391, 397, 416 
 
 Bismark Bujld'g and Loan Ass'n v. Bolster et al., 11 Norris (92 Pa. St.) 
 
 123 85, 415 
 
 Bissell v. M. S. & N. J. R. R. Co., 22 N. Y. 258 288 
 
 Black v. Galway, 12 Har. (Pa.) 18 315 
 
 Blackburne's Appeal, 39 Pa. St. 160 84, 126 
 
 Blondheim v. Moore, 11 Md. 365 487 
 
 Blue v. West Kilbride Free Gardeners' Soc'y, 4 Macph. 1042; 38 Sc. 
 
 Jur. 538 230 
 
 Board of Education v. Greenebaum, 39 111. 609 255 
 
 Boston Type Foundry v. Spooner, 5 W. 93 l>7:i 
 
 Bottomly v. Fisher, 31 L. J. Exch. 417 ; S. C., 6 L. T. Rep., N. S., 688.... 264 
 
 Bourgignon Build'g Ass'n v. Comm'th, 10 W. N. C. (Pa.) 161 85, 125, 476 
 
 Bowkerv. Mill River Loan Fund Ass'n, 7 Allen (Mass.) 100.. ..40, 152, 182, 
 
 337, 379, 495, 496, 500, 502, 504 
 
 Bradstreet v. Bank of Royalton, 42 Vt. 128 225 
 
 Breden v. Dunbarry, 14 Serg. & Rawle (Pa.) 27 263 
 
 Briggs v. Penniman, 8 Cow. (N. Y.) 387 154, 517 
 
 Briggs v. Thompson, 20 Johns. (N. Y.) 294 355 
 
 Brigham v. Dana, 29 Vt. 1 351 
 
 Bright v. Hutton, 3 H. L. Cas. 341 ; S. C., 16 Jur. 695 ; 17 L. T. Rep. 249.. 117 
 
 Brinkerhoff v. Brown, 7 Johns. Ch. (N. Y.) 217 487 
 
 Brindle v. Mcllvaine, 9 S. & R. (Pa.) 74 444 
 
 Brinley r. Mann, 2 Cush. 337 264 
 
 Britton v. The Amer. Build'g and Loan Ass'n, 12 Phila. 430 ; 35 Leg. Int. 
 
 474 86,180 
 
 Brogles et al. v. McCoy, 5 Sneed (Tenn.) 602 118, 263 
 
 Brolasky v. Miller, 1 Stockt. (N. J.) 807 359 
 
 Brooks v. Dorsey, 4 Comst. 225 359 
 
 Brouwer v. Appleby, 1 Sandf. S. C. R. 158 -. 511 
 
 Browning v. Morris, Cowp. 790 355 
 
 Buckley v. Briggs, 30 Mo. 452 255 
 
 Buel v. Pumphrey, 2 Md. 268 435 
 
 Buell v. Buckingham & Comp., 16 la. 284 223, 226 
 
 Build'g Ass'n v. Benson et al., 2 W. N. C. (Pa.) 541 86, 235 
 
 Build'g Ass'n v. Britton, 7 W. N. C. (Pa.) 330 85 
 
 Build'g Ass'n v. Ellster, 6 Phila. 6 86, 355
 
 XXX11 TABLE OF CASES CITED. 
 
 Build'g ABS'D v. Eshlebach, 7 Phila. 189 86, 451, 4g 
 
 Bnild'g Affi'n t. George, 3 W. N. C. (Pa.) 239 88, 378, 397, 408 
 
 Build'g Aas'n t. Neurath, 2 W. N. C. (Pa.) 95 8(5. :i7S, 397 
 
 Build'g Afls'n . O'Conner, 3 Phila. 453 SG, 359 
 
 Build'g Ass'n r. Reid, 3 Phila. 345 86, 451 
 
 Build's Aas'n r. Rice and wife, 8 W. N. C. (Pa.) 12. 85, 314 
 
 Build'g Ass'n v. Rock, 9 Phila. (Pa.) 75 86, 200 
 
 Build'g Ass'n v. Rowe, 15 Leg. Int. 45 87, 451 
 
 Build'g Ass'n v. Schuller, 3 W. N. C. (Pa.) 431 86, 146, 380, 
 
 404> 405, 408, 416 
 
 Build'g Ass'n r. Seemiller, 35 Pa. St. 225; S. C., 3 Phila. 115 84, 309 
 
 Build'g Ass'n v. Timmins, 3 Phila. 209 86, 451 
 
 Burbidge u. Cotton, 8 Engl. L. & Eq. 57 ; 21 L. J. Ch. 201 ; 15 Jur. 1070 ,- 
 
 5 DeG. &Sm. 17 333, 335, 348 
 
 Burbridge v. Norris, 34 L. J. Eq. 131 118 
 
 Burlington Mut. Loan Ass'n v. Heider et al., 55 Iowa 424 29, 347, 378, 
 
 379, 382, 397 
 
 Burrall v. Bushwick R. R. Comp., 75 N. Y. 211 438, 441, 442 
 
 Burrill v. Nahant Bank, 2 Mete. (Mass.) 163 224 
 
 Bury t>. Hartman, 4 S. & R. (Pa.) 175 444 
 
 Butchers' Beneficial Ass'n, 38 Pa. St. 298 147 
 
 C. 
 
 Cabot and West Springfield Bridge Co. v. Chapin et al., 6 Gush. (Mass.) 
 
 50 440 
 
 Cadbury v. Duval, 1 Am. Law Reg. 109 474 
 
 Cahall v. Citizens' Mut. Build'g Ass'n, 61 Ala. 232 83, 307 
 
 Caldwell t. Ernest, 28 L. J. Ch. 810; 27 Beav. 39 305 
 
 Campbell v. Baker, 2 W. (Pa.) 83 263 
 
 Campbell v. Johnson, 4 Dana 179 359 
 
 Canal Co. v. Railroad Co., 4 G. & J. 1 519 
 
 Canton Nat'l Build'g Aas'n v. Weber, 34 Md. 669 35, 297 
 
 Card v. Carr, 1 C. B., N. S. (87 Engl. C. L. Rep.) 197 ; 26 L. J., C. P. 
 
 113 136,147,223 
 
 Carey . Thi Cincinnati, &c., R. Co., 5 la. 357 519 
 
 Carpenter v. Koons, 20 Pa. St. 222 471, 472 
 
 Carr v. Chartiers' Coal Company, 25 Pa. St. 337 243 
 
 Carr v. City of St. Louis, 9 Mo. 191 243 
 
 Cassebeer et al. v. Kalbfleisch, 4 N. Y. W. Dig. 586 354 
 
 Cefn Cilcen Min'g Co. (Lim.), In re Edgworth's Claim, Law Rep., 7 Eq. 
 
 88; 19 L. T. Rep., N. S., 593 296 
 
 Chamberlain v. Chamberlain, 43 N. Y. 424 301 
 
 Chambersburg Woolen Co. v, Chambersburg Manuf 'g and Build'g Ass'n, 
 
 31 Leg. Int. (Pa.) 357 86, 155, 489 
 
 Champlin v. Tilley, 3 Dav 303 278
 
 TABLE OF CASES CITED. XXX1U 
 
 Chandler v. Monmouth Bank, 1 Green (N. J.) 255 246 
 
 Chapleo v. Brunswick Perra't Build'g Sotfy et al, L. R. 6 Q. B. 696 296 
 
 Cheeseborough v. Millard, 1 Johns. C. K. 409 475 
 
 Chicago Building Society v. Crowell, 65 111. 453 18, 263, 381 
 
 Chicago, &c., R. R. Co. v. Howard, 7 Wall. (U. S.) 392 154 
 
 Chillicote Sav'gs Ass'n v. Euegger et al., 60 Mo. 218 58, 272 
 
 Cincinnati German Build'g Ass'n, No. 3, v. Flach et al., 1 Rep. Cine. Super. 
 
 Ct. 468 80, 190, 371, 374 
 
 Citizens' Loan Ass'n of Newark v. Lyon et al., 2 Stewart (N. J.) 110.. ..63, 229 
 Citizens' Loan Ass'n of the City of Newark v. Nugent et al., 11 Vroom (40 
 
 N. J. L. R.) 215 64, 235 
 
 Citizens' Mut. Loan and Accumulating Fund Ass'n v. Webster, 25 Barb. 
 
 (N. Y.) 263 .... 67, 145, 168, 185, 190, 208, 339, 369, 379, 384, 408, 426, 458 
 Citizens' Security and Land Co. of Baltimore City v. Uhler, 48 Md. 455... 35, 
 
 39, 362 
 
 City Build'g and Loan Ass'n v. Fatty, 1 Abb. App. Dec. (N. Y.) 347... .68, 190, 
 
 318, 339, 368, 369, 379 
 
 City of Davenport v. The Peoria, &c., Ins. Co., 17 la. 276 255 
 
 City v. Given, 60 Pa. St. 136 235 
 
 City Loan and Build'g Ass'n of Augusta et al. v. Goodrich et al., 48 Ga. 
 
 445 107, 482, 502, 507 
 
 Clark v. Turnpike Co., 13 Leg. Int. (Pa.) 156 273 
 
 Clark v. Woollen Manuf'g Co., 5 Wend. (N. Y.) 256 253 
 
 Clarke r. Imperial Gas Co., 4 B. & Ad. 315; 1 N. & M. 206 ; 24 Engl. C. 
 
 L. Rep. 64 253 
 
 Clarke v. Shee & Johnson, Cowp. 197 354, 355 
 
 Clarkville Build'g and Loan Ass'n v. Stephens, 11 C. E. Gr. 351 63, 272, 
 
 337, 367, 368, 379, 402, 413 
 
 Clinch v. Financial Corporation, L. R. 5 Eq. 450; L. R. 4 Ch. 117 158 
 
 Cochran et al. v. Arnold et al., 58 Pa. St. 399 513, 514, 516, 520 
 
 Cockran v. Islam, 2 M. & S. 301 266 
 
 Coetmor Benefit Build'g Sotfy, 51 L. T. 253 295 
 
 Coil v. Pittsburgh Female College, 40 Pa. St. 439 513 
 
 Coles v. Trecoothick, 9 Ves. 234 266 
 
 Collin v. Godfrey, 1 Barn. & Ad. 953; 20 Engl. C. L. 514 246 
 
 Colonial Life Assurance Co. v. Home and Colonial Assurance Co. (Lira.) 
 
 33 L. J. Ch. 741 ; 10 Jur., N. S., 967 ; 10 L. T. Rep., N. S., 448 ; 12 
 
 W. R. 783 118 
 
 Colt v. Ives, 31 Conn. 25 447 
 
 Columbia Build'g and Loan Ass'n v. Bellinger, 12 Rich. Eq. (S. C.) 124... 107, 
 
 342, 380 
 
 Columbia Build'g Ass'n v. Dobbins, 15 Leg. Int. 45 87, 450 
 
 Columbian Build'g Ass'n of East Baltimore, No. 4, v. Crumb, 42 Md. 192... 
 
 35, 209, 274, 374, 434 
 Commercial Bank of Bufialo t>. Kortright, 22 Wend, (N. Y.) 348 267 
 
 C
 
 TABLE OP CASES CITED. 
 
 Committee v. Morris, 1 Phila. 411 511 
 
 Commonwealth v. German Soc'y, 15 Pa. St. 261 147 
 
 Commonwealth v. Penna. Beneficial Institution, 2 S. & R. (Pa.) 141 147 
 
 Commonwealth v. St. Patrick Soc'y, 2 Binn. (Pa.) 441 147 
 
 Commonwealth v. Watmough, 6 Whart. (Pa.) 117 444 
 
 Commonwealth v. Woelper, 3 S. &. R. (Pa.) 29 216 
 
 Commonwealth Insurance Co. v. Crane, 6 Mete. (Mass.) 64. _' 1 1 
 
 Congregational Soc'y in Troy v. C. Perry, 6 N. H. 164. 518 
 
 Conro v. Port Henry Iron Co., 12 Barb. (N. Y.) 27 225 
 
 Conrow v. Tradesmen's Sav. Fund and Loan Ass'n, 21 Leg. Int. 109 87 
 
 Conway v. Log Cabin Perm't Build'g Ass'n of Baltimore City, 52 M<1. 
 
 137 35, 164,260,277 
 
 Conwell v. Pumphrey, 9 Ind. 135 :',',(! 
 
 Cook v. Kent, 105 Mass. 246 40, 482, 500, 502, 504 
 
 Cooke v. State Bank, 52 N. Y. 96 i^t 
 
 Cooley's App., 1 Grant (Pa.) 401 361, 472, 473 
 
 Corn Exchange Bank v. Cumberland Coal Co., 1 Bosw. 436 266 
 
 Costen's App., 1 Harris (Pa.) 292 442 
 
 Cottrell v. Stratum, 28 L. T. Rep., N. S., 218 ; L. R. 8 Ch. App. 295; 21 
 
 W. R. 234; 42 L. J. Ch. 417 ; 37 J. P. 4 209 
 
 Cover v. Black, 1 Pa. St. 493 474 
 
 Cox . Leech, 1 C. B., N. S., 617 ; S. C., 26 L. J., C. P. 125 ; 3 Jur., N. S., 
 
 442; 87 Engl. C. L. Rep. 617 232 
 
 Craig t-. Gregg, 83 Pa. St. 19 221, 230 
 
 Crook v. Jewett, 12 How. Pr. (N. Y.) 19 227 
 
 Cruikshank t>. Duffin, 13 L. R., Eq. 555 ; 41 L. J., Ch. 317 ; 20 W. R. 354 ; 
 
 26 L. T., N. S., 121 316 
 
 Crystal Lake Ice Co. v. Adm'r of Backus, 32 111. 82 329 
 
 Cummins v. Evir, 2 Halst. Ch. (N. J.) 73 359 
 
 Cushman v. Thayer Jewelry Manuf'g Co., 76 N. Y. 365 445 
 
 Cutbill v. Kingdom, 1 Exch. 494; 17 L. J. Exch. 177 158, 162, 
 
 165, 166, 312, 335 
 
 D. 
 
 Damon v. Granby, 2 Pick. (Mass.) 345 253 
 
 Dannebroge Min'g Co. v. Ailment & Barrett, 26 Cal. 286 514 
 
 D'Arcy v. Tamar, Kithill and Callington Railway Co., Law Rep., 2 Exch. 
 
 158 ; 14 L. T. Rep., N. S., 626 225, "254 
 
 Davies & Co. v. Creighton, 33 Grattan (Va.) 696 83, 95, 96, 97 
 
 Davis v. West Saratoga Build'g Union, No. 3, 32 Md. 285 35, 297 
 
 Decker v. Freeman, 3 Greenl. (Me.) 338 253 
 
 Delano v. Wild et al., 6 Allen (Mass.) 1 39, 328, 337, 338, 364, 
 
 368, 379, 452, 458, 524 
 
 Delaware Build'g Ass'n v. Keller, 2 W. N. C. (Pa.) 29 86, 379 
 
 De Lisle v. Priestman, 1 Browne 176 447
 
 TABLE OF CASES CITED. JLXXV 
 
 Denny v. West Phila. Sav'g and Build'g Ass'n, 39 Pa. St. 154. 84, 126, 345 
 
 Derby Canal Co. v. Wilmot, 9 East 360 253 
 
 De Wolf v. Johnson, 10 Wheat. (U. S.) 367 354 
 
 Diligent Fire Co. v. Commonwealth, 75 Pa. St. 291 147 
 
 Dime Savings Institution v. Mulford, 4 Stew. (N. J.) 99 363 
 
 Dinsmore v. Duncan, 57 N. Y. 573 254 
 
 Dix r. Van Wyck, 2 Hill (N. Y.) 522 359 
 
 Dobinson v. Hawks, 12 Jur. 1037 ; S. C., 16 Sim. 407 ; 12 L. T. Rep. 238 ; 
 
 39 Engl. CJi. Rep. 406 135, 225, 443 
 
 Dodge v. Perkins, 9 Pick. 368 268 
 
 Doe v. Roll, 7 Ham. (Ohio) 401.. 311 
 
 Duncaster Perm't Build'g Sotfy, In re, Law Rep., 3 Eq. 158 ; 15 L. T. Rep., 
 
 N. S.,270; 15 W. R. 102; 31J. P. 310 211 
 
 Dove v. Young, 7 Macph. 304 441 
 
 Duke r. Cahawba Nav. Co., 10 Ala. 82 443 
 
 Dimston r. Imperial Gas Co., 3 Barn. & Ad. 125; 23 Engl. C. L. Rep. 42.. 246 
 Durham County Perm't Benefit Build'g Soc'y, In re, Davis' Case, Wilson's 
 
 Case, L. R., 12 Eq. 516; 25 L. T., N. S., 83 296, 305, 306, 317, 335 
 
 Dutch West India Co. v. Henriques, 2 Ld. Ray. 1535 272 
 
 Dutcher's Cotton Manufactory v. Davis, 14 Johns. (N. Y.) 238 272, 520 
 
 Dyer & Co. v. Walker, 40 Pa. St. 157 513 
 
 Dykers v. Allen, 7 Hill (N. Y.) 498 447 
 
 E. 
 
 Eagle Beneficial Soc'y's Appeal, 75 Pa. St Rep. 226 360, 415 
 
 Early & Lane's App., 8 Norris (89 Pa. St.) 411 85, 185, 447, 
 
 451, 453, 461, 469 
 
 East Anglian R. Co. v. Lythgoe, 10 C. B. (70 Engl. C. L. Rep.) 726 244 
 
 Eastwood v. Lever, 4 DeG., J. & S. 114; 9 L. T. Rep., N. S., 615. 221, 278 
 
 Economy Build'g Ass'n to the use of Smyth v. Hungerbuehler, 12 Norris 
 
 (93 Pa. St.) 258; 9 W. N. C. (Pa.) 218 85, 451, 453, 455, 467 
 
 Edelyn et al. v. Pascoe et al., 22 Grattan (Va.) 826 97, 486, 487, 495 
 
 Edgerly v. Emerson, 3 Eost. 555 223 
 
 Kdwards v. Bates, 13 L. J., C. P. 156; 8 Jur. 539; 8 Scott N. R. 406; 2 
 
 D. & L. 299 427 
 
 I'xlwards v. Fairbanks, 27 La. Ann. 449 310 
 
 Ellery v. Cunningham, 1 Mete. 112 268 
 
 Elwell v. Dodge, 33 Barb. (N. Y.) 336 310 
 
 Elwes v. Ogle, 2 Engl. L. & Eq. 379 244 
 
 Ely v. McClung, 4 Port. (Ala.) 128 354 
 
 Emerson v. Blonden, 1 Esp. 142 258 
 
 Entwistle v. Davis, 36 L. J. Ch. 825; L. K, 4 Eq. 272 441 
 
 Evans v. Bicknell, 6 Vea. 173 267 
 
 Evans v. Coventry, 3 W. R. 149 ; 24 L. T. Rep. 186 ; 19 J. P. 37.. 230
 
 XXXVI TABLE OF CASES CITED. 
 
 Evans t-. Hearts of Oak Friendly Society, 12 Jur., N. 8., 163 237 
 
 Evans v. Thibault, 2 Miles (Pa.) 251 466, 47ft 
 
 Everham v. Oriental Sav'g and Loan Ass'n, 47 Pa. St. 352 ; 8. C., 5 Phila. 
 
 62 84,142 
 
 Everhart v. West Chester and Phila. E. R. Co., 28 Pa. St. 339 148 
 
 Excelsior Build'g Ass'n v. Commonwealth, 10 W. N. C. (Pa.) 161 85, 476 
 
 Ex'reof Howell v. Auten, 1 Gr. Ch. R. (N.J.)45 232,362 
 
 Eyre . Build'g Ass'n, 17 Leg. Int. (Pa.) 148 87, 171, 203, 291 
 
 F. 
 Farmer t>. Smith, 4 H. & N. 196 ; 5 Jur., N. 8, 533 n; 28 L. J. Exch. 226 ; 
 
 32 L. T. Rep. 371 ; 7 W. R. 362 143, 190, 199 
 
 Faulkner's Appeal, 11 W. N. C. (Pa.) 48 85, 251, 299, 301, 307 
 
 Fed. Insurance Co. v. Robinson, 3 N. Y. W. Dig. 431 355 
 
 Ferris r. Crawford, 2 Denio (N. Y.) 595 465, 472 
 
 Fisher v. Kahlnan, 3 Phila. 213 86, 359 
 
 Fitzherbert v. Mather, 1 T. R. 12 267 
 
 Flanders t. Jones, 10 N. H. 160 359 
 
 Fleckner v. Bank of the United States, 8 Wheat. 338 259 
 
 Fleming v. Parry, 12 Harris (Pa.) 47 428 
 
 Fleming v. Self, 18 J. P. 296 ; 23 L. T. Rep. 63 ; Kay. 518 ; S. C. upon 
 
 appeal, 24 L. J., Ch. 29 ; 18 J. P. 772 ; 24 L. T. Rep. 101 ; 1 Jur., 
 
 N. S., 25; S De G., M. & G.. 997 3 Eq. Rep. 14; 3 W. R. 89 119, 
 
 170. 189. 190, 196, 197, 198, 199, 370, 430 
 
 Flounders v. Hawley, 78 Pa. St. 45 84, 381, 382 
 
 Forney's App., 59 Pa. St. 398 444 
 
 Forest City United Land and Build'g Ass'n v. Gallagher et al., 25 Ohio St. 
 
 208..." 80. 184. 145. S09, 378, 379, 380, 382, 397, 407, 410 
 
 Fort Wayne v. Jackson, 7 Blackf. (Ind.) 36 269 
 
 Foster v. Essex Bank, 17 Mass. 497 219 
 
 Franklin Build'g Ass'n v. Marsh, 5 Dutch. (N. J.) 225.... 63, 112, 338, 379, 385 
 
 Franklin Bnild'g Ass'n v. Mather. 4 Abbott Pr. (N. Y.) 274 68, 350, 378, 
 
 415, 422, 426 
 
 Franz t-. Teutonic Build'g Ass'n, No. 2, 24 Md. 259 34, 273, 349, 520 
 
 French v. Barren, 2 Atk. 120 432 
 
 Fritz r. Commiss'rs of Montg*y, 17 Pa. St. 130 273 
 
 Frostburg Mut. Build'g Ass'n v. Brace et al., 51 Md. 508 35, 264 
 
 Frostburg Mut. Build'g Ass'n v. Lowdermilk, 50 Md. 175 35, 432 
 
 Frostburg Build'g Ass'n et al. v. Stark et al., 47 Md. 338 35, 487, 488 
 
 Fuller v. Hooper, 3 Gray (Mass.) 334 264 
 
 Fuller v. Salem and Danvers Loan and Fund Ass'n, 10 Gray (Mass.) 94. 39, 173 
 
 G. 
 
 Ganster r. Homestead Build'g Ass'n, unrep. dec. of Supr. Ct. of Penna., 
 
 East. Distr., on error to C. P. of Berks County, 1881 521 
 
 Garrett v. Dillsbury and Mechanicsburg R. R. Co., 78 Pa. St. 465 140, 514
 
 TABLE OF CASES CITED. 
 
 tiobhwiler v. Willis, 33 Cal. 11 225 
 
 Gass v. Citizens' Build'g and Loan Ass'n, 9 W. N. C. (Pa.) 326... 85, 260, 262, 272 
 
 German Fair Hill Build'g Ass'n t;. Metzger, 3 W. N. C. (Pa.) 204. 86, 143, 
 
 209, 274, 373 
 
 German Min'g Co., In re, 22 L. J., Ch. 956 ; 4 De G., M. & G. 19 296 
 
 German Union Build'g and Sav. Fund Ass'n v. Sendmayer, 50 Pa. St. 67... 84, 
 
 135," 225, 277, 442, 443, 446 
 
 Germania Build'g Ass'n v. Neill, 12 Norris (93 Pa. St.) 322... 85, 427, 428, 451 
 Giblin v. McMullen, 38 L. J., P. C. 25 ; 2 P. C. 317 ; 21 L. T. Kep., N. S., 
 
 214; 17 W. E. 445 219 
 
 Gilpin v. Howell, 5 Barr. (Pa.) 57 442 
 
 Ginz v. Stumph, 73 Ind. 209 23, 376, 452 
 
 Glass v. Warwick, 4 Wright (Pa.) 140 315 
 
 Glover et al. v. Giles et al., L. E. 18 Ch. 173 486, 513 
 
 Glynn et al. v. Home Build'g Ass'n, 22 Kas. 746 190, 336 
 
 Goldbold v. Bank of Mobile, 11 Ala. 191 :>43 
 
 Goldsmith, In re, Ex parte Osborne, L. E. 10 Ch. 41 186 
 
 Good v. Grant, 76 Pa. St. 52 358, 361 
 
 Goodrich et al. v. The City Loan and Build'g Ass'n of Augusta et al., 54 
 
 Ga. 98 107,482,487,507 
 
 Gordon v. Preston, 1 Watts (Pa.) 385 253, 263 
 
 Gordon, &c., v. Winchester Build'g and Accumulat'g Fund Ass'n, 12 Bush 
 
 (Ky.) 110 107, 133, 162, 251, 281, 344, 379, 397, 485 
 
 Gormerly v. The Port Eichmond Build'g and Loan Ass'n, 3 W. N. C. 
 
 (Pa.) 11 86, 478, 479, 488, 494 
 
 Gosling v. Veley, 12 Q. B. 347 284 
 
 Gourdon v. Insurance Co. of North America, 1 Binney (Pa.) 430 444 
 
 Grant v. Mechanics' Bank, 13 S. & E. (Pa.) 140. 141 
 
 Gravestine's App., 13 Wright (49 Pa. St.) 310 229, 230 
 
 Gray's Ex'rs v. Brown, 22 Ala. 262 ^ 358 
 
 Greaves v. Gouge, 69 N. Y. 154 230, 231 
 
 Green . Kemp, 13 Mass. 515 359 
 
 Greenough v. Greenough, 1 Jones (Pa.) 495 127 
 
 Grimes v. Harrison, 28 L. J. Ch. 823; 33 L. T. Eep. 115; 5 Jur., X. S., 
 
 528; 26 Beav. 435; 23 J. P. 421 158, 218, 221, 230, 231, 302 
 
 Gwinner v. The Lehigh & Delaware Gap E. E. Co., 55 Pa, St. 126 83 
 
 H. 
 
 Hager v. Cleveland & Bassett, 36 Md. 476 140, 440 
 
 Hagerman et al. ". Ohio Build'g and Sav. Ass'n, 25 Ohio St. 186 80, 142, 
 
 145, 165, 184, 187, 189, 190, 208, 211, 279, 290, 347, 350, 
 365, 371, 379, 407, 409, 410, 416, 426, 479, 495, 498, 520 
 
 Hamilton v. Smith, 28 L. J., Ch. 404 118 
 
 Hamilton Build'g Ass'n v. Eeynolds, 5 Duer (N. Y.) 671 67, 350, 378, 434
 
 XXXV111 TABLE OF CAS13S CITED. 
 
 Hundley v. Farmer, 29 Beav. 362 142, 190, 199, 483 
 
 Hanner et al. v. Greensboro Build'g and Loan Ass'n, 78 N. C. 188 .... 77, 342. 
 
 368, 380 
 Uaii-lniry, Treasurer Germantown Build'g Ass'n, v. Pfeiffer & Schaufl'ele, 
 
 ]_' I'liila. 2-V); 35 Leg. Int. 395; S. C., nom. Link r. Germantown 
 
 Build'g Ass'n, 89 Pa. St. 15 86 
 
 IlmiM-ll v. Lutz, 20 Pa. St. 284 361, 471, 472 
 
 Haw-on v. Derby, 2 Vern. 392 431 
 
 J lardy r. Metropolitan Land and Finance Company, L. R., 7 Ch. App. 427 ; 
 
 41 L. J., Ch. 207 ; 20 W. R. 225 ; 26 L. T., N. S., 407 ; reversing S. C., 
 
 L. R., 12 Eq. 386 316 
 
 Hardy v. Reeves, 4 Yes. 480 431 
 
 Harford v. U. S., 8 Cranch 109 83, 96 
 
 Harnier v. Gooding, 13 Jur. 400 ; 3 De G. & S. 407 ; 13 L. T. Rep. 134. . .221, 230 
 
 Harris v. The Muskingum M. Comp., 4 Blackf. (Ind.) 267 272 
 
 Harrison v. Hannel, 5 Taunt. 784; 1 Engl. C. L. Rep. 263 358 
 
 Haying's Case, 10 Watts (Pa.) 303 465, 471 
 
 Haven r. Low, 2 N. H. 13 448 
 
 Hawkeye Benefit and Loan Ass'u v. Blackburn et al., 48 Iowa 385 29, 141, 
 
 347, 378, 379, 382, 397 
 Hekelnkaemper et al. v. The German Build'g and Sa.v'g Ass'n, 22 Kas. 
 
 549 31, 185, 187, 190, 208, 291, 336, 452, 479, 511 
 
 Hennighausen and Wolff. Rec'rs, v. Tisher, 50 Md. 583 35, 174, 175, 
 
 190, 208, 275, 277, 431 
 
 Henry v. Rutland R. Co., 27 Vt. 435 246 
 
 Herbert, &c., v. Kenton Build'g and Sav'g Ass'n of Covington, 11 Bush 
 
 (Ky.) 296 107, 123, 162, 185, 250, 280, 344, 379, 397 
 
 Herbert v. The Mechanics' Build'g and Loan Ass'n of New Brunswick et 
 
 al., 2 C. E. Gr. (N. J.) 497 63, 151, 184, 190, 251, 
 
 447, 448, 452, 457, 464, 465, 473 
 
 Herder v. Pinkerton, 14 Allen 381 253 
 
 Herod v. Rodman, 16 Ind. 241 263 
 
 Hiester v. Fortner, 2 Binney (Pa.) 40 473 
 
 Hill v. Featherstonhaugh, 7 Biugh. 569 ; 20 Engl. C. L. Rep. 244 232 
 
 Hoboken Build'g Ass'n v. Martin, 2 Beas. (N. J.) 428 64, 112, 139, 
 
 153, 172, 189, 190, 202, 204, 215, 216, 232, 269, 273, 291, 
 309, 338, 350, 362, 379, 383, 452, 478, 480, 488, 505, 513 
 
 Hodges v. Rutland R. Co., 29 Vt. 220 246 
 
 Ho'gan v. Guigon, Judge, 29 Grat. (Va.) 705 83, 95 
 
 Holbrook v. Baker, 5 Greenl. (Me.) 309 448 
 
 Holland v. Cruft, 3 Gray (Mass.) 173 526 
 
 Holt v. Bodey, 18 Pa, St. Rep. 207 471,472 
 
 Hopcroffi v. Parker, 16 L. T. Rep., N. S., 123, 561 , 118 
 
 Hopkins t>. Baker's Adm'r et al., 2 P. & H. (Va.) 110 232, 362 
 
 Hopkins v. Mehaffey, 11 S. & R. (Pa.) 126 220
 
 TABLE OF CASES CITED. XXXIX 
 
 . LiVx&fcairs-' fcuild'g au^ ~s:v\ ASE'C, 84 N. C. 838 77, 185, 
 
 190, 342, 450 
 
 Houfier r. Hermann Build'g A<*'n, U Fa. St. 478 84, 126 
 
 Howard Mui. Loan and Fund Ass'n v. Mclntire, 3 Allen (Mass.) 571 39, 
 
 137, 312, 522 
 
 Unwell v. Commonwealth, ex rel. Keppleman, 97 Pa. St. 332 233 
 
 Hudson City Sav'gs Institute v. McArthur et al., 8 N. Y. W. Dig. 63 315 
 
 Hughes's App. 30 Pa. St. 471 84, 108, 126, 359, 451, 470 
 
 Hughes v. D'Eyncourt, 3 N. R. 420 290, 301, 307 
 
 Hughes v. Layton or D'Eyncourt, 10 Jur., N. S., 513 ; 33 L. J., M. C. 89 ; 
 
 12 W. R. 408 ; 9 L. T., N. S., 383; 4 B. & 8. 820; 116 Engl. C. L. 
 
 Rep. 819 290, 301, 307 
 
 Hunter v. Caldwell, 16 L. J., Q. B. 274; S. C., 11 Jur. 770; 10 Q. B. 69... 232 
 
 Huntress v. Patten, 20 Me. 28. 358 
 
 Hutton v. Thompson, and Norris v. Cooper, 3 H. L. Cas. 161 ; S. C., 17 L. 
 
 T. Rep. 237 '. 117 
 
 L 
 
 Importing and Exporting Co., &c., v. Locke, 50 Ala. 332 513 
 
 Ingoldby v. Riley, 28 L. T., N. S., 55 145, 413 
 
 Inhabitants of Upper Alloways Creek v. String, 5 Ealst (N. J.) 323 269 
 
 Insurance, In re, 22 Wend. (N. Y.) 597 223 
 
 Insurance Co. v. Connor, 17 Pa. St. 136 283 
 
 Irvine v. Lumbermen's Bank, 2 Watts & Serg. (Pa.) 190 513 
 
 J. 
 
 Jackson v. Campbell, 5 Wend. (N. Y.) 572 253, 254 
 
 Jackson et al. v. Myers et al., 43 Md. 452 35, 254, 297 
 
 James v. Nat'l Build'g Ass'n, 9 W. N. C. (Pa.) 325 ; see S. C., nom. Jones 
 
 v. Nat'l Build'g Ass'n, 94 Pa. St. 215 85, 260, 262 
 
 James v. Woodruff, 10 Paige (N. Y. Ch. Rep.) 541 ; S. C., 2 Denio 474 444 
 
 Jarrett v. Cope, 68 Pa. St. Rep. 67 2, 108, 161, 346, 349, 379, 403, 524 
 
 Jeffries v. Life Insurance Co., 22 Wall. (U. S.) 47 153, 320 
 
 John v. Reardon, 11 Md. 465 474 
 
 Johnson v. Cunningham, 1 Ala., N. S., 249 266 
 
 Johnston's Estate, 9 Casey (Pa.) 511 83 
 
 Johnston v. Scott, 22 Dunlop, 393 ; 32 Sc. Jur. 174 118 
 
 Jones v. Dana, 24 Barb. (N. Y.) 402 513 
 
 Jones v. National Building Ass'n, 9 W. N. C. 325 ; 94 Pa. St. 215.... 85, 260, 262 
 
 Juniata Build'g and Loan Ass'n v. Mixell, 3 Norris (84 Pa. St.) 313 84, 144, 
 
 165, 311, 315, 378, 383, 402, 415 
 K. 
 
 TCehler v. Miller, 4 Leg. Gaz. 126; S. C., 1 Leg. Chron. 35 88 
 
 Kellner v. Baxter, L. R., 2 C. P. 174 117, 118, 263 
 
 Kelly v. Accommodation Sav'g Fund and Loan Aas'n, 2 Phila. 237. ..86, 451, 45
 
 xl TABLE OF CASES CITED. 
 
 Kelly v. Mobile Building and Loan Ass'n, 64 Ala. 501 14, 310 
 
 Keily t>. Perseverance Build'g Ass'n, 39 Pa. St. 148 84, 451 
 
 Kelly v. Rosenstock, 45 Md. 389 264 
 
 Kelsall v. Tyler, 30 J. P. 151 ; 11 Exch. 513; 25 L. J., Exch. 153; 26 L. 
 
 T. Rep. 226 131 
 
 Kelsey v. Nat'l Bank of Crawford County, 69 Pa. St. 426 263 
 
 Kendall, Ex parte, 17 Vea. 514 464 
 
 Kennedy . Cotton, 28 Barb. 59 272 
 
 Kennedy's Ex're v. Ware, 1 Pa. St. 445 245 
 
 Kent Benefit Build'g Society, In re, 1 Drew. & Sm. 417 ; 7 Jur., N. 8., 
 
 1045 ; 30 L. J., Ch. 785 ; 9 W. R. 686 ; 4 L. T. Rep., N. S., 610 ; 25 
 
 J P. 8051 108, 219, 220, 287, 301, 304, 305, 306 
 
 Kent v. Quicksilver Min'g Co., 78 N. Y. 159 202, 262, 283, 287 
 
 Kidder v. Bedford County, 7 Serg. & Rawle (Pa.) 386 247 
 
 Kilpatrick v. Penrose Ferry Bridge Co., 49 Pa. St. 118 245 
 
 King i'. Cator, 2 Burr. 2026 83 
 
 King v. Davis, 1 Leach's Cases, 306 83 
 
 King v. Passmore, 3 T. R. 244 ; 1 Rolle's Abr. 514; 4 Com. Dig. 273 519 
 
 Kingsessing Build'g Ass'n . Roan, 9 W. N. C. (Pa.) 15 85, 315, 451, 469 
 
 Kinziew. Chicago, 2 Scam. (111.) 188 254 
 
 Kisterbock v. Premium Build'g Ass'n, 7 Phila. (Pa.) 185 86, 499 
 
 Kislerbock's App., 51 Pa. St. 485 84, 229, 492, 500 
 
 Kittera's Estate, 17 Pa. St. 424 452 
 
 Knell v. Green Street Build'g Ass'n, 34 Md. 67 35, 474 
 
 Knickerbocker Life Ins. Co. v. Nelson et al., 6 N. Y. W. Dig. 145 358 
 
 Knoblauch v. Build'g Ass'n, 8 Pitteb. Leg. Jour., N. S., (Pa.) 39 87, 149 
 
 Knox . Shepherd, 2 L. T. Rep., N. S., 351 131 
 
 Kochler v. Iron Co., 2 Black. 715 226, 264 
 
 Kortright v. Buffalo Commercial Bank, 20 Wend. (N. Y.) 91 ; S. C., in 
 
 error, 22 Id. 348 442, 446 
 
 Kreamer v. Springfield Build'g Ass'n, 6 W. N. C. (Pa.) 267 86, 451, 469 
 
 Kupfert t>. Guttenberg Build'g Ass'n, 30 Pa. St. 465 84, 108, 126, 161, 187, 
 
 189, 327, 345, 349, 359, 451,470 
 
 L. 
 
 I^aing v. Reid, L. R., 5 Ch. App. 4 ; 18 W. R. 76 ; 39 L. J., Ch. 1 ; 21 L. T., 
 
 N. S., 773; 34 J. P. 134 291, 292, 295, 296 
 
 Lamberton t>. Logan, 2 Binney (Pa.) 257 127 
 
 L'iniiu t-. Port Deposit Homestead Association of Cecil County, 49 Md. 
 
 233 35, 261,267 
 
 Lamoihe County Nat'l Bank v. fiingham, 50 Vt 105 358, 359 
 
 1. lining t). Eddy, 1 Johns. Cn (N. Y.) 49 361 
 
 Larkins' Appeal. 38 Pa. St. 457 ; 4 Phila. 95 84, 266, 277 
 
 l-rtLain and *ife v Washington Buil i'g and Loan Ass'n, 77 N. C. 145 77, 
 
 133, 162, 251, 281, 342, 357, 380
 
 TABLE OF CASES CITED. xli 
 
 Laussat '.. Lippincott, 6 Serg. & Rawle (Pa.) 386 266 
 
 Leffingwell v. Elliott, 8 Pick. 455 52C 
 
 Leffman v. Flanigan, 5 Phila. 155, 419 86, 221, 228, 229, 230 
 
 Leggett v. New Jersey Bank'g Co., Saxton's Ch. (N. J.) 541 253 
 
 Legrand v. Hampton-Sidney College, 5 Munf. (Va.) 324 254 
 
 Lehigh Bridge Co. v. Lehigh Coal and Navigation Co., 4 Kawle (Pa.) 9... 273 
 Lethbridge v. Kirkman, 25 L. J., Q. B. 89 ; S. C., 2 Jur., N. S., 372 ; 26 
 
 L. T. Rep. 122 305 
 
 Licking County Sav. Loan and Build'g Ass'n v. Bebout's Adrn'r et al., 25 
 
 Ohio St. 252 80, 379, 383 
 
 Lincoln Build'g and Sav. Ass'n, app'ee, v. Benjamin & Benjamin, app'te, 7 
 
 Neb. 181 61, 122, 126, 185, 343, 350, 380, 4.03, 485, 513 
 
 Lincoln Build'g and Sav. Ass'n, app'ee v. Graham, app't, 7 Neb. 173... 61, 122, 
 
 126, 145, 185, 343, 350, 380, 403, 485, 613 
 Lincoln Build'g and Sav. Ass'n, app'ee, v. Haas et al., app'ts, 10 Neb. 
 
 581 62, 145, 415, 432 
 
 Link v. Germantown Build'g Ass'n, 89 Pa. St. 15 85, 86, 346, 349, 359, 
 
 360, 361, 403, 451, 455, 467, 472, 524 
 
 Lister v. Log Cabin Build'g Ass'n, 38 Mi 115 35, 184, 189, 190, 
 
 335, 436, 495, 496, 498 
 
 Liverpool, &c., Build'g Soc'y, In re, McCowan's Claim, 15 S. J. 177 295 
 
 Lloyd v. Galbraith, 32 Pa. St. 103 465, 471 
 
 Lloyd v.Scott, 4 Peters (U. S.) 205 364, 359 
 
 Loan Ass'n v. Stonemetz, 25 Pa. St. Rep. 534 84, 245, 246 
 
 Loan Co. v. Everham, 5 Phila. 62; 47 Pa, St. 352 84 
 
 Locke v. Stearns, 1 Mete. 560 267 
 
 Lodge v. Lysely, 4 Sim. 70; 6 Engl. Ch. Rep. 37 474 
 
 Long v. Orsi, 18 C. B. 610 ; S. C., 26 L. J., C. P., 127 ; 86 Engl. C. L. Rep. 
 
 610 232 
 
 Loomis v. Eaton, 32 Conn. 550 359 
 
 Lord v. Bigelow, 8 Vt. 445 273 
 
 Lord v. Ocean Bank, 15 Pa. St. 386 451 
 
 Lord & Robinson v. Essex Build'g Ass'n, No. 4, 37 Md. 320 35, 281, 
 
 349, 513, 515 
 
 Lothrop r. Stedman, 42 Conn. 583 231 
 
 Love v. Build'g and Loan Ass'n, 11 W. N. C. (Pa.) 303 85, 276 
 
 Lovejoy r. Mulkarn, 37 L. T., N. S., 77 ; 46 L. J., Ch. Div., 630... 145, 406, 407 
 
 Lovett v. The Steam Saw Mill Ass'n, 6 Paige Ch. 54 253 
 
 Low r. Connecticut Railr. Co., 45 N. H. 375 247 
 
 Low Street Build'g Ass'n, No. 6, &c., v. Zucker, 48 Md. 448 35, 389. 
 
 502, 507, 509 
 
 Lucas v. Greenville Build'g and Sav. Ass'n, 22 Ohio St. 339 79, 520 
 
 Ludlow v. Simond, 2 Caines Cases in Error 1 235 
 
 Lyle v Barker, 5 Binney (Pa.) 457 448
 
 TABLE OF CASES CITED. 
 
 M. 
 
 Madden v. McMullen, 13 Ir. C. L. Rep. 305; 4 L. T. Rep., N. S., 180 233 
 
 Maddick v. Marshall, 17 Com. B., N. S., 829 (112 Engl. C. L. R) 118 
 
 Maisrh P. Seamen's Say. Fund Soc'y, 5 Phila, 30 228, 229 
 
 Manahan r. Varnum, 11 Gray (Mass.) 405 39, 525, 526 
 
 Maniilarturere' and Mechanic's' Sav. and Loan Co. v. Conover, 5 Phila. 
 
 (Pa.) 18 86, 165, 251, 252, 289, 291, 310, 311, 484, 513 
 
 Manufacturers' and Mechanics' Sav. and Loan v. Odd Fellows' Hall Ass'n 
 
 of Spring Garden, 48 Pa. St. 446 84, 235 
 
 Marble Build'g Ass'n v. Hooker, 3 Phila. 494 86, 126 
 
 Marietta Bilild'g Ass'n ?'. Hanlen, 10 Lane. B. (Pa.) 47 87 
 
 Martin v. Nashville Build'g Ass'n et al., 2 Cold. (Tenn.) 418. ..107, 123, 133, 162, 
 
 251, 279, 280, 281, 343, 380, 397, 485 
 Maryland Perm't Land and Build'g Soc'y of Baltimore v. Smith et al., 41 
 
 Md. 516 35, 362 
 
 Massey v. The Citizens' Build'g and Sav. Ass'n of Paola, Kas., 22 Kas. 
 
 624 31, 140, 207, 289, 311, 335, 375, 376, 
 
 377, 378, 379, 383, 402, 415, 439, 462, 514 
 Matterson t>. Elderfield, L. R., 4 Ch. App. 207 ; 17 W. R. 422 ; 20 L. T., 
 
 N. S., 503; 33 J. P. 326 207, 210, 221, 373, 401, 458 
 
 Matthew v. Blackmore, 26 L. J., Ex. 150; S. C., 1 H. and N. 761 427 
 
 Maule v. Build'g Ass'n, 5 Phila. 421 86,357 
 
 McCahan v. Columbian Build'g Ass'n of East Baltimore, No. 2, 40 Md. 
 
 226 35, 147, 190, 374, 402, 423, 425, 428, 430 
 
 McCoole v. Smith, 1 Black. (U. S.) 59, 470 -. 83, 96 
 
 McCormick's App., 57 Pa. St. 54 465, 476 
 
 McCullough v. Moss, 5 Den. (N. Y.) 567 225 
 
 McDevitt & Hay's App., 70 Pa. St. 373 465, 471 
 
 McGrath v. Hamilton Sav. and Loan Ass'n, 44 Pa, St. 383.... 84, 141, 148, 150, 
 
 188, 207, 451, 455, 457 
 
 McLaughliu v. Citizens' Build'g, Loan and Savings Ass'n, 62 Ind. 264... 23, 28, 
 
 128, 347, 350, 379, 513 
 
 Mechanics' Bank v. Edwards, 1 Barb. 271 358 
 
 Mechanics' Build'g and Loan Ass'n of New Brunswick v. Conover et al., 
 
 1 McCart. (N. J.) 219 63, 151, 158, 184, 190, 
 
 192, 447, 451, 455, 457, 458, 463 
 
 Mechanics' Building Ass'n v. Stevens et al., 5 Duer (N. Y.) 676 ... 67, 349, 513 
 Mechanics' and Workingmeu's Mutual Sav. Bank and Build'g Ass'n of 
 
 New Haven v. The Meriden Agency Co., 24 Conn. 159... 106, 133, 251, 
 
 312, 313, 314, 317, 392 
 Mechanics' and Workingmen's Mutual Sav. Bank and Build'g Ass'n, &c., 
 
 v. Wilcox, 24 Conn. 147 106, 133, 134, 161, 312, 313, 314, 347, 392 
 
 Melville v. American Benefit Build'g Aas'n et al., 33 Barb. (N. Y.) 103... 68, 
 
 339, 349, 524, 526
 
 TABLE OF CASES CITED. xliii 
 
 Menier v. Hooper^ Tclegr. Works, L. R. 9 Ch. 350 158 
 
 Merchants' Bank v. Cook, 4 Pick. (Mass.) 405. 447 
 
 Merchants' Bank v. State Bank, 10 Wall. 604 259 
 
 Merrick v. Burlington and Warren Plank Koad Co., 11 la. 74 255 
 
 Merrill v. Mclntire, 13 Gray (Mass.) 157 39, 336, 379, 422, 524, 526 
 
 Mickles v. Rochester Bank, 11 Paige (N. Y.) 118 488 
 
 Middlediteh v. Ellis, 17 L. J.,'Ex. 365; 8. C., 2 Exch. 623 427 
 
 Middletown Savings Bank v. Jarvis et al., 33 Conn. 372 447 
 
 Miller v. Jacobs, 3 Watts (Pa.) 477; S. C., 5 Id. 208 474 
 
 Miller v. Jeflerson Build'g Ass'n, 50 Pa. St. 32 84, 153, 
 
 171, 172, 202, 291 
 
 Miller's Estate, 2 Pearson (Pa.) 248 86, 252, 301, 306, 
 
 309, 478, 484, 513, 519 
 Milieu v. Davey, 32 L. J., Ch. 122; S. C., 31 Beav. 470; 9 Jur., N. S., 92; 
 
 7 L. T. Rep., N. S., 551 ; 11 W. R. 176 431 
 
 Millville Mut. Marine and Fire Ins. Co. . Mechanics' and Workingmen's 
 
 Build'g and Loan Ass'n, 14 Vt. 652 64, 259 
 
 Mills et al. v. Salisbury Build'g and Loan Ass'n, 75 N. C. 292 77, 133, 161, 
 
 251, 281, 342, 357, 368, 380 
 
 Miner v. Graham, 12 Har. (Pa.) 491 315 
 
 Miners' Trust Co. Bank v. Roseberry, 81 Pa. St. 309 358, 360* 
 
 Money penny v. Hartland, 1 Car. & P. 353 ; Id. 378 ; 11 Engl. C. L. Rep. 
 
 414; 12 Id. 180 23 
 
 Monumental Build'g Ass'n, No. 2, of Balto. City v. Herman et al., 33 Md. 
 
 128 35, 129- 
 
 Monumental Perm't Build'g and Land Soc/y of Balto. v. Lewin, 38 Md. 
 
 445 35,405 
 
 Moore v. Harrisburg Bank, 8 Watts (Pa.) 138 428 
 
 Moore v. Rawlins, 6 C. B., N. S., 289 147 
 
 Morris v. Floyd, 5 Barb. 137 359 
 
 Morris v. Harvey, 4 Ala. 300 311 
 
 Morrison et al., Rec'rs Chesapeake Mutual Land and Build'g Ass'n v. Dor- 
 
 sey, 48 Md. 461 35, 140, 141, 289, 349, 439, 440, 450, 514, 522 
 
 Morrison v. Glover, 19 L. J., Ex. 20; 4 Exch. 430 158 
 
 Mosley v. Baker, 6 Hare 87 ; S. C., 27 Engl. Law & Eq. 512 ; 12 Jur. 551 ; 
 
 17 L. J., Ch. 257 ; 10 L. T. Rep. 461 ; aff'd on app., 1 Hall & T. 301 ; 
 
 13 Jur. 817 ; 18 L. J., Ch. 457 ; 13 L. T. Rep. 317 ; 3 DeG., M. & 
 
 G., 1032 190, 192, 193 
 
 Mount Holly Turnpike Co. v. Ferree, 17 N. J. Eq. 117 445 
 
 Moye v. Sparrow, 22 L. T. Rep., N. S., 154 ; S. C., 18 W. R. 400 ; 5 W. 
 
 N. 33 295 
 
 Muir v. Newark Sav. Institution et al., 1 C. E. Gr. (N. J.) 537 363 
 
 Mullock v. Jenkins, 14 Beav. 628; 21 L. J., Ch. 65 305 
 
 Mulloy v. Fifth Ward Build'g Ass'n, 2 McArth. (Supr. Ct, D. C.) 594 144, 
 
 338, 379, 380, 400,
 
 TABLE OF CASES CITED. 
 
 Muth t. Dolfield, 43 Md. 466 85, 264, 297 
 
 Mutual Build'g and Loan Asw'n r. Hammell et al., 14 Vr. (N. J.) 78... .64, 144, 
 
 219, 235, 236 
 Mutual Life Ins. Co. t. Wiloox, 7 N. Y. W. Dig. 13 290, 310, 376 
 
 N. 
 
 Narragansett Bank v. Atlantic Silk Co., 3 Mete. (Mass.) 282. 520 
 
 National Bank v. Matthews, 98 U. S. (8 Otto) 627 290, 310 
 
 National Build'g Ass'n v. Hottenstein, 10 Pittsb. Leg. Journ., N. S., 225... 87, 
 
 210, 274 
 National Loan and Homestead Ass'n v. Hubley, 34 Leg. Int. 6 ; 24 L. 
 
 J. 50 86, 177 
 
 National Perm't Benefit Build'g Soc*y, In re, Ex parte Williamson, L. E., 
 
 15 Ch. 309; 18 W. R. 388; 22 L. T., N. S., 284 ,. 294 
 
 National Sav. Loan and Build'g Ass'n, In re, Assigned Estate of, 9 W. N. 
 
 C. (Pa.) 79 85, 174, 180, 329, 487, 489, 491, 493, 523 
 
 Neflfs App., 9 Watts & Serg. (Pa.) 36 465, 471 
 
 Nelson v. Blakey, 54 Ind. 29 23 
 
 Nesmith v. Washington Bank, 6 Pick. (Mass.) 324. 447 
 
 Neville v. Wilkinson, 1 Bro. C. C. 543; 3 P. Wms. 74. 267 
 
 Newlin . The Milton Build'g and Loan Ass'n, No. 2, 9 W. N. C. (Pa.) 
 
 220 85,275 
 
 New York R. Co. v. Ketchum, 27 Conn. 170 246 
 
 New York R. R. Co. v. Schuyler, 34 N. Y. 30 256 
 
 Nisbett v. Walker, 4 Ga. 221 359 
 
 Norris v. Staps, Hob. 211 272 
 
 North American Build'g Ass'n v. Sutton, 35 Pa. St. 463 84, 133, 136, 147, 
 
 161, 185, 208, 277, 385, 430, 431, 446, 451, 453, 454, 466, 469 
 
 North River Bank v. Ayinar, 3 Hill 262 267 
 
 North Whitehall, &c., v. South' Whitehall, &c., 3 S. & R. (Pa.) 117 256 
 
 Northumberland County Bank . Eyer, 60 Pa. St. 436 273 
 
 .Norwich and Norfolk Provident Build'g Sotfy, In re, Smith's Case, L. R., 1 
 
 Ch. Div. 481; 45 L. J., Ch. Div. 143; 24 W. R. 103 202, 284 
 
 Norwich and Norfolk Provident Build'g Soc'y, In re, Ex parte Rackham, 
 
 45 L. J., Ch. Div. 785 491 
 
 Nusbaum v. Stein, 12 Md~ 315 487 
 
 O. 
 
 Oak Cottage Build'g Ass'n v. Eastman & Rodgera, 31 lb.a. 556 35, 201, 
 
 378, 382, 397 
 
 Ocmulgee Build'g and Loan Ass'n v, Thomson, 52 Ga. 427 2, 107, 110, 144, 
 
 146, 185, 190, 208, 382, 385, 400, 401, 409, 412 
 
 O'Connor v. Warner, 4 Watts & Serg. (Pa.) 227 127 
 
 Odd FelloW Build'g Ass'n v. Hogan, 28 Ark. 261 107, 270, 272, 273. 350
 
 TABLE OF CASES CITED. X*V 
 
 Orangeville Mutual Sav. Fund and Loan Ass'n v. Young, 9 W. N. C. (Pa.) 
 
 251 85,164,281,398 
 
 O'Reilly i>. Fetherston et al., 4 Bligh, N. S., 161 ; 8. C., 2 Dow. & Cl. 39.... 431 
 O'Rourke v. West Penn Loan and Build'g Ass'n, 12 Norris (93 Pa. St.) 
 
 808; 8 W. N. C. (Pa.) 176 85, 174, 180, 276, 494, 495 
 
 Oroville and Virginia R. R. Co. v. Plumas County, 37 Cal. 354 516 
 
 Osborne, Ex parte, In re Goldsmith, L. R., 10 Ch. App. 41 368, 371 
 
 Overby and Wife v. Fayetteville Build'g and Loan Ass'n, 81 N. C. 
 
 56 77, 185, 190, 208, 342, 380, 450 
 
 Owen v. Haman, 4 H. L. C. 997 487 
 
 P. 
 
 P., Ft. W. & C. R. R. Co. v. Shaefler, 59 Pa. St. 350 235 
 
 Pabst v. Economical Build'g Ass'n, 1 McArth. (D. C.) 385 338, 379, 380 
 
 Paffert v. Robert Blum Build'g and Loan Ass'n, No. 2, 8 Pittsb. Leg. 
 
 Journ. 40 87,149 
 
 Palethorp v. Furnace, 2 Esp. 511 258 
 
 Palmer v. Lawrence, 3 Sand. S. C. R. 161 513 
 
 Parker v. Butcher, 36 L. J., Ch. 552; Law Rep., 3 Eq. 762 144, 210, 
 
 401, 411, 413 
 Parker v. The Fulton Loan and Build'g Ass'n, 42 Ga. 451; 46 Id. 
 
 166 107, 161, 185, 280,340, 341, 355, 356, 357, 379 
 
 Paterson v. Arnold, 45 Pa. St. 410 513, 520 
 
 Patten v. Wilson, 10 Casey (34 Pa. St.) 299 444 
 
 Patterson v. Robinson, 1 Casey (Pa.) 82 315 
 
 Pattison v. The Albany Build'g and Loan Ass'n, 63 Ga. 373 107, 149, 185, 
 
 188, 207, 341, 350, 356, 362, 485, 513, 514 
 
 Patty v. Pease, 8 Paige 277 476 
 
 Pearce v. M. & I. R. Co., 21 How. 441 260 
 
 Peabody Build'g and Loan Ass'n v. Houseman, 89 Pa. St. 261 261, 266 
 
 Pearson v. Morgan, 2 Bro. C. C. 388 267 
 
 Penobscot Boom Corporat'n v. Lamson, 16 Me. 224 273 
 
 People v. Elrnore, 36 Cal. 653 443 
 
 Peoples Tiernan, 30 Barb. (N. Y.) 193 247 
 
 People v. The Troy House Co., 44 Barb. (N. Y.) 625 484 
 
 People's Build'g and Loan Ass'n of Camden v. Wroth et al., 14 Vr. 70.. .64, 144, 
 
 219, 222, 235, 236, 400 
 
 People's Sav. Bank and Build'g Ass'n v. Collins, 27 Conn. 145 106, 350, 359, 
 
 379, 473, 514, 5:11 
 
 Percy v. Millandon et al., 3 La. 568 228 
 
 Peter's Build'g Ass'n, No. 5, of Balto. City v. Jaecksch, 51 Md. 198 35, 503, 
 
 507,509 
 
 Peto v. Hammond, 8 Jur., N. S., 550; 31 L. J., Ch. 354; 30 Beav. 495 155, 
 
 306,489 
 Petrie v. Wright, 6 S. & M. (14 Miss.) 647 255
 
 Xlvi TABLE OF CASES CITED. 
 
 Pfuff v. Build'g Ass'n, 6 W. N. C. (Pa.) 349 86, 20o, !(, 
 
 Philadelphia Mercantile Loan Ass'n v. Moore, 49 Px St. 233 84, 4G1, 462 
 
 Philanthropic Build'g Ass'n v. McKnight, 35 Pa. St. 470.. .84, 345, S55, 357,451 
 
 Philipps v. Wiekham, 1 Paige (N. Y.) 595 519 
 
 Philips v. Foxall, 27 L. T. Rep., N. S., 231 ; Law Rep., 7 Q. B. 666 ; 41 
 
 L. J., Q. B. 293; 20 W. R. 900 235 
 
 Philippeburg Mut. Loan and Build'g Ass'n v. Hawk, 12 C. E. Gr. 355 63 
 
 464,466 
 
 Phenix Bank of New York v. Curtis, 14 Conn. 437 273 
 
 Pinnellr. Boyd, 6 Stewart (N. Y.) 190 359,360 
 
 Planet Benefit Build'g and Investment Sotfy, In re, L. R., 14 Eq. 441 ; 41 
 
 L. J., Ch. 738; 20 W. R. 935; 27 L. T., N. S., 638 493 
 
 Pondville Co. v. Clarke JL Conn. 97 489 
 
 Poock et al., v. The Lafayette Build'g Ass'n, 71 Ind. 357... 23, 25, 290, 311, 312 
 
 Post v. Bank of Utica, 7 Hill (N. Y.) 391 359 
 
 Powell t. Abbott, 9 W. N. C. (Pa.) 231 525 
 
 Power v. Hoey, 19 W. R. 916. 255 
 
 Pratt v. Hutchinson, 15 East oil 4,5 
 
 Premium Fund Ass'n's App., 3 Wright (39 Pa. St.) 156 84, 126, 345, 346 
 
 Presbyterian Church v. Carlisle Bank, 5 Barr. (Pa.) 345 445 
 
 President and Visitors of the Maryland Hospital v. Foreman, 29 Md. 524... 251 
 
 President, &c. v. Myers, 6 Serg. & Rawle (Pa.) 12 253 
 
 President of the U. S. Bank.?'. Harkins, 1 Johns. Cas. 132 272 
 
 Price . Moulton, 20 L. J., C. P. 102 ; 15 Jur. 228 ; 10 C. B. (70 Engl. C. 
 
 L. Rep.) 561 427 
 
 Price v. Taylor, 29 L. J., Ex. 331 ; 6 Jur., N. S., 402 ; 2 L. T. Rep., N. S., 
 
 221; 5H. &N. 540 264 
 
 Priestley v. Hopwood, 12 W. R. 1031 ; 10 L. T., N. S., 646 153, 225 
 
 Professional, Commercial and Industrial Benefit Build'g Sot'y, In re, L. R., 
 6 Ch. 856; 25 L. T., N. S., 397; 19 W. R. 1153 295, 494 
 
 Q 
 
 Quaker-town Build'g and Loan Ass'n v. Server et al., 33 Leg. Int. (Pa.) 
 
 359 476 
 
 Queen's Benefit Build'g Soc'y, In re, 4 L. J., Ch. 381 ; 24 L. T., N. S., 346 ; 
 
 19 W. R. 597, 762; L. R., 6 Ch., 815 493 
 
 Queen City Perpetual Build'g Ass'n of Cumberland v. Price, Trustee, 53 
 Md. 397 35, 432, 433 
 
 Quigley v. Deliaas, 82 Pa. St. 267 263 
 
 Quiner v. Marblehead Social Ins. Co., 10 Mass. 476 447 
 
 B. 
 
 R. v. Aldham and United Parishes Insurance Soc'y, 21 L. J., Q. B. 1 ; 16 
 J P. 149; 15 Jar. 1035; 18 L. T. Rep. 74 218
 
 TABLE OF CASES CITED. 
 
 R. r. Bank of England, Doug. 524 446 
 
 R. v. Bannatyne, 20 L. J., Q. B., 210; 2 L., M. & P. 213 213 
 
 R. v. Batty, 2 Moo. C. C. 257 242 
 
 R. v. Bowers, 35 L. J., M. C. 207 ; S. C., 14 L. T. Rep., N. S., 671 ; Law 
 
 Rep., 1 C. C., 41 ; 12 Jur., N. S,, 671 ; 14 W. R. 803 ; 30 J. P. 452 ... 242 
 R. v. Bren, 9 L. T. Rep., N. S., 452 ; S. C., 27 J. P. 804 ; 9 Cox, C. C. 398 ; 
 
 33 L. J., M. C. 59 ; 3 N. R. 176 ; 12 W. R. 107 ; 1 L. & C., C. C. 346.. .240, 243 
 R. v. Burgess, 32 L. J., M. C. 185 ; S. C., 9 Jur., N. S., 582 ; 8 L. T. Rep., 
 
 N. S., 255 ; 11 W. R. 602 ; 1 L. & C., C. C. 299 ; 9 Cox, C. C. 302 ; 27 
 
 J. P. 388 241 
 
 R. v. Cain, 1 Car. & Mar. (41 Engl. C. L. Rep.) 309 238 
 
 R. v. D-Eyncourt, 4 Best & S. (116 Engl. C. L. Rep.) 820; 28 J. P. 116 ; 
 
 9 L. T. Rep., N. S., 712 ; 12 W. R. 408.... 147, 206, 221, 290, 301, 306; 513 
 R. v. Essex, 30 L. T. Rep., 171 ; S. C., 4 Jur., N. S., 15 ; 7 Cox, C. C. 384 ; 
 
 1 Dears. & B., C. C. R. 369; 21 J. P. 789 239 
 
 R. v. Goodbody, 8 Car. & P. 665; 34 Engl. C. L. Rep. 575 243 
 
 R. e. Hall, 1 Moo. C.C.474 241 
 
 R i'. Hastie, 32 L. J., M. C. 63 ; S. C., 7 L. T. Rep., N. S., 695 ; 9 Jur., 
 
 N. S., 235 ; 11 W. R. 293 ; 1 L. & C., C. C. 269 ; 9 Cox, C. C. 264 ; 27 
 
 J. P. 85 239 
 
 R. v. Lorse, 29 L. J., M. C. 132; S. C., 8 W. R. 422 ; 6 Jur., N. S., 513; 
 
 8 Cox, C. C. 302; Bell, C. C. 259 ; 24 J. P. 341 238 
 
 R. v. Marks, 10 Cox, C. C. 367 239 
 
 R. v. May, 30 L. J., M. C. 81 ; S. C., 7 Jur., N. S., 147 ; 3 L. T. Rep., N. 
 
 S., 680; 8 Cox, C. C. 421 ; 1 L. & C., C. C. 13 243 
 
 R. v. McDonald, 5 L. T. Rep., N. S., 330; S. C., 31 L. J., M. C. 67 ; 7 Jur., 
 
 N. S., 1127 ; 9 Cox, C. C. 10; 10 W. R. 21 ; 1 L. & C., C. C. 85 243 
 
 R. v. Miller, 2 M., C. C. R. 247 240 
 
 R. v. Monday, Cowper 538 222 
 
 R. v. Murphy, 4 Cox, C. C. 101 241 
 
 R.V.Patrick, 1 Leach 253 239 
 
 R. i'. Prince, 1 Moo. & M. 21 240 
 
 R. v. Proud, 31 L. J., M. C., 71 ; S. C., 5 L. T. Rep., N. S., 331 ; 9 Cox, C. 
 
 C. 22; 10W. R. 62; 1 L. & C., C. C. 97 ; 25 J. P. 245 243 
 
 R v. Redford, 21 L. T. Rep., N. S., 508; S. C., 11 Cox,C. C. 367 242 
 
 R. v. Registrar of Friendly Societies, 16 J. P. 613 ; 19 L. T. Rep. 182 212 
 
 R. v. Richardson, 1 Burr. 539 ; 237 
 
 R. v. Shoitridge, 1 New Sess. Cas. 56, 1 D. &'L. 855 310 
 
 R. v. Spencer, Russ. & Ry. 299 240 
 
 'R. v. Thorley, 1 Moo. C. C. 343 240 
 
 R. . Tite, 30 L. J., M. C., 142; S. C., 4 L. T. Rep., N. S., 259; 7 Jur., 
 
 N. S., 556; 8 Cox, C. C. 458; 1 L. & C., C. C. 29; 9 W. R. 554; 25 
 
 J. P. 613 242 
 
 R. v. Tongue, 3 L. T. Rep., N. S., 415; S. C., 8 Cox, C. C. 386; 30 L. J., 
 
 M. C., 49; 24 J. P. 723; Bell C. C. 289 24'<
 
 xlviii TABLE OF CASES CITED. 
 
 R . Turner, 11 Cox,C. C. 551 243 
 
 R v. Tyree, 38 L. J., M. C., 58; 8. C., 19 L. T. Rep., N. 8., 657; Law 
 
 Rep., 1 C. C. R 177 ; 17 W. R 334 ; 33 J. P. 134 241 
 
 R v. Wade, 4 Jur., N. S., 68 ; 8 E. & B. 384 265 
 
 R. . Waite, 2 Cox, C. C. 245 240 
 
 R . Walker, 27 L. J., M. C., 207 ; 1 Dears. & B., C. C. B., 600 243 
 
 Railway Co. v. Allerton, 18 Wall. (U. S.) 233 222 
 
 Railway Co. v. Filler, 60 Pa. St. 132 488 
 
 Ramsey's App., 2 Watts. (Pa.) 228 465, 471 
 
 Reading v. Weston, 7 Conn. 409 359 
 
 Rct-j-procity Bank, In re., 29 Barb. (N. Y.) 369 125 
 
 Red Bank Ass'n v. Patterson, 12 C. E. Gr. (N. J.) 223 63, 369, 379, 464, 466 
 
 Redwine r. The Gate City Loan and Build'g Ass'n, 54 Ga. 474 107, 123, 280 
 
 Reeve v. Palmer, 27 L. J., C. P., 327 ; 4 Jur., N. S., 929 ; 5 C. B., N. S., 
 
 (94 Engl. C. L. Rep.) 84; S. C. at nisiprius, 1 F. & F. 48 232 
 
 Reeve v. Perkins, 2 J. & W. 390 230 
 
 Reeves r. White, 16 J. P. 115; S. C., 21 L. J., Q. B. 169; 16 Jur. 637; 
 
 7 Q. B. 995 434 
 
 Regents of the University of Md. v. Williams, 9 Gill & Johns. (Md.) 
 
 365 481,513 
 
 Reilly i>. Mayer, 1 Beas. (N. J.) 55 63, 466, 475, 476 
 
 Reiser v. William Tell Build'g Ass'n, 39 Pa. St. 13 7 . 84, 126, 345 
 
 Relief Sav. Fund Ass'n v. Longshore et al., 8 Luz. Leg. Reg. (Pa.) 199. ... 87, 165, 
 
 311, 377, 379, 383, 402, 415 
 
 Remington v. King, 11 Abb. Pr. 278 68, 154 
 
 Reynall v. Lewis, and Wyld v. Hopkins, 16 L. J., Ex., 25 ; S. C., 15 M. & 
 
 W. 517. 118 
 
 Reynolds v. Tooker, 18 Wend. (N. Y.) 591 474 
 
 Rheen v. Naugatuck Wheel Co., 33 Pa. St. 358 273 
 
 Rhoads v. Hoernerstown Build'g Ass'n, 82 Pa. St. 180 83, 84, 171, 301, 306, 
 
 346, 349, 403, 484, 514, 515, 517, 518 
 Richards v. The Bibb County Loan Ass'n, 24 Ga. 198... 107, 190, 208, 340, 382 
 
 Richards v. Davis, Am. Law Reg., June, 1859, p. 483 447 
 
 Richards v. Richards, 2 B. & Ad. 447 ; 22 Engl. C. L. Rep. 119 130, 441 
 
 Richardson v. The St. Joseph's Iron Co., 5 Blackf. (Ind.) 146 272 
 
 Richardson v. Williamson, Law. Rep., 6 Q. B. 276; 40 L. J., Q. B., 
 
 145 220,287 
 
 Riley v. Packington, 16 L. T. Rep., N. S., 382 118 
 
 Risk v. Delphoe Build'g and Sav. Ass'n, 31 Ohio St. 517 80, 142, 
 
 190, 208, 378, 426 
 
 Roberts v. Price, 16 L. J., C. P., 169; 11 Jur. 352; 4 C. B. 1231 237 
 
 Robertson v. American Homestead Ass'n, 10 Md. 397 34, 142, 189, 190, 191, 
 
 208, 335, 371, 374, 379, 380, 402, 421, 422, 423, 426, 430 
 
 Robinson v. Smith, 3 Paige (N. Y.) 222 229 
 
 Rodgera . Gibson, 1 Yeates (Pa.) Ill 474
 
 TABIJB OF CASES CITED. 
 
 Rodgers v. Southwestern Mutual Sav. Fund and Build'g Ass'n, 7 W. N. C. 
 
 (Pa.) 95 85, 171, 282 
 
 Rogers v. Huntington Bank, 13 S. & R. (Pa.) 77. 141 
 
 Rollins r. Clay, 33 Me. (3 Red.) 132 488 
 
 Ross v. City of Madison, 1 Ind. 98 255 
 
 Russell v. Wakefield Water Works, L. R., 20 Eq., 474 158 
 
 S. 
 
 Salina Build'g, Sav. and Trust Ass'n v. Nelson et al., 22 Kan. 751.... 31, 32, 379 
 
 Samuel v. Halladay, 1 Woolw. (C. C.) 400 . 222 
 
 Sands v. Church, 2 Seld. (6 N. Y.) 347 358, 359 
 
 Sanford et al. v. Tremlett et al., 42 Mo. 384 254 
 
 Sargent v. Carr, 12 Me. 396. 448 
 
 Sargent v. Franklin Ins. Co., 8 Pick. (Mass.) 90 446 
 
 Sargent v. Webster, 13 Mete. (Mass.) 497 222 
 
 Saving Fund v. Murray, 14 Leg. Int. (Pa.) 133 87, 451 
 
 Sawyer v. Meth. Ep. Church, 18 Vt. 405 22 
 
 Schaeff'er v. Amicable Perm't Land and Loan Co., 47 Md. 126. 35, 270 
 
 Schermerhorn v. Amer. Ins. and Trust Co., 14 Barb. 147 359 
 
 Schnepf's App., 47 Pa. St. 37 84, 362, 451 
 
 Schober v. Accommodation Sav. Fund and Loan Ass'n, 35 Pa. St. 223 84, 
 
 309, 461, 462 
 
 School Distr. v. Blaisdell, 6 N. H. 197 273 
 
 Scott v. Depeyston, 1 Edw. Ch. 513 29 
 
 Scott v. Leary, 34 Md. 589 356 
 
 Scott v. Scholey, 8 East 476 448 
 
 Scott v. Scott, 1 Cox 378 2ti7 
 
 Seagrave v. Pope, 15 Engl. L. & Eq. 477 ; 22 L. J., Ch. 258 ; 16 Jur. 1099 ; 
 
 19 L. T. Rep. 173; 20 Id. 158; 1 DeG., M. & G. 783 188, 189, 190, 
 
 195, 333, 335, 348, 370 
 
 Second Amer. Build'g Ass'n v. Platt et al., 5 Duer (N. Y.) 675 67, 270 
 
 Second German-Amer. Build'g Ass'n of Baltimore City v. Newman, 50 
 
 Md. 62 35, 356 
 
 Second Manhattan Build'g Ass'n v. Hayes, 4 Abb. App. Dec. 183 ; 2 Keyes 
 
 (39 N. Y. Rep.) 192 68, 227, 265, 349, 514 
 
 Second National Bank of Titusville, Appeal of, 85 Pa. St. 528 358, 360 
 
 Second New York Build'g Ass'n v. Gallier, cited in Citizens' Mutual Loan, 
 
 &c., Ass'n v. Webster, 25 Barb. (N. Y.) 263 67, 145, 408 
 
 Selden v. Reliable Sav. and Build'g Ass'n, 2 W. N. C. (Pa.) 481 ; 32 P. F. 
 
 Sm. 336 85, 260, 271, 379, 397, 451, 469 
 
 Selma Build'g and Loan Ass'n v. Morgan, 57 Ala. 33 14, 435 
 
 Sewall v. Lancaster Bank, 17 S. & R. (Pa.) 285 141 
 
 Shack v. Anthony, 1 M. & S. 573 427 
 
 Shackleford v. New Orleans, Ac., R. Co., 37 Miss. 202 24 
 
 D
 
 1 TABLE OF CASES CITED. 
 
 Shaffrey v. The Workingmen's Sav., Loan and Build'g Aaa'n, 64 Ind. 
 
 600 23, 347, 379 
 
 Shannon et al., Trustees, &c., . Dunn, 43 N. H. 194 338, 379, 524 
 
 Shannon v. Howard Mutual Build'g Ass'n of the City of Baltimore, 36 Md. 
 
 383 35, 144, 145, 190,335,350,368,378, 
 
 379, 400, 401, 402, 405, 408, 412, 413, 416, 430 
 
 Sharpe t. Warren, 6 Price 161 266 
 
 Shaw r. Arden, 9 Bingh. 290; 23 Engl. C. L. Rep. 278 232 
 
 Shelley v. The Newport Sav. Ass'n, 11 Bush (Ky.) 305 107, 269 
 
 Sherriff v. Glenton, 28 L. T., N. S., 65 427 
 
 Sherman Build'g Ass'n v. Rock, 9 Phila. 75 86 
 
 Shewalter v. Pirner, 55 Mo. 233 310 
 
 Shinn v. The Commonwealth, 32 Gratt. (Va.) 899 97, 238 
 
 Shipley v. Kymer, 1 M. & S. 484 266 
 
 Shipley r. Mechanics' Bank, 10 Johns. (N. Y.) 484 445 
 
 Shuttle's App., 2 Pa. St. 304. 465,471 
 
 Shufelt v. Shufelt, 9 Paige (N. Y.) 137 359 
 
 Silver v. Barnes, 6 Bingh., N. C. 800 ; 8 Scott 300 ; 37 Engl. C. L. Rep. 
 
 335 327, 332, 335, 337, 341, 343, 346, 348 
 
 Skinner's Estate, 4 Phila. 189 86 
 
 Slawson v. Loring, 5 Allen 340 264 
 
 Slaymaker t. Gettysburg Bank, 10 Barr. (Pa.) 373 442 
 
 Slee v. Bloom, 19 Johns. 456... 519 
 
 Smiths. Crocker, 5 Mass. 538 442 
 
 Smith v. Pilkington, 4 Jur., N. S., 58 ; 30 L. T. Rep. 196 ; 22 J. P. 5 ; 
 
 S. C., on appeal, 1 DeG., F. & J. 120 ; 29 L. J., Ch. 227 ; 24 J. P. 227... 119, 
 
 190, 198, 430 
 
 Smith v. Prattville Manuf'g Co., 29 Ala. 503 228 
 
 Smith t?. Wolf et al., 55 Iowa 555 362 
 
 Smith et al. r. Virgin et al., 33 Me. 148 482 
 
 Smith and Wife v. Mechanics' Build'g and Loan Ass'n, 73 N. C. 372... 77, 187, 
 
 342, 380, 416 
 
 Snider's Estate, 34 Leg. Int. (Pa.) 49 86, 132, 206 
 
 Somerset County Build'g, Loan and Sav. Ass'n v. Canraan & Vandervere, 
 
 3 Stockt. (N. J.) 282. 63, 190, 208, 370, 379, 426, 452 
 
 South Bay Meadow Dam Co. v. Gray, 30 Me. 547 520 
 
 Sparrow v. Farmer, 26 Beav. 511 ; 5 Jur., N. S., 530; 28 L. J., Cn. 537 ; 
 
 33 L."T. 216; 23 J. P. 500 142, 190, 199 
 
 Spering's App., 71 Pa. St 11 227, 228, 229 
 
 Spinning v. Home Build'g and Sav. Ass'n of Dayton, Ohio, et al., 26 Ohio 
 
 St. 483 80, 514, 518, 520 
 
 Spring Garden Ass'n v. Tradesmen's Loan Ass'n, 46 Pa. St. 493.... 84, 451, 453, 
 
 454, 462, 466, 468 
 
 Spring Valley Water Works v. San Francisco, 22 Cal. 434 514 
 
 Springville Sav. Fund and Loan Ass'n v. Raber's Adm'r and terre-tenant, 
 
 33 Leg. Int. (Pa.) 329 ; S. C., 24 Pittsb. L. J. 23 86, 451, 454, 469
 
 TABLE OF CASES CITED. K 
 
 Ftate Board of Agriculture t. The Citizens' Street Kailway Co., 47 Ind. 
 
 407 290 
 
 State v. Carrol], 38 Conn. 471 247 
 
 State v. Greenville Build'g Ass'n, 29 Ohio St. 92 80, 164, 251, 
 
 281, 320, 321, 395, 484 
 
 State v*Oberlin Build'g and Loan Ass'n, 35 Ohio St. 258. ..80, 164, 251, 281, 
 
 296, 309, 311, 320, 321, 365, 395, 484 
 State, Galbraith, pros., v. People's Build'g and Loan Ass'n of Caraden, 14 
 
 Vr. (N. J.) 389 64, 277, 445 
 
 State, Hill, pros., v. Hansom, 7 Vr. (N. J.) 50. 437 
 
 State, Washington Build'g Ass'n, pros., v. Creveling, 10 Vr. (39 N. J. L. 
 
 K.) 465; S. C., aff'd, 11 Vr. (40 N. J. L. R.) 192 64, 437, 477 
 
 State, Washington Build'g Ass'n, pros., v. Hornbacker, 12 Vr. 519, 13 Vr. 
 
 635 64, 325, 338, 386, 436, 437, 452, 477 
 
 State, Wickoff, pros., v. Jones, 10 Vr. 650 437 
 
 State v. State Bank of Maryland, 6 Gill & J. (Md.) 205 488 
 
 State Sav. Ass'n v. Kellogg et al., 63 Mo. 540 58, 154 
 
 Steamship Dock Co. v. Heron, 52 Pa. St. 280 141 
 
 Stedmanv. Eveleth, 6 Mete. (Mass.) 114 513 
 
 Stein and Wife v. Indianapolis Build'g Loan Fund and Sav. Ass'n, 18 Ind. 
 
 237 23,127,272,359,526 
 
 Stephens v. Stephens, 1 Ashm. (Pa.) 190 444 
 
 Stetsons Kempton, 13 Mass. 282 283 
 
 Stevens v. Hurlbut Bank, 31 Conn. 146 447 
 
 Stevens v, Muir, 8 Ind. 352 359 
 
 Stiles's App., 9 W. N. C. (Pa.) 83 85, 164, 252, 281, 
 
 297, 311, 394, 395, 396, 484 
 St. Joseph and Kansas Loan and Build'g Ass'n v. Thompson et al., 19 Kan. 
 
 321 31, 312, 313 
 
 St. Luke's Church v. Mathews, 4 Des. Ch. (S. C.) 578 244 
 
 Stockett v. Ellicott, 3 Gill & Johns. (Md.) 123 354 
 
 Stoddert v. Vestry of Port Tobacco Parish, 2 Gill & J. 227 258 
 
 Stow v. Wise, 7 Conn. 214 520 
 
 Stratton v. Allen, 1 Green 229 226 
 
 Sturgis v. Drew et al., 5 N. Y. W. Dig. 95 278 
 
 Stuyvesant v. Hone, 1 Sandford (N. Y.) 419. 476 
 
 Sunbury Mutual Sav. Fund and Build'g Ass'n . Martin, 1 Luz. Leg. Reg. 
 
 (Pa.) 147 86 
 
 Suttonv. Cole, 3 Pick. (Mass.) 232 273 
 
 Swift v. Allegheny Build'g and Loan Ass'n, 82 Pa. St. 142. 84, 270 
 
 T. 
 
 Tallmadge v. The Fiahkill Iron Co., 4 Barb. 382. 154 
 
 Tanner's App., 11 Pittsb. Leg. Journ. 301 87, 311, 315, 415 
 
 Taylor v. Bank of Kentucky, 2 J. J. Marsh. 564. 235
 
 lii TABLE OF CASES CITED. 
 
 Taylor's Exr t v. Maria, 5 Rawle (Pa.) 51 47ft 
 
 Thatcher v. Gammon, 12 Mass. 268 - 361 
 
 Thistle Friendly Soc'y of Aberdeen t>. Garden, 12 Shaw & Dunlop's Rep. 
 
 745 235 
 
 Thorn t>. Doub, 8 Gill (Md.) 1 359 
 
 Thomas . Shoemaker, 6 Watts & Serg. (Pa.) 183 355 
 
 Thompson v. Berry, 3 Johns. Ch. (N. Y.) 395 361 
 
 Thompson v. Hudson, Law Rep., 2 Ch. App. 255 401 
 
 Thompson t>. Planet Benefit Build'g Soc'y, L. R., 15 Eq. 333 ; 42 L. J., Ch. 
 
 364; 21 W. R. 474; 28 L. T., N. S., 549 231 
 
 Thompson r. Stephens, 10 Me. 27... ..' 448 
 
 Thomson v. Ocmulgee Build'g and Loan Ass'n, 56 Ga. 350 107, 
 
 479, 482, 506 
 Thorn v. Croft, 36 L. J., Ch. 68 ; S. C., 31 J. P. 356 ; L. R., 3 Eq. 193 ; 15 
 
 L. T. Rep., N. S., 205; 15 W. R. 54 435 
 
 Thorndike v. Stone, 11 Pick. (Mass.) 183 337 
 
 Three Towns British Mutual Deposit and Loan Society (Lirn.) v. Doyle, 7 
 
 L. T. Rep., N. S., 276 ; S. C., 11 W. R. 22 ; 13 C. B., N. S. (106 Engi. 
 
 C. L. Rep.), 290 406 
 
 Tierney, In re, 9 Ir. Rep., Eq. 1 ; 8 IT. Law T. Rep. 29 145, 405 
 
 Tobacco-Pipe Makers v. Woodrofle, 7 B. & C. 838 ; 5 D. & R. 530 ; 14 
 
 Engl. C. L. Rep. 129 148 
 
 Tomkine v. Barnett, 1 Salk. 22 354 
 
 Tradesmen's Build'g, &c., Ass'n . Thompson, 5 Stew. (N. J.) 133; 4 Id. 
 
 536 63, 261 
 
 Triefert v. Burgess, 11 Md. 452 487 
 
 Triton Ins. Co. v. McGarian, 4 Denio 392 513 
 
 Trott v. Hughes, 16 L. T. Rep. 260 230 
 
 Trunibo v. Blizzard, 6 Gill & Johns. (Md.) 18 354 
 
 Trustees v. Reneau, 2 Swan (Tenn.) 94 269 
 
 Tucker Mamif!g Co. v. Fairbanks, 98 Mass. 101 263 
 
 Turner v. Calvert, 12 Serg. & Rawle (Pa.) 46 289 
 
 Tyson v. Rickard, 3 HU1 & Johns. (Md.) 109 354 
 
 U. 
 
 Union Bank . Laird, 2 Wheat (U. S.) 390 141 
 
 Union Build'g and Loan Ass'n of New Brunswick v. Masonic Hall Ass'n 
 
 of New Brunswick, et al., 2 Stew. (N. J.) 389 63, 143, 160, 164, 166, 
 
 274, 311, 312, 317, 374, 376, 415 
 
 Union Hall Ass'n t>. Morrison, 39 Md. 281 432, 433 
 
 Uniontown Build'g and Loan Ass'n's App., 92 Pa, St. 200 85, 475 
 
 United States v. Bank of Columbus, 21 How. 356 259 
 
 United States v. Kirkpatrick, 9 Wheat. 720 235 
 
 United States r. Vanzandt, 11 Wheat. 184 235
 
 TABLE OF CASES CITED. liii 
 
 United States Build'g Ass'n v. Silver-man, 4 W. N. C. (Pa.) 546 ; 35 Leg. 
 
 Int. 51 ; 4 Norris (85 Pa. St.) 394 84, 149, 174, 176, 178, 179, 275 
 
 United States Ins. Co. v. Shriver et al., 3 Md. Ch. Dec. 381 465 
 
 Utica Bank v. Smalley, 2 Cow. (N. Y.) 770 141 
 
 Utica Ins. Co. v. Bloodgood, 4 Wend. (N. Y.) 652 243, 246 
 
 V. 
 
 Vann and wife v. Fayetteville Build'g and Loan Ass'n, 75 N. C. 494 77, 
 
 342, 380 
 
 Vansands v. Middlesex County Bank, 26 Conn. 144 447 
 
 Vermilye v. Adams Express Co., 21 Wall. (U. S.) 138 .. 254 
 
 Victoria Perm't Benefit Build'g, Investment and Freehold Land Soc'y of 
 Birmingham and the Midland Counties, In re, Empson's Case, 22 L. T., 
 
 N. S., 855; 18 W. R. 565; L. R., 9 Eq. 597 137 
 
 Victoria Perm't Benefit Build'g, Investment and Freehold Land Soc'y, In 
 re, Hill's Case, Jones' Case, L. R., 9 Eq. 605 ; 39 L. J., Ch. 628 ; 18 
 W. R. 967 ; 22 L. T., N. S., 777 135, 295 
 
 W. 
 
 Wachtel v. The Noah Widows' and Orphans' Beneficial Soc'y, 11 N. Y. 
 
 W. Dig. 457 133, 147 
 
 Wakefield v. Phelps, 37 N. H. 295 83 
 
 Walker v. British Guarantee Ass'n, 16 Jur. 885; 21 L. J., Q. B., 257 219 
 
 Walker v. Giles, 6 C. B. (60 Engl. C. L. Eep.) 662; 13 Jur. 588 : 18 L. J., 
 
 C. P. 323; 13 L. T. Rep. 209 232, 252, 435, 436 
 
 Waller v. Bank of Kentucky, 3 J. J. Marsh. 201 244 
 
 Walter v. Riehl, 38 Md. 211 35 
 
 Wardel v. Edwards, 2 Johns. Cas. 260 444 
 
 Warren v. Lynch, 5 Johns. (N. Y.) 230 253 
 
 Washington Build'g and Loan Ass'n v. Beaghen et al., 12 C. E. Gr. 99 63, 
 
 466, 476 
 Waterlow v. Sharp, Gardner v. Sharp, Law Rep., 8 Eq. 501 ; 20 L. T. 
 
 Rep., N.S., 902 296 
 
 Watkins v. Workingmen's, &c., Build'g and Loan Ass'n of Hyde Park, 38 
 
 Leg. Int. (Pa.) 333; 10 W. N. C. 414; 97 Pa. St. 514 85, 141, 147, 151, 
 
 152, 168, 187, 190, 192, 203, 207, 271, 383, 384, 389, 
 430, 451, 453, 454, 455, 457, 458, 479, 484, 498, 505, 511 
 
 Watts' App., 78 Pa. St. 370 22S, 20 
 
 Weis' App., 5 W. N. C. (Pa.) 423 86, 451, 462, 409, 474 
 
 Welch v. Seymour, 28 Conn. 387 236 
 
 Welsh v. Phillips, 54 Ala. 309 311 
 
 Westerveldt v. Radde, 55 How. Pr. (N. Y.) 369 218 
 
 West Harrisburg Loan and Build'g Ass'n v. Morganthal, 2 Pearson (Pa.) 
 
 343 . 86
 
 llV TABLE OF CASES CITED. 
 
 West Winsted Sav. Bank and Build'g Ass'n v. Ford, 27 Conn. 282..... 106, 350, 
 
 379. 513, 514, 52C 
 
 West Winsted Sav. Bank, Ac., v. Rice, 27 Conn. 293 106, 350, 
 
 379, 513, 514, 520 
 
 Weston P. Bear River, etc., Mining Co., 5 Cal. 186 445, 449 
 
 Wetterwulgh . Knickerbocker Build'g Ass'n, 2 Bos. (N. Y. Super. Ct.) 
 
 381 68, 174, 175 
 
 Wheeler v. Hughes, 1 Dallas (Pa.) 23 444 
 
 White r. Mechanics' Build'g Fund Ass'n, 22 Grattan (Va.) 233... .97, 109, 182, 
 
 189, 208, 285, 338, 365, 379, 486 
 
 White Haven Ass'n v. Kelly, 9 Luz. Leg. Reg. (Pa.) 9 87, 205, 481 
 
 Wide v. Jenkins, 4 Paige (N. Y.) 481... 488 
 
 Wilcox, Ex parte, 7 Cowen (N. Y.) 402 216, 222 
 
 Williams v. Hayward, 25 L. J., Ch. 289 ; S. C., 1 Jur., N. S., 1128 ; 26 L. 
 
 T. Rep. 134; 22 Beav. 220; 19 J. P. 787 435 
 
 Williams v. Storrs, 6 Johns. Ch. 353 268 
 
 Williar v, Baltimore Butchers' Loan and Annuity Ass'n (Williar's App.), 
 
 45 Md. 546 35, 39, 189, 335, 349, 356, 378, 397, 517 
 
 Willis v. Jerrain, Cro. Eliz. 167, Cruise T. 32, C. 2, S. 82. 254 
 
 Wilson v. Little, 2 Comst. (N. Y.) 443 447 
 
 Wilson v. Tucker, 3 Stark. 154 232 
 
 Winchester Build'g Ass'n et al. v. Gilbert, 23 Grattan (Va.) 787.. .97, 182, 189, 
 
 190, 338, 379, 421, 422, 464, 486 
 Windsor & Applegarth v. Bandel et al., 40 Md. 172; 14 Am. Law Rep., 
 
 N. S., 250 14,502, 504, 509 
 
 Witherington v. Banks, Sel. C. C. 31 431 
 
 Wittman v. Build'g Ass'n, 7 W. N. C. (Pa.) 80 85, 149, 175 
 
 Wolbach v. Lehigh Build'g Ass'n, 3 Norris (84 Pa. St.) 211 84, 311, 
 
 313, 314, 402 
 
 Wood v. Robbins, 11 Mass. 504 268 
 
 Wood v. United States, 16 Pet. (U. S.) 342 96 
 
 Woodbury Sav. Bank and Build'g Ass'n v. Charter Oak Fire and Marine 
 
 Ins. Co., 31 Conn. 517 259 
 
 Worcester Medical Institution v. Harding, 11 Cush. (Mass.) 285 520 
 
 Workingmen's Build'g Ass'n v. Coleman, 8 W. N. C. (Pa.) 17 ; 89 Pa, St. 
 
 428 85, 349, 485, 513, 518, 519 
 
 Y. 
 
 Yates v. Aston, 4 Q. B. 182; 8. O, 3 G. & D. 361; 12 L. J, N. S., Q. B. 
 160; 7 Jur. 83 427 
 
 Z. 
 
 Zabriskie v. Cleveland, &<x, R. Co., 23 How. 381 260 
 
 Zion Church v. St. Peter's Church, 5 Watts & Serg. (Pa.) 215- 278
 
 TABLE OF DEFENDANTS 
 
 In Cases in which Building Associations are Plaintiffs. 
 
 B. 
 
 Beaghen et al., Washington Build'g and Loan Ass'n v. 
 
 Bebout's Adm'ra et al., Licking County Sav. and Build'g Ass'n v. 
 
 Benjamin & Benjamin, appellants, Lincoln Build'g and Sav. Ass'n, appellee, v 
 
 Benson et al., Build'g Ass'n v. 
 
 Blackburn et al., Hawkeye Benefit and Loan Ass'n t>. 
 
 Bellinger, Columbia Build'g and Loan Ass'n v. 
 
 Bolster, Bismark Build'g and Loan Ass'n v. 
 
 Brace et al., Frostburg Mutual Build'g Ass'n v. 
 
 Britten, Build'g Ass'n v. 
 
 C. 
 
 Canman & Vandervere, Somerset County Build'g, Loan and Sav. Ass'n . 
 
 Charter Oak Fire and Marine Ins. Co., Woodbury Sav. Bank and Build'g Ass'n v. 
 
 Clifford, Berlin Build'g and Loan Ass'n v. 
 
 Coleman, Workingmen's Build'g Ass'n v. 
 
 Collins, People's Sav. Bank and Build'g Ass'n v. 
 
 Commonwealth, Bourgignon Build'g Ass'n v. 
 
 Commonwealth, Excelsior Build'g Ass'n v. 
 
 Conover, Manufacturers' & Mechanics' Sav. and Loan Co. v. 
 
 Conover el al., Mechanics' Build'g and Loan Ass'n of New Brunswick . 
 
 Creveling, State, Washington Build'g Ass'n, prosecutor, v. 
 
 Crowell, Chicago Build'g Soc"y v. 
 
 Crumb, Columbian Build'g Ass'n of East Balto., No. 4, v. 
 
 D. 
 
 Dobbins, Association v. 
 
 Doyle, Three Towns British Mutual Deposit and Loan Sotfy v. 
 
 E. 
 
 Eastman & Rodgers, Oak Cottage Build'g Ass'n . 
 Ellsler, Build'g Ass'n t>. 
 Eshlebach, Build'g Ass'n v. 
 Everham, Loan Co. v.
 
 Ivi TABLE OF DEFENDANTS. 
 
 F. 
 
 Fatty, City Build'g and Loan Ass'n . 
 
 Flacli, Cincinnati Germ. Build'g Ass'n, No. 3, v. 
 
 Ford, West Winsted Sav. Bank and Build'g Ass'n e. 
 
 GK 
 
 Gallagher et al., Forest City United Land -and Build'g Ass'n . 
 
 ( Sillier, Second New York Build'g Ass'n t. 
 
 Garden, Thistle Friendly Soc"y of Aberdeen t>. 
 
 ir.irge, Build'g Ass'n v. 
 
 Gibson, Ass'n v. 
 
 Gilbert, Winchester Build'g Ass'n v. 
 
 Goodrich et al., City Loan and Build'g Ass'n of Augusta, et al. . 
 
 Graham, Lincoln Build'g and Sav. Ass'n v. 
 
 Haas et al., Lincoln Build'g and Sav. Ass'n v. 
 
 Hammell et al., Mutual Build'g and Loan Ass'n p. 
 
 JIanlen, Marietta Build'g Ass'n v. 
 
 Hawk, Phillipsburg Mutual Loan and Build'g Ass'n v. 
 
 Hayes, Second Manhattan Build'g Ass'n v. 
 
 Heider, Burlington Mutual Loan Ass'n v. 
 
 Hermann et al., Monumental Build'g Ass'n, No. 2, of Balto. City ft. 
 
 Hooker, Marble Build'g Ass'n v. 
 
 Hogan, Odd Fellows' Build'g Ass'n v. 
 
 Hornbacker, State, Washington Build'g Ass'n, prosecutor, v. 
 
 Hottenstein, Nat'l Build'g Ass'n v. 
 
 Houseman, Peabody Build'g and Loan Ass'n v. 
 
 Hubley, Nat'l Loan and Homestead Ass'n v, 
 
 J. 
 
 Jaecksch, Peter's Build'g Ass'n, No. 5, of Balto. City . 
 
 K. 
 
 Keller, Delaware Build'g Ass'n v. 
 Kellogg, State Sav. Ass'n v. 
 Kelly, White Haven Ass'n v. 
 Kribs, Ass'n v. 
 
 I*. 
 
 Lewin, Monumental Perm't Build'g and Land 8oc*y of Balto. flk 
 Lowdermilk, Frostburg Mutual Bnild'g Ass'n v. 
 Lyon, Citizens' Loan Ass'n of Newark v.
 
 TABLE OF DEFENDANTS. Ivii 
 
 M. 
 
 March, Franklin Build'g Ass'n . 
 
 Martin, Hoboken Build'g Ass'n v. 
 
 Martin, Sunbury Mutual Sav. Fund and Build'g Ass'n v. 
 
 Masonic Hall Ass'n of New Brunswick, Union Build'g and Loan Ass'n of 
 
 New Brunswick v. 
 Mather, Franklin Build'g Ass'n v. 
 McKnight, Philanthropic Build'g Ass'n . 
 Meriden Agency Co., Mechanics' and Workingmen's Mutual Sav. Bank aW 
 
 Build'g Ass'n of New Haven v. 
 Metzger, German Fair Hill Build'g Ass'n v. 
 Mixell, Juniata Build'g and Loan Ass'n v. 
 Moore, Philadelphia Mercantile Loan Ass'n v. 
 Morgan, Selma Build'g and Loan Ass'n v. 
 Morganthal, West Harrisburg Loan and Build'g Ass'n . 
 Morrison, Union Hall Ass'n v. 
 Murray, Saving Fund v. 
 
 N. 
 
 Neill, Germania Build'g Ass'n v. 
 Nelson et al., Salina Build'g, Sav. and Trust Ass'n v. 
 Neurath, Ass'n v. 
 
 Newman, Second Germ.-Amer. Build'g Ass'n of Balto. City v. 
 Nugent et al., Citizens' Loan Ass'n of the City of Newark v. 
 
 O. 
 
 O'Connor, Build'g Ass'n v. 
 
 Odd Fellows' Hall Ass'n, Manufacturers' and Mechanics' Sav. and Loan 
 Ass'n v. 
 
 P. 
 
 Patterson, Red Bank Ass'n v. 
 
 PfeifFer & Schauffele, Hansbury, Treas. Germantown Build'g Ass'n, . 
 
 Platt, Second Amer. Build'g Ass'n v. 
 
 Prioe, Queen City Perpetual Build'g Ass'n of Cumberland v. 
 
 B. 
 
 Raber's Adm'r, Springville Sav. Fund and Loan Ass'n t. 
 
 Reid, Build'g Ass'n v. 
 
 Reynolds, Hamilton Build'g Ass'n t. 
 
 Rice and wife, Build'g Ass'n v. 
 
 Richards, Bibb County Loan Ass'n v. 
 
 Roan, Kingsessing Build'g Ass'n v. 
 
 Rock, Sherman Build'g Ass'n v. 
 
 Rowe, Build'g Ass'n t. 
 
 Ruegger, Chillicote Sav. Ass'n .
 
 Iviii TABLE OF DEFENDANTS. 
 
 8. 
 
 Schuller, Build'g Ass'n v. 
 
 Seemiller, Build'g Ass'n v. 
 
 Sendmayer, German Union Build'g and Sav. Fund Ass'n v. 
 
 Silvenuon, United States Build'g Ass'n v. 
 
 Smith et al., Maryland Perm't Land and Build'g Soc'y of Baltimore *. 
 
 Server et al., Quakertown Build'g and Loan Ass'n v. 
 
 Stark et al., Frostburg Build'g Ass'n et al. v. 
 
 Steele, Association v. 
 
 Stephens, Clark ville Build'g and Loan Ass'n v. 
 
 Stevens et al., Mechanics' Build'g Ass'n v. 
 
 Stonemetz, Loan Ass'n v. 
 
 Sutton, North Anier. Build'g Ass'n v. 
 
 T. 
 
 Taylor, Baltimore Perm't Build'g and Land Soc'y v. 
 
 Thompson et al., St. Joseph and Kansas Loan and Build'g Awn . 
 
 Thompson, Tradesmen's Build'g, &c., Ass'n v. 
 
 Thomson, Ocmulgee Build'g and Loan Ass'n v. 
 
 Timmins, Build'g Ass'n v. 
 
 Tradesmen's Loan Ass'n, Spring Garden Ass'n v. 
 
 TJ. 
 Uhler, Citizens' Security and Land Co. of Balto. City v. 
 
 V. 
 
 Vandervere, Somerset County Build'g, Loan and Sav. Ass'n . 
 
 W. 
 
 Wall, Ass'n v. 
 
 Weber, Canton Nat'l Build'g Ass'n v. 
 
 Webster, Citizens' Mut. Land and Accumul'g Fund Ass'n t>. 
 
 Wilcoz, Mechanics' and Workingmen's Mut. Sav. Bank and Build'g Asu'n w 
 
 Wroth, People's Build'g and Loan Ass'n of Camden v. 
 
 Y. 
 
 Young, Orangeville Mut Sav. Fund and Loan Ass'n v. 
 
 Z. 
 Backer, Low Street Build'g Ass'n, No. 6, v.
 
 THE LAW OF 
 
 BUILDING ASSOCIATIONS. 
 
 CHAPTER I. 
 
 INTRODUCTORY. 
 
 1. Introduction of the subject of the present treatise. 
 
 4. Early history of building associations. 
 
 5. Account of the Greenwich Union Building Association, founded 
 
 1809. 
 
 6. Growth of building associations in America. 
 7. Primary design and general description of the operation of the 
 
 building association scheme. 
 12. Terminology of building associations. 
 
 Introduction of the Subject of the Present Treatise. 
 
 1. The building association is an institution in modern 
 society. Its plan was designed to meet the wants, and accom- 
 modate itself to the peculiarities, of men, whose little earnings 
 can be only slowly raised to an effective bulk. It is the 
 creature of legislative policy, and not of legislative caprice. 
 In its essential plan and nature, it is the same all over the world, 
 springing from the same considerations, ministering to the 
 same necessities, achieving the same results. The similarity 
 existing between the statutes and usages relating to building 
 associations in the various States and countries is neither 
 accident nor simply imitation. It is at once the evidence 
 and the recognition of identical requirements of society in the 
 various communities. 
 
 2. This identity being a conceded fact, it follows that 
 the same system of legal and equitable principles must control 
 the relations and workings of building associations generally, 
 subject only to such modifications as may be introduced by 
 statutes and rules governing any particular society, or the
 
 2 THE LAW OP BUILDING ASSOCIATIONS. [CH. 1. 
 
 societies of any particular State. These statutes and rules, in 
 turn, are all framed upon substantially the same plan, elabo- 
 rated by many years of practical experience, and passed by a 
 sjxjcies of tradition from land to land and from society to 
 society. Thus the same regulations, and the same contracts 
 under them, all couched in very nearly identical phraseology, 
 have been for years before the courts, and " there is scarcely a 
 word in them that is superfluous or without a definite mean- 
 ing." ' There are probably but few questions capable of 
 arising in a building association, which have not, at some time 
 or other, in some court or other, received such adjudication 
 as will furnish a guide, if not an absolute rule, in the determ- 
 ination of similar questions under similar circumstances. 
 
 A mere compilation of these decisions would, at first 
 blush, seem but a jumble of ill-considered and confused con- 
 tradictions, based, without logical connection between them or 
 many general doctrines of law, upon the circumstances of 
 each special case. " I am afraid I do not understand them 
 all," says Sharswood, Chief Justice of Pennsylvania, referring 
 to the decisions of the courts of his Own State alone upon a 
 single class of building association cases." Yet these associa- 
 tions are, all over the world, founded on a few plain, identical 
 principles of equity and fairness, and the theory of their 
 business based upon immutable mathematical axioms. These 
 principles and these axioms, appealing, perhaps unconsciously, 
 to the common sense and justice of the courts, have led them, 
 without method, with very little reference to one another, yet 
 always in fact working together, to establish, in isolated de- 
 cisions, a body of law applicable to building associations, 
 which, when understood as a whole, presents a most perfect, 
 complete and beautiful system : so that, whilst there is an 
 abundance of inconsistencies between judicial utterances, not 
 only in different States, but in the same State ; not only be- 
 tween the grounds taken in different decisions, but between 
 the reasons adduced in support of the same judgment, there 
 is no difficulty in discriminating between the right and the 
 wrong. 
 
 3. It is the primary design of this work to furnish a 
 
 i 
 
 1 Ocmulgce Building Association * Jarrett v. Cope, 68 Pa. St. 67. 
 v. Thomson, 52 Ga. 427.
 
 4.] INTRODUCTORY. 3 
 
 convenient and reasonably complete statement of the princi- 
 ples thus established, the grounds upon which they rest, and 
 the deductions fairly to be drawn from them ; to consider the 
 institution of building associations, their formation, nature, 
 scope, purposes, powers and workings, in the light of all the 
 decisions affecting them ; and to provide the means of arriv- 
 ing at a prompt understanding of the true character of any 
 manifestation of the scheme, as well as of the governing legal 
 principles : in a word, to present a comprehensive view of 
 the system of law applicable to Building Associations. 
 
 In view of the extraordinary number of building associa- 
 tions scattered over the entire country ; of the immense 
 amount of capital controlled by them ; of the thorough iden- 
 tification of the largest class of the population of many com- 
 munities with these societies, both as stockholders and as bor- 
 rowers, there seems to be no apology needed for a work of 
 such design. 
 
 On the other hand, the novelty of the undertaking, with 
 no treatise of similar reach upon the subject to suggest even 
 the topics to be considered, or the arrangement of the matter 
 treated of ; the almost total absence of any* apparent reference 
 in the decisions of the courts of one jurisdiction to those of 
 another ; the numerous variations introduced, by special or 
 general statutes and by recognized usage, in the methods and 
 forms adopted or followed in the several States, have con- 
 stituted difficulties in the way of producing a work of gen- 
 eral utility, as well as of substantial service under each particu- 
 lar system, which the writer can hope to have but imperfectly 
 overcome. 
 
 Early History of Building Associations. 
 
 4. The history of the origin and early growth of build- 
 ing associations is involved in considerable uncertainty. It 
 answers no practical purpose to ascribe to them a fanciful 
 antiquity, reaching back to the days of the Greek republics. 
 Nor, owing to the scarcity of literature on the subject, has it 
 been possible to substantiate the supposition (based upon 
 their prevalence and flourishing condition in Germany, and 
 in the German-peopled sections of America, as well as the 
 peculiarly frugal and associative tendency of the Teutonic 
 race,) that they are of German birth, although every effort
 
 4 THE LAW OF BUILDING ASSOCIATIONS. [CH. I. 
 
 has been made to obtain authoritative historical information 
 touching these institutions in that country. 
 
 Account of the Greenwich Union Building Association, founded 1809. 
 5. The first association of this kind, of whose existence 
 and character the English reports furnish evidence, was the 
 Greenwich Union Building Association, founded by a deed 
 of rules and regulations, dated the 7th day of January, 1809. 1 
 Its object was the raising, by monthly subscriptions, of a 
 fund or capital, to be laid out in building houses, which were 
 to be divided among the members, under and subject to the 
 rules and regulations of the deed. The society was to con- 
 sist of not more than fifty members, holding, in the aggregate, 
 not more than 200 shares, of 210 each. They met upon the 
 first Thursday in every month, when the books continued 
 open for two hours, and each member was obliged to pay two 
 guineas on every share held by him, until 210 should be 
 paid on each share. The first default in making the pay- 
 ment so required, subjected the delinquent to a forfeiture of 
 2s. 6d., the second 5*., the third 10s. Gd., and if, after notice, 
 he should still refuse to comply with the articles, he should 
 be excluded, and the money advanced by him forfeited, un- 
 less he should, within three months from his last default, 
 provide a person who should be voted eligible to become a 
 member of the Society. In such case, the member thus sell- 
 ing his share should forfeit ten per cent upon his subscrip- 
 tions for the benefit of the Society, unless his default were 
 excusable on the ground of misfortune. The members were 
 to draw lots, from time to time, as often as the funds of the 
 Society amounted to 100 clear. Every share should con- 
 sist of a dwelling-house of the best materials, to be completed 
 in a workmanlike manner. The tradesmen, etc., to be em- 
 ployed were indicated in the articles. Every house must be 
 begun within one week after notice, roofed within three 
 weeks, and finished within six months ; in default of which the 
 tradesmen, etc., forfeited five per cent upon their respective 
 
 1 Pratt t>. Hutchinson, 15 East. 511; -whom the credit of founding the 
 
 decided May 1, 1812. Seealso Davis, first modern building society has 
 
 Law of Building, etc., Societies, 2d usually been assigned, was of later 
 
 ed., p. 1. The society started in date, the year generally being given 
 
 Scotland by the Earl of Selkirk, to as 1815.
 
 6.] INTRODUCTORY. 5 
 
 bills. These were to be paid by the treasurer of the society 
 only upon the work being pronounced satisfactory by the 
 society's surveyor. And from the time such house was 
 finished the member owning it should pay to the Society five 
 per cent per annum on the 210 share, so drawn and ad- 
 vanced, until the final close of the society, when each mem- 
 ber should have paid his 210 on each share held by him. 
 A member might build his house before being successful in 
 the drawing ; and in that case, whenever his turn came, he 
 should be paid 210 for every share he held, provided he em- 
 ployed, in the construction of his house, the tradesmen, etc., 
 appointed by the society. If the member had not himself 
 paid those who built his house for him, the treasurer of the 
 society was to do so, and the surplus only, if anv, of the said 
 210 was to be paid to the member. Security, to the satis- 
 faction of the Society, for the money thus advanced, was to be 
 placed in the treasurer's hands until the final winding up of 
 the concern ; and a bond was executed by the member for 
 the payment of interest on the sum advanced and all future 
 payments required by the rules, and for the due performance 
 of the rules. This association was held to be legal, 1 and it 
 certainly appears that the fundamental theory and practice 
 of a terminating building association were already well com- 
 prehended. 
 
 Growth of Building Associations in America. 
 
 6. In the year 1836, twenty-seven years after the Green- 
 wich Union Building Society had been established, and in 
 the same year which was distinguished in Great Britain by 
 the passage of an Act of Parliament' affording ample facili- 
 ties for the formation of building associations in that 
 country, the first association of this kind in America was 
 organized in Brooklyn under the name of The Brooklyn 
 Building and Mutual Loan Fund Association. 3 After that 
 date, they began to crop out plentifully throughout the east- 
 ern section of the country, partly as unincorporated, volun- 
 tary associations, partly under charters obtained by virtue of 
 
 Pratt v. Hutchinson, 15 East, 8 See opinion of Lnrapkin, J., in 
 511. Bibb County Loan Association v. 
 
 * 6 and 7 Will. IV. c. 32. Richards, 21 Ga. 592.
 
 6 THE LAW OF BUILDING ASSOCIATIONS. [CH. I. 
 
 general acts of the several commonwealths, authorizing the 
 incorporation of beneficial and such like associations. Their 
 power and importance grew rapidly during the feverish era of 
 our national development almost immediately preceding the 
 civil war, and legislation became imperative. The decade be- 
 tween 1850 and 1860 comprises the period when most of the 
 older States, already thickly strewn with building associa- 
 tions, made the first attempts at statutory regulation of the 
 powers, formation and management of these societies. Since 
 then, they have constituted a class of corporations distinct 
 and different from every other, peculiar in their privileges as 
 well as in their disabilities, the source of dispute and differ- 
 ence of opinion, about equally witli reference to the applica- 
 tion of legal principles, and in respect of their practical util- 
 ity. In some States, they have proved a failure, and their 
 formation has been either prohibited or abandoned. In 
 others they have continued to prosper and multiply until 
 their number and the amount of capital and property they 
 control is at this day truly enormous. 
 
 Primary Design and General Description of the Operation of the 
 Building Association Scheme. 
 
 7. The idea which n'rst gave rise to the institution of 
 building associations ; which furnished their ostensible and 
 legitimate raison d'etre, and which secured to them their pop- 
 ularity and their, in many respects, exceptionally favored po- 
 sition before the law, is that of enabling persons belonging 
 to a class whose earnings are small, and with whom the slow- 
 ness of the accumulation discourages the effort, to become, 
 by a process of gradual and compulsory saving, either at the 
 end of a certain period, or by anticipation of it, the owners 
 of homesteads. The operation of the scheme may be easily 
 understood. 1 
 
 1 For a good many of the sugges- atoga, Sept. 9, 1881. The only fault 
 tions contained in the following de- I have to find with that gentleman's 
 signedly popular description of the exposition is, that there is too little 
 building association scheme 1 am stress laid upon the mission of a build- 
 indebted to a lecture reported in the ing association to make its members 
 Philadelphia Ledger of Sept. 16, 1881, their own landlords, a point which 
 as delivered by Addison B. Burke, it is essential to keep in view, in or- 
 Esq. , of that city, before the Ameri- der to understand the law of building 
 can Social Science Association at Sar- associations in many of its bearings.
 
 8.] INTRODUCTORY. 7 
 
 8. Suppose that there are an hundred men able to save 
 live dollars out of their monthly earnings. They agree, for 
 the purpose of united action and mutual encouragement, to 
 put their money together upon fixed days every month, until 
 the whole aggregate shall be sufficient to pay to each of the 
 hundred associates $1000 in cash. It is clear, that if all are 
 prompt in their payments, the treasure will be ready for di- 
 vision at the end of 200 months ; in other words, letting each 
 monthly payment of one dollar represent a " share" in the 
 common fund, each share will, at the end of 200 months, be 
 worth a fixed par value of $200. This period, however, will 
 be shortened if, after each monthly collection of $500 has 
 been made, that sum is at once put out at interest, upon some 
 safe investment, with the addition of the interest, etc., accruing 
 to the fund. The distribution of $200 to each share may be fea- 
 sible in, say, 180 months, when each associate has. in fact, paid 
 only $180 on each of his five shares, that js. has paid in 
 $900 up to the time when he is entitled to receive $1000. 
 Thus far we have simply a co-operative savings fund, the 
 stated payments being periodical and compulsory. But the 
 persons who started this association, had an object beyond the 
 mere saving of money ; they desired, through it, to acquire 
 houses, homes. When, therefore, the question of investing 
 the money arose, it was found that it might be made the 
 means of securing to some of the members, particularly anx- 
 ious to "become their own landlords," the property upon 
 which they wished to build, and the money to defray the ex- 
 penses of building, they paying the interest upon the amount 
 loaned them. In this way the money, which belonged to all, 
 would assist the individual, and he, whilst he continued to 
 pay his monthly instalments, would, in paying interest on the 
 money advanced to him, in fact be paying it in part to him- 
 self, and would himself help to hasten the day when he 
 would be entitled to participate with the others in the distri- 
 bution of the common fund, his share in which might then 
 at once be devoted to the extinguishment of the loan he had 
 received. Thus he would get his house, perhaps, a number of 
 years before his monthly payments of five dollars could be 
 expected to amount to a sum sufficient to pay for it; and yet 
 those small payments, being kept up by him, would, in time,
 
 8 THE LAW OP BUILDING ASSOCIATIONS. [CH. I. 
 
 equal the sura he had borrowed, and he would have his house 
 free, virtually paying for it in instalments of five dollars 
 monthly, and the interest on the amount he had borrowed. 
 Such a bargain he could get nowhere else, and it stands to 
 reason that more than one member should endeavor to obtain 
 the advantage of being able to pay so gradually for his house, 
 and yet have it all his very own. Hence, whenever there is 
 a sum of money ready for investment, there will probably bo 
 a number of applicants, and it will be a matter of embarrass- 
 ment to know to whom to give the loan. But this awkward- 
 ness is again turned into a source of profit. Among those 
 who apply there will be some to whom, for various reasons, 
 the accommodation may be of considerably more moment 
 than to others. It will be worth more to some than to the 
 rest, and this difference will probably be capable of expression 
 in dollars and cents. The loan, therefore, is put up at a sort 
 of auction. Various members, desirous of obtaining it, bid 
 against each other for the preference, agreeing that they 
 will receive the sum offered, less the amount bid by them. 
 This difference, the borrower's bid, is called the premium or 
 bonus, which he undertakes to pay, together with the amount 
 actually received by him, the two constituting his whole 
 debt, to be discharged in the same manner and at the same 
 time. It is a rule with these societies that a member's in- 
 debtedness by loan shall not exceed the paid-up value of the 
 number of shares he holds in the association. 
 
 Thus it appears that the association, in turning over the 
 moneys coining in with regularity every month, has the bene- 
 fit of two sources of profit, interest on loans to its mem- 
 bers, and premiums for the preference of the loans. The 
 accumulation is, therefore, far more rapid than if it enjoyed 
 the former only ; and it may be supposed, that, barring any 
 unforeseen losses and calamities, all will be ready for the 
 final distribution of $1000 to each member in, say, 140 
 months. 
 
 9. But all members are not uniformly punctual and pre- 
 cise in their habits. Some one may fail, in the course of 
 time, to pay an instalment as it becomes due. In such a case 
 the member who defaults will injure his fellows. He de- 
 prives the society of the use of the amount due from him,
 
 10.] INTRODUCTORY. 9 
 
 and yet, having an equal interest with all in the common 
 fund, he will eventually lose only his proportionate share of 
 the possible profit upon his unpaid deposit, which will be 
 more than compensated (remembering that he has in addi- 
 tion retained the money he ought to have paid in) by the 
 gain he makes, to the extent of his interest in the profits of 
 the common fund, from the gains upon the deposits of other 
 more conscientious members. To counterbalance this loss to 
 the society, and to check any tendency of imposing upon it 
 in this manner, a fine is put upon unpaid instalments or de- 
 posits of an amount slightly in excess of the possible profit 
 which might have been made upon the unpaid instalment. 
 Thus, neither does the defaulter gain anything by his delin- 
 quency, nor is the society a loser through his negligence. 
 Yet it is an irregularity which embarrasses the business, and 
 as the success of the enterprise rests upon the continued zeal, 
 faithfulness and economy of its members, persistent neglect 
 of duty makes any particular individual a nuisance to all the 
 rest. If. therefore, he perseveres in his dereliction, the so- 
 ciety reserves to itself the right of shaking him off. In such 
 case he forfeits his interest in the concern, and ceases to be a 
 member. 
 
 10. But circumstances may arise, when, without any 
 personal fault, a member finds it impossible to keep up his 
 payments, or when, for some reason or other, it becomes 
 necessary or advisable for him to withdraw from the society. 
 There has been, it must be supposed, no dereliction on his 
 part, and hence nothing savoring of penalty can be properly 
 imposed upon him. Yet it would be almost impossible, 
 taking into account his original assumption to participate in 
 the scheme, without intermediate return of profits, until the 
 time agreed upon for separation has arrived, to figure out 
 precisely what his interest may be worth at any given 
 moment. The funds of the society are invested ; upon them 
 there may be losses which cannot, as yet, be estimated. The 
 membership may dwindle down, and embarrassments arise 
 in consequence. The premiums may be high during the 
 next few years, or money may be very free, and premiums 
 low, in the one case making profits large, in the other reduc- 
 ing them to a minimum; in the one case admitting of a
 
 10 THE LAW OF BUILDING ASSOCIATIONS. [CH. I. 
 
 speedy winding up, in tlio other postponing it even beyond 
 the estimated period of dissolution, and requiring an unex- 
 pectedly prolonged continuance of stock payments. The 
 effect of all these uncertainties is such that it would embar- 
 rass the society exceedingly, were they obliged, at the instance 
 of any member, however well justified, at any time to take 
 an account, and estimate exactly the amount he would be en- 
 titled to receive as his present interest in the society's future 
 accumulations. To avoid this contingency, and yet do sub- 
 stantial justice to the individual, provision is made in the 
 organic law of the society, to enable a member desirous of 
 withdrawing to receive from the society, upon proper notice 
 given it of his intention, a sum equal to what he has paid 
 in, with the addition of a certain percentage in liquidation 
 of and representing his proportion of the profits of the busi- 
 ness. He then surrenders his stock for cancellation and 
 withdraws from the membership. If the business of the 
 society and its legal powers warrant it, new shares are issued, 
 i.e. new members taken in, in the place of those withdrawn 
 or forfeited, and back payments demanded from them suf- 
 ficient to put them on an equal footing, as to the amount 
 already paid and gained upon the old shares, with the rest of 
 the members. 
 
 11. It will be readily understood, that, in such a society, 
 the demand for money will at first be brisk and premiums 
 rule high. In course of time, this demand slackens, premi- 
 ums fall off, and eventually it becomes difficult to dispose of 
 the money to the members. Other, outside investments 
 must be made. At last it is found that the money on hand, 
 and the securities representing money, are sufficient, after 
 payment of all expenses, to cancel all the obligations given 
 by members to the society, and to distribute to those who 
 have received no loans the full amount of $200 on each share, 
 or, upon our supposition, $1000 to each member who has bor- 
 rowed nothing, and to surrender the securities given by those 
 who have bought out their shares. The association is then, 
 technically speaking, " wound up," that is, its business of 
 receiving deposits from its members is closed, interest on 
 the obligations of members to the society ceases, and the 
 obligations themselves are vacated, moneys due from out-
 
 13.] tNTHOJDUCTOKY. 11 
 
 eiders collected, lands held by the society sold off, and the 
 fund, after payment of all expenses, distributed among the 
 unadvanced members. 
 Terminology of Building Associations. 
 
 12. It remains to explain, in a few words, some phrases 
 which have come to be stereotyped and accepted in certain 
 well-defined meanings, in the business language of building 
 associations, and which, for the sake of brevity, will be here- 
 after used in this treatise. 
 
 The capital or stock, that is to say, the fund which the 
 association expects to have accumulated within the period 
 fixed for its duration, and the readiness of which to be 
 divided in cash or by cancellation of obligations marks that 
 period, is divided into shares, to which is given a fixed par 
 or paid-up value. This value represents the amount which 
 these shares are expected to be worth, when, together with 
 the profits upon investments, etc., the numerous small sums 
 which have been paid up by the members have swelled to the 
 bulk contemplated at the outset. The actual value of the 
 share, which is a very different thing, may be very small 
 indeed, during the first year of the society's life. But 
 the par QY paid-up value is fixed from the beginning. When 
 the two coincide the course is run, for, whilst in manufac- 
 turing and other business corporations, the capital stock 
 is merely the instrument through which their objects are 
 effected, and its payment, at least to a large proportion, a pre- 
 requisite to their operations, building associations have accom- 
 plished the purposes of their organization the moment the 
 stock by virtue of the periodical payments made by its 
 members, and the gains realized therefrom and placed to the 
 credit of the association, each member having an interest 
 therein, proportionate to the number of shares held and 
 paid on by him is paid up to the amount ascertained and 
 limited by the charter of the association. The fixed peri- 
 odical payments to be made on each share of stock are 
 the " stock payments," "instalments" "subscriptions," or 
 "dues." 
 
 13. Corresponding in amount with the par value of the 
 share is the " loan" A member being entitled to a loan for 
 every share of stock he holds, the money, which at any time
 
 12 THE LAW OP BUILDING ASSOCIATIONS. [CH. I. 
 
 the association is prepared to place, is divided into lots each 
 equal to the paid-up value of a share. These lots are called 
 loans, and are bid for separately, a member, however, having, 
 in general, a right to take as many loans as his stock interests 
 entitle him to, at the figure or discount agreed to on the first. 
 This discount, the sum bid or offered by the member desir- 
 ing the loan, the price of his preference, is the "premium" 
 or " bonus." 
 
 When a member receives a loan by virtue of his stock 
 interest in the society, he practically anticipates his future 
 dividend ; he is therefore an " advanced " member, a " bor- 
 rower" as contradistinguished from an "investor" who 
 merely goes on depositing his monthly instalments without 
 taking a loan. The share, upon the strength of being the 
 holder of which, he obtained the advance, is said to be 
 " redeemed" as to the building association ; " bought out" as 
 to the borrower. 
 
 14. The withdrawal of a member is his voluntary ces- 
 sation of membership in the society, attended with all the 
 rights and advantages secured by statute, or by the rules of 
 the organization, to persons desiring to sever their connection 
 with the same previously to its expiration, but without los- 
 ing the benefit of their past payments. Before, however, 
 the privileges of withdrawal can be claimed, the withdrawal 
 notice, setting forth the intention of the party, must have 
 been given to the society. When the latter has accumulated 
 an amount sufficient to distribute to each unredeemed share 
 its fixed par value, and to cancel the loans granted upon 
 those that were bought out, it is ready for " winding-up" 
 i.e., the closing of its business and the dissolution of its cor- 
 porate existence. 
 
 15. The variety of the nomenclature with which it has 
 been sought to express the peculiar character and office of these 
 institutions is very perplexing. Building and savings associa- 
 tions, mutual benefit building societies, loan fund associations, 
 homestead associations, mutual loan, savings and building 
 associations, building and loan associations, co-operative sav- 
 ings or saving and loan associations, are but a few of them. 
 
 The shortest name has been chosen for the purposes of this 
 treatise, partly because the societies are, it is believed, more
 
 17.] STATUTOEY PROVISIONS OF THE STATES. 13 
 
 generally and popularly known as building associations than 
 by any other phrase ; and partly, also, because it is, after all, 
 looking at the fundamental principles and purposes which 
 recommend the scheme, not more apt to mislead than some 
 of the other names, which are besides more difficult to 
 handle. 
 
 CHAPTER II. 
 
 STATUTORY PROVISIONS OF THE SEVERAL STATES OF THE UNION* 
 
 16. General observations. 29. Nebraska. 
 
 18. Alabama. 30. New Jersey. 
 
 19. California. 31. New York. 
 
 20. Illinois. 32. North Carolina. 
 
 21. Indiana. 33. Ohio. 
 
 22. Iowa. 34. Pennsylvania. 
 
 23. Kansas. 35. Virginia. 
 
 24. Maryland. 36. West Virginia. 
 
 25. Massachusetts. 37. Wisconsin. 
 
 26. Michigan. 38. States in which building as- 
 
 27. Minnesota. sociatious are incorporated by special 
 
 28. Missouri. acts. Connecticut. 
 
 General Observations. 
 
 16. The general plan described in the preceding chapter 
 forms the model after which, all over the world, these socie- 
 ties are organized. Infinite as are the varieties and diversities 
 of their details, their essential features will be found to be 
 substantially similar. The most notable differences, indeed, 
 are more in the extent or limitation of the powers conceded 
 to building associations than in the kind and nature of these 
 powers. At the same time, the decisions of the several courts, 
 in a large number of cases, are merely interpretations of stat- 
 utes, rather than expositions of general principles. The com- 
 parison of statutes is, therefore, a most powerful auxiliary to 
 the perfect understanding of the law as laid down. 
 
 17. It is the purpose of this chapter to exhibit the stat- 
 utes of the several States, as and where, at the present time, 
 such are in force. In the later portions of this treatise, it 
 would obviously be impossible to refer, whenever discussing 
 any feature or incident of the building association scheme,
 
 14 THE LAW OF BUILDING ASSOCIATIONS. [CH. LL 
 
 to the statutory regulations throughout the Union upon the 
 subject. Such reference, if desired, can be readily had in 
 this chapter, the States being arranged alphabetically and the 
 statutes given in full. It has, therefore, appeared advisable 
 to refrain, in the body of the work, from any express refer- 
 ence to this chapter, it being presumed that comparisons will 
 of course be made whenever necessary. 1 
 
 18. Alabama. 8 (a) When two or more persons are de- 
 sirous of forming a ... building and loan association, 
 . . . and of becoming incorporated, such persons must make 
 a declaration in writing, stating : 
 
 1. The name of the company, or association, and the object 
 for which it is formed. 
 
 2. The amount of capital stock, and the number of shares 
 into which the same is divided. 
 
 3. The names of stockholders and number of shares held 
 by each. 1 
 
 (J) This declaration, signed by the stockholders, must be 
 recorded in the office of the judge of probate of the county 
 or counties in which such business is to be carried on. 4 
 
 (c) Upon the filing and recording of such declaration, the 
 persons who have signed the same, and their successors, be- 
 come a body corporate by the name stated therein, and with 
 the powers conferred on private corporations by this code.* 
 
 (d) All shares are transferable on the books of the com- 
 pany, and in all votes to be given by the stockholders each 
 share is entitled to one vote.* 
 
 (e) No company incorporated under the provisions of this 
 chapter shall continue f 01 a longer term than twenty years, 
 unless renewed according to the provisions thereof within one 
 year before the expiration of its term. 7 
 
 1 See post, 38. cerning real estate, repeal of Rev. 
 
 8 See Code of Alabama, 1876, Code, 1867, 1756-7). 
 
 1937-1943; 372. Decisions touching Code, 1937; Act Mar. 3, 1870, 
 
 Building Associations in Alabama: p. 308. 
 
 Selma Building and Loan Associa- 4 Code, 1938; see Act Jan. 27, 
 
 tion v. Morgan, 57 Ala. 33 (taxation); 1872, p. 74. 
 
 Kelly v. Mobile Building and Loan * Code, 1939. 
 
 Association, 64 Ala. 501 (loans, con- Code, 1940. 
 
 formity with bylaws, ejectment); ' Code, 1941; see Act Feb. 25, 
 
 Cahall v. Citizens' Mutual Building 1871, p. 18. 
 Association, 61 Ala. 232 (powers con-
 
 18.] STATUTORY PROVISIONS OF THE STATES. .ft 
 
 (f) A copy of the declaration, recorded according to the 
 provisions of this chapter, duly certified by the judge of pro- 
 bate in whose office the same is recorded, is evidence of the 
 incorporation, and also presumptive evidence, in any action 
 brought against such corporation, of the facts stated therein. 1 
 
 (g) Such associations shall have power : 
 
 1. To levy monthly contributions from the shareholders, 
 not to exceed one dollar per share in every month. 
 
 2. To compel payment and compliance with all lawful 
 orders, by fines and forfeitures. 
 
 3. To acquire real estate, to erect buildings, and to let the 
 same to any shareholder of the corporation, or to sell to such 
 shareholder on such terms as may be fixed by its by-laws. 
 
 4. To aid shareholders in the erection or improvement of 
 houses by loans of the funds of the association, on such security 
 as may be fixed by the by-laws. 
 
 5. When funds are on hand, to lend the same to any share- 
 holder of the corporation on such security and on such terms 
 and conditions, as may be prescribed by the by-laws, but the 
 eecurity shall be a mortgage on real estate, sufficient to pro- 
 tect the association. 
 
 6. When deemed advisable, or when two or more share- 
 holders desire to borrow funds on hand, the association may 
 lend such funds to the highest bidder ; and all shareholders 
 shall have equal opportunities to bid, under such regulations 
 as may be prescribed by the by-laws ; but no shareholder shall 
 borrow, or purchase the loan of more than two hundred dollars 
 for each share held by him. 
 
 7. To prescribe a uniform scale of monthly instalments, in 
 which the loans made are to be repaid according to the terms 
 agreed on, and if loaned to the highest bidder, according to 
 the terms of the purchase. 
 
 8. To secure the payment of instalments and loans, and a 
 compliance with all the terms on which loans are purchased, 
 by mortgages, with power of sale, on real estate, and the 
 same to foreclose hi case of default by a public sale to the 
 highest bidder, and by conveyance to the purchaser, and such 
 purchaser need not be a shareholder. 
 
 > Code, 1943.
 
 16 THE LAW OF BUILDING ASSOCIATION'S. [CH. II. 
 
 9. In determining the amount of capital stock of the associ- 
 ation, each share shall be valued at forty dollars. 1 
 
 (7t) In listing and assessing the property of building and 
 loan associations of this State, the tax-assessor shall not, under 
 the head of " solvent creditors," or elsewhere, include the notes 
 and mortgages of the stockholders or members of such associ- 
 ations, given to the associations for purchases of money or 
 advances of stock, made at the distribution of the funds there- 
 of ; and that all claims for such taxes, which have been made, 
 and which have not been collected, are hereby released and 
 remitted ; but such associations shall be liable for, and shall 
 pay taxes on the largest average amount of money held by 
 them at any one time during the year next preceding the time 
 for the assessing of the taxes therein. 8 
 
 19. California. 8 (a) Corporations organized for the 
 erection of buildings, and making other improvements on real 
 property, may raise funds in shares not exceeding two hundred 
 dollars each, payable in periodical instalments. Such bodies 
 are known as land and building corporations, and may be or- 
 ganized with or without a capital stock.* 
 
 (5) Any such corporation may borrow money for the pur- 
 pose of carrying out its objects, and may give as security 
 therefore its shares, or mortgage upon its real estate.' 
 
 (c) Any such corporation may purchase real estate and 
 erect buildings for its members, and make loans to its mem- 
 bers for the purpose of aiding them in acquiring and improv- 
 ing real estate. Such loans must in all cases be secured on 
 such real estate." 
 
 (d) Such corporation may insure in some life insurance 
 company, incorporated under the laws of this State, the lives 
 of its members and debtors. In case of the death of a mem- 
 ber or debtor so insured the amount recovered on the policy 
 must be applied to cover the indebtedness, including the 
 
 1 Code, 1943; see Act Mar. 3, the English freehold land societies 
 
 1870, p. 444, sec. 2. and 649 repealed. See Amendment 
 
 9 Code, 372; Act Feb. 9, 1877, to Code, 1873-4, p. 217. 
 
 p. 19. * So amended, in Amendment to 
 
 1 See California Civil Code, 872, Code, 1873-4, p. 217. 
 
 639-648, 646. The society here 6 Code, 640. 
 
 contemplated seems to be more like Code, 641.
 
 19.] STATUTORY PEOVISIOKS OF THE STATES. 17 
 
 premium paid, and the residue, if any, must be paid to the 
 legal representatives of the decedent. 1 
 
 (e) Any such corporation may purchase, hold and convey 
 real estate as follows : 
 
 1. The lot and building in which the business of the cor- 
 poration is carried on, the cost of which must not exceed 
 twenty thousand dollars ; 
 
 2. Such as may from time to time be necessary to supply 
 the wants of its members, the cost of which, held unallotted 
 to the members thereof at any one time, must not exceed the 
 sum of one hundred thousand dollars ; 
 
 3. Such as shall have been mortgaged, pledged, or con- 
 veyed to it in trust, to secure money loaned or to secure the 
 purchase price thereof in pursuance of the regular business of 
 the corporation. 8 
 
 (f) The bylaws of such corporations must specify the 
 amount of the periodical subscriptions or payments to be 
 made by each member ; the time and manner in which such 
 payments are to be made ; the fines and forfeiture for de- 
 fault ; the time and manner of election of directors and other 
 officers, and their terms of office ; the manner in which the 
 real estate may be distributed, allotted, or sold to its mem- 
 bers ; the terms and conditions upon which loans may be 
 made to its members and by them repaid to the corporation ; 
 the manner in which a person may become and cease to be a 
 member ; the conditions on which members may withdraw 
 from the corporation, and the provisions for the payment to 
 withdrawing members of the sums of money due to them, aris- 
 ing from subscriptions or payments, and the proportion of the 
 profits such withdrawing members may receive on with- 
 drawal. 8 
 
 (g) The secretary of any such corporation must once in 
 each year, during the existence of the corporation, prepare a 
 full and explicit statement of the financial affairs thereof, 
 comprising a balance sheet, statement of receipts and expen- 
 ditures, profit and loss, and assets and liabilities, which must 
 be audited and verified by two competent persons (not direc- 
 tors) elected by the general body of shareholders, and be 
 countersigned by the president and secretary. A copy of 
 
 1 Code, 642. Code, 643. Code, 644.
 
 18 THK LAW OP BUILDING ASSOCIATIONS. [CH. II. 
 
 such statement must be printed and circulated among the 
 members, and appear immediately after the annual meeting 
 of the corporation daily at least one week, or weekly at least 
 fonr weeks, in one or more newspapers published at the 
 place of the principal business of the corporation. 1 
 
 (A) Any two or more such corporations may unite and 
 become incorporated in one body with or without any disso- 
 lution or division of the funds of such corporation, or either 
 of them ; or any such corporation may transfer its engage- 
 ments, funds, and property to any other such corporation, 
 upon such terms as may be agreed upon by two-thirds of the 
 members of each of such bodies present at general meetings 
 of the members, convened for the purpose by notice stating 
 the object of the meeting, sent through the post-office to 
 every member, and by a general notice, appearing daily, at 
 least one week, or weekly at least two weeks, in some news- 
 paper published at the place of the principal business of the 
 corporation ; but no such transfer can prejudice any right of 
 any creditor of either corporation.* 
 
 20. Illinois.* (a) Whenever any number of persons not 
 less than tive, may desire to become incorporated as a mutual 
 building, loan and homestead association, for the purpose of 
 building and improving homesteads, and loaning money to 
 the members thereof only, they shall make a statement to 
 that effect under their hands and seals, duly acknowledged 
 before some officer in the manner provided for the acknowl- 
 edgment of deeds ; such statement shall set forth the name of 
 the corporation, its capital stock, its location and the duration 
 of the corporation ; which statement shall be tiled in the office 
 of the Secretary of State. The Secretary of State shall there- 
 upon issue to such persons a license as commissioners, to open 
 books for subscription to the capital stock of said corporation, 
 at such time and place as they may determine ; but no license 
 shall be issued to two associations having the same name/ 
 
 1 Code, 645. Section 646 is re- Chicago Building Society v. Crowell, 
 
 pealed; see Amendment to Code, 65 111 453 (power to stipulate for in- 
 
 1873-4, p. 217. surance incident to power to take 
 
 * Code, 647. security, measure of damages for 
 
 8 Act July 1, 1879, Laws of Illi- breach of such stipulation), 
 
 nois, 1879, pp. 83-87. Decision: * 1.
 
 20.] STATUTOBY PROVISIONS OF THE STATES. 19 
 
 (&) As soon as one hundred shares or more shall be sub- 
 scribed, the commissioners shall convene a meeting of the sub- 
 scribers, for the purpose of electing directors, adopting a char- 
 ter and by-laws, and the transaction of such other business as 
 shall come before them. Notice thereof shall be given by 
 depositing in the post-office properly addressed to each sub- 
 scriber, at least ten days before the time fixed, a written or 
 printed notice, stating the object, time arid place of such meet- 
 ing. Directors of such corporations organized under this act 
 shall be elected, classified and hold their office for such period 
 of time as is provided by general law governing the election 
 and classification of Directors, Trustees or Managers of cor- 
 porations. 1 
 
 (c) The commissioners shall make a full report of their 
 proceedings, including therein a copy of the notice provided 
 for in the foregoing section, a copy of the subscription list, 
 a copy of the charter and by-laws adopted by the association, 
 and the names of the Directors elected and their respective 
 terms of office, which report shall be sworn to by at least a 
 majority of the commissioners, and shall be filfed in the office 
 of the Secretary of State. The Secretary of State shall there- 
 upon issue a certificate of the complete organization of the 
 corporation, making a part thereof a copy of all papers filed 
 in his office in and about the organization of the corporation 
 and duly authenticated under his hand and seal of State ; and 
 the same shall be recorded in the office of the Recorder of 
 Deeds in the county in which the principal office of such com- 
 pany is located. Upon the recording of said copy the corpor- 
 ation shall be deemed fully organized and may proceed to 
 business ; unless such company shall be organized and shall 
 proceed to business as provided in this act within two years 
 after the date of such license, the license shall be deemed re- 
 voked and all proceedings thereunder void. 4 
 
 (d) Corporations formed under this act shall be bodies 
 corporate and politic for the period for which they are organ- 
 ized ; may sue and be sued ; may have a common seal which 
 they may alter or renew at pleasure. 8 
 
 (<?) The corporate powers shall be exercised by a Board of 
 Directors: /V^.vV/W. the number of Directors shall not be in- 
 1 2. $ 3. g 4.
 
 20 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 creased or diminished, nor their term of office changed, with- 
 out the consent of the owners of two thirds of the shares of 
 stock. The officers of the company shall consist of a Presi- 
 dent, Vice-President, Secretary and Treasurer, to be elected at 
 the annual meeting of the Board of Directors, as may be pro- 
 vided for in the charter and by-laws of the Association : Pro- 
 vided, that the Secretary only shall be entitled to compensa- 
 tion, and in such amount as may be provided for in the char- 
 ter of such Association : and Provided, that the treasurer 
 shall give bond and security to be approved by the board of 
 directors. 1 
 
 (f) The shares of stock shall be one hundred dollars 
 each, and shall be deemed personal property transferable upon 
 the books of the company, in such manner as may be pro- 
 vided by the by-laws, and subscriptions therefor shall be 
 made payable to the corporation, and shall be payable in such 
 periodical instalments and at such time or times as shall be 
 determined by the charter and by-laws ; but no periodical pay- 
 ment to be made exceeding two dollars on each share ; and 
 every share of stock shall be subject to a lien for the payment 
 of unpaid instalments, and other charges incurred thereon 
 under the provisions of the charter and by-laws, and the by- 
 laws may prescribe the form and manner of enforcing such 
 lien. New shares of stock may be issued in lieu of shares 
 withdrawn or forfeited, and the stock may be issued in one 
 or in successive series, as may be prescribed in the charter 
 and by-laws, and in such amount (not to exceed the total 
 capital stock) as the Board of Directors may determine, and 
 any stockholder wishing to withdraw from the said corpor- 
 ation shall have power to do so, by giving thirty days' notice 
 of his or her intention to withdraw, when he or she shall be 
 entitled to receive the amount paid in by him or her, and 
 such interest thereon or such proportion of the profits there- 
 on as the by-laws may determine, less all fines and other 
 charges : Provided, that at no time shall more than one half 
 of the funds of the treasury of the corporation be applicable 
 to the demands of withdrawing stockholders without the con- 
 sent of the Board of Directors, and that no stockholder shall 
 be entitled to withdraw whose stock is held in pledge for 
 
 '5.
 
 20.] STATUTORY PROVISIONS OF THE STATES. 21 
 
 security. Upon the death of a stockholder his or her legal 
 representatives shall be entitled to receive the full amount 
 paid in by him or her on the shares not borrowed upon or 
 pledged to the association as collateral security, and legal in- 
 terest thereon, first deducting all charges that may be due on 
 the stock ; but no fines shall be charged to a deceased mem- 
 ber's account from and after his or her decease, unless the 
 legal representatives of such decedent assumes the future pay- 
 ment of the dues on the stock. 1 
 
 (g) Married women may become subscribers to the capital 
 stock of such association, and hold, control and transfer their 
 stock in all respects as fernmes-sole, and their stock shall not 
 be subject to the control of, or liable for the debts of their 
 husbands. Minors may become subscribers to and owners of 
 the stock of such associations by guardian or trustee, and such 
 guardian or trustee may withdraw the stock of such minor as 
 provided in section six of this act : Provided, however, that 
 such guardian or trustee shall give bonds to the Probate 
 Court in double the amount of the withdrawal value of such 
 stock, for the use of such minor on his or her becoming of 
 age ; but it is hereby provided, that no person as owner or 
 legal representative of the stock of such association shall by 
 himself or by proxy, vote at any election, when the stock- 
 holders are called upon to vote, on more than forty shares of 
 stock. 4 
 
 (K) The Board of Directors shall hold such stated meet- 
 ings, not less frequently than one each month, as may be pro- 
 vided by the by-laws, at -which the money in the treasury, if 
 one hundred dollars or more, shall be offered for loan in open 
 meeting; and the stockholder who shall bid the highest 
 premium for the preference or priority of loan, shall be en- 
 titled to receive a loan of one hundred dollars, less the pre- 
 mium bid, for each share of stock held by Niid stockholder : 
 Provided, that no loan shall be made by said corporation ex- 
 cept to its own members, nor in any sum in excess of the 
 amount of stock held by such members borrowing: Ami j>i'o- 
 vided, that such stockholder may borrow such fractional part 
 of one hundred dollars as the by-laws may provide. Good 
 and ample real estate security unincumbered except by prior 
 1 6. 7.
 
 22 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 loans of such association shall be given by the borrower, to 
 secure the repayment of the loan : Provided, however, that 
 the stock of such association may be received as security, to 
 the amount of the withdrawal value of such stock. 1 
 
 (i) In case the borrower shall neglect to offer security, or 
 shall offer security that is not approved by the Board of Direc- 
 tors by such time as the by-laws may prescribe, he or she shall 
 be charged with one month's interest, together with any ex- 
 penses incurred, and the money may be resold at the next 
 stated meeting. In case of nonpayment of instalments or in- 
 terest and fine by borrowing stockholders for the space of six 
 months, payment of principal and interest and fines, without 
 deducting the premium paid or the interest thereon, may be 
 enforced by proceedings against their securities according to 
 law, upon the order of the Board of Directors.* 
 
 (j) A borrower may repay a loan at any time, and in the 
 event of the repayment thereof before the expiration of the 
 eighth year after the organization of the association, or the 
 date of issue of the series of stock in such association on which 
 the loan may have been made, there shall be refunded to such 
 borrower one eighth of the premium paid for every year of 
 the said eight years then unexpired.* 
 
 (k) Corporations organized under this act being of the 
 nature of co-operative associations, therefore no premiums, 
 fines nor interest on such premiums that may accrue to the 
 said corporation according to the provisions of this act, shall 
 be deemed usurious, and the same may be collected as other 
 debts of like amount may be collected by law in this State. 4 
 
 (I) No corporation or association created under this act 
 shall cease or expire from neglect on the part of the corpora 
 tion to elect officers at the time mentioned in their charter 
 and by-laws, and all officers elected by such corporation shall 
 hold their offices until their successors are duly elected.* 
 
 (m) Any loan or building association incorporated by or 
 under this act is hereby authorized and empowered to pur- 
 chase at any sheriff's or other judicial sale, or at any other 
 sale, public or private, any real estate upon which such associa- 
 tion may have or hold any mortgage, lien, or other incum- 
 brance, or in which said association may ha?e an interest, and 
 '8. 9. ltt 11. '12.
 
 21.] 
 
 STATUTORY PROVISIONS OF THE STATES. 
 
 23 
 
 the real estate so purchased to sell, convey, lease, or mortgage 
 at pleasure to any person or persons whatever. 1 
 
 (n) Any loan or building association incorporated under 
 this act or any prior act, may extend the duration of time for 
 which such association was organized by a vote of two thirds 
 of the capital stock of such association at any annual meeting 
 of the stockholders of such association, thereupon the Board 
 of Directors shall transmit a copy of the proceedings of such 
 annual meeting, duly attested, to the Secretary of State, who 
 shall issue his certificate as provided in section three of this 
 act, certifying to the extension of time of duration of such 
 association, and the same shall be recorded as provided in said 
 section three of this act. And any association incorporated 
 under any prior act, and extending the duration of the time 
 for which it was incorporated, in the manner herein provided, 
 shall be deemed incorporated, under and be vested with all of 
 the powers given in this act, the same as if such association 
 had been originally incorporated under it." 
 
 21. Indiana. 9 (a) Any number of persons not less than ten 
 
 '13. 
 
 * 14. 
 
 3 Act Mar. 11, 1875, Acts of In- 
 diana, Reg, and Spec. Sess., 1875, 
 pp. 17-21; Act Mar. 13, 1877, Acts 
 of Indiana, Spec. Sess., 1877, ch. 
 vii. pp. 25-27; Act April 16, 1881, 
 Acts of Indiana, 1881, ch. xv. p. 
 90, amending Act Mar. 3, 1877, 
 Acts 1877, p. 7. See also Act Mar. 
 24, 1879, Acts 1879, ch. x. pp. 80- 
 81, legalizing existing associations 
 defectively organized. Decisions: 
 Stein and wife . Indianapolis Build- 
 ing Loan Fund and Saving Associ- 
 ation, 18 Ind. 237 (constitutionality 
 of Act Mar. 5, 1857, repealed by Act 
 of 1875. Usury, voluntary associ- 
 ation after incorporation may sue in 
 corporate name on securities re- 
 ceived before in corporation); Nel- 
 son v. Blakey, 54 Id. 29 (requisites 
 of incorporation "duplicate" re- 
 quired by Act of Mar. 11, 1867, to 
 be filed with Secretary of State, is 
 
 not a certified copy, but an original 
 instrument, like that recorded in the 
 Recorder's office, executed with the 
 same formalities and by the same 
 persons, suit to recover for stock 
 subscribed must show by proof that 
 certificate of incorporation was filed 
 with recorder of proper county, and 
 duplicate with Secretary of State); 
 McLaughlin, et al., v. The Citizens' 
 Building Loan and Saving Associ- 
 ation, 62 Id. 264 (constitutionality 
 of Act of 1875, loans, premium, 
 plea of nul tiel corporation); Shaf- 
 frey v. The Workingmcn's Savings, 
 Loan and Building Association, 64 
 Id. 600 (follows preceding case); 
 Poock et al. v. The Lafayette Build- 
 ing Association, 71 Id. 357 (lending 
 money ultra tires, estoppel, Act 
 Mar. 13, 1877); Ginz c.Stumph et al., 
 73 Id. 209 (assignment of stock, al- 
 though absolute on its face, may be 
 shown to have been as collateral 
 merely).
 
 34 THE LAW OF BUILDING ASSOCIATIONS. [CH. 11. 
 
 may associate themselves together for the purpose of organ ix- 
 ing building, loan fund and savings associations, and for that 
 purpose they shall make, sign and acknowledge, before some 
 officer capable of taking acknowledgments of deeds, an article 
 of association in writing, which shall state the corporate mimo 
 adopted by the company, the object of its formation, the 
 amount of capital stock, the number of the directors and their 
 names who shall manage the affairs of the company for the 
 first year, and the name of the town or county in which its 
 operations are to be carried on, and cause the said articles to 
 be recorded in the Recorder's office of the county where the 
 business is to be carried on, and a duplicate thereof in the 
 office of the Secretary of State. 1 
 
 (b) When the articles of association shall have been filed and 
 recorded as aforesaid, a certified copy thereof shall be evidence 
 of the things therein contained, and the persons who shall 
 have filed and acknowledged the same, and their successors, 
 shall be a body corporate and politic, and in their corporate 
 name may contract, sue and be sued, and may hold and con- 
 vey real estate and personal property as hereinafter provided, 
 and the business of the association shall be managed by a 
 board of directors, who shall be stockholders of the associa- 
 tion, and who shall be selected by the stockholders a the by- 
 laws of the association may provide.* 
 
 (c) The company shall have the power and franchise of 
 loaning or advancing to the stockholders thereof the moneys 
 accumulated from time to time, and the power and right to 
 secure the repayment of such moneys and the performance of 
 the other conditions upon which the loans are to be made by 
 note and mortgage, or upon note secured by stock of the 
 association, or personal security, as well as the power and 
 right to purchase or erect houses, and to sell, convey, lease, or 
 mortgage the same at their pleasure to their stockholders or 
 others, for the benefit of their stockholders in such manner ; 
 also, that the premiums taken by the said association for the 
 preference or priority of such loans, shall not be deemed usuri- 
 ous ; and also that in case of nonpayment of instalments or 
 interest by borrowing stockholders, for three months, payment 
 of principal, premium and interest, without deducting the 
 
 1 Act Mar. 11, 1875, Sec. 1. * Act Mar. 11, 1875, Sec. 2.
 
 21.] STATUTORY PROVISIONS OF THE STATES. 25 
 
 premium paid or interest thereon, may be enforced by pro- 
 ceedings on their securities according to law. 1 
 
 (d) The capital stock of any corporation created for such 
 purposes, by virtue of this act, shall at no time consist in the 
 aggregate of more than live hundred thousand dollars, to be 
 divided into shares of such denomination, not exceeding 
 five hundred dollars each, and in such number as the by- 
 laws of the association may provide : Provided, that the 
 capital stock may be issued in series, but no such series shall 
 at any time exceed in the aggregate one hundred thousand 
 dollars ; the instalments on which stock are to be paid, at 
 such time and place as the by-laws may provide, but no peri- 
 odical payment of such instalment to be made exceeding fifty 
 cents per week on each one hundred dollars of stock, and said 
 stock may be paid off and retired, as the by-laws may pro- 
 vide ; and every share of stock shall be subject to a lien for 
 the payment of unpaid instalments and other charges incurred 
 thereon, under the provisions of the Constitution and by- 
 laws, and the by-laws may prescribe the form and manner of 
 enforcing such lien, and, in lieu of the shares withdrawn or 
 forfeited, the stock may be issued in one or in successive se- 
 ries, in such amounts as the board of directors may deter- 
 mine, and any stockholder wishing to withdraw from said 
 corporation shall have power to do so by giving three months' 
 notice to the board of directors of his or her intention to 
 withdraw, when he or she shall be entitled to receive the 
 amount paid in by him or her, less all fines and other charges, 
 but after the expiration of one year from the issuing of such 
 series such stockholder shall be entitled, in addition thereto, 
 to legal interest thereon : Provided, that at no time shall 
 more than one half of the funds in the treasury be applicable 
 to the demands of withdrawing stockholders, without the 
 consent of the board of directors, and that no stockholder 
 shall be entitled to withdraw whose stock is held in pledge 
 
 1 Act Mar. 13, 1877, Sec. 1. This taking what act was intended to be 
 
 act misrecites Act Mar. 11, 1875, amended, the whole hill being cor- 
 
 which it amends, citing it as Act rectly set out, and that it would not 
 
 Mar. 11, 1873. In Poock et al. v. The be justifiable to annul an act on 
 
 LaFayette Building Association, 71 so narrow a ground. The point is, 
 
 Ind. 357, the court advert to that however, perhaps not absolutely 
 
 fact, but say that there is no mis- decided by the court.
 
 26 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 for security. Upon the death of a stockholder his or her 
 legal representative shall be entitled to receive the full 
 amount paid in by him or her, and legal interest thereon, 
 first deducting all charges that may be due on the stock. No 
 tines shall be charged to a deceased member's account from 
 and after his or her decease, unless the legal representatives 
 of such decedent assume the future payments on the stock. 1 
 
 (e) The number, functions, qualilications and compensa- 
 tion of the officers of any corporation, their terms of office, 
 the times of their elections, as well as the qualilications of 
 electors, and the votes and manner of voting, and the period- 
 ical meetings of said corporation, shall be determined by the 
 by-laws of the association, when not provided by this act.* 
 
 (f) Said directors shall hold stated meetings, at which 
 the money in the treasury, if over the amount fixed in the 
 constitution or by-laws as the full value of a share, shall be 
 offered for loan in open meeting. The by-laws of the asso- 
 ciation shall prescribe the manner of awarding such loan or 
 loans to its members, the rate of interest to be paid therefor, 
 not exceeding ten per cent, per auiium, payable monthly or 
 quarterly in advance ; or said association may provide in its 
 by-laws that such loans shall be made to the members of said 
 association who shall bid the highest premium for the prefer- 
 ence or priority of loan, and who shall be entitled to receive 
 a loan of not more than the amount fixed by the constitution 
 and by-laws as the full value of a share for each share of 
 stock held by such person. The said premium shall be bid 
 as of so much per share : Provided, that a stockholder may 
 borrow such fractional part of the amount fixed by the con- 
 stitution and by-laws as the full value of a share, as the by- 
 laws may provide. Good and ample real estate or personal 
 security, as prescribed by the by-laws of the corporation, 
 shall be given by the borrower to secure the repayment of the 
 loan, with interest, and also for the payment of the dues, fines 
 and assessments that may be assessed on his share of stock 
 upon which the loan is made. In case the borrower shall 
 neglect to offer security, or shall offer security that is not ap- 
 proved by the board of directors, by such time as the by-laws 
 may prescribe, he or she shall be charged with legal interest 
 
 1 Act Mar. 18, 1877, Sec. 2. Act Mar. 11, 1875, Sec. 5.
 
 21.] STATUTORY PROVISIONS OF THE STATES. 27 
 
 as prescribed in the by-laws, together with any expense in- 
 curred and the loss in premium, if any, on a re-sale, and the 
 money may be re-sold at the next stated meeting. In case of 
 nonpayment of instalments by borrowing stockholders, for 
 the space of three mouths, payments of principal and inter- 
 est and tines, without deducting the premiums paid or inter- 
 est thereon, may be enforced by proceedings on their security 
 according to law. 1 
 
 (g) A borrower who is not in arrears for dues, interest, 
 fines or assessments, may repay his loan at any time, and may 
 at the same time withdraw from the association ; and for that 
 purpose he shall pay to the association, or the officer thereof 
 authorized to receive payment of dues or interest, the full 
 face amount of the principal of his loan, less the amount by 
 him paid to said association, as dues and assessments on his 
 stock, with interest on such payments from the time they 
 were made at eight per cent, per annum, and less so much of 
 the premium or discount paid by him on his loan for the pri- 
 ority thereof as shall bear the same proportion to the whole 
 premiums by him paid, which the unexpired time for which 
 the loan was made bears to the whole time for which the loan 
 was made ; and, on such payments being made, the stock held 
 by such person shall be delivered up to said association and 
 cancelled, and no new stock shall be issued therefor ; and the 
 officer of such association to whom such payment is made 
 shall also immediately cancel and deliver up to such borrower 
 his note and mortgage, or other evidence of said loan, and 
 shall enter on the record of such mortgage a full satisfaction 
 thereof, which entry shall be a complete satisfaction of such 
 mortgage." 
 
 (A) No premiums, fines or interest on such premiums that 
 may accrue to the said corporation, according to the provi- 
 sions of this act, shall be deemed usurious, and the same may 
 be collected as debts of like amount are now by law collected 
 in this State." 
 
 (*) No corporation or association created under this act 
 shall cease or expire from neglect on the part of the corpora- 
 tion to elect officers at the time mentioned in their by-laws, 
 1 Act. Mar. 3, 1877, Sec. 3. * Act Apr. 16, 1881. 
 
 Act Mar. 11, 1875, sec. 8.
 
 28 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 and all officers elected by such corporation shall hold their 
 offices until their successors are duly elected. 1 
 
 (j) Any building, loan fund, or savings association, in- 
 corporated under or by this act, and those incorporated prior 
 thereto, are hereby authorized and empowered to purchase at 
 any sheriff's or other judicial sale, or at any other sale, pub- 
 lic or private, any real estate upon which such association 
 may have or hold any mortgage, judgment, lien or other in- 
 cumbrance, or ground rent, or in which said association may 
 have an interest, and the real estate so purchased, or any 
 other, that such association may hold or be entitled to at the 
 passage of this act, to sell, convey, lease or mortgage at pleas- 
 ure to any person or persons whatever, and all sales of real 
 estate heretofore made, by such association, to any person or 
 persons, are hereby confirmed and made valid." 
 
 (&) All such corporations shall have full power to pur- 
 chase lands, and to sell and convey the same, or any part 
 thereof, to their stockholders or others, in fee simple, with or 
 without the reservation of ground rents; but the quantity of 
 land purchased by any one of said associations, hereinafter in- 
 corporated, shall not, in the whole, exceed fifty acres, and in 
 all cases the land shall be disposed of within ten years from 
 purchase of same. That all building, loan fund and sav- 
 ings associations are hereby authorized to make sale of, and 
 extinguish to any person or persons the ground rents created 
 as aforesaid.* 
 
 (I) The shares of capital stock in any building, loan fund 
 or saving association, organized under the previous laws of this 
 State, and any such association that may hereafter be organ- 
 ized under this act, shall be listed by the president thereof in 
 the county, township, city or town where such association is 
 located, in conformity to the provisions of section 59 of an act 
 entitled " An act for the uniform assessment of property and 
 for the collection and return of taxes thereon," approved De- 
 
 1 9. and allowing such as have com- 
 
 * 10. menced proceedings under the re- 
 
 8 11. The following section of pealed acts, to continue them under 
 
 the Act ( 12) repeals the Acts of the Act of 1875. See McLaughlin 
 
 Mar. 5, 1857, and Mar. 7, 1873, and et al. v. The Citizens' Building Loan 
 
 all other conflicting acts, reserving and Saving Association, 62 lud. 
 
 all rights to existing corporations, 204
 
 ^ 22.] STATUTORY PROVISIONS OF THE STATES. 29 
 
 cember 21, 1872, and shall be taxed at the same rate as other 
 personal property, and shall be assessed with regard to the 
 value of its stock on the first day of April of the current year, 
 and this act shall apply to the taxes for the year 1874, which 
 taxes shall be paid by the association. 1 
 
 (m) All such associations shall have power to assess, in 
 addition to the amount provided in section 4 of this act, the 
 sum of twenty-five cents per month, upon each share of stock, 
 for the purpose of defraying the expenses of the association, 
 which sum to be payable with the regular instalment, and 
 shall also have the power to provide in their by-laws for the 
 assessment and collection of fines and penalties from delin- 
 quent stockholders for nonpayment of dues, interest, instal- 
 ments and assessments ; also to provide in their by-laws for 
 the forfeiture of all the rights and immunities in the associa- 
 tion of such delinquent members, after a default of three 
 months to pay the dues, interest, instalment, assessment and 
 fines, and also provide, in case a borrower of money from such 
 association shall fail and neglect to pay his dues, fines, assess- 
 ments, interest and instalments for a period of three months 
 from the time the same shall become due and payable, such 
 failure and neglect shall work a forfeiture of all his rights and 
 immunities as a member of said association, and the whole 
 sum loaned to him by said association shall become immedi- 
 ately due and payable, and may be collected, together with 
 all such fines, dues, interest and instalments, by law. 4 
 
 22. Iowa. 3 (a) Any number of persons, not less than 
 five, may associate themselves, and become incorporated as 
 provided in chapter one of this title, for the purpose of rais- 
 ing moneys, to be loaned to the members of the corporation, 
 and to other persons, and for use in buying lots and houses, 
 or in building or repairing houses, or other purposes. 
 
 (J) Such corporation shall be authorized and empowered 
 
 1 13. Hawkeye Benefit, &c. , Association 
 
 * 14. v. Blackburn, 48 Iowa, 885 (with- 
 
 8 Code of Iowa, 1873, 1184- drawal, liability for share of losses, 
 
 1187; Act April 6, 1872, Laws of interest on premium); Burlington 
 
 Iowa, 1872, C. 30, pp. 35 seq. ; Act Mutual Loan Association . Heider, 
 
 April 23, 1872, Laws 1872, C. 101, et al., 55 Id. 424 (S. P., usury a 
 
 p. 106; Act Mar. 17, 1876, Laws personal defence). 
 1876, C. 163, p. 165. Decisions:
 
 30 THE LAW OF BUILDING ASSOCIATIONS. [ CH - n - 
 
 to levy, assess and collect from its members such sums of 
 money, by rates of stated dues, fines, interest on loans ad- 
 vanced, and pivniiunis bid by members for the right of pre- 
 cedence in taking loans, as the corporation by its by-laws shall 
 adopt ; also to acquire, hold, encumber, and convey all such 
 real estate and personal property as may be legitimately 
 pledged to it on such loans, or may otherwise be transferred 
 to it in due course of its business, and the dues, fines and pre- 
 miums so paid by members, in addition to the legal rate of in- 
 terest on loans taken by them, shall not be construed to make 
 the loans so taken usurious, but no person shall hold more 
 than twenty shares in any such association. 1 
 
 (c) When mutual loan societies, or other associations here- 
 tofore organized under the laws of this State, with objects 
 similar to those contemplated in the preceding sections, and 
 permitting not more than twenty a shares of their stock to be 
 owned by any one member, have loaned, or shall hereafter 
 loan, their capital or funds, or any part thereof, to their mem- 
 bers, and have taken, or shall take, notes or obligations there- 
 for, secured by mortgages or otherwise, in accordance with the 
 terms of their articles of incorporation and by-laws, such 
 notes, obligations and securities shall not be construed or held 
 to be usurious by reason of any dues, fines or premiums for 
 the right of preference in taking such loans paid in addition 
 to the legal rate of interest, but the same shall be valid and 
 binding in all respects, the payment of such dues, fines or 
 premiums, in addition to a rate of interest not exceeding ten 
 per cent, per annum, payable annually, or at any less period, 
 notwithstanding." 
 
 (d) So much of the earnings of said corporation as ma v 
 be necessary, not exceeding ten per cent, per annum, may be 
 set apart to defray the current expenses of said association, 
 and for the purchase of such real estate as may be necessary 
 for the convenient transaction of its business, and the residue 
 of said earnings shall be transferred to the credit of the share- 
 holders, and when said shares are fully paid, then to be paid 
 ratably to the shareholders. 4 
 
 1 Code, 1184 Code, 1186. 
 
 8 Act Apr. 38, 1872. Laws 1872, * Code, 1187. 
 C. 101, p. 106.
 
 g 23.] STATUTORY PBOVISIOtfS OF THE STATES. 31 
 
 (c) The shares of stock of mutual loan and building associ- 
 ations shall be assessed at their cash value, but only the un- 
 redeemed shares of such stock shall be taxed, and such unre- 
 deemed shares shall be listed to the individual owners thereof. 1 
 
 23. Kansas. 2 (#) Private corporations may be created 
 by the voluntary association of five or more persons, for the 
 purpose and in the manner mentioned in the following sec- 
 tions of this article and amendments thereto. Every member 
 or stockholder in said corporation shall vote in person or by 
 proxy. 8 
 
 (&) A charter must be prepared setting forth : First, the 
 name of the corporation. Second, the purpose for which it is 
 formed. Third, the place or places, where its business is to 
 be transacted. Fourth, the term for which it is to exist. 
 Fifth, the number of its directors or trustees, and the names 
 and residences of those who are appointed for the first year, 
 and Sixth, the amount of its capital stock, if any, and the 
 number of shares into which it is divided. 4 
 
 (c) That premiums bid for priority of loan in building 
 and saving or trust associations, organized under the corpora- 
 tion laws of this State, by the members of such associations, 
 shall not be deemed as usury, or subject to the provisions of 
 sections 3 and 4 of an act regulating the interest of money, 
 Chapter 51 of General Statutes of 1868, and all such premi- 
 ums incorporated in the notes given by the members ot the 
 associations, and all the fines assessed against its members in 
 accordance with the by-laws of such associations, may be col- 
 leted by civil action, before any Court having jurisdiction. 6 
 
 'Act Mar. 17, 1876, Laws 1876, Paola, 22 Kan. 624 (acts prior to Mar. 
 
 C. 163, p. 165. 20,1375, loans, usury, pleaof nul 
 
 2 Com piled Laws of Kansas, 1879; tiel corporation, marshalling of as- 
 
 pl. 1064, 1068, Ch. 23, Art. 2, 5, sets), Salina. Building, Saving and 
 
 6; pi. 1193-1203, Ch. 23, Art. 17, Trust Association*. Nelson etal., 22 
 
 134-143; pi. 5795, Ch. 107, Art. 6, Kan. 751 (Act of 1869, and see pre- 
 
 23. Decisions: St. Joseph and Kan- ceding case). 
 
 BUS Loan and Building Association * Pi. 1064, Ch. 23, Art. 2, 5; L. 
 
 T. Thomson et al., 19 Kan. 321 (loans, 1872, Ch. 105, 1, Mar. 19, 1872. 
 
 usury); Ilekeinkaemper et al. . * PI. 1068, 6. 
 
 The German Building and Saving PI. 1193, Ch. 23, Art. 17, 134, 
 
 Association, 22 Kan. 549 (premature sec. 1; L. 1869. Ch. 5, 1, Mar 11, 
 
 dissolution) ; Massey v. The Citizens' 1869. The Act of 1869 is neither void 
 
 Building and Saving Association of nor repealed, but applies in all cases
 
 32 THE LAW OF BUILDING ASSOCIATIONS. [CU. II. 
 
 (d) All corporations heretofore incorporated under the 
 laws of the State of Kansas, for the purpose of accumulating 
 and loaning funds to members, or that have been so accumu- 
 lating and loaning, are hereby recognized and confirmed as 
 legal and valid corporations from the date of their incorpora- 
 tion, or the time they commenced to accumulate and loan to 
 mem be re, and all contracts made between them and their 
 members ; all loans made, at whatsoever premium, discount or 
 interest, and all securities taken for such loans, are. hereby de- 
 clared legal, valid, and binding on all parties concerned or af- 
 fected thereby, or having notice thereof. 1 
 
 (e) All associations organized under the general corpora- 
 tion laws of this State for the purpose of accumulation and 
 loan of funds, the erection of buildings, and the purchase and 
 sale of real estate, for the mutual benefit of their members, shall 
 be permitted to conduct such business with its members ex- 
 clusively, and may receive payment for its shares of stock 
 in such manner, and upon such terms as are prescribed by the 
 by-laws, may receive money on loan or on deposit, and may 
 lend money to its members on the security of United States 
 bonds, or bonds of the State of Kansas, the stock of such asso- 
 ciation or real estate, which loans shall be repaid in such stated 
 periodical instalments as are prescribed in the by-laws, and all 
 contracts between such associations and their members shall 
 be deemed valid and binding in law : Provided, that the sum 
 of all the repayments agreed to be made by the borrower, for 
 the whole time for which he receives his loan, shall not exceed 
 the actual amount of money borrowed, with interest thereon 
 at twelve per cent, per annum for the whole time for which it 
 was so borrowed." 
 
 (f) Whenever, by reason of default in payment of dues 
 or loans by members of such association, it becomes necessary, 
 according to the by-laws, to bring suit on any mortgage for the 
 purpose of collecting such loans or dues, no greater sum shall be 
 
 where loans were made in accord- PI. 1194, 135, sec. 1; L. 1870, 
 
 ance with its provisions and prior to Ch. 43, 1 , Mar. 10, 1870. 
 
 Mar. 20, 1875, when Ch. 65, Laws 136, sec. 2, repealed; L. 1875, 
 
 1875, took effect. Salina Building, Ch. 65. 4; L. 1876, Ch. 34, 15* 
 
 Saving and Trust Association . (1195). 
 
 Nelson et al., 22 Kan. 751. PI. 1196, 137. sec. 1.
 
 23.] STATUTORY PROVISIONS OF THE STATES. 33 
 
 recovered, than that actually due at the time of judgment, and 
 the amount so due may be ascertained by adding to the sum 
 of arrears the present value of all future instalments dis- 
 counted at the rates per cent, and according to the times and 
 periods of payment established by the by-laws, not inconsistent 
 with section one of this act. And whenever, by the constitu- 
 tion or by-laws of such association, loans shall be made, or have 
 heretofore been made, to its members by the share, for premi- 
 ums, the amount for which judgment shall be rendered, 
 shall not be greater- than the actual amount of money 
 loaned, with interest to time of judgment at twelve per 
 cent, per annum, and all unpaid fines lawfully assessed 
 against the borrower for nonpayment under such by-laws not 
 exceeding two per cent, per month, less the amount paid in 
 on such shares, with like interest, from the time of said pay- 
 ment or payments. 1 
 
 (g) Every such corporation, before commencing business 
 under its charter, shall tile a copy of its by-laws with the Sec- 
 retary of State, and shall likev/ise so file copies of all subse- 
 quent changes of such by-laws ; and all such associations now 
 doing business shalT immediately file copies of their by-laws 
 with the Secretary of State, and also all subsequent changes 
 thereof. A majority of stockholders present at any organized 
 meeting may adopt, alter or change the constitution or by- 
 laws, or transact any other business. 11 
 
 (h) That any building and loan association organized un- 
 der the corporation laws of this State for the purpose of ac- 
 cumulating and loaning funds, for the erection of buildings, 
 and the purchase and sale of real estate for the mutual benefit 
 of its members, is hereby authorized and empowered to reor- 
 ganize as a savings bank and to do business as such. 3 
 
 (*) That before any such association can reorganize under 
 the provisions of this act, there shall be presented to its board 
 of directors a petition, signed by two thirds of the members 
 for such reorganization. Whereupon it shall be the duty of 
 
 1 PI. 1197, 138, sec. 2; L. 1875, Laws 1870, and all Acts and parts of 
 
 Ch. 65, 2, Mar. 20, 1875. acts inconsistent with Act 1875 
 
 8 PI. 1197, 139, sec. 3 ; L. 1875, (1199). 
 
 Ch. 65, 3, 139 a, sec. 4; L. 1875, PI. 1200, 140, sec. 1 ; L. 1876. 
 
 Ch. 65, 4, repeals sec. 2 of Ch. 43, Ch. 51, 1.
 
 34 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 such board of directors, within thirty days from the time of 
 presenting tin- petition, to tile with the Secretary of State an 
 addition;! 1 charter, setting forth that they have reorganized 
 under this act, which shall be acknowledged and certified, as 
 provided by law for obtaining charters. 1 
 
 (J) That all fully paid-up permanent shares in such build- 
 ing and loan association shall be exchanged for paid-up stock 
 to the same amount in such savings bank or reorganized cor- 
 poration, and all accumulating shares shall be exchanged for 
 investment certificates, to be issued by said bank, bearing the 
 same payments and penalties, the same rate of interest, the 
 same ratio of participation in profits, and payment on with- 
 drawal or at maturity, as attached to the same by the constitu- 
 tion and by-laws of such association before its reorganization." 
 
 (k) All contracts heretofore made with any such building, 
 loan or savings association, may be enforced by action in 
 the name of such new or reorganized corporation, and all liens, 
 causes of action, are hereby saved and preserved to such cor- 
 poration, as fully as if this act had not been passed. 8 
 
 (/) Every private bank, banker, broker, building and loan 
 and trust association, shall list and return the average amount 
 of capital invested in such business during the year, ending 
 on the first day of March next preceding the time required 
 for listing personal property. The average amount of capital 
 so required to be listed, shall be determined by the average 
 amount of private capital or individual fund of such bank, 
 banker, broker, building or loan association, invested, used, or 
 subject to use in such business, to which shall be added the 
 average amount of net profits remaining undivided at the end 
 of each month during the year. 4 
 
 2-i. Maryland. " (a) Any five or more persons, citizens of 
 
 1 PI. 1201, 141, sec. 2; L. 1876, Tit. xxiii. Art., 40, p. 810. In par- 
 
 Ch. 51, 2. ticular 86-93; 95 (pp. 329-332); 
 
 * PL 1202, 142, sec. 3; L. 1876, Act April 14, 1880, Laws, Ch. 351, 
 
 Ch. 51, 3. p. 509. Decisions: Robertson . The 
 
 3 PI. 1203, 143, sec. 4; L. 1876, American Homestead Association, 
 Ch. 51, 7. 10 Md. 397 (loans, usury, mort 
 
 4 PI. 5795, Ch. 107, Art. 6, 23; gage, equity, computation of 
 L. 1876, Ch. 34, g 23 as amended, L. amount due on mortgage, member- 
 1879, Ch. 39, 11. ship); Franz v. Teutonia Building 
 
 5 Revised Code of Maryland. 1878, Association No. 2, 24 Md. 259 (plea
 
 24.] 
 
 STATUTORY PBO VISIONS 01? THE STATES. 
 
 35 
 
 the United States, and a majority of them citizens of this State, 
 who may desire to form a homestead or building associa- 
 
 of nul tiel corporation, estoppel); 
 Oak Cottage Building Association v. 
 Eastman and Rodgers, 31 Md. 556 
 (voluntary re-payment) ; Davis v. 
 West Saratoga Building Union No. 
 
 3, 32 Md. 285 (power of borrowing 
 money; see also Canton National 
 Building Association v. Weber, 34 
 Md. 669); Monumental Building As- 
 sociation No 2 v. Herman et al. , 33 
 Md. 128 (mortgage by infant); Await 
 v. Eutaw Building Association No. 
 
 4, 34 Md. 435 (recovery of money vol- 
 untarily paid usuriously); Knell v. 
 Green St. Building Association, 34 
 Md. 67 (judgment creditor); Shan- 
 non v. The Howard Mutual Build- 
 ing Association, 36 Md. 383 (fines, 
 mortgage, dues, computation of 
 amount payable on mortgage); Lord 
 & Robinson v. Essex Building Asso- 
 ciation No. 4, 37 Md. 320 (irregular- 
 ity of articles and by-laws, plea of 
 nul tiel corporation); Monumental 
 Permanent Building and Land So- 
 ciety v. Lewin, 38 Md. 445 (fines); 
 Lister v. Log Cabin Building Associ- 
 ation, 38 Md. 115 (mortgage, loan, 
 computation membership) ; Walter 
 . Riehl, 38 Md. 285 (parties to bill 
 for foreclosure); McCahan^. Colum- 
 bian Building Association, 40 Md. 
 226 (construction of mortgage 
 membership, fines, computation); 
 Windsor & Applegarth v. Baudel, et 
 al. , 40 Md. 172 ; 14 Am. L. R. , N. S. , 
 250 (effect of premature dissolution 
 on borrowers); Maryland Perma- 
 nent Land and Building Association 
 v.. Smith et al., 41 Md. 516 (usury); 
 Baltimore Permanent Building and 
 Land Society t>. Taylor, 41 Md. 409 
 (usury); Columbian Building Asso- 
 ciation No. 4 v. Crump, 42 Md. 192 
 (tender); Jackson et al. T. Myers et 
 al., 43 Md. 452 (sealed note); Muth 
 
 v. Dolfield, 43 Md. 466 (S. P.); Wil- 
 liar v. Baltimore Butchers' Loan and 
 Annuity Association, 45 Md. 546 
 (usury); Birmingham et al. v. Mary- 
 land Land and Permanent Home- 
 stead Association, 45 Md. 541 (usu- 
 ry); Schaeffer . Amicable Perma- 
 nent Land and Loan Co., 47 Md. 
 126 (continuance of default must be 
 alleged); Frostburg Building Asso- 
 ciation v. Stark,47Md. 338 (equity^ 
 injunction, receiver); Citizens' Se- 
 curity and Land Co. v. Uhler, 48 Md. 
 455 (usury, pleading, Act 1872, C. 
 178 void); Low St. Building Asso- 
 ciation No. 6 v. Zucker, 48 Md. 448 
 (effect of appointment of receiver, 
 working practical dissolution) ; Pe- 
 ter's Building Association No. 5 v. 
 Jaecksch.51 Md.198 (S. P.); Morrison 
 et al. . Dorsey, 48 Md. 461 (plea of 
 nul tiel corporation, insufficient 
 subscription of capital stock, notice 
 of payments due); Lamm v. Port 
 Deposit Homestead Association, 49 
 Md. 233 (agency, caveat emptor, 
 fraud); Frostburg Mutual Building 
 Association v. Lowdermilk, 50 Md. 
 175 (deputation to sell in mortgage); 
 Second German American Building 
 Association v. Newman, 50 Md. 62 
 (recovery of usury after settlement, 
 Act. 1876, C. 358, valid); Hennig- 
 hausen & Wolff v. Tisher, 50 Md. 
 583 (claim of corporators against 
 corporation, withdrawal balances) ; 
 Frostburg Mutual Building Associ- 
 ation v. Brace et al., 51 Md. 508 (ac- 
 knowledgment of mortgage by agent 
 of corporation), Con way r. Log 
 Cabin Permanent Building Associa- 
 tion, 52 Md. 137 (no action of as- 
 sumpsit to recover sum promised to 
 be loaned, agency); Queen City 
 Perpetual Building Association v. 
 Price, 63 Md. 397 (deputation in
 
 36 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 make, siirn, seal and acknowledge, before some 
 officer competent to take the acknowledgment of deeds, a certi- 
 ficate in writing, in which shall be stated : 1. The names in full 
 and place of residence of the applicants. 2. The proposed 
 corporate name of the corporation which shall always include 
 the name of the county or city in which it may be formed. 
 3. The object or purpose for which incorporation is sought, 
 the time of its existence not to exceed forty years, and the 
 articles, conditions and provisions under which the incorpora- 
 tion is formed. 4. The place or places where the operations 
 of the corporation are to be carried on, and the place in this 
 State in which the principal office of the corporation w r ill be 
 located. 5. The amount of capital stock of the corporation. 
 6. The number of shares of stock and the amount (par value) 
 of each share. 7. The number of trustees, directors, or man- 
 agers, and their names, who shall manage the concerns of the 
 corporation for the first year." The certificate thus executed, 
 shall be submitted to one of the judges of the proper court 
 who may determine whether it is in Conformity with the law, 8 
 and if he so finds, shall certify his determination upon the 
 certificate, which shall thereupon be recorded in the office of 
 the clerk of the proper court, in a book provided for that 
 special purpose.* When the said certificate shall have been 
 recorded, the persons who have signed and acknowledged the 
 same, and their successors shall, according to the objects, pur- 
 poses, articles, conditions and provisions in said instrument 
 contained, become and be a body politic and corporate, in fact 
 and in law, by the name stated in such certificate.* 
 
 (fy Any such corporation formed under the provisions of 
 this article shall have power in its certificate of incorporation 
 to limit the number of shares, which each stockholder may be 
 allowed to hold ; to prescribe the entrance fee to be paid by 
 each stockholder at the time of subscribing ; to regulate the 
 
 mortgage to sell, equity of pur- dence, the amendment and alteration 
 
 chaser for value). of charters, clerk's fees and endoree- 
 
 1 One of the corporations belong- mcnts, general powers of corpora- 
 
 ing to Class 5, Art. 40, 18. lions and corporators, and similar 
 
 * Tit. xxiii. Art. 40, 37. provisions generally applicable to 
 
 * See 38. corporations, see the sections follow- 
 
 * See 39. ing the 40th, viz., 41-80; see 
 
 * 40. As to the certificate as evi- also 1-13.
 
 24.] STATUTORY PROVISIONS OF THE STATES. 37 
 
 instalments to be paid on each share : Provided, the same 
 shall not exceed the sum of one dollar per share per week ; 
 and the times at which the same shall be payable. 1 
 
 (c) Any such corporation shall have power to enforce the 
 payment of all instalments and other dues, due to the corpo- 
 ration from the members or stockholders, by such fines and 
 forfeitures, as the corporation may from time to time provide 
 in the by-laws or articles of association of such corporation." 
 
 (d) Any person applying for membership, or for stock in 
 any such corporation, after the end of one month from the 
 time of incorporation, may be required to pay on subscribing 
 such bonus or assessment as may from time to time be fixed 
 or assessed, in such manner as may be provided by the cor- 
 poration, in order to place such new member or stockholder 
 on a footing with the original members, and 011161*8 holding 
 stock at the time of such application. 3 
 
 (<?) Such corporation may, at any time in advance of the 
 . period of time at which such corporation may cease to exist, 
 according to the plan contained in the original articles of as- 
 sociation, advance to any member thereof, for such premium 
 as may be agreed upon, the sum which he would be entitled 
 to receive upon the dissolution of the corporation, for any 
 number of shares therein held ; or may purchase from any 
 member thereof the share, or any number of shares, of the 
 stock held by him, at such price or sum as, according to the 
 articles of association, such member may agree to receive, and 
 on payment of said sum of money may receive from such 
 member security as mentioned in the next succeeding section 
 of this article, for the payment by such member to such cor- 
 poration of the unpaid instalments to be paid on the share or 
 shares of stock so sold or redeemed, together with interest at 
 the rate of six per cent, per annum on the sum so paid or ad- 
 vanced, at such times, and subject to such fines and penalties 
 for the nonpayment thereof, as may be prescribed in the arti- 
 cles of association or in the by-laws/ 
 
 (f) The payment of the unpaid instalments on the share 
 
 or shares so purchased or redeemed, with interest on the 
 
 money paid therefor as aforesaid, and all fines and penalties 
 
 incurred in respect thereof by any member, shall be secured 
 
 '86. 87. 88. 4 89.
 
 38 THE LAW OP BUILDING ASSOCIATIONS. [CH. II. 
 
 to such corporation by mortgage on real or leasehold property, 
 or by the hypothecation of stock of such corporation held by 
 such members as may be provided in the articles of associa- 
 tion or by-laws ; but, in case of hypothecation of stock, no 
 greater sum of money shall at any time be drawn out by any 
 member, than shall have been already paid in by him on all 
 his shares of stock at the time of hypothecation ; and any 
 such mortgage, and the mortgage debt created thereby, and 
 the shares of stock of any such corporation, and of all cor- 
 porations for the loan of money on mortgage of real or lease- 
 hold property, are hereby declared exempt from taxation to 
 the extent of such corporation's investment in such mortgages, 
 the property so mortgaged to the corporation being taxed in 
 the hands of the individual member or mortgagor. 1 
 
 (g) On the trial of any action or other proceeding at law 
 or in equity, in which the property or interest of any such 
 corporation may be in any wise concerned, any member of 
 such corporation shall be a competent witness, and shall not 
 be objected to on account of any interest he may have as such 
 member, in the result of any such action or proceeding. 2 
 
 (A) Any association of persons, which may have been or- 
 ganized, or established at any time prior to the adoption of 
 this article, on being made a body corporate, under the pro- 
 visions of this article, shall become merged in such corporate 
 body thereby created, and every act, done or to be done by 
 any such unincorporated association of persons, relating to the 
 ends and purposes of such association, and all mortgages, 
 bonds, or other instruments made to such association of per- 
 sons, or to any person or persons for the use of such associa- 
 tion of persons, or any number thereof as such, shall remain 
 and continue in full force and virtue at' law and in equity, in 
 like manner as if such incorporated association of persons had 
 originally been a body corporate.* 
 
 (i) Any trustee or trustees, person or persons, to whom 
 any such conveyance shall have been made, to and for the use 
 of such incorporated association, may be required to assign 
 and transfer the same to such corporation, and they shall be 
 as good and sufficient as if made to such corporation, and all 
 
 ' 90 amended by Act Apr. 14, 1880, Laws 1880, Ch. 351, p. 509. 
 9 91. 92.
 
 25.] 
 
 STATUTORY PROVISIONS OF THE STATES. 
 
 39 
 
 the liabilities and obligations of, by, and between the mem- 
 bers of such incorporated association of persons shall remain 
 of as binding force or effect, as if such association had been 
 from the first incorporated. 1 
 
 (f) It shall not be lawful for any land company, home- 
 stead, or building association, or any association formed for 
 the purpose of lending money, or using the corporate funds 
 for the purpose of buying, selling, lending upon mortgage, 
 leasing, or otherwise dealing in real or leasehold estate, to 
 issue any promissory note, bill, or obligation of any kind to any 
 member thereof, or borrower therefrom, in lieu of money, and 
 all loans by such corporation shall be made in money and not 
 otherwise, and all notes, bills, or obligations of any sort issued 
 by any such association to or for the use or benefit of any 
 member or borrower in lieu of money, and all deeds, mort- 
 gages, or other securities whatsoever, given to secure the 
 same, shall be void, and of no force and validity whatever, 
 either in law or in equity. 8 
 
 25. Massachusetts. 3 (a) Any number of persons not 
 
 1 93. Section 94 is omitted, as it 
 is believed that the corporations con- 
 templated by it have very little in 
 common with building associations 
 properly so-called. They belong to 
 the class of corporations appearing 
 in the Baltimore Permanent Build- 
 ing and Land Society v. Taylor, 41 
 Md. 409, Williar v. The Baltimore 
 Butchers' Loan and Annuity Asso- 
 ciation, 45 Md. 546; Birmingham <o. 
 The Maryland Lnnd and Permanent 
 Homestead Association, 45 Md. 541 ; 
 Citizens' Security and Land Co. . 
 Uhler,48 Md. 455, in which last case, 
 the Act of 1872, C. 178, which con- 
 stitutes sec. 94 (omitted here) was de- 
 clared void under Art.31.sec.57 of the 
 Constitution of Maryland, it being 
 merely an attempt to legalize, in the 
 case of special corporations, the tak- 
 ing of usurious interest. See also 
 Birmingham v. Association, supra. 
 
 95. 
 
 * Acts and Resolves of Massachu- 
 
 setts, 1877, pp. 613-623; 1881, pp. 
 594-596; Acts 1877, Ch. 224, as 
 amended by Acts 1881, Ch. 271. De- 
 cisions: Fuller v. Salem and Danvers 
 Loan and Fund Association, 10 Gray 
 94 (under St. 1854, C. 454; with- 
 drawal, equity, jurisdiction con- 
 ferred by statute does not prevent 
 member from suing company at law 
 where a proper case for a common 
 law remedy is shown); Munuhan v. 
 Varuum, 11 Gray 405 (assignment, 
 foreclosure, incorporation) ; Merill 
 v. Mclntire, 13 Gray 157 (incorpora- 
 tion, bond for dues, usury); Bax- 
 ters. Mclntire,ld.l68 (unincorporat- 
 ed societies, foreclosure, mort- 
 gage for dues, agency, usury); Bar- 
 ker v Bigelow,15 Gray, 130 (loans, 
 validity of mortgage and bond, re- 
 demption); Howard Mutual Loan 
 and Fund Association v. Mclntire, 3 
 Allen, 571 (unacknowledged and un- 
 recorded mortgage, estoppel from 
 denial of membership); Delano r.
 
 40 THE LAW OF BUILDING ASSOCIATIONS. [OH. II. 
 
 less than twenty-five as is hereinafter provided, who shall 
 have associated themselves together by an agreement in writ- 
 ing, such as is hereinafter described, with the intention to 
 constitute a corporation for the purpose of accumulating the 
 savings of its members, paid into such corporation in fixed 
 periodical instalments, and the lending of such funds so ac- 
 cumulated to its members, shall become a corporation upon 
 complying with the provisions of this act, and shall remain a 
 corporation, with all the powers, rights and privileges, and 
 subject to all the duties, limitations and restrictions conferred 
 by general laws upon corporations except as herein otherwise 
 provided. 1 
 
 () Such agreement shall set forth the fact that the sub- 
 scribers thereto associate themselves with the intention to con- 
 stitute a corporation, the name by which the corporation shall 
 be known, the purpose for which the corporation is consti- 
 tuted, the town or city, which town or city shall be within 
 this commonwealth, in which it is established or located, and 
 the limit of capital to be accumulated." 
 
 (c) Any name may be assumed for such corporation not 
 previously in use by an existing corporation established under 
 the laws of this commonwealth, and the name assumed in the 
 agreement shall not be changed but by an act of the Legisla- 
 ture. The words " Co-operative Saving Fund and Loan As- 
 sociation" shall form a part of the name. 3 
 
 (d) The provisions of the ninth, tenth and eleventh sec- 
 tions of the two hundred and twenty-fourth chapter of the 
 Acts of the year 1870 shall apply to corporations established 
 under the provisions of this act, except that in the form of 
 certificate signed by the secretary of the commonwealth, the 
 limit of capital to be accumulated, as fixed in the agreement 
 of association, shall be inserted, instead of the capital, that 
 the certificate required by said eleventh section to be filed and 
 recorded may be signed and sworn to by the presiding and 
 financial officers and a majority at least of the officers pos- 
 sessing the powers of directors, by whatever name they may 
 
 Wild, 6 Allen, 1 (usury); Bowker v. society under rules, usury); Cook 
 
 Mill River Loan Fund Association,? v. Kent, 105 Mass. 246 (dissolution). 
 Allen, 100 (relation of borrower to ' Acts 1877, Ch. 234, 1. 
 * 2. 3 3.
 
 25.] STATUTORY PROVISIONS OF THE STATES. 41 
 
 be called, and that the fees to be paid for filing and recording 
 the certificates required by said eleventh section, including 
 the issuing of the certificate of organization by the secretary 
 of the commonwealth, shall be five dollars. 1 
 
 (e) The object of such corporations shall be the accumula- 
 tion of a capital in money, to be derived from savings and 
 accumulations by the members thereof, to be paid into said 
 corporation in periodical instalments, and in fixed and cer- 
 tain sums, at such times and in such amounts, as shall be 
 hereinafter designated ; the capital so as aforesaid to be accu- 
 mulated by any corporation created by virtue hereof shall not 
 exceed in the aggregate and full ultimate value thereof, one 
 million dollars, and shall be divided into shares of the ulti- 
 mate value of two hundred dollars each ; and said shares may 
 be issued in quarterly, half yearly or yearly series, in such 
 amounts and at such times as the shareholders may deter- 
 mine ; and payments of dues or instalments on each series or 
 issue of shares shall commence and date from the issue 
 thereof. No person shall hold more than twenty-five shares 
 in the capital of any one of said corporations. No shares of 
 a prior series shall be issued after the issue of a new series. 
 New shares may be issued in lieu of shares withdrawn, can- 
 celled or forfeited. Said capital, so as aforesaid saved and 
 accumulated, from time to time shall be loaned or advanced 
 to members of the particular corporation holding one or more 
 shares in the capital thereof, who shall from time to time de- 
 sire to anticipate the ultimate value of their shares, and shall 
 give security for the prompt and continued payment of all 
 periodic instalments of dues, interest, premium and fines, 
 until each of their said shares, so advanced upon, shall be 
 found to be of the ultimate value of two hundred dollars, as 
 hereinafter provided. 2 
 
 (f) The number, title, functions and compensation of the 
 officers of any corporation created by virtue of this act, their 
 tenns of office, the time of their election, as well as the 
 qualifications of electors, and the time of each periodical 
 meeting of the officers and shareholders of said corporation 
 shall be provided by the by-laws : Provided, that no member 
 shall be entitled to more than one vote at any election.* 
 
 1 4. 5. 6.
 
 42 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 (g) The said officers shall hold stated monthly meetings, at 
 which each shareholder shall pay into the said corporation the 
 periodical instalments, to be called " dues," on account of 
 i-ach share subscribed for by him, together with such interest 
 and premiums on advance's made from time to time, and such 
 iiiirs as shall be imposed on arrears, as is hereinafter pro- 
 vided. The moneys so as aforesaid saved and accumulated at 
 each stated monthly meeting from dues, interest, premiums 
 and fines as aforesaid, or from any other source whatsoever, 
 after due allowance made for all necessary and proper ex- 
 penses, and subject to the provisions hereinafter in section ten 
 contained and set forth respecting the withdrawal and cancel- 
 lation of shares, shall be offered to such shareholder or share- 
 holders as shall bid the highest premium for preference or 
 priority of right to a loan or advance on the ultimate value 
 of one or more of his or their respective shares ; and such 
 shareholders so bidding the highest premium as aforesaid shall 
 be entitled to receive a loan or advance of two hundred dol- 
 lars for each share held by him : Provided, that a shareholder 
 may borrow such fractional part of two hundred dollars as 
 the by-laws shall provide. 1 
 
 In case there shall be a balance of money remaining unsold 
 after a monthly auction sale, the directors may at their dis- 
 cretion invest the same in any of the securities named in the 
 second clause of section nine of chapter two hundred and 
 three of the acts of the year 1876. 8 
 
 (A) For every loan and advance made as aforesaid, a note 
 secured by first mortgage of real estate shall be given, accom- 
 panied by a transfer and pledge of the shares of the mem- 
 ber or members so as aforesaid obtaining a loan or advance. 
 Said shares so transferred and pledged shall be held by said 
 corporation as additional or collateral security for the per- 
 formance of the terms, covenants and conditions of said note 
 and mortgage ; and all payments of dues by a member so as 
 aforesaid borrowing or obtaining advances, and all profits and 
 gains from time to time accruing and adjusted as hereinafter 
 provided to said shares so transferred and pledged, shall be 
 deemed and taken to be payments on account of such loan or 
 advance, until said loan or advance shall be cancelled by the 
 1 7. * Acts 1881, Ch. 271. 1, Cl 4.
 
 25.] STATUTORY PROVISIONS OF THE STATES. 43 
 
 ultimate value of such share or shares so pledged or shall be 
 otherwise sooner cancelled and discharged. Said note and 
 mortgage shall recite and set forth the number of shares 
 pledged and transferred by the particular shareholder so bor- 
 rowing, and the amount of money advanced thereupon, and 
 shall be expressed to be conditioned for the payment at the 
 stated meetings of the corporation of the monthly dues on 
 the number of shares so pledged and advanced upon, and the 
 interest and premium upon the loan or advance for which 
 said shares are pledged and said note and mortgage givn, to- 
 gether with all lines chargeable upon arrears of such payment 
 until said shares shall reach the ultimate value of two hun- 
 dred dollars each, or said loan shall be otherwise sooner can- 
 celled and discharged : Provided, however, that the shares of 
 the particular corporation, without other security, may in 
 the discretion of the board of directors be so pledged and 
 transferred as security for loans or advances to an amount not 
 exceeding the assessed and adjusted value of such shares at 
 the annual or other settlement and adjustment of the accounts 
 of said corporation next preceding the time of such loan or 
 advance. In case a shareholder shall neglect to offer security 
 for a loan, or offering security, it shall not be approved of by the 
 board of directors by such time as the by-laws may prescribe, 
 his right to such loan shall be forfeited for the time being, 
 and he shall be charged with one month's interest and one 
 month's premium, at the rate bid for the same by him, to- 
 gether with all expenses incurred, if any, and the money so 
 forfeited shall be subject to re-loan at the next or any subse- 
 quent stated meeting. In case of nonpayment by borrowing 
 shareholders of monthly dues and interest and premiums on 
 loans or advances and all fines or arrears for the space of six 
 months, such defaulting borrower, in addition to the original 
 amount loaned, shall be charged with all monthly dues, inter- 
 est, premiums and fines in arrears, and shall have and be given 
 credit for the withdrawing value of his shares, pledged ami 
 transferred as aforesaid, in accordance with the rule herein- 
 after, in section ten, provided for the withdrawal and cancel- 
 lation of shares, together with the dues paid thereon from the 
 next preceding adjustment and valuation of shares to the date 
 of such settlement; and the balance found to be remaining
 
 44 THE LAW OP BUILDING ASSOCIATIONS. [CH. II. 
 
 due over and above such credit, together with an attorney's 
 collection fee of five per cent, on said balance, shall be en- 
 forced and recovered on his security, as debts of a like 
 amount are now enforced and recoverable according to 
 law. 1 
 
 (i) Each shareholder shall pay to said corporation, at or 
 before each stated monthly meeting of the directors, as a con- 
 tribution to the capital thereof, the sum of one dollar as dues 
 for each and every share held by him, until each share shall 
 under the provisions of this act reach the ultimate value of 
 two hundred dollars, or shall sooner be forfeited, cancelled or 
 withdrawn, as hereinafter provided. When each unpledged 
 share of a particular series shall reach the ultimate value of 
 two hundred dollars, all payments thereon shall cease, and 
 the holder thereof shall be entitled to receive, and shall be 
 paid out of the funds of the said corporation, the sum of two 
 hundred dollars for each share maturing and so held by him, 
 and from the date of such maturity to the date of such pay- 
 ment shall also be entitled to receive and shall be paid inter- 
 est at the rate of six per cent per annum on the sum so due 
 and payable : Provided, however, that at no time shall more 
 than one half of the funds in the treasury be applicable to the 
 payment of such matured shares without the consent of the 
 directors ; and provided, further, that the directors of said 
 corporation shall have the power at their discretion to retire 
 the unpledged shares of any particular series, by enforcing 
 the withdrawal of the same at any time after the lapse of four 
 years from the date of the issue thereof, provided, that the 
 retired shareholders shall be entitled to receive, and shall be 
 paid, the full value of their shares, Jess all fines and a propor- 
 tionate part of any unadjusted loss, and provided, further, 
 that all shareholders whose shares are to be so retired shall be 
 determined by lot under such regulations as the directors may 
 prescribe. A borrowing shareholder, for each share borrowed 
 upon, shall, in addition to the dues aforesaid, pay the sum of 
 one dollar per month as interest, together with the monthly 
 premium bid for said loan, as hereinafter in section twelve 
 provided for, until said shares shajl reach the ultimate value 
 of two hundred dollars each, when said shares and said loan 
 1 Acts 1877, Ch. 224, 8; Acts 1881, Ch. 271, 1, Cl. 1.
 
 25.] STATUTORY PKOVISIONS OF THE STATES. 45 
 
 shall be declared cancelled and satisfied, unless otherwise 
 sooner paid off and discharged. 1 
 
 (j ) A shareholder may withdraw at any time by giving 
 thirty days' notice of his desire to do so on a book to be pro- 
 vided by said corporation for the purpose, when he shall be 
 entitled to receive the amount of dues paid in by him on each 
 of his shares, together with such proportion of the profits per 
 share, as assessed and adjusted at the settlement, adjustment 
 and division of assets, profits and losses next preceding such 
 notice, as the by-laws may determine, less all fines and the 
 proportionate part of all losses and other charges accrued sub- 
 sequent to said next preceding assessment and adjustment : 
 Provided, however, that at no time shall more than one half 
 of the funds in the treasury be applicable to the demands of 
 withdrawing shareholders without the consent of the board of 
 directors ; and further, that no shareholders shall be entitled 
 to withdraw whose shares are held in pledge as security for a 
 loan or advance on the same, except as is next hereinafter pro- 
 vided. 3 
 
 (K) A shareholder may repay a loan at any time upon ap- 
 plication to said corporation, whereupon, on settlement of his 
 account, he shall be charged with the full amount of the loan 
 as originally made to him, together with all monthly instal- 
 ments of dues, interest, premium and fines then remaining 
 due and unpaid, and shall receive and be given credit for the 
 withdrawing value of his shares, pledged and transferred as 
 security for said loan, in accordance with the rule hereinbefore 
 (in section ten) provided for the withdrawal and cancellation 
 of shares, together with the dues paid thereon from the next 
 preceding adjustment and valuation of shares to the date of 
 such settlement, and the balance found to be remaining due 
 over and above such credit shall be received by said corpora- 
 tion in full satisfaction and discharge of said loan or advance : 
 Provided, that all settlements made at periods intervening 
 between stated meetings of the directors, shall be made as of 
 the date of the stated meeting next succeeding such settle- 
 ment ; and provided, that a shareholder desiring to retain his 
 shares, and membership thereunder, may at his option repay 
 his loan without claiming credit for said shares, whereupon 
 
 1 Acts 1881, Ch. 271, 1, Cl. 3. * Acts 1877, Ch. 224, 10.
 
 46 THE LAW OP BUILDING ASSOCIATIONS. [CH. II. 
 
 said shares shall be re-transferred to him, and he shall assume 
 and be entitled to all the privileges of non-borrowing mem- 
 bers, free, clear, and discharged of and from any claim thereon 
 by reason of said cancelled loan or advance. 1 
 
 (Z) Premiums for loans or advances as aforesaid, shall con- 
 sist of a percentage on the amount to be loaned, advanced, or 
 borrowed, and shall be a charge in addition to interest as afore- 
 said on the amount loaned, and said premium shall be deemed 
 and taken to be a consideration or bonus, paid by the borrower 
 for the present and immediate use and possession of the future 
 or ultimate value of the shares so pledged, and shall, together 
 with interest and fines paid, be received by said corporation 
 as a profit on the amount of capital invested in said loan, and 
 shall be divided and distributed to the various shares, several- 
 ties and series of said capital in the way and manner herein- 
 after provided." 
 
 (m) Shareholders who shall make default in the payment 
 of their monthly dues, interest and premiums, shall be charged 
 a fine not exceeding two per cent per month on each dollar 
 of such dues, interest and premiums so in arrears. No fines 
 shall be charged after the expiration of six months from the 
 first lapse in payment of said dues, interest and premiums, 
 and no fine shall be charged upon a fine in arrears. The 
 shares of all shareholders who shall continue in arrears for a 
 longer period than six months shall, at the option of the 
 board of directors, on thirty days' notice to such defaulting 
 shareholder, be declared forfeited, and in default of payment 
 of said arrears before the expiration of said thirty days, the 
 withdrawing value of said defaulting shares at the time of 
 said first default shall be ascertained, and after deducting all 
 fines and other legal charges, the balance remaining shall be 
 transferred to an account, to be designated the "Forfeited 
 Share Account," and shall be held by said corporation, with 
 respect to the shares of non-borrowing members, subject to 
 the order of the defaulting shareholder entitled to the same 
 without any interest from the time of such transfer, and upon 
 notice in the manner hereinbefore provided (in section ten) 
 for the withdrawal and cancellation of shares, he shall be en- 
 ti;l;-<l to receive the balance in due order of his turn, out of 
 1 11. * 12.
 
 25.] STATUTORY PROVISIONS OF THE STATES. 47 
 
 the funds appropriated to the payment of withdrawals. And 
 with respect to the shares of borrowing members, the said 
 directors may proceed to the enforcement and recovery of the 
 loan or advance for which such defaulting share or shares are 
 or shall be pledged, in the manner hereinbefore provided, and 
 on recovery of said loan said shares and the balance due 
 thereon shall revert to said corporation as a payment on ac- 
 count of said loan, and shall be held by said corporation free, 
 clear and discharged of and from all interest, claim and 
 demand on the part of such defaulting borrower, or any per- 
 son or persons claiming from or under him, her or them : 
 Provided, however, that all shares so as aforesaid forfeited or 
 transferred to " Forfeited Share Account" shall cease to par- 
 ticipate in, or be entitled to any portion of the gains or prof- 
 its of said corporation accruing after the adjustment and 
 settlement of the accounts of said corporation and the valua- 
 tion of shares as hereinafter provided next preceding the date 
 of such forfeiture and transfer. 1 
 
 (ri) The general accounts of any corporation created by 
 virtue of this act, shall in all cases be kept upon the system 
 of accounting known as " double entry ;" all instalments and 
 moneys received by such corporation from shareholders shall 
 be receipted for by a person or persons designated by the 
 board of directors, in a pass-book provided by the corporation 
 for the use of and to be held by each member, and said pass- 
 book shall be plainly marked with the name and residence of 
 the holder thereof, the number of shares held by him, and 
 the number or designation of the series or issue to which said 
 shares respectively belong, and the date of the issue of such 
 series. All moneys so received shall be originally entered by 
 the proper officer in a book to be called the " cash-book," to 
 be provided by said corporation for the purpose, and the 
 entries therein shall be so made as to show the name of the 
 payer, the number of shares, the number or designation of 
 the series or issues of the particular share or shares so entered, 
 together with the amount of dues, interest, premiums and 
 lines paid thereon as the case may be. Each payment made 
 shall be classified and entered in a column devoted to its kind. 
 Said cash-book shall be closed after the termination of each 
 
 ' 13.
 
 48 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 stated meeting, and shall be an exhibit of the receipts of all 
 moneys paid at said meeting. All payments nuide by said 
 corporation for any purpose whatsoever, shall be by order, 
 check or draft upon the treasurer, signed by the President 
 and Secretary, and endorsed by the person or persons in 
 whose favor the same shall be drawn. The name of the 
 payer, the amount paid, and the purpose, object or thing for 
 which the said payment shall have been made, together with 
 the date of such payment, shall be entered on the counterfoil 
 or margin of said order, check or draft. The treasurer shall 
 dispose of and secure the safe keeping of all moneys, balances, 
 assets, securities and property of said corporation, in the way 
 and manner designated by the by-laws, and the treasurer and 
 secretary shall give such security for the true and faithful 
 performance of their respective duties as the by-laws may 
 direct. 1 
 
 (0) The profits and losses may be distributed annually, 
 semi-annually or quarterly, to the shares then existing, but 
 shall be distributed at least once in each year, and whenever 
 a new series of shares is to be issued. Profits and losses shall 
 be distributed to the various shares existing at the time of 
 such distribution to the then value of the share, and shall be 
 computed upon the basis of a single share, fully paid to date 
 of distribution. Losses shall be apportioned immediately fol- 
 lowing their occurrence. 1 
 
 (p ) No corporation created under this act shall cease or 
 expire from neglect on the part of such corporation to elect 
 officers at the time mentioned in the charter or by-laws, and 
 all officers elected by such corporation shall hold their respect- 
 ive offices until their successors are duly elected. 8 
 
 (^) Any corporation created by or under this act is hereby 
 authorized and empowered to purchase at any sheriffs or other 
 judicial sale, or at any other sale, public or private, any real 
 estate upon which such corporation may have or hold any 
 mortgage, judgment, lien or other incumbrance, or in which 
 such corporation may have an interest ; and the real estate so 
 purchased, to sell, convey, lease or mortgage, at pleasure, to 
 any person or persons whatsoever: Provided, that all real 
 
 1 14. Acts 1881, Ch. 271, 1, Cl. 2. 
 
 * Acts 1877, Ch. 224, 16.
 
 26.] STATUTORY PROVISIONS OF THE STATES. 49 
 
 estate so acquired shall be sold within five years from the ac- 
 quisition of title thereto. 1 
 
 (r) Every association organized under the authority oi 
 this act, shall pay to the treasurer of the Commonwealth a tax 
 on account of its shareholders, of three quarters of one per 
 cent, per annum on the amount of its monthly dues paid in 
 by such shareholders, exclusive of h'nes, interest and pre- 
 miums, to be assessed, one half of said annual tax on the 
 average amount of its monthly dues .paid in for the six 
 months preceding the first day of May, and the other on the 
 average amount of its monthly dues paid in for the six 
 months preceding the first day of November, and all property 
 taxed under this section shall be otherwise exempt from taxa- 
 tion for the current year in which the tax is paid. The pro- 
 visions of the fifth, eighth, ninth and eleventh sections of the 
 two hundred and twenty-fourth chapter of the Acts of the 
 year 1862, so far as applicable to savings banks, shall apply to 
 the associations organized under this act." 
 
 26. Michigan. 3 (a) It shall and may be lawful for any 
 number of persons, not less than ten, to associate themselves 
 to form with such other persons as shall afterwards associate, 
 a body politic and corporate, under such name as the original 
 associates may select, for the purpose of saving and investing 
 among themselves and accumulating sums to be paid at in- 
 tervals of not exceeding one month, by its members, in pro- 
 portion to their interests in the funds to be invested or ac- 
 cumulated. 4 
 
 (b) The persons associating in the first instance shall make 
 and subscribe in duplicate an instrument in writing, stating 
 the name, location and place of business of such corporation ; 
 the amount of each share therein, the periods for payment on 
 the shares, and the amount of each payment thereon ; the 
 maximum number of shares ; the officers it will elect, which 
 
 1 17. properly belonging to the class here- 
 
 2 18. in treated of. But the reader is also 
 3 PublicLaws, Michigan, Session referred to Compiled Laws of Michi- 
 
 of 1877, pp. 274-278, Act May 26, gau of 1871, Ch. 93, Act Apr. 5, 
 
 1877, "An Act to autliori/e the in- 1869, Laws 1869, p. 305, and to Act 
 
 corporation of co-operative savings Apr. 3, 187.3, Laws 1873. p. 85. 
 
 associations." The provisions of this 4 Law* 1877, p. 274, Act May 26, 
 
 an scorn to contemplate associations 1877. 1.
 
 50 THE LAW OP BUILDING ASSOCIATIONS. [CH. II. 
 
 shall, include a president,' secretary and treasurer, and the 
 first officers may be named therein ; the times of the annual 
 elections ; and the period of the corporate existence of such 
 corporation, which shall not be less than three years nor more 
 than ten years, and be further limited to the number of 
 periods necessary to pay in full the shares subscribed for in 
 the manner proposed ; the minimum number of shares to be 
 subscribed for previous to the filing of said instrument as 
 the articles of association of said corporation, and such rules 
 and limitations as the subscribers shall deem proper to be in- 
 serted for the security of its members. 1 
 
 (c) Whenever the necessary shares shall have been sub- 
 scribed, any three or more of the subscribers may annex to 
 one of the counterparts so executed an affidavit that the sub- 
 scriptions are genuine and made in good faith as they believe, 
 and thereupon such counterpart and affidavit shall be tiled 
 and recorded in the office of the clerk of the county in which 
 the business of the corporation is to be conducted, and upon 
 such tiling the said association shall become a body politic 
 and corporate, and such record or a certified copy thereof 
 shall be evidence of such incorporation." 
 
 (d) Such corporation shall in no case borrow moneys or 
 receive deposits, with or without interest, nor shall it execute 
 or endorse, or buy or sell commercial paper, or in any way 
 engage in the business of banking ; it shall accept no trusts 
 or agencies, and shall engage in no business other than that 
 of, or connected with, the collection of the dues of members 
 of the corporation, and of liquidating the obligations of the 
 corporation to its members.* 
 
 (e) The shares of such corporation shall be not less than 
 twenty-five dollars nor more than one hundred and twenty- 
 five dollars each ; the total nominal amount of all such shares 
 shall not exceed three hundred thousand dollars ; no person 
 shall become the owner of more than sufficient of said shares 
 to amount to the nominal value of two thousand and five 
 hundred dollars; but a parent or guardian may, if author- 
 ized by the by-laws, sign for and become personally responsi- 
 ble for shares to be taken in his name as trustee for his infant 
 child or children or ward, to such extent as the by-laws may 
 
 1 g 2. s 3. g 4.
 
 I 2G.] STATUTORY PROVISIONS OF THE STATES. 51 
 
 permit, but not exceeding for each child or ward the said 
 sum of twenty-five hundred dollars : Provided, however, that 
 this provision shall not authorize such subscription by a guar- 
 dian for a ward and payment out of the moneys of the ward, 
 except authority for that purpose be given by the proper 
 probate court. 1 
 
 (f) Every holder of one or more shares in said corporation 
 in his own right, who is of full age, shall be entitled to one 
 vote and no more at all meetings of the corporation, and no 
 vote by proxy shall be allowed. A quorum shall consist of 
 such number not less than fifteen as the articles of associa- 
 tion or by-laws shall prescribe. 8 
 
 (g) At the time of organizing the corporation an initia- 
 tion fee not exceeding one dollar may be charged to each 
 member, and the amount of the initiation fee may be from 
 time to time increased to such sum as in the judgment of the 
 members constituting a quorum at any regular meeting may 
 be required to make the investment of a new member equal 
 to that of an original corporator. 3 
 
 (A) The by-laws to be adopted by such corporations shall 
 provide for the collection of fines by way of penalty for any 
 failure to pay periodical dues, or to carry into effect any 
 agreement made by the corporation with a member, or for 
 any other infraction of the reasonable by-laws of the corpora- 
 tion or of its articles of association, and such fines shall be a 
 lien upon the interest of the member upon whom they are 
 imposed in the said corporation, which lien may be enforced 
 and collected in such mode as the articles of association or 
 by-laws may provide : Provided, however, that the amount 
 of all unpaid fines chargeable against any member, who is 
 not an officer of the corporation, shall at no time exceed the 
 annual profits of such member upon the share or shares held 
 by him, and any member, not an officer, shall be entitled at 
 any time, by making a demand in writing, and a surrender to 
 the corporation of all accrued profits, to be repaid all moneys 
 paid by him on his share or shares, except initiation fees, 
 and with such interest, if any, as the by-laws shall in such 
 case (cases) provide. Such surrender of profits shall cancel 
 all fines against members who are not officers, and the cor- 
 1 5. 6, p. 275. 7.
 
 52 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 poration shall repay such moneys before it shall make other 
 liquidations of its liabilities to members. If any member 
 shall continuously neglect for sixty days to pay the periodic 
 dues required of or tines imposed upon him, it shall be law- 
 ful for the corporation to pay or tender to him the amount 
 which he may have actually paid as periodic dues, without 
 interest, or with such interest as the by-laws may in such 
 cases provide for, and with or without the initiation fee, as the 
 by-laws shall provide, and thereupon all the rights and liabili- 
 ties of such member in the said corporation shall cease and 
 determine. 1 
 
 (*) Any member may dispose of any share held by him 
 to any member holding less than the maximum number of 
 shares, or to any other person who may be approved, in such 
 manner and upon such conditions as the by-laws shall pre- 
 scribe. 9 
 
 (j) All arrangements for the liquidation of shares shall be 
 made with a member of the corporation, upon security to be 
 given, which security shall consist either of unencumbered 
 real estate worth not less than twice the amount depending 
 on such security, upon a bond and mortgage duly executed 
 and acknowledged, or upon shares in said corporation, upon 
 estimates according to the dues actually paid thereon. 3 
 
 (k) It shall and may be lawful at any regular meeting of 
 the corporation to offer to purchase, with any money then or 
 soon to be in the treasury, the share or shares of the member, 
 who, at an auction or bidding there to be held, shall allow the 
 greatest discount from the par value of his share or shares, 
 upon a purchase of the same, subject to the payment by the 
 seller of the regular periodical dues and the payment by him 
 of such additional periodic sums, not exceeding the rate of 
 seven per cent, per annum on the nominal amount of the 
 shares, as may be prescribed by the by-laws. If at the said 
 auction or bidding no member present or represented shall 
 offer to allow a discount, subject to the payment by him of 
 such original and additional periodic dues, it shall be lawful 
 to cast lots in such manner as the by-laws shall prescribe, to 
 determine the share in said corporation, which shall be paid 
 and extinguished with the said moneys, and the same shall 
 1 8. 9, p. 276. 10.
 
 26.] STATUTORY PROVISIONS OF THE STATES. 53 
 
 be applied according to said lot upon the like securities being 
 given as in other cases : Provided, that, in case the owner of 
 the share so designated by lot shall not give the requisite 
 security, then that the money shall be deposited in some bank 
 upon such interest as can be obtained, there to remain as 
 security for such payments till by the regular application of 
 the same to the payment of dues the share shall be fully 
 paid : Provided further -, however, that such portion of the 
 same shall be paid to the owner of such share as, in the judg- 
 ment of the committee or officers authorized by the by-laws 
 to decide, can be safely paid, and leave such payments to be 
 made to the corporation adequately secured. 1 
 
 (I) Any officer not acting as auctioneer may bid at any 
 auction authorized by this act, but if the purchase shall be 
 struck off to any officer having anything to do with the tak- 
 ing of securities, or if the share of such officer shall be desig- 
 nated by the lot mentioned in the last preceding section, the 
 security which such officer shall offer, shall be brought before 
 a regular meeting of the corporators, and approved before 
 any money shall be advanced or paid thereon. 3 
 
 (m) No member of such corporation shall receive any 
 greater pecuniary benefit or advantage from his share therein 
 than its payment in full, at its nominal or par value ; every 
 discount and sum of interest allowed or paid, and every fine 
 or penalty collected shall, equally and ratably in proportion 
 to their shares, be for the benefit and advantage of selling 
 and non-selling members, and every agreement which any 
 shareholder may make in regard to payments for his share, or 
 for additional payments in case of a sale thereof, shall be 
 construed to have been fully performed whenever he shall 
 have contributed in dues or additional dues, his ratable pro- 
 portion of the sums necessary, with the profits accruing from 
 initiation fees, discounts, dues, fines, and all other sources, 
 after paying all expenses, to pay in full all shares in the cor- 
 poration. Whenever such payments shall have been made, 
 the said corporation shall cease and determine for all pur- 
 poses, except winding up its affairs. The cancellation and 
 discharge of a security given by a selling shareholder, to an 
 
 8 11. '12.
 
 54 THE LAW OP BUILDING ASSOCIATIONS. [CH. II. 
 
 amount equal to his share or shares shall be deemed the pay- 
 ment thereof. 1 
 
 (ri) The interests of the shareholders of such corporations 
 shall be deemed personal estate, and shall be liable to taxation 
 in the ward or township in which they reside, which taxation 
 shall be in lieu of all taxes against said corporation, and the 
 books of every corporation of this class shall be so kept as to 
 show the interests of each shareholder, and shall be open at 
 all reasonable times to the inspection of officers charged with 
 the duty of making assessments for any purpose.* 
 
 (0) No corporation authorized by this act shall become 
 the owner of any real estate except by purchase at sales made 
 upon foreclosure of mortgages taken by it, and in such case, 
 the land purchased shall be sold and disposed of within two 
 years after the purchase: Provided, Jwwever, that it may 
 rent an office or room for holding the meetings of the cor- 
 porators, as may be convenient or necessary.* 
 
 (p) Any voluntary association which, before the going 
 into effect of this act, may have been organized for like pur- 
 poses, may, by the unanimous consent and agreement in writ- 
 ing of its members, become a body corporate under this act, 
 upon filing the original articles of association of its members, 
 and such consent and agreement in writing ; which consent 
 and agreement shall state all particulars required by the sec- 
 ond section of this act, not already stated in the original arti- 
 cles, and modify such articles, if necessary, to conform them 
 to this act, with the county clerk of the county, as required 
 by the third section hereof ; arid such articles, consent and 
 agreement, having first annexed to them an affidavit made by 
 three or more of the incorporators, that the signatures to such 
 articles and consent and agreement are genuine, that the per- 
 sons signing such consent and agreement are all the members 
 of such association, and that such original articles, consent and 
 agreement were executed in good faith as the affiants believe, 
 being so duly filed and recorded on the record thereof, shall 
 be evidence of the fact of incorporation, and all acts of such 
 association, of which a proper record shall have been kept 
 from the date of its original organization, not inconsistent 
 
 '13. * 14 p. 277.
 
 ^6.] STATUTORY PROVISIONS OF THE STATES. . 55 
 
 with this act, shall be deemed valid and binding as though 
 the original organization had been under this act. 1 
 
 (q) Every corporation may require, by its by-laws or other- 
 wise, bonds from its president, treasurer and other officers, to 
 the amounts and to the extent which it shall judge necessary 
 to secure the safe-keeping of its moneys and the. faithful per- 
 formance of the duties of its officers. The duties of all offi- 
 cers shall be prescribed by by-laws adopted by the corpor- 
 ators, and all powers granted by this act, not expressly de- 
 volved thereby, or by the articles of association, or some 
 by-law upon one or more officers of the corporation, shall 
 be exercised by the corporators only, at meetings where the 
 quorum required by section six shall be present. 11 
 
 (r) Every corporation formed under this act shall, in the 
 month of January in each year, make a report in writing, 
 under the oaths of two or more of its officers, showing the 
 condition of its affairs at the close of the pending (preceding) 
 year to the following extent : 
 
 First. The amount of its shares which have been sub- 
 scribed for ; 
 
 Second. The amount which has been paid upon such sub- 
 scriptions in dues and penalties ; 
 
 Third. The number of shares which have been pur- 
 chased, and the gross amount of the discount allowed upon 
 purchases ; 
 
 Fourth. The number of shares otherwise paid and extin- 
 guished ; and 
 
 Fifth. The gross amount of the debts of the corporation ; 
 
 Which report shall be filed in the office of the clerk of 
 said county. The attorney-general of the State may at any 
 time require further and detailed reports to be made to him 
 as to the affairs of any or all such corporations to any extent 
 which in his judgment the public interest may require, and 
 he may personally make any investigation of their books, pa- 
 pers and securities, which he shall judge for the interest of 
 the public. 3 
 
 (*) Every member of such corporation, and every creditor 
 whose just claim exceeds twenty-five dollars, shall at all rea- 
 
 1 16. 17. 3 18, p. 278.
 
 56 TUE LAW OF KL'ILDINO ASSOCIATIONS. [ 11. 11. 
 
 sonable times be allowed to inspect the records and securities 
 of said corporation. 1 
 
 (t) The shareholders of every such corporation shall be 
 severally and jointly liable for all labor performed for such 
 corporation, but no suit shall be brought against them, or any 
 of them, until after an execution shall have been returned 
 unsatisfied against said corporation, or the same shall have 
 been judicially declared bankrupt ; and any stockholder who 
 may have been so compelled to pay such debt may collect of 
 any other stockholder his ratable proportion thereof.* 
 
 (u) The circuit court for the county in which any cor- 
 poration organized under this act shall be located may, on ap- 
 plication of the corporation, or on petition of any member or 
 creditor aggrieved by delay in winding up its affairs, and no- 
 tice to the corporation, make such order and direction as it 
 shall deem best calculated to secure the just and speedy dis- 
 position of its unsettled or uncompleted business. 3 
 
 27. Minnesota. 4 (a} Any number of persons, not less 
 than three, who have or shall, by articles of agreement in 
 writing, associate according to the provisions of this title, un- 
 der any name assumed by them .... for the purpose of 
 establishing a saving-fund, loan or building association, (or 
 association for buying, owning, improving, selling and deal- 
 ing in lands, tenements, etc.), and who have, or shall comply 
 with the provisions of this title, shall, with their associates, 
 successors or assigns, constitute a body corporate and politic, 
 under the name assumed by them in the articles of agree- 
 ment : Provided, no company shall take a name previously 
 assumed by any other company. Any such association for 
 buying, owning, improving, selling and dealing in lands, ten- 
 ements and hereditaments, real, mixed and personal estate 
 and property, shall have, and may exercise and enjoy, all the 
 franchises, rights, powers and privileges of a corporation, as 
 provided in this title and act, and the same is made capable 
 and authorized in law and in equity to have, own, purchase, 
 receive, possess and retain to itself and successors, lands, ten- 
 ements and hereditaments, real, personal and mixed estate 
 
 1 19. 4 General Statutes of Minnesota, 
 
 8 20. 1878, Ch. 34, Title 2, 45; Ch. 23, 
 
 *S1. 8.
 
 27.] STATUTORY PROVISIONS OF THE STATES. 57 
 
 and property, and to use and enjoy the same, and the same im- 
 prove by erecting thereon dwelling-houses and other buildings, 
 and otherwise to improve the same in such manner, and for 
 such purposes as may become necessary, or as such corpora- 
 tion may deem proper ; to sell, convey, lease, let, mortgage, 
 or otherwise dispose of, charge or encumber such lands and 
 other property, or any right or interest therein, at pleasure, 
 and on such terms as the corporation may determine by or- 
 der of its directors, or establish by its by-laws ; and for that 
 purpose to make and deliver, accept and receive, all necessary 
 deeds, conveyances, mortgages, leases and other contracts, and 
 to have and exercise all necessary rights, franchises, muni- 
 ments, estate, powers and privileges ; such corporation is au- 
 thorized to loan money and funds, and secure such loan by 
 mortgage, or other security, and any premium taken by such 
 association for the preference of such loans, or on any sale or 
 disposition of its lands or other property, or any premium for 
 preference or priority taken by any mutual building associa- 
 tion for any loan of its funds, shall not be deemed interest 
 within the meaning of any law of this State, nor shall any ex- 
 cess of such premiums over any rate of interest permitted by 
 the laws of this State, be deemed in any court of law or equity 
 to be usury. Any association organized under this title is em- 
 powered to purchase at any sheriff's or other judicial sale, or 
 at any other sale, public or private, and to hold any real estate 
 upon which such associates or association may hold any mort- 
 gage, judgment, lien, or other incumbrance, or may have an 
 interest; and the real estate so purchased to sell, convey, 
 lease or mortgage, at pleasure, to any person whatever : Pro- 
 vided, however, that no mutual building association, nor as- 
 sociation for buying, selling and dealing in lands, etc., shall 
 loan its funds except to its own members. 1 
 
 (b) None of the provisions of an act entitled " An act to 
 amend sec. 1 of chap. 23, of General Statutes of 1866," the 
 same being chap. 38 of the Statutes at Large, relating to in- 
 terest on money, shall apply to mutual building associa- 
 tions." 
 
 1 Ch. 34, Title 2, $5 4.1; Acts 1878, Ch. 28, 8; Acts 1877, Ch. 95, 
 Ch. 10. SI. S 1
 
 58 THE LAW OP BUILDING ASSOCIATIONS. [CH. II. 
 
 28. Missouri. 1 (a) Any ten or more persons in any 
 county of this State, who shall have associated themselves by 
 articles of agreement in writing, as provided by law, for the 
 purpose of forming a mutual savings fund, loan, or building 
 association, may be incorporated under any name or title, 
 designating such business.' 
 
 (b) The articles of agreement mentioned in 958 shall set 
 out : First, the corporate name of the proposed corporation, 
 which shall not be the name of any corporation heretofore 
 incorporated in this State for similar purposes ; second, the 
 name of the city, or town, and county, in which the corpora- 
 tion is to be located ; third, the amount of the capital stock 
 of the corporation, the number of shares into which it is 
 divided and their par value ; the number of shares subscribed 
 for being not less than three hundred in number, and that 
 the entrance fees are paid in ; fourth, the names and places 
 of residence of the several shareholders, and the number of 
 shares subscribed by each ; fifth, the number of directors and 
 managers, and the names of those agreed upon for the first 
 year ; sixth, the number of years the corporation is to con- 
 tinue, which in no case shall exceed twenty years ; seventh, 
 the purposes for which the association is formed. The arti- 
 cles of agreement shall be signed and acknowledged by the 
 parties thereto, recorded in the ofiice of the recorder of deeds 
 of the county or city in which the corporation is to be 
 located, and then filed and recorded in the office of the Sec- 
 retary of State.* 
 
 (c) The capital stock of any corporation created under this 
 article shall at no time consist of more than two thousand 
 five hundred shares, of not less than two hundred dollars 
 each, the instalments of which stock are to be paid at such 
 time and place as the by-laws shall appoint ; no periodical 
 payment to be made exceeding two dollars on eacli share ; 
 every share of the stock shall be subject to a lien for the 
 payment of unpaid instalments and other charges incurred 
 thereon under the provision of the charter and by-laws, and 
 
 1 Rev. Stat. of Missouri, 1879, Art. of members); The Chillicote Sav- 
 
 x. p. 175, 958-969. Decisions: ings Association . Ruegger et al. , 60 
 
 State Savings Association v. Kellog Mo. 218 (averment of incorporation), 
 
 et al., 63 Mo. 540 (personal liability s 958. 8 959.
 
 28.J STATUTORY PROVISIONS OF THE STATES. 59 
 
 the by-laws may prescribe the form and manner of enforcing 
 such lien ; new shares of stock may be issued in lieu of shares 
 withdrawn or forfeited ; the stock may be issued in one or in 
 successive series, in such amount as the board of directors or 
 the shareholders may determine ; any shareholder wishing to 
 withdraw from said corporation, shall have power to do so by 
 giving thirty days' notice of his or her intention, when he or 
 she shall be entitled to receive the amount paid in by him or 
 her, and such proportion of the profits as the by-laws may 
 determine, less all fines and charges : Provided, that at no 
 time shall more than one half of the funds in the treasury be 
 applicable to the demands of withdrawing stockholders with- 
 out consent of the board of directors, and no shareholder be 
 entitled to withdraw, whose stock is held in pledge for se- 
 curity ; upon the death of a shareholder, his or her legal rep- 
 resentatives shall be entitled to receive the full amount paid 
 in by him, or her, and legal interest thereon, first deducting 
 all charges that may be due on the stock ; no fines shall be 
 charged to a deceased member's account from or after his or 
 her decease, unless the legal representatives of the decedent 
 assume the future payments on the stock. 1 
 
 (d) Every such corporation shall lend its funds on real 
 estate security only, and upon the terms and in the manner 
 specified by the by-laws. Such corporation may, however, 
 employ a portion of its capital stock, not exceeding fifty 
 thousand dollars at any one time, in the purchase of real es- 
 tate, and the erection of buildings thereon for rent or other- 
 wise : Provided, that if at any time it happen that there is 
 no demand, by any of its shareholders, for the funds of such 
 corporation, then such funds may be loaned to others, who 
 are not stockholders. 4 
 
 (e) The officers of the corporation shall hold stated meet- 
 ings, at which the money in the treasury, if equal to one 
 share of stock, shall be offered for loan in open meeting, and 
 the shareholder bidding the highest premium for the prefer- 
 ence of priority shall be entitled to receive a loan equal in 
 amount to the shares of stock held by him : Provided, that a 
 shareholder may borrow such fractional part of a share as the 
 by-laws may provide, and good and ample security shall be 
 
 1 p 960. 8 961.
 
 60 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 given by the borrower ; in case he neglect to offer security, 
 or offers security not approved by the board of directors, by 
 such time as the by-laws prescribe, he or she shall be charged 
 with one month's interest, together with any expenses in- 
 curred, and the money shall be reloaned at the next stated 
 meeting ; in case of nonpayment of interest and instalments, 
 by borrowing shareholders, for the space of six months, pay- 
 ment of principal and interest, without deducting the pre- 
 mium paid or interest thereon, may be enforced by proceed- 
 ing on their securities according to law. 1 
 
 (f) A borrower may repay a loan at any time, and in case 
 of the repayment thereof before the expiration of the eighth 
 year after the organization of the corporation, there shall be 
 refunded to the borrower one eighth of the premium paid 
 for every year of the eight years thus unexpired ; and in case 
 of recovery of loans by process of law, when the amount 
 collected by or distributed to the said corporation, shall exceed 
 the amount of loan taken by the borrower, with interest or 
 charges, the money shall be reloaned at the next stated meet- 
 ing, and the excess recovered, beyond the amount required to 
 pay the loan, interest and charges, shall be returned to the 
 borrower, from whom the money was collected, or his legal 
 representatives ; and provided, that if the premium offered 
 for the reloan shall be greater than that originally given by 
 the defaulting borrower, the amount of the original premium 
 only shall be paid over by the corporation ; and provided, 
 that such defaulting borrower may, at any time after the said 
 reloaning, demand from the corporation, the amount to be 
 paid to a shareholder withdrawing his stock, saving and ex- 
 cepting, however, to the corporation, the right to retain so 
 much thereof as may be requisite to save it from loss, in case 
 the amount recovered shall not suffice to pay the reloan.* 
 
 (g) No premiums, lines or interest on such premiums, that 
 may accrue to the said corporation according to the provisions 
 of this article, shall be deemed usurious ; and the same may be 
 collected as debts of like amount are now by law collected.' 
 
 (A) No corporation created under this article shall cease or 
 expire from neglect, on the part of the corporators, to elect 
 officers at the time mentioned in the articles of agreement or 
 1 962. g 963. 3 964.
 
 29.] STATUTORY PROVISIONS OF THE STATES. 61 
 
 by-laws; and all officers elected by such corporation shall 
 hold their offices until their successors are duly elected. 1 
 
 (i) Any savings fund, loan or building association, incor- 
 porated under the laws of this State is hereby authorized and 
 empowered to purchase at any sheriffs or other judicial sale, 
 or at any other sale, public or private, any real estate upon 
 which such association may have or hold any mortgage, judg- 
 ment, lien or other incumbrance, or in which said association 
 may have an interest ; and the real estate so purchased, or any 
 other that such association may hold or be entitled to at the 
 passage of this article, to sell, convey, lease, or mortgage, at 
 pleasure, to any person or persons whatever. 3 
 
 (j) Every such corporation shall terminate, except for the 
 purpose of settling its affairs, whenever all its shares shall have 
 been redeemed, by loans or advances thereon, or whenever the 
 funds and property of the corporation shall be sufficient to 
 pay upon the unredeemed shares the value thereof, as fixed 
 by the by-laws of such corporation, filed in the office of the 
 Secretary of State, as aforesaid. 3 
 
 (k) No member of any such corporation, who has bor- 
 rowed money of the same, shall be allowed to vote on any 
 question affecting the claim of such corporation against him- 
 self. 4 
 
 (1) Every such corporation shall, semi-annually, in the 
 months of January and July, publish, in one or more news- 
 papers in the city or county where such corporation is located, 
 a statement, verified by the oath of its president or chairman, 
 setting forth its actual financial condition, and the amount of 
 its property and liabilities, under a penalty of five hundred 
 dollars to the State, to be recovered by indictment against 
 the president, cashier, or directors ; and shall also deposit a 
 copy of said statement, verified as aforesaid, in the office of 
 the Secretary of State. 6 
 
 29. Nebraska. 8 (a) Any number of persons not less 
 than five, may associate themselves together and become a 
 
 1 965. tion, appellee,. Graham, appellant, 
 
 * 966; Laws 1879, p. 73, 19. 7 Neb. 173, and Same e. Ben jam in 
 
 3 967. 4 968. 8 969. and Benjamin.appellants, 7Neb.l81 
 
 8 General Statutes of Nebraska, (plea of mil tiel corporation, loans. 
 
 1873(158-161). Decisions: The Lin- usury, retroactive and rxposi- 
 
 coln Building and Savings Associa- tory statutes, legislation) ; Lincoln
 
 62 THE LA.W OF BUILDING ASSOCIATIONS. [cil. II. 
 
 corporation, as is provided in chap. 25, of the Revised Statutes, 
 commencing at 123 of said chapter under the title of " Cor- 
 porations," for the purpose of raising moneys to be loaned 
 among the members of such corporation, for use in buying 
 lots or houses, or in building, or repairing, or removing in- 
 cumbrances from houses; and such corporation shall be 
 authorized and empowered to levy, assess and collect from its 
 members such sums of money, by rates of stated dues, fines, 
 interest on loans advanced, and premiums bid by members, 
 for the right of precedence in taking loans, as the corporation, 
 by its by-laws, shall adopt ; also to acquire, hold, encumber 
 and convey all such real estate and personal property as may 
 be legitimately pledged to it on such loans, or may otherwise 
 be transferred to it in the due course of business : Provided, 
 that the dues, lines and premiums so paid by members of 
 such corporation, although in excess of twelve per cent, per 
 annum, on loans taken by them, shall not be construed to 
 make the loans so taken usurious : And, provided also, that 
 no person shall hold more than ten shares in any such 
 association in his own right, each share not to exceed two 
 hundred dollars. 1 
 
 (J) All stockholders of any such association shall be 
 deemed and held liable to any amount equal to their stock sub- 
 scribed, or by them at any time held in addition to said stock, 
 for the purpose of securing the creditors of said association. 8 
 
 (c) All contracts and loans made by any corporation or 
 association already formed and now in existence in this State, 
 under and by virtue of said chap. 25 of the Revised Statutes, 
 to and with any member of said corporation, and not incon- 
 sistent with the laws of this State, or anything in this act 
 contained, are hereb} 7 declared to be legal and binding ; and 
 the securities given by said members upon said contract or 
 loan, for the security of any loan, fine and forfeiture, accord- 
 ing to the terms of said security or contract therein referred 
 to, and not inconsistent with any law of this State or in this 
 act contained, is hereby declared to be legal, valid and bind- 
 ing security, and contract in law in the hands of said corpora- 
 Building and Savings Association, ' PI. 158, 1. 
 appellee, v. Haas etal., appellant, 10 s PI. 159, 2. 
 Neb. 581 (mortgage).
 
 30.] STATUTORY PROVISIONS OF THE STATES. 63 
 
 tion, and with the party making the same, notwithstanding 
 a greater rate of interest than twelve per cent per annum 
 may have been contracted for or reserved in said contract. 1 
 
 (d) That, in all corporations or associations now existing 
 and doing business in this State, which said corporation or 
 association have made loans to any of its members, and taken 
 securities therefor in pursuance of their constitution and by- 
 laws, that any payment made after the passage of this act, by 
 any member of said corporation of any dues, lines or forfeit- 
 ures, which may be due to said corporation, according to the 
 terms of the contract between said corporation and said mem- 
 ber, shall be deemed in law a waiver of anything in said con- 
 tract or loan that might be deemed usurious in the same 
 under the laws of this State, at the time the same was made 
 and securities given, and a ratification of said loan or con- 
 tract, and of its present and future legality between said par- 
 ties, as now existing under and by virtue of this act. 3 
 
 30. New Jersey. 3 (a) Any number of persons, not less 
 than five, may associate and form a company for the purpose 
 of assisting each other, and all who may afterwards become 
 associated with them, in acquiring real estate, making im- 
 provements thereon and removing incumbrances therefrom, 
 
 1 PL 160, 3. * PI. 161, 4. Mechanics' Building and Loan A MO- 
 
 3 Revision of New Jersey, 1709- ciation, 2 C. E. Gr. ,497 (marshalling 
 
 1877, pp. 92, 93; Act April 9, 1875 of assets); Red Bank Association v. 
 
 (revision). See also P. L. 1849. p. Patterson, 12 C. E. Gr., 223 (mar- 
 
 227; 1852, 83; 1855, 423; 1869, 40; shalling of assets) ; The Washington 
 
 Amendments and Supplements, p. Building and Loan Association v. 
 
 1272; Feb. 29, 1876; Mar. 15, 1876; Beaghen, 12 C. E. Gr., 99 (S. P.); 
 
 April 21, 1876. See also Act Mar. Philippsburg Mutual Loan nnd 
 
 7. 1878, Ch. 50, p. 61. Decisions: Building Association v. Hawk, 12 
 
 Franklin Building Association v. C. E. Gr., 355 (S. P.); Reilly e. 
 
 Marsh, 5 Dutch. 225 (loans, mort- Mayer, 1 Beas., 55 (S. T. judgment, 
 
 gage, plea of nul tiel corporation, creditors); Union Building Loan 
 
 misnomer, charge for search, Association v. Masonic Hall, 2 
 
 usury, premature winding up, re- Stew., 389 (security, loans, dues); 
 
 demption); Somerset County Build- Tradesmen's Building Association 
 
 ing, Loan and Savings Association v. Thompson, 4 Stew., 536;5ld.,133 
 
 v. Vandervere, 3 Stock. 282 (mort- (mortgage, substitution); Ciii/'ms' 
 
 gage of husband and wife, loan); Loan Association v. Lyon, 2 Stew., 
 
 Mechanics' Building and Loan As- 110 (waste of funds. liability of of- 
 
 sociation v. Conover, 1 McCart. 219 fleers) ;Clarkville Building and Loan 
 
 (loans); S. C. uom. Herbert v. The Association c. Stephens, 11 C.E.Gr.
 
 64 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 by the payment of periodical instalments ; and for the further 
 purpose of accumulating a fund to be returned to its mem- 
 bers who do not obtain advances, for purposes above men- 
 tioned, when the funds of such association shall amount to a 
 certain sum per share, to be specified in the articles of incor- 
 poration. 1 
 
 Any such persons shall sign a certificate, setting forth 
 that they may have formed such an association under the pro- 
 visions of this act, and the name adopted for such association, 
 and the city, borough or township where it is to be located 
 and its business transacted, and who shall cause the same to 
 be delivered to the clerk of the county which embraces the 
 place of its location, thereupon, together with all who may 
 afterwards become members, their successors and associates, 
 shall be a body corporate and politic in law, with all the pow- 
 ers mentioned in the first section of the act entitled " An act 
 concerning corporations." " 
 
 (c) The said clerk shall immediately file said certificate, 
 and record the same in a book to be kept for that purpose, 
 for which he shall be entitled to receive the sum of twenty- 
 five cents. 3 
 
 (d) Parents and guardians may take and hold shares in 
 such associations in behalf of their minor children or wards, 
 and trustees in behalf of married women, and may act in such 
 associations in behalf of those they represent. 4 
 
 (e) The right of membership in all associations formed 
 under this act, shall consist in the periodical payment of such 
 sum of money, at such times, and subject to such penalties as 
 
 351 (negligence, fines, loans, Loan Association v. Hammel et al., 
 
 usury); Citizens' Loan Association Id. 78 (S. P.); State, Galbraith, pros., 
 
 0. Nugent, 11 Vroom, 215 (sureties v. People's Building and Loan As- 
 
 on officer's bond); State, "Washing- sociation of Camden, Id. 389 (rem- 
 
 ton Building and Loan Association, edy for refusal to transfer shares is 
 
 pros., v. Creveling, 10 Vroom, 465, at law, not by mandamus); Millville 
 
 11 Vroom, 192; and Same v. Horn- Mutual Marine and Fire Insurance 
 
 backer, 12 Vroom, 519, 13 Vroom, Co. v. Mechanics' and Workingmen's 
 
 635 (taxation); People's Building Building and Loan Association, Id. 
 
 and Loan Association of Camden 652 (agency, agent's contract). 
 
 . Wroth et al., 14 Vroom, 70 (ex- > Rev. of N. J., 1709-1877, p. 92, 
 
 tent of liability of sureties on treas- 93, 1. 
 
 urer's bond, dues and fines to be 2 P. 92, 2. 
 
 paid in cash); Mutual Building and 3 P. 92. 3. * P. 93. 4
 
 30.] STATUTORY PHOVIS1ONS OF THE STATES. 65 
 
 shall be determined by the constitution adopted and filed as 
 aforesaid, or in the payment of a principal sum specified in 
 such constitution to be repaid by the company, in such way 
 and manner as shall therein be designated, with interest not 
 exceeding seven per cent per annum. 1 
 
 (/} The funds of every association formed under this act 
 shall be invested in the purchase of lands or building lots, 
 and erecting buildings and improvements thereon, or in the 
 purchase of lots and houses, already built, which lands, dwell- 
 ings and improvements shall be sold to the members of such 
 association, payable in the shares of the company, or in 
 periodical instalments for a period such as shall be agreed 
 upon and designated in their constitution, and which shall 
 not exceed the term of twenty years ; at the expiration of 
 which time the lands, dwellings and improvements so sold 
 and conveyed to the members of such associations, shall be- 
 come the property of the grantees, discharged from all further 
 payments and clear of all incumbrances, or in loans to mem- 
 bers on mortgage of real or personal estate, payable in shares 
 of said company, or by such periodical instalments ; or in the 
 redemption of shares, or in all or any of these modes. 3 
 
 (g) It shall be lawful for married women and minors to 
 hold shares in any associations formed under this act : Pro- 
 vided, said shares are paid for out of the earnings of said 
 married women and minor children, or with money given to 
 them by others than the husbands of said married women, or 
 the male parents of minor children. 3 
 
 (//) Every company formed under this act shall adopt a 
 constitution which shall embrace all the provisions of the; 
 foregoing sections, and such articles for their government and! 
 the management of their business as they shall deem proper: 
 Provided, the same shall not be inconsistent with this act or 
 with the act concerning corporations aforesaid, and shall not 
 contravene the laws or constitution of this State or the United 
 States ; and may alter and amend the same, from time to 
 time, in the manner therein provided ; the investments of 
 every such association shall be made either in loans to, or in 
 redemption of the shares of, or in purchasing lots and erecting 
 dwellings for the members, or in all of said modes, or in such 
 1 P 93, 5. P. 93, 6. 3 P. 93, 7.
 
 66 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 other ways as the constitution of the particular association 
 shall provide ; and no premium given for priority of loan or 
 acquisition of a building or discount given on the redemption 
 of shares, shall be deemed usurious. 1 
 
 (t) Every company formed under this act shall furnish to 
 the Secretary of State, if required, an annual statement of its 
 business and condition of the company, which shall be duly 
 attested, under oath or affirmation, by the proper officers of 
 said company.* 
 
 (j) Any company formed in pursuance of this act shall 
 have power to dispose of or sell any lands, tenements, to others 
 than those constituting the said company, on terms according 
 to and not inconsistent with the constitution of such company ; 
 and the purchasers of said tenements so sold or disposed shall 
 not thereby be constituted members of any such company 
 formed as aforesaid.' 
 
 (k) The original associates, or those formed into com- 
 panies under this act, or their assigns, and who shall have 
 actually created a fund, and expended the same in acquiring 
 lands and tenements, shall be alone deemed to have and to 
 exercise the right of members in said companies. 4 
 
 (I) All deeds of conveyance of lands or tenements, granted 
 by any company formed in pursuance of this act, shall be held 
 to be valid and binding, with all the restrictive clauses as 
 against nuisances, or what may be deemed nuisances by the 
 constitutions of any companies so formed, as aforesaid, unless 
 the same are in violation of the constitution of this State or 
 the laws thereof, or of the United States. 6 
 
 (ra) All matters not herein provided for shall be regulated 
 by the constitution and by-laws of said associations, respect- 
 ively.' 
 
 (n) The legislature may at any time alter, amend, or re- 
 peal the charter of any association created under this act. 7 
 
 (0) Companies organized under this act may divide or par- 
 tition the lands by them owned among their members by lot 
 in such way as to them may seem most advantageous, and all 
 
 1 Amendments and supplements, , 4 P. 93, 11. 
 
 p. 1272; Feb. 29, 1876. 6 P. 93, 12. 
 
 Rev. of N. J., 1, p. 93, 9. P. 93, 13. 
 
 3 P. 93, 10. ' P. 93, 14.
 
 31.] STATUTORY PROVISIONS OF THE STATES. 67 
 
 conveyances made in pursuance of such allotments shall, for 
 all purposes, be valid and effectual. 1 
 
 (p) Nothing in this act shall be construed to prevent any 
 association formed under its provisions from taking a pre- 
 mium for priority of loan or acquisition of real estate, or dis- 
 count on redemption of shares ; and no premium or discount 
 so taken for such purpose shall be deemed usurious. 2 
 
 (2) Any mutual loan, homestead or building association 
 heretofore organized under the laws of this State, shall have 
 power to meet and reorganize, and provide for the transac- 
 tion of their future business under the provisions of the act 
 to which this is a supplement, by giving notice thereof by 
 advertisement for four weeks successively, at least once in 
 each week, in a newspaper published or circulating where 
 such company or association is located, which advertisement 
 shall be signed by the secretary, and state the time, place and 
 purpose for which such meeting is called, and also by sending 
 a written or printed notice to each stockholder, containing the 
 same information ; when so assembled they shall have power, 
 by a two thirds vote of the stockholders present, to change, 
 alter, or repeal their present constitution and by-laws, and to 
 adopt such new constitution and by-laws as they may deem 
 needful for their future government : Provided, the same do 
 not conflict with the laws or constitution of this State or of 
 the United States. 3 
 
 31. New York.* (a) Any number of persons, not less 
 than nine, may associate and form an incorporated company 
 
 1 P. 93, 15; Act Feb. 10, 1869 (P. 64, 1, 2, 4, 5, 6; 1878, Ch. 965. 
 
 L. 1869, p. 40). See also Rev. Stat. of N. Y., 1882 
 
 * Act April 21, 1876. (Banks & Brothers), pp. 1762-1767. 
 
 8 Act Mar. 15, 1876. "All the Decisions: Hamilton Building As- 
 real and personal estate of every cor- sociation v. Reynolds, 5 Duer, 671 
 poration incorporated by any act of (mortgage) ; Second American 
 legislature, or by the filing of a cer- Building Association v. Platt et al., 
 tiflcate, or otherwise under any gen- 5 Duer, 675 (pleading); Mechanics' 
 eral law of this State, shall be taxed Building Association v. Stevens et 
 the same as the real and personal es- al., 5 Duer, 676 (plea of nul tiel cor- 
 tate of an individual." Act Mar. 7, poration); The Citizens' Mutual 
 1878, C. 50, p. 61. Loan and Accumulating Fund Asso- 
 
 4 Revised Statutes of New York, ciation v. Webster, 25 Barb. 263 
 
 1876, Tit. xxi. 1-22, 24-26, p. 700 (loans, usury, fines); Second New 
 
 *eqq.; Laws 1851, Ch. 122; 1875, Ch. York Building Association t.Gallier,
 
 68 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 for the purpose of accumulating a fund for the purchase of 
 real estate, the erection of buildings, or the making of other 
 improvements on lands, or to pay off incumbrances thereon, 
 or to aid its members in acquiring real estate, making im- 
 provements thereon, or removing incumbrances therefrom; 
 and for the further purpose of accumulating a fund to be re- 
 turned to its members, who do not obtain advances as above 
 mentioned, when the funds of such association shall amount tx> 
 a certain sum per share, to be specified in the articles of asso- 
 ciation. 1 
 
 (b) Such persons shall severally subscribe articles of asso- 
 ciation, in which shall be set forth the name of the corpora- 
 tion, the time of its regular meetings, and how special meet- 
 ings may be called, and what shall constitute a quorum to- 
 transact business at meetings ; the qualifications of members, 
 and how constituted; what officers, trustees and attorney 
 there shall be, and how and when chosen, and their duties, and 
 how removed or suspended from office ; the entrance fee of 
 new members and new shares ; the monthly or weekly dues 
 per share ; the redemption fee on shares on which advance* 
 shall be made, and fees to be paid on the transfer of shares ; 
 the fines and penalties for nonpayment of dues or fees, or 
 other violation of the articles of association ; the manner of 
 redemption of shares by advances made thereon ; the mort- 
 gaged security to be taken on such advances, and how the 
 same may be redeemed or changed ; the manner of the trans- 
 fer or withdrawal of shares ; the manner of investing funds- 
 not required for advances on shares; the qualifications of 
 voters at the meetings, and the mode of voting ; the ultimate 
 amount to be paid to the owners of unredeemed shares ; the 
 manner of altering or amending the articles of association, 
 and such other provisions as shall be necessary for the eifec- 
 
 cited in preceding case (fines); Mel- (plea of nultiel corporation, execu- 
 
 ville v. The American Benefit Build- tion of certificate of corporation); 
 
 ing Association et al., 33 Barb. 103 Franklin Building Association t.Ma- 
 
 (unincorporated building associa- ther, 4 Abb. Pr., 274 (mortgage); 
 
 tions. usury); City Building and Wetterwulgh v. The Knickerbocker 
 
 Loan Co. v. Fatty, 1 Abb. App. Dec., Building Association, 2 Bos. 881 
 
 347 (loans, usury); Second Manhat- (withdrawal) ; Remington r. King, 11 
 
 tan Building Association t?. Hayes. Abb. Pr., 278 (personal liability, 
 
 4 Abb. App. Dec., 183; 2Keyes, 192 offset). ' Rev. St. Tit. xxi , 1.
 
 31.] STATUTORY PROVISIONS OF THE STATES. G'J 
 
 live and convenient transaction of the business thereof : Pro- 
 vided, that the same shall not in any respect contravene the 
 constitution or laws of this State. 1 
 
 (c) A true copy of such articles, signed by the officers of 
 the association, together with a statement showing when the 
 association was organized, and its place of business, the names of 
 the officers and trustees at the time of making such statement, 
 which shall be verified by oath or affirmation before any of 
 ficer authorized to take affidavits, to be used in courts of justice, 
 shall be filed in the office of the clerk of the county in which 
 such association shall transact its business ; and thereupon the 
 persons who have subscribed the articles of association, and such 
 other persons as shall become members, and their successors, 
 shall be a body coiporate by the name specified in such arti- 
 cles, and shall possess the powers and privileges, and be sub- 
 ject to the provisions of title third of chapter eighteen of the 
 first part of the Revised Statutes, so far as those provisions 
 are consistent with the provisions of this act, and they shall 
 by their corporate name be capable in law of purchasing, hold- 
 ing and conveying any real and personal estate whatever, 
 which may be necessary to enable such company to carry out 
 their operation named in such certificate. 8 
 
 (d) It shall be lawful for the trustees to call in and de- 
 mand from the stockholders respectively, all such sums of 
 money by them subscribed, at such times and in such pay- 
 ments or instalments as the articles of association prescribe, 
 under penalty of forfeiting the shares of stock subscribed for 
 and all previous payments made thereon, if payment shall not 
 be made by the stockholder within sixty days after a personal 
 demand, or notice requiring such payment shall have been 
 published for six successive weeks in the newspaper nearest 
 the place of business of the company.' 
 
 (e) All corporations formed under this act shall have 
 power to borrow money for temporary purposes not inconsist- 
 ent with the objects of their organization ; but no loan for such 
 purposes shall have a longer duration than two years, nor 
 shall such indebtedness exceed at any one time one fourth of 
 the aggregate amount of the shares and parts of shares, and 
 the income thereof, actually paid in and received/ 
 
 '2. 3. 4. 4 5.
 
 70 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 (f) Parents and guardians may take and hold shares in 
 such association, in behalf and for the use of their minor chil- 
 dren or wards, provided the cost of such shares be defrayed 
 from the personal earnings of such minor children or wards, 
 or by gifts from persons other than their male parents ; mar- 
 ried women may take and hold shares, provided the cost of 
 such shares be defrayed from their personal earnings, the per- 
 sonal earnings of their children voluntarily bestowed for the 
 purpose, or from property bequeathed or given to them by 
 persons other than their husbands. 1 
 
 (g) The trustees of any association, formed under the pro- 
 visions of this act, may from time to time declare dividends 
 from the earnings of the association, payable in such manner 
 as may be provided in the articles of association ; but no div- 
 idend shall be declared except from the earnings of the asso- 
 ciation, and if the said trustees shall declare and pay any div- 
 idend, when the company is insolvent, or any dividend the 
 payment of which would render it insolvent, they shall be 
 jointly and severally liable, to the extent of the dividend so 
 declared and paid, for all the debts of the association, then ex- 
 isting, or that shall be thereafter contracted, while they shall 
 respectively continue in office : Provided, that if any of the 
 trustees shall object to the declaring of such dividend, or to 
 the payment of the same, and shall at any time before the 
 time fixed for the payment thereof, file a certificate of his ob- 
 jection in writing with the clerk of the company, and with 
 the clerk of the county, he shall be exempt from the liability. 
 But no trustee who shall be present at any meeting when 
 such dividend shall be declared, shall be exempt from such 
 liability, unless he shall then and there object to the declara- 
 tion or payment of such dividend, and shall also procure hie 
 objection to be noted in the book of minutes of such associa- 
 tion. No holder of redeemed shares shall claim to be exempt 
 from making the monthly or stated payments provided in 
 the articles of association upon the ground that, by reason of 
 losses or otherwise, the association has continued longer than 
 was originally anticipated, whereby the payments made on 
 such shares may amount to more than the amount originally 
 advanced, with legal interest thereon ; nor shall the imposi- 
 
 '6.
 
 31.] STATUTORY PROVISIONS OF THE STATES. 71 
 
 tion of fines for the nonpayment of dues or fees, or other vio- 
 lation of the articles of association, nor the making of any 
 monthly payment required by such articles, or of any pre- 
 mium for loans made to members, be deemed a violation of 
 the provisions of any statute against usury. 1 
 
 (A) Any existing association formed for the purposes 
 mentioned in the first section of this act, may, on the vote of 
 a majority of the voting shares, at any regular meeting after 
 the passage of this act, become entitled to the benefit of this 
 act, on complying with the second and third sections thereof, 
 unless the second section has heretofore been complied with ; 
 in which case it shall be necessary to comply only with the 
 third section.' 
 
 (i) No officer, trustee, attorney, agent or servant of any 
 association hereby incorporated, shall use or dispose of any 
 part of the funds of such association, or assign, transfer, can- 
 cel, deliver up, or acknowledge satisfaction of any bond, mort- 
 gage, or other written instrument belonging to such associa- 
 tion, unless duly authorized, or be guilty of any fraud in the 
 performance of his duties ; and every person guilty of a vio- 
 lation of this section shall be liable civilly to the party in- 
 jured, to the extent of the damage thereby incurred, and shall 
 also be liable to an indictment for a misdemeanor, punishable 
 by fine or imprisonment, or both, in the discretion of the 
 court by which he shall be tried. 3 
 
 (f) Each association formed under the provisions of this 
 act, shall, at the close of the first year's operations, and annu 
 ally thereafter at the same period, publish in at least two 
 newspapers, published where their place of business may be 
 located, or if no newspaper shall be published in such place, 
 then in any two newspapers published nearest such place, a 
 concise statement, verified on the oath of its president and 
 secretary, showing the actual financial condition of the a.-so- 
 ciation, and the amount of its property and liabilities, speci- 
 fying the same particularly. 4 
 
 (fc) All stockholders of any association formed under this 
 
 act, shall be individually liable to creditors of said association, 
 
 to an amount equal to the stock held by them respectively, 
 
 for all debts contracted by such association. The directors, or 
 
 1 7; Laws 1875, Ch. 564. g 1. 8. s $ 9. 4 10.
 
 72 THE LAW OF BUILDING ASSOCIATIONS. [Cll. II. 
 
 other officers of associations formed under this act, shall be 
 personally liable for any fraudulent use, disposition or invest- 
 ment of any moneys or property belonging to such associa- 
 tion, or for any loss which shall be incurred by any invest- 
 ment made by such directors or other officers other than such 
 as are mentioned in, and authorized by this act ; but no direc- 
 tor or other officer shall be liable as aforesaid, except he 
 authorized, sanctioned, approved, or made such fraudulent 
 use, disposition or investment as aforesaid. 1 
 
 (I) No person holding stock in any such company, or ex- 
 ecutor, administrator, guardian, or trustee, and no person hold- 
 ing such stock as collateral security, shall be personally subject 
 to any liability as stockholder of such company, but the person 
 pledging such stock shall be considered as holding the same, 
 and shall be liable as stockholder accordingly ; and the estate 
 and funds in the hands of such executor, administrator, guar- 
 dian, or trustee shall be liable in like manner and to the same 
 extent as the testator or intestate, or the ward or person in- 
 terested in such trust fund would have been if he had been 
 living, and competent to act, and hold the same stock in his 
 own name." 
 
 (m) Every such executor, administrator, guardian, or trustee 
 shall represent the share of stock in his hands, at all meetings 
 of the company, and may vote accordingly as a stockholder : 
 and every person who shall pledge his stock as aforesaid may 
 nevertheless represent the same at all meetings, voting as a 
 stockholder. 3 
 
 (ri) In case it happen, at any time, that an election of offi- 
 cers is not made on the day designated by the by-laws of said 
 company, when it ought to have been made, the company for 
 that reason shall not be dissolved ; but it shall be lawful on 
 any other day to hold an election for trustees in the manner 
 prescribed by the by-laws ; and all acts of trustees shall be 
 valid and binding against such company until their successors 
 are elected. 4 
 
 (<?) The legislature may at any time alter, repeal, or amend 
 
 this act, or may annul or repeal any incorporation formed or 
 
 created under this act ; but such repeal or amendment shall 
 
 not, nor shall the dissolution of any such company, take away 
 
 '11. '12. 13. 14.
 
 31.] STATUTORY PROVISIONS OF THE STATES. 73 
 
 or impair any remedy given against any such corporation, its 
 stockholders or officers for any liability which shall have been 
 previously incurred. 1 
 
 (p) Any company which may be formed under this act 
 may increase or diminish its capital stock, by complying with 
 the provisions of this act, to any amount that may be deemed 
 sufficient and proper for the purposes of the corporation. 
 But before any corporation shall be entitled to diminish the 
 amount of its capital stock, if the amount of its liabilities ex- 
 ceed the amount of capital to which it is proposed to be re- 
 duced, such amount of liabilities shall be satisfied, and reduced, 
 so as not to exceed such diminished amount of capital.' 
 
 (^) Whenever any company shall desire to call a meeting 
 of the stockholders, for the purpose of increasing or dimin- 
 ishing the amount of its capital stock, it shall be the duty of 
 the trustees to publish a notice, signed by at least a majority 
 of them, in a newspaper in the county, if any be published 
 therein, at least three successive weeks, and to deposit a 
 written or printed copy thereof in the post-office, addressed 
 to each stockholder at his usual place of residence, at least 
 three weeks previous to the day specified for holding such 
 meeting, specifying the object of such meeting, the time and 
 place, when and where to be held, and the amount to which 
 it shall be proposed to increase or diminish the capital, and a 
 vote of at least two thirds of all the shares of stock shall be 
 necessary to an increase or diminution of the amount of its 
 capital stock. 3 
 
 (r) If at any time and place specified in the notice pro- 
 vided for in the preceding section of this act, stockholders 
 shall appear in person or by proxy in numbers representing 
 not less than two thirds of all the shares of stock of the cor- 
 poration, they shall organize by choosing one of the trustees 
 chairman of the meeting, and also a suitable person for secre- 
 tary, and proceed to a vote of those present in person or by 
 proxy; and if on canvassing the votes, it appear, that a suffi- 
 cient number of votes has been given in favor of increasing 
 or diminishing the amount of capital, a certificate of the pro- 
 ceedings showing the compliance with the provisions of this 
 act, the amount of capital actually paid in, the whole amount 
 1 15. 16. 3 17.
 
 74 THE LAW OF BUILDING ASSOCIATIONS. [CH. IL 
 
 of debts and liabilities of the company, and the amount to 
 which the capital shall be increased or diminished, shall be 
 made out, signed and verified by the affidavit of the chair- 
 man, and countersigned by the secretary ; such certificate 
 shall be acknowledged by the chairman, and filed as required 
 by the first section of this act ; and when so filed the capital 
 stock of such corporation shall be increased or diminished to 
 the amount specified in certificate. 1 
 
 (s) The shares held by the members of all associations 
 incorporated under the provisions of this act, shall be exempt 
 from sale or execution for debt, to an extent not exceeding 
 six hundred dollars in such shares, at their par value. 8 
 
 (t) No loan made by such association to its members may 
 exceed the par value of the stock to which such member may 
 have subscribed." 
 
 (u) The copy of any certificate of incorporation filed in 
 pursuance of this act, certified by the county clerk or his 
 deputy, to be a true copy, and of the whole of such certificate, 
 shall be received in all courts and places as presumptive legal 
 evidence of the facts therein stated. 4 
 
 (v) Every corporation, organized under the provisions of 
 said act, and every corporation heretofore organized under 
 the laws of this State for purposes similar to those provided 
 for in said act, shall annually make a full report in writing of 
 the affairs and condition of said corporation, on the first day 
 of January of each year, to the superintendent of the banking 
 department, in such form, and by such officers of the corpo- 
 ration, as the said superintendent may designate, which report 
 shall be in place of any report which any such corporation 
 may now be required to make to the Supreme Court, the 
 comptroller, or otherwise. Such report shall be verified by 
 the oath or affirmation of the officers making such report ; 
 and any wilful swearing with regard to such report, shall be 
 deemed perjury, and be subject to the prosecutions and pun- 
 ishments prescribed by law for that offence. Every such 
 report shall be made within twenty days after the day to 
 which it relates, and shall be in such form, and contain such 
 statements, returns and information as to the affairs, business, 
 condition, obligations and resources of such corporation, as the 
 1 ? 18. * 19. 3 g 20. 4 21.
 
 31.] STATUTORY PROVISIONS OF THE STATES. 75 
 
 said superintendent may, from time to time, prescribe and re- 
 quire. And the said superintendent may, if he be of opinion 
 that it is desirable, require that a like report, either wholly or 
 in part, be made to him at any time, by any such corporation, 
 within such period as he may designate. 1 
 
 (w) Whenever the stockholders of any corporation organ- 
 ized under the provisions of this act shall deem that a person- 
 al examination by said superintendent of the affairs of said 
 corporation is desirable or necessary, it shall be the duty of 
 said superintendent, on the request in writing, signed by not 
 less than live of the stockholders of said corporation, that 
 such examination be made, either by himself or by some per- 
 son duly appointed by him for that purpose, make a full and 
 careful examination of the affairs of said corporation and 
 make his report thereon as herein provided. The person 
 making such examination shall have power to administer 
 oaths and take all testimony by him deemed necessary and 
 proper, and to compel the attendance of witnesses and the 
 production of books and papers, by like process and in the 
 same manner as now provided by law, to procure the attend- 
 ance of witnesses and the production of books and papers in 
 the courts of record of this State. The expense of such ex- 
 amination shall be borne by said corporation, but no charge 
 shall be made therefor, when the examination is made by said 
 superintendent personally or by one of the salaried employees 
 of his department, except for necessary travelling and other 
 expenses ; whenever said superintendent shall appoint any 
 person other than a salaried officer in his department to make 
 such examination, the amount charged therefor shall not ex- 
 ceed the sum of ten dollars per day for the time actually ex- 
 pended in making the same, and the actual and necessary 
 expenses as herein provided." 
 
 (a?) On every such examination, inquiry shall be made as 
 to the. nature and resources of the corporation generally, t^ie 
 mode of conducting and managing its affairs, the action of its 
 directors or trustees, the investment of its funds, the satVty 
 and prudence of its management, the security afforded to 
 those by whom its engagements are held, whether the re- 
 
 1 22; Laws 1875, Ch. 564. 2. 
 
 Laws 1878, Ch. 96 (p. 103). Act April 1. 1878.
 
 76 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 quirements of its charter and of law have been complied with 
 in the administration of its affairs. 1 
 
 (y) If it shall appear to said superintendent, from the re- 
 port of any such corporation, or from any examination made 
 by him, that any corporation has committed a violation of 
 its charter or of law, or is conducting business in an unsafe 
 and unauthorized manner, he shall by an order, under his 
 hand and seal of office, addressed to such corporation, diivrt 
 the discontinuance of such illegal or unsafe practices, and 
 conformity with the requirements of its charter and of law, 
 and with safety and security in its transactions ; and whun- 
 over any corporation shall refuse or neglect to make such re- 
 port, or comply with such order, or whenever it shall appear 
 to said superintendent that it is unsafe or inexpedient for any 
 corporation to continue to transact business, he shall com- 
 municate the facts to the attorney-general, who shall there- 
 upon be authorized to institute such proceedings against any 
 such corporation, as are now, or may be hereafter provided 
 for by law in the case of insolvent corporations, or such other 
 proceeding as the nature of the case may require.* 
 
 (s) If any such corporation shall fail to furnish to the 
 superintendent of the banking department any report or 
 settlement required by this act, at the time so required, it 
 shall forfeit the sum of ten dollars per day for every day such 
 statement shall be delayed or withheld, and the said superin- 
 tendent may maintain an action in his name of office, to re- 
 cover such penalty, and when collected, the same shall be paid 
 into the treasury of the State and be applied to the expenses 
 of the bank department,' 
 
 32. North Carolina. 4 (a) It shall and may be lawful, 
 and authority is hereby given to any individuals or persons in 
 
 1 24; Laws 1875, Ch. 564, 4. 14, 1881. The preamble to the Act 
 
 8 25; Laws 1875, Ch. 264, 5. 1869-70, C. 129, Battle's Rev., Ch. 
 
 3 26; Laws 1875, Ch. 264, 6. 12, p. 105, is as follows: " Whereas, 
 
 4 Battle's Rcvisal of the Public divers persons, chiefly of the indus- 
 Statutes of North Carolina, adopted trial classes, are desirous of forming 
 by the General Assembly at the Ses- associations for the purpose of ac- 
 sion of 1872-3 (C. 74), Ch. 12, pp. cumulating by small periodical de- 
 105-107; amended ( 5), Laws 1874- posits a savings fund with which 
 5, C. 78, p. 71, Feb. 11, 1875, and they may secure a homestead, and 
 < 6), Laws 1881, C. 365, p. 604, Mar. for their mutual benefit; and where-
 
 32.] STATUTORY PROVISIONS OF T1IE STATES. 77 
 
 any city or county in this State, under any name by them to 
 be assumed, to associate for the purpose of organizing and 
 establishing homestead and building associations, and being 
 so associated shall, on complying with the provisions of this 
 chapter, be a body politic and corporate, and as such shall be 
 capable in law to hold and dispose of property, both real and 
 personal, may have and use a common seal, may choose a pre- 
 siding and other officers, may enact by-laws for the regula- 
 tion of the affairs of such corporation, and compel the due 
 observance of the same by fines and penalties, may sue and 
 be sued, plead and be impleaded, answer and be answered in 
 any court in this State, and do all acts necessary for the well- 
 ordering and good government of the affairs of such corpora- 
 tion, and shall exercise all and singular the powers incident 
 to bodies politic or corporate : Provided, however, that be- 
 fore any such corporation shall be entitled to the privileges of 
 this chapter, they shall lodge with the clerk of the superior 
 court of the county where such corporation is designed to 
 act, a copy of the articles of association of such corporation, 
 signed by at least seven members and certified by the secretary 
 thereof, to be recorded in the office of said clerk. 1 
 
 (J) Any addition or additions to, alteration or alterations 
 in, or amendments of, the articles of association of any such 
 corporation shall be signed, certified, and recorded as is pro- 
 vided in the preceding section of this chapter.* 
 
 (c) Any corporation created under and by virtue of the 
 provisions of this chapter, shall have power to declare in their 
 articles of association the number of shares of which the 
 capital stock of such corporation shall consist ; the par value 
 
 as, it is the dictate of a sound policy Vann and wife v. Fayetteville Build- 
 that the protection and encourage- ing and Loan Association, 75 N. C. 
 ment of the legislature should be 494; Latham and wife n. Washing- 
 given to associations having in view ton Building and Loan Association, 
 ends and objects so commendable in 77 N. C. 145; Hanner et al. e. 
 their character." Decisions: Smith Greensboro Building and Loan As- 
 and wife t>. Mechanics' Building and sociation, 78 N. C. 188; Overby and 
 Loan Association, 73 N. C. 372 wife t>. Fayetteville Building and 
 (building association incorporated Loan Association, 81 N. C. 56; IIos- 
 under special act, usury, in June- kins v. Mechanics' Building and 
 tion); Millsfl.SalisburyBuildingand Loan Association, 84 N. C. 838. 
 Loan Association, 75 N.C. 292 (loans, 'Battle's Rev., Ch. 12, 1, p. 
 usury, redemption): S. P. in 105. s 2, p. 106.
 
 78 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 of the same ; to limit the number which each stockholder may 
 be allowed to hold, to prescribe the entrance fee to be paid 
 by each stockholder at the time of subscribing, to regulate 
 the instalments to be paid on each share, and the times at 
 which the same shall be paid and payable. 1 
 
 (d) Any such corporation shall have power to issue to 
 each member of such corporation a certificate of the shares of 
 stock held by him, and to enforce the payment of all instal- 
 ments and other dues due to said corporation from the mem- 
 bers or stockholders, by such fines and forfeitures as the cor- 
 poration may, from time to time provide in the by-laws or 
 articles of association of such corporation.* 
 
 (e) Any person or persons applying for membership or 
 stock in any such corporation after the end of a month from 
 the date of its incorporation, may be required to pay, on sub- 
 scribing, such sums or assessments as may from time to time 
 be fixed, and assessed in manner as may be provided by said 
 corporation, in order to place such new member or stock- 
 holder on like footing with the original members and others 
 holding stock at the time of such application : ' Provided, 
 that any association that has been or may be organized under 
 this chapter shall be and they are hereby authorized and em- 
 powered to establish one or more additional class or classes 
 of shares, under such rules and regulations and restrictions 
 for issuing, paying, and redeeming the same as to them shall 
 appear expedient and proper, not inconsistent with the gen- 
 eral provisions of this chapter, or laws of North Carolina. 4 
 
 (f) It shall and may be lawful for any such corporation, 
 at any time in advance of the time at which such corporation 
 shall cease to exist, according to the plan contained in the 
 articles of association thereof, to advance to any member 
 thereof, for such premium as may be agreed upon, the same 
 which he would be entitled to receive upon the dissolution 
 thereof, for any number of shares therein held by him, or to 
 purchase from any member the share or shares of stock held 
 by him at such price or sum as, according to the articles of 
 association, such member may agree to receive, and, on pay- 
 ment of said sum of money, to receive from such member 
 
 1 3, p. 106. 4, p. 106. 8 5, p. 106. 
 
 4 Laws 1874-5, Ch. 78, p. 71, Feb. 11, 1875.
 
 33.] STATUTORY PUO VISIONS OF THE STATES. 79 
 
 security as is hereinafter mentioned for the payment by such 
 members to said corporation of the unpaid instalments, to be 
 paid on the share or shares of stock so sold or redeemed, to- 
 gether with interest at the rate of eight per cent, per annum, 
 on the sum of money so paid or advanced to such member 
 at such times, and under and subject to such fines and penal- 
 ties for nonpayment thereof, as may be prescribed by the* 
 articles of association of such corporation. 1 
 
 (g) The payment of the unpaid instalments to be paid on 
 the share or shares so purchased or redeemed with interest 
 upon the sum of money paid therefor as aforesaid, at the 
 rate heretofore mentioned, and all fines and penalties incurred 
 in respect thereof by any such member shall be secured to 
 such corporation by way of mortgage or leasehold property, 
 or by hypothecation of stock of such corporation held by such 
 member as may be provided in the articles of association of 
 any such corporation : Provided, however, that in case of hy- 
 pothecation of stock, no greater sum of money shall at any 
 time be drawn out by any member than shall have already 
 been paid in by him on all his shares at the time of such hy- 
 pothecation, and such mortgage or mortgages, and the mort- 
 gage debt or debts, intended to be secured thereby as afore- 
 said, is and are hereby declared exempt from taxation, the 
 property so mortgaged as aforesaid to the corporation being 
 taxed in the hands of the mortgagor. 2 
 
 (h) The power is hereby reserved to alter, amend, or re- 
 peal this chapter at pleasure." 
 
 33. Ohio. 4 (a) Any number of persons, not less than 
 five, a majority of whom are citizens of this State, desiring 
 to become incorporated, shall subscribe and acknowledge, be- 
 
 1 Battle's Rev., Ch. 12, 6, p. 106; ter, for provisions applicable to 
 
 Laws 1881, Ch. 365, p. 604, Mar. 14, building associations in common 
 
 1881, substituting eight for six per with other corporations, relating to 
 
 cent. by-laws, capital stock, officers, clec- 
 
 8 Battle's Rev., Ch. 12, 7, p. tions, etc., etc.), Ch. 17, 3833 (p. 
 
 107. 969), 3834, 3835, as amended by Act 
 
 8 8, p. 107. April 15, 1880 (Laws 1880, pp. 208- 
 
 4 Revised Statutes of Ohio, 1880, 9). 3836. Decisions: Lucas v. Green- 
 
 (vol. i.p. 837), Tit.ii., Ch. 1, g 3236, ville Building and Savings Associ- 
 
 3238, 3239, 3242, 3258 (and see also ation, 22 Ohio St. 339 (defective ac- 
 
 the remaining sections of said chap- knowledgment, plea of nul tielcor-
 
 80 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 fore an officer, authorized to take acknowledgments of deeds, 
 articles of incorporation, which must contain : 1. The name 
 of the corporation, which shall begin with the word " The," 
 and end with the word " Company" (sic). 2. The place 
 where it is to be located, or where its principal business is to 
 be transacted. 3. The purpose for which it is formed. 4. 
 The amount of its capital stock, if it is to have capital stock, 
 and the number of shares into which the stock is divided. 1 
 The official character of the officer before whom the acknowl- 
 edgment of articles of incorporation is made shall be certi- 
 fied by the Clerk of the Court of Common Pleas of the county 
 in which the acknowledgment is taken, and the articles shall 
 be filed in the office of the Secretary of State, who shall 
 record the same, and a copy duly certified by him shall be 
 prima-facie evidence of the existence of such corporation ; 
 and all certificates thereafter filed in the office of the Secre- 
 tary of State relating to the corporation shall be recorded. 8 
 Upon such filing of the articles of incorporation, the persons 
 who subscribed the same, their associates, successors, and as- 
 signs, by the name and style provided therein, shall thereafter 
 be deemed a body corporate, with succession, and power to 
 sue and be sued, contract and be contracted with, acquire and 
 
 poration, interest, usury) ; Hager- incorporation cured under Act Mar. 
 
 man v. Ohio Building and Savings 10, 1859); Risk v. Delphos Building 
 
 Association, 25 Ohio St. 186 (plea of and Savings Association, 31 Ohio 
 
 nultiel corporation, limitation upon St. 517 (computation of amount 
 
 shares held by individual member, due on mortgage, interest on pre- 
 
 application of loans, fines, se- miums); Cincinnati German Build- 
 
 curity, informality in adoption of ing Association No. 3, v. Flach 
 
 by-laws, computing amount due on et al., 1 Rep. Cine. Super. Ct. 468 
 
 mortgage); Forest City United Land (method of computation of amount 
 
 and Building Association v. Galla- due on mortgage on distribution); 
 
 gheretal., 25 Ohio St. 208 (Acts 1867, State v. Greenville Building Asso- 
 
 1868, depositors, no banking ciation, 29 Ohio St. 92 (no power to 
 
 powers, premiums legal, not so discount paper, fixed premium); 
 
 interest on premiums, fines, and State v. Oberlin Building and Loan 
 
 see preceding case); Licking County Association, 35 Ohio St. 258 (refusal 
 
 Savings, Loan, and Building Associ- of loans, fixed premium, borrow- 
 
 ation v. Bebout's Administrator, 25 ing, trafficking in its own shares, 
 
 Ohio St. 252 (claim of heirs and excessive number of shares in one 
 
 legal representatives); Spinning v. individual, dividends, comprom- 
 
 The Home Building and Savings ising with members). 
 
 Association, 26 Ohio St. 483 (error ] Rev. St., 1880, 3236. 
 
 in acknowledgment of certificate of * ' ""'"*
 
 33.] STATUTORY PROVISIONS OF THE STATES. 81 
 
 convey at pleasure all such real or personal estate as may be 
 necessary and convenient to carry into effect the objects of 
 the incorporation, to make and use a common seal, the same 
 to alter at pleasure, and to do all needful acts to carry into 
 effect the objects for which it was created. 1 
 
 (&) The stockholders . . . shall be deemed and held liable, 
 in addition to their stock, in an amount equal to the stock by 
 them subscribed or otherwise acquired, to the creditors of the 
 corporation, to secure the payment of the debts and liabilities 
 of the corporation." 
 
 (c) A corporation organized for the purpose of raising 
 money to be loaned among its members and depositors, and 
 for use in buying lots, or in building or repairing houses, or 
 other purposes, 3 may levy, assess, and collect from its members 
 such sums of money, by rates of stated dues, fines, interest on 
 loans advanced, and premiums bid by members or depositors- 
 for the right of precedence in taking loans, as the corporation 
 by its by-laws shall provide ; and it may acquire, hold, en- 
 cumber, and convey all such real estate and personal property 
 as may be legitimately pledged to it on such loans, or may 
 otherwise be transferred to it in the due course of its business ; 
 but the dues, fines, and premiums so paid by its members or 
 depositors, although in addition to the legal rate of interest 
 on loans taken by it, shall not be construed to make the loans 
 so taken usurious ; and no person shall hold more than twenty 
 shares in any such association in his own right. 4 
 
 (d) Such association may receive on deposit ail sums of 
 money offered for that purpose by mechanics, clerks, laborers,, 
 servants, and others, on such terms, and at such rates of in- 
 terest, not exceeding the legal rate, as shall be prescribed by 
 the Directors, and loan the same pursuant to the preceding 
 section. 8 
 
 (e) So much of the earnings as may be necessary shall be 
 set apart to defray the current expenses of the association, 
 and a portion of the earnings, to be determined by the Board 
 of Directors, shall be reserved, annually or semi-annually, for 
 the payment of contingent losses, and the residue of such 
 
 1 3239. * 3258. 8 i. e. Building Associations. 
 
 4 3833. 3834.
 
 82 THE LAW OF BUILDING ASSOCIATIONS. [cil. II. 
 
 earnings shall be transferred to the credit of all members, 
 borrowing and non-borrowing, to be paid ratably to them at 
 such times and in such manner as the association, by its con- 
 stitution and by-laws, rules and regulations in conformity 
 with this act, may provide ; and upon the cancellation of any 
 share or shares that have been fully paid, by dues paid in and 
 earnings credited, the association shall pay such members 
 their pro-rata share of such reserve fund, and at the end of 
 eneh year shall make a rebate of interest on the amount of 
 dues paid on loans awarded. Such associations shall provide 
 in their constitution and by-laws rules and regulations, for the 
 terms of membership ; for the manner of subscribing shares 
 of stock therein ; for the times and amounts of payment (but 
 the premium paid in any one year shall not exceed such pro- 
 portionable part of the premium bid as one year bears to the 
 approximate number of years which that class of loans run) ; 
 for the withdrawal of non-borrowing members ; for the can- 
 cellation of the securities of borrowing members, upon de- 
 mand being made by them or their legal representatives, which 
 shall be upon the following terms, to wit : after the premium 
 for one year shall have been paid, the borrowing member 
 shall be permitted to adjust and pay off his loan by paying to 
 the association an amount, which, added to the dues and in- 
 terest already paid and earnings credited, that will aggregate 
 the sum actually borrowed, with the legal rate of interest 
 thereon, and a relative proportion of the premium bid for the 
 time the loan is retained, as hereinbefore provided ; and shall 
 be permitted to reinstate their stock by paying to the associa- 
 tion the amount actually borrowed, with interest thereon, 
 and the proportion of premium as aforesaid, together with all 
 dues and assessments delinquent thereon. And it is hereby 
 provided that all adjustments heretofore made in good faith 
 between such corporation and its respective members, in ac- 
 cordance with its constitution and by-laws, shall be valid and 
 binding upon them. The stock and shares of individual 
 members or depositors of such corporation shall be considered 
 and held as credits, and the said members and depositors in- 
 dividually, shall list for taxation the number of shares held 
 by them, and the true value thereof in money, on the day 
 preceding the second Monday of April, in each year, and the
 
 34.] 
 
 STATUTORY PROVISIONS OF THE STATES. 
 
 83 
 
 same shall be assessed at such valuation for taxation, and 
 taxed as other property. 1 
 
 34. Pennsylvania." (a) Building and loan associations 
 
 1 Act April 15, 1880, Laws 1880, 
 pp. 208-9, amending Rev. Stat. 
 3835 by substituting the above. 
 
 * Act April 29, 1874, P. L., p. 73; 
 Act April 10, 1879, P. L., p. 16; Act 
 April 17, 1876, P. L., p. 30; Act 
 April 17, 1876, P. L., p. 41; Act 
 June 19, 1878, P. L., p. 214; Act 
 June 10, 1881, 1, P. L., p. 99; 
 See, also, Act May 11, 1874, P. L., 
 p. 133, validating defective charters. 
 Tiie Act April 12, 1859, P. L., p. 
 644, Purd. Dig., vol. i., p. 183, seems 
 to have been repealed by implica- 
 tion, by the Act April 29, 1874, P. 
 L., p. 73, which is a general incor 
 poration act. There is no provision 
 abrogating the Act of 1859 in the 
 Act of 1874, whose last clause, in- 
 deed, repeals former laws relating 
 to certain corporations expressly. 
 (For a statement of the law ad- 
 versely to the application of the 
 doctrine of repeal by implication, 
 see post., 35, note 7, Davies & 
 Co. v. Creighton, 33 Grattan, 696 
 (cit. Hogan v. Guigon, judge, 29 Id. 
 705; Harfordfl.U. 8., SCranch, 109; 
 Wood v. U. 8., 16 Pet. 342, 363; Mc- 
 Coole v. Smith, 1 Black, 59, 470; Ar- 
 thur v. Homer, 96 U. 8. (6 Otto), 137), 
 where, in Virginia, a similar case 
 was discussed and a former statute 
 maintained.) But in Pennsylvania, 
 the inconsistency held necessary 
 to be shown between two acts, in 
 order to make the later operate to re- 
 peal the former by implication, has 
 been found and declared in "acts, 
 which, although in pan materia, 
 grant a right conditioned on differ- 
 ent things." Gwinner v. The Le- 
 high and Delaware Gap R. R. Co., 
 55 Pa. St. 126. And in Johnston's 
 Estate, 9 Casey, 511, it was said, that 
 
 "a subsequent statute revising the 
 whole subject-matter of a former 
 one, and evidently intended as a 
 substitute for it, although it contains 
 no words to that effect, must, in the 
 principles of law, as well as in rea- 
 son and common sense, operate to 
 repeal the former." (Woodward, J., 
 cit. Bartlett v. King, 12 Mass. 545; 
 King v. Cator, 2 Burr., 2026; King 
 v. Davis, 1 Leach's Cases, 306). 
 Upon such grounds it was held 
 that the Act of 1859 repealed all 
 prior building association acts in 
 Pennsylvania. Rhoads v. Hoeruers- 
 town Building Association, 82 Pa. 
 St. 180. And all that is said there, 
 seems to apply, mutatis mutandis, to 
 the Act of 1874, together with much 
 that might be added, in ascertaining 
 its effect upon the earlier legislation. 
 If, however, the Act of 1874 left 
 any thing of the Act of 1859 in force, 
 it is repealed by the Act of April 
 10, 1879, P. L. 16, which expressly 
 repeals all laws or parts of laws in- 
 consistent with its provisions. (In 
 Cahall v. Citizens' Mutual Building 
 Association, 61 Ala. 232, citing 
 Johnston's Est., 33 Pa. St. 511, and 
 Wakefield v. Phelps, 37 N. H. 295, 
 the relation of two acts is adjudi- 
 cated, which bears a striking resem- 
 blance to that between the Acts of 
 1859 and 1874 (and 1879). The Rev. 
 Code of 1867. 1756-1757, which 
 provided for a method of incorpora- 
 tion similar to that contemplated 
 in the Act of 1859, was held to be 
 repealed by the Act of Nov. 18, 
 1868, p. 349, which prescribes a 
 method similar to that of the Act of 
 1874, and is a general incorporation 
 law. Like the Act of 1879, supple- 
 menting the Act of 1874 as to build-
 
 THE LAW OF BUILDING ASSOCIATIONS. 
 
 [cil. 
 
 are created by letters patent, issuing by direction of the Gov- 
 ernor of the commonwealth, upon the voluntary association 
 
 ing associations, the Alabama Act 
 of 1868 contained a section repeal- 
 ing all acts and parts of acts incon- 
 sistent therewith.) By the Act of 
 1879 some portions of the Act of 
 1874 are apparently superseded. 
 See Freedley, Gen. Corp. Law of 
 Pa., p. 66, note 3. These por- 
 tions are inserted in the notes. 
 
 Decisions: Loan Association n. 
 Stonemetz, 25 Pa. St. 534 (sala- 
 ries, directors); Bechtold v. Brehm, 
 26 Id. 269 (unincorporated build- 
 ing associations, usury) ; Kupfert v. 
 Guttenberg Building Association, 
 30 Id. 465 (Acts April 22, 1850, May 
 8, 1855, loans, usury); Hughes's 
 App., 30 Id. 471 (S. P.); North 
 America Building Association v. 
 Sutton, 35 Id. 463 (membership, 
 loan, stock payments, transfer of 
 stock); Philanthropic Building As- 
 sociation v. McKnight, 35 Id. 470 
 (recovery of usury paid) ; Schober 
 v. Accommodation Savings Fund 
 and Loan Association, 35 Id. 223 
 (loans to members not discounts); 
 Building Association v. Seemiller, 3 
 Phila. 115; 35 Pa. St. 225, note 
 (S. P.); Larkins's App., 4 Phila. 
 95; 38 Pa. St. 457 (negligence, 
 stock, estoppel) ; Denny v. West 
 Philadelphia Saving and Build- 
 ing Association, 39 Pa. St. 154 
 (usury, retroactive and expository 
 statutes); Reiser . William Tell 
 Savings Fund Association, 39 Id. 
 137 (S. P.); Premium Fund Asso- 
 ciation's App., 39 Pa. St. 156 (S. P.); 
 Blackburne's App., 89 Id. 160(8. P.); 
 Houser v. Hermann Building As- 
 sociation, 41 Id. 478(8. P.); Kelly v. 
 Perseverance Building Association, 
 39 Id. 148 (agreement not to apply 
 stock) ; McGrath t. Hamilton Savings 
 and Loan Association, 44 Id. 383 
 
 (contribution to losses, etc.); Spring 
 Garden Association v. Tradesmen's 
 Loan Association, 46 Id. 493 (appli- 
 cation of stock payments to loan); 
 Schnepf'g App., 47 Id. 37 (usury in 
 mortgage after judgment, terre- 
 tenaut); Philadelphia Mercantile 
 Loan Association v. Moore, 47 Id. 
 233 (double hypothecation of stock); 
 Everham v. Oriental Savings nd 
 Loan Association, 5 Phila. 62; 47 
 Pa. St. 352 (mortgage after payment 
 of priucipal, a security for dues, 
 etc.); Manufacturers', etc., Loan 
 Co. v. Odd Fellows' Hall Associa- 
 tion, 48 Pa. St. 446 (official bond); 
 Miller v. Jefferson Building Asso- 
 ciation, 50 Id. 32 (compromise, es- 
 toppel); German Union Building 
 and Savings Fund Association v. 
 Sendmayer, 50 Id. 67 (transfer of 
 stock, measure of damages for re- 
 fusal); Kisterbock's App., 51 Pa. 
 St. 485 (misbehaving director post- 
 poned ou distribution) ; Jarrett v. 
 Cope, 68 Id. 67 (unincorporated build- 
 ing associations, usury); Bank of 
 Commerce's App., 73 Id. 59 (trans- 
 fer of stock, evidence of member- 
 ship); Flounders v. Hawley, 78 Id. 
 45 (premium upon re-loan); Swift v, 
 Alleghany Loan and Building As- 
 sociation, 82 Id. 142 (sci. fa. on 
 mortgage); Rhoadsr. Hoernerstown 
 Building Association, 82 Id. 180 
 (building association legislation in 
 Pa., defective process of incorpo- 
 ration, unincorporated building 
 associations); Wolbach v. Lehigh 
 Building Association, 84 Id. 211 
 (strangers, married woman mort- 
 gagee); Juniata Building Associ- 
 ation v. Mixell, Id. 313 (married 
 woman's mortgage to secure hus- 
 band's loan); U. S. Building and 
 Loan Association v. Silverman,
 
 34.] 
 
 STATUTORY PROVISIONS OF THE STATES. 
 
 85 
 
 of five or more persons, under, and in the manner provided 
 for by the general incorporation laws of the State, 1 for corpo- 
 
 35 Id. 394 (withdrawal, contri- 
 bution to losses, pleading, 
 member's right to sue society); 
 Becket v. Unioutown Building As- 
 sociation, 88 Pa. St. 211 (provi- 
 sions of by-laws, etc., inconsistent 
 with statute, plea of uul tiel cor- 
 poration); Workingmeu's Building 
 Association v. Coleman, 8 W. N. 
 C. 17; 89 Pa. St. 428 (defective in- 
 corporation cured, plea of nul tiel 
 corporation); Link v. Germautown 
 Building Association, 89 Pa. St. 15 
 (unincorporated building associa- 
 tions, terre-tenant, usury, stock 
 payments and mortgage); Peabody 
 Building and Loan Association v. 
 Houseman, 89 Pa. St. 261 (solicitor, 
 agency); Early and Lane's App., Ib. 
 411 (hypothecated stock); Bismark 
 Building Association . Bolster et 
 al., 92 Pa. St. 123 (chattel mortgage 
 not within meaning of acts having 
 exclusive reference to mortgages 
 upon real estate); O'Rourke v. West 
 Pa. Loan and Building Associa- 
 tion, 8 W. N. C. 176; 93 Pa. St. 
 308 (members' right to sue, equity 
 jurisdiction) ; GermaniaBuilding As- 
 sociation v. Neill, 93 Id. 322 (mort- 
 gage, merger, stock hypothe- 
 cation); Watkin's v. Workingmen's 
 Building and Loan Association, 38 
 Leg. Int. 333; 10 W. N. C. 414; 97 
 Pa. St. 514 (loans, application of 
 stock payment to mortgage debt, 
 forfeiture, proof of maturity); Sel- 
 den v. Reliable Savings and Build- 
 ing Association, 32 P. F. Sm. 336; 
 2 W. N. C. 481 (loans, premiums, 
 etc., pleading, agency); Faulkner's 
 App., 11 W. N. C. 48 (power of pur- 
 chasing real estate, borrowing, 
 
 suit against building associations on 
 bond, ultra vires); Association . 
 Steele, Ib. 204 (mortgage by married 
 women estoppel by recitals); Love 
 v>. Building and Loan Association, 
 Ib. 303 (report of auditors as to 
 shares no ground for judgment for 
 want of affidavit of defence by with- 
 drawing member against society); 
 Bourgignon and Excelsior Building 
 Association v. Commonwealth, 10 
 Id. 161 (taxation); Economy Build- 
 ing Association t>. Hungerbuehler, 
 9 Id. 218 (application of stock pay- 
 ments to mortgage, terre-tenant); 
 Stile's App., Ib. 83 (fixed pre- 
 mium illegal, may be defalked); 
 Orangeville Mutual Savings Fund 
 and Loan Association . Young, 
 Ib. 251 (borrower must be in- 
 jured thereby); James v. National 
 Building Association, Ib. 325 (agen- 
 cy, estoppel); Gass v. Citizens' 
 Building and Loan Association, Ib. 
 326 (agency, proof); Kingsessing 
 Building Association v. Roan, Ib. 15 
 (married woman's mortgage, dis- 
 ability cannot be set up after death) ; 
 Newlin v. The Milton Building and 
 Loan Association No. 2, Ib. 220 (ac- 
 knowledgment of withdrawal no- 
 tice, affidavit of defence) ; Est. Na- 
 tional Savings, Loan and Building 
 Association, Ib. 79 (equity jurisdic- 
 tion to wind up building associ- 
 ations, assignment for benefit of 
 creditors); Powell v. Abbott, Ib. 23, 
 (unincorporated building associ- 
 ations, by- laws, constitution); 
 Building Association v. Rice and 
 wife, 8 Id. 12 (married woman's 
 mortgage); Building Association . 
 Britten, 7 Id. 330 (withdrawals); 
 
 1 Act April 29, 1874, P. L., p. 73. See also provisions of Act April 17, 
 1876, P. L., p. 80. supplementary to foregoing act.
 
 THE LAW OF BUILDIHO ASSOCIATIONS. [CH. II. 
 
 rations of the second class, of which building and loan associ- 
 ations are the fifteenth head.' 
 
 Rodgers t>. 8. W. Mutual Savings building association not affected by 
 
 Fund and Building Association, 7 
 Id. 95 (by -laws, withdrawal); Witt- 
 man v. Building Association, Ib. 80 
 (suit by withdrawing member, alle- 
 gation of losses); Association v. 
 Gibson, 6 Id. 502 (agency of secre- 
 tary and treasurer); Kreamer . 
 Springfield Building Association, 
 Ib. 267 (application of stock pay- 
 ments to debt, terre- tenant) ; Pfaft 
 . Building Association, Ib. 349 (pre- 
 mature winding up, injunction); 
 Weiss's App., 5 Id. 423 (assignee 
 of hypothecated stock); German 
 Fair Hill Building Association V. 
 Metzger, 3 Id. 204 (interest pending 
 a suit on mortgage); Gormerly t>. 
 The Port Richmond Building and 
 Loan Association et al., Ib. 11 (disso- 
 lution in equity not decreed where 
 there is a remedy at law); Building 
 Association. George, Ib. 239 (fines); 
 Building Association v. Schuller, 
 Ib. 431 (fines); Association v. Neu- 
 rath, 2 Id. 95 (interest on premium); 
 Delaware Building Association v. 
 Keller, 2 Id. 29 (premium); Build- 
 ng Association v. Benson & Allen, 
 Ib. 541 (surety on bond when mort- 
 gage merged); Britton v. American 
 Building and Loan Association, 12 
 Phila. 430; 35 Leg. Int. 474 (no 
 judgment against society for value 
 of shares until after final meeting to 
 make division); Hansbury v. Pfeif- 
 fer, 12 Phila. 250; 35 Leg. Int. 395 
 (unincorporated building associ- 
 ation ; see Link v. Building Associ- 
 ation, 89 Pa. St. 15); Sherman Build- 
 ing Association v. Rock, 9 Phila. 
 75 (return of one-eighth premium 
 for every whole year unexpired); 
 Kisterbock v. Premium Building As- 
 sociation, 7 Id. 185 (mortgage of 
 
 its dissolution when land in hands 
 of trustee) ; Building Association v. 
 Eshelbach, 7 Phila. 189 (stock pay- 
 ments, mortgage); Association t>. 
 Wall, Ib. 240 (burden of proof of 
 payment); Building Association t>. 
 Ellsler, 6 Id. 6 (usury, recovery); 
 Maule v. Building Association, 5 Id. 
 421 (limitation of time to recover 
 usurious interest) ; Leff man v. Flan- 
 igan, Ib. 155, 419 (suit against direc- 
 tors); Manuf., etc., L. Co. v. Cono- 
 ver.Ib.18 (discounting, ultra vires, 
 plea of nultiel corporation); Skin- 
 ner's Est., 4 Id. 189 (usury); Fisher 
 0. Kahlnan, 3 Id. 213 (usury, 
 recovery, terre - tenant); Marble 
 Building Association v. Hocker, Ib. 
 494 (Act 1859 no retroactive effect); 
 Building Association v. Reid, Ib. 
 345 (loans, stock payments) ; Build- 
 ing Association v. O'Connor, Ib. 
 453 (usury in mortgage may bo, set 
 up before auditor by judgment 
 creditors); Building Association v. 
 Timmins, Ib. 209 (usury); Kelly v. 
 Accommodation Saving Fund and 
 Loan Association, 2 Id. 237 (mar- 
 shalling of assets); Sunbury, etc., 
 Association t>. Martin, 1 Luz. Leg. 
 Reg. 147 (loans); West Harrisburg 
 Loan and Building Association v. 
 Morganthal, 2 Pears. 343 (defect in 
 recording charter cannot be raised 
 collaterally, pleading) ; Miller's 
 Est., Ib. 248 (charter, real estate, 
 plea of nul tiel corporation); Brandt 
 v. Greul, 4 Leg. Gaz. 388; 1 Luz. 
 L. R. 737 (computation of period of 
 grace on arrears) ; Kehler v. Miller, 
 4 Leg. Gaz. 126; 1 Leg. Chr. 35 
 (premium, fines, waiver of ex- 
 emption); Snider'sEst.,34 Leg. Int. 
 49 (discharge of mortgage by judi. 
 
 1 See above acts.
 
 34.] 
 
 STATUTORY PROVISIONS OF THE STATES. 
 
 (b) Notice of the intention to apply for any such charter 
 shall be inserted in two newspapers of general circulation, 
 printed in the proper county, for three weeks, setting forth 
 briefly the character and object of the corporation to be 
 formed, and the intention to make application therefor. 1 
 
 (c) The charter of intended building and loan associations- 
 must be subscribed by five or more persons, three of whom 
 at least must be citizens of this commonwealth, and shall set 
 forth : 1. The name of the corporation. 2. The purpose for 
 which it is formed. 3. The place or places where its busi- 
 ness is to be transacted. 4. The term for which it is to exist. 
 5. The names and residences of the subscribers, and the num- 
 ber of shares subscribed by each. 6. The number of its di- 
 rectors, and the names and residences of those who are chosen 
 directors for the first year. 7. The amount of its capital 
 stock, and the number and par value of shares into which it 
 is divided. 2 8. Whether the premium or bonus bid for the 
 prior right to a loan shall be deducted therefrom in advance, 
 
 cial sale, what due) ; Association v, 
 Hubley, Ib. 6 (withdrawal, invest- 
 ment of all funds improper); Spring- 
 ville Building Association v. Raber, 
 33 Id. 329; 24 Pittsb. L. J. 23 (ap- 
 plication of stock payments to 
 debt, sheriff 's vendee) ; Chambers- 
 burg Woollen Co. v. Chambersburg 
 Manufacturing and Building As- 
 sociation, 31 Leg. Int. 357 (in- 
 solvency); Conrow v. Tradesmen's 
 Savings Fund and Loan Associa- 
 tion, 21 Leg. Int. 109 (loan); Eyre 
 v. Building Association, 17 Id. 148 
 (compromise, estoppel); Associa- 
 tion v. Dobbins, 15 Id. 45 (loan); 
 Columbia Building Association . 
 Howe, Ib. 45 (loan); Saving Fund v. 
 Murray, 14 Id. 133 (usury); Associa- 
 tion v. Kribs, 7 Leg. and Ins. Rep. 21 
 (association may sue member for 
 dues); Marietta Building Associa- 
 tion v. Hanlen, 10 Lane. Bar 47 
 (fines, computation of amount due 
 on mortgage); Ashland Banking Co. 
 v. Centralia Mutual Savings Fund 
 
 Association, 9 Luz. Leg. Reg. 41 
 (order drawn by president on traas- 
 urer is not a negotiable security, 
 powers of building associations); 
 White Haven Loan and Building 
 Association v. Kelly et al., Ib. 9 
 (agreement of stockholders to dis- 
 band is valid, plea of mil tiel cor- 
 poration); Relief Savings Fund As- 
 sociation v. Longshore et al., 8 Id. 
 199 (premium, application of loan, 
 surety) ; National Building Asso- 
 ciation v. Hottenstein, 10 Pittsb. 
 Leg. Jour., N. S. 225 (serial build- 
 ing associations, burden of proof 
 of loss); Knoblauch v. Robert Blum 
 Building and Loan Association, No. 
 2, 8 Id. 39; Paffert v. Same, II). 40 
 (proportionate loss retained from 
 withdrawing stockholders before it 
 occurs, if certain to occur). Tan- 
 ner's App. , 11 Pittsb. Leg. Jour. 301 
 (married woman). 
 
 'Acts April 29, 1874, 3, p. 
 75
 
 8 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 or paid in periodical instalments, or whether interest in ad- 
 vance shall be deducted from the loan in lieu of premium or 
 bonus. 1 This certificate shall l>e acknowledged by at least 
 three of the subscribers thereto, before the Recorder of Deeds 
 of the county in which the chief operations are to be carried 
 on, or in which the principal office is situated, and they shall 
 also make and subscribe an oath or affirmation before him, to 
 be endorsed on the said certificate, that the statements con- 
 tained therein are true. The said certificate, accompanied 
 with proof of publication of notice, as hereinbefore provided, 
 .shall then be produced to the Governor of this common- 
 wealth, who shall examine the same, and if he find it to be 
 in proper form, and within the purposes named in the second 
 class, .... he shall approve thereof, and endorse his ap- 
 proval thereon, and direct letters patent to issue in the 
 usual form, incorporating the subscribers, and their fcttCH 
 ciates and successors, into a body politic and corporate, in 
 deed and in law, by the name chosen, and the said certifi- 
 cate shall be recorded in the office of the secretary of the 
 commonwealth in a book to be by him kept for that pur- 
 pose, and he shall forthwith furnish to the Auditor-General 
 an abstract therefrom, showing the name, location, amount of 
 capital stock, and name and address of the treasurer of such 
 corporation. The said original certificate, with all of its en- 
 dorsements, shall then be recorded in the office for the re- 
 cording of deeds, in and for the county where the chief op- 
 erations are to be carried on, and from thenceforth the sub- 
 scribers thereto, and their associates and successors, shall l>e a 
 corporation, for the purposes and upon the terms named in 
 the said charter. Certified copies of both the records thereof, 
 and of the charters of the corporations named in the first class 
 specified in the foregoing section, shall be competent evi- 
 dence for all purposes in the courts of this commonwealth. 
 The Secretary of the commonwealth shall charge and receive 
 a fee of five dollars upon every paper relating to a corpora- 
 tion filed or recorded in his office." 
 
 (d) Building and loan associations incorporated under the 
 provisions of this act, shall have the powers, and from the 
 
 1 Act April 10, 1879, 1; P. L., p. 16. 
 8 Act April 29, 1874, 3, p. 76.
 
 $ 34.] STATUTORY PROVISIONS OF THE STATES. 89 
 
 date of the letters patent creating the same, when not other- 
 wise provided in this act, be governed, managed, and con- 
 trolled as follows : They shall have the power and franchise 
 of loaning or advancing to the stockholders thereof the 
 moneys accumulated from time to time, and the power and 
 right to secure the repayment of such moneys, and the per- 
 formance of the other conditions upon which the loans are to 
 be made, by bond and mortgage, or other security, as well as 
 the power and right to purchase or erect houses, and to sell, 
 convey, lease, or mortgage the same at pleasure, to their stock- 
 holders or others, for the benefit of their stockholders in such 
 manner, also, that the premiums taken by the said associa- 
 tions for the preference or priority of such loans shall not be 
 deemed usurious, and so, also, that in case of nonpayment of 
 instalments, premiums, or interest by borrowing stockholders 
 for six months, payment of principal, premiums, and interest, 
 without deducting the premium paid, or interest thereon, may 
 be enforced by proceeding on their securities according to 
 law. 1 And it shall be lawful for any mutual savings fund, 
 or building and loan association, now incorporated, or here- 
 after to be incorporated, in addition to dues and interest, to 
 charge and receive the premium or bonus bid by a stock- 
 holder for preference or priority of right to a loan in period- 
 ical instalments ; and such premium or bonus so paid in in- 
 stalments shall not be deemed usurious, but shall be taken to 
 be a payment, as it falls due, in contradistinction to a premium 
 charged and paid in advance; and in so far as said premium 
 or bonus so charged and paid, in addition to dues and inter- 
 est, shall be in excess of two dollars for each periodical pay- 
 ment, the same shall be lawful, any law, usage or custom to 
 the contrary notwithstanding. It shall also be lawful for any 
 mutual savings fund or building and loan association to 
 charge and deduct interest in advance, in lieu of premiums, 
 for preference or priority of right to a loan : Provided, 
 that the certificate of incorporation of each association here- 
 after to be incorporated, and the certificate provided in sec- 
 tion nine of this act for those heretofore incorporated, shall 
 set forth whether the premium or bonus bid for the prior 
 right to a loan shall be deducted therefrom in advance, or 
 Act April 29, 1874, 87, Cl. 1. p. 96.
 
 90 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 paid in periodical instalments, or whether interest in advance 
 shall be deducted from the loan in lieu of premium or bonus. 1 
 
 (e) The capital stock of any corporation created for such 
 purposes by virtue of this act, shall at no time consist in the 
 aggregate of more than one million dollars, to be divided into 
 shares of such denomination, not exceeding five hundred dol- 
 lars each, and in such number as the corporators may, in the ap- 
 plication for their charter, specify : Provided, that the capi- 
 tal stock may be issued in series, but no such series shall at 
 any issue exceed in the aggregate five hundred thousand dol- 
 lars, the instalments on which stock are to be paid at such 
 time and place as the by-laws shall appoint ; no periodical 
 payment of such instalments to be made exceeding two dol- 
 lars on each share, and said stock may be paid off and retired 
 as the by-laws shall direct ; every share of stock shall be sub- 
 ject to a lien for the payment of unpaid instalments and other 
 charges incurred thereon, under the provisions of the charter 
 and by-laws, and the by-laws may prescribe the form and 
 manner of enforcing such lien ; new shares of stock may be 
 issued in lieu of the shares withdrawn or forfeited ; the stock 
 may be issued in one or in successive series, in such amount 
 as the Board of Directors or the stockholders may determine.* 
 
 (f) Stockholders withdrawing voluntarily shall receive 
 
 1 Act April 10, 1879, 1, p. 16. the treasury of the corporation be 
 * Act April 29, 1874, 37, Cl. 2, applicable to the demands of with- 
 p. 97; the balance of this clause drawing stockholders without the 
 supplied by g 2 and 3. Act April 10, consent of the boayd of directors, 
 1879, post, (f) and (g) (see Freedley, and that no stockholder shall be en- 
 Corporation Law of Pa., p. 68), titled to withdraw whose stock is 
 isasfollows: " And any stockholder held in pledge for security; upon 
 wishing to withdraw from the said the death of a stockholder, his or 
 corporation, shall have power to do her legal representative shall be en- 
 BO by giving thirty days' notice of titled to receive the full amount 
 his or her intention to withdraw, paid in by him or her, and legal in- 
 when he or she shall be entitled to terest thereon, first deducting all 
 receive the amount paid in by him or charges that may be due on the 
 her, less all fines and other charges; stock; no fines shall be charged to 
 but after the expiration of one year a deceased member's account from 
 from the issuing of the series, such and after his or her decease unless 
 stockholder shall be entitled, in ad- the legal representatives of such de- 
 dition thereto, to legal interest there- cedent assume the future payments 
 on: Provided, that at no time shall on the stock." 
 more than one half of the funds in
 
 34.] STATUTORY PROVISIONS OF THE STATES. 91 
 
 such proportion of the profits of the association, or such rate 
 of interest, as may be prescribed by the by-laws, any law or 
 usage to the contrary notwithstanding ; but payment of the 
 value of stock so withdrawn, shall only be due when the 
 funds now by law applicable to the demand of withdrawing 
 stockholders are sufficient to meet and liquidate the same, 
 and then only in the order of the respective times of presen- 
 tation of the notices of such withdrawals, which must have 
 been presented in writing at a previous stated meeting, and 
 have been then and there endorsed as to times of presentation 
 by the officer designated by the by-laws of the association. 1 
 
 (g) The by-laws may provide for the involuntary with- 
 drawal and cancellation at or before maturity of shares of 
 stock not borrowed on : Provided, that such withdrawal and 
 cancellation shall be pro rata among the shares of the same 
 series of stock : And provided further, that not less than 
 legal interest shall be credited and allowed to each share so 
 withdrawn and cancelled. 8 
 
 (A) The number, titles, functions and compensation of the 
 officers of any such corporation, their terms of office, the 
 times of their elections, as well as the qualifications of elec- 
 tors, and the ratio and manner of voting, and the periodical 
 meetings of the said corporation shall be determined by the 
 by-laws when not provided by this act. 3 
 
 (i) The said officers shall hold stated meetings, at which 
 the money in the treasury, if over the amount fixed by char- 
 ter as the full value of a share, shall "be offered for loan in 
 open meeting, and the stockholder who shall bid the highest 
 premium for the preference or priority of loan, shall be en- 
 titled to receive a loan of not more than the amount fixed by 
 charter as the full value of a share for each share of stock 
 held by such stockholder : Provided, that a stockholder may 
 borrow such fractional part of the amount fixed by charter as 
 the full value of a share, as the by-laws may provide ; good 
 and ample security, as prescribed by the by-laws of the cor- 
 poration, shall be given by the borjrower to secure the repay- 
 ment of the loan ; in case the borrower shall neglect to offer 
 security, or shall offer security that is not approved by the 
 
 1 Aft April 10, 1879. 2. p. 16. 8 Act April 29, 1874, 37, Cl. 3, 
 
 - Vft April 10. 1879, 3, p. 17. p. 97.
 
 92 THE LAW OP BUILDING ASSOCIATIONS. [CH. 11. 
 
 Board of Directors, by such time as the by-laws may prescribe, 
 lie or she shall be charged with legal interest, together with any 
 expenses incurred, and the loss in premium, if any, on a re-sale, 
 and the money may be re-sold at the next stated meeting. 1 
 
 (J) A borrower may repay a loan at any time, and in case 
 of the repayment thereof before the maturity of the shares 
 pledged for said loan, there shall be refunded to such bor- 
 rower, (if the premiums, bonus, or interest shall have been 
 deducted in advance,) such proportion of the premiums, bonus, 
 or advance interest bid, as the by-laws may determine : Pro- 
 vided, that in no case shall the association retain more than 
 one one-hundredth of said premiums or bonus for each calen- 
 dar month that has expired since the date of the meeting 
 upon which the loan was made, or if interest in advance, it 
 shall retain only the interest due on the loan up to the time 
 of settlement : A.nd furtJier provided^ that such borrower 
 shall receive the withdrawing value of the shares pledged for 
 said loan, and the shares shall revert back to the association. 3 
 
 (fc) In case of nonpayment of instalments of stock, premi- 
 ums, dues or interest, by borrowing stockholders, for the 
 space of six months, payment of the same, together with the 
 full principal of the loan, may be enforced by proceeding on 
 their securities according to law ; and the moneys so recov- 
 ered shall be paid into the treasury of the association for such 
 uses (loans or otherwise) as may be deemed proper by the 
 association; and if the said moneys so recovered, together 
 with the withdrawal value of the shares of such defaulting 
 
 1 Act April 29, 1874, 37, Cl. 4, ( 37, 01. 5, p. 98) is as follows: "A 
 p. 97. The balance of this clause, borrower may repay a loan at any 
 supplied by 5, Act April 10, 1879, time, and in case of the repayment 
 post, (k) (see Freedley, Corp. L. of thereof, before the expiration of the 
 Pa., p. 70), is as follows: "In case eighth year, after the organization 
 of nonpayment of instalments or of the corporation, there shall be re- 
 interest by borrowing stockholders, funded to such borrower one eighth 
 for the space of six months, pay- of the premium paid for every year 
 ment of principal and interest, with- of the said eight years then unex- 
 out deducting the premium paid or pired: Provided, When the stock is 
 interest thereon, may be enforced issued in separate series the time 
 by proceeding on their securities ac- shall lie computed from the date of 
 cording to law." the issuing the scries of stock on 
 
 9 Act April 10, 1879, 4, p. 17. which the loan was made." 
 The provision of the Act of 1874
 
 34.] STATUTORY PROVISIONS OF THE STATES. 93 
 
 borrower, shall exceed the amount it would have required, 
 according to the preceding section, to have voluntarily repaid 
 the loan, together with all the expenses incurred by the asso- 
 ciation, such excess shall be repaid to such defaulting borrower. 1 
 
 (1) No premiums, fines, or interest on such premiums, that 
 may accrue to the said corporation, according to the provisions 
 of this act, shall be deemed usurious, and the same may be 
 collected as debts of like amount are now collected by law in 
 this commonwealth. 2 But fines or penalties for the nonpay- 
 ment of instalments of dues, interest and bonus, or premiums, 
 shall not exceed two per cent, per month on all arrearages. 3 
 
 (ra) It shall be lawful for any married woman of full age 
 to hold stock in any of said saving funds, building, or loan 
 associations ; and as such stockholder, she shall have the rights 
 and privileges of other members, including the right to bor- 
 row money from said associations and bid premiums therefor, 
 and shall also have the right and power to secure such loan 
 by transferring her said stock or other securities to said asso- 
 ciation from which the same was borrowed, or by executing 
 bond and mortgage upon her separate real estate to secure 
 said loan : Provided, however, that the husband of such mar- 
 ried woman join in the execution of such bond and mortgage ; 
 and such married woman shall also have the right to sell, as- 
 sign, and transfer her said stock, or withdraw the same, without 
 joining the husband in such transfer or withdrawal ; and it 
 shall be lawful for any such savings fund, building, or loan 
 association to collect such loan made to such married woman, 
 including the does, interest, premium, and fines, as loans 
 made by such associations to other members are now by law 
 collected, and such stock, or interest in such stock, shall not be 
 liable for the debts of any husband of such married woman. 4 
 
 (n) No corporation or association created under this act 
 shall cease or expire from neglect on the part of the corpo- 
 rators to elect officers at the time mentioned in their charter 
 or by-laws, and all officers elected by such corporation shall 
 hold their offices until their successors are duly elected.* 
 
 1 Act April 10, 1879, 5, p. 17. * Act April 10, 1879, 7, p. 17- 
 
 8 Act April 29, 1874, 37, Cl. 6, 18. 
 
 p. 98. Act April 29, 1874, 87, Cl. 7, 
 
 3 Act April 10. 1879. 6, p. 17. p. 98.
 
 THE LAW OP BUILDING ASSOCIATIONS. [CH. II. 
 
 (0) Any loan or building association incorporated by or 
 this act, is hereby authorized and empowered to pur- 
 chase at any sheriffs or other judicial sale, or at any other 
 sale, public or private, any real estate, upon which such asso- 
 ciation may have or hold any mortgage, judgment, lien, or 
 other encumbrance, or ground rent, or in which said associa- 
 tion may have an interest, and the real estate so purchased, or 
 any other that such association may hold or be entitled to at 
 the passage of this act, to sell, convey, lease, or mortgage at 
 pleasure, to any person or persons whatsoever ; and all sales 
 of real estate heretofore made by such associations to any 
 person or persons not members of the associations so selling, 
 are hereby confirmed and made valid. 1 All such corporations 
 shall have full power to purchase lands, and to sell and convey 
 the same, or any part thereof, to their stockholders or others 
 in fee simple, with or without the reservation of ground 
 rents, but the quantity of land purchased by any one of said 
 associations hereafter incorporated, shall not, in the whole, ex- 
 ceed fifty acres, and in all cases the lands shall be disposed of 
 within ten years from the date of the incorporation of such 
 associations respectively." All land and building associations 
 are hereby authorized to make sale of and assign or extin- 
 guish to any person or persons the ground rents created as 
 aforesaid." 
 
 (p) All purchases of lands heretofore made by building 
 and loan associations, incorporated by virtue of any law of 
 this commonwealth, and also all sales of the same made by 
 them to their stockholders or others, are hereby confirmed, 
 and the titles of said associations and their vendees are hereby 
 declared good and valid, to all intents and purposes ; and the 
 said associations, their successors or assigns, may sell, convey 
 or lease, at pleasure, at any time within five years from the 
 passage of this act, the undisposed-of portions of the real 
 estate so heretofore purchased. 4 
 
 (3) All deeds of conveyance of lands situate within this 
 commonwealth made by any savings fund, building, or loan 
 
 1 Act April 29, 1874, 37, Cl. 8, 8 Act April 29, 1874, 37, Cl. 10, 
 p. 98. p. 99. 
 
 1 Act April 29, 1874, 37, Cl. 9, 4 Act June 19, 1878; P. L., p. 
 p. 98-99. 214.
 
 35.] STATUTORY PROVISIONS OF THE STATES. 95 
 
 association after the term for which it was incorporated shall 
 have expired, shall be as good and effectual, and have the same 
 force and effect for passing title to the lands so conveyed as 
 though executed during the period of its chartered existence. 1 
 
 (/') The bonus or tax due the commonwealth upon the 
 capital stock of corporations, as provided for by Act first of 
 May, 1868, or by any other act, shall not apply to or be due 
 from mutual savings fund, or building and loan associations ; 
 nor shall the registry for corporations, prescribed by the first 
 section of the Act of first of May, 1868, the first section of 
 the Act of twenty -fourth of April, 1874, and the twenty-sixth 
 section of the Act of twenty-ninth of April, 1874, apply to or 
 be required of mutual savings fund, or building and loan 
 associations. 2 
 
 (s) The General Revenue Act of June 7, 1879,' does not 
 apply to building and loan associations : 4 Provided, however, 
 that moneys loaned by building and loan associations shall be 
 subject to tax, the same as money loaned by individuals. 6 
 
 (t) Mutual savings fund, or building and loan associations, 
 heretofore incorporated under the provisions of any law, shall 
 be entitled to all the privileges, immunities, franchises and 
 powers conferred by this act, upon filing with the secretary 
 of the commonwealth a certificate of their acceptance of the 
 same in writing, under the duly authenticated seal of said 
 association, which certificate shall also prescribe their mode or 
 plan of charging premiums, bonus, or advance interest, as set 
 forth in the first section of this act ; and upon such accep- 
 tance and approval thereof by the Governor, he shall issue 
 letters patent to said corporation reciting the same. 8 
 
 35. Virginia. 7 (a) Any number of persons not less 
 
 1 Act April 17, 1876; P. L., p. 41. 696, that this act was not repealed 
 
 4 Act April 10, 1879; 8, p. 18. by any of the subsequent statutes, 
 
 8 P. L., p. 112. and that a building association or- 
 
 4 Act June 10, 1881, 1; P. L., ganized under it, on Sept. 2, 1S72, 
 
 p. 99. was a legally organized corpora- 
 
 6 Ib. tion. The acts referred to were 
 
 Act April 10, 1879, 9, p. 18. Acts 1853-4, C. 46; 1855-6, C. 36; 
 
 1 Virginia Acts of Assembly, 1857-8, C.70; 1866-7. C.129; 1870-1, 
 
 1852, C. 101, pp. 81-83, Act May C. 277. It is there said that the 
 
 29, 1852. It was decided, in Davies repeal of a statute by implication is 
 
 & Co. v. Creighton, 83 Gr.ittan, not favored by the courts (cit. Ho-
 
 96 
 
 THE LAW OF BUILDING ASSOCIATIONS. 
 
 [cil. 
 
 than nine, may associate and become, in the manner herein- 
 after prescribed, un incorporated company, for the purpose of 
 accumulating a fund, to enable its respective members to pnr- 
 chase houses and lots, erect buildings, improve lands, and to 
 remove encumbrances from real estate, and for the further 
 purpose of distributing, among the members, who do not re- 
 gan v. Guigon, judge, 29 Gratt. 705); by a body politic or corporate, ex- 
 
 as, ordinarily, where the repeal is 
 intended by the legislature, it is de- 
 clared in express terms. In their 
 absence, the presumption is always 
 against the intention to repeal, 
 which ought not to be presumed, 
 unless, from the repugnance of the 
 provision, the inference be necessary 
 and unavoidable (cit. Harford v. U. 
 S., & Cranch, 109, op. by Marshall, 
 C. J.). It is not sufficient to estab- 
 lish that subsequent laws cover 
 some or even all of the cases pro- 
 vided for by the former law; for 
 the latter may be merely affirma- 
 tive, or cumulative, or auxiliary; but 
 there must be positive repugnancy 
 between the provisions of the new 
 laws and those of the old (cit. Wood 
 v. U. S., 16 Pet. 342, 363, op. by 
 Story, J.). They must be irrecon- 
 cilable, incapable of standing to- 
 gether (cit. McCoole v. Smith, 1 
 Black (U. S.). 459, 470; Arthur v. 
 Homer, 96 U. S. (6 Otto), 137). The 
 c Uert of the Act of March 6, 1873 
 (Arts 1873-3, Ch. 113, p. 95), amend- 
 ing Act 1871, is not discussed. It 
 would seem, however, upon the 
 reasoning in Davies v. Creighton, 
 that it, too, left the Act of 1852 un- 
 i in paired . To avoid misunderstand- 
 ing, however, and because incorpo- 
 ration may probably be had under 
 both acts, the provisions of the Act 
 of 1873 are here inserted: "Any 
 five or more persons, who shall 
 desire to form a joint stock com- 
 pany, for the conduct of any enter- 
 prise or business, which may be law- 
 fully conducted by an individual, or 
 
 ct'pt to construct a turnpike to be 
 constructed beyond the limits of a 
 county, or railroad, or canal, or to 
 establish a bank of circulation, may 
 make, sign, and acknowledge, be- 
 fore any justice of the peace, or no- 
 tary public, or county judge, or clerk 
 of a county or circuit court, a cer- 
 tificate in writing, setting forth the 
 name of the company, the purposes 
 for which it is formed, the capital 
 stock, and its division into shares, 
 the amount of real estate proposed 
 to be held by it, the place at which 
 its principal office is to be kept, and 
 the chief business to be transacted, 
 and the names and residences of the 
 officers, who for the first year are to 
 manage the affairs of the company. 
 This certificate may be presented to 
 the circuit court of the county, city, 
 or town in which the principal office 
 of the company is to be located, or 
 to the judge thereof in vacation. 
 The said court or judge in vacation 
 shall have a discretion to grant or 
 refuse to said persons a charter of 
 incorporation, upon the terms srt 
 forth in the said certificate, or upon 
 such other ter.ms as may be adjudged 
 reasonable. If the charter be grunt- 
 ed, it shall be recorded by the clerk 
 of the said court in a book, to be 
 provided and kept for the purpose, 
 and shall be certified by said clerk 
 to the secretary of the common- 
 wealth, to IK- in like manner record- 
 ed in his office; and thereafter the 
 court, or the judge thereof in vaca- 
 tion, may, upon the motion of the 
 said company, or of any company
 
 35.] STATUTORY PROVISIONS OF THE STATES. 97 
 
 ceive aid by advances on their shares for the objects aforesaid, 
 their proper dividends of the fund so accumulated in money. 
 (J) Persons who wish to form such a company shall sever- 
 ally sign articles of association, which shall specially state the 
 name of the association, the place in which its business is to 
 be transacted, the number of shares of stock, which shall not 
 exceed six hundred, and the ultimate or par value of each 
 share of stock, which shall not exceed two hundred dollars ; 
 and shall also contain the constitution, rules, regulations, and 
 by-laws of the association, which shall not be inconsistent 
 with the Laws and Constitution of this State or of the United 
 States. 9 
 
 (c) The officers of every such association shall be a presi- 
 dent, six directors, a treasurer, a secretary and three trustees. 
 The president and directors shall constitute a Board to man- 
 age the affairs of the association, with such powers as the 
 articles shall prescribe ; the duties of the treasurer and secre- 
 tary shall be prescribed by the by-laws ; the trustees shall 
 hold the title for the association of all its real estate, and of 
 all real estate conveyed to secure debts due the association, 
 and shall convey and release the same, by order of the Board, 
 as may be required by the articles. The Board shall take 
 from all officers and trustees of the company bonds with 
 security, payable to the association by its corporate name, in 
 such penalty as they may require. 3 
 
 (d) A true copy of such articles as are mentioned in the 
 second section, signed by the officers and trustees of the asso- 
 ciation, together with a statement showing the time of its 
 
 to whom heretofore a charter has Building Association, 22 Gratt. 233 
 been granted by a court, or on rea- (premium, loan, assignment of 
 sonable notice to said company, al- shares, redemption, injunction); 
 ter or amend said charter, or change Edelyn v. Pascoe, Ib. 826 (equity jur- 
 the corporate name of said com- isdiction, winding up); Winches- 
 pany; and such alteration, amend- ter Building Association v. Gilbert 
 ment, or change, shall be recorded et al., 23 Id. 787 (S. P.); Shinn r. 
 by said clerk, and in the office of Commonwealth, 32 Id. 899 (cmbcz- 
 the secretary of the commonwealth, zlement by secretary, collateral in- 
 as hereinbefore provided for re- quiry into corporate existence); Da- 
 cording charters, and shall be as ef- vies & Co. r. Creighton, 33 Id. 696 
 fectual and legal, from that time, as (Acts of 1852, etc. See supra), 
 if originally a part of said charter." ' Act 1852, C. 101, 1. 
 Deci.-iiius: White v. Mechanics' 2 2. 8 3.
 
 98 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 organization, and that the persons whose names are appended 
 to the articles are the officers and trustees of such association, 
 verified by the oath or affirmation of the president and secre- 
 tary, shall be recorded in the Court of the county or con>' na- 
 tion in which such association shall transact its business ; and 
 thereupon, the persons who have subscribed the articles of 
 association, and such other persons as shall become members 
 thereof, and their successors, shall be a body corporate, by 
 the name specified in such articles, and shall in all respects 
 be bound and governed by such articles of association, and 
 any amendments thereto, made in conformity to the same, 
 and such association shall be capable in law of purchasing, 
 holding and conveying any real and personal estate, which 
 may be necessary and suitable for the business and purposes 
 set forth in the articles of association ; but such company 
 shall not, at any one time, hold real estate exceeding in quan- 
 tity five acres, except such as haa been received in satisfaction 
 of debts ; and the clear yearly value or income of all real estate 
 owned by such company, (other than that conveyed to its 
 trustees as security for advances or loans,) shall not exceed 
 -one thousand dollars. 1 
 
 (e) It shall be lawful for the proper officers to be desig- 
 nated in such articles, to call in and demand, from the stock- 
 holders respectively, the sums of money subscribed by them, 
 at such time and in such payments as the articles of associa- 
 tion shall prescribe; and for failure to pay such sums so 
 demanded, the articles may provide for the forfeiture to the 
 company of the stock of delinquent holders.* 
 
 (f) Parents may take and hold shares in any such associa- 
 tion for the use of their minor children, in case such shares 
 are paid for by the personal earnings of said children or by 
 gifts made for such purpose. Married women, with the con- 
 sent in writing of their husbands first obtained, may take and 
 hold, for their separate use, and exempt from the debts and 
 contracts of their husbands, shares in any such association, in 
 case they are paid for by the personal earnings of said mar- 
 ried women, or by those of their children, voluntarily be- 
 stowed for this purpose, or by gifts made to them by persons 
 other thaa their husbands, and not otherwise ; and any real 
 
 ' 4. 5.
 
 35.] STATUTORY PROVISIONS OF THE STATES. 99 
 
 estate, acquired by the proceeds of such shares, shall be held 
 by such married women in like manner, exempt from the 
 debts and contracts of their husbands. 1 
 
 (g) Every such association, except sooner dissolved by a 
 vote of a majority of the stockholders, shall continue in being 
 until the fund accumulated, including shares redeemed, and 
 all property, money and other effects shall amount to such a 
 sum as will enable the company to divide, on each share, a 
 sum equal to the par or ultimate value of the shares agreed 
 upon in the articles, and no longer ; and, in such estimate, the 
 redeemed shares shall be estimated at their par or ultimate 
 value. No dividend of principal or profits shall be made, ex- 
 cept at the termination of the association.* 
 
 (A) It shall be lawful for any such association to redeem 
 the shares held by the stockholders respectively, upon such 
 terms and under such regulations as may be prescribed in the 
 articles ; but such association shall in no case receive or de- 
 mand from any stockholder interest exceeding the rate of six 
 per cent, per annum upon the sum actually paid by such asso- 
 ciation to such stockholder for the shares so redeemed and 
 brought in. Nothing herein contained, however, shall be 
 construed to prevent the association from receiving and de- 
 manding from any stockholder, whose shares have been re- 
 deemed, such regular payments on stock as may be required 
 by the articles, and any fines that may be imposed on him in 
 accordance with such articles.' 
 
 (i) Any existing association, formed for the purposes 
 mentioned in this act, may, upon complying with its pro- 
 visions, become entitled to its benefits. 4 
 
 (j ) If the directors or other officers of any association in- 
 corporated under this act, shall use, dispose of, or invest any 
 moneys or property belonging to such association, otherwise 
 than is prescribed by this act, or by the articles recorded as 
 aforesaid, every such director or officer who authorized, made, 
 or sanctioned such use, disposition, or investment, shall be 
 liable to the association or to the person injured for all losses 
 and damages incurred by reason of such unlawful use, disposi- 
 tion, or investment.* 
 
 (k) If any officer, trustee, attorney, agent, or servant of 
 '6. f 7. 8. 9. 10.
 
 100 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 any such association shall apply to his own use, or shall, with- 
 out due authority, assign, transfer, cancel, or deliver up, or 
 acknowledge satisfaction of any bond, mortgage, deed of 
 trust, or other written instrument belonging to such associa- 
 tion, or shall be guilty of any fraud in the performance of his- 
 duties, he shall be liable to the association or to any person 
 in jured for the damages thereby incurred, and shall also'be 
 deemed guilty of a misdemeanor ; and upon conviction of any 
 such offence, he shall be fined in a sum not exceeding one 
 thousand dollars, and be imprisoned in the county jail for a 
 term not exceeding one year. 1 
 
 (1) There shall be a general meeting of the stockholders of 
 every association incorporated under this act, on the first 
 Thursday of January in each year, for the purpose of elect- 
 ing the officers of the association for the ensuing year. But 
 if for any cause, such meeting be not held on the day afore- 
 said, the company shall not for that reason be dissolved, but 
 the officers and trustees previously elected shall continue in 
 office until their successors are appointed at some other meet- 
 ing of stockholders to be provided for in the articles of asso- 
 ciation. The stockholders, at every such general meeting, or 
 in case there be no such general meeting, then the president 
 and directors of every such association shall cause to be pub- 
 lished, during the month of January in every year, in one or 
 more public newspapers printed in or nearest its place of busi- 
 ness, a statement, verified by the oath or affirmation of the- 
 president and secretary, showing the actual financial condition 
 of the company, brought down to the thirty-first day of 
 December in the preceding year. Such statement shall ex- 
 hibit the amount of money on hand, the number of shares re- 
 deemed, the amount due the association, and its liabilities, if 
 any, the value of its property, and the estimated cash value of 
 each share of stock.* 
 
 (m) It shall not be lawful for any such association to loan 
 to one of its members a sum exceeding the par or ultimate 
 value of the shares subscribed for by such member ; and no 
 member shall own at any one time more than twenty shares 
 of stock. 8 
 
 (n) The stock of any such association shall be deemed 
 1 11. 8 12. 13.
 
 36.] STATUTORY PROVISIONS OP THE STATES. 101 
 
 personal estate, and shall pass as such ; it shall be transferred 
 and represented in meetings of the stockholders in such man- 
 ner as may be prescribed in the articles. 1 
 
 (0) The articles of any such association may be amended 
 in such manner as may be prescribed therein ; but every sucli 
 amendment shall be certified by the president and secretary, 
 and be recorded in the court in which the original articles 
 are recorded.* 
 
 (p) The general assembly may at its pleasure amend, 
 modify, or repeal this act, and may dissolve -any association 
 incorporated under its provisions. Every modification or 
 amendment of this act shall be deemed to modify or amend 
 the charter of every association incorporated under its pro- 
 visions ; but no act to amend, modify, or repeal this act, or to 
 dissolve any such association, shall take away or impair any 
 remedy, existing at the time of the passage of such act, against 
 such association, or deprive such association of the power to 
 sell its property, foreclose its mortgages, collect its debts, dis- 
 tribute its effects, and to perform in its corporate capacity all 
 other acts necessary to close its business.* 
 
 36. West Virginia. 4 (a) Any number of persons, not 
 less than five, desiring to become incorporated as a homestead 
 and building association may do so, under the general Incor- 
 poration Act of 1881, 6 by signing an agreement setting forth 
 such intention, the name of the proposed corporation, its pur- 
 pose, principal office or place of business, the period of its 
 expiration, capital stock subscribed, total capital stock, num- 
 ber and par value of shares, name and residence of, and num- 
 ber of shares held by each corporator, in the form prescribed 
 in said act ; which agreement, being acknowledged by several 
 corporators before a justice, notary, or judge, and certified by 
 such officer, and the affidavits of at least two corporators 
 
 1 14. diately following, as to effect of such 
 
 * 15. certificate, change of capital stock, 
 
 3 16. acceptance of chapter by existing 
 
 4 Luws 1881, Ch. 54, p. 214, Act corporations, etc., continuance of 
 Mar. 14, 1881, in particular sections directors in office until successors 
 25-29. p. 222; Code of West Vir- are appointed, first meeting of stock- 
 ginia, Ch. 53. holders, record, publication, and 
 
 5 Laws 1881, Ch. 54, 2, iii., and official certificates of incorporation, 
 6-9. See also the sections imme- etc., 10-24.
 
 102 THE LAW OP BUILDING ASSOCIATIONS. [CH. II. 
 
 named in the agreement being annexed thereto, declaring the 
 bona fides of the transaction, subscriptions, and understanding 
 of the parties, shall be delivered, with the acknowledgments 
 and affidavits, to the Secretary of State, who shall thereupon 
 issue to the corporation his certificate under the great seal of 
 the State, declaring them to be a corporation by the name 
 and for the purposes set forth in the agreement, according to 
 the form prescribed in said act. 
 
 (b) Homestead and building associations formed under 
 this chapter may be for the purpose of raising money, to be 
 used among the members of such corporation in buying lots 
 or houses, or in repairing houses ; and shall be subject to the 
 provisions of this and the fifty-third chapter of the Code, so 
 far as the same are not inconsistent with the following sec- 
 tions. 1 
 
 (c) Such corporations shall not use or direct the funds 
 thereof for or to any other object or purpose than those men- 
 tioned in the preceding section, and in case the said funds 
 shall be so used or directed, the association so using or direct- 
 ing them stall forfeit all the rights and privileges as a corpo- 
 ration.* 
 
 (d) Every such corporation is authorized to levy, assess 
 and collect from its members such sums of money, by stated 
 dues, fines, interest on loans advanced, and premiums bid by 
 members for the right of precedence in taking loans, as the 
 corporation by its by-laws shall provide ; also to acquire, hold, 
 convey and encumber all such real estate and personal prop- 
 erty as may be legitimately pledged to it on such loans, or 
 may be otherwise transferred to it in the due course of its 
 lawful business : Provided, that the dues, fines and premiums 
 paid by the members of such corporation, although paid in 
 addition to the legal rate of interest on loans taken by them, 
 shall not be construed to make the loans so taken usurious.* 
 
 (e) All the stockholders of any such corporation shall be 
 held liable to an amount equal to the stock subscribed by 
 them, or held by them at any time, in addition to said stock r 
 for the purpose of securing the creditors of said association. 4 
 
 (/") Every such corporation shall adopt a constitution, 
 which shall be signed by the members thereof, and which 
 '25, p. 222. 8 26. 3 27. 4 28.
 
 37.] tJTATUTOKY PBOVISIONS OF THE STATES. 103 
 
 shall embrace a-11 the provisions of the four preceding sections, 
 and such articles for its government and the management of 
 its business, as it shall deem proper : Provided, the same are 
 not inconsistent with the provisions of the four preceding 
 sections. 1 
 
 37. Wisconsin. 2 (a) At any time when five or more per- 
 sons may desire to form a mutual savings fund, loan or build- 
 ing association, under the provisions of this act, they shall 
 make and subscribe a certificate of organization and shall fik?, 
 the same in the office of the Clerk of the Circuit Court of the 
 county in which they intend to carry on the business of such 
 corporation; and such certificate shall specify : 1. The name 
 assumed by such association, and by which it shall be known ; 
 2. The amount of its capital ; 3. The city, village, or town in 
 which such association designs to carry on its corporate busi- 
 ness : Provided, that such association ; in making its loans as 
 hereinafter provided, may accept as security for such loan or 
 loans any property situated within the county in which such 
 association carries on its corporate business, and that no char- 
 ter granted under or by virtue of the provisions of this act, 
 shall be for a longer term than seven years. 3 
 
 (b) The capital stock of any such corporation shall not ex- 
 ceed five hundred thousand dollars, and shall be divided into 
 shares of two hundred dollars each. 4 Building associations 
 whose capital is limited to less than five hundred thousand 
 dollars, may, by resolution, carried by a vote of at least two 
 thirds of the members of such association present at any reg- 
 ular meeting thereof, increase the amount of its capital to any 
 amount not exceeding the sum of five hundred thousand dol- 
 lars, including the amount mentioned in the certificate of or- 
 ganixation of such corporation: Provided, that no such vote 
 shall be taken, unless such resolution, stating the amount of 
 the proposed increase of capital, shall have been offered at the 
 regular meeting next preceding the one at which such vote 
 is taken. 6 The secretary of such association or corporation 
 
 1 29. * Laws 1878, C. 253, Act Mar. 18, 
 
 * Revised Statutes of Wisconsin, 1878. 
 
 1878, Ch. 93, 2010-2014; Act Mar. * Rev. Stat., 2010. 
 
 18, 1878, Laws 1878, C. 253, p. 518; 5 Laws 1878, C. 254, 1, Act Mar. 
 
 Act Mar. 18, 1878, Laws 1878, C. 18, 1878. 
 :r>4. p. 519.
 
 104 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 shall, immediately after any such resolution as is mentioned in 
 the preceding section shall have been adopted, file in the of- 
 fice of the Clerk of the Circuit Court in and for the county in 
 which such association or corporation carries on its corpora- 
 tive business, u certified copy of such resolution, and nhall 
 state in such certificate the date of the adoption of such reso- 
 lution, and from and after the filing of such certificate as 
 aforesaid, such association or corporation may issue capital 
 stock up to the amount specified in such resolution, in the 
 same manner as if the amount of capital specified in such res- 
 olution had been originally specified in the certificates of or- 
 ganization of such association or corporation. 1 Payments on 
 such stock shall be made in instalments of not exceeding two 
 dollars each, on each share, at such time and place as the by- 
 laws shall prescribe ; and every share of stock shall be sub- 
 ject to a lien for the unpaid instalments and other charges 
 incurred thereon. The by-laws shall pi-escribe the form and 
 manner of enforcing such lien. The stock may be issued in 
 one or more successive series, in such amount as the Board of 
 Directors or the stockholders may determine, and new shares 
 of stock may be issued, in lieu of shares withdrawn or for- 
 feited. Any stockholder wishing to withdraw from the cor- 
 poration may do so by giving thirty days' notice of his inten- 
 tion, and shall then be entitled to receive the amount paid in 
 by him, and such proportion of the profits as the by-laws may 
 prescribe, less all fines and other charges, due such corpora- 
 tion ; but no stockholder, whose stock is held in pledge for 
 security shall be allowed to withdraw ; and at no time shall 
 more than one half of the funds then in the treasury be ap- 
 plicable to the demands of withdrawing stockholders, without 
 consent of the board of directors. Upon the death of a 
 stockholder, his legal representative shall be entitled to re- 
 ceive the full amount paid in by him, 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 after his decease, unless his legal representatives shall 
 have assumed his future payments on the stock.* 
 
 (<?) The by-laws of every such corporation shall provide 
 for the ratio and manner of voting of its members, and fix the 
 1 Laws 1878, C. 254, 2, Act Mar. 18, 1878. Rev. Stat., 2010.
 
 37.] STATUTORY PROVISIONS OF TIIE STATES. 105 
 
 time for holding periodical meetings, at which the money in 
 the treasury, if more than two hundred dollars, shall be of- 
 fered for loan in open meeting, and the stockholder who shall 
 bid the highest premium for the loan, shall be entitled to a 
 loan of at least two hundred dollars for each share of stock 
 held by him, but not exceeding the sum then in the treasury, 
 and offered for loan, upon giving good and ample security 
 upon property situated in the county, where such corporation 
 is located, for the repayment of the loan : Provided, that a 
 stockholder may borrow such fractional part of two hundred 
 dollars as the by-laws may prescribe. In case the borrower 
 shall neglect to offer security, or shall offer security that is not 
 approved by the board of directors within the time pre- 
 scribed by the by-laws, he shall be charged with one month's 
 interest, together with any expense incurred, and the money 
 shall be reloaned at the next periodical meeting. In case of 
 nonpayment of instalments or interest by borrowing stock- 
 holders, for the space of six months after due, payment of the 
 whole principal and interest, without deducting the premium 
 paid, or interest thereon, may be enforced by proceedings on 
 their securities, according to law. 1 
 
 (cT) A borrower may repay a loan at any time, and, in case 
 of repayment thereof, before the expiration of the term for 
 which the loan was made, there shall be refunded to such 
 borrower such proportion of the premium paid, as the part of 
 the term unexpired bears to the whole term of the loan ; and 
 when a loan is collected by process of law, and the amount 
 collected by the corporation exceeds the amount taken by the 
 borrower, with the interest and charges, the money shall be 
 reloaned at the next periodical meeting, and the excess recov- 
 ered, beyond the amount required to pay the loan, with inter- 
 est and charges, shall be returned to the borrower, from whom 
 the money was collected, or his legal representatives ; but, in 
 case the corporation shall have issued its stock in series, such 
 reloan shall be made only to the stockholders of the same 
 series, and if the premium received for the re-loan shall be 
 greater than that originally given by the defaulting borrower, 
 no part of such excess of premium shall be paid to him. Any 
 defaulting borrower may, at any time after the securities 
 1 Rev. Stat., 2011.
 
 106 THE LAW OF BUILDING ASSOCIATIONS. [CH. IL 
 
 given by him have been collected by such corporation, with- 
 draw his stock upon the same terms prescribed in section 
 2010 ; ' but the corporation may retain out of the moneys 
 due upon such withdrawal so much as may be requisite to 
 save it from loss, in case the amount so collected shall not be 
 sufficient to pay his loan with interest and charges.' 
 
 (e) No premiums, fines, or interest on such premiums that 
 may accrue to any such corporation under the provisions of 
 this chapter shall be deemed usurious.' 
 
 (f) Every such corporation may purchase, at sheriff's or 
 other judicial sale, or at any other sale, public or private, any 
 real estate upon which it may have or hold any mortgage, 
 judgment, lien, or other encumbrance, or ground rent, or in 
 which it may have any interest, and sell, convey, lease, or 
 mortgage, at pleasure, the real estate so purchased. 4 
 
 States in which Building Associations are Incorporated by Special 
 Acts. Connecticut. 
 
 38. Among the remaining States there are only a few in 
 which building associations are at all extensively known. In 
 Connecticut,* indeed, there has been much legislation and a 
 number of decisions ' on the subject ; but the institution has 
 
 1 See ante (6). ers not protected, Act 1855. no 
 
 * Rev. St., 2012. retroactive efficacy, membership 
 8 Rev. St., 2013. merely for purpose of getting loan); 
 
 4 Rev. St., 2014. Peoples' Savings Bank and Building 
 
 5 See Statutes of Connecticut, Association . Collins, 27 Conn. 145 
 Compilation of 1854, p. 218, Act (plea of nul tiel corporation, bor- 
 1850; Act June 29, 1855, Laws of rower estopped from, estoppel ex- 
 Conn., 1855, Ch. 18, p. 19; Act tends to persons claiming under lien, 
 July 9, 1864, Laws 1864, Ch. 74, plea of usury personal, appli- 
 1, p. 99; Act July 30, 1868, cation of stock to payments to mort- 
 Laws 1868, p. 196; Act July 1, 1869, gage); West Winsted Savings Bank 
 Acts 1869, p. 231; Act June 29, and Building Association v. Ford, 
 1870, Laws 1870, p. 383; Act July Ib. 282, and Same v Rice, Ib. 293 
 22, 1870, Laws 1870, p. 502; Act (plea to merits admits corporate 
 July 24, 1872, Laws 1872, p. 21. character of plaintiff, formalitiesof 
 
 See Mechanics' and Working incorporation, plea of nul tiel cor- 
 Men's Mutual Savings Bank and poration, borrowing member es- 
 Building Association v. Meriden topped from such plea, defective 
 Agency Co., 24 Conn. 159 (stock mortgage reformed) ; Babcock et al. 
 subscription, and ultra vires, loan 0. The Middlesex Savings Bank and 
 to one not a member not protected); Building Association, 28 Conn. 302 
 Same v. Wilcox, Ib. 147 (Act 1850, ("net value" of shares, rights of 
 usury, premium, loans to outsid- deceased members representatives).
 
 38.] 
 
 STATUTORY PROVISIONS OF THE STATES. 
 
 107 
 
 died out, and seems to have been finally prohibited by law. 1 
 In Arkansas,* Delaware, Georgia,' Kentucky, 4 South Caro- 
 lina,* Tennessee," and some other States, it appears to be the 
 practice to incorporate building associations by special acts of 
 legislature. 
 
 1 I have a statement to that effect 
 very kindly furnished me by Geo. 
 G. Sill, Esq., of Hartford, formerly 
 Lieutenant-Governor of Connecti- 
 cut; and see Act July 24, 1872. 
 
 8 Decision: Odd Fellows' Build- 
 ing Association -v. Hogan, 28 Ark. 
 261 (allegation of corporate existence 
 in suit against building association). 
 
 3 Exemption from taxation on 
 stock: see Code 1873, Act 1869, p. 
 13. Decisions: Bibb County Loan 
 Association v. Richards, 21 Ga. 592 
 (nature of building associations, 
 loans, incorporation by articles); 
 Richards v. Bibb County Loan As- 
 sociation, 24 Id. 198 (loan, foreclo- 
 sure, computation); Parker v. The 
 Fulton Loan and Building Associa- 
 tion, 42 Id. 451 (usury may be re- 
 covered); Same v. Same, 46 Id. 166 
 (usury, loan, purpose of building 
 associations, settlement bars recov 
 ery of usury) ; City Loan and Build 
 ing Association v. Goodrich et al., 
 48 Id. 445 (premature winding up, 
 equity jurisdiction) ; Ocmulgee 
 Building and Loan Association v. 
 Thomson, 52 Id. 427 (membership 
 of borrower, terms of repayment, 
 credit for stock); Goodrich et al. v. 
 The City Loan and Building Asso- 
 ciation, 54 Id. 98 (see City Loan 
 and Building Association v. Good- 
 rich et al.. supra); Redwine v. The 
 Gate City Loan and Build ing Asso- 
 ciation, Ib. 474 (court, when applied 
 
 to for incorporation, may specify 
 objects, if not set forth in petition); 
 Thomson v. Ocmulgee Building and 
 Loan Association, 56 Id. 350 (see Oc- 
 mulgee, etc., v. Thomson, supra, 
 temporary suspension of business); 
 Pattisou v. The Albany Building 
 and Loan Association, 63 Id. 373 
 (corporate existence cannot be col- 
 laterally attacked, plea of usury 
 must conform to statute, member's 
 liability for losses and expenses, 
 negligence in settlement.) 
 
 4 Decisions: Herbert, etc., v. Ken- 
 ton Building and Savings Associa- 
 tion, 11 Bush. 296 (loans, usury); 
 Shelley v. The Newport Savings As- 
 sociation, Ib. 305 (building associa- 
 tion instituting an action must give 
 bonds for costs); Gordon, etc., v 
 Winchester Building and Accumu 
 lating Fund Association, 12 Id. 110- 
 (purpose of incorporation must be 
 served, loans, usury, legislature 
 cannot authorize a set of corpora- 
 tions to take usury). 
 
 6 Decision: Columbia Building 
 and Loan Association v. Bollinger, 
 12 Rich. Eq. 124 (loan, usury). 
 
 6 Decision- Martin v. Nashville 
 Building Association et al., 2 Cold. 
 418 (loans, usury, declared pur- 
 pose of legislature the guide in con- 
 struing validity of by-laws, etc. ; if 
 their practical operation defeats that 
 purpose they are void).
 
 108 THE LAW OF BUILDING ASSOCIATIONS. [CH. 111. 
 
 CHAPTER III. 
 
 DEFINITION AND VARIETIES OF BUILDING ASSOCIATIONS. 
 
 39. Definition of building associations. 
 
 41. Terminating societies. 
 
 42. Method of obtaining loans. 
 
 44. Bowkett societies. 
 
 45. Starr-Bowkett societies. 
 
 46. Permanent societies, strictly so-called. 
 
 47. Serial societies. 
 
 Definition of Building Association. 
 
 39. A building association, then, is a private corpora- 
 tion, 1 erected for such a period of time as may be permitted 
 by the laws under which it is incorporated, for the accumula- 
 tion, from fixed periodical contributions of its shareholders 
 and the profits upon their investment, of a fund, to be ap- 
 plied, from time to time, in accommodating such shareholders 
 with loans, or advancements, for the purpose, primarily, of 
 acquiring the free possession of real estate, and constructing 
 dwellings, 3 under terms and regulations, sanctioned by ex- 
 perience, and prescribed by legislation, and the charter and 
 by-laws of the association, upon principles of strict mutuality 
 and equality of benefits and obligations, with the effect of 
 gradually extinguishing the liability incurred for such loans 
 and advancements simultaneously with the prescribed con- 
 tinuance of the shareholder's periodical contributions upon 
 the stock held by him in the association ; the said periodical 
 contributions being so calculated as to amount, in the aggre- 
 gate, at compound interest, to the par value of all the shares, 
 as agreed upon at the formation of the society, and fixed by 
 its charter, within the period allowed for the anticipated dura- 
 
 1 As to unincorporated building Kupfert v. Guttenberg Building As- 
 
 associations, see post, ch. xx. sociation, 30 Pa. St. 465; Jarrett 
 
 1 This element has been repeated- v. Cope, 68 Pa. St 67. See also 
 
 ly held to be an essential feature in Kindersley, V. -C., in re Kent Bene- 
 
 the constitution of a building asso- fit Building Society, 1 Dr. and Sm. 
 
 ciation, without which it could not 417; 7 Jur., N. S. 1045; 80 L. J., Ch. 
 
 properly claim to be such. See 785: 9W. R. 686; 4L. T., N. S. 610.
 
 40.] DEFINITION AND VARIETIES. 100 
 
 tion of the society, or the continuance of the contributions,' 
 after deduction of all necessary expenses of the business. 
 
 40. It was originally assumed, that all the stockholders 
 would at some period become borrowers to the full extent of 
 their presumptive interest in the association's finally accumu- 
 lated fund. It was not intended to allow capitalists, under 
 pretence of philanthropy, or upon any other ground, to ob- 
 tain for their money a greater interest than could be got 
 through the ordinary channels of investment. 3 Therefore, 
 whilst, in practice, a large percentage of the members of 
 building associations do not become borrowers, but remain 
 merely investors, yet the results of the scheme which follow 
 as to them, are, in reality, only incidental, and form no part 
 of the proper definition of the institution. For them, it is 
 merely a co operative savings fund, or loan fund association, 
 into which they make their stated payments, in due season 
 receiving back their money, increased by the accumulations 
 of an unusually high rate of interest. The shares of all the 
 members, be they borrowers or investors, advance, of course, 
 at the same rate, and reach the same ultimate value at the 
 same time. In the case of the former, that value has been 
 anticipated, drawn in advance. They have nothing more to 
 look for, (unless, indeed, they hold a larger number of shares 
 than whose par value is equal to the amount borrowed by 
 them, and are, as to such excess, merely investors,) except to 
 be released from any subsisting liability for what they have 
 already received. The latter have, as yet, taken nothing. 
 Their money has gone on accumulating, until, the shares hav- 
 ing attained to their fixed value, they are entitled to receive 
 that amount in payment of them. It is, therefore, practically 
 and legally quite immaterial, whether that period of maturity 
 be described as the period when the funds of the society shall 
 be sufficient to distribute a certain sum to all its stockholders, 
 or, when it shall be sufficient, after cancelling the obligations 
 of borrowing members, to distribute that sum to the unad- 
 vanced members." But it would be incorrect to suppose, that 
 the latter is the supreme object of the building association 
 
 1 See post., " Serial Societies," 47. 
 
 1 Barry, Law of Building Societies, p. 3. 4. 
 
 3 "White v. Mechanics' Building Association, 22 Qrattan (Va.). 233.
 
 110 THE LAW OF BUILDING ASSOCIATIONS. [CH. III. 
 
 scheme. It is merely a result. The principal aim is to pro- 
 vide for its members, desirous of owning homesteads, the 
 opportunity of obtaining advancements, with facilities for 
 gradual liquidation, not elsewhere to be obtained, which, 
 together with the mutuality of the whole plan, amply com- 
 pensates for the apparent exorbitancy of premiums and inter- 
 est, keeping, however, in constant view the interests of the 
 investor as well as of the borrower. " These associations are 
 founded on mathematical calculations, and a close scrutiny of 
 their charters will show that their rules are based upon the 
 highest principles of equity and fairness." ' The results which 
 they achieve are arrived at by various methods, constituting 
 so many different species of the genus building association. 
 A brief notice of them is necessary at this point. 
 
 Terminating Societies. 
 
 41. The least complicated form of the scheme is exhib- 
 ited in what is now known in England as the Terminating 
 Building Society," simply, and is the one usually adopted in 
 this country under the statutes of the various States, which, 
 as a rule, prescribe the period for which charters can be 
 granted to such organizations. 
 
 A number of persons, usually limited, by statute, as to the 
 minimum in number, and frequently as to the maximum of 
 value which each can represent, form themselves into a soci- 
 ety, of which they become members by subscribing for one 
 or more shares of a certain paid-up value, and not exceeding 
 in aggregate the total capital stock allowed such societies by 
 law and by their several charters. Upon each share a fixed 
 monthly subscription of uniform amount is payable through- 
 out the whole duration of the society, the purpose being to 
 continue the same, until the members' subscriptions, by the 
 aid of investments made from time to time, shall amount to 
 a fund large enough to give to every member, upon every 
 share held by him, a sum fixed by the charter at the com- 
 mencement. The length of the association's possible continu- 
 ance is limited by law or by charter, and the payments required 
 from the shareholders so adjusted as to guarantee, on the 
 
 1 Ocmulgee Building and Loan ing Societies, pp. 31-33; Davis, Law 
 Association v. Thomson, 52 Ga. 427. of Building, etc., Societies, pp. 54- 
 9 Compare Barry, Law of Build- 56.
 
 42.] DEFINITION AND VARIETIES. Ill 
 
 score of long experience, its running out within that period. 
 The members all start from the same date, and, should any 
 one be permitted to join the society subsequently to the time 
 limited for taking subscriptions, he will be required to make 
 a " back-payment " of an amount equivalent to the then value of 
 the stock held and paid on from the beginning. Whenever 
 the society has on hand a sum equal to the full value of a 
 share, or, when by law required, at stated intervals, loans will 
 be made to members, (or outsiders, if that be permitted,) 
 upon sufficient security, an assignment of stock held by the 
 borrower to the association being usually required by way of 
 collateral security. The member then, in addition to the 
 regular subscription, pays, also monthly, the legal interest 
 upon the full face value of his loan, or upon the amount 
 actually received by him, according as the one or other may 
 be demanded under the statutes of the several States, and both 
 these duties are stipulated in the mortgage, which becomes avail- 
 able for their enforcement in the hands of the association. 
 
 Method of obtaining Loans. 
 
 42. The method of obtaining the loan is peculiar, and 
 thereon depends largely the success of this class of money- 
 lending institutions. When the time has arrived for loaning 
 money, it is put up, in sums equal to the full paid-up value 
 of a share, at auction ; and the members desiring the loan 
 bid, in competition, the amount they are willing to allow as 
 a discount, "bonus," or "premium," for the preference. 
 This premium is included in the obligation given by the 
 borrower, who makes himself liable for the payment of the 
 full amount to the association. 1 Thus, if the amount offered 
 be $1000, in five loans of $200 each, (that being the par value 
 of the shares,) and the premium bid be $30 on each loan, the 
 person receiving the advancement would execute his obliga- 
 tion to the society for $1000, taking from it but $850 ; in 
 other words, he receives $850, and agrees to repay it, together 
 with a premium, or bonus, of $150. ,It is understood that 
 he has the right to make this payment in the proceeds of his 
 stock in the society, when it has reached its ultimate value, 
 and, in the mortgage or bond he gives for the loan, he stipu- 
 lates to keep up his payments upon such stock ; and, usually, 
 1 See post, ch. xii.
 
 112 THE LAW OF BUILDING ASSOCIATIONS. [CH. III. 
 
 he assigns the stock itself as collateral security. When the 
 association is wound up, the borrower's stock is set oif against 
 his debt, and, the two being equal, both are cancelled. J'ra--- 
 tically, therefore, there is no difference between this method 
 and that which, instead of requiring an obligation for the 
 actual repayment of the money advanced, and the premium, 
 retains the latter out of the amount offered for loan, and 
 requires security for the continuation of the stock and other 
 payments, and interest, till the society shall have run out. 
 And, again, it is but doing the same thing, under a slightly 
 different guise, where the building association makes the loan 
 by purchasing or " redeeming" a shareholder's shares at the 
 lowest bid, advancing that sum to him, and taking his secur- 
 ity for the payment of monthly instalments upon the whole 
 stock, together with interest, etc. The bidding is done in 
 reversed order. The association has a certain amount of 
 money, with which it offers to redeem its own stock, in ad- 
 vance of the period, when, by charter limitation and the 
 accumulation of profits, it will become necessarily redeem- 
 able. The member desiring to take the money, offers his 
 shares to be redeemed by the association. He who offers his 
 stock at the lowest figure, gets the loan, his shares are re- 
 deemed at once by the association, at the figure at which he 
 offers them ; but he binds himself to continue his regular 
 payments, interest, and fines, till the expiration of the society, 
 and he remains in it as a member (a so-called " redeemed " 
 member), subject to its rules, by-laws, and constitution. 1 
 
 43. Each member is entitled to receive a loan, if he can 
 offer sufficient security, and the amount he receives (and for 
 which he gives his obligation) may be nominally equal to (but 
 not ordinarily beyond) the paid-up value of his whole stock- 
 interest. If he receives more, his stock payments will be 
 proportionately increased. 
 
 Bowkett Societies. 
 
 44. The Bowkett and Starr-Bowkett Building Associations 
 are terminating varieties of limited popularity. The former 
 
 1 See Franklin Building Associa- Martin, 2 Beas. (N. J.) 428. And 
 tion v Marsh, 5 Dutch. (N. J.) 225; see post, 14&-148, and ch. xii. 
 Iloboken Building Association .
 
 45.J DEFINITION' AND V.UUETIES. 
 
 are best described in the language of the originator, Dr. Bow- 
 kett, in his evidence before the royal commissioners in Eng- 
 land 1 : u They are based on a principle of arithmetic which 
 scarcely any one connected with building societies, or any one 
 else, seems to comprehend. The principle is this : That, by a 
 certain arrangement, men uniting together can realize, in the 
 tirst instance, the same amount of interest for their own sav- 
 ings, that they are accustomed to pay for other people's 
 money ; next, that they can practically obtain one-fourth 
 more than that rate of interest ; and next, that that rate of 
 interest is compound interest. The plan is this : One hun- 
 dred persons, putting down tyd. a week, will produce 2 Is. 
 2d. each year. Leaving the 1*. 2d. out of the question, to 
 pav the current expenses (and that amount is nearly sufficient), 
 they have, at the end of the year, 200 ; they draw lots for it, 
 and the one to whom it falls has the 200 lent to him, without 
 interest, provided he expends it upon freehold property, and 
 repays it at the rate of 10 per cent, per annum, continued 
 for ten years. After that Ike continues his subscription, until, 
 if he is one of the earlier persons, he has paid 62, and if one 
 of the later ones, 50. Each member has all his subscription 
 1 >ack again, the principle being, that the subscriber lends the 
 society a small sum annually for a long time, and the society 
 lends him a large one for a long time." 
 
 Starr-Bowkett Societies. 
 
 45. " The chief difference," says Mr. Davis, 8 " between 
 the Starr-Bowkett Societies and the preceding is that, in the 
 Starr-Bowkett Societies, after a man has repaid that which 1 in- 
 been lent to him upon property, he has to pay an increased 
 subscription, so as to make the society terminate at an earlier 
 period than it would do if the member still continued to pay 
 his ordinary subscription. Thrs, a man who lias an advance 
 of 300 pays back at the rate of 30 a year, and a subscrip- 
 tion of Is. 3^7. a week, or 3 5s. per annum. At the end "f 
 ten years he would have repaid the 300, and paid into the 
 society, in subscriptions, 32 10s. The society now says, in 
 order to enable other members, who have been waiting, 
 
 1 First Report of Commissioners, 4 Davis. Lnw of Building, etc., So- 
 p. 64. cietios. p. 59.
 
 114 THE LAW OF BUILDING ASSOCIATIONS. [CH. III. 
 
 and are still anxious to get their appropriations, to do so, and 
 to make the society terminate as quickly as possible, we think 
 it is only right that you should make up your pmp.irri..n of 
 subscription, viz., 81 5*., by paying at the rate of 30 a \ 
 during the next two years. The result is, that at the end 
 of eleven and a half years from the time the man borrowed 
 the money, he has repaid the 300 lent to him, and he Jia> 
 81 5*. subscription in the society. At the close of the 
 society these subscriptions are returned to the members," 
 after deduction of a proper amount for his share of the work- 
 ing expenses. 
 
 Members who have obtained an appropriation, i.e., a right 
 to have an advance, frequently sell that privilege to others 
 for a premium. In such case the rate of interest practically 
 paid by the purchaser, i.e., the borrower, may become enor- 
 mous, and this benefit does not accrue to the society. 
 
 Permanent Societies, strictly so called. 
 
 46. The Permanent Building Association, strictly so 
 -called, is not of frequent occurrence (if at all known) in this 
 country, the statutes regulating these institutions and pro- 
 viding for their incorporation, in the various States, generally 
 limiting their duration to a comparatively short period. It 
 seems, however, in England, to be now the most approved 
 form of what is there known as the Benefit Building Society. 
 It is described as " a society which has not by its rules any 
 fixed date, or specified result at which it shall terminate." ' 
 Shares are issued, upon which the various members make 
 payments, either in one sum, when the share is said to be 
 * paid up,' or by periodical or other sums, the interest, in either 
 case, being allowed to accumulate until the share has reached 
 the full value prescribed by the rules, or else paid out yearly 
 to the member, as he may prefer. Advances are made to 
 members, repayable by small periodical instalments, extend- 
 ing over a fixed term of years, and the rules generally allow 
 the borrower to choose any term, from three to twenty years, 
 over which his repayments may be spread equally. The 
 great difference between permanent and terminating societies 
 consists in this, that whereas, in the latter, a person must 
 
 1 37 and 38 Viet., Ch. 42, s. 5.
 
 47.] DEFINITION AND VARIETIES. 115 
 
 either become a member at the time the society is established, 
 or else pay a large amount of back subscriptions ; in the for- 
 mer, he may become a member at any time, without making 
 any such payment. And the former class oifers many advan- 
 tBges to both investing and borrowing members, which a 
 terminating society cannot offer. In a permanent society the 
 investors can always ascertain the exact length of time during 
 which they will have to pay their subscriptions, if the regular 
 payment be enforced by fines ; and it is always comparatively 
 easy to ascertain the amount to which any investing member, 
 who may wish to withdraw, is entitled ; whilst in a terminat- 
 ing society, the members will be unable to calculate, with any 
 degree of certainty, how long the society will exist, and, con- 
 sequently, how long they will be required to subscribe, and it 
 will be absolutely necessary to impose fines on those members 
 who do not pay their contributions regularly. But it ^s to 
 the borrowing member that the permanent system holds out 
 the greatest inducements for it enables him to extend his re- 
 payments over any fixed number of years, at his own choice, 
 with the absolute certainty of clearing his property from the 
 encumbrance, and freeing himself from all further liability, 
 at the end of that time, and to feel, when he mortgages it, 
 that he can redeem it at any time, on payment of a sum easily 
 calculated, and that whether the society prove successful or 
 not. 1 
 
 Serial Societies. 
 
 47. A modification of this plan is of frequent occurrence 
 in America in the shape of serial associations," i.e., asso- 
 ciations, which, their duration being limited, instead of issuing 
 all the stock, to the full extent allowed by law or charter, at 
 once, divide it up into series, and issue them successively, 
 each class, or series, being then treated, to some extent, as a 
 separate association distinct from the others, but with them 
 sharing in the profits of the concern. A society founded on 
 this plan will issue as many shares as are thought advisable 
 during the first year, and those will run their course to the 
 final result, precisely as those issued by a society, on the plan 
 first described. At the end of the first year, the total number 
 1 Davis, Law of Building, etc., 9 Compare Davis, Law of Build- 
 Societies, pp. 60-61. ing, etc., Societies, pp. 61-62.
 
 116 THE LAW OF BUILDING ASSOCIATIONS. [cH. III. 
 
 of shares of this " first series" participates in the profits, their 
 value is ascertained, and a new or " second series" is issued of 
 as many shares as it appears advisable to sell. The payments 
 <>n this second series commence with their issue, and they 
 may, in their turn, run the same course as the "first series," 
 till, at the end of the second year, the sum total of the income 
 for it is divided by the whole number of shares in both series, 
 and their value again ascertained. Thus the shares of the 
 first series will be found to have the value of two years' sub- 
 scriptions, to which is added the profit made, during the two 
 years, on each share ; while the shares of the second series 
 will be worth the amount of only one year's subscription and 
 one year's profit ; and so on, each year producing a new series 
 of stock, and the sum total of subscriptions and profits being 
 divided, at the end of each year, by the number of shares of 
 all the series then issued (with the exception, of course, of 
 such shares as may have been withdrawn). By the time the 
 eighth, ninth, or tenth series is issued, according to the success 
 of the society, the first series will have reached its ultimate 
 value, and its members will receive that amount in cash, or, 
 if they be borrowers, its equivalent by cancellation of their 
 loans. Suppose, therefore, that the society has twenty years 
 to run, then, from the first to the tenth year, the society 
 issues a new series of shares every year, and after that, a 
 series is cancelled every year. 
 
 48. It is not, of course, imperative that the space of a, 
 year, or of a year only, should elapse between the issuing of 
 the various series. Any time which will allow the series to 
 run out within the legal life of the association, is short 
 enough ; whilst, in some instances, new series are started 
 semi-annually, monthly, and even weekly. 1 
 
 49. It has been said that these associations are limited 
 as to the period of their duration. Yet they belong, in prin- 
 ciple, to the permanent class. 8 It is the serial issue of stock 
 which constitutes the permanent feature. For, although the 
 membership of any individual terminates with the series of 
 stock on which that membership is claimed, yet the associa- 
 
 1 Any particular period or inter- 4 Wrigley, The Workinirman's 
 val may, of course, be prescribed Way to Wealth (a Treatise on Build- 
 by statute for the issuing of series. ing Associations), pp. 32, seqq.
 
 50.] FORMATION OF BUILDING ASSOCIATIONS. 117 
 
 tion continues on, until the last series is wound up. Upon 
 the terminating principle, both the membership and the asso- 
 ciation terminate at one and the same time. 
 
 CHAPTER IY. 
 
 FORMATION OF BUILDING ASSOCIATIONS. 
 
 50. Preliminary expenses. 
 
 51. Choice of the society's name. 
 
 52. Framing of rules, articles, or constitution. 
 
 54. Matters to be provided for in rules. 
 
 55. Various methods of incorporation. 
 
 56. Incorporation by letters patent from the Executive. 
 
 57. Incorporation by Special Act of Legislature. 
 
 59. Latitude in framing rules, etc., where incorporation is by patent 
 or special act. 
 
 60. Incorporation by decree of Court. 
 
 61. Incorporation by voluntary association. 
 
 63. Necessity in every case of substantially complying with require- 
 ments of statute. 
 
 64. Powers contained in articles, in excess of statute, void, and 
 cause of forfeiture. 
 
 65. Power of Legislature to modify charter by subsequent enact- 
 ments. 
 
 66. Retroactive and expository statutes. 
 
 67. Statutes affecting remedies only. 
 
 Preliminary Expenses. 
 
 50. When a building association is about to be formed, 
 upon any of the foregoing plans, it is important that the per- 
 sons having the enterprise in hand should attend (1) to keep- 
 ing down the preliminary expenses, as of advertising, etc. ; 
 and (2) to having a memorandum signed by all of them, to 
 share the expenses equally, and to indemnify one another 
 against individual liability for more than a due proportion of 
 such expenses. For the various members of the managing 
 committee of an inchoate undertaking, of whatever kind, are, 
 on the principle of partnership, liable, jointly and severally, 
 for the particular engagements which each has contracted in 
 endeavoring to form the association. 1 Nor is this liability 
 
 1 Hutton v. Thompson and Norris 17 L. T. Rep. 237, 261; Bright t. 
 . Cooper, 3 H. L. Cas. 161; S. C., Hutton, 3 H. L. Cas. 341; 8. C., 16
 
 118 THE LAW OP BUILDING ASSOCIATIONS. [CH. IV. 
 
 taken away or changed by the subsequent incorporation, and 
 an agreement of the corporation to pay according to the term* 
 of the original contract, if the contract should be completed. 1 
 
 Choice of the Society's Name. 
 
 51. The first thing to be done, supposing the scheme to 
 meet with encouragement from a sufficient number of sub- 
 scribers, is to choose a name. Herein, it must be remem- 
 bered, (1) that no society will receive a charter from the 
 State, whose name is identical with, or bears a close and mis- 
 leading resemblance to, one belonging to a subsisting organi- 
 zation ;* (2) that a corporation cannot, however, by use 
 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 ; 8 and (3) that an improper, or pre- 
 judicial assumption of a title, misleading as to identity, and 
 not simply descriptive of locality, may be restrained in equity. 
 
 Framing of Rules, Articles, or Constitution. 
 
 52. The next step is the framing of rules or articles, 
 which are to be the basis of the society's existence and gov- 
 ernment, and which, in general, must undergo, at least in their 
 most essential points, the inspection and approval of the in- 
 corporating authority, and subsequently become, whether 
 embodied in the instrument of incorporation, or merely 
 adopted in pursuance of it, the organic law of the associa- 
 tion. This organic law, wherever found, is generally called 
 the constitution, rules and regulations subsequently adopted 
 for the internal government of the society, in accordance 
 with the constitution, the by-laws. The importance of 
 
 Jur. 695; L. T. Rep. 249; Kelner v. Johnston v. Scott, 22 Dunlop, 393; 
 
 Baxter, L. R, 2 C. P. 174; Reynall 32 Sc. Jur. 174. 
 
 v. Lewis and Wyld v. Hopkins, 16 ' Brogleset al. . McCoy, 5 Sneed 
 
 L. J., Ex. 25; S. C., 15 M. and W. (Tenn.), 602; Kelner *. Baxter, L. 
 
 517; Maddick v. Marshall, 17 Com. R, 2 C. P. 174. 
 
 B., N. S. (112Engl. C. L. R.) 829; * See Field, on Corporations, 
 
 Hamilton v. Smith, 28 L. J., Ch. 24, p. 31, note 4. 
 
 404; Burbridge v. Norris, 34 L. J., 3 See Colonial Life Assurance Co. 
 
 Ex. 131; Riley v. Packington, 16 v. Home and Colonial Assurance Co. 
 
 L. T. Rep., N. S. 382; Hopcrofft (Lim.)33L. J., Ch. 741; 10 Jur., N. 
 
 v. Parker, 16 L. T. Rep., N. S. 123, S. 967; 10 L. T. Rep., N. S. 448; 12 
 
 561. Otherwise in Scotland; see W. R 783.
 
 54.] FORMATION OF BUILDING ASSOCIATIONS. 119 
 
 drawing them with care and forethought, following gome 
 approved model which has stood the test of practical 
 experience, requires no demonstration. English judges 
 have complained bitterly over the negligence displayed 
 in the wording of the laws of building associations, framed 
 "so ignorantly and absurdly that they perplex the under- 
 standings of the ablest men." 1 And much of what is to 
 follow in this treatise will be evidence, that, in this country > 
 too, great difficulties, and questions so embarrassing as to in- 
 volve the necessity of tedious and expensive litigation, in 
 order to their definitive settlement, have frequently arisen 
 from badly worded or carelessly inserted provisions in the 
 constitution or by-laws of the associations. 
 
 53. In the exercise of the general powers incident to 
 corporations, the regulations, modifications, restrictions con- 
 tained in the charter, or organic law of the society, adopted 
 in pursuance of, or as the basis of an application for, the 
 charter, will be binding upon it in the future, and serve as a 
 guide to the courts, in questions of right arising upon their 
 operation. In those particulars, however, in which special 
 legislation, applicable to this kind of associations, has super- 
 seded the discretion of individuals forming and magistrates 
 sanctioning the incorporation, the charter must clearly and 
 distinctly follow the enactment, or else be void, pro tanto, 
 and expose the association to a forfeiture of franchises at the 
 instance of the Attorney-General." 
 
 Matters to be provided for in Rules, etc. 
 
 54. Subject to, and following such statutory enactment, 
 every constitution should contain adequate provisions on the 
 following heads : 
 
 1. The name of the society, its purposes, and place of 
 business. 
 
 2. The amount of capital stock and number of shares to 
 be issued by the society, and their paid-up value. 
 
 3. The terms and conditions upon which, consistently 
 
 1 Hatherly, V.-C., in Smith . peal, 3 Eq. Rep. 14; 3 De G., M. & 
 
 Pilkington, 4 Jur., N. S. 58, 62; 30 G. 997. 
 
 L. T. Rep. 196. See also Fleming 9 Upon this question, and that of 
 
 v. Self, 18 J. P. 296; 23 L. T. Rep. the relations of the charters to the 
 
 63; Kay, 518, and S. C., upon ap- general law, see post, 479-481.
 
 120 THE LAW OF BUILDING ASSO. LATIOXS. j< II. IV. 
 
 with the general law, shares will be issued to persons desirous 
 ot' becoming member.-. 
 
 4. The personal prerequisites of membership ; its duties ; 
 the amount to be paid periodically during its continuance ; the 
 officer and place to whom and when- payable ; the liability of 
 delinquent members to the imposition of lines, and amount 
 thereof, and to forfeiture of membership ; the terms of such for- 
 feiture, and provisions for voluntary withdrawal of members. 
 
 5. The manner of obtaining and making loans ;' the per- 
 sons entitled to receive them ; the amount receivable on each 
 share subscribed ; the terms and security ; the time, place, and 
 recipient of payments of interest, and the amount from time 
 to time payable ; provision, in case of default of payment, and 
 for voluntary repayment of loans. 
 
 6. The government of the society ; its officers and direc- 
 tors ; their duties, powers, terms, remuneration, and removal ; 
 the method and time of their nomination and election ; the 
 number of votes each shareholder is entitled to cast ; 3 proxies. 
 
 7. Provision for annual or more frequent audit of the 
 accounts, and inspection, by the auditors, of the mortgage and 
 other securities held by the society. 
 
 8. Time, and, if possible, place of annual meetings ; num- 
 ber of members whose presence required to make a quorum ;* 
 provision for calling special meetings. 
 
 9. Provisions for enactment, alteration, and rescission 
 of by-laws, and alteration and amendment cf constitution, 
 within the limits allowable by law. 
 
 10. Duration and manner of terminating the society. 
 
 Various Methods of Incorporation. 
 
 55. The act of incorporation may be consummated (1) 
 by the Executive of the State issuing his patent, by virtue of 
 powers vested in him by statute, upon presentation to him 
 properly made under the same; (2) by special legislative 
 
 1 The fixing of a minimum pre- the number of his shares. Barry, 
 
 mium is illegal when the law directs Law of Building Societies, p. 28. 
 
 the granting of the loan to the high- And this rule seems to be very gen- 
 
 est bidder. erally followed. 
 
 * It has been customary, in build- 3 As to what constitutes a quo- 
 ing associations, to give each mem- rum, see post, 186-187. 
 ber one vote only, no matter what
 
 57. J l-OUMATIOX OF BUILDING ASSOCIATIONS. 121 
 
 enactment ; (3) by decree of court, proceeding in accordance 
 with and under the authority of general laws ; (4) by the 
 operation of law, endowing, by virtue of statutes passed for 
 that purpose, with the character and capacities of a body 
 corporate, persons desirous of acquiring the same, who have 
 authenticated and legitimated their act of association, in 
 accordance with the statutory requirements. 
 
 Incorporation by Letters Patent from the Executive. 
 
 56. Where a charter is granted by the Executive, the 
 constitution of the association is, subject to the declared in- 
 tention of the corporators and the laws of the State, the 
 creature of their will. With that intention, with the pur- 
 poses of the incorporation, and with the terms of the statutes 
 under which it was effected, it must in every particular cor- 
 respond, and its validity, in whole and in part, depends upon 
 such correspondence. When once properly established, it 
 becomes binding upon the association, but may, from time to 
 time, be altered and amended, in such manner as the statute 
 and its own provisions may authorize, consistently with all 
 the limitations to which the corporation may be liable. The 
 charter, in such case, is entirely distinct from the constitution. 
 It is merely the patent of the Executive, announcing the per- 
 sons named therein, with their associates and successors, to be 
 a corporation under and subject to the statute which enables 
 him to confer corporate franchises for the purposes declared 
 therein. 
 
 Incorporation by Special Act of Legislature. 
 
 57. Charters granted by special act of the Legislature 
 usually prescribe, in detail, the powers intended to be given 
 to the corporation, as well as the manner of exercising the 
 same, leaving the regulation of minor matters to its discrete >n, 
 by giving it the power of passing by-laws for its government. 
 The charter itself, in such case, embraces the constitution of 
 the society. The establishment of the corporation, and the 
 giving of its constitution, are one and the same enactment, 
 and the authority to make by-laws being delegated, they must 
 be neither inconsistent with the intention of the Legislature, 
 nor in conflict with the spirit of that enactment. The same
 
 122 THE LAW OF BUILDING ASSOCIATIONS. [CH. IV. 
 
 rule obtains when the power of amendment of the constitu- 
 tion, or charter, is given to the corporation. Both amend- 
 ments and by-laws, if they be improper, and contravene the 
 purpose intended to be subserved by the Legislature, are 
 void. 
 
 58. In Georgia it has been held competent for the Legis- 
 lature to incorporate a building association by its constitu- 
 tion and by-laws (it having been in existence and in business 
 previously under those rules), without the same being em- 
 bodied in the act. 1 They were a fixed quantity at the time, 
 readily ascertainable, and by the reference of the act to them, 
 became essentially a part of its substance. 
 
 Latitude in Framing Rules, etc., where Incorporation is by Patent or 
 Special Act. 
 
 59. In none of these cases is much latitude conceded to 
 the association in the framing of its rules. Where the incor- 
 poration is by patent, granted by the Executive under a general 
 law, its provisions, sufficiently searching and detailed, point 
 out a straight and narrow path, within whose limits the crea- 
 ture of that law must move." When the Legislature assumes 
 to dictate a constitution to the corporation it is establishing, 
 the freedom of the latter's actions is still more closely hedged 
 in. But the Legislature may content itself with granting to 
 an association a corporate existence, defining the purpose of 
 the enactment, giving general powers, and the right to estab- 
 lish a constitution and pass by-laws for the regulation of the 
 details of the scheme. In such a case, the criterion of the 
 legality of the whole or any part of the constitution or by- 
 laws, which may thereafter be adopted, may be entirely 
 whether or not their practical operation is such as to carry 
 out the expressed intention of the Legislature in creating the 
 corporation. Thus, the Legislature, having declared the object 
 
 1 Bibb County Loan Association tain class of corporations, viz. : 
 
 v. Richards, 21 Ga. 592. Building Associations, authorized 
 
 J Under a provision of the Con- to be incorporated, must be treated 
 
 stitution of Nebraska, that " no bill as a nullity. Lincoln Building and 
 
 shall contain more than one subject, Savings Association, appellee, v. 
 
 and the same shall be clearly ex- Graham, appellant, 7 Neb. 173; 
 
 pressed in its title," the words "and Same v. Benjamin & Benjamin, Ib. 
 
 other purposes" added to the title of 181. 
 a bill denning the objects of acer-
 
 60.] FORMATION OF BUILDING ASSOCIATIONS. 123 
 
 of the building association incorporated by its act to be to 
 '' assist members thereof to become their own landlords," and 
 the practical operation of the constitution and by-laws passed 
 thereunder, to which the act gave, in advance, "the force 
 and effect of legal enactment," appearing to be principally 
 the taking of usury upon loans, to the oppression of the bor- 
 rowers, and frustration of the declared intention of the enact- 
 ment, seeking, by the complication of the transactions, to 
 escape the laws of usury, it was held that the constitution 
 and by-laws were inoperative and void. 1 
 
 Incorporation by Decree of Court. 
 
 60. When the incorporation is the act of the Court, un- 
 der general laws, and the petition, upon which the decree is- 
 based, sets forth the fundamental rules, or constitution, by 
 which the association sought to be invested with corporate 
 franchises is to be governed, the decree upon such petition, 
 referring to it, makes it, as a whole, a part of itself. If the 
 petition to Court, for the purpose of obtaining a charter, un- 
 der a general law, should fail to set forth the object of the 
 corporation, it is competent for the Court, in granting its as- 
 sent, to specify the objects, and to set forth the terms on 
 which the charter is granted. 4 The constitution, then, be- 
 comes an integral element of the charter, this term being un- 
 derstood to mean the instrument, deed, or decree, conferring 
 upon a body of men the franchises and capacities incident to 
 united action as a corporation. It can be changed only by 
 the power which ordained and sanctioned it, or by the Legis- 
 lature itself. If, therefore, it contain a provision for amend- 
 ment, such provision can avail only to prescribe the propor- 
 tion of members whose consent shall be deemed necessary, 
 and the mode of its expression, in order to entitle the corpo- 
 ration to take such steps as will secure the desired amendment 
 of the constitution to be sanctioned by the competent au- 
 thority. 
 
 1 Martin v. Nashville Building Legislature to grant the privilege of 
 
 Association, 2 Cold. (Tenn.) 418; usury to certain corporations, see 
 
 and see, to the same effect, Herbert, post, 383, and ch. xii. , passim. 
 
 etc., v. Kenton Building and Savings 8 Redwine . The Gate City Loan 
 
 Association of Covington, 11 Buch. and Building Association, 54 Ga. 
 
 (Ky.). 296. As to the right of the 474.
 
 THE LAW OF BUILDING ASSOCIATIONS. [CH. IV. 
 
 Incorporation by Voluntary Association. 
 
 61. Analogous in every respect is the position of a cor- 
 poration having legal existence by virtue of the dne execu- 
 tion of articles of association, setting forth the fundamental 
 aims and laws of the society, acknowledged, deposited, and 
 authenticated in accordance with the provisions of a general 
 statute, whose effect, thereafter, is to confer upon the associ- 
 ates the corporate franchise. 
 
 62. The requirement, in either of these cases, to place 
 on record, with extraordinary guarantees of publicity, these 
 rules, this constitution, as part of the charter, and as the basis 
 of the granting of the same, as well as of its continuance, 
 make their substance matter of public property, as well as of 
 public notoriety, binding alike upon the members of the as- 
 sociation among themselves, upon the association as against 
 the world, and upon the latter, to the extent of compelling it 
 to take notice of the stipulations thus published. A power 
 of amendment other than that laid down would defeat this 
 very object, and work injustice to the corporation and to the 
 community at large. 
 
 Necessity, in Every Case, of Substantially Complying with Require- 
 ments of Statute. 
 
 63. Whatever the method of incorporation may be, it is 
 necessary, that, when it is prescribed by a general statute, in- 
 dicating the various steps and prerequisites in the process of 
 incorporation, its terms be substantially complied with ; and 
 that, under all circumstances, every stage of the proceeding, 
 as well as the whole enterprise, be characterized with perfect 
 good faith. For whilst it is a general rule, that a charter, 
 once granted under color of authority, cannot subsequently 
 be questioned collaterally ; yet it is at all times liable to the 
 interference of the State (even in the absence of misuse of the 
 franchise), upon the ground of irregularity or fraud in the 
 procuring of it. 
 
 Powers Contained in Articles, in Excess of Statute, Void, and Cause 
 of Forfeiture. 
 
 64. If the charter of a building association, or what is 
 called its constitution, contain the grant of powers contrary to 
 the laws, or the Constitution, of the State or the United States,
 
 05.] FORMATION OF BUILDING ASSOCIATIONS. 125 
 
 or in excess of what the statutes regulating the formation and 
 powers of such organizations sanction, the objectionable grant 
 is simply void. Each such illegal feature may become the basis 
 of a proceeding by the State against the society, and result in 
 the forfeiture of the franchise. 
 
 Power of Legislature to Modify Charters by Subsequent Enactments. 
 65. The act of incorporation having been performed ac- 
 cording to law, and the charter accepted by the association, a 
 compact is struck, as to all its lawful provisions, between the 
 State on the one side, and the association on the other. That 
 compact is binding upon both. The society cannot deviate 
 from it ; nor, whilst its observance is unexceptionable, can the 
 State impair it by adding new terms and conditions inconsist- 
 ent with its reasonable construction. 1 But where the Con- 
 stitution of the State, or the general or special statute under 
 which the charter is granted, reserves to the Legislature the 
 power to alter, modify, or repeal, that prerogative becomes 
 part of the original contract, and remains in the State, even 
 if no clause to that effect be inserted in the charter itself.* 
 Such alterations or modifications are to be made in accordance 
 with the forms prescribed by the Constitution in force when 
 they are made, and not with those prescribed at the time the 
 charter was granted. 3 But the coq^oration has a discretion 
 to accept or reject the grant as amended, and new franchises 
 granted to existing corporations are inoperative as to them 
 until accepted. 4 The acceptance muct be unqualified, not 
 partial, 5 and a refusal may be at the peril of forfeiture of the 
 corporate franchise." Statutes requiring, in order to affect 
 any particular corporation, an acceptance to be filed by it, 
 cannot lend it any advantage before being so accepted. 7 
 
 1 Angell and Ames, Corp., 31. Bourgignon Building Association 
 
 9 Angell and Ames, Corp. , 767. v. Commonwealth, 10 W. N. C. 
 
 The imposition of a tax on the capi- (Pa.) 161. 
 
 tal stock was held justified by such 3 Angell and Ames, Corp., 767; 
 
 a reservation, notwithstanding a cit. In the matter of the Reciprocity 
 
 supplemental act had exempted the Bank, 29 Barb. (N. Y.) 369. 
 
 capital stock and dividend of that * Field, Corp., 50. 
 
 class of corporations. Union Im- 5 Field, Corp., 50. 
 
 provement Company v. Common- * Field Corp. , 46. 
 
 wealth, 69 Pa. St. 140. See also T Angell and Ames, Corp., 82.
 
 126 THE LAW OF BUILDING ASSOCIATIONS. [CII. IV. 
 
 Retroactive and Expository Statutes. 
 
 66. But such additional and altering provisions, whether 
 by constitution or statute, can have no retroactive efficacy. 1 
 Hence, a building association, incorporated under a statute 
 which does not legalize certain reservations in its loans, will 
 derive no support from a statute passed subsequently to the 
 making of such contracts, which authorizes the formation of 
 building associations having that particular power. It has, 
 therefore, been held in Pennsylvania, that building associa- 
 tions incorporated in that State, under acts previous to that 
 of 1859, which was the first to allow reservations upon loans, 
 amounting, practically, to the taking of usurious interest, were 
 not aided in the enforcement of such contracts by that act ;* 
 and this, notwithstanding the Legislature, in the passage of that 
 act, attempted to extend its provisions, retroactively, upon 
 loans made before it took effect, by declaring such to have 
 been the meaning and intention of the earlier acts, which had, 
 by the Supreme Court of the State, been adjudged inade- 
 quate to sanction the practice.' An expository statute, which 
 is substantially in the nature of a mandate to the court to 
 construe and apply a former law, not according to judicial, 
 but according to legislative judgment, is inoperative, and can- 
 not control the courts in interpreting the law and declaring 
 what it is. The making of statutory laws, and their exposi- 
 tion and application to cases as they arise, are clearly and dis- 
 tinctly two different functions. The former is allotted to the 
 Legislature ; the latter to the courts. Such retroactive and 
 expository efficacy cannot be conceded to any law. 4 Where, 
 therefore, a general statute, under which charters are granted 
 to building associations, has received judicial interpretation 
 
 'Field, Corp., 46; cit. West Blackburne's App., Ib. 160: Houser 
 
 Wisconsin R. Co. . Supervisors, v. Hermann Building Association, 41 
 
 35 Wis. 257; Hamilton v. Keith, 5 Pa. St. 478. 
 
 Bush (Ky.) 458; Griffin 0. The Ken- Kupfert t. Guttenberg Build- 
 
 tucky Co., 3 Id. 592. ing Association, CO Pa. St. 465; 
 
 9 Marble Building Association v. Hughes's App.. Ib. 471. 
 
 Hocker, 3 Phila. (Pa.) 494; Denny 4 The Lincoln Building and Sav- 
 
 . West Philadelphia Saving and ings Association, appellee, t. Gra- 
 
 Building Association, 39 Pa. St. 154; ham, appellant, 7 Neb. 173; Same, 
 
 Premium Fund Association's App., appellee, v. Benjamin & Benjamin, 
 
 Ib. 156; Reiser v. William Tell appellants, Ib. 181. 
 Building Association, Ib. 137;
 
 67.] FORMATION OF BUILDING ASSOCIATIONS. 127 
 
 as to the nature of the powers conferred, it is incompetent 
 for the Legislature to change that settled interpretation by en- 
 actment ; for the Legislature has no power to direct the judi- 
 ciary in the interpretation of acts previously passed, or to re- 
 quire it to change the construction already put upon them. 
 Doubts upon previous statutes may be explained by legisla- 
 tive enactment, but no new interpretation arbitrarily forced 
 upon the judiciary, for this would be the substitution of the 
 language and meaning of the one for the other. 1 
 
 Statutes Affecting Remedies only. 
 
 67. The same objection does not hold when the Legisla- 
 ture, having the power to alter, etc., charters already granted, 
 does not assume to make any change in the actual state of the 
 law, but confines itself to declaring explicitly what it is, and 
 to modifying merely the remedy under it. Thus in Indiana, 
 the first act providing for the incorporation and regulation of 
 building associations, 8 had reserved to the Legislature the 
 right to change or repeal, from time to time. The later act = 
 repealed the former one, but gave building associations, hav- 
 ing commenced proceedings under the same, the right to pro- 
 ceed, thereafter, according to the provisions of this- later act. 
 It also contained a provision that " no premium, fine, or in- 
 terest on such premiums that may accrue to the said corpora- 
 tion, according to the provisions of this act, shall be deemed 
 usurious, and the same may be collected as debts of like 
 amount are now by law collectable in this State." This pro- 
 vision was held applicable to corporations continued in exist- 
 ence by said act, and not inconsistent with the Constitution of 
 the State of Indiana; because, it was said by the Court, it 
 made no change in the law as it had previously existed, but 
 merely declared, in plain language, what the law was on that 
 
 1 See cases in preceding two p. 273), declared constitutional in 
 
 notes, and also Greenough v. Green- Stein and wife v. Indianapolis 
 
 ough, 1 Jones (Pa.) 495; Lamberton Building, Loan Fund, and Savings 
 
 v. Logan, 2 Bin. (Pa.) 257; O'Con- Association, 18 Ind. 237. 
 nor v. Warner, 4 Watts & Serg. "Act 11 March, 1875 (1 R S. 
 
 (Pa.) 227. 1876, p. 243). 
 
 8 Act 5 March, 1857 (1 G. & H.,
 
 128 THE LAW OF BUILDING ASSOCIATIONS. [CH. V. 
 
 subject ; and if it made any change in the law, it was one 
 which affected only the remedy, and such an one it was com- 
 petent for the Legislature to make. 1 
 
 CHAPTER V. 
 
 MEMBERSHIP IN BUILDING ASSOCIATIONS. 
 
 68. Mode of acquiring membership. 
 
 69. Persons capable of acquiring membership. 
 
 70. Powers of infants and married women under enabling statutes. 
 
 72. Status of husband of feme sole member at common law. 
 
 g 73. Status of executor and administrator of deceased member. 
 
 75. Building association cannot, of course, become a member in 
 
 another building association. 
 
 76. A person may become member merely to obtain loan. 
 77. Depositors. 
 
 78. Stock book primary evidence of membership. 
 79. Society estopped from denying a person's membership. 
 81. Borrower est.opped from denying hia membership. Exception. 
 82. Termination of membership. 
 
 Mode of Acquiring Membership. 
 
 68. Membership in a building association is acquired in 
 the same manner in which membership is acquired in other 
 corporations, by becoming the holder of its stock. The 
 division of the membership into two classes, investors and 
 borrowers, has already been noticed as a result of the opera- 
 tions of the scheme. From a legal point of view, it is not, 
 however, of adequate moment, to base a classification, for the 
 purpose of separate consideration. As a general rule, it may 
 be laid down, that the mere fact, that a member of a building 
 association, who has been or is an investor, becomes a bor- 
 rower, does not change his status as a member, or affect his 
 rights and liabilities as such. Whatever exceptions there 
 may be to this rule, and its consequences, will be sufficiently 
 noticed hereafter. 
 
 1 McLaughlin et al. t>. The Citizens' Building, Loan, and Savings Asso- 
 ciation, 62 Ind. 264.
 
 70. J MEMBERSHIP IX BUILDING ASSOCIATIONS. 129 
 
 Persons Capable of Acquiring Membership. 
 
 69. Generally speaking, any individual capable of enter- 
 ing into a binding contract may become a member of a build- 
 ing association by subscribing to its stock, 1 whilst, in some 
 instances, the policy of the government has granted an exten- 
 sion of this capability, by special enactment, in favor of such 
 institutions. Thus, in England, the fact of infancy, and in 
 some States, that of coverture, is no bar to valid membership 
 under the statutes. 
 
 Powers of Infants and Married Women under Enabling Statutes. 
 
 70. It must be observed, however, with reference tct 
 these exceptional cases, that, as they depend entirely upon 
 statute, and are in opposition to the common law, they are to 
 be strictly construed, and are allowable only in such building 
 associations as exist under the laws contemplated to govern 
 them, and under the statutes of incorporation provided for 
 them. And where the statute does permit such membership, 
 the license, without further authorization, extends only to 
 allowing the enabled individual, or class of individuals, to 
 become investing or depositing members of a society, and, as 
 such, subject to its rules, and entitled to exercise the rights of 
 membership ; to withdraw the whole or any part of the in- 
 vestment, if and when the rules of the society and the statutes- 
 governing them permit members to do so ; and to give a 
 valid and effectual discharge to the society for any sum so 
 withdrawn. It does not extend, without express provision to 
 that effect, to an authority to borrow money, execute a valid 
 security, or enter into any other contract with the association 
 from which the subsisting inability, under the law, of the indi- 
 vidual's condition, would, in the ordinary relations of life, 
 debar him. 8 
 
 1 Davis, Law of Building, etc., the money loaned, or that he was 
 
 Societies, p. 144. capable of perpetrating a gross fraud 
 
 4 Davis, Law of Building, etc., upon the association, and it being 
 
 Societies, p. 144. In Maryland, the uncertain whether or not the mort- 
 
 sale upon an infant's mortgage to a gage was for his benefit. SeeMonu- 
 
 building association was set aside, mental Building Association No. 2, 
 
 where there was no evidence that of Baltimore City c. Herman et aL. 
 
 the infant had received any part of 33 Md. 128.
 
 130 THE LAW OF BUILDING ASSOCIATIONS. [CH. V. 
 
 71. But where the husband was the owner of sixteen 
 shares in a building association, and nine shares stood in his 
 name as " trustee of Maria T. Steele," who was his wife ; and 
 money was borrowed from the association by the husband f->r 
 his own benefit ; the mortgage, being upon the wife's prop- 
 erty, but duly executed by husband and wife together, and 
 reciting that the twenty-five shares of stock were the hus- 
 band's and had been transferred to the association as collateral, 
 secured " the monthly contributions on twenty-five shares of 
 the capital stock . . . now owned by the said Thomas R. 
 Steele." There appeared to have been no actual transfer on 
 the books from T. R. S., as trustee, to T. R. S., individually, 
 and then again from him to the building association as collat- 
 eral security for the loan. Yet it was held that the associa- 
 tion had the right to infer, either that the shares always were 
 the property of T. R. S., or that they were the property of 
 the wife, and that she had made a parol assignment or gift to 
 him, or had allowed him to pledge them to secure the loan, 
 and that, the mortgage being properly executed and valid 
 under the laws of the State, she was estopped from denying 
 this, and bound by her declarations in the mortgage. 1 
 
 Status of Husband of Feme Sole Member at Common Law. 
 
 72. At common law, if a female who is an investing 
 member marry, then, in the absence of a settlement, the hus- 
 band will be entitled during the coverture to receive the 
 money deposited by her dum sola / but if he die without hav- 
 ing received it, his wife will be again entitled to the money, 
 and his personal representatives will have no claim." And if 
 a woman, dum sola, become a member of a building associa> 
 tion, and receive an advantage, in return for which she mort> 
 gages the property she holds in her own right, covenanting 
 in the mortgage deed for payment of subscriptions, fines, etc., 
 and afterwards marry, she and her husband will be jointly 
 liable during the coverture upon the covenant. But the hus- 
 
 1 (Building) Association . Steele, ment of premiums, fines, etc. See 
 
 11 W. K C. (Pa.) 204; although the post, 313-318. 
 
 law in Pennsylvania, as interpreted * Co. Litt. 351 a; Richards v. 
 
 before the passage of the Act of Richards, 2 B. & Ad. 447 (453); 1 
 
 1M79, was that a married woman Engl. C. L. Rep. 119. 
 could not bind herself to the pay-
 
 73.] MEMBERSHIP IN BUILDING ASSOCIATIONS. 131 
 
 band will not remain liable after the death of his wife, unless 
 he administer to her estate, and if she survive her husband, 
 she will again become solely liable. 1 Whether the husband 
 of a female member becomes, immediately upon marriage, a 
 member of the association, by virtue of the common law, or 
 only after he has caused the investment to be transferred 
 into his own name (and that would appear a sufficient asser- 
 tion of ownership to make the shares his), or otherwise 
 reduced it into possession, is said by an English writer to be 
 a question of some difficulty, and appears unsettled. 4 
 
 Status of Executor and Administrator of Deceased Member. 
 
 73. An executor of a deceased member is not, ipso facto, 
 a member of the association.* If he be enabled to continue 
 his testator's contributions, he must, it seems, also be allowed 
 to exercise his rights and be bound by the rules of the asso- 
 ciation. But membership in a building association is so 
 much in the nature of a venture, involving so varied a class 
 of engagements on the part of the person embarking upon it, 
 and carrying with it so large an element of risk, that it would 
 seem scarcely compatible with the policy of our law in re- 
 stricting an executor's discretion, and impressing upon him 
 the character of a trustee bound to great care in the adminis- 
 
 1 See Davis, Law of Building, lar rule being in force, certain fines 
 tc., Societies, 147 and note (.) and subscriptions became due after 
 9 Ibid. the death of a member, and the trus- 
 8 Such is probably the conclusion tees sued his administrator in the 
 to be drawn from the only two cases County Court. It was held, under 
 which bear upon this question, and the evidence, that the administrator 
 which both arose in England; and was a member, and had been treated 
 these are seemingly conflicting. In as such by the society, and, accord- 
 the earlier case, it was held, that, un- ingly, a prohibition went to the 
 der a rule that ' ' every matter in County Court to restrain proceed- 
 dispute between this institution and ings, in order to arrive at a settle- 
 any member thereof, or person ment by arbitration. Knox v. Shep- 
 claimin<r on account of such mem- herd, 2 L. T. Rep., N. S 851. This 
 ber, shall be referred to arbitrators," case scarcely can be held to establish 
 the administrator of an investing any doctrine, as it is strictly tut 
 member was not bound by that rule, generis, and the duty to submit to 
 as not being a member, nor a person arbitration is forced upon the so- 
 claiming on account of a member, ciety, upon the ground of its es- 
 Kelsall v. Tyler. 25 L. J., Ex. 153; toppel to deny the membership of 
 20 J. P. 150; 11 Exch. 513: 26 L. T. the administrator whom it had pre- 
 Rep. 226. In the later case, a simi- viously treated as a member.
 
 132 THE LAW OP BUILDING ASSOCIATIONS. [CII. V. 
 
 tration and investment of his trust, and to abstain from all 
 acts and relations, in his fiduciary capacity, imperilling, even 
 to a comparatively slight degree, the integrity of the fund in 
 his hands ; tliat the Court having supervision over him would 
 scarcely be justified in countenancing the possibility of his- 
 being regarded as a member of the association, and the policy 
 by which the courts are governed, in this country, would 
 seem to forbid a doctrine by which the executor would stand,. 
 ipso facto, in the shoes of the decedent, as to all the rights- 
 and liabilities of membership in buiMing associations. The 
 constitution of most societies of this kind, and many of the 
 building association statutes, contain adequate provisions for 
 the contingency. On the other hand, to this extent an exec- 
 utor's authority would unquestionably go : he would be entitled 
 to all the advantages the decedent would have had upon volun- 
 tary withdrawal, or upon repayment by him, in advance of 
 the stipulated time, of the money loaned him by the building 
 association. 1 
 
 74. If the decedent have been an investor, his executor 
 is bound to observe the society's rules as to notice of the 
 withdrawal of funds. If he have been a borrower from, and 
 died a debtor to, the association, his executor is undoubtedly 
 bound to comply with the requirements of his obligation a 
 to payments, etc., subject to the right of payment of the 
 whole debt before its maturity, if such existed in the dece- 
 dent. But, even in the absence of legal provision upon the 
 subject, the building association should not be allowed to 
 impose any fines and forfeitures, without giving the executor 
 at least a reasonable time to acquaint himself with his dece- 
 dent's estate, and get funds into his hands wherewith to make 
 the required payments. The general spirit of the courts is, 
 to deal most gently with those who represent the inter- 
 
 1 Thus, too, in Pennsylvania, dent) had elected to repay the loan 
 when a building association mort- and withdraw, there being no de- 
 gage was divested, by an Orphan's fault on his part. The mortgage i 
 Court sale of the mortgagor's prem- divested under the policy of the law, 
 ises for the payment of his debts, it and the money repaid under its corn- 
 was held that the building associa- pulsion. Acfris teffts neminem in- 
 tion could claim only the same jnriat. In re Snider's Estate, 34 
 amount as if the borrower (dece- Leg. Int. (Pa.) 49.
 
 76. J MEMBERSHIP IN BUILDING ASSOCIATIONS. !''>> 
 
 ests of decedents, as against those who have claims against 
 the latter. 1 
 
 Building Association Cannot, of course, Become a Member in Another 
 Building Association. 
 
 75. Except by special statute authority, it would appear 
 that one building association cannot lawfully become a mem- 
 ber or shareholder in another. This seems to flow from the 
 design of the creation of building associations, to utilize the 
 money collected in small sums, so as to do most benefit to its 
 own members, and such members, in particular, who desire to 
 build or possess houses. This is their public duty, and the 
 source of their privileges." And a person, whether natural 
 or artificial, to whom privileges are granted by the Legislature, 
 is bound, upon accepting the same, to render to the public 
 that service, the performance of which was the inducement 
 to the grant. It is because of such obligation to render service 
 to the public, that the Legislature has power to make the 
 grant ; and whatever act, on the part of the grantee, tends to 
 defeat the accomplishment of the object contemplated in 
 making it, is necessarily unlawful. 3 
 
 A Person may Become Member Merely to Obtain a Loan. 
 
 76. A person may, legitimately, become a member for 
 the mere purpose of obtaining a loan. He has a perfect right 
 
 1 In the case of a beneficial socie- ficial Society, 11 N. Y. Weekly Dig. 
 
 ty, where the charter provided that 457. 
 
 the secretary should send to each * See North America Building 
 member six months in arrears, notice Association . Sutton, 35 Pa. St. 463 
 that he would be stricken off the (opinion by Strong, J., p. 467). 
 roll unless he paid up in thirty days; 3 Gordon, etc., . Winchester 
 and a penalty was also provided, in Building and Accumulation Fund 
 case of an omission to give notice of Association, 12 Bush (Ky.), 110. 
 every change of residence; and the See also Mills et al. . Salisbury 
 decedent, besides having failed to Building and Loan Association, 75 
 notify the association of a change N. C. 292; Latham and wife r. 
 in his residence, had actually died Washington Building and Loan As- 
 far in arrears; it was held that the sociation, 77 N. C. 145; Martin c. 
 omission to have the required notice Nashville Building Association et 
 served was not excused, and that al., 2 Cold. (Tenn.) 418; The Me 
 the society could not exercise the chanics and Working Men's Mutual 
 power of expulsion without notice Savings Bank and Building Assoc. of 
 to the deceased. Wachtel v. The New Haven v. Meriden Agency Co. , 
 Noah Widows' and Orphans' Bene- 24 Conn. 159; Samep.Wilcox,Ib.l47.
 
 134 THE LAW OF BUILDING ASSOCIATIONS. [CH. V. 
 
 to become a stockholder, and if, in consequence, he is enabled 
 to obtain a loan, the fact that this was his purpose in enrolling 
 himself in the building association, constitutes no objection 
 to his exercising any and all of the privileges conceded and 
 appertaining to membership therein.' Nor does the fact that, 
 by reason of an excessive assumption of authority on the part 
 of the building association, indictating the terms of the loan 
 made to such member, he escapes the full extent of the obliga- 
 tion he has been saddled with, affect his rights or liabilities as 
 a stockholder.* 
 
 Depositors. 
 
 77. There is, where it is permitted by law to exist, a 
 class, known as " depositors," persons who, without entering 
 the circle of the society's membership, and becoming liable to 
 all its duties, and sharing in all its benefits, use its treasury as 
 a savings bank, in which to deposit, from time to time, small 
 sums of money, with the privilege of drawing them, at their 
 pleasure, thereafter, under certain restrictions, and with the 
 addition of interest at a certain moderate rate.' These people 
 are not members. Their status depends entirely upon statu- 
 tory provisions ; for, without such, the society has no right to 
 take their money, and the safety of their own deposits is ma- 
 terially imperilled. 4 Thus, where depositors had given their 
 money to a building association having no power to borrow, 
 the depositors were subsequently held bound by the rules of 
 the association by which the advanced shareholders, who had 
 repaid their loans and extinguished their stock, were dis- 
 charged from all connection with the society, and could not, 
 consequently, be called upon for contribution towards the pay- 
 ment of the society's debts, which consisted largely in balances 
 due these depositors.' 
 
 1 The Mechanics and Working hinted at, without being expressly 
 
 Men's Mutual Savings Bank and decided, in Ohio (Forrest City Uni- 
 
 Building Association of New Haven ted Land and Building Association 
 
 t>. Wilcox et al., 24 Conn. 147. t>. Gallagher et al., 25 Ohio St. 208), 
 
 * Ib. to wit, that it is illegal, under the 
 
 3 This feature is a popular one in Constitution of the State, as a spe- 
 
 Germany and England, but has not cies of banking. 
 
 gained much ground in this coun- 4 It involves the power of borrow- 
 
 try; probably because, in most ing, asto which, see post, 293-302. 
 
 States, the reason obtains which is * This ground was taken in ad-
 
 79.] MEMBERSHIP IN BUILDING ASSOCIATIONS. 135 
 
 Stock-book Primary Evidence of Membership. 
 
 78. In all dealings of the building association with its 
 members, not in especial contract relations ; in stock payments, 
 exercise of the elective franchise, participation in dividends 
 upon winding up, etc., the stock-book is prima facie evidence 
 of membership.' The corporation is not required to look 
 beyond it, without having been affected by circumstances cal- 
 culated to put it upon its guard. As between two claimants 
 of the stock, the question is one of absolute fact : Which is- 
 actually the holder of the shares ? Possession of the certifi- 
 cates, with the transfer endorsed upon them, is frequently, 
 in such cases, the decisive criterion. But, as between the 
 claimant and the building association, it is the business of any 
 one, desiring the benefits of membership in it, to bring him- 
 self to its notice, to acquire his proper standing and recogni- 
 tion as a member, by procuring the stock he holds to be 
 placed in his name upon the corporation's books. The society 
 need not beat about for its members whenever it is ready to 
 dispense some one of its corporate benefits to such as may be 
 entitled to them. One who wishes to come in for a share, 
 must put himself in a position to be remembered by the offi- 
 cers of the building association, when they consult the corpo- 
 ration book to ascertain who are the members, by attending 
 to it that his name shall be found in its proper place. If he 
 be legally entitled to hold the stock, he may, in a proper case, 
 enforce its transfer to his name on the books, or else have 
 his action for damages against the society, for their refusal to 
 permit such transfer when properly requested." 
 
 Society Estopped from Denying a Person's Membership. 
 
 79. The building association may, indeed, put itself in 
 a position where it will be estopped from denying a person's 
 membership. So, where it continues to receive stock-pay - 
 
 dition to, and distinct from that of Ch. Rep. 406; Bank of Commerce's 
 
 ultra vires. In re Victoria Perma- Appeal, 73 Pa. St. 59; German, 
 
 nent Benefit Building Society, Hill's town Union Building and Savings 
 
 Case, Jones's Case, 9 L. R., Eq. 605; Fund Association v. Sendrnayer, 50 
 
 39 L. J., Ch. 628; 18 W. R. 967; 22 Pa. St. 67; and see post., 445- 
 
 L. T., N. S. 777. 446. 
 
 1 Dobinson v. Hawks, 16 Sim. * As to all matters relating to 
 
 407; 12 L. T. Rep. 238; 39 Engl. stock, see post, Ch. xvii.
 
 136 THE LAW OF BUILDING ASSOCIATIONS. [CH. V. 
 
 ments from one upon whose mortgage it lias sued and issued 
 execution to collect, making the whole amount out of the 
 mortgaged premises, it will not subsequently be permitted to 
 deny his subsisting membership.' The continued acceptance 
 of his dues as a member indicates that there has been no for- 
 feiture enforced, but that, if the right to put it in operation 
 was perfected at any time, it was waived. The same fact pre- 
 cludes the theory of an appropriation of the stock to the 
 mortgage debt, either by the member or by the association. 
 And, having led him into payments, under this assumption, of 
 which the association received the benefit, it cannot afterwards 
 set up any such forfeiture or appropriation against the mem- 
 ber claiming as such against the corporation. 
 
 80. But this acceptance of payments must be clearly the 
 act of the association, or such portion of it as can bind the 
 whole. Hence, when stock payments were received by only 
 two of twelve directors, from one whose shares, under the 
 rules, were forfeited, and this acceptance was, at the first sub- 
 sequent board meeting, promptly disavowed, and the money 
 returned, no claim of membership could, upon the ground of 
 the acceptance of said payment, avoid the forfeiture. 8 Only 
 a majority of the directors could make a contract binding 
 upon the building association. A lesser number could not 
 assume to do so. Their act might be ratified by the major- 
 ity ; but it might equally be repudiated, if no such time 
 was suffered to elapse, or circumstances to arise, as could give 
 the other party equities enough to enforce it, in spite of its de- 
 fect as to consent on the part of the building association. 
 
 Borrower Estopped from Denying His Membership. Exception. 
 
 81. Conversely a borrower may become estopped from 
 denying that he is a member of a certain building association. 
 Thus, where the signing of the by-laws was made, by the 
 charter, a requirement in order to membership, and the law of 
 the State prohibited building associations from loaning money 
 to any but members ; the execution of a bond necessarily im- 
 plying or purporting to be that of a member, by a person who 
 
 1 North America Building As- Engl. C. L. R. 197; 26 L. J., P 
 sociation t. Button, 35 Pa. St. 463. 113 
 * Card T>. Carr, 1 C. B., N. S. (87
 
 82.] MEMBERSHIP IN BUILDING ASSOCIATIONS. 13? 
 
 had received a loan from the society, without ever having 
 signed the by-laws, was held to be a sufficient assent to them, 
 on the part of such person, and he was not subsequently 
 permitted to deny that he was a member, for the purpose of 
 showing that the loan by the association was ultra vires, and 
 could not be enforced against him. 1 Yet, where the ac- 
 knowledgment, or matter relied upon to estop a person from 
 denying relations to the building association, which are 
 sought to be made the ground of claim against him, has arisen 
 from demonstrable error or accident, and the actual state of 
 facts is clearly shown to contradict the assumption, the estop- 
 pel will not take place. A person, not being a member, pur- 
 chased land from a building association, and mortgaged it to 
 the same, to secure the purchase money. The mortgage, 
 which was a filled-up printed form, prepared by the society's 
 solicitor, recited that the mortgagor was the holder of eleven 
 shares. In point of fact, he had never applied for any shares, 
 never held any, never been treated by the society as a share- 
 holder. He did not read over the mortgage, nor were its 
 contents explained to him prior to execution. The building 
 association having been ordered to be wound up, he was 
 placed on the list of contributories. But it w r as held, that, as 
 the recital was incorrect, and as he was ignorant of its exist- 
 ence at the time he executed the mortgage, he was not liable 
 as a contributory. 8 
 
 Termination of Membership. 
 
 82. The relation of membership in a building associa- 
 tion, with all its attendant rights and liabilities, is terminated : 
 (1) by the death of the member; (2) by transfer of the shares 
 
 1 Howard Mutual Loan and Fund provision of the statute which in- 
 
 Association v. Mclntire, 3 Allen hibits loans to non-members, the de- 
 
 (Mass.), 571. It is proper to add, fendant might, probably, show such 
 
 that the borrower, in this case, re- fraud in his defence, 
 
 lied entirely upon the fact of his not s Victoria Permanent Benefit 
 
 having signed the by-laws, and pro- Building Investment and Freehold 
 
 duced no other ground for his alle- Land Society of Birmingham and 
 
 gation that he was not a member; the Midland Counties, Epsom's 
 
 and that the Court intimates, that, . Case, 22 L. T., N. S. 855; 18 W. R 
 
 if the bond had been given with a 565; 9 L. R., Eq. 597. 
 view to a fraudulent evasion of the
 
 138 THE LAW OP BUILDING ASSOCIATIONS. [CH. VI. 
 
 held by him to another party stepping into his shoes ; (3) by 
 voluntary withdrawal in accordance with the provisions of 
 the statute, charter, and by-laws governing the association, or 
 in pursuance of some special arrangement or composition, or 
 by application of the value of his shares to his debt, if he be 
 a borrower ; (4) by forfeiture of membership, in the manner 
 and for the causes set forth in the rules of the society ; (5) 
 by the dissolution, or what amounts to dissolution, of the so- 
 ciety, and by the expiration of the series in which the mem- 
 ber's stock stood ; (6) in case the member has become a bor- 
 rower, by the terms of his contract with the association, if 
 they warrant and contemplate such a conclusion. 
 
 All these points, so far as they require elucidation, will 
 receive it under the proper heads. 1 
 
 CHAPTER VI. 
 
 DUTIES OF MEMBERS. 
 
 83. Obedience to rules and assent to lawful corporate acts. 
 
 84. Duties of members as to stock-payments. 
 
 85. No absolute liability for stock-payments until the whole capital 
 subscribed. Exception. 
 
 86. Society may maintain assumpsit for dues, without notice. 
 
 | 87. Statutory lien on stock for arrears, etc. 
 
 88. Borrower's liability upon his obligation after repayment of loan. 
 
 91. Liability for dues, etc., not suspended by entry of suit. 
 
 92. Liability to fines imposed on default. 
 
 93. Necessity and legal aspect of fines in building associations. 
 
 96. Rules to be observed in relation to fines. 
 
 1 99. Forfeitures. 
 
 103. Duty of members to render personal services. 
 104. Duty of members to contribute pro rata to losses and expenses of 
 
 society. 
 
 105. Members cannot withdraw to evade liability to contribute. 
 106. Liability to contribute not affected by taking loan. 
 108. Termination of liability to contribute. 
 110. Personal liability of stockholders for debts of society. 
 111. Corporate property may be followed into hands of stockholders, 
 
 See post, 99, 108, 127, seqq., 146-148, 495, etc.
 
 85.] DUTIES OF MEMBERS. 139 
 
 Obedience to Rules and Assent to Lawful Corporate Acts. 
 
 83. The relation of membership in a building associa- 
 tion involves certain reciprocal rights and obligations, as 
 between the individual and the society. The person entering 
 its circle is, in many cases, required to subscribe to the consti- 
 tution and by-laws, in token of his submission to their re- 
 quirements. But, independently of such formality, the law 
 imposes upon him, as a duty springing from an implied but 
 binding contract, obedience to the rules of the association ; 
 not only to such as exist at the time of his reception into it, 
 but also to all such other rules, by-laws, and orders as may, 
 at any future time, be lawfully established. As to such regu- 
 lations, as well as all lawful acts of the society, the law pre- 
 sumes the assent of every individual member. 1 Every member 
 also owes the society his personal services. 
 
 Duty of Members as to Stock Payments. 
 
 84. The whole prosperity of the enterprise involved in 
 the building association scheme, depends upon the prompt 
 fulfillment of the members' undertakings with regard to stock- 
 payments. This undertaking is absolute in its obligation 
 upon the member, and ceases only with his cessation from 
 membership, or the determination of the society. Nothing 
 short of fraud or misrepresentation, on the part of the associa- 
 tion, can relieve him of the binding force of his undertaking. 
 The misbehavior of other members, their refusal to live up 
 to their engagements, their persistent and deliberate default 
 in the payment of dues, will not excuse similar action on the 
 part of any particular one, nor relieve him of his liability to 
 the association for his stipulated stock-payments.* 
 
 No Absolute Liability for Stock-Payments until the Whole Capital 
 Subscribed. Exception. 
 
 85. This absolute liability, however, does not occur 
 until, where the amount of the capital stock is fixed, and the 
 
 1 Angell and Ames, Corp., 499; dissolution, practically, the liability 
 
 Field, Corp., 226. of borrowing members may become 
 
 9 See Hoboken Building Associa- materially affected. See post, g 
 
 tion v. Martin, 2 Beas. (N. J.) 428. 496-503. 
 Where the defection amounts to a
 
 140 THE LAW OF BUILDING ASSOCIATIONS. [CH. VI. 
 
 i! ii i nber of shares ascertained by the charter, the whole capital 
 stock has been taken. 1 It is to be presumed that the entire 
 amount fixed is necessary for the successful prosecution of 
 the business for which the association is incorporated, and the 
 subscriptions are made upon this implied understanding, 
 being considered, to that extent, as conditional. Yet it is a 
 condition which the subscribers may waive, and, with their 
 consent, the company may not only organize, but do all other 
 thi >gs incident to, and necessary for, the particular business 
 for which it was formed. And this waiver may be either 
 express, or implied from the acts and declarations of the 
 members. If, knowing the whole capital stock has not been 
 taken, they attend the meetings of the company, co-operate 
 in the votes for expenditure of money, for the purchase of 
 property, for the making of contracts, and other acts which 
 could only properly be done upon the assumption that the 
 subscribers intended to proceed with the stock taken up, they 
 will become affected with all the liabilities of membership, 
 and estopped from setting up the irregularity as against their 
 enforcement.* This rule can only protect and relieve from 
 the duty of payment subscribers who, in good faith, objected 
 to the organization of the company, when all its capital stock, 
 which was necessary to the enterprise, had not, in fact, been 
 taken ; but it was never intended, and courts will not permit 
 it, to be used as an instrument of fraud, but will enforce 
 upon such members, as consented to going on with the incom- 
 plete subscriptions, all the duties and liabilities of member- 
 ship in a properly organized association. 
 
 Society may Maintain Assumpsit for Dues, without Notice. 
 
 86. The association may maintain an action of assumpsit 
 against a member for his dues.* Nor is it necessary, in order 
 
 1 Morrison, etal., Receivers Chesa- R. Co., 78 Pa. St. 465. The recog- 
 
 peake Mutual Land and Building nition of the society's proper exist 
 
 Association, v. Dorsey, 48 Md. 461. ence by a person, giving it his note, 
 
 * See case in preceding note, and etc., in its corporate name, is also a 
 
 Hager . Cleveland and Bassett, 36 waiver of the above defect. Massey 
 
 Md. 476 (491); cit. Cabot and West v. The Citizens' Building and Sav- 
 
 Springfield Bridge Co. v. Chapin et ings Association of Paola, 22 Kas. 
 
 al., 6 Gush. (Mass.) 50. 373; Garrett 624. 
 c. Dillsburg and Mechanicsburg R. * Building Association v. Kribs,
 
 88.] DUTIES OF MEMBERS. 141 
 
 to perfect this right, that the society give notice to the delin- 
 quent member of the fact that hie payment is due, unless 
 such notice be required by the rules. 1 A statutory direction 
 to corporations generally, to give notice to members of 
 calls upon subscriptions, does not apply to a corporation, 
 under the by-laws of which the subscribers to its stock are 
 under a continuing requirement to pay a periodical instal- 
 ment of a fixed amount on each share. Hence it has no 
 application to a building association.* 
 
 Statutory Lien on Stock for Arrears, etc. 
 
 87. The statutes of the various States regulating build- 
 ing associations, generally give them a lien upon the default- 
 ing member's shares for the amount of the unpaid instalments 
 and other charges and liabilities of membership. A member 
 who is in arrears, therefore, has no right to withdraw * from 
 the society, nor can he properly and freely transfer his shares 
 until he has become " clear of the books." Such right of lien, 
 however, rests upon statute, and not upon common law. 4 
 
 Borrower's Liability upon His Obligation, after Repayment of Loan. 
 88. If the member be at the same time a borrower, his 
 bond or mortgage, even after satisfaction or payment of the 
 amount loaned, or stipulated to be repaid, and interest, re- 
 mains as a security for the faithful performance of his duties 
 as a member, such being part of the condition of the obliga- 
 tion, and may be used to enforce the further payment of his 
 monthly dues and other charges. 5 Any previous liability, 
 
 7 Leg. and Ins. Rep. (Pa.) 21; and ation v. Blackburn, et al., 48 Iowa, 
 
 see case in following note. 385, and see post. 
 
 1 Morrison, et al., Rec'rs Cbesa- Field, Corp., g 310; cit. Union 
 
 peake Mutual Land and Building Bank u. Laird, 2 Wheat. 390; 
 
 Association, v. Dorsey, 48 Md. 461. Rogers t>. Huntington Bank, 13 S. 
 
 Ib., holding the Act of 1868, & R. (Pa.) 77; Grant v. Mechanics' 
 
 Ch. 471, 65, inapplicable to build- Bank, 15 Id. 140; Sewall v. Lancas- 
 
 ing associations. ter Bank, 17 Id. 285; Utica Bank v. 
 
 3 McGrath n. Hamilton Savings Smalley. 2 Cow. (N. Y.)770; Steam- 
 
 and Loan Association, 44 Pa. St. ship Dock Co. v. Heron, 52 Pa. St. 
 
 883; Watkins v. Workingraen's 280. 
 
 Building and Loan Association, 10 5 Everham . Oriental Saving 
 
 W. N. C. (Pa.) 414, 97 Pa. St. 514; and Loan Association, 47 Pa St. 
 
 Hawkeye Bom-fit and Loan Associ- 352. This case arose prior to 1859,
 
 142 THE LAW OF BUILDING ASSOCIATIONS. [CH. Vt. 
 
 due or to become due, may be included in a mortgage given 
 for a present advance, and as one of the terms on which the 
 advance is made. The agreement, then, by the borrower, to 
 pay monthly dues, embraces a previously existing, lawful 
 debt, and may, as well at law as in equity, be secured by a 
 mortgage given for a present advance. 1 The repayment of 
 the sum borrowed, therefore, or, to use a phrase more uni- 
 versally applicable to all kinds of schemes by which the loan 
 of money in building associations is disguised the indemnifi- 
 cation of the society for the use of the money, according to 
 the undertaking of the mortgage, does not entirely satisfy all 
 ics conditions. It remains a subsisting security in the hands 
 of the association, and may be sued upon to enforce the re- 
 maining stipulations relating to stock-payments, etc. 
 
 89. In like manner, where the amount due upon a mort- 
 gage has been fixed, by a decree of Court, in a suit to fore- 
 close, upon default in the payment of instalments, etc., and 
 an order of sale has passed, whilst the mortgagor, asserting his 
 right to redeem before actual sale, by paying the amount 
 judicially ascertained, will stop the sale of the property, the 
 decree will stand as a security for future installments and lia- 
 bilities. 4 
 
 90. In England, the same principle is enforced and 
 strikingly illustrated. The estimated probable duration of a 
 building association was thirteen years. An advanced mem- 
 ber was held entitled to redeem on payment of his subscrip- 
 tions (the mortgage being given to secure such) to the end of 
 the thirteen years, although he was still liable to pay sub- 
 scriptions until the fixed value of each share was realized for 
 every member. 1 And, in a similar case, the same principle 
 was re-asserted, with this peculiar feature, that the borrower, 
 who was allowed to redeem, was, notwithstanding the redemp- 
 tion, held liable te continue his subscriptions beyond the 
 thirteen years, which period proved insufficient to bring the 
 
 and its policy expands with the act Ohio St. 186; Risk . The Delphos 
 
 of that year. Building and Savings Association, 
 
 1 Ib. 31 Ohio St. 517. 
 
 9 Robertson t>. The American 8 Sparrow v. Farmer, 26 Beav. 
 
 Homestead Association, 10 Md. 397; 511 ; 5 Jur., N. S. 530; 28 L. J., Ch. 
 
 Hagerman et al. . The Ohio Build- 537; 33 L. T. 216; S. P. Handley 
 
 ing and Savings Association, 25 v. Farmer, 29 Beav. 362.
 
 93.] DUTIES OF MEMBERS. 143 
 
 shares up to the fixed value, upon reaching which the society 
 was to terminate. 1 The securities in these cases were va- 
 cated, under the system in practice in England ; but the cov- 
 enants in the mortgage deeds were held to extend to pay- 
 ments as just indicated, and might be sued upon. 
 
 Liability for Dues, etc., not Suspended by Entry of Suit. 
 
 91. The bringing of suit by the building association 
 against a member does not relieve the latter from continuing 
 his payments, or, upon neglect to do so, from exposing him- 
 self to the penalties resulting therefrom under the rules of 
 the society. 1 
 
 Liability to Fines Imposed on Default. 
 
 92. The most usual and effective method, however, of se- 
 curing punctuality on the part of the members in the discharge 
 of their, for the purposes of the association, most important 
 duty, the regular payment of their subscriptions, is the system 
 of fines and forfeitures which these societies have adopted. 
 The authority given them by the various statutes to impose 
 these penalties, carries with it a corresponding liability, on the 
 part of the members, to submit to their imposition, from 
 which they cannot escape. 
 
 Necessity and Legal Aspect of Fines in Building Associations. 
 
 93. It is not quite accurate to call fines in building asso- 
 ciations penalties, nor have the courts, when called upon to 
 enforce them, treated them as such. They answer a purpose 
 very different from that of mere punishment. The default- 
 ing member's action is an injury to the association, arising out 
 of a breach of contract attributable to him. If he is allowed 
 to continue indefinitely to withhold his subscription from the 
 common fund, or even to withhold it for a comparatively 
 short space of time, whenever the day for his periodical pay- 
 ment comes around, and it suits him to delay, it is clear that, 
 on every such occasion, he is depriving the society of just so 
 much money, which might and ought to be invested and 
 
 1 Farmer v. Smith, 4 H. and N. Association . Metzgcr, 8 W. N. 
 
 196; 5 Jur., N. 8. 533, n.; 28 L. J. C. (Pa.) 204; Union Building Loan 
 
 Exch. 226. Association v. Masonic Hall Associ- 
 
 * Sec German Fair Hill Building atiou, 2 Stew. (N. J.) 389.
 
 144 THE LAW OF BUILDING ASSOCIATIONS. [CH. VI. 
 
 working for the common good. Yet, in the end, he will 
 come in for his share of the profits, not otherwise than if ho 
 had l>een the most conscientious of members. Thus he will 
 be getting an advantage over and above the other members : 
 he will have had the use of his subscription money for a 
 longer period than the other members had theirs, 1 and, besides, 
 In- will have his proportionate share of the gains made upon 
 all their prompt payments, whilst he will lose only the trilling 
 amount which would have come to him as his proportion of 
 the profits that would have been made upon his subscription 
 during the time intervening between the day when it was his 
 duty to pay it, and that upon which he did pay it. It follows, 
 that the society is entitled, ex cequo, to be reimbursed. Yet 
 the precise amount which it has lost by the member's default 
 is not to be got at. Therefore, the original contract between 
 the member and the association, foreseeing the possibility of 
 such a case, and providing for it, stipulates for certain liqui- 
 dated damages, which are called fines. 
 
 9. These fines, therefore, do not, in any sense, come 
 within the principle which forbids a Court of Equity to lend 
 itself to enforcing the payment of fines, penalties, and for- 
 feitures. 4 
 
 95. So thoroughly, indeed, are fines recognized as an es- 
 sential part of a building association's machinery, that a mar- 
 ried woman's mortgage on her separate property, to secure a 
 ' loan which her husband, as a stockholder, had procured from 
 a building association, covers fines incurred by him by reason 
 cf his default in payments to the association, their payment 
 being an usual part of his undertaking; 3 and that, when a 
 
 1 Dues and fines are payable in tnulgee Building and Loan AssocLi- 
 cash, and the treasurer has no right, tion . Thomson, 52 Ga. 427; Par- 
 even in the presence and with the ker . Butcher, 16 L. J., Ch. 552 ; 3 
 acquiescence of the executive offi- L. R., Eq. 762. The case of Mul- 
 cers, to receive promises to pay in- loy r>. Fifth Ward Building Associn- 
 stead of cash. People's Building tion, 2 McArth. (Supr. Ct., D. C.) 
 and Loan Association v. Wroth, et 594, contra, seems to have been 
 al., 14 Vroom (N. J.) 70; Mutual dictat ed by the unreasonably oppres- 
 Building and Loan Association v. sive character of the fines, whirh 
 Hammell, et al., Ib. 78. made them penalties, indeed, of the 
 
 s Shannon v. The Howard Mu- most grievous kind, 
 tual Building Association of the 3 Juninta Building and Loan As- 
 City of Baltimore, 36 >Id. 383; Oc- sociation v. Mixell. 84 Pa. St. 313.
 
 97.] DUTIES OF MEMBERS. 145 
 
 mortgage, given to a building association by one of its mem- 
 bers, recognizes his obligation to pay the fines which may be 
 imposed upon him by the building association, and stipulates 
 for their payment, it has been held that the court, when called 
 upon to foreclose the mortgage, exparte or otherwise, ought 
 to allow, in the ascertainment of the indebtedness of the mort- 
 gagor, the fines reasonably charged against him. 1 
 
 Rules to be Observed in Relation to Fines. 
 
 96. The liability of members to fines, however, unques- 
 tionable as it is, is nevertheless sufficiently guarded by certain 
 qualifications as to the fines themselves, to check any tempta- 
 tion to run into excess or abuses in this particular. In the 
 first place, the very power of imposing fines lawfully and 
 effectually depends upon, and is measured by, statutory au- 
 thority for that purpose. 2 Without such, there is no right in 
 the building association to fine, nor can it in any degree ex- 
 ceed the limits prescribed by statute. 3 
 
 97. In the next place, whe.'e the power of imposing 
 fines is given to building associations by statute, the fines it 
 contemplates are reasonable fines, not oppressive penalties ; 
 and where the latter class is attempted to be enforced against 
 members, the courts have nowhere been slow to relieve the 
 members and restrain the association. 4 The fine which is 
 
 1 Shannon v. The Howard Mu- of interest. Hagerman et al. v. The 
 
 tual Building Association of the Ohio Building and Savings Associa- 
 
 City of Baltimore, 36 Md. 383. tion, 25 Ohio St. 186; and see Shan- 
 
 4 Lincoln Building and Savings non v. The Howard Mutual Build- 
 Association, appellee, . Graham, ing Association, 36 Md. 383. But 
 appellant, 7 Neb. 173; Same v. Haas, see 415-416. 
 10 Neb. 581; Forrest City United 4 See In re Tierney, 9 Ir. R, Eq. 
 Land and Building Association v. 1; Lovejoy v. Mulkarn, 37 L. T.. 
 Gal higher etal., 25 Ohio St. 208. N. S. 77; 46 L. J., Ch. Div. 630; 
 
 * Thus, where they are authorized Ingoldby v. Riley, 28 L. T., N. S. 
 
 by law as against members, they 55; Hagerman et al. v. The Ohio 
 
 cannot be imposed upon depositors. Building and Savings Association, 
 
 Forrest City, etc., Building Associa- 25 Ohio St. 186; The Citizens' Mu- 
 
 tion v. Gallagher, supra. And when tual Loan and Accumulating Fund 
 
 fines are legalized upon default in Association t>. Webster, 25 Barb, 
 
 the payment of dues, they are not, (N. Y.) 263; Second New York 
 
 without special mention, charge- Building Association v. Gallier, 
 
 ithle. by virtue of a by-law to that cited in foregoing case. And see, 
 
 < TCI r, upon default in the payment also, po>t, 401-118.
 
 146 THE LAW OF BUILDING ASSOCIATIONS. [CH. VI. 
 
 contemplated by the statutes is oiie whose amount is only 
 slightly in excess of the real damage the building association 
 su>taiii8 from the failure of a member to pay his lur.-. : \vhich 
 damage is equal to the profit the association might make upon 
 the money if in its hands from the day when it was due; or, 
 as it is said, equal to interest upon the amount, together with 
 the proportion coming to it of the then obtainable premiums 
 upon the sale of money.* 
 
 98. Finally, in order to affect a member with liability 
 to fines, they must be established by charter or by-laws.' It 
 is altogether necessary that every member should be aware, in 
 advance, of the consequences of any action or omission in 
 violation of the rules of the society. And if the by-laws im- 
 posing them, by reason of ambiguousness, admit of several 
 interpretations, the courts will adopt that most favorable to 
 the member, and least favorable to the association. 4 
 
 Forfeitures of Stock and Membership. 
 
 99. Where the imposition of fines, for default in pay- 
 ments, proves unavailing to secure a members faithful ob- 
 servance of his duties, he may become liable to forfeiture of 
 his membership in the society. The continued and repeated 
 neglect of subscribers to live up to their undertakings, will, it 
 may readily be understood, have the tendency to frustrate, to 
 a large extent, the design of the organization, which, though 
 it may be, in a measure, made whole by the ultimate payment 
 of what the member owes, together with the fines accruing 
 against him, will be subject to a variety of embarrassments, 
 arising from the irregularity of its revenues, and the compli- 
 cated and long-winded accounts, the keeping of which will 
 become necessary by reason of such irregularities, and which, 
 the society being for the most part composed of men who 
 have all to do they can do to follow, with success, their daily 
 avocations, will make intolerable calls upon their time and 
 inexperience, for the purpose of avoiding disastrous confu- 
 sion. Besides this, the societies are generally required to 
 make to the State an annual statement of their assets and the 
 
 1 Ocmulgee Building and Loan 8 Building Association v. Schul- 
 Association v. Thomson, 52 Ga. 427. ler, 3 W. N. C. (Pa.) 4'tt. 
 Ib. See post, 401-419.
 
 102.] DUTIES OF MEMBERS. 147 
 
 value of their shares, for the purpose of taxation or other pur- 
 poses. The difficulties in the way of this are almost insuper- 
 able, when frequent and long-continued defaults are allowed. 
 The rules of every society, therefore, establish a limit, beyond 
 which indulgence cannot be claimed by derelict members, by 
 providing for the forfeiture of their shares, when that limit 
 is exceeded, and such rules, not imposing too short a period 
 of grace, have expressly, upon general principles of law, been 
 held reasonable and within the legal power of building asso- 
 ciations. 1 
 
 100. Gross impropriety of conduct, on the part of a 
 member, may also become the ground of forfeiture, when it 
 is specifically and distinctly set forth as such in the charter 
 or by-laws, or for which he is indictable by the laws of the 
 land. 2 
 
 101. As in the case of fines, so, in that of forfeitures, it 
 is necessary that the causes of their occurrence should be dis- 
 tinctly defined by by-law, 3 and the method of their enforce- 
 ment, as there pointed out, must be followed exactly. 4 Nor 
 does forfeiture ever take place, until declared against a mem- 
 ber by the society or its competent officers. 5 Hence it may 
 be waived, by implication, by the society or its officers," and 
 its enforcement is, at all times, at the option of its directors. 7 
 
 102. Forfeiture of stock is necessarily forfeiture of 
 membership, and vice versa ; and when it takes place, the 
 obligation to continue the payment of dues, the consequence 
 and necessary incident of membership, is at an end. 8 
 
 1 Card e. Carr, 1C. B., N. S. (87 15 Pa. St. 251; Diligent Fire Co. c. 
 
 Engl. C. L. R.) 197; 26 L. J., C. P. Commonwealth, 75 Id. 291. 
 
 113. 5 Watkins t>. Workingmen's 
 
 8 See Angell and Ames, Corp., Building Association, 38 Leg. Int. 
 
 412-417, and opinion of Tilghman, (Pa.) 333; 10 W. N. C. 414; 97 Pa. 
 
 C. J., in Commonwealth v. St. Pat- St. 514; Reg. t>. D'Eyncourt, 116 
 
 rick Society, 2 Binn. (Pa.) 441. Engl. C. L. Rep. (4 Best and Smith) 
 
 * Butchers' Beneficial Associa- 820. 
 
 tion, 38 Pa. St. 298; Beneficial Asso- North America Building As- 
 
 ciation of Brotherly Unity, Ib. 299. sociation v. Sutton, 35 Pa. St. 468. 
 
 4 See Wachtel v. The Noah Wid- ' Moore v. Rawlins, 6 C. B., N. 
 
 ows' and Orphans' Beneficial Socie- S. 289. 
 
 ty, 11 N. Y. Weekly Dig. 457; Com- McCahan v. Columbian Build- 
 
 monwealth v. Pennsylvania Benefl- ing Association of East Baltimore, 
 
 cial Institution. 2 S. and R. 141 ; 40 Md. 226. 
 {/omuiouwealth v. German Society,
 
 148 THE LAW OF BUILDING ASSOCIATIONS. [CH. VL> 
 
 Duty of Members to Render Personal Services. 
 
 103. It is a general doctrine that " a corporation has a 
 right to the service of all its members, and may make by-lawa 
 to enforce it." ' Conversely, the individual members owe to 
 the association such services as it is reasonably within their 
 power to contribute, and this duty may be enforced, by tines- 
 provided by charter or by-laws, against such members as re- 
 fuse, without reason, to attend the corporate meetings," or to 
 assume the functions of offices, to which they may have been 
 duly and properly elected,' or to give their proper attention 
 to them when assumed. 4 
 
 Duty of Members to Contribute, Pro Rata, to Losses and Expenses of 
 Society. 
 
 104. As members of the corporation, all shareholders 
 are, as to one another, liable to bear their respective propor- 
 tion of the expenses of the concern. Being equally entitled,, 
 with all the others, in the direct ratio of his interest in the 
 society, to share in the common gains of the enterprise, every 
 member is liable to contribute, in the same proportion in 
 which he expects to profit, to the losses and expenses incident 
 to its management. 5 He cannot evade such liability by a 
 transfer of his stock, without the consent of the corporation.* 
 Nor can he be allowed to withdraw from the association for 
 the purpose of escaping his proportion of the common bur- 
 den. 7 
 
 Members Cannot Withdraw to Evade Liability to Contribute. 
 
 105. Even when the statute gives members the peremp- 
 tory right to withdraw, with certain privileges, upon certain 
 notice given, this right is subject to modification, so as to pre- 
 vent any member from taking advantage of his fellows. In 
 a case in Pennsylvania, arising at the suit of a member 
 against the association, which had failed to make the payment 
 
 ! Angell and Ames, Corp., 352. B McGrath v. Hamilton Building 
 
 9 Tobacco Pipe Makers v. "Wood- Association, 44 Pa. St. 383. 
 
 roffe, 7 B. & C. 838; 5 D. & R. Everhart v. West Chester and 
 
 530; 14 Engl. C. L. Rep. 129. Philadelphia R R Co., 28 Pa. St. 
 
 3 See Angell and Ames, Corp., 339. 
 
 352. i McGrath v. Building Associa- 
 
 4 See post, 220. tion, supra.
 
 106.] DUTIES OF MEMBERS. 149 
 
 demanded by him upon statutory notice of withdrawal, the 
 association, in its affidavit of defence, averred, besides the 
 fact that the reserve provided for by statute to accommodate 
 withdrawing members was exhausted, that the association 
 had, owing to the depreciation of real estate, sustained heavy 
 losses, and incurred liabilities which should be paid before 
 stockholders were permitted to withdraw. Upon this affi- 
 davit being held insufficient, judgment was given against the 
 association ; but it was intimated by the court, that, had the 
 affidavit set forth losses incurred before the plaintiff's with- 
 drawal, a set-off would have been exhibited, and the decision 
 would have been different. 1 Such an allegation, in a later 
 case, was held sufficient to prevent judgment. 3 It amounts 
 to a defence to the extent of the withdrawing member's pro- 
 portionate share in the association's liabilities ; in other words, 
 a member cannot, by withdrawing, evade his proportionate 
 share in the expenses, losses, and debts of the association. The 
 association has the right to deduct it from the amount other- 
 wise coming to him upon legal notice of withdrawal. And 
 the society has the right to retain from withdrawing stock- 
 holders their proportion of probable loss sustained by reason 
 of the purchase of real estate sold on its mortgage, which had 
 depreciated, even before the loss has been finally determined 
 by the sale of the real estate, where it is evident there will 
 be a loss. The society may have the property appraised by a 
 committee, and fix the loss and assess the same on each share 
 of stock pro rata.* 
 
 Liability to Contribute not Affected by Taking Loan. 
 
 106. Nor is this liability in any way affected by the fact 
 that the member has become a borrower, 4 so long as, being 
 such, he still continues in membership. Whilst merely an 
 
 1 United States Building and * "VVittman v. Building Associa- 
 
 Loan Association v. Silverman, 85 tion, 7 W. N. C. (Pa.) 80, Ludlow, 
 
 Pa. St. 394; 4 W. N. C. 546; 85 P. J. 
 
 Leg. Int. 51. Of course, no con- Knoblauch v. Robert Blum 
 
 tribution can be asked of a person Building and Loan Association No. 
 
 upon losses accruing to the society 2, 8 Pittsb. Leg. Jour., N. S. 89; 
 
 subsequently to the time when, un- Paffert . Same, Ib. 40. 
 
 der the statute or by-laws, as the 4 Pattison v. The Albany Building 
 
 case may be, the withdrawal took and Loan Association, 63 Ga. 373. 
 effect
 
 150 THE LAW OF BUILDING ASSOCIATIONS. [CH. VI. 
 
 investing member, his stock is chargeable with, and he, by vir- 
 tue of his ownership of that stock, is liable for, a proportion- 
 ate share of the expenses of the enterprise. It certainly can- 
 not be that the fact of his having received a benefit from the 
 society should operate to relieve him of that obligation. If, 
 in obtaining that benefit, he relinquishes his membership, the 
 duty to contribute, of course, falls with it, because its advan- 
 tages have ceased. But if he retains his standing as a mem- 
 ber, he retains also his privileges and burdens as such, and if, 
 by his subsequent defaults, he forfeits his membership, and 
 his debt becomes collectable against him, his mortgage will 
 stand as a security for his proportionate share of the losses 
 and expenses of the society. This is the doctrine distinctly 
 held in a case which arose in Pennsylvania. 1 The building 
 association had been incorporated under the Act of 1851, 
 under which building associations were allowed to recover 
 only the amount loaned with interest. The facts of the case, 
 incorporated in a case stated, were these : The defendant was 
 the owner of thirty-three shares of stock of the association, 
 and, in the months of February and March, 185-i, borrowed 
 money of the building association, at 32 and 32^ per cent, pre- 
 mium, giving a mortgage for the nominal whole amount. 
 Expenses had been incurred in the business and management 
 of the association, such as room-rent, account books, officers' 
 salaries, etc., equal to four dollars upon each share of the 
 stock. By the annual reports of the association, the profits 
 on each share of stock, above legal interest on the amount 
 paid in, were more than sufficient to pay all expenses, said 
 profits being derived from premiums, fines, and profits on re- 
 loans, none of which premiums or fines were paid by the de- 
 fendant, (as they could not lawfully have been enforced 
 against him.) The reasoning of the court was substantially 
 as follows : As a mortgagor, he could not be compelled to 
 pay more than the sum actually advanced, with legal interest. 
 Had he remained a member, he could have claimed a share in 
 the society's profits. He would then have received a benefit 
 from the payments made by others. Whatever payments he 
 had made, had not swelled the common fund ; for he was en- 
 titled to credit for them by way of set-off against his mort- 
 1 McGrath t>. Hamilton Savings and Loan Association, 44 Pa. St. 383.
 
 107.] DUTIES OF MEMBERS. 151 
 
 gage. If, then, in addition, he could have balanced the lia- 
 bilities which he, as a member, had incurred in respect of the 
 common expenses, by a share, equal to those liabilities, of the 
 common profits, he would, in effect, be recovering more than 
 he had paid in, and would be throwing upon his associates the 
 whole of a burden, which, in truth, was his" as much as theirs. 
 To this was added another consideration. Under the inter- 
 pretation given to the Act of 1851, in Pennsylvania, as has 
 been said, building associations could recover from borrowers 
 only the amount actually loaned, with legal interest. What- 
 ever premiums, etc., had been paid by the borro\ver, he must 
 be allowed credit for under his obligation. This was the 
 right of every borrower in the society, and it must hold itself 
 in readiness to answer the same call from, perhaps, its whole 
 membership. Whence, then, would the means for defraying 
 the expenses of the enterprise come ? The doctrine forced 
 itself upon the court, that the building association must have 
 the right to treat the payments made by borrowing members 
 and others, whilst their membership lasted, as contributions, 
 so far as they were needed, to defray the expenses of the so- 
 ciety and make good its losses. A deficit, equal to their re- 
 spective shares of such expenses and losses, would thus appear 
 upon their subscription and interest, which the building as- 
 sociation might recover properly upon the mortgage given to 
 secure the debt. 
 
 107. This reasoning is undoubtedly good upon the hy- 
 pothesis underlying it : to wit, the right of the borrower to 
 claim credit for all his payments and agreed premiums. But 
 this hypothesis has no foundation whatever where premiums, 
 fines, etc., are legalized. 1 All that the borrower can, in such 
 case, ask credit for, is what he has actually paid in by way <>f 
 subscriptions and interest." The building association . may 
 enforce the premium, and recover the fines incurred. And 
 yet the same conclusion which was reached in the above case, 
 
 'Mechanics' Building and Loan l Walking p. "Workingmen's Build- 
 Association of New Brunswick r. ing and Loan Association, 10 W. N. 
 Conover et al., 1 McCart. (X. J.) C. (Pa.) 414; 38 Leg. Int. 333; 97 
 219, not reversed in this particular Pa. St. 514, and see post, 128- 
 in 2 C. E. Gr. (N. J.) 497; and see 130. 
 post, 453-457.
 
 152 THE LAW OF BUILDING ASSOCIATIONS. [ CH - VI - 
 
 must inevitably follow, with logical necessity, upon this latter 
 basis also. Remembering that the borrower is a member, 
 and not the less so for being a borrower; that, consequently, 
 his liability for his share of the expenses is complete during 
 the continuance of his membership ; it is clear, that, had he 
 remained a member, he might eventually have set off a por- 
 tion of the profit accruing to him from the common fund, 
 against his proportion of the common expenses. By becom- 
 ing a defaulter, he simply loses that right, or expectancy, 1 
 and gains nothing in the way of shaking off responsibilities 
 already incurred. Now, his mortgage, conditioned for the 
 faithful performance of his membership duties, includes, be- 
 yond question, that of sharing in the expenses of the society, 
 and may be used by it for the purpose of enforcing such con- 
 tribution. 3 
 
 Termination of Liability to Contribute. 
 
 108. The liability to contribute to expenses ceases with 
 the cessation of membership, bonafide, and with the consent 
 of the association. If, upon becoming a borrower, the mem- 
 ber relinquish his membership ; * or if, being an investor 
 merely, he avail himself of a provision in the rules or by-laws- 
 of the association, or of the statute supreme over it, to with- 
 draw himself from it, 4 he cannot subsequently be made liable 
 for its debts and losses, and called upon by the society to 
 contribute towards their payment. 
 
 109. The same result (at least, as between the building 
 association and the member) follows when the latter, under a 
 resolution of the society permitting borrowers to withdraw 
 on the payment of a stipulated amount, the stock to be then 
 " withdrawn and cancelled," withdrew, and paid off his loans, 
 
 1 Watkins . Workingmen's Build- 8 Such a person is described as one 
 
 ing and Loan Association, supra, whose only relation, thereafter, to 
 
 and see post, 175. the association, is that of debtor. 
 
 * This is in every sense analogous, Bowker v. Mill River Loan Fund 
 and stands upon the same ground Association, 7 Allen (Mass.). 100. 
 of right, as the propositions already 4 The notice of withdrawal murks 
 laid down with reference to the en- the time of the cessation of the mem- 
 forcement of subscriptions upon bership, the time elapsing till pay- 
 mortgages, the principal debt se- meut of the stock can be demanded, 
 cured by which lias been discharged, being merely a provision for the 
 See ante, 88-91. convenience of the society.
 
 110.] DUTIES OF MEMBERS. 153 
 
 whereupon his stock was marked, on the books, as " cancelled 
 and withdrawn." It was held, in such a case, that the building 
 association, becoming embarrassed by liabilities, could not after- 
 wards recover for dues which would have subsequently accrued 
 on said stock. The relative position of the parties was that of 
 debtor and creditor ; and after an acceptance of the terms of 
 the resolution, and payment by the debtor of the sum found 
 thereby to be due, the new contract became executed, and a 
 case of accord and satisfaction was made out. 1 The fact that 
 the sum so fixed for the payment in full was subsequently 
 found insufficient to meet the exigencies of the society, will 
 not avail to impose any further liability upon, or give the 
 building association any further claim against, the member who 
 withdrew under such an arrangement. 2 And, though there 
 may be doubts as to the validity of the resolution under which 
 it was consummated, the building association, having had the 
 benefit of it, is estopped from denying such validity, 3 just 
 as a shareholder, v ID, in his turn, benelitting by such an op- 
 portunity thus o. cr 1 by the association, has assumed certain 
 obligations, in er.clunge for others, cannot be relieved from 
 them upon the plea of illegality in the conduct of the officers 
 of the association in sanctioning the arrangement. 4 
 
 Personal Liability of Stockholders for Debts of Society. 
 
 110. As to the extent of the individual liability of mem- 
 bers of building associations to third parties for the debts of 
 the corporation, this is a matter which depends largely upon 
 the statutes of the State in which it may be located. It has 
 already been intimated, that, before the incorporation of the 
 society, care and economy should be exercised by the parties 
 conducting the scheme with reference to the expenses they 
 
 1 Miller . Jefferson Building As- and what is unwise and imprudent; 
 
 sociation, 50 Pa. St. 32. upon that point the judgment of the 
 
 9 Priestly v. Hopwood, 12 W. R. individual is subject to that of no 
 
 1031; 10 L. T. ( N. S. 646. "The other tribunal." Hunt, J., in Jef- 
 
 right of an individual or a corpora- fries v. Life Insurance Co., 22 Wall, 
 
 tion to make an unwise bargain is (U. S.) 47 (53). 
 
 as complete as that to make a wise 3 Miller v. Jefferson Building As- 
 
 bargain. The ri^ht to make con- sociation, supra, 
 
 tracts carries with it the right to de- 4 Hoboken Building Association 
 
 termine what is prudent and wise, v. Martin, 2 Beas. (N. J.) 428.
 
 154 THE LAW OF BUILDING ASSOCIATIONS. [CH. VI. 
 
 incur, as, BO f afr as these are concerned, the individual liability 
 of the persons contracting is unquestioned, even after the in- 
 corporation is effected, and although the society agree to un- 
 dertake the payment. 1 Towards liabilities assumed by the 
 association subsequently to its incorporation, the members, in 
 the absence of any statutory exception made as to them, hold 
 the same relations as the members of any other corporation 
 have to its indebtedness. An examination of the details of 
 this question is quite beyond the scope and purpose of this 
 treatise. The general doctrine is, that a member's liability 
 is equal to the extent of his stock-interest in the association ; 
 i.e., to the par value of the stock he holds in his name, to- 
 gether with the unpaid subscriptions thereon." And if he 
 be himself a creditor of the association, he may set off his 
 claim against his liability. 3 
 
 Corporate Property may be Followed into Hands of Stockholders. 
 
 111. Property which was owned by the association may, 
 under circumstances, become liable for its debts in the hands 
 of stockholders to whom it has been transferred. For whilst 
 the doctrine, that " the law recognizes only the creature of 
 the charter, and knows not the individuals," 4 in general 
 holds out a protecting hand over the stockholder who no 
 longer bears that relation to the company, who has settled 
 with it, and become a bona-fide holder of its property ; yet a 
 stockholder is not entitled to any share of the capital stock, 
 or dividends of the profits, until all the corporation's debts 
 are paid. The property of the corporation is regarded as 
 held by it in trust for the payment of its debts ; * and if a 
 
 1 See ante, 50. in another action begun later.) See 
 * State Savings Association . also cases in next note. 
 Kellogg et al. 63 Mo. 540. (It is Remington . King, 11 Abb. 
 there said that the institution of Pr. (N. Y.)278; cit. Briggs v. Pen- 
 suit against a member, for a corpo- niman, 8 Cow. (N. Y.) 387; Tall- 
 rate debt of the association, does not madge v. The Fishkill Iron Co., 4 
 operate as a lien upon his limited Barb. (N. Y.) 382. 
 liability under the statute, so as to 4 Angell and Ames, Corp., 595. 
 hold him therefor against a senior 5 Field, Corp., 143; cit. Chicago, 
 iudgment, and execution obtained etc. , R. R. Co. v. Howard, 7 Wall. 
 
 (U. S.) 392.
 
 111.] EIGHTS OF MEMBERS. 155 
 
 stockholder in an insolvent building association accept its 
 real estate in payment of his stock, it will be affected with 
 that trust in his hands, and the purchaser, though there was 
 a valuable consideration, will be liable for its value to the 
 creditors. 1 So, too, where the trustee of a building associa- 
 tion purchased lands, paying one-fourth of the purchase 
 money, and agreeing to execute a legal mortgage, if required 
 so to do, for the balance, the vendor retaining the conveyance ; 
 the members of the society to whom the land was allotted, 
 and who paid their purchase money to the building associa- 
 tion, without inquiring into the title, were, upon a bill filed 
 against them by the original vendor, after failure on the part 
 of the trustees to pay the balance of the purchase money, for 
 which no legal mortgage had been given by the trustees, de- 
 creed to pay the same, otherwise the estate to be sold. And 
 in case any of the allottees, less than the whole number, 
 should liquidate the claim, the others were ordered to con- 
 tribute, otherwise their land to be sold to discharge what 
 was due in respect thereof. 2 
 
 CHPATER VII. 
 
 RIGHTS OF MEMBERS. 
 
 112. Classification of rights of members. 
 
 113. General rights as corporators. 
 
 115. Nature of the right to receive loan. 
 
 117. Right of members applying for loan to be preferred over outside 
 
 investments. Purpose of building associations. 
 
 122. Highest bidder to receive loan. Minimum premiums. 
 
 123. Right to claim loan depends upon ability to furnish security. 
 
 124. Member cannot maintain assumpsit for promised loan. 
 
 1 Chambersburg "Woollen Co. v. * Peto v. Hammond, 8 Jur., N. 
 Chambersburg Manufacturing and S. 550; 31 L. J., Ch. 354; 30 Beav. 
 Building Association, 31 Leg. Int. 495. Persons buying from building 
 (Pa.) 357. associations must examine the title 
 
 they buy.
 
 156 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 125. Society need not inquire into purpose or application of loan. 
 
 126. Proportion of loan grantable to applicant's stock-interest. 
 
 127. Right of withdrawal; its foundation, nature, and extent. 
 
 128. Right to withdraw does not involve right to account of profits. 
 
 130. Amount withdrawable by any member. 
 
 131. Statutory terms of withdrawal. 
 
 132. Charter and by-law provisions, as to the withdrawal, inconsistent 
 with statute, void. 
 
 133. Terms of withdrawal, deviating from prescribed rule, may be- 
 come binding on society. 
 
 134. Regulation of withdrawals by charter or by-laws, construc- 
 tion. 
 
 135. Officers cannot exercise discretion in approving withdrawals 
 arbitrarily. 
 
 186. Withdrawing member becomes a mere creditor of the society. 
 
 137. Withdrawing member may proceed to judgment against society 
 for amount due him. 
 
 138. Discretion of courts as to execution against society. 
 
 139. Society to keep funds available for withdrawing members. 
 
 140. Statutory limitation of funds available for withdrawing mem- 
 bers. 
 
 141. Effect thereof upon right to enforce payment by suit. 
 
 144. Stockholder cannot, qua stockholder, sue society at law for value 
 of paid-up stock. 
 
 145. Member may, under circumstances, compel settlement in 
 equity. 
 
 146. Foundation of the principles applicable to borrowers. Mutual- 
 ity of the scheme. Membership of borrowers. 
 
 149. Elements of contract between borrowing members and society. 
 
 151. Borrowing member cannot withdraw. 
 
 152. Right of voluntary repayment. 
 
 154. Terms of, and rules for, voluntary repayment in the absence of 
 special by-laws or statutory provision. 
 
 158. Voluntary repayment under the provisions of the articles. Eng- 
 lish decisions. 
 
 165. Importance of English cases in America. Exceptions. 
 
 167. Construction of provisions, favoring right of repayment. 
 
 169. Rights as to repayment at time of loan cannot be varied; but 
 special arrangements, agreed to by member, conclude both 
 parties. 
 
 171. Member cannot claim benefit of special arrangement unless he 
 consent to, and carry out its terms; except where value of stock 
 changed with a view to dissolution, etc. 
 
 173. Borrowing members, being a majority, cannot force terms upon 
 investors, involving discontinuance of society. 
 
 174. Repayment upon decease of borrowing member, and judicial 
 sale of property. 
 
 175. Rights of members upon forced repayments on default. 
 
 176. Borrower's membership not necessarily forfeited by suit upon 
 default. Statement of account in equity.
 
 113.] RIGHTS OF MEMBERS. 157 
 
 178. Tender. Effect of refusal to accept by society. 
 
 179. Costs in redemption and foreclosure suits. 
 
 180. Redemption in permanent societies. Liability of members. 
 
 Classification of Rights of Members. 
 
 112. In treating of the rights of members of building 
 associations, it will be necessary, in order to avoid confusion, 
 to consider the subject, first, briefly and generally, in relation 
 to them, as members of the corporation, or corporators ; 
 secondly, with peculiar reference to their status as investors ; 
 and thirdly, in like manner, as borrowers. 
 
 General Rights as Corporators. 
 
 113. In their capacity of corporators, the members of a 
 building association have the same rights, in every respect, so 
 far as may be applicable, as are conceded to the members in 
 any other corporation. Such is the right to attend the cor- 
 porate meetings, and to receive the proper notification of 
 the time and place of its occurrence ;' as well as the right 
 of voting at the same. It has been a custom in building 
 associations, since their inception, and one, it seems, very 
 generally followed, to allow every member but one vote, 
 irrespectively of the number of shares he may hold. 1 Some- 
 times this rule is established by the constitution or statute, and 
 again it is followed by a sort of tacit understanding, and general 
 consent. Its reason, or origin, at least, may be found in the 
 primary character of building associations as institutions, not 
 for the enrichment of capitalists who could afford numerous 
 shares, but for the safe-keeping and fructifying of the pit- 
 tance of the inopulent and industrious ; not for the hoarding 
 of great sums to be increased, under the pretence of philan- 
 thropy, at exorbitant rates of interest, but for the accumu- 
 lation of a modest sum, wherewith to secure a homestead 
 sufficient for the wants of artisans, mechanics, or small trades- 
 men. Each single share as will be seen, for instance, in the 
 account given of the Greenwich Union Building Association* 
 represented such an amount ; and every member held but 
 one. Indeed, it was, at one time, considered doubtful, 
 whether, under a statute in which shares were authorized as 
 
 1 As to the corporate meeting, s Barry, Law of Building Socie- 
 with nil its incidents, see post, ties. p. 28. See 441, 68, note. 
 1^2-190. 'See ante, 5.
 
 158 THE LAW OF Bt'ILLUNli ASSOCIATIONS. [CU. VII. 
 
 not exceeding a certain amount for each share, a member 
 could lawfully hold more than one share. Otherwise, what 
 purpose was to be served by limiting the shares to a fixed 
 amount, if a member could hold any number of them?' 
 Subsequently, it was held, under the same statute, that a 
 member might take more than one share of the fixed value, 2 
 and the question does not appear to have been again raised. 
 Yet the new doctrine and practice have not entirely changed 
 that remnant of the old which restricts a member to the right 
 of casting a single vote, no matter how large his interests 
 may be in the society. And the vote must be cast in person, 
 unless there is special authority for proxies in the constitution 
 or by-laws.' But a pledgor of his stock retains his rights to 
 vote and hold office as a member.* 
 
 114. To be elected to, and to hold, office, to have access 
 to the corporate books ; in proper cases to institute and con- 
 duct proceedings against unfaithful and negligent officers for 
 the protection of the stockholders^ 5 or to compel lawful action 
 on their part, by restraining their unlawful projects,' to sue 
 the corporation upon claims not arising out of the relations of 
 membership in it, T and ultimately, upon the termination of 
 the scheme, to share in its profits, and even, in proper cases, 
 to apply to the court having jurisdiction to dissolve or wind 
 np the concern, 8 are equally prerogatives of membership, 
 
 1 Cutbill v. Kingdom, 17 L. J., McCart. (N. J.) 219, not disturbed 
 
 Ex. 177; 1 Exch. 494. in this particular in 2 C. E. Gr. (N. 
 
 * Morrison n. Glover, 19 L. J , Ex. J.) 497. 
 20, 25; 4 Exch 430; and see Barry, B See post, 213. 
 Law of Building Societies, p. 6, Grimes v. Harrison, 28 L. J., 
 12, following the latter case; 14 L. Ch. 823; 33 L. T. Rep. 115: 5 Jur., 
 T. Rep. 204; 14 J. P. 84. There is N. S. 528. 26 Beav. 435; 23 J. P. 
 no restriction upon the number of 421. A single shareholder can main- 
 shares any member may hold, unless tain such an action. See Atwood 
 imposed by statute, charter, or by- t>. Merry weather, L. R., 5 Eq. 464, 
 law. n. ; Clinch v. Financial Corporation, 
 
 8 Angell and Ames, Corp., Id. 450, L R. 4, Ch. 117; Menier 
 
 128-9, 130: Davis, Law of Building, t>. Hooper's Telegraph Works. L. 
 
 etc., Societies, 88. R. 9 Ch. 350 ; Russell v. Wake- 
 
 4 Angell and Ames, Corp.. 132; field Water Works, L. R, 20 Eq. 
 
 Field, Corp., 233; Mechanics' Build- 474. 
 
 ing and Loan Association of New T See post, 264-268. 
 
 Brunswick t>. Conover et al., 1 8 See post, 488-491.
 
 115.] BIGHTS OF MEMBERS. 159 
 
 together with others which it is needless to mention, being, 
 in a great measure, merely the converse of the rights of the 
 society against the members, and of the duties of the latter to 
 the former. Many are in no wise distinctive of, or peculiarly 
 significant to, building associations, and their details belong 
 more properly to a work upon the law of corporations gen- 
 erally, which is not intended to be herein embraced. To 
 them, and to such incidental mention as may be given to 
 these particulars, in this treatise, under appropriate heads, the 
 reader must be referred. 
 
 Nature of the Right to Receive Loan. 
 
 115. The most important privilege which a member in 
 a building association, by virtue of his being a shareholder 
 and investor the privilege, indeed, which draws that class of 
 men into its circle, of whom legitimately the membership 
 ought to be composed, and for whose benefit the whole 
 scheme was invented, and countenanced by law, is that of 
 receiving loans or advances ' from the association, upon 
 proper security furnished by the borrower, or advanced mem- 
 ber. It, no doubt, lay in the original plan of the institution, 
 that every member should eventually become a borrower. 2 
 Certainly every sneinber has the right to become such, pro- 
 vided he can give the society such guarantees against losses 
 as prudence and good business management require, and is 
 willing to pay the premium which fair competition with 
 other members desirous of obtaining the same benefit may tix 
 as the value of his preference. In order to serve this purpose 
 the more effectually , by prescribing the periods and manner 
 in which these loans are to be granted by the association, and 
 making these directions obligatory upon it, as well as notori- 
 ous and intelligible to the members, many of the statutes 
 governing building associations require their officers to offer 
 the money on hand, when it a'mounts to a certain sum, at 
 stated periods, for sale to the stockholders, and to award the 
 loans to the highest bidder. 
 
 1 The words "loan" and "ad- being attached to the one distin- 
 
 vance," and their derivatives, are guishing it, in legal effect, from the 
 
 used interchangeably in this work, other, unless expressly pointed out. 
 
 as in popular speech, no significance * See ante, 40
 
 ICO THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 Right of Members Applying for Loan to be Preferred over Outside In- 
 vestments. Purpose of Building Associations. 
 
 116. Where such a provision is contained in the statute 
 supreme over the building association, or is incorporated in 
 the charter, it follows (1) that the members are entitled to the 
 refusal of the money ; (2) that the highest bidder at the sale 
 must be awarded the loan, if he can give proper security ; 
 and (3) it seems to be a necessary result of such provision of 
 the statute, that the building association is absolved from in- 
 quiring into the application of the money loaned, by the bor- 
 rower. 
 
 117. It may become a question of some nicety, exactly 
 how far the building association is bound to accommodate its 
 members, to the exclusion of outside investments. Where 
 expressly authorized by statute so to do, a building association 
 has the right to lend its money, not only to members, but 
 also to strangers. 1 Yet such loans must be regarded as shifts, 
 allowable, from the necessities of the case, for the purpose of 
 obviating the contingency of its funds remaining idle upon 
 its hands, for lack of members to take them up. If there 1)3 
 any such, desirous of obtaining the money, and capable of 
 satisfying the society as to the security receivable by it to 
 make the loan safe, the association is obliged to give it to him, 
 though the profit, in that case, may be smaller than if it were 
 allowed to choose another investment offering at the same 
 time. Under some statutes, too, building associations are al- 
 lowed to use their funds in the purchase of real estate. Where 
 this is the case, opportunities may frequently present them- 
 selves of making most desirable investments, quite as secure 
 and far more proiitable than loans to members at any practi- 
 cable premium. Yet, if the statute or rules contain the re- 
 quirement referred to, the obligation resting upon the associa- 
 tion admits of no cavil, that the members should be given 
 the preference. Indeed, it seems clear, that such would be 
 the duty of the association, and the right of the member, even 
 were the statute bare of any command to that effect ; and 
 that the provision contained in the Act of 1850 in Con- 
 
 1 Union Building Loan Associa- Brunswick et al , 2 Stewart (N. J.), 
 tion of New Brunswick t>. The Ma- 359: Cutbill T. Kinpdora, 1 Exch. 
 sonic Hall Association of New 494; 17 L. J. Exch. 177.
 
 I 118.] iUGillS OF MEMBERS. 161 
 
 iiecticut, prohibiting building associations from loaning money 
 to outsiders where there were members willing to take it, and 
 capable of giving proper security for it,' was but the ex- 
 press declaration by one Legislature of the thought and intent 
 in the minds of all the others. 
 
 118. If we consider the reasons which may be assumed 
 to have guided Legislatures in conferring upon building 
 associations the extraordinary privileges and immunities 
 which they enjoy, it will be readily understood, (and there 
 can be no other apology for it,) that, at the bottom of it all, is 
 a motive of public policy. * The primary design of building 
 associations is, to encourage the acquisition of real estate, the 
 building of dwellings, the ownership of homesteads, to in- 
 crease the proportion of property holders among that class of 
 the population whose slow and laborious earnings are, by 
 reason of their pettiness, most fugitive, and generally spent 
 before they reach a sum of sufficient magnitude to back a 
 desire for those guarantees of good citizenship, which the 
 policy of our law has always found in landed property. That 
 is the class for whose benefit building associations were origi- 
 nally devised ; from among whose number their membership 
 was, and, for the most part, still is, drawn ; and all the inci- 
 dents of membership were designed to accommodate their 
 necessities, and intended to serve their purposes. It is, there- 
 fore, asserted by the courts of Pennsylvania, that an associa- 
 tion for the " accumulation of a fund by the savings of its 
 members, to build or purchase for themselves dwelling-houses 
 or real estate, or to enter into business; " 8 or merely for the 
 purpose of loaning money to its members, not expressing any 
 intention to further the erection and acquisition of hoine- 
 Htfads, 4 was not a building association within the meaning 
 of the Legislature. And the courts of other States, holding 
 that fundamental object in view, have not hesitated to declare 
 contracts* made with building associations, and rules and 
 
 1 See The Mechanics and Work- Association T. Sutton, 35 Pa. St. 463 
 
 ingmen's Mutual Savings Bunk and (opinion of Strong, J.. 467). 
 
 Building Association r. Wilcox, 24 3 Jarrett r. Cope, 68 Pa. St. 67. 
 
 Conn. 147. Similar provisions ap- * Kupfert v. Guttenberg Building 
 
 ponr also in the statutes of other and Savings Association, 30 Pa. St. 
 
 See nnte. ch. ii. 465. 
 
 * See North America Building s Parker v. The Fulton Loan and
 
 362 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 regulations ' made by them, illegal and void, where their 
 operation was such as to defeat that purpose. 
 
 119. As a mere savings institution, the building : 
 ciation would never have recommended itself to the favor of 
 Legislatures to so unprecedented a degree.* As a mere bank 
 for the depositing of money lying idle, for the purpose of 
 fructifying it, for the rich, by fleecing the needy, it would 
 never have acquired the unusual rights it exercises. But the 
 idea, the possibility, of making membership in it the muans 
 of raising a property-holding, homestead-owning class of citi- 
 zens, precisely among those whose improvident habits and 
 petty earnings had hitherto debarred them from the blessing, 
 or feeling the stimulus of the prospect, of owning their own 
 homes; the desirableness of augmenting the proportion of 
 land-owners among the working classes, particularly in a 
 republic, seemed so weighty a consideration in the minds of 
 legislators, that they were willing, in exchange, to make a 
 sweeping exception to many of the best-settled rules of gen- 
 eral policy applicable to dealings between man and man. 
 But " the person, whether natural or artificial, to whom a 
 privilege is granted, is bound, upon accepting it, to render to 
 the public that service the performance of which was the 
 inducement of the grant ; and it is because of such obligation 
 to render service to the public that the Legislature has power 
 to make the grant." ' 
 
 120. If a building association invest its money in the pur- 
 chase of real estate (looking forward to an increase in its 
 value for the realization of a great gain), to the exclusion of a 
 member who desires the whole or a portion of that money, to 
 enable him to acquire and improve real estate of his own, 
 and who offers acceptable security for the loan ; it is doing 
 precisely what it was not created for. It is tying up money, 
 
 Building Association, 46 Ga. 166; Association et al., 2 Cold. (Tenn.) 
 Mills et al. r>. Salisbury Building 418; Herbert et al. e. Kenton Build- 
 and Loan Association, 75 N. C. 292; ing, etc., Association, supra. 
 Latham and wife v. Washington * See Wrigley, The Working- 
 Building and Loan Association, 77 man's Way to Wealth, (a Treatise on 
 Id. 145; Herbert et al. v. Kenton Building Associations,) pp. 10, seqq. 
 Building and Savings Association 'Gordon, etc., v. Winchester 
 of Covington, 11 Bush (Ky.) 296. Building and Accumulating Fund 
 1 Xartin v. Nashville Building Association, 12 Bush, (Ivy.) 110.
 
 122.] BIGHTS OF MEMBERS. 163 
 
 whilst its business is to let it circulate ; it is making large 
 gains which enrich the wealthy, who can afford to wait, and 
 benefit little to the poor who stand in need of immediate 
 accommodation ; it is incurring great hazards, when its busi- 
 ness is intended to be conducted on slight risk and moderate 
 profits; it is denying its assistance to those for whose ad- 
 vancement it was endowed with liberal powers ; it is making 
 membership, with its continual payments, an oppression to 
 those to whom it was intended to be a blessing denying 
 them what it was meant to ensure, and forcing upon them a 
 policy, and drawing them into speculations, inconsistent with 
 their necessities and resources ; and it is defrauding the State, 
 from whom it holds its franchises for a specific end, whilst 
 adopting the very course by which that end will most effectu- 
 ally be defeated of its accomplishment. 
 
 121. Where there are no members desiring to borrow 
 the association's money, its investment in real estate, or any 
 other enterprise, may or may not be proper, according to the 
 powers granted it. But where the question is between a 
 member who desires a loan, and whose standing and proposed 
 securities are unexceptionable after the standard adopted by 
 the association, and a possible investment of the funds in real 
 estate, or by way of loan to a stranger, it is clear, upon prin- 
 ciple, that the member should have the preference, and is en- 
 titled to enforce the same against the officers of the society, 
 who, in their turn, must, if need be, be enjoined from any 
 proposed action looking towards a depletion of the treasury 
 by such outside loans and investments, whilst individual mem- 
 bers, desiring to take loans, and entitled so to do, would be 
 prejudiced (in a manner and to an extent necessarily incapable 
 of adequate compensation at law) by such action. 
 
 Highest Bidder to Receive Loan. "Minimum Premiums." 
 
 122. It is equally manifest, that, where the statute or 
 charter directs the granting of the loan to the highest bidder, 
 the person who, upon a fair competition, occupies that posi- 
 tion, is, if he can substantiate his claim to the loan by offering 
 the proper security, absolutely entitled to receive it. If the 
 direction is contained in the statute under which the building 
 association is organized, such right resides in every member, 
 notwithstanding a provision in the charter or by-laws intended
 
 164 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 to modify it by fixing a minimum premium, below which no- 
 bids will be accepted. In such case, the rule which estab- 
 lished the so-called " fixed premium" has no validity what- 
 ever, 1 and its operation, to the injury of a borrower, may 
 by him be act up as a defence, pro tanto, against the enforce- 
 ment of his debt to the association. 9 But it must appear that 
 he was really prejudiced by the operation of the illegal rule.* 
 Therefore, if the premium was run up, even to an extrava- 
 gant figure, by mere competition, free and unfettered, he has 
 nothing to complain of with regard to the rule ; for it has 
 in no wise affected him, and he can base no claims to defal- 
 cation upon the ground of a wrong done to him by reason 
 of it. 
 
 Right to claim Loan Depends upon Ability to Furnish Security. 
 
 123. Again, his right to receive the loan by virtue of 
 being the highest bidder, depends upon his ability to furnish 
 the requisite security. What security may be demanded by 
 a society, for the loans which it grants to its members, (un- 
 less specifically prescribed by statute or charter), is within 
 the proper discretion of the society and its directors ; with- 
 out conceding to them, however, the right to discriminate 
 arbitrarily between members, imposing upon any particular 
 one more severe conditions, in the absence of substantial rea- 
 sons therefor, than are established in the generality of cases. 
 Usually, the security exacted by building associations is that 
 of mortgage or judgment, accompanied with an assignment of 
 the borrower's stock in the association. But the latter is ordi- 
 narily under no obligation to take this security, to the exclu- 
 sion of any yther, and no sort of equities arise against it by 
 reason of its deviation from what may be the usual course. 4 
 Gross negligence in the officers would, of course, subject them 
 to personal liability in case of loss. 
 
 1 State v. Greenville Building As- Fund and Loan Association . 
 
 sociation, 29 Ohio St. 92; State v. Young, 9 W. N. C. (Pa.) 251. 
 
 The Oberlin Building and Loan As- 4 Union Building Loan Associa- 
 
 sociation, 35 Ohio St. 258; Stiles's tion of New Brunswick t>. The Ma- 
 
 App., 9 "W. N. C. (Pa.) 83, and see sonic Hall Association et al., 2 
 
 post, 394-397. Stewart (N. J.), 389; and see post, 
 
 * Stiles's App. supra. g 380-381. 
 
 * Orangeville Mutual Savings
 
 126.] RIGHTS OF MEMBERS. 1C5 
 
 Member Cannot Maintain Assumpsit for Promised Loan. 
 
 12-i. Where a member has become entitled to receive a 
 loan, and been promised such accommodation by the society, 
 he cannot, if subsequently refused the money, even after his 
 mortgage has, by the building association's attorney, without 
 its consent, been placed upon record, recover the sum agreed 
 upon in an action of assurnpsit, though he might have an 
 action on the case for breach of contract. 1 
 
 Society need not Inquire into Purpose or Application of Loan. 
 
 125. Under the statutory provision referred to, and sub- 
 ject to the proper discretion of the directors as to security, the 
 highest bidder is entitled to receive the loan irrespectively of 
 the purpose to which he proposes to devote the money. 8 
 This doctrine follows, as a necessary consequence, from the 
 duty of the association to give its money to the highest bid- 
 der, and the impracticability, in most cases, if deception is 
 intended to be practised, to supervise and control the applica- 
 tion of the money received by the borrower, in the absence 
 of direct statutory mandate to that effect. 
 
 Proportion of Loan Grantable, to Applicant's Stock-Interest. 
 
 126. The proportion which the loans grantable to any 
 member shall bear to the amount of stock he holds, is usually 
 regulated by law. As a general rule, it may be assumed, that 
 he is entitled to receive, by way of loan or advancement, an 
 amount equal to the par value of the shares he holds, less the 
 premium. Beyond this he cannot claim, nor the society 
 grant, any amount by way of loan or advancement, without 
 the support of some statutory, charter, or by-law provision, 
 giving him the right and the society the power. Sweeping 
 
 1 Conway . The Log Cabin Per- (Pa.) 18; Becket . Uniontown 
 
 manent Building Association of Bal- Building Association, 7 Norris (88 
 
 timore City, 52 Md. 137; and see Pa. St.), 211; Relief, etc., Associa- 
 
 post, 264-268. tion v. Longshore, 8 Luz. Leg. Reg. 
 
 9 Juniata Building and Loan As- (Pa.) 199. It has been long recog- 
 sociation v. Mixell, 84 Pa. St. 313; nized in England that building as- 
 Hagerman, et al. . The Ohio Build- sociations need not look to the ap- 
 ing and Savings Association, 25 plication of money loaned to mem- 
 Ohio St. 186; and see Manufac- bers. Cutbill a. Kingdom, 1 Exch. 
 turers' and Mechanics' Sav. and 494, 17 L. J. Exch. 177. 
 Loan Co. v. Conover, 5 Phila.
 
 166 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII, 
 
 discretion is sometimes vested in the directors in such cases 
 by statute and by-law. But even when this is not the case, 
 they would probably be authorized to concede a loan to a 
 member beyond the figure of the par value of his stock, pro- 
 vided they may lend money to strangers. 1 From such they 
 have the right to take any kind of security, they, in the 
 proper exercise of their discretion, may deem sufficient.* 
 They need not require an assignment of stock as collateral, 
 equal to the amount of the loan, or any assignment of stock 
 at all.' Why, then, should a member necessarily be in a 
 worse position, as to the possibility of accommodation out of 
 the society's funds, than a mere stranger, so long as he can 
 give acceptable security ? 4 The right to grant, in such case, 
 unless there be some binding restriction somewhere, is cer- 
 tainly vested in the directors ; but the right to demand does 
 not reside in the member, except by virtue of, and in the 
 manner prescribed by the provision of the by-laws of the 
 society. 
 
 Right of Withdrawal : its Foundation, Nature, and Extent. 
 
 127. The privilege to withdraw, at any time before the 
 society's expiration, without being subject to a forfeiture of 
 the money already paid in, is one of the most valuable of an 
 investing member's rights. It is true that his connection 
 with the association is essentially that of one of a partnership 
 for a definite period of time, entitled, upon its expiration, to 
 reap the harvest of his investments in the enterprise. In 
 becoming a member of the association, he does so, ostensibly, 
 at least, with the purpose of remaining in it to the end, bear- 
 ing his part of all its burdens, and finally sharing all its prof- 
 its in the same proportion. His failure to continue in the 
 concern, therefore, is essentially in the nature of a breach of 
 contract, upon which the loss of his previous contribution 
 might, not unreasonably, be held to follow. But circum- 
 stances, unforeseen at the time of his assumption of member- 
 
 1 See Cutbill . Kingdom, 1 Exch. Union Building and Loan As- 
 
 494; 17 L. J. Exch. 177; Union sociation t?. The Masonic Hall As- 
 
 Building and Loan Association v. sociation, supra. 
 The Masonic Hall Association, 2 3 Ib. 
 Stewart (N. J.), 389. 4 See Cutbill . Kingdom, supra.
 
 128.] RIGHTS OF MEMBERS. 167 
 
 ship, may, without any wrong on his part, make a severance 
 of his connection with the association desirable, imperative. 
 A prudent person may be supposed to take such a contingency 
 into consideration when about to join the society. If now, 
 upon entering, he had the alternative only of sticking to it 
 till to its close, or losing what he has paid in, or even all in- 
 terest upon what he has paid in, the prospect would deter 
 many who would make good and conscientious members, but 
 who could not fail to remember, that, through some one of the 
 numerous contingencies to which men are liable, the pay- 
 ments incident to membership might, some day, become too 
 heavy a burden for them to carry ; or that, by reason of re- 
 moval from the seat of the corporation, their keeping up 
 might be rendered impracticable. A provision, as politic in 
 the interests of the building association, as just and reassuring 
 to its members, is, therefore, made an integral part of the 
 scheme, viz. : that a member desiring to withdraw shall be 
 allowed to do so, upon proper notice given to the association, 
 of his intention, and with the privilege of receiving from it 
 what he has paid in by way of subscription (after deduction 
 of all fines and charges against him, and of his proportion- 
 ate share of the expenses of the enterprise, to the date of 
 his withdrawal), together with such share of the profits of 
 the association as may appear just and warranted by its 
 business. 
 
 Right to Withdraw does not Involve Right to Account of Profits. 
 
 128. It must be well understood that such a business 
 does not give the withdrawing members the right to ask an ac- 
 count of his payments into, and of the profits made thereon 
 by, the association. No such liability can be recognized on 
 its part. Its contract with the members never was to hold 
 his deposits, like a bank, subject to his call, and at the same 
 time, like a factor, to be accountable to him, at any moment, 
 for the gains made by the turning over of these deposits. It 
 is a business venture, staked upon the achievement of ;i 
 tain object, possibly within a certain space of time. When 
 that object is accomplished, or that limit of time exhausted, the 
 contract between the member and the association calls for an 
 account at the hands of the latter. Previously to the happen-
 
 168 THE LAW OF BUILDING ASSOCIATIONS. [cH. VII. 
 
 ing of that contingency, there is no such liability resting upon 
 it. Nor, in the nature of things, could it reasonably be implied. 
 129. The whole business and operation of a building as- 
 sociation is based upon the idea that, as to the contributor, it 
 stands in a trust relation in respect of the funds contributed. 
 It receives them and administers them, and finally accounts 
 for them to the contributor, and for the profits made by their 
 investment, and the losses and expenses incident thereto 
 throughout the whole period of its running. Whatever may 
 be thought of the policy of thus putting one's funds out of 
 his own control, and into the hands of agents and trustees for 
 management and investment, during a long number of years, 
 this is, nevertheless, precisely what is done. 1 It is, more- 
 over, what is contemplated at the outset. The association is 
 to run until the shares are worth a certain amount, subject to 
 the limit imposed by statute or charter upon the length of 
 time allowed for the attainment of this result, or the duration 
 of the company. As soon as this happens, the society becomes 
 liable to account to the members ; for then their mutual deal- 
 ings cease, and an adjustment becomes necessary. In the 
 mean time, the stockholder has agreed to continue his pay- 
 ments upon his shares, and his money goes into the general 
 fund, and is administered and managed by the association, for 
 his own advantage and that of his fellows. It would be a 
 matter of great difficulty, at any stage intervening between 
 the commencement of the society and its winding-up, to give 
 an exact account of what has been done with any particu- 
 lar shareholder's contributions, or even generally with their 
 equivalent, without pretending to trace its source ; to tell how 
 much has been realized upon them in the way of profits ; how 
 much of them has been spent to answer the necessities of the 
 management ; how much of them has been lost by misfor- 
 tunes and accidents of every kind, to which investors of 
 money are exposed. It is a difficulty which amounts to a 
 practical impossibility.* The present value of the stock de- 
 
 1 Citizens' Mutual Loan and Ac- Building and Loan Association of 
 
 cumulating Fund Association v. Hyde Park, 38 Leg Int. (Pa.) 333: 
 
 Webster, 25 Barb. (N. Y.) 264. 11 W. N. C. 414; 97 Pa. St. 514. 
 
 8 Watkins v. The "Workingmen's
 
 129.] BIGHTS OF MEMBERS. 169 
 
 pends upon the length of time during which payments upon 
 it will have to be made, in order to raise it to the required 
 figure. The shorter that period, the greater its present worth. 
 Much of the property of a building association consists of se- 
 curities of various kinds, taken, as is usual, to cover a far 
 greater proportion of the value of the real estate upon which 
 they are liens, than would be allowed by individuals or cor- 
 porations prohibited from recovering usurious interest. How 
 much will be realized from these securities it is beyond hu- 
 man foresight to tell. Much, too, of the property consists of 
 real estate, purchased to save debts secured upon it, or, where 
 that is legally within the association's powers, for purposes of 
 investment. What these assets may be worth upon the ter- 
 mination of the enterprise, or within the next few years, con- 
 sidering the rises and falls in the real estate market, is again 
 a thing which no man can find out. It is by waiting and 
 taking advantage of the opportunities of the moment that 
 they are made paying to the association, and whether that 
 moment shall arrive sooner or later, or not at all within the 
 society's corporate life, cannot be foretold. Yet another im- 
 portant factor in estimating the probable value of the stock 
 upon dissolution, would have to be the relative and always 
 fluctuating proportion between borrowing and investing 
 members (upon the frequency of the former of which largely 
 depends the prosperity of the society), and the extent of the 
 premium which borrowers may, from time to time, be found 
 willing to concede, a matter wholly controlled by the money 
 markets of the country, and the prevailing rates of interest 
 among men. The incalculable items of expenses in litiga- 
 tion, which may or may not become necessary in collecting 
 debts owing the society, of the promptness or tardiness of 
 contributing members, and innumerable minor considerations, 
 all directly tending either to augment or decrease the chanct- 
 of a speedy, profitable winding-up, must be taken into the ac- 
 count. All of them unite in making anything like an ap- 
 proximation of the present value of any one share, upon any 
 given day, having due regard to the fact that here is an en- 
 terprise whose character is to be judged of as a whole, and in 
 which no one person concerned shall have an advantage over
 
 170 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 any other, an absolute impossibility. Nor can the associa- 
 tion be called upon to perform such an impossibility. 1 
 
 Amount Withdrawable by any Member. 
 
 130. Where, as formerly in Connecticut, the shares of 
 a building association are a regular feature in the stock mar- 
 ket, and have an ascertainable value by reason of that fact, the 
 difficulty in doing exact justice to a withdrawing member 
 is very readily removable.* Where, however, that is not the 
 case, the most satisfactory expedient is that of allowing him 
 to take out what he has paid in, less fines and other charges 
 still owing from him, and a proportionate share of the expenses 
 of the business to date, and add to it such a sum, as his share of 
 the common profit, as may be deemed proper by the society. 
 
 Statutory Terms of WithdrawaL 
 
 131. In order to put this right upon a firm basis, and to 
 secure members against any kind of unfairness or oppression, 
 to which, at the hands of the building association, they might 
 become exposed, it is usually established and defined in the 
 statutes governing the incorporation of such societies. The 
 right of withdrawal is conceded to every unadvanced mem- 
 ber, upon certain notice given to the society of his intention 
 to withdraw. The proportion of the profits he may claim is 
 usually left to the discretion of the association, 3 with the 
 provision sometimes added, that members who have been 
 such for less than one year, shall not be entitled to any 
 profits, unless by the grace of the association, and that only 
 a certain proportion of its funds shall, at any one time, be 
 applied in satisfying withdrawings members. 
 
 Charter and By-Law Provisions as to Withdrawal, Inconsistent with 
 Statute, Void. 
 
 132. Where these details are prescribed by the statute, 
 no charter or by-law provisions can vary them to the preju- 
 
 1 See post, 455-457. share of profits as the directors may 
 
 * See Babcock v. The Middlesex determine, they must allow some. 
 Savings Bank and Building Associa- Fleming v. Self, 18 J. P. 296; 23 L. 
 tion, 28 Conn. 302. Even in such T. Rep. 63; Kay, 518; S. C., upon 
 case the withdrawing member is appeal, 3 Eq. Rep. 14; 24 L T. Rep. 
 liable to his share of losses and ex- 101; 18 J. P. 772; 24 L. J. r Ch. 29; 
 penses incurred. 1 Jur., N. S. 25; 3 W. R. 89; 3 De 
 
 * Where the statute or rules give G., M. & Q. 987. 
 the right to withdraw, with such
 
 133.J RIGHTS OF MEMBERS. 171 
 
 dice of withdrawing members ; and where the charter speci- 
 fies them, any by-law inconsistent therewith is, of course, 
 void. It is, however, in such case, necessary, that the person 
 desiring to withdraw with the benefits ordained by the stat- 
 ute, put himself into the proper position by complying 
 strictly with the requirements and formalities called for by 
 the same, and also with all regulations made by the society 
 not inconsistent with it. 1 As soon as he has done so, his 
 rights against the association are perfected, no matter what 
 may be the provisions of its own rules. Thus, where the 
 statute gives the right to withdraw with certain benefits, after 
 the expiration of the first year of membership, upon thirty 
 days' notice to the society ; whilst the charter of the associa- 
 tion provides that " members may withdraw only on good 
 and sufficient cause shown, to be judged of by the Board of 
 Directors ;" a person who has complied with the requirements 
 of the statute alone is held entitled to its full benefit, and 
 the charter provision, inconsistent with it, is utterly void. 2 
 Equally inoperative, under the same statute, is a by-law 
 assuming to compel withdrawing members to compete for 
 the priority of payment of their claims. 3 And the law gov- 
 erning in such case is that in force at the time the charter 
 was granted, and under which it was granted/ 
 
 Terms of Withdrawal, Deviating from Prescribed Rule, may become 
 Binding on Society. 
 
 133. Where, however, the operation of the variance 
 between the rule adopted by the society, and the provision 
 of the statute, is in favor of the member, and, upon the 
 whole, adverse to the society's interests, in strictness it may 
 be equally ultra vires / yet this plea cannot be set up by the 
 society when it has derived benefit, even if only of a tem- 
 porary kind, from the member acting under it, or has placed 
 him in such a position in consequence of his relying upon 
 the rule, that he would be injured by its abrogation.' This 
 
 ings Fund and Building Associa- 
 
 ' See post, 133-185. tion, 7 W. N. C. (Pa.) 95. 
 
 9 See Rhoads v. Hoernerstown 4 Miller v. Jefferson Building As- 
 Building and Savings Association, social ion, 50 Pa. St. 32. 
 82 Pa. St. 180 (185). 5 Eyre r>. Building Association, 
 
 3 Rogers v. S. W. Mutual Sav- 17 Leg. Int. (Pa.) 148; Miller p. Jef-
 
 172 THE LAW OF BUILDING ASSOCIATIONS. [CH. VIL 
 
 doctrine rests upon the ground of equitable estoppel, whereby 
 no party may be suffered to induce another to change his 
 condition, and then prejudice him by conduct inconsistent 
 with the prospects held out to him. Nor, on the other hand, 
 is the party benefited, that is, the member, a proper one to 
 raise objection to the validity of the arrangement. 1 And 
 though he repudiate it, he is, where it has been partly carried 
 out, entitled to its benefits. 11 
 
 Regulation of Withdrawals by Charter or By-Laws. Construction. 
 
 134. In the absence of any statutory provision upon the 
 subject, the matter of the terms of withdrawal is open to 
 regulation, either by charter and by-laws passed in accordance 
 therewith, or by by-laws alone. Whatever regulations may 
 then be adopted and conditions imposed by the society, so 
 long as they are not contrary to the spirit of the charter, to 
 the laws of the State and of the Union, will be binding upon 
 all parties. If, however, they are not explicit, or admit of 
 several interpretations, the leaning of the court is, to favor 
 the member as against the building association, and to give 
 to his liberty the benefit of any doubt. Thus, the by-laws of 
 an association provided that " in case any member, by reason 
 of sickness, removal, or through misfortune, is unable to con- 
 tinue the payment of his subscription, he may give notice to 
 the secretary of an intention to withdraw from the associa- 
 tion, and in case the directors are satisfied as to the grounds 
 of withdrawal, his whole amount of subscription shall be re- 
 turned, except the entrance fee;" 8 and that "any person 
 wishing to withdraw for the above reasons, or otherwise," 
 and who shall have been a member for a certain length of 
 time, "and be clear of the books," shall be entitled to certain 
 interest on that amount. It was held that any person having 
 
 ferson Building Association, 50 Pa. 8 Entrance fees in building asso- 
 
 St. 32; Archer c. Harrison, 7DeG., ciations are properly applicable to 
 
 Mac. & G. 404; 3 Jur., N. S. 194; the discharge of the ordinary ex- 
 
 and see post, 323. penses of the association, and are 
 
 1 See Hoboken Building Asso- not to be considered a deposit or 
 ciation v. Martin, 2 Beas. (N. J.) payment for which the member may 
 428. subsequently claim credit, under any 
 
 2 See Ibid. ; but also, post, 171, circumstances. Barker v. Bigelow, 
 172. 15 Gray (Mass.), 180.
 
 135.] RIGHTS OF MEMBERS. 173 
 
 been a member for the period of time specified, and being 
 " clear of the books," might withdraw without leave of the 
 directors, and was entitled to the bt'Mcfits set forth in the by- 
 laws. 1 The requirement of the directors' approval applied 
 only to those who wished to withdraw for the reasons given 
 in the by-laws, and who had not been members for the speci- 
 fied time. 
 
 Officers Cannot Exercise Discretion in Approving Withdrawals Arbi- 
 trarily. 
 
 135. Nor have the officers, vested with such power of 
 approval by the rules of the society, the right to exercise it 
 capriciously, unreasonably, or oppressively. The rules of a 
 building association provided, that, if any member, by reason 
 of sickness, removal from the city, or misfortune, were unable 
 to continue his subscriptions, he should give notice of his in- 
 tention to withdraw ; and in case the Board of Trustees were 
 satisfied as to the grounds of withdrawal, the whole amount 
 of subscriptions paid in by the member should be returned to 
 him. A member gave notice, in due form, of his intention 
 to withdraw, on the ground that he was " no longer able to 
 continue the payment of his subscriptions to the association, 
 owing to various misfortunes, losses in business, sickness in 
 his family, and the rigor of the times." The approval of the 
 trustees being withheld, suit was brought by the member 
 against the society. It was held that he must be permitted 
 to prove the truth of his alleged grounds of withdrawal, 
 which were set forth in his complaint and denied in the 
 building association's answer; and that, if he proved, upon 
 these grounds, his total inability to continue his subscription, 
 and that there was nothing in the pecuniary circumstances or 
 condition of the building association furnishing any reason 
 why the money paid into it should not be returned, he might 
 recover it back, although the Board of Trustees may n<>t 
 have declared themselves satisfied as to the grounds of his- 
 withdrawal. This approval, it was said, could not, under any 
 and all circumstances, be an indispensable condition to a mem- 
 ber's right to withdraw and receive back his money ; or. rather, 
 
 1 Fuller v. Salem and Danvers Loan and Fund Association, 10 Gray 
 (Mass.), 94.
 
 174 THE LAW OF BUILDING ASSOCIATIONS. [CH. VI 1. 
 
 the trustees had not the right to withhold their consent arbi- 
 trarily, when no ground existed, or could be suggested, for 
 their so doing. 1 
 
 Withdrawing Member Becomes Mere Creditor of Society. 
 
 136. As soon as a member has perfected his right, as a 
 withdrawing stockholder, against the association, by giving 
 the proper notice of his intention, for the specified time, and 
 conforming with all other lawful requirements in the premises, 
 he ceases, eo instanti, to be a member of the association,* and 
 assumes the exclusive character of creditor towards it, to the 
 amount he may be entitled to receive under the rules and 
 statutes. He has no longer the right to exercise any of the 
 privileges of membership. Nor can he transfer his stock, for 
 the act of withdrawal is the yielding up of the stock of the 
 withdrawing holder to the society, it paying him, or becoming 
 liable to pay him, its constitutionally ascertained value. But 
 he is at liberty, before being fully paid by the association, to 
 assign and transfer the balances due him from it,* to a mem- 
 ber of the association, as well as to any other person. 4 
 
 Withdrawing Member may Proceed to Judgment against Society 
 for Amount Due Him. 
 
 137. In his capacity as creditor, the retiring member, 
 having thus perfected his rights against the association, may 
 enforce them by an action at law/ in which the society is 
 made defendant, and there is no plea under which it can pre- 
 vent the entry of judgment against it for what the claimant 
 may, upon trial, be shown to be entitled to receive at its 
 hands.' The same right belongs to the retiring member's 
 
 1 Wetterwulgh v. The Knicker- 6 O'Rourke v. West Pennsylvania 
 
 bocker Building Association, 2 Bos. Loan and Building Association, 8 
 
 (N. Y.) 381. W. N. C. (Pa.) 176; 93 Pa. St. 308; 
 
 8 A member is not bound by new U. S. Building and Loan Associa- 
 
 rules made after he has given notice tion v. Silverman, 85 Pa. St. 394; 
 
 of his intention to withdraw. Ar- Estate National Savings, Loan and 
 
 milage . Walker, 2 Jur., N. S. 13; Building Association, 9 W. Js T . C. 
 
 30 J. P. 53; 26 L. T. Rep. 182; 2 (Pa.) 79; Wetterwulgh v. The Knick- 
 
 Kay & J. 211. . erbocker Building Association, 2 
 
 8 See Hennighausen and Wolff, Bos. (N. Y.) 381. 
 
 Rec're. v. Tisher, 50 Md. 583. U. S. Building and Loan Asso- 
 
 4 See Ibid. ciation v. Silverman, supra.
 
 138.] BIGHTS OF MEMBERS. 175 
 
 assignee of balances due upon withdrawal, even though the 
 latter be a member of the association. 1 But an averment by 
 the building association, defendant, of losses sustained at the 
 time of the withdrawal, will prevent judgment against it by 
 the withdrawing member until the amount really due him 
 has been ascertained. 1 
 
 Discretion of Courts as to Execution against Society. 
 
 138. Judgment being obtained against the building as- 
 sociation, it does not necessarily follow that execution may. 
 issue at once. Indeed, where the whole subject of withdraw- 
 als is left to charter or by law regulation ; i.e., when the 
 absolute right to withdraw and receive certain benefits, imme- 
 diately upon a certain notice, is not expressly secured by 
 statutory enactment ; it would seem that the claim of a with- 
 drawing member, not to be invested with rights of a 
 creditor, a judgment creditor even, but to force the society 
 at once to a full settlement with him, may be modified, to 
 some extent, and postponed, by reason of some matter or 
 thing contained in the constitution of the society of which he 
 was a member, or found in the present circumstances of the 
 same, making it inequitable or unjust to his late fellow-mem- 
 bers, to allow them to be unduly embarrassed by immediate 
 process. Thus in a case already referred to, 3 it was held that 
 a recovery might take place upon proof, inter alia, " that there 
 was nothing in the pecuniary circumstances of the building 
 association furnishing any reason why the money paid should 
 not be returned ;" and in another, 4 a set-off, by members of 
 the association indebted to it, of balances assigned them, by 
 withdrawing members, against claims of the society, wore 
 allowed, " there being nothing in the constitution making it 
 inequitable, with due regard to the rights of others, to allow 
 the set-off." It is by virtue of his past association with the 
 remaining members, and the participation allowed him, by the 
 rules, in the profits of their money as well as his own, that 
 
 1 Hennighausen and Wolff, bocker Building Association, 2 Bos 
 
 Rec'rs, t>. Tisher, 50 Md. 583. (N. Y. Super. Ct.) 381. 
 
 * Wittman v. Building Associa- 4 Hennighnusen and Wolff, 
 tion, 7 W. N. C. (Pa.) 80. Rec'rs, c. Tisher, 50 Md. 583. 
 
 * Wetterwulgh c. The Knicker-
 
 176 THE LAW OF BUILDING ASSOCIATIONS. [CH. VIL 
 
 the withdrawing shareholder receives back the payments he 
 lias made, increased by a certain amount. It would not be 
 right to suffer him, by way of acknowledging this benefit, 
 to turn upon the society he had just left, under circum- 
 stances exonerating it from the charge of wilful tardiness, or 
 of wilfully arranging its affairs in such a manner as to make 
 its funds unavailable for withdrawals, and when the incon- 
 venience of a reasonable delay would be slight to him, whiUt 
 the embarrassment resulting to the society and its members 
 from an instantaneous collection, by judicial process, of the 
 debt, which it has nourished and strengthened, and which 
 exists against it, by its own conscientiousness, sense of jus- 
 tice, and good management, might be such as to throw the 
 entire business into disastrous confusion. There appears no 
 reason for denying the right to proceed to judgment against 
 the society, to a member who lias perfected his claim against 
 it by observing ail the formalities and prerequisites of 
 withdrawal. He is a creditor, just as well as any other per- 
 son to whom the building association owes money, 1 and as 
 such is entitled to every security for his claim that any other 
 creditor might obtain. But the court has the power, and the 
 building association has the right to invoke that power, of 
 restraining the immediate issuing of execution against the 
 building association for the collection of the judgment, when 
 proper equities are shown by the society, in order to give it a 
 reasonable time to make up the money without undue embar- 
 rassment of its affairs.* 
 
 Society to Keep Funds Available for Withdrawing Members. 
 
 139. It must not, however, be overlooked, that it is the 
 duty of the association, whether the right of withdrawal be 
 
 1 U. S. Building and Loan Associ- Tisber, supra; U. S. Building and 
 
 ation T?. Silverman, 85 Pa. St., 394. Loan Association -c. Silvcrmnn, su- 
 
 9 Aside from the natural justice pra, which see post, 141-143. It 
 
 of this view, it seems to be ?uffl- has already been said, that a mem- 
 
 diently sustained by the .general ber cannot, by withdrawing, escnpe 
 
 spirit of the court's reasoning in his share of the expenses aud losses 
 
 Wetterwulgh v. The Knickerbocker of the association to the time of his 
 
 Building Association, supra; Hen- withdrawal. See ante, 104-106, 
 
 nighausen and Wolff, Rec'rs, v. 108.
 
 140.] BIGHTS OF MEMBRRS, 177 
 
 granted by charter or by-law, or ordained by statute, to keep 
 itself, as far as practicable, and in accordance with the die 
 tates of experience and reason as to the probable amount re- 
 quired for withdrawals, iu readiness to meet their demands. 
 It is always improper for a building association, and, under 
 statutory sanction and regulation of withdrawals, an abuse of 
 the corporate power, to invest all its funds, and leave none 
 available for the calls of withdrawing members. 1 A lack of 
 funds from that reason would constitute no defence on the 
 part of the building association, nor establish, in itself, a 
 ground for indulgence in the payment of withdrawing mem- 
 bers' claims. 
 
 Statutory Limitation of Funds Available for Withdrawing Members. 
 140. The statutory mandate, binding upon the building 
 association, giving the absolute privilege of withdrawal, with 
 profits, upon compliance with the terms and requisitions of 
 the enactment, as to notice, etc., compels the payment of such 
 claims upon demand, in accordance with the statute, and after 
 expiration of the legal period of notice. The inconvenience 
 which might arise to the society from multiplied simulta- 
 neous withdrawals, and the danger and iatal embarrassment 
 to which its affairs might thus fall subject, at any moment, 
 at the pleasure of even a comparatively small number of 
 dissatisfied, evil-disposed, or unreasonable shareholders, are 
 averted by the coupling, with that provision, of another, 
 whereby not more than a certain proportion of the funds in 
 the treasury shall, at any one time, be applicable to the satis- 
 faction of withdrawing members, except by the consent of 
 the directors of the building association. This, then, be- 
 comes a charter limitation upon the rights of withdrawing 
 members, and operates to prevent a conflict between them 
 and the undisturbed exercise of the association's corporate 
 functions, by narrowing them down to a certain portion of 
 its assets as the source of their payment; whilst, at the s;m.<> 
 time, it is a check upon the society itself, an indication of 
 the proportion of funds which it should be ready to disburse 
 
 1 National Loan and Homestead Association v. Hubley, 34 Leg. Int. 
 (Pa.) 6: 24 L. J. 50.
 
 178 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 at short notice, and a warning against too marginless invest- 
 ments. 1 
 
 Effect thereof upon Right to Enforce Payment by Suit. 
 
 141. In the presence, side by side, of these several pro- 
 visions, a question arises as to the rights of a withdrawing 
 member, who has not been paid by the association, and has, 
 in consequence, instituted his action against it. If the pro- 
 portion of its funds, pointed out by the act, has already been 
 applied in the payment of withdrawal claims, and the direc- 
 tors consent to no further draining of the treasury, has he the 
 right to sue and to proceed to judgment, or must he wait 
 until the society has funds to pay him ? And if he gets judg- 
 ment, can he issue his execution ? A case precisely in point 
 has been decided in Pennsylvania. 
 
 142. A stockholder of a building association, incorpo- 
 rated under the Act of April 12, 1859, gave the required 
 notice of his intention to withdraw from the association. 
 Upon the failure of the latter to refund the money he had 
 paid in, he brought suit therefor. It was provided in the 
 act that at no time should more than one-half of the funds 
 in the treasury of the corporation be applied to the demands 
 of withdrawing stockholders, except by the consent of the 
 directors of the association. On an affidavit of defence, the 
 association averred that fifty per cent, of its funds had already 
 been so applied, and that the directors refused to apply any 
 more, for the time being. It was held, that the withdrawing 
 stockholder was not estopped by the proviso of the act from 
 legal process for the recovery of his money until the treasurer 
 might have funds sufficient to meet his claim, but was en- 
 titled to his judgment for the same. 1 It is said that the fact 
 that the association has no money is not an answer. " That he 
 <may, upon the refusal of the company to pay him, sue it, and 
 recover judgment, just as any other creditor, is not doubtful. 
 It is urged, however, that he is estopped by the proviso, from 
 legal process, for the recovery of his money, until the treasury 
 Jias funds sufficient to meet his claim. If this be the true in- 
 
 1 Ib. ; U. 8. Building and Loan 9 Building Association v. Silver- 
 Association v. Silverman, 85 Pa. St. man, supra. 
 394; 35 Leg. Int. 51; 4 W. N.C. 546.
 
 143.] RIGHTS OF MEMBERS. 179 
 
 terpretation of the statute, then is this creditor in a most un- 
 fortunate position ; for the corporation may never choose to 
 make the necessary provision for such purpose, and therefore 
 he can never hare process to compel it to do so. It is a fact 
 now alleged that this company has no money to apply to the 
 claim in suit. "When will it have ? in one, six, or ten years, 
 or ever ? And vrill the Statute of Limitations be suspended 
 in the mean time 2 To these questions the defendant but an- 
 ewers : The proviso interposes to prevent the plaintiff from 
 all compulsory process, though his claim be recognized, in 
 the body of the statute, as just and proper, as long as the cor- 
 poration manage to maintain an empty treasury, or, which is 
 the same thing, us long as prior drafts leave no money to be 
 applied to his debt. Looking at the statute as a whole, we 
 are not prepared to adopt an interpretation so contrary to its 
 spirit and the plain dictates of justice. Whilst it is certainly 
 intended that the operations of the corporation shall not be 
 embarrassed by having the whole amount of its cash assets 
 taken, in order at once to pay the withdrawing stockholders, 
 yet it certainly does not intend that no provision shall be 
 made for their payment, and that they may be indefinitely post- 
 poned, even from judgment, by a plea of quasi insolvency." ' 
 143. The withdrawing member is, therefore, entitled to 
 his judgment ; but when he comes to the execution of it 
 against the association, the design of the proviso is made 
 manifest and its whole object served, by enabling, or, rather, 
 obliging, the court to restrain, should it be made to appear 
 just and equitable, the plaintiff's execution, in order to give 
 the building association a reasonable time to raise the money 
 without undue derangement of its affairs. 1 There is, indeed, 
 no other just and safe application to be made of it. Its ob- 
 ject is to prevent a crowding of claimants, to the prejudice 
 and destruction of the interests of the association and the 
 rights of many of its members. That purpose is fully served 
 by the view above laid down ; and, at the same time, it con- 
 cedes to the member the right of reducing his claim to judg- 
 ment, with the additional security afforded thereby, a right, 
 
 1 U. S. Building Association v. 8 U. S. Building Association t>. 
 Silverman, 85 Pa. St. 394; opinion Silvcrman, supra, 
 of Gordon, ,1.
 
 180 THE LAW OF BUILDING ASSOCIATIONS. [cil. VII, 
 
 to deprive him of which would be highly improper and in- 
 equitable, lie, the creditor, would thus be thrown entirely 
 upon. ;he mercy of the association, the debtor; the which, be- 
 in^ too complete a reversal of the old-fashioned order of 
 things ihe world, in its present state of morals, is scarcely 
 titted to permit, with promise of anything like the same degree 
 of satisfaction to the creditor as to the debtor. The interpre- 
 tation put upon the relation of the provisions under discussion 
 in the foregoing case, and the disposition of the difficult ques- 
 tions involved in the conflicting rights and claims springing 
 from the ono and the other, may, therefore, in every sense of 
 the word, be called a " most righteous conclusion." ' 
 
 Stockholder Cannot, qua Stockholder, Sue Society at Law for Value of 
 Paid-up Stock. 
 
 144. Membership in a building association gives ground 
 to no exception to the general rule relating to corporations, 
 that a shareholder, qua shareholder, cannot sue at law for the 
 value of his paid-up stock. If he desires to participate in all 
 the profits of tne concern, he must wait until the society, or 
 the series to which he belongs, is wound up ; an operation 
 which, on account of sales of real estate, and other arrange- 
 ments necessary to be made, in order to realize the money re- 
 quired to pay the unadvanced shares in cash, may call for 
 some indulgence in the matter of time. The only method of 
 obtaining the money's worth of his shares from the associa- 
 tion, is that already pointed out, viz., withdrawal under the 
 statute or by-laws, and suit at law for the amount legally 
 coming to him." The value of any member's stock, as has. 
 before been shown, is not a present subsisting claim against 
 the building association in the member. Its value, if he con- 
 tinues in the society, depends upon his going through the 
 whole course of the scheme, and can be ascertained only upon 
 and after complete winding-up. 1 As a member, therefore, he 
 cannot sue for it at law, at any time. He can become a claim- 
 
 1 Ludlow, P. J., in Estate of Na- W. N. C. (Pa.) 176, 93 Pa. St. 308. 
 
 tional Savings, Loan and Build- See also post, 265. note, 
 
 ing Association, 9 "W. N. C. (Pa.) 3 /. ., after the final meeting to 
 
 79. make division : Britton r. American 
 
 * O'Rourke r. West Pennsylvania Building and Loan Association, 12- 
 
 Loan and Building Association, 8 Phila. (Pa.) 430; 35 Leg. Int. 474.
 
 147.] RIGHTS OF MEMBERS. 181 
 
 ant for a definite amount only by withdrawal, i.e., by surren- 
 der of his membership, substituting in its place the character 
 of creditor, pure and simple. 
 
 Member may, under Circumstances, Compel Settlement in Equity. 
 
 145. It is, however, a right belonging to every member 
 of a building association, by virtue of his membership, in a 
 proper case, and under proper circumstances, to invoke the 
 jurisdiction of a court of equity, to wind up the society, and 
 then compel settlement, a subject which will hereafter, in 
 its proper connection, be more fully discussed. 1 
 
 Foundation of the Principles Applicable to Borrowers. Mutuality 
 of the Scheme. Membership of Borrowers. 
 
 146. Having thus reviewed the rights of membership 
 generally, and the privileges pertaining distinctively to the 
 class of unadvanced members, investors, in building associa- 
 tions, it remains to consider that branch of the subject-matter 
 embraced in the examination of the " Rights of Members," 
 which refers peculiarly to advanced members, borrowers. 
 In order to appreciate the distinctions which the law makes 
 between these two classes, and the entirely new set of rights 
 clustering around the latter, it is necessary, first of all, fully 
 to understand the relations which the borrowing member 
 sustains to the association. 
 
 147. Starting with the elementary working principle of 
 the building association scheme, a system of perfect mutual- 
 ity and reciprocity and equality of all members, whereby the 
 gain of one must be the gain of all, and every advantage 
 enjoyed exclusively by one, must be accompanied with a 
 corresponding and compensating benefit to the entirety ; it 
 follows, wnth logical cogency, that, whatsoever accommodation 
 any individual member may receive, some equivalent, beyond 
 the mere repayment of money (for there is nothing particu- 
 larly mutual in that), must by him be returned to the society, 
 and that, in the discharge of this obligation, he is again en- 
 titled to his proportionate share, by way of relief, in the 
 advantages which may accrue to the society from other 
 sources. From this self-evident proposition, flow all the 
 rights, as well as all the distinctive obligations, of borrowers 
 
 1 See post, 483-491.
 
 182 THE LAW OP BUILDING ASSOCIATIONS. [CH. VIL> 
 
 in building associations, and it at once defines and settles the 
 status of such members in them. For that borrowers neces- 
 sarily remain members, at least in the sense of continuing 
 entitled to share in the profits of the enterprise, it is im- 
 possible, in practice, to deny, whatever may be the theory 
 held with regard to this subject, and however they may be 
 restricted in exercising the general rights of membership in 
 corporations through the attempted application of such 
 theory. It is held in Virginia, that, when a member of a 
 building association obtains an advance upon his shares, the 
 building association thereby acquires the right of property 
 therein ; and the assignment of the shares to the society for 
 the advance received is not a hypothecation for a loan, but 
 an absolute surrender of them to the building association, 
 whereby they are sunk and extinguished, and cannot entitle 
 the borrower to participate in the final division and distribu- 
 tion of the funds of the association. But, it is said, such 
 assignment does not release him from his covenant, as a 
 party to the articles of association, to make his regular 
 monthly payments on shares, and on account of fines, obli- 
 gations which are secured by his bond and mortgage. 1 And 
 yet there is only one form which the contract between a 
 building association and the borrowing member may assume, 
 under which the latter can, by any practicable method, be 
 debarred from participation in the profits of the society, 
 and that is one which has none of the features of the 
 building association scheme about it, save that of gradual 
 repayment. It is, where a member, obtaining an advance^ 
 surrenders his membership, and gives his bond for the period- 
 ical repayment of a certain amount, to be applied in liquida- 
 tion of the principal sum, until such monthly payments 
 themselves, in the aggregate, shall amount to the principal 
 sum ; and adopting, as part of his contract, the regulations 
 of the by-laws of the society as to penalties for neglect, etc.* 
 Under such an arrangement, it is clear, the borrower no 
 
 1 White v. Mechanics' Building the duties of membership, and has 
 
 Association, 22 Gratttn (Va.), 233; even put himself under bonds to be 
 
 Winchester Building Association a good member, 
 
 et al.. 23 Id. 787. Observe the in- * See Bowker v. Mill River Loan 
 
 consistency: he has lost his member- Fund Association, 7 Allen (Mass.), 
 
 ship, but is bound, as a member, to 100.
 
 148.] RIGHTS OF MEMBERS. 183 
 
 longer has any interest in the society. All he has to do, is to- 
 pay up until his payments aggregate the sum borrowed. 
 Then he has nothing more to do with the society. He may 
 calculate, to the day, when this will occur. But upon any 
 other plan, the borrower, undertaking to continue his pay- 
 ments until, having gone into the general fund, they, with 
 the other contributories, have swelled it to a certain magni- 
 tude, distinctly retains his interest in, his right to benefit by, 
 his privilege to participate in, the profits derived from all 
 those various sources. It cannot, therefore, upon any logical 
 principle be said, that he has one particle less interest in the 
 common fund of the association than before he became a 
 borrower ; that the whole scheme is in the slightest degree 
 less mutual, as to him, than it was before ; that the manage- 
 ment of the society's business, and the proper administration 
 of its affairs, are of any less moment to him, as a borrower, 
 than they were to him as an investor. In the latter character 
 he was anxious to see it prosper for the sake of speedily real- 
 izing the prospective cash value of his share ; in the former, 
 having anticipated that cash value, subject to a heavy dis- 
 count, he is equally, nay, more concerned to hasten the period 
 of his discharge ; for, in addition to his stock-payments, which 
 he has obligated himself to pay equally as if he were an 
 investor only, and as to which he has surrendered the right 
 of withdrawal, 1 he is obliged to pay interest upon the money 
 he has received." Now, if he retains all the interests of 
 membership in the building association, which are, at all 
 times, the basis of its rights, he certainly retains all of the 
 latter. In other words, a borrower continues, in every 
 sense of the word, a member of the association. There is 
 not, even in America, perfect unanimity among the courts 
 upon this question, when put in its simplest and most di- 
 rect form. But it becomes the more important, as much 
 of the uncertainty in, and conflict between, our judicial in- 
 terpretations of the law of building associations, is referable 
 solely to an imperfect understanding of this fundamental 
 principle. 
 
 148. But, although the full force and bearing of the 
 
 1 The consequence of taking a a If not by name, then by way of 
 loan, see post, 151. increased dues, premiums, etc.
 
 184 THE LAW OF BU1LIMNG ASSOCIATIONS. [CH. VII. 
 
 principle has sometimes failed to receive its proper weight, 
 the principle itself has been sufficiently often asserted by 
 courts of this country, upon questions arising in particular 
 associations, as to place it beyond the reach of cavil. 
 uv understand the relative position of the two classes of 
 members," says the court in Maryland, 1 " they might perhaps 
 be better designated as the ' advanced,' or prepaid, and the 
 ''deferred,' or unpaid, shareholders. They are all continuing 
 members, however classified, until the association is deter- 
 mined, unless they cease to be so, in pursuance of the articles. 
 The advanced, or 'prepaid' members . . . have not ceased 
 to be members, by the prepayment, but continue to hold an 
 interest in the management and success of tho association, as 
 upon that depends their earlier relief, not only from the pay- 
 ment of the weekly dues, but their final release from their 
 mortgages. . . . Both are interested, and under a mutual ob- 
 ligation to contribute to the accumulation of the common 
 fund, by payment of their weekly dues, until the time pro- 
 vided for its final distribution and settlement." And, again, 
 it is said in New Jersey : " " There is, it is shown, a formal 
 transfer of the shares to the association, as collateral security 
 for the repayment of the loans. But the shareholder is not 
 deprived of his title to the stock. He still continues to be a 
 member, with all the rights of membership. He is by ihe 
 constitution regarded as a stockholder. As such, he is re- 
 quired to pay his monthly instalments on each share. He 
 may vote, act as a director or other officer, and in fact do 
 every act which a stockholder may do, except transfer his 
 title to his shares. Even that he may do, subject to the lien 
 of the association." A similar doctrine has been established 
 in Ohio, 8 where the transaction between the society and the 
 
 1 Lister t. The Log Cabin Build- pressed in this case would make the 
 
 ing Association, 38 Md. 115. borrowing member's position an im- 
 
 8 Mechanics' Building and Loan possible one if strictly applied. It 
 
 Association of New Brunswick . is said that the real transaction be- 
 
 Conover et al., 1 McCart. (N. J.) tween the borrower and the corpo- 
 
 219; (not disturbed in this particular ration is equivalent to the redemp- 
 
 in 2 C. E. Gr. 497). lin by it of his stock in advance, 
 
 8 Hagerman et al. v. The Ohio and that, thereafter, he has no in- 
 
 BuiLling and Savings Association, terest in the final distribution of the 
 
 25 Oliio St. 186. The doctrine ex- company's funds: but if there is a
 
 148.] 
 
 KIGHTS OF MEMBKKS. 
 
 185 
 
 borrowing member is held to be of such a nature as to save 
 *' to the member his rights as a corporator." And in Georgia, 
 he " still retains his right to vote and act as a member." ' 
 And it may be safely stated, that the doctrine has forced its 
 own recognition upon the courts of nearly every State in the 
 Union, as well as England. It may, it is true, not have 
 found, upon all occasions, express and explicit judicial sanc- 
 tion. In theory, it may have been persistently denied. Yet, 
 in its results, it has, in some form or other, been everywhere 
 applied ; and in the condemnation of the outrageous conse- 
 quences flowing from the opposite doctrine, it has, at some 
 time or other, been everywhere confirmed. It is needless to 
 point out these coincidences at this place. They will suffi- 
 ciently appear at every step of the subsequent discussion. 
 But it is essential, in order to its understanding, to keep the 
 principle itself firmly in view. 
 
 surplus of assets, the amount re- 
 ceived by him on his redeemed shave 
 being exceeded by the value of it 
 before the termination of the socie- 
 ty; i.e., if the shartw turn out to be 
 worth more than the estimated par 
 value, which hns bwn advanced to 
 him, he may still come in upon that 
 surplus fund, for his dividends as a 
 shareholder. Both of these propo- 
 sitions cannot be true at the same 
 time. If the society owns the shares, 
 the member has hwt them, and with 
 them his membership. (See ante, 
 102.) He cannot then retain any of 
 his "rights as a corporator," nor 
 participate as such in any sort of f u- 
 ture distribution. Yet this is an un- 
 questionable right, proclaimed by 
 the most ordinary common sense 
 and sense of justice, no less than by 
 a proper consideration of the pur- 
 pose and working of the scheme. 
 It follows, therefore, that the doc- 
 trine above staled is the true and 
 correct doctrine of this case. 
 
 1 Parker v. The Fulton Loan and 
 Building Association, 46 Ga. 166. 
 See also Pattison v. The Albany 
 Building and Loan Association, 63 
 Id. 373; North America Building 
 Association v. Sutton, 35 Pa. St. 
 463; Early and Lane's App., 89 Pa. 
 St, 411; Citizens' Mutual Loan 
 and Accumulating Fund Associa- 
 tion v. Webster, 25 Barb. (N. Y.) 
 263; Hekelnkaemper et al. v. The 
 German Building and Savings As- 
 sociation, 22 Kas. 540; Ocmulsree 
 Building and Loan Association v. 
 Thomson, 52 Ga. 427; Lincoln 
 Building and Savings Association 
 t>. Graham. 7 Neb. 173; Same . 
 Benjamin, Ib. 181; Herbert . Ken- 
 ton Building and Savings Asso- 
 ciation, 11 Bush (Ky.), 296. But 
 see Overby v. Fayetteville Build- 
 ing and Loan Association, 81 N. C. 
 56 ; S. P. Hoskins >. Mechanics' 
 Building and Loan Association. 84 
 Id. 838.
 
 186 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 Elements of Contract Between Borrowing Member and Society. 
 
 149. It follows, from this principle, that, when a mem- 
 ber of a building association becomes a borrower, his original 
 contract with the association, and that of the latter with him, 
 together with the rights and obligations resulting therefrom 
 to each respectively, continue in force intact, except in such 
 minor details, not affecting the membership of the borrower, 
 in which they may have been varied by the conditions of the 
 new contracts entered into by both parties, whether expressed 
 or implied. On the part of the borrower, this new contract 
 may, in general, be said to embrace the following essential 
 features: (1) The member agrees to receive the advance- 
 ment from the building association, and to allow it, for the 
 privilege of the preference, a certain stipulated price, pre- 
 mium, or bonus. (2) He undertakes, and gives security in 
 support of the undertaking, faithfully to perform, to the 
 termination of the society's existence, or the running of a 
 series, all the requirements of its constitution and by-laws 
 relative to stock-payments, or dues, fines, and other charges, 
 upon and in respect of the shares held by him (which, as a 
 rule, he pledges to the society as collateral security), and to 
 be liable for and discharge all proper dues, assessments, con- 
 tributions, and charges, arising upon them, in the same pro- 
 portion and in the same manner as the rest of the members ; 
 and, in addition, to make a fixed periodical payment by way 
 of interest on his loan, 1 either by that name, or in the way of 
 a stipulated increase in the regular dues corresponding with 
 the interest upon the loan. (3) He agrees, that, upon the 
 termination of the society, when its assets shall become dis- 
 tributable, it shall appropriate to its own reimbursement the 
 proportion accruing to such of his shares as were advanced to 
 him. (4) He agrees, that, in case of his failure at any time 
 to perform the continuing conditions of his undertaking, for 
 a certain period ; or for such remissness in the payment of 
 dues, etc., as would be ground of forfeiture of his shares as a 
 member, the society shall be absolved from the necessity of 
 waiting, until the period of dissolution, for its payment, but 
 
 1 The society is, of course, not pal has been all repaid. In re Gold- 
 entitled to any payment in respect smith, ex parte Osborn, 10 L. R, 
 of interest accruing after the princi- CL. 41. But see post, g 375-376.
 
 151.] RIGHTS OF MEMBERS. 187 
 
 shall have the right to demand and recover it from him at 
 once, including, in the debt, not only the amount actually 
 loaned, but all the payments and charges which may, law- 
 fully, under his obligation, as member and borrower, be de- 
 manded from him. 
 
 150. The building association, in its turn, assumes cer- 
 tain corresponding obligations towards the borrower. (1) 
 It agrees to let him have the use of the money advanced dur- 
 ing the continuance of the society's legal life, or the running 
 of a series, provided he lives up to the terms of his undertak- 
 ing. 1 (2) In the meanwhile, it is to receive and invest the pay- 
 ments made by him, both as dues and as, or in lieu of, interest, 
 in the same manner as those of other members, and as part 
 of the common fund. (3) Finally, upon the winding up 
 of the concern, it is to account to him for such proportion 
 of his whole accumulation, as may be coming to his share, 
 retaining so much as may be necessary to cover his propor- 
 tionate share of the losses and expenses, and applying the 
 balance to the liquidation of his debt, including the actual 
 advance, interest, fines, and premium, according to his under- 
 taking, arid thereupon cancelling his securities. 
 
 Borrowing Member Cannot Withdraw. 
 
 151. Such being the contract subsisting between the two 
 parties, it is perfectly plain that the borrowing member is 
 not in a position to withdraw from me society.* And this 
 is quite just, for, having received, in advance, the benefit of 
 the whole scheme, he is, in common fairness, bound to con- 
 tribute until all derive an equal advantage.' And yet the 
 same reasons, which may make withdrawal, at some time, 
 
 1 This is the understanding, al- Building and Savings Association, 
 
 though the mortgage may be drawn 25 Ohio St. 186; Smith v. The Me- 
 
 to stand for a year only. The in- chanics' Building and Loan Asso- 
 
 tention is not to collect at all, but ciation, 73 N. C. 872. See post, 
 
 to let the association run its course, 326-337. 
 
 and cancel the mortgage with the 9 Watkins r. The WorUngmon's 
 
 borrower's dividend upon his shares. Building and Loan Association, 10 
 
 Kupfert v. Guttenberg Building As- \V. N. C. (P.) 414; 38 Leg. Int. 
 
 sociation, 80 Pa. St. 465; Ik-keln- 333; 97 Pa. St. 514. 
 
 kacmpcretal. e. The German Build- 'Barry, Law of Building Socic- 
 
 ing and Savings Association, 22 Kas. ties, 26. 
 540; Ilagrrman et al. v. The Ohio
 
 188 THE LAW OF BUILDING ASSOCIATIONS. [CH. VLL 
 
 most desirable to the investor, may operate in the case of a 
 borrower, either necessitating a cessation of his relations with 
 the society, or holding out peculiar opportunities for, and ad- 
 vantages in, relieving himself at once from indebtedness to it. 
 It is, therefore, most necessary that some method should be 
 provided, by which, with perfect justice to the society and 
 without hardship to himself , he should be enabled to discharge 
 his liabilities, before, in the regular course of things, the 
 steady progress of the scheme will work it out for him. 
 
 Right of Voluntary Repayment. 
 
 152. Conceding the justice and propriety of the claim, the 
 difficulty lies in ascertaining the exact amount which the bor- 
 rower ought to pay, at any given time, in order to return to 
 the society the exact sum of money in the aggregate, for the 
 payment of which in installments his obligation calls. The 
 advantage of borrowing from building associations (leaving 
 out of the question the facilities for gradual discharge of the 
 indebtedness), the consideration, which, in a measure, justifies 
 the high premiums such loans command, arises largely from 
 the uncertainty as to the precise amount the borrower will be 
 obliged to lay out in tne eventual return of the loan. If the 
 society is successful, it may be, in the whole, a sum much in- 
 ferior to the face of the obligation, and very slightly, if at 
 all, in excess of the amount actually received, with interest. 
 On the other hand, it has already been seen that it is impos- 
 sible to compute the true indebtedness of a member to the 
 association, without taking into the reckoning a profit and loss 
 account, and an expense account for management, 1 his pro- 
 portionate share of which is an essential part of his liability 
 under the mortgage or other security he has given to the 
 society. 1 
 
 153. The true view of this indebtedness, in fact, is, that 
 the return of the money received, at any period intermediate 
 between the time of taking it and the time of the ultimate 
 squaring of accounts upon the expiration of the society, or 
 series, is not contemplated by the contract.' That money is 
 
 1 Pattison v. The Albany Build- and Loan Association, 44 Pa. St. 
 
 iiiir and Loan Association, 63 Ga. 383. 
 
 373. See Seagrave v. Pope, 22 L. J., 
 
 * McGrath v. Hamilton Savings Ch. 258; 16 Jur. 1099; 19 L. T. Rep.
 
 154.] RIGHTS OF MEMBERS. 189 
 
 never, before that period, intended to be collected, or repaid. 1 
 The essential feature of the contract is the continued payment 
 of certain dues ; the incident, the payment of interest as a 
 compensation for the use of the money. Even where the 
 obligation is given for the repayment of a specific sum of 
 money, with interest, the character it would seem to derive 
 from that fact, is modified and overcome by the provisions 
 which may follow as to the payment of dues, etc., showing 
 clearly the true intent of the transaction. Such, then, being 
 the real nature of the borrower's undertaking, to stand by 
 the society to its end, and to continue, throughout, certain 
 stipulated payments, it would appear that the very terms of 
 the contract precluded any determination of its requirements 
 before the period set by itself. Such, indeed, judicial utter- 
 ances would seem to indicate as the view first held. 2 But it 
 promptly became recognized that a method by which the bor- 
 rower would substantially comply with the requirements of 
 his contract, might absolve him from the literal fulfilment 
 of it ; i.e., that, having obligated himself to a long series of 
 small payments, 3 he might be allowed to substitute, in lieu 
 thereof, a single larger one, equal, at once, to the aggregate of 
 all the smaller ones. 
 
 Terms of, and Rules for, Voluntary Repayment, in the Absence of Spe- 
 cial By-Law or Statutory Provisions. 
 
 154. The rule has, therefore, been adopted in England, 
 and recognized in America, that a borrowing member of a 
 building association may redeem his property mortgaged, and 
 discharge his indebtedness, to the same, upon payment of all 
 the future subscriptions which would accrue against him until 
 the dissolution of the society, 4 its probable duration to be 
 
 173; 20 Id. 158; 1 De G., M. and G. 22 Grat. (Va.) 233; Winchester 
 
 783; 15 Engl. L. & Eq. 477; Building Association v. Gilbert ct 
 
 Fleming v. Self, 24 L. T. Rep. al., 23 Id. 787; Williar t>. The Bal- 
 
 101; 18 J. P. 772; 24 L. J., Ch. 29; timore Butchers' Loan and Annuity 
 
 3 De G., M. and G. 997; 3 Eq. Rep. Association, 45 Md. 546. 
 
 14; Hagerman et al. t>. The Ohio ' Kupfert v. Guttenberg Building 
 
 Building and Savings Association, Association, 30 Pa. St. 465. 
 
 25 Ohio St. 186; Lister T. Log Cabin * See Seagrave v. Pope, supra. 
 
 Building Association, 88 Md. 115; * Robertson r. The American 
 
 Hoboken Building Association v. Homestead Association, 10 Md. 397. 
 
 Martin. 2 Beas. (N. J.) 428; White 4 Or the expiration of the series. 
 9. Mechanics' Building Association,
 
 190 
 
 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 ascertained by calculation, and the future payments to be 
 treated as if immediately due. 1 
 
 155. To the sum thus found must be added any arrear- 
 ages, fines, and other charges standing against the borrower, 
 
 1 Mosley v. Baker, 6 Hare, 87; 12 
 Jur. 551 ; 17 L. J., Ch. 257 (affirmed 
 on appeal, 1 Hall and T. 801; 13 
 Jur. 817- 18L. J.,Ch. 457;3DeG., 
 Mac. and G. 1032); Fleming v. Self, 
 8 De G.. Mac. andG. 997; 3 Eq. R. 
 14; 1 Jur., N. S. 25; 24 L. J., Ch. 
 29 (substituting and insisting upon 
 "possible" for "probable" dura- 
 tion); Smith v. Pilkington, 1 De G., 
 F. and J. 120; 29 L. J., Ch. 227; 
 Farmer v. Smith, 4 H. and N. 196; 5 
 Jur., N. 8. 533, n.; 28 L. J. Exch. 
 226; Sparrow v. Farmer, 26 Beav. 
 511; 5 Jur., N. S. 530; 28 L. J., Ch. 
 537; 33 L. T. 216; Handley v. Far- 
 mer, 29 Beav. 362 ; Seagrave v. Pope, 
 1 De G., Mac. and G. 783; 15 Engl. 
 L. and Eq. 477; Hoboken Building 
 Association . Martin, 2 Beas. (N. 
 J.) 428; Somerset County Building 
 Loan and Savings Association v. 
 Vandervere, 3 Stock. (N. J.) 282; 
 Mechanics' Building and Loan As- 
 sociation of New Brunswick . 
 Conover, 1 McCart. (N. J.) 219 (not 
 reversed, in this particular, in 2 C. 
 E. Gr. 497); City Building and Loan 
 Co. v. Fatty, 1 Abb. App. Dec. (N. 
 Y.) 347; Citizens' Mutual Loan and 
 Accumulating Fund Association . 
 Webster, 25 Barb. (N. Y.)264; Rob- 
 ertson v. The American Homestead 
 Association, 10 Md. 397; Shannon a. 
 The Howard Mutual Building Asso- 
 ciation of Baltimore, 36 Md. 383; 
 Lister v. The Log Cabin Building 
 Association, 38 Md. 115; McCahan 
 t. The Columbian Building Asso- 
 ciation of East Baltimore, 40 Md. 
 226; Henmghausen and Wolff, 
 Rec'rs, v. Tisher, 50 Md, 583; Ha- 
 german et al. v. The Ohio Building 
 and Savings Association, 35 Ohio 
 
 St. 186; Risk v. Delphos Building 
 and Savings Association, 31 Ohio 
 St. 517; Cincinnati German Build- 
 ing Association No. 3 v. Flach et al., 
 1 Rep. (Cine. Super. Ct.) 468; Win- 
 Chester Building Association n. Gil- 
 bert et al., 23 Grattan (Va.), 787. 
 See also Richards v. The Bibb 
 County Loan Association, 24 Ga. 
 198; Ocmulgee Building and Loan 
 Association v. Thomson, 52 Ga. 427 
 (under which the borrower must pay 
 back the money he got with such an 
 advance as will enable the company, 
 at the lower or higher rates prevail- 
 ing, to get the same monthly interest 
 upon it as he ought to pay at the 
 same rates he got it at). Overby and 
 wife v. The Fayetteville Building 
 and Loan Association, 81 N. Car. 
 56; Hoskins v. Mechanics' Building 
 and Loan Association, 84 N. Car. 
 838 (which indicates a rule of set- 
 tlement upon the basis of a mere 
 loan, and subsequent partial pay- 
 ments); Hekelnkaemper v. The Ger- 
 man Building and Savings Aasocia- 
 tion, 22 Kas. 549; followed in Glynn 
 etal. v. Home Building Association, 
 22 Kas. 746 (in which the rule in 
 text was held inapplicable, the trans- 
 action being regarded as a mere loan 
 of so much money, to be returned). 
 Watkins r. The Workingmen's 
 Building and Loan Association of 
 Hyde Park, 38 Leg. Int. (Pa.) 333; 
 10 W. N. C. 414; 97 Pa. St. 514, 
 (which, so far as it relates to volun- 
 tary repayments, proceeds upon 
 statutory provisions, and as for the 
 rest, treats the transaction as a loan 
 which must be repaid, but to which 
 the borrower may apply his stock 
 payments already made).
 
 157.] RIGHTS OF MEMBERS. 191 
 
 if the society is willing not to make the fact of there being 
 such an insuperable objection ' to permitting the member the 
 advantage of this arrangement, or does not insist upon requir- 
 ing their previous payment by him, as it has a perfect right 
 to do, in the case of repayments of advances, as well as in the 
 case of withdrawing members. 
 
 156. The rule just indicated recognizes, by necessary 
 implication, two highly important principles concerning the 
 rights of borrowing members, viz. : (1) that, in striking the 
 account between the borrowing member and the association, 
 at any time after the creation of the indebtedness, and prior 
 to its working oil in the natural course of the scheme, the 
 member is to be credited with all his periodical payments, on 
 account of stock and interest ; (2) that he is to be credited 
 only with his actual payments, and not with any profits 
 thereon, (unless special statutory enactment or the rules of the 
 society allow him some share of profits.) The first of these 
 principles clearly appears, when, remembering that the mort- 
 gage is, upon its face, given to secure a series of. small pay- 
 ments, 3 the borrower is allowed to satisfy it upon payment of 
 the instalments likely to be coming due between the date 
 when he desired to pay off, and the termination of the society, 
 claiming credit, as to all that precedes that date, on the score 
 of his former payments. The second proposition follows as 
 closely as the former. The whole undertaking calling for the 
 payment of a series of items, and the undertaker having made 
 payment of a number of them, he is allowed credit for that 
 number. With the profits they have been making, he has 
 nothing to do, because for that the society is accountable only 
 upon its dissolution, and then only to those who have per- 
 severed in its membership. 8 Similarly, he gets credit for tho 
 interest he paid, but not for the gains the association may 
 have made by throwing it into the general fund and re-m vest- 
 ing it. 
 
 157. Nor does the fact that the security given to the 
 building association is for a definite sum, rather than, as is 
 more proper, for the payment of dues, etc., make any practi- 
 
 ! Davis, Law of Building, etc., Homestead Association, 10 Md. 
 Societies, p. 249. 397. 
 
 Robertson v. The American s See ante, 128-129.
 
 192 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 cal difference in the application of these principles. In such 
 case, the sum merely indicates the part of the ultimate value 
 of the shares advanced upon, which shall be applied to the 
 extinguishment of the debt upon the final account, the mem- 
 ber being entitled to any surplus, an apparent advantage, 
 which is practically no advantage at all, as the sum loaned 
 and the ultimate value of the share are, upon presumption, 
 the same amount. The periodical contributions, and the in- 
 terest, are fixed, and their regular payment stipulated. The 
 period of their continuance is no more and no less certain in 
 the one case than in the other. If the sum is fixed, it is much 
 easier to say at any given time how much it will take to dis- 
 charge the debt. But it is merely the ascertained aggregate 
 of a certain number of periodical dues. For those, therefore, 
 which he has paid, and for the interest he has paid, but only, 
 for what he has actually paid, without any profits, can the 
 borrower (independently of any rule or law giving him more) 
 claim credit. 1 
 
 Voluntary Repayment Under the Provisions of the Articles. English 
 Decisions. 
 
 158. But the rules of the society may be, and frequently 
 are, such as to entitle the repaying borrower to a certain 
 proportion of the profits made upon his past contributions, 
 u provision as politic as it is just, and in every way com- 
 mendable upon the same principles of expediency and equity 
 which govern in the case of voluntary withdrawals.* The 
 cases which define the rights of repaying borrowers most 
 clearly, and which are the leading authorities upon this point, 
 arose in England. 
 
 159. Mosley v. Baker 8 was the first case on the subject. 
 There a rule of the society provided, " that if any member of 
 this association shall be desirous of paying off and redeeming 
 any security or securities which he shall have given to this 
 
 1 Watkins r.Workingmen's Build- * See ante, 127. 
 
 ing Assoc., 38 Leg. Int. (Pa.) 333; 12 Jur. 551 ; S. C., 10 L. T. Rep. 
 
 10 W. N. C. 414; 97 Pa. St. 514; Me- 461 ; 6 Hare, 87; 17 L. J.. Ch. 25; ott 
 
 chanics" Building and Loan Assoc. appeal, 18 Id. 457; 13 L. T. Rep. 
 
 of New Brunswick T. Conover, 1 317; 13 Jur. 317; 1 Hall and Tw. 
 
 McCart. (N. J.) 219 (not disturbed 301 ; also, 27 Engl. L. and Eq. 512. 
 in this particular in 2 C. E. Gr. 497).
 
 1 J9.] RIGHTS OF MEMBERS. 
 
 association, and shall give notice of such his desire to the 
 manager, the directors shall allow such member the profits of 
 his share or shares made up to such a time, and shall make a 
 deduction of such profits, and of the amount of subscriptions 
 paid in by such member, from the full amount expressed to 
 be secured in and by the mortgage ; and the directors are 
 hereby authorized and empowered to receive the balance, 
 either in one payment or in such instalments as the directors 
 and the members shall agree upon ; and upon payment of the 
 balance, together with all fines due in respect of such share 
 or shares, the directors shall authorize the trustees, to deliver 
 all deeds and other documents in their custody relating to the 
 mortgage so redeemed by the member, and, at his cost, en- 
 dorse a receipt or acknowledgment of payment on such 
 mortgage, according to 6 and 7 Will. 4, C. 32." Mosley be- 
 came an advanced member of the association, and executed a 
 mortgage deed, whereby, after reciting that the plaintiff was, 
 according to the rules of the association, entitled to receive 
 out of the funds thereof a certain sum, it was witnessed, that, 
 in consideration of sucli sum, he assigned to the trustees the 
 property in question, to secure the monthly subscriptions, 
 etc., upon the following trusts : " Upon trust, if G. Mosley,, 
 his heirs, executors, administrators, and assigns do and shall 
 from time to time duly pay, observe and perform all the 
 subscriptions, payments, redemption moneys and regulations 
 on his and their part to be paid, observed and performed, ac- 
 cording to the articles of the association, in respect of the said 
 twelve and a half shares, to permit G. Mosley, his heirs, etc.,, 
 to hold and enjoy the said hereditaments and premises, ami: 
 to receive the rents and profits thereof for his and their own 
 benefit; but if G. Mosley should fail for six monthly nights 
 to make and pay all or any of the subscriptions, payments 
 and redemption moneys, or to observe or perform all or any 
 of the regulations on his or their parts to be paid, observrJ 
 or performed, or neglect to keep the premises in repair, or to 
 pay the rent, or to observe and perform all the covenants in 
 the lease, or in case the said G. Mosley should become bank- 
 rupt or insolvent, then and in any or either of the said cases 
 it shall be lawful for the trustees of the said association to 
 appoint a person to collect the rents and profits thereof, and
 
 194 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 thereout to pay, satisfy and effect all the purposes aforesaid ; 
 but in case the rents and profits of the premises shall he in- 
 sufficient to satisfy the purposes aforesaid, then upon trust 
 that the trustees, with or without the concurrence of the 
 mortgagor, shall sell the said premises." The trusts of the 
 money to arise from such sale were declared to be, first, to 
 retain and pay all expenses of executing the trust ; then to 
 retain for the association " all such subscriptions and other 
 payments as shall be then, or shall hereafter become due and 
 owing and payable in respect of the said shares by him, the 
 said G. Mosley, his executors, etc., calculating the probable 
 duration of the said association, it being hereby declared and 
 agreed that, in case such sale as aforesaid shall take place, all 
 moneys which shall at any time afterwards become due in 
 respect of the said shares, shall be considered as due at the time 
 of such sale, and that the same shall be fully deducted and 
 paid out of the moneys received by virtue of the aforesaid 
 powers or trusts, and that the said trustees, or the board of 
 directors of the said association, shall calculate the amount 
 accordingly," and upon trust to pay the surplus, if any, to 
 the mortgagor, his heirs and assigns. The deed then con- 
 tained the usual clause, that the receipts of the trustees should 
 be a sufficient discharge, and a covenant by G. Mosley to 
 make the payments and observe the regulations prescribed 
 by the articles of the association in respect of his shares as 
 aforesaid ; and, also, that if, upon the sale of the property 
 under the trusts thereinbefore contained, any loss should arise 
 to the said association, the said G. Mosley, his heirs, etc., 
 should make good and pay the deficiency to the said associa- 
 tion. He having become in arrears, the trustees exercised the 
 power of sale in respect of part of the premises comprised in 
 the mortgage. Mosley then made a tender to pay a certain 
 sum to redeem, which was refused, except as on account. 
 Upon a bill to redeem, praying that an account might be 
 taken of what was due to the defendants, the trustees, on the 
 mortgage security ; and that it might be declared, that, in 
 taking such account, he ought not to be charged with any 
 sums for redemption moneys, subscriptions, fines, or other 
 payments on his said shares accruing after such tender, the 
 plaintiff offering to confirm the sale that had been made, and
 
 160.] UKiilTS OF MEMBEKS. 195 
 
 to pay what should be found due from him ; and that, upon 
 such payment, the trustees might endorse a receipt or ac- 
 knowledgment upon the mortgage deed according to the 
 62d rule; the trustees, by their answer, insisted that the 
 plaintiff could not redeem the property except upon payment 
 of all the future subscriptions, etc., and that the price of the 
 redemption must be ascertained upon the same principle as 
 was provided by the mortgage deed in case of a sale of the 
 premises by the association in consequence of the default of 
 the mortgagor. The Vice-Chancellor (Wigram) decided in 
 favor of the claim of the association, and the order eventually 
 was for the master to ascertain the full value of the plaintiff's 
 future contributions according to the terms of the deed. This 
 decision was afterwards affirmed. 1 
 
 160. In Seagrave v. Pope * the rules and security were 
 very much in the same terms as in Mosley v. Baker. The 
 mortgage deed contained no covenant or stipulation for the 
 repayment of the money advanced to the borrower upon his 
 shares ; and the articles of the society provided, that, at the 
 termination of the society, the mortgage should be endorsed 
 as satisfied, without contemplating the repayment of the ad- 
 vance made. The rule which provided for the case of an ad- 
 vanced member being desirous to redeem, was nearly the 
 same as that in Mosley v. Baker, above set out. Lord Truro, 
 L. C., held, that an advance made to the plaintiff upon his 
 shares was not a loan, but an anticipatory payment, by way 
 of discount, of the shares he would otherwise have been en- 
 titled to at the termination of the society ; and that the deed 
 was to secure his future subscriptions, etc., until that period, 
 and that he was not entitled to redeem upon the terms of re- 
 payment of the advance, minus the amount of subscriptions 
 paid by him up to the notice to redeem ; and the bill was dis- 
 missed, on the ground that the plaintiff was bound to continue 
 his payments until every member had satisfied his shares, 
 there being no covenant for repayment, or proviso for redemp- 
 tion, in the deed. This case is considered to have decided 
 that the member could only redeem upon payment of his 
 
 1 18 L. J., Ch. 457; S. C., 13 L. 1099; 19 L. T. Rep. 173; 20 Id. 158; 
 T. Rep. 317; 1 H. and T. 301. 1 De G., M. & G. 783; 15 Engl. L. 
 
 8 22 L. J., Cb. 258; S. C., 16 Jur. and Eq. 477.
 
 196 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 subscriptions down to the end of the estimated duration of 
 the society, and not that the member was unable to redeem 
 upon any terms. 1 If this be correct, the reason for the bill 
 having been dismissed may have been that the plaintiff did 
 not, by the bill, submit to redeem upon any terms the court 
 might think just, but prayed to be declared entitled to re- 
 deem upon certain terms specified by himself. But, however 
 this may have been, in a case, decided shortly afterwards upon 
 the same rules, it was held that the member had a right to re- 
 deem. 
 
 161. The case in question was that of Fleming v. Self* 
 and the plaintiff, Fleming, had been one of the plaintiffs in 
 Seagrave v. Pope, in respect of another mortgage to the same 
 society. This being the leading case on the subject, it will 
 be desirable to examine it with some carefulness. 
 
 By the 14th rule it was provided, that, if any member 
 should be desirous of satisfying the securities which should 
 have been given for any shares which he might have pur- 
 chased, and should give notice of such desire then that the 
 directors should, within one month, award him the same pro- 
 portion of profit per share as was allowed on the withdrawal 
 of unpurchased shares ; and the directors should make a de- 
 duction of such profits and of the amount of subscriptions 
 paid in by such member from the full amount expressed to 
 be secured in and by the mortgage ; and the directors were 
 thereby authorized to receive the same in one payment, or by 
 such instalments as the directors and members should agree' 
 upon ; and upon the payment of the balance, together with 
 all fines and other sums due in respect of such shares, the di- 
 rectors should desire the trustees to deliver up all deeds, etc., 
 and endorse a receipt, etc. By the 33d rule, " When all 
 the payments ni;. i .i'ioned in the rules hereinbefore contained, 
 that is to say, when the full sum of 100 for each share, with 
 all other expenses and liabilities of the society, shall be fully 
 paid and satisfied," the society should then cease. By the 
 16th rule, members wishing to withdraw unpurchased shares 
 
 1 See 24 L. J., Ch. 81. 3 De G.,M. & G. 997; on appeal from 
 
 *24 L. T. Rep. 101; 18 J. P. 772; the Vice-Chancellor's decision, re- 
 
 S. C.. 24 L. J., Ch. 29; 1 Jur., N. ported Kay, 518; 18 J. P. 296; 23 
 
 S. 25; 3 Eq. Rep. 14; 3 W. R. 89; L. T. Rep. 63.
 
 162.] EIGHTS OF MEMBERS. 197 
 
 were to be a/lowed such bonus upon withdrawal as the di- 
 rectors should from time to time appoint. The plaintiff be- 
 came an advanced member, and subsequently the directors 
 passed a resolution that the society should tenriinate and its 
 affairs be wound up after the period of eleven years from its 
 foundation. Several meetings of the society were held, and 
 it was resolved, that the bonus or share of profits to be al- 
 lowed to withdrawing members should be .32 per share. 
 At the end of the term of eleven years from the foundation 
 of the society, the plaintiff gave notice to withdraw, and 
 claimed to have the bonus awarded to him, and to have his 
 security discharged without any further payment on his part. 
 In reply, after consideration, the trustees told the plaintiff 
 that he could not be allowed any bonus or share of profits on 
 his shares, nor could he be allowed to redeem upon any other 
 terms than the payment of 180, that sum being the calcu- 
 lated amount payable by him from the time of his giving no- 
 tice to redeem, down to the estimated period of the society's 
 termination. The plaintiff then filed the claim, praying a 
 decree for redemption and the delivery up of his title-deeds 
 without any further payments being made, and also praying 
 a declaration that he was entitled to the amount of bonus 
 which he had sought, and for payment of the same. It was 
 eventually held, that the plaintiff could only redeem upon the 
 terms of paying the amount of subscriptions and redemp- 
 tion money, which would become payable by him during the 
 longest period that the society could possibly last, having re- 
 gard to the state of its assets ; but that he was entitled to the 
 same share of profits as would, at the time of his notice, have 
 been payable to a withdrawing member under the rules. As 
 to this last order, the Lord Chancellor, in making it, varied the 
 decree of the court below, where the Vice-Chancellor had de- 
 cided that the plaintiff was not entitled to any share of the 
 profits. 
 
 162. In Archer v. Harrison l the question involved was 
 precisely the same as that which arose in Fleming v. Self, 
 namely, the right of a borrowing member, when he redeems, 
 to the benefit of any bonus that had been declared on the 
 
 1 3 Jur., N. 8. 194; S. C., 21 J. P. 515; 7 De G., M. & G. 404; 29 L. 
 T. Rep. 71.
 
 198 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 shares prior to the notice to redeem, and the rules were simi- 
 lar in all respects. A bonus of 23 per share had been de- 
 clared in April, 1849, that was, prior to the decision of the 
 Lord Chancellor in Fleming v. Self, and upon the assumption 
 that borrowing members were not entitled to participate in 
 the bonuses. The calculation was consequently erroneous ; 
 and accordingly, after the decision in Flemings. Self, but sub- 
 sequently to the plaintiffs notice to redeem, the directors 
 made another calculation, and determined that 7 per share 
 was the proper amount of the bonus, in order to enable the 
 directors to pay all borrowing members, subsequently coming 
 to redeem, the same bonus of 7 per share. The defendants 
 offered the plaintiff this bonus, but he declined to take it, 
 contending, that, upon the principle of Fleming v. Self, he 
 was entitled to the amount of bonus declared prior to his 
 giving notice to redeem. The Lord Chancellor held that he 
 was entitled to the actual bonus declared, namely, 23 per 
 share, saying, " The rule being implicit, I cannot say that 
 the plaintiff is not to have the bonus which has been declared ; 
 but the amount ultimately to come to him will be diminished 
 to some extent by the payment of the entire monthly and 
 other charges in consequence of the prolongation of the ex- 
 istence of the society." 
 
 163. Smith v. Pilkington : was another redemption suit. 
 Smith, in 1846, became a borrowing member of " The Glouces- 
 tershire and Cheltenham Accumulating Fund and Mutual 
 Benefit Society," the rules in which were similar to those in 
 Iteming v. Self. In July, 1855, a bonus of 25 per share 
 was declared by the directors. Prior to June, 1856, Smith 
 gave notice of his intention to redeem his securities, in ac- 
 cordance with the rules of the society. In July, 1856, meet- 
 ings of the society were held, Smith, who was a director, 
 being present, at which redemption of the securities was pro- 
 posed upon certain terms, and all the borrowing members, 
 some of whom Smith had consulted, applied to redeem, and 
 subsequently did redeem, on the terms of the resolutions 
 passed at these meetings. Smith, however, refused to adopt 
 these terms, and filed a bill against the trustees of the society, 
 
 1 4 Jur., N. S. 58; 30 L. T. Rep. 29 L. J., Ch. 227: 1 De G.,F. & J, 
 196; 22 J. P. 5; S. C., on appeal, 120; 24 J. P. 227.
 
 1G4.] RIGHTS OF MEMBERS. 199 
 
 whereby he prayed that it might be declared that he was, on 
 the 24th of October, 1856, on redeeming his mortgage secur- 
 ity, entitled to the bonus of 25 per share on each of his 
 shares in the society ; that certain accounts might be taken, 
 and the plaintiff credited with the amount of the said 
 bonuses ; that the defendants might be decreed to pay to the 
 plaintiff out of the funds of the society what, upon taking 
 the accounts, should appear to be payable on redeeming his 
 mortgage security, with interest, etc. The defendants, the 
 trustees of the society, contended that Smith was, by his con- 
 duct, precluded from redeeming, except upon the terms pro- 
 posed at the above-mentioned meetings, and granted to all 
 the other borrowing members who had retired or withdrawn. 
 But the Vice-Chancellor held that the plaintiff was not bound 
 by the resolutions of July and the terms granted to the retir- 
 ing members ;' that there was no new agreement entered into 
 between Smith and the directors ; and therefore that the plain- 
 tiff was entitled to the relief prayed for, the accounts to be 
 taken upon the principle of the decision in Fleming v. Self. 3 
 164. In Farmer v. Smith* the rule for redemption pro- 
 vided that an advanced shareholder might, at any time, satisfy 
 the security by paying the subscriptions to the end of the 
 thirteenth year of the society's existence, and it was never 
 doubted but what he had power to do so, as far as the secur- 
 ity of the land was concerned; and the same thing v,-;is 
 expressly decided, in another case, in equity. 4 And so, if, by 
 the rules, a period is fixed for the termination of the society, 
 and that time has elapsed without the objects of the society 
 having been accomplished, the member will nevertheless 1 >e 
 entitled to have his property discharged from the mortgage, 
 though, as we shall presently see, he will not be discharged 
 from his covenant to pay the subscriptions. 6 
 
 1 See Armitage v. Walker, 2 Jur., 3 28 L. J., Ex. 226; S. C.. 32 L. 
 N. 8. 13; 20 J. P. 53; S. C., 26 L. T. Rep. 371 ; 5 Jur., N. S.533. n. ; 4 
 T. Rep. 182; 2 Kay & J. 211. II. & N. 196; 7 W. R. 362. 
 
 2 23 L. T. Rep. 63; 18 J. P. 295; 4 IlnmlU'y r. Farmer, 29 Beav. 
 Kay, 518; S. C., on appeal, 24 L. 362. 
 
 T. Rep. 101; 18 J. P. 772; 24 L. J., 5 Sparrow 73. Farmer, 28 L. J., 
 
 Ch. 29; 1 Jur., N. S. 25; 3 De G., Ch. 537; S. C., 5 Jur., N. S. 530; 33 
 
 M. & G. 997; 3 Eq. Rep. 14; 3 W. L. T. Rep. 216; 26 Beav. 511 ; 23 J. 
 
 R. 89. P. 500.
 
 200 TUB LAW OF BL'ILDIM. &880I lAl'lON-. [i.H. VIL 
 
 Importance of English Cases in America. Exception. 
 
 1<5. These decisions form the groundwork upon which 
 American courts have framed their opinions on questions 
 touching the rights of repaying borrowers. 1 They are im- 
 portant particularly as defining those rights, where the statute 
 governing the formation and management of building asso- 
 ciations, or the rules of the society under them, fail of ade- 
 quate and clear expression. Their principles are univer- 
 sally applicable. The applicability, however, of the exact 
 measure laid down in these rules may be superseded by 
 statutory enactment, or constitutional or by-law provisions 
 of the association itself, which have become a part of the 
 contract. 
 
 166. Thus, in Pennsylvania, under the acts of 1859 
 and 1874, a borrowing member, voluntarily repaying his loan, 
 might claim a rebate upon the amount payable, of one-eighth 
 of the premium he contracted to pay, for every unexpired 
 year of the association's running, within eight. If, therefore, 
 he repaid when the society was four years old, it having 
 still four years of the eight before it, he was entitled to an 
 allowance, in reduction of the debt, amounting to one-half 
 of the premium at which he took the loan. 2 But, under 
 such a rule, in computing the reduction, only whole years 
 can be counted, and no claim can be made for proportionate 
 reductions for any additional fraction of a year.* Similar 
 provisions are made by statute in other States. 4 
 
 Construction of Provisions, Favoring Right of Repayment. 
 
 167. In the construction of provisions regulating the 
 right and terms of repaying, the courts favor the borrower. 
 So, under a provision of a building association's constitution 
 that " any member having taken a loan, may obtain a release 
 of his property mortgaged to the association, by paying back 
 to the association the difference between the dues paid in, 
 and the amount borrowed, together with a bonus of $8 per 
 share, if returned in the first year of the working of the asso- 
 ciation ; if the second, $6 ; if the third, $5 ; if the fourth, 
 
 1 See cases under note, 154, p. 190. 8 Building Association v. Rock, 9 
 
 9 See Act, 12 April, 1859; Wrig- Phila. (Pa.) 75. This is remedied, 
 
 ley, "Workingman's Way to Wealth, in Pennsylvania, by the Act 10 
 
 pp. 64-65; Act April 29, 1874, April, 1879, g 4, p. 17; ante, 34 (J). 
 
 37, Cl. 5, p. 98: but see ante, 34 (j) * See ante, Ch. ii.
 
 169.] RIGHTS OF MEMBERS. 201 
 
 $4 ; if the fifth, $3 ; and $3 thereafter, and their proportion 
 of the losses the association may have sustained during 
 their membership, etc., if returned before the unredeemed 
 shares are worth $120," it was held, there being no evi- 
 dence of such losses, and the offer to repay being made in 
 the first year, that the proper mode of ascertaining the 
 correct amount repayable, was to deduct the amount of dues 
 paid in from the amount actually borrowed, and to this add a 
 bonus of $8 on each share. 1 
 
 168. Similarly, in another case, a member of a building as- 
 sociation had given a bond and mortgage conditioned for cer- 
 tain periodical payments to be kept up until their aggregate 
 should amount to the sum loaned, and interest, and all fines and 
 other charges against the shares should be paid. A by-law 
 provided that any member, wishing to pay off his mortgage 
 in advance, should apply to the directors, who should " decide 
 the amount to be paid by the mortgagor," upon payment of 
 which he should receive a discharge and release of the mort- 
 gaged property. Upon desiring to repay it, being clear of 
 all dues and fines, before the termination of the society, it was 
 held that the directors, to whom the member applied, could 
 not require him to pay more than the sum for which the obli- 
 gation had been given (they proposed to charge an additional 
 bonus for the privilege of premature repayment), adding un- 
 paid interest thereon, and deducting the amount of monthly 
 dues already paid, without interest, and making no deduction 
 for entrance fees, which latter were said to be more prop- 
 erly applicable to the discharge of the ordinary expenses of 
 the association, than to be considered in the light of a deposit 
 or payment, to be afterwards allowed to a member upon any 
 future loan.* 
 
 Rights as to Repayment at Time of Loan Cannot be Varied ; but 
 Special Arrangements Agreed to by Members Conclude both 
 Parties. 
 
 169. The rights, in respect of repayment or redemp- 
 tion, which, at the time of obtaining a loan, are secured t> 
 the borrower by the rule then in force, become part of his 
 contract, and cannot be .-iiW]iiently varied, without his con- 
 
 1 Oak Cottage Building Associa- * Barker v. Bigelow, 15 Gray 
 tion v. Eastman and Kodgers, 31 (Mass.), 130. 
 Md. 556.
 
 202 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 sent. 1 It happens, however, occasionally, that especial ar- 
 rangements are made, outside of statute and by-law, for the pur- 
 pose of inducing borrowers to repay. Whilst no arrangement 
 of this kind, which is inconsistent with his existing contract, 
 can be forced upon the borrower, he may yet, by taking ad- 
 vantage of it, rid himself of his obligations towards the soci- 
 ety. And although such arrangements have not only, in most 
 cases, proved short-sighted and disastrous to the society, but 
 also, under certain circumstances, may rest under grave doubts 
 as to their legality,* this objection is practically brushed 
 aside by the fact, that, if ultra vires, they come strictly under 
 the head of unauthorized measures affecting only the inter- 
 ests of stockholders, which may, therefore, be sanctioned and 
 made operative by unanimous consent ; s and, further, by the 
 doctrine of estoppel, which closes the mouths, as to any such 
 objection, of the members benefiting by it, 4 as well as of 
 the corporation offering it.* 
 
 170. So, where, under a resolution of the building associa- 
 tion permitting borrowers to withdraw on payment of a stip- 
 ulated amount, the stock to be then " withdrawn and can- 
 celled," a stockholder withdrew, paid off his loan and stock, 
 which was then marked on the books " cancelled " and " with- 
 drawn," it was held that the corporation could not afterwards 
 recover for dues which subsequently accrued thereon. The 
 position of the parties was that of debtor and creditor ; and 
 after an acceptance of the terms of the resolution, and pay- 
 ment by the debtor of the sums found thereby to be due, the 
 new contract was executed, and a case of accord and satisfac- 
 tion was made out. Besides, having enjoyed the benefit of 
 the arrangement, the company was estopped from denying 
 the validity of the resolution under which it was done. 8 
 Similarly, 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- 
 
 1 In re Norwich and Norfolk 4 Hoboken Building Association 
 
 Provident Building Society, Smith's v. Martin, 2 Beas. (N. J.) 428. 
 
 Case, 1 L. R, Ch. Div. 481; 45 L. * Miller v. Jefferson Building As- 
 
 J., Ch. Div. 143; 24 W. R 103. sociation, 50 Pa. St. 32. 
 
 9 But see post. 323. 6 Miller v. Jefferson Building As- 
 
 3 Kent T. Quicksilver Mining Co., sociation, supra. 
 78 X. Y. 139.
 
 1 72.] RIGHTS OF MEMBERS. 203 
 
 not be rescinded to the prejudice of an ex-member who has 
 made application to withdraw, and had refrained from making 
 his monthly payments, in the belief that his application had 
 been accepted. 1 
 
 Member Cannot Claim Benefit of Special Arrangement, Unless He 
 Consent to, and Carry Out, its Terms; Except where Value of 
 Stock Changed with a View to Dissolution, etc. 
 
 171. These measures being, however, in point of legal 
 efficacy, nothing but offers of compromise, as they cannot 
 bind members against their will, so, in order to benefit them, 
 must be assented to, and acted upon, by them, according to 
 their spirit and purpose. Hence, where the officers of a 
 building association had passed a resolution to the effect that 
 borrowing stockholders should be permitted to cancel their 
 obligations upon payment of all arrears, and monthly dues, 
 as many months in advance as would be required to make 
 the duration of the society 100 months ; in a subsequent con- 
 troversy between the building association and a borrower, 
 who had not at the time made the payment demanded by the 
 resolution, it was held that he could not avail himself of its 
 privileges. 2 There was here evidently no acceptance of the 
 modification of his contract by the borrower, but, on the con- 
 trary, a neglect of his plain duties as a member, even such as 
 they were before the proposed plan was thought of, and this res- 
 olution itself clearly applied only to such as availed themselves 
 promptly of its offer, for the purpose of making voluntary 
 payment of their debts. The object of the arrangement 
 seems to have been to stimulate the cash influx, by offering a 
 premium, as it were, upon the prompt anticipation of the 
 stipulated period of payment ; but they furnished no evi- 
 dence of an intention to change the value of the stock, or to 
 make a permanent and sweeping provision for the computa- 
 tion of the present value of any debt, of which any one could, 
 at any time, avail himself. 
 
 172. This case is different from such an one in which 
 the arrangement was meant to be a final one, looking towards 
 a dissolution of the society upon the basis of a certain value 
 
 1 Eyre n. Building Association, Building Association, 10 "W. X. C. 
 17 Le. Int. (Pa.) 148. (Pa.) 414; 38 Leg. Int. 333; 97 Pa. 
 
 8 W;itkins v. Workingmcn's St. 514.
 
 204 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 attrihuted to the stock by the resolution, especially 
 the process of winding up had been carried to a considerable 
 extent upon that basis. Under such a state of facts, it would 
 be unjust to require any one member to pay more than all 
 the rest, and it could not, without extensive readjustment-, 
 be made to benefit more than the small proportion of mem- 
 bers whose accounts, being still unsettled, would l>e swelled 
 without any sort of reason or propriety, and to their manifest 
 advantage over all those with whom the association had 
 already settled. There is a case in point, decided in New 
 Jersey. 1 Trouble arose within the society to such an extent 
 that it was seen to be impossible to carry on its operation, 
 and, as a basis for winding up, it was agreed, that borrowing 
 members should be discharged of their obligations, upon 
 payment of what they had actually received, less their paid 
 instalments; that non-borrowers should receive back what 
 they had paid in, with interest, and that thereupon the 
 building association should be dissolved. Out of 49 borrow- 
 ing members 44 had withdrawn and been released upon these 
 terms. A borrowing member, who first had assented and 
 approved the scheme, subsequently repudiated it, and was 
 sued by the society. He contended, moreover, that, as the 
 society had departed from the legal measure of the debt, 
 and pretended to enforce against him a settlement clearly 
 'ultra vires, he was discharged of all liability towards it in 
 respect of the loan he had received from it. T^he reasoning 
 of the court was substantially as follows : Independently of 
 the arrangements for winding up the affairs of the association, 
 the defendant would be bound to account according to the 
 condition of his bond until tbe tinie fixed or properly com- 
 puted for the dissolution of the association. Whether the 
 arrangement agreed .upon was legally within the powers of 
 the building association to pass or not, the illegal conduct of 
 its officers could not relieve the defendant from his obligation. 
 He would then be left to the terms of his contract, and, 
 according to the constitution of the society and the terms of 
 his mortgage deed, he would be entitled to redeem only upon 
 payment of all the future subscriptions on his shares until 
 the association ceased. But, equitably, the defendant was 
 1 Hoboken Building Associution T. Martin, 2 Beas. (N". .T.) 428.
 
 ITo.] KIGHTS OF MEMBERS. 205 
 
 entitled to the benefit of the arrangement, notwithstanding 
 his refusal to stand by it ; nor could the association complain 
 of a decree upon that basis. They had acted and were acting 1 
 upon it, and were proceeding, at the time, to wind up their 
 affairs according to its terms and spirit. 1 
 
 Borrowing Members Cannot Force Terms on Investors, Involving 
 Continuance of Society. 
 
 173. On the other hand, it is quite certain that the 
 borrowing portion of the society's membership has no right, 
 for the purpose of easing its burdens, to force upon the in- 
 vestors, if these happen to be in the minority and in opposi- 
 tion, either a method of terminating the borrowers' relations 
 with the society, involving its continuance as such, or one of 
 forced withdrawal of the investors. And in such matters, 
 the court, if appealed to for interference, cannot assume to 
 control the discretion and judgment of members, as to their 
 own interests, or the most beneficial policy to be pursued by 
 them in the association, but must accord to them their plain 
 right of insisting upon the proper and legal carrying on of 
 its business. Hence, where the borrowers had resolved to 
 wind up the affairs of an association upon a certain basis, as 
 its business appeared to be unprofitable on account of the 
 inability to dispose of funds on hand, an injunction was 
 granted at the instance of the investors." And in an English 
 case, which underwent very elaborate consideration, where 
 the directors decided " not to receive any further subscrip- 
 tions from investing members, but to consider such as with- 
 drawing members in future, the same as if they had given 
 notice of withdrawal," the effect of which was intended to 
 be, to shake off all but the borrowing members, with a view to 
 changing the nature ot the society into a freehold land soci- 
 ety ; Cockburn, C. J., says : " I think . . . that such a reso- 
 lution was inoperative, and that investing members might 
 insist upon paying up their subscriptions and getting the 
 benefit of the society, unless they had precluded themselves 
 
 1 An agreement of the stockhold- tion t>. Kelley et al., 9 Luz. Leg. 
 
 ers to wind up is legal (see post, Reg. (Pa.) 9. 
 
 475), and binds a member who has J Pfaff v. Building Association, 6 
 
 consented, and his assignee; White W. N. C. (Pa.) 349. 
 Haven Loan and Building Associa-
 
 206 THE LAW OF BUILDIXG ASSOCIATIONS. [CH. VII. 
 
 by concurring in the resolution to treat themselves as with, 
 drawing members." 1 
 
 Repayment upon Decease of Borrowing Member and Judicial Sale 
 of Property. 
 
 174:. Thus far, we have examined the rights of a bor- 
 rowing member upon voluntary repayment of his loan. It 
 remains, in connection with this subject, to consider how his 
 rights stand upon a forced repayment. There is, however, 
 one case, which is just between these two divisions. It is the 
 case in which a mortgage, given by a member of a building 
 association to it, becomes divested and repayable, in conse- 
 quence of a judicial sale of the mortgaged premises, upon the 
 member's decease.* In such a case, there is neither a volun- 
 tary act of the borrower in repaying the loan, nor is there 
 any fault to be imputed to him in respect of it. The mort- 
 gage is divested by the policy of the law, and upon the 
 principle actus legis neminem injuriat, it has been held 
 that the building association is bound to make the same 
 allowances upon the mortgage, as if the borrower had elected 
 to pay off the loan and withdraw.' 
 
 Rights of Member upon Forced Repayment on Default. 
 
 175. But there is obviously a great difference between 
 the case of a member who has fulfilled, faithfully, all the re- 
 quirements of his undertakings with the building association, 
 of those which relate to the duties of membership generally, 
 as well as of those which pertain to his position as a borrower, 
 and that of a member, who, after obtaining an advance, neg- 
 lects both classes of obligations, and renders himself liable to 
 compulsory proceedings on the part of the society, which the 
 latter is bound to institute, all the more rigorously, as the suc- 
 cess of the whole scheme depends upon the exact perform- 
 ance of all his duties by every member. Whatever, there- 
 fore, may be the advantages allowed to members voluntarily 
 repaying their loans, these provisions have no application and 
 offer no immunities to those who become defaulters, and are, 
 
 1 Reg. v. D'Eyncourt, 116 Engl. * E. g. , by an Orphan's Court Sale 
 
 C. L. R. (4 Best & Smith. C. B.) in Pennsylvania. 
 
 820; 28 J. P. 116; 9 L. T. Rep., N. 8 Suider's Estate, 34 Leg. Int. 
 
 a 712; 12 W. R. 408. (Pa.) 49.
 
 176.] EIGHTS OF MEMBEUS. 207 
 
 upon that ground, sued by the association upon the covenants 
 of their obligations. Having thus violated the rules of the 
 society, they are not entitled to the benefits held out to those 
 who keep them, 1 nor are they within the meaning of the 
 statute designed to favor conscientious borrowers. 2 All that 
 they can claim as against the building association is the right 
 (which, we have already seen, is inherent in every member at 
 all times 3 ) to appropriate, in part-payment of their obligations, 
 the actual payments they have already made by way of sub- 
 scriptions and by way of interest upon their loans. 4 But 
 even then it must not be forgotten, that, as members, they 
 were liable for their proportionate share of the expenses and 
 losses of the concern, and that this share is to be reckoned 
 against them as part of their mortgage debt. 6 
 
 Borrower's Membership not Necessarily Forfeited by Suit upon De- 
 fault. Statement of Account in Equity. 
 
 176. A borrower does not, however, necessarily forfeit 
 his membership by being sued by the association. Forfeiture 
 does not, at any time, take place without being declared by 
 the society against the member; nor, without its enforce- 
 ment, does the cessation of his membership occur, unless in- 
 sisted upon by him, in exercising his right to apply his stock 
 in part payment of his debt. If, without either of these con- 
 tingencies arising, the building association makes its whole 
 claim out of the mortgaged premises, it would be highly in- 
 equitable to insist, in addition, upon the loss of his interest.-? 
 in the association. 8 In such case, therefore, if he continues 
 his stock-payments, he continues to be a member, and en- 
 
 1 Matterson v. Elderfleld, 4 L. R, Building and Loan Association, 38 
 Ch. 207; 17 W.R. 422; 20 L. T., N. Leg. Int. (Pa.) 333; 10 W. N. C. 
 S. 503. Hatherly, L. C., says: "It 414; 97 Pa. St. 514. 
 is true that the right to sell prevents 8 See ante, 127-131. 
 the right of redemption. So far, it 4 See ante, 156-157. 
 is a forfeiture, but not otherwise. 4 McGrath v. Hamilton Savings 
 If the mortgagor had redeemed, he and Loan Association, 44 Pu. St. 
 would have had an abatement; as 883; Pattisou v. The Albany Build- 
 he 1ms not done so, he can have no ing and Loan Association, 63 Ga. 
 such benefit." And there is no ilif- 873 
 
 ference as to this principle between 6 Massey v. The Citizens' Build- 
 
 ;i permanent and a terminating so- ing and Savings Association of 
 
 ciety. Paola, 22 Kas. 624. 
 
 * Watkins v. Workingmen's
 
 208 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 titled, upon the final distribution, to his share in the com- 
 pany's profits. ' 
 
 177. Courts of equity, upon proceedings to foreclose, 
 order a preliminary account to be taken between the parties, 
 ihowing the amount actually in arrears by the borrower. 
 A-f ter, upon this basis, the account is stated and a sale ordered, 
 tho mortgagor has the right to prevent tlie sale by the pay- 
 ment of the amount thus found, and the decree of sale stands 
 as a continuing security. Should he, however, fail to make 
 such payment, and the mortgaged property be converted 
 into money, other considerations than those relating to 
 the amount then due would arise in making an equitable 
 distribution of the fund between the parties. 11 This is 
 not a deviation from the principles already laid down ; for 
 the accounts indicated are preliminary only, and the proceed- 
 ing has the effect of affording the borrower an opportunity 
 of saving his membership. 8 
 
 Tender. Effect of Refusal to Accept by Society. 
 
 178. Whenever a member is in such a position as will 
 entitle him to repay his loan, whether voluntarily or upon 
 suit brought, the building association is bound to accept his 
 offer of what, according to the circumstances, its rules, and 
 the statute governing, all the rights of both parties being duly 
 
 1 North American Building As- plios Building and Savings Associa- 
 
 sociation v. Button, 35 Pa. St. 463; tion, 31 Ohio St. 517; Somerset 
 
 Ocmulgee Building and Loan Asso- County Building, Loan and Saving 
 
 ciation v. Thomson, 52 Ga. 427; Association n. Vandervere, 3 Stock. 
 
 Overby and wife. The' Fay ettcville (N. J.)282; Citizens' Mutual Loan, 
 
 Building and Loan Association, 81 etc., Association v. "Webster, 25 Barb. 
 
 N. Car. 56. See also Hekelnkaem- (N. Y.) 263. 
 
 per v. The German Building and 8 See White v. The Mechanics' 
 
 Savings Association, 22 Kas. 549; Building Association, 22 Grat. (Va.) 
 
 Richards v. The Bibb County Loan 233, for validity of a provision in 
 
 Association, 24 Ga. 198; Hennig- mortgage, whereby, in cnse of de- 
 
 hausen and Wolff, Rec'rs, v. Tisher, fault, the amount payable is to be 
 
 50 Aid. 583. ascertained by referees, according 
 
 8 Robertson v. The American to the value for which shares are 
 
 Homestead Association, 10 Md. 397. then selling. An injunction im- 
 
 See Hagerman et al. v. The Ohio properly obtained should not be clis- 
 
 Building and Savings Association, solved, however, until the indebted- 
 
 25 Ohio St. 186; Risk v. The Del- ness is ascertained.
 
 179.] EIGHTS OF JJ EMBERS. 209 
 
 regarded, is coming to it upon his obligation. And having 
 made such offer, the borrower is in the situation of one who 
 has made a lawful tender of his debt actually due. 1 For, al- 
 though upon mortgages drawn, as is the custom in most build- 
 ing associations, to cover merely payments of certain period- 
 ical amounts during the existence of the society's life, or the 
 running of the series, it can scarcely, in strictness, be said that 
 such an offer is technically a tender ; yet, if it is made of such 
 terms as will satisfy all just claims of the association and 
 make a suit unnecessary, it amounts to a tender.* The re- 
 fusal of the corporation to accept such terms will stop the 
 running of interest upon the debt ; but a subsequent agree- 
 ment to accept will start the running of intersst as if no ten- 
 der had been made, until the money is paid, or brought into 
 court. 3 And the bringing of suit upon the mortgage by the 
 building association is not, of course, equivalent to a refusal 
 by it to accept interest ; wherefore, the running of the period 
 of grace allowed for the payment of arrears is not suspended, 
 while a prior suit, prematurely brought and discontinued, 
 was pending. 4 
 
 Costs in Redemption and Foreclosure Suits. 
 
 179. In England, where the borrower's right to redeem 
 his property from the mortgage given to the association is 
 enforced by a bill in equity brought by him for that purpose, 
 it is said that the member will have to pay all the costs of 
 such proceeding, unless the society has been guilty of vexa- 
 tious and oppressive conduct. 6 The same principle, mutatis 
 mutandis, must apply, where the suit is for the enforcement of 
 a mortgage by the association ; remembering, however, that a 
 specific tender before suit, or with accrued costs after its com- 
 mencement, and refusal by the plaintiff to accept the same, will 
 make him liable for the costs, though he is entitled to a decree.* 
 
 1 The Columbian Building Asso- 5 Cotterell v. Stratton, 28 L. T. 
 
 ciation of East Baltimore No. 4, v. Rep.. N. S. 218; L. R., 8 Cli. App. 
 
 Crumb, 42 Md. 192. 295; 21 W. R. 234; 42 L. J. ( Ch. 
 
 ' lb. Ib. 417; 37 J. P. 4. 
 
 4 The German Fair Hill Building Columbian Building Associa- 
 
 .W.K-iaJinn c. Metzger, 3 W. N. C. tion of East Baltimore No. 4, v. 
 
 (Pa.) 204. Crumb. 42 Md. 192.
 
 210 THE LAW OF BUILDING ASSOCIATIONS. [CH. VII. 
 
 Repayment or Redemption in Permanent Societies. Liability of Mem- 
 bers. 
 
 180. Nothing has, in the foregoing sections, been said 
 as to the question of repayment or redemption in permanent ' 
 societies. Nor is it necessary to make any di>tinrtiun.-. in 
 this particular, between terminating and the serial cla>> nf 
 permanent societies; for, in such, the rules al>ove laid down 
 apply, with this only difference, that the rights and liabilities 
 of each member are referable, in the first instance, to the series 
 to which he belongs.* In societies, however, which are or- 
 ganized upon the purely permanent plan, the whole matter 
 becomes a very simple one.* For, though the rules of each 
 society must be considered, to settle the terms upon which an 
 advanced member may redeem, equally whether the society 
 is permanent or terminating, 4 yet the repayments, being for 
 a fixed number of years, it is always easy to calculate the 
 amount which ought to be paid as the price of redemption. 
 If the rules do not provide otherwise, it seems that an ad- 
 vanced member must pay the full amount of his future sub- 
 scriptions, and not merely their present value, if he wishes to 
 redeem; 6 and- if any fines are due at the time of notice of 
 withdrawal, they must be paid before he will be entitled to 
 have his security discharged.' And it must not be supposed 
 that an advanced member of a permanent society incurs no 
 liability other than that expressed in the deed ; for where, by 
 the rules of such a society, it was provided that advanced 
 members, on paying their subscriptions for fourteen years 
 
 1 See ante, 46. others, and the accounts of each 
 9 Where the stock is issued in series must be kept separately. Na- 
 series, under the law and the build- tional Building Association v. Hot- 
 ing association's charter, which pro- tenstein, 10 Pittsb. Leg. Jour., ^. 
 vided that "the gains, losses, and S. (Pa.) 225. 
 
 the expenses of the association shall 3 Compare Davis on the Law of 
 
 be divided among the several series Building, etc., Societies, pp. 252- 
 
 of stock, and an account shall be 254. 
 
 kept with each company or series of 4 Matterson t. Elderfleld, 20 L. 
 
 stock, and all profits, losses, and ex- T. Rep., N. S 503: S. C., L. R., 4 
 
 penses shall be divided equally Ch. App. 207; 17 W. R. 422; 33 J. 
 
 among the several companies, and P. 326. 
 
 the net gains to be credited to the 5 Matterson t. Elderfield, ubi sup. 
 
 number of shares held by each 6 Parker v. Butcher, 36 L. J., Ch. 
 
 company at the time," each series 552; S. C., L. R., 3 Eq. 762. 
 is financially independent of the
 
 181.] GOVERNMENT OF BUILDING ASSOCIATIONS. 211 
 
 (discount at five per cent, per annum being allowed), and 
 also all fines and other charges due up to the date of redemp- 
 tion, should hold their property released from the mortgage 
 to the society ; and, by another rule, that the holders of ad- 
 vanced shares, on which subscriptions should have been paid 
 for fourteen years, or, where the amounts paid should equal 
 the advances, should receive a complete release, and at once 
 cease to be members : it was held, that, on the society being 
 wound up by the court, the advanced members ought to be 
 placed on the list of contributories of the society, for the 
 purpose of discharging the debts due to third parties. 1 
 
 CHAPTER VIII. 
 
 GOVERNMENT OF BUILDING ASSOCIATIONS. 
 
 181. Supreme power vested in corporate meeting. 
 
 182. Of the corporate meetings. General meetings. 
 
 184. Special meetings. Officers' duty in calling. Notice 
 
 185. Acts of special, adjourned, or irregular meetings. 
 
 186. Quorum proxies. 
 
 188. Principal function of corporate meeting. Election of officers. 
 
 191. Rights of inspectors and judges as to candidacy and holding of 
 
 elections. 
 
 192. Courts will not look into regularity of election collaterally. 
 193. Management of society entirely in hands of its officers. 
 
 Supreme Power Vested in Corporate Meeting. 
 
 181. The supreme governing power of the association, 
 subject to its charter and the laws of the State, is vested in 
 the general body of the members in meeting regularly as- 
 sembled. The principle that the whole is bound by the acts 
 of the majority, when those acts are lawful, is universally 
 applicable to all corporations, 11 building associations not ex- 
 cepted. 8 And every individual who becomes a member is 
 held to assent, beforehand, to all lawful measures that shall 
 
 1 In re The Doncaster Permanent * Angell and Ames, Corp., 499. 
 
 Building Society, Ex parte Burgess, 8 Hagerman et al. v. The Ohio 
 
 L. R., 3Eq. 158; S. C..15L.T. Hep., Building and Savings Association, 
 
 N. 8. 270; 15 W. R. 102; 31 J. P. 310. 25 Ohio St. 186.
 
 212 THE LAW OF BUILDING ASSOCIATIONS. [CH. VIII. 
 
 be sanctioned by the majority of the corporation, lawfully 
 expressed. 1 
 
 Of Corporate Meetings. General Meetings. 
 
 182. The corporate meetings of the association are either 
 general or special : i.e., they are either the meetings fixed by 
 the constitution or by-laws to occur at stated times, for the 
 election of officers and the transaction of all business within 
 the corporate powers ; or such as are called on particular oc- 
 casions and for special purposes. 9 
 
 183. In the case of the former, provided for by the laws- 
 * of the association, all members are bound to take notice of 
 berth time and place of holding them, where both are speci- 
 fied by the by-laws, as well as of the usual character of the 
 business to be transacted at such meetings ; but where mat- 
 ters jot usually brought up at such meetings are to be 
 considered, and where their objects are to be defined by 
 express .provision of the by-laws, special notice of the sub- 
 jects intended to be submitted should be given. 1 So, 
 also, where no place is fixed by the constitution and by-laws- 
 for the holding of the corporate meetings. 4 At no time, 
 however, cnn the place of meeting or business be removed 
 out of the county in which the association is located. Cole- 
 ridge, J., in an English case, 5 says : " Nothing is more clear 
 than that these societies were intended to be local ; and witli 
 regard to the place of meeting, there is good reason why 
 they should be locally confined. The general meetings- 
 should be held in the county where the members reside." 
 
 Special Meetings. Officers 1 Duty in Calling. Notice. 
 
 184. In the case of special meetings, it may be premised, 
 that the duties of the officers pointed out as the proper ones 
 
 : Angell and Ames, Corp., 499; ture. Hagerman etal. v. The Ohio- 
 Field, Corp., 226. But this does Building and Savings Association, 
 not extend to implying the consent 25 Ohio St. 186. 
 to acts ultra vires; if such be de- * Field, Corp., 231. 
 cided upon, any single member may 3 Angell and Ames, Corp., 489; 
 obtain relief inequity. Davis, Law Field, Corp., 227, 231. 
 of Building, etc., Societies, p. 82. 4 Angell and Ames, Corp., 496. . 
 And see ante, 113, p. 158, note 6. * Reg. v. Registrar of Friendly So- 
 Nor where the matter passed by the cieties, 16 J. P. 613; 19 L. T. Rep. 
 majority is clearly unreasonable, and 182. ' ' General " is used in the sense 
 not within the intent of the Legisla- of "corporate."
 
 185.] GOVERNMENT OF BUILDING ASSOCIATIONS. 213 
 
 to sign the call, are, where the by-laws impose the duty of 
 doing so, at the request of a certain number of members, 
 merely ministerial, and they have no discretion whatever as to 
 complying with the requisition, if presented in the form and 
 manner indicated by the by-laws. 1 Notice of such meetings 
 and of their purpose to all members, according to the by- 
 laws, is essential, and failure to give it will invalidate the 
 meeting. 2 In the absence of any particular provision to the 
 contrary, this notice must be personal, and a reasonable time, 
 or the usual time, if a custom prevails, must be given. 8 The 
 summons must, also, be issued by the authority competent to 
 assemble the corporation. 4 But any defects as to notice, be- 
 ing, in general, a matter affecting only individual rights of 
 members, may be waived by the unanimous consent of all per- 
 sons entitled to vote. 6 And if all having the right to vote are 
 assembled, some upon notice, and some without, and agree to 
 enter upon the proceedings, it is a waiver of notice and of the 
 right to impeach the acts of the meeting upon that ground. 8 
 A subsequent recognition of their validity operates in the 
 same way. 7 Nor can that validity be questioned collaterally 
 upon the ground of want of notice to all members. 8 
 
 Acts of Special, Adjourned, or Irregular Meetings. 
 
 185. A special meeting can transact no business other 
 than that for which it was summoned.' But, being regularly 
 convened, it may be adjourned, and any business that might 
 have been lawfully transacted at the original meeting, may 
 also be done at the adjourned meeting. 10 The acts of a meet- 
 ing of the corporation irregularly convened are not binding. 
 
 1 Reg. v. Aldham and United Par- extraordinary matter, when it can- 
 
 ishes Insurance Society, 21 L. J., not be waived. Ib. 
 Q. B. 1; 8. C., 16 J. P. 149; 15 Jur. Angell and Ames, Corp., 
 
 1035; 18 L. T. Rep. 74: R. e. Ban- 491-492; Field, Corp., 227. 
 natyne, 2 L., M. & P. 213; 20 L. J., ' Field. Corp., 229. 
 Q. B. 210, being overruled. And 8 Ib. Advanced members, even 
 
 see Davis, Law of Building, etc. , when having pledged their stock to 
 
 Societies, p. 86. the society, are entitled. See ante, 
 
 8 Field, Corp., 227. 114. 
 
 1 Field. Corp., 228. 9 Davis, Law of Building, etc., 
 
 4 Angfll and Ames, Corp., 491. Societies, p. 88. 
 
 8 Except where the charter iin- I0 Field, Corp., 230; Davis, Law 
 
 peratively requires special notice of of Building, etc., Societies, p. 88.
 
 214 THE LAW OF BUILDING ASSOCIATIONS. [CH. VHI 
 
 Quorum. Proxies. 
 
 186. In the absence of special provision in the charter 
 or by-laws, fixing the minimum number of stockholders 
 capable of holding a valid meeting, the corporate acts of the 
 society, binding upon all its members, are the acts of a 
 majority of those present at a regular meeting, whether they 
 were or were not a majority of the members of the society. 1 
 Indeed, the majority whose acts become those of the associa- 
 tion, need not even be the majority of all present at the 
 meeting, but of all present and voting. " Otherwise, persons 
 jnot voting would be counted as voting against the measure. 
 As a majority of all present binds all members, because all 
 members might be present, and perhaps because it is their 
 duty to be present ; so a majority of those present and vot- 
 ing should have the same force, because it is within the right 
 and power, and perhaps the duty, of all present to vote, and 
 so to express their dissent from any measure they do not 
 approve." * 
 
 187. It is otherwise, however, where the charter requires 
 the presence of a quorum of the membership in order to con- 
 stitute a valid meeting, or the consent of a majority of a 
 quorum to pass a measure. If the number of members 
 necessary to constitute a quorum is not prescribed by statute 
 or constitution, it comprises a majority of all the members 
 entitled to vote. 3 And the right of representation by proxy 
 is not a general one, but must be shown to rest upon special 
 authority contained in the constitution or by-laws. 4 
 
 Principal Function of Corporate Meeting. Election of Officers. 
 
 188. As the management of corporations, and particu- 
 larly of building associations, is left almost entirely to the 
 directors, the principal function of the corporate meetings, 
 besides that of occasionally passing by-laws, 6 is to express, 
 
 1 Attorney-General v. Davy, 2 narily entitled to one vote, no mat- 
 
 Atk. 212. ter what the number of shares he 
 
 * 1 Pars. Contr., p. 142. holds. See ante, 114. 
 
 3 Davis, Law of Building, etc., B Even this is, in building asso- 
 Societies, 88: Field, Corp., 239. ciations, usually delegated to the di- 
 
 4 Angell and Ames, Corp., rectors. As to by-laws generally, 
 128, 130; Davis, Law, etc., ubi su- see post, Ch. xv. 
 
 pra. And everv member is ordi-
 
 190.] GOVERNMENT OF BUILDING ASSOCIATIONS. 215 
 
 annually, through the members at large, the association's will, 
 as to the policy and management of the corporate affairs, by 
 the election of such officers as will execute such will. 1 Tho 
 election of officers must take place in the manner and upon 
 the nomination required by the constitution and by-laws. If no 
 particular form is prescribed, no election conducted ingood faith 
 will be set aside. 8 But no usage, adduced in explanation, can 
 sustain a corporate act, done in a manner plainly contrary to 
 that prescribed by the charter (or the statute to which it 
 must conform) ; * though, if the meaning of the words of the 
 charter be doubtful, usage for a great length of time may be 
 admitted as explanatory. 4 The fact that improper votes were 
 received at an election will not necessarily vitiate it ; it must 
 be affirmatively shown, that, had they not been received, the 
 result would have been different. 5 In this case, the court 
 may set aside the election. On the other hand, when votes 
 which were rejected by the inspectors, would, if received, 
 have been sufficient to elect a certain ticket, and are adjudged 
 to have been erroneously rejected, the court cannot declare 
 the ticket elected for which they would have been cast, had 
 they been received ; it can merely vacate the election alto- 
 gether." And a failure to elect new officers will not work a 
 dissolution of the society ; 7 for the stockholders compose the 
 corporation^ and on a failure to elect new officers at the time 
 designated, the old hold over. 8 
 
 189. If the election has been fairly held, whoever has a 
 majority of the votes cast (no minimum being required by 
 the constitution) is elected, although a majority of the entire 
 assembly abstained from voting.' Where, therefore, the ma- 
 jority merely protests against the election of an officer, but st-r> 
 up no other, the minority may elect the candidate proposed. 1 
 
 190. An election of a less number of directors than tin- 
 charter calls for is valid ; that of all beyond it, void." For this 
 
 1 Field, Corp., 186. ib., 136. Ib., 188. 
 
 8 Angell and Ames, Corp., 138. ' Hoboken Building Association 
 
 * As to the effect of usages of cor- v. Martin, 2 Beas. (N. J.) 428. 
 
 poratious upon acts in excess of 8 Angell and Ames, Corp., 
 
 charter, see Clarke's Browne on 142-144, 771. 
 
 Usages aad Customs, 122. Angell and Ames, Corp., 127. 
 
 4 Angell and Ames, Corp., ubi I0 Ib., 126. 
 
 supra. " Ib., 135.
 
 216 THE LAW OF BUILDING ASSOCIATION'S. [ciI. VIII. 
 
 reason, too, ballots containing the names of a less number of 
 directors than provided for by the charter are good, as far ;i- 
 they go, whilst those containing a greater number, must, of 
 necessity, be rejected. 
 
 Hights of Inspectors and Judges as to Candidacy and Holding of 
 Election. 
 
 191. Inspectors 1 and judges* of the election may, at 
 the same time, be candidates. 3 And the inspectors are not 
 bound to close the polls at the end of an hour, even where, 
 by resolution of the board from which they derive their 
 power, the election is limited to that time. They are entitled 
 to exercise a reasonable discretion in the matter. If no time 
 be limited, the poll may be adjourned from day to day. 4 
 
 Courts will not Look into Regularity of Election Collaterally. 
 
 192. So long as an officer is such de facto, though indis- 
 putably ineligible, 6 his acts have binding efficacy upon the cor- 
 poration, at least so far as they respect third parties. 8 And 
 persons acting publicly as officers are to be presumed right- 
 fully in office. 7 Their acts, as such, cannot be collaterally 
 impeached, 8 nor will the court, in an action by a corporation 
 against its debtor, look into the regularity or validity of the 
 election of its corporate officers.* 
 
 Management of Society Entirely in Hands of its Officers. 
 
 193. The management of the aifairs of a building asso- 
 ciation is entirely in the hands of its officers, who, deriving 
 their powers, of course, primarily from the corporate meet- 
 ing, and possibly appealing to it in difficult and momentous 
 cases, yet virtually constitute the government of the associa- 
 tion. 
 
 1 Ex parte Wilcox, 7 Cow. (N. Y.) of trespass relating to any cor- 
 
 402. porate property against others 
 
 * Commonwealth v. Woelper, 3 claiming to be the board of di- 
 
 Serg. and R. (Pa.) 29. rectors. 
 
 3 See Angell and Ames, Corp., 7 See Angell and Ames, Corp., 
 141. 139. 
 
 4 See Ib., 138. 8 See Field, Corp., 180; 2 Dill., 
 *.See Ib., 287. Mun. Corp., 892, n. 
 
 See Ib. 139; Field, Corp., Hoboken Building Association 
 180. And they may have au action v. Martin, 2 Beas. (N. J.) 428.
 
 104. J FUNCTIONS, ETC., OF OFFICERS. 217 
 
 CHAPTER IX. 
 
 FUNCTIONS, DUTIES, AND LIABILITIES OF OFFICEB8. 
 
 194. Usual officers in building associations, and their general powers. 
 
 195. President. 
 
 196. Treasurer. 
 
 197. Secretary. 
 
 ^ 198. Directors. 
 
 200. Limits of the powers of directors. 
 
 201. Meetings of directors. Notice. Quorum. 
 
 204. Discretion of directors cannot be controlled nor delegated. 
 Committees. 
 
 205. Minutes of directors' transactions. 
 
 207. Director may become party to contract with society. 
 
 208. Modified sense in which directors are officers in the society. 
 
 209. Personal liability of directors for losses, etc. 
 
 211. Directors who were parties to fraud upon society, whereby it 
 was ruined, cannot share in its assets. Presumptive fraud. 
 
 212. Liability of directors to account to society for waste or misap- 
 plication of funds. 
 
 213. Eight of individual stockholders to sue delinquent directors for 
 protection of society. Qualifications. 
 
 214. Trustees. 
 
 215. Officers' bonds. When prerequisite to entering upon office. 
 
 216. Discretion and responsibility in, and method of, approving bonds. 
 
 217. Sureties not discharged by negligence of society. 
 
 218. If officers' election void, surety not bound. 
 
 219. Liability of sureties strictly confined to terms of bond. 
 
 220. Liability of officers to fines and amotion. 
 
 221. Criminal liability of officers in certain cases. 
 
 223. Compensation of officers. 
 
 226. Implied liability of society for compenstion. 
 
 227. A director cannot claim extra compensation for acts done in the 
 line of his duty. Services before organization. 
 
 228. De facia officer cannot claim salary. 
 
 229. Salaried officer, improperly removed, may sue for salary. 
 
 230. Officers must look to society's funds for compensation. 
 
 Usual Officers in Building Associations and Their General Powers, 
 10-i. The officers of a building association are, (1) Presi- 
 dent and Vice-President ; (2) Treasurer ; (3) Secretary ; (4-) 
 Board of Directors ; (5) Trustees, the latter class, not prop- 
 erly officers, 1 having now become, almost every where, un- 
 
 1 See post, 214.
 
 218 THE LAW OF BUILDING ASSOCIATIONS. [CH. IX. 
 
 necessary and discarded. The authority of these several 
 officers, in the absence of any express provision and limita- 
 tions, extends to the performance of all the duties usually 
 belonging or appertaining to similar officers in corporations 
 generally. 
 
 President. 
 
 195. The President, or, in his absence, the Vice-Presi- 
 dent, is the presiding officer at the meetings of the corporation 
 or Board of Directors. In general, and unless other officers 
 are designated, either by law or special direction of the 
 society or its directors, it is his business to call special meet- 
 ings of the association ; to sign contracts, and execute deeds ; 
 to legalize, by his signature, warrants drawn upon the treas- 
 urer, and have the general custodianship of the corporate 
 seal. His contracts with third persons for necessaries to be 
 furnished the society, are, in general, binding upon it, except 
 where there is a resolution upon the corporate books, forbid- 
 ding him to enter into such a contract. 1 
 
 Treasurer. 
 
 196. The Treasurer is the keeper of the society's funds, 
 and the officer entrusted with their immediate disbursement ; 
 but only upon warrants and authority executed and presented 
 in the form and manner provided by the by-laws. And he 
 is bound to keep accurate and correct accounts of the same. 
 His functions are purely ministerial. If, therefore, a war- 
 rant duly made out is presented to him for payment, for the 
 purpose, as he knows, of applying the money to an object not 
 within the powers of the association, and he cashes it, he is 
 not, by reason of such action, to be held personally liable for 
 the amount.* On the other hand, if he makes a payment out 
 of his pocket, for a purpose authorized by the directors, but 
 not within the corporate powers, it seems he cannot recover 
 it against the corporation if a warrant is afterwards refused.* 
 
 1 Westerveldt . Radde, 55 How. to "trustees," who, under the law 
 
 Pr. (N. Y.) 369. then in force in England, supplied, 
 
 1 See Grimes v. Harrison, 28 L. inter alia, the exact position of 
 
 J., Ch. 823; 33 L. T. Rep. 115; 5 treasurers in our associations. 
 Jur., N. S. 528; 26 Beav. 435; 23 J. 3 See In re The Kent Benefit 
 
 P. 421. This decision really refers Building Society. 30 L. J., Ch. 785;
 
 197.] FUNCTIONS, ETC., OF OFFICEBS. 219 
 
 He is not liable for loss of the society's funds by robbery, 1 or 
 by failure of the bank in which he has deposited them, under 
 authority and direction of the Board of Directors, or in the 
 exercise of his proper judgment and discretion, in the name 
 of the association, free from fraud and gross negligence.* To 
 ensure his responsibility, he is required to give bond for the 
 faithful discharge of his duties, and the proper application of 
 the moneys committed to his care. 
 
 Secretary. 
 
 197. The Secretary's business, in a building association, 
 is, generally, to conduct the correspondence of the society ;. 
 attest the President's signature where required ; keep the 
 financial accounts of the association and correct minutes of 
 its proceedings, as well as of those of the Board of Directors ; 
 summon meetings of the directors and the society, and 
 furnish, at all times, any information concerning the corpo- 
 rate affairs that may be necessary. As he is the mouthpiece, 
 so, practically, his functions are those of a general agent of 
 the association, 3 and often he is, in point of fact, the manager 
 of its entire business. When such is the case, the society 
 will be bound by orders given by him, for necessary repairs, 
 though not sanctioned by the required number of directors, 
 nor entered on their minutes. 4 But under no circumstances 
 can he bind the society against its will, by his single-handed 
 
 4 L. T. Rep., N. 8. 610; 1 Dr. and note. But he has no right to take 
 
 8. 417; 7 Jur., K S. 1045; 9 W. R. anything but cash in payment of 
 
 686. Also referring to " Trustees." dues and fines, even in the presence 
 
 See preceding note. and with the acquiescence of the 
 
 1 See Davis, Law of Building, etc., executive officers : he and his bonds- 
 Societies, pp. 96-97. In the case of men will be liable for any loss thus 
 Walker v. British Guarantee Asso- occurring. People's Building and 
 ciation, 21 L. J., Q. B. 257; 16 Jur., Loan Association v. Wroth, 14 Vr. 
 885. The treasurer was held liable (N. J.) 70; Mutual Building and 
 under an imperative provision of Loan Association v. Hammell, Ib. 
 the statute. See, in support of text, 78. 
 
 Giblin v. McMullen, 38 L. J., P. C. * See Davis, Law of Building, etc., 
 
 25; Law Rep., 2 P. C. 817; 21 L. Societies, p. 104; and see post, 
 
 T. Rep., N. 8. 214; 17 W. R. 445; 245-246, 251-253, as to incidents to 
 
 Fosters. Essex Bank, 17 Mass. 497; agency, etc. 
 
 Redfield, Bailments, 632. 4 Allard v. Bourne, 15 C. B., N. 
 
 See Davis, Law of Building, S. (109 Engl. C. L. Rep.) 468; 3 N. 
 
 etc., Societies, p. 97, and preceding R. 46.
 
 Xi'JU THE LAW OF BUILDING ASSOCIATIONS. [CH. IX. 
 
 acts, where they are either ultra vires of the association, or 
 clearly such as require the consent of the Board of Directors.' 
 
 Directors. 
 
 108. The Board of Directors constitutes, in a manner, 
 the managing committee of the association. They are ap- 
 pointed under provision of the charter and by-laws, by the 
 members at a general meeting, for the purpose of vesting in 
 them, for the convenience of the association, the management 
 of its affairs. Their acts, therefore, within the powers con- 
 ferred upon them by the constitution, are the acts of the as- 
 sociation, binding it, in every respect, equally as if done by 
 all its members, lawfully assembled and acting for the corpo- 
 ration ; * and if they travel outside of their proper authority, 
 and put the corporation, for which they act, in the position 
 of contracting ultra vires, whilst their engagements cannot 
 be enforced against the corporation, if it resists, it seems that 
 the directors may be held personally liable on an implied 
 warranty that the society had power to do what they assumed 
 to do in its name." And there is no obligation upon the 
 members to indemnify the suffering transgressors. The rule 
 is, that, as between the directors and the society, a transaction 
 by the former, which is ultra vires, must, in order to bind the 
 latter, be authorized or ratified by each individual member ; 
 for no one will be assumed to assent, or to have pledged 
 his assent beforehand, to any but legal and competent acts. 
 Where, therefore, the directors of a building association, with- 
 out authority, bought land, and mortgaged it to secure money 
 borrowed for the purchase, there being no power in the so- 
 ciety to borrow money ; and certain members, acting as trus- 
 tees, covenanted to pay the mortgage debt, and, under that 
 covenant, were subsequently obliged to pay it ; and it did not 
 appear that every member acquiesced in, or was even cog- 
 nizant of the transaction, the unfortunate trustees were not 
 permitted to compel contribution among the shareholders to 
 recover their loss. 4 
 
 1 See post, 245-246. 4 In re Kent Benefit Building 
 
 9 Field, Corp., 67. Society, 1 Drew, and Sm. 417: 7 
 
 s Richardson v Williamson, Law Jur., N. S. 1045; 80 L. J.. Ch. 785; 
 
 Rep., 6 Q. B. 276; 40 L. J., Q. B. 9 W. R. 686; 4 L. T. Rep. N. S. 610; 
 
 145. Sec also Hopkins v. Mel.affy, 25 J. P. 805. 
 
 11 S. & R. (Pa.) 126.
 
 200.] FUNCTIONS, ETC., OF OFFICERS. 221 
 
 199. The precise powers and duties of the directors in 
 any particular association depend, in a great measure, upon the 
 provisions of its constitution and by-laws ; but, in general, 
 they are vested with the supervision and management of the 
 association's business, by the disposition of its funds, the delib- 
 eration upon all proposals for loans, the filling of vacancies in 
 offices and among their own number for unexpired terms, 1 
 and the providing of proper compensation, when not other- 
 wise fixed, for the services of committees and the members 
 of the board. In the exercise of their powers, they are sub- 
 ject to the control of the corporate meeting, but not to the 
 interference of individual members, except in so far, that, if 
 the directors act illegally, proceedings may be taken against 
 them by individual members, representing the whole, in 
 equity. 11 For an accomplished misapplication of the society's 
 funds they may be made personally answerable. 3 And when 
 the laws of the society give the Board of Directors a discre- 
 tion, e.g., in the amount of fines to be imposed, allowance to 
 members, approval of withdrawals, etc., it has been said that 
 a Court of Chancery will compel them to exercise that dis- 
 cretion in a reasonable manner. 4 
 
 Limits of the Powers of Directors. 
 
 200. The power conferred upon directors of managing 
 and controlling the business of the association, in no case ex- 
 tends to an authority to change its entire character and pur- 
 pose. Any attempt of that .description, being clearly ultra 
 
 1 When such power is vested in bill against directors for a breach of 
 the directors, a court of equity trust, see Harmer v. Gooding, 13 
 might, it would appear, compel its Jur. 400; 3 De G. and S. 407; East- 
 exercise, at the instance of a mem- wood v. Lever, 9 L. T. Rep., N. S. 
 ber of the association, upon proper 615; 4 De G., J. & S. 114; Craig . 
 grounds laid. Gregg, 83 Pa. St. 19; Leffman r. 
 
 2 Davis, Law of Building, etc., Flanigan, 5 Phila. (Pa.) 155, 419; 
 Societies, p. 100; cit. Reg. v. D'Eyn- Davis, Law of Building, etc., So- 
 court, 28 J. P. 116; 9 L. T. Rep., cieties, p. 103; post, g 209-213. 
 
 N. S. 712; 4 Best and S. (116 Engl. < Davis, Law of Building, etc., 
 
 C. L. Rep.) 820; 12 W. R. 408; and Societies, p. 104; cit. Matterson 9. 
 
 see post, 212-213. Elderfleld, 20 L. T. Rep., N. S. 503: 
 
 3 Grimes t>. Harrison, 28 L. J., Law Rep., 4 Ch. App. 207; 17 
 Hi. S23: 33 L. T. Rep. 115; 5 Jur., W. R. 422; 33 J. P. 362. Ante, 
 N. S. 528; 26 Beav. 435; 23 J. P. 135. 
 
 421. And for proper parties to a
 
 THE LAW OF BUILDING ASSOCIATIONS. [cil. IX. 
 
 vires, 1 is cnjoinable at the instance of any member of L. 
 fiociation.* Thus, in England, the conversion of a built 1 in:; 
 association into a land association * was held clearly to be out- 
 eide of the powers of the board. 4 Equally so is that of 
 changing the capital stock of the corporation beyond the limit 
 fixed by the charter. 6 The former cannot be done at all ; 
 whilst the latter only by a corporate meeting, by virtue of a 
 specific authority conferred by the charter, or by the Board of 
 Directors only in consequence of specilic charter authorization 
 thereto. Nor can the directors, upon their own responsi- 
 bility, apply for an enlargement of the corporate powers ; and 
 a grant thereof, upon such application, is void." 
 
 Meetings of Directors. Notice. Quorum. 
 
 201. The meetings of the Board of Directors are fixed in 
 the laws of the association as to the number of their stated oc- 
 currence. Time and place are usually left to their discretion, 
 as also the entire matter of special meetings. It is essential that 
 all the directors should have full notice of all meetings of the 
 board. Being regularly convened, they may be adjourned ; 
 but if the meeting be irregular, its acts are invalid, though 
 they may become binding upon the society where the interests 
 of third parties would innocently suffer. 7 
 
 1 Field, Corp., 155. 6 Angell and Ames, Corp., 280. 
 
 * Grimes . Harrison, supra And it was held in New Jersey, 
 
 8 Ib. "A freehold land society that the authority of the directors 
 
 buys lands with the funds subscribed did not extend to empowering, by 
 
 by the members, and divides that their presence and acquiescence, 
 
 land among them; but a benefit the treasurer to receive anything 
 
 building society advances to mem- but cash in payment of dues and 
 
 bers, out of the subscriptions made fines, so as to relieve his sureties 
 
 by members, sums of money to be from liability for losses thus sus- 
 
 laid out in the purchase of lands or tained. ' ' The executive officers or 
 
 buildings, which are then mortgaged directors . . . had no authority to 
 
 to the society. That appears to be set aside the constitution and by- 
 
 the principal difference between laws of the association, or change 
 
 these two kinds of societies." Ib. the duties of the treasurer as there- 
 
 4 Ib. But this wrongful conver- in prescribed, nor can they by their 
 
 sion having taken place, it does not, unauthorized acts relieve the sure- 
 
 therefore, cease, of course, to exist as ties from their responsibility to the 
 
 a building association, and the mem corporation." People's Building 
 
 bers are still bound by its rules. Ib. and Loan Association v. Wroth, 14 
 
 8 Railway Co. v. Allerton, 18 Vr. 70. 
 
 Wall. (U. S.) 233. 7 Field, Corp., 235; cit. Samuel
 
 203.] FUNCTIONS, ETC., OF OFFICERS. W6 
 
 202. If the minimum number of directors capable of 
 constituting a quorum for business purposes is fixed by the 
 articles or by-laws of the association, a less number cannot, 
 but a greater can, act. 1 If nothing is fixed, concerning that 
 point, and the general rule, that a majority constitutes a 
 quorum, obtains when the meeting is a stated one (of which 
 all members are bound to take notice), or a special one, of 
 which all have been duly notified," a majority of the whole 
 definite number designed to constitute the Board of Directors 
 constitutes a quorum, the action of a majority of which will 
 be binding : so that, if the whole number of directors con- 
 templated by the constitution be (e.g.] twelve, the least num- 
 ber capable of constituting a valid board will be seven, of 
 which four may pass any competent action. 8 Therefore, 
 where the management of a building association was vested in 
 twelve directors, and a member, who, under the rules, had 
 become liable to forfeit his stock, tendered the arrearages 
 thereon, with fines, to two of the directors, who were sitting 
 for the receipt of payments, and who accepted the said mem- 
 ber's tender ; and the first meeting of the board held subse- 
 quently to such action declared the stock forfeited, and or- 
 dered the member's name to be stricken off the roll, and his 
 money returned, it was held that the action of the two di- 
 rectors was not a waiver of forfeiture, and that the stock was 
 properly forfeited by the subsequent action of the whole 
 board. 4 
 
 203. If the rule is couched in negative phraseology, that 
 " not less than" a certain number of the directors shall con- 
 stitute a board for the transaction of business, the whole Ixxlv 
 of the directors, or any portion thereof, not less than the 
 
 . Halladay, 1 Woolw. (C. C.)400; * When this pre-requisite has 
 
 with Am. Corp. Cas. 139; Bank of been omitted, the power to art ran 
 
 Alabama n. Comegys, 12 Ala. 772. not be exercised by less than the; 
 
 1 Field, Corp., 238; cit. Buell v. whole number of directors, waiving 
 
 Buckingham & Co., 16 la. 284; Sar- notice, as in the case of corporate 
 
 gent v. Webster, 13 Mete. (Mass.) meetings, which sec, aiite, 184, and 
 
 497; In re Insurance Co., 22 Wend. Field, Corp., g 239. 
 
 (X. V.) 597; Ex parte Wilcox, 7 1 Dill., Mun. Corp., 278. 
 
 Cow. (N. Y.) 402; Rex v. Monday. Card r. Carr, 1 C. B., N. S. (87 
 
 Cowper, 538; Sawyer . Methodist Engl. C. L. Rep.) 197; 26 L. J., C. 
 
 Episcopal Church, 18 Vt. 405. P. 113.
 
 224 THE LAW OF BUILDING ASSOCIATIONS. [CH. IX. 
 
 number so limited, is competent to act. 1 A measure, how- 
 ever, requiring, by rule, the concurrence of a majority of all 
 the directors appointed, cannot be passed by a minority of the 
 whole number, a portion being in any way disqualified or re- 
 fusing to vote.* Thus, if the whole number of directors con- 
 templated by the articles be twelve, and a certain class of 
 measures require the consent of a majority of the whole num- 
 ber of the directors appointed, a measure of that description 
 could not be passed by a vote of less than seven concurring 
 directors. 
 
 Discretion of Directors Cannot be Controlled nor Delegated. Commit- 
 tees. 
 
 204. As the directors, in the honest exercise of their 
 reasonable discretion, are not only beyond the control and di- 
 rection of the court at the instance of a stockholder, but are 
 also protected against any personal liability, in consequence 
 of losses arising from errors of judgment ;' and because they 
 hold their position mainly Tby reason of the confidence placed 
 in their capacities ; they cannot be allowed, when the powers 
 conferred upon them involve the exercise of personal judg- 
 ment and discretion, to delegate this authority to another per- 
 son, or set of persons, without some express authority to that 
 purpose found in the charter or by-laws under which they 
 act. 4 The establishment of committees of their own num- 
 ber, however, with special care of particular branches of the 
 general business, for the purpose of expediting and effectu- 
 ally systematizing the whole work, does not seem a delegation 
 prohibited by the rule, potestas nonpotest delegari." 
 
 Minutes of Directors' Transactions. 
 
 205. The transactions of the directors should be entered 
 in a minute book belonging to the society, and be properly 
 attested.' Such a record is, however, by no means essential, 
 either to the validity or proof of their acts and contracts, 
 
 1 Edgerly v. Emerson, 3 Fost. not bind the association. Angell 
 
 555. and Ames. Corp. , 277. 
 
 8 1 Dill., Mun. Corp., 278-281. 8 Burrill v. Nahant Bank, 2 Mete. 
 
 8 See post, 20&-210. (Mass.) 163. 
 
 4 Field, Corp., 160. And con- Davis, Law of Building, etc., 
 
 tracts made by such sub-agents will Societies, p. 103.
 
 200.] FUXCTlOXs, ETC., OF OFFICERS. 225 
 
 whether in favor or against the association. If, indeed, the 
 incorporating act, or the charter, make it obligatory, for any 
 purpose, these requisites must, of course, be complied with. 
 But when there is merely, in the charter or by-laws, the usual 
 provision that such record shall be kept by some designated 
 officer, these directions are to be deemed simply directory ; 
 " and the breach or neglect of them, though it may render 
 the directors or their scribe responsible in case of consequen- 
 tial damages for violation of duty, is a matter wholly between 
 themselves and the stockholders, and between the latter and 
 the government as a violation of the charter and by-laws, and 
 by no means affects the validity of the unrecorded acts." ' 
 Hence, when the rules of a building association declared 
 that " the minutes of the managers, entered into the minute- 
 book, and signed by the managers concurring therein, shall be 
 sufficient authority for the execution of any of the aforesaid 
 powers," it was held that the failure of the managers to sign 
 as required did not invalidate their execution of the powers 
 entrusted to them. 2 
 
 206. As a matter of evidence, the record, if existing, 
 should be primarily produced. For of elections, meetings, 
 declaring of dividends, etc., and all relations between corpo- 
 rators and corporation, they are the evidence.* If there be 
 none, or if, upon notice, the corporation fail to produce it, 
 other evidence is admitted. 4 But the "authority of the board., 
 upon which any act is done, ought to be given at a regularly 
 convened meeting; or, at least (if the practice of giving sepa- 
 rate consent has been adopted), after consultation of all to- 
 gether, and a concurrence of a majority. 5 Where, by a spe- 
 cial act of an incorporated company, three directors were a 
 quorum, and the secretary obtained at one time the authority 
 of two directors, to seal a bond for money due the engineer of 
 the company, and at another time the authority of another 
 
 1 Angell and Ames, Corp., 291 a. v. Sendmayer, 50 Id. fc7; Dobinson 
 
 * Priestly t>. Hopwood, 10 L. T. r>. Hawks, 16 Sim. 407; 12 L. T. 
 Hep., N. 8. 646; 12 W. R. 1031; Rep. 238; 39 Engl. Ch. Rep. 406. 
 see, also, Davis, Law of Building, 4 Angcll and Ames, Corp., 291 a. 
 etc., Societies, p. 104. 5 See Field, Corp., 236 and 
 
 * Bank of Commerce's Appeal, 237. It is certainly not advisable to 
 7:i 1'a. St. 59; German Union Build- run the risks involved in tlii< pruc- 
 iiiii and Savings Fund Association ticc.
 
 226 THE LAW OF BUILDING ASSOCIATIONS. [CH. IX. 
 
 director, it was held that the bond was not the deed of the 
 company. 1 
 
 Director May Become Party to Contract with Society. 
 
 207. Whilst it is true that directors are, in a sense, trus- 
 tees for the stockholders, and cannot, therefore, without fraud, 
 secure to themselves advantages not common to the other 
 members,* this principle does not preclude a director from 
 being a party to a contract with his association, and then, as 
 to his contract, standing as a stranger to the society. 5 In- 
 deed, where the president and two directors constitute a quo- 
 rum, a sale of the corporation's land to the president, by such 
 a quorum, was upheld by the court. 4 
 
 Modified Sense in which Directors are Officers in the Society. 
 
 208. It is, perhaps, not perfectly accurate, to class the 
 directors among the officers of the building association, the 
 general acceptation of that word carrying with it the idea of 
 executive rather than deliberative and directory power. The 
 distinction is of no moment here, when the object is simply 
 to review the whole machinery of a building association's 
 government ; but it may become of importance. Thus, in . 
 Xew York, under the Act of 10 Apr., 1851, which vests the 
 general functions of directors in a body of so-called trustees, 
 .and which requires, that the persons, being not less than nine, 
 desiring to form a building association, shall subscribe articles 
 setting forth, inter alia, " What officers, trustees and attorney 
 there shall be," and that a true copy of such articles, signed by 
 the officers of the association, together with a statement showing 
 the time when the association was organized, the intended place 
 of the transaction of its business, and the names of the offi- 
 
 1 D'Arcy . Tamar, Kit Hill and Co., 12 Barb. (N. Y.) 27; McCul- 
 Callington Railway Co., Law. Rep., lough . Moss, 5 Denio (X. Y.). 567. 
 2 Exch. 158; 14 L. T. Rep., N. S. But see Bank of MiiMIHmry r. Rut- 
 626. The corporate powers of a laud, etc., R. Co . 30 Vt. 159; Brail- 
 corporation are to be exercised by street v. Bank of Royulton. 42 Id. 
 the trustees only when duly assem- 128 
 
 bled and acting as a board. Con- 9 Koehler v. [Iron Co., 2 Black, 
 
 ferring authority to sell and convey 715. 
 
 property is the exercise of a oorpo- 8 Stratton . Allen, 1 Green. 229. 
 
 rate power. Gashwilera. Willis, 33 4 Buell v. Buckingham & Co., 16 
 
 Cal. 11; Conro . Port Henry Iron la. 284.
 
 209.] FUNCTIONS, ETC., OF OFFICERS. 227 
 
 cers and trustees at the time of making such statement, veri- 
 fied by oath or affirmation, shall be tiled with the clerk of the 
 proper court, and that thereupon the association is to become 
 a body corporate, etc. ; a case arose in which it appeared, 
 inter alia, that all the officers, and all the trustees but one, 
 had signed. This point being urged against the building as- 
 sociation, under a plea of nul tiel corporation, Denio, C. J., 
 says : " If the copy of articles were required to be signed by 
 the trustees; in other words, if the trustees are embraced 
 within the term 'officers,' . . . the omission of one of 
 them to sign would be a defect which might defeat the title 
 of the association to be regarded as a corporation. It is no 
 doubt true, that, to create a corporate body under these gen- 
 eral laws, the formal requirements of the statute must be 
 substantially followed. But it seems very clear to me that 
 the trustees were not required to sign. When we speak of the 
 officers of a corporation, the term is understood to define those 
 who are entrusted with the executive powers of the corporate 
 body ; and if it is intended to embrace the board of direc- 
 tors, trustees, or managers, they are expressly named. By 
 officers we mean the president, vice-president, cashier, or sec- 
 retary, and any others who are entrusted with a part of the 
 executive authority." And Campbell, J., adds: "Directors 
 and trustees may be said to hold office in the corporation in a 
 general sense, and may control and direct presidents and sec- 
 retaries in the management of the business of the corporation. 
 But, in the transaction of such business with the public, the 
 corporation generally speaks through its president and secre- 
 tary. They are emphatically its officers." Hence, the omis- 
 sion of one of the trustees to sign, although, if he had been 
 required by the act so to do, it would have avoided the char- 
 ter, was not held to be a defect. 1 
 
 Personal Liability of Directors for Losses, etc. 
 
 209. Directors cannot be said to be trustees as to the 
 stockholders, except in a general sense ; as an agent or bailee 
 entrusted with the care and management of another's prop- 
 erty may be termed a trustee. They are in fact only maiula- 
 
 1 Second Manhattan Building Association v. Hayes, 4 Abb. App., 
 Dec. (N. Y.) 183.
 
 228 THE LAW OF BUILDING ASSOCIATIONS. [cil. IX. 
 
 tories, bound to apply ordinary skill and diligence, but no 
 more. 1 They are, therefore, personally liable to the stock- 
 holders for losses, only where they were occasioned by reason 
 of some fraud on the part of the directors, 11 or their conniv- 
 ance at some fraud, upon the corporation ; their embezzle- 
 ment, or wilful misconduct, or breach of trust, for their own 
 benefit, and not for the benefit of the stockholders ; ' their 
 gross inattention and negligence, amounting to a fraud upon 
 the rights and interests of the stockholders, or by which the 
 perpetration of such fraud or misconduct on the part of 
 agents, officers, or co-directors has been made possible. 4 I>ut 
 they are not liable for mistakes of judgment, even thotu'li 
 they be so gross as to appear absurd and ridiculous, provided 
 they are honest, and provided they are fairly within the 
 scope of the powers and discretion confided to the managing 
 body. 6 
 
 210. But if, by his attendance at a board meeting, a 
 director might have averted a fraudulent action, whilst, in 
 fact, he neglected to be present ; or if, being present, he failed 
 to use his best judgment in opposing it, he will be deemed a 
 partner to it, and affected with liability. "Every absent 
 director is equally responsible in case of extreme negligence 
 in his attendance at the board, or, in case, after the act comes, 
 or must have come, to his knowledge, had he used due dili- 
 gence, he does not labor to avert its injurious consequences." ( 
 But the directors of a saving fund, who did not participate in 
 the transactions of the board, who never took their seats, and 
 against whom there was no allegation made of knowledge of 
 the frauds, but merely an allegation of the fact of their elec- 
 tion, were held exonerated. 7 
 
 1 Spering's App., 71 Pa. St. 11. Watt's App., supra; see also Smith 
 
 9 Crook . Jewett, 12 How. Pr. t>. Prattville Manufacturing Co., 29 
 
 (N Y.) 19. Ala. 503. 
 
 1 Attorney - General v. "Wilson, 1 6 See opinion of Martin, J., in 
 
 Craig and Ph. (18 Engl. Ch. Rep.) Percy v. Millandon, 3 La. 5G8 
 
 1; 10 L. J.,N. S. 53. (575). 
 
 4 Spering's App., ubi supra; ' Maisch r>. Seamen's Saving Fund 
 
 Watt's App., 78 Pa. St. 870. Society, 5 Phila. (Pa.) 30; Leffman 
 
 4 Spering's App., supra (p. 24); v. Flanigan, Ib. 155, 419.
 
 212.] FUNCTIONS, ETC., OF OFFICERS. 229 
 
 Directors who were Parties to a Fraud Upon Society, whereby it 
 was Ruined, Cannot Share in its Assets. Presumptive Fraud. 
 
 211. A director who has thus become a party to a fraud 
 upon the building association, by means of which it became 
 ruined, cannot afterwards assume to share in its assets alike 
 with the other members. His intention may have been good 
 enough. " But an act innocent in the intention may be so 
 injurious in the consequences, that the law declares it to be a 
 fraud, and forbids it. ... Out of the act, the law constructs 
 the fraud, though not tainted with actual fraud. But legal 
 presumptions lie thickly strewn in the pathway of evidence. 
 A state of facts being proved, the law makes its own infer- 
 ence, and from it pronounces that another fact must have 
 existed. Thus, from a receipt for one year's rent in full, a 
 prior year's rent is presumed to be paid. 1 And so, from the 
 nature of the fact proven, the law may infer the existence of 
 fraud, the party's knowledge of it, and participation in it." " 
 Hence, one who was a director in a building association, long 
 insolvent by declaring dividends out of the capital, with his 
 knowledge and participation, is not entitled to receive, from 
 the estate of the corporation in the hands of its assignee, for 
 the benefit of creditors, any part of a loan made by him to 
 the association to pay a dividend thus fraudulently declared, 
 until the stockholders are fully paid. And this priority over 
 him extends to all who were members of the association at 
 the time of the assignment for benefit of creditors, whether 
 they had become so before or after the declaring of the 
 fraudulent dividend. 8 
 
 Liability of Directors to Account to Society for Waste or Misapplica- 
 tion of Funds. 
 
 212. Subject to the qualification above laid down, the 
 waste or misapplication of the funds of a building association 
 by its directors entitles the corporation to resort to equity, in 
 order to compel an account at their hands for such waste or 
 breach of trust, even though an adequate remedy be conceded 
 at law. 4 
 
 1 Kisterbock's App., 51 Pa. St. Ib. 
 
 485. * Citizens' Loan Association of 
 
 8 Ib. Newark v. Lyon et al., 2 Stewart
 
 230 THE LAW OF BUILDING ASSOCIATIONS. [CH. IX. 
 
 Right of Individual Stockholders to Sue Delinquent Directors for Pro- 
 tection of Society. Qualifications. 
 
 213. But whilst the right of the corporation to sue, in 
 such case, is unquestioned, it may, under certain circum- 
 stances, even become the right of any individual stockholder 
 to do so, for the protection and in the interests of the so- 
 ciety. 1 Yet a stockholder cannot sue the directors in a sep- 
 arate action at law for damages, sustained by reason of their 
 negligence." The remedy must be in a form to protect the 
 interests of the corporation, as the trustee for all the stock- 
 holders. By such negligence or misfeasance of the directors, 
 no individual member can be said to have sustained a loss 
 which is not common to all the other stockholders. 8 It gives 
 him no special ground for complaint against the directors. 
 Nor would a judgment obtained against the directors in such 
 an action, it seems, be a bar to an action by the corporation, 
 whose remedy against the culpable parties cannot be ques- 
 tioned ; nor would it affect the measure of damages in such 
 an action, because the corporation would recover primarily 
 for its creditors. If, therefore, it were held competent for 
 any individual stockholder to proceed, on his own separate 
 behalf, against such officers, the anomaly would, it seems, 
 arise of making a person liable (upon the same cause shown,) 
 not only to an indefinite number of actions, on all of which 
 
 (N. J.), 110; Angell and Ames, J. P. 421 ; Evans v. Coventry, 3 W. 
 
 Corp., 312; cit. Attorney-General R 149; 24 L. T. Rep. 186; 19 J. P. 
 
 V. Utica Insurance Co., 2 Johns., Ch. 37; Reeve v. Perkins, 2 J. and W. 
 
 371, 389; Baylers v. Orne, Freem., 390; Harmer v. Qooding, 13 Jur. 
 
 Ch. 161, 173: Attorney-General v. 400; 3 De G. and 8. 407; 13 L. T. 
 
 Wilson, 1 Cr. and Ph. 2. Rep. 134; Trott v. Hughes, 16 L. T. 
 
 1 Watts' App., 78 Pa. St. 370; Rep. 260. 
 
 Spering's App., 71 Pa. St. 11 ; Grave- Craig v. Gregg et aL, 83 Pa. St. 
 
 stine's App., 13 Wright (49 Pa. St.), 19. 
 
 310; Robinson v. Smith, 3 Paige (N. 8 But in Scotland it is said that 
 
 Y.), 222; Scott v. Dc-peyston, 1 Edw., if a member suffers, by a violation 
 
 Ch. 518; Allen v. Curtis, 26 Conn, of the rules by the officers of the 
 
 456; Maisch v. Seaman's Saving society, its funds will be liable to 
 
 Fund Society, 5 Phila. (Pa.) 30; him in damages. See Davis, Law 
 
 Leffman v. Flanigan, Ib. 155, 419; of Building, etc., Societies, p. 222; 
 
 Greaves v. Gouge, 69 N. Y. 154. cit. Blue v. West Kilbride Free 
 
 And see Grimes c. Harrison, 28 L. Gardeners' Society, 4 Macph. 1042; 
 
 J., Ch. 823; 33 L. T. Rep. 115; 5 S. C., 38 Sc. Jur. 53& 
 Jur., N. S. 528; 26 Beav. 435; 23
 
 214.] FUNCTIONS, ETC., OF OFFICERS. 231 
 
 judgment might be obtained, but also of again subjecting 
 him to another action on the same grounds, in which the 
 measure of damages would be the whole aggregate of all the 
 M'panite judgments already obtained. This clearly cannot be 
 allowed, and the member desiring to step in for the protection 
 of his association, upon a proper case, must bring all the par- 
 ties interested into court at once, and for the purpose of ac- 
 complishing this, must proceed by bill in equity, in which 
 both the officers sought to be charged arid the corporation 
 must be joined as defendants. 1 And in New York it has 
 been held that such an equitable action can be had by a stock- 
 holder only after application to, and refusal, or neglect 
 amounting to refusal, by the corporation to bring it, and that 
 the facts of the complaint made to, and rebuff received from, 
 the corporation must be set forth in the complaint. 2 And 
 the bill alleging the misconduct, etc., must ask relief upon 
 that ground ; otherwise, upon demurrer, the allegation will 
 be treated as immaterial. 3 If, however, the illegal act, in- 
 stead of being already consummated, still rest merely in con- 
 templation, it seems that it is the right of every individual 
 member to come into a court of equity, and ask that the com- 
 mission of the act, by which he as well as the rest of the 
 stockholders would be injured, be restrained. 4 
 
 Trustees. 
 
 214. The functions of trustees, properly so called, in a 
 building association, are principally, to hold title for the asso- 
 ciation of its real estate, and of the real estate conveyed to 
 secure debts due to the association, and to convey and release 
 the same, by order of the Board of Directors, as may be 
 required by the constitution and by-laws. 6 As a compara- 
 tively useless piece of machinery, this class of officers has, in 
 
 1 See Leffman v. Flanigan, 5 * Thompson v. Planet Benefit B. 
 
 Puila. 155, 419; Craig v. Gregg, 83 S., 15 L. R., Eq. 333; 42 L. J. ( Ch. 
 
 Pa. St. 19; Greaves v. Gouge, 69 N. 364; 21 W. R. 474; 28 L. T., N. S. 
 
 Y. 154. But see Gravestine's App., 549. 
 
 49 Pa. St. 310. See ante, 113-114. 
 
 Greaves v. Gouge, 69 N. Y. 154. See Act, May 29, 1852. g 3 
 
 This does not apply to a bill brought (Virginia); Davis, Law of Building, 
 
 in good faith by a creditor. Lothrop etc., Societies, pp. 93-99. 
 v. Stedmau, 42 Conn. 083.
 
 
 THE LAW OF BUILDING ASSOCIATIONS. [CH. IX. 
 
 general, gone out of date. In England (where, since the pas- 
 sage of 37 and 38 Vic., c. 42, the office has become almr u 
 sinecure 1 ) they were (previously to that statute) 3 said to act 
 ministerially only.' Where the property of the association 
 is vested in trustees, if any of them die, resign, or be removed, 
 and the vacancy tilled by new appointment, the same est;itu 
 and interest as the former trustees had therein, and subject to 
 the same trusts, vests in the new trustees, without any assign- 
 ment. Thus, a mortgagor, being one of three trustees of the 
 society, executed his mortgage to the other two, one of whom 
 subsequently resigned, and a successor was appointed. The 
 interest of the original mortgagees vested, without assign- 
 ment, in the remaining trustee and successor, exclusively, of 
 the mortgagor. 4 
 
 1 37 and 38 Viet., C. 42, S. 25; 
 Davis, Law of Building, etc., So- 
 cieties, p. 99. 
 
 1 Under Statute 10 Geo. 4, C. 56, 
 they acted as treasurers. See ante, 
 196, and notes. 
 
 8 Grimes r. Harrison, 28 L. J., 
 Cli. 8'? 5: :!:} L. T. Rep. 115; 5 Jur., 
 N. > .'<) Beav. 435. And see 
 
 aulc. s uj. 
 
 * Walker v. Giles, 6 C. B. (60 
 Eugl. C. L. Rep.) 662; 13 Jur. 588; 
 18 L. J., C. P. 323; Davis, Law 
 of Building, etc., Societies, p. 94. 
 Solicitor, surveyor. In English 
 building associations one of the 
 most important offices is that 
 of solicitor; an office which might, 
 with very beneficial results, be es 
 tablished in American societies. 
 His duty is to examine carefully the 
 title of every security which may be 
 offered to the society, and report 
 thereon to the directors; to prepare 
 all securities to the society: and, 
 generally, to transact all its legal 
 business. He ought to be of good 
 standing at the bar, and thoroughly 
 qualified as a conveyancer. His 
 compensation ought to be a moder- 
 ate yearly salary, with the privilege 
 
 of charging separate fees (upon a 
 scale agreed upon in advance with 
 the society) for the examination of 
 every title, and for the preparing of 
 every security, to be charged to the 
 applicant for the loan. (Such a 
 charge is not usurious. Hopkins v. 
 Baker's Adm'r et al., 2 P. and H 
 (Va.) 110; Hoboken Building Asso- 
 ciation v. Martin, 2 Beas. (N. J.) 
 428, and see Ex'rs of Howell t. Au- 
 ten, 1 Gr. Ch. R. (N. J.) 45.) His 
 appointment should be under seal, 
 even when his name is mentioned in 
 the rules. Davis, Law of Building, 
 etc., Societies, p. 107; cit. Arnold 
 v. The Mayor, etc.. of Poole, 5 Scott, 
 N. R. 741; 2 D., K S. 574: 4 M. 
 and G. 860; 12 L. J., C. P. 97; 7 
 Jur. 653. (But see Angell and 
 Ames, Corp., 284.) The law im- 
 plies a promise, on the part of every 
 solicitor, to conduct the business en- 
 trusted to him with care, skill, and 
 despatch; and if he fails in this, an 
 action on the case will lie against 
 him. But if he has acted, bo mi Jicte, 
 to the best of his ability and with 
 reasonable diligence, hi will not be 
 responsible. If he lose a deed, this 
 will be prima facie negligence.
 
 215.] 
 
 FUNCTIONS, ETC., OF OFFICERS. 
 
 233 
 
 Officers' Bonds : When Prerequisite to Entering upon Office. 
 
 215. In order to enforce the responsibility of such offi- 
 cers in the building association as have the handling and 
 custody of its money, or whose trust in other particulars 
 exposes them to temptations, and the society to the possibility 
 of losses, which may, under conscientious management, be 
 avoided ; it has been customary to require such officers to 
 give bonds for the faithful performance of their duties, and 
 the proper application of the corporate funds. What par- 
 ticular officers shall be liable to this exaction, is a matter to 
 be determined by the association in the absence of any stat- 
 utory mandate upon the subject. But the completeness of 
 the officer's appointment will not depend upon, nor be post- 
 poned to, the giving of the security, unless it appears from 
 the provision (of charter, by-law, or statute) to be so intended, 
 us where it is declared, that, " before he enters upon his 
 office, he shall give security," etc. 1 
 
 Reeve c. Palmer, 27 L. J., C. P. 327; 
 4 Jur., K S. 929; 5 C. B., N. S. (94 
 Engl. C. L. R.) 84; S. C., at 
 nisi prius, 1 F. and F. 48. Nor 
 has he the right, to rely upon an 
 extract of a will in examining a 
 title, instead of looking at the whole 
 will. Wilson v. Tucker, 3 Stark. 
 154. In such case the question of 
 negligence is for the jury. See also 
 Hunter v. Caldwell, 16 L. J., Q. B. 
 274; S. C. 11 Jur. 770; 10 Q. B. 69. 
 If there has been negligence, but 
 the society derived some benefit 
 from the solicitor's services, his ac- 
 tion upon his bill will not be barred, 
 but he may recover. Shaw v. Arden, 
 9 Bingh. 290 ; 23 Engl. C. L. Rep. 
 278, the jury having the right to 
 strike out items for useless work. 
 Hill v. Featherstonhaugh, 7 Bingh. 
 569; 20 Engl., C.L. Rep. 244. But see 
 Chitty on Contracts, 9th ed.,522; cit. 
 Cox 9. Leech. 1 C.B., N.8. 617; S.C. 
 26 L. J., C. P. 125: 3 Jur . N. S. 442; 
 87 Engl. C. L. Rep. 617: Long . 
 Orsi, 18 C. B. 610; S. C. 26 L. J., 
 C. P. 127; 87 Engl. C. L. Hep. 610. 
 
 The surveyor is an officer found 
 in some building associations, whose 
 duty it is to report upon the sufficien- 
 cy of the value of property offered 
 as security. His implied undertak- 
 ings are essentially similar to those of 
 the solicitor. In case of grossly in- 
 correct estimates, whereby the so- 
 ciety loses money, he will be liable 
 for the loss, and cannot recover for 
 his services. Davis, Law of Build- 
 ing, etc., Societies, p. 110; cit. 
 Moneypennya. Hartland, 1 Car. and 
 P. 353; 2 Id. 378; 11 Eugl. C. L. 
 Rep. 414; 12 Id. 180. Common 
 prudence suggests, that, in order to 
 prevent the surveyor from placing 
 too high a value upon property, in 
 collusion with the borrower, he- 
 should be paid out of the irt'm-ral 
 funds ; or that the rule be established, 
 that everv application for a loan be 
 accompanied with a deposit of the 
 surveyor's fee arronlinir to the scale 
 adopted. Dvii,Law,etc.,vW<pfti 
 
 1 Angel 1 and Aim-*. Corp.. 285. 
 See Howcll v. Commonwealth, ex 
 rel. Keppleman, 97 Pa. St. 332.
 
 234 THE LAW OF BUILDING ASSOCIATIONS. [CH. IX. 
 
 Discretion and Responsibility in, and method of, Approving Bonds. 
 
 216. The approval of the security offered devolves, in 
 general, upon the directors. If, then, fraudulently and 
 negligently, they approve of notoriously bad security, or do 
 not follow out the directions of the rules of the society upon 
 the subject, they will be held personally liable in case of loss 
 sustained in consequence. 1 But, though the direction be that 
 the bond shall be given by the officer and two sureties, a bond 
 given by the officer and one surety, a or merely by two sure- 
 ties, without joining the officer, 8 will be valid and binding 
 upon the sureties, if accepted by the directors. Nor is it 
 necessary that their vote of acceptance or approval be re- 
 corded, unless, by charter, by-law, or statute, that be made a 
 prerequisite. 4 Indeed, in the absence of such express require- 
 mentj it need not be shown to have been by vote at all, but 
 may be presumed from the fact of the bond being found in 
 their possession. 6 
 
 Sureties not Discharged by Negligence of Society. 
 
 217. Being once accepted, the sureties on an officer's 
 bond will not be discharged by neglect on the part of the as- 
 sociation to enforce its by-laws requiring its officers to account, 
 from time to time, where there has been no fraudulent con- 
 cealment by it of circumstances and acts on the part of the 
 officer, which, if brought to the surety's notice, would have 
 prevented him from becoming such ; or where there has been 
 no demand from him for investigation of the officer's account, 
 or his removal. By-laws of this description have the object 
 of serving for the greater security of the corporation, not of 
 the surety. They form no part of his contract with the cor- 
 poration a contract which is founded in the confidence he 
 has in his principle, and not in his confidence in the vigilance 
 of the other officers of the corporation. As to it, they are 
 held to be directory only ; so that neglect to comply with 
 them will not, in the absence of circumstances amounting to 
 
 1 Angel 1 and Ames, Corp., ubi 9 Angell and Ames, Corp., 
 
 supra. But no policy of the law 254. 
 precludes directors from becoming J Ib., 319. 
 an officer's sureties. AmherstBank 4 Ib., 284. 
 v. Root et al., 2 Mete. (Mass.) 534-5. 5 Ib., 252-
 
 219.] FUNCTIONS, ETC., OF OFFICERS. 235 
 
 fraud, exonerate him from liability upon his undertaking. 1 
 Even where the executive officers were present and acquiesced, 
 when the treasurer, instead of cash, in payment of dues and 
 fines, accepted promises to pay, given by members and others 
 for them, the sureties were not discharged from liability, upon 
 the bond, for credits thus given and losses arising thereon. 2 
 
 If Officer's Election Void, Surety not Bound. 
 
 218. But if the officer's election be invalid, it seems his 
 sureties will not be bound. They undertake for legal officers, 
 not for illegal incumbents. 3 
 
 Liability of Sureties Strictly Confined to Terms of Bond. 
 
 219. The condition of an officer's bond is confined to 
 the period of the appointment or election, for which it was 
 given. 4 " It is a well-settled rule, both at law and in equity, 
 that a surety is not to be held beyond the precise terms of 
 his contract. This rule is founded upon the most cogent and 
 salutary principles of public policy and justice. In the com- 
 plicated transactions of civil life, the aid of one friend to 
 another, in the character of surety or bail, becomes requisite 
 at every step. Without these constant acts of mutual kind- 
 ness and assistance, the course of business and commerce 
 
 1 Angell and Ames, Corp., 321; exercised by the society over their 
 
 Brandt on Suretyship and Guaranty, officers, the cautioners will be liber- 
 
 369; Madden v. McMullen, 13 Ir. ated from their responsibility." 
 
 C. L. R. 305 (4 L. T. Rep., N. S. J People's Building and Loan As- 
 
 180); The U. 8. v. Kirkpatrick, 9 sociation v. Wroth etal., 14 Vr. (N. 
 
 Wheat. 720; The U. S. v. Vanzandt,, J.) 70; Mut. Building an d Loan As- 
 
 11 Wheat. 184; P., Ft. W., and C. sociation v. Hammell et al., Ib. 78. 
 
 R. R. Co. v. Shaeffer. 59 Pa. St. 350; See opinion of Thompson, C. 
 
 Wayne . Comm. National Bank, J., in City v. Given, 60 Pa. St. 136 
 
 52 Pa. St. 343; Taylor v. Bank of (140). 
 
 Kentucky, 2 J. J. Marsh. 564. But So, too, the liability of a surety 
 
 see Philips v. Foxall, 27 L. T. Rep., on a bond of indemnity against liens, 
 
 N. S. 231; S. C. Law Rep., 7 Q. accompanying a mortgage, cannot 
 
 B. 666: 41 L. J., Q. B. 293; 20 W. be extended to a loss accruing on :i 
 
 R. 900. The case of the Thistle sale of the mortgaged premises, after 
 
 Friendly Society of Aberdeen . the mortgage has merged. Build 
 
 Garden, 12 Shaw and D. 745, is re- ing Association v. Benson, 2 W. N. 
 
 i'lMTi-d to in Davis, Law of Building, C. (Pa.) 541. Here, however, the 
 
 etc.. Societies, p. 125, note <t, in sup- additional principle was invoked, 
 
 port of the statement that, in Scot- that, when principals negotiate, 
 
 l.ind. " unless a sufficient control be sureties are discharged.
 
 236 THE LAW OF BUILDING ASSOCIATIONS. [CH. IX. 
 
 would be prodigiously impeded and disturbed. It becomes, 
 then, excessively important to have the rule established, that 
 a surety is never to be implicated beyond his specific engage- 
 ment." l An officer of an association, elected to fill a vacancy 
 in an office which was annual, gave bond with sureties. 
 .Judgment was entered on the bond, and the .officer was re- 
 peatedly re-elected, giving no new security. It was held that 
 the bond was confined to the period for which he was first 
 elected, when it was given, and that the society was not en- 
 titled to payment of the judgment as a continuing lien.' 
 Upon the same principle, it was decided that a bond stipu- 
 lating for the good conduct of an officer holding office for a 
 fixed time, and until " another officer be appointed," will not 
 remain in force after the reappointment of such original offi- 
 cer.' The term " another," in such case, does not mean " an- 
 other person;" 4 but if there is a re-election, it is, in fact, 
 another, and not the same office. 6 It is a well settled rule, 
 therefore, that, where the office of treasurer in a building as- 
 sociation is annual or limited, the sureties on his official bond 
 will not be liable for a breach of the duties of such officer 
 beyond the definite term, when the condition is for good be- 
 havior during his continuance in office. If, however, thereto 
 , be added, " whether of the present term for which he has 
 been elected, or of any succeeding terms to or for which he 
 may be elected," the sureties' liability continues.* 
 
 Liability of Officers to Fines and Amotion. 
 
 220. The faithful discharge of their duties by the offi- 
 cers may also, in a measure, be secured by the imposition of 
 fines, according to the provisions of the by-laws; 7 and per- 
 sistent neglect, or infidelity, punished by amotion. This is a 
 
 1 Chancellor Kent, in Ludlow v. * Ib. 
 
 Simond, 2 Caines' Cases in Error, k Amherst Bank v. "Root et al., 2 
 
 1. Mete. (Mass.) 536; Welch v. Sey- 
 
 8 The Manufacturers' and Me- mour, 28 Conn. 387. 
 ehanics' Saving and Loan Co. v. The 6 People's Building and Loan As- 
 Odd Fellows' Hall Association of sociation of Camden, N. J.. v. 
 Spring Garden. 48 Pa. St. 446. Wroth et al.. 14 Vr. (X. J.) 70: Mut. 
 
 3 Citizens' Loan Association of Building and Loan Association v. 
 
 the City of Newark v. Nugent et al., Hammell, Ib. 78. 
 
 11 Vroom (40 N. J. L. RA 215. ' See ante, 96-98, 10a
 
 221.J FUNCTIONS, ETC., OF OFFICERS. 237 
 
 power which is inherent in the society, 1 and if exercised fot 
 the reasons, and strictly in the manner, and with the formali- 
 ties prescribed by its rules, the individual whom it affects, 
 and who is equally subject to those rules, has nothing to com- 
 plain of. 9 And it is always justifiable where the officer ha& 
 become guilty of transgressions, either such as are in them- 
 selves infamous, and whilst they have no immediate relation 
 to the office, yet make the offender unfit to execute any pub- 
 lic franchise ; 3 or such as are against his duty as a corporator, 
 and amount to a breach of the tacit condition annexed to the 
 office ; or such as are at once an offence against the duty of 
 his office, and a matter indictable at common law. 4 But, 
 although the appointing power be vested in certain officers, 
 that of amotion, unless expressly delegated to them, rests 
 with the association at large. 6 
 
 Criminal Liability of Officers in Certain Cases. 
 
 221. In cases of gross breaches of trust, appropriation 
 of the society's funds, conspiracy to defraud, etc., the wrong- 
 doing officer may become amenable to the criminal laws of 
 the State, the same as the officers of any other society or cor- 
 poration. Many of the building association acts expressly 
 make applicable, to the officers of these institutions, the stat- 
 utes relating to embezzlement, or fix particular penalties for 
 particular misfeasances. In Virginia, the secretary of a build- 
 ing association was indicted for the larceny of a check, the 
 property of the association, which had been given to him in 
 payment of a debt due the association.' It was made payable 
 to the accused as secretary, and also payable to bearer. This 
 check, the court say, was the property of the association, and 
 should have been turned over to the treasurer by the secre- 
 tary. If he had accounted for the money, that would, of 
 course, show that he had no intention to appropriate the 
 
 1 1 Dill. Mun. Corp., 240; An- 3 In which case there must be a 
 
 gell and Ames, Corp., g 423-424. previous indictment and convic- 
 
 * Davis, Law of Building, etc., tion. 
 
 Societies, p. 90-91 ; cit. Evans v. * Rex e. Richardson, 1 Burr. 539. 
 
 Hearts of Oak Friendly Society, 12 * See 1 Dill. Mun. Corp., $ -Ml. 
 
 Jur., N. S. 163; Roberts v. Price, And see An gel 1 and Ames, Corp., = 
 
 16 L. J., C. P. 169; 11 Jur. 352; 4 703. And see post, 229. ns to 
 
 C. B. 1231. action for wrougful removal.
 
 238 THE LAW OF BUILDING ASSOCIATIONS. [CH. IX. 
 
 clurk. Not having done so, it was a question for the jury, 
 whether he intended to embezzle it. In order to convict 
 him, it was necessary that the jury be satisfied that this in- 
 tention existed before, or at the time the check passed into 
 the possession of the bank. If he drew the money on the 
 check with the intention of using it for his own purposes, 
 and not for the liquidation of the debt it was given for, 
 though probably with the intention of returning it, at some 
 future day, to the building association, he was guilty of em- 
 bezzlement of the check. And the records of the building 
 association whilst he was in office, and oral evidence relating 
 to the organization, objects, and business of the society, the 
 appointment and duties of the accused as secretary, his con- 
 duct with respect to the funds of the association in his hands, 
 and his disposition and appropriation of the check, for the 
 larceny of which he was indicted, were competent evidence 
 against him. But the question, whether or not the building 
 association was organized strictly in accordance and con- 
 formity with the requirements of the statute, was not a proper 
 subject of inquiry. Having, as secretary of the association, 
 received and wilfully appropriated its funds, or property, he 
 cannot be heard, upon a criminal prosecution therefor, to con- 
 tradict its legal existence. 1 
 
 222. There has fortunately not often been occasion, in 
 this country, to enforce the criminal responsibility of officers 
 in building associations. But the following observations, 
 borrowed from Davis, Law of Building, etc., Societies, pp. 
 127-133, in England, may become of substantial service to 
 the American practitioner : 
 
 " In all proceedings, whether criminal or civil, in respect 
 of a society under the old law, the property of the society \\ ;is 
 to be deemed to be in the treasurer or trustees of the society.' 
 and accordingly, where a trusteee of a society misappropri- 
 ated the funds, it was held that the property might be laid in 
 the treasurer,' and probably the converse would also hold 
 
 1 Shinn . Commonwealth. 32 Lorse, 29 L. J., M. C. 132; S. C., 8 
 
 Grattan (Va.), 899. W. R. 422; 6 Jur., N. S. 513; 8 Cox, 
 
 - 10 Gco. 4. C. 56, 21. C. C. 302; Bell, C. C. 259; 24 J. 
 
 3 R. r. Cain, Car. and Mar. (41 P. 341. 
 Eugl. C. L. Rep.) 309. See R. c.
 
 222.] FUNCTIONS, ETC., OF OFFICERS. 239 
 
 good. But it was necessary to be able to prove that the party 
 in whom the property was laid did actually hold the office of 
 treasurer or trustee. Thus, in an indictment for embezzle- 
 ment by the clerk of a savings bank, the property was laid in 
 A. B. and others. In order to prove that A. B. was a trus- 
 tee, he was called as a witness, and stated that since the com- 
 mission of the offence he had been active as a trustee, but be- 
 fore that date he had attended only one meeting, having been 
 requested to do so lest there should be a deficiency of trus- 
 tees ; but he was also a manager, and it did not appear that 
 any act was done at that meeting which might not have been 
 done by a manager as well as by a trustee. It was held thut 
 this was insufficient evidence of acting to support the infer- 
 ence of a legal appointment as trustee. 1 Where the secre- 
 tary of a society, of which C. D. and others were the trus- 
 tees, was charged with embezzling money belonging to the 
 society, and in the indictment the property was laid as of ' C. 
 D. and others,' without alleging that they were trustees of 
 the society, it was held by the Common Sergeant that the in- 
 dictment might be amended by adding the words ' trustees 
 of, etc.' ' 
 
 " "When a society is incorporated under a new act, the 
 property of the society must be laid as belonging to the so- 
 ciety in its corporate name, and not in the names of any of 
 the individual members/ 
 
 " It frequently happens that when an officer of a society 
 has misappropriated the funds, he is proceeded against by in- 
 dictment as a servant of the society. For by 2-i and 25 Viet., 
 C. 96, S. 98, whosoever, being a clerk or servant, or bvimr 
 employed for the purpose, or in the capacity of a clerk or 
 servant, shall fraudulently embezzle any chattel, money, <>r 
 valuable security, which shall be delivered to, or re(viv. 
 taken into possession by him, or in the name or on the ac- 
 count of his master or employer, or any part thereof, shall be 
 deemed to have feloniously stolen the same from his master 
 or employer, although such chattel, money, or security was 
 
 1 R. v. Essex. 30 L. T. Rep. 171 ; * R. v. Marks, 10 Cox, C. C. 
 
 S. C., 4 Jur., N. S. 15; 7 Cox, C. C. 367. 
 
 884; 1 Dears. andB., C. C. R. 369; 8 R. . Patrick, 1 Leach, 258. 
 21 J. P. 789.
 
 240 
 
 THE LAW OF BUILDING ASSOCIATIONS. [CII. IX. 
 
 not received into the possession of such master or employer, 
 Otherwise than by the actual possession of his clerk, servant, 
 or other person so employed. 1 In order to come within the 
 denomination of ' clerk or servant,' the person must be under 
 the direction of a master, and must receive remuneration for 
 his services. Where two societies appointed a committee, of 
 which the accused was a member, to conduct an excursion, 
 and the committee employed the accused and several others 
 to sell tickets, when it became his duty to pay over the money 
 so received (which was to belong to the two societies) to a 
 person appointed by the committee, but he received no re- 
 muneration for his services, it was held that he was a joint 
 owner of the money, and not a ' clerk or servant,' liable to be 
 indicted for embezzlement under the act. 8 
 
 " So, in J2. v. Waite* the accused was a member of a 
 friendly society, of which he was also clerk or secretary. The 
 society met periodically for the despatch of business, and the 
 moneys were first received by the collector, and then handed 
 
 1 Under the 7 and 8 Geo. 4, C. 29, 
 47, the offence could not be 
 proved unless the money or other 
 chattel was received by the clerk or 
 servant "by virtue of such employ- 
 ment." But now it is immaterial 
 whether or not it was the duty of 
 the servant to receive, or whether or 
 not he had authority to do so. The 
 case of R. v. Hastie, 32 L. J., M. C. 
 63; S. C., 7 L. T. Rep., N. S. 695; 
 9 Jur., N. S. 235; 11 W. R. 293; 1 
 L. and C., C. C. 269; 9 Cox, C. C. 
 264; 27 J. P. 85, turned upon the 
 former enactment. There, by the 
 rules of a certified building society, 
 mortgages were directed to be made 
 to the trustees, and the redemption 
 money to be paid to the directors; 
 and it was no part of the secretary's 
 duty, as prescribed by the rules, to re- 
 ceive subscriptions or other moneys 
 for the society. The course of busi- 
 ness, however, was that the manage 
 merit of the society was left almost 
 entirely to the secretary, and he fre- 
 
 quently received subscriptions. The 
 mortgages were made to the trustees, 
 but when redeemed, the money was 
 paid to the secretary for the trustees. 
 The secretary having embezzled the 
 redemption money upon a mortgage 
 so paid to him; it was held, upon 
 an indictment under the above sec- 
 tion, that the jury were warranted 
 upon this evidence in finding that 
 the money was received by virtue of 
 his employment, and for his masters. 
 See also R. v. Miller, 2 M., C. C. R. 
 249; R. . Tongue, 3 L. T. Rep , N. 
 8. 415; S. C., 8 Cox, C. C. 386; 30 
 L. J., M. C. 49; 24 J. P. 723; Bell, 
 C. C. 289; R. v. Spencer, Russ. and 
 Ry. 299; R. v. Thorley, 1 Moo., C. 
 C. 343; R. v. Prince, 1 Moo. and M. 
 21. 
 
 * R. v. Bren, 9 L. T. Rep., N. S. 
 452; S. C., 27 J. P. 804; 9 Cox, C. 
 C. 398; 33 L. J., M. C. 59; 3 N. R. 
 176; 12 W. R. 107; 1 L. and C., C. 
 C. 346. 
 
 3 2 Cox, C. C. 245.
 
 ^.J FUNCTIONS, ETC., OF OFFICERS. 241 
 
 to the accused in his capacity as clerk, to be paid by him to 
 Messrs. Chuck, the bankers of the society. On one occasion 
 the accused suggested that, the interest allowed by the bank 
 IK- ing very small, he could place their money with a firm in 
 London, where a better interest could be obtained, and he 
 ultimately, with the consent of the society, drew all the 
 money from the bank for the purpose, as he alleged, of so 
 investing it ; but instead of so doing, he appropriated it to 
 his own purposes, and it was then discovered that no such 
 firm as he had represented existed ; and Coleridge, J., 1 held 
 that an indictment for embezzlement could not be sustained. 
 And where the defendant was a member of, and also secretary 
 to, a benefit society, and he derived a percentage from the 
 funds of the society and in the course of his duty he received 
 a sum of money from the members of the society, which he 
 ought to have paid into an account in the bank, kept in the 
 names of certain other members of the society, but instead <>t 
 so doing, he appropriated it ; it was held that he could not be 
 convicted of embezzling the money upon an indictment 
 charging him to be a servant of A. B. (an ordinary member 
 of the society) and others, and laying money as that of the 
 said A. B. and others. So, where the treasurer of a friendly 
 society, whose duty it was to receive the moneys paid into 
 the society, and hold them to the order of the secretary, 
 countersigned by the chairman or a trustee, and to account 
 whenever called upon, but who had no salary or remunera- 
 tion paid to him for his services, misappropriated the funds 
 of the society ; it was held that he was not a clerk or servant 
 within the meaning of the act. 9 But in a case where the 
 trustees of a building society borrowed money for the pur- 
 poses of their society on their individual responsibility: the 
 money was on one occasion received by the secretary, and 
 (.mbezzled by him ; it was held that he might be charged as 
 
 1 See 28 J. P. 2, nnd seeR. v. Bur- R. t>. Tyrte. 38 L. J., M. C. 58; 
 
 gess, 32 L. J., M. C. 185; S. C., 19 S. C., 19 L.*T. Rep.. N. S. 657; Law 
 
 Jur., N. S. 582: 8 L. T. Rep., N. 8. Rep., 1 C.- C. R. 177; 17 W. R :,:;. : 
 
 r.r>: 11 W. R. 602; 1 L. nncl C., C. 33 J. P. 134. See R. v. Murphy. 4 
 
 C 099 ; 9 Cox. C. C. 302; 27 J. P. Cox. C. C. 101; R. v. Hall, 1 Moo. 
 
 ik& a- t.) t'nnn of indictment where C. C. 474. 
 there LUC iu> in:-
 
 242 Tin: LAW OF BUILDING ASSOCIATIONS. [CH. ix. 
 
 the servant of W. and others, W. being one of the trustees 
 and a member of the society. 1 
 
 "But if the accused has received a remuneration fur his 
 services, it seems that the mode in which lie received it is 
 immaterial, so that, in fact, in other respects the relationship 
 of master and servant existed between the parties. Thus 
 where the defendant was employed to obtain orders for the 
 prosecutor, being paid by commission, and being at liberty to 
 take orders for others than the prosecutor, it was held that 
 he was liable to be indicted for embezzlement as a servant or 
 clerk." And where A. agreed to engage B. as agent or 
 traveller for the sale of coals, at a salary of one guinea per week, 
 and Is. per ton as commission on coals sold, and 6d. per ton on 
 coals sold to dealers procured by B. as customers ; and B. 
 agreed to collect all moneys in connection with his orders, the 
 commission not to be due until the money was received by A. ; 
 moneys received by B. not to be kept more than one week in 
 his hands; it was held, that under that agreement B. was a 
 clerk or servant within the meaning of the act. After 15. 
 had been in A.'s service about a year the prisoner was desirous 
 of selling coals by retail on his own account, and A. agreed 
 to supply him with coals, and then made the following 
 alteration in their agreement : ' As you are now going into 
 the retail coal trade on your own account, we think it best to 
 have a proper understanding, and in future we pay you a 
 commission only ; your salary will be stopped from this date. 
 There is a large amount against you, and we request you to 
 do all you can to get it in ;' and it was held, that under this 
 new agreement B. was not a clerk or a servant within the 
 statute. 1 From this case it should seem, that if the secre- 
 tary of a building society received a percentage on the 
 receipts of the society, and is subject to the orders of the 
 directors or trustees of the society, he will be a clerk or ser- 
 vant, and as such, will be liable to be indicted if he should 
 
 1 R. v. Bedford, 21 L. T. Rep., J. P. 618; R. . Batty, 2 Moo. C. C. 
 
 N. S. 508; 8. C., 11 Cox, G. C. 367. 257. 
 
 R. . Tite, SOL. J., M. C. 142; R. v. Bowers, 35 L. J., M. O. 
 
 S. C., 4 L. T. Rep., N. S. 259; 7 Jur.. 207; S. C., 14 L. T. Rep., N. S. 671; 
 
 N. S. 556; 8 Cox, C. G. 458; 1 Leigh Law Rep., 1 C. C. 41: 12 Jur., N. 
 
 and C., C. C. 29; 9 W. R. 554: 25 S. 671; 14 W. R. 803; 30 J. P. 452.
 
 223.] FUNCTIONS, ETC., OF OFFICERS. 243 
 
 embezzle the funds. 1 But a mere agent, who is employed by 
 a building society to conduct the business at a branch office, 
 and who receives his remuneration by way of commission 
 on the amounts received by him, would probably not be con- 
 sidered as a clerk or servant within the meaning of the act." 
 Thus where the prisoner was employed by a coal merchant 
 under an agreement, whereby ' he was to receive Is. per ton 
 procuration fee, payable out of the first payment ; four per 
 cent, for collecting ; and 3d. on the last payment, collections 
 to be paid on Friday evening, before 5 P.M., or Saturday 
 before 2 P.M.,' and he received no salary, and was not obliged 
 to be at the office except on Friday or Saturday to account 
 for what he had received, and was at liberty to go where he 
 pleased for orders ; it was held that he was not a ' clerk or 
 servant.' " ' 
 
 Compensation of Officers. 
 
 223. The compensation of officers in building associa- 
 tions is either fixed by provisions of the charter or by-laws, 
 or, more generally, left to the discretion of the directors, or 
 based upon. the terms of express contract. Where the charter, 
 or other fundamental law, fixes the salaries of any officers, 
 allowance in excess of the same cannot be made by the cor- 
 poration or its directors ; 4 and an express charter authorization 
 to fix the salaries of its officers applies, in such case, only to 
 salaries not fixed by the charter.* 
 
 1 And see R. v. Bren, 9 L. T. Rep., 1 L. and C., C. C. 13; R. v. Walker, 
 
 N. 8. 452; S. C., 27 J. P. 804; 33 27 L. J., M. C. 207; IDear. and B., 
 
 L. J., M. C. 59; 12 W. R. 107; 9 C. C. R. 600; R. t>. Goodbody, 8 
 
 Cox, C. C. 898; 3 N. R. 176; 1 L. Car. and P. 665; 34Engl. C. L. Rep. 
 
 and C., C. C. 346; R. v. McDonald, 575. 
 
 5 L. T. Rep., N. S. 330; S. C., 31 3 R. v. Turner, 11 Cox, C. C. 551. 
 
 L. J., M. C. 67; 7 Jur., N. S. 1127; 4 Field, Corp., 222; cit. Carr t>. 
 
 9 Cox, C. C. 10; 10 W. R. 21 ; 1 L. City of St. Louis, 9 Mo. 191; Utica 
 
 and C., C. C. 85; R. v. Proud, 31 Insurance Co. v. Bloodgood, 4 
 
 L. J., M. C. 71; 8. C..5L. T. Rep., Wend. 652; Godbold v. Bank of 
 
 N. S. 331; 9 Cox, C. C. 22; 10 W. Mobile, 11 Ala. 191; Carr t>. Cbar- 
 
 R. 62; 1 L. and C., C. C. 97; 25 J. tier's Coal Co., 25 Pa. St. 337; St. 
 
 P. 245. Luke's Cburcb v. Matthews, 4 Des. 
 
 See R. o. May, 30 L. J., M. C. Ch. 578. 
 
 81; S. a, 7 Jur., N. S. 147; 8 L. T. s Angell and Ames, Corp., 
 
 Rep., N. S. 680; 8 Cox, C. C. 421i 317.
 
 24:4 THE LAW OF BUILDING ASSOCIATIONS. [CH. IX. 
 
 224. "Where the salary is annexed to the office, either 
 by charter or by-law, the incumbent's right to it stands ujmii 
 the ground of distinct record agreement, established by hi& 
 election to, and acceptance of, the position. 1 But if the 
 duties incident to such an office become enlarged, and what 
 he receives appears to him inadequate, whilst he is free to 
 resign, he cannot claim additional compensation. The salary, 
 where annexed to the office, belongs to the person legally 
 elected to fill it, the officer dejure, whether also de facto or 
 not.' 
 
 225. A claim of compensation resting upon special con- 
 tract with a de facto board of directors, will not, after 
 services performed, be affected by the illegality of their 
 tenure of office, where the contract was made, on the part of 
 the claimant, in ignorance of this circumstance, and without 
 collusion. 1 
 
 Implied Liability of Society for Compensation. 
 
 226. In most cases, the power to provide suitable com- 
 pensation for officers, directors, and committees, is vested in 
 the Board of Directors. In such case, and where no salary 
 has, in fact, been provided, and no express contract entered 
 into, much must depend upon the custom obtaining in 
 this class of corporations, and the particular one sought to 
 be made liable, with regard to compensation for the particu- 
 lar services, and the expectations of the parties justly growing 
 out of their knowledge of that custom. In a general way, it 
 is said that " the agents of a corporation, like the agents of a 
 natural person, are entitled, in legal presumption, to be paid 
 for their services by their principal, the corporation, what 
 they are reasonably worth." 4 And it has, therefore, been 
 
 1 1 Dill., Hun. Corp., 233. against any suit for services for that 
 
 8 See post, 228. year. Ib. 
 
 3 St. Luke's Church v. Matthews, 4 Field, Corp., 221; cit. Com- 
 
 4 Des. Ch., (S. C.) 578. In the en- monwealth Insurance Co. . Crane, 
 
 suing year the same clergyman en- 6 Mete. 64; Waller v. Bank of Ken- 
 
 tered into a contract with the same tucky, 3 .1. J. Marsh. 206; Ehves v. 
 
 vestry, after he was apprised of the Ogle, 2 Engl. L. and Eq. 379; Bill 
 
 illegality of their election, and the v. Dnreuth, etc., R. Co., 1 H. and 
 
 court, upon the ground of collusion, X. 305; 37 Engl. L. and Eq. 539; 
 
 decreed a perpetual injunction East Anglian R. Co. . Lythgoe,
 
 226.] FUNCTIONS, ETC., OF OFFICERS. 245 
 
 repeatedly held, that an officer, duly appointed, although no 
 salary had been fixed for his services by the corporation, may 
 recover for them in assum/psit, quantum valebant. 1 But in 
 Pennsylvania, the doctrine is established, that corporations 
 are not liable, on a quantum meruit, for services performed 
 by an officer, and that, where no salary is fixed by the charter 
 or by-laws, there can be no recovery except upon an express 
 contract for compensation." Such an express contract arises, 
 either upon special arrangement between the officer and the 
 association, or by virtue of antecedent resolution fixing his 
 salary, and acceptance of the office under its provisions. This 
 doctrine has much to commend it. On the subject of com- 
 pensation of officers of municipal corporations, Dillon says : 
 " Officers of a municipal corporation are deemed to have 
 accepted their office with knowledge of, and with reference to, 
 the provisions of the charter or incorporating statute relating 
 to the services which they may be called upon to render, and 
 the compensation therefor. Aside from these, or some 
 proper by-law, there is no implied assumpsit on the part of 
 the corporation with respect to the services of its officers. In 
 the absence of express contract, these regulate the right to 
 recovery, and the amount." ' If considerations of public in- 
 terest and morality have dictated such policy as to municipal 
 corporations, a policy, equally cogent in reason and principle, 
 would appear to urge its extension to private corporations. 4 
 As for hardship, there would be no more in the latter case, than 
 in the former ; and the moral obligation to remunerate is no 
 more restricted in the one case than in the other. 6 And, per- 
 haps, particularly in building associations, should claims for 
 salaries, without distinct by-law or contract stipulation, be 
 discountenanced. The mutuality of the whole scheme, the 
 generally inopulent circumstances of the members, the great 
 interest which all have in keeping down expenses, the heavy 
 
 10 C. B. 726; 70 Engl. C. L. 4 Loan Association v. Stonemetz 
 
 Rep. 29 Pa. St. 534. 
 
 I See preceding note. 5 In Pennsylvania the theory of 
 
 II Kilpatrick v. Penrose Ferry moral obligation, in such cases, is 
 jp- Co., 49 Pa. St. 118. very much restricted by the decision 
 
 3 1 Dill., Mun. Corp., 230. of the S. C. in Kennedy's Ex'rs v. 
 
 Ware. 1 Pa. St. 445.
 
 246 THE LAW OF BUILDING ASSOCIATIONS. [CH. IX. 
 
 loads which many of the borrowing members have to carry, 
 and the general obligation which every shareholder is under, 
 to contribute, according to his powers', to the speedy final 
 success of the enterprise, all seem to point in the same direc- 
 tion. 
 
 A Director Cannot Claim Extra Compensation for Acts done in the Lone 
 of His Duty. Services before Organization. 
 
 227. In the case of a director, elected where no salary 
 was attached to the office or particular function he was called 
 upon to exercise as a director, it has been expressly held, that 
 he cannot recover against the association for services rendered 
 in that capacity, or for such as were incidental to his office ; 
 that where services are rendered by a person in the line of his 
 legal duty, 1 no implication arises that they were rendered at 
 the special request of the party benefited by them ; and that, 
 therefore, a resolution passed by the association, after the 
 services were rendered, that such director be paid a certain 
 sum for his services, was without a consideration, and imposed 
 no obligation on the association that could be enforced by 
 action. 4 It seems clear, therefore, that directors, for services 
 they performed whilst acting in that capacity, are not, with- 
 out express stipulation, to be allowed any compensation. 8 But, 
 for extra services rendered, not in the capacity of directors, it 
 seems that they may claim it, 4 within a reasonable time of 
 their rendition. 6 But services rendered before organization 
 of the association do not form a valid consideration for a vote 
 of the directors to pay, after complete organization.' 
 
 1 A director in a bank cannot 3 See also, Angell and Ames, 
 
 claim a reward offered by the bank Corp., 317; N. Y. R Co. v. Kct- 
 
 f or the recovery of stolen properly, chum, 27 Conn. 170; Hodges v. 
 
 because he merely did his duty. Rutland R. Co., 29 Vt. 220. 
 
 Collin v. Godfrey, 1 Barn, and Ad. 4 See Chandler v. Monmouth 
 
 956: 20 Engl. C. L. 514. And a Bank, 1 Green (N. J.), 255; Henry 
 
 resolution formally adopted, allow- v. Rutland R. Co., 27 Vt. 435; 
 
 ing directors certain compensation Shackleford v. New Orleans, etc., 
 
 for attendance on court, etc., is in- R. Co., 37 Miss. 202. 
 
 sufficient to give A director a right 6 See Utica Insurance Co. . 
 
 to recover for such services. Dun- Bloodgood, 4 Wend. (N. Y.) 652. 
 
 stou v. Imperial Gas Co., 3 Barn. N. Y. R. Co. . Ketchum, su- 
 
 and Ad. 125; 23 Engl. C. L. 42. pra. But where services were ren- 
 
 s Loan Association v. Stonemetz, dered for the benefit of a corpora- 
 
 29 Pa. St. 534. tion, before the completion of its-
 
 230.] FUNCTIONS, ETC., OF OFFICERS. 247 
 
 De facto Officer Cannot Claim Salary. 
 
 228. The right of mere de facto officers to claim com- 
 pensation, independently of an express contract (in the literal 
 sense of the word ; not by virtue of a charter or by-law pro- 
 vision, or resolution relating to the office), has never been rec- 
 ognized ; where there is a salary annexed to the office, it can 
 be drawn only by the de jure officer. 1 
 
 Salaried Officer, if Improperly Removed, may Sue for Salary. 
 
 229. But an officer, whose term is fixed, and to whose 
 office a salary has been attached, in any manner binding upon 
 the association, being improperly removed, may sue for the 
 amount of salary which would come to him, if allowed to re- 
 main, between the dates of his wrongful removal and of the 
 regular expiration of his term. 8 
 
 Officers Must Look to Society's Funds for Compensation. 
 
 230. Finally, the officers of building associations can 
 only look to the funds of the society for their remuneration, 
 and cannot recover the amount of their salary or compensa- 
 tion from any individual member or director. If the society 
 becomes insolvent, they simply lose the sums due them. 3 
 This was the law even before societies were incorporated, and 
 as such is clearly laid down in the leading English case upon 
 the subject. 4 The surveyor of a building association brought 
 an action against a shareholder and member of the committee 
 of management for a sum of money due to him for preparing 
 plans, etc., for six houses. It appeared that the plaintiff had 
 been duly appointed surveyor of the society, in accordance 
 
 organization, in obtaining subscrip- Connecticut R. R. Co. , 45 N. H. 
 
 tiotis and removing obstacles to its 375. 
 
 organization, which were valuable, ' See State v. Carrol, 38 Conn. 
 
 and at the request of parties who 471; Kidder v. Bedford County, 7 
 
 afterwards became members of it. S. and R. (Pa.) 386; Bentley r. 
 
 and the corporation, after its organ- Phelps. -,'T Marl). (N. Y.)524; People 
 
 ization, accepted of such services v. Tiernan, 30 Barb. (N. Y.) 193. 
 
 and received the benefit and advan- See I Dill., Mun. Corp., 
 
 tages of the same, it was held that 3 Davis, Law of Building, etc., 
 
 the person rendering the same was Societies, p. 91. 
 
 entitled to recover of the company 4 Alexander v. Worman, 30 L. J., 
 
 therefor in an action of assuinpsit Exch. 198: 3 L. T. Rep , X. S. 477; 
 
 upon an implied promise. Low v. 25 J. P. 312; 6 H. and X. 100.
 
 248 THE LAW OF UL'IUJIXG ASSOCIATIONS. [CH. IX. 
 
 with the rules of the society, by which rules his duties were 
 defined, and by which it was declared that he should "receive 
 out of the funds thereof " the society " a fair and reasona- 
 ble remuneration ; and should any dispute arise as to his 
 charges, the same shall be referred to the decision of the 
 committee, which shall be final." At a meeting of the com- 
 mittee, the plaintiff was instructed to prepare certain plans 
 and specifications, which he did, and subsequently he attended 
 several meetings for the purpose of explaining them and re- 
 ceiving instructions. The defendant was present at these 
 meetings, but gave no direct instructions to the plaintiff. 
 The plaintiff, from time to time, made reports to the society 
 of the progress of the works, and addressed a letter " to the 
 directors," asking payment of his own as well as the con- 
 tractors' claims, which remained unpaid. The society had 
 " died a natural death" for want of funds, and hence the ac- 
 tion. In giving the judgment of the majority of the court, 
 which was in favor of the defendant, Martin, B., said : " We 
 think the onus of proof in this, as in every other case for 
 work and labor, is upon the plaintiff, and that he is bound to 
 satisfy the jury, either, first, that the defendant contracted 
 to pay, by which we mean that he understood that he him- 
 self, or that he in conjunction with the other directors, was 
 to pay the plaintiff for his labor. Such a contract might 
 have been proved in an infinite variety of ways, but we think 
 it clear upon the evidence in this case that the defendant 
 thought that lie was dealing with an officer of the society, 
 and not with a surveyor whom he was to pay out of his own 
 private funds, either solely, or in conjunction with others. 
 But secondly, we quite agree that if the defendant had so 
 conducted himself as reasonably to create in the plaintiff's 
 mind the belief that he was to be paid by the defendant for 
 his labor, it is quite immaterial whether the defendant him- 
 self understood that he was to pay. To create a liability of 
 the kind, however, it is of the very essence of it to establish 
 that the plaintiff himself understood and believed that he was 
 to be paid by the defendant ; but the evidence satisfies us 
 that he had no such belief, and that until the society was 
 broken up, he looked to the funds of the society for payment, 
 and not to the defendant or his co-directors at all. "We think
 
 230.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 249 
 
 it is a mistake to suppose that in societies of this kind the 
 surveyor, or secretary or the officers do work and labor upon 
 the same terms as professional men of their class ordinarily 
 do. They generally have a much greater interest in these 
 societies than the directors, and in the great majority of cases 
 are the individuals who get them up, and at whose request 
 the directors consent to accept the trust, and take upon them- 
 selves the liabilities and duties of their situation ; and it is 
 to us very clear that such officers discharge duties and per- 
 form services, with the understanding on all hands that they 
 are to be remunerated out of the funds, and that if the funds 
 fail, the officers must remain unpaid." 
 
 CHAPTER X. 
 
 GENERAL POWERS OF BUILDING ASSOCIATIONS. 
 
 231. General corporate powers of building associations. 
 
 232. Powers denned by statute, and limited to purposes of incorpora- 
 tion. 
 
 233. Perpetual succession. 
 
 234. The common seal ; its custody, use, effect. 
 
 236. Proof of the common seal; estoppel upon association. 
 
 237. Necessity and significance of seal in contracts of corporation. 
 
 238. Liability of association upon implied contracts. 
 
 239. Contracts entered into, etc., by association directly. 
 
 241. Contracts entered into through agents. Officers are agents. 
 
 242. Appointment of agents, and persons capable of becoming such. 
 
 243. Acts of agents binding upon society. 
 
 244. Presumptions as to existence of agency. 
 
 245. Persons dealing with agents, bound, to a certain extent, to take 
 notice of limits of powers. Estoppel upon society. 
 
 247. Unauthorized contracts of agents. Ratification. 
 
 g 248. Form of execution by agent to bind society. Personal liability. 
 
 250. Notice to agent or officer is notice to society. 
 
 '.251. Delegation of authority by agents. Survival. 
 
 252. Society's liability for torts and misrepresentations of agents. 
 
 253. Agents' liability for interest on moneys collected.
 
 250 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 254. Right and liability to suits and actions. Employment of attor- 
 neys. Forms, etc., of proceedings. 
 
 257. Society may sue on obligation executed to it by wrong name. 
 Misnomer. Abbreviations. 
 
 258. Necessary averments as to default in suits against borrowing 
 members. 
 
 259. Computation of period of default. 
 
 260. Certainty required in defendant's allegations of payments and 
 proof. Agency. 
 
 261. Averment of and pleas to incorporation. Tender. 
 
 264. Suits by members against the society. Withdrawals, balances, 
 promised loan, refusal to transfer shares. 
 
 269. Society must be party to bill in certain causes. 
 
 270. Judgment obtained after dissolution in action pending against 
 society. 
 
 271. Nature and qualifications of the right of ordaining by-laws. 
 
 272. By-laws must conform with constitution and laws of Union and 
 State. 
 
 273. By-laws must conform with charter and purpose of incorpora- 
 tion, else void. Instances. 
 
 278. By-laws must be reasonable and equitable. 
 
 279. By-laws cannot have retroactive efficacy as against rights under 
 subsisting contracts. 
 
 280. By-laws manifestly contrary to interests of society, etc., void. 
 
 281. By-laws restricting member from pursuing legal remedies. Ar- 
 bitration. 
 
 General Corporate Powers of Building Associations. 
 
 231. Having thus reviewed the elements of which 
 building associations are composed, and the machinery by 
 which they act, the next step is, to consider the nature of the 
 powers which, by virtue of the franchises conferred upon 
 them, they are capable of exercising. In common with other 
 corporations, they possess the general rights and privileges, 
 and are subject to the general liabilities, incident to corporate 
 bodies. These attributes are (1) to have perpetual succession ; 
 (2) to have and use a common seal ; (3) to contract, grant and 
 receive, and hold real estate, in the corporate name ; (4r) to 
 sue and be sued in like manner ; (5) to make by-laws, a sort 
 of private statutes, for the internal government of the 
 association. 
 
 Powers Defined by Statute, and Limited to Purposes of Incorporation. 
 
 232. Of these powers and capacities, in general, it may 
 be said, that they are all subject to modification and limita-
 
 232.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 251 
 
 lion by the charter of incorporation, and the statutes under 
 which it may be effected, or which may be applicable to its 
 provisions ; and even when in no degree restricted and cur- 
 tailed, can be exercised only to effect the purposes for which 
 they were conferred by the government. 1 But certain powers 
 being specifically granted, all those fairly and necessarily 
 implied in, or incident to the same, follow with the grant, 
 as, likewise, do all those essential to the declared object ;m<l 
 purposes of the association; not simply convenient, but indis- 
 pensable.* To this extent, and no further, goes the contract 
 implied between the State and the corporation. It lends no 
 legitimacy to the transaction of other business, or the use of 
 corporate powers for objects wholly without the scope and 
 meaning of the charter. The corporation cannot leave its 
 legitimate business in the background, and assume unwar- 
 ranted functions, without rendering every step upon the 
 unauthorized path illegal and void." Neither the corporation 
 nor its officers can do any act, or make any rule or contract, 
 or incur any liability not authorized either expressly, or by 
 implication, or from the necessities of its lawful business. 
 All acts beyond the scope of the powers granted, and all 
 powers granted, however explicitly, under a charter based 
 upon a general statute, which are repugnant to such statute, 
 are void, and infect, with that inherent weakness, whatever 
 
 1 Angell and Ames, Corp., 111; Conover, 5 Phila. (Pa.) 18; Mechan- 
 
 Field, Corp., 54; and see Mills v. ics' and Workingmen's Mutual Sav- 
 
 Salisbury Building and Loan Asso- ings Bank and Building Association 
 
 ciation, 75 N. C. 292; Latham and v. The Mcriden Agency Co., 24 
 
 wife v. Washington Building and Conn. 159. 
 
 Loan Association, 77 Id. 145; Her- 'Field, Corp., g 53, 54; 1 Dill., 
 
 bert v. Kenton Building and Savings Mun. Corp., 89; President :md 
 
 Association of Covington, 11 Bush. Visitors of the Maryland Hospital 
 
 (Ky.) 296; Gordon v. Winchester v. Foreman, 29 Md. -VJ I. 
 Building and Accumulation Fund 3 Building Association v. Conover, 
 
 Association, 12 Id. 110; Martin v. 5 Phila. (Pa.) 18 (the language ttted 
 
 Nashville Building Association et in this case is, that the grant of spo- 
 
 al., 2 Cold. (Tenn.)418; Stater. The cific powers includes the riglit toex- 
 
 Oberlin Building and Loan Asso- ercise those nectusary for the con- 
 
 ciation, 35 Ohio St. 258; State r. venient and effectual prosecution of 
 
 Greenville Building Association, 20 the association's authorized I>UM- 
 
 Id. 92: Faulkner's App., 11 W. N. ness); Ashland Banking Oo. r. l'< B- 
 
 C. (Pa.) 48; Manufacturers' and tralia Mutual Saving Fund &MO 
 
 Mechanics' Saving and Loan Co. v. ciation. 9 Luz. Leg. Reg. (Pa.) 41.
 
 252 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 acts are done by virtue of them. 1 But if the acts are 
 merely ultra vires, and not actually prohibited, and affect 
 the interests of the stockholders only, they may be made 
 good by their unanimous consent.' 
 
 Perpetual Succession. 
 
 233. What is meant by the attribute of perpetual suc- 
 cession, is, that the association has the capacity to take and 
 hold property, without suffering interruption from the change 
 of officers, or in the composition of membership. As to such 
 new elements, taking the place of outgoing ones, the corpo- 
 ration, itself continuing unchanged, and preserving its iden- 
 tity throughout the allotted period of its duration, is invested 
 with the power of holding its property in uninterrupted, or 
 perpetual succession, during that period, or for the length 
 of time allowed by charter and statute. It is merely a nec- 
 essary corollary to the unity and personality given to cor- 
 porate bodies, the idea that, whilst they live, they constitute 
 an artificial person, similar, in every respect, to a natural one, 
 and has nothing to do with immortality or perpetuity beyond 
 the limitation contained in the charter, or in the general stat- 
 ute under which the charter is granted, as to the period of 
 corporate existence.* Upon this principle, too, a mortgage 
 given by one of three directors of a building association to 
 the remaining two, vests, upon the resignation of one of these 
 two, and the appointment of his successor, in the remaining 
 trustee and the successor, witho'ut assignment. 4 
 
 The Common Seal ; its Custody, Use, Effect. 
 
 234. The seal of the association is the stamp, bearing a 
 certain device, adopted by the corporation for the purpose of 
 making an impression upon wax, or other impressible sub- 
 stance affixed or attached to instruments to be executed by 
 the corporation, or upon the paper or parchment on which 
 
 1 See Miller's Estate, 2 Pearson s See ante, 200. 
 
 (Pa.), 248; Stiles's Appeal, 9 W. N. 3 See Angell and Ames, Corp., 
 
 C. (Pa.) 83; Becket . Uniontown 8. 
 
 Building Association, 88 Pa. St. * Walker v. Giles. 6 C. B. 662; 13 
 
 211 ; Manufacturers', etc., Saving .Tur. 588; 18 L. .1.. C. P. 323; 60 
 
 and Loan Co. v. Conover, sttpra; Engl. C. L Rep. 662. 
 and cases in notes to this section.
 
 ^35. J GENERAL POWERS OF BUILDING ASSOCIATIONS. 253 
 
 such instruments are written, as an additional and solemn au- 
 thentication of such instruments. The stamp must be such 
 as to make an impression into the wax or paper to which it 
 is applied. 1 It is part of the implied authority conferred 
 upon the president, to have the custody of and affix the seal. 
 But the by-laws, or a corporate meeting, where they are 
 silent, may authorize any person, not only to execute an in- 
 strument for the society, but also to affix its seal ; and this 
 authority being conferred upon a Board of Directors, they may 
 appoint some officer or agent to execute and seal with the 
 common seal a contract on behalf of the corporation. 2 And 
 where not only the affixing of the seal, but also acknowledg- 
 ment in certain prescribed forms, in order to satisfy the re- 
 cording laws, is required, the officer or agent executing the 
 instrument may generally also make those acknowledg- 
 ments. 3 
 
 235. The affixing of the seal should be accompanied with 
 the signature of the president, as president, and the secretary, 
 as secretary. 4 As that of a natural person to an instrument 
 makes it a specialty, so does the addition of the corporate 
 seal. 6 But where the articles of association of a building 
 association authorized the president, secretary, treasurer, and 
 three directors to sign all promissory notes to be given to the 
 corporation ; and a mortgage was taken from a member, the 
 consideration of which was paid by the building association, 
 not in money, but by giving the mortgagor a promissory 
 note signed by the officers above mentioned, attaching some 
 
 1 Herder c. Pinkerton, 14 Allen, facturing Co., 15 Wend. 256. And 
 
 (Mass.) 381; Warren v. Lynch, 5 one seal will suffice, where the whole 
 
 Johns. (N. Y.) 230. committee, authorized to sell lands 
 
 * Field, Corp., 288; cit. Jackson and make the necessary deeds in 
 
 e. Campbell, 5 Wend. 572; Damon the corporation's name, signed the 
 
 /. Gran by, 2 Pick. 345; Derby Canal instruments. Decker n. Freeman, 
 
 Co. . Wilmot, 9 East 360; Bank of 3 Greenl. (Me.) 338. 
 
 I lie U. 8. c. Dandridge, 12 Wheat. * Field, Corp., 289; cit. Gordon 
 
 68, 118; The President, etc., v. . Preston, 1 Watts (Pa.), 885; 
 
 Myers, 6 S. ind R. (Pa.) 12; Clarke Lovett v. The Steam Saw Mill Asso- 
 
 o. The Imperial Gas Co., 4 B. and ciation, 6 Paige's Ch. 60. 
 
 Ad. 315; 1 N. and M. 206:24 Engl. Field, Corp., g 247, 285. 
 
 C. L. Rep. 64; Leggett v. New Jer- * Clarke r. Manufacturing Co.. 15 
 
 sey Banking Co., Snxton's Ch. (N. Wend. (X. Y.) 256, 265; Field, 
 
 J.) 541; Clark v. Woollen Manu- Corp. , 288, note 2.
 
 254 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 device which was afterwards claimed to be the seal of 
 the corporation : it was held that the note was negotia- 
 ble ;. that the nature of the transaction showed that it was 
 intended to be such ; that the seal was not a restraint upon 
 its negotiability, but merely a mark of its genuineness ; ;ui<l 
 that the validity of the note, as such, in no manner depended 
 ui)on the seal, but upon the signatures of the proper, author- 
 ized persons. 1 The apposition of the common seal gives per- 
 fection to the corporation's deed, without the further formal- 
 ity of delivery." Such deed, however, must be under seal 
 and by agent, 8 though his authority may be derived from 
 appointment not under seal. 4 And a lease from a corpora- 
 tion is void for want of seal ; 6 but not an authorized agree- 
 ment by an agent to sell land,' or an authorized assignment 
 of a lease.' 
 
 Proof of the Common Seal ; Estoppel upon the Association. 
 
 236. The seal affixed to an instrument does not prove 
 its own authenticity ; it must be shown to be really the seal 
 of the association. 8 But any seal, authoritatively affixed, al- 
 though not the seal regularly adopted, becomes binding upon 
 it ; whilst, conversely, it is not bound even by the regularly 
 adopted seal, if affixed without due authority. 9 The associa- 
 tion may, undoubtedly, become estopped from denying its 
 authority for a contract whose benefit it had reaped ; 10 yet it 
 must always be allowed to show that the instrument contain- 
 ing it was not legally executed. 11 Therefore, as the custody 
 and proper use of the seal ought to be, and usually are, pro- 
 
 1 Jackson et al. t>. Myers et al., 43 8 1 Dill., Mun. Corp., 190; 
 
 Md. 452; S. P. Muth v. Dolfield, 43 cit. Jackson v. Campbell, 5 Wend. 
 
 Md. 466; and see Dinsmore v. Dun- 572. 
 
 can, 57 N. Y. 573; Vermilye . 9 Ifr 
 
 Adams Express Co., 21 Wall. 138. 10 See post, 245-246. 
 
 8 Willis v. Jermin, Cro. Eliz. 167; " 1 Pars., Contr., 141. Thus, 
 
 Cruise, T. 32, C. 2, S. 82. where three directors were a 
 
 8 Field, Corp., 285. quorum, and the secretary ob- 
 
 4 Ib., 188-288, n. 2, and post, tained, at one time, the consent of 
 242. two to seal a bond, and, at another, 
 
 5 Kinzie v. Chicago, 2 Scam. (111.) that of a third, it was held the bond 
 188. was not the deed of the company. 
 
 * Legrand v. Hampton-Sidney D'Arcy v. Tamar, Kit Hill and Call- 
 College. 5 Munf. (Va.) 324. ington R. Co.. Law Rep.. 2 ExcJ* 
 7 Sanford . Tremlett, 42 Mo. 384. 158; 14 L. T. Rep., N. S. 626.
 
 237.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 255 
 
 vided for by the constitution or by-laws of the society, it is 
 expedient to place an attestation upon every document of 
 importance which has the corporate seal, stating affirmatively 
 that the rules have been properly observed. But if the proper 
 formalities have been observed in affixing the common seal, 
 the only way of invalidating the deed, is, to show that it was 
 prohibited by the act or instrument incorporating the society, 
 or is EO foreign to, or inconsistent with, the purposes for 
 which the same was incorporated, that it is to be deemed as 
 if it had been so prohibited. 1 
 
 Necessity and Significance of Seal in Contracts of Corporations. 
 
 237. It was formerly held that corporations could con- 
 tract, that their corporate consent could be expressed, only by 
 the corporate seal. But " it is now well settled, that acts of 
 a corporation evidenced by a vote are as binding upon it, and 
 are as complete authority to its agents in the execution of the 
 will of the corporation thus expressed, as if such will and 
 authority was authenticated by the corporate seal ; that it 
 may be as well bound by the acts of its agents as if the prin- 
 cipal was a natural person."' "And the corporate will is 
 now seldom expressed or authenticated by the corporate seal, 
 except in those cases where, under similar circumstances, it 
 would be necessary to execute the instrument with a seal if 
 a natural person were the party executing it." ; Hence, 
 " wherever the law requires a natural person to attach a seal 
 to the instrument executed by him, in like cases only would 
 it be necessary for a corporation to execute a like instrument 
 by a corporate seal. If in the former case the instrument 
 must be by deed, that is, executed or authenticated by a .-; al, 
 so, in the latter case, should it also be executed or authenti- 
 cated by the common seal of the corporation." 4 Indeed, the 
 formalities requisite in the execution of contracts to which 
 building associations are parties, are precisely analogous to 
 
 1 Davis, Law of Building, etc., Warren Plank Road Co., 11 la. 74; 
 
 Societies, p. 80; cit. Power t. Hoey, Petrie v. Wright. 14 Miss. 647; 
 
 19 W. R. 916. Buckley v. Briggs. 30 Mo. 452. And 
 
 'Field, Corp., 285; cit. Board see The City of Davenport v. The 
 
 of Education v. Greenebaum, 39 111. Peoria, etc. , Insurance Co. ,17 la. 276. 
 
 609; Ross v. City of Madison. 1 Ib.,283. 
 
 Ind. 98; Merrick v. Burlington & 4 Ib., 284.
 
 256 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 those characterizing the same species of dealings between 
 private persons. What is said in Field's Private Corporations, 
 on this subject, is strictly applicable to building associations: 
 " If a verbal contract, relating to the same subject, would be 
 good between private persons, it would be so between corpo- 
 rations, or between corporations and private persons and co- 
 partnerships. If, under the same circumstances, the contract 
 should be in writing, it would be necessary in case a corpora- 
 tion was a party. If it should b3 under seal if natural per- 
 sons were parties to it, under like circumstances it should be 
 under seal when a corporation is a party. But if the mode 
 of the execution of contracts is prescribed by the statute or 
 fundamental law of the institution, that mode should be fol- 
 lowed." ' The corporate assent appearing to be given to a 
 measure properly within the scope of the association's powers, 
 whether by resolution or otherwise, this is sufficient in order 
 to bind the corporation, where the nature of the contract, to 
 be valid in law, is not such an one as requires more deliberate 
 formality. 
 
 Liability of Association upon Implied Contracts. 
 
 238. The common seal being shorn of its ancient dignity 
 and significance in corporation contracts, a building associa- 
 tion becomes liable upon undertakings either expressed by 
 it or implied from its acts; and all duties imposed upon 
 it by law, and all benefits conferred at its request, raise 
 implied promises, for the enforcement of which an action 
 lies.' 
 
 Contracts Entered into, etc., by the Association Directly. 
 
 239. Again, the contracts of a building association may 
 be expressed by, or implied from, the acts of the association 
 at large, acting, directly, in meeting assembled ; or acting, in- 
 directly, by delegation, through the medium of its duly con- 
 stituted officers, or authorized agents. 
 
 1 F. 247. If a contract is under * Bank of Columbia n. Patterson, 
 
 seal, it should be signed by the presi- 7 Crunch (U. S.), 299 (306); Bank v. 
 
 dent and secretary, and authenti- Wister, 2 Pet. (U. S.)318; N. Y. R. 
 
 cated -with the seal of the associa- R. Co. v. Schuyler, 34 N. Y. 30; 
 
 tion stamped upon the instrument. North Whitehall, etc., v. South 
 
 See ante, 235. Whitehall, etc.. 8 8. and R. (Pa.) 117.
 
 x!-il.J GENERAL POWERS OF BUILDING ASSOCIATIONS. 257 
 
 24:0. From the nature of the case, the contracts the asso- 
 ciation, as a body, can enter into, or become liable upon by 
 an implied assumpsit of the whole, acting directly, must be 
 very limited. Practically, they are probably narrowed 
 down to those entered into and implied between the associa- 
 tion and its members, its officers, and the sureties of its 
 officers. 1 
 
 Contracts Entered into, etc., by Association Through Agents. Offi- 
 cers are Agents. 
 
 241. In its dealings with the outside world, and in most 
 of its relations with its own members, the building associa- 
 tion, like any other corporation, is represented by, and acts 
 through, its officers or agents, duly appointed and employed. 
 For this purpose, and within the sphere of his legitimate au- 
 thority, each officer, including the directors, is an agent of the 
 society. The directors, indeed, " are the most important of 
 corporate agents, as on them usually devolves the manage- 
 ment of all the affairs of the corporation. In view of the 
 usual powers conferred upon them, they may almost be said 
 to be the corporation, the reserved powers of the corporation, 
 in a majority of cases, being the mere right to annually ex- 
 press, through the members at large, the corporate will as to 
 the policy and management of the corporate affairs, by an 
 election of such directors or managers as will execute such 
 will.'" Hence, " it is evident that the directors of a corpo- 
 ration, in whatever manner constituted, are agents of the cor- 
 poration, and, within the scope of the authority conferred by 
 the laws or regulations of the company relating to them. 
 their acts are the acts of the company." 3 It follows, that, in 
 addition to the principles already pointed out as applicable to 
 the states of the various officers of building associations, those 
 of the law of agency govern the relations between the associ- 
 ation and its directors and other officers, acting as its airents. 
 as well as between it and agents employed for special pur- 
 poses: and that, in their representation of the society before 
 the world, officers and society and third parties are governed 
 by the principles of that law. 
 
 'See ante, Chapters vi., vii., * Field. Corp., 186. 
 /u. 8 II>.. si 15T>.
 
 258 THE LAW OF BUILDINO ASSOCIATIONS. [(11. X. 
 
 Appointment of Agents, and Persons Capable of Becoming Such. 
 
 242. For authority to act as tlio agent of the association, 
 *' the record of the corporate will, either as expressed by the 
 majority of its members in attendance at a corporate nuvt- 
 ing, or by a majority of the directors at a meeting duly called, 
 is the highest and best evidence, and agents for any and all 
 j mi-poses may be thus appointed and constituted, without any 
 other written authority, or any authentication by the corpo- 
 rate seal." l It may, in general, be said, that any person may, 
 by due appointment, be the agent of an association." A minor 
 may be employed as such ; 3 and a member of the association 
 may act as auctioneer at a sale, and, while so acting, he may 
 also be the agent for the purchaser, and sign for him the mem- 
 orandum required under the Statute of Frauds to bind him. 4 
 
 Acts of Agents Binding upon Society. 
 
 2-13. There is this difference between the agents of pri- 
 vate persons and those of a corporation (particularly where 
 the agency is the incident to and co-extensive with an office 
 whose powers are a fixed quantity), that, whilst, in the former 
 case, the fact and terms of the procuration are matters strictly 
 between the principal and agent, and to outsiders evidenced 
 mainly by the acts and representations of the agent ; in the 
 latter, their authority is either statutory, or matter of record, 
 to which all have access who may have occasion to deal with 
 the agent. 6 Acting within the apparent scope of the authority 
 thus conferred upon them, it is a rule established for the pro- 
 tection of mankind, that their acts will be presumed to have 
 been authorized by the body they represent, and consequently 
 be binding upon it. 6 Thus, where an agent of an insurance 
 Company received from a building association an application 
 for insurance of a mortgage interest held by the association, 
 
 1 Field, Corp., 188 Even for * Ib., Stoddert t. Vestry of Port 
 
 the con veyin <r of real estate, and for Tobacco Parish, 2 G. and J. (Md.) 
 
 -other acts under seal. 227. 
 
 Angell and Ames, Corp., 278; 5 Field, Corp., 156-157. The 
 
 cit. Co. Lit. 52 a; Emerson v. Blou- distinction, in this respect, between 
 
 drn, 1 Esp. 142; Palethorp r. Fur charter and by-law powers of offi- 
 
 nace, 2 Esp. 511; Anderson t. San- cers, does not appear to be sustained 
 
 derson. 2 Stark.. N. P. 204. Ib., g 158. and notes. 
 
 Angell and Ames : Corp., ubi * Ib., 157, 192. 
 tupra.
 
 245.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 259 
 
 upon which application the building association obtained from 
 him such an assurance ; the fact that the agent had been in- . 
 structed by the insurance company to take no applications for 
 insurance upon mortgage interests, was held not to affect the 
 right to recover in the building association, which had no 
 knowledge of such a limitation upon the agent's powers. 
 Upon the usages and customs of insurance business, it had a 
 right to presume that the agent, if he appeared ready and 
 willing, had also the right to take such an application. 1 
 
 Presumptions as to Existence of Agency. 
 
 24-i. The same ground, however, of the superior facili- 
 ties of acquiring certainty in the case of corporation agents 
 and officers, as compared with the case of agents for private 
 persons, precludes the doctrine applicable to persons acting 
 for individuals, that an authority to make a contract may 
 be implied from his former employment for the same pur- 
 poses, from extending to such as assume to act as agents for 
 the corporation. 3 But where a person assumes to exercise 
 powers usually pertaining to and as an officer or agent of the 
 association, and within the limits of the corporate powers, the 
 corporation, or its immediate representatives, the Board' of Di- 
 rectors, having knowledge of his proceedings ; third parties 
 having dealings with the association may properly treat such 
 officer or agent as if lawfully appointed, and as rightfully ex- 
 ercising the duties of his office. 3 
 
 Persons Dealing with Agents Bound, to a Certain Extent, to Take 
 
 Notice of Limits of Powers. Estoppel upon Society. 
 
 245. It follows, equally, that parties dealing with either 
 
 officers or special agents, both of whom are agents only so far 
 
 as they have authority, by virtue of the powers with which 
 
 they are invested, 4 are required to take notice of its general 
 
 1 Woodbury Savings Bank and cit. Merchants' Bank v. State Bank, 
 
 Building Association v. The Charter 10 Wall. 604; Fleckner v. Bank of 
 
 Oak Fire and Marine Insurance Co., the U. S., 8 Wheat. 338; Bank of 
 
 31 Conn. 517. See similarly Mill- the U. S. . Dunn. 6 Pet, 51 ; U. S. 
 
 ville Mutual Marine and Fire In- v. Bank of Columbus, 21 How. 356; 
 
 surance Co. v. Mechanics and Work- Baldwin v. Bank of Newburgh, 1 
 
 ingmen's Building and Loan Asso- Wall. 234; Badger t>. Bank of Cum- 
 
 ciation, 14 Vr. (N. J.) 652. berland, 26 Me. 428; Cooke t>. State 
 
 4 Field, Corp., 157. Bank. 52 N. Y. 96. 
 
 See Field, Corp., g 20S : 192, 4 Ansrdl and Ames, Corp., 280.
 
 2GO THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 extent and limits. 1 And if the agent, in his capacity as such, 
 assumes to become a party to a contract manifestly in excess 
 ut the same, the corporation will not necessarily, or without 
 further showing of the required power being granted the 
 agent, or acts of the corporation amounting to ratification or 
 estoppel, be liable. A surety on a bond given to a building 
 association to secure a loan, attempted to set up, as a defence 
 to its enforcement, an agreement made with the agent of the 
 association, to the effect that, upon the happening of a certain 
 contingency, he should be released from liability on his 
 guaranty. It was held that he must establish, besides the 
 actual occurrence of the event contemplated, the additional 
 fact, that the agent was, at the time, acting within the scope 
 of his authority ; or that his declarations were made in the 
 course of business which he was authorized to transact ; or 
 that the agreement existed within the knowledge of the offi- 
 cers of the association. 3 So, too, where a mortgage, offered 
 as security for a loan applied for, was rejected by the direc- 
 tors of a building association, but placed on record by its 
 attorney, without its authority or knowledge ; and where it 
 appeared that the society had no actual notice of the facts 
 until sued by the mortgagor named in the mortgage, nor 
 ever, in any way, had ratified the attorney's act in placing the 
 instrument upon record ; it was held that the building asso- 
 ciation was not liable, and the plaintiff could not recover.* 
 So, too, the cancellation of a mortgage by an attorney-at-law, 
 under a supposed authority from the mortgagee, where the- 
 evidence as to the latter's direction was conflicting, and a 
 mortgage, which the complainant claimed was to have been 
 substituted for the original one, was never delivered, was held 
 
 1 Field- Corp.. 156; cit. Zabris- Building Association, 9 W. N. C 
 kie v. Cleveland, etc., R. Co., 23 (Pa.) 325; 8. C. nom. Jones v. Na- 
 How. 381 ; Bank of Augusta v. tional Building Association, 94 Pa. 
 Earle, 13 Pet. 587; Pearce v. M. and St. 215. 
 
 I. R. Co., 21 How. 441. 3 Con way v. Log Cabin Perraa- 
 
 2 Gass v. Citizens' Building and nent Building Association of Bal- 
 Loan Association, 9 W. N. C. (Pa.) timore City, 52 Md. 137, so decided 
 326. See also Selden v. Reliable upon the additional ground that an 
 Savings and Building Association, action of assumpsit will not lie to re- 
 32 P. F. Sm. (Pa.) 336; 2 W. N. C. cover money promised to be loaned 
 481 ; but see James r>. National from the intended mortgagee.
 
 247.] GENERAL POWEKS OF BUILDING ASSOCIATIONS. 2C1 
 
 invalid, as being unauthorized, and was set aside. 1 And, in 
 like mariner, where a member of an unincorporated loan 
 fund association made a bond and mortgage to it for a loan, 
 part of which he received, but repaid, upon being told that 
 the sum was too great for the security furnished, and, upon 
 executing a new bond for a less amount, cancelled the ii rst ; 
 it was held, if the association did riot assent to, or ratify the 
 cancellation, they might still maintain a writ of entry to fore- 
 close the mortgage." 
 
 246. And where the limits of an agent's authority are 
 set forth in a manner necessarily coming under the observa- 
 tion of the other party to a contract in which the agent exceeds 
 those limits, the party dealing with the agent is bound to 
 take notice of such limits. Thus, the powers of an agent of 
 a building association, conducting a sale of mortgaged prem- 
 ises under an appointment from the mortgagee, must be 
 found in the mortgage authorizing the sale ; and any repre- 
 sentations or agreements made by such agent, beyond the 
 powers contained in the mortgage authorizing such sale, do 
 not bind the mortgagee." 
 
 Unauthorized Contracts of Agents. Ratification. 
 
 247. For if an officer or agent exceed his power in enter- 
 ing into contracts (remembering, however, that these include 
 all the necessary and appropriate means of carrying out the 
 purposes of the agency), these, if executory, will be void as to 
 the association, if ultra vires / and voidable, if merely in ex- 
 cess of the agent's powers. But if executed, the corporation, 
 
 1 The Tradesmen's Building and etc., Association v. Houseman, 89 
 
 Loan Association of Camden, N. Pa. St. 261. 
 
 J. v. Thompson etal., 4 Stew. (N. a Baxter v. Mclntire, 13 Gray 
 J.) 536; 5 Id. 133. A release of (Mass.), 168. Upon the trial of a 
 mortgaged premises to a person hav- writ of entry to foreclose a mort- 
 ing no actual notice of the assignment gage, defendant cannot object to 
 of the mortgage, is, by statute, valid, the introduction in evidence of a 
 if such assignment has not been re- bond corresponding to that de- 
 corded. Ib. The society's solicitor, scribed in the condition of the mort 
 acting ultra vires in the delegation gage, except in being for a less sum 
 of his functions, does not bind the and dated one day later. Ib. 
 society to the acts of a third party 3 Lamm r. The Port Deposit 
 so as to exonerate the recorder Homestead Association of Cecil 
 from liability. Peabody Building, County, 49 Md. 233.
 
 262 THE LAW OF BUILDING ASSOCIATIONS. fCH. X. 
 
 having received the benefit of the agent's transgression of his 
 own powers, holding the beneficial result of the contract or 
 the instrument as price for property sold, or the like, cannot 
 be heard to deny his authority, where, under the society's 
 general powers, the contract might have been made. ' Where, 
 therefore, one has been induced to become a surety upon a 
 promissory note to a building association, through the repre- 
 sentation and undertakings of its secretary, in its behalf, 
 that he should be liable only until an insurance could be 
 placed upon the borrowers house and deposited with the 
 association, the latter cannot set up a want of authority in 
 the secretary to make the contract, as against a defence made 
 under its terms. It cannot have the benefit of the security, 
 and, at the same time, repudiate the contract by means of 
 which it was obtained. It must do one of two things, 
 either reject the whole, or stand bound by the whole. 2 
 
 Hence, an acceptance of, or an omission promptly to dis- 
 avow, the act of an agent who has transcended his authority, 
 makes it the act and contract of the association. Thus where 
 the secretary of a building association made a contract with a 
 borrower to insure the mortgaged premises, and failed to do 
 so before a loss through fire occurred ; and where the secre- 
 tary had been making similar contracts with others, for some 
 time, having himself no personal interest in the insuring, and 
 the society received the benefits accruing from such contracts 
 
 1 1 Pars., Contr., p. *139; see, presumed; whereas, in the latter, 
 
 however, post, 299, note. there being no evidence that the 
 
 8 James v. The National Building agent was even such (" he told me 
 
 Association, 9 W. N. C. (Pa.) 325; he was secretary of the associa- 
 
 S. C. nom. Jones v. National Build- tion,") and there being no proof of 
 
 ing Association, 94 Pa. St. 215. the knowledge of the officers of the 
 
 The only possible ground upon nature of the bargain, or of their 
 
 which this case can be distinguished consent to it, the fact of their igno- 
 
 from that immediately following it, ranee of it, and of remissness of the 
 
 ib., page 326 (see Gass v. Citizens' defendant in not ascertaining any- 
 
 Building and Loan Association, 9 thing beyond the agent's represen- 
 
 W. N. C. 326, ante, 245), is that tations, and in no wise bringing his 
 
 in the former, the contract having bargain to the notice of the society, 
 
 been with an officer of the society, became an element in exonerating 
 
 the knowledge of its managing offl- the building association from being 
 
 cers of the details of the contract, limited by it. See also Kent 0. Quick- 
 
 and their implied assent to it, is silver Mining Co. , 78 N. Y. 159.
 
 248.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 263 
 
 without objection ; it was held that it might be inferred 
 that he acted with the knowledge of the directors, and was 
 authorized to make such contracts, and that the society was 
 estopped from denying its own power to make it 1 
 
 Form of Execution by Agent to Bind Society. 
 
 248. In order to make an agent's or officer's contract in 
 writing binding upon the association, u he must express by 
 some form of words that the writing is the act of the princi- 
 pal, though done by the hand of the agent. If he does thi.s, 
 the principal is bound, and the agent is not." J If he fail to 
 give the parties with whom he is dealing to understand that 
 he is acting for another and binding another, and not himself, 
 he will be liable as principal, 3 as, also, where the per.-soij 
 assumes to act on behalf of an association not yet existing, 4 
 even though it, when organized, adopts the contract. 5 If the 
 contract be in writing, the name of the association should 
 appear in the body of the instrument as the real contracting 
 1 tarty, and its officer or agent should sign as such. Thus 
 where a promissory note was in the following form : 
 
 "MIDLAND COUNTIES BUILDING SOCIETY, No. 3, 
 
 " BIRMINGHAM, Sept. 1, 1856. 
 
 " One month after demand we jointly and severally prom- 
 ise to pay J. B. the sum of 120, with interest, etc., for 
 value received. " W. R. H. ) 
 
 " S I) S ( Trustees. 
 
 " W. D. FISHER, Secretary" 
 
 1 Chicago Building Society c. 27; Gordon v. Preston, 1 Watts 
 
 Crowell, 65 111. 453. It was further (Pa.), 385. 
 
 held, that tae society had actually 8 See Gray, J., in Tucker Manu- 
 
 the power to make the contract as facturing Co. n Fairbanks, 9S M.i-< 
 
 an incident to the power of taking 101. In Pennsylvania, the person 
 
 security, and that upon its failurp signing as agent must sign the name 
 
 to carry out the agreement, it was of his principal. Campbell n. Baker, 
 
 luilile to damages, the measure of 2 W. 83 (84). Otherwise he is per- 
 
 which should be the sum or dividend sonally liable, although the princi- 
 
 the insurance company would have pal's name is disclosed intheinstru- 
 
 been able to pay if the insurance ment. Quigley v. De Haas, 82 Pa. 
 
 had been perfected before loss, and St. 2<!7. 3 Field. Corp.. t 210. 
 
 not the whole amount agreed upon * Ib., 178; Herod . Hodman, 
 
 as insurance. Ib. See also Kelsey 16 Ind. 241. 
 
 r. National Bank of Crawford Kellner r. Baxter. L. R.. 2 C. 
 
 Co , 69 Pa. St. 426; Predin v. P. 174: Brocks et al. c. McCoy, 5 
 
 Durbarry, 14 Serg and R. (Pa.) Sneed (Tenn.), 602.
 
 THE LAW OF BUILDING ASSOCIATIONS. [cii. X. 
 
 Fisher was held personally liable, the mere addition of the 
 word "secretary" to his name not cutting down his liability. 
 and the signature, from its position, showing nothing like a 
 counter-signature as secretary merely. 1 
 
 249. But if the whole instrument evinces the purpose 
 to act for the association, and there are no words disclosing 
 an intention 11 to assume a personal liability, the association, 
 not the agent, will be bound thereby, although he sign his 
 own name and affix his own seal. This creates, however, 
 only a simple contract On the part of the association, valid, as 
 to it, so far as it goes, the private seal, in such case, being 
 nugatory ; * for the deed of a corporation must be under its 
 corporate seal. 4 Thus, where a deed was written throughout 
 as that of the corporation, by an attorney having full and 
 complete authority thereto, and he, in executing it, declared 
 he did so on behalf of the corporation, but went on to say, 
 " in witness whereof I set my hand and seal," and in the 
 acknowledgment, stated it to be "his free act and deed."- 
 this was his deed only, and did not pass the company's land. 5 
 But in Maryland the acknowledgment of a mortgage by an 
 attorney of a corporation " to be his act and deed," was 
 held to be a substantial compliance with the provisions of 
 the Code, upon the circumstances of the case. 8 The court 
 being bound, in construing an instrument, to look at the 
 whole of it, T it clearly appeared that the instrument was, by 
 
 1 Bottomry v. Fisher, 31 L. J., payable to " A. B., treasurer," and 
 
 Exch. 417; S. C., 6 L. T. Rep., N. endorsed by him in the same way, 
 
 S. 688; 1 H. and C. 211; see also creates no personal liability. 
 
 Allan v. Miller, 22 L. T. Rep., N. * Parol evidence is admissible, in 
 
 S. 825; Price T. Taylor, 29 L. J., cases of doubt, to show the facts and 
 
 Ex. 331; 6 Jur., N. S. 402; 2 L. T. the intention of the parties; as that 
 
 Rop., N. S. 221; 5 H. and N. 540; the principal and not the agent 
 
 Davis, Law of Building, etc., Socie- should be bound. Field, Corp., 
 
 ties. pp. 101, 102, 105. But see 198. 
 
 Field, Corp., 212; cit. Fuller . Ib., 197; 1 Dill., Mun. Corp., 
 
 Hooper, 3 Gray, 334; Slawson v. 452; 1 Pars., Contr., p. *141. 
 
 Loring, 5 Allen, 340; that the name 4 Koehler . Iron Co., 2 Black, 
 
 of the corporation being printed in 715. 
 
 the margin, though not appearing * Brinlsy v. Mann, 2 Cush. 337. 
 in the body of the instrument, is 6 The Frostburg Mutual Build- 
 sufficient. And see Ib., cit. Bank ing Association v. Brace et al., 51 
 of New York v. Bank of Ohio, 29 Md. 508. 
 N. Y. 619, that a note being made ' Kelly v. Rosenstock, 45 3Id
 
 xJol.J GENEKAL POWERS OF BUILDING ASSOCIATIONS. 265 
 
 all parties, intended and understood to be the corporation's 
 mortgage, and the use of the possessive pronoun "his" for 
 "its" was unquestionably a mere mistake, which was cured 
 upon the principle, mala grammatica non mtiat legem. 
 
 Notice to Agent, or Officer, is Notice to Society. 
 
 250. Notice to an agent, in the transaction for which 
 he is employed, is notice to the principal, both in equity and 
 at law. 1 And where the agency is a joint one, as that of the 
 directors, knowledge of a material fact conveyed by a director 
 to the board, at a regular meeting, is notice to the associa- 
 tion." So, likewise, is notice to any of the directors whilst 
 engaged in the business of the association ; 8 but not where 
 he is not so engaged. 4 Nor is a notice published in a news- 
 paper, 6 where the subject matter is not such as, by law, is 
 ordained to be notified in that manner, in which case the 
 notice affects the principal and agent alike. A mere private 
 communication of a fact to a director, or his knowledge of it 
 from rumor, is not notice to the board unless he communicate 
 it." Neither will the private knowledge of one of the direc- 
 tors (and actuary), that certain shares have been assigned or 
 encumbered, be deemed notice of the fact to the association, 
 where the apparent ownership of the shares remains in the 
 assignor, and he is by the association recognized as the 
 owner. 7 But "a subsequent Board of Directors is to be 
 considered as knowing all the circumstances communicated 
 or known to a previous board." And, as to such matters, no 
 change in the directors can render a new notice necessary. 8 
 
 Delegation of Authority by Agents. Survival. 
 
 251. The power of agents to delegate their authority is 
 confined to such cases in which it must be implied ; as when 
 it is indispensable in law, in order to accomplish the end : <>r 
 it is the ordinary custom of the business contemplated ; or it 
 
 389; in this case, too, the omission knowledgment under the statute. 
 
 of the date of the acknowledgment Second Manhattan Buildini: 
 
 was held not to be fatal; as in New ciation v. Hayes, 4 Abb. App., Dec. 
 
 York, the omission, in the certificate 183. 
 
 tiled, of the day of the mouth (the ' See Angell and Ames, Corp.. 
 
 latter being given), upon which the 30.). * bee Ib., 307. s Sc< Ih. 
 art ides of association wcn-ackmnvl- See Ib. See Ib., g 308. 
 
 1-dsrcd, was held :i sufficient ac- * See Ib. * See Ib. 8 See Ib.
 
 266 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 is understood by the parties to be the mode in which the par- 
 ticular business would or might be done. 1 But where three 
 persons are appointed by the association for a particular pur- 
 pose, all must act, and a contract made by two of the three 
 will not bind the corporation.* It seems, however, that where 
 an office has been tilled by the appointment of two persons to 
 act jointly in the execution of its duties,' where the functions 
 are ministerial only, on the death of one of the two, the office 
 will survive to the remaining incumbent, and its duties be 
 properly executed by him. 4 
 
 Society's Liability for Torts and Misrepresentations of Agents. 
 
 252. The commission of a tort by one of its agents or 
 servants, ratified by the corporation, by the knowledge and 
 consent of its managing officers (which must, in general, be 
 proved), will render it liable to trespass equally as if it had 
 previously authorized the same. 5 And where a corporation 
 places, or allows a person to remain in a position implying 
 responsibility, thereby inducing others to confide in his in- 
 tegrity, especially concerning matters which properly pertain 
 to the office or agency, and siipposed to be peculiarly within 
 
 'See Field, Corp., 204; cit. has power to appoint any officer (it 
 
 Coles v. Trecoothick, 9 Ves., 234 et is said iu Davis, Law of Building, 
 
 seq.; 1 Bill's Com. 387 et seq.; 3 etc., Societies, p. 91, cit. Sharpe v. 
 
 Chit, on Cora, and Man. 206; Ship- Warren, 6 Price, 131), the appoint- 
 
 ley v. Kymer, 1 M. and S. 484; ment of two persons to act jointly 
 
 Cockran v. Islam, 2 M. and S. 301 ; in the execution of the office will be 
 
 Laussatt v. Lippincott, 6 S. and R. valid. 
 
 386; Johnson v. Cunningham, 1 4 See Reg. v. "Wade, 4 Jur, N. S. 
 Ala. (X. S.)249. The action of the 68; 8 E. and B. 384. But where 
 society's solicitor allowing the ap- some portion, at least, of the duties 
 plicant for the loan to procure the of the office are judicial, it will not 
 search of the records, who then in- survive. See also the Auditor Cur- 
 duced the clerk to omit a certain le's Case. 11 Co. 36. 
 previous mortgage upon the prop- * See Angell and Ames, Corp.. 
 <-rty in his certificate, does not make 304. But the mere presence of the 
 said applicant the society's agent, so society's solicitor, at the hearing be- 
 as to relieve the recorder from lia- fore a magistrate, to conduct the 
 bility upon the search. Peabody proceedings in behalf of the servant 
 Building and Loan Association v. when arrested, or the writing of a let- 
 Houseman, 89 Pa. St. 261. ter by the secretary of the company, 
 
 * Corn Exch. Bank v. Cumber- for the purpose of effecting a corn- 
 laud Coal Co., 1 Bosw. 436. promise, is no evidence of a rati- 
 
 8 And if by the rules the society fication.
 
 252.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 267 
 
 the knowledge of the officer or agent, his misrepresentation,, 
 negligence, or fraud will affect the association with liability 
 to a party, who, having dealt with him in good faith, has sus- 
 tained loss in consequence.' For, where one of two innocent 
 parties must suffer by the acts of a third party, he who ena- 
 bled the latter to occasion the injury must carry the damages 
 caused thereby." Thus, a feme sole held stock in a building 
 association, in the name of a trustee, paying the monthly dues 
 by an agent, who, meanwhile, borrowed money from the 
 building association to the full value of the stock, gave a 
 mortgage therefor, and at length had this mortgage satisfied 
 by giving up the stock, though it still stood, untransf erred, 
 in the name of the trustee. A bill in equity was filed to se- 
 cure the value of the stock to the trustee and cestui que trust. 
 It was held that the complainant was not estopped by the 
 silence of the trustee, when the agent's name, instead of his, 
 was called to answer for monthly dues ; for an estoppel pro- 
 tects one misled by silence, where silence is a fraud. The 
 association could not have been misled, w r hile the shares stood 
 upon the books untransf erred, in the name of the trustee and 
 cestui que trust. The building association was, therefore, 
 held liable to refund to them the value of the stock.' Meas- 
 uring, then, the agent's authority by the extent of his em- 
 ployment, his principal is liable to third parties in a civil suit 
 for the frauds, deceits, concealments, misrepresentations, torts, 
 negligences, and omissions of duty of the agent, in the course 
 of his employment, and, if authorized by the principal, both 
 he and the agent are liable. 4 But representations, false in 
 fact, if innocently made by a party, believing in the truth of 
 what he asserts, will afford no ground of action ; the concur- 
 rence of fraudulent intent and false representation, and dam- 
 age resulting therefrom, constitute the ground of it, 6 and 
 
 1 Field, Corp., 193. North River Bank v. Aymnr, 3 Hill, 
 
 s Story, Agency, 127; see also 262; Commercial Bank v. Kortrisrht. 
 
 Story, Eq. Jur., 884-394; Fitz- 22 Wend. 248; Locke 0. Steams. 1 
 
 herbert v. Mather, 1 T. R. 12; Field, Mete. 560. 
 
 Corp., 193; cit., inter alia, Neville 3 Larkins's App., 38 Pa. St. 457. 
 v. Wilkinson, 1 Bro. Cli. 548; 3 P. * Lamm v. The Port Deposit 
 
 Wins. 74; Scott v. Scott, 1 Cox, 378; Home-stead Association of Cecil 
 
 Bicknell. 6 Vcs. 173; Pear- County. 49 Md. 233. 
 Morgan, 2 Bro. Ch. 388; * Ib. and B< nj. on Sales, 338.
 
 208 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 where it is laid, the rule caveat einptor, applying to sales 
 made by trustees (<?.^., under a power to sell given in a mort- 
 gage), does not shield a j>arty rendering himself liable to an 
 action for fraud and deceit perpetrated at a sale thus made. 1 
 
 Agents' Liability for Interest on Moneys Collected. 
 
 253. Agents entrusted with the collection or safe-keep- 
 ing of corporate moneys, are chargeable with interest thereon, 
 if they unreasonably neglect to inform the association of the 
 receipt of the money, and the interest then accrues from the 
 time when such information should have been communi- 
 cated ; s or, if they use the funds, or default in accounting 
 for them,' or fraudulently obtain and withhold them. 4 
 
 Right and Liability to Suits and Actions. Employment of Attorneys. 
 Forms, etc., of Proceedings. 
 
 254. The obligations arising upon any contract thus en- 
 tered into by the building association, or through implication 
 affecting it as a party, either as investing it with rights, or as 
 loading it with liabilities, would be nugatory, indeed, if they 
 were not judicially enf orcable by or against it, as the case may 
 be. It has already been observed that the rights incident to 
 membership, such as that of withdrawal, of insisting upon 
 legal and conscientious behavior on the part of the officers, 
 may give individual members a standing in courts of justice 
 as plaintiffs against the association ; " that officers who are 
 wrongfully removed may sue for damages ; " that the State 
 may call it to an account for a violation of its charter com- 
 pact; 7 and that a shareholder may demand indemnification 
 at its hands for refusing to acknowledge his status as such, by 
 transferring to his name the stock he owns, and has properly 
 presented for that purpose. 8 The building association, on the 
 other hand, has, incidentally, appeared possessed of the power 
 of bringing suit against delinquent officers ' and members, 10 
 
 1 Lamm v. The Port Deposit 5 See ante, g 136, 137, 145, 213. 
 Homestead Association, supra. * See ante, 229. 
 
 * See Dodge e. Perkins, 9 Pick. 7 See ante, 64; and, in detail, 
 
 368. post. 309, 325. 
 
 3 Williams r. Storrs, 6 Johns. Ch. 8 See ante, 78; and, iu detail, 
 313; and see Ellery v. Cunningham, post, 268. 
 
 1 Mete 112. See ante, g 209-210. 
 
 4 Wood . Bobbins. 11 Mass. 504. 10 See ante, g 96.
 
 257.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 269 
 
 whether borrowers or investors, and of defending actions 
 brought against itself. 1 To these liabilities and privileges 
 of the association must be added, in general, those of enforc- 
 ing every legal or equitable right against outsiders, by appeal- 
 ing to the proper judicial tribunal, and of suffering suit at 
 the hands of such, wherever they may have acquired a claim 
 upon it. 
 
 255. The employment of attorneys is a necessary inci- 
 dent to this power and liability. It seems to be held, in Eng- 
 land, that the attorney's appointment should be made under 
 the common seal of the association, even where his name is 
 mentioned in the rules." But the same strictness does not 
 now obtain, at least, in the majority of the United States. 3 
 
 256. In the issuing of process for and against building 
 associations, and in every successive step of the proceedings, 
 the laws of the State in which the proceedings are taken, rel- 
 ative to suits and executions by and against corporations, as 
 well as the general doctrine and rules of law applicable to 
 that subject, are to be, in every respect, observed, unless varied 
 or suspended by positive statutory enactment. 4 
 
 Society may Sue on Obligations Executed to it by Wrong Name. 
 Misnomer. Abbreviations. 
 
 257. A building association, being the holder of an ob- 
 ligation executed to it by a name differing from its corporate 
 name, may sue in its right name, alleging that it is the party 
 intended. 6 And if, being plaintiff, it has been misnamed in 
 bringing a bill in equity, the defect may be cured by amend- 
 ment at the hearing. 8 An endorsement upon the summons 
 
 1 See ante, 137, 138, etc. Newport Savings Association, 11 
 
 * Davis, Law of Building, etc., Bush (Ky.), 305. 
 Societies, p. 107; cit. Arnold v. s Hoboken Building Association 
 
 The Mayor, etc., of Poole, 5 Scott, c. Martin, 2 Beas. (N. J.) 428. Sec 
 
 N. R. 741; 2 D., N S. 574; 4 M. also African Society v. Varick, 13 
 
 and G. 860; 12 L. J., C. P. 97; 7 Johns. (N. Y.) 38; Trustees e. Re- 
 
 Jur. 653. See ante, 214. note. neau, 2Swau(Tenn.),94;Ft. Wayne 
 
 3 See Angell and Ames, Corp., v. Jackson, 7 Blackf. (Ind.)36. In- 
 284. habitants of Upper Alloways Creek 
 
 4 Thus, in Kentucky, it, like any v. String, 5 Halst. (N. J.) 323; An- 
 corporation instituting an action in gell and Ames, Corp., g 647. 
 
 any of the courts, must give bond ' Hoboken Buildinir Association 
 for costs, otherwise the action will r. Martin, supra; and references in 
 be dismissed. See Shelly . The note above.
 
 270 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 served on a building association, referring to the within writ. 
 but giving merely the initials of the society's name (as " O. 
 F. B. A., " meaning " Odd Fellows' Building Association"), 
 creates an ambiguity which is removed by examining the 
 " within writ," where the name appears in full. 1 
 
 Necessary Averments as to Default in Suits Against Borrowing Mem- 
 bers. 
 
 258. In a suit by a building association upon a bond 
 given to it, containing the usual special conditions and pro- 
 visos, that, upon the failure to make certain payments for a 
 certain length of time, the whole principal, with interest, 
 lines, etc., shall become at once recoverable; the ordinary 
 averment, that the sum stipulated, with interest, yet remains 
 unpaid, is inapplicable. It has been held insufficient in Penn- 
 sylvania to ground a judgment for want of an affidavit of de- 
 fence. The declaration (or, if the action be by scire facias 
 upon the mortgage securing the bond, the writ which takes 
 its place), must show, upon its face, an immediate cause of 
 action. It cannot be presumed or inferred, without specific 
 allegation, that there was a failure to pay installments beyond 
 the stipulated period of grace ; nor that the principal sum, 
 etc., has actually become recoverable. 8 Upon the same prin- 
 ciple, in New York, where the mortgage gave the building 
 association a power to sell, if default be made " in the said 
 monthly payments, for the space of six months, after they 
 or any of them shall become due," and the building associa- 
 tion's complaint averred that default had been made in 
 monthly and other payments, and that a certain sum was due, 
 but not that any one monthly payment had been due six 
 months ; a demurrer to the complaint was sustained. 3 And 
 in Maryland it was distinctly asserted, that, where the contin- 
 uance of default for a specified time is a condition precedent 
 to the sale of the property under the mortgage and decree, the 
 court, unless such default is shown to exist, will interfere to 
 arrest the sale. 4 
 
 1 Odd Fellows' Building Associa- sociation v. Platt et al. , 5 Duer (N. 
 
 tion v. Hogan, 28 Ark. 261. Y.), 675. 
 
 * Swift v. The Allegheny Build- 4 Schaeffer v. The Amicable Per- 
 
 ing and Loan Ass'n, 82 Pa., St. 142. manent Land and Loan Co. of Balti- 
 
 8 Second American Building As- more City, 47 M<1. 13*5.
 
 260.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 271 
 Computation of Period of Default. 
 
 259. But in the computation of the period fixed by 
 charter or by-laws as the limit allowed before the whole debt 
 becomes due, partial payments of dues, etc., are not to be 
 counted. The period begins to run from the first day of the 
 month next following the last month of which the dues, etc., 
 were fully paid. Thus, where the period of six months was 
 fixed, as the period whose elapse, without payment, would 
 give the association the right to proceed upon the securities 
 held by it against the borrower, to enforce performance of 
 his duties and undertakings, and collect the debt, it was held 
 that a member was to be deemed six months in arrears, notwith- 
 standing a partial payment of dues in the first of the six 
 months counted ; so that, where part of January's dues had 
 been paid and judgment and execution were had in July, this 
 was not premature. 1 
 
 Certainty Required in Defendant's Allegations of Payment, and Proof. 
 Agency. 
 
 260. Conversely, the defendant, in his allegations of 
 payment, is held to certainty and particularity in his state- 
 ments and proofs. Thus, in an affidavit of defence, in IV i in- 
 sylvan ia, the mere allegation of payments by the defending 
 borrower is insufficient to prevent judgment. Such pay- 
 ments must be distinctly alleged to have been made on the 
 claim in suit. 2 The presumption is that they were made upon 
 fines and dues. And it is the duty of the defending mort- 
 gagor to prove payment of the mortgage to the association. 
 win-re that is the defence, with reasonable certainty. Ill- 
 holds the affirmative, and the proof is on him." So, under a 
 plea of payment, in a feigned issue to determine the amount 
 due on a judgment confessed to a building association l>y a 
 borrowing member, the burden of proof of the matin 
 the stock rests upon the defendant. 4 And where a party, 
 by his own negligence, has deprived himself of the written 
 
 1 Barndt v. Greul, 4 Leg. Gaz. Association v. Wall, 7 Phila. 
 
 (Pa.) 388; S. C., 1 Luz. L. Reg. (Pa.) 240. 
 
 737. \V;itkius v. The Woi-kinim. 
 
 * Selden v. The Reliable Savings Building and Loan Association. Hi 
 
 and Building Association. 2 W. N. W. N. C. (Pa.) 41-i; 38 Leg. lut. 
 
 C. (Pa.) 481; 32 P. F. Smith, 336. 333; 97 Pa. St. 514.
 
 272 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 evidence of payments claimed credit for by him, which was 
 by entry in a book provided by the building association for 
 that purpose ; he must, in order to avail himself of such pay- 
 ments, produce convincing proof of their having been made. 
 Uncertain, vague, and indefinite statements will not suffice. 1 
 In an action by the building association against the guarantor 
 of an indebted member's bond, a defence, based upon an 
 alleged agreement with its agent, to the effect, that, upon the 
 happening of a certain contingency, the surety should be re- 
 leased from his liability, must, in order to be available, estab- 
 lish, besides the fact of the happening of the contingency ; 
 also that the agreement existed within the knowledge of the 
 officers of the building association, or that the agent was act- 
 ing, at the time, within the scope of his authority, or that his 
 declarations were made in the course of business which he 
 was authorized to transact. 1 
 
 Averment of, and Pleas to, Incorporation. 
 
 261. It was held in Missouri, that, in a suit by an asso- 
 ciation, an averment by it that it was a corporation " duly in- 
 corporated under and by virtue of an act of General Assembly 
 of the State of Missouri, entitled," etc., was a sufficient alle- 
 gation of the plaintiff's corporate existence. 3 But it seema 
 that, in general, no specific allegation of incorporation will bo 
 required, either where the building association is plaintiff, or 
 where it is defendant, beyond the mere statement of its name, 
 and the making of the agreement or the creating of the lien be 
 tween the association and the other party., out of which the 
 suit arises. This is impliedly averred by the name itself,* 
 
 1 Clarkville Building and Loan Staps, Hob. 211; The Dutch West 
 
 Association v. Stephens, 11 C. E. India Co. v. Henriques, 2 Ld. Ray. 
 
 Gr. (N. J.)351. 1535; The President of the U. S. 
 
 9 Gass v. Citizens' Building and Bank . Harkins, 1 Johns. Cas. 132; 
 
 Loan Association, 9 W. N. C. (Pa.) The Bennington Iron Co. r. Ruther- 
 
 :WO. ford, 3 Harr. (N. J.) 105: Harris v. 
 
 3 Chillicote Savings Association The Muskingum M. Co., 4 Blaokf. 
 c. Rueggeret al.,60Mo. 218. (Ind.) 267; Richardson T. The St. 
 
 4 Stein and wife v. Indianapolis Joseph's Iron Co.. 5 Ih. 146; Dut- 
 Building, Loan Fund and Savings flier's Cotton Manufacturing Co. n. 
 Association. 18 Ind. 237; Odd Fel- Davis. 14. Johns. 239; Bank of Utica 
 lows' Building Association v. Ho- t>. Smalley. 2 Cow. 770: Kennedy 
 gan, 28 Ark. 261; cit. Norris n. T. Cotton. 28 Barb. 59; Bank of
 
 263.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 273 
 
 and no proof of it need be made by a corporation plaintiff un- 
 der a plea of the general issue. If the want of corporate ex- 
 istence is relied upon as a defence, it must be raised distinctly 
 by the plea of nul tiel corporation, 1 which may be either a 
 plea in bar, or in abatement. 2 
 
 262. How far the practical dissolution of the society 
 before the intended period of its winding-Tip, affects existing 
 contracts, will form the subject of discussion later on.* But 
 it may be stated here, that, where the fact of the indebted- 
 ness is established, a very clear case should be made out to 
 enable a debtor to escape liability, on the ground that the 
 building association has ceased to exist. 4 
 
 263. A tender of the amount actually due the associa- 
 tion, or of such terms as will satisfy its just demands, and 
 
 Michigan v. Williams, 5 Wend. 478; 
 Bank of Waterville v. Bcltscr, 13 
 llow.Pr. 270. See also Fran tzv. The 
 Teutonia Building Association No. 
 2, 2-4 Md. 259; where there was an 
 ex purte proceeding by the society. 
 
 ' See Odd Fellows' Building As- 
 sociation v. Hogan, 28 Ark. 261; 
 Phenix Bank of N. Y. v. Curtis, 14 
 Conn. 437; Champliu v. Tilley, 3 
 Day, 303; Sutton v. Cole, 3 Pick. 
 232, 245; Penobscot Boom Corpo- 
 ration v. Lamsou, 16 Maine, 224; 
 Bank of Manchester v. Allen, 11 
 Verm. 302; Boston Type Foundry 
 9. Spooner, 5 Vt. 93; Lord v. Bige- 
 lo\v, 8 Vt. 445; ^Etna Insurance Co. 
 v. Wires, 28 Vt. 93; School District 
 P, niais.lell, 6 N. Ilamp. 197; Bank 
 of Utiea . Smalley, 2 Cow. (N. Y.) 
 770; Lehigh Bridge Co. v. Lehigh 
 Coal and Navigation Co., 4 Rawle, 
 (Pa.) 9; Zion Church r. St. Peter's 
 Church, 5 Watts and Serg. (Pa.) 
 i!5: Frit/ v. Commissioners of 
 Montgomery, 17 Pa. St. 130; CInrk 
 r. Turnpike Co.. 13 Leg. Int. (Pa.) 
 1"i(5: Hliccm r. Naugatuck Wheel 
 Co., 33 Pa. St. 358. 
 
 * " A plea in bar impugns the right 
 of notion altogether; a plea in abate, 
 iii'nt. only the form or names in 
 
 which it was brought. Stephen on 
 Plead. 432. Hence the misnomer of 
 a corporation, as well as of a natural 
 person, must be pleaded in abate- 
 ment. But the defence that there 
 never was such a natural person as 
 the plaintiff, in rerum nature, or 
 that such a corporation as that 
 named as plaintiffs never existed, 
 which are pleas of precisely the same- 
 nature, go to the right of action al- 
 together, and are therefore pleadable 
 in bar. . . . One reason is, that, in 
 the latter case, the defendant can- 
 not give the plaintiffs a better writ, 
 which must generally be done in 
 abatement, though perhaps not al- 
 ways." Sharswood, J. , in Northum- 
 berland County Bank v. Ever, 60 
 Pa. St. 436 (439), where the question 
 is thoroughly discussed. The dis- 
 tinction seems to be; that where the 
 plea is substantially that of misno- 
 mer, it is in abatement; when it goes 
 to the existence of the corporation, 
 at the time of the impel rat ion of tin- 
 writ, or at any time, so as to impugn 
 the right of suing at all. it is in 
 bar. 
 
 See post, 55 496-503. 
 
 4 IIoliok n Biiildiivj- Association 
 r. Martin. J IVa 'X J.) 428
 
 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 make a suit unnecessary, made before suit brought, or, with 
 accrued costs, after its commencement, will, besides stopping 
 the running of interest until the tender is accepted, make 
 the building association, refusing it, liable to costs of suit, 
 although remaining entitled to a decree. 1 Nor does the 
 bringing of suit against a member relieve him of the nr<-r>- 
 sity of continuing his stipulated payments and interest, or 
 suspend his liability to fines for delinquency in his regular 
 payments.* 
 
 Suits by Members Against Society. Withdrawal, Balances, Promised 
 Loan, Refusal to Transfer Shares. 
 
 26-i. It has already been said that the exercise of the 
 privilege of withdrawal, under the statutes of the several 
 States and the rules of the building associations, gives to the 
 member availing himself of it the right to enforce his claim 
 upon the society by suit at law. 3 But where he assumes to 
 exercise this right, it must appear in his complaint that 1 it- 
 has conformed with the requirements of statute and by-laws 
 relating to the method and manner and notice of with- 
 drawal, so far as, being contained in the by-laws, they are 
 legal and binding ; 4 and that the society has refused or 
 neglected to satisfy him according to his rights. This being 
 made out, his right to a judgment is established, although its 
 execution may, at the discretion of the court, upon a proper 
 case, be deferred. 5 Nor can any losses accruing subsequently 
 to the time, when, under the statute or by-laws, the with- 
 drawal took effect, be used to create a set-off against his 
 -claim by holding him liable to contribution thereto ; ' nor are 
 his rights affected by any new rule adopted by the association 
 .subsequently to the giving of the notice. 7 But the mere 
 
 1 Columbian Building Associa- 4 See ante, 132. 
 
 lion of East Baltimore No. 4 t>. 5 See ante, 136-138. 
 
 Crumb, 42 Md. 192; and see ante, See ante, 108-109. And the 
 
 178. burden of showing losses affirma 
 
 1 The German Fair Hill Building lively, in order to charge a member 
 
 Association c. Metzger, 3 W. X. C. desiring to withdraw, is upon the 
 
 (Pa.) 204; Union Building Loan As- building association. National 
 
 sociation of New Brunswick v. The Building Association?. Hottenstein. 
 
 Masonic Hall Association, etc., 2 10 Pittsb. Leg. Jour., N. S. (Pa.) 
 
 Stewart (N. JA 389. 22.',. 
 
 1 See ante. 136-137 Annitage c. Walker, 2 Jur., N.
 
 265.] GENEBAL POWERS OF BUILDING ASSOCIATIONS. 275 
 
 acknowledgment of the receipt of such notice, coupled with 
 a statement that the shares " will be paid in regular order of 
 notice," and signed by the secretary of the building associa- 
 tion, is not such an instrument in writing for the payment 
 of money, as will require the building association in Pennsyl- 
 vania to file an affidavit of defence, or, upon its omission to 
 do so, suffer judgment immediately. In a case in point, the 
 writing was as follows: "Philadelphia, March 10, 1880. 
 Mr. James W. M. Newlin : Mr. James K. Duffy has this 
 day transferred to your name four shares of the capital stock 
 of the Milton Building Association, No. 2, in the first series, 
 the value of which is seven hundred and eight dollars ($708). 
 Notice of withdrawal has been given on these shares, and 
 they will be paid in regular order of notice. M. A. Quinn, 
 Secretary." This instrument was held to be in the nature of 
 proof that there was a certificate to which N. was entitled, 
 and amounting to an appropriation, in advance, of funds of 
 the society to his claim to be disposed of in regular order of 
 notice ; but not as forming a proper basis for a judgment, for 
 want of an affidavit of defence. 1 
 
 265. It is no longer a doubtful question whether or not 
 a member of a corporation, standing to it in the relation of a 
 creditor merely, having a present and perfected demand 
 against it, may become the plaintiff in a suit against the cor- 
 poration to enforce the claim.* This does not extend to 
 allowing a member of a building association, qua share- 
 holder, to sue the society for the value of his paid-up stock 
 before the winding up of the society or the series to which 
 he belongs. The value of the stock, as has been seen, is not 
 a present subsisting claim against the building association in 
 any one of its members before final settlement, but depends 
 
 S. 13; S. C., 20 J. P. 53: 26 L. T. voucher in the hands of the treas- 
 
 Rep. 182; 2 Kay and J. 211. urer. Ashland Banking Co. t. Cen- 
 
 ! Xcwlin r. The Milton Building tralia Mutual Saving Fund Asso- 
 
 and Loan Association No. 2, 9 W. ciation, 9 Luz. Leg. Reg. (Pa.) 
 
 N. C. (Pa.) 220. Nor is an order 41. 
 
 drawn by the president upon the * Angell and Ames, Corp.. 394; 
 
 .rer a bill of exchange, or pos- Hennighauscn and Wolff, Rec'rs, t. 
 
 sessed of the quality of negotiabil- Tisher. 50 Md. 583; U. S. Building 
 
 ity; it is a mere evidence of indcbt- and Lou: >n r. Silverman, 
 
 edness, and, after payment, is a 85 Pa. St. 394. audaute. ; 144-145.
 
 276 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 upon his going through the whole course, and can be ascer- 
 tained only upon actual winding-up. 1 But remembering that 
 reference is here had only to definite and complete rights, 
 arising out of contract relations between the member and the 
 society, independently of those of membership merely, a 
 member of a building association is just as free to sue the 
 corporation to which he belongs, in order to enforce such 
 rights, as any stranger in a similar position. 
 
 266. The assignment to a member of a withdrawn mem- 
 ber's unpaid balances makes him a creditor. Where a member 
 has, in the proper manner, signified his intention to with- 
 draw, and his rights as a withdrawing member have become 
 completed against the association, he is, before payment of 
 his claim, to be regarded simply as a creditor of the building 
 association. If he transfers his ascertained balance in its 
 hands to a continuing member of the association, the latter is- 
 in the position of one who holds a claim against the same, 
 which is entirely distinct from his own rights as a member, 
 and which he may enforce against the society. It has, there- 
 fore, been held, that where a member becomes, by assign- 
 ment, the holder of claims of balances due other members 
 who have withdrawn, but whose lawful demands have not 
 yet been paid by the building association, his claim, upon 
 which he has a perfect right to sue the association, is not, in 
 such case, liable to set-off or reduction by the building asso- 
 ciation on account of losses sustained since the ascertainment 
 of those balances. As a shareholder, every member is liable 
 for his proportion of the common losses ; but as a creditor, 
 he is entitled to recover the amount due him independently 
 of all losses. If there are acknowledged and ascertained 
 
 1 O'Rourke v. West Penns} r lvania distribution. Britton v. The Ameri- 
 
 Loau and Building Association, 8 can Building and Loan Association. 
 
 W. N. C. (Pa.) 176; 93 Pa. St. 308. ISPhila. 430; 35 Leg. Int. (Pa.) 474. 
 
 Nor, in Pennsylvania, can a mem- Nor does the report of auditors lix- 
 
 ber obtain judgment against the so- ing the value of the shares entitle 
 
 eiety, for want of an affidavit of de- a withdrawing member to a judg- 
 
 fence, for the value of his shares, ment for that amount, for want of 
 
 merely upon the strength of the re- an affidavit of defence, the value of 
 
 port of auditors that the shares \vcre the shares being liable to a deduc- 
 
 at par, and before a meeting has tion. Love v. Building and Loan 
 
 been convened to wind up and make Association, 11 W. N. C. (Pa.) 303.
 
 268.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 277 
 
 balances standing in favor of any persons who were members 
 and had withdrawn, they must be presumed to have been 
 arrived at after allowing all deductions to which the with- 
 drawing members, the assignors, were then subject or liable, 
 and as such, the claim passes in its integrity to the assignee, 
 to be enforced by him, or set-off against a claim which the 
 association may have upon him. 1 
 
 267. Where there has been a promise by a building 
 association to loan a certain sum of money to a member, he 
 cannot, in case of subsequent refusal of the company, maintain 
 an action of assumpsit to recover the sum thus promised from 
 it.* " The judgment could only be for a sum of money certain, 
 and would finally settle and determine that that amount 
 belonged to the plaintiff. It would be conclusive upon the 
 parties ; and would, as a necessary consequence, estop the 
 defendant from afterwards claiming that the money so 
 recovered was loaned to the plaintiff." The remedy, in 
 such case, might be an action on the case for breach of con- 
 tract. 3 
 
 268. The case of a plaintiff suing a building association 
 for damages upon an unjust refusal to allow a transfer on its 
 books of shares acquired by him, the transfer of which 
 was duly requested of the society's officers, presents no 
 features different from those characterizing similar actions 
 against other corporations. The right to sue the association 
 in such case is undoubted, 4 and the measure of damages is 
 the same, mutatis mutandis, as in other corporations, viz. : 
 the value of the stock at the time of refusal, which is 
 to be ascertained by getting the amount paid thereon as 
 dues, and adding interest from the time of the several pav- 
 ments. 6 
 
 1 Hennighausen and Wolff, sufBciec.',security,and rejected, upon 
 
 Receivers, etc., v. Tisher, 50 Md. record. Sec ante, 124. * Ib. 
 
 583. 4 German Union Building and 
 
 s Conway . The Log Cabin Per- Savings Fund Association r. Send - 
 
 inanent Building Association of mayer, 50 Pa. St. 67; State, Gal- 
 
 Bultimore City, 52 Md. 137. Even Imiitli, pros., v. People's Building 
 
 although the society's attorney had, and Loan Association of Camden, 
 
 without its knowledge or consent, 14 Vr. (N. J.) 889. 
 
 phiccd the mortgage offered by the 6 Ib. and North America Build 
 
 applicant, nnd which was deemed in- ing Association v. Sutton, 35 Pa. St
 
 278 THE LAW OF BUILDING ASSOCIATIONS. [CH. X, 
 
 Society Must be Party to Bill in Certain Causes. 
 
 269. Where the deeds of conveyance of real estate con- 
 veyed by the trustees of a building association contained 
 certain restrictive covenants agreed to in the conveyances by 
 the grantees, one covenant, in particular, being to the effect 
 that the restrictive covenants should not only inure to the 
 benefit of the persons for the time being entitled under the 
 conveyances to be thereafter made by the covenantees, but 
 that the covenantees should be deemed to be trustees of the 
 covenants for the benefit of the persons for the time being 
 claiming under any conveyances already made by the trustees 
 of the society ; it was held that the trustees were necessary 
 parties to a bill brought to enforce the performance of the 
 restrictive covenants, the bill being filed by the purchaser 
 of a grantee against another person standing, in respect of 
 the society, in a similar position as himself. 1 And in an 
 equitable proceeding by a member against misbehaving offi- 
 cers of the building association, it has been seen, the latter 
 must be made a party defendant. 8 
 
 Judgment Obtained After Dissolution in Action Pending Against 
 Society. 
 
 270. A judgment rendered in an action against a cor- 
 poration, which has, pending such action, become dissolved 
 by expiration of its charter, is void unless the action has been 
 continued against the proper parties. 8 
 
 Nature and Qualifications of Right of Ordaining By-Laws. 
 
 271. The power of ordaining by-laws, a sort of private 
 statutes for the internal government of the association, regu- 
 lating details impossible to foresee and provide for either by 
 general statutes or by original charter, is incidental to the 
 very being of a corporation, being annexed to it tacitly by 
 law, if not expressly conferred by charter. 4 And clauses in 
 
 463. See also Larkins's App., 38 Pa. ' Eastwood v. Lever, 4 De G., J. 
 
 St. 457. And see post, 448-449. But and S. 114. 9 See ante, 213. 
 
 where the stock has a readily ascer- 3 Sturgis v. Drew et al., 5 N. Y. 
 
 tainable value in the stock market, W. Dig. 95, but see post, ; Dis- 
 
 that would probably be the measure, solution, Ch. xviii. 
 
 SeeBabcock et al. r. Middlesex Sav- 4 See Angell and Ames, Corp., p 
 
 ings Bank and Building Association, 325-368; Field, Corp., 294-313; 
 
 28 Conn. 302. and case in next note.
 
 272.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 279 
 
 a charter granted by special act of Legislature, giving " the 
 force and effect of legal enactment" to the " constitution and 
 by-laws" that may be adopted by the society, confer no 
 greater sanction than that usually given in charters which 
 contain no such provisions. 1 Ordinarily this power resides 
 in the corporate meeting of the stockholders, to be exercised 
 by them in the same manner in which the charter directs 
 them to exercise other powers, or to transact general busi- 
 ness. 11 It is only by express charter provision, that this power 
 can be delegated to particular officers or bodies of members, 
 e. (/., the Board of Directors. 3 In such case, and wherever 
 the charter prescribes the mode in which by-laws shall be 
 passed, or the preliminaries to be observed in order to make 
 them effectual and valid, all regulations upon the subject 
 must be strictly followed. 4 And all by-laws, to be binding, 
 must be in conformity (1) with existing and supreme laws, 
 i.e., with the constitution of the United States, and the acts of 
 Congress under it ; with the constitution and all valid laws of 
 the State of which the society is a corporation; and with the 
 common law as there accepted ; (2) with the charter, its 
 letter and its spirit ; (3) with reason and equity. Where these 
 features are found, and the by-law has been properly passed, 
 every member's consent is conclusively presumed and his 
 submission required. 5 
 
 By-Laws Must Conform to Constitution and Laws of Union and State. 
 
 272, The Constitution of the United States, and the laws 
 enacted by Congress, are part and parcel of the constitution 
 and laws of every individual State, and as such are, so far as 
 applicable, equally supreme with the latter over the corpora- 
 tion formed under them. A by-law which contravenes any 
 
 1 Martin t>. Nashville Building rum for the purpose of passinir a 
 
 Association et al., 2 Cold. (Tenn.) by-law, where no special number is 
 
 418. fixed. But the co-operation of a 
 
 1 As to rules relating to corporate person not intended by charter to 
 
 meetings, see ante, Ch. viii., |182- have a voice will invalidate the 
 
 187. law. 
 
 3 Of " immemorial usage," which 5 See Hagerman et al. T. The Ohio 
 may also authorize such delegation Building and Savings Association, 
 in some cases, there can be no ques- 25 Ohio St. 186; Angell and Am. >. 
 tion in building associations. Corp., 499; Field, Corp.. ; 
 
 4 A majority constitutes a quo- ante, 83.
 
 280 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 provision of either is utterly void ; and not only the laws in 
 force at the time of the granting of the charter (of which the 
 common law of the State is an essential part), but all that 
 may be subsequently passed are to be taken into considera- 
 tion. 1 
 
 By-Laws Must Conform with Charter and Purpose of Incorporation ; 
 else Void. Instances. 
 
 273. It is the legitimate province of the Legislature to 
 define the purposes of an incorporation, and not within the 
 power of the corporation itself to do so. All by-laws must 
 conform to the purposes for which the corporation is created, 
 as gathered from its charter, and must be in accordance with 
 the intention which dictated the same ; otherwise they are 
 void." The will of the Legislature may be expressed in 
 granting a specific charter directly ; or it may be, once for all, 
 declared by a general statute under which the associations de- 
 siring the privileges of building associations may become in- 
 corporated. In either case, the spirit of the enactment the 
 intention of the Legislature in providing for this particular 
 species of corporations a particular class of powers governs 
 the conduct of the association, and circumscribes the extent of 
 its lawful enterprises, just as the express provisions of the 
 enactment become an essential part of the charter itself. It 
 has, indeed, been said, in Georgia, that, when a petition to 
 court for incorporation under a general act, for the purpose 
 of obtaining a charter, fails to set forth the object of the pro- 
 posed corporation, it is competent for the court, in granting 
 its assent, to specify the objects, and to prescribe the terms 
 on which the charter is granted. 8 
 
 274. When there is a question, whether, in point of 
 fact, the b} T -law is such as to frustrate the legitimate and de- 
 clared object of the association ; then, in a controversy regard- 
 ing its enforcement, the jury becomes practically the ju<lgf 
 of its legality or illegality. 4 If no other facts appear to the 
 jury, by the proof, going to show the object of such an asso- 
 ciation, than the constitution or by-laws, and tlie contract 
 
 1 See ante, | 52, 53, 59, 63-65. and Building Association, 54 Ga. 
 
 * Martin v. Nashville Building 474. 
 
 Association etal., 2 Cold.(Tenn.) 418. 4 Parker v. The Fulton Loan and 
 
 8 Redwine v. The Gate City Loan Building Association, 46 Ga. 166.
 
 276.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 281 
 
 made in accordance therewith, a verdict that the contract is 
 not illegal, is not only supported, but required, by the evi- 
 dence. 1 But if it be shown, by proof satisfactory, that the 
 practical operation of the by-law is such as to defeat that de- 
 clared object, or to bring about a result not lawful under the 
 laws of the State, the by-law must be held to be void, 3 and 
 contracts made with those who deal with the association under 
 the illegal by-law cannot be enforced by the courts. 3 
 
 275. But where the by-law is, upon its face, clearly .1 
 violation of the charter and of the statutes, it is presump- 
 tively void, and contracts under it cannot be enforced. Thus, 
 where the act directs that the building association shall put 
 up its money at auction, and that the member bidding the 
 highest premium shall be entitled to the loan, a by-law fixing 
 a minimum premium, under which no bids are to be received, 
 is entirely void ; 4 and where its operation has compelled a 
 member to contract for a higher premium than, in the course 
 of free and legitimate competition, he would have been 
 obliged to bid, the excess cannot be recovered from him. 
 But it must appear that he was prejudiced by the operation 
 of the illegal by-law. 5 
 
 276. In like manner, where the charter called for a di- 
 vision of funds whenever the shares in any series became 
 worth $200, a by-law was held void which directed that, 
 whenever the value of the certificates of any series was equal 
 to $200 each, and there were not funds enough in the treas- 
 ury to pay non-borrowers, then one half of the entire income 
 should be set aside for that purpose ; and whenever there were 
 $200 in the treasury it should be put up for sale, the holders 
 in the series only being allowed to bid, and the money should 
 
 1 ib. 77 N. C. 145; see also Lord and 
 
 8 Martin v. The Nashville Build- Robinson v. The Essex Building 
 
 ing Association, 2 Cold. (Tenn.)418; Association No. 4, 37 Md. 320; and 
 
 Herbert v. Kenton Building and Sav- infra passim. 
 
 ings Association of Covington, 11 * Stiles's App., 9 W. N. C. (Pa.) 
 
 Bush (Ky.) 290; Gordon o. Win- 83; State v. Greenville Buildi 
 
 Chester Building and Accumulating soriation. 29 Ohio St. 92; State v. 
 
 Fund Association, 12 Id. 110. The Oberlin Building and L" 
 
 .Mills et al. v. Salisbury Build- sociation, 35 Ohio St. 986 
 
 in;: and Loan Association, 75 N. C. * Orangeville Mutual Saving 
 
 292; Latham and wife ;-. Washing- Fund ami Loan Association 
 
 ton Building and Loan A.8iM*iatfbft, Ymini:. 9 \V. N. C. (Pa.) 251.
 
 282 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 be paid to the highest bidder, the premium being first de- 
 ducted and added to the value of the remaining certificates. 1 
 To this same category of illegal by-laws belong all such as 
 place restraints beyond merely formal regulations calculated 
 to secure order, certainty, and expedition, and in no way in- 
 terfering with or delaying established rights, upon the with- 
 drawal of members, where that right is given by statute upon 
 compliance with certain requirements. 1 
 
 277. Of the different classes of by-laws mentioned in An- 
 gell and Ames, on Corporations, 3 as being void for transcend- 
 ing the charter, the following may be noticed : " By-laws cre- 
 ating a new office, imposing an oath of office where none is 
 provided by the constitution, giving a vote to a person, or a 
 casting vote to an officer who is not entitled to it by the char- 
 ter, restricting the right of an officer to vote to a mere casting 
 vote in case of a tie," altering the prescribed method of elec- 
 tion, or imposing new or additional tests or qualifications on 
 members or voters, and changing the salaries of officers, hav- 
 ing their salaries already fixed in the charter, or by special 
 contract. 
 
 By-Laws must be Reasonable and Equitable. 
 
 278. Particularly important in the matter of fines and 
 forfeitures, the attributes of reasonableness and equity are to 
 a certain degree essential to the validity of all by-laws. It is 
 true, that what is bad as a by-law as against common right, 
 may be good as a contract ; since a man may part voluntarily 
 with a common right, of which it is impolitic and unjust to 
 deprive him by a by-law passed without his assent, or, per- 
 haps, knowledge. 4 Whilst, therefore, a by-law may be void 
 as against strangers and dissenting members, it may vet 
 be good as a contract between the association and those of 
 its members who assented. And the principle, that all the 
 corporators are presumed to assent to what is done at a regu- 
 lar meeting, will not deprive a dissenting member of his 
 remedy. Where that presumption applies, it goes hand in 
 hand with the other presumption, that the corporation will 
 
 1 Rodgers v. South Western Mu- 9 See ante, 132. 
 tual Saving Fund and Building As- 3 345. 
 sociation, 7 W. N. C. (Pa.) 95. 4 Angell and Ames, Corp., 343.
 
 279.] GENERAL POWERS OF BUILDING ASSOCIATIONS. 283 
 
 pass only legal votes ; and where this latter fails in point of 
 fact, the other drops also. 1 " So far as a member's rights, 
 duties, and obligations as a corporator are concerned, he is 
 bound by the acts of the majority ; but the corporation has, 
 of course, no right by by-law, or resolution, without his con- 
 sent, to dispense with a contract in which he is one party, and 
 the corporation another." * In other words, a corporation has 
 not the right to repeal a by-law so as to impair rights which 
 have been given and become vested by virtue of the by-law ; 
 although the power to alter, amend, or repeal its by-laws, is 
 granted by charter.* 
 
 By-Laws cannot have Retroactive Efficacy as against Rights under 
 Subsisting Contracts. 
 
 279. Nor can the enactment of new rules add anything 
 to the contract of a mortgagor to a building association, in the 
 way of burdening him beyond what the rules and covenants, 
 in force at the time when be became a borrower, imposed 
 upon him. By the covenants contained in their mortgages 
 advanced members of a building association covenanted to pay 
 to the association, at the times and in the manner prescribed 
 by its rules for the time being, the sums payable periodically, 
 by way of subscription or otherwise, in respect of their shares, 
 until the shares with interest on the amount in advance should 
 be realized, and until the premium and interest thereon 
 should be paid, and that, in the mean time (except when varied 
 by those presents), all the rules for the time being of the 
 society should, in respect of the shares, be observed by the 
 member. The proviso for redemption took effect in each 
 case "if the shares and premium and interest thereon re- 
 spectively should be duly realized and paid according to the 
 covenant." New rules were subsequently passed, one of 
 which provided that advanced members, before redeeming 
 their securities, should pay an additional sum as a contribu- 
 tion towards certain losses sustained by the society, and an- 
 other of which made these rules retroactive. It was held, 
 
 1 Angell and Ames, Corp., 343; s Angell and Ames, Corp., :M,\ 
 
 cit. Stetson v. Kempton. 13 Mass. "Kent v. Quicksilver MiningCo., 
 
 282; Insurance Co. v. Conuor, 17 78 N. Y. 159. See ante, 169- 
 
 P;\. St. R 136. 170.
 
 284 THE LAW OF BUILDING ASSOCIATIONS. [CH. X. 
 
 however, that, notwithstanding the reference in their cove- 
 nants to the "rules for the time being," previously advanced 
 mrmln'rs were entitled to redeem their securities on payment 
 only ot' those sums which they were liable to pay according 
 to the rules in existence at the date of their respective con- 
 tracts. 1 
 
 By-Laws Manifestly Contrary to Interest of Society, etc., Void. 
 
 280. By-laws which are manifestly contrary to the in- 
 terests of the association,* and all " nugatory and vexatious, 
 mi(.'(|ual, oppressive" by-laws are void. 8 
 
 By-Laws Restricting Members from Pursuing Legal Remedies. Arbi- 
 tration. 
 
 281. As a general thing, " by-laws prohibiting members 
 from pursuing their legal remedies beyond the jurisdiction of 
 the corporation, are void ; since no power less than that of 
 the Legislature can exclude a subject or citizen from his right 
 to legal redress." 4 Yet the desirable results to be attained by 
 providing a method of settling disputes between the building 
 association and its members, without the intervention of the 
 courts, is self-evident. A regular system of arbitration has, 
 therefore, been devised in England, and made applicable to 
 building associations by statute,* giving the arbitrators the 
 privilege, at the request of either member or association, to 
 state a case for the opinion of the court." No attempt has 
 been made in this country to introduce such a system gener- 
 ally, although individual building associations have at times 
 adopted rales providing for the adjustment of certain speci- 
 fied differences between the association and its members by 
 reference. If, between the society and the member, these be 
 made part of an express contract, they will be enforced. 
 Thus, in Virginia, a borrower covenanted, that, in case of his de- 
 fault, and the sale of the mortgaged land, or if the association 
 should decide to dissolve before the time fixed in its charter, it 
 
 1 In re Norwich and Norfolk * See Gosling t>. Veley, 12 Q. B. 
 
 Provident Building Society, Smith's 347. 
 
 Case. 1 L. R., Ch. Div. 481; 45 L. See Angell and A-mes, Corp.. 
 
 J.. Ch. Div. 143; 24 W. R. 103. 347. 
 
 And see Archer v. Harrison, 7 De 4 II).. 341. 
 
 G., AL.c. and G. 404; 3 Jur., N. S. 5 37 ami 38 Viet., C- 42, 8 21- 
 
 194. . 37 and 38 Viet., C. 42. 36-
 
 281.] LEGALITY AND EFFECT OF CERTAIN ACTS, ^.TC. 285 
 
 should receive from the borrower, or out of the proceeds of 
 the sale of the mortgaged premises, in the first case, in dis- 
 charge of his obligation, such an amount as might be deter- 
 mined upon by referees chosen by both parties, according to 
 the rate at which shares might be redeeming at the time of 
 such sale or dissolution. It was held that this agreement was 
 not unlawful, that the parties were competent to make it, and 
 that it must be enforced. 1 
 
 CHAPTEE XL 
 
 LEGALITY AND EFFECT OF CERTAIN ACTS AND CONTRACTS OF 
 BUILDING ASSOCIATIONS. 
 
 282. Meaning of the term "ultra vires." 
 
 283. Criterion of legality of acts of building associations. 
 
 284. Acts merely in excess of power may be made good as against 
 
 society. Liability of agents and directors. 
 285. Acts and contracts in excess of power merely, and in defiance of 
 
 statutory prohibition; effect of either upon the rights and 
 
 liabilities of either party. Estoppel. 
 
 293. Power of building associations to borrow money. English cases. 
 300. Mere overdrawing of bunk account is not borrowing. 
 801. Rule in America as to borrowing powers. 
 303. Power of building associations to acquire and hold lands. 
 305. English decisions on power to acquire lands. Liability of 
 
 directors acting ultra vires. 
 
 % 308. American rule as to power to acquire and hold lands. 
 309. Effect upon corporation of unlawful departure from proper 
 
 functions. 
 
 g 310. Misuse of the power of lending money. 
 g 311. Nature of security to be lawfully taken. Sureties. 
 313. Loans to strangers and persons not sui juris. Mortgages of 
 
 married women. 
 
 319. Loans to other corporations. 
 322. Power to reserve interest. 
 ? :'>>;}. Power to compromise with members. 
 324. Declaring dividends. 
 S 325. Liability to State for unlawful departure from powers granted. 
 
 1 White r. Mechanics' Building Association. 22 Grattan (Va.), 233.
 
 THE LAW OF BT I I.I MM, ASSOCIATIONS. [CH. XI. 
 
 Meaning of the Term " Ultra Vires." 
 
 282. That the inaccuracy of the term ultra vires, ap- 
 plied to corporate acts, either prohibited by law and invalid 
 at common law, or merely in excess of the powers intended, 
 by the act of incorporation and the charter, to be conferred 
 upon its creature, the corporation, frequently does, and, in 
 the nature of the case, very readily may lead to confusion, 
 has been forcibly pointed out in a recent work upon corpora- 
 tions. 1 There is, however, no other term familiar to legal 
 phraseology, by which the one or the other of these classes 
 may safely be indicated. And it is believed, that any diffi- 
 culty arising from this lack of precision will be obviated, if 
 the ambiguity of the term ultra vires is borne in mind. In 
 pointing out the result, in either case, the arrangement and 
 precedents adduced in this chapter will scarcely admit of any 
 remaining doubts upon the principles applicable. But it 
 must be remembered, that, with the infinite diversity subsist- 
 ing between the statutes of the several States touching build- 
 ing associations, and the extent and limitations of their 
 powers, as well as the constitutional restrictions, which, in the 
 one State or the other, may come into play, it is impossible 
 to lay down any precise and universal rule as to what a build- 
 ing association may lawfully do or engage in. The consti- 
 . tution and laws of the State must be primarily referred to. 
 All that can be here attempted is to indicate, in general 
 propositions, the consequences following illegal or presump- 
 tuous actions, and to supply the material upon which to 
 found, in any particular case, an argument from the analogy 
 of established decisions. 
 
 Criterion of Legality of Acts of Building Associations. 
 
 283. In treating of the power of building associations 
 to contract, it has already been said that it is confined to such 
 objects as are fairly within the scope of the business contem- 
 plated by their charters as the proper and legitimate purpose 
 of their creation, or necessary in order to its effectual accom- 
 plishment." What this purpose is, has already been shown. 3 
 
 1 See Morawetz, Priv. Corp., Ch. See ante, 232. 
 ii. 3 See ante, 7, 117-121.
 
 284.] LEGALITY AND EFFECT OF CERTAIN ACTS, ETC. 287 
 
 To all practical intents, it may be said to be, to enable a 
 number of associates to combine and invest their savings, to 
 mutual advantage, so that, from time to time, any individual 
 among them may receive out of the accumulation of the 
 pittances which each contributes periodically, a sum by way 
 of loan, wherewith to buy or build a house, mortgaging it to 
 the association as security for the money borrowed, and ulti- 
 mately making it absolutely his own by paying off the 
 encumbrance out of his subscriptions. 1 It is only so far as 
 they serve these purposes, and are confined to the objects 
 necessarily involved therein, that the acts of building associa- 
 tions fall properly within the powers granted. As soon as 
 they transgress these limits, they are ultra vires? 
 
 Acts Merely in Excess of Powers may be Made Good as Against 
 Society. Liability of Agents and Directors. 
 
 28-i. The acts of a corporation, not per se illegal, or 
 malum prohibitum, but ultra vires, affecting, however, only 
 the interests of the stockholders, may be made good (so far as 
 the society is concerned) by their assent. 3 On the other 
 hand, if the agents or officers make ultra vires contracts, they 
 may be personally responsible to the stockholders for dam- 
 ages sustained by reason of such contracts, 4 and probably to 
 third parties, concerned in the contract, upon an implied 
 assumpsit that their corporation had the power to do what 
 they had assumed to do in its name. 6 
 
 1 See In re Kent Benefit Building Q. B. 145. The defendants, direc- 
 
 Society, 30 L. J., Ch. 785; 8. C., 4 tors of a building association, had 
 
 L. T. Rep., N. S. 610; 7 Jur., N. received deposits, giving n-cv;:-!- 
 
 S. 1045; 1 Dr. and Sm. 417; 9 W. therefor, promising to repay, with 
 
 R. 686; 25 J. P. 805; opinion of interest, upon fourteen days' notice-, 
 
 Kindersley, V.-C. after the expiration of three months. 
 
 8 See Green's Brice's Ultra Vires, As the society had no power to bor- 
 
 p. 54. As to acts ultra vires of the row money, the plaintiff, unable to 
 
 agent's powers, but not of the asso- get her money back from it, MUM! 
 
 ciat ion's, see ante, 347. the defendants, who, upon the above 
 
 3 Kent v. Quicksilver Mining Co., principle, were held liau'.e in d.-un- 
 78 N. Y. 159. ages for a breach of implied war- 
 
 4 See Field, Corp., 266. ranty of authority. Nor can they 
 6 Richardson v. Williamson, Law claim contribution from the mc-in- 
 
 Rqx. 6 Q. B. 276; S. C., 40 L. J., bers. See ante, 209-210.
 
 288 THE LAW OF BUILDING ASSOCIATIONS. [CH. XI. 
 
 Acts and Contracts in Excess of Powers Merely, and in Defiance of 
 Statutory, etc., Prohibition. Effect of Either upon the Rights and 
 Liabilities of Either Party. Estoppel. 
 
 285. A building association's acts ultra vires, whilst 
 they always constitute a species of misbehavior on its part, 
 which may render it liable to a forfeiture of its franchises, do 
 not necessarily absolve either it, or the party with whom it 
 was dealing, from obligations thus wrongfully contracted, or 
 deprive either one of the rights which would spring from 
 them, if they were indeed lawful. The plea of ultra vires 
 imports, not that the corporation could not, and did not, in 
 fact, make the unauthorized contract ; but that it ought not 
 to have been made. 1 Such a plea either of the parties may 
 be estopped from setting up. An unauthorized act of a build- 
 ing association may be one which is simply in excess of its 
 powers; or it may be one which it is distinctly indicated by 
 the Legislature that it shall not, under any circumstances, be 
 permitted to do. 
 
 286. In the former case, it is clear that the individual 
 contracting with the society, being himself under no disa- 
 bility to make the contract, cannot plead the impropriety of 
 the society's entering into it as an excuse for the non-per- 
 formance of the obligations resulting from it to him. The 
 s. >ciet y, on the other hand, if the contract be still executory, 
 and the other party's rights have not yet become perfected, 
 nor his condition so changed as to entitle him, in justice, to 
 insist upon the whole performance, may plead the incompati- 
 bility of the contract with its legitimate powers, and avoid it 
 upon that ground. If, however, the contract has become 
 wholly, or in part, executed by the individual ; if the associa- 
 tion has reaped the benefit of it, and the other party's condi- 
 tion has become so changed thereby as to make it impractica- 
 ble to absolve the corporation from its bargain, without injury 
 to him, then the corporation is in the position of a natural 
 person who has estopped himself, by his own wrong, from 
 claiming a privilege of which otherwise he might, avail him- 
 self ; and then, as in the case of an individual, so in the case 
 of a corporation, the abuse, or misuse, of a power, by employ- 
 ing it for an end or purpose for which it ought not to be em- 
 
 ' See Bissell t>. The M. S. and N. J. R. R. Co.. 22 N. Y. 258.
 
 288.] LEGALITY AND EFFECT OF CEKTAIX ACTS, ETC. 289 
 
 ployed, and was riot given, whilst it may give rise to a liability 
 to the public, and call for the State's interposition to enforce 
 the law and punish the delinquent, cannot operate as a de- 
 fence in a civil action, available to either of the contracting 
 parties. 1 
 
 287. But where there is a distinct legislative prohibition, 
 the wrongful act cannot become the ground of any legal 
 right. This prohibition need not be express ; it is enough if 
 there is no doubt left of the intention to prohibit. It then 
 amounts to a legal disability, depriving the act or contract 
 prohibited of any existence before the law, and preventing it 
 from being made the foundation of a right of action by either 
 party. 8 
 
 288. Applying these principles to the question, whether 
 or not a person, who has incurred liabilities towards a build- 
 injj; association, may set up its illegal acts, not distinctly pro- 
 hibited by law, as a defence to the enforcement of the con- 
 tract, even where the proof of its existence involves the 
 demonstration of its impropriety, it is clear that he can claim 
 no immunity upon such showing. Thus it constitutes no de- 
 fence for a person in such condition, that the entire amount 
 of the capital stock provided in the charter had not been 
 taken, when the society went into operation, all the laws for 
 the creation and organization of the society having been sub- 
 stantially complied with, and there being no law requiring a 
 building association to have more capital stock than the 
 amount actually subscribed for and taken in it.' Nor is the 
 fact that a member of a building association, sued by it, was 
 permitted to hold, in his own right, a number of shares 
 greater than the maximum prescribed by the by-laws of the 
 corporation, but not in excess of the number limited bv the 
 statute, a defence for him or his guarantors, against anv claim 
 which the building association may have on account of such 
 
 1 Manufacturers and Mechanics' site which the society may waive, 
 Saving and Loan Co. v. Conover, 5 and the person, who, in dealing wiih 
 Pliihi. (Pa.) 18. it, sanctions its action, cannot after 
 
 2 See Ib. and Turner v. Calvert, wards set it up as a defence. See 
 12 Scrg. and R. (Pa.) 46. Morrison et al , Rec'rs Chesapeake 
 
 Ma>soy r. The Citizens' Build- Mutual Land and Building Associa- 
 ini: nnd Savings Association of tion, v. Dorsey, 48 Md. 461. 
 Paola. 22 Kas. 624. This is a requi-
 
 290 THE LAW OF BUILDING ASSOCIATIONS. [CH. XT. 
 
 shares, whether for stated dues, interest, or fines. The build- 
 ing association, in such case, may waive its own rule, and the 
 violating member, or his surety, cannot complain of its having 
 done so. 1 Again, it is no answer, in a suit by a building as- 
 sociation upon a promissory note, that the plaintiff exceeded 
 its powers in loaning the money for which such note was 
 given to one not a member. The borrower was under no 
 disability to borrow and to give his note for the amount of 
 the loan, and having done so, he cannot be permitted to deny 
 the right of the association to receive it." And if the lia- 
 bility incurred be upon securities different from those in 
 which the charter prescribes that the corporation's funds shall 
 be invested, the borrower cannot claim that the security by 
 him given is void, on the ground that the corporation had no 
 right to take it. 3 
 
 289. Equally unavailing, as a defence, is the previous or 
 subsequent illegal conduct of the building association, or its 
 officers, where a valid contract has been entered into, or 
 obligations incurred. A case occurred in England, in which 
 a building association, which had practically converted itself 
 into a freehold land-society (partly by the aid of borrowed 
 money), sought to enforce payment of a member's stipulated 
 subscription after and in consideration of his acceptance of an 
 allotment of land thus held by the building association with- 
 out legal warrant. The claim was allowed in the Queen's 
 Bench, the defendant's attempt, to set up the illegal action of 
 the society as a defence to his liability, being overruled. It 
 was said by Cockburn, C. J., that " such a misappropriation 
 of the funds may be prevented by an application to a court 
 of equity, but so long as the society exists, the members are 
 bound by the rules." 4 And it was said in New Jersey that, 
 
 1 Hagerman et al. t. The Ohio * Mutual Life Insurance Co. v. 
 
 Building and Savings Association, Wilcox, 7 N. Y. Weekly Dig. 13. 
 
 25 Ohio St. 186. 4 Reg. v. D'Eyncourt,28 J. P. 116; 
 
 * Poock et al. v. The Lafayette 9 L. T. Rep., N. S. 383; 4 Best and 
 
 Building Association, 71 Ind. 357; S. 820; 12 W. R. 408; S. C. nom. 
 
 cit. The State Board of Agriculture Hughes v. Layton, 33 L. J., M. C. 
 
 T. The Citizens' Street Railway Co , 89; 10 Jur., N. S. 513; et nom. 
 
 47 Ind. 407; National Bank v. Mat- Hughes v. D'Eyncourt, 3 X. R. 420; 
 
 thews, 8 Otto (U. 8.), 621. But as 116^Engl. C. L. Rep. 819. 
 to usury, in the case of louus to 
 Strangers, see post, 313.
 
 291.] LEGALITY AX I) EFFECT OF CERTAIX ACTS, ETC. 291 
 
 if the conduct of the officers of the building association, in 
 changing the course of its projected business, so as to wind it 
 up at once, the investors receiving what they had paid in, 
 with interest, the borrowers to be discharged upon repaying 
 the amount they had actually received, with interest, was ille- 
 gal, it still did not operate to relieve any particular borrower 
 from the obligation he had assumed towards the society. 1 
 
 290. On the other hand, it has already been seen, that, 
 where the building association has adopted an arrangement 
 for the repayment of loans and withdrawal of members, not 
 contemplated by the charter, and, therefore, supposed to be of 
 questionable validity, it can neither be rescinded to the preju- 
 dice of a member, who, acting upon it, had refrained from 
 paying on his monthly dues ; * nor can the building associa- 
 tion be subsequently allowed, in such case, to deny the valid- 
 ity of the contract or resolution under which it was done. 3 
 
 291. But, if the basis of the claim by the building as- 
 sociation is an act or contract distinctly forbidden by a legis- 
 lative prohibition upon the society's powers, whether in the 
 act under which it is constituted, or by the laws or constitu- 
 tion of the State, the building association will not be permit- 
 ted to recover. 
 
 Thus, where a building association, in the face of a con- 
 stitutional prohibition upon all corporations attempting to 
 exercise banking powers, except such as were properly 
 qualified for that particular purpose, had assumed to engage 
 in the business of purchasing and discounting bills and notes ; 
 the maker of a note so discounted and held by the building 
 association, when sued thereon by the same, could not be made 
 liable upon it. 4 
 
 And authority given by a charter under a general statute 
 is not conclusive upon the right or disability of the society 
 
 1 Hoboken Building Association sociation, 50 Pa. St. 82; and ante, 
 
 v. Martin, 2 Beas. (N. J.) 428. See 169-170. Such compromises 
 
 ul-n llekelnkaemperfl. The German are not ultra vires. See post, 
 
 Building and Savings Association, 323. 
 
 22 Kas. 549. * Manufacturers and Mechanics' 
 
 9 Eyre v. Building Association, Savings and Loan Co. v. Conover, 
 
 17 Leg. Int. (Pa.) 148; and ante, 5 Phila. (Pa.) 18. See also Laiug c. 
 
 133. Reed, Law Rep., 5 Ch. App. 4; 
 
 8 Miller . Jefferson Building As- 39 L. J.. Cli. 1 : 21 L. T.. N. S. 773;
 
 TIIE LAW OF BUILDING ASSOCIATIONS. [dl. XI. 
 
 to do an .act. If the power contained in the charter is distinct- 
 ly prohibited in the act under which it is granted, or antago- 
 nistic to its scope and intention, so that, if it obtains, its effect 
 will be to make the society " a thing different from" a building 
 association under the act, the charter provision is of no avail.' 
 292. Conversely, under such a state of the law, the 
 building association cannot be made liable upon contracts it 
 has entered into, which are distinctly forbidden, either by ex- 
 press statutory provision, or where the intention to prohibit 
 is clearly inferable. The most important controversies which 
 have arisen in reference to this subject are those touching the 
 right of building associations to borrow money, and to pur- 
 chase and hold real estate. 
 
 Power of Building Associations to Borrow Money. English Cases. 
 
 293. The question, whether a building association can 
 lawfully hold and use borrowed capital, can, of course, arise 
 only under a statute which is silent upon the subject. If the 
 statute permits or prohibits it in express terms, the right, in 
 the former case, is precisely measured by the extent of the 
 license granted ; the disability, in the latter, established be- 
 yond question. But the charter, granted under a statute 
 which does not expressly settle this point, may also become 
 an element in the consideration of the right ; it may assume 
 to authorize the building association to borrow money, or it, 
 too, may leave the subject untouched. The difficulties which 
 appear under all these complications have received most care- 
 ful consideration in England. In Laing v. Reed* the rules 
 of the society, as certified under the Act 6 and 7 "Will. 4, C. 
 32, provided " that its object is for raising, by the weekly 
 contributions of the members, a stock or fund, to enable each 
 of them to erect or purchase a dwelling-house," etc., and, 
 " that the trustees for the time being may, from time to time, 
 as occasion shall require, borrow and take up at interest any 
 sum of money from any banker witli whom the funds of this 
 society shall be deposited, or from any other person, to pro- 
 
 18 W. R. 76; 34 J. P. 134: opinion 34 J. P. 134; and ante, 64. and 
 
 of Gifford, L. J. post, 305-307, 309. 
 
 1 See Laing v. Reed, Law Rep., s Law Rep., 5 Ch. App. 4; 39 L. 
 
 5 Ch. App. 4; 39 L. J., Ch. 1; 21 J., Ch. 1; 21 L. T. Rep., N. S. 773; 
 
 L. T. Rep., N. 8. 773; 18 W. R. 76; 18 W. R. 76; 34 J. P. 134.
 
 294.] LEGALITY AND EFFECT OF CERTAIN ACTS, ETC. 293 
 
 cure which the trustees may give their own personal security, 
 and they shall be indemnified out of the first funds of this so- 
 ciety which shall be received," adding, " that the total sum 
 of money to be borrowed under this rule shall not at any one 
 time exceed two-thirds of the amount for the time being se- 
 cured by mortgage to the society, including the mortgage 
 or mortgages for which such advance or advances may be re- 
 quired." A member of the association brought a bill against 
 the trustees, who had, under these rules, borrowed sums of 
 money amounting to 66,362, and had secured their repay- 
 ment by promissory notes given to the lenders, bearing inter- 
 est at five per cent, per annum. In this bill he alleged the 
 illegality of the above rule ; that borrowing money on behalf 
 of the association was ultra vires, and a breach of trust on the 
 part of the defendants ; and that the payment of interest on 
 the loan was a misappropriation of the society's funds, for 
 which the defendants were liable. To this bill the defend- 
 ants demurred. Their demurrer was overruled, and they ap- 
 pealed. The Court of Appeals in Chancery sustained the 
 demurrer, and held that the rule which authorized the borrow- 
 ing of money to a limited extent was valid. 
 
 294. Hatherley, L. C., 1 after distinctly repudiating the 
 idea that the certificate of incorporation could be conclusive, 
 if a comparison with the Act of Parliament showed the power 
 it granted to be unlawful, says : " If the rule had authorized 
 the trustees to raise an unlimited sum of money, wholly re- 
 gard less of the contributions which might be made by its 
 members, that, no doubt, would be contrary to the intent and 
 scope of the act. The act states that money shall be raised, 
 first, by weekly contributions of the members ; secondly, by 
 fines ; and thirdly, by the payments of those who are desirous 
 
 of acquiring land Then comes the question, the society 
 
 having these funds, are they or are they not to be allowed to 
 manage them in such a way as they may think best and most 
 conducive to their own interest? If we consider the question 
 of investing instead of borrowing, there is nothing in the Act 
 of Parliament expressly relating to investing ; but it is clear 
 that they may invest, because there is a prohibition against 
 investing in savings banks, and that is just one of the things, 
 
 1 See Ib.
 
 294 THE LAW OF BUILDING ASSOCIATIONS. [CH. XI. 
 
 I apprehend, which are left to them to frame rules about. . . . 
 Then, if they have power to invest, and have invested their 
 money, it might be injurious and inconvenient for the society 
 to dispose of th'ose investments just at the time when mem- 
 bers required advances. Their investments might be in the 
 funds, and the funds might be so low as to make it inexpe- 
 dient to sell out at that time, and the natural course would 
 be to procure the money elsewhere. For at that time they 
 would probably obtain a high rate of interest, not being 
 bound by the usury laws, whilst they would not pay more 
 
 than five per cent, for what they might borrow If an 
 
 advance were wanted when they had not money in hand, 
 might they not obtain the sum required by overdrawing their 
 account at the banker's ? "Would anybody say that that would 
 be an irregular course, provided always that the borrowing 
 did not exceed the proper amount ?" 
 
 295. A case, decided very shortly after the above, 1 
 raises the question in an association whose rules contained no 
 power to borrow. " What we have here," says Gifford, L. J., 
 " is a limited benefit building society, without any power to 
 borrow, and the rules and very nature of that society show 
 that it would be contrary to its constitution to borrow money 
 so as to bind the company, or to make the individual members 
 of the company, as members, liable for borrowing money ; 
 because the whole constitution of the society is that the mem- 
 bers are to make certain monthly payments, and in considera- 
 tion of these monthly payments and the fines provided by the 
 rules, they are to receive certain loans. After the rules had 
 been certified and published, and the nature of the company 
 had been fixed, a prospectus was issued, and by that pro- 
 spectus the directors chose to say 'that they have made ar- 
 rangement to borrow sums to be advanced to such members 
 as desire to receive an advance before their turn for it regu- 
 larly arrives, such members of course paying interest on the 
 sum lent until their turn arrives.' If we look at the nature 
 of the company, that can only amount to this: that the direc- 
 tors have chosen to pledge their personal liability. . . . I am, 
 
 1 In re National Permanent Bene- 22 L. T. Rep., N. S. 284; 18 W. R. 
 fit Building Society, ex parte Wil- 388; 34 J P. 341. 
 liamson, Law Rep.. 5 Ch. App. 309;
 
 298.] LEGALITY AXD EFFECT OF CERTAIN ACTS, ETC. 295 
 
 therefore, of opinion that there is no legal or equitable 
 debt." 
 
 296. In the case of the Coetmor Benefit Building So- 
 ciety, 1 the rules as certified contained no power to borrow; 
 but a rule (which was never certified) was subsequently added 
 by the authority of a general meeting, empowering the man- 
 agers to borrow such sums as they might consider necessary 
 for the purpose of making advances to the members. A 
 person who had advanced money upon the faith of this rule 
 was held to have no claim against the assets of the society, 
 which was in liquidation. 
 
 297. Agajn, where the rules contained no definite power 
 to borrow 7 , but provided that persons merely joining the so- 
 ciety to invest or deposit money should not be entitled to 
 vote at general meetings, and that " investors not in the build- 
 ing branch" should be at liberty to withdraw on giving cer- 
 tain notice ; it was held that the rules, if, and so far as they 
 authorized borrowing money on deposit, w r ere illegal, as no 
 limit was fixed to the amount which might be borrowed. 2 
 This is the doctrine established in Laing v. Reed, and fol- 
 lowed in another case, in which the society was, by its rales, 
 authorized to borrow money for the purposes of the society, 
 and the court decided that the rule, as authorizing unlimited 
 borrowing, was ultra vires.* 
 
 298. But a rule authorizing the borrowing of money, for 
 the special purpose of making advances to members who 
 might have applied for them, does not sanction the borrowing 
 of money not actually required to meet applications at the 
 time of the loan. 4 When, therefore, trustees, authorized, by 
 rule, to borrow money for the purposes of the society, bor- 
 rowed and spent the money in a way which was held not to 
 be for the legitimate purposes of the society, the lender was 
 
 1 51 L. T. 258; M. R., 31 July, Society, McCorwan's Claim, 15 S. 
 
 1871. J. 177. See also, In re Professional, 
 
 8 In re Victoria Permanent Build- Commercial, and Industrial Benc- 
 
 ing Society, Hill's Case, Jones' Case, fit Building Society, 6 L. R.. Ch. 
 
 Law Rep., 9 Eq. 605; S. C. 39, L. 850; 25 L. T., N. S. 397; 19 W. K. 
 
 J., Ch. 628; 6 Mag. Cas. 474; 22 L. 115:5. 
 
 T. Rep., N. S. 777; 34 J. P. 532; 18 * Moye v. Sparrow, 22L.T. Rep., 
 
 W. R. 967. N. S. 154; S. C., 18 W. R 400; 5 
 
 1 In re Liverpool, etc.. Building W. N. 33.
 
 296 THE LAW OF BUILDING ASSOCIATION'S. [CH. XI. 
 
 not allowed to claim payment against the society. 1 But 
 another creditor of the same society, having had deeds belong- 
 ing to some of the members deposited with him by the 
 trustees, as a collateral security for the money lent, the court 
 refused to compel him to return the deeds unless the money 
 for which he held them as security was repaid to him. 8 
 
 299. The doctrine, as established by the English deci- 
 sions, before the Act of 37 and 38 Vic., C. 42, which permits 
 building associations to borrow money within certain limits, 
 may be summed up as follows: Without a certified rule (i.e., 
 a provision contained in the charter or constitution estab- 
 lished or amended under the General Statute) authorizing the 
 borrowing of money, the society has no power to raise money 
 on loan ; if there was a certified rule, its provisions must be 
 strictly observed, or loans obtained under it are invalid ; and 
 even a rule which is certified is illegal, unless it sets some 
 reasonable limit upon the sums to be borrowed from time to 
 time. 8 
 
 Mere Overdrawing of Bank Account is not Borrowing. 
 
 300. The mere overdrawing of its bank account by an 
 association is not a borrowing of money, in the proper sense 
 of the word, which may be questioned as ultra vires. 4 
 
 1 In re Durham County Building sconded. It was held that the find- 
 Society, Davis's Case, Law Rep., 12 ing was bad in law as against the 
 Eq, 516; S. C., 25 L. T. Rep., N. society, and that the latter was not 
 S. 83 liable; but (semble) the directors, 
 
 9 In re Durham, etc., Wilson's even though there was no fraud, 
 
 Case, Law Rep., 12 Eq. 521; S. C., were personally liable to the plain- 
 
 25 L. T. Rep., N. S. 84. tiffs for the money. Chapleo t. 
 
 3 See Davis, Law of Building, Brunswick Permanent Building 
 
 etc., Societies, p. 114. In a recent case Society et al., L. R., 6 Q. B. 
 
 in England, money was loaned to a 696. 
 
 building association in excess of its * See opinion of Hatherley, L. C., 
 
 powers under the rules, the secre- iu Laing t. Reed. Law Rep.. 5 Ch. 
 
 tary taking tl.e money, and procur- App. 4. See also same principle in 
 
 ing a note from the directors to the Waterlow v. Sharp; Gardner v. 
 
 lenders. Finally the secretary ab- Sharp, Law Rep., 8 Eq. 501; 20 L. 
 
 sconded with the money, and the T. Rep., N. S. 902; In re Cefn 
 
 society, refusing to make it good, Cilcen Mining Co. (Lim.), Edge- 
 
 wns sued. The jury found that the worth's Claim, Law Rep., 7 Eq. 88; 
 
 society held out the secretary to the 19 L. T. Rep., N. S. 593; also In re 
 
 plaintiffs as having authority to re- German Mining Co., 22 L. J., Ch, 
 
 ceive the loan with which he ab- 956; 4DeG., M. aud G. 19.
 
 301.] LEGALITY AND EFFECT OF CERTAIN ACTS, ETC. 29? 
 Rule in America as to Borrowing Powers. 
 
 301. Such being the accepted law in England, 1 there i& 
 nothing in American decisions pointing out any particular in 
 which it would fail of general recognition in this country, 
 except where the construction put upon the statutes of indi- 
 vidual States may restrict it. In Maryland, notes signed 
 and given by building associations to members, instead of 
 money, the members giving mortgages to the building asso- 
 ciation for the proceeds of the notes, the same as if they had 
 received money, have been repeatedly enforced, and their 
 capacity to borrow money, with a view to accomplish the 
 purposes of their formation, expressly recognized. 2 But in 
 Pennsylvania, there is a dictum of Sharswood, C. J., which 
 intimates, that, under the Act of 1859, a building association 
 is not permitted to borrow money from banks or others, for 
 the purpose of loaning it to its members at interest in 
 excess of six per cent, per annum. 3 And in Ohio, the power 
 of building associations to borrow money for the purpose of 
 lending it, is expressly denied. 4 The case, however, in which 
 the question there arose, disclosed the fact that the money 
 was borrowed by the building association partly for the pur- 
 pose of trafficking in its own stock. This is, in itself, an 
 illegal purpose; whilst the only reason for permitting a 
 building association to incur debt, is, that it may thereby be 
 enabled to accomplish its lawful ends. By borrowing money 
 at a low rate of interest, and loaning it at a greater to its 
 members standing in need of accommodation beyond what the 
 immediate resources of the society's treasury may afford, it is 
 substantially serving its legitimate purposes. Such probably 
 would not be the case if the loan were intended to supply 
 funds to be taken by strangers; or if they were to be perma- 
 nent debts of the society, instead of temporary accommoda- 
 tions for the purpose of serving temporary wants. The same 
 
 1 Applicable to building societies ing Association v. "Weber, 84 Md. 
 
 incorporated previous to the Act of 669; Jackson et al. v. Myers et al., 
 
 37 and 38 Vic. C. 42 (1874), which 43 Md. 452; Muth v. Dolfleld, Ib. 
 
 expressly confers the power of bor- 466. But see ante, p 24 (j). 
 rowing within certain limits. Stiles's App., 9 W. X. C. (Pa.) 
 
 9 Davis v. The AVcst Saratoga 83. 
 
 Building Union No. 3. 32 Md. 285. * State v. The Oberlin Building 
 
 See also the Canton National Build- and Lonn A^'n, :J5 Ohio St. 258.
 
 298 THE LAW OF BUILDING ASSOCIATIONS. [CH. XI. 
 
 reasons would not, in such cases, hold good. It is quite 
 possible that cases will arise, where a building association 
 will -be enabled, by reason of peculiar necessities, to borrow 
 money or give its obligations for other purposes than the 
 accommodation of members. For instance, where, at a judi- 
 cial sale (and in Pennsylvania, at that of an assignee for 
 benefit of creditors) the building association is constrained, 
 in order to escape serious loss, to buy in property upon 
 which it holds a junior encumbrance, and there is not money 
 enough in the treasury to pay the whole sum required, a 
 purchase-money mortgage, or a bond, mortgage, note, or 
 judgment for the sum borrowed to make up the deficiency, 
 would seem entirely unobjectionable. In such case, it might 
 become essential to the accomplishment of powers distinctly 
 conferred, if not, indeed, from reasons of self-protection, and 
 in order to save the association from ruin. Again, under a 
 general power to invest money in real estate, the right of 
 improving the real estate held, and making it not only more 
 productive, but substantially an element in the achievement 
 of the final results contemplated in the incorporation, and the 
 hastening of the period of realization to the stockholders, by 
 erecting houses, seems a necessary concomitant ; nor would a 
 loan of money, of a temporary character, to accomplish that 
 end, seem at all improper. It is possible, too, that the affairs 
 of an association, becoming momentarily embarrassed by 
 losses, sometimes not to be avoided by the most unexception- 
 able management, or by depreciation of property necessarily 
 thrown and remaining upon its hands, a loan of money to bridge 
 over the difficulties would be within the corporate powers. 
 But, to allow the lender to stand as a creditor of the building 
 association before the law, and to debar it from invoking a 
 plea of ultra vires, the power to borrow must be given, 
 specifically and limited, in the charter or articles of associa- 
 tion, or by proper amendments thereto, to the officers 
 attempting to exercise it, even where there is nothing in the 
 statute repugnant to such authority; and it must clearly 
 appear, that the loan was made for purposes legitimately 
 within the scope of the association's incorporation. 
 
 302. A case arose in Pennsylvania, in which it appeared 
 that a building association had, acting ultra vires, purchased
 
 302.] LEGALITY AND EFFECT OF CERTAIN ACTS, ETC. 299 
 
 land, giving its bond and mortgage for part of the purchase- 
 money. An act of Assembly was subsequently passed vali- 
 dating purchases of land by building associations. Yet it 
 was held by the Supreme Court, that this did not render 
 valid the contract as to the unpaid purchase-money, which 
 could not be collected upon the bond except only as against 
 the land on account of the purchase-money for which the 
 bond was given, and which constitutes an equitable lien, 
 and that any execution upon any judgment obtained must be 
 confined to the real estate, and could not be enforced against 
 the society itself. 1 The questions involved in this case are 
 rather nice, upon the facts shown. On June 14, 1873, A. sold 
 to the American Building and Loan Association, incorpo- 
 rated under Act 1859, fifty acres of land, at $400 per acre. lie 
 got 4000 cash, and the building association's bond and mort- 
 gage for $8000, payable in five equal annual instalments, with 
 interest. The building association also assumed the payment 
 of a purchase-money mortgage of $8000, resting on the land. 
 No part of the land was sold by the building association, and 
 no part of the purchase-money mortgage was paid. In course 
 of time, A. received all but $1600 upon his mortgage, and 
 he assigned this remaining installment, part to F. and part to 
 R. The building association, on June 11, 1878, was dis- 
 solved, and a receiver appointed. Suit was brought against 
 the building association (A. to the use of F. and R.) to re- 
 cover the balance of purchase-money due by the building 
 association on their bond and mortgage to A. On September 
 17, 1879, before the suit came on for trial, the receiver filed 
 a bill in equity, praying that the purchase of the land by 
 the building association from A. be declared void and ultra 
 vires / that the receiver be directed to isconvey the land to 
 A. ; that A. be directed to refund the money paid him by 
 the building association; that an injunction issue restrain- 
 ing the defendant from further prosecuting his action at law. 
 The contention of defendants before the Master was. that. 
 though at the time the purchase was made, the building 
 ciation had no power to purchase real estate as this pureha-e 
 was made, or to issue bonds and mortgages thereon, yet, that, 
 by virtue of the Act of Assembly of June 17, 1878 (P. L. 
 
 1 Faulkner's Appeal, 11 W. N. C. (Pa.) 48.
 
 300 THE LAW OF BUILDING ASSOCIATIONS. [CH. XI. 
 
 214), confirming purchases and sales made by building asso- 
 ciations prior to the act, the sale made in this case was vali- 
 dated and confirmed ; that the contract between A. and the 
 building association was an executed one, and therefore the 
 building association estopped from setting up the defence of 
 ultra vires. The Master reported, that, at the time of the 
 purchase, the building association had no power to make 
 such a purchase, or to give bonds and mortgages thereon, 
 and that, in his judgment, the Act of June 17, 1878 (P. L. 
 214), " fails to relieve the defendants here, mainly because it 
 contains no provisions making valid bonds and mortgages 
 executed without authority of law." He recommended that 
 the purchase and sale be declared void, and that the receiver 
 be directed to reconvey to A., the latter to refund what the 
 society had paid him. The court, upon exception, held that 
 the Act of 1878 validated the title of the corporation, at least 
 so far as to enable it to hold the land, if it elected, and to 
 convey the title; but that, aside from the liability of the 
 land or its proceeds, the act does not validate the unpaid 
 obligations for the purchase-money. " The defendants should 
 be permitted to proceed on either their bond or mortgage to 
 enforce payment on the land ; but the lien of an execution 
 on any judgment thereon must be limited to the land in ques- 
 tion. But the defendant cannot be called on to repay the 
 money already paid him."- The defendants were, therefore, 
 enjoined from prosecuting their action on the bonds, except 
 only as against the land on account of the purchase-money 
 for which the bond was given ; and that they be confined and 
 limited, upon any execution which may be issued upon any 
 judgment thereon, to said real estate. The defendants ap- 
 pealed. The Supreme Court say : " We are of opinion that 
 the purchase by the building association was ultra vires. Con- 
 ceding that it was validated by the Act of Assembly, of 1878, 
 we agree with the court below, that the contract for the unpaid 
 purchase-money was not rendered valid upon their surrender- 
 ing the land and putting the parties in statu quo. This is 
 precisely what is accomplished by the decree below, which 
 limits the recourse of the vendors for the unpaid purchase- 
 money to the land. So far the contract is unexecuted. So far 
 as the purchase-money was paid, the corporation certainly
 
 303.] LEGALITY AND EFFECT OF CERTAIN ACTS, ETC. 301 
 
 cannot claim to avoid the contract, and recover back the 
 money. The doctrine of estoppel fairly applies. But not 
 as to the unpaid purchase-money. We are of opinion that 
 the decree below does exact justice between the parties." 
 
 Power of Building Associations to Acquire and Hold Land. 
 
 303. The power of a building association to take and 
 hold real estate stands upon a somewhat different footing. 
 The extent to which it may be lawfully exercised is usually 
 denned with accuracy in the statutes under which they are 
 incorporated, and, like all corporations, building associations- 
 are in this particular subject to the law's jealous supervision. 
 An .improper assumption of authority in this direction will 
 not, of itself, dissolve the society, 1 nor relieve its members * 
 or debtors s of their obligations towards it. But corporations 
 cannot take or hold property in excess of what their charters, 
 or the statute supreme over them, allows them. 4 The asso- 
 ciation, therefore, cannot be held to compliance with the con- 
 tract ; * and if it is carried into effect, the sales and purchases, 
 being unauthorized, may be avoided by any party in inter- 
 est,' and the individual who assumed to enter into the con- 
 tract for the corporation, may become personally liable 
 thereby. 7 It has been suggested, 8 that the only method by 
 which a building association, incapable of holding real estate 
 to an unlimited extent, and desirous of dealing in it beyond 
 the limits allowed by law and charter, is to let the directors 
 or some other fit person take the title, and mortgage the 
 property to the society for the full amount of the purchase- 
 money. 
 
 1 See Hughes v. Layton, 33 L. J., with by the State. See Rhoads v. 
 M. C. 89; 10 Jur., N. S. 513; S. C., Hoernerstown Building Associa- 
 nom. Reg. v. D'Eyncourt, 9 L. T. tion, 82 Pa. St. 180. 
 Rep., N. S. 702; 28 J. P. 116; 4 8 In re Kent Benefit Building So- 
 Best and S. 820; 12 W. R. 408; S. ciety, 30 L. J., Ch. 787; 4 L. T. 
 C., nom. Hughes v. D'Eyncourt, 3 Rep., N. S. 610; 7 Jur., N. S. 1045; 
 N. R. 420; 116 Engl. C. L. Rep. 1 Dr. and Sm. 417; 9 W. R. 686; 25 
 819. See post, 309. Ib. J. P. 805; Faulkner's App.. 11 W. 
 
 3 See ante, 200, 232, 289. N. C. (Pa.) 48; and post, S 307. 
 
 4 Chamberlain T. Chamberlain, 6 Miller's Est., 2 Pears. (Pa.) 248. 
 43 N. Y. 424, reversing decision of ' See ante, 209-210. >! J'.''.' 
 Supreme Court, that the corporation 8 Duvis. Law of Building, etc., 
 can take and hold, until interfered Societies, p. 75.
 
 302 THE LAW OF BUILDING ASSOCIATIONS. [CH. XI. 
 
 304. Building associations, chartered as such, in the 
 proper signification of the term, exclusively, very frequently 
 engage in a species of real estate transactions, more properly 
 belonging to what in England is called Freehold Land Socie- 
 ties: i.e., they purchase land, and either without or after 
 erecting dwellings thereon, parcel it out to their members, 
 bidding in competition for preference, as for a loan, the suc- 
 cessful competitor giving his mortgage uppn the 'property so 
 acquired to the society ; or they sell the different properties at 
 auction to outsiders. Such practice, unless clearly authorized 
 by statute and charter, is illegal in every step, from the acqui- 
 sition of the land, down to the final disposition of it. There 
 is nothing in the objects of such societies permitting them to 
 speculate in land, in fact, to become land societies. The ques- 
 tion has received exhaustive consideration in England, and the 
 doctrine as there laid down seems entirely applicable in the 
 United States. 
 
 English Decisions on Power to Acquire Land. Liability of Directors 
 Acting Ultra Vires. 
 
 305. In Grimes v. Harrison, 1 the latter question was 
 first discussed. By the first rule of " The Prince of Wales 
 Mutual Benefit Building Society" (duly registered) it was 
 stated that the object of the society " was to raise a fund by 
 weekly subscriptions of the members in shares of twenty-five 
 pounds each, out of which each member may receive the 
 amount or value of his share for the erection or purchase of a 
 dwelling-house or houses, or other real or leasehold estate." 
 The thirty-first rule provided, that " the board shall have full 
 power to conduct the affairs of the society, subject only to 
 the rules thereof for the time being, and any committee to be 
 selected and appointed shall have the same power in respect of 
 any matter confided to them, subject to the control from time 
 to time of the board." Upon the affairs of the society being 
 investigated, it having fallen into difficulties, it was found that 
 the directors had made an attempt to vary the objects of the 
 society, and that they had altered its name as follows: ''The 
 Northwest London Equitable Freehold Land Society, enrolled 
 
 1 28 L. J., Ch. 823; S. C., 33 L. T. Rep. 115; 5 Jur., N. S. 528; 26 Beav. 
 135; 23 J. P. 421.
 
 305.] LEGALITY AXD EFFECT OF CERTAIN ACTS, ETC. 303 
 
 as the Prince of "Wales Mutual Benefit Building Society," and 
 that they had issued pass-books, containing a copy of the rules 
 of the society and the accounts of the individual member.-. 
 It was also found that they had contracted to purchase a piece 
 of land at a price greater than the moneys of the society then 
 in hand, and that they had caused portions of the purchase- 
 money to be paid out of the funds of the society. Upon a bill 
 being filed by some of the members of the society against the 
 trustees and directors, charging (inter alia) that the invest- 
 ment was a fraud on the rules of the society, it was held that 
 it was such a fraud, for the objects of the society could not 
 be changed, that the rules of the original society could not be 
 adapted to any altered purpose, and that the rules did not 
 authorize the purchase of land. The Master of the Rolls, in 
 delivering judgment, said that there is a great distinction be 
 tween a freehold land society and a benefit building society. 
 " A freehold land society buys land with the funds subscribed 
 by the members, and divides that land among them; but a 
 benefit building society advances to members, out of the sub- 
 scriptions made by the members, sums of money, to be laid 
 out in the purchase of land or buildings, which are then mort- 
 gaged to the society. That appears to be the principal differ- 
 ence between these two kinds of societies. But in either <-a.-e 
 these societies must be bound by the rules by which they have 
 been constituted. It does not lie in the mouth of any mem- 
 ber of the society to say that the book which professes to 
 contain the rules of the society does not contain the rules by 
 which they are bound. ... I cannot accede to the argu- 
 ment that, as between the members of the society, the fact oi . 
 putting a title-page to the pass-book, in which the society i> 
 culled a freehold land society, will really alter the rules. ani 
 convert them into something other than what they purporr n 
 be upon the face of them. ... It appears that the certilicate 
 of Mr. Tidd Pratt was obtained without any intimation that 
 the words ' freehold land society ' constituted the title of the 
 society, or that it was intended in any respect to be n free- 
 hold land society. It was sworn that this omission was made 
 purposely, because it was known that Mr. Tidd Pratt would 
 not certify the rules of the society, if called a freehold land 
 society, to be within the provisions of the <> and 7 Will.
 
 304 THE LAW OF BUILDING ASSOCIATIONS. [CH. XI. 
 
 4, 0. 32, but would only certify it as a benefit building society. 
 Therefore it is impossible to adopt the argument, that the 
 court can mould these rules so as to make them applicable to 
 a freehold land society, when, by the suppression of the fact 
 that this was a freehold land society, or was intended to be 
 so, these parties have obtained from the officer appointed by 
 the legislature the benefit and advantage derived from being 
 a benefit building society, solely because the society was not 
 known or believed to be a freehold land society. It is there- 
 fore impossible to modify these rules so as to make them ap- 
 ply to a freehold land society." His Lordship further pointed 
 out that Rule 1, above set out, did not give the directors 
 power to purchase land as they thought fit, even if it were 
 lawful to do so, but that the obvious meaning of the rule was, 
 that " the amount or value of the share" of each member was 
 to be applied " for the erection or purchase by him of a dwell- 
 ing-house, or other real or leasehold estate," and it contained 
 no authority to the directors to purchase and divide land 
 amongst the members, which might be the function of a free- 
 hold land society, but not of a benefit building society. " It 
 is not within these rules ; and every member is entitled to say 
 to the directors, " You shall not go out of these rules ;" and 
 the fact of the society being entitled a Freehold Land Society, 
 or of the pass-book being an account of a freehold land society, 
 or of the minutes being kept as the minutes of the proceed- 
 ings of a freehold land society, does not entitle the directors 
 so to act, or preclude any one of the members who may think 
 fit from taking the objection to their acting in disobedience 
 of rules to which they are bound to conform." 1 
 
 306. So, in another case, it was held that changing the 
 name of a society to that of "The Kent Freehold Land- 
 Society, enrolled as The Kent Benefit Building Society," did 
 not constitute it a freehold land society, although the change 
 was made with the concurrence of the members. 1 
 
 1 This case did not impeach the 2 In re The Kent Benefit Building 
 
 right of the directors of benefit Society. 30 L. J., Ch. 785; S. C., 4 
 
 building societies to invest their sur- L. T. Rep., X. S 610; 7Jur., N. S. 
 
 plu funds in land under the old 1045; 1 Dr. and Sm. 417; 9 W. R 
 
 law, hut only referred to specula- 686; 25 J. P. 305. 
 tions in land.
 
 307.] LEGALITY AND EFFECT OF CERTAIN ACTS, ETC. 305 
 
 307. The position, as defined in these cases, is this : (1) 
 A society which, by its rules, authorized the directors to deal 
 in land like a land society, or beyond the limits contemplated 
 by the statute, could not be registered as a building associa- 
 tion under it ; ' and (2) if the rules did not so authorize the 
 directors, they would have no power to do so, and any member 
 might, if he desired, proceed against them in equity. 2 Since, 
 therefore, it cannot be done at all without authority contained 
 in the rules or constitution of the society ; and since such 
 rules, if made, are illegal, the association or its officers must, 
 in either case, be deemed to be acting ultra vires ; the asso- 
 ciation taking no title in the land contracted for; and, conse- 
 quently, its contract for the purchase of land, under such cir- 
 cumstances, cannot be enforced against it. 3 And where the 
 society had the power to borrow money " for the purposes of 
 the society," a debt, which its directors, pretending to act 
 under that authority, had contracted for the purpose of pur- 
 chasing a landed estate, was held not to be a claim against the 
 assets of the corporation under process of winding-up, Bacon. 
 Y.-C., saying: " Such transactions are not within the powers- 
 of the society. They might as well have betted upon the- 
 horses running at Goodwood, or done anything else that came 
 into their heads." 4 The building association not having had 
 
 'This does not, however, extend law to have acquired land, and after- 
 to making a rule illegal, under the wards to have entered into a contract 
 old act in England, allowing the for its sale, it is doubtful whether 
 directors to invest a portion of the .the trustees could enforce the con- 
 society's surplus funds in the pur- tract if they did not obtain the con- 
 chase of real estate-, provided this currence m the deed of conveyance 
 be done bonn fide, and in further- of every member of the society, un - 
 am-e of their main objects; Mullock less it was expressly stipulated in 
 r. Jenkins. 14 Beav. 628; 21 L. J., the contract for sale that the trus- 
 Ch. 65. tees should be the only conveying 
 
 * See Davis, Law of Building, etc., parties;" cit. Lethbridtre r. Kirk- 
 
 Societies, p. 72. Ante. 114. 213. man, 25 L J , Q. B. 89; S. C.. 2 Jur.. 
 
 3 In re Kent Benefit Building So- N. S. 372; 26 L. T. Rep. 122. See 
 
 ciety. 30 L. J., Ch. 787; S. C., 4 L. Caldwell v. Ernest, 28 L. J., Ch_ 
 
 T. Rep., N. S. 610: 7 Jur., N. S. 810: 27 Beav. 39. 
 
 1045; 1 Dr. and Sm. 417; 9 W. R. 4 In re Durham County Perma- 
 
 686; 25 J. P. 805. It is further said, nent Investment Land and Building 
 
 in Davis, Law of Building, etc., So- Society Davis's Case, Law Rop., 12 
 
 cieties, p. 76, that " supposing the Eq. 516; S. C., 25 L. T. Rep., N. S. 
 
 trustees of a society under the old 83.
 
 306 THE LAW OP BUILDING ASSOCIATIONS. [CH. XI. 
 
 the right to borrow the money for the purpose to which 
 it was applied, it was further said, the principle that 
 the lender may follow the money into the land could be of no 
 assistance to him in this case. 1 If, on the other hand, the 
 officers who made the illegal contract became personally liable 
 by reason of it, this imposes no obligation upon the mem be i^ 
 to indemnify the suffering transgressors. The rule is, that, 
 as between the officers and the society, the latter may become 
 committed to a transaction of the former which is ultra vires, 
 by unanimous consent and ratification. Where, therefore, the 
 directors of a building association, without competent author- 
 ity, bought land and mortgaged it to secure money borrowed 
 for the purchase ; and certain members, acting as trustees, 
 covenanted to pay the mortgage debt, and under that cove- 
 nant were subsequently obliged to pay it, and it did not 
 appear that every member acquiesced in, or was cognizant of 
 the transaction ; the unfortunate trustees were not allowed to 
 compel contribution among the shareholders to recover their 
 loss. 2 But, where the corporation had purchased land, but 
 had not paid the purchase-money, the vendor retaining an 
 equitable lien thereon ; the properties purchased from the 
 building association, upon the latter's failure to pay the vendor, 
 were held subject to his claim, although the owners had paid 
 the building association in full. 3 
 
 American Rule as to Power to Acquire and Hold Land. 
 
 308. Analogously with the principles established in the 
 foregoing cases, it has been repeatedly held in Pennsylvania, 
 that a building association has no power to take or hold real 
 estate beyond the limits fixed by statute, 4 an i that debts con- 
 
 1 But where a loan to the same Wilson's Case, Law Rep., 12 Eq. 
 
 society was secured by a promissory 521 ; S. C. , 25 L. T. Rep. , N. S. 84. 
 
 note of the trustees, and by a de- s In re Kent Benefit Building So- 
 
 posit of the mortgage deeds execut- ciety, 30 L. J., Oh. 785; S. C., 4 L. 
 
 ed by the members of the society; T Rep., N. S. 610; 7Jur., N. S. 
 
 it was held (without deciding upon 1045; 1 Dr. and Sm. 417; 9 "W. R. 
 
 the right of the lender to enforce 686; 25 J. P. 805. 
 
 hie security against the society), that * Peto v. Hammond, 8 Jur., N. 
 
 the official liquidator was not enti- S. 550; 31 L. J., Ch. 354; 30 Beav. 
 
 tied, without payment of the money 495. 
 
 advanced, to deprive the lender of 4 Miller's Estate, 2 Pearson (Pa.), 
 
 his securities. In re Durham, etc., 248; Rhoadsa. Hoernerstown Build-
 
 309.] LEGALITY AND EFFECT OF CERTAIN ACTS, ETC. 307 
 
 tracted by it in purchasing real estate cannot be enforced 
 against it. 1 Even where, by a subsequent curative act, the 
 title to the land purchased ultra vires became confirmed in 
 the association, this did not validate a mortgage given upon 
 the premises by the building association, and the vendor could 
 base no claim against the society itself thereon, but was only 
 allowed, upon the equitable doctrine of liens for purchase- 
 money, to make himself paid out of the land itself, so far as 
 it would reach.* 
 
 Effect upon Corporation of Unlawful Departure from Proper Func- 
 tions. 
 
 309. The unlawful departure of a building association 
 from its proper functions in purchasing real estate, even to 
 the extent of changing its character entirely into that of a 
 land society, will not, of course, eo ipso, put an end to its 
 chartered existence as a building association, nor relieve its 
 members from obedience to its rules and performance of their 
 duties in the society. The case of Hughes v. Lay ton 3 was 
 decided upon this point. The following were the facts of 
 the case : On the 10th of May, 1852, about 300 persons 
 formed themselves into a society intended to be established 
 under the provisions of the act. At the first meeting held 
 for the establishment of the society, it was stated that the ob- 
 ject of the society was to enable those persons who might 
 join it to procure a vote for the county by obtaining the allot- 
 ment of a piece of land. The respondent (Layton) was not 
 present at the meeting, but he" was aware, at the time he 
 took shares in the society, that one of its objects was the 
 purchase of land. Rules for the conduct of the society were 
 prepared, and were duly certified and enrolled, and shortly 
 afterwards Layton joined the society as an investing member 
 
 ing Association, 82 Pa. St. 180. As Ib., and see ante, 302. 
 to powers of building associations, s 33 L. J., M. C. 89; 10 Jur., N. 
 
 incorporated under the general law S. 513; S. C., nom. Reg. . D'Eyn- 
 
 of Alabama, to hold real estate, and court, 9 L. T. Rep., N. S. 712; 28 
 
 convey the same (not abridged by J. P. 116; 4 Best and S. 820; 12 W. 
 
 Act 1870, p. 308) see Cahall v. Citi- R. 408; et nom. Hughes v. D'Eyn- 
 
 zens* Mutual Building Association, court, 3 N. R. 420; 116 Engl. C. L. 
 
 61 Ala. 232. Rep. 819. 
 
 1 Faulkner's App., 11 W. N. C. 
 (Pa.) 48.
 
 308 THE LAW OF BUILDING ASSOCIATIONS. [CH. XI. 
 
 (there being at that time no other class of members), by sub- 
 scribing for two shares, upon which he at various times after 
 wards made payments. The directors of the society bought 
 an estate, which was conveyed to the trustees for the society, 
 and was then divided into allotments amongst such of the 
 members as desired to have land. The members who had no 
 allotment made to them continued as investing members, as 
 contra-distinguished from the other members, who were also 
 allottees. On the 26th of March, 1855, Lay ton became one 
 of the allottees of the said land, and signed and delivered to 
 the board a memorandum, of which the following is a copy : 
 "No. of Register, 501. I, Edward Layton, of 12, Upper 
 Street, Islington, do agree to take two allotments of the so- 
 ciety's land situate at Enfield. Dated March 26, 1855. Ed- 
 ward Layton. The weekly subscription as usual." Layton 
 was at thr.t time considerably in arrear with his subscriptions, 
 and never paid any more after the date of the memorandum, 
 but disputed his liability. The society, having borrowed a great 
 part of the purchase-money of the said land, and having no 
 funds out of which it could repay the sum borrowed, except 
 the subscriptions in arrear from Layton and other allottees, 
 called upon him for payment, which he refused to make. 
 Arbitrators were then appointed, who made an award order- 
 ing Layton to pay a certain sum ; and on his neglecting to so 
 do, a summons was taken out by Hughes, as a trustee, to en- 
 force the performance of the award. At the hearing it was 
 objected that the justice had no jurisdiction, on the ground 
 that the society was not a society within the meaning of the 
 6 and 7 Will. 4, C. 32, and that it had no power to buy land, >r 
 make its members contribute to the purchase thereof, and 
 that the said E. Layton had ceased to be a member. The 
 justice decided that he had no jurisdiction, and a case was 
 stated for the opinion of the court under the 20 and 21 Vic., 
 C. 43. In delivering judgment, Cockburn, C. J., said : " I 
 am of opinion that there ought to be judgment for the appel- 
 lant. Under the circumstances of the case, the justice ought 
 to have issued his warrant to enforce the performance of the 
 award. The society was registered as a benefit building so- 
 ciety under the 6 and 7 Will. 4, C. 32, and, by the rules which 
 have been certified, subscriptions and fines are to be paid by
 
 310.] LEOALITr AND EFFECT OF CERTAIN ACTS, ETC. 3U'J 
 
 the members. The respondent was a member, and he has 
 not paid his subscriptions or fines. To the claim of the so- 
 ciety for the'payment of the sums due, two answers are made. 
 First, the respondent says that the society has been dissolved, 
 and that, by an arrangement between the members, the society 
 has been changed from a benefit building society to a free- 
 hold land society. If that be the case, it would seem to be a 
 contravention of the original purpose of the society, under 
 which it had been formed in the first instance ; but, even if 
 that is so, it does not follow that the society has ceased to 
 exist. If there has been a misapplication of the funds con- 
 tributed by the members, the proper course of proceeding, on 
 the part of a member who thought himself aggrieved, would 
 be to apply to a court of equity. But so long as it remains 
 in existence the members are bound by the rules ; the con- 
 sideration of an alleged misapplication of the funds is foreign 
 to the jurisdiction of the justice. The whole question is, Was 
 it in existence ? If so, the justice has no power to consider 
 whether the funds have been properly applied or not. That 
 is a question for a court of equity. I do not see that, because 
 the arrangement was made to purchase land, the society is 
 put an end to." The same doctrine has received incidental 
 recognition in Pennsylvania. 1 
 
 Misuse of Power in Lending Money. 
 
 310. A building association may also become guilty of 
 acts ultra vires in lending its money in a manner not permit- 
 ted by law. It is well understood, that, whilst the power to 
 lend its money is at the very foundation of a building asso- 
 ciation's usefulness, it does not amount to, and was never in- 
 tended to be, a banking or discounting power in any proper 
 acceptation of the term," and its assumption, by entering into 
 
 1 See Miller's Est., 2 Pears. (Pa.) Ohio St. 258; Forest City United 
 
 248. See also Hoboken Building Land and Building Association . 
 
 Association v. Martin, 2 Beas. (N. Gallagher etal., 25 Id. 208; Ashland 
 
 J.) 428. Banking Co. t>. Centralia Mutual 
 
 9 Schober v. Accommodation Sav- Saving Fund Association, 9 Luz. 
 
 ing Fund and Loan Association, 35 Leg. Reg. (Pa.) 41. Order drawn 
 
 Pa. St. 223; Building Association v. by president on treasurer is not a ne- 
 
 Seemiller, 3 Phila. (Pa.) 115; S. C., gotiable security, but subject, in any 
 
 35 Pa. St. 225; State v. The Oberlin holder's hands, to all the equities of 
 
 Building and Loan Association, 35 the society. Ib.
 
 310 THE LAW OF BUILDING ASSOCIATIONS. [CH. XI. 
 
 the business of purchasing and discounting notes, where there 
 was a constitutional prohibition upon any corporation at- 
 tempting to exercise banking powers, except upon certain 
 qualifications not acquired by building associations, was held 
 to be not only an act in excess of its powers, but in contra- 
 vention of the law of the land, giving the society, as the 
 holder of a note so discounted, no claim upon its maker. 1 
 
 Nature of Security to be Lawfully Taken. 
 
 311. It seems, indeed, to be the accepted law in Eng- 
 land that, " although the society may hold personal estate and 
 securities for its money, yet it has never been allowed to ad- 
 vance the funds of the society to the members upon personal 
 security."* No such strictness, however, seems to prevail in 
 this country. As to corporations generally, it is said that a 
 provision in the charter pointing out the securities in which 
 its funds shall be invested, is merely directory ; and that a 
 borrower upon different security cannot claim that it is void 
 on the ground that the corporation had no right to take it.* 
 In Alabama it is decided that, building associations being au- 
 thorized by law to lend money to their shareholders secured 
 by mortgage on real estate, on such terms and conditions as 
 may be prescribed by their by-laws, a loan is not ultra vires, 
 although it is not made in conformity with, or may be in di- 
 rect contravention of, the by-laws of the association granting 
 it. 4 And it is said in New Jersey, that a building association 
 
 1 Manufacturers and Mechanics' Bank . Matthews, 98 U. S. 627; 
 
 Savings and Loan Co. . Conover, Shewaiter v. Pirner, 55 Mo. 233; 
 
 5 Phila. (Pa.) 18. Edwards t>. Fairbanks, 27 La. Ann. 
 
 s Davis, Law of Building, etc., 449, 450; Elwell v. Dodge, 33 Barb. 
 
 Societies, p. Ill; cit. R. t>. Scott, 13 336. 
 
 L. J., M. C. 70; 8 Jur. 473; S. C., 4 Kelly t>. Mobile Building and 
 
 nom. R. v. Shortridge, 1 New Sess., Loan Association, 64 Ala. 501 (rit. 
 
 C. 56; 1 Do we and L. 855. Angell and Ames, Corp.-, 362). 
 
 3 Mutual Life Insurance Co. . This was a case of ejectment, the 
 
 Wilcox, 7 N. Y. Weekly Dig. 13. mortgage having been given to se- 
 
 A loan made by a corporation upon cure the payment of $2000 in one 
 
 security forbidden by its charter has year, and monthly rent of $25 for 
 
 been held to be enforceable against the premises. It was held that 
 
 the borrower: Morawetz, Priv. usury was no defence, a mortgage, 
 
 Corp., 47; cit. Ayresc. South Au- in a court of law, being more than 
 
 stralian B. Co., L. R., 3 P. C. 548, a mere security for a debt, and creat- 
 
 559, per Mellish, L. J. -. National ing a direct and immediate estate
 
 313. J LEGALITY AND EFFECT OF CEKTAIX ACTS, ETC. 3H 
 
 has the right to invest its funds upon the same security as 
 would be taken between private persons ; so that, whilst it 
 may be the custom to require bond and mortgage, and an as- 
 signment of stock as collateral, this is by no means obligatory, 
 and no presumption arises against the association where it is 
 not insisted upon. 1 So, in Pennsylvania, the purchasing of 
 notes, as a means of safe keeping and investment of the soci- 
 ety's funds, is not questioned, although the buying of them 
 to sell, or for the purpose of gain, and with a view to employ- 
 ing the proceeds in buying again, is said to be a very differ- 
 ent thing, wholly outside the legitimate business of a building 
 association.' 
 
 312. It may also, when lending money to a member, ac- 
 cept, in addition to his own personal security and assignment 
 of his stock, the note and mortgage of a third party, not a 
 member, upon his or her own real estate, 3 and the mortgage 
 so given will stand for the whole undertaking of the borrower 
 with the society, 4 although it be given by a married woman, 
 the wife of the borrower. 5 
 
 Loans to Strangers and Persons not Sui Juris. Mortgages of Married 
 Women. 
 
 313. It is said in Pennsylvania,' and in Ohio, 7 and 
 seems to be the understanding of the law in Indiana, 8 in Kan- 
 
 in lands, a fee-simple unless other- * See Massey v. The Citizens' 
 wise limited. Welsh v. Phillips, Building and Savings Association of 
 54 Ala. 309. Hence no defence could Paola, 22 Kas. 624; Juniata Build- 
 be made which could not be made ing and Loan Association v. Mixell, 
 if the conveyance was absolute no 84 Pa. St. 313; Ass'n v. Steele, 11 
 inquiry into the consideration of the W. N. C. (Pa.) 204; Tanner's App., 
 debt, or of its validity. Doec. Roll, 11 Pittsb. Leg. Jour. (Pa.) 301. 
 7 Ham. Ohio, 4Q1. A court of 4 Ib. and Relief Saving Fund 
 equity is the proper forum for the Association v. Longshore ct al., 8 
 consideration of all other questions Luz. Leg. Reg. (Pa.) 199. 
 than found in the execution of the * See cases in note 3. 
 conveyance. Morris v. Harvey, 4 * Wolbach v. The Lehigh Build- 
 Ala 300. ing Association. 84 Pa, St. 211 (217), 
 
 1 Union Building and Loan As- and Obiter in Stiles's App., 9 W. N. 
 
 sociation of New Brunswick . The C. 83 (84). 
 
 M iM,nic Hall Ass'n, 2 Stew. (N. J.) ' State v. The Oberlin Building 
 
 389 (392). See ante, 123, 126. and Loan Association, 35 Ohio St. 
 
 8 Manufacturers and Mechanics' 258. 
 
 Savings and Loan Co. v. Conover, 5 8 Poock et nl. v. The Lafayette 
 
 Phila. 18. Building Association, 71 Ind. 357.
 
 312 THE LAW OF BUILDING ASSOCIATIONS. [CH. XI. 
 
 sas, 1 and in Massachusetts," that a building association has 
 the power of lending its money to members only, and not to 
 strangers. It must be admitted that there is nothing in the 
 reason or constitution of building associations in favor of the 
 doctrine. On the contrary, although it undoubtedly was their 
 design that eventually all the members should become bor- 
 rowers, in practice there is always a large portion of them 
 who content themselves with paying, and never think of draw- 
 ing out. Thus, if none but members may receive loans, the 
 funds of the society may go begging ; it may be subjected to 
 constant losses on account of their lying idle ; and the very 
 end aimed at by the association, the speedy and profitable 
 winding-up, be delayed by a restraint as unreasonable as the 
 license is harmless. 8 Yet, in the absence of special statutory 
 authority giving that license, the doctrine denying it to build- 
 ing associations must be held to be established by authority. 
 In England it was long ago conceded that building associa- 
 tions had the right to make loans to persons not members/ 
 In New Jersey, their right to do so is expressly asserted. 5 In 
 Connecticut, under the Act of 1850, the power of loaning to 
 strangers, under certain restrictions, was recognized.' But 
 in all of these instances the power was expressly granted by stat- 
 ute. Where such is not the case, the weight of authority un- 
 doubtedly is to consider the loaning of money to outsiders as 
 an unlawful act on the part of the association ; and the latter 
 will not be permitted to enforce the loan for more than the 
 amount actually advanced, with legal interest. Such, indeed, 
 was the rule laid down in Connecticut. 7 In Indiana, the 
 borrower was not permitted to defend against the building 
 association, plaintiff, upon the ground that it had exceeded its 
 powers in loaning the money to one not a member. 8 And in 
 
 1 St. Joseph and Kansas Loan 6 The Mechanics and Working- 
 
 and Building Association t. Thomp- men's Mut. Sav. Bank and Building 
 
 son et al., 19 Kas. 321. Ass'n v. Wilcox et al., 24 Conn. 159. 
 
 * See Howard Mutual Loan and And see Same v. The Meriden Agen- 
 Fund Ass'n t>. Mclntire, 3 Allen, 571. cy Co., Ib. 147. The act allowed 
 
 1 See ante, 117-121. loaning to strangers where no mem- 
 
 * Cutbill v. Kingdom, 1 Exch. bers applied. 
 
 494 (505); 17 L. J., Exch. 177. 7 See cases in preceding note. 
 
 6 Union Build.Loan Assn. etc.r.The ? Poock et al. t;. The Lafayette 
 Masonic Hall Assn, 2 Stew. 389 (392) Building Association, 71 Iiid. 357.
 
 315.] LEGALITY AND EFFECT OF CERTAIN ACTS, ETC. 31S 
 
 Pennsylvania, the building association is allowed to recover 
 from a borrower, not being a member, the amount loaned, 
 with interest. 1 The same rule is applied in Kansas." 
 
 314. The true theory probably should be between the 
 extremes ; so that, without denying the right of the building 
 association to lend its funds to outsiders, under any and all 
 circumstances, it must be remembered, (1) that it can be per- 
 mitted to exercise the right only when by so doing no mem- 
 ber who can give sufficient security, and applies for a loan, 
 is prejudiced in his right and opportunity to receive the 
 8;uiio ; b and (2), that the statutory and charter privileges and 
 immunities conceded to building associations, in the matter of 
 premiums, interest, and all payments beyond the limits of 
 what the usury laws allow in transactions between other bor- 
 rowers and lenders, were intended to apply only to dealings 
 between the association and its members, and not between it 
 and outsiders. 4 The relations between the association and its 
 members are, by statute, placed upon a peculiar footing, and 
 it cannot be assumed that a mere stranger should be bound 
 by rules which govern the members only by virtue of their 
 membership and its implied and express undertakings ; or by 
 statutory provisions which look towards the government of 
 the society's internal affairs exclusively, and whose favor and 
 obligations are intended for members only. 
 
 315. Thus, in Connecticut, a joint stock corporation, 
 authorized by its charter " to do a general insurance agency, 
 commission and brokerage business, and such other things as 
 are incident to, and necessary in, the management of that 
 business," in order to effect a loan of a building association, 
 subscribed for its stock, and received a loan upon the sunn- 
 conditions on which other members, as one of which it was 
 treated, received loans. Upon a suit to foreclose the mort- 
 gage given to secure the loan, it was held, that the corporation, 
 whose charter gave it the powers above described, had not 
 
 1 Wolbach v. The Lehigh Build- Building Association of New Haven 
 
 iug Association, 84 Pa. St. 211. t>. Wilcox, 24 Conu. 147; Same . 
 
 9 St. Joseph and Kansas Loan and Merideu Agency Co., Ib. 159. And 
 
 Building Association v. Thompson see ante, g 117-121, and post. 315. 
 et al.. 19 Kas. 821. 4 Ib. and Wolbach v. The Lchiirh 
 
 3 The Mechanics ami Working- Building Association, 84 Pa. St. 211 
 
 men's Mutual Savrur- Bank and (217).
 
 314 THE LAW OF BUILDING ASSOCIATIONS. [CH. XI. 
 
 power to subscribe to the stock and become a member of the 
 building association ; that such subscription was void ; and 
 that, therefore, as the loan must be considered to have been 
 made to a party who was not a member of the building asso- 
 ciation, practically at a rate exceeding the lawful rate of in- 
 terest (6 per cent.), the contract was not protected by the 
 laws sanctioning such contracts between the building associa- 
 tion and its members, but was usurious. The amount of all 
 payments whatever made by the borrowing corporation to 
 the lending corporation, were therefore ordered to be deducted 
 from the sum total of the former's apparent indebtedness, and 
 a decree of foreclosure entered upon the remainder only. 1 
 
 316. In the class of outsiders, towards whom the build- 
 ing association, as a lender, and with reference to the statutes 
 of usury, stands in precisely the same position as any other 
 corporation or private person, must be included all those who 
 are not sui juris, as infants and married women, who, al- 
 though they may, in some States, become members of build- 
 ing associations, yet labor to such a degree, under the com- 
 mon law disability to contract, as to be incapable, without 
 special authority, to become bound, by the terms of a build- 
 ing association mortgage, to any greater extent than they 
 would be bound by a mortgage given to a private person ; 
 i.e., where they have, in general, the capacity to mortgage, for 
 principal and lawful interest. Thus, in Pennsylvania (under 
 the Building Association Act of 1859 and its supplements), 
 where a married woman, capable of mortgaging her separate 
 property, but incapable of contracting, except where expressly 
 empowered by statute, and only to the precise extent granted 
 by such authorization, gave a mortgage to a building associa- 
 tion to secure the repayment of a loan, together with fines, 
 premiums, and dues, the association could recover from her 
 no more than the amount actually loaned, with legal interest, 
 and that, notwithstanding the money received by her was ex- 
 pended in the improvement of her separate estate. 2 These 
 
 1 The Mechanics and Working- * Wolbach t>. The Lehigh Build- 
 
 men's Mutual Savings Bank and ing Association, 84 Pa. St. 211. 
 
 Building Association of New Haven See, however, also Building Asso, 
 
 .TheMeriden Agency Co., 24 Conn, elation . Rice and wife, 8 W. N. 
 
 159 ; and see Same v. Wilcox, Ib. 147. C. (Pa.) 12.
 
 318.] LEGALITY AND EFFECT OF CERTAIN ACTS, ETC. 315 
 
 stipulations, it is said, are distinct and separate from the con- 
 tract of loan, and not, like other conditions (e. g., scire facias, 
 and failure of interest clauses, etc.), or waivers, part of the 
 authorized mortgage contract itself ; and whilst the latter bind 
 the married woman, 1 the former do not. 
 
 317. But if a married woman does not set up her cover- 
 ture as a defence to the premiums contracted for, her next of 
 kin, after her death, cannot be permitted to do so. a And 
 where a woman was the owner of shares in a building associa- 
 tion, and upon a joint judgment of her and her husband 
 (which was, in law, only the latter' s), a loan was made by the 
 building association to the husband, the money passing di- 
 rectly into his hands ; his appeal from a decree refusing to 
 open the judgment was dismissed, on the ground that the 
 contract, though invalid as to her, was perfectly valid as to 
 the husband, who alone was before the court asking for relief 
 against its enforcements. 3 
 
 318. On the other hand, if a married woman, being ca- 
 pable of giving a mortgage upon her separate property to 
 secure her husband's debts, unites in executing such an one to 
 secure a loan which her husband, as a stockholder, procured 
 from a building association, it was held to be a valid mort- 
 gage upon her separate property, covering premiums, fines, 
 and dues. 4 The question here is a very simple one, and the 
 distinction obvious. The woman is capable of giving a mort- 
 gage to secure her husband's debts, whatever they may be. He 
 is free to contract for the payment of fines and premiums. 
 What, then, is his debt ? If he is liable (as he is) for the 
 whole sum stipulated in the mortgage, and fines, and pre- 
 
 1 See Miner v. Graham, 12 Har- But the fact of a wife's joining with 
 
 ris (Pa.), 491 ; Glass 0. Warwick, 4 her husband in a mortgage upon his 
 
 Wright, 140; Patterson v. Robin- lands to secure overdue notes, when, 
 
 son, 1 Cas. 82; Black v. Galway, 12 by assignment she held a prior m< >rt- 
 
 Harris, 18. gage covering the undivided 0110- 
 
 * Kingsessing Building Associa- half of a co-tenant's intercut in the 
 
 tion v. Roan, 9 W. N. C. (Pa.) 15. same lands, does not subordinate 
 
 3 Tanner's Appeal, 11 Pittsburgh the mortgage she holds as assignee 
 Leg. Jour. (Pa.) 301. to that in which she joined with her 
 
 4 Juniata Building and Loan As- husband. She conveys IIRT. ly her 
 sociation r. Mixell. 84 Pa. St. inchoate right of dower. Hudson 
 313. Sec also Association r. Steele, City Savings Institute r. McAitlmt 
 51 \V. X 0. (P:i.) 304; ante, 71. -t al.. 8 N. Y. Weekly Dig. 63.
 
 316 THE LAW OF BUILDING ASSOCIATIONS. [CH. XI. 
 
 miurns, or for dues and contributions of any kind secured by 
 his obligation, the wife's mortgage stands for them all. 1 
 
 Loans to Other Corporations. 
 
 319. A further question arises as to the right of a build- 
 iiiir association to advance money to another corporation. 
 When this is done by way of mere deposit in a bank, there 
 can be no impropriety in it. But a case" arose in 1870, in 
 England, in which it appeared that the directors of a building 
 association had deposited money with a finance company, the 
 bank for the regular deposit of funds being named in the 
 rules. The finance company was incorporated, among other 
 things, for the raising and borrowing money at interest, and 
 receiving deposits. The manager of the latter was also the 
 manager of the building association. The finance company, 
 however, not being a banking company, no checks were 
 drawn on it; but when a deposit was to be withdrawn, two 
 of its directors drew a check upon its bankers in favor of the 
 depositor for the amount withdrawn. Such a check, upon 
 the representation of the manager that the directors of the 
 building association had required repayment, was drawn in 
 favor of the building association, countersigned by the man- 
 ager of the finance company (who was also the manager of the 
 building association), and was then given into his possession. 
 It was cashed by the bank, but the proceeds never paid to the 
 building association's directors. Shortly afterwards the man- 
 ager died, and his estate, being insolvent, the building associa- 
 tion was unable to recover the amount. It then, by bill in 
 equity, asked the court to direct the finance company to 
 make good the amount, alleging that the deposit of the so- 
 ciety's money with the defendants was unauthorized and ille- 
 gal, and that the defendants had notice of such illegality ; 
 that the repayment to the manager was without any authority 
 from the directors of the building association, and without 
 
 1 It seems that an executor, where J., Ch. 317; 20 W. R. 354; 26 L. T., 
 
 he can mortgage at all generally, N. S. 121. 
 
 may equally effect a mortgage with s Hardy t. Metropolitan Land 
 
 power of sale and all the incidents and Finance Co., Law Rep., 7 Ch. 
 
 of a building association mortgage App. 427; S. C., 41 L. J., Ch. 237; 26 
 
 on advanced shares Cruikshank L. T. Rep., N.S. 407; 20 W. R. 425; 
 
 v. Duffln, L. R. 13 Eq. 555; 41 L. (reversing S. C., L. 11. 12 Eq. 386.)
 
 320.] LEGALITY AND EFFECT OF CERTAIN ACTS, ETC. 317 
 
 taking a proper receipt. The defendants, in their answer, 
 alleged that they had no notice that the building association 
 had no power so to invest its moneys ; that, if it were so, it 
 followed that the society had also full notice of the fact of 
 that investment, as some of the directors in the finance com- 
 pany were also directors of the building association ; and that 
 they had duly repaid the deposit by the check given to the 
 manager. It was held that the building association's direc- 
 tors had been guilty of a breach of trust in the depositing 
 the money with the defendants, since, if it was to be perma- 
 nently invested, it must be placed upon certain securities 
 only, and if to be kept for immediate use, it must be de- 
 posited in the bank indicated by the rules ; that the payment 
 to the manager was not a payment to the building association, 
 as was shown by the course of business, and that the building 
 association's demand from his personal representatives did not 
 prove it to have been such ; and that, therefore, the money 
 having come into the defendants' hands by a breach of trust, 
 and being still in their hands, they must now refund it (with 
 interest), and it could not be treated as a mere money demand 
 to be sued out at law. It had also been previously deter- 
 mined that a building association had no power to invest its 
 funds with another building association, and that money bor- 
 rowed by one to be lent to another constituted no debt which 
 could be enforced against the former. 1 
 
 320. It can scarcely be said that these decisions furnish 
 an universally applicable guide to the solution of the question. 
 In this country it has received no distinct adjudication. There 
 was a case in New Jersey, 8 in which a Masonic hall associa- 
 tion had subscribed for stock in a building association, and 
 received a loan from it, and the debt was enforced. But this 
 question was not expressly presented, and the decision of the 
 court touched only upon other issues raised before it. Tin- re 
 was another case, in Connecticut,' where a building associa- 
 
 1 In re Durham County Perma- * Union Building Loan Associa- 
 
 nent, etc., Society, AVilson's Case, tion of New Brunswick r. Tin- Ma- 
 
 25 L. T. Rep., N. S. 83; Law Rep., sonic Hall Association, etc., 2 Stew. 
 
 12 Eq. 516. The Act 37 and 38 Vic., (N. J.) 389. 
 
 C. 42, allows a terminating society $ Mechanics and Workingmen's 
 
 to invest with another society, but Mutuiil Savings Bank and Building 
 
 goes no further. A x-ia'ion of New Haven v. The
 
 318 THE LAW OF BUILDING ASSOCIATIONS. [CH. XI. 
 
 tion attempted to enforce a note secured by mortgage given 
 it by a corporation chartered " to do general insurance agency, 
 commission and brokerage business, and such other things as 
 are incidental to, and necessary in, the management of that 
 business;" and which had subscribed to the stock of the 
 building association, and received a loan under reservation of 
 premium, etc. It was, however, held that the agency com- 
 pany had acted ultra vires in subscribing for the stock, and 
 the subscription was void ; that the loan was, therefore, not a 
 loan to a member, and that the building association might 
 only recover what it had actually loaned the corporation, 
 with legal interest. 
 
 321. It certainly does not appear to be consistent with 
 the purposes of a building association's being, nor in any wise 
 related to the policy which justifies the creation of these in- 
 stitutions with the extraordinary powers they possess, to have 
 its membership in part composed of corporations, and there 
 can be little doubt that the statutes never contemplated such 
 a departure. 1 But, dismissing the question of membership, 
 and looking at the transaction as one between the association 
 and a stranger, there appears to be no reason for denying the 
 right of a building association to lend money to another cor- 
 poration, under the same restrictions which were indicated in 
 the case of loans to strangers. 8 As for any power to invest 
 their funds in the purchase of and speculation in stocks and 
 bonds of any other corporation whatever, none such has ever 
 been conceded to building associations, and the act would be 
 clearly a misapplication of its funds. 
 
 Power to Reserve Interest. 
 
 322. The taking of interest is so much the ordinary in- 
 cident to a loan, that the authority to lend implies that of 
 reserving lawful interest on the loan, and it is, therefore, not 
 ultra vires of building associations to reserve interest upon 
 the loans they are capacitated to make.* 
 
 Meriden Agency Co., 24 Conn. 3 City Building and Loan Co. v. 
 
 159. Fatty, 1 Abb. App. Dec. (N. Y.) 
 
 1 See ante, 117-121. 347. But see post, Ch. xii., and 
 
 * See ante, 313-316. Maryland cases there collected.
 
 3*3.] LEGALITY AND EFFECT OF CERTAIN ACTS, ETC. 319 
 
 Power to Compromise with Members. 
 
 323. Nor doe8 it appear to be an improper exercise of 
 the building association's power, to compromise with its 
 members, investors as well as borrowers, upon fair and equita- 
 ble principles, and in good faith, both as to the interest of 
 the stockholders and of the public, and thereupon to release 
 them from further obligation to the society. A building as- 
 sociation was brought into court upon quo warranto on the fol- 
 lowing charges of abuse of its charter : (1) It had refused to 
 make loans to members ; (2) it had established a minimum 
 premium, giving the directors power to vary and n'x it, from 
 time to time, below which bids by members were refused ; (3) 
 it had ordained distribution or dividends of cash and securi- 
 ties to be made to unadvanced shareholders, amounting, in 
 the aggregate, to $10,296 ; (4) it had borrowed money on notes 
 from a bank, for the purpose of making loans to member:-. 
 and for purchasing stock held by members, so as to transfer 
 it to persons not members, who desired to obtain loans from 
 the association ; (5) it had permitted some members to hold 
 more than the legal maximum of shares, and issued loans 
 thereon ; (6) it had, on several occasions, compromised with 
 members, who then sold their shares to the association, and 
 were released by it from all further obligations towards it. 
 Every one of these transactions was by the court declared 
 illegal and an abuse of power, except the last. Of this the 
 court says: "The association compromised with several of its 
 members, and released them from further obligation to the 
 corporation, as well on account of indebtedness for loans, as 
 on subscriptions. We have examined the evidence, and wi- 
 de not find there was any want of good faith in these- transit: 
 tions. The interest of the stockholders, as well as the public, 
 seems to have been kept in view. Of course, without this. 
 such acts could not be upheld ; but we are not able to iiml in 
 the statute any inhibition of the power to make such coin 
 promises, and, on fullest consideration, we unite in holding 
 that the power exists." The judgment of the court, accord- 
 ingly, was, that the corporation be ousted from the exercise 
 of the powers referring to the refusal of loans to its members ; 
 of establishing rules and regulations, or so conducting its busi- 
 ness as to prevent the loan of its funds to a member who bids
 
 320 THE LAW OF BUILDING ASSOCIATIONS. [CH. II. 
 
 the highest premium therefor ; to borrow money for the pur- 
 pose of lending it ; to divide or distribute its funds among 
 members in advance of the distribution at the winding-up <>f 
 the corporation ;' to traffic in shares of its own stock ; and to 
 permit any member to hold in his own right more than the 
 legal maximum of shares : but not from the power of com- 
 promising, in good faith and reasonably, with a member, 
 and releasing him from further obligation to the corpo- 
 ration, whether the indebtedness be for a loan, or on sub- 
 scription. 3 
 
 Declaring Dividends. 
 
 32-t. In the absence of express statutory authorization to 
 declare and pay dividends out of the profits of the society's 
 business, either annually or otherwise, no such power exists in 
 building associations. As to any participation in profits, the 
 scheme has reference to the final adjustment of accounts, not 
 to any intermediate realizations. 3 
 
 Liability to State for Unlawful Departure from Powers Granted. 
 
 325. As to the corporate existence of the building asso- 
 ciation, as affected by the departures above considered (and 
 of all others of which it may become guilty), from its pre- 
 scribed and legitimate course of business ; it is not determined, 
 eo ipso facto, simply by reason of their occurrence, but they 
 render the association liable to the interference of the State 
 for the purpose of depriving it of the franchises, with which 
 it has shown itself unfit to be entrusted. 4 And, upon such 
 direct proceeding to enforce against the society the forfeiture 
 of its charter, every step on the unlawful path becomes nn 
 aggravating element, to be weighed by the court in pronounc- 
 
 1 Such periodical dividends are Association, 29 Ohio St. 92. And 
 
 permitted in some of the States by the mere disadvantageousness of a 
 
 statute. bargain is not ordinarily a ground 
 
 s State v. The Oberlin Building for setting it aside. Jeffries c. In- 
 
 and Loan Association, 35 Ohio St. surance Co., 22 Wall. (U. S.)47, and 
 
 258; (Gilmore, C. J., dissenting be- ante, 169-170. 
 
 cause, in his opinion, the violations 3 See State v. The Oberlin Build- 
 
 of its charter by the building asso- ing and Loan Association, 35 Ohio 
 
 ciation had been such as should be St. 258. 
 
 punished with total forfeiture). 4 See post, 479-481, 504 
 See also States. Greenville Building
 
 326.] LOANS OR ADVANCEMENTS TO MEMBERS. 321 
 
 ing its sentence. But it is said, that where a corporation has 
 abused, or misused, its corporate power, but not in any par- 
 ticular as to which it is declared by statute the act shall op- 
 erate as a forfeiture of its charter, the court is vested with a 
 discretion to determine whether the corporation shall be 
 ousted of its franchise to be a corporation, or merely from 
 the exercise of the powers illegally assumed. 1 
 
 CHAPTER XII. 
 
 LOANS OK ADVANCEMENTS TO MEMBERS. 
 
 326. Analysis of the transaction and contract of loan or advancement 
 
 between society and borrowing member. 
 328. Interpretation by the various courts of the nature of loans or 
 
 advancements in building associations. 
 338. Decisions in England. 
 339. Decisions in Maryland. 
 340. Decisions in Kansas. 
 341. Decisions in Massachusetts. 
 342. Decisions in New Jersey. 
 
 343. Decisions in Virginia (and District of Columbia). 
 344. Decisions in New Hampshire. 
 345. Decisions in New York. 
 346. Decisions in Georgia. 
 
 347. Decisions in North Carolina (and South Carolina). 
 348. Decisions in Nebraska. 
 349. Decisions in Tennessee. 
 350. Decisions in Kentucky. 
 g 351. Decisions in Pennsylvania. 
 352. Decisions in Indiana. 
 353. Decisions in Connecticut, Iowa, Ohio. 
 !. Result of examination of all decisions. 
 ;: :!57. Two cardinal principles concerning loans and borrowers. 
 
 Analysis of the Transaction and Contract of Loan or Advancement 
 Between Society and Borrowing Member. 
 
 32G. The peculiar principles of the building asso- 
 ciation scheme are fully developed in the transaction of 
 loan or advancement between the association and its mein- 
 
 1 State t>. The Oberlin Building 258: State r. Greenville Building 
 and Loan Association, 35 Ohio St. Association. 29 Id. 92.
 
 322 THE LAW OF BUILDING ASSOCIATION'S. [CII. XII. 
 
 It is a matter of no slight difficulty, to convey an exact 
 Appreciation of the elements which enter into this transaction 
 in their relation to one another, and so to penetrate and anal 
 yze its complicated nature, as to present, at once, all its divers 
 phases in a homogeneous and consistent aspect. It i.- DOOM 
 .sary, in order to accomplish this purpose, to exclude, from 
 the outset, the consideration of all contracts which do not 
 partake of the distinctive properties of the building associa- 
 tion loan, in its legitimate character, keeping in view its 
 legitimate results. This transaction is made up of the 
 following essential parts : (1) A member holding a certain 
 interest in the ultimate achievements of the association, 
 conditioned upon his fulfilment of the duties of his mem- 
 bership, may, instead of waiting for the realization of 
 liis prospects upon final settlement, anticipate their contem- 
 plated result by obtaining from the society an advance bear- 
 ing a certain proportion to the same ; (2) in consideration of 
 the preference thus accorded him over his fellows, the require- 
 ments of strict mutuality constrain him to yield to the society 
 a return, in the shape of a sum of money, premium, or 
 bonus, which he agrees to pay it, not only commensurate 
 with the advantage he has from the accommodation, but also, 
 being a contribution to the common treasure of the associa- 
 tion, designed to be, in a measure, an indemnification to 
 others who have been postponed to him in the competition 
 for such preference, in which his peculiar circumstances and 
 necessities have justified him in overbidding them ; (3) he 
 accepts a liability to reimburse the association for the outlay 
 it has made in his favor, for the measure of which reimburse- 
 ment the business affairs of men furnish only a single univer- 
 sally just and adequate basis, that of principle and interest. 
 But the manner and method in which this obligation is 
 intended to be discharged is the crucial test of the system, 
 and the criterion of the legitimacy of the transaction. 
 
 327. It is perfectly manifest, that, if a person, receiving 
 
 1 For the manner and formal! Lies as in popular speech, no significance 
 
 of obtaining loans, see ante, 42- being attached to the one distin- 
 
 43. The words "loan" and "ad- guishing it, in legal effect, from 
 
 vance," and their derivatives, are the other, unless expressly pointed 
 
 rised interchangeably in this work, out.
 
 328.] LOANS OR ADVANCEMENTS TO MEMBERS. 323 
 
 an advance of, say, $750, were to give another a bond for 
 $1000, payable in one, three, or ten years, with interest, he 
 would have little reason to be gratified with his bargain, 
 whether the interpretation put upon it obliged him to pay 
 interest on $750 or on $1000,' and whether he was to be per- 
 mitted to repay that sum in installments, or only in a lump. 
 This would be nothing more nor less than a loan at usury, 
 which could in no wise recommend itself to the conscience of 
 a court, or to the policy or intelligence of a sanctioning legis- 
 lature. Still less attractive would it appear, if the bond 
 imperatively called for regular monthly partial payments, to 
 be enforced by fines and forfeitures, at the same time stip- 
 ulating that the interest, also to be paid monthly, should, 
 until the entire $1000 were made up, never decrease in 
 amount, but at all times be the lawful rate per annum upon 
 $750 or $1000, as the case might be. Such, therefore, can- 
 not be the nature of a building association loan ; yet such, 
 viewing it merely as a loan, unquestionably are its features. 
 The conclusion is thus forced upon the mind, that it will not 
 do, to consider the advancement of the building association to 
 its borrowing member in the light of a loan, pure and simple, 
 but that there must be something in the transaction, its inten- 
 tion and essential nature, as well as its practical workings, 
 which lifts it beyond the pale of mere usurious lending. 
 This element is found in the manner and method of reim- 
 bursement, although it unquestionably proceeds upon the 
 basis of principal and interest. 
 
 328. As to the repayment of the principal, the design is 
 most simple. The member, bound by his original contract 
 with the association to make stated periodical payments of 
 fixed amounts, strengthens his undertaking, to the greater 
 security of the association which has parted with its funds to 
 him, and may well, as a condition of so doing, require him to 
 give substantial assurance of his faithful intentions as to the 
 discharge of his membership duties, by mortgaging his prop- 
 erty to it as a pledge for such discharge, to the end of the 
 society's existence, and, in case of his neglect, notwithstand- 
 ing, for the enforcement of the same, as well as of all arrearages 
 and fines properly charged against him. The society being 
 1 In some States interest on premiums bid is allowed.
 
 324 THE LAW OF BUILDING ASSOCIATIONS. [CH. XII. 
 
 thus re-assured, the member, mindful of the impossibility of 
 evasion, continues to pay his regular dues. These, together 
 with all similar payments made by other members, and 
 together with all the revenues, from whatever source, flowing 
 into the society's coffers, are added to the common treasury, 
 and again made the means of securing new profits, until the 
 period arrives when the association is ready to wind-up. The 
 shares, his own interest in the society's accumulations, have 
 now reached their contemplated value. But the borrower 
 has anticipated that result, and in so doing has given the asso- 
 ciation the right to make itself whole, to reimburse itself, not 
 only for what it has given him, but also for what he has 
 agreed to add to that amount by way of premium offered, out 
 of the sum standing to his credit as a member of the society. 
 That sum is necessarily the amount he has received, plus the 
 premium he has bid. The society appropriates this, and the 
 principal is repaid. 
 
 329. There remains the matter of the interest. Small 
 and frequent contributions are the life and blood of the build- 
 ing association. They are also less irksome and far easier to 
 persons in small circumstances than large payments at greater 
 intervals. The interest is, therefore, payable monthly, like 
 the subscriptions, and, like them, its discharge is secured by 
 the borrower's mortgage. As the interest from any borrower 
 comes in, it is added to the common fund, swelling his own 
 share in it not only by a proportionate part of its own size, 
 but also of the profits which its re-investment may secure. It 
 is clear, however, that, as no reckoning or adjustment of ac- 
 counts can take place between the society and the borrower, 
 previously to the final one, when the society is wound up, 1 
 and as he gets the full benefit of every contribution he makes, 
 not only in the increased value it adds to his interest in the 
 common fund, but also in his share of the profits made upon 
 its investment, the amount of interest which he has to pay 
 does not vary from the beginning to the end. Each contri- 
 bution is not applied to his debt as it comes in ; it is the final 
 amount, ascertained, upon winding up, to have accumulated 
 upon his shares, which is then applied in extinguishment of 
 
 1 See ante, 128-129.
 
 331.] LOANS OR ADVANCEMENTS TO MEMBERS. 325 
 
 the principal. 1 Until that period arrives the latter remains 
 unchanged, and unchanged, of course, the interest upon it. 
 Both cease at the same time. 
 
 330. These are the essential elements of a building asso- 
 ciation loan, and where they are not found, the contract does 
 not properly come under that description. Thus, if the 
 building association were to make a loan to a stranger, or to a 
 member, upon terms which excluded him from participating 
 in the advantages resulting from the mutual system, in which 
 outlay and return are so intimately blended as to' be in fact 
 inseparable ; if the contract were that of mere loan, looking 
 towards the repayment, dollar for dollar, of the sum loaned, 
 and the discharge of interest in the meanwhile, this would 
 not constitute a building association loan, and the reservation 
 of a premium would be merely usury, whether sanctioned by 
 statute or not. But it is not, therefore, indispensable, that 
 the security given by a member to his association should stip- 
 ulate only for the performance of membership duties and the 
 payment of interest. It may be given for a specific sum, or 
 principal, to be returned at a specified time, if it is, neverthe- 
 less, clearly shown, in the bond or mortgage, that, whatever 
 may be its formal phraseology, the discharge of the debt is 
 designed to be according to the system and principle peculiar 
 to building associations. 
 
 331. As to the stipulation for the return of the loan, 
 naming a specific sum, such, in fact, is the effect of every 
 building association mortgage. And one which calls for it in 
 express terms, does nothing which is not equally done in a mort- 
 gage which calls for the continued payment of dues during the 
 association's existence. These payments (of dues) must, accord- 
 ing to calculation, eventually be equal, or make the borrower' s 
 share, in value, equal, to the sum actually loaned and the 
 premium bid. This, then, is to be given to the association, 
 and a mortgage which calls for a specific sum to be returned, 
 really asks nothing more ; for that sum will be realized when 
 the shares are at par, and in either case that par value goes 
 to satisfy the mortgage. It is a distinction in words only, to 
 say, that in the one case there is no money to be returned, 
 
 1 See Barker v. Bigelow, 15 Gray ton, etc.. Association, pros., t. Horn- 
 (Mass.), 130 (137); State, Washing- backer, 13 Vr. (N. J.) 635. '
 
 326 THE LAW OF BUILDIXO ASSOCIATIONS. fCH. XII. 
 
 whilst in the other there is ; that the latter stipulates for pay- 
 ment of principal and interest, whilst, in the former, these 
 features are not an element in the transaction, the only debt 
 the member guarantees in his mortgage being his obligation 
 to pay dues, and to be a faithful member, to the end of the 
 society's life. The fact that the society must be made whole, 
 is acknowledged upon either theory, and it makes no practi- 
 cal difference in this particular, whether the transaction is 
 treated as one in which money has been advanced and must 
 be repaid out of the final accumulation ; or whether, to save 
 consistency, the same end be accomplished by proclaiming 
 that an advanced member has no interest in the final distribu- 
 tion. Yet the latter is a theory, the handling of which is not 
 only a most delicate matter, but which, logically, results in 
 the most confusing inconsistencies and palpable error. 1 There 
 is, indeed, a purpose of convenience to be served by making 
 a definite sum repayable, the advantage of which is apparent, 
 where it is desired to repay a loan before its maturity, or 
 where it becomes necessary to enforce such payment from a 
 delinquent borrower. In such cases, instead of being obliged 
 to resort to intricate and uncertain calculations, as to the 
 probable duration of the society, during which dues may yet 
 become payable by the member, there is afforded a plain and 
 unmistakable basis, in the figure of the mortgage, from which 
 it only remains to deduct the stock-payments (less his share of 
 expenses, etc.) which the member wishes to apply to the liqui- 
 dation of his debt. 
 
 332. As to the stipulation for the return of the loan, 
 naming a specific time when the debt shall be due, it has 
 probably never been pretended that a building association, 
 taking a mortgage from one of its members for a specific 
 sum (being, in fact, the amount received, plus the premium 
 bid by him, or the former only), and contracting for the repay- 
 ment of the same, with interest, in one year, or any number 
 of years within the lifetime of the association, would have 
 the right, upon the expiration of the period named, and with- 
 out any default on the part of the mortgagor, to demand 
 from him the face value of the mortgage, even allowing him 
 
 1 See ante, 146-148.
 
 332.] LOANS OR ADVANCEMENTS TO MEMBERS. 32? 
 
 to deduct the aggregate amount of his stock-payments. Such 
 is not the purpose intended to be served by building associa- 
 tion loans. A long time to repay, and small payments fre- 
 quently repeated, are among the principal recommendations 
 of this system, and a contract which contemplates anything 
 else is not properly to be classed as a building association 
 loan. Yet mortgages written for one year are not neces- 
 sarily improper, unless intended to be enforced, at all events, 
 fctrictly according to such limitations. By such arrangement, 
 even independently of statutory power given, the borrower's 
 right to repay is fixed beyond question, as also that of the 
 society to recover in case of default; and it seems the court 
 will treat such mortgages as not intended to be recoverable 
 during the building association's continuance except upon 
 default in stock-payments, etc. 1 In one of the earliest Eng- 
 lish cases, the note given by the borrowing member to the 
 society was payable on demand, the agreement of forbearance 
 and stock-payments being an outside and additional arrange- 
 ment. 2 Certainly a building association may, with perfect 
 propriety, make loans to its members, with all the incidents- 
 of true building association loans, fixing the probable period 
 of the. dissolution of the society as that of the maturity of 
 the debt. In adding this provision to the insertion of a 
 stipulated amount, loaned and returnable, there is, again, 
 nothing added to the substance of the contract looking 
 merely towards the payment of dues, etc., during the soci- 
 ety's running. About this period, in either case, a settlement 
 must take place between the association and its borrowers. 
 But as it does not follow that all mortgages held by the soci- 
 ety against its members must of necessity then be cancelled, a 
 member having the right to apply his stock-payments to the 
 liquidation of his debt, or not, as he pleases, provided the 
 society's claim is satisfied ; ' it is perfectly clear that a mort- 
 gage stipulating for the repayment of a sum certain, at a 
 time certain, whilst it answers every purpose aimed at by the 
 society, will be more readily disposed of and realized upon 
 by way of assignment, than one which lacks certainty in 
 
 1 See Kupfert 0. Guttenberg Build- See Silver?. Barnes, 37 E. C. L. 
 ing Association, 30 Pa. St. 485; and R. 335; 6 Bing. N C. 180; Scott,, 
 see also, post, Ch. xvi. 300. 8 See post, 453-453.
 
 328 THE LAW OF BUILDING ASSOCIATIONS. | ' II. XII. 
 
 these particulars, and is, therefore, a more generally available 
 security. 
 
 333. The fact, that, in some loans by building associa- 
 tions, interest upon the advance is not reserved as such, can 
 make no difference in the essential nature of the transaction, 
 win -re its equivalent is added to the borrowing member's 
 stated contributions, the payment of which, thus increa-r'l, 
 is secured "by his mortgage. Thus, if the par value of a 
 share be $200, the monthly dues upon which, for an invent- 
 ing member, are $1, but, after he has taken a loan of siino 
 from the association, become 2, it is perfectly evident that 
 the additional $1 per month exactly represents the interest 
 he would have to pay, at six per cent, per annum, upon SL"III, 
 whether it be called dues, interest, or redemption money. 
 Calling it by another name does not make it another thing. 1 
 Some distinctions may, of course, arise where such an arrange- 
 ment is adopted, as to the interpretation of the word <1n< s 
 and of the liabilities of borrowing members in respect of 
 them, 4 but there is no difference, so far as the practical 
 results of the contract are concerned, between the two 
 methods of securing to the society the full return of its 
 outlay. 3 
 
 33-i. An exact analysis of the transaction between the 
 building association and its borrowing member, therefore, 
 discloses this primary fact, that the reimbursement which he 
 owes to the society, proceeds upon the basis of a return of 
 principal and interest, whether, under the construction of any 
 particular statute, this principal, upon which interest is to be 
 charged, be taken to include both the amount actually chang- 
 ing hands and the premium contracted for ; or whether, for 
 the purposes of interest, the real principal be considered as 
 represented only by the sum which he, in point of fact, has 
 received into his hands, the premium being regarded as an 
 additional and separate undertaking, forming no part of the 
 loan proper, and hence not liable to carry with it the pay- 
 ment of interest so far as it is concerned. 4 
 
 1 See Delano v. Wild et al., 6 Al- is practically charged upon the 
 
 leu (Mass.), 1. * See post, 373. amount advanced together with the 
 
 1 Except that in the latter case premium bid. 
 the interest, under the name of dues, 4 See post, 369-370, 398.
 
 335. J LOANS OR ADVANCEMENTS TO MEMBERS. 329 
 
 335. The features thus far developed give evidence of 
 little beyond a mere transaction of loan : and yet the element 
 which lifts it beyond this conception has of necessity already 
 been hinted at. It lies in the fact, that, whatever is paid by 
 the borrower, by way of premium, interest, dues, fines, etc., 
 becomes a portion of the common fund, and, being re-in- 
 vested, adds its profits to the great bulk in which he has a 
 proportionate interest; and these, being again re-invested, 
 and so on, ad infinitum, continue to swell the assets of the 
 association, until, in due course of time, distribution can be 
 made, and advanced members may be relieved of their obli- 
 gations. Thus the borrower himself profits by his own pay- 
 ments : he is, in a measure, at once the lender and the bor- 
 rower, the payer of the interest and the recipient of his own 
 payments. Yet, such he is not directly, but only consequen- 
 tially. He contracts, in no literal sense of the word, with 
 himself, but with the corporation. His own individuality is 
 merged in it as the lender. He does not deal with his fellow 
 members of the association, as with so many partners. The 
 transaction is not a dealing in partnership funds pure and 
 simple ; for members of a corporation are not partners, even 
 as between themselves, 1 and a corporation is not a partner- 
 ship. Nevertheless, so closely does the organization of a 
 building association resemble that of a partnership, that it is 
 almost impossible to draw the line precisely where the attri- 
 butes of a partnership end and those of a mere corporation 
 begin. 3 As a mere member, his interest in the society's 
 lands and assets is essentially that of a stockholder in a corpo- 
 ration, not that of a partner in the partnership property ; yet 
 in no other corporation known to the law do all the payments 
 made by a member, who is at the same time a borrower so di- 
 rectly affect the extent of his liabilities to the corporation, at 
 any moment at which he desires to balance against them his 
 interests in the same, nor so distinctly impress him with the du- 
 plex character of creditor and debtor at one and the same time. 1 
 
 1 Baker . Adm'r of Backus, 32 s This refers to incorporated 
 
 111. 82; Crystal Lake Ice Co. v. building associations. As to uuin- 
 
 Sainc. Ib. corporaled societies, see post, Ch. 
 
 * See Est. National Building As- xx. 
 sociation, 9 \V. N. C. (Pa.) ?<J.
 
 330 THE LAW OF BUILDING ASSOCIATIONS. [CH. XII. 
 
 336. An additional and equally important element, in- 
 timately involved in that just considered, is the uncertainty, 
 which, to the very final settlement, leaves the exact extent of 
 the borrowing member's reciprocal rights and liabilities in 
 doubt. As a member of the association, he is bound to con- 
 tribute his proportionate share to the payment of its expenses, 
 and to bear his proportion of the common losses. The nature 
 of a building association's business necessarily brings with it 
 great and constantly recurring risks. It may be fortunate 
 and it may be unfortunate. In the former case, the accumu- 
 lation will be exceedingly rapid, under the operation of the 
 rules of compound interest, and he will be in a position to 
 discharge his debt in so short a time after its creation, that, 
 notwithstanding his heavy undertakings at the outset, the sum 
 total of his disbursements may not have drained him more, to 
 any appreciable extent, than an ordinary loan of the same 
 amount would have done, in the discharge of which he would 
 not have had the advantage of the easy and gradual method 
 of repayment. In the other case, he will, in common with 
 the rest of the members, and to precisely the same extent, 
 labor under the difficulties which beset the association, and 
 the effect of these drawbacks will be the postponement and 
 aggravation of the burden of his contract. A larger propor- 
 tion of his contributions, and of the profits thereon, will be 
 absorbed in discharging his obligations as a member, a less- 
 er one will be available for the discharge of his obligations 
 as a debtor of the association. These contingencies, however, 
 are incalculable up to the time when the association is in a 
 position to pay out the shares in cash. There has been a loan ; 
 the method of its repayment is pointed out ; but there is no 
 telling what will be required to repay the loan. Under all 
 circumstances, it will be the par value of the shares advanced : 
 but how much the member will be obliged to pay until they 
 have attained that figure, it is impossible to foretell. It may 
 be approximated upon the theory of annuities, as in mort- 
 gages given merely for the payment of dues ; but it cannot 
 be ascertained with infallible accuracy before winding up. 
 The figure, indeed, may be stated in the obligation ; but when 
 that amount will have accumulated to the borrower's share in 
 the undivided funds of the association, when, only, that sum
 
 337.] LOANS OR ADVANCEMENTS TO MEMBERS. 331 
 
 becomes repayable, no man can tell until the time has actu- 
 ally arrived. 
 
 337. Tims, there appear to be combined in this trans- 
 action two distinct elements inseparably blended, viz. ; that of 
 a loan, and that of a partnership venture. Exclusively, it is 
 neither ; nor can either element properly be said to impress 
 the transaction with its distinctive character more decidedly 
 than the other. But either the one or the other side may, in 
 the formal parts of the transaction, be presented with pecu- 
 liar prominence. Where the method pursued is technically 
 that of a redemption of the stock by the society, and an un- 
 dertaking by the advanced member to continue the payment 
 of dues, etc., during the society's existence, no mention being 
 made of the return of a specific sum of money, the partner- 
 ship feature is notably striking ; whilst the underlying fact 
 of an actual loan is, at the first glance, thrown into the back- 
 ground. The converse of this occurs where there is the re- 
 cital of a loan of a specific amount and a stipulation for its 
 return. Substantially both are the same ; but, accordingly as 
 the one or the other mode has been prevalent, the courts, as 
 a general thing, have contented themselves to go no further 
 than t\\e prima fades ) and have based their theories upon it, 
 holding the one to be a partnership transaction, the other to 
 be a mere loan, as the one or the other appeared to be sanc- 
 tioned by the statutes, and by previous judicial interpretation 
 of similar contracts. The safe rule to follow, and the rule 
 which courts have practically, if not avowedly, followed in 
 most instances, particularly in the United States, is this : The 
 two elements being in a state of such perfect equipoise, as 
 to entitle neither to indubitable preponderance, when any 
 question of legality or reciprocal rights depends upon the rec- 
 ognition of the one or the other as governing the construc- 
 tion of the contract, if the association has proceeded ami is 
 proceeding under a statute authorizing the formal methods 
 and the practical results of such contracts, the weight of de- 
 cision must be thrown to the effectuating of the intention of 
 the legislature; if the association is not proceeding under the 
 protection of such express legislative sanction, the benefit of 
 the doubt must be given to the individual seeking to escape 
 an apparently or actually exorbitant demand, and against the
 
 332 THE LAW OF BUILDING ASSOCIATIONS. [CH. XII. 
 
 association endeavoring to enforce a contract which partakes 
 equally of two elements, one of which would render it lawful, 
 the other unlawful. 
 
 In order to give the reader a perfectly clear and can- 
 did view of the state of the law upon this subject, it is in- 
 dispensable to present a synopsis of the leading decisions 
 found in the reports of England and the several States of the 
 
 Union. 
 
 i 
 
 Interpretation by the Various Courts of the Nature of Loans or Ad- 
 vancements in Building Associations. Decisions in England. 
 
 338. In the case of Silver v. Barnes? it appeared that, 
 under the rules of the society, advances were made to mem- 
 bers, from time to time, at five per cent, interest ; the sums 
 so advanced were put up to competition among the members, 
 and the member who bid highest obtained the loan. The de- 
 fendant, a member of the society, having bid 15 17s. 66?. for 
 a loan of 80, gave his note, payable on demand, for 80, with 
 interest, the premium of 15 17s. 6d. being agreed upon, in ad- 
 dition ; the whole sum of 95 17s. Qd., and interest on 80, to 
 be paid by monthly installments of 16s. On an action being 
 brought upon the note, these facts were set out, and usury plead- 
 ed. Upon the trial, the judge left it to the jury to say whether 
 the partnership was a shift and contrivance to evade the usury 
 laws ; if so, they were to find for the defendant : but if they 
 thought it a bonajlde partnership, to find for the plaintiffs. 
 The jury gave a verdict for the latter, and Tindal, C. J., re- 
 fused to set it aside, on the ground of misdirection. " The ques- 
 tion was, whether the transaction was a loan of money, or a 
 dealing with the partnership fund. If it was a loan it was usu- 
 rious. We think it was a dealing with the partnership fund, in 
 which the defendant had an interest in common with the other 
 members of the society, and that it was not a loan. The de- 
 fendant was interested in the fund when the money was ad- 
 vanced and when it was repaid. The rules of the society are, 
 in effect, a mere agreement by partners that their joint con- 
 tributions shall be advanced for the use of the one or the other 
 as occasion requires ; and the transaction was not a borrowing 
 by the maker of the note from the payees." A case is then 
 
 1 6 Bing., K C. 180; 8 Scott, 300; 37 Engl. C. L. Rep. 335.
 
 338.] LOANS OB ADVANCEMENTS TO MEMBERS. 333 
 
 referred to before Alexander, C. B., in the year 1828, in which 
 ;u i advance from a similar society to one of its members was 
 held to be a partnership transaction, and not a loan. 
 
 In Burbidge v. Cotton* the objects of the society, certi- 
 fied in 1845, were to advance the society's funds to its 
 members, to accumulate and divide the profits periodical- 
 ly. The advances were made by putting up a share at one 
 of the meetings for competition among the members, and the 
 highest bidder was entitled to the advance on that share, and 
 as many more, to the number of twenty, as he chose to take 
 at the same premium. For each share so taken, he was to 
 pay the premium agreed upon, and also 85. a month, for 100 
 months (during which time the society was to exist) as re- 
 demption money ; and on these conditions he might have an 
 advance of 100, the full value of his share, on giving 
 security for the repayment of it, together with such premium 
 and redemption money. He was also entitled to participate 
 in the general profits of the society. B. became a member 
 of the society, and obtained an advancement of five shares at 
 premiums of 71 for three, and 73 for the remaining two, 
 receiving an advance of 500 upon giving the security re- 
 quired. Subsequently he died, and, the society pressing for 
 the payment of the moneys secured to them, B.'s executrix 
 filed a bill against them, alleging that the transaction was 
 usurious, and the society illegal, and claiming to redeem the 
 security on repayment of 500 with legal interest. It was 
 held (besides, that the question of legality or illegality of the 
 association could not be determined in this proceeding) that, 
 upon the principle of Silver v. Barnes, the transaction was 
 a dealing with partnership funds, and not a loan, and hence 
 there could be no question of usury. 
 
 In Seagrave v. Pope? a member was advanced upon ten 
 shares, on two different occasions, at a premium of 45 1<>.<J. 
 per share of 100. Receiving at each time 272 lite., he 
 gave two mortgages, conditioned for payment of dues, etc., 
 and 3$. 6d. per share redemption money, in the rules also 
 called interest. Desiring to transfer these mortgages upon 
 
 1 8 Engl. Law and Eq. Rep. 57; 21 15 Engl. L. and Eq. 477: 22 L. 
 L. J., Ch. 201; 15 Jur. 1070; 5 De J., Ch. 258: 16 Jur. 1099; 1 De G.. 
 G. and Sm. 17. M. and G. 783; L. T. Rep 173.
 
 334 THE LAW OF BUILDING ASSOCIATIONS. [CH. XII. 
 
 other property, and obtaining the consent of the directors 
 thereto, a deed was drawn, by which, in consideration of .".44. 
 to him paid by the trustees of the building association, he as 
 signed to them certain lease-hold property, upon trust to per- 
 mit him, so long as he should duly make the several pay 
 ments, and observe the regulations, prescribed in the articles 
 of the society in respect of said shares, etc., to hold said prem- 
 ises, and receive the rents thereof for his benefit : in case of 
 default for six months, these to be taken by the society, and 
 if insufficient with their revenues to cover the payments, due 
 upon his undertaking, to be sold. Truro, L. C., held, in an 
 elaborate opinion, that the transaction was not a loan, but an 
 anticipatory payment, by way of discount, of the shares the 
 members would otherwise be entitled to claim payment of 
 at the termination of the society. The 3*. Gd. per share, 
 although called " redemption money or interest," in the rules 
 of the society, the Lord Chancellor held to be a consideration, 
 not for the loan of money to be returned, but for a repay- 
 ment to the member made earlier than he would, of right, bo 
 entitled to receive it. And similarly other phrases, in the 
 society's rules, seeming to indicate that they regarded the 
 transaction as a loan, e.g., the rule that no second mortgage 
 shall be deemed a sufficient security for any moneys to be ad- 
 vanced by the society, a provision for redemption beginning 
 with the words, " That if any member of the society having 
 purchased any share or shares, and secured the repayment 
 thereof," or "security which shall have been given for the 
 same," are all held to be merely inapt expressions, inap- 
 plicable, in strictness, to the nature of the real transaction. 
 Yet, in the course of the opinion, it is significantly said, that 
 the securing of the payment of dues " virtually amounts to a 
 securing the repayment of the sum advanced, but something 
 more, as the monthly payments will be sure to cover and 
 exceed the amount advanced." This excess is, clearly, the 
 premium bid, and, if the dues are taken to include the re- 
 demption money, the accruing interest, besides. 
 
 These cases are regarded as establishing the principle in 
 England that the transaction is to be viewed as a dealing in 
 partnership funds, and, in that sense, have been uniformly
 
 340.] LOANS OR ADVANCEMENTS TO MEMBERS. 335 
 
 followed in subsequent decisions. 1 It must be observed, how- 
 ever, that the doctrine of Silver v. Barnes appeai-s to have 
 been carried a step farther than originally intended. In that 
 case, as has been seen, the nature of the contract had been 
 left to the jury, and upon their finding that it was, in fact, a 
 partnership arrangement, the court merely refused to disturb 
 the verdict, or to declare the transaction illegal upon its face. 
 The later cases admit no question as to the nature of the 
 transaction, but take it for granted, that it is a partnership 
 transaction, and proceed upon that as a legal postulate. 
 
 Decisions in Maryland. 
 
 339. In this axiomatic shape, the doctrine seems to have 
 found its way to Maryland. In Robertson v. The American 
 Homestead Association? the cpurt say : " We adopt the 
 views expressed by the Court of Queen's Bench in Silver v. 
 Barnes, . . . and by the Courts of Chancery in England, in 
 Burlidge v. Cotton, . . . and Seagrave v. Pope. . . . This 
 last case involved the construction of a mortgage exe- 
 cuted in conformity with the Statute of 6 and 7 Will. I V. 
 Ch. 32, almost identical in its terms with the mortgage before 
 us." And these views have been subsequently applied in 
 that State, 8 but only where the mortgages were given for 
 the payment of dues, etc., merely, for the indefinite period 
 of the society's continuance in strict accordance with the 
 statute, and where the association advancing the money was 
 organized under the building association's act, and came pre- 
 cisely within its meaning. 4 
 Decisions in Kansas. 
 
 340. The same principles are adopted in Kansas, in the 
 case of MKKe>/ v. TJie Citizens' Building and Saving 
 
 1 See Cutbill t>. Kingdom, 17 L. liar v. The Baltimore 
 
 J., Ex. 177; 1 Exch. 494; In re Loan and Annuity Association, 45 
 
 Durham County Permanent Benefit Md. 546. 
 
 Building Society, Davis's Case, Wil- 4 See Williar . The Baltimore 
 
 son's Case, Law Rep., 12 Eq. 516; Butchers' Loan and Annuity A>M>- 
 
 8. C., 25 L. T. Rep., N. S. 83. elation, ubi supra; The Baltimore 
 
 * 10 Md. 897 (411). Permanent Building and Land So- 
 
 8 See Shannon v. The Howard ciety v. Taylor, 41 Md. 409; Bir- 
 
 Mutual Building Association, 36 mingham et al. v. The Maryland 
 
 Md. 383; Lister B. Log Cabin Build- Land and Permanent Homestead 
 
 ing Association, 88 Md. 115; Wil- Association, 45 Md. 541
 
 336 THE LAW OF BUILDING ASSOCIATIONS. [CH. XII. 
 
 elation of Paola. 1 The facts, that the borrower continued 
 to have an interest in the company after receiving the loan; 
 that he remained a member ; that he was interested in having 
 his debt cancelled at as early a day as possible, through the 
 aid of the accumulation of the common fund in which he had 
 a share ; that, the more he contributed himself, by way of 
 payments, to the increase of the society's funds, the sooner 
 would that time be likely to arrive ; and that the amount he 
 would, upon the winding-up of the concern, have paid, was 
 quite uncertain, were held to be elements excluding the no- 
 tion of a mere loan, and recommending that of a mere part- 
 nership transaction. 
 
 Decisions in Massachusetts. 
 
 341. In Massachusetts, the decision in Merrill et al. v. 
 Mclntire? does not distinctly proceed upon the English 
 doctrine. The ground taken as a basis for the assumption 
 that the transaction is not one of mere loan, seems rather to 
 be the uncertainty of the issue. "The monthly payment 
 which he stipulated to pay as long as the association should 
 continue to exist, was not simply for the use of the money, or 
 forbearance of repayment of the principal, but for the privi- 
 lege accorded to him of becoming an owner of a certain 
 number of shares,- and of eventually taking the dividend to 
 which, by the articles of agreement, he would, upon the 
 winding up of the affairs and general settlement of the con- 
 cerns of the association, be entitled. Whether the arrangement 
 made was one which would be likely to result advantageously, 
 was a question upon which to exercise his own judgment. 
 All the associates had the same right. Each one would de- 
 termine for himself what was the value of the prospective 
 benefit to be enjoyed, and would make his offer for the 
 money to be loaned, according to his estimate of the worth of 
 the shares which he was allowed to take and of which he 
 became the owner. . . . Whether the advantages antici- 
 pated will finally be obtained, may perhaps be questionable ; 
 
 1 22 Kas. 624. But in Hekeln- sociation, Ib. 746, the court pro- 
 
 fraemper v. The German Building ceeds upon the doctrine and assuror - 
 
 Association, Ib. 549, followed by tion of a nv re loan, 
 
 tjlynn et al. v. Home Building As- * 13 Gray. 157
 
 342.] LOANS OR ADVANCEMENTS TO MEMBERS. 337 
 
 but since the borrower, under such circumstances, is to have 
 his full proportion of the benefit of all the gain which may 
 be made, he cannot assert that he has contracted to pay, or 
 that the lender has reserved to himself, a usurious rate of in- 
 terest." ' 
 
 But in Delano v. Wild et al.* the question receives the 
 most exhaustive consideration. After looking at the trans- 
 action in the light of a purchase, by the society, of the bor- 
 rowing member's prospective interest, in which the price he 
 might be willing to take therefor, must properly be the sul>- 
 ject of negotiation, owing to the element of uncertainty, 
 which, even considering the monthly contributions as a sub- 
 stantial repayment of the principal advanced, must leave it 
 " entirely uncertain at the time of the advancement, what 
 sum, including interest, would ultimately prove to be re- 
 quired in fulfilment of the contract, to be paid upon it ;" so 
 that, so far as this element is concerned, " the redemption by 
 the company of a share of one of its members resembles, 
 and is, in some degree, analogous to those contracts which are 
 held not to be usurious, although containing stipulations for 
 the payment of extra interest, because the principal is put at 
 hazard by being made to depend upon contingent or fortui- 
 tous events, as in the cases of bottomry and respondentia, on 
 loans on post obit bonds and the like :" * the court say, " Fi- 
 nally, the transaction between the parties cannot be deemed 
 to embrace an agreement between them for the reservation of 
 payment of usurious interest, because it is a dealing between 
 them as partners in relation to a partnership fund, in which 
 they had a common interest." This case avowedly rests 
 upon that of Silver v. Barnes* and is followed in Bowker 
 v. Mill River Loan Fund Association? 
 
 Decisions in New Jersey. 
 
 342. The case of Delano v. Wild, is approvingly cited 
 in New Jersey, in Clarkville Building and Loan Associa- 
 tion v. Stephens* it being there, too, observed that, " the as- 
 
 1 See, to the same effect, Baxter 3 Cit. 2 Pars. Con. 415; Thorn. 
 
 v. Mclntire, 13 Gray (Mass.), 168; dike v. Stone. 11 Pick. 183. 
 Marker et al. . Bigelow, 15 Id. * Supra, 338. 
 130. 7 Allen (Mass.), 100. 
 
 s 6 Allen, 1. 11 C. E. Gr. 351 (355).
 
 338 THE LAW OF BUILDING ASSOCIATIONS. [CH. XII. 
 
 sociation, in this case (Delano v. Wild), was unincorporated, 
 but the principle declared, if sound, must govern the rights 
 of the members of an incorporated association." ' 
 
 And in Iloboken Building Association v. Martin* the 
 method of making the loan being under the guise of a re- 
 demption by the society of its stock held by the member 
 offering it at the lowest price, it is said : " The money was 
 not advanced by way of loan, but in redemption of the de- 
 fendant's share, a mode of investment provided for by the 
 constitution of the association, authorized by the act of in- 
 corporation." ' 
 
 Decisions in Virginia (and District of Colombia). 
 
 343. In Virginia, where it is held that the contract be- 
 tween the association and the borrower involves the total 
 cessation of his interest and membership in the concern, and 
 the total extinguishment of his stock, his mortgage binding 
 him, however, to continue certain payments during the asso- 
 ciation's existence, 4 it is said that " the price of the shares is 
 not a loan," but a redemption, after which, " if they continued 
 in existence for any purpose whatever, they could only so 
 continue as the absolute property of the association, and of 
 course could not be sold for any debt due to it." ' 
 
 Decisions in New Hampshire. 
 
 344. In New Hampshire, in the case of Shannon et al., 
 Trustees Manchester Loan and Fund Association v. Dunn* 
 
 1 The logic of this statement is 8 Winchester Building Associa- 
 
 not very apparent. tion . Gilbert et al., supra. A 
 
 * 2 Beas. 428. See also Franklin similar doctrine seems to be held in 
 
 Building Association v. Marsh, 5 the District of Columbia, where it 
 
 Dutch. (N. J.) 225. is said that the advance of money 
 
 3 See also State, Washington made by a building association to 
 Building and Loan Association, one of its stockholders upon the 
 pros. v. Hornbacker, 13 Vr. (N. J.) shares which he owns, is not a loan 
 635, where a distinction seems to be of money, but a purchase of such 
 attempted between the effect of the stock, and is therefore not subject to 
 technical process of "redeeming" the usury laws. Pabst v. Building 
 shares, and of "loaning" upon Association, 1 McArthur, 385; Mul- 
 shares. See post, 440. loy v. Fifth-Ward Building Associa- 
 
 4 See White v. Mechanics' Build- tion, 2 Id. 594. 
 
 ing Association, 22 Grattan, 233; 43 N. H. 194. This also was 
 Winchester Building Association t. an unincorporated society. 
 Gilbert et al., 23 Ib. 787.
 
 345.] LOANS OR ADVANCEMENTS TO MEMBERS. 339 
 
 the Massachusetts decisions are also followed, to the extent 
 of holding the contract of loan prima facie a partnership 
 dealing, and, consequently, free from usury ; the question, 
 however, whether there be usury or not in the transac- 
 tion, being left, not to the court, on the face of the con- 
 tract, but to the jury to find from all the circumstances of 
 the case. 
 
 Decisions in New York. 
 
 345. Similar seems to be, in New York, the leaning 
 of The Citizens' Mutual Loan Association v. Webster, 1 in 
 which the contract was for payment of dues, not for the 
 return of the principal absolutely. Whilst the court says that, 
 *' the moneys collected by the association being the mutual 
 property of all the members, and the greater the accumu- 
 lation, the shorter being the period during which they will 
 have to bear the burden of paying the moneys for the pur- 
 pose of accumulation, the ordinary objections to the collec- 
 tion of interest beyond the fixed rates are removed ;" yet this 
 is preceded, in an earlier part of the opinion, by the state- 
 ment : " Whether the payments required to be made by this 
 bond, in order to prevent forfeiture, will exceed the principal 
 and legal interest of the amount advanced to the defendant, 
 will depend upon matters not brought before the court. . . . 
 If the principal were payable absolutely, there could be no 
 doubt of usury," 2 and that the contract in question might 
 be, and perhaps might be shown to have been usurious, is 
 expressly stated by the court. 
 
 But in Melville v. The American Beneficial Building 
 Association et al.* where the contract was substantially the 
 same as in the preceding case, but the association was unin- 
 corporated, the doctrine of a partnership transaction was held 
 inapplicable : " The English cases . . . are distinguishable 
 from the present, in that all those cases arose out of trans- 
 actions of associations formed under and authorized by 
 statute." 
 
 1 25 Barb. 263. See also City ferent from the other arrangement, 
 
 Building and Loan Association v. see ante, 331. 
 
 Fatty, 1 Abb. App. Dec. 347. 33 Barb. 103. 
 
 * That this is really nothing dif-
 
 340 THK LAW OF BUILDING ASSOCIATIONS. [CH. XII. 
 
 Decisions in Georgia. 
 
 346. In Georgia, the doctrine adopted by the courts is 
 very closely akin to that held in the last two States. In 
 Parker v. The Fulton Loan and Building Association, 1 a 
 distinction between the transaction of a formal sale of the 
 stock to the association and a mere loan is recognized on the 
 ground of the borrower's continued interest in the society's 
 affairs, his partnership relations. "And if there can lie- 
 any difference arising from the fact that the sale is made to 
 the company itself, it is only in this, that the seller himself 
 then is and continues interested in the purchase, as well as in 
 every sale and purchase until the final winding up of the 
 enterprise. If he sold it to a stranger, no matter at what 
 discount, there could be no question of usury ; much less can 
 such be the case where he sells it to an organization of which 
 he is a member and an interested party." 
 
 In a case anterior to this in point of time, that of The 
 J3ilb County Loan Association v. Richards? the same 
 principle had been adverted to, and it had been further said : 
 " Perhaps the best argument in support of this transaction, is 
 the risk and uncertainty attending the result. Stock is put 
 up at auction, the terms of the sale are distinctly understood, 
 and a sale and purchase is made, taking into view all the 
 contingencies attendant on the society, whether of prosperity 
 or adversity, during the few or many years of its existence. 
 The stock may be worth a premium, or it may be a dead loss 
 at the end of the operation. This, each must decide for 
 itself. If he concludes to take half now for it, that is, one 
 hundred dollars for stock now, nominally worth two hundred 
 dollars, six, eight, or ten years hence, who has the right to 
 say he judges foolishly ? So, on the part of the association, 
 they run the hazard of losing all. The debts of the concern 
 may absorb all their funds, including [the borrower's] bond 
 and mortgage, so that instalments paid in, out of their pri- 
 
 1 46 Ga. 166. about the transaction, and that, if 
 s 21 Ga. 592. McDonald, J., dis- tbere were, there being a substan- 
 sents with an elaborate opinion, in tial loan, the transaction was not 
 which he denies, inter alia, that necessarily free from usury, a part- 
 there was any partnership dealing nership having no more right than
 
 346.] LOANS OE ADVANCEMENTS TO MEMBERS. 341 
 
 vate funds, and paid to [the borrower] for liis worthless 
 stock, in advance, ... is a total loss, not only to the body 
 corporate, but to each individual.*' 
 
 Analogous is the reasoning in Pattison v. The Albany 
 Building and Loan Association* where, repelling the idea 
 of a mere loan at usury, as upon the face of the contract, it is 
 said : " The very nature of such an institution involves a 
 profit and loss account, and an expense account for manage- 
 ment. An advanced, or borrowing member, as well as the 
 rest, holds a relation to these accounts which must be ad- 
 justed before he can repudiate his express contract, on the 
 plea of deficient consideration or on that of usury. Whether 
 he gets full consideration, or whether he pays usury, does not 
 depend simply on whether the amount he refunds is more 
 than he has drawn out with lawful interest on the latter sum. 
 There may be no excess after deducting from his payment 
 his due share of the losses and expenses. As he takes his 
 chances, in case an early winding up should occur (in which 
 event his payments cease from that time), the rule of equity 
 requires that he should incur the hazards fairly incident to 
 the business in the way of losses and expenses, and bear his 
 due proportion of the same. There is no proper basis for 
 ascertaining usury and arriving at the amount of it, without 
 all these elements are brought in." 
 
 But the application of the partnership principle in these 
 cases, whilst prima facie recognized, and, consequently the 
 question of usury or no usury, are to be left to the jury, 
 finding that the organization is, in fact, and l)ona Jide, one 
 whose real intent and object is the " accumulating a fund 
 by monthly subscriptions or savings of the members thereof, 
 to assist them in procuring for themselves such real estate as 
 they may deem proper," and not, in truth, a mere device to 
 evade the usury laws." The fact of the borrower's member- 
 ship raises no conclusive presumption that there was no usury 
 in the transaction. 8 
 
 an individual to exceed the stat- * Parker v. The Pulton Loan and 
 
 utes of usury. See post, 347, Building Association, 46 Ga. 166. 
 
 note. J See Silver t>. Barnes, supra. 
 1 63 Ga. 373.
 
 342 THE LAW OF BUILDING ASSOCIATIONS. [CH. XII. 
 
 Decisions in North Carolina (and South Carolina). 
 
 347. In North Carolina, the case of Mills et al. v. The 
 Salisbury Building and Loan Association ' appears to 
 put the transaction upon the basis of a mere loan. The 
 declared object of the Legislature being, to enable and 
 encourage persons, chiefly poor persons, to save and deposit 
 their littles, and, when sufficiently accumulated, to draw 
 them out in bulk and secure homesteads ; there is said to be 
 nothing contrary to the spirit of the act in allowing those 
 desiring to do so, to draw out in bulk and pay back in littles. 
 But it must be done in a manner not to frustrate the purposes 
 of the society's creation. The laws governing loans between 
 men must be observed. " We know of no device or cover 
 by which these associations can take from those who borrow 
 their money, more than the legal rate of interest, without in- 
 curring the penalties of our usury laws. Calling the borrower 
 ' a partner,' or substituting ' redeeming,' for lending, or ' pre- 
 mium or bonus ' for the amount which they profess to have ad- 
 vanced, and yet withhold, or ' dues ' for interest or any like 
 subterfuges, will not avail. We look at the substance." 
 
 Hence, in Overby and Wife v. The Fayetteville Build- 
 ing and Loan Association* it is said that the proper mode 
 of adjustment between the building association and its 
 borrowing member, is upon the basis of an actual loan of 
 money, and subsequent partial payments therefor by the 
 bortbwer. And these decisions have been followed con- 
 sistently in cases arising subsequently in that State.* 
 
 1 75 N. C. 292. Carolina, in Columbia Building and 
 9 81 N. C. 56. Loan Association v. Bellinger, 12 
 8 See Vann and wife . The Fay Rich. Eq. 124; O'Neal, C. J., say- 
 etteville Building and Loan Asso- ing: "How the contract . . . can 
 ciation, 75 N. C. 494; Latham and he anything else than usurious, . . . 
 wife v. Washington Building and it is difficult to conceive. Indeed it 
 Loan Association, 77 N. C. 145; must task, and has tasked human 
 Hanner et al. . The Greensboro ingenuity in every tribunal where 
 Building and Loan Association, 78 the question has been presented, to 
 N. C. 188; Hoskins r>. Mechanics' find the reason whereby such a con- 
 Building and Loan Association, 84 tract could be sustained." And ad- 
 N. C. 838; and see Smith and wife verting to the dissenting opinion of 
 . The Mechanics' Building and McDonald, J., in Building Associa- 
 Loan Association, 73 N. C. 372. tion v. Richards, 21 Ga. 592 (ante, 
 The same doctrine was held in South 346, note), he approves it, say-
 
 349.] LOANS OB ADVANCEMENTS TO MEMBERS. 343 
 
 Decisions in Nebraska. 
 
 348. In Nebraska, the cases of The Lincoln Building 
 and Savings Association, appellee, v. Graham, appellant, 1 
 and of Same v. Benjamin and Benjamin, appellants? pro- 
 ceed upon a similar theory. A building association, it is 
 said, incorporated under the general Incorporation Laws of 
 Nebraska, " for the transaction of any lawful business," and 
 having the power to "make by-laws not inconsistent with 
 any existing laws, for the management of its affairs," has no 
 right, by any device whatever, no matter how ingenious, to 
 take interest beyond the maximum allowed by the general 
 laws of the State. " Now, the scheme of a building associa- 
 tion, by selling shares under reservation of a premium, in- 
 cluded in the nominal amount of the debt, and contracted to 
 be repaid, with interest, is to be treated as a mere loan of 
 money, and is, therefore, affected with the vice of usury." 
 
 Decisions in Tennessee. 
 
 349. In Tennessee, in Martin v. The Nashville Build- 
 ing Association* where the bond was drawn for the pay- 
 ment of the nominal par value of the shares, from which the 
 premium had been deducted, by paying a certain amount, in 
 this case, one per cent, per month until it should be satis- 
 fied, the court resolved the whole transaction, which was 
 similar to that in other associations, into a mere loan, declar- 
 ing the whole scheme a shift and device to evade the law of 
 usury, and applying to the building association Lord Coke's 
 warning : " To them that lend money my caveat is, that, 
 neither directly nor indirectly, by art, or cunning invention, 
 they take above ten in the hundred ; for they that seeke by 
 slight to creepe out of these statutes, will deceive themselves 
 and repent in the end." 
 
 ing, as to the theory of partnership even a partnership fund. It wa* 
 
 transactions as underlying the con- the taking of more than legal inter- 
 
 struction of building association est for the forbearance of money." 
 
 loiins, "how that could have sane- The court below, which, under the 
 
 tified such a contract, I cannot per- English and Massachusetts 
 
 ceive. For it was as much usury had held the transaction to be legal 
 
 to receive more than seven per cent, and valid, was reversed, and the loan 
 
 (referring to Silver v. Barnes, supra) declared usurious, 
 
 on such an advance as upon indi- ' 7 Neb. 173. 
 
 vidual funds. . . . For it still was Ib. 181. 
 
 contaminated by usury, if it was s 2 Cold. 418.
 
 344 THE LAW OF BUILDING ASSOCIATIONS. [CH. 
 
 Decisions in Kentucky. 
 
 350. Similarly, in Kentucky, in Herbert v. The Kenton 
 Building and Savings Association of Covington, 1 where it 
 was shown that borrowers were required to make their ob- 
 ligations to the society payable in a certain time, for the 
 nominal amount of the advance, the premium being retained 
 by the society, and to pay their regular dues on the advanced 
 shares, and interest on the principal monthly, until the 
 general fund of the association was found sufficient to pay oif 
 all remaining shares, when the society was to dissolve ; the 
 transaction between it and the borrower was regarded as one 
 in which he released all claims upon the association, although 
 remaining a member, and, consequently, merely as a usurious 
 loan. And the same principle is reaffirmed in Gordon, etc., 
 v. The Winchester Building and Accumulating Fund As- 
 sociation? 
 
 Decisions in Pennsylvania. 
 
 351. In Pennsylvania, too, where, under the statute, the 
 powers and privileges of building associations, as to the res- 
 ervations lawfully to be made upon loans to members, are 
 more sweeping than in any other State, the English doctrine 
 is emphatically rejected. 
 
 In Bechtold v. Brehm* the member had received an actual 
 advance of $1418, executing a bond and mortgage to the associa- 
 tion, which was unincorporated, for $1800. Upon refusal to 
 pay fines and dues, the association declared the bond forfeited, 
 and thereupon caused judgment to be entered upon it. In 
 the Supreme Court, Lowrie, J., says : " We have never had a 
 case like this before, though such cases are not unknown in 
 England. 4 There such a contract was enforced at law and in 
 equity as a security for the payment of the monthly contribu- 
 tions to the association. In the present case, the defendant has 
 been treated as having forfeited his membership by default in 
 paying his contributions, and has been required to stand to his 
 bond of $1800 as a loan, after allowing his paid contributions 
 and his payment of interest as a credit thereon. The bond 
 has not been used for its legitimate purpose of enforcing the 
 
 1 11 Bush 296. 26 Pa. St. 269. 
 
 9 12 Bush 110. 4 Citing the English cases.
 
 351.] LOANS OE ADVANCEMENTS TO MEMBERS. 345 
 
 contributions of the defendant as a member, because the asso- 
 ciation has abandoned that purpose, and elected its alternative, 
 by depriving the defendant of his membership, and of all the 
 profits of their seven or eight years' business. We are there- 
 fore prohibited from considering this as a case of composition 
 by anticipation of the defendants' future share of the common 
 property, and must treat it as a mere loan ; for such is its form, 
 so the parties have treated it, and as such alone, since the for- 
 feiture of the defendant's membership, can it be enforced." 
 This was the case of an unincorporated building association. 
 
 In Heiser v. The William Tell Saving Fund Associa- 
 tion, 1 the fact of incorporation under the Act of 1850, which 
 authorized those companies to give preferences to their mem- 
 bers, under such conditions and regulations as they should 
 agree upon, was not held to legalize the contract, which was 
 again regarded as a mere loan. 
 
 The transaction disclosed in the Premium Fund Associa- 
 tion's Appeal? was not legitimately a building association 
 loan, the mortgage being executed for the sum of $1000, at a 
 rate of interest of 19 mills to the dollar per month, to be de- 
 ducted in advance for the whole period of the loan, 168 days. 
 When the loan became due it was renewed by the borrower 
 at the same rate for six months, and the interest was paid at 
 the time of renewal. Nor did it appear that the borrower be-; 
 came a stockholder at all. The transaction was, therefore, 
 treated as a mere loan. 
 
 But in Kupfert v. Guttenberg Building Association? 
 where the mortgage was written for a year, the court, 
 although distinctly recognizing the fact that these mortgages 
 were, after all, not intended to be collected during the run- 
 ning of the association, yet followed the doctrine, which had 
 already become familiar, that the transaction was a loan only. 
 
 In Philanthropic Building Association v. McKnight* 
 the borrower obtained money, at 28 per cent, premium, and 
 under stipulation for the return of a definite sum. The re- 
 turn, however, was to take place upon regular building asso- 
 ciation principles. The borrower, desiring to repay his mort 
 
 1 39 Pa. St. 137; see S. P. in Ib. 156. 
 
 Denny v. The West Philadelphia 30 Pa. St. 465. 
 
 Saving and Building Ass'n, Ib. 154. * 35 Pa. St. 470.
 
 346 THE LAW OF BUILDING ASSOCIATIONS. [CH. XII. 
 
 gage before due, agreed with the building association that it 
 should take his stock at the amount paid in, remit ten per 
 cent, from the nominal amount of the loan, and receive the 
 balance in cash. In a suit subsequently brought by the mem- 
 ber to recover usury paid, the transaction was treated as a 
 mere loan, and it was said that even the last stage of it, the 
 withdrawal of shares to pay up the mortgage, could not be 
 called a sale of the stock to the building association for the 
 balance of the mortgage loan, after deducting payments for 
 principal and interest, so as to change its nature from a mere 
 loan. 
 
 The Act of 1859 and the later acts, as to building associa- 
 tions incorporated thereunder, have made the distinction prac- 
 tically unimportant, so far as the questions presented in cases 
 arising under them are concerned, by defining exactly what, 
 upon such loans, could be recovered by the association. But 
 wherever cases arose in which loans had been taken from un- 
 incorporated building associations, or such as did not appear 
 to be incorporated under the Act of 1859, the principle that 
 the transaction is to be regarded as nothing more nor less thai} 
 a loan, is either expressly asserted, or applied in its results, 
 being, at all times and under all circumstances, taken to be 
 the established doctrine in Pennsylvania. 
 
 Thus, in Jarrett v. Cope, 1 the cases of Bechtold v. Brehm 
 and Premium Fund Association's Appeal are referred to as 
 establishing the general inapplicability, in Pennsylvania, of 
 the doctrine of Silver v. Barnes, and other English cases. 
 And in Rhoads v. Ilownerstown Building Association * and 
 Link v. Germantown Building Association* the validity 
 and extent of the contract between the building association 
 which lends, and the member who borrows, are placed en- 
 tirely upon statutory authorization, the doctrines of partner- 
 ship dealing, etc., being wholly lost sight of. 
 
 Decisions in Indiana. 
 
 352. In Indiana, the premium or percentage for a loan 
 offered by the association, which was included in a note exe- 
 cuted by the borrowing member to the association, was said 
 not to be, strictly speaking, " interest on money," within the 
 
 1 -68 Pa. St. 67. * 82 Pa. St. 180. s 89 Pa. St. 15.
 
 LOANS OR ADVANCEMENTS TO MEMBERS. 34? 
 
 meaning of those words as used in sec. 22, art. 4, of the 
 Constitution of Indiana, which prohibits, inter alia, the en- 
 art ment of local or special laws on such subjects. This bonus, 
 or percentage, or premium was merely the contract price, 
 agreed upon between the parties, for the " preference," which 
 such association was expressly authorized to sell, and such 
 member authorized to buy, and was not interest on money. 
 u The question propounded to its corporators, or the members 
 of the association, was practically this, ' How much will you 
 give for the privilege of taking this loan ? ' The members 
 of the association were under no compulsion, moral, legal, or 
 physical, in regard to any such loan ; they could compete or 
 not for the privilege of taking the loan, at their own free 
 will and pleasure." The member taking the loan " did not 
 pay his bid, but, in lieu thereof, he gave his note for the full 
 sum," of the nominal loan. 1 This reasoning, supposing it to 
 have been sufficient to satisfy the conscience of a court, 
 certainly recognized nothing in the transaction but a lending 
 and a borrowing of money. 
 
 Decisions in Connecticut, Iowa, Ohio. 
 
 353. The decisions in Connecticut, 2 Iowa,* and Ohio, 4 
 do not expressly touch upon this question. In all of them, 
 as in Pennsylvania, the statute is the exact measure of the 
 
 1 McLaughlin et al. . The Citi- " It matters not what may be the 
 
 zens' Building Loan and Savings form or device adopted, if more 
 
 Association, 62 Ind. 264; S. P. than the legal rate of interest is 
 
 Shaffrey v. The Workingmen's Sav- exacted on the money loaned, it 
 
 ings, Loan and Building Associa- constitutes usury." " Suppose the 
 
 tion, 64 Ind. 600. transaction had been as follows: 
 
 8 See the Mechanics' and Work- That the defendant borrowed of the 
 
 ingmen's Mutual Savings Bank plaintiffs $1000, and gave his obli- 
 
 and Building Association of New gation therefor, providing h- was 
 
 Haven v. Wilcox et al., 24 Conn, never to pay the principal, but was 
 
 147. to pay twenty-five per cent, interest 
 
 8 See The Hawkeye Benefit and thereon for twenty years. Such an 
 
 Loan Ass'n v. Blackburn, 48 Iowa, obligation would, we think, be usur- 
 
 385; Burlington Mutual Loan Asso- ious on its face, and the intent or 
 
 ciation v. Heider et al. , 55 Ib. 424. good faith of the transaction would 
 
 In the latter case, referring to the be immaterial." Per Seevers, J. 
 taking of interest upon the premium * See Hasrerman et al. v. The 
 
 charged, which is decided to be il- Ohio Building and Savings Asso- 
 
 legal and usurious, the court says: ciation, 25 Ohio St. 186.
 
 348 THE LAW OF BUILDING ASSOCIATIONS. [CH. XII. 
 
 legitimacy and binding extent of the contract. Only under 
 the statute can it be enforced, and only so far as it is in 
 accordance with the statute. 
 
 Result of Examination of all Decisions. 
 
 354. Such being the conflicting results of judicial inter- 
 pretation of contracts differing very slightly, and in points 
 essentially immaterial, from one another, it is impossible that 
 the truth should be found in either one of the extremes 
 represented. It must not be forgotten that a distinction 
 between such transactions in which the return of the sums 
 advanced does not, upon the face of the contract, appear to 
 be an element in it, but which seem to look merely towards 
 the payment of dues, including, or with the addition of, in- 
 terest or redemption money, to the end of the society's run- 
 ning ; and such, in which an actual repayment is stipulated; 
 although obvious enough, yet lacks not only reason, but also 
 the support of the very authorities upon which the theory oi 
 a partnership dealing is grounded. This theory comes to nl 
 from England, and has received neither the strength of addi- 
 tional argument, nor the benefit of further elucidation from 
 the reasonings of our courts. In England, no such distinc- 
 tion is hinted at. On the contrary, it has been seen, that the 
 very first case, that of Silver v. Barnes^ was one in which 
 the borrowing member had given a note for the amount 
 advanced, payable on demand, with interest ; in Burbidge v. 
 Cotton* a mortgage had been given for the payment of 8s.. 
 including redemption-money, for 100 months ; whilst in 
 Seagrave v. Pope' the deed merely recited the amount re- 
 ceived by the member, and stipulated for the payment of 
 dues and " redemption-money or interest," during the life of 
 the association. Yet upon all these transactions, including 
 the essence of every variety of form conceivable in building 
 association loans, the same construction was placed by the 
 courts, recognizing the fact that they are all, in truth, the 
 same, and that any one of them may be followed consistently 
 with the logic of the dealings, the nature, and the purpose of 
 these institutions. It is true that the terms of a statute under 
 which a building association has its being may prescribe the 
 
 1 See ante, 338. * See ante, Ib. * See ante, Ib.
 
 355.] LOANS OK ADVANCEMENTS TO MEMBERS. 349 
 
 one or the other of these forms, and thus render the remain- 
 ing ones illegal, so far as it is concerned. This is, indeed, 
 the case in some States ; * but the identity of all, in sub- 
 stance, is not thereby affected. 
 
 355. Whilst, therefore, it is impossible to exclude the 
 force of this doctrine, as pointing out an essential ingredient 
 in building association loans to members, there is still, on the 
 other hand, a peculiarity which cannot be overlooked, in con- 
 nection with the foregoing review of decisions. It is this, 
 that, with the exception of Massachusetts and New Hamp- 
 shire, where alone the partnership theory seems consistently 
 carried through, the right, independently of statutory sanc- 
 tion, of any association, incorporated or otherwise, to deal 
 with its members upon this peculiar partnership basis, has 
 never been expressly recognized, but frequently explicitly 
 denied. In New York, the doctrine of the English cases was 
 distinctly held inapplicable to an unincorporated building as- 
 sociation.* In Maryland, a corporation which made its loans . 
 to members in the approved form of building association 
 loans, but whose aims and nature did not bring it properly 
 within the statute as a building association, was not allowed 
 to enforce the reservations lawfully permitted to such insti- 
 tutions.' The same doctrine, 4 as well as'the inability of un- 
 incorporated building associations to claim the powers as to 
 such reservations conceded, to those properly incorporated 
 and standing under the protection of the statute, 6 is estab- 
 lished in Pennsylvania ; whilst in all those States, 9 as well as 
 
 1 See post, 420-422, 433-434. See Second Manhattan Build- 
 
 9 Melville v. The American Bene- ing Association v. Hayes, 4 Abb. 
 
 fit Building Association et al., 83 App. Dec. 183; 2 Keyes, 192; Me- 
 
 Barb. 103. chanics' Building Association t. 
 
 3 Williar v. The Baltimore Butch- Stevens et al., 5 Duer, 676; Franz 
 ers' Loan and Annuity Association, v. The Teutonia Building Assocw- 
 45 Md. 546. tion No. 2, 24 Md. 259; Lord and 
 
 4 Jarrett v. Cope, 68 Pa. St. 67; Robinson v. Essex Building AMO 
 Kupfert v. Guttenberg Building As- ciation No. 4, 37 Id. 320; Morrison 
 sociation, 30 Id. 465; Rhoads v. et al., Rec'rs, v. Dorsey, 48 Id. 461; 
 Hoernerstown Building Association, Workingmen's Building Associa- 
 82 Id. 180. tion v Coleman, 89 Pa. St. 428; 
 
 1 Link v. Germantown Building Becket v. Uniontown Building As- 
 Association, 89 Id. 15; and seecases sociation, 88 Id. 211; and see post, 
 in preceding note. cases noticed in Ch. xix.
 
 350 THE LAW OF BUILDING ASSOCIATIONS. [CH. XII. 
 
 in Arkansas, 1 Connecticut, 9 Georgia," Indiana, 4 Nebraska,* 
 New Jersey,* and Ohio, 7 the attempt has been made to show 
 that the building association suing upon the contract with its 
 borrowing member, was not, in truth, an incorporated build- 
 ing association under the statute, and hence, not entitled to 
 enforce it according to its terms. Yet, if the partnership 
 doctrine is exclusively to govern the construction of the ad- 
 vancements made by building associations to their members, 
 that is, at least, equally applicable to unincorporated societies, 
 as it is held to be in Massachusetts 8 and New Hampshire,' 
 and might be recognized in such as are incorporated under 
 charters authorizing them to do business in a manner similar 
 to that of building associations, although the purposes of their 
 creation do not permit them to be strictly classed as such. 
 
 356. Again, it is noticeable, that, under all the statutes, 
 the extent of the reservations upon advancements by the 
 building association to its members, which, upon the theory 
 of mere partnership dealing, might fairly be left to the dis- 
 cretion and agreement of the contracting parties, is not only 
 measured exactly by the letter of the law, but this is, in fact, 
 strictly construed in limiting the lender. 
 
 Thus, it is said in New York, 10 that a mortgage taken by 
 a building association is a security for the payment of money 
 only within the statute ;" and in Maryland, 1 * that it is oper- 
 ative only so far as it conforms with the statute and the by- 
 laws under the same. This principle is asserted, in one form 
 
 1 Odd Fellows' Building Associa- 6 Hoboken Building Association 
 
 tion . Hogan, 28 Ark. 261. v. Martin, 2 Beas. 428. 
 
 * People's Savings Bank and 7 Hagerman et al. v. The Ohio 
 
 Building Association v. Collins, 27 Building and Savings Association, 
 
 Conn. 145; West Winsted Savings 25 Ohio St. 186. 
 
 Bank and Building Association v. 8 See ante, 341. 
 
 Ford, Ib. 282; Same v. Rice, Ib. See ante, 344. 
 
 293. 10 Franklin Building Association 
 
 3 Pattison t>. The Albany Build- v. Mather, 4 Abb. Pr. 273. 
 
 ing and Loan Ass'n, 63 Ga. 873. Hamilton Building Association 
 
 4 McLaughlin and wife v. Citi- v. Reynolds, 5 Duer, 671; Franklin 
 zens' Building Ass'n, 18 Ind. 237. Building Association v. Mather, 4 
 
 8 Lincoln Building and Savings Abb. Pr. 273. 
 
 Association . Graham, 7 Neb. 173; " Shannon v. The Howard Mutual 
 
 Same v. Benjamin and Benjamin, Building Association of Baltimore, 
 
 Ib. 181. 36 Md. 383.
 
 356.] LOANS OB ADVANCEMENTS TO MEMBERS. 351 
 
 <>r another, in nearly every State, 1 clearly demonstrating that, 
 independently of legislative sanction, the contract between 
 the society and its borrowing member is not such an one, no 
 matter what may be said of its partnership character, as to 
 commend itself to the unhesitating approval of the judicial 
 mind ; whilst, at the same time, its complicated nature, inti- 
 mately joining in equal parts that which, as between private 
 parties, would be legal," and that which would be there ille- 
 gal, is such as to induce a court to subordinate the one ele- 
 ment to the other in favor of effecting the expressed intention 
 of the Legislature, to the precise extent and in the precise 
 form indicated by it, where such subordination is necessary 
 in order to accomplish the purposes and legalize the opera- 
 tions clearly contemplated by the enactment. Where, how- 
 ever, the latter, as construed by the courts, does not appear 
 to aim at the practical results flowing from the methods ob- 
 served in building association loans ; a or where there is no 
 statutory sanction at all within whose protection the society 
 can bring itself and its contract, there no theory of partner- 
 ship dealings, and no complication or veiling of the transac- 
 tion will hold out to remove the fact of a substantial loan upon 
 apparently extraordinary reservations. The doctrine in Mas- 
 sachusetts and New Hampshire, extending the partnership 
 theory and its consequences to unincorporated building asso- 
 ciations, must, therefore, be regarded as an anomaly, resulting 
 from the logically consistent application of a rule which loses 
 sight of the loan element in the transaction altogether ; which 
 has been invoked to answer temporary purposes and explain 
 isolated incongruities ; which expresses part of a truth, that 
 may or may not become decisive, accordingly as there is or is 
 not a legislative intent to be served ; but which, regarded as 
 an exclusively governing axiom, with its legitimate corollaries, 
 is simply impossible. 
 
 1 See post, 420, also 421-422, the contract is not usurious, al- 
 
 433-434. though, in addition to regular inter- 
 
 9 Where the return of money ad- est, the party advancing the money 
 
 vanced is made dependent upon the is entitled to share in the profits of 
 
 event of that amount being realized the adventure. Brigham v. Dana, 
 
 in a contemplated joint adventure, 29 Vt. 1. 
 over and above losses and expenses, * See ante, 346-350.
 
 352 THE LAW OF BUILDING ASSOCIATIONS. [CH. XII, 
 
 Two Cardinal Principles Concerning Loans and Borrowers. 
 
 357. There are two principle! in the law of building as- 
 sociations, wl.ich govern all the rights and liabilities of bor- 
 rowing members, and condition and comprehend the entire 
 system of rules applicable to these loans or advancements, and 
 to the duties and relations reciprocally resulting to the society 
 and to the borrower, as they are laid down, with astonishing 
 unanimity, by the most respectable courts of the United States 
 and of England, although proceeding upon different paths of 
 reasoning, and announcing us their starting points the most 
 contradictory positions. The one has already been exam- 
 ined : ' it is, that a member of a building association, becom- 
 ing a borrower, continues to be a member. The other is the 
 one just discussed, that the transaction of loan or advance- 
 ment from the society to its member partakes equally of the 
 character of a loan and of a dealing in a partnership fund, 
 either element giving its color to the transaction accordingly 
 as the form, substance, and results of the same are or are not 
 within the intention and protection of legislative enactment ; 
 and as such declared purpose may best be served by the pre- 
 dominance of the one or the other ; neither element, however, 
 at any time, operating to the entire overshadowing or exclu- 
 sion, nor withdrawing itself from the modifications conse- 
 quent upon the presence, as part of it, of the other. 
 
 It is clear, from this latter proposition, (1) that, neither 
 independently of the statute nor beyond the manner and ex- 
 tent prescribed by it, and the rules adopted under it, can the 
 contract between the society and its borrowing member have 
 any validity ; and (2) that, where it subsists as a valid con- 
 tract, it is invariably made up of those two essential and nicely 
 balanced elements, that of a loan, and that of a venture with 
 partnership funds. 
 
 1 See ante, 146-148.
 
 358. J INCIDENTS TO LOANS OR ADVANCEMENTS. 
 
 353 
 
 CHAPTER XIII. 
 
 INCIDENTS TO LOANS OR ADVANCEMENTS. 
 
 858. Usury may become an element in a building association loan. 
 
 359. Right of borrower to recovery of usury. Qualifications. 
 
 $ 361. Rule as to recovery of usury paid, in North Carolina ana 
 
 Georgia where borrowers are members. 
 
 362. Limitation in suits for recovery of usury. 
 
 363. Who may set up the defence of usury. 
 
 366. Usury merged in judgment cannot be recovered. 
 
 367. Plea of usury must conform to statute. 
 
 368. Charges incidental to negotiation of loan when not usurious. 
 
 369. Lawful incidents to building association mortgage. 
 
 371. Significance of stipulation for stock-payments or dues. 
 
 373. "Dues" practically including interest, or redemption money. 
 
 374. Right and extent of interest reservation. 
 
 375. Interest, in any form, ceases upon reimbursement of society. 
 
 377. Running of interest not suspended by bringing and during pen- 
 
 dency of suit; but by tender. 
 
 6 378. Premiums. 
 
 379. Fines. 
 
 380. Security its nature and kind. 
 
 382. Joint security of members and outsiders. 
 
 383. Reservations legalized in the several States. 
 
 384. "Loan" construed to mean " amount actually advanced." 
 
 386. Binding force of contract of loan, etc., made in pursuance of 
 
 charter and statutory powers. 
 
 387. Practical results of building association loans. 
 
 Usury may Become an Element in a Building Association Loan. 
 
 358. It follows, as a necessary result of the proposition, 
 that the binding extent and legitimacy of the contract be- 
 tween the building association and its borrowing member, 
 partaking so largely of the nature of a loan, is referable, in 
 form and substance, to the provisions of the statute under 
 which the society is incorporated, and its rules adopted in 
 accordance with the same, that usury, as a possible incident 
 to the contract, is by no means entirely excluded. Usury is 
 defined to be " the taking of more interest for the use of
 
 854 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIII. 
 
 money than the law allows," ! and it is said that the requisites 
 to form an usurious contract are, (1) a loan, either express or 
 implied ; (2) an understanding that the money lent shall or 
 may be returned ; and (3) that, in effect, a greater rate of 
 interest than is allowed by statute shall be paid.* The man- 
 ner, form, or pretence under which this is done is entirely 
 immaterial. It is the business of the courts to analyze a 
 transaction, and lay bare its usurious nature, however it may 
 be disguised and hidden. 3 Equally immaterial it is, whether 
 the usurious reservation be stipulated for in the instrument 
 securing the principal, or by a separate written or oral con- 
 tract. 4 If the statute makes the usurious contract void, the 
 instrument creating it will be void ab initio, even in the 
 hands of an innocent holder. 6 And a security substituted for 
 one which is usurious, is equally void with it.' But a new 
 security being given to a bona fide holder, for value, of a 
 promissory note tainted with usury, constitutes a new trans- 
 action, and the usury on the first note, for which the second 
 was given, does not affect the latter. 7 
 
 Right of Borrower to Recover Usury. Qualifications. 
 
 359. On the question of the right of the borrower upon 
 usury to recover the money paid by him in excess of legal 
 interest, Strong, J., in Philanthropic Building Associa- 
 tion v. McKnight* reviews the course of decisions. The 
 earliest English cases' denied the party paying the usurious 
 
 1 3 Pars., Contr., p. *107. contract itself is free from it, and a 
 
 * Lloyd 0. Scott, 4 Pet. (U. S.) subsequent contract, in payment of 
 
 205, overruling De Wolf n. Johnson, the first, be usurious, it is only the 
 
 10 "Wheat. 367. second which becomes tainted, and 
 
 8 3 Pars., Contr., p. *133; 2 Ib. p. the debt may be enforced as stated 
 
 *385; Tyson v. Rickard, 3 Hill and in and under the terms of the first 
 
 J. (Md.) 109; Stockettfl. Ellicott, 3 contract. See Ely v. McClung, 4 
 
 Gill and J. (Md.) 123; Trumbo v. Port. (Ala.) 128. 
 
 Blttzard, 6 Id. 18. In Beete v. Bid- 6 3 Pars., Contr., p. *117. 
 
 good, 7 B. and C. 453, Tenterden, Ib., p. *119. 
 
 C. J., says the court must " look, T Cassebeerc. Kalbfleisch, 4N. Y. 
 
 not at the form and words, but at Weekly Dig. 586. 
 
 the substance of the transaction." 8 35 Pa. St. 470. 
 
 4 3 Pars. , Contr. , p. *113. It is the See Tomkins v. Barnett, 1 Salk. 
 
 contract as a whole, not the separate 22 (' ' long exploded : " Mansfield, in 
 
 pieces of paper, that suffers from Cowp. 200; see next note), 
 the taint of usury. But where the
 
 360.] INCIDENTS TO LOANS OR ADVANCEMENTS. 355 
 
 interest the right subsequently to recover it, as being in pari 
 delicto, and because volenti nonfit injuria. Lord Mansfield 
 denied this doctrine at an early date. 1 Later, a distinction 
 was drawn between transactions under statutes enacted on 
 grounds of general policy, where each party violating the law 
 is held in equal fault ; and transactions under the usury laws, 
 enacted to protect weak and needy men from being " over- 
 reached, defrauded, and oppressed." To the latter, the law 
 does afford relief. It regards the lender as the oppressor, 
 and the borrower as the oppressed. 2 No other duress or 
 oppression has been held necessary to be shown, in order to 
 entitle the borrower to recover, than such as is involved in 
 the act itself of taking the money under an usurious contract. 
 These statutes regard the lender alone as the wrongdoer, the 
 borrower as the victim. Hence the payment of usurious 
 interest is not such a voluntary payment as will entitle the 
 receiver to retain it ; but it may be recovered by action at 
 the suit of the borrower who paid it. 3 So it is said in 
 Georgia that usury voluntarily paid may be recovered back 
 under the common law and the Code of that State. 4 
 
 360. But usurious interest collected or paid upon lawful 
 process of execution cannot be recovered back. The remedy 
 in such case is by application to court to open the judgment.* 
 And in Maryland, where there has been a deliberate settle- 
 ment, in pursuance of which the borrower has paid to the 
 lender an amount in excess of lawful interest, if there was no 
 compulsion or duress, and full knowledge of the facts and 
 circumstances under which the amount was demanded, no ac- 
 tion will lie to recover back the amount thus usuriously paid, 
 although the payment was made under protest.' 
 
 1 Clarke v. Shee and Johnson, and Building Association, 42 Ga. 
 
 Cowp. 197. 451. 
 
 s See Browning D. Morris, Cowp. B Fed. Insurance Co. v. Robinson, 
 
 790. See also Briggst>. Thompson, 8 N. Y. Weekly Dig. 481. 
 
 20 Johns (N. Y.), 294; Thomas v. Await v. Eutaw Building Asso- 
 
 Shoemuker, 6 W. and S. (Pa.) 183. ciation No. 4, 84 Md. 435. The Act 
 
 J Philanthropic Building Asso- of 1876, Ch. 858, in that State, barred 
 
 ciation v. McKnight, supra. See the right of recovery of money 
 
 also Building Associations. Ellsler, usuriously paid, where the transac- 
 
 6 Pliilu. (Pa.) 6. tion had been closed and finally set- 
 
 4 Parker v. The Fulton Loan tied by the parties, and the debt
 
 356 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIII. 
 
 So, too, it is said in Georgia, that, if a contract clai:iif<l 
 by one of the parties to be usurious, and by the other not, is 
 compromised and settled between them the question of dis- 
 pute as to the usury forming a distinct item of the settlement 
 this is an accord and satisfaction, even as to the usury, and 
 the money paid therefor cannot be recovered back. 1 In like 
 manner, where an account is stated by the building associa- 
 tion creditor, and the debtor gives his promissory notes in 
 settlement, being grossly negligent in omitting to inform him- 
 self concerning the elements of the account ; the fact that it 
 actually embraced interest or usury which he was not legally 
 liable to pay, is not such an imposition upon him as will en- 
 title him to open the settlement on the ground of fraud.* 
 But where there have been no such laches on the part of 
 the debtor, a mere compromise and settlement of the debt, 
 without distinct reference to the dispute as to the illegality 
 of the contract, is not a bar to a suit to recover the usury 
 paid. 8 
 
 Rule as to recovery of usury paid, in North Carolina and Georgia 
 where borrowers are Members. 
 
 361. With particular reference to members borrowing 
 from building associations, the courts of North Carolina and 
 Georgia seem, however, to lean to a somewhat^tricter doctrine 
 as regards the right of the borrower to recover what he has 
 paid in excess of legal interest. In the former State, it is said 
 that the law will not aid a plaintiff seeking to recover interest 
 usuriously paid, where both he and the defendant are in pan 
 delicto. Hence, where plaintiffs, who were members of a 
 building association and had paid usurious interest upon 
 money borrowed from it, endeavored to recover it back by 
 suit, they were not held entitled so to do. The reasoning 
 upon which this decision is based is this : If, at any time, 
 they had repudiated the building association, and the latter 
 
 paid and satisfied. Second German ' Parker v. The Fulton Loan and 
 American Building Association of Building Association, 46 Ga. 166. 
 Baltimore v. Newman, 50 Md. 62, * Pattisou v. The Albany Build- 
 declaring that act constitutional, and ing and Loan Association, 63 Ga. 
 apparently to that extent overrul- 373. 
 
 ing Scott v. Leary, 34 Md. 589, and 3 Parker v. The Fulton Loan and 
 
 Williar's App., 45 Id. 546. Building Association, ubi supra.
 
 363.] INCIDENTS 10 LOANS OB ADVANCEMENTS. 35? 
 
 had sought the aid of the court to enforce the contract, the 
 court would have refused its assistance. 1 But whatever had 
 been executed, both parties being in pari delicto, and the 
 plaintiffs not having, in reality, made these payments under 
 any mistake of fact, the court would not undo the transaction. 
 " Whatever the 'association was, they were, for they were 
 parts and parcels of it, and the court will no more aid them 
 against the association, than it would have aided the latter 
 against them." 4 In Georgia, again, the peculiar relation of 
 the complaining borrower in a building association gave rise 
 to the following observations : " In such a scheme as this, the 
 great element of usury is wanting, to wit, oppression, ad- 
 vantage taken by one of the necessities of another, 3 the per- 
 son getting the money, in this case, being, in fact, interested 
 himself in having the sales as high as possible. To permit 
 the usurer himself to set up the usury, after the contract has 
 been executed, would be contrary to all principle. The per- 
 son wronged is allowed to do so, but not the wrongdoer, and 
 if the plaintiff here recovers, he will recover a part of the ad- 
 vantage which came to himself, for the high rates at which 
 others sold their interest in the ultimate dividend." * 
 
 Limitation in Suits for Recovery of Usury. 
 
 362. Where the general usury law of the State fixes a 
 certain time within which actions to recover money usuriously 
 paid shall be instituted, suits against building associations to 
 recover payments made to them in excess of legal interest 
 must be brought within those limits.* 
 
 Who may Set Up Defence of Usury. 
 
 363. Where usury avoids the contract, the plea of usury 
 as a defence to the enforcement of a contract is available be- 
 
 1 Mills et al. v. The Salisbury duress and oppression, further than 
 
 Building and Loan Association, 75 is involved in the receiving a loan 
 
 N. C. 292. at usurious interest. 
 
 1 Latham and -wife v. The Wash- 4 Parker v. The Fulton Loan and 
 
 ington Building and Loan Associa- Building Association, ubi supra. 
 
 tion, 77 N. C. 145. 5 Maule . Building Association, 
 
 8 See ante, 359, and Strong, J. ( 5 Phila. (Pa.) 421; thus, in Pennsyl- 
 
 in Philanthropic Building Associa- vania, under the Act of 28 May. 
 
 tion v. McK night, 35 Pn. St. 470, 1858, within six months, 
 that there need be no evidence of
 
 358 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIII 
 
 tween privies only. 1 The guarantor of a debt may set it up,* 
 whilst, where the borrower delegates one who is debtor to 
 him, to pay the debt, the delegated debtor cannot set this up 
 defence, and plead the usury by which he was not affected.* 
 But the vendee of property, subject to a mortgage which was 
 usurious, cannot set up that fact as a defence against its en- 
 forcement.' But when N. executed a mortgage to secure an 
 usurious loan, subsequently sold the property subject to the 
 mortgage, and finally bought it back, the same not being made 
 subject to the mortgage in the deed, in an action to foreclose, 
 it was held that N. was " the borrower," had never been re- 
 leased from his obligation as such, and was entitled, upon 
 proof of usury, to a judgment avoiding the mortgage al- 
 together. 6 
 
 364. But whether, in general, a stranger to the original 
 transaction, becoming the owner of property upon which 
 rests a mortgage given upon usurious reservations, is entitled 
 to defend against it on the ground of usury, depends entirely 
 upon whether the statute under which the defence is set up, 
 limits the same to the original parties, the borrower and the 
 lender, or whether it extends itself to all others interested ; 
 whether the statute gives the right to recover or defalc, or 
 whether it prohibits the lender from retaining. Where the 
 statute applies only to the parties to the transaction, a subse- 
 quent creditor (or holder of the property) cannot attack the 
 claims on that ground, 9 unless the taking of the usury amount 
 to a fraud, not upon the debtor, but upon subsequent mort- 
 gagees, judgment creditors, or such as become purchasers of 
 the property encumbered at sheriff's sale. 7 Where, however, 
 
 1 8 Pars., Contr., p. *120. Co, e. Nelson et al., 6 N. Y. Week- 
 
 9 Huntress v. Patten, 20 Me. 28; ly Dig. 145. 
 
 Harrison v. Hanuel, 5 Taunt. 784; Miners' Trust Co. Bank . Rose- 
 
 1 Engl. C. L. Rep. 263; Gray's berry, 81 Pa. St. 309; Appeal of 
 
 Ex'rs . Brown, 22 Ala. 262. But Second National Bank of Titusville, 
 
 see contra Laraoille County Na- 85 Id. 528, being .subsequent to the 
 
 tional Bank v. Bingham, 50 Vt. 105. change made in Pennsylvania by the 
 
 3 3 Pars., Coutr., p. *122. Act of 28 May, 1858. 
 
 4 Mechanics' Bank v. Edwards, 1 ' See cases in note above ; but 
 Barb. 271 ; Sands v. Church, 6 N. the fact of usury does not necessar- 
 Y. 347. ily make a fraud; Good v. Grant, 76 
 
 6 Knickerbocker Life Insurance Pa. St. 52.
 
 365.] INCIDENTS TO LOANS OB ADVANCEMENTS. 
 
 359 
 
 the policy of the law is different, extending the right to 
 other parties interested, the purchaser at sheriff's sale may- 
 take advantage of usury in a mortgage of prior date to the 
 judgment upon which his execution issued. 1 
 
 365. But if it appears that a purchaser bought ex- 
 pressly subject to an encumbrance which was tainted with 
 usury, and that the nominal amount of such incumbrarice had 
 entered into and formed part of the price, or consideration, 
 then, being by no possibility prejudiced thereby, he is not 
 allowed to set up the usury in reduction of the amount ap- 
 pearing to be due on the face of the encumbrance." But the 
 
 1 As illustrating this principle, 
 see Lloyd . Scott, 4 Pet. (U. S.) 
 205; Kupfert v. Guttenberg Build 
 ing Association, 30 Pa. St. 465; 
 Hughes's App., Ib. 471; Fisher v. 
 Kahlnan, 3 Phila. (Pa.) 213; Build- 
 ing Association . O'Connor, Ib. 
 453 [where subsequent judgment 
 creditors were held entitled to im- 
 peach a mortgage for usury before 
 an auditor] ; Post v. Bank of Utica, 
 7 Hill (N. Y.), 391 ; NisbetttJ. Walk- 
 er, 4 Ga. 221; Thorn v. Doub, 8 
 Gill (Md.), 1; Cummins v. Evir, 2 
 Halst. Ch. (N. J.) 73; Pinnell t>. 
 Boyd, 6 Stew. (N. J.) 190; Brolasky 
 t>. Miller, 1 Stock. (N. J.) 807; and 
 see, also, Link n. Germantown 
 Building Association, 89 Pa. St. 15 
 (A. D. 1879) in which the terre-ten- 
 ant who purchased the mortgaged 
 premises at sheriff's sale, and was 
 allowed to defend against the claim 
 of the association on the mortgage, 
 was held entitled to take defence as 
 to the consideration of the mortgage, 
 and to show that it was, on the 
 ground of partial failure of consid- 
 eration, unlawful and fraudulent to 
 the amount of the premiums (the 
 society being unincorporated), and 
 to that extent not a valid charge 
 against the land. 
 
 As illustrating the doctrine where 
 the defence of usury is a personal 
 
 one, and cannot be set up by any 
 but original parties, see The Peo- 
 le's Savings Bank and Building 
 Ass'n v. Collins, 27 Conn. 145; 
 Stein and wife v. The Indianapolis 
 Building Loan Fund and Savings 
 Ass'n, 18Ind. 237; Loomis v. Eaton, 
 32 Conn. 550; Green v. Kemp, 18 
 Mass. 515; Reading v. Weston, 7 
 Conn. 409; Shufelt . Shufelt, 9 
 Paige (N. Y.), 137; Dix v. Van 
 Wyck, 2 Hill (N. Y.), 524; Scher- 
 merhorn v. American Ins. and Trust 
 Oo., 14 Barb. (N. Y.) 131 (167); 
 Sands . Church, 6 N. Y. 347; Mor- 
 ris v. Floyd, 5 Barb. (N. Y.) 137; 
 Flanders v. Joue?, 10 N. H. 160; 
 Lamoille County National Bank 
 v. Bingham, 50 Vt. 105; Stevens t>. 
 Muir, 8 Ind 352; Campbell P. John- 
 son, 4 Dana (Ind.), 179; Conwell v. 
 Pumphrey, 9 Ind. 135. 
 
 * See Fisher v. Kahlnan, 3 Phila. 
 (Pa.) 213; Brooks v. Dorsey. 4 
 Comst. (N. Y.)225; Sands r. Church, 
 6 N. Y. 347. It K indeed, a gen- 
 eral doctrine that the purchaser is 
 governed by the face of the mort- 
 gage subject to which he buys, 
 whether it be to his advantage or 
 disadvantage. So, where the mort- 
 gage called for payment in "law- 
 ful money," whilst the bond stipu- 
 lated for "lawful silver money" of 
 the United States, the purchaser
 
 360 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIII. 
 
 sheriff, selling land on foreclosure of the second mortgage, 
 does not, by conveying, subject to the first mortgage, deprive 
 the purchaser of the right to set up the same defence as 
 the law would otherwise afford him. The sheriff has no power 
 to waive usury. 1 And, from a recent case in Pennsylvania 
 (where, under the Act of 28 May, 1858, the defence of usury 
 is a personal one 3 ), it would seem that the purchase must be 
 distinctly subject to the figure contained in the mortgage, in 
 order to debar the purchaser from disputing its accura<-\ <>u 
 the ground of a failure of consideration to the extent of the 
 excess usuriously taken. Mortgages had been given to a 
 building association which was unincorporated, and conse- 
 quently incapable of lawfully stipulating for premiums to 
 be paid upon its loans. The premiums reserved were in- 
 cluded on the face of the mortgages. A sale of the mort- 
 gaged premises, subject to the mortgages, was subsequently 
 had upon a junior judgment. Suit was brought upon the 
 mortgages, and the purchaser, L., was allowed to defend as 
 terre-tenant. Allison, P. J. (C. P. No. 1, Philadelphia 
 County), whose opinion, before the Supreme Court upon a 
 writ of error, was affirmed per curiam, says : " The terre- 
 tenant, ... is entitled to take defence as to the considera- 
 tion of the mortgages, notwithstanding the fact found by the 
 special verdict, that at the ' sale notice was given of the mort- 
 gages sued on in this case.' The defence to the mortgages is 
 that as to the excess [above what was] actually advanced as a 
 loan, they are without consideration. That if such excess or 
 premium could not be recovered against the land in the 
 hands of the mortgagors, why against the land in the posses- 
 sion of a terre-tenant ? When one purchases under and sub- 
 subject to the mortgage was held perhaps in remote parts, unless the 
 entitled to pay in lawful money of recital itself leads to something that 
 the United States of any descrip- is wanting in it (e.g., if it be given 
 tion. For whilst the bond is the for future advances). Eagle Bene- 
 principal debt in law, and governs flcial Society's App., 75 Pa. St. 
 the rights of the parties to it between 226. 
 
 themselves; the purpose of the re- ' Pinnell . Boyd, 6 Stew. (N. Y.) 
 cital in the mortgage is merely to 190; S. C., on appeal, Ib. 600. 
 give notice of the substantial char- * Miners' Trust Co. Bank v. Rose- 
 acter of the debt to be secured, and berry, 81 Pa. St. 309; Appeal of 
 not to send subsequent purchasers Second National Bank of Titusville, 
 and mortgagees to seek the bond, 85 Id. 528.
 
 366.] INCIDENTS TO LOANS OB ADVANCEMENTS. 361 
 
 ject to a mortgage debt, it is the debt which at the time is due. 
 He ought to be allowed to show payments made upon the mort- 
 gage by the mortgagor, by which the mortgage is to that 
 extent extinguished, or to show payment in full, or that 
 the mortgage debt never existed, and that there is therefore 
 no such lien to be enforced as against the land. For the 
 like reason he ought to be allowed to show that the mort- 
 gage is in part or in whole fraudulent. The mortgages in 
 these cases were unlawful to the amount of the premiums, 
 and to that extent never were a valid charge against the 
 land, having been given for a larger sum than the actual 
 loan. "When the purchase is under and subject to a lona Jide 
 debt secured by mortgage, the purchaser buys for a consid- 
 eration of which the mortgage debt forms a part ; but where 
 the debt is not bona fide, or where it does not exist at all, he 
 ought to be entitled to take defence to the claim. 
 
 " Where .land is sold subject to a mortgage, it becomes 
 the primary fund to pay the mortgage debt, but it is the debt 
 of so much of it as is actually due. Ilansell v. Lutz, 8 Har- 
 ris, 284, decides no more than this, where it says that the 
 purchaser shall discharge the mortgage. Nor is Good v. 
 Grant, 26 P. F. Smith, 52, an authority against the conclu- 
 sion reached on this point. The effort of the terre-tenant is 
 not to recover back usury paid by the mortgagors. His de- 
 fence rests upon a partial failure of consideration, and to 
 be allowed credit for the interest as on the real instead of 
 the nominal debt. Coolers Ajypeal, 1 Grant, 401, does no 
 more than affirm the general principle of the liability of a 
 purchaser at sheriff's sale of an estate encumbered by a prior 
 mortgage to pay it off. That is, the mortgage, or so much 
 as is actually due upon it." ' 
 
 Usury Merged in Judgment Cannot be Recovered. 
 
 366. If the person entitled to set up the defence of 
 usury allows the usurious claim to become merged in a judir- 
 ment, it is then too late to set it up. Thus, where the purchaser 
 of mortgaged premises" had, as terre-tenant, an opportunity 
 
 'Link v. Germantown Buildiug Ch. (N. Y.) 395; Berry v. Thompson, 
 
 Association, 89 Pa. St. 15. 17 Id. 436. See also, Lansing c. 
 
 1 Thatcher v. Gammon, 12 Mass. Eduy, 1 Id. 49. 
 268; Thompson v. Berry, 3 Johns.
 
 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIII. 
 
 to defend in an action upon the mortgage, he was not per- 
 mitted, after verdict and judgment, to deny that the amount 
 thereby ascertained, although far in excess of the legal rate of 
 interest, was due upon it ; nor could his mortgagees do so, 
 after verdict, and before final judgment, on the first (the 
 building association's usurious) mortgage. 1 
 
 Plea of Usury must Conform to Statute. 
 
 367. The plea of usury (apart from fraud) must con- 
 form to the statute, where, as a defence, it has been made 
 the subject of special legislation. 2 But where property is sold 
 on an usurious mortgage, and the proceeds are in court for 
 distribution, the defence of usury need not be raised by spe- 
 cial plea. 3 In Maryland, indeed, it is said that the question 
 of usury in the terms of a mortgage arises upon the statement 
 of the final account by the auditor. 4 It cannot, therefore, be 
 urged as an objection to the sale of the property ; and if the 
 sworn statement of the mortgage claim, required by law, 6 is 
 erroneous in not showing the true balance due upon the mort- 
 gage, it is open to correction when the account may be stated 
 by the auditor ; but such error constitutes no reason for set- 
 ting aside the sale.' 
 
 Charges Incidental to Negotiation of Loan when not Usurious. 
 
 368. An agreement on the part of the borrower to bear 
 the expenses of searching the records and preparing (and re- 
 cording) the papers, is no part of the loan proper. Hence, 
 the deduction, according to custom, of a reasonable sum, from 
 the amount coming to the borrower, to cover such expenses, 
 infuses no element of usury into the transaction. 7 But where 
 
 1 Schnepfs App., 48 Pa. St. 37. Public Laws, and Act 1864, Ch. 
 
 9 Pattison . The Albany Build- 124. 
 
 ing and Loan Association, 63 Ga. The Maryland Permanent Land 
 
 873. and Building Society of Baltimore 
 
 8 The Citizens' Security and Land v. Smith et al., tibi supra. 
 Co. of Baltimore City v. Uhler, 48 7 Hoboken Building Association 
 
 Md. 455. v. Martin, 2 Beas. (N. J.) 428. See 
 
 4 The Maryland Permanent Land also Ex'rs of Howell v. Auten, 1 Gr., 
 
 and Building Society of Baltimore Ch. R. (N. J.) 45; Hopkins r. Ba- 
 
 v. Smith et al., 41 Md. 516. ker's Adm'r et al., 2 P. and H. (Va.) 
 
 4 Art. 4, 783, of the Code of 110; Smith v. Wolf, 55 Iowa, 555.
 
 369.] INCIDENTS TO LOANS OR ADVANCEMENTS. 363 
 
 the lender is a corporation, and its agent in making the loan 
 is its officer, and it is shown that a bonus was paid to the lat- 
 ter for the loan, in pursuance of a contract made by him with 
 the borrower, in the name of, and for the corporation ; it must 
 be assumed, in the absence of proof to the contrary, that the 
 bonus was paid to and received by the corporation, in conse- 
 quence of which the loan is rendered usurious. 1 Where, how- 
 ever, the corporation is shown to have known nothing about 
 it, no such result follows.* 
 
 Lawful Incidents to Building Association Mortgage. 
 
 369. Such being the principles governing in all cases of 
 usury which may arise, it remains to be seen how far the 
 loans or advancements of building associations to their mem- 
 bers, under the peculiar powers and immunities conferred 
 upon these institutions, are exempt from the operation and 
 interference of the usury laws. In view of what has been 
 said, in the preceding chapter, concerning the essential nature 
 and ingredients of these contracts, it is unnecessary, for the 
 purposes of the present examination, to take any further no- 
 tice of the conflicting theories regarding the same. Bearing 
 in mind (1), that the contract entered into by the borrowing 
 member embraces all the undertakings and stipulations, 
 which are part and parcel of the entire transaction, whether 
 they be embodied in the written evidence of his obligation, 
 or depend in parts upon agreements resulting from the rela- 
 tions of membership, or again be made up in part by per- 
 formances ancillary and prerequisite to the completion and 
 fruition of his bargain, under the terms of the same, and the 
 rules of the society; and (2), that this contract is legitimate 
 and absolutely binding just so far as it responds, in form and 
 substance, to the declared intention of the Legislature, and is 
 upheld by statute, according to the construction put upon the 
 same by the courts of the State : it is manifest, that what may 
 be lawful in one State, under its statutes, may be improper 
 in another, under different statutes ; that, indeed, enactments 
 most similar in their terms, may yet, under the interpretation 
 authoritatively put upon the one or the other, confer differ- 
 
 1 Dime Savings Institution . * Muir r. The Newark Savings 
 Mulford, 4 Stew. (N. J.) 99. Institution, 1 C. E. Gr. (N. J.) 587.
 
 364 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIII. 
 
 ent powers, and impose widely divergent limitations. For 
 the details of this branch of the law of building associations, 
 as for those of every other, therefore, as adapted to special 
 localities, it is necessary to refer to the particular provisions 
 of the statutes of the several States. Yet there are certain 
 established rules governing their construction; certain prin- 
 ciples founded in the very nature and purpose of these institu- 
 tions, generally applicable to the matter at hand, which not 
 only admit of being digested and systematized, but are, in 
 truth, indispensably necessary in order to an adequate and 
 ready comprehension of the force and bearing of any given 
 statutory provision upon the subject. 
 
 370. The ordinary formal incidents to a building asso- 
 ciation loan are, (1) stock-payments or dues, (2) interest, (3) 
 premium, (4) fines these constituting, as a general thing, the 
 whole debt of the advanced member, for the discharge of 
 which he gives the society (5) mortgages or other security. 
 The privilege of redeeming his obligation before the expira- 
 tion of the society, is one which is incident to his rights as a 
 member in it, and has been already sufficiently considered. 1 
 
 Significance of Stipulation for Stock-Payments or Dues. 
 
 371. Stock-payments, or dues, are the fixed periodical 
 contributions upon each share of stock held, which, by virtue 
 of his original undertaking of membership in the society, the 
 holder thereof is liable to pay, whether he remain an in- 
 vestor or become a borrower. Having been subject to this 
 liability in the former capacity, he is not relieved from it by 
 the fact of having incurred the additional obligations of the 
 latter relation." On the contrary, remembering that build- 
 ing association loans, in the proper sense, are never designed 
 to be collected before the expiration of the society or series, 
 and cannot, legitimately, be so intended, the agreement faith- 
 fully to continue the payment of dues becomes the all-im- 
 portant consideration in the transaction. For, under the 
 same cloak with it there is conveyed the substance of an im- 
 plied undertaking to allow the society to make itself whole 
 out of the accumulation of these stock-payments, together 
 
 1 See ante, 153-174. 
 
 * Delano . Wild, 6 Allen (Mass.). 1.
 
 371.] INCIDENTS TO LOANS OB ADVANCEMENTS. 365 
 
 with the proportionate share of the common profits to be 
 added thereto. If, upon allowing a member an advancement 
 of the prospective value of his shares, the society, in return, 
 require nothing more of him than an assurance, backed by a 
 mortgage upon his property, that he will continue to make 
 the payments his membership requires of him, and interest 
 upon the loan he has received, such a consideration will be of 
 slight benefit to the society, unless it shall also have the right 
 of appropriating the results of his regular payments in the 
 accumulated par value of his shares, and the borrower, there- 
 fore, in fact, renounces his claim to receive such dividend 
 becoming payable upon his share at the winding up of the 
 scheme : he has anticipated it by way of advancement at the 
 hands of the association, and cannot, in equity, claim it a 
 second time. For the purposes of the final distribution, the 
 advanced shares may, to their par value, be regarded as sunk, 
 merged in the capital stock. This principle is often formu- 
 lated in the proposition that a member, becoming a borrower, 
 loses his interest in the final distribution ; can no longer par- 
 ticipate in the profits of the society's business ; and similar 
 inaccurate and misleading statements. 1 By virtue of his 
 continued membership, he is entitled to share in the distribu- 
 tion ; * but he has given the society a lien upon the dividend 
 accruing to his advanced shares, to the amount of their par 
 value. The equivalent of that par value he has, in the trans- 
 action of loan, anticipated, by receiving the whole of it re- 
 duced by the amount which he has agreed to pay for his own 
 accommodation, and for the risk run by the society in making 
 the advancement, as well as for the purpose of compensating 
 his fellow-members for the advantage accorded to him by his 
 preference over them. If there be any surplus of assets, it 
 is said, the borrowing member is entitled to come in for his 
 share of it on distribution. 1 Again, as it is within the power 
 of the association to compromise with its borrowers, 4 he may 
 settle with it for all his liabilities, and regain full control over 
 
 1 See White v. The Mechanics' Building and Savings Association, 
 
 Building Association, 22 Grat. (Va.) 25 Ohio St. 186. 
 
 233. 4 State *. The Oberlin Building 
 
 * See ante, 146-148. and Loan Association, 35 Ohio St. 
 
 8 Hagerman et al.. v. The Ohio 250. Sec ante, 323.
 
 366 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIII. 
 
 his stock, and participate in the distribution, equally as any 
 other member not indebted to it. One method of doin<^ this 
 is by inducing the association to assign, for such a considera- 
 tion as it consents to accept in discharge of the debt, his 
 mortgage to some other person, who will then hold it as a 
 subsisting security for the amount of the money covered by 
 it, whilst the mortgagor will draw his stock-dividend from the 
 society. 1 
 
 372. Such is, in reality, the purpose of binding the bor- 
 rower in his security to the association, to the payment of 
 stock contributions, the certainty of creating a fund stand- 
 ing to the credit of the borrower, in the hands of the society, 
 wherefrom the latter may reimburse itself for the advance- 
 ment made. This design undoubtedly appears with more 
 distinctness, where the return of a specific sum, in final 
 liquidation of the debt, is stipulated ; for, in such case, the 
 fact of the payment of dues, being required by the terms of 
 the obligation itself, or by an agreement concurrent with and 
 supplementary to the same, both indicates the contemplated 
 method of payment of that sum, and is, by its apparent rela- 
 tion to the discharge of the principal, assigned, upon the face 
 of the transaction, its proper place and function in the same. 
 
 The covenant, however, answers the further purpose of 
 assuring the society of the borrower's performance of that 
 duty incident to membership, which consists in contributing 
 to the common losses and expenses. These, of course, must 
 be defrayed out of the payments made by members before 
 any portion of them can become the source of profit to the 
 society. If they be great, the period over which stock-pay- 
 ments are extended will be prolonged ; because a greater 
 share of them will be required to cover these outlays, and a 
 proportionably lesser one can be devoted to investment and 
 gain. By giving security, then, for the continuance of these 
 payments to the end of the society's running, i.e., to the 
 period when, after allowing for all deductions by reason of 
 losses, etc., the shares shall have reached their ultimate value, 
 the borrower effectually undertakes to bear his whole share 
 of them. Now, whilst one palpable purpose of requiring and 
 giving the assurance of continued stock -payments is the rais- 
 
 1 Such arrangements are of frequent occurrence in Pennsylvania.
 
 373.] INCIDENTS TO LOANS Oil ADVANCEMENTS. 367 
 
 ing of a credit standing in favor of the borrower, in the 
 hands of the society, with the ulterior view of then making 
 that credit the source of the society's reimbursement ; the 
 undertaking is, nevertheless, one which is independent and 
 distinct from that of actually permitting the society to recoup 
 itself out of this fund. It is simply the re-assertion of a pre- 
 existing duty ; and the securing it by mortgage, a condition 
 of the loan, as upon the fulfilment of that duty depends the 
 possibility, or at least the certainty, of the society's being ulti- 
 mately made whole. Hence, neither the obligation of that 
 duty, nor the availability of a security given for its perform- 
 ance, is interrupted by the premature repayment of the loan ; 
 but the security given, even after repayment, remains such 
 for the purpose for which it was manifestly intended, viz. ; 
 the performance of membership duties regarding the pay- 
 ment of dues, l and may be used by the society to enforce the 
 same. 2 
 
 " Dues" Practically Including Interest or Redemption-Money. 
 
 373. In the nomenclature adopted by some statutes and 
 building associations there is included, under the term 
 "dues," what would be more properly called redemption- 
 money, or simply interest. The dues, per share, of the 
 investing member being a certain fixed amount per week or 
 month, these dues (it is said) become increased by another 
 fixed amount per week or month, after he has received his 
 advancement, and, usually, this additional payment is the 
 amount, for a week or month, of the interest, at the legal 
 rate, either upon the nominal par value of the share ad- 
 vanced, or upon the amount actually received by the bor- 
 rower. The two amounts, however, make a single payment, 
 and in England have been treated strictly as such ; so that, 
 in ascertaining the present value of a mortgage given to a 
 building association for the securing to it of dues, etc., during 
 its running, by finding the probable period of the same, and 
 computing the aggregate of the "dues" likely to become 
 
 1 And the payment of fines seems mortgage. See Clarkville Build- 
 to belong to these duties, even where ing and Loan Association v. Ste- 
 thcrc is no express stipulation or phens, 11 C. E. Or. (N. J.) 851. 
 mention of them in the bond and * See ante, 88-90, 106-107.
 
 TIM; LAW OF BUILDING ASSOCIATIONS. [< :jj. \jn. 
 
 payable therein, the increased dues stipulated for in the 
 mortem*-, without rebate, have been taken as the basis of the 
 computation. 1 On the other hand, a subdivision of such 
 " dues" (made a unity by the by-laws), for the purpose of 
 impoMng distinct fines for the nonpayment of each, has been 
 condemned as improper. 2 This arrangement, however, is >. > 
 transparent, that, where any injustice was likely to result 
 from it, the courts in this country, and the British Court of 
 Chancery, in a recent case, have not hesitated to analyze it 
 according to the elements it actually contains. 8 It is clear 
 that where the word " dues" is used in that sense, a mortiraire 
 given to secure the payment of " dues," etc., can, after dis- 
 charge of the money-debt owing to the society, be used for 
 the enforcement of such " dues " only as are incident to 
 membership proper, without reference to the additional obli- 
 gations resulting from an advancement. These belong more 
 properly to the subject of interest, and dues representing 
 interest cease with the debt. 4 
 
 Right and Extent of Interest Reservation. 
 
 374. The taking of interest is so much the ordinary 
 incident to a loan, that the authority to loan implies it. It is 
 not, therefore, uii/rcb vires of the building association to make 
 a loan upon interest. 6 This must be at the legal rate, and 
 will not, without valid statutory authority, be permitted to be 
 charged upon more than the amount actually advanced to 
 the borrower.* It follows from the doctrine that payments 
 upon stock are not payments upon the loan ; that is, that the 
 
 1 See ante, 158-164. But that society); and see Clarkville Build- 
 
 the same rule is not followed in this ing and Loan Association r. Ste- 
 
 country, see post, 375. phens, 11 C. E. Gr. (N. J.) 301 ; De- 
 
 8 Shannon v. The Howard Mu- lano v. Wild. 6 Allen (Mass.), 1. 
 
 tual Building Association of Balti- And see post, 376. 
 
 more, 36 Md. 383. 4 See post, 375. The obligation 
 
 3 See Mills et al. v. The Salis- to pay dues and interest is not sus- 
 
 bury Building and Loan Associa- pended hy the bringing of suit upon 
 
 tion, 75 N. C. 292; Hauner et al. v. the mortgage. See post, 377, and 
 
 The Greensboro Building and Loan cases there cited. 
 
 Association, 78 N. C. 188; Ex parte 6 City Building and Loan Co. . 
 
 Osborue, In re Goldsmith, Law Fatty, 1 Abb. App. Dec. (N. Y.) 
 
 Rep., 10 Ch. App. 41 (this was, 347. 
 
 however, the case of a permanent 6 See post, 383, 398.
 
 375.] INCIDENTS TO LOANS OK ADVANCEMENTS. 369 
 
 payments of dues are not intended to be applied, at once they 
 are made, as partial payments, to the pro tanto extinguish- 
 ment of the debt, but are paid as the capital of the com- 
 pany, and paid alike by those who do, and those who do not 
 take loans ; ' that the figure upon which the interest is to be 
 paid, and hence the amount of the interest itself, do not 
 vary, from the time the loan is taken to the time when it is. 
 finally discharged ; and that, consequently, the reservation of 
 an unvarying amount of interest for the whole period of the 
 loan, whilst, at the same time, the borrower's stock-payments 
 are going on, is not usurious." And these payments on ac- 
 count of interest may ordinarily be stipulated to be made 
 monthly and even weekly, under the rules of the society, and 
 the statutes governing them. 8 The substantial identity of 
 interest reserved as such, and when called redemption-money 
 or dues, has already been pointed out. 4 
 
 Interest, in Any Form, Ceases upon Reimbursement of Society. 
 
 375. The interest reserved by a building association 
 upon an advance to its members ceases when it is reimbursed 
 for that advance. It has been seen that the repayment of a 
 loan is one of the rights belonging to membership in these 
 societies, 5 and that the early English decisions, in ascertain- 
 ing the amount, upon the payment of which, presently, the 
 borrower will be discharged of his future liabilities arising from 
 the advancement made to him, adopted the rule of calculat- 
 ing the probable (or possible) duration of the society's exist- 
 ence, and treating all the payments likely to become due during 
 the period thus fixed, as immediately payable ; " and that the 
 rule has been, in a measure, followed in the United States. 7 
 Remembering that, in the cases decided in England, there 
 was no interest reserved as such, but, in lieu thereof, a 
 certain monthly payment, termed "redemption-money", and 
 
 1 See post, g 455-457. 8 See Red Bank Association t\ 
 
 8 Citizens' Mutual Loan and Ac- Patterson, ubisn/;i. 
 
 cumulating Fund Association v. * See ante, 333, 373. 
 
 Webster ct al., 25 Barb. (N. Y.) 263; * See ante, 152-153. 
 
 City Building and Loan Co. . Fat- See ante, 154-164. 
 
 ty. 1 Abb. App. Dec (N. Y.) 347; ' See ante, 154-157, 165-166, 
 
 Ked Bunk Association v. Patterson, 
 
 12 C. E. Gr. (N. J.) 223.
 
 370 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIII. 
 
 that this redemption-money, in accordance with the doctrine, 
 that the advancement was in no sense of the word a loan, 
 was not regarded as interest for the forbearance of money, 1 
 those cases allowed no rebate, except by way of bonus 
 under the rules of the society," for the premature redemp- 
 tion of the debt. In other words, although the stipulated 
 payments, by way of monthly dues, included both stock-pay- 
 ments and redemption-money exactly equivalent to interest 
 upon the nominal value of the shares advanced, the logic of 
 the theory applied to these transactions required the courts 
 to overlook that fact, and compel the debtor to pay, in re- 
 demption of his mortgage before the expiration of the soci- 
 ety, the full amount of all the dues he had contracted to 
 pay during its entire existence. An exaction so harsh and 
 oppressive 8 has not been adopted by American courts, even 
 where they assumed to be guided by the English decisions in 
 regarding the nature of the transaction as wholly foreign to 
 that of a loan of money.* Hence, in Maryland, the rale is 
 stated thus : Ascertain by proof the probable duration of the 
 society, then estimate the aggregate amount of the weekly 
 and monthly instalments payable during that time, from tJwt 
 sum rebate a just amount of interest, and add thereto the 
 arrearages due, after allowing for payments made to the 
 society, and the sum thus ascertained is the amount which 
 the mortgagee is entitled to receive inpresenti in satisfaction 
 of the mortgage. 6 The same principal seems to be expressed 
 
 1 See Seagrave v. Pope, ante, 160. 4 The case of the Somerset 
 
 3 See Fleming v. Self, 3 De G., County Building, Loan and Savings 
 
 Mac. and G. 997; 3 Eq. R. 14; 1 Association v. Canman and Vnnder- 
 
 Jur., N. S. 25; 24 L. J., Ch. 29; vere, 3 Stock. (N. J.) 282, can 
 
 ante, 161, 338. scarcely be cited as an exception. 
 
 3 Yet it is strictly consequential The transaction- there is said by the 
 
 upon the assumption that the trans- court itself to have been sui generis, 
 
 action between the society and the and the decree of the court, assum- 
 
 borrower has nothing in it of the ing the principal debt to have been 
 
 nature of a loan; and the fact that $600, payable without interest, by 
 
 American courts of unquestioned monthly instalments of $3, cannot, 
 
 authority have been obliged to re- without straining points on all sides, 
 
 pudiate this logical result of a doc- be brought under any recognized 
 
 trine they endeavor.in other matters, principle. 
 
 to adopt, shows how impracticable B Robertson v. The American 
 
 and one-sided the theory itself is. Homestead Association, 10 Md. 397.
 
 376.] INCIDENTS TO LOANS OR ADVANCEMENTS. 371 
 
 in Ohio, in the rule thus laid down : Ascertain by proof the 
 probable duration of the corporation, and calculate the dues 
 and interest yet to come ; then find the principal, which, with 
 interest for the supposed time, will amount to the dues and 
 interest already calculated ; this will be the present value of 
 the anticipated payments ; to this principal add the arrear- 
 ages due, and the fines for the time between the date of 
 default and the entry of the decree of sale, and the sum will 
 be the present value of the mortgage. 1 
 
 376. In England, indeed, in a recent case," the same rule 
 has been applied, although under distinction drawn as to pre- 
 vious cases. The rules of a permanent building society 
 provided that " any member receiving an advance shall repay 
 the same with interest at the rate which shall be determined 
 by the board, by monthly or other instalments." Goldsmith, 
 being a member, obtained an advance of 600, his whole 
 monthly payment, or installment, being 9 13s., calculated to 
 discharge the debt in seven years. He paid only two install- 
 ments, and defaulting thereafter, his property was sold. Out 
 of the proceeds of the sale, the society claimed to retain, upon 
 the principle of previous cases, the whole amount of the 
 monthly installments to the end of the seven years, together 
 with the fines due for payments in arrear down to the time 
 of sale. Cairns, L. C., in passing upon this claim, says : " The 
 manner in which the mortgage deed is expressed and in 
 which the rules are worded, creates an unnecessary amount of 
 obscurity ; but, after careful attention to the language of 
 these documents, I have no doubt as to the real nature of the 
 transaction. Denuded of technicalities, it is an advance in 
 respect of the shares to which Goldsmith was entitled ; and, 
 . . . [he] was treated as if he had received an advance of 
 600 at 5 per cent.; but the way in which this was done 
 was, that it was agreed that the repayment should be spread 
 over seven years, by monthly instalments, each instalment to 
 be made up by a portion of interest and a portion of princi- 
 
 1 Cincinnati German Building . The Ohio Building and Savings 
 Association No. 3 t>. Flach et al., 1 Association, 25 Ohio St. 186. 
 Rep. (Cine. Super. Ct.) 468, which * Ex parte Osborne, in re Gold- 
 seems approved in Hagerman et al. smith, Law Rep., 10 Ch. App. 41.
 
 372 THE LAW OF BUILU1XU ASSOCIATIONS. [cU. XIII. 
 
 ]>al. If that be so, one would, in the absence of any stipula- 
 tion to the contrary, suppose that, if default was made in 
 payment of any of the instalments, and the property were 
 sold, all that was due for monthly instalments and for fines 
 was to be paid out of the proceeds of the sale, but that with 
 regard to the future, so much of the principal sum as remained 
 unpaid having been paid off, there would be nothing in respect 
 of which interest could accrue. Interest implies forbearance, 
 and, therefore, when the whole is paid there can be no inter- 
 est. That seems the natural result of the transaction, and the 
 trust of the sale moneys in the mortgage deed is consistent 
 with that view. It is there provided, that the trustee, after 
 payment of the expenses of the sale, shall ' retain all such 
 subscriptions, lines, and other sums of money and payments 
 which shall be then due, or which would afterwards become 
 due, in respect of the said shares during the then remainder 
 of the said period of seven years, it being agreed by the par- 
 ties hereto that in case any such sale shall take place all the 
 moneys which would at any time afterwards become due from 
 the said G. Goldsmith, his executors, administrators, or assigns, 
 in respect of the said shares, according to the rules of the said 
 association, shall be considered as being immediately due and 
 payable.' With regard to the future, you cannot include 
 under ' moneys which would at any time afterwards become 
 due,' any lines ; no more can you include payments in respect 
 of interest, for interest can only arise in respect of a principal 
 sum remaining outstanding and forborne. Therefore, my 
 conclusion is, that everything due, in respect of monthly in- 
 stalments and fines, at the time of the sale must be retained ; 
 and then it must be ascertained how much of the monthly 
 payments represented principal and how much interest, and 
 it will then appear how mucli of the principal remained un- 
 paid. That must also be retained, and that will conclude the 
 transaction." Mellish, L. J., concurring, says, however : " Ac- 
 cording to the rules of this society this was not strictly an 
 advance in anticipation of the sum eventually payable to the 
 member in respect of his shares, as it was in other cases which 
 had been before the courts ; but the ninth rule says that any 
 member receiving an advance shall repay the same with in- 
 terest at the rate which shall be determined by the board, that
 
 377.] INCIDENTS TO LOANS OR ADVANCEMENTS. 313 
 
 is, at 5 per cent. He was, therefore, not only to receive an 
 amount equal to his subscriptions, but he was to repay any 
 amount which might be advanced, which might be more or 
 might be less, than the amount of his shares." ' Yet the pay- 
 ments which a borrowing member in a permanent society " *is 
 bound to make are calculated to render his shares, at the end 
 of a certain time, just equal in value to the amount of his 
 loan with premium and interest ; the only difference, in this 
 respect, between those and terminating societies being, that, 
 instead of, as in the latter, all shares having to run a given 
 period to reach maturity, when their value may be applied to 
 the extinguishment of the debt, the borrower, in the former, 
 is permitted to elect the period most convenient to himself, 
 whereupon his payments are so calculated and adjusted, as to 
 accomplish the result he desires within that period. There 
 is, therefore, no reason, in the nature of the case, why the rule 
 should be different in these two classes of associations. Where 
 the payments of principal and interest are expressly and eo 
 nomine made elements in the transaction and stipulations of 
 the loan, there can, of course, be no claim, on the part of the 
 building association, to recover interest beyond the time 
 when the principal is returned. 
 
 Running of Interest not Suspended by Bringing, and During Pendency 
 of, Suit, but by Tender. 
 
 377. The running of interest, and consequently of the 
 period of grace allowed for the payment of arrears, is not 
 suspended by the bringing, or during the pendency of, a suit 
 on the bond and mortgage of the borrower. 3 But the tender 
 of mortgage money actually due by a person having the right 
 
 1 See also Matterson v. Elderfleltl, stead of at one time. In calculating 
 Law Rep., 4 Ch. App. 207, where what is due, they charge him in his 
 the transaction, also in a permanent pass-book with principal and inter- 
 society, was somewhat like the est, and split the whole sum so 
 above, except that there was no charged into monthly instalments, 
 mention of "interest," but merely The mortgagor borrows on these 
 dues. This, however, was held im- terms. The directors could not call 
 material. " I think," says ITather- in the 1200; they must wait for the 
 ley, L. C., "the true explanation of instalments becoming due." 
 the transaction is, that the borrower * See ante, 46. 
 has the advantage of making the re- 3 The German Fair Hill Building 
 payment by fixed instalments, in- Association v. Metzger, 3 W. N. C.
 
 37-i THE LAV.' 07 BUILDING ASSOCIATIONS. [CH. XIII. 
 
 to make a tender, or where, in strictness, no technical tender 
 ran bo made (as when the mortgage secures merely stock- 
 payments, etc.), the offer of such terms as will make the suit 
 unnecessary ; or, after suit brought, of such terms, together 
 with costs accrued, will, upon refusal to accept, stop the run- 
 ning of interest, and render the plaintiff, though entitled to a 
 decree, liable to costs. 1 A subsequent agreement to accept, 
 starts the running of interest as if no tender had been made, 
 until the money is paid or brought into court." 
 
 Premiums. 
 
 378. The most peculiar incidents of the transaction of 
 loan between the building association and its members, are 
 those of premiums and fines. It is sufficient, in this connec- 
 tion, to state the general principles relating to them, as estab- 
 lished by the decisions. 5 
 
 By premium is meant the difference between the nominal 
 amount of the advancement, the par value of the share ad- 
 vanced, and the sum actually received by the borrowing mem- 
 ber. It consists of a gross sum of money agreed to be paid 
 by the borrower for the accommodation, to be deducted, in 
 ascertaining the amount receivable by him, from the total 
 nominal value of the share advanced, or loan purchased. The 
 validity of its reservation, or the question, whether or not the 
 borrower may be held to his agreement to pay it, depends 
 upon statutory authority conferred upon the corporation, to 
 engage in this particular species of dealing with its funds, and 
 is to be strictly judged by the intention of the Legislature, ap- 
 parent from the enactments, as well as by its direct mandates 
 and inhibitions. The amount of the premium to be reserved 
 upon any loan must be ascertained, exclusively, by fair and 
 
 (Pa.) 204. See also Union Building 1 Rep. (Cine Super. Ct) 468 (see ante, 
 
 Loan Association of New Brans- 375); McCahan v. The Columbian 
 
 wick v. The Masonic Hall Associa- Building Association, 40 Md. 226. 
 
 tion of New Brunswick etal., 2 Stew. * Columbian Building Associa- 
 
 (N.J.) 389; and observe rule of com- tion of East Baltimore No. 4, v. 
 
 putation given in Robertson v. The Crumb, 42 Md. 192. * Ib. 
 
 American Homestead Association, 3 As to the Law of Premiums, 
 
 10 Md. 397; Cincinnati German see post, Ch. xiv. Fines, post, Ch. 
 
 Building Association . Flach et al., xv.
 
 380.J INCIDENTS TO LOANS OR ADVANCEMENTS. 375 
 
 open competition among the applicants for the advancement, 
 and can neither be arbitrarily decided upon by the directors, 
 nor fixed by by-law, to the prejudice of the borrowing mem- 
 ber. No interest can be charged upon the premium con- 
 tracted for, except by statutory permission. 
 
 Fines. 
 
 379. Fines 1 are impositions, in the nature of liquidated 
 damages, upon members neglecting to pay, at the proper 
 time, to the society, any moneys which are due to the latter 
 from them. The validity and binding effect of their imposi- 
 tion, generally, depends upon statutory authority conferred 
 upon the society for that purpose, expressly or by implication, 
 and upon by-law regulation establishing the rate and princi- 
 ples which are to govern their assessment. As the amount of 
 any particular fine is left to the association, to be fixed by by-" 
 law, its discretion is limited only by the rule, that the lines 
 must be reasonable, certain, and notorious, and specified by 
 by-law. Where these elements concur, the liability to fines 
 becomes a part of the original contract of membership as well 
 as of loan, and can be enforced upon the borrower's bond and 
 mortgage, although fines are not expressly made recoverable 
 by the terms thereof. The mortgage will, in fact, after re- 
 payment of the advance, stand as a security for future fines. 
 Pines upon fines, and fines upon interest can be charged only 
 by virtue of express by-law regulations to that effect, consist- 
 ently with the statute. 
 
 Security : its Nature and Kind. 
 
 380. The authority to grant loans or make advancements 
 to its members, embracing any or all of these elements, being 
 given to the building association, the right to take security 
 for the performance of the undertakings which form the law- 
 ful consideration, on the part of the recipients of suc-h loans 
 or advancements, follows by necessary implication. 1 The 
 seciirity usually required in building associations is that of 
 bond (or note) and mortgage, accompanied by an assignment 
 of the stock, upon the strength of which the advance is made. 
 
 1 See Ch. xv. ing and Savings Association of 
 
 9 Massey . The Citizens' Build- Paola, 22 Kas. 624.
 
 376 TilE LAW OF BUILDING ASSOCIATIONS. [CH. XIII. 
 
 as collateral. 1 But unless the statute or charter be unequivo- 
 cal iii its requirement, that the security taken shall be such, 
 and none other, the building association has the right to take 
 any security which, in the ordinary transactions of business, 
 are customary.* The borrower, at any rate, cannot evade his 
 obligation by showing a deviation from the rule governing the 
 society,* nor will any equities arise therefrom, as against the 
 building association, in favor of other encumbrancers. 4 
 
 381. This entire question seems well settled by a case 
 reported in New Jersey. 6 The Union Building Loan Asso- 
 ciation of New Brunswick advanced $50,000 to the Masonic 
 Hall Association of the same place, which held 215 shares of 
 the building association's stock. A mortgage was executed 
 conditioned for the monthly payment of $1 on each share, 
 and interest on $50,000 at per cent, per month, until the 
 $50,000 should be paid. In case of default for three months, 
 that sum should be at once due and payable. The Masonic 
 Hall Association also assumed to assign 250 shares of stock as 
 collateral security, whilst, in reality, it never acquired more 
 than 215 shares. In like manner, the Empire Building and 
 Loan Association, upon an advance made by it to the Masonic 
 Hall Association, failed to obtain, as collateral security, the 
 full number of shares of stock which the assignment to them 
 purported to transfer. Other building associations, also loan- 
 ing to the Masonic Hall Association, were put in possession 
 of shares of stock, by way of assignment as collateral security, 
 to the full extent of their advancements. On distribution of 
 
 1 An assignment of stock in a made, and even if required by the 
 building association may be shown rules of the association to be made, 
 to have been for the purpose of in absolute form " Ginz v. Stumph 
 collateral security only, though et al , 73 Ind. 209. 
 made, and even if required by the 9 Union Building Loan Associa- 
 rules of such Association to be made, tion of New Brunswick t>. Tin- Ma- 
 absolute in terms. "The fact that sonic Hull Association et al., 2 
 the assignment was absolute in Stew. (N. J.) 389. And see Massey 
 terms did not conclude the question, n. Building Association, sujrra. 
 and not withstanding the declaration 3 Mutual Life Insurance Co. c. 
 of the olHcers of the association, Wilcox, 7 N. Y. Weekly Dig. 13. 
 that the stock could not be assigned 4 Union Building Loan Associa- 
 as a security or collateral, it was tion . The Masonic Hall Associa 
 competent for the parties to make a tion, ubi supra. 
 transfer for such purpose, though 6 Ib.
 
 382.] INCIDENTS TO LOANS OR ADVANCEMENTS. 377 
 
 the proceeds of the sale of the mortgaged premises, it was 
 contended, that, if there should not be sufficient to pay all 
 the mortgages in full, the above-named building associations 
 ought, under the circumstances, in equity, to be postponed, as 
 to the payment of so much of the principal of their respective 
 claims, and interest thereon, as was unsecured by collateral 
 security of stock, until after the demands of the other as.-<>< ia- 
 tions were paid. " This claim of equity," says the court, " is 
 based upon the assumption that the complainants and the 
 Empire Association, as between them and the other associa- 
 tions which obtained collateral security of stock to the full 
 extent of these loans, were bound to obtain such security to a 
 like extent. There was no agreement between the mortga- 
 gees that any collateral security whatever should be obtained, 
 but it is insisted that an implied agreement arose from the 
 nature of the organization, business, and objects of the lenders 
 of the money. Such an implication, however, did not arise. 
 A building loan association may lawfully lend its money to its 
 members or other persons, on adequate and proper security, 
 in the ordinary way, instead of the way peculiar to such in- 
 stitutions. That they have failed to do so is obviously to 
 their disadvantage to the extent of the failure, for they have 
 so much less security for their debt ; but, in the absence of 
 any agreement, there was no obligation upon them, in equity, 
 as between them and the other building loan associations, to 
 obtain such security." 
 
 Joint Security of Member and Outsider. 
 
 382. Although a building association is not permitted to 
 lend money to outsiders upon the terms and under the reser- 
 vations lawful in advancements to members, 1 there is no ob- 
 jection to its taking the joint obligation, or mortgage, of a 
 member and an outsider for an advance made to the former.* 
 And such obligation will then be enforceable against both, ac- 
 cording to its terms and effect upon the member ; as, where a 
 wife, having the power of mortgaging her separate property 
 for the debt of her husband, gives a mortgage to a building 
 
 1 See ante, 313-318. Paola. 2? K:is. 624; Relief Saving 
 
 * Massey v. The Citizens' Build- Fund Association r. Longshore et 
 ing and Savings Association of al., 8 Luz. Leg. Keg. 199.
 
 378 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIII. 
 
 association for a loan made to him, as a member thereof, the 
 mortgage stands for his entire undertaking. 1 
 
 Reservations Legalized in the Several States. 
 
 383. These are the ordinary features of building associ- 
 ation loans. The variations to which their details are subject 
 depend upon the state of the law obtaining in different local- 
 ities. The right of the association to demand and receive se- 
 curity for the consideration of its advancement to a member^ 
 in particular for the payment of dues, has, it seems, never been 
 questioned : although the character and terms of the security 
 taken must, in order to escape the taint of usury, conform with 
 the requirements of the statute under which the society is in- 
 corporated, and with those of its own by-laws.* Nor is there 
 any question as to the propriety of reserving interest on the 
 amount actually advanced, either as such, or in the shape of 
 " redemption-money," according to the method prescribed in 
 the by-laws. But the charging of interest upon the premiums 
 offered for precedence in the taking of a loan has been dis- 
 tinctly held illegal in Ohio,' Iowa, 4 and Maryland ; 6 whilst in 
 Pennsylvania, since 1859, it is authorized by statute and held 
 valid. 8 The premium itself has been almost universally cou- 
 
 1 Juniata Building and Loan As- 3 Forest. City United Land and 
 sociation . Mixell, 3 Norris (84 Pa. Building Association v. Gallagher 
 St.), 313, and see ante, 317-318. et al., 25 Ohio St. 208; Risk v. Del- 
 The peculiarities of a building asso- phos Building and Savings Asso- 
 ciation mortgage, whilst not mate- elation, 31 Id. 517. 
 rial at this point, are such as to re- 4 Hawkeye Benefit & Loan Asso- 
 quire more detailed examination ciation T. Blackburn, 48 Iowa, 285; 
 than can be given in a chapter not Burlington Mutual Loan Associa- 
 exclusively devoted to that subject, tion v. Heider et al. , 55 Id. 434. 
 See, therefore, post, Ch. xvi. 6 Baltimore Permanent Building 
 
 9 Massey v. The Citizens' Build- and Land Society v. Taylor. 41 Md. 
 
 ing and Savings Association of 409; Oak Cottage Building Associa- 
 
 Paola, 22 Kas. 624; Shannon v. The tion T. Eastman and Rodgcrs, 31 
 
 Howard Mutual Building Associa- Md. 561; Williar t. The B.-iltimore 
 
 tion of Baltimore, 36 Md. 383; Bir- Butchers' Loan and Annuity Asso- 
 
 mingham et al. . The Maryland ciution, 45 Id. 546; Birmingham et 
 
 Land and Permanent Homestead al. v. The Maryland Land and Per- 
 
 Association, 45 Id. 541; Hamilton manent Homestead Association, 45 
 
 Building Association t>. Reynolds, Id. 541. 
 
 5Duer(N.Y.), 671; Franklin Build- 6 [Building] Association v. Neu- 
 
 ing Association v. Mather, 4 Abb. rath, 2 W. N. C. (Pa ) 95; Building 
 
 Pr. (N. Y.) 273. Association v. George, 3 Id. 239;
 
 383.] INCIDENTS TO LOANS OB ADVANCEMENTS. 379 
 
 sidered allowable/ the only exceptions being in Kentucky,* 
 
 Selden t>. Reliable Savings and 
 Building Association, 32 P. F. 
 Smith (Pa. ), 336. As to the doctrine 
 previous to 1859, see ante, 351; 
 and post, ch. xx. 
 
 1 Ib. ; Delaware Building Asso- 
 ciation v. Keller, 2 W. N. C. (Pa.) 
 29; Jarrett v. Cope, 68 Pa. St. 67; 
 Relief Saving Fund Association v. 
 Longshore et al., 8 Luz. Leg. Reg. 
 (Pa.) 199; Franklin Building Asso- 
 ciation v. Marsh, 5 Dutch. (N. J.) 
 225 ; Hobokeu Building Association 
 v. Martin, 2 Beas. (N. J.) 428; Som- 
 erset County Building Loan and 
 Saving Association v. Canman and 
 Vandervere, 3 Stock. (N. J.) 282; 
 Red Bank Association v. Patterson, 
 12 C. E. Gr. (K J.) 223; Clarkville 
 Building and Loan Association v. 
 Stephens, 11 Id. 351; Citizens' Mu- 
 tual Loan and Accumulating Fund 
 Association v. Webster et al., 25 
 Barb. (N. Y.) 263; City Building 
 and Loan Co. v. Fatty, 1 Abb. App. 
 Dec. (N. Y.) 347; West Winsted 
 Savings Bank and Building Asso- 
 ciation v. Ford, 27 Conn. 282; Same 
 . Rice, Id. 293; The Peoples' Sav- 
 ings Bank and Building Associa- 
 tion v. Collins, Id. 145; Forest City 
 United Land and Building Associa- 
 tion v. Gallagher et al., 25 Ohio St. 
 208; Hagerman et al. v. The Ohio 
 Building and Savings Association, 
 25 Id. 186; The Licking County 
 Savings, Loan and Building Asso- 
 ciation v. Bebout's Adm'r et al., 25 
 Id. 252; Robertsons. The American 
 Homestead Association, 10 Md. 397; 
 Shannon v. The Howard Mutual 
 Building Association of Baltimore, 
 36 Md. 383; Bowker T. Mill River 
 Loan Fund Association, 7 Allen 
 (Mass.) 100; Merill v. Mclntire, 18 
 Gray (Mass.), 157; Barker v. Bige- 
 low, 15 Id. 180; Delano v. Wild et 
 
 al., 6 Allen (Mass.), 1; Shannon, et 
 al., Trustees Manchester Loan and 
 Fund Association, v. Dunn, 43 N.H. 
 194 (the last four cases being of un- 
 incorporated associations) ; Hawk- 
 eye Benefit & Loan Association v. 
 Blackburn,48 Iowa, 385; Burlington 
 Mutual Loan Association v. Heider 
 et al., 55 Id. 424; Massey v. The Citi- 
 zens' Building and Saving Associa- 
 tion of Paola, 22 Kas. 624; Salina 
 Building, Savings and Trust Asso- 
 ciation v. Nelson et al., Ib. 751; 
 Mulloy v. The Fifth Ward Building 
 Association, 2 McArthur (Supr. Ct. 
 D. C.), 594; Pabst v. Economical 
 Building Association, 1 Id. 385; 
 White v. Mechanics' Building Asso 
 elation, 22 Grattan(Va.), 233; Win- 
 chester Building Association V. Gil- 
 bert et al., 23 Id. 787; McLaughlin 
 et al. v. The Citizens' Building Loan 
 and Savings Association, 62 Ind. 
 264; Shaffrey v. The Workingmeu's 
 Savings, Loan and Building Asso- 
 ciation, 64 Id. 600; Bibb County 
 Loan Association q. Richards, 21 
 Ga. 592; Parker. The Fulton Loan 
 and Building Association, 46 Id. 166 
 (the admission in the Georgia cases 
 is somewhat restricted, partly de- 
 claring it to be a question for (he 
 jury, whether there was a bona fide 
 transaction calculated to serve the 
 purposes of the Legislature in incor- 
 porating the society, or a mere 
 breach of the usury laws). And see 
 English cases, supra. See 338. 
 
 * Gordon, etc., v. Winchester 
 Building nnd Accumulating Fund 
 Association, 12 Bush, 110: Herbert, 
 etc. v. The Kenton Building and 
 Savings Association of Covington, 
 11 Id. 296: the transaction is treated 
 as a mere loan at usury, which, un- 
 der the Const it ut ion, the Legislature 
 could not authorize.
 
 380 
 
 TI1K LAW OF BUILDING ASSOCIATIONS. [CH. XIII. 
 
 Nebraska, 1 North Carolina," South Carolina,' and Tennes- 
 see. 4 In those States, lines, also, are not collective from 
 the borrower, and in the District of Columbia,' they have 
 been held irrecoverable on equitable grounds.' In other 
 parts of the country, they appear to be allowed, both on dues 
 proper and on interest, except that in Ohio they must be con- 
 fined to the former only/ In Pennsylvania, lines upon lines 
 seem to be legal, if specified in the by-laws. 8 It is also gen- 
 erally conceded to be proper to include in the contract stip- 
 ulations for the payment of ground-rent, taxes, insurance, and 
 similar charges, which may then be recovered, together with 
 the balance of the debt.* 
 
 1 The Lincoln Building and Saving 
 Assoc'n, appellee, v. Graham, appel- 
 lant, 7 Neb. 173; Same v. Benjamin 
 and Benjamin, appellants, Ib. 181. 
 
 1 Mills et al. v. The Salisbury 
 Building and Loan Association, 75 
 N. C. 292; Latham and wife v. The 
 Washington Building and Loan As- 
 sociation, 77 Id. 145; Vann and wife 
 v. The Fayetteville Building and 
 Loan Association, 75 Id. 494; Han- 
 ner et al. v. The Greensboro Build- 
 ing and Loan Association, 78 Id. 
 188; and see Overby v. Fayetteville 
 Building Association, 81 Id. 56; 
 Smith and wife v. The Mechanics' 
 Building and Loan Association, 73 
 Id. 372. In the latter case, the 
 building association being incorpo- 
 rated by special act authorizing pre- 
 miums, etc., they were not held il- 
 legal; but the mortgage was not 
 such as could be enforced under the 
 charter. See Ch. xvi. 
 
 8 Columbia Building and Loan 
 Association V. Bellinger, 12 Rich. 
 Eq. (S. C.) 124. 
 
 4 Martin . Nashville Building As- 
 sociation, 2 Cold. (Tenn.) 418. The 
 principle in these States is to regard 
 the transaction as a loan, and to find 
 nothing in the statutes apparently 
 contemplating stich reservations. 
 
 "Mulloy v. Fifth Ward Buil ling 
 
 Association, 2 McArthur (Supr. Ct. 
 D. C.), 494; Pabst v. Economical 
 Building Association, 1 Id. 385. 
 
 6 See post, 401-403. 
 
 7 Forest City United Land and 
 Building Association v. Gallagher, 
 25 Ohio St. 208. 
 
 8 Building Association v. Schuller, 
 3 W. N. C. (Pa.) 431. 
 
 9 Robertson v. The American 
 Homestead Association, 10 3Id. 
 397; Hanner et al. v. The Greens- 
 boro Building and Loan Associa- 
 tion, 78 N. C. 188; Overby and wife 
 v. The Fayetteville Building and 
 Loan Association, 81 Id. 56. It is 
 said in Illinois that a building asso- 
 ciation, authorized by its charter to 
 make a loan and provide for its se- 
 curity, may, as an incident of such 
 right, contract to insure the proper- 
 ty taken as security; and that, upon 
 failure to do so, and loss by fire, an 
 action will lie against the society for 
 breach of the agreement to insure; 
 the measure of damages, however, 
 being, not the sum agreed upon as 
 insurance, but the dividend the in- 
 surance company would have been 
 able to pay in case the insurance 
 had been effected before loss. And 
 it was further said, that, where the 
 secretary of the building association 
 had been making similar contracts
 
 384.] INCIDENTS TO LOANS OR ADVANCEMENTS. 381 
 
 " Loan " Construed to Mean " Amount Actually Advanced." 
 
 384. Subject, then, to the various modifications which 
 may be imposed by the various statutes, the ' loan ' of the 
 building association to its member includes, without becoming 
 usurious, all these different items, stock-payments, interest, 
 premiums, and fines, besides the customary charges for insur- 
 ances, taxes, etc. But a narrower significance is given to that 
 word, whether used in statutes or by-laws, where justice and 
 the purposes of the enactment require it. Thus, where the 
 Act of Assembly ordained, that, in case of recovery of the 
 loan by process of law, when the amount collected by or dis- 
 tributed to the association exceeds " the amount of the loan 
 taken by the borrower," with interest and charges, the excess 
 recovered beyond the amount required to pay the loan, with 
 interest and charges, shall, after the money has been reloaned 
 (which shall be at the next stated meeting), be returned to 
 the borrower from whom the money was collected, or his or 
 her legal representatives ; the reloan to be made, if the stock 
 was issued in series, only to the stockholders of the same 
 series, and, in case the premium offered for the reloan be 
 greater than that originally given by the defaulting borrower, 
 the amount of the original premium only to be paid over by 
 the association ; it was held that the words " amount of loan 
 taken by the borrower" must be construed to mean " the 
 sum of money actually paid to, or received by, the bor- 
 rower." ' " The clear intent of the act is not to require any 
 borrower to pay the premium on a loan for a greater number 
 of years than he shall retain it. The corporation shall not, on 
 a reloan for a premium, keep both the original and second 
 premium for the same period of time. If, however, the 
 second premium be greater than the first, the second proviso 
 permits the corporation to retain the greater and repay the 
 lesser to the first borrower from whom the corporation has 
 received it. To give due effect to the intent of the statute, 
 
 with others for some time, having no acted with the knowledge of the 
 
 personal interest in doing so as directors and was authorized to 
 
 agent, etc., of the insurance com- make such contracts. Chicago 
 
 pany, and the building association Building Association v. Crowell, 65 
 
 had received the benefits accruing 111. 453. 
 
 from such contracts without objec- ' Flounders r. Hawley, 78 Pa, St. 
 
 tion, it might be inferred that he 45.
 
 889 
 
 THE LAW OP BUILDING ASSOCIATIONS. [CII. XIII. 
 
 iii case of a recovery by process of law before the loan 
 matures, we must construe " the amount of loan taken by the 
 borrower" to mean the sum of money actually paid to or re- 
 coived by him. As this part of the section does not go into 
 effect until after the corporation shall have had an opportunity 
 of reloaning the sum thus recovered at a greater rate of in- 
 terest than the original loan, this construction protects both 
 the first borrower and the corporation." l 
 
 385. A similar meaning has been given by the courts of 
 Maryland and Ohio, to the words " loans advanced," * " sum 
 paid or advanced,"' "amount borrowed," 4 in restricting the 
 charging of interest, under statutes or by-laws, to the amount 
 of cash actually received by the borrower, instead of allowing 
 interest to be taken upon the whole debt, including the pre- 
 mium. But, where the by-laws provide, that, in case a share- 
 holder who had received a loan shall die, " his or her heirs or 
 legal representatives may return the same to the association," 
 and receive from it the value of the stock of the decedent, as 
 the same was assessed at the annual meeting of the association 
 1 Mercur, J., in Flounders n. Haw- not grossly in excess of the real loss 
 ley, 78 Pa. St. 45 (48). A principle 
 somewhat similar to that expressed 
 above, and in the section of the 
 statute referred to, seems to be at 
 the bottom of the rule embodied in 
 the constitutions of building associa- 
 tions, and adopted by the courts in 
 Georgia, in the case of a defaulting 
 borrower; he must pay back the 
 money he got, with such an advance 
 upon it as will enable the company, 
 at the lower or higher rates, as the 
 case may be, at which money is sell- 
 ing, to get the same monthly inter- 
 
 sustained by the company by reason 
 thereof. Ocmulgee Building and 
 Loan Association v. Thomson, 52 
 Ga. 427. And in Richards v. The 
 Bibb County Loan Association, 24 
 Ga. 198, it is said that the rate ob- 
 taining on the day of judgment be- 
 ing taken as the guide in making the 
 estimate, if, on the day of sale, that 
 estimate was no longer correct, the 
 party affected by the change might 
 have the judgment modified accord 
 
 est upon it as he ought to pay at the 
 rates he got it at ; to be ascertained 
 by deducting from the par value of 
 the shares, such a per cent, of the 
 same as advances were sold or al- 
 lotted to members at the last regu- 
 lar monthly meeting next before the 
 judgment, and adding to this the 
 dues on such share for each default 
 up to such meeting, and any fines 
 that may be due for such default, 
 
 * Forest City United Land and 
 Building Association v. Gallagher 
 et al., 25 Ohio St. 208. 
 
 8 The Baltimore Permanent 
 Building and Land Society v. Tay- 
 lor, 41 Md. 409. 
 
 4 Oak Cottage Building Associa- 
 tion v. Eastman and Rodgers, 31 Md. 
 556. See also Hawkeye Benefit & 
 Loan Association v. Blackburn, 48 
 Iowa, 385; Burlington Mutual Loan 
 Ass'n r>. Heider et al., 55 Id. 424.
 
 386.] INCIDENTS TO LOANS OR ADVANCEMENTS. 383 
 
 i in mediately preceding his decease, "or may continue to pay 
 interest and monthly dues, and become, in all respects, a 
 member of the association until the same shall terminate ;" 
 it was held that if the heirs or legal representatives of the 
 deceased shareholder and borrower elect to return the loan, 
 the amount to be returned is the money actually received, 
 together with the premium bid for the preference, and not 
 only the amount actually received by the decedent. Any 
 other construction, it was said, would require a surrender by 
 the association of the benefits of the contract by which the 
 decedent had obligated himself to it, a surrender which 
 had not been contemplated or reserved in the contract. 1 
 
 Binding Force of Contract of Loan, etc., Made in Pursuance of Charter 
 and Statutory Powers. 
 
 386. This contract, whatever it may lawfully be, under 
 the particular statutes governing the building association, is 
 absolutely binding upon the member entering* into it, as 
 well as upon his guarantor or co-obligor, 3 and upon all who 
 stand in his shoes. 4 It cannot be varied, without the bor- 
 rower's consent, by any action or dereliction of the building 
 association or its members ; * but it may, it seems, under 
 certain circumstances, become partially abrogated by the 
 premature dissolution of the society ; ' and it is a right 
 which every borrower has, by virtue of his membership, to 
 cancel it by discharging his obligation to the society at any 
 time in advance of its maturity. 7 The contract of loan itself 
 contemplates no discharge before that time ; and the bor- 
 rower can rid himself of his obligation only by giving to the 
 
 1 The Licking County Savings, Relief Saving Fund Association v. 
 
 Loan and Building Ass'n v. Be- Longshore etal., 8 Luz. Leg. Reg. 
 
 bout's Adm'r et al., 25 Ohio St. (Pa.) 199. 
 
 252. 4 A purchaser of property subject 
 
 9 Hoboken Building Association to a building association mortgage 
 
 v. Martin, 2 Beas. (N. J.)428; Wat- is liable to make monthly payments, 
 
 kins v. The Workingmen's Building etc. , as stipulated therein. Sec post, 
 
 and Loan Association, 10 W. N. C. 485. Nor can he complain of 
 
 (Pa.) 414; 38 Leg. Int. 333; 97 Pa. usury in the transaction, where it 
 
 St. 514. was in accordance with the statute 
 
 3 Juniata Building Association v. legalizing such contracts. 
 
 Mixell, 84 Pa. St. 313; Massey t> See ante, 169-170, 289. 
 
 The Citizens' Building and Saving See post. g 496-503. 
 
 Association of Paola, 22 Kas. 624; ' See ante, 152-153.
 
 384 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIII. 
 
 society an exact present equivalent of what, by following 
 out the terms of the contract, would, during the running of 
 it, pass from the member to the society, subject to such re- 
 ductions as, under the statutes, or by special compromise, 
 may be granted. 1 The apparent oppressiveness of the bar- 
 gain, in the absence of fraud or misrepresentation, is not a 
 ground for relieving the borrower.' In a case arising in 
 New York,' where it was urged upon the court, under all 
 the circumstances of the case, Birdseye, J., says : '' That the 
 defendant is required to pay considerable sums of money, 
 every month, and that these payments may be increased by 
 fines in case of default, and that such fines may be made 
 heavier for a continued default, forms no sufficient reason for 
 declaring the contract void, in the whole, or even jrro tanto. 
 It is not shown or pretended, except in the arguments of 
 counsel that the defendant did not fully understand the na- 
 ture of the bargain made ; or that he could not have calcu- 
 lated the precise amount he would be bound to pay ; or that 
 lie has been in any manner deceived, defrauded, or misled, 
 either in joining the association, or bidding for the shares and 
 paying his premium. His engagement may be an onerous 
 one. But all his associates entered into the same engage- 
 ment and assumed the same burden. For aught that ap- 
 pears, they have borne those burdens, and made all their 
 payments regularly, in the expectation that the defendant and 
 every other member, would do the same, and thus the wind- 
 ing up of the association, and the termination of the tax upon 
 them, would be speeded. To release the defendant from his 
 contract, or any part of it, is only imposing on each of them 
 so much greater burden, and requiring a proportionate exten- 
 sion of payments, to an early relief from which they are 
 justly entitled. The defendant must continue to pay into 
 the common fund the sum he agreed to pay ; and if the other 
 members of the association comply with their agreement, all 
 of them will be, at no very distant day, relieved from the 
 
 1 See ante, 154-164, 169-170. Association, 10 W. N. C (Pa.) 414; 
 
 9 Citizens' Mutual Loan and Accu- 38 Leg. Int. 333; 97 Pa. St. 514. 
 
 initialing Fund Association v. Web- 3 Citizens' Mutual Loan and Ac- 
 
 ster, 25 Barb. (N. Y.) 263; Watkins cumulating Fund Association, uZA 
 
 . Workingmen's Building and Loan supra.
 
 387.] INCIDENTS TO LOANS Oil ADVANCEMENTS. 385 
 
 necessity of making further contributions." " They may not 
 then have realized the benefits they worked for. They will, 
 perhaps, have learned that the proprietor is the best guardian 
 of property ; that the making of extravagant gains involves 
 great risks or great burdens; and that the steady accumula- 
 tions of honest industry are the surest way to wealth. But 
 they will have met with no losses which a reasonable pru- 
 dence would not have enabled them to foresee and measure.' 5 ' 
 
 Practical Results of Building Association Loans. 
 
 387. As to the practical working of building associa- 
 tions, as shown in these transactions of loan and advancement, 
 it does not cover the whole ground, to say, with Strong, J., 1 
 that they are " but agencies for obtaining usurious interest 
 from the necessitous and unwary ;" or, with Whelpley, C. J., a 
 " that they are but organized societies of legalized usurers, and 
 that, by their operation, the investments of needy members 
 are absorbed by the usury paid to those more able. The only 
 advantage secured is enabling borrowers to repay a loan by 
 monthly payments somewhat within their means. In all ordi- 
 nary cases, it is a most expensive way of obtaining a loan, 
 and when it is obtained, the borrower is utterly unable to tell 
 what rate of interest he is to pay, or how soon his debt will 
 be extinguished." It may, with equal reason, be said that 
 " these associations are founded on mathematical calculations, 
 and a close scrutiny of their charters will show that their 
 rules are based upon the highest principles of equity and fair- 
 ness. Their fundamental idea is, that one who has the privi- 
 lege of paying money advanced to him, in small sums. 
 monthly, can, in consequence of the slight strain the payment 
 makes on his resources each month, pay a large per cent, for 
 the use of that money, and the whole scheme, adopting this 
 as its fundamental idea, is based upon fairness and equity to 
 all parties."' None of these statements do exact justice. 
 Aside from the legal aspect of the transaction, the theory of 
 a building association loan is different from that of other loans. 
 
 1 North America Building Ass'n 3 Ocmulgee Building and Loan 
 
 *. button, 35 Pa. St. 463 (468). Association . Thomson, 52 Ga. 
 
 9 Franklin Building Association 427. 
 t>. Marsh, 5 Dutch. (N. J.) 225.
 
 386 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIII. 
 
 Theoretically, and, in most cases, practically, the borrowing 
 member of a building association aims at becoming the owner 
 of property by means of small payments, spread over a num- 
 ber of years, payments corresponding as near as possible to 
 the rent he would otherwise be obliged to pay for the same 
 property. Now, private mortgagees, or money-lending corpo- 
 rations other than these societies, would, in the vast majority 
 of cases, object to such small partial payments ; and whilst it 
 is true that the borrower might put by small sums until the 
 amount would be sufficient to pay the whole debt, yet, on the 
 one hand, in doing so he would be the loser to the extent of 
 the interest the association allows him on his payments, and 
 which he could not get elsewhere ; and, upon the other hand, 
 the likelihood is that those small sums would not be put by, 
 because such a course practically involves a greater amount 
 of self-denial than most persons possess. In this respect, 
 the pressure exerted by the system of fines and penalties 
 adopted by building associations operates, in point of fact, 
 most beneficially for the member. And furthermore, and 
 this is, to a poor man, one of the greatest advantages in bor- 
 rowing from a building association, he can obtain a larger 
 sum, in proportion to the value of the property, than he could 
 raise upon it from other sources. " Private mortgagees are 
 not advised to lend more than two-thirds of the value of land, 
 and one-half of houses ; but building societies can afford to 
 advance a much larger proportion, indeed, to nearly the value 
 of the property, partly because the principal sum at once 
 begins to be reduced by means of the periodical payments, 1 
 and partly also because these societies, being co-operative 
 associations, may recoup losses, arising from bad securities 
 here and there, from general funds and resources." * 
 
 1 This statement is not perfectly up, for the claim of the society 
 accurate, because payments upon against him on account of his ad- 
 stock are not, ipso facto, payments vancement ; ante, 326-337), is 
 to the mortgage. See post, Ch. the result expected to happen." 
 xvii., 452-454.. But, "in a gen- State, Washington Building and 
 eral way, this view may seem fair, Loan Association, pros., v. Horn- 
 because an exchange of one for the backer, 13 Vr. (N. J.) 635. 
 other (the accumulation of stock- * See Barry, on Building Socie- 
 payments, profits, etc., standing to ties, 103. 
 the member's credit upon winding
 
 389.] PEEMIUM. 387 
 
 CHAPTER XIV. 
 
 PKEMIUM. 
 
 888. Definition of premium generally. 
 
 389. Its true nature and method of payment. 
 
 jj 391. For purposes of computation must be treated as a deduction. 
 
 392. Premium must ordinarily be a gross amount per share, not 
 
 merely increased interest. 
 394. Premium must be fixed by free competition. Minimum 
 
 premium. 
 
 398. Interest upon premium. 
 399. Abatements, discounts, and remissions on premium. 
 
 Definition of Premium Generally. 
 
 388. " The premium is a bonus charged to a stockholder 
 wishing to borrow, for the privilege of anticipating the ulti- 
 mate value of his stock, by obtaining the immediate use of 
 the money his stock will be worth at the winding up." 1 
 In effect, it is the conventional difference between the par 
 value of the share advanced, and the amount actually received 
 by the borrower. It is not, therefore, a cash payment which 
 he is obliged to make upon obtaining his preference ; nor 
 can it properly be said to be a deduction made at the time 
 from any money belonging to him. 
 
 Its True Nature and Method of Payment. 
 
 389. The true nature of the premium appears most 
 clearly where the form of the transaction of loan is that of a 
 sale to, and redemption by, the society of the shares held by 
 the member, which indeed appears to be the oldest method. 
 His duty as a member being to keep up his payments to the 
 society, until it is ready to wind up, he offers to sell to it his 
 prospective interest, in right of his shares,* in its final accu- 
 mulations, whilst, at the same time, binding himself to the 
 continuance of those payments which are intended eventually 
 to raise the shares to their fixed par value. A number of share- 
 
 1 Wrigley, The Workingman's his membership and extinction of 
 
 Way to Wealth, p. 67. the stock, pro tanto ; results which 
 
 * It seems to be entirely inaccu- do not occur. See ante, 146-148, 
 
 rate to say that he sells his shares; and cases there examined, 
 for that implies a relinquishment of
 
 388 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIV. 
 
 holders being in competition for the same advancement, the 
 society selects him who will relinquish to it the prospective 
 dividend upon his shares in exchange for the lowest present 
 cash payment per share. The borrower thus sells the future 
 dividend upon his shares at a discount ; the society, its funds 
 at a premium ; but there is neither a transfer of money to 
 the society, to cover the premium, nor a deduction from any- 
 thing belonging to the borrower to liquidate the discount. 
 There is simply an agreement, on the part of the borrower, to 
 continue making his regular payments, until his shares have 
 reached their par value, the whole of which, he agrees, shall 
 belong to the society, notwithstanding the amount he has, in 
 fact, received from them is less than such par value, by the 
 amount he has allowed the society by way of discount, or 
 premium. The benefit of this arrangement the society reaps 
 when its assets become distributable, in that then the whole 
 value of the advanced share falls into the common fund, 
 from which originally was taken only a portion of what that 
 share was expected to be worth. And it is the same tiling 
 where the obligation the borrower gives to the association 
 " is nominally for the repayment of the loan, but particularly 
 for the payment of the monthly dues on the stock and legal 
 interest on the loan, until the association is able to divide, to 
 each share of stock held by the members," l the par value of 
 those shares as fixed in the charter. Assuming that the sum 
 
 ~ 
 
 the borrower actually received is covered by a certain pro- 
 portion of the whole number of dues, payments of various 
 kinds, and profits, which go to make up the total value of his 
 matured share ; there is still another portion left, equal to 
 the difference between that value and what he really got, 
 viz.; the premium he agreed to pay. Now, the society appro- 
 priates the whole according to the bargain ; and thms the 
 premium is paid at precisely the same time at which the 
 society is reimbursed for the advance made to its member, 
 that is to say, when it is ready to wind up and distribute its 
 assets. 
 
 390. The premiums cannot, therefore, in any sense be 
 said to be a prepayment by the borrower, and the taking of 
 such on the part of the society, would undoubtedly be beyond 
 1 Wrigley, Workingman's Way to Wealth, p. 67.
 
 390.] PREMIUM. 389 
 
 what the Legislature contemplated, and therefore usurious. 
 Nor, in any proper sense, can it be regarded as an actual 
 deduction of money, either belonging to him, in the hands of 
 the society, or which he was entitled to receive from it. At 
 the time when he received the loan, he had, as yet, nothing 
 in the society but a prospective interest in its final accumula- 
 tions, in proportion to the number of his shares. These are, 
 to be sure, estimated at a certain figure. They may, how- 
 ever, never reach it, they may, indeed, exceed it ; but, for 
 the present, there .is not any basis for a deduction, no cer- 
 tain figure describing an amount which belonged to him, or 
 which he was entitled at the time to receive. For thereto he 
 becomes entitled only by reason of his willingness and ability 
 to surpass his competitors in undertakings looking towards 
 the remission of future obligations presumptively accumulat- 
 ing in his favor against the society. Hence, it was said in 
 Pennsylvania, in answer to the claim of a defendant in a 
 judgment which had been given by him, as borrower, to a 
 building association, and which embraced the whole debt, 
 principal, premium and interest : " It is a mistake to sup- 
 pose, as was claimed by the defendant, that he has paid the 
 premium. He only promised to pay it. It was inserted in 
 the judgment note, and is now being collected." ' 
 
 1 Paxson, J., in "Watkins v. The shall be raised to pay each unre- 
 "Workiugmeu's Building and Loan deemed shareholder the fixed value 
 Association, 10 W. N. C. 414; 38 of his shares in full." It is sub- 
 Leg. Int. 333 ; 97 Pa. St. 514. mitted that this description is inac- 
 In Low Street Building Associa- curate. It is not " the right of pres- 
 tion No. 6 v. Zucker, 48 Md. ently receiving the fixed value of 
 448, the transaction is described the shares," which the society sells, 
 to be this: "The association pro- subject to any deduction upon that 
 poses to sell to the shareholder value; but the right of anticipating 
 the right of presently receiving that fixed value by receiving what, 
 the fixed value of the shares upon in the borrower's opinion, may pres- 
 being allowed a certain deduc- ently be equal to that future divi- 
 tion from the amount, commonly dend. The difference between these 
 called a bonus, it being, in fact, a two values, the premium, he prom- 
 deduction made at the time, and the ises to make up in raising his share, 
 shares thus discounted or redeemed for the benefit of all the members 
 are to be paid for by the coin inuance of the society, to its par value, 
 of the subscriptions and payment of When that is accomplished, the so- 
 weekly dues, and fines, if any in- ciety absorbs the whole, and then 
 curred, until the required amount only is the premium paid.
 
 390 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIV. 
 
 For Purposes of Computation must be Treated as a Deduction. 
 
 391. For the purpose, however, of computing the amount 
 which a member agreeing to a certain premium is entitled to 
 receive in cash, it must be treated as, theoretically, a deduc- 
 tion. The reason is, that in offering its money to borrowers, 
 the society adopts, as the basis of each loan, the par value of 
 the shares. Upon this basis the premium is bid, so much 
 upon each share advanced ; and, in ascertaining the sum then 
 coming to the applicant, the figure of the premium contracted 
 for is deducted from the figure representing the par value of 
 the share, the difference being the actual advancement of 
 money to be made. But it is apparent that this is a rule of 
 computation merely, necessitated by the fact that a member 
 is ordinarily entitled to incur liabilities to the association, not 
 exceeding, in the whole, the par value of the shares he holds 
 in its stock. Now, if it were attempted to add the premium 
 he bids to the par value of such shares, his debt to the associ- 
 ation would clearly be in excess of what is lawfully allowable. 
 In other words, if the member holding five shares in the so- 
 ciety, of a prospective aggregate value of $1000, be, under 
 the law and the rules of the society, entitled to receive a 
 " loan" of that amount and not beyond ; and, in competing 
 for the advance, he be accepted upon the offer of a premium 
 of $50 per share, then his whole debt, or loan, not being per- 
 mitted to exceed $1000, it is evident, that, to ascertain the 
 amount he is entitled to receive, the sum of $250 must be de- 
 ducted from $1000. If it were added to $1000, the borrower 
 actually receiving that amount, instead of $750, his debt to 
 the society would be $1250, i.e., $250 in excess of what it 
 lawfully may be. lie would, therefore, be obliged to make 
 up to the society such an amount as would eventually render 
 his shares worth $250 more than their fixed value, according 
 to the value fixed for all the shares ; whereas, the manifest 
 intention of the Legislature, and the very nature and opera- 
 tion of the building association scheme, is to balance, upon 
 final settlement, the par value of the shares standing to the 
 borrower's credit, and which have been advanced against his 
 indebtedness, so that the one shall cancel the other. 1 This, 
 
 1 Wrigley, Workingman's Way to Wealth, p. 67.
 
 392.] PREMIUM. 391 
 
 then, is what is properly meant by deducting the premium in 
 advance, viz. ; that the amount of the cash advanced to the 
 member, together with the premium bid by him, shall not ex- 
 ceed the par value of his shares, which is adopted as a basis 
 for the loans, and which his regular contributions are calcu- 
 lated to make up in the course of the running of the build- 
 ing association. It was, therefore, held in Maryland that an 
 association incorporated uijder an act ' which authorized pre- 
 miums and interest, or either, to be " deducted in advance," 
 had no right to add a premium of $250 to a loan of $1000, 
 being the par value of the shares advanced, taking a mortgage 
 for $1250 repayable in monthly instalments, for 120 con- 
 secutive months, of $10.41$ dues, and of $6.25 for interest 
 and bonus ; and that a contract so made, not being in con- 
 formity with the statutory requirements, was usurious, and 
 could be enforced only for the amount actually advanced, 
 and lawful interest, excluding all excessive interest exacted 
 or paid in the shape of bonus or otherwise.* 
 
 Premium must Ordinarily be a Gross Amount Per Share, not Merely 
 Increased Interest. 
 
 392. It follows, from the same principle, that the pre- 
 mium reserved must ordinarily be a fixed gross amount per 
 share for the whole advance, and that the stipulation for pay- 
 ment of a bonus, in the shape of increased interest merely, is 
 improper. The statute, unless it distinctly declares other- 
 wise, or permits other methods, means a definite sum for the 
 whole period of the loan, and not anything whatever which 
 the parties, in their contract, may choose to denominate a 
 bonus or premium. A building association, making a loan, 
 stipulated for the return of the principal, for the payment of 
 legal interest monthly, in advance, and for the payment of a 
 bonus of one per cent., also monthly in advance. Upon a 
 suit to foreclose the mortgage securing this loan, the court 
 held that, although one portion of the sum to be paid 
 monthly, for the use of the money, was called intciv>r. and 
 another portion a bonus, yet, in truth and in fact, it was noth- 
 Mi<r more nor less than a contract to pay fifteen per cent, for 
 
 1 Act 1868, Ch. 427. land Land and Permanent Home- 
 
 * Birmingham et al. v. The Mary- stead Association, 45 Md. 541.
 
 392 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIV. 
 
 such use. And the court deliberately say that the Legislature 
 " did not intend to authorize contracts of so ruinous a char- 
 acter as the one under consideration. Their design was to 
 benefit a class of borrowers who might not be able to obtain 
 loans in other modes. . . . Such men generally understand 
 the effect of a contract for a loan, at the legal rate of interest, 
 although a specific sum may be required to be paid for the ac- 
 commodation, for a given period of time. If the borrower 
 fails to pay at the end of that time, his debt is subject only 
 to lawful interest. And how much he can afford to pay for 
 that accommodation, is a matter within his judgment. But 
 such men may not all be able to foresee the consequences of 
 a contract like the one under consideration, a contract by 
 which the borrower is bound to pay fifteen per cent, per annum 
 for the loan, so long as it continues, and} from an accumula- 
 tion of the debt, at that rate of interest, he has no means 
 of extricating himself, except by the repayment of the debt, 
 with the accumulated interest. This he may not at all times 
 be able to do. Sickness, scarcity of money, misfortunes in 
 business, and various other causes, may prevent. And if he 
 has mortgaged his dwelling-house for the security of the loan, 
 he may find that the loan, instead of enabling him to become 
 the proprietor of his own house, is sweeping it from under 
 him, with all his other earnings therein invested. His con- 
 dition, upon a failure to pay, is very different from that of a 
 man who has borrowed at lawful interest and a stipulated 
 bonus. The latter, under no circumstances, can be compelled 
 to pay, in addition to a specific bonus, more than the debt and 
 the lawful interest, however long the debt may remain. Hut 
 the debt of the former may go on accumulating at a rate f 
 which, if the debt be a large one, few men can bear, for any 
 great length of time, without becoming ruined." ' 
 
 393. It was stated by Mr. Wrigley. in 1872,' that " In 
 some associations, organized of late years, it is the rule not to 
 deduct the premium from the face of the loan, on paying the 
 
 1 The Mechanics and Working- s Wrigley, Workingman's Way 
 
 men's Mutual Savings Bank and to Wealth, p. 71. No attempt is 
 
 Building Assoc'n of New Haven v. made in that work to examine 
 
 Wilcox et al.. 24 Conn. 147; Same v. the legal aspect of such transac- 
 
 The Meriden Agency Co., Ib. 159. tions.
 
 394.] PREMIUM. 393 
 
 borrower his money, but to require him to pay it in monthly 
 instalments. In some cases it is a premium charged on each 
 share, and in others a percentage on the amount of money 
 borrowed." The same practice obtains in numerous building 
 associations at this day. All that can be said of it, under the 
 authority of the cases just examined, proceeding, as they do, 
 not only upon mere statute law, but equally upon principles 
 founded in the nature of the building association scheme, is, 
 that such an arrangement, in the absence of distinct legisla- 
 tive sanction, and strict compliance with the requirements of 
 the statute authorizing it, is unquestionably illegal, and ren- 
 ders the entire transaction usurious. 
 
 Premium must be Fixed by Free Competition. Minimum Premium. 
 39-i. The premium which is to be paid by any member, 
 upon an advancement made to him by the society, must be 
 fixed by free and open competition between all the applicants, 
 and in no other way. It is the price to be paid for obtaining 
 preference before other members who may desire the same 
 loan, and at the same time a compensation to them indirectly 
 for the disappointment and postponement which falls to their 
 lot. There can, then, be only one proper method of getting 
 at the exact amount, which, in fairness and equity, a borrower 
 should, at any given time, be required to pay, viz. ; by compe- 
 tition. If no other person wants the money, or if. among 
 those who would take it, there are none to whom the prece- 
 dence of another causes any appreciable inconvenience, there 
 is little for which the borrower is bound to offer compensa- 
 tion, and the premium must be trifling, unless positive injus- 
 tice is to be done him. On the other hand, if there are many 
 who desire the advancement, and if the prospect of obtaining 
 it appears to them worth a considerable sacrifice, then he to 
 whom the loan was most necessary and advantageous, and who 
 has therefore bid the highest, has but done his duty towards 
 the other applicants in agreeing to a signal concession, and 
 has nothing to complain of if the premium is rather oppres- 
 sive. If the present accommodation was not worth that to 
 him, he should have ceased bidding, and preferred his appli- 
 cation at another time. Where, on the other hand, the soci- 
 ety undertakes to fix arbitrarily a certain figure as the lowest
 
 394 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIV. 
 
 premium at which it will entertain a bid, the borrowing 
 member, in case there are no, or few, other applicants for 
 the same loan, is obliged to compensate an advantage which 
 he has not received, having been preferred to no one ; or to 
 pay more on account of such preference than those to whom 
 he was preferred considered it worth. The impropriety of 
 such an arrangement is, therefore, apparent, even independ- 
 ently of any statutory considerations ; and whatever grounds 
 these are based upon are equally applicable, on principle, to 
 all cases. 
 
 395. In Pennsylvania, under the Act of 1859, which 
 directs building associations to put up their money for com- 
 petition among the members, and to lend it to the highest 
 bidder, upon his furnishing proper security, Sharswood, C. J., 
 makes the following observations on the subject of fixed pre- 
 miums established by by-law in these societies : " They are 
 bound to offer all that is in the treasury to open competition, 
 so that the members may obtain the loan at a low premium, 
 if there should be no bid at a higher. The practical opera- 
 tion of such institutions is, that whenever the member pro- 
 cures a loan, at a premium below the average of the premiums 
 for the whole time the association has to make, he is to that 
 extent a gainer ; when his loan is at a premium higher than 
 the average, he is to that extent a loser. This is a most valu- 
 able feature in such associations, and hence the importance 
 of maintaining the principle of free competition in the bids. 
 "When the member is told that there is a minimum premium 
 below which loans will not be made, he must offer that 
 amount for the loan, whether any other one offers or not. If 
 no offer to that amount is made, the money remains in the 
 treasury without investment. It is evident, in this way, that 
 the members who are not borrowers will obtain a very undue 
 advantage over the members who are borrowers. These in- 
 stitutions are liable, like everything else human, to abuse, and 
 we are bound to guard them carefully from being perverted 
 into mere contrivances by which capitalists can evade the laws 
 of usury. So the Legislature evidently intended they should 
 be by the Act." ' Hence a provision in the rules of the so- 
 
 Stiles's App., 9 W. N. C. 83.
 
 397.] PREMIUM. 395 
 
 ciety providing for a minimum premium is held inconsistent 
 with the Act, and void. 1 
 
 396. Nor does the power of regulation of the society's 
 business, residing in the directors, entitle them to adopt any 
 rule as to a minimum premium, or in any manner abridge the 
 right of a member to receive the desired loan at no greater 
 expense than that which the unfettered competition among 
 the applicants, in the course of which the borrower's bid was 
 made, imposes upon him. Upon this subject, Gilmore, C. J., 
 says :* " The most valuable right that a member acquires by 
 virtue of his membership is that of obtaining a loan of money 
 with which to procure a home, with the privilege of repaying 
 the same in weekly instalments. This right . . . cannot be 
 destroyed or abridged by the Board of Directors, under the 
 power of regulation" that may be given them as to prescrib- 
 ing rules touching the time, manner and place of exercising 
 the right of demanding loans, the kind of security to be fur- 
 nished, and the formalities of its execution and tender for ap- 
 proval. " That this kind of regulation does not authorize the 
 Board of Directors to regulate the amount of premium to be 
 paid by a member for a loan, or to refuse loans to members 
 otherwise entitled to them, except upon payment of the min- 
 imum premiums, fixed by the directors," also appeared from 
 a section of the articles providing that " money on hand to 
 be loaned shall be sold to the member (or depositor) who 
 will pay the highest premium for the preference in taking the 
 loan. This is the only mode known to the law by which the 
 premium upon loans can be fixed and determined. . . . 
 When there is little or no competition, and a member bids a 
 merely nominal premium for the preference, and there is no 
 higher bid by any other member or depositor, he is entitled 
 to the loan at such nominal premium, and the Board of Di- 
 rectors cannot refuse it if sufficient security is properly ten- 
 dered." The fixing of a minimum premium was, therefore, 
 in this case also held illegal.' 
 
 397. It follows, as a necessary consequence of the ille- 
 gality of the attempt to establish and enforce any provision as 
 
 1 Stiles's App., 9 W. N. C. 83. 8. P., State t>. Oberlin Building and 
 9 State*. Gnseuville Building As- Loan Association, 35 Ohio St. 258. 
 sociution, 29 Ohio St. 92. See also, * See cases in above note.
 
 396 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIV. 
 
 to a fixed minimum pri-mium, that contracts made under the 
 stress of the operation of such a rule, and affected by it to the 
 prejudice of the borrower, are usurious, and cannot be en- 
 forced according to their terms. 1 But the mere existence of 
 the rule in the society will not afford the borrower a defence 
 against the enforcement of his covenant, unless he was really 
 affected by its operation. If, therefore, the premium which 
 he contracted to pay was the result of fair competition running 
 it up without reference to the illegal law, no bid being re- 
 fused because below the established minimum, nor raised for 
 the sole purpose of covering it, he has nothing to complain 
 of, and cannot evade his obligation by showing the presence of 
 a rule which would carry an unlawful taint to any contract 
 affected by it, but which was no element in his.* 
 
 Interest Upon Premium. 
 
 398. The nature of the premium, being neither a deduc- 
 tion nor a prepayment, forbids the charging of interest upon 
 it, unless expressly permitted by statute. If it were a deduc- 
 tion, it would be analogous to the bonus reserved in advance 
 by usurers upon loans made by them, ostensibly at legal inter- 
 est, the debtor being, nevertheless, required to pay that 
 interest upon the whole nominal sum, as if he had received it 
 entire ; thus virtually paying interest upon the bonus. If it 
 were intended to be a prepayment, the borrower, since he 
 does not, in fact, hand it over immediately, ought to pay in- 
 terest upon it to the society as for the forbearance of a debt 
 presently due. In either case, the legality of the premium 
 would seem to draw after it the legality of interest upon the 
 premium. Such, however, is not the character or office of the 
 premium. 3 It is simply the amount which the member, in 
 consideration of immediate payment, declares himself willing 
 to relinquish to the society upon the credit coining to him at 
 the final distribution, the period to which alone the whole 
 arrangement has reference. It is manifest that the claim of 
 interest upon premiums, so understood, constitutes a paradox 
 for which there can be no apology except that of positive 
 legislative grant. In Ohio, the court says : " The statute 
 
 1 Stiles's App., ubisvpra. Young, 9 W. N. C. (Pa.) 261 (El- 
 
 * Orangeville Mutual Saving well, P. J., Com. Pleas). 
 Fund and Loan Association t>. 3 See ante, 389-390.
 
 399.] PKEMIUM. 397 
 
 does not authorize the exaction of interest on the premium. 
 The extent of the plaintiffs demand, exclusive of fines, is to 
 require the payment of the stated dues and interest on the 
 money advanced, until the time arrives for winding up the 
 affairs of the association. The premium is then to be ac- 
 counted for by the borrower as so much advanced towards the 
 redemption or payment of his stock. Interest is intended by 
 the statute as a compensation for the use of the money the 
 borrower receives. The higher the premium, the less money 
 the borrower gets, and, if interest can also be charged on the 
 premium, the less money he has to use, the higher the rate of 
 interest he will have to pay for it. A declared object of the 
 statute, as expressed in its title, in authorizing these associa- 
 tions, is to enable their members to obtain for themselves 
 homesteads. To justify an exaction so well calculated in its 
 practical results to defeat this object, as this exorbitant demand 
 for interest, the authority for it ought to be unequivocally ex- 
 pressed." ' It has also been expressly held unlawful and 
 essentially usurious in Maryland," and Iowa,* as well as in 
 Kentucky 4 and Tennessee, 6 and must be so regarded except 
 where distinct legislative ratification will avail to legalize it, as 
 in Pennsylvania. 6 
 
 Abatements, Discounts, and Remissions on Premium. 
 
 399. It is, of course, within the discretion of the build- 
 ing association, to allow abatements, discounts, or remissions 
 upon the premium bid by any applicant for a loan under cer- 
 
 1 Forest City United Land and 4 Gordon, etc., v. Winchester 
 
 Building Association t>. Gallagher et Building and Accumulating Fund 
 
 al., 25 Ohio St. 208. Association, 12 Bush, 110; Herbert, 
 
 * The Baltimore Permanent etc., v. The Kenton Building and 
 
 Building and Land Society v. Tay- Saving Association of Coviugton, 
 
 lor, 41 Md. 409. See also, Oak Cot- 11 Id. 296. 
 
 tage Building Association v. East- ' Martin v. The Nashville Build- 
 man and Rodgers, 31 Md. 561 ; Wil- ing Association, 2 Cold. 418. 
 liar v. The Butchers' Loan and* An- See Acts, 12 April, 1859; 29 
 nuity Ass'n, 45 Id. 546; Birmingham April, 1874; 7 June, 1879; [Building] 
 et al. v. The Maryland Land and Per- Association v. Neurath, 2 W. N. C. 
 manent Homestead Ass'n. 45 Id. 541. 95; Building Association v. George, 
 
 8 Hawkeye Benefit & Loan Assoc'n 3 Id. 239; Seldcn v. The Reliable 
 
 r. Blackburn, 48 Iowa, 885; Bur- Savings and Building Association, 
 
 lington Mutual Loan Association v. 32 P. F. Smith, 336. 
 Heider et al., 55 Id. 424.
 
 398 THE LAW OF BUILDING ASSOCIATIONS. [CH. XIV. 
 
 tain specified circumstances. Such, indeed, is the custom in 
 many societies, at least in Pennsylvania, " Where a member 
 has simply paid dues on a certain series of stock, without bor- 
 rowing, for one or more years, and then borrows, an allowance 
 of ten per cent, is made upon the premium bid (the rate, it is 
 believed, most usual) for each year that has expired since the 
 series of stock on which he borrows was issued. For instance, 
 were he to borrow on a series of stock at any time during the 
 running of the second year of its existence, say at thirty per 
 cent., he would be allowed a deduction at ten per cent, off the 
 premium, thus reducing the premium to twenty-seven per 
 cent. If the stock is in its third year, twenty per cent, will 
 be deducted, reducing the premium to twenty-four per cent. 
 If it is in its sixth year, five-tenths, or fifty per cent, will be 
 deducted, reducing the premium to fifteen per cent. This is 
 manifestly a just and reasonable provision, as it would be un- 
 fair to charge one as much premium for the use of money 
 borrowed in the second, third or fifth year of a series, as is 
 charged one borrowing during the first year, and who would 
 then have the use of the money during the entire running of 
 the series." ' It has already been seen that it is lawful for a 
 building association to compromise with a borrowing mem 
 ber," and that, at all events, when the compromise has taken 
 effect, the society is not in a position to dispute the validity 
 of the arrangement under which it was done.* 
 
 400. Upon repayment of the loan, previously to its 
 maturity, such remissions, or discounts, may become obligatory 
 upon the association, under the statutes or under the provi- 
 sions of its own by-laws. These cases occur, (1) upon voluntary 
 repayment ; 4 (2) when the mortgage becomes divested and 
 repayable by operation of law upon a judicial sale of the 
 property mortgaged after the borrower's decease ; 6 (3) where, 
 upon collection of the member's debt by legal process, a great- 
 er sum being realized than the amount actually advanced to the 
 member, and a reloan, at a premium, is made of the money 
 collected, the society is required to return to the first borrow- 
 er one of the two premiums realized upon the same money.' 
 
 1 Wrigley, Workingman's Way 4 See ante, 154-l{f7. 
 to Wealth, pp. 73-74. See ante, 174. 
 
 * See ante, g 170, 323. See ante, 384. 
 
 See ante, 16-170.
 
 401.] FINES. 399 
 
 CHAPTER XV. 
 
 FINES. 
 
 401. Purpose of fines in building associations. 
 
 402. Legal aspect of fines in building associations. 
 
 404. Submission to fines an essential part of building association 
 loans. Married women, etc. 
 
 405. Power to impose fines depends upon authority conferred by 
 statute and charter. 
 
 406. Regulation of fines belongs to by-law. Rules to be observed. 
 
 407. Fines must be notorious, certain, and fixed by by-law. Con- 
 struction of ambiguous provisions favors member. 
 
 410. Fines must be reasonable. Fines upon fines, or in progression. 
 
 413. Proper measure of fines. 
 
 414. Fines must be imposed for dereliction in duties incident to mem- 
 bership. Depositors. 
 
 415. Fines upon interest. 
 
 417. Interest upon fines. 
 
 418. Discretion of directors in remitting fines. 
 
 Purpose of Fines in Building Associations. 
 
 401. Fines are essentially an incident to membership in 
 building associations, 1 the direct outgrowth of the obligation, 
 resting upon every shareholder, regularly and punctually to 
 pay the dues accruing periodically upon his stock. 2 The un- 
 interrupted and certain influx of these small payments is the 
 primary condition in order to the success of the entire enter- 
 prise. A member neglecting, in this particular, the perform- 
 ance of his duty, which the society has a right to calculate 
 upon, disturbs, to the extent of his default, the course of its 
 business, and injures every individual stockholder to the 
 amount of his proportionate share of the profit which might 
 be derived from the investment of the money if properly 
 paid. Exactly how great this injury may be, it is impossible 
 to estimate with accuracy ; but it is sufficient to warrant the 
 association in making such provision as will, on the one hand, 
 reimburse it for any losses resulting from the member's 
 
 1 See ante, 92. cash in payment thereof. People's 
 
 * Dues and fines are payable in Building & Loan Association . 
 
 cash, and the treasurer has no Wroth et al., 14 Vr. (N.J.) 70. And 
 
 right, and cannot be authorized by see ante, 200, 217. 
 the officers, to receive anything but
 
 400 THE LAW OP BUILDING ASSOCIATIONS. [CH. XV. 
 
 negligence ; and, on the other hand, prevent him from taking 
 advantage of his fellows by reaping the benefit of their 
 promptitude, without either bearing an equal burden, or 
 indemnifying the society for his delay. This is accomplished 
 through a system of fines, which are not, therefore, to be 
 regarded as penalties and forfeitures, abhorred by the law, 
 but as liquidated damages for a breach of the member's 
 original contract, wherefore, ex aequo et bono, the society is 
 entitled to be made whole. 1 
 
 Legal Aspect of Fines in Building Associations. 
 
 402. It is upon this understanding of the nature of fines 
 in building associations, that they will be aided by the courts 
 in recovering them ; for the law will not enforce fines, as 
 such, because it is a settled rule, that penalties agreed upon 
 for a breach of contract are illegal. 11 It is, indeed, said by 
 the court, in one case : s " We perceive nothing in the char- 
 acter of these associations, to relieve them from the doctrine 
 of equity we apply to other cases of penalty for the nonpay- 
 ment of money, which is to prohibit its enforcement upon 
 condition that the primary debt be paid with interest." The 
 dues compose the debt, " which, by fair contract, the member 
 agrees to pay, at stated times, into the treasury of the society. 
 If he pay them, the debt is paid, and it is satisfied." " It is 
 true, indeed, that these fines, which are provided for in the 
 articles of building associations, have been fruitful sources of 
 profit, and that the members of the association who remain 
 such to the end will share in the profits. But that is not an 
 answer which will satisfy the oppressed member at the time, 
 or lighten the load he is called upon to bear. If all the 
 members owned the like number of shares, and all obtained 
 the same amount of advances, and all were to make default 
 together, and then pay their several fines simultaneously, the 
 prosperity of such association by these means would bring it 
 
 1 Shannons. The Howard Mutual between such prn.iiiirs and fines in 
 
 Building Association of the City of building associations is pointed out, 
 
 Baltimore, 36 Md. 383. see post, 403 
 
 s Ocmulgee Building and Loan * Mulloy . Fifth Ward Building 
 
 Association t>. Thomson, 52 Ga. Association, 2 McArth. (Supr. Ct., 
 
 427, where, however, the difference D. C.) 594; Olin, J., digs.
 
 I 403.] FINES. 401 
 
 speedily to a winding up and a common division of the profits, 
 when each man would find his penalties returned to him, 
 slightly diminished, perhaps, by expenses. But these circum- 
 stances are not likely to occur in the history of any of these 
 societies. The shares held by the members respectively are 
 unequal; some of the members obtain advances, others do 
 not. Some, through misfortune in business, or sickness, or 
 other causes, are unable to make their monthly payments ; 
 and so it happens that, at the winding up, those members 
 who have asked for no advances, met with no misfortunes, 
 and have incurred no penalties, gather most of the profits 
 collected from their less fortunate brethren. The advantages 
 are for the strong ; the losses fall upon the weak. This, how- 
 ever, is only the experience of mankind in every department 
 of life. But it often becomes the duty of the court to check 
 the power of the former, and to protect the latter even from 
 the consequences of their own voluntary contracts.'" Such, 
 however, is not the view taken by the vast majority of judi- 
 cial opinions upon this subject. 
 
 403. It is said in England, that, when a fine is imposed 
 by the rules upon any borrowing member who becomes in 
 arrear with his subscriptions, this is not interest in the way of 
 a penalty so as to entitle the member to equitable relief;* and 
 in Maryland, fines in building associations are not held, in any 
 sense, to come within the principle which forbids a court of 
 equity to lend itself to enforcing the payment of fines, penal- 
 ties and forfeitures. 8 The same view is taken in Georgia, 
 where they are treated, when reasonably assessed, as liqui- 
 dated damages. 4 
 
 1 In this case, fines for default in the association was incorporated or 
 
 the payment of monthly dues had not. 
 
 been imposed at the rate of ten per s Parker v. Butcher, 36 L. J.. Ch. 
 
 cent, per month, and the court held 552; Law Rep., 3 Eq. 762. See 
 
 that chancery would interpose to also Thompson . Hudson, Law 
 
 prohibit the collection of these pen- Rep., 2 Ch. App. 255; Matterson r. 
 
 alties, and would restrain a sale of Elderfield, Law Rep., 4 Ch. App. 
 
 real estate by virtue of a deed of 207; 20 L. T. Rep., N. 8. 503; 17 
 
 trust given to secure the amount ad- W. R. 442; 33 J. P. 326. 
 
 vanced, when the account between 3 Shannon t>. Howard Mutual 
 
 the parties disclosed that nothing B'ld'g Ass'n of Baltimore, 36 Md.888. 
 
 was owing the society except fines. * Ocmulgee Building and Loan 
 
 It does not appear, however, whether Ass'n t>. Thomson, 52 Ga. 427.
 
 402 THE LAW OF BUILDING ASSOCIATIONS. [CH. XV. 
 
 Submission to Fines an Essential Part of Building Association Loans. 
 
 404. Indeed, so thoroughly is the propriety of these charges 
 recognized, that in Pennsylvania, where, under the act of 1859, 
 a married woman's mortgage of her separate estate to a building 
 association for her own debt, could bind her property only to 
 the extent of the amount actually advanced with interest, 1 her 
 mortgage to secure her husband's loan, which, as a stockholder, 
 he obtained from the society, covers and stands for fines in- 
 curred by him by reason of his default in payment to the asso- 
 ciation. 8 And in Maryland, it is said, that, where a mortgage 
 given to a building association by one of its members recog- 
 nizes the obligation of fines which may be imposed upon him 
 by the society, and stipulates for their payment, the court, 
 when called upon to foreclose the mortgage, ex parte, or other- 
 wise, ought to allow, in the ascertainment of the indebtedness 
 of the mortgagor, such reasonable and legal fines as may have 
 been incurred by him, by his own consent, since he acknowl- 
 edges himself bound by the laws and regulations of the build- 
 ing association authorized by its charter, when he has been in 
 default.* But it is also said that a covenant to pay " all fines 
 imposed by the articles of association," does not make the 
 articles a part of the mortgage, or authorize the court to con- 
 sider them in construing it. 4 On the other hand, it is said in 
 New Jersey, that, even where the mortgage makes no men- 
 tion whatever of fines, or of the borrower's liability to pay 
 such, the borrower, having paid them, can claim no credit for 
 them upon his mortgage debt.* " Neither the condition of the 
 bond, nor the terms of the mortgage, contain any provision 
 
 1 Wolbach v. The Lehigh Building It is there said that, in case of sale, 
 
 Assoc., 3 Norris (84 Pa. St.,) 211. the court cannot look beyond the 
 
 * Juniata Building and Loan As- mortgage itself in ascertaining the 
 
 sociation . Mixell, 84 Pa. St. 313. sum due, where the rules and ar- 
 
 See also Massey v. The Citizens' tides of the building association are 
 
 Building and Savings Association, not so referred to as to make them 
 
 22 Kas. 624 ; Relief Saving Fund a part of the mortgage, or call the 
 
 Association v. Longshore et al., 8 court's attention to them. But 
 
 Luz. Leg. Reg. (Pa.) 199. see McCahan t>. The Columbian 
 
 5 Shannon v. The Howard Mutual Building Association of East Balti- 
 
 Building Association of the City of more, 40 Md. 226. 
 
 Baltimore, 36 Md. 383. 6 Clarkville Building and Loan 
 
 4 Pobertson . The American Association r. Stephens, 11 C. E. 
 
 Homestead Association, 10 Md. 397. Gr. (N. J.) 351.
 
 406.] FINES. 403 
 
 for the collection of these fines. The complainants (building 
 association) do not claim they can be enforced against the 
 mortgaged premises as part of the sum to be raised by a sale. 
 The contention of the defendant is, that . . . there never were 
 any fines for want of power to impose them, and the money 
 taken in payment of them still belongs to the defendants, and 
 must now be applied by the court in discharge of the mort- 
 gage debt." The court, after repelling this assumption, on the 
 ground that there was no usury in the transaction, directs the 
 master to " apply each monthly payment, first in payment of 
 the fines of that month, then to the monthly instalments on 
 subscriptions to stock, and the balance to the monthly in- 
 terest." 
 
 Power to Impose Fines Depends upon Authority Conferred by Statute 
 and Charter. 
 
 405. As all the powers of building associations are meas- 
 ured by the terms of their charters, and of the statutes under 
 which the incorporation is effected, it follows, that no society, 
 calling itself a building association, is to be permitted to chargb 
 fines, except by authority of charter, derived from statutory 
 enactment authorizing their imposition. Where this is want- 
 ing, fines cannot be enforced, and, if paid by a borrower, 
 must be defalked from the amount due by him to the asso- 
 ciation. 1 
 
 Regulation of Fines Belongs to By-Law. Rules to be Observed. 
 
 406. Under the statute and charter, the regulation of the 
 fines is left to, and becomes the proper province of, the by- 
 laws. But, even without any distinct statutory qualifications, 
 the power is subject to well-settled restrictions. These are 
 principally, (1) that the fines to be charged must be certain 
 and notoriously established by by-law ; (2) that they must be 
 reasonable, and not grossly oppressive ; (3) that, in general, 
 they must be fines imposed for the neglect of duties which 
 the member owes as a corporator. 
 
 1 Lincoln Building and Savings vania. See Jarrett t>. Cope, 68 Pa. 
 
 Association, appellee, v. Graham, St. 67; Rhonds . Hoerneretown 
 
 appellant, 7 Neb. 173; Same v. Ben- Building Association, 83 Id. 180; 
 
 jamin and Benjamin, Ib. 181. The Link v. Germantown Building Asso- 
 
 samc doctrine was held in Peuusyl- ciation, 89 Id. 15.
 
 404 THE LAW OF BUILDING ASSOCIATIONS. [CH. XV. 
 
 Fines must be Notorious, Certain, and Fixed by By-Law. Construc- 
 tion of Ambiguous Provisions Favors Member. 
 
 407. It is necessary that every member should be aware, 
 in advance, of the consequences of any action or omission in 
 violation of the rules of the society. These rules or by-laws 
 should, therefore, be explicit and unequivocal upon the sub- 
 ject. "The rules imposing fines should be very precise in 
 their terms, and clear in their meaning, as the courts do not 
 like penalties of any kind, and generally decide against them 
 if possible." ' Fines cannot be collected at all unless they are 
 imposed by charter or by-law, 2 and if the by-law imposing 
 them, by reason of ambiguousness, admit of several interpre- 
 tations, the courts will adopt that most favorable to the mem- 
 ber and least favorable to the association. 
 
 408. So, where the rule was, that " mortgagors neglect- 
 ing to pay their monthly repayments will be subject to fines 
 at the rate of three per cent, per share for the first month, 
 and for each and every succeeding month threepence per 
 share additional on such repayments," the association was 
 allowed to collect only one fine of threepence on each share 
 of the defaulting member. This was, indeed, less than the 
 member himself had contended for. The society claimed 
 threepence per share for the first month, sixpence for the 
 second, ninepence for the third, and so on, adding three- 
 pence for each month. It was contended against this claim, 
 that, if the society were allowed under the rule to put on 
 cumulative fines in arithmetical progression, it would work a 
 forfeiture, and that no court of equity would put a construc- 
 tion on an ambiguous rule which would amount to a forfeiture 
 of a man's estate; and it was suggested that the most that 
 could be charged under the rule was sixpence per share for 
 each month's default after the first ; that was, sixpence for 
 the second, sixpence for the third, and so on. But the court 
 (Flanagan, J.) said : " "What is the true construction of the 
 rule ? I confess that I have felt considerable difficulty in put- 
 ting a construction upon it. The society consists of members 
 and borrowers, and the latter may be third parties. The bor- 
 rowed money ought to be repaid by monthly instalments so 
 
 1 Davis, Law of Building, etc., * Building Association . Scbul- 
 Societies, p. 32. ler, 3 W. N. C. (Pa.) 431.
 
 409.] FINES. 405 
 
 much for principal, and so much for interest. The owner of 
 the estate, after some months, ceased to pay the instalment, 
 and then the society put their rule in force. They construed 
 this to mean that they might multiply these fines in arithmeti- 
 cal progression month after month, and then add them all to- 
 gether. It is enough to say, that after about twenty months 
 the fines amounted each month to nearly as much as the in- 
 stalments, and if the rule had not been changed, would have 
 largely exceeded the instalment itself. ... I think that the 
 rule admits of three constructions, the one contended for by 
 the society, the other suggested in the argument for the bor- 
 rower, and a third, more favorable for him, which I think the 
 right construction, and that is, that the society are only to be 
 allowed one fine of threepence on each share." * 
 
 409. So, too, under a by-law providing that "if any 
 stockholder shall neglect or refuse to pay his weekly dues as 
 often as the same shall be payable . . . every stockholder 
 so neglecting or refusing shall forfeit and pay the additional 
 sum of ten cents for every share by him held for every such 
 weekly neglect or refusal, to be charged with the weekly 
 dues," it was held that one fine only could be charged on any 
 number of omissions to pay one particular installment.* And 
 under a by-law providing, that " if any person shall neglect, 
 omit, or refuse to pay his or her weekly dues at the time re- 
 quired hereby, he or she, as the case may be, shall be fined 
 ten cents weekly, for each and every dollar, remaining un- 
 paid ;" it was held that only one fine could be imposed for the 
 nonpayment of the weekly installment as it fell due, and not 
 repeated fines for every week that it may have been allowed 
 to stand in arrear. 3 Where it was provided, that, " whenever 
 and so often as, the borrower should make default in the pay- 
 ment of any of the said monthly instalments," he should 
 " pay to the society Vs. in the pound for each and every pound 
 of said instalment so left unpaid," and the society claimed 
 not only Is. in the pound for the month in which default was 
 
 1 In re Tierney, 9 Ir. Rep., Eq. 3 The Monumental Permanent 
 
 1; 8 Ir. L. T. Rep. 29. Building and Land Society of Bal- 
 
 * Shannon . The Howard Mu- timore v. Lewiu, 38 Md. 445. See 
 
 tual Building Association of the similarly, Building Association t>. 
 
 City of Baltimore, 36 Md. 383. Schuller, 3 W. N. C- (Pa.) 431.
 
 406 THE LAW OF BUILDING ASSOCIATIONS. [CH. XV, 
 
 made, but for all subsequent months during which it remained 
 unpaid, and also Is. in the pound for every fractional part of 
 a pound ; it was held that they were entitled only to Is. in 
 the pound for the month in which default was made, and that 
 they could take nothing on the fraction of a pound.' Simi- 
 larly, where the table of fines exhibited in the rules was 
 arranged in such order from the first to the sixth month as to 
 make lines progressive from month to month, but there was 
 no express charge for the seventh and subsequent months ; 
 the court held that, according to the true construction of the 
 table, the fines were not to increase in amount after the sixth 
 month. 9 
 
 Fines must be Reasonable. Fines upon Fines, or in Progression. 
 
 410. In Ohio, Sec. 2 of the Act of 9 May, 1868, author- 
 izes the levying, assessing and collecting from the members 
 " such sums of money, by rate of stated dues, fines, . . . 
 as the corporation by its laws may adopt." There is here no 
 limitation as to amount or occasion of the imposition of the 
 fines upon members, except as prescribed in the by-laws 
 adopted by the corporation, and there is no express limitation 
 on the power of the corporation to adopt by-laws. " It is to 
 be regretted," says the court, " that the Legislature was not 
 more specific in making the grant of power thus intended to 
 be conferred. . . . That there are limits, however, beyond 
 which the corporation, by its by-laws, cannot go, is undoubted. 
 (1.) The amount of the fine must be reasonable. (2.) It can 
 be imposed only by way of punishment for some delinquency 
 in the performance of a duty which the member may owe to 
 
 1 Three Towns British Mutual charging (a) interest at a certain 
 
 Deposit and Loan Society (Lim.) v. rate per cent., to run from the dale 
 
 Doyle, 7 L. T. Rep., N. S. 276; 8. of the default to that of final pay- 
 
 C., 11 W. R. 22; 13 C. B., N. 8. ment of the amount due; and (6)"a 
 
 290; [106 Engl. C. L. Rep.] It conventional penalty at a certain 
 
 is, therefore, said to be advisable to rate per cent, running in the same 
 
 impose the fines in proportion to way. Satzungen des Ban - unti 
 
 the number of shares held by the Spar-Vereins in Frankfurt am Main, 
 
 defaulter, and not to the amount of 1875. 
 
 the subscriptions due from him. 9 Lovejoy e. Mulkarn, 37 L. T., 
 
 Davis, Law of Building, etc., Soci- N. 8. 77; 46 L. J., Ch. Div. 630. 
 
 eties, p. 233. In German building But that amount was chargeable 
 
 associations the penalty is fixed by beyond I lie six months.
 
 411.] FIXES. 407 
 
 the corporation by reason of his membership. (3.) It is un- 
 reasonable, and therefore we assume that the Legislature did 
 not intend that more than one fine should be imposed for the 
 same delinquency." ' The court further declares, that the 
 application of these tests cannot be resisted on the ground 
 that tines imposed under such by-laws must be regarded as 
 conventional between the corporation and the member. The 
 by-laws are undoubtedly adopted by a majority ; but the Legis- 
 lature did not intend that the assent of the minority, or of any 
 member, to the imposition of fines, should in all cases be con- 
 clusively presumed. The true intention was, that the power 
 to assess unreasonable fines, or to assess for any other cause 
 than the delinquency of a corporator, or to assess twice for the 
 same offence, should not exist in the corporation. A second 
 tine for the nonpayment of the same due is a second punish- 
 ment for the same offence. The nonpayment of the same 
 stated due, at a subsequent day, is not a new offence. The 
 obligation to pay, when the due first matured, was complete. 
 No new obligation to pay it is undertaken by the member ; 
 but the obligation or duty to pay it at maturity continues after 
 default, until payment be made.'' 1 
 
 411. If the effect of this last case is designed to be, to 
 declare the charging of a second, or any number of subsequent 
 fines, for continued default in the payment of the same due, 
 necessarily and under all circumstances unreasonable and ille- 
 gal, without regard to the wording of the by-law imposing it, 
 or to the proportion the fine bears to the amount of the 
 arrears, when the statute contains no restriction upon the 
 building association in this particular ; its doctrine is probably 
 too sweeping. Such impositions have been passed by courts 
 repeatedly without question, 3 and in New York it was dis- 
 tinctly said that a member may not only become liable to a 
 fine for neglect to pay his dues, but to additional fines for 
 continued neglect, and entitled to relief only when there had 
 
 1 Ilmrerman et al. v. The Ohio "See Lovejoy v. MulUarn. :!7 L. 
 
 Building and Savings Association, T., N. S. 77; 46 L. J., Ch. Div. 630. 
 
 25 Ohio St. 186. And sec, >ipr<i, the grounds upon 
 
 1 See, to the same effect, Forest which the English coses contra were 
 
 City United Land and Build. Ass'ii ruled. 
 c. Gallagher et al., 25 Ohio St. 208.
 
 408 THE LAW OF BUILDING ASSOCIATIONS. [CH. XV. 
 
 been deception practised upon him, or the operation of the 
 rule \vas manifestly tttd outrageously oppressive. 1 The ca.-e in 
 Maryland, in which, also, it was held that only one line could 
 be charged for the neglect to pay a certain instalment, turned 
 like the English cases above referred to, upon the wording 
 of the article of the by-laws : " If any stockholder shall neg- 
 lect or refuse to pay his weekly dues as often as the same .-hall 
 l)e payable as aforesaid, every stockholder so neglecting or re- 
 fusing, shall forfeit and pay the additional sum of ten cents 
 for every share of stock by him held, for every such weekly 
 neglect or refusal, to be charged with the weekly dues." 
 Upon this rule it was held that only one fine could be 
 charged.* Similarly, in Pennsylvania, under the following 
 clause in the articles of the association : "In case any stock- 
 holder shall neglect or refuse to pay his, her, or their monthly 
 dues or interest, such stockholder shall forfeit and pay the 
 additional sum of ten cents on each dollar due by him, her, or 
 them, for every such monthly refusal or neglect, to be 
 charged with the monthly dues ; but no fines shall, in any 
 case, be charged on fines." The court held this clause to be 
 so worded as to exclude the imposition of fines for the un- 
 paid dues of past months. 3 
 
 412. But the courts have been unanimous in discounte- 
 nancing a repeated imposition of the same fine increased, 
 every time, upon the principle of arithmetical progression. 
 Thus, where the fine upon each share's dues in arrear was, for 
 the first month, 12 cents ; for the second month, 37 cents ; 
 for the third month, 75 cents; for the fourth month, $1.25, 
 and for every following month 50 cents more than the amount 
 charged in the preceding one, the rate was held to be unrea- 
 sonable and exorbitant. 4 
 
 1 The Citizens' Mutual Loan and 8 Building Association v. Schul- 
 
 Accumulating Fund Association v. ler, 3 W. N. C. 431. 
 
 Webster, 25 Barb. (N. Y.) 263. See 4 Second New York Building As- 
 
 also Building Association v. George, sociation v. Gallier, cited by Birds- 
 
 3 W. N. C. (Pa.) 239. eye, J., in the Citizens' Mutual 
 
 * Shannon v. The Howard Mutual Loan and Accumulating Fund As- 
 Building Association of the City of sociation v. Webster, 25 Barb. (N. 
 Baltimore, 36 Md. 383. Y.) 263.
 
 414.] FINES. 409 
 
 Proper Measure of Fines. 
 
 413. The proper measure of fines is the real damage 
 the building association sustains from the failure of a mem- 
 ber to pay his dues, which damage is really equal to interest 
 upon the amount, together with the proportion coming to it 
 from the then obtainable premiums upon the sale of money. 1 
 The fine should be slightly in excess of this, 8 so as to make 
 it more profitable to the member to pay promptly than to lag 
 behind. " The fines should be placed at a figure but slightly 
 in excess of the average profit which would be earned by the 
 subscription if punctually paid and regularly invested in the 
 legitimate business of the society. ... It is true that 
 those who suffer have made the law which 'binds them, or 
 subscribe and agree to it on becoming members, but through 
 ignorance of those who draw the rules, the law is often made 
 unnecessarily oppressive. A fine of from one to two per 
 cent, per month, would in nearly all cases, be sufficient and 
 just. A default in payment implies weakness, for the time 
 being, at least ; why, then, should the overburdened be fur- 
 ther oppressed ? If one stumbles under a weary load, can he 
 rise the better if his burden is increased to twice its original 
 size while he is prone upon the earth?" Excessive fines 
 tend directly to destroy the primary object of the society's 
 usefulness, the assistance of those who have small means. 
 These are also, in most cases, precisely the ones whose lack 
 of experience and forethought would fail to prompt or enable 
 them to scrutinize provisions in the rules of societies they 
 might desire to join, and to calculate beforehand whether 
 they were likely or not to operate oppressively upon them. 
 
 Fines must be Imposed for Derelictions in Duties Incident to Mem- 
 bership. Depositors. 
 
 414. An authority given by statute to building associa- 
 tions to impose fines upon its members, does not authorize 
 their imposition upon persons holding the relation of de- 
 positors merely. 4 It is an incident to membership, and justi- 
 
 1 Ocraulgee Building and Loan 3 Davis, T.:i\v of Building, etc., 
 
 Association t>. Thomson, 52 Qa. Societies, p. 165. 
 
 427. * Hagerman et al. v. Ohio Building 
 
 * Ib. and Savings Ass'n, 25 Ohio St. 186.
 
 410 THE LAW OF BUILDING ASSOCIATIONS. [CH. XV. 
 
 fiable only on the ground of a member's full participation 
 in the profits of a scheme of mutual gains and liabilities 
 which does not extend to any but members. 
 
 Fines upon Interest. 
 
 415. The distinction which is taken in Ohio, 1 between 
 the legality of fines imposed under the statute, upon neglect 
 of dues, and fines upon default in the payment of interest 
 on a loan, does not appear to be founded in reason or upon 
 authority. Fines in the latter case are there held to be 
 illegal, because, the object of lines being to reach the mem- 
 ber in his relation as member, the statute did not contem- 
 plate exposing him, under the same clause, to additional and 
 separate penalties, in a character which is distinct from that 
 of membership, viz. ; that of debtor. 2 Were the advance- 
 ment by the building association to its member a mere loan, 
 and the payment of interest a mere consideration for the for- 
 bearance of that loan, this reasoning might be held to be 
 decisive. But its force is materially diminished when it is 
 remembered that the transaction is not one of loan only, and 
 that, when the advancement is taken, the payment of interest, 
 or its equivalent, under some other name, is just as much a 
 duty belonging to membership as the payment of dues. It 
 is added to the common fund ; it is reinvested for the benefit 
 of the borrower as well as of his fellows ; it is a substantial 
 element in the achievement of the final result, the liquidation 
 of all shares at their par value, in which all the members of 
 the society, whether borrowers or investors, are equally in- 
 terested. A share of the profits made upon the investor's 
 contributions goes to make up the accumulation upon the 
 borrower's shares, by means of which his debt is to be can- 
 celled. And equally does the whole plan contemplate the 
 prompt payment of interest or redemption moneys. The 
 loan itself is granted to the member on the ground of his 
 membership relations, and it cannot lie in his mouth, as to 
 the duties arising from the loan, to deny the application of 
 the principles which govern those relations after the most 
 
 1 See case in preceding note. 25 Ohio St. 186; Forest City Unit- 
 
 * Hagerman et al. v. The Ohio ed Land and Building Association 
 Buildiug and Savings Association, . Gallagher et al. , Ib. 208.
 
 415.] FINES. 411 
 
 signal benefit they are intended to secure has been conferred 
 upon him. 
 
 In Parker v. Butcher* decided in 1867, the loan was 
 repayable by monthly contributions covering principal and 
 interest, and imposed fines for nonpayment of contributions 
 at the rate of a shilling per pound per month. It was con- 
 tended that this imposed a penal interest of sixty per cent, 
 for every installment of principal and interest due from the 
 advanced member so long as it was in arrear, and that this 
 was unreasonable. But Romilly, M. R., deciding that the 
 fine was reasonable, and that the borrower could not redeem. 
 a mortgage to the society without paying the fines he had 
 incurred, said : " I see nothing unreasonable in it. It is a 
 matter well understood between the contracting parties, and 
 it is a contract which, in the absence of all fraud or undue 
 pressure, the parties were perfectly competent to enter into. 
 Neither do I see anything in the shape of forfeiture in the 
 transaction. It is true that the court will not allow a person 
 to contract to receive a given rate of interest, and to stipulate, 
 that, if not paid, the rate of interest shall be increased, but 
 this has no resemblance to that case. It is simply such a 
 transaction as the following: One man lends to another 
 100, to be repaid on a given day, and if it be not repaid on 
 that day, it shall bear interest at the rate of sixty per cent. ; 
 that is, no doubt, a high rate of interest, but since the repeal 
 of the usury laws I see nothing illegal in the transaction if 
 there be no concealment and no undue pressure, and the 
 parties perfectly understand and assent to the contract. If, 
 then, such a transaction is legal, does it become illegal U'- 
 cause the loan is to be repaid by instalments, as if a man lent 
 another 100, to be repaid by sums of 10 per month, with 
 interest at the rate of sixty per cent, on every instalment un- 
 paid ? I think it does not." 
 
 The doctrine of this case is applicable to fines upon in- 
 terest in building associations of this country, except that 
 what is there regarded as practically a mere reservation of 
 interest, since the repeal of the usury laws, lawful to no 
 matter what exorbitant extent, is here treated as "in the 
 nature of liquidated damages, agreed to be paid for the non- 
 1 Law Rep., 8 Eq. 762; 36 L. J.,Ch. 552.
 
 412 THE LAW OF BUILDING ASSOCIATIONS. [CH. XV. 
 
 performance of a promise ;md covenant," ' and enforcible 
 only "where they arc- not unconscionable or disproportionate 
 to the exigency of the case." * In neither instance, however, 
 are fines in building associations considered to be " for- 
 
 O 
 
 i tu res" or punishments for offences. It is believed, too, 
 that the imposition of tines for the nonpayment of inter 
 either expressly, or by assessing tines at a certain ratio upon 
 the amount owing by the member as dues (in which are in- 
 cluded the monthly installments of interest), is customary and 
 usual among building associations. And where the intention 
 of the statute to limit the imposition of fines to defaults in 
 stock-payments only is not so clear as to admit of no question, 
 it would seem that the testimony of the common practice 
 among these societies in favor of its own usefulness and 
 v reasonableness should be entitled to some weight. 
 
 416. But where, under the statute or the rules of the 
 society, the installments on account of stock-payments and of 
 interest are lumped in one periodical contribution, and the fine 
 is levied at a certain rate per share, it is improper to divide 
 the whole sum into its constituent elements, so as to levy two 
 tines for its nonpayment, one on account of dues of stock-pay- 
 ments, or principal ; the other on account of dues of interest. 
 Thus, in Maryland, the court, holding that the statute de- 
 signed the joining of the two kinds of dues in one periodical 
 payment, declares : " There is no reason nor authority under 
 the law, for the subdivision of the principal and interest, and 
 separate and independent by-laws, imposing distinct fines for 
 the nonpayment of each ;" and the building association was 
 not permitted to recover the fines assessed under a by-law 
 authorizing their imposition for default upon dues of inter- 
 est, at the rate of ten cents per share, the same fine being 
 previously and additionally charged for defaults in the dis. 
 charge of stock-payments and principal. 3 " The weekly 
 instalments and weekly interest constitute but one debt, and 
 the weekly interest, according to our construction of the terms 
 
 1 Shannon . The Howard Mutual * See cases in preceding note. 
 
 Building Association of the City of * Shannon t>. The Howard Mu- 
 
 Baltimore, 36 Md. 383; Ocmulgee tual Building Association of the 
 
 Building and Loan Association v. City of Baltimore, ubi supra. 
 Thomson, 52 Ga. 427.
 
 418.] FINES. 413 
 
 of the law, ought to be included in the weekly dues, .... 
 that is, the portion of the principal properly so called payable 
 weekly, and the proportional interest, weekly payable, con- 
 stitute the weekly instalment, and make up the weekly in- 
 debtedness, which, if not paid punctually, subjects the party 
 to a fine, if the company think proper so to determine by its 
 by-laws." l But there cannot be two distinct fines imposed, 
 one for each of the actual ingredients of the single debt. 3 
 
 Interest upon Fines. 
 
 417. Interest can never be charged upon fines standing 
 against a member. If they are regarded as interest agreed 
 to be paid to the society for nonpayment of installments, 
 then "to give the society interest upon these fines, would be 
 to give them compound interest, which is not in the contract, 
 and which is contrary to the rules and principles adopted by 
 courts of equity." * If they are viewed as stipulated damages, 
 the contingency of delay in their payment must be taken to 
 have entered into the calculation of the amount fixed ; nor 
 will the court permit the debtor's burden to be aggravated 
 beyond what he has clearly undertaken to perform. 
 
 Discretion of Directors in Remitting Fines. 
 
 418. The remission of fines for proper reasons shown 
 is discretionary with the society or its directors, like the 
 option of enforcing or waiving forfeitures. 4 The remission 
 of fines may be justified also upon the general ground of the 
 society's right to compromise with its members and debtors.* 
 The liability for fines is not suspended by the bringing of 
 suit by the association against the member.* 
 
 1 Shannon v. The Howard Mutual 4 See ante, 99-102. 
 
 Building Association of the City of l See ante, 323. The function 
 
 Baltimore, ubi supra. of fines to secure the services of 
 
 * Parker v. Butcher, 36 L. J., Ch. members as officers, and the faith- 
 
 552; Law Rep., 3 Eq. 762; Ingoldby ful performance of their duties as 
 
 t>. Riley, 28 L.T., N. S. 55; Clarkville such, as well as the attendance of 
 
 Building Association c. Stephens et members at meetings has, already 
 
 al., 11 C. E. Gr. (N. J.) 351. been sufficiently adverted to. See 
 
 8 Romilly, M. R, in Parker t>. ante. 92-95. 103, 220. 
 
 Butcher, supra. See ante, 91.
 
 414 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVI. 
 
 CHAPTER XVI. 
 
 MORTGAGES. 
 
 419. Right to take mortgage security involved in power to make loans 
 
 or advancements. Mortgageable estates. 
 
 420. Validity of mortgage security under statute and by-laws. 
 421. Examination of the various forms of mortgages used in building 
 
 associations. Their relative propriety and adequacy. 
 423. Covenants as to stock-payments, etc. 
 424. Effect and validity of building association mortgage. Equity 
 
 jurisdiction. 
 
 425. Covenants as to default. 
 
 426. Propriety of court's looking at rules to ascertain amount due. 
 427. Rule for ascertaining amount presently due upon mortgage. 
 428. Same rule applicable in courts of Jaw and equity. Basis of 
 
 equity jurisdiction in foreclosure. Preliminary account. De- 
 cree. 
 429. Discharge of mortgage by sale of property does not necessarily 
 
 discharge debt. Remedy in such case. 
 
 430. Terms of mortgage preclude withdrawal. Right of repayment. 
 431. Sale upon mortgage, and application of proceeds of sale and 
 
 value of stock to debt, extinguish membership of debtor. 
 432. Mortgage (or decree after preliminary account), after payment 
 
 of amount due stands as security for future membership duties. 
 
 Rights of mortgagee in possession. 
 433. Errors and omissions in mortgages. 
 435. Purchaser subject to building association mortgage. 
 436. Building association, mortgagee, may exercise all the powers 
 
 given it concurrently, notwithstanding its rules. 
 437. Tender upon building association mortgage. 
 438. Taxation of mortgages held by building association. Power of 
 
 Legislature to remit. 
 439. Exemption of building association mortgages in England held to 
 
 include mortgages by strangers. 
 440. Members' mortgages held by building associations, are not assets 
 
 for the purpose of winding up, but for taxation of its personal 
 
 property. 
 
 Right to Take Mortgage Security Involved in Power to Make Loans 
 or Advancements. Mortgageable Estates. 
 
 419. The power granted to building associations to 
 make loans or advancements to their members, upon certain 
 reservations and agreements, necessarily involves the right to 
 take mortgage security for the performance of the conditions
 
 420.] 
 
 MORTGAGES. 
 
 415 
 
 of the contract. 1 The mortgage, it seems, may be upon free- 
 hold or leasehold 8 property; upon legal or equitable titles.* 
 It may be upon the lands of the borrowing member, or upon 
 those of another and outside person submitting his property 
 to the encumbrance as security for the debt. 4 The bond 
 given by the member constitutes the debt; the mortgage 
 secures it. 5 What is the nature of this debt, and of the trans- 
 action which created it, and what its lawful ingredients, has 
 been sufficiently discussed.' It is proposed in this chapter to 
 examine merely the building association mortgage under the 
 statutes, its form, and its effect in law. 
 
 Validity of Mortgage Under Statute and By-Laws. 
 
 420. A mortgage taken by a building association is a 
 
 o o o / 
 
 security for the payment of money only within the statute, 7 
 and operative only so far as authorized by it and by the by- 
 
 1 Massey v. The Citizens' Build- 
 ing and Savings Association of Pa- 
 ola, 22 Kas. 634. And in Union 
 Building Loan Association of New 
 Brunswick v. The Masonic Hall 
 Association of New Brunswick et 
 al., 2 Stew. (N. J.) 389, it is said 
 that the building association may 
 take any security for its loans 
 which other persons are in the 
 habit of taking. See ante, 330- 
 331. 
 
 * In the case of Seagrave v. Pope, 
 15 Engl. L. and Eq. Rep. 477; 22 
 L. J., Ch. 258; 16 Jur. 1099; 1 De 
 G., M. and G. 783; 20 L. T. Rep. 
 158, the mortgage was given upon 
 leasehold property and enforced. 
 
 8 In the case of Lincoln Building 
 and Savings Association, appellee, 
 v. Haas et al. appellants, 10 Neb. 
 581, a mortgage upon an equitable 
 title was enforced. It purported to 
 be upon the fee simple, and it was 
 held that it was not defeated by a 
 subsequent purchase of the fee sim 
 pie by one who procured a quit- 
 claim deed from the holder of an 
 equitable title. In Bismarck Build- 
 
 ing and Loan Association v. Bol- 
 ster et al., 92 Pa. St. 123, the build- 
 ing association had taken a chattel 
 mortgage, the propriety of which 
 was not questioned. But it was 
 said by the court that acts which 
 relate exclusively to mortgages of 
 "real estate," have no relation to 
 mortgages on leaseholds, as the 
 mortgage in this case was. 
 
 4 Massey v. The Citizens' Building 
 and Savings Association of Paola, 
 ubi supra; Juniata Building Asso- 
 ciation v. Mixell, 84 Pa. St. 313; 
 Tanner's App., 11 Pittsb. Leg. Jour. 
 (Pa.) 301; Relief Saving Fund As- 
 sociation v. Longshore et al., 8 Luz. 
 Leg. Reg. (Pa.) 199. 
 
 6 See Eagle Beneficial Society's 
 App., 75 Pa. St. 226 ; but subse- 
 quent purchasers and mortgagees 
 need not go beyond the face of 
 the mortgage, unless there be some- 
 thing in the recital of the bond in 
 the mortgage to put them upon in- 
 quiry. 
 
 See ante, 326-357. 369-387. 
 
 1 Franklin Building Association 
 v. Mather, 4 Abb. Pr. (N. Y.) 273.
 
 416 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVL 
 
 laws of the association, and in conformity therewith. 1 No 
 reservation inserted in the mortgage, therefore, which is not 
 contemplated by statute and by-law, can be enforced under it." 
 Hence, where a building association was incorporated by a 
 special act, its charter authorizing it to grant loans at a pre- 
 mium, taking mortgages from the borrowers for the payment 
 of installments to the end of the society's running, together 
 with tines and interest on the par value of the shares ad- 
 vanced ; a mortgage so written as to include the sum actually 
 advanced, and making it repayable, with interest from date, 
 in case any default should be made by the borrower in the 
 payments undertaken by him, was held to be priina facie in 
 violation of the constitution of the association. And it was 
 left to the jury to determine whether the mortgage was 
 drafted so as to include the sum paid to the member by the 
 association as the price of the redemption of his stock, by ac- 
 cident, mistake, or by ignorance of the draftsman ; or by de- 
 sign and on purpose, with the knowledge of the society, and 
 with a view to oppression and wrongful exaction. In the 
 former case, the deed might be reformed and corrected and 
 then sustained ; in the other case, declared void for fraud and 
 circumvention. At all events, it was said to be error in the 
 court below when asked by the mortgagor to cancel the mort- 
 gage, and enjoin the building association from selling the land 
 conveyed in the mortgage, and from further proceedings to 
 refuse the injunction peremptorily where the facts appeared 
 as above.' It may be laid down, therefore, as a rule, that, 
 where the statute or charter under which a building associa- 
 tion is incorporated, defines the formal conditions and cov- 
 enants which may be embodied in the mortgage, with a view 
 to attaining the results contemplated by the act, these details 
 must be strictly and technically followed out : 4 where, how- 
 
 1 Shannon v. The Howard Mutual ics* Building and Loan Association, 
 
 Building Association of the City of 78 N. C. 372. See also the Bal- 
 
 Baltimore, 36 Md. 383. timore Permanent Building and 
 
 Ib. ; Hagerman et al. v. The Ohio Land Society v. Taylor, 41 Md. 409; 
 
 Building and Savings Association, Birmingham et al. v. The Maryland 
 
 25 Ohio, 186; Building Association Land and Permanent Homestead 
 
 v. Schuller, 3 W. N. C. (Pa.) 431; Ass'n. 45 Id. 541; and ante, 383. 
 
 and ante, 383. * The importance of observing 
 
 1 Smith and wife v. The Meclian- this rule is in the fact that the
 
 421.] MORTGAGES. 417 
 
 ever, the statute and charter make provision merely for the 
 results to be worked out by the scheme, a greater latitude ob- 
 tains, and every fonn of mortgage or security which ensures 
 that result may be adopted by the association. 
 
 Examination of the Various Forma of Mortgages Used in Building As- 
 sociations. Their Relative Propriety and Adequacy. 
 
 421. There are principally three classes of mortgages 
 used in building associations, any particular one being adopted 
 accordingly as the intention of the Legislature seems best 
 served by its peculiar form : (1) That in which the fact of an 
 advancement upon or redemption of shares is recited, and the 
 condition calls for regular stock-payments of fixed amounts, 
 and performance of membership duties and liabilities gener- 
 ally, together with the payment of redemption money or in- 
 terest on the amount advanced (being frequently lumped to- 
 gether with stock-payments under the name of dues) to the 
 end of the society's existence ; (2) that in which, in addition, 
 the sum advanced is made repayable ; (3) that in which the 
 nominal amount of the loan, the par value of the shares ad- 
 vanced, thus including the premium, is made payable, with 
 interest (upon that whole sum, or only upon the actual ad- 
 privileges conceded to building as- England. It is, of course, within 
 sociations are so extraordinary, that the power of the Legislature to pre- 
 the courts will measure their exer- scribe, if it so chooses, in detail, 
 cise by the precise extent of the every reservation, modo et fonnn, 
 terms of the law, and any deviation which shall be made in these mort- 
 from the prescribed course will ren- gages ; and if it does so, it is the busi- 
 der the transaction unlawful and ness of the associations to conform 
 usurious. Unless there is a posi- with that requirement. But unless 
 live statutory or charter direction there be such an one (either iu 
 as to the form of the covenants to statute or in charter), not only ex- 
 be inserted in the mortgage, there plicit. but exclusive of every other 
 seems no reason for regarding one substantially like method, there ia 
 form more appropriate to a build- no sufficient reason given any where 
 niir association loan than another, for limiting the associations in this 
 when both secure substantially the particular: and where this is done, it 
 same thing. It has already been is because of adefective undersiand- 
 seen that the reservation of the pay- ing of the real nature of the trans- 
 ment of principal and interest is, action of a building association loan, 
 in effect, identical with that of looking at the mere surface of the 
 mere dues, etc. See 330-332. paper which is the evidence of a 
 Both forms are used under statutes portion of the contract, instead of 
 exceedingly similar. No distinction examining the substance of tluj 
 has been made on that ground in whole coflvi'act itself.
 
 418 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVI. 
 
 vance, accordingly as the statute may sanction the one or the 
 other), stock-payments, etc., being stipulated as in the other 
 cases. Every one of these forms covers a greater or lesser 
 portion of one and the same contract between the society and 
 its borrowing member. This contract, it has already been 
 seen, 1 includes (1) the borrower's consent to the payment of 
 a premium, to be retained by the society out of his final credit 
 in its funds ; (2) the discharge of regular stock-payments, and 
 all other duties incident to membership during the society's 
 existence, looking forward to the raising of the value of his 
 shares to an amount equal to the sum advanced, plus the 
 premium ; (3) a relinquishment to the society, as a reim- 
 bursement or repayment of the advance, of the accumulation 
 standing to the credit of the borrower's shares (equal to their 
 estimated par value) upon final distribution ; (4) the payment 
 of interest, or its equivalent, in the shape of redemption 
 money, during the interval between the taking of the ad- 
 vance and the ultimate settlement. It is clear, that, the con- 
 tract embracing all these subsidiary or constituent undertak- 
 ings, being struck between the building association and its 
 member, and becoming immediately executed, as to the 
 society, by the handing over the sum agreed to be advanced, 
 the only portions of it that really require any security to be 
 given by the member for performance are those relating to 
 the discharge of stock-payments, interest, and membership 
 duties, including fines and similar charges. This, therefore, 
 is all that is covered by mortgages belonging to the first class 
 above indicated, and this is the mortgage originally and most 
 legitimately adopted by building associations. 
 
 The next form goes a step farther, expressing, upon the 
 face of the mortgage, that portion, also, of the contract, which 
 consists of an undertaking to return the sum actually ad- 
 vanced. The manner in which it is to be done, viz. ; by the 
 relinquishment of stock-accumulations at the termination of 
 the scheme, is sufficiently indicated by the concurrent stipula- 
 tion for the payment of dues to the end of the society's run- 
 ning. It adds no new undertaking to the elemental con- 
 tract ; but it lends to the whole transaction something of the 
 appearance of a loan, repayable in numerous small installments, 
 1 See ante, 326.
 
 422.] MORTGAGES. 419 
 
 but bearing interest upon the original sum from the begin- 
 ning to the end. The third form differs from this only in 
 that the remaining element of the whole contract is brought 
 under the protection of the mortgage security, by stipulating 
 for the eventual payment, not only of the amount advanced, 
 but also of the premium bid, both of which, together, make 
 up the full value of the shares advanced, or, as it is called, 
 the nominal amount of the loan. But in this case, also, the 
 stipulation for stock -payments, etc., is the characteristic and 
 decisive one. " The obligation ... is nominally for the re- 
 payment of the loan, but particularly for the payment of the 
 monthly dues on the stock, and legal interest on the loan until 
 the association is able to divide, to each share of stock held by 
 the members, the sum of two hundred dollars [or whatever 
 the par value of the shares may be], and when this result is 
 reached, as the association would owe a borrower on five shares 
 of stock $1000, and the borrower would also owe the associa- 
 tion $1000, one debt cancels the other, and the loan is paid 
 off." ' The fact that interest may, under some statutes, be 
 charged upon the premium bid, as well as on the sum actually 
 advanced, is an anomaly, 2 which, whilst it does no credit to 
 the possible sagacity of the legislators sanctioning, nor to the 
 sense of justice of the society exacting it, does not, in any 
 wise, affect the nature of the transaction. 
 
 422. By none of these forms, therefore, is there added 
 to the contract itself anything which is wanting to it under 
 either of the remaining forms. The difference lies merely 
 in the relative number of the elements secured by mortgage, 
 all equally belonging to the entire transaction, but set forth 
 and confirmed, in one form, more or less in detail, than in 
 another. It is possible that, by the wording of a statute, the 
 society under it may be precluded from taking mortgage se- 
 curity for more than some particular portion of this contract, 
 and that a stipulation contained in the deed beyond this limit 
 must be deemed unlawful. 3 Certain it is, that the mortgage 
 securing the continued and regular payment of dues to the 
 end of the scheme, either including therein the redemption 
 money or interest, or with an additional stipulation for the 
 
 1 Wrigley, Workingman's Way See ante, 856. 
 to Wealth, p. 67. * See ante, 420.
 
 420 THE LAW OF BUILDING ASSOCIATIONS. [cU. XVI. 
 
 payment of interest on whatever sum the law may allow its 
 reservation, and providing, in case of defaulj in any such pay- 
 ment, for the imposition of fines, as well as generally for the 
 observance of all membership duties and liabilities, covers 
 everything for which there is any need of a continuing secu- 
 rity. In none of. the remaining elements of the contract, is 
 a breach on the part of the member within the range of legal 
 possibilities. By the payment of the money agreed to be 
 advanced, the contract is so far executed as to preclude the 
 borrower, in the absence of fraud, or circumstances amounting 
 to fraud, from resisting its consummation ; and if such crook- 
 edness occur in it, the parchment and seal and solemn attesta- 
 tion will not straighten it into uprightness. Besides, in case 
 of a dispute, the society holds the key to the situation. The 
 borrower's regular payments and other membership obliga- 
 tions being secured, it is sure to be in actual possession of 
 the money, which, by his entire contract, he has relinquished 
 to it. No court will aid him in recovering it from the soci- 
 ety, unless lie can show that the latter is not entitled to hold 
 it ; and the principles upon which that question is to be 
 solved, so far as it is a question of contract, are too well- 
 settled to require the assistance of re-iteration in the mort- 
 gages. If there are other considerations, arising outside of 
 the contract, which affect the right of the society to retain 
 the money, the mortgage stipulations, in emphasizing that 
 contract, are again of no utility. Indeed, from every point of 
 view, except that regarding convenience in computing the 
 amount at any time payable upon the mortgage, for purposes 
 of recovery or release, 1 and that regarding the negotiability 
 of the instrument,* the stipulations for the repayment of the 
 amount advanced, or of that amount plus the premium, to- 
 gether constituting the nominal loan, are simply useless and 
 redundant, though not, in any sense, positively improper. It 
 is the stipulation for the payment of dues, etc., which con- 
 stitutes the differentia of the building association mortgage, 
 every legitimate form of which presents it as the essential 
 peculiarity ; but the class in which this characteristic is given 
 the most signal prominence i. e., where the stipulation is sim- 
 ply for dues, etc., without any superfluous adjuncts concern- 
 1 See ante, 331-332. * See ante, 331-532.
 
 424.] MORTGAGES. 421 
 
 ing the repayments is to be regarded as the proper type of 
 building association mortgages. In treating of them gener- 
 ally, the other forms may be safely disregarded. There is, 
 at the bottom, no difference between them, and the same 
 principles, with very slight and obvious modifications, apply 
 to all. 
 
 Covenants as to Stock-Payments, etc. 
 
 423. By the covenants of such a mortgage, the borrower 
 undertakes, for himself and his heirs, with the society, their 
 successors and assigns, to pay to the society, their successors 
 and assigns, or to such other person or persons, as, by the 
 rules of the society, or by the Board of Directors thereof, shall 
 from time to time be appointed to receive the same, at the 
 office of the society for the time being, on a certain day in 
 each succeeding week or calendar month, as the case may be, 
 a certain fixed sum, either so calculated as to include stock- 
 payments and redemption money, or interest, or with the 
 additional stipulation for a further sum payable in the man- 
 ner, and at the time, that may be provided during the run- 
 ning of the society or series ; ' together with such further 
 sums, as, by the rules of the society, shall be payable from him 
 or them to the society, and all fines that may be lawfully as- 
 sessed against him, under and according to the rules of the 
 society ; and also in all other respects to observe the rules of 
 the society." 
 
 Effect and Validity of Building Association Mortgage. 
 
 42-4. On the face of it, such a mortgage secures the pay- 
 ment of a series of small sums during an indefinite period of 
 time.' Yet, though the time during which the payments are 
 to be made is not specified, there is a contingency stated in 
 
 1 If this be not added, and the covenant to keep the premises in 
 
 covenant is merely to pay each sue- repair, and insured; pay ground- 
 
 cessive week or month, that would rent, taxes, etc., or permit the so- 
 
 amount to the same thing, at least ciety to do so at the borrower's ex- 
 
 in an ordinary terminating society, peuse. See ante, 383. 
 
 since, when that expires, the pay- 3 Robertson v. The American 
 
 ments must of necessity cease. And Homestead Association, 10 Md. 397 ; 
 
 probably the effect would be the Winchester Building Association t>. 
 
 same in a series. Gilbert, 23 Qrattan (Va.), 787. 
 
 9 To this is properly added a
 
 422 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVI. 
 
 the mortgage, 011 the happening of which the payments are 
 to cease ; and its duration may be ascertained by proof, or 
 approximated with as much certainty and exactness as the 
 duration of a mortgage securing an annuity for the life of a 
 person. The mortgage is, therefore, not void for uncertainty, 
 but a valid mortgage in law. 1 Nor, though being for the 
 payment of such trifling sums, does it fall under the opera- 
 tion of the principle de mini-mis non curat lex, but it is prop- 
 erly within the jurisdiction of a court of chancery. 3 
 
 Covenants as to Default. 
 
 425. In case these stipulations for the payment of dues 
 and interest are not faithfully observed by the mortgagee, 
 there is a provision inserted for the foreclosure of the mort- 
 gage and sale of the encumbered property. The disposition 
 of the proceeds of such sale may be contracted for in various 
 ways. The most commonly adopted, after providing for the 
 payment of all arrears, are either (1) to permit the overplus 
 to be invested by the society for the mortgagee, upon trust, 
 to draw and apply the revenues, from time to time, as re- 
 quired, to the payment of all accruing monthly sums and 
 lines, until the termination of the building association ; and it 
 has been expressly declared that such a provision in the mort- 
 gage is valid, and that under it the society was entitled, upon 
 judgment of foreclosure, to have a provision inserted direct- 
 ing the surplus to be invested according to the mortgage 
 stipulations ;" or (2) to allow the society to receive at once, 
 from out of the proceeds, the full present value of the mort- 
 gage, all future installments being regarded as immediately 
 payable. 4 These future installments, by the terms of the 
 mortgage, are those which shall become due during the 
 
 'Ib.; Merrill v. Mclntire, 13 Law and Eq. Rep. 477, where the 
 
 Gray (Mass.), 157; The Franklin property was leasehold, and the 
 
 Building Association v. Mather, 4 mortgage gave the society the right 
 
 Abb. Pr. (N. Y.) 274. to enter and draw rents, and, if in- 
 
 * Robertson v. The American sufficient, sell. 
 
 Homestead Association, ubi supra. * Where there is a stipulation for 
 
 * The Franklin Building Associa- the recovery of the amount ad- 
 tion v. Mather, ubi supra. See also vanced, plus the premium, i.e., of 
 Winchester Building Association t). the par value of the shares advanced. 
 Gilbert et al., 23 Gratt. (Va.) 787. this amounts to the same thing. See 
 And Seagrave v. Pope, 15 Engl. ante, 330-332.
 
 42G.] MORTGAGES. 423 
 
 balance of the entire running of the society. In order to- 
 ascertain this period, and thus the sum payable, it becomes 
 necessary for the court to look beyond the mortgage. 
 
 Propriety of Court's Looking at Rules to Ascertain Amount Due. 
 
 426. It was said in Robertson v. The American Home- 
 stead Association* that the court could not look beyond the 
 mortgage itself in ascertaining the sum due, where the rules 
 and articles of the building association were not so- referred 
 to as to make them a part of the mortgage, or call the court's 
 attention to them, and that a covenant to pay " all lines 
 imposed by the articles of association" does not make them a 
 part of the mortgage, or authorize the court to consider them 
 in construing it. 
 
 But this decision was explained in the case of McCahan 
 v. The Columbian Building Association of East Baltimore, 
 No. 2," where the court say : " It is urged on the part of the 
 defendant that the constitution of the association has no effect 
 upon the mortgage or the rights and liabilities of the parties 
 under it : that the mortgage is a subsequent independent 
 contract between the corporation and the defendant, to be 
 construed without reference to the articles of the constitution, 
 which form no part of it, have not been incorporated into it, 
 and can in no wise control or affect it. Some expressions in 
 the opinion in Robertson '<? Case, 10 Md. 397, where a similar 
 mortgage was before the court, apparently give countenance 
 to this view ; but we think it quite clear, from the whole 
 tenor of that judgment, the court never intended to decide 
 that in no case could the provisions of the constitution of 
 such an association be looked to, for the purpose of ascertain- 
 ing the relation of the parties under, or determining the 
 continuance of, the mortgage or its covenants. In that case, 
 the mortgage had been presented to the court below. 1>\ peti- 
 tion for a decree under the assent clause, and decree was 
 passed that unless a certain sum was paid by a given day. the 
 mortgaged premises be sold. The appeal was from that 
 decree, and the record contained only the petition, the mort- 
 gage with a statement of the amount due, verified by affidavit, 
 and the decree. The court first decided that decree to be 
 
 1 10 Md. 897. * 40 Md. 234-236.
 
 424 THE LAW OF UUILDIN'Q ASSOCIATIONS. [CH. XVI. 
 
 erroneous and reversed it, 1 . . . they decided what sum the 
 mortgagor must pay in order to prevent a sale of his proj>- 
 erty, and allow the decree to stand as a security for future 
 instalments and liabilities. It is evident that upon payment 
 of this sum ho would continue a member of the association, 
 and the covenants of the mortgage would remain in force. 
 The court then lay down the rule for ascertaining what sum 
 the mortgagee would be entitled to receive, in satisfaction of 
 the mortgage, in case of a sale of the mortgaged property. In 
 this connection the remarks are made upon which the defend- 
 ant's counsel relies, viz. : 'In ascertaining that sum the court 
 cannot look beyond the mortgage itself; there is no such 
 reference made in the mortgage to the rules and articles of 
 the association as to make them part of the mortgage, or to 
 authorize the court to consider them in construing the mort- 
 gage, or ascertaining the amount which the mortgagee is 
 entitled to receive in presenti out of the proceeds of sale.' 
 Even this language fairly construed, goes no further than to 
 say the rules and articles cannot be referred to for the pur- 
 pose of ascertaining the present value in gross of the sums 
 secured by the mortgage payable in future, and does not for- 
 bid a reference to them in order to determine when the 
 covenants of the mortgage may cease to be operative. But in 
 the conclusion of their opinion they say, ' In construing this 
 contract this court confines itself entirely to the terms of the 
 mortgage, there being no other proof in the cause,' etc. They 
 are thus careful to limit their decision on this point to the case 
 as presented by the record before them, in which the constitu- 
 tion or Articles of the association do not appear. We find 
 in that opinion nothing that is conclusive of the question 
 we are now considering. Here the articles of incorporation 
 and the constitution and by-laws were offered, and read 
 in evidence by the plaintiff without objection, and form 
 part of the proof in the case, to be considered by the court 
 and jury. "We are of opinion they may be examined for 
 the purpose of examining when the mortgage contract ter- 
 minated." 
 
 1 Because the court below could gage, it being open for examination 
 not determine judicially by its de- and proof, either before sale, or af- 
 cree the amount due on the mort- ter order of ratification, nisi. Ib.
 
 428.1 MORTGAGES. 435 
 
 Rule for Ascertaining Amount Presently Due upon Mortgage. 
 
 427. This power has, indeed, been universally exercised 
 by courts, and has enabled them to arrive at the statement of 
 the formula in ascertaining the amount, which, at any given 
 time, is payable upon a mortgage in order to satisfaction of 
 the mortgage sued upon, as well as in case of voluntary re- 
 demption ; the difference between the two appearing to be 
 only, that, in the latter, the mortgagor is entitled to receive 
 the bonus, or share of profits allowed him by by-law under 
 the statute, upon voluntary repayment, whilst, in the former, 
 he, being a defaulter, and having violated those very by-laws, 
 is not entitled to share in any of the profits held out to those 
 who faithfully observed them. 1 The cases in England and this 
 country bearing upon the question of the ascertainment of the 
 present value of a building association mortgage, have been 
 examined, at considerable length, in treating of the borrowing 
 member's right to discharge his debt previously to its maturity, 
 and need not be here reviewed." The rule, as laid down in 
 England, requires the probable or possible duration of the 
 society to be approximated by proof, and the aggregate of all 
 the dues 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 mort- 
 gagor, mid the whole amount thus found is what the society 
 will be allowed to receive out of the proceeds of the sale.* 
 In America, this rule has been applied with the single modi- 
 fication, where the interest is lumped with stock-payments as 
 in England, that a just amount of interest is to be rebated 
 from the sum total of the future installments, so that the 
 society will not recover interest after that which bears inter- 
 est, the loan, has been returned to its hands. 4 
 
 Same Rule Applicable in Courts of Law and Equity. Basis of Equity 
 Jurisdiction in Foreclosure. Preliminary Account. Decree. 
 
 428. This rule for ascertaining the sum due in satisfac- 
 tion of the mortgage in case of sale, holds good, whether the 
 suit be an action at law or a proceeding in equity.* " There is 
 no more difficulty in applying it in the one case than in the 
 
 1 See ante, 175. 4 See ante, 154-157, and also, 
 
 * See ante, 154-157. 375-376. 
 
 * See ante, 158-164. McCahan v. The Columbian
 
 426 THE LAW OF BUILDING ASSOCIATIONS. [cil. XVI, 
 
 other, and no good reason exists why it should be enforced in 
 the one and not in the other." It is, therefore, a matter of 
 indifference, what course, under the statutes of any particular 
 State, may be adopted for the collection of the debt : the 
 method of computing it remains the same. In most States, it 
 is believed, the collection of the mortgage debt is through 
 foreclosure in equity, and it is said that the jurisdiction of a 
 court of equity to decree foreclosure of mortgages " does not 
 arise out of the power of sale usually contained in them, but 
 from the very nature of the conditional transfer of the estate 
 as security for the payment of the debt ; so that either of the 
 parties has the right to apply to a court of equity to fix the 
 amount actually due on the security, with a view, on the one 
 hand, to the enforcement of it in case of failure to pay ac- 
 cording to condition ; or, on the other, to a redemption by the 
 payment of the true amount found due." " But, where the 
 proceedings are in equity, the rule as above laid down is that 
 which governs the distribution of the proceeds of sale, and 
 must not be confounded with that which obtains in stating the 
 preliminary account between the parties, merely as a basis for 
 a decree of sale. All that can be included in that account is 
 the actual arrears and charges standing against the borrower 
 up to the time of the decree, consisting of the items enu- 
 merated in the mortgage, monthly interest, weekly install- 
 ments, fines, ground-rent, taxes, insurance costs, etc., if any 
 such be in arrear, deducting the credits for which the bor- 
 rower claims and is entitled to allowance for payments made 
 by him." If he pays the amount thus found, the sale will be 
 prevented, and the decree will stand against him as security 
 for future payments. 4 If he refuses or neglects to pay them, 
 the sale must take place, the premises mortgaged will be dis- 
 
 Building Association of East Balti- Ohio St. 186; Risk v. Delphos Build- 
 more No. 2, 40 Md. 239. ing and Savings Association, 31 Id. 
 1 Ib. 517. See also Somerset County 
 * Birdseye, J., in The Franklin Building Loan and Savings Asso- 
 Building Association . Mather, 4 ciation v. Vandervere, 3 Stock. 
 Abb. Pr. (N. Y.) 274 (278). (N. J.) 283; Citizens' Mutual Loan 
 8 Robertson v. The American and Accumulating Fund Associa- 
 Homestead Association, 10 Md. 397; tion . Webster, 25 Barb. (N. Y.) 
 Hagerman et al. v. The Ohio Build- 263. 
 ing and Savings Association, 25 4 See cases in preceding note.
 
 429.] MORTGAGES. 427 
 
 charged of the encumbrance, and the rule indicated will then 
 come in to control the distribution of the proceeds. 1 
 
 Discharge of Mortgage by Sale of Property does not Necessarily Dis- 
 charge Debt. Remedy in Such Case. 
 
 429. A sheriff's sale on a mortgage divests its lien on the 
 land covered thereby. 2 But if the proceeds of the sale are 
 found insufficient to liquidate the whole amount appearing 
 due to the association, the debt is not discharged. It is said 
 in England that assumpsit will not lie for the mortgage 
 money, where there is a covenant for repayment. 1 Where, 
 however, a plaintiff advanced money upon the security of a 
 mortgage which contained no covenant for the repayment of 
 the money advanced, but merely gave the plaintiff the security 
 of the mortgaged premises, it was held, that the advance, be- 
 ing made at the request of the defendants, raised a contract 
 by parol for the repayment, which was not merged in the 
 security of a higher nature ; the mortgage, in such a case, be- 
 ing in the nature of a collateral security. 4 And a case arose 
 in Maryland, in which it appeared that a mortgage had been 
 given to a building association, conditioned for the payment 
 of dues, interest, fines, etc., and the stipulation in case of de- 
 fault was in accordance with an article of the constitution, 
 which was as follows : " If any member taking a loan, shall 
 fail to pay his dues and interest for three months, the directors 
 
 1 It is needless to repeat that there C. B. (70 Engl. C. L. Rep.) 561; 
 is no substantial difference between Shack v. Anthony, 1 M. and S. 573; 
 the result attained by this rule in and Davis, Law of Building, etc., 
 cases where the mortgage recovers Societies, p. 187. Where the mort- 
 dues, etc., only, and the judgment gage was given to repay by monthly 
 for the nominal amount of the mort- installments, upon default in which 
 gage debt where its payment has the whole amount stipulated to be re- 
 been reserved. See ante, 330- paid should be payable immediately, 
 332. the trustees, after default and 
 
 * See Germania Building Associ- brought an action upon the deed to 
 
 ation v. Neill, 93 Pa. St. 322. recover the whole of the difference 
 
 s See Middle-ditch v. Ellis, 2 between the proceeds of sale and the 
 
 Exch. 623; 17 L. J., Ex. 365; Ed- amount of unpaid installments : 
 
 wards v. Bates, 13 L. J., C. P. 156; held, there was an implied covenant 
 
 8 Jur. 539; 8 Scott, N. R. 406; 2 to pay the whole amount. Sherriff 
 
 D. and L. 299; Matthew r. Black- t. Glenton, 28 L. T., N. S. IM. 
 
 more, 26 L. J., Ex. 150; 1 II. and Yates v. Aston, 4 Q. B. 182; 3 
 
 N. 761. See also Price . Moulton. G. and 1). :J31: 12 L. J.. N. S., Q. 
 
 20 L. J., C. P. 102; 15 Jur. 228; 10 B. 160; 7 Jur. 83.
 
 428 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVI. 
 
 shall compel payment by a sale of the mortgaged property ; 
 the proceeds of said sale to be applied, lir.-r, to pay ;-U the 
 expenses of the sale, arrears of ground-rent and taxas, and 
 second, to all arrears due the association, and the balance, if 
 any, to the delinquent. Such member shall then cease to be 
 a member of the association." It was held that "all arrears 
 due the association" included dues, lines, and also such sum 
 a- would liquidate the installments payable in future; and if 
 the proceeds of sale were insufficient for that purpose, an im- 
 plied assumpsit arose to pay the balance, upon which the 
 building association might maintain an action at law against 
 the mortgagor accordingly. 1 Nor will the purchase of prop- 
 erty by the building association, holding several mortgages 
 upon the same property and against the same debtor, the 
 owner, upon a sale under the last mortgage, necessarily op- 
 erate as a payment or extinguishment of the debt secured by 
 the prior mortgage, where the sum realized did not cover the 
 whole of the borrower's indebtedness to the association. 3 
 Such effect depends upon the agreement and intention of the 
 parties. 3 In the absence of anything to show that the land 
 mortgaged was intended to be the only security (and further 
 security was, in fact, exacted by requiring an assignment of 
 the borrower's stock), or that the society meant to give up any 
 security held by it, the member has no right, upon such show- 
 ing, to claim his debt to be extinguished, and that his stock 
 should be reconveyed ; nor does an attaching creditor take any- 
 thing in it. 4 
 Terms of Mortgage Preclude Withdrawal. Right of Repayment. 
 
 430. It is perfectly evident that a member of a building 
 association, who, upon becoming a borrower, has not only 
 agreed to allow the society to appropriate, in indemnification 
 for its advancement, and in payment of the premium con- 
 tracted for, the amount calculated to accumulate upon his 
 shares by right of his faithful continuance of stock-payments ; 
 
 1 McCahan v. The Columbian 8 Watts (Pa.), 138; Fleming v. Parry, 
 
 Building Association of East Balti- 12 Har. (Pa.) 47. 
 
 more No. 2, 40 Md. 237. This 4 Germania Building Association 
 
 was an action in assumpsit. . Neill, ubi supra; i.e., until after 
 
 s Germania Building Association the building association's claim was 
 
 . Neill, 93 Pa. St. 322. satisfied, or subject to it. See post, 
 
 8 Moore t>. The Harrisburg Bank, 450.
 
 430.] MORTGAGES. 429 
 
 but has, by his bond and mortgage, obligated himself to con- 
 tinue these payments to the end of the society's existence, 
 cannot be permitted, at any time before the completion of his 
 contract, to put an end to his liability to make stock-payments 
 by withdrawing from the society. As an investing member,, 
 he has the privilege of doing so ; as a borrower, the very es- 
 sence of his undertakings must operate as a waiver of that 
 privilege. This result is distinctly recognized in denying the 
 right of a borrowing member to withdraw. 1 Nor does the 
 contract itself contemplate any discharge of the debt previ- 
 ously to the period of the association's or series's running 
 out. 2 But this being an incident to the rights of member- 
 ship, 3 it would seem that a borrowing member desirous of dis- 
 charging his obligations to the building association, and sever- 
 ing his connection with it, could do so only by first paying his 
 debt in full (i.e., paying what, upon the rule above laid down, 
 would be the present value, for purposes of collection, of his 
 mortgage at the very instant of its execution), without apply- 
 ing any of his stock-payments to it, and then giving notice of 
 withdrawal of his stock. But this course, circuitous as it is, 
 would put the borrower to the inconvenience, not only of de- 
 lay, but also of the necessity of making a cash payment to the 
 society, in addition to what the future installments might be 
 calculated to sum up, of an amount equal to what he has 
 already paid in, and would have the right, thereafter, to draw 
 out. There is no reason for imposing such restrictions upon 
 the member, for he is not asking the society for the payment 
 of anything, or putting it to any trouble or inconvenience, 
 save perhaps that of re-investing the money which he desires 
 to return, and upon which there is an opportunity of making 
 a second premium. It has therefore been held that a member 
 may discharge the debt and relinquish his connection with the 
 building association at once, by giving it, in addition to what 
 he has paid in already, the sum which, upon the rule given, 
 may become ascertained to be payable if treated as presently 
 due upon the mortgage. 4 In so doing, he must, however, as 
 
 1 Ante, 151. of repayment are expressly reserved 
 
 s Unless, indeed, as is now done in the mortgage, 
 in England, the privilege and terms s See ante, g 152-153. 
 
 4 See ante, 152-157.
 
 430 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVI. 
 
 in withdrawing, bring himself under, and conform with the 
 requirement^ of, the statutory and by-law provisions govern- 
 ing the case. 1 A certain benefit, or rebate, is, in most cases, 
 provided by the one or the other. Where such is not the case, 
 a member thus repaying to obtain his discharge from the 
 society is entitled to the same proportion of bonus as is con- 
 ceded to withdrawing members :" and this extends to the de- 
 duction of redemption moneys paid in by the borrower.' 
 
 Sale upon Mortgage, and Application of Proceeds of Sale and Value of 
 Stock to Debt, Extinguish Membership of Debtor. 
 
 431. A sale of the mortgaged property, and application 
 of the proceeds and of the previous stock-payments made by 
 the mortgagor, to the extinguishment of the debt, " terminates 
 the membership of the mortgagor in the association, and the 
 obligation to continue payment of dues in consequence of 
 membership ceases." 4 But where the building association 
 makes the whole amount of the debt out of the proceeds of 
 the sale, without applying the borrower's stock interest to its 
 extinguishment, the membership is not terminated, especially 
 where the society continues to receive subscriptions from him 
 upon the share originally advanced. 6 And there seems to be 
 no reason for distinguishing, in this respect, between a case in 
 which the debt, as such, is made repayable, and one in which 
 dues, etc., merely are reserved. Payments upon stock are not 
 ipso facto payments upon the mortgage." The borrower has 
 the right so to apply them, and in the absence of every such 
 application by him, the society may make it.' But, if neither 
 adopt this method, and the whole debt, as it was in the begin- 
 ning, undiminished by any stock- payments, be returned to the 
 
 1 Shannon v. The Howard Mu- Robertson v. The American Home- 
 tual Building Association of the stead Association, 10 Id. 397; Shan- 
 City of Baltimore, 36 Md. 383. non . The Howard Mutual Build- 
 
 * Fleming v. Self, 18 J. P. 296; ing Association of the City of Balti- 
 
 S. C., 23 L. T. Rep. 63; Kay, 518. more. 36 Id. 383; Watkins t. The 
 
 1 Smith v. Pilkington, 4 Jur., N. Workingmen's Building, etc., Asso- 
 
 S. 58; 30 L. T. Rep. 196; 22 J. P. 5; ciation, 38 Leg. Int. (Pa.) 333; 10 W. 
 
 S. C., on App., 29 L. J., Ch. 227; 1 N. C. 414; 97 Pa. St. 514. 
 
 De G., F. and J. 120; 24 J. P. 227. North America Building Asso- 
 
 4 McCahan t>. The Columbian ciation v. Button, 35 Pa. St. 463. 
 
 Building Association of East Balti- See post, 452-457. 
 
 more No. 4, 40 Md. 239; and see 7 See post, 453-454.
 
 432.] MORTGAGES. 431 
 
 society, the stock remains intact, and the borrower, continuing 
 to hold it, retains his membership. 1 
 
 Mortgage (or Decree after Preliminary Account) after Payment of 
 Amount Due Stands as Security for Future Membership Duties. 
 Rights of Mortgagee in Possession. 
 
 432. It has already been seen, that, even after payment 
 of the moneys secured by the mortgage, or of the amount 
 found due by a decree of court as the basis of an order of sale, 
 the mortgage, in the one case, and the decree, in the other, 
 will stand as a security for future payments becoming due 
 from the member as such." And the mortgage may also, 
 in addition to the usual reservations, stipulate for the pay- 
 ment of taxes, insurance, ground-rent, and similar charges, 
 which thereby become part of the debt.* A mortgagee in 
 possession may add to the debt any sums he is compelled to 
 pay for arrears of rent, for maintaining the title of the estate, 
 for rebuilding or repairing the premises. 4 He must not com- 
 mit waste, 5 unless the security be defective, when he may fell 
 timber and sell it, in part liquidation of the mortgage debt, 
 and may open mines. 7 If the property be renewable lease- 
 hold, and fall in during the time the mortgagee is in possession, 
 he may renew and charge the estate with the sum paid for 
 renewal, with interest and costs ; even if he himself does not 
 renew, he will not be allowed to release the right to do so, 
 without the concurrence of the person who is entitled to the 
 equity of redemption. 8 The mortgagee cannot, however, 
 mako any charge as receiver, if he himself has personally re- 
 ceived the rents, although there may be an express agreement 
 that he shall be entitled to do so." Nor can the mortgagee 
 
 North America Building Asso- Ib. ; cit. Wltheriogtonv. Banks, 
 
 elation . Sutton, ubi supra, and Sel. C. C. 31. 
 
 ante, 79-80. See also Hennig- * Ib. ; cit. Millett P. Davey, 32 L. 
 
 turaeenandWolfl, Rec'rs, . Tisher, J., Ch. 122; S. C., 31 Beav. 470; 9 
 
 50 Md. 583. Jur., N. 8. 92; 7 L. T. Rep., N. S. 
 
 See ante, 89-90. 551 ; 11 W. R. 176. 
 
 Sec ante, 332. 8 Ib. ; cit. O'Reilly t. Fcther- 
 
 4 Davis, Law of Building, etc., ston, et al., 4 Bligh, N.S.,161; S. C., 
 
 Societies, p. 194. 2 Dow and Cl. 39. 
 
 6 Ib. ; cit. Hanson t>. Derby, 2 Ib. ; cit. Sugd. V. and P., 14tli 
 
 Vern. 392; Hardy v. Reeves, 4 Ves. ed., 69. 
 480.
 
 432 THE LAW OF BU1LDINU ASSOCIATIONS. [CH XVI. 
 
 claim the costs of an attempt to sell the mortgaged property, 
 which is ineffectual owing to a misdescription of the prem- 
 ises. 1 
 
 Errors and Omissions in Mortgages. 
 
 433. It was held in Nebraska, that, where a mortgage 
 purported to be upon the fee simple, but was, in fact only 
 upon an equitable title, it was not defeated by a subsequent 
 purchaser of the fee simple who procured from the holder of 
 the equitable title a quit-claim deed. 2 The recording of the 
 mortgage was notice to the subsequent purchaser, nor could a 
 mistake of the county clerk in entering a description of the 
 mortgaged premises on the numerical index, the mortgage be- 
 ing, in all other particulars, properly recorded and indexed, 
 vitiate the record as to the subsequent purchasers.* 
 
 434. In Maryland, 4 the statute provided that " in all 
 mortgages there may be inserted a clause authorizing the 
 mortgagee, or any other person to be named therein, to sell the 
 mortgaged premises," upon the happening of certain contin- 
 gencies. Under this act, a clause in a mortgage to a building 
 association, with power of sale to the building association, or 
 its attorney, not naming him, was held to be of no effect, and 
 the power of sale invalid.* It was said that the act recog- 
 nized the deputation of authority to sell to some person other 
 than the mortgagee, but required that person to be named. 
 Moreover, as the act evidently contemplated a natural, not an 
 artificial person, such as a corporation is, the building associa- 
 tion itself could not execute the power, except only through 
 its agent or attorney named in the mortgage. A sale, thcre> 
 fore, by the attorney, who had not been named, was invalid, 
 and the building association, having itself become the pur- 
 chaser, acquired no rights under it. 6 It was, however, inti- 
 mated, that if the property, in such case, had been purchased 
 by a third party, paying the whole or a part of the purchase 
 
 1 Ib. ; cit. French . Barren, 2 s The Queen City Perpetual 
 
 Atk. 120. Building Association v. Price, trus- 
 
 8 Lincoln Building and Savings tee, 53 Md. 397; Frostburg Mutual 
 
 Association, appellee, v. Haas et al., Building Association v. Lowdermilk, 
 
 appellants, 10 Neb. 581. 50 Id. 175. See also The Union. 
 
 Ib. Hall Ass'n v. Morrison, 39 Id. 281. 
 
 4 Publ. Gen. L., Art. 64, sec. 5. See cases in preceding note.
 
 436.] MORTGAGES. 433 
 
 money, if he be not restored the amount so paid, he would 
 be held in equity to be equitably entitled as assignee of the 
 mortgage, subject, of course, to the equity and right of re- 
 demption : and if he be let into possession of the mortgaged 
 premises, and make valuable improvements thereon, he would 
 be entitled to compensation. 1 
 
 Purchaser Subject to Building Association Mortgage. 
 
 435. A purchaser subject to a building association mort- 
 gage, taking the forfeited shares of the defaulting borrower, 
 and agreeing to pay part of the purchase money by install- 
 ments of a certain amount, was subsequently held liable under 
 the rules of the society (authorizing sales upon such terms) to 
 fines for nonpayment of the installments.* 
 
 Building Association, Mortgagee, may Exercise all the Powers given 
 it Concurrently, Notwithstanding its Rules. 
 
 436. The building association, being mortgagee, may, if 
 it pleases, exercise all the powers that are given it, even con- 
 currently. It may sue on the bond or covenant, or it may 
 exercise a power of sale given in the deed, or it may foreclose.* 
 And it seems that this holds good, although by the rules a 
 certain course be prescribed. " In the case of a building so- 
 ciety, a power of entry, and to take and receive the rents, does 
 not bind them down to pursue that course alone. By the 19th 
 rule of the Second Borough of South wark Benefit Building 
 and Investment Association, it was provided "That if any 
 member, having executed a mortgage, at any time thereafter 
 fail, neglect, or refuse for six monthly nights to pay, observe, 
 and perform all or any of his or her subscriptions, payments, 
 and regulations, on his or her part respectively to be paid x 
 observed, and performed, then the directors for the time 
 being shall appoint a person or persons to collect the rents 
 and profits of the premises therein mentioned ; but should 
 the same be insufficient to satisfy the purposes aforesaid, or 
 should the member refuse to allow the person or persons so 
 appointed to collect the said rents and profits, or neglect or 
 
 1 The Queen City Perpetual Handley v. Fanner, 29 Beav. 
 
 Building Association, etc., v. Price, 862. 
 
 etc., ubi supra ; Union Hall Asso- * Davis, Building, etc., Socieuen 
 
 elation c. Morrison, ubi supra. p. 197.
 
 434 THE LAW OF I5L1LD1XG ASSOCIATIONS. [CH. XVI. 
 
 refuse to supply such person or persons with sufficient au- 
 thority to collect the same, or, if required by the directors 
 (under the hands of the trustees), to collect the same himself 
 or herself, and to pay the same forthwith to such person or 
 persons, tuen the said directors shall, without the concurrence 
 or consent of the said member, absolutely sell and dispose of 
 all or any part of the said premises, etc." Upon an action 
 being brought upon the covenant in the deed for payment, 
 this rule was pleaded, in order to show that the course indi- 
 cated in such rule must be first adopted, to the exclusion of 
 an action at law. It was held by the court, that, if the trus- 
 tees of the society could maintain an action upon the cove- 
 nant at all, they might resort either to that remedy, or to 
 the remedy prescribed by the rule at their option. 1 But in 
 no event will the mortgagee be allowed to recover more from 
 the mortgagor than is actually due upon the mortgage.* 
 
 Tender upon Building Association Mortgage. 
 
 437. The nature of a building association mortgage se- 
 curing dues, etc., only, does not admit of tender, strictly and 
 technically speaking. But an offer of such terms of repay- 
 ment as the borrowing member is entitled to demand, and as 
 will make a suit unnecessary, amounts to a tender. 8 Such 
 tender of mortgage money actually due by a person having 
 the right to make it, and refusal to accept, stops the running 
 of interest : a subsequent agreement to accept, however, starts 
 the interest as if no tender had been made, until the money 
 is paid or brought into court. 4 A special tender before suit, 
 or with costs accrued after its commencement, and refusal, 
 make the mortgagee liable to costs, although he is entitled to 
 a decree. 6 And if a party declare beforehand, that, if tender 
 
 1 Reeves n. White, 16 J. P. 115; ingly short; the form of the mort- 
 
 S. C., 21 L. J., Q. B. 169; 16 Jur. gage before the court, and the reason. 
 
 637; 17 Q. B. 995. ing of the latter, are not given, and 
 
 * It is said, in Hamilton Building it is difficult to know precisely what 
 
 Association, v. Reynolds, 5 Duer is meant by the decision. 
 
 (N. Y.), 671, that a mortgage to a 3 The Columbian Building Asso- 
 
 building association, in the usual elation of East Baltimore No. 4 . 
 
 form, is a valid security only for the Crumb, 42 Md. 192. 
 
 monthly payments stipulated to be 4 Ib. 
 
 madf. not for fines and other dues. * Ib. As to effect of dissolution 
 
 Tnc report of this case is exceed- of the building association upon the
 
 439.] MORTGAGES. 435 
 
 I 
 
 is made, it will not be accepted, that will dispense with a 
 formal tender. 1 
 
 Taxation of Mortgages held by Building Associations. Power of Leg- 
 islature to Remit. 
 
 438. Mortgages given to building associations by their 
 members are exempt from taxation only by virtue of special 
 enactment. The General Assembly has full power as against 
 a public officer and a county, which is its mere creature, to 
 release and remit a tax levied under its authority." An act 
 of the Legislature, therefore, releasing from taxation notes and 
 mortgages given by members of building associations to such 
 associations for advances on stock, and remitting such taxes 
 already made but not collected, is binding upon the county, in 
 respect of taxes claimed to be due it, as well as upon the 
 State's collectors, in respect of taxes due to the State.' But 
 where there is no equity outside of the illegality of the tax, 
 an injunction will not lie to restrain it ; the injury is not ir- 
 remediable, the tax-payer having an adequate remedy at law. 4 
 
 Exemption of Building Association Mortgages in England held to 
 Include Mortgages by Strangers. 
 
 439. In England it was held that the provisions of the 
 statute * exempting from stamp duties bonds, securities, and 
 assurances given on account of any friendly society, extended 
 to building societies,' and that the building association mort- 
 gage was a security falling within the exemption act, 7 even 
 though taken by the society before its rules were certified, 8 
 and in TJwrn v. Croft* Wood,Y.-C., decided that a mortgage 
 to the trustees of a benefit building society by a stranger, to 
 
 liabilities of mortgagors, members ' Walker v. Giles, 18 L.J..C. P. 323; 
 
 of the society, see post, 496-503. 13Jur.588; 6C.B.(60Engl. C. L. R.) 
 
 1 Buel v. Pumphrey, 2 Md. 268. 662; 13 L. T. Rep. 209; Barnard v. 
 
 * Selma Building and Loan Asso- Pilswortb. 6 C. B. 692, n. ; S. C., 18 
 ciation v. Morgan, 57 Ala. 33. L. J., C. P. 330, n. ; 14 L.T. Rep.132. 
 
 ' Ib. ' Ib. 
 
 4 Ib. 8 Williams v. Hayward, 25 L. J., 
 
 * 10 Geo. 4, C. 56, 37. The Ch. 289; S. C. 1 Jur., N. 8. 1128; 
 Building Association Act of 6 and 26 L. T. Rep. 134; 22Beav. 220; 19 
 7 Will. 4, C. 32, 4, incorporates J. P. 788. 
 
 all the clauses and provisions of the 36 L. J., Ch. 68; S. C., 81 J. P. 
 Act of 10 Geo. 4, so far as applica- 356; Law Rep., 3 Eq. 193; 15 L. T. 
 Me- Rep., N. S. 205; 15 W. R. 54.
 
 43G THE LAW OF BUILDING ASSOCIATIONS. [< II. XVI. 
 
 secure the repayment of money advanced to him out of the 
 surplus funds, is exempt from duty, saying: Walker v. <;il,* 
 decided that the 37th section of the Friendly Societies' Act 
 (10 Geo. 4, c. 56) was one of those which were incorporated 
 in the Benefit Building Societies' Act (6 and 7 Will. 4, c. 32). 
 .Now the 13th section of the former Act provided that the 
 trustees of the societies to which it related might invest the 
 surplus fund on mortgage; and then the 37th section di- 
 rected that no security given to such societies should be 
 chargeable with stamp duty. It was clear, therefore, that 
 under this act mortgages to friendly societies were free from 
 stamp duty, and, therefore, by the latter act, mortgages to 
 building societies were so likewise. These acts ought to be 
 construed liberally in favor of such societies ; and it was rea- 
 sonable enough to believe that the Legislature intended to 
 give them that advantage over other lenders which they 
 would derive, by being able to go into the market and say to 
 the borrower, " If you borrow of us, you will not have to pay 
 stamp duty." 
 
 Members' Mortgages held by Building Associations, are not Avail- 
 able Assets for Purpose of Winding up, but for Taxation of its 
 Personal Property. 
 
 440. The mortgages which a building association holds 
 against its members, cannot be counted as available assets in 
 calculating the amount on hand required to pay off the un- 
 advanced shares upon a winding-tip. In such computa- 
 tions, they must be set off against the shares upon which 
 they were advanced, and both be excluded from the reck- 
 oning. 1 
 
 These mortgages must, however, be considered as assets, 
 " as synonymous with property," a for the purposes of taxation. 
 Thus, in New Jersey, the property of building associations is 
 assessable, like that of individuals, at its full and actual value.* 
 An assessment of the property of such a corporation was made, 
 based upon the annual report of the company, exhibiting its 
 
 1 Lister v. Log Cabin B'ld'g Ass'n, 3 Act March 7, 1878, Ch. 50. p. 
 
 38 Md. 115. See also, post, 492. 61. See above case (State, etc., v. 
 
 * See State, Washington Building Hornbacker) on appeal, 13 Vr. (N. 
 
 and Loan Association, pros., c. J.) 635, affirming 12 Vr. 519. 
 Hornbacker, 12 Vr. (N. J.) 519.
 
 440.] 
 
 MOKTGAGES. 
 
 437 
 
 financial condition, from which the personal estate appeared 
 to be $120,787.51, after deducting the value of the real es- 
 tate, no statement of the taxable property having been fur- 
 nished to the assessor, as required by law. 1 It was contended 
 that the building association was taxable only for the amount 
 yet to be paid in by all the stockholders to make each share 
 worth $200, the par value, upon the theory that the money 
 advanced ceases to be assets, and becomes the property of 
 the stockholder, subject to his duty to pay interest and in- 
 stallments. 8 The court below says: ""Whether the sale of 
 money to a stockholder constitutes technically a loan or an 
 advance whether the bonds or mortgages secured the repay- 
 ment of the principal sum, or a collateral duty I think is 
 immaterial in solving the present question." It was ac- 
 cordingly held that the building association was properly 
 assessed for the bonds, mortgages, and notes held by it, for 
 the sums named in them, and as aggregated in the report of 
 the secretary. The judgment was the same upon appeal. 4 
 
 1 Wherefore the court said, that the bond on the other the distinct 
 the corporation, having failed to ex- 
 hibit, clearly and accurately, to the 
 
 assessor or to the commissioners of 
 appeals, the true particulars of its 
 property subject to taxation, was 
 not entitled to relief. State, etc., t>. 
 Horubacker, 13 Vr. (N. J.) 635. 
 
 2 In such case, the court says, 
 nothing would be taxable to the 
 association except such part of the 
 interest, or such installments as may 
 be owing at the time of the assess- 
 ment; cit. State, Hill, pros., v. Han- 
 som, 7 Vr. 50; State, Wickoff, pros., 
 
 . Jones, 10 Id. 650. 
 
 3 State, Washington Building 
 Association, pros., v. Hornbacker, 
 12 Vr. (K J.) 519. 
 
 4 Same v. Same, 13 Id. 635. It 
 was here said, that the unsoundness 
 of the view that the obligations did 
 not stand good for their full face 
 value, and hence ought not to be 
 so taxed, arose from "not observing 
 the distinct and separate existence 
 of the stock on the one hand, and 
 
 and separate relation borne to the 
 company on the one hand by its 
 stockholder, and on the other by 
 its boiTower. . . . The stock is a 
 collateral security for, and not a 
 credit on the bond." (See post, 
 451-454.) There seems, in this 
 case, to be a mere hint at a dis- 
 tinction to be drawn between the 
 effect, upon the question at hand, 
 of a technical redemption of the 
 stock, and a loan to the member, 
 which was the case here. But, 
 again, the distinction appears to 
 have been drawn only for the pur- 
 pose of being brushed aside by 
 reference to the fact, that (if there 
 was anything in it) it could not be 
 applied, because the method ob- 
 served in this association was dis- 
 tinctly that of loan, and not of re- 
 demption. In substance and effect, 
 it has already been seen, both are 
 the same; ante, 42-43; 354, 389. 
 See also, as to taxation, State, 
 Washington Building Association.
 
 438 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 CHAPTER XVII. 
 
 THE STOCK OF BUILDING ASSOCIATIONS. 
 
 441. Definition of stock. Implied condition in subscription. Defi- 
 ciency in stock-subscriptions. 
 
 442. Implied condition in subscription may be waived. Estoppel. 
 
 443. Increase of stock. 
 
 444. Property in shares of stock. 
 
 445. Transfer and assignment of shares of stock. 
 
 447. Restraints upon transfer. Regulation by by-law. 
 
 448. Remedy for improper refusal to transfer. Measure of damages. 
 
 450. Lien of society upon shares for arrears, etc. Levy on stock 
 covered by lien. 
 
 451. Right of society to enforce stock-payments by suit. Relation 
 of borrower's stock-payments to his debt to the society. 
 
 453. Borrower's right to apply stock-payments to extinguishment of 
 his debt. 
 
 454. Society's right, being pledgee, to apply stock -payments of bor- 
 rower to extinguishment of his debt. Character of such 
 application. 
 
 455. Value of stock for purposes of application to debt. 
 
 458. Borrower's right of application lost by assignment of shares to 
 third party. 
 
 459. Right of borrower's representative to apply stock to debt. Judg- 
 ment creditors. 
 
 460. Marshalling of assets, as to stock assigned as collateral and 
 property mortgaged. 
 
 467. Standing of judgment creditors, as to marshalling of assets. 
 
 468. Effect of rights of third parties upon claim for marshalling of 
 assets. 
 
 469. Notice of subsisting rights to compel resort to one of two funds. 
 
 470. Taxation upon capital stock. 
 
 Definition of Stock. Implied Condition in Subscription. Deficiency 
 in Stock- Subscriptions. 
 
 441. " The stock of a corporation is that money or prop- 
 erty which is put into a single corporate fund by those who, 
 by subscription therefor, become members of the corporate 
 body." ' This common fund, or stock, is divided into equal 
 parts, having a separate existence from one another in idea 
 or abstraction only. These are the shares, and they are fixed 
 
 pros. , t>. Creveling, 10 Vr. (39 N. J. ' Folger, J. , in Burrall v. Bush- 
 L. R.) 465; 8. C. aff'd, 11 Vr. 192; wick R R Co., 75 N. Y. 211. 
 post 470.
 
 44^. J THE STOCK OF BUILDING ASSOCIATE 439 
 
 by legislative enactment, or by charter, within the limits set 
 by general statutes, as to number and value, both individually 
 and in the aggregate. The person desiring to become a 
 member in the corporation, subscribes for, i.e., binds himself 
 to pay into the common fund the sums represented by each 
 of a certain number of these shares, not in excess of the 
 allowance ordained by statute or charter as the maximum of 
 shares to be lawfully held by any individual. 1 The subscrip- 
 tion of the whole amount thus ascertained and divided by 
 the organic law of the corporation, is, in general, a condition 
 precedent to entering upon the active operations contem- 
 plated in the act of association. It is presumed that the 
 entire amount fixed is necessary for the successful prosecu- 
 tion of the business of the society.* This is a principle, 
 however, designed only to protect the subscriber; for, where 
 somewhat over three-fourths of the capital stock provided in 
 the charter of a building association had been taken ; all the 
 laws for the creation and organization of the corporation had 
 been substantially complied with ; and there was not, at the 
 time, nor at any subsequent period, any law requiring a 
 building association to have more capital stock than the 
 amount actually subscribed for and taken in ii : it was held 
 that the power of the corporation to transact all the legitimate 
 business for which it was created, was complete. 3 But, to 
 save the subscriber from the hardship of being compelled to 
 risk his substance upon an enterprise rendered precarious, 
 from the outset, by a manifest want of working capital, an 
 understanding is implied in the contract of subscription that 
 he shall not be held thereto unless the full amount of the 
 stock be taken 4 . 
 
 Implied Condition in Subscription may be Waived. EstoppeL 
 
 442. To that extent, the subscription may IK> considered 
 as conditional. It is a condition, however, which may be 
 
 1 As to the right of a member to 3 Massey v. The Citizens' Building 
 
 hold more than one share, where and Savings Association of Paola, 
 
 the value is fixed by law, see ante, 22 Kas. 624. See also S. P. in case 
 
 68, note. in preceding note. 
 
 * Morrison et al., Rec'rs Chesa- 4 Morrison et al., Rec'rs, c.Dorsey, 
 
 peake, etc., Building Association, v. ubi supra. 
 Dorsey, 48 Md. 461.
 
 440 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 waived by the subscribers themselves, and with their consent 
 the company may not only organize, with those as members 
 who are willing to proceed or waive their objection to so 
 doing, but do all other things incident to and necessary for 
 the prosecution of the particular business for which it was 
 incorporated. 1 This consent or waiver may be either expiv-.- 
 or implied from the acts and declarations of the subscribers. 
 If, knowing the whole capital stock had not been taken, they 
 attend the meetings of the association, co-operate in the votes 
 for the expenditure of money, for the purchase of property, 
 for the making of contracts, and other acts which could only 
 be properly done upon the assumption that the subscribers 
 intended to proceed with the stock taken up, they would be 
 estopped thereafter from denying the proper corporate exist- 
 ence of the society because of the defect of stock, in defence 
 against the enforcement of obligations incurred by them 
 towards it.* 
 
 Increase of Stock. 
 
 
 
 443. The amount and value of the stock being fixed by 
 charter, under a general statute, it is competent for the asso- 
 ciation, by virtue of authority given for that purpose in the 
 charter, to increase the stock within the limits established by 
 the statute, and in the manner required to legalize such 
 change. But the Board of Directors, except under powers 
 expressly conferred, can neither assume to increase the capi- 
 tal stock, nor will such an increase, if made by the court upon 
 application of the directors acting without such powers, be 
 valid. 8 
 
 Property in Shares of Stock. 
 
 444. A share is, in fact, merely a right to partake in the 
 surplus profits obtained from the use and investment of the 
 paid-in subscriptions and other revenues of the association, in 
 proportion to the amount contributed upon it, and under 
 such restrictions and regulations as are prescribed by statute, 
 or may be legally imposed by charter or by-laws. These 
 
 1 Ib. ; Hager v. Cleveland and Bas- ubi supra; Cabot and West Spring- 
 sett, 36 Md. 476 (491). field Bridge Co. v. Cbapin et al., 6 
 
 * Morrison et al.,Rec'rs, v. Dorsey, Cush. (Mass.) 50. 
 
 ubi supra ; Massey v. The Citizens' 8 See ante, 200. 
 Building and Savings Association,
 
 444.] THE STOCK OF BUILDING ASSOCIATIONS. 441 
 
 profits arise, in many cases, largely out of realty ; where the 
 funds of the association are bound up in land, may even, for 
 a time, be almost exclusively represented by real estate. Yet 
 the shares are personal property, and the members have no 
 interest in the realty as such. 1 At the same time, the shares 
 are not chattels; they are rather akin to choses in action, 
 mere evidences of property. They are not, at common law, 
 capable of being taken in execution, and sold for debts, and, 
 under the common law rules as to property of husband and 
 wife, if a woman who is an investing member in a building 
 association marry, her husband (in the absence of settlement) 
 will be entitled, during coverture, to receive the money de- 
 posited by her dum sola" but if he die without having 
 received it, the wife will be again entitled to the money, and 
 the deceased husband's personal representatives will have no 
 claim." The interest, therefore, which a member in a build- 
 ing association has, by virtue of his status as a shareholder, 
 and independently of any rights of withdrawal and anticipa- 
 tion, is a subsisting claim to participate, in a certain propor- 
 tion, in the distribution of the effects of the association, upon 
 its expiration and winding up. There is constantly going on, 
 within the association, an ideal process of setting apart divi- 
 dends, reuniting and fructifying them, as it were, until, by 
 the aid of all these undistributed dividends, the amount 
 actually paid in upon each share has swollen to the limit 
 fixed by the charter as the paid-up value thereof. Then 
 only, when the functions of the association have ceased, to 
 use and manage the fund for the benefit of its members, and 
 to hold the legal title thereto for that purpose; when the 
 duties of the association have grown merely ministerial, to be 
 
 1 In the case of an English Free- holders more than an interest in the 
 
 hold Land Society it was held that common stock, which is a movable 
 
 the members had no interest in the subject, and not a joint ownership 
 
 land conveyed to it, and that shares of heritable subjects. Dove c. 
 
 therein are not within the Mortmain Young, 7 Macph. 304. See also, 
 
 Acts. Entwistle v. Davis, Law Angell and Ames, Corp.. 567, 
 
 Rep., 4 Eq. 272; 36 L. J., Ch. 825. fteqq.; Field, Corp., 127, stqq. 
 And in Scotland, the possession of * Davis, Law of Building, etc., 
 
 shares in a joint-stock company Societies, p. 146; cit. Richards . 
 
 holding heritage, whether incorpo- Richards, 2 B. and Ad. 453; 22 
 
 rated or not, does not give the share- Engl. C. L. R. 119.
 
 442 THE LAW OP BUILDING ASSOCIATIONS. [CH. XVII. 
 
 the disburser of the amounts due on each share, is the prop- 
 erty comprehended by the ideal thing called a share, which 
 is "intangible, and rests in abstract legal contemplation," 1 
 perfected in its holder, and becomes susceptible of tangible 
 and visible possession, and legally the subject of such, either 
 actually or constructively. 11 Realization of such shares may, 
 under certain circumstances and restrictions, be achieved at 
 an earlier period by virtue of the rights of withdrawal and 
 anticipation ; * but it is partial only, and rests upon contract 
 and compromise between the society and the member, and in 
 no manner affects the real nature of the interests of share- 
 holders as such in the society. 
 
 Transfer and Assignment of Shares of Stock. 
 
 445. Like notes or bills of exchange, these shares may 
 be transferred by assignment and delivery. For the protec- 
 tion and convenience of the association, the method and 
 formalities of the transfer of its shares are either specified in 
 the charter or left to by-law regulation. In general, the pro- 
 vision is made that the stock shall be transferable only upon 
 the books of the corporation, and even in the absence of such 
 rule, the usual and proper mode of assigning corporation 
 stock is laid down as follows : " An assignment of the stock 
 in writing is made by the former owner of it, with a power 
 of attorney to transfer it on the books of the corporation. 
 Books of transfer are kept for this purpose, and on the pro- 
 duction of these papers, the nominated attorney makes the 
 formal transfer, the old certificate is cancelled, and a new 
 certificate is issued to the new owner."* The signing of 
 powers of attorney to transfer in blank has become a matter 
 of usage, 6 and the delivery of the instrument so signed, to- 
 gether with the certificates of stock, is evidence of an implied 
 authority to fill up the power with the name of the attorney to 
 
 1 Opinion of Folger, J., in Burrall B Kortright v. Bank, 20 Wend, 
 
 e. Bushwick R. R. Co., ubi supra. (N. Y.) 91. See Smith v. Crocker, 
 
 * Compare Slaymaker v. Gettys- 5 Mass. 535; Costen's App., 1 Har- 
 
 burgBank. 10 Pa. St. 373; Gilpin ris (Pa.), 292; Angell and Ames, 
 
 . Howell, 5 Id. 57. Corp., 564; German Union Build- 
 
 3 See ante, 72-74. ing and Savings Fund Association 
 
 4 Folger, J., in Burrall r. Bush- t>. Sendmayer, 50 Pa. St. 67. 
 wickR. R. Co, 75 N. Y. 211.
 
 44C.] THE STOCK OF BUILDING ASSOCIATIONS. 443 
 
 make the transfer, 1 and the proceeding is unobjectionable, 
 if there is a valuable consideration to support the contract.* 
 
 446. The rule, that the stock shall be transferable only 
 on the books of the corporation, being intended merely for 
 the security of the corporation, no force is given to it further 
 than to effect that purpose ;* and even where embodied in 
 the act of incorporation, it does not prevent the title to shares 
 from passing by a transfer otherwise made. 4 As between ad- 
 verse claimants of the stock, possession of the certificate, with 
 the transfer upon it, is often the test of title ; 6 a person to 
 whom shares have been bona fide transferred will, indeed, 
 hold them without any certificate.* But, as the stock-book is 
 the evidence of the relation between the member and the as- 
 sociation, 7 the certificate being such only secondarily, and as 
 the corporation itself, when performing a corporate duty, 
 springing out of the membership relation, and not dealing 
 with its stockholder on the security of his stock on a distinct 
 contract relation," need consult nothing further than its own 
 records, whoever would demand the privileges of a stock- 
 holder being bound to produce his title, and ask to be per- 
 mitted to participate ; * it is evident that an assignment of the 
 stock not entered upon the books, though it passes a perfect 
 title as between the parties to the assignment, is only an equi- 
 table transfer, and, to be made absolutely available, and give 
 the transferee the privileges of a recognized stockholder, must 
 be produced to the corporation, and a transfer effected, or, at 
 least, demanded. 10 Hence, the officers of a building association, 
 
 1 German Union Building and 5 Bunk of Commerce's App., 73 
 
 Savings Fund Association v. Send- Pa. St. 59. 
 
 mayer, ubi supra. 6 Agricultural Bank v. Burr, 24 
 
 "German Union Building and Maine, 256; Same v. Wilson, II). -73. 
 
 Savings Fund Association v. Send- 7 Dohinson T. Ilnwks. l(i Sim. 
 
 mayer, ubi supra. 407; 12 L. T. Rep. 238; 39 Engl. Ch. 
 
 Angell and Ames, Corp., 354. Rep. 406. See ante, 78. 
 
 A transfer of stock not entered upon 8 German Union Building and 
 
 the books of the company is good Savings Fund Association v. Send- 
 
 against all the world, except a sub- mayer, 50 Pa. St. 67. 
 
 sequent purchaser in good faith 'Field, Corp., 132, note 3; 
 
 without notice. People v. Elmore, Bank of Commerce's App., ubi 
 
 86 Cal. 653. mpr,t. 
 
 4 Duke v. Cahawba Nav. Co., 10 I0 Bank of Commerce's App. ubi 
 
 Ala. 82. "a pru.
 
 444 THE LAW OF Bl 1LIIN(, ASSOCIATIONS. [c'H. XVII. 
 
 who, on its expiration, divided the assets among those whom 
 the books showed to be stockholders (the charter and by-laws 
 providing nothing on the subject of transfers, but a book for 
 that purpose being kept by the association), were not held lia- 
 ble to an assignee whose assignment was not entered on the 
 books, and who had given no notice thereof, though he held 
 the certificates, with power of attorney to transfer. 1 More- 
 over, until the transfer is made on the books of the associa- 
 tion, the assignee's title, being merely an equitable one, re- 
 mains liable to every equity subsisting against the assignor.* 
 And a transfer of the shares, entered upon the books by per- 
 mission of the association, to a subsequent tonafde purchaser 
 from the assignor, in whose name the stock has been allowed 
 to remain standing, will destroy all rights and equities in the 
 holder of the stock certificates to the stock itself. 8 Still, the 
 assignment being, even before perfection on the books of the 
 company, indisputably an equitable transfer of the stock, the 
 rule that the assignment of a debt due by a third person is a 
 good equitable transfer of such debt as against a subsequent 
 attaching creditor, notwithstanding no notice of such assign- 
 ment is given to the debtor until after the attachment, ren- 
 ders ineffective an attachment of shares in a building associa- 
 tion standing in the name of the debtor, but assigned to anoth- 
 er party by transfer on the back of the certificate merely. 4 
 
 Restraints upon Transfer. Regulation by By-Law. 
 
 447. The entry or record of the transfer on the corpo- 
 ration books is, therefore, a right which the l>onafide assignee 
 of stock may insist upon, and a duty which the association, its 
 
 1 Bank of Commerce's App. ribi 'Field, Corp., g 110, 132. 
 
 supra. 4 See Stephens v. Stephens, 1 Ashm. 
 
 * Ib. See also Bayard t>. Farm- (Pa.) 190. An attaching creditor 
 ers and Mechanics' Bank, 52 Pa. stands in the shoes of his debt- 
 St. 232; Bury v. Hartman, 4 S. and or, and any equities that could 
 R. (Pa.) 175; Brindle v. Mcllvain, be set up against the latter are 
 9 Id. 74; Gourdon v. Insurance Co. equally arvailable against the for- 
 ofN A., 1 Bin. (Pa.) 430; Wheeler mer. Patten v. Wilson, 10 Ca- 
 . Hughes, 1 Dallas (Pa.), 23; War- sey (34 Pa. St.), 299; Common- 
 del t>. Edwards, 2 Johns. Cas. (N.Y.) wealth v. Watmough, 6 Whart. (Pa.) 
 260: James v. Woodruff, 10 Paige, 117, 137; Forney's App., 59 Pa. St. 
 K Y. Ch. Rep. 541; S. C. 2 Denio, 398. 
 474; Angell and Ames, Corp., g 779.
 
 448.] THE STOCK Of BUILDING ASSOCIATIONS. 445 
 
 officers and agents having charge of the books, are bound to per- 
 form, upon proper demand and proof, and where no rights of 
 the corporation are interfered with. 1 And the possession of the 
 certiticate, with transfer to the holder, or power of attorney 
 executed in blank, is prima facie evidence of equitable own- 
 ership, and renders the stock transferable ; and proof of value 
 paid, without notice of any intervening equity, makes the 
 holder's title unimpeachable. 11 The association has no right 
 to restrain the free exchange of property by trammelling the 
 transfer of its own shares. It would seem to have the right 
 to charge a reasonable fee for the recording of the transfer ; 
 but a by-law requiring any unreasonable formality, or raising 
 any extraordinary impediment to the transfer of stock, would, 
 in the absence of express legislative authority to pass it, be 
 void. 3 
 
 Remedy for Improper Refusal to Transfer. Measure of Damages. 
 
 448. If the transfer of stock, when duly requested, is 
 improperly refused by the corporation, or its officers or agents 
 having charge of its books, the person wronged will have an 
 action on the case, 4 or an action of assumpsit to recover dam- 
 ages or dividends. 6 But, it seems, the existence of the legal 
 remedies precludes the interposition of the extraordinary 
 equity powers for the purpose of compelling a transfer by 
 mandamus* except where the recovery of damages would be 
 an inadequate compensation. 7 The purchaser of shares in a 
 building association is, therefore, not entitled to a mandamus 
 to compel the association to transfer them to him on its 
 books. He has an adequate remedy in a suit for damages. 8 
 
 1 As, for instance, if it have a B Angell and Ames, t/W tupra; 
 
 lien upon it for unpaid installments, Sargent v. Franklin Insurance Co., 
 
 fines, etc. But after payment of 8 Pick. (Mass.) 90. 
 
 these charges, it is again bound to 6 Shipley v. Mechanics' Bank, 10 
 
 transfer. Westoua. Bear River, etc., Johns. (N. Y.) 484. 
 
 Mining Co., 5 Cal. 186. ' Cushman v. Thayer Jewelry 
 
 * Mt. Holly Turnpike Co. v. Manufacturing Co., 76 N. Y. 
 Ferree, 17 N. J. Eq. 117. 365. 
 
 8 Angell and Ames, Corp., 567. 8 State, Galbraith, pros., t>. Peo- 
 
 * Angell and Ames, Corp., 38; pie's Building and Loan Associa- 
 Presbyterian Church t>. Carlisle tion of Camden, 14 Vr. (N. J.) 
 Bank, 5 Pa. St. 345. 389.
 
 446 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 TT rless the particular case is " of such exceptional character 
 tfiut damages recoverable in a suit at law will not adequately 
 compensate the relatorfor the loss of his stock, the writ must 
 be denied. There are some features peculiar to these associa- 
 tions which distinguish them from other stock companies ; 
 but they do not render it impracticable to estimate fairly the 
 value of the shares at any time so as to remunerate the 
 owner of them in damages for their loss, nor do these pecu- 
 liarities, in my judgement," says Van Syckel, J., 1 "furnish a 
 sufficient reason for engrafting an exception upon a well- 
 settled rule of law. Exceptions always, to some extent, 
 render a rule uncertain, and should not be favored unless 
 clearly essential to the promotion of justice." 
 
 449. In an action at law, the measure of damages for 
 improper refusal to transfer, is the actual value of the stock at 
 the time of such refusal.* In applying this rule to the case of 
 building associations, it was held that the plaintiff was entitled 
 to recover the amount which had been paid as dues on the 
 stock up to the time of refusal, with interest thereon from the 
 date of his several payments.' 
 
 Lien of Society upon Shares for Arrears, etc. Levy on Stock Cov- 
 ered by Lien. 
 
 450. The right of lien upon shares owned by members 
 of building associations is conferred by the statutes under 
 which they are incorporated, and extends to all liabilities of a 
 member for installments, fines, and other lawful charges. A 
 provision in the by-laws prohibiting a transfer of shares, upon 
 which and whilst such a lien subsists against them, is analo- 
 
 1 Ib. ; cit. High, Extra-ord. Reme- St. 67; North America Building 
 
 dies, 313; Rex v. Bank of Eng- Association v. Sutton, 35 Id. 
 
 land, Doug. 524; Shipley v. Me- 463 
 
 chanics' Bank, supra ; Kortright 3 North America Building Asso- 
 
 t. Buffalo Commercial Bank, 20 ciation . Sutton, ubi supra. But 
 
 Wend. (N. Y.) 91; 8. C. in error, where the stock has a daily market 
 
 22 Id. 348. value, that value, at the date of the 
 
 9 2 Sedgwick, Meas. of Dam. (7th refusal, would probably be the meas- 
 
 ed.), 143-144; Sargent v. Franklin ure, according to the interpretation 
 
 Insurance Co., 8 Pick. (Mass.) 98; put upon "net value" in Babcock 
 
 Kortright v. Bank, supra. German et al. v. The Middlesex Savings Bank 
 
 Union Building and Savings Fund and Building Association, 28 Conn. 
 
 Association v. Sendmayer, 50 Pa. 302.
 
 450.] THE STOCK OF BUILDING ASSOCIATIONS. *4 * 
 
 gous to similar provisions in other corporations, and proper. ' 
 All other parties attempting to acquire any interest in the 
 shares thus bound are postponed to the claims of the associa- 
 tion. So, too, where a member has formally pledged his 
 stock, or assigned it as collateral security, to the association, 
 his title to it is so far divested that an attachment of it at the 
 suit of a creditor is postponed to the rights of the association 
 to satisfy its claim against the member, to the extent of the 
 debt owing it from him out of the stock, before the attach- 
 ment (binding onjy what remains after the building associa- 
 tion is satisfied) can enure to the benefit of the attachor.' 
 It is going too far, to say that the stock so held in pledge is 
 not the subject of attachment at all, and cannot be sold. " It 
 is true," says Green, Ch., " that a chattel mortgage, after for- 
 feiture in the hands of the mortgagee, is not liable to be taken 
 and sold on execution at law against the mortgagor, on the 
 ground that the legal ownership is in the mortgagee. But 
 the company is not the mortgagee of the stock. There is, it 
 is shown, a formal transfer of the shares to the association as 
 collateral security for the payment of the loans. But the 
 shareholder is not deprived of his title to the stock. He 3 
 still continues to be a member with all the rights of member- 
 ship. He is by the constitution regarded as a stockholder. 
 As such, he is required to pay his monthly instalments on 
 each share. He may vote, act as a director, or other officer, 
 and, in fact, do every act which stockholders may do, except 
 transfer the title to his shares. Even that he may do, subject 
 to the lien of the association. The transfer of the shares to 
 the association is in the nature of a pledge rather than of a 
 chattel mortgage. The shares remain the property of the 
 
 ' Field, Corp., 310, note. chants' Bank v. Cook, 4 Pick. (Mass.) 
 
 9 Early and Lane's App., 89 Pa. 405; Nesmithc. Washington Bank, 6 
 
 St. 411. Id. 824; Quinert. Marbli-head Social 
 
 3 Mechanics' Building and Loan Ins. Co., 10 Mass. 476; Vansands 9. 
 
 Association of New Brunswick v. Middlesex County Bank. 26 Conn. 
 
 Conover et al., 1 McCart. 219 (not 144; Colt v. Ives. 31 Id. 25; Stevens 
 
 disturbed in this particular, by 2 C. . Hurlbut Bank, Ib. 146; Middle- 
 
 E. Gr. 497). See, in support, Allen town Savings Bank . Jarvis et al., 
 
 T>. Dykers, 3 Hill (N. Y.), 593; Dy- 88 Id. 372; DeLisle t>. Priestman, 1 
 
 kers v. Allen, 7 Id. 498; Wilson v. Browne, 176; Richards r. Davis, 
 
 Little. 2 Comst. (N. Y.) 443; Mer- Am. Law Rep., June. 1859. p. 488.
 
 448 
 
 THE LAW OF BUILDING ASSOCIATIONS. [CH. 
 
 shareholder for every purpose, excepting that of defeating 
 the lien of the association. The shareholder may rxcivixj 
 every other control over them. The principle is applied 
 wherever a stockholder pledges his stock to the corporation of 
 which he is a member. ... It is true that by the strict ruk'S 
 of the common law, a pledge could not be taken in execution 
 in the hands of the pledgee. Neither could an equity of re- 
 demption in land, nor goods which had been leased, or levied 
 upon by prior execution, nor bank-notes, nor stocks, be levied 
 upon, in regard to which the strictness of the ancient rule has 
 been greatly relaxed by judicial decisions and by statute. I 
 doubt exceedingly whether the doctrine is applicable to the 
 peculiar nature of the pledge. But, admitting it to be so, the 
 doctrine was designed to operate in favor of the pledgee. His 
 interest, it is admitted, cannot be disturbed by the levy. But 
 if the claim of the pledgee is satisfied, the levy is good. The 
 sheriff may even sell, with the pledgee's assent, or upon satis- 
 faction of his claim. . . . And if the pledgee consents, no 
 third party can object." l 
 
 1 Mechanics' Building and Loan 
 Association of New Brunswick v. 
 Conover et al., ubi supra. The 
 chancellor refers to Scott v. Scho- 
 ley, 8 East. 476: "Goods pawned 
 may be taken in execution against 
 the pawnee in satisfaction of his 
 pledge. And though it is said, 
 that, in the case of a lease of land, 
 and of a stock of cattle for a year, 
 they cannot be taken in execution 
 during the term, that is because the 
 lessor himself could not have dis- 
 possessed the tenant during the 
 year, and of course the lessor's 
 creditor cannot. But, subject to 
 the right of the pawnee in the one 
 case, and of the lessee in the other, 
 the goods may be taken." The 
 reasoning of the chancellor on this 
 branch of the case does not seem to 
 be touched by the ruling of the 
 court in the same case, nom. Her- 
 bert v. The Mechanics' Building and 
 Loan Association of New Bruns- 
 
 wick et al., 2 C. E. Gr. 497, which 
 merely modified the decision in the 
 above case so as to do justice to 
 other parties who appeared for the 
 purpose of enforcing their right to 
 the marshalling of assets. (See 
 post. 460-468.) This was a su- 
 pervening equity, whose recogni- 
 tion cannot disturb the reasoning 
 upon the question whether or not 
 an execution may take shares upon 
 which the society has a lien, or 
 which have been pledged to it, sub- 
 ject to its claims. Compare, how- 
 ever, contra, Badlam v. Tucker, 1 
 Pick. (Mass.) 389 (relating to an 
 equitable interest in a vessel): Hoi- 
 brook v. Baker, 5 Greenl. (Me.) 30 
 clock); Thompson r. Stephens, (10 
 Maine, 27 (horse); Lylc r. Barker, 5 
 Binn. (Pa.) 457 (equity of redemp- 
 tion in land); Haven v. Low, 2 N. 
 H. 13 (equity of redemption in a 
 sloop mortgaged); Sargent v. Carr, 
 12 Maine, 396 (creditor's tendering.
 
 451.] THE STOCK OF BUILDING ASSOCIATIONS. 449 
 
 Right of Society to Enforce Stock Payments by Suit. 
 
 451. l>y virtue of his subscription to the stock of the 
 building association, and the express and implied under- 
 takings he has entered into with it in his original contract of 
 membership, the shareholder is bound to continue the dis- 
 charge of his stipulated dues or stock-payments during the 
 society's existence, or until an end is put to the relation of 
 membership. 1 The capital stock of a building association 
 differs from that of a manufacturing or other corporation, in 
 that, whilst, in the latter, the stock is merely the means of 
 accomplishing the objects for which the concern was designed, 
 in the former, it is itself the end and aim, upon the 
 achievement of which the entire enterprise is perfected and 
 reaches its termination. There is, on the other hand, a 
 similarity between the two classes of corporations in the fact, 
 that, in many of those having nothing in common with 
 building associations, the stock is not all paid up at once, 
 and may, indeed, never be all paid by the subscribers, if, 
 from the profits derived upon such portion as is paid upon 
 the shares at the outset, sufficient can be added to the work- 
 ing capital to render its efficiency, over and above all loans, 
 equal to that originally contemplated. So, in building as- 
 sociations, where the stock is paid up to its par value in 
 gradual and trifling installments, the aim of the management 
 is, by investing these periodical partial payments, to make 
 them contribute, in their turn, to the common fund, and to 
 shorten, as much as possible, the time during which the in- 
 stallments must be paid, and consequently to diminish, to the 
 utmost, the aggregate amount or total percentage payable by 
 each shareholder upon every share subscribed. But, as soon 
 as that which has actually been paid in has, by its own earn- 
 
 the pledgee the amount due on the ' And payments of dues, as well 
 
 pledge made no difference : but see as of fines, must be in cash. The 
 
 Weston v. Bear River, etc., Mining treasurer, even with the acquies- 
 
 Co.,5Cal.l86,thatif the claims of the cence of. the executive officers. h:is 
 
 corporation against the stockholder, no right to accept anything <: 
 
 for which the former has a Hen upon he does, his bondsmen are liable for 
 
 the stock, are satisfied, the assignee any loss. People's Building A> 
 
 of the stock may compel its transfer social ion . Wroth et al., 14 Vr. 
 
 to him on the books). As to marshal- (N. J.) 70. 
 ling of assets, see post, 460-468.
 
 450 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 ings and accumulations, grown equal to the amount originally 
 contemplated as the capital stock of the building association, 
 unlike any other business corporation, whose prosperity would 
 then only be placed upon a solid basis for future operations, 
 the building association has achieved the whole purpose of 
 its existence, and is not only ready, but compelled to disband. 
 Until, however, this purpose is accomplished, every share- 
 holder is bound to continue contributing the installments pay- 
 able, from time to time, upon his stock ;' he is not entitled to 
 special notice of their coming due, as in the case of calls upon 
 the stock of most other corporations, but is bound to observe 
 the provisions of the charter and by-laws as to their periodical 
 recurrence. 8 And if he neglect or refuse to discharge his 
 obligations in this particular, he may be held therefor by the 
 association in an action of assumpsit* besides becoming 
 liable to the imposition of fines and forfeitures under the 
 rules of the society. 4 
 
 Relation of Borrower's Stock-Payments to His Debt to the Society. 
 
 452. In case the member, instead of remaining a mere 
 investor, becomes also a borrower from the building associ- 
 ation, the question as to the relation between the payments 
 made by him upon his stock, and the debt he owes the society, 
 has given rise to much confusion in the decisions of the 
 various courts. In North Carolina it was said that the trans- 
 action must be treated upon the basis of an actual loan of 
 money, and subsequent partial payment therefor by the bor- 
 rower. 6 The same view was taken in Pennsylvania, pre- 
 viously to the decision in North America Building As- 
 sociation v. Sutton* in which, for the first time, the Su- 
 preme Court of that State approached an understanding of 
 the nature of the dealings between the building association 
 and its members. Under the rulings of the cases proceeding 
 upon the theory of partial payments, it follows that every 
 
 1 See ante, 84. 4 See ante, 84-86. 
 
 9 Morrison et al., Rec'rs Chesa- 5 Overby and wife v. The Fay- 
 
 peake Mutual Land and Building etteville Building and Loan Asso- 
 
 Association, . Dorsey, 48 Md. ciation, 81 N. C. 56; Hoskins v. Me- 
 
 461. chanics' Building and Loan Associ- 
 
 8 [Building] Association v. Kribs, ation, 84 Id. 838. 
 
 7 L. -. and Ins. Rep. (Pa.) 21. 35 Pa. St. 463.
 
 452.] 
 
 THE STOCK OF BUILDING ASSOCIATIONS. 
 
 451 
 
 stock-payment made by the borrowing member is a pro tanto 
 reduction of his mortgage debt, 1 and must be defalked there- 
 from with interest from the date of the payment. 8 The fal- 
 lacy of this doctrine is obvious, from the fact that the borrow- 
 er's standing as a member is not merged in his superadded 
 character of debtor, 3 and that, as a member, he is not entitled 
 to an account of profits made by the society upon his contri- 
 butions before the period of its termination (or that of the 
 series to which his stock belongs), 4 whilst the settlement of 
 his liabilities as a borrower is also referred to the winding up 
 of the mutual scheme/ It has, therefore, become a well- 
 recognized doctrine that payments of dues upon stock are 
 not payments to the mortgage debt, and do not, ipso facto, 
 work an extinguishment of so much of the mortgage." The 
 fact that the borrower has assigned his shares to the society 
 as collateral security for his debt, makes no difference; for, on 
 the one hand, this is a recognition of the distinct standing of 
 
 1 Kupfert v. Guttenberg Build- 
 ing Association, 30 Pa. St. 465; 
 Hughes's App., Ib. 471; Philan- 
 thropic Building Association v. 
 McKnight, 35 Id. 470 (charge of 
 Hare, J., p. 471); Building Associa- 
 tion v. Timmins, 3 Phila. 209; 
 Building Association . Reid, Ib. 
 345; Savings Fund v. Murray, 14 
 Leg. Int. 133; Columbia Building 
 Association v. Dobbins, 15 Id. 45; 
 Building Association v. Rowe, Ib. 
 See also Kelly v. Accommodation 
 Saving Fund and Loan Association, 
 2 Phila. 237; Kelly v. Perseverance 
 Building Association, 39 Pa. St. 148; 
 Schnepfs App., 47 Id. 37; Mc- 
 Grath v. Hamilton Building Asso- 
 ciation, 44 Id. 383. 
 
 * Building Association v. Reid, 
 8 Phila. 845. 
 
 See ante, 146-148. 
 
 4 See ante, 128-129, 154-168. 
 
 k See ant, 144, 154-166. 
 
 ' North America Building Asso- 
 ciation v. Sutton, 35 Pa. St. 463 
 f!68), followed in Spring Garden 
 
 Association v. Tradesmen's Loan 
 Association, 46 Id. 493; Link t>. 
 Germantown Building Association, 
 89 Id. 15 (unincorporated); Wat- 
 kins v. Workingmeu's Building As- 
 sociation, 10 W. N. C. 414; 38 Leg. 
 Int. 333; 97 Pa. St. 514; Kreamer 
 v. Building Association, 6 W. N. 
 C. 267 ; Building Association v. 
 Eshelbach. 7 Phila. 189; Building 
 Association v. Wall, Ib. 240; 
 Kingsessing Building Association 
 v. Roan, 9 W. N. C. 15; Spring- 
 ville Building Association v. Raber, 
 33 Leg. Int. 329; 24 Pittsb. L. J. 
 23; Selden v. Reliable Savings and 
 Building Association, 2 W. N. C. 
 481; 32 P. F. Smith, 336; Economy 
 Building Association v. Hunger- 
 buehler, 9 W. N. C. 218; Germauia 
 Building Association v. Neill, 93 
 Pa. St. 322; Early and Lane's App., 
 89 Id. 411; Weiss's App., 5 W. N. 
 C. 423. The same principle is rec- 
 ognized in Barker e. Bigelow, 15 
 Gray (Mass.), 130 (137); Delano t. 
 Wikl, 6 Allen (Mass.), 1 ; Mechanics'
 
 452 THE LAW OP BUILDING ASSOCIATIONS. [CH. XVII. 
 
 the member as a member and as a debtor; 1 and, on the other 
 hand, it is a general doctrine of law, that payments on account 
 of collaterals are not payments on account of the debt they 
 secure.* Thus, in a case which arose in New Jersey, 1 it was 
 contended that the mortgages held by a building association, 
 in which loans were made to members upon mortgages with 
 a collateral assignment of the stock, could not be taxed at 
 their full face value, but only after making allowance th- 
 for stock-payments made. "The unsoundness of the argu- 
 ment in support of this denial," says the court, "consists in 
 not observing the distinct and separate existence of the stock 
 on the one hand, and the bond on the other, the distinct 
 and separate relation borne to the company, on the one hand 
 by its stockholder, and on the other by its borrower. A con- 
 nection is sought to be established between the stook held by 
 the stockholder and the bond held by the company, by virtue 
 of which, as payments are made on the stock, they are to be 
 treated as payments on the bond, so that one steadily merges 
 in or becomes offset by the other. But while, in a general 
 way, this view may seem fair, because an exchange of the one 
 for the other is the result expected to happen, it is still not a 
 view warranted by the terms of the company's constitution, 
 nor by the terms of the bond. By the condition of the bond, 
 the borrower is to pay interest monthly, on the principal 
 borrowed, at the rate of six per cent, per annum. No time 
 
 Building and Loan Association of cbanics' Building and Loan Associa- 
 
 New Brunswick v. Conover, ct al., tion v. Conover, 1 McCart. (N. J.) 
 
 1 McCart. (N. J.) 219 (not over- 219. 
 
 ruled in this particular in 2 C. E. 2 Lord . Oceau Bank, 15 Pa St. 
 
 Gr. 497); Hobokcn Building Asso- 386; Kitteru's Est., 17 Id. 424. 
 ciation v. Martin, 2 Beas. (N J.) s State, Washington Building 
 
 428; Somerset County Building and Loan Association, pros. /. 
 
 Loan and Savings Association v. Hornbacker, 13 Vr. 635, affirming 
 
 Vandervere, 3 Stock. (N. J.) 282; S. C., 12 Vr. 519. And in Ginz v 
 
 State, Washington Building and Stumph et al., 73 Ind. 209, it is said 
 
 Loan Association, pros., fc. Horn- that an assignment of stock m a 
 
 bacher, 13 Vr. (N. J.) 635; Hckeln- building association may be shown 
 
 kaemper v. The German, etc., As- to have been for the purpose of col- 
 
 sociation, 22 Kas. 549. And see lateral security merely, though 
 
 post, 455-457. made, and even if required by the 
 
 1 Springville Building Associa- rules of such association to be made, 
 
 tion v. Raber, 33 Leg. Int. (Pa.) 329; absolute in terms. 
 24 Pittsb. L. J. 23. See also Me-
 
 453.] THE STOCK OF BUILDING ASSOCIATIONS. 453 
 
 is named for the payment of the principal, because if the 
 borrower, in addition to interest, pays also the monthly 
 instalments on the stock, he cannot be compelled to pay the 
 principal in cash, but may, when his stock becomes paid up } 
 exchange his stock for such principal debt. This is so pro- 
 vided in the condition of the bond. But until so exchanged, 
 they are distinct in legal contemplation as well as in form. 
 The stock is a collateral security for, and not a credit on, the 
 bond." 
 
 Borrower's Right to Apply Stock-Payments to Extinguishment oi 
 His Debt. 
 
 453. But whilst the borrowing member's stock-pay- 
 ments do not, of course, operate to the pro tanto extinguish- 
 ment of his debt, it is his privilege, by virtue of his 
 membership, at any time so to apply them ;' and the society, 
 holding a lien upon the debtor's shares for security of his 
 indebtedness, may also, in case of his default to come up to 
 his obligations, use them to satisfy, so far as they will reach, 
 the claim it has upon him. 9 This principle is implicitly 
 recognized in all the English decisions, and those in this 
 country ruled upon their analogy, in which the borrower's 
 right to redeem is conceded upon payment by him of the dues 
 calculated to become payable during the remaining period 
 of the association's existence. 3 His whole debt consisted of 
 the obligation to pay all the dues accruing during the entire 
 course of the society's running, from the time of his advance- 
 ment to that of final winding up. Under the rule established 
 in England and adopted in America, the payments made by 
 him, up to the period when he desires to redeem his property 
 and discharge his obligations to the society, are allowed to be 
 deducted from the whole number of dues, for the payment of 
 which his mortgage stands as security, and the building 
 association is permitted to claim from him only those pay- 
 ments, which, upon calculation, shall appear likely to become 
 
 1 Spring Garden Association v. Building Association, 10 W. N. C. 
 
 Tradesmen's Building Association, (Pa.)414; 38 Log. Int. 833; 97 Pa.St. 
 
 46 Pa. St. 493; Early and Lane's 514: Economy Building Association 
 
 App.. 89 Id. 411 ; North America r. Ilnn.ircrlmehler. 9 W. N. C. 218. 
 Building Association r. Sutton. 35 Mb. ; cn^es in preceding note. 
 Id. 463; Watkins r Workingim 'ii's s Sec ante. ^ 154-168.
 
 154 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 payable during the l>;il;ince of its existence. In other words, 
 the borrower is allowed to apply what he has thus far paid 
 in, i.e., his stock, to the extinguishment of his mortgage debt. 
 His representative, e.g., his assignee for benefit of creditors, 1 
 may also make such application. By it, the stock is relin- 
 quished to the building association, forced upon it,* and its 
 value deducted from the amount of the debt owing to it, and 
 his membership destroyed.* But he ie not bound to take 
 this course. He need not, when sued upon his bond, abandon 
 his interest as a shareholder to the society. He may pay them 
 what he owes and retain his stock. 4 Remembering the 
 duplex character he sustains in the association, being at once 
 its debtor for moneys secured by his obligation, and its 
 creditor for the amount it holds to his credit by reason of his 
 payments into the common fund, the disposition which he 
 may see fit to make, so long as it violates no rights, and con- 
 flicts with no equities which must be protected, is binding 
 upon the association under the general doctrine of a debtor's 
 right of appropriation. 
 
 Society's Right, being Pledgee, to Apply Stock-Payments of the 
 Borrower to Extinguishment of His Debt. Character of Such 
 Application. 
 
 454:. In the absence of such appropriation, however, by 
 the owner of the stock, the building association, holding it 
 under an assignment as collateral security, may, by virtue of 
 its interest as pledgee, elect to treat the payments thereon as 
 payments upon the debt owing by the member. 6 But this 
 appropriation by the society must be prompt and unequivocal. 
 Where the payments made by a borrowing member on stock 
 have been credited to his general account with the building 
 association, the testimony of its officers that they considered 
 
 1 Spring Garden Association v. sociation v. Button, ubl supra; and 
 
 Tradesmen's Building Association, ante, 431. 
 
 ubi supra. * Ib.; Springvihe Building As- 
 
 * Ib. ; North America Building sociation v. Raber, 33 Leg. Int. 
 
 Association v. Sutton, 35 Pa. St. (Pa.) 329; 24 Pittsb. L. J. 23. 
 
 463; Watkins v. Workingmen's 6 Spring Garden Association v. 
 
 Building Association, 10 W. N. C. Tradesmen's Building Association, 
 
 (Pa.) 414; 38 Leg. Int. 333; 97 Pa. 46 Pa. St. 493; North America 
 
 St. 514. Building Association v. Sutton, 35 
 
 8 North America Building As- Id. 463; and case in next note.
 
 455.] THE STOCK OF BUILDING ASSOCIATIONS. 455 
 
 those payments as, in law, payments on tlie mortgage, is not 
 evidence of an application to that purpose. 1 A fortiori, if 
 an association, after full recovery on a member's mortgage, 
 receives payments on account of installments becoming due 
 on such member's shares, it is estopped from denying the ex- 
 istence of the stock. 3 And the receipt-book of the associa- 
 tion, proved by the secretary to be such, containing entries 
 of payments made by a member, is evidence against the 
 building association without producing the officer by whom 
 they were countersigned.* Nor will these entries be rejected 
 because furnishing evidence of other payments than those 
 only for which they are properly admissible. 4 
 
 Value of Stock for Purposes of Application to Debt. 
 
 455. The value of the stock which may thus be applied 
 to the partial extinguishment of the member's indebted- 
 ness before maturity, consists merely of the aggregate of all 
 the subscriptions which have been paid upon it* 6 Upon 
 voluntary repayment, there may be added to this, under pro- 
 visions of statutes and by-laws, a certain portion of the profits 
 of the society up to the time of repayment. 6 But defaulting 
 members can claim no such benefit. 7 Disregarding, there- 
 fore, this element as variable, according to the circumstances 
 of the case, the rule for ascertaining the absolute value of the 
 stock at any given time applicable in reduction of the mort- 
 gage debt, is to find the total gross amount of all the stock- 
 payments made by the member up to the time of default or 
 repayment, allowing no interest upon any of them, 8 and the 
 
 1 Economy Building Association v. Germantown Building Associa- 
 
 v. Hungerbuehler, 9 W. N. C. (Pa.) tion, 89 Pa. St. 15; McGrath r. Il.mi- 
 
 218. ilton Building Association, 44 Id. 
 
 8 North America Building As- 383. 
 
 gociation v. Button, 85 Pa. St. 463. See ante, 154-170. 
 
 8 Ib. i See ante, 173, and post, 156, 
 
 4 Ib. note. 
 
 1 Barker v. Bigelow, 15 Gray 8 It must not be forgotten tliat 
 
 (Muss.), 130; Watkins r. Working- the member is also liable for his 
 
 men's Building Association, 10 W. proportionate share of the exj 
 
 N. 0. (Pa.) 414; 38 Leg. Int. 333; of the enterprise. See McGrath 
 
 1)7 I'a. St. 514. See also Mechanics' v. Hamilton Building Association, 
 
 Building and Loan Association v. 44 Pa. St. 383, and aute, 106- 
 
 Conover, 1 McCart.(N. J.) 219; Link 107.
 
 456 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 interest he has paid upon his loan standing, of course, as 
 interest to his credit. " If his interest has been punctually 
 paid, the remaining claim against him to be discharged is the 
 principal sum loaned. Towards payment of that, the mort- 
 gagor may properly apply the gross amount of all sums paid 
 as monthly dues, computing the same as the amount may In- 
 at the time of the adjustment. But upon such payments of 
 monthly dues the mortgagor can claim no interest, nor require 
 any application of them to be made as payments at the time 
 when received. They are not payments originally required 
 or stipulated to be paid as payments towards any loan. They 
 are paid as the capital of the company, and paid alike by 
 those who do and by those who do not take loans. Those who 
 take loans may apply them, on the final adjustment of the 
 loans, to the discharge of the loans ; but they are to be ap- 
 plied in a gross sum, and without any allowance of interest 
 thereon.' 5 * 
 
 456. S'.\ch is the meaning of the word " value," when it 
 is said that the borrower has the right to apply the value of 
 his stock in part payment of the loan ; and such all that the 
 society need give him credit for when it elects to treat his 
 stock-payments as payments upon his loan. It is obvious 
 that this amount does not represent the value of his shares in 
 another sense, viz. ; that of a proportionate part of the total 
 stock accumulation of the society at the time when the appli- 
 cation is made. This is the value, which, upon final settle- 
 ment of the society's business, is intended to be applied in 
 cancelling the debt. It is the result, primarily, (1) of the 
 member's stock-payments ; (2) of his payments of interest or 
 redemption money ; (3) of whatever fines he has become liable 
 to and has discharged ; (4) of a share of the profits made upon 
 all these payments mingled with the common fund: and 
 secondarily, of a proportionate share of all the like revenues 
 the society has had from other members, their stock-pay- 
 ments, interest, fines, and other charges, as well as from 
 forfeiture of stock, and fortunate speculations with and invest- 
 ments of the whole corporate fund : and, lastly, of a pro- 
 portionate share of the profit made by the society in the way 
 
 1 Barker . Bigelow, 15 Gray (Mass.) 130 (137).
 
 45G.] THE STOCK OF BUILDING ASSOCIATIONS. 45? 
 
 of premiums allowed by all the borrowing members of the 
 association, himself included, whereby the society gains the 
 difference between the amount which it advanced at an early 
 stage of its business, and that which, upon its termination, it 
 is authorized to retain. All these items, when that period is 
 reached, have gone to swell the general fund to such a in;iLr- 
 nitude that every share has actually reached its maximum at 
 the time when the business of the association is ready to be 
 wound up. But a borrower's claim to have all these items 
 taken into account, and to be given credit therefor, at any in- 
 termediate stage, "has no foundation in law or equity.'" It 
 must be remembered that he is, in the first place, a member, 
 and only in the second place, a borrower. In the former ca- 
 pacity he has no right to an account of profits except upon 
 the termination of the scheme." And if the society by its 
 rules, or the statute by its equitable mandate, offers to a with- 
 drawing or repaying member who has done his whole duty 
 in the association, a share in the profits of the concern ; this 
 is not by way of account, but of a fixed bonus whose ascer- 
 tainment requires no intricate calculations ; nor can one who 
 violates the rules of the society, and puts himself outside of 
 the protection of the statute and the benefit of the rules, 
 insist upon the like advantages. 3 As for interest upon his 
 several stock-payments, his contract with the building associa- 
 tion, upon acceding to it, never contemplated such a thing. 
 No such stipulation, expressed or implied, ever entered into 
 the bargain. All he was entitled to, all he reserved to him- 
 self the right to claim, was a share of t\\& profits of the build- 
 ing association's dealings with the whole fund of subscriptions. 
 A part of these profits undoubtedly is made up of the interest 
 upon the investment, from time to time, of each individual's 
 small installments ; but the building association, in settling 
 with the members, returns this to them in the shape of profits, 
 not of interest upon the installments. The building associa- 
 
 1 Mechanics' Building and Loan ciation, 44 Pa. St. 383; and post, 
 
 Association of New Brunswick v. 457. 
 
 Conover et nl., 1 McCart. (N. J.) 9 See ante, 128-129. 
 
 219 (not overruled in this particular 3 Watkins . Workingmen's 
 
 in 2 C. E. Or. 497); and see Me- Building Association, 10 W. N. C. 
 
 Grath v. Hamilton Building Asso- (Pa.) 414; 38 Leg. Int. 333; 97 Pa,
 
 458 TTTE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 tion is not a borrower from its members ; it is their repository, 
 their financial manager. 1 Whatever is realized from the 
 sum total of its ventures, it is bound to account for in a bulk, 
 not by separate items. The member nowhere reserves to 
 himself the right to charge the building association interest 
 upon his stock-payments. He has no such claim to an ac- 
 count or to interest, as a member, and it cannot be assumed, 
 that, by incurring the additional obligations towards the 
 building association involved in the grant of an advancement, 
 his previous rights in respect of it have become enlarged. 
 He continues liable on his original undertaking.* The day 
 for stating the account between him and his business agent, 
 the association, is not hurried. The whole scheme continues 
 without interruption, without modification of any sort or in 
 any degree. The building association does not become a 
 borrower from him, any more than it was before, liable to 
 pay him interest upon his contributions to the common 
 fund. 
 
 457. This question has recently received elaborate ex- 
 amination at the hands of the Supreme Court in Pennsylva- 
 nia, whose decision, pronounced by Paxson, J., s is not only 
 in strict accordance with the opinions expressed by other 
 courts, and with the reason and logic of the whole subject 
 matter, but may be taken as definitively conclusive upon the 
 controversy. The question being as to the value of the de- 
 fendant's stock, for the purpose of application to the extin- 
 guishment of his debt to the building association, upon suit 
 brought against him, the learned Justice says : " Its value for 
 the purposes of this case was just what the defendant had 
 paid on account thereof. This was all ... the law gave him 
 the right to apply. The value of the stock beyond this con- 
 sisted mainly of the profits, in which a defaulting borrower 
 
 St. 514 ; Matterson t>. Elderfield, J See Delano v. Wild, 6 Allen 
 
 L. R, 4 Ch. 207; 17 W. R. 422; 20 (Mass.), 1, and ante, 106-107, 
 
 L. T., N. S. 503. See also Me- 146-150. 
 
 cLanics* Building and Loan Asso- * In Watkins v. The "Working- 
 
 tion of New Brunswick r. Conover men's Building and Loan Associa- 
 
 et al., 1 McCart. 219, and ante, 175. tion of Hyde Park, 10 W. N. C. 414; 
 
 1 See Citizens' Mutual Loan and 38 Leg. Int. 333; 97 Pa. St. 514: 
 
 Accumulating Fund Association D. Sharswood, C. J., and Gordon and 
 
 Webster, 25 Barb. (N. Y.) 264. Truukey, JJ., dtss.
 
 457.] THE STOCK OF BUILDING ASSOCIATIONS. 459 
 
 has no right to particijn.u. This arises from two causes : 1st, 
 The peculiar nature of the contract between building associa- 
 tions and their members; and 2d, The difficulty, if not abso- 
 lute impossibility, of ascertaining the profits until the associa- 
 tion is ready to wind up. A venture in building associations 
 is a peculiar investment. It is much to be feared that many 
 persons of slender means embark in such enterprises without 
 a clear understanding of their particular working. The pres- 
 ent case furnishes an apt illustration of the results in one 
 class of cases. The defendant received but $384, in cash, on 
 his loan ; at the end of 87 months, a little over seven years, 
 he had paid into the treasury the sum of $794. He now has 
 a judgment against him, in addition, for the sum of $518.84r. 
 This disastrous result is the legitimate outgrowth of our 
 building association laws; yet it is not worse than many other 
 ventures in partnership and other transactions, where persons 
 embark in enterprises beyond their means. The loss is not 
 necessarily the fault or result of the law, but of the inability 
 of the defendant to keep his contract with the association. 
 Such investments are profitable or otherwise, according to 
 circumstances. Where the association is prudently managed, 
 and is wound up within the prescribed period, it is always 
 profitable to the non-borrowing members. They participate 
 in the premium which they do not pay. If the association 
 was composed exclusively of non-borrowers, there would be 
 no profits ; if, on the other hand, it was composed exclusively 
 of borrowers, the gain of the individual member would de- 
 pend upon the amount of his premium ; if he had paid less 
 than the average, there would be a profit ; if he had paid 
 more, there would be a loss. Where the association is com- 
 posed of both classes of members, the result to the borrowing 
 member must depend, to a great extent, upon the relative 
 proportion of the two classes, and upon the amount of pre- 
 miums which he had paid. There are, of course, other mat- 
 ters which in a minor degree affect the result ; but the fore- 
 going are the two cardinal principles which underlie the whole 
 matter; and it is further to be observed, that the profits are 
 reserved for those members who continue to the end. For 
 borrowing members who drop out by the way, there is noth- 
 ing but disaster. The defendant dropped out by the way.
 
 460 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 There is nothing in the character of the association, or in his 
 contract, to entitle him, at this stage, to a share of the profits. 
 The law provides but for one such case, and that is a with- 
 drawing member. . . , The defendant was not a withdraw- 
 ing stockholder, nor could he have been, so long as his stock 
 was held in pledge. lie is not entitled to the rights which 
 the law confers upon such stockholders, yet his claim far ex- 
 ceeds what the Act of Assembly ' gives to them. With- 
 drawing stockholders can only claim of the profits such pro- 
 portion as may be fixed by by-laws. Such proportion might 
 readily be fixed by a by-law so as not to work injustice to 
 remaining stockholders. At most it would be an approxima- 
 tion. Here the defendant claims an absolute right to par- 
 ticipate in the entire profits up to the time of the trial of his 
 case ; such right is nowhere to be found, and if it existed, how 
 can it be ascertained with accuracy at this stage of the asso- 
 ciation's business ? Its assets consist chiefly of judgments for 
 money loaned, including some houses which were evidently 
 bought in upon executions. The exact value of the houses 
 can be ascertained only by a sale, and the judgments are 
 worth only what can be realized therefrom ; as such loans are 
 made usually upon small margins, they cannot be regarded as 
 securities having a fixed value. In view of the facts shown 
 by the evidence, that a large number of members had ceased 
 paying up their dues by reason of a supposed defect in the 
 charter of the association, the difficulties of realizing the face 
 of the judgments may be readily appreciated. The ascer- 
 tainment of the real value of the stock can only be arrived at 
 by closing up the affairs of the corporation. This the de- 
 fendant has no right to demand. If, as was contended, he 
 was entitled to it in this proceeding, the most that could be 
 done would be to approximate it. The jury, and even the 
 officers of the company, might place a much higher value 
 upon its securities than could be realized therefrom. In such 
 case the defaulting member would receive more than the 
 members who paid up to the end ; besides, the profits are 
 composed chiefly of the premiums ; they are made up in part 
 of the premium which the defendant agreed to pay. I say 
 
 1 Act of 1859.
 
 458.] THE STOCK OF BUILDING ASSOCIATIONS. 46] 
 
 agreed to pay, for it is a mistake to suppose, as was claimed 
 by the defendant, that he has paid the premium. He only 
 promised to pay it. It was inserted in the judgment note, 
 and is now being collected. The building association law ex- 
 pressly authorizes the plaintiff to recover the premium from 
 a defaulting borrower, yet the defendant's proposition, if sus- 
 tained, would defeat his right in part. We are of opinion that 
 the right to apply the stock in such cases as this, means only 
 the right to apply the payments made thereon." ' 
 
 Borrower's Right of Application Lost by Assignment of Shares to 
 Third Pai "ty. 
 
 458. But the member's right to claim credit even for 
 such value of his stock, when sued by the building associa- 
 tion for his loan, is lost, if he has assigned his shares to a 
 third party. 2 By so doing, he has made a definite appropri- 
 ation of the value of the stock. He cannot afterwards assume 
 to re-appropriate it in violation of that already consummated 
 arrangement. 3 And where a member assigned all his shares 
 as collateral upon a loan from the building association ; and, 
 on obtaining from it a second loan, made a second assignment 
 of the same stock as collateral ; it was held, that he could not 
 subsequently apply the payments made on the stock to the 
 first loan, which had also been secured by judgment, if, before 
 obtaining the second loan, he had made no such appropria- 
 tion of them. 4 The first assignment, as collateral, was not a 
 discharge of the loan to the extent of the installments paid, 
 and the second was an election by the debtor not to treat the 
 first assignment as a partial payment of the first debt, but to 
 pledge all the stock as a living security for the payment of 
 the second. It was, therefore, said, that the payments on the 
 stock should be applied to the second debt, and not to 
 the first, against the consent of the association, except to the 
 extent of what might remain after the second was satisfied. 
 This was said not to be a case of a debt or owing two 
 debts, of which neither he nor his creditor has made any 
 
 1 And it is added that such only ing Fund and Loan Association, 35 
 
 is the effect of the decision in Pa. St. 223. 
 
 Early and Lane's App., 89 Pa. St. * Ib. 
 
 411. Philadelphia Mercantile Loan 
 
 9 Schober v. Accommodation Sav- Ass'n c. Moore, 47 Pa. St. 238.
 
 462 THE LA V OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 application, and which the law will, therefore, apply. It 
 In reliance upon the second assignment that the second loan 
 was made. Had the debtor after the first, and before the 
 second loan, made an assignment of the stock to a third party, 
 he could not have claimed credit for its value on the first 
 debt. 1 This second assignment operated analogously ; the 
 assignment of the stock to a third party would have been 
 a new appropriation, divesting him of the right to appropriate 
 to the debt owing to the building association. The second 
 assignment to the building association itself was likewise a 
 new appropriation drawing after it the loss of the same right, 
 for the same reason." 
 
 Right of Borrower's Representative or Surety to Apply Stock to 
 Debt. Judgment Creditors. 
 
 459. The doctrine that payments on the stock are not, 
 ipso facto, payments to the mortgage, but that either of the 
 parties may so apply them, precludes any mere outsider from 
 either claiming such application, or interfering with it, to his 
 own advantage. The debtor's representative, e.g., his assignee 
 for benefit of creditors,* executor, etc., may exercise the same 
 rights in the premises, which the debtor himself would have had. 
 And it is said that where a member borrows money from the 
 association, and gives a joint note of himself and another per- 
 son, the real estate of the latter being mortgaged as security 
 for the advance, and the borrower's stock being assigned to 
 the association as additional security; this third party has the 
 right, when sued for the debt, to have the stock assigned first 
 sold for the debt. 4 A claim, on the part of the society, that 
 the share is forfeited to it, and that no credit should be given 
 for it, is inequitable and cannot be allowed. The share must 
 be sold, either subject to all dues which have accrued against 
 it since the trial of the case; or freed from all dues accrued 
 prior to the sale : in the latter case, the dues accrued since the 
 trial, and before the sale, to be first paid out of the proceeds.* 
 
 1 Schobere. Accommodation Sav- 8 See Spring Garden Association 
 
 ing Fund and Loan Association, 35 v. Tradesmen's Loan Association, 
 
 Pa. St. 223. 46 Pa. St. 493. 
 
 * Philadelphia Mercantile Loan 4 Masseya. Citizens' Building, etc., 
 
 Association v. Moore, 47 Id. 233. Association, 22 Kas. 624. * Ib.
 
 460.] THE STOCK OF BUILDING ASSOCIATIONS. 463 
 
 On the other hand, where the stock has been assigned to the 
 building association as collateral security, the title to the stock 
 has so far passed from its owner, that a subsequent purchaser 
 of the same stock cannot prevent the building association 
 from applying the sums paid thereon in extinguishment of the 
 borrowing member's debt. Thus, S., the holder of shares in 
 a building association, procured a loan from it, giving a judg- 
 ment upon his real estate, and pledging his shares as collat- 
 eral, lie afterwards assigned the stock to G. The real estate 
 belonging to S. was subsequently sold under a lien junior to 
 said judgment, and the money brought into court for distribu- 
 tion. The building association directed the sums paid on the 
 stock to be applied in payment of the original loan to S. G. 
 appeared before the auditor, and claimed that the judgment 
 held by the building association should be paid in full out of 
 the proceeds of the sale of S.'s real estate. But it was held 
 that he had no standing to make such a demand. 1 
 
 Marshalling of Assets as to Stock Assigned as Collateral and Prop- 
 erty Mortgaged. 
 
 460. But the doctrine does not extend to denying the 
 right in equity of a junior mortgagee to compel the building 
 association, being the first mortgagee, and also holding, by 
 assignment as collateral security, the stock of the borrower in 
 its hands, to resort first to the latter on which it has a sole lien 
 in satisfaction of the debt, before asserting its right upon the 
 land on which it holds a lien in common with the second 
 mortgagee, but anterior to him in point of time. Where this 
 state of facts obtains, "it is quite certain" that the second 
 mortgagee " has the right in equity to require the first mort- 
 gagee (building association) to look, primarily, to the stock 
 in question." a It must, at the instance of the second mortga- 
 
 1 Weiss's App., 5 W. N. C. (Pa.) whose shares were redeemed, and 
 
 423. who executed a trust deed upon hi 
 
 * Herbert v. The Mechanics' property to secure payment of dues, 
 Building and Loan Association et etc. ; then gives another deed to se- 
 al., 2 C. E. Gr. (N. J.) 497, overrul- cure a debt to another party upon 
 ing, on this point, the same case, the same property ; upon his default 
 nom. The Mechanics' Building and in paying dues and interest, and sale 
 Loan Association of New Bruns- of the property by the building as- 
 wick v. Conover et al., 1 McCart. sociation, the debtor and other credi- 
 (X J.j 219. In Virginia, where one tor may elect to have tL? proceeds
 
 464 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 gee, be sold, and the proceeds applied to the mortgage before 
 recourse can be had to the land. 1 Nor will this equity be 
 defeated by a levy upon the stock under a judgment against 
 the mortgagor.* The right of the creditor to marshal the 
 assets of the debtor is absolute against the debtor himself, and 
 cannot be taken away by the subsequent action of other 
 creditors. 8 
 
 461. This acceptation of the law rests upon the ground 
 of the equity doctrine of marshalling of assets. " The 
 general principle is, that, if one party has a lien on, or inter- 
 est 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 a right in equity to compel the former to resort to 
 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." 4 
 " If A. for example, holds a first mortgage against two parcels 
 of real estate, and B. is the owner of a subsequent mortgage 
 against only one of these parcels, natural justice would seem 
 to require that A. should not resort, in the first instance, to the 
 parcel covered by B.'s mortgage, but should endeavor to 
 collect his debt from the lot charged with his encumbrance 
 alone, and resort to the portion covered by B's mortgage only 
 for the purpose of making up any deficiency. Justice further 
 requires, that, if A. does resort, in the first place, to the par- 
 cel covered by B.'s mortgage, the latter, thus disappointed in 
 his security, shall be subrogated to A.'s rights as against the 
 other parcel ; and in this way, while sufficient play is given to 
 
 of sale invested, and the unpaid Reillyt. Mayor etal., 1 Beas (N. J.) 
 
 monthly dues and interest paid 55; Washington Building and Loan 
 
 monthly out of the interest and as Association v. Beaghen et ah, 12 C. 
 
 much of the principal as may be E. Gr. (N. J.) 99. 
 
 necessary, or to have the present * Philippsburg Mutual Loan and 
 
 value of these monthly dues and in- Building Association v. Hawketah, 
 
 terest ascertained, on the principle 12 C. E. Gr. (N. J.) 355. 
 
 of annuities, and paid out of the 8 Herbert v. The Mechanics' 
 
 proceeds of sale to the building as- Building and Loan Association of 
 
 sociation. Winchester Build'g Ass'n New Brunswick et ah, 2 C. E. Gr. 
 
 . Gilbert et ah, 23 Grattan, 787. (N. J.) 497. 
 
 1 Red Bank Association v. Pat- * 1 Story, Eq. Jur. 638. Ex 
 
 tereon, 12 C. E. Gr. (N. J.) 223; parte Kendall. 17 Ves. 514.
 
 461.] THE STOCK OF BUILDING ASSOCIATIONS. 465 
 
 the rights of one party, protection is, at the same time, af- 
 forded to the rights of others." ' It is, indeed, in most cases, 
 practically immaterial which of the two methods the court, in 
 its discretion, may adopt. Both operate essentially to the 
 same end, viz.; that a person who can resort to two funds, 
 shall not, by his option, disappoint another who has a claim 
 on one only. 8 It is not without reason, that courts have pre- 
 ferred the latter method (by subrogation), thus giving the 
 first encumbrancer on both funds the option to proceed on the 
 one or the other ; and if he elect the one upon which the 
 second encumbrancer relies also, then substituting, or subrogat- 
 ing him in the other's place as to the remaining fund bound 
 by his lien. The equities of both to make their claims out of 
 the property of the debtor are equal, and prior in tempore 
 potior in jure, is the principle which governs in such cases. 
 At the same time, while giving him ample latitude to use his 
 preference, the right of subrogation effectually cures and pre- 
 vents the infringement of that other rule of law and good 
 morals alike, sic utere tuo ut alienum non laedas. It has, 
 therefore, been settled in Pennsylvania, that the courts will 
 not enjoin the first creditor from proceeding against the 
 doubly encumbered fund ; but that the rights of the second 
 creditor will be secured by subrogation. 8 Nor can it make 
 any real difference, whether both funds consist of real estate, 
 or whether the one fund only be such, and the other, say, stock 
 pledged as collateral. The principle, the "natural justice" 
 of the thing, is broad enough to eover both cases, and it has 
 been unquestioningly applied, where both were involved, by 
 courts whose opinions are entitled to the highest respect. 4 
 
 1 Bispham, Eq., 340. aside the execution. Evans v. Thi- 
 9 Ramsey's A pp., 2 Watts (Pa.), bault, 2 Miles (Pa.), 251. 
 228; Hastings' Case, 10 Watts, 803; 8 Ramsey's App., 2 Watts, 228; 
 Lloyd v. Galbraith, 32 Pa. St. 103; Hastings' case, 10 Id., 303; Lloyd 
 U. 8. Insurance Co. v. Shriveretal., v. Galbraith, 32 Pa. St. 103; Neffs 
 3 Md. Ch. Dec. 381. The equity App., 2 Watts and Serg. 36; Shunk's 
 to control the order in which several App., 2 Pa. St. 304; McDevltt and 
 properties shall be sold to satisfy a Kay's App., 70 Id. 373. See, how- 
 common encumbrance is one against ever, Kelly t>. Accommodation Sav- 
 tfie execution, not against the judg- ings Fund, 2 Philn. 237. 
 ment. McCormick's App., 57 Pa. * See Ramsey's App., 2 Watts, 
 St. 54. But the court will not en- 228; Ferris r. Crawford, 2 Donio 
 tertaia it upon a motion to set (N. Y.}, 595; Herbert r. The Me-
 
 466 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 462. There is, however, a class of cases decided in Penn- 
 sylvania, in which the right of applying the stock-payments 
 upon the borrower's stock held as collateral by the building 
 association, to the extinguishment of -the debt also secured by 
 mortgage in favor of the same, seems to be confined to the 
 original parties to the transaction, the borrower and the 
 society ; and in which the right of any third party, no matter 
 what may be his equities, to compel the society so to apply 
 said stock-payments, seems to be denied in toto. The decision 
 of Strong, J., in North America Building Association v. 
 Sutton ' first recognized the fact, that payments upon stock 
 were not, ipso facto, payments upon the mortgage debt, but 
 might be so applied by the debtor. This case was cited, and 
 a decision based thereon, in /Spring Garden Association v. 
 Tradesmen's Loan Association? in which Agnew, J., held 
 that the debtor only, and in the absence of any election on his 
 part, the society only, could make the application, and that a 
 purchaser at sheriffs sale could require nothing which the 
 parties did not. In this case it appeared that C. had given a 
 mortgage and assigned stock to the Tradesmen's Loan Asso- 
 ciation, of which he was a member. He subsequently gave a 
 judgment to the Spring Garden Loan Association upon the 
 same property, subject to the first mortgage. After he had 
 made an assignment for the benefit of creditors, the mort- 
 gaged premises were sold at sheriffs sale, to the Spring 
 Garden Loan Association, subject to the first mortgage, and 
 C.'s assignee notified the Tradesmen's Loan Association of the 
 assignment to him, and that he claimed the stock assigned to 
 them as collateral security, requiring them to collect the whole 
 amount of the mortgage, and not to allow any deduction 
 for C.'s payments on the stock. The association thereupon 
 brought an action of scire facias on their mortgage, and the 
 Spring Garden Loan Association took defence as terre-tenants, 
 
 chanics' Building and Loan Asso- *. Mayer et al., 1 Beas. (N. J.) 55; 
 
 ciation et al., 2 C. E. Gr. (N. J.) and see Washington Building and 
 
 497; Red Bank Association t>. Pat- Loan Association t>. Beaghen et al., 
 
 terson, 12 Id. 223; Philipsburg 12 C. E. Gr. (N. J.) 99. 
 
 Mutual Loan and Building Associa- J 35 Pa. St. 463. 
 
 tion v. Hawk et al., Ib. 355; Reilly 46 Id. 493.
 
 4G3.] THE STOCK OF BUILDING ASSOCIATIONS. 467 
 
 claiming that the stock-payments made by C. upon the stock 
 held as collateral by the Tradesmen's Loan Association, plain- 
 tiffs, must be applied to part payment of the mortgage debt. 
 In Link v. Germantown Building Association, 1 property 
 mortgaged to an unincorporated building association was sold 
 at sheriff's sale, upon a judgment against the owners, to L., 
 who does not appear to have had any relations to the owners, 
 except that he became the purchaser of their lands at sheriff's 
 sale, at which notice was given that the purchaser would take 
 the property subject to the mortgage of the building associa- 
 tion. Suit having been brought by the latter, L. defended as 
 terre-tenant, claiming credit for the stock-payments made by 
 the mortgagors. But Allison, P. J., whose opinion was sub- 
 sequently affirmed by the Supreme Court, held, upon the 
 authority of the above cases (which was considered applicable 
 to unincorporated building associations), that, there having 
 been no appropriation of the stock to the mortgage debt by 
 either the borrower or the building association, it could not 
 be compelled by the purchaser at sheriff's sale defending as 
 terre-tenant. 
 
 463. The same doctrine was applied in Economy Build- 
 ing Association v. Xlungerbuehler? to a somewhat compli- 
 cated state of facts. II. was the owner of the property, the 
 building association first mortgagee for $2200, and R. second 
 mortgagee. S. was the holder of a judgment against H. for 
 $1400, upon which H.'s stock, held as collateral security by 
 the building association, was sold to S., subject to the building 
 association's claims upon it. The building association being 
 then in a condition to wind up, i.e., having reached the 
 limit of its chartered existence, the board of directors passed 
 a resolution directing the president and secretary to assign 
 to S. the mortgage it held against H., upon receiving from 
 S. the arrearages due on H.'s stock, $73.14 ; which arrange- 
 ment was consummated. In the interval between the pas- 
 sage of the resolution and the assignment of the mort- 
 gage, suit was brought on the mortgage in the name of 
 the building association, to the use of S., against H. It was 
 
 1 89 Pa. St. 15. 9 W. N. C. 218; 93 Pa. St. 258.
 
 468 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 admitted that II. was, at no time, six months in arrear in 
 the payment of his dues and interest on his mortgage. But 
 judgment was taken against him, by default of apj>ear- 
 ance, for $2346.37, and execution issued. Upon the petition 
 of R., the second mortgagee, however, the judgment was 
 opened, and R. let into a defence. Before the trial R. ob- 
 tained judgment on his (second) mortgage, and purchased the 
 property at sheriff's sale. On trial, under the rulings of the 
 court as to what was evidence of an application of the stock- 
 puyments to the debt, S. got a verdict for $81.75, the amount 
 he had paid the building association for the assignment of the 
 mortgage, with interest thereon, and judgment was entered 
 accordingly. The Supreme Court, Gordon, J., delivering the 
 opinion, reversed the judgment, saying, as to the application 
 of the stock-payments to the mortgage : " Either of the origi- 
 nal parties might have made such application before the levy 
 of S.'s attachment, but this was done by neither of these par- 
 ties, and so S., by virtue of his attachment took the place of 
 H., and as the company might, at H.'s instance, had he re- 
 turned the stock, have paid to him the value thereof, and re- 
 tained the mortgage (sic), so might it have done with S. In 
 such case, however, R. could not be heard to complain, for his 
 position as second mortgagee could not be in the least affect- 
 ed thereby. This stock became collateral security, not for his 
 benefit, but for that of the association, hence its surrender 
 would have put him in no worse position than he was when 
 his mortgage was executed. Surely then R. could not inter- 
 vene to prevent the disposition of collaterals, in which he 
 had no interest." . . . Then, referring to the case of Sjn-nxj 
 Garden Association v. Tradesmen's Loan Association, to 
 show that the borrower might elect to draw his stock, and oblige 
 the society to proceed upon the mortgage, the court continues : 
 " But if the association plaintiff could have paid the value of 
 the stock to S. and retained and collected the mortgage, why 
 could it not retain the stock and assign the mortgage ? It 
 certainly would not put R.'s mortgage in a worse position be- 
 cause S. held the first lien rather than the company. S. was 
 undoubtedly by act of law owner of this stock, which was 
 worth some $2200, and that amount he had the right to de- 
 mand of the company, or its equivalent. The company, on
 
 464.] 
 
 THE STOCK OF BUILDING ASSOCIATIONS. 
 
 469 
 
 the other hand, had the right to retain either the stock or the 
 mortgage ; it chose to retain the stock, and by assigning the 
 mortgage to S., as in that case it w;^ bound to do, it thereby 
 clothed him with all the right it would have had, had it paid 
 him the value of the collaterals and kept the mortgage. This, 
 however, was a matter for themselves, a matter with which 
 II. had nothing to do." ' 
 
 464. These are the principal cases upon which the Penn- 
 sylvania doctrine rests. 4 They all profess to build upon 
 North America Building Association v. Sutton* That, 
 however, was an action brought against the building associa- 
 tion by the assignee of a borrowing member's shares, for un- 
 
 1 It is needless to point out the 
 effect of this adjudication upon the 
 unfortunate mortgagor, who thus, 
 after having paid into the building 
 association enough money to make 
 his shares worth $2200, lacking 
 only $73.14, finds the mortgage 
 which he intended to pay off with 
 that amount standing undiminished 
 against him, in the hands of another 
 creditor, who paid $73.14 for it, 
 and holds a judgment against him, 
 besides, for $1400, less the amount 
 bid upon the shares at the execution 
 sale, when they were sold, subject 
 to the building association's pleas- 
 ure, as to whether or not it would 
 apply them to the mortgagor's 
 debt. Again, what equities had 
 8. superior to R? It has been 
 decided again and again that the 
 sale of stock which the building 
 association holds as collateral vests 
 nothing in the buyer until after 
 the building association is satis- 
 fied (Early and Lane's App., 89 
 Pa. St. 411; and ante, 459), and 
 that an assignor of such stock can- 
 not require the building associa- 
 tion to make its claim out of the 
 real estate on which it also holds 
 a lien (Weiss's App., 5 W. N. 
 C. 423). How then can it be said 
 that S. had u right to demand $2200 
 
 from the building association, or 
 its equivalent? or that the society 
 was bound to assign him the. mort- 
 gage, if it satisfied its own claim 
 out of the stock? The previous 
 decisions in Pennsylvania recognize 
 no such obligation, and it certainly 
 could not exist where there was a 
 second mortgagee of the land, 
 whose claim to subrogation, to the 
 one fund or the other, was at least 
 equal to that of a mere judgment 
 creditor who has attached stock in 
 which he can take nothing until 
 after the society's claim has been 
 satisfied. If it becomes a question 
 between a mortgagee or purchaser, 
 and a judgment creditor, the weight 
 of decision is, that the equities of 
 the former are stronger than those 
 of the latter. 
 
 9 See also Springville Building 
 Association v. Raber, 33 Leg. Int. 
 329; 24 Pittsb. L. J. 23; Building 
 Association v. Eshelbach, 7 Phila. 
 189; Selden v. Reliable Savings and 
 Building Association, 32 P. F. Sm. 
 336; Krcamer v. Springfield Build- 
 ing Association, 8 W. N. C. 267; 
 Association v. Wall, 7 Phila. 189; 
 Kingsessing Building Association v. 
 Roan, 9 W. N. C. 15. 
 
 35 Pa. St. 463.
 
 470 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 justly refusing to permit the transfer upon the corporation 
 books. The society had obtained judgment against Sutton 
 for the full amount of the mortgage, less the premiums, which 
 were not recoverable under the statutes governing the case. 
 This amount had been paid by the assignee of the shares to 
 the building association, and upon its refusal to recognize him 
 as a shareholder the suit was instituted, Sutton being the 
 nominal, the assignee the equitable, plaintiff. And all that 
 that case assumed to decide was, that the positions taken by 
 the court in Guttenberg Building Association v. Kupfertj 
 and Hughes '# App.? were " not to be regarded as laying down 
 the rule that payment of dues on the stock, ipso facto, works 
 an extinguishment of so much of the mortgage. The debtor 
 may so apply it, but the payment itself is not an application 
 of the money to the reduction of the mortgage. To hold that 
 it is, would be giving to the associations additional facilities 
 for obtaining excessive interest. The debtor is not compelled 
 to give up his stock, whenever suit may be brought upon his 
 bond or mortgage. Such would, however, be the necessity 
 of his case, if the law applied, against his consent, the instal- 
 ments paid by him upon his stock, to the discharge of his in- 
 debtedness for the money borrowed." The rule, therefore, 
 as first laid down, was designed for the protection of the 
 member against oppression by the society. Only these two 
 were before the court, and what was said upon adjudication of 
 their rights had reference to two parties only. No third per- 
 son's equities formed any element in the case, and the court cer- 
 tainly had no intention of deciding what the remotest bearing 
 of the controversy presented could not bring before them, or 
 even suggest. It was established as a rule of justice, and not as 
 an engine of iniquity, whereby a debtor, with the connivance 
 of the building association of which he is a member, perchance 
 a director, may keep alive a first mortgage upon his property, 
 whilst his ~bon.afide creditor continues helplessly holding on 
 to a second mortgage, the mortgagor, in the meanwhile, 
 himself drawing out of the treasury and applying to foreign 
 purposes the fund intended for, and slowly gathered during 
 a series of years, with the legitimate object of extinguishing 
 the prior encumbrance. Nor was that rule, judging from the 
 1 30 Pa. St. 465. Ib. 471.
 
 464.] THE STOCK OF BUILDING ASSOCIATIONS. 471 
 
 nature of the circumstances under which it was laid down, 
 ever meant to assert the unquestionable right of either party, 
 uninfluenced by the just claims and expectations of third per- 
 sons, to exercise a capricious or malevolent discretion in 
 throwing the entire burden of a debt, secured by two kinds 
 of securities, upon the one, though it is the only protection 
 available for the other creditor, in utter disregard of the equi- 
 table doctrines as to marshalling of assets and subrogation, 
 whose function is to prevent just that species of iniquity and 
 hardship which have resulted from their rejection under the 
 misunderstood formula, ' payments upon stock are not pay- 
 ments to the mortgage.' Those doctrines are recognized and 
 applied in Pennsylvania in cases to which building associa- 
 tions are not parties, 1 and there is no reason why these should 
 form an exception, as is shown by the application of the same 
 principle to them in other States. Where the courts are in 
 the habit of adopting the method of subrogation, rather than 
 that of restraint upon the option of the doubly secured cred- 
 itor, in availing himself of the one or the other of the funds 
 at his command, the same practical result is attained. The 
 former is an active interposition of the court, which is largely 
 a matter of discretion under the circumstances of the case, 
 and which it may become difficult to enforce, except in chan- 
 cery proceedings ; the latter, a legal consequence, a silent op- 
 eration of law, whose simple recognition is sufficient to pro- 
 duce the desired results under any form of procedure. If, 
 however, the effect of the decisions in that State is, to deny 
 the applicability of the principle itself to cases in which build- 
 ing associations hold both mortgage and assignment of stock 
 as security for the same debt, whilst another creditor has but 
 a second mortgage upon the same premises, and in similar 
 cases, all that can be said of them is, that they are in conflict 
 alike with reason and with justice and equity, as expounded 
 by well-considered and respectable authorities in all the courts 
 of the civilized world, and by the elaborate discussions of the 
 most eminent writers upon the subject. 
 
 1 Ramsey's App., 2 Watts, 228; App., 2 Pa. St. 804; McDevitt's 
 
 Hastings' Case, 10 Id. 303; Lloyd v. App., 70 Id. 373; Carpenter t>. 
 
 Gnlbraith, 33 Pa. St. 103; Neff's Koons, 20 Id. 222; Hansell r. Lutz, 
 
 App., 2 Watts and Serg. 36; Shunk's Ib. 484; Holt v. Bodey, 18 Id. 207.
 
 472 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 465. Nor is the recognition of these principles at all 
 at variance with the rule that payments on stock are not, 
 of course, payments to the mortgage. The stock and the 
 mortgage are, undoubtedly, two separate things. Like two 
 parallel lines, starting from opposite extremes, growing in 
 opposite directions at equal speed, passing along side by side 
 until they both reach equal lengths, the one ending beside 
 the point from which the other started, yet never meeting, 
 the stock is never merged in the mortgage, nor the mort- 
 gage in the stock. The right of the shareholder to control 
 his stock remains intact, along with the like right of the 
 building association to enforce the mortgage against the 
 debtor, and the land mortgaged is the primary source for the 
 payment of the mortgage debt. 1 "Where, therefore, the mem- 
 ber does in fact retain an unqualified ownership of his stock, 
 there can be no talk of marshalling assets or of subrogation ; 
 for the building association has only the mortgage to look to 
 for its money. But where the borrower, or the law, gives the 
 association a lien upon his stock, collaterally to the lien upon 
 his land, the right of the subsequent mortgagee of the same 
 premises " is absolute" to compel application of the fund 
 upon which he has no lien, whilst the building association 
 has, before allowing the latter to deprive him of the possibil- 
 ity of making his own claim, by resorting for its own satis- 
 faction to the land upon which they both have encum- 
 brances : or, at least, he must be allowed subrogation to the 
 rights of the building association upon the other lien which 
 it might, but preferred not to, resort to for payment of its 
 claim. 
 
 466. It stands to reason that the doctrine of the marshall- 
 ing of assets and subrogation has no place where it is super- 
 seded by positive contract between the mortgagor and the 
 purchaser of the mortgaged premises ; whether, by the agree- 
 ment, the latter take the property expressly subject to the full 
 
 1 See Link v. Germantown Build- gage. Cooley's App., 1 Grant (Pa.), 
 
 ing Association, 89 Pa. St. 15; Han- 401. But where there are two se- 
 
 sell v. Lutz, 20 Id. 484. The mort- curities for the same debt, each must 
 
 gage is an appropriation of the land bear its share. Carpenters. Koons, 
 
 to the payment of that particular 20 Pa. St. 222; Hansell v. Lutz, Ib. 
 
 debt, binding upon a purchaser sub- 484; Holt P. Bodey. 18 Id. 207; Fer- 
 
 sequent to the giving of the mort- nav. Crawford, 2 Denio(N.Y.), 595.
 
 407. J THE STOCK OF BUILDING ASSOCIATIONS. 473 
 
 face-value of the mortgage, or the former consent to reduce it 
 by the amount of the stock-payments standing to his credit. 
 The latter arrangement is, of course, binding upon the build- 
 ing association, subject to its claims against the stock, and if 
 the purchaser, being a mere stranger, buy subject to the mort- 
 gage, its whole amount must be presumed to have entered 
 into his calculation as to the value of the property, and the 
 price paid by him to have been fixed with reference to it. 1 
 If, buying distinctly subject to it, he was the holder of a 
 second mortgage upon the land, he is in the position of one 
 who has accepted, in discharge of his claim, the property such 
 as it is, i.e., subject to all the liens resting upon it, and the 
 primary source of their satisfaction, 11 and his mortgage is 
 merged. In the one case, he is a mere stranger, buying sub- 
 ject to a patent claim ; in the other, a satisfied creditor. 
 
 Standing of Judgment Creditors as to Marshalling of Assets. 
 
 467. Whether a mere judgment creditor is surrounded 
 by the same potent equities which protect a second mort- 
 gagee, or purchaser, in demanding the application of these 
 principles, is a question which it is difficult to determine from 
 the authorities. As between the two classes, in reference to 
 the questions arising upon the marshalling of assets, it is said 
 that judgment creditors have not the high equities belonging 
 to purchasers and mortgagees. " A creditor who has done 
 nothing more than to convert his debt, subsisting in the form 
 of a contract, into a judgment, has no claim but that of dili- 
 gence, to the favor of equity. Neither natural justice nor 
 public policy enacts a preference for him over adverse claim- 
 ants."' Thus, C. owed the building association money, 
 secured by mortgage and an assignment of stock as collateral. 
 C. gave H. a second mortgage on the same land. II., later on, 
 had to take the land to save at least a part of his claim. So 
 far, the case was clear, that the building association must look 
 first to the stock for its money. But, Y., Z., creditors of C., 
 had obtained judgment against him, and levied on his stock 
 
 1 See The People's Savings Bank * Herbert v. The Mechanics' 
 
 anil Building Association v. Collins, Building and Loan Association of 
 
 27 Conn. 145. New Brunswick, 2 C. E. Gr. (N. J.) 
 
 * See Cooley'sApp., 1 Grant (Pa.), 497. 
 401.
 
 474 THE LAW OP BUILDING ASSOCIATIONS. [CH. XVII. 
 
 in the hands of the building association, asking the court to 
 compel the latter to make its money out of the land, so as to 
 benefit them in regard to the stock. This was refused. 1 
 
 Effect of Rights of Third Parties upon Claim for Marshalling of Assets. 
 
 468. And the doctrine of the marshalling of assets will 
 not be applied to the injury of third parties, over whom the 
 person claiming the benefit of the principle has no superior 
 equities.* Where, therefore, M. executed a mortgage on two 
 lots of ground to the Trenton Mutual Loan Association, as- 
 signing to them, at the same time, as collateral security, five 
 shares of stock, then gave complainant a mortgage on one of 
 these lots, and finally, after the execution thereof, assigned to 
 S. and O. his interest in the five shares of stock ; it was held, 
 that, whilst the complainant could require the building asso- 
 ciation to sell first the lot which was exclusively covered by 
 its mortgage, he had no equity to compel the appropriation of 
 the stock to its payment, Williamson, C., saying: ''The 
 question is what equity has the complainant to take their 
 (the purchasers of the stock) property for the relief of his 
 security ? While the common debtor owned the stock, there 
 was an equity, as between him and the complainant, that in 
 enforcing the mortgage securities, the stock should be applied 
 to the payment of the mortgage to which the debtor had 
 
 1 Ib. See, similarly, Weiss's App., if the land of the wife be mortgaged 
 
 5 W. N. C. (Pa.) 423. In Lodge . for the husband's debt, a subsequent 
 
 Lysely, 4 Sim.70; 6 Engl. Ch. R.37, judgment creditor of the husband 
 
 the equitable interest of a purchaser has no standing to claim that the 
 
 for value, before conveyance, was mortgagee shall proceed first upon 
 
 preferred to the claim of the judg- the property of the wife, because 
 
 ment creditor of the vendee. Nor is the latter's equity is superior to that 
 
 a judgment creditor a purchaser or of the husband, and necessarily so 
 
 mortgagee within the letter or spirit to the equities of his creditors, 
 
 of Art. 24, 16 of the Maryland Reynolds v. Tooker, 18 Wend. (N. 
 
 Code (Knell . The Green Street Y.) 591. See also Ayres T. II us- 
 
 Building Association, 84 Md. 67); tard, 15 Conn. 504; John v. Rear- 
 
 nor of a similar statute in Pennsyl- don, 11 Md. 465. Nor can a hen 
 
 vania. Rodgers v. Gibson, 1 Yeates, creditor invoke, under the doctrine 
 
 111; Hiester V. Fortner, 2 Binn. 40; of marshalling, any security taken 
 
 Cover v. Black, 1 Pa. St. 493 ; Cad- by another, which had not become 
 
 bury v. Duval, 1 Am. Law Reg. a lien at the time when he secured 
 
 109. his own. Miller v. Jacobs, 3 Watts 
 
 * Thus it has been decided, that, /Pa.), 477; S. C. 5 Id. 208.
 
 469.] THE STOCK OF BUILDING ASSOCIATIONS. 475 
 
 pledged it, in such manner as to relieve the complainant's 
 security. Does that equity follow it in the hands of a lona, 
 fide purchaser without notice ? The complainant had no lien 
 upon the property, either equitable or legal. He had the 
 right merely to invoke the aid of a court of equity to marshal 
 the securities for his relief. This right does not follow the 
 security into the hands of a bona fide purchaser without 
 notice. The rule that has been stated as a general one ' has 
 its qualifications, and is never applied except where it can be 
 done without injustice to the creditor, or other party in in- 
 terest, having a title to the double fund, or injury of a third 
 person, over whom the party claiming the benefit of the prin- 
 ciple has no superior equity. There certainly can be no 
 equity in permitting the complainant to appropriate the 
 property of these innocent persons to relieve his security. 
 They purchased subject only to the mortgage of the associa- 
 tion. 
 
 " The contract between the association and the mortgagor 
 was, that the stock should be only additional security to the 
 land embraced in the mortgage. The complainant now seeks 
 to change the contract to the prejudice of these third persons. 
 They purchased without notice of his equities, if he had any. 
 They are innocent purchasers. There was nothing to put 
 them on inquiry. Notice of the mortgage to the association 
 did not require them to search the record, for the purpose of 
 ascertaining whether there might not possibly exist some 
 equities between that and other mortgages to affect the title 
 of the stock." a 
 
 Notice of Subsisting Rights to Compel Resort to One of Two Funds. 
 
 469. If there are any equities to compel the prior lien 
 creditor to recover satisfaction from any particular fund, the 
 subsequent creditor must notify him thereof; for a prior 
 creditor is not bound to know of the existence of any subse- 
 quent encumbrance. 3 The creditor, therefore, having a lien 
 
 1 See rule above quoted from Association's App., 92 Pa. St. 200. 
 
 Story's Eq. Jur., 633; see ante, See also Bank of Pennsylvania v. 
 
 % 461. Winger, 1 Rawle (Pa.), 295; Konig- 
 
 1 Reilly v. Mayer et al., 1 Beas. maker v. Brown, 2Har. 274; Adams 
 
 (N. J.) 55. v. Heffermnn, 9 Watts, 529. And 
 
 3 Uniontown Building and Loan the equity to control the order in
 
 476 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVII. 
 
 upon two funds, does not, by releasing one of them, prejudice 
 his right as to the other, unless expressly notified of a .<ul>M-- 
 quent encumbrance which is a lien on one only of the funds, 
 and cautioned against diminishing his security. And the re- 
 cording of the subsequent encumbrance is not notice to him.' 
 But where the building association, holding, bc.-ides a mort- 
 gage upon the borrower's land, an assignment of his stock as 
 collateral to his mortgage, released the stock, with actual 
 notice of the existence of a subsequent mortgage on the land, 
 it was held that the prior mortgage was, so far as the right of 
 the subsequent one was concerned, satisfied to the extent of 
 the value of the stock.* 
 
 Taxation upon Capital- Stock. 
 
 470. Building associations, in the absence of any special 
 exempting legislation, are liable to taxation upon their capital 
 stock under general laws providing for the same upon the 
 stock of other corporations. 3 The fund which has accrued 
 from monthly payments on shares, from premiums and inter- 
 est on loans, and from fines, is the full amount of the capital 
 
 which several properties shall be recourse to the stock for the pay- 
 sold to satisfy a common encum- ment of the debt, before looking to 
 brance is one against the execution, the land, upon which both mort- 
 not against the judgment. Me- gages rested. 
 
 Cormick's App., 57 Pa. St. 54. 3 The Bourgignon Building As- 
 
 But the court will not entertain it sociation v. The Commonwealth, 10 
 
 upon a motion to set aside the exe- W. N. C. (Pa.) 161 ; The Excelsior 
 
 cution. Evans v. Thibault, 2 Miles Building Association v. The Com- 
 
 (Pa.), 251. monwealth, Ib. The Act of 10 
 
 1 Taylor's Ex'rs v. Maris, 5 Rawle Apr., 1879, exempted building as- 
 
 (Pa.), 51 ; Quakertown Building and sociations from taxation upon stock. 
 
 Loan Association t>. Sorver et al., At the same session of the Legisla- 
 
 33 Leg. Int. (Pa.) 259; Patty v. ture, the Act of 7 June, 1879, was 
 
 Pease, 8 Paige, 277; Stuyvesant v. passed. This was a general revenue 
 
 Hone, 1 Sandf. (N. Y.) 419; Reilly act, imposing taxes upon all cor- 
 
 v. Mayer et al., 1 Beas. (N. J.) 55 porations except such as were 
 
 (59); Cheeseborough v. Millard, 1 named therein, among these, "sav- 
 
 Johns. Ch. (N. Y.) 409. ings institutions when they de- 
 
 * The Washington Building and clare no dividends." The court 
 
 Loan Association v. Beaghen et al., held the later act repealed the 
 
 12 C. E. Or. (N. J.) 99; because the former, and that building associa- 
 
 subsequent mortgagee had the right tions were not exempted by the Act 
 
 to compel the building association, of 7 June, 1879. 
 being the prior mortgagee, to have
 
 470.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 477 
 
 stock and accumulated surplus of such associations; the 
 former being the aggregate of the monthly payments on 
 stock, which, by the fundamental law of the association, are 
 made obligatory on all stockholders alike ; while other pay- 
 ments, which are in effect optional with those who make 
 them, represent the profits of the scheme, and make up the 
 accumulated surplus.' 
 
 CHAPTER XVIII. 
 
 DISSOLUTION AND EFFECTS OF DISSOLUTION. 
 
 471. Methods of termination of building associations. 
 
 472. Events whose happening ipso facto ends corporate existence. 
 
 g 474. Dissolution by voluntary agreement of stockholders and surren- 
 der of franchise. 
 
 476. Surrender may be inferred under certain circumstances. 
 
 477. Dissolution by act of Legislature. 
 
 478. Dissolution by decree of court. 
 
 479. Grounds of forfeiture of franchises. Who entitled to ask it. 
 
 482. Rights of and grounds for appointment of receiver by court. 
 
 485. Insolvency. Distribution of assets. 
 
 488. Persons entitled to ask for appointment of receiver. 
 
 490. Right of members to ask interposition of court to wind up 
 society, when shares at par. 
 
 492. Financial condition which must be shown to exist. Mortgages 
 of members not assets for winding up. 
 
 493. Effect of expiration of charter limitation upon society's corpo- 
 rate existence. 
 
 1 State, The Washington Build- to make any deduction from the 
 
 ing and Loan Association, pros., amount stated; the commissioners 
 
 . Creveling, 10 Vroom (39 N. J. of appeal sustained his decision ; and 
 
 L. R.), 465; S. C. affirmed, 11 Vroom the court refused to disturb the as- 
 
 (40 N. J. L. R.), 192. In this sessment, as an actual valuation of 
 
 case the secretary of the build- the stock, shortly after, showed an 
 
 ing association, when called upon excess of $4000 over that amount; 
 
 by the assessor, returned to him the assessment tax being upon the 
 
 $101,400.00, as the amount of bonds, full amount of the capital stock and 
 
 mortgages, and notes then held by, accumulated surplus. See also 
 
 the association as securities for State, Washington Building and 
 
 money loaned to its stockholders Loan Association, pros., . Horn- 
 
 and others, as provided for in its backer, Ib Vr. (N. J.) 635; ante, 
 
 constitution. The assessor declined 440 and notes.
 
 478 THE LAW OP Bl'Il.lUNt, ASSOCIATIONS. [CH. XVIII. 
 
 495. Subsisting liabilities of society. 
 
 496. Effect of dissolution upon obligations of borrowing members. 
 Exceptions. 
 
 Methods of Termination of Building Associations. 
 
 471. The corporate existence of a building association 
 is terminated (1) first by the death of its members ; (2) by 
 the expiration of the franchise under original charter limita- 
 tion upon its continuance; (3) by a valid and executed agree- 
 ment of its members, or voluntary surrender of the corporate 
 franchise ; (4) by the action of the Legislature ; and (5) by 
 the decree or interference of court. 
 
 Events Whose Happening ipso facto Ends Corporate Existence. 
 
 472. The events whose happening put, ipso facto, an 
 end to the society's existence are only the first two men- 
 tioned. As in all other corporations, the one is the death of 
 all or an integral essential part of its members, 1 where there 
 is no means of repairing the breach. The other is the expira- 
 tion of the time for which the corporation was created, where 
 the period is fixed by the constating instrument or by the 
 general law.* It is immaterial whether the limitation as to 
 time be contained in the general law only, or in the charter 
 only, or in both. If the statute fixes the maximum time, the 
 omission to limit it by charter to conform with the statute, 
 whilst it is a defect, is not a fatal defect in the instrument, 
 nor such as to impair the building association's corporate 
 existence. The limitation will be supplied from the general 
 law, and treated as embodied in the charter to conform with 
 it. s Any charter grant, under the general law, of a period in 
 excess of its provisions will be simply void. 4 
 
 473. Except as effected by the happening of one of 
 these events, there is no such thing as an ipso facto dissolu- 
 tion of the corporation. The misuser or nonuser of the 
 franchise will not do it.* The insolvency of the society,' or 
 the neglect or refusal of members to continue their stock- 
 
 1 See Angell and Ames, Corp., % * See ante, 309, and post, 479- 
 
 768; Field, Corp., 490. 481, and ch. xix. 
 
 9 See Angell and Ames, Corp. , * Gormerly v. The Port Richmond 
 
 778 a; Field, Corp., 481. Building and Loan Association et 
 
 1 Miller's Est, 2 Pears. (Pa.) 248. al., 3 W. N. C.. (Pa.) 11; and see 
 
 4 See ante, 64. post, 485.
 
 474.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 479 
 
 payments will not do it. 1 The mere omission to elect officers 
 will not accomplish it,* even where this contingency is not 
 specifically provided for in the charter or general law.' It is 
 the stockholders, and not the officers, that constitute the cor- 
 poration. 4 The arrival of the shares at the value fixed as 
 the ultimate one in the charter, does, indeed, necessarily 
 bring the career of the association to a close. " Whenever 
 the assets of the corporation become equal to the par value 
 of all its stock, it ceases to exist, except for the purpose of 
 winding up its affairs." 6 The precise period, however, when 
 this occurs is so much a matter of calculation, based upon 
 knowledge necessarily within the possession of the officers of 
 the association exclusively, that its effect in dissolving the 
 corporation can be obtained only in one of two ways, either 
 by voluntary winding up, or by a decree of a court, upon 
 investigation of the affairs of the society, at the instance of 
 one competent to demand it, and upon proof that the time 
 has actually arrived when the assets of the corporation have 
 become equal to the par value of all its stock.* 
 
 Dissolution by Voluntary Agreement of Stockholders and Surrender 
 of Franchise. 
 
 474. It is a well-settled doctrine, that, in the absence of 
 charter or statutory provisions to the contrary, a private cor- 
 poration for pecuniary gain may dissolve by surrender of its 
 franchises by agreement among its members. " The question 
 as to the unanimity required by the corporators in order to 
 accomplish a voluntary surrender of corporate franchises may 
 depend upon the provisions of the charter. If there is no 
 provision upon this subject, and no definite period of limita- 
 
 1 Hoboken Building Association P., Gormerly v. The Port Richmond 
 
 v. Martin, 2 Beas. (N. J.) 428. See Building and Loan Association et 
 
 also Watkins t>. Workingmen's al., 3 W. N. C. 11. As to the fact 
 
 Building Association, 10 W. N. C. of there being no officers as a ground 
 
 <Pa.)414; 38 Leg. Int. 333; 97 Pa. for asking dissolution, see post, 
 
 St. 514; Hekelnkaempcr t>. The Ger- 484 
 
 man Building Association, etc., 22 3 Hoboken Building Association 
 
 Kas. 549; Thomson v. Ocmulgee t>. Martin, ubi supra. * Ib. 
 
 Building and Loan Association, 56 5 Hagcrman et al. . The Ohio 
 
 Oa. 350. But see post, 501-502. Building and Savings Association, 
 
 8 Hoboken Building Association 25 Ohio St. 186. 
 
 c. Martin, ubi supra. See also, S. See, therefore, post, 493-494.
 
 480 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVIII. 
 
 tion to corporate existence, it has been uniformly held tli;it :i 
 majority may, by resolution, surrender its charter ; but if it i.s 
 otherwise provided in the constating instruments, or if the 
 duration of the corporation is fixed by them, unanimity of the 
 stockholders is held essential to a surrender/' ' In the C;IM- 
 of building associations, the period of duration is usually iixcu 
 either by charter or by general law. Hence the action of 
 members looking towards a dissolution by agreement must be 
 unanimous. A mere majority cannot force it upon the rest, 
 against what the latter conceive to be their interests. So, 
 it was held in Pennsylvania that the borrowing stockhold- 
 ers, who constituted the whole membership of the building 
 association, except 37, who were non-borrowers, could not, in 
 order to wind up the concern, before the time limited by the 
 charter, compel the few non-borrowers to accept a sum per 
 share less than the amount fixed by charter ; and the prelim- 
 inary injunction was continued." 
 
 Even in the absence of a distinct limitation upon a build- 
 ing association's continuance, expressed, by the charter or 
 general statute, by naming the number of years for which the 
 franchise is granted; the fact that each individual member 
 has in the concern an interest accumulating towards a stipu- 
 lated final amount at a rate giving sufficient data to calculate, 
 with tolerable accuracy, the period during which his interest 
 will continue, so fixes the necessary duration as to him, that 
 it would appear, that, upon this ground, too, unanimous con- 
 sent must be obtained in order to effect a valid agreement 
 for the surrender of the franchises. Different from most 
 other corporations, the charter of a building association im- 
 poses upon it the working out of a certain task, 3 within a 
 
 1 Field, Corp., 487, where, and Acts 9 Apr. 1856, 1 (P. L., 293); 
 
 under 486, the authorities on this 4 Apr. 1872, 1 (P. L., 40.) 
 
 subject are collected. Where the 9 Pfnff p. Building Association, 
 
 statutes provide for the dissolu- 6 W. N. C. (Pa.) 349. The case of 
 
 tion by voluntary surrender upon The Hoboken Building Ass'nr. Mar- 
 
 a vote of the majority of the mem- tin, 2 Beas. (N. J.) 428. is not an au- 
 
 bers, and petition to, and decree by thority contra; the circumstances 
 
 the court, this, of course, overrides having been peculiar, and the ruling 
 
 any general doctrine of law applic- of the court dictated by them, 
 
 able where no such provision ex- 3 See Pfaff v. Building Associa- 
 
 ists. See, e.g., in Pennsylvania, tion, ubi supra.
 
 476.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 481 
 
 given time, or at least by a process whose known operation af- 
 fords a tolerably accurate measure of the contemplated period. 
 475. But where the stockholders had agreed in writing 
 to dissolve the association, before the period limited in ita 
 charter arrived to put an end to its existence, it was held that 
 such agreement was valid, and not only bound the stockhold- 
 ers (who, it appears, had all consented to the closing out,) but 
 was good also against the assignee of one of them. 1 
 
 Surrender may be Inferred Under Certain Circumstances. 
 
 476. Mere nonuser is not ipso facto a surrender.* But 
 the nature or purpose of a building association is such that a 
 surrender, by unanimous consent, may be inferred from the 
 fact that one member has been permitted to unite in his 
 hands all the live shares and all the securities held by the 
 association. A case occurred in Massachusetts, the circum- 
 stances of which were as follows : The association was incor- 
 porated under St. 1854, c. 454, with power to collect monthly 
 dues and fines, from its members, etc. As often as the fund 
 of the society should amount to a certain sum, it was to be 
 applied to the redemption of the share of that member who 
 would bid the greatest sum, by way of discount or premium, 
 for the privilege of taking out his distributive share at once. 
 He should then cease to be a member, but give bond and 
 mortgage for the payment of the sum advanced, namely 
 monthly dues, " to be applied in liquidation of the principal 
 sum," interest monthly until the monthly dues should amount 
 to the principal sum, and fines. Neither interest nor fines 
 should be deducted in computing the amount due on the 
 mortgage. The entries in the books of the secretary should 
 be prima facie evidence against any member, but an appeal 
 might be taken to a meeting of the association. A quorum 
 should consist of twenty-five members. Provision was also 
 made for the election, duties, and removal of officers. On 
 November 30, 1866, the secretary of the association purchased 
 and took assignments to himself of all bonds, mortgages and 
 
 1 White Haven Loan and Build- its charter, cannot be inquired into 
 
 ing Association v. Kelly et al., 9 collaterally. Ib. 
 
 Luz. Leg. Reg. (Pa.) 9; and an ob- * Angell and Ames, Corp., 773; 
 
 jection that the association was not cit. Regents of the University of 
 
 legally organized, or had forfeited Md. P. Williams, 9 Gill and J., 303.
 
 482 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVIII. 
 
 assets of the association, and of all unredeemed shares. It 
 was held that the mortgagors might redeem upon payment of 
 interest on their loans and monthly dues and lines up to Nov. 
 30, 1866; and the reasoning of the court was as follows : " In 
 this condition of things (after the assignments upon Nov. 30, 
 1866), there was no longer a quorum of members necessary 
 for the transaction of business, no meetings could be held to 
 which the plaintiffs (members) could appeal from the entries 
 of the secretary, which are decided by the by-laws, to be 
 prima facie evidence, nor for election or removal of officers to 
 whom the plaintiffs (mortgagors) must apply for the redemp- 
 tion of their land from the mortgage, nor for any other cor- 
 porate object or purpose. . . . The liability to pay monthly 
 dues, or fines, or interest on the amount advanced, cannot ex- 
 tend beyond the existence of the corporation. . . . The trans- 
 action of Nov. 30, 1866, amounted to a complete suspension, at 
 least, if not to a final dissolution, of the corporation by the 
 unanimous consent of all members." ' 
 
 Dissolution by Act of Legislature. 
 
 477. Building associations may be dissolved by the act of 
 the Legislature, wherever such action does not impair the obli- 
 gation of contracts.* Where the power to repeal any special 
 charter, or all charters granted to corporations, is reserved to 
 the legislature, either in the charter conferring the franchise, 
 or in the general acts for incorporation of such societies, or in 
 the general laws of the State, applicable to all cases, or in the 
 constitution of the State ; the Legislature, in its discretion, by 
 virtue of its paramount authority and of the terms of its un- 
 dertaking with the association, may exercise the power with- 
 out becoming guilty of any violation of the original contract. 3 
 
 Dissolution by Decree of Court. 
 
 478. In no other way, except in one of those indicated, 
 can a building association be dissolved without a decree of a 
 competent judicial tribunal, ascertaining and declaring the 
 forfeiture or expiration of its charter, or handing its affairs 
 
 1 Cook v. Kent, 105 Mass 246 and Loan Ass'n, 56 Id 350 , and 
 
 See also The City Loan and Build- post, 496-503. See also Smith 
 
 ing Association of Augusta v. Good et al v. Virgin et al., 33 Maine, 148. 
 
 rich. 48 Ga. 445; Goodrich et al. t>. See ante, 65. 
 
 Th-> City, etc., Association. 54 Id. See Field, Corp., 478-479; 
 
 08; Thomson v. Ocmulgee Building Angell and Ames, Corp., 769.
 
 479.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 483 
 
 over to an officer appointed by such tribunal, for the purpose 
 of winding np the concern, with a view to doing justice to all 
 parties interested. In the exercise of its franchises, every 
 corporation is bound to respect rights and observe its responsi- 
 bilities in two directions, towards the State which granted 
 them, and protects it in the exercise of them ; and towards the 
 individual members who are directly and pecuniarily in- 
 terested in the proper administration of the prerogatives 
 granted, as well as towards creditors dealing with the corpora- 
 tion upon the guarantee of the powers possessed by the 
 corporation, and the assurance of its solvency implied in their 
 legal exercise. It is clear, therefore, that where the corpora- 
 tion becomes guilty of a departure from the contract entered 
 into with the State, and for the carrying out of whose terms 
 alone the latter has obligated itself and granted its sanction, it 
 may at any time interfere to enforce that penalty which fol- 
 lows the unlawful act, the forfeiture of the franchises granted. 
 And building associations, to whom the State grants, from 
 motives of public policy, such extraordinary powers looking 
 towards the accomplishment of certain definite objects favored 
 by it, are no exception to this rule. Nonuser and misuser 
 may equally become the ground of a forfeiture of the charter 
 at the instance of the State. The former need scarcely be 
 considered except as involved in the latter ; for every misuser 
 necessarily implies a neglect to use the precise powers in- 
 tended to be given by the charter, in subserviency of the 
 purposes contemplated by the same. But a case, where a 
 building association simply omitted to exercise any functions, 
 or engage in any operations by virtue of its incorporation, has 
 not, it is believed, ever come under judicial notice. 
 
 Grounds of Forfeiture of Franchises. Who Entitled to ask it. 
 
 479. A misuser of the corporate franchise is any de- 
 parture from the legitimate course of business intended to be 
 sanctioned by the charter, in accordance with the Act of Leg- 
 islature under which it is issued, whether the same be simply 
 in excess of the powers conferred, or neglect of the duties 
 imposed, or involve a radical change or disregard of the pur- 
 poses of the grant. " In general, to work a forfeiture, there 
 must be something wrong, arising from wilful abuse, or im-
 
 484 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVIII. 
 
 proper neglect; something more than accidental negligence, 
 excess of power, or mistake in the mode of exercising an 
 acknowledged power. A single act of abuse, or wilful nou- 
 frasance in a corporation, may be insisted on as a ground of 
 total forfeiture ; but a specific act of noufeasance, not com- 
 mitted wilfully or negligently, not producing, nor having a 
 tendency to produce, mischievous consequences to any one, 
 and not being contrary to any particular requisition of the 
 charter, will not work a forfeiture." ' Thus, whilst the occa- 
 sional taking of notes and bills by a building association, or 
 their acceptance as a mere means of safe-keeping and in- 
 vestment of its funds, in the course of its legitimate business, 
 would constitute no ground of complaint against the society ; 
 if it had, to any extent, substituted the business of purchasing 
 and discounting paper for its legitimate business, buying it 
 for the purpose of gain, and with a view to employ the pro- 
 ceeds in buying again, that would be aground of forfeiture.* 
 So, also, would be the deliberate acquisition, holding, and deal- 
 ing in more real estate than the law or charter allows the 
 building association to purchase and hold.* A similar wrong- 
 ful intent is shown by the fact that the articles of association, 
 or by-laws, contain provisions not authorized by, or contrary 
 to, the general act, and these, besides being utterly void, 4 
 may, therefore, become the ground of forfeiture. 5 But it is 
 said, that, where a corporation has abused or misused its cor- 
 porate power, but not in any particular as to which it is de- 
 clared by statute that the act shall operate as a forfeiture of 
 its charter, the court is vested with a discretion to determine, 
 whether the corporation shall be ousted of its franchise to be 
 a corporation, or merely from the exercise of the powers ille- 
 gally assumed." 
 
 1 Angell and Ames, Corp., 776. 83; State v. Greenville Building As- 
 
 * Manufacturers' & Mechanics' sociation, 29 Ohio St. 92. 
 
 Bav. & Loan Co. v. Conover, 5 Phila. 8 Becket c. Uniontown Building 
 
 (Pa.) 18. See also State v. Green- Association, 88 Pa. St. 211; Rlioads 
 
 ville Build'g Ass'n, 29 Ohio St. 92. v. Hoernerstown, etc.. ubi supra. 
 
 3 Miller's Est., 2 Pears. (Pa.) 248; 8 State t>. The Oberlin Building 
 Rhoads v. Hoernerstown Building and Loan Association. 35 Ohio St. 
 Association, 82 Pa. St. 180; and see 258. See also The People v. The 
 ante, 303-308. Troy House Co., 44 Barb. (N. Y.) 
 
 4 Stiles's App., 9 W. N. C. (Pa.) 625.
 
 481.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 485 
 
 480. Any material defect in the proceedings of incorpo- 
 ration ; any omission of a step or performance of duty made 
 essential by the act, in order to render the society, desirous of 
 the privilege of corporate existence and action, a rightful and 
 legally qualified party to the contract with the State, 1 whose 
 form and substance it 1 is the prerogative of the latter to pre- 
 scribe and define;" any fraud or misrepresentation in induc- 
 ing the State to accede to the requested grant of the franchise,* 
 are equally breaches of which the State may, at any time, 
 avail itself to avoid the charter granted defectively, or to 
 persons imperfectly qualified under the law, or upon im- 
 proper representations. 
 
 481. But all these are grounds of which the State alone 
 may avail itself in instituting proceedings to deprive the 
 building association of its corporate franchises. It is the State 
 alone which is injured or imposed upon by the wrong-doings 
 of the corporation ; and it is with the State only that the latter, 
 in rebelling against its sovereign authority, or betraying its 
 confidence, has violated the original contract of recognition and 
 protection subsisting between the creature and the creator. On 
 grounds of misbehavior, therefore, of the building association 
 in its corporate capacity, it belongs to the State alone, to re- 
 voke, upon direct proceeding in quo warranto, and by a de- 
 cree properly promulgated through the medium of its judi- 
 cial tribunals, or by legislative exercise of the powers inhe- 
 rent to its sovereignty, the privileges granted to the corpora- 
 tion. No private person can ask for its dissolution * on such 
 grounds, nor insist upon the consequences with which the 
 State might visit corporate misbehavior, for the purpose of 
 escaping his contract obligations with the association. 6 
 
 1 Becket v. Uniontown Building Savings Association, appellee, v. 
 
 Association, ubi supra; Working- Graham, appellant, 7 Neb. 173; 
 
 men's Building Association v. Cole- Same fl. Benjamin and Benjamin, 
 
 man, 89 Pa. St. 428. appellants, Ib. 181. And see post, 
 
 1 Martin v. The Nashville Build- 489, 490-491, 506-508. 
 
 ing Association, 2 Cold. (Tcnn )418; 4 Except where the statute gives 
 
 Gordon, etc., v. The Winchester the court the power to dissolve a 
 
 Building and Accumulating Fund corporate body upon request, in the 
 
 Association, 12 Bush (Ky.) 110. prescribed form, of a certain pro- 
 
 s See Pattison t?. The Albany portion of its members. 
 
 Building and Loan Association, 63 & See post, 506-508. A case 
 
 Ga. 373; The Lincoln Building and arose recently in England, in which
 
 486 TIII: LAW OF BUILDING ASSOCIATIONS. [CH. XVIIL 
 
 Right of, and Grounds for, Appointment of Receiver. 
 
 482. A temporary administration of the corporate fran- 
 chises may, however, be assumed by the courts, upon the 
 petition of proper parties in interest, and upon a sufficient 
 showing of facts. Where, therefore, it appears that the 
 affairs of a building association are managed in such a man- 
 ner as to jeopardize, beyond a reasonable hope of recovery, 
 the interests of its members ; or that the termination of the 
 society's present system of operations is necessary to save 
 them from further losses, some such having already fallen 
 upon them, it becomes a right in them to apply to the courts 
 for such process and interference as may be proper in the 
 premises. Mismanagement of the association's affairs by its 
 officers will, as has already been seen, give rise, under certain 
 circumstances, to personal liability in them to the corporation, 
 which, upon the refusal of the society to enforce it, may be 
 asserted by individual members suing for the benefit and pro- 
 tection of the whole. 1 But where such mismanagement is 
 going on, and the mischief ensuing therefrom in its nature ir- 
 remediable and continuing, it also becomes the ground of an 
 application for the appointment of a receiver, at the hands of 
 a court of chancery, to take charge of the association's affairs 
 to the best advantage of all parties interested. It is said, in 
 Virginia, 5 that a court of equity has jurisdiction, at the suit 
 of iinredeemed shareholders " in a building association, to call 
 the redeemed shareholders to account, enforce payment of 
 what they respectively owe, and distribute the fund among 
 the unredeemed shareholders, thus embracing the whole 
 series of steps necessary to bring about the winding-up of the 
 concern, by making the corporation and its debtors all parties 
 
 certain members of a building soci- * See ante, 213. 
 ety endeavored to obtain a decree s Edelyn et al. v. Pascoe et al., 
 of dissolution against the corpora- 22 Grattan, 826. 
 lion, on the ground of irregularity 3 Redeemed members, or borrow- 
 in the proceedings of organization, ers, in building associations are 
 for the purpose, later on, of enforc- not, in Virginia, considered any 
 ing the personal liability of trustees longer as members. See White v. 
 who had acted, it was supposed, Mechanics' Building Association, 
 illegally. But the court of chan- 22 Grattan. 233; Winchester Build- 
 eery declined to entertain the peti- ing Association v. Gilbert, 23 Id 
 tion. Glover et al. v. Giles et al., 787. 
 L. R, 18 Ch. 173.
 
 483.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 487 
 
 to one bill. 1 But, whilst the right to appoint receivers, in 
 proper cases, resides in the equity court, by virtue of statu- 
 tory powers conferred upon it to exercise a visitatorial super- 
 vision over corporations, this authority is not usually exer- 
 cised, in the absence of express legislative grant, " for the pur- 
 pose of sequestering the effects of the corporation and closing 
 up its affairs, but merely for the purpose of using the fran- 
 chises, and, through the management and control of the cor- 
 porate powers by the receiver, to secure the application of the 
 revenues and net profits of the corporate business," to the 
 objects entitled to such protection in the eyes of a court of 
 equity. 11 In the case of building associations, this will practi- 
 cally, in most instances, amount to a dissolution. 
 
 483. The interposition of a court of equity, by appoint- 
 ing a receiver for a building association and enjoining its 
 management from interfering in its affairs, at the suit of 
 shareholders alleging mismanagement, fraud, and gross neg- 
 ligence in the officers, should not ordinarily be granted with- 
 out giving the association an opportunity to be heard by an- 
 swer ; or, if this cannot, from the nature of the case, be done, 
 it becomes the duty of the complainant, not only to show that 
 he has an interest in the property in dispute, but that the in- 
 terference of the court is absolutely necessary to preserve it 
 from loss and injury. 3 But where a bill filed by members 
 charged the officers of the building association with gross 
 and fraudulent mismanagement, breach of by-laws, and con- 
 nivance with defaulting officers, setting forth these matters 
 specifically : and averred that the directors had refused to take 
 steps to recover the amount due by the defaulting officers ; 
 that they were, at the time, doing business without a treasurer 
 
 1 The bill is not, thereby, made ing Association, Estate of, 9 V,'. X. 
 
 obnoxious to the objection of mul- C. (Pa.) 79; Goodrich i\ City Loan 
 
 tifariousness, but looks to doing and Building Association, 54 Ga. 
 
 complete justice to all the parties; 98. 
 
 Edelyn v. Pascoe, ubi supra. But 9 Field, Corp., 416. See also 
 
 upon such a proceeding, in taking 415-417. 
 
 the account of the redeemed share- 3 Frostburg Building Association 
 
 holders, interest is not to be charged et al. v. Stark et al., 47 Md. 338; 
 
 upon the interest and premiums cit. Blondheim r. Moore, 11 Id. 365; 
 
 charged against them on the books Trie-fort P. Burgess, Ib. 452; Nus- 
 
 of the association. Ib. See also bauin r. Stein, 12 Md. 315; Owen 
 
 Savings Loan and Build- v. Human, 4 II. L. C. 997, 1032.
 
 488 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVIII. 
 
 and bonded secretary ; that the mismanagement, fraud and 
 negligence still continued ; and that the building association, 
 although long enough in operation to have redeemed all its 
 shares, was $24,700 in debt, accompanying the bill with 
 an exhibit, the report of a committee of shareholders ap- 
 pointed to investigate the association's affairs, showing that 
 they could find no records of the minutes of the proceedings 
 of the Board of Directors, but sustaining the bill in every 
 respect upon data secured otherwise and from various other 
 sources ; it was held that the court was justified in granting 
 the injunction and appointing a receiver in an ex parte pro- 
 ceeding, no answer having been filed by the building associa- 
 tion denying the bill, and no motion being made by it, on the 
 strength of such a denial, to dissolve the injunction and dis- 
 charge the master. 1 A fortiori, if, upon examination into the 
 facts of the case, these were found to sustain the bill, would 
 the decree granting the injunction and appointing a receiver 
 be proper, in the case of a building association as in that of 
 other corporations. 
 
 484. But the mere allegation that the building associa- 
 tion was without any responsible officers does not seem to be 
 a sufficient ground for asking the interposition of a court of 
 equity, even if coupled with an averment of the society's in- 
 solvency.* 
 
 Insolvency. Distribution of Assets. 
 
 485. Insolvency does not dissolve a corporation. 3 It 
 " neither impairs its power to manage its own affairs, nor con- 
 
 1 The Frostburg Building Asso- such whilst he had an adequate 
 
 ciation et al. v. Stark et al., 47 Md. remedy at law. It is ruled without 
 
 338. The building association, in opinion, but, it would seem, cor- 
 
 this case, merely appealed from rectly upon principle. See post, 
 
 the ex parte decree of the court 488-489. 
 
 below. Railway Co. v. Filler, 60 Pa. St. 
 
 1 Gormerlyu.The Port Richmond 132; Wider. Jenkins,4 Paige (N.Y.), 
 
 Building and Loan Association et 481 ; Brinkerhoff v. Brown, 7 Johns, 
 
 al., 3 W. N. C. (Pa.) 11. See also Ch. (N. Y.)217; Micklesp. Roches- 
 
 Hoboken Building Association v. ter Bank, 11 Paige (N. Y.), 118; 
 
 Martin, 2 Beas. (N. J.) 428. In the Barclay v Tallman, 4 Edw. Ch. 
 
 former case (Gormerly v. Port Rich- (X. Y.) 123; State v. State Bank of 
 
 mond, etc., Association) it seems Maryland, 6 Gill and Johns. (Md.) 
 
 that the member petitioning was 205 , Rollins c. Clay, 33 Maine, 
 
 also a creditor, and petitioned as 132.
 
 485.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 489 
 
 verts its property into a trust fund for the benefit of its cred- 
 itors." ' But where it necessitates the abandonment of the 
 enterprise, the proper method to pursue is by way of petition 
 by members to the court, for the appointment of a receiver. 
 For where, upon that ground, the winding up of a building 
 association's affairs becomes desirable, it has been decided in 
 Pennsylvania, that the proper course is through a court of 
 equity, by means of a receiver, and not by an assignment of 
 its property, under the insolvency laws, to an assignee for the 
 benefit of creditors." The case in which this question arose 
 is peculiarly illustrative of the difficulties which a mere 
 assignee would encounter, and to which he would inevitably 
 have to succumb. The building association was a serial one, 
 incorporated in 1866. It continued issuing series of stock 
 until 1878, when, on Aug. 29, by an almost unanimous vote, 
 an assignee for the benefit of creditors was put in charge of 
 its affairs. Two years previously, the first series, declared full 
 at $1 80 per share, had matured, and part payments on account 
 had been made to its holders. No other series had matured. 
 Before the auditor, appointed by the court to make distribu- 
 tion of the balance appearing from the assignee's account filed 
 to be in his hands, appeared (1) the holders of shares in the 
 first series, who held orders upon the treasurer, on which part 
 payment had been made, and who claimed the full value of 
 the stock as ascertained at its maturity; (2) withdrawing 
 members who had given notice prior to the assignment, 
 some holding orders upon the treasurer for what was due 
 them, and all claiming, in accordance with the constitution 
 and by-laws, the amount of the money they had paid in, to- 
 gether with six per cent, interest after the first year ; s (3) the 
 holders of shares in the second and subsequent series who had 
 not given notice of withdrawal, and claimed that division of 
 
 1 Angell and Ames, Corp., 770; Building Association et al., 31 Leg. 
 cit. Pondville Co. v. Clarke, 25 Int. (Pa.) 357. And see Peto . 
 Conn. 97. But a sale by an insol- Hammond, 8 Jur., N. S. 550; 31 L. 
 vent corporation of its real estate to J., Ch. 354; 30 Beav. 495. 
 a stockholder for stock, makes such * In re Assigned Estate of The 
 purchaser liable for its value in cash National Savings, Loan and Build- 
 to the corporation's creditors. The ing Association, 9 W. N. C. 79. 
 Chambersburg Woollen Co. v. The See Act 13 April, 1859. 
 Chambersburg Manufacturing and
 
 490 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVIII. 
 
 the assets should be made among all claimants pro rata. The 
 hitter course was adopted by the auditor, and the whole mat- 
 ter was brought before the court upon exceptions tiled by the 
 holders of the first series, to his report. President Judge 
 Ludlow, in his opinion, said that a building association, from 
 the nature of its business and limited extent of its legitimate 
 operations, could have but few creditors strictly so called ; 
 that the organization is, in fact and in law, a partnership with 
 corporate rights, in which every stockholder is a member; 
 and that, whilst it may be true that every stockholder may 
 recover a judgment against the corporation when his right to 
 receive his certain share has become perfected, and thus be- 
 come, in a sense, a creditor, yet the peculiar nature of the 
 constitution and by-laws of a building association clearly indi- 
 cate that an assignment for the benefit of creditors could 
 never be intended to reach such creditors as the members of 
 a building association must be, who have even obtained judg- 
 ment upon their claims. The execution of such a judgment 
 might, at the discretion of the court, be deferred in order to 
 give the building association a reasonable time to collect 
 money enough to satisfy its withdrawing member, a right 
 which, as opposed to an ordinary creditor, would not be con- 
 ceded to it. The learned judge, therefore, held, that under an 
 assignment like the one executed in this case, the creditors, 
 within the meaning of the assignment laws, were not those 
 whose claims depended upon a former membership in the as- 
 sociation and consequent ownership of its stock, no matter to 
 what series the stock owned might belong ; and he directed 
 that the general, outside creditors of the association, if there 
 be any, should be at once paid, and intimated, that, this hav- 
 ing been done, upon a petition in the usual form being pre- 
 sented, he would order a reconveyance of the entire property 
 remaining in the assignee's hands to the building association ; 
 whereupon a bill in equity should be prepared at the suit of 
 those interested in a final settlement, in which it should ap- 
 pear that the corporation was insolvent, that its assets might 
 be lost, and that by the appointment of a receiver the rights 
 of all would be protected. Then, if the case be a proper one 
 upon the bill, answers and proofs, a receiver would be ap- 
 pointed, by n cautious and prudent policy to wind up the
 
 48?.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 491 
 
 affairs of the concern, and the assets so marshalled and dis- 
 tributed by a final decree as to do justice to all parties. 1 
 
 486. The principle upon which the distribution as be- 
 tween the members should proceed, seems indicated in an 
 English case. By the rules of a building association, realized 
 members, who had by their subscription, with interest and 
 bonuses, made up the full amount of their shares, were en- 
 titled to payment, or certificates for payment, in rotation, of 
 such amount ; and withdrawing members, who had not made 
 up the full amount of their shares, but had given notice to 
 withdraw, were entitled to like payment or certificates for the 
 amount of their subscription, with interest. In the winding- 
 up of the society, it was held that these two classes stood in 
 the position of creditors entitled to be paid in priority to in- 
 vesting members, who had not made up their shares, and had 
 given no notice of withdrawal. 11 
 
 487. Members of an insolvent building association, 
 who are also its creditors, are, of course, entitled to come in 
 upon the distribution of its assets as such. 3 And it makes 
 no difference if the capacity of director be joined with that 
 of member or creditor, where the individual has not been 
 guilty of any fraud or culpability in bringing about the in- 
 solvency. But, if he has been instrumental in bringing about 
 the wreck, he will be postponed to all the innocent members. 
 So, one who was a director of a building association, long in- 
 solvent by declaring dividends out of the capital, with his 
 knowledge and participation, is not entitled to receive from 
 the estate of the corporation, in the hands of an assignee, any 
 part of a loan made by him to the corporation, to pay a divi- 
 dend fraudulently declared, until the stockholders are fully 
 paid. " The question is not whether he might have enforced 
 his demand against the corporation, if it were solvent, but he 
 here seeks to have satisfaction out of a fund which belongs to 
 the stockholders, whose interest he has betrayed. The cor- 
 poration is insolvent, and some one must lose. Shall it be 
 the innocent stockholders, or the guilty participant in the 
 
 1 In re Assigned Estate National Provident Building Soc'y, ex parte 
 
 Savings, Loan and Building Asso- Rackham, 45 L. J., Ch. Div. 785. 
 
 ciation, vbi supra. 3 As to members as creditors, see 
 
 * lu re Norwich and Norfolk ante, 264-268.
 
 492 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVIII. 
 
 fraud which caused the insolvency? It is not a mere set-off, 
 or a counter-claim by reason of simple liability of the corpo- 
 ration, but it is a claim to come in on the remnant of the cor- 
 porate effects, constituting a fund to be distributed justly upon 
 the evidence. He assisted by fraud to reduce the association 
 to insolvency, and thereby to bring the wreck of its fortunes 
 into distribution, and now he seeks to put in his hand, and 
 withdraw from this fund the very money he gave to carry 
 out the fraud. Every principle of justice requires him to be 
 postponed until the stockholders, whom he defrauded, are 
 satisfied. Nor can we see that the difference of time in mak- 
 ing the deposits, which created the stockholders depositors, 
 changes the result." The question whether the members 
 claiming to be preferred to him had ever received any bene- 
 fit in the shape of dividends, or not, is immaterial, as affect- 
 ing their right to be preferred. He has no merit to demand 
 an investigation and analysis of the relations of the prior and 
 subsequent stockholders, so as to distribute the money with 
 a view to, and the effect of, equalizing the various claims. 
 These dividends are no compensation for the fraud which 
 continued for months, and ended in the ruin of the associa- 
 tion. Even if he were claiming the identical money he had 
 put in, the principle that, ' if one unlawfully mixes his 
 goods with mine, so that I cannot distinguish his, he must 
 suffer, not I,' would debar him. But his claim is to take out 
 of the whole estate a debt which he, as trustee and guardian 
 of the stockholders' interests, contracted with himself. It 
 would be most difficult to settle the equities of prior and sub- 
 sequent stockholders as they existed at the time the assign- 
 ment was made. Nor will the court attempt so to do, but 
 will postpone his claim until all the stockholders, without 
 respect to the time of their becoming such, are fully satis- 
 fied. 1 
 
 Persons Entitled to Ask for Appointment of Receiver. 
 
 488. Whilst the propriety of a court of equity, assum- 
 ing to protect the interests of all claimants upon a building 
 association which is shown to be insolvent, by putting a re- 
 
 1 Kisterbock's App. (In re Estate of the Premium Loan Association), 
 61 Pa. St. 483.
 
 488.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 493 
 
 ceiver in charge of its property, in order " by a cautious and 
 prudent policy to wind up the affairs of the concern," appears 
 never to have been questioned ; the insolvency of a building 
 association is itself a peculiar thing. As intimated by Ludlow, 
 P. J., 1 the number and extent of outside creditors of a build- 
 ing association are necessarily limited. It would, therefore, 
 be scarcely conceivable that the assets of a building associa- 
 tion should shrink in so remarkable a manner as to leave such 
 claimants in a position of inability to reimburse themselves 
 by process of law. No case, it is believed, has occurred in 
 which this was the ground of a successful application for the 
 appointment of a receiver. On the contrary, it has been re- 
 peatedly asserted by the courts that the application must pro- 
 ceed from persons interested and suing as members. It is 
 the inability of the building association, not to pay its outside 
 debts (for that does not seem to have ever occurred, and, in 
 the nature of things can scarcely be thought of), but to sat- 
 isfy the demands of its own members, that has been recog- 
 nized as an insolvency. It has been held in England that an 
 order to wind up a building association, whose rules do not 
 give it express power to borrow, may be obtained upon the 
 petition of a person, who, under the rules of the society, has 
 deposited money, with a view of becoming a shareholder, but, 
 before becoming one, has given proper notice to withdraw the 
 money, and been unable to obtain it. But such petition must 
 not be a mere creditor's petition. It must express that the 
 petitioner is a creditor in respect of money advanced by him 
 as a member of the society, which he has given notice to with- 
 draw. 2 And in Pennsylvania, the court refused to take the 
 action prayed for viz. ; dissolution in the petition tiled by 
 a shareholder, who was also a creditor, in the capacity of 
 
 1 In re Assigned Estate National Ch. 738; 20 W. R. 935; 27 L. T., N. 
 
 Savings, Loan and Building Asso- 8. 638, showing that a withdrawing 
 
 ciation, 9 W. N. C. (Pa.) 79; ante, member's petition for a winding- 
 
 485. up order under the statute will not 
 
 9 In re Queen's Benefit Building be granted where the society is per- 
 
 Society, 4 L. J., Ch. 881; 2 L. T., fectly solvent, but requires time to 
 
 N. S. 346; 19 W. R 597, 762; L. R, realize on its assets in order to sat- 
 
 6 Ch. 815. And see, In re Planet isfy him. See ante, 138-143, as 
 
 Benefit Building and Investment to stay of execution in similar cases 
 
 Society, L. R, 14 Eq. 441 ; 41 L. J., in America.
 
 494 mi; LAW OP HUILDINU ASSOCIATIONS. [CH. XVIIL 
 
 <-ivditor, although the building association was insolvent and 
 hud no responsible officers. 1 
 
 489. In England, a petition was presented by four mem- 
 bers of a permanent building association, whose shares had 
 i.n 11 advanced on mortgage, for winding up the society. One 
 of the rules of the society gave the trustees power to borrow 
 any money that might be necessary for the purposes of the 
 society. Under this power, considerable sums had been bor- 
 rowed on deposit, and some of the depositors pressed for their 
 money, which the society was unable to pay without calling 
 on its members. The committee of the society had according- 
 ly proposed that the business should be transferred to another 
 company and the society wound up, to which the great ma- 
 jority of the shareholders had agreed. After the petition was 
 presented, the creditors of the society executed a release to 
 the petitioners from their debts, and the committee offered to 
 effect a transfer of their mortgages. It was held, that, as the 
 release of the petitioners operated as a release to the whole 
 society, the petitioners were under no direct or indirect lia- 
 bility in respect of the existing debts ; that, the society being 
 one of unlimited liability, and the rule as to borrowing ultra 
 vires, the insolvency was not proved ; and that the interest 
 which the petitioners had in the profits, as advanced mem- 
 bers, was not sufficient to induce the court to make a winding- 
 up order contrary to the wishes of the great majority of the 
 other members. The petition was, therefore, dismissed with- 
 out costs.* 
 
 Right of Members to Ask Interposition of Court to Wind up Society 
 When Shares at Par. 
 
 490. A case, peculiar to building associations, upon the 
 occurrence of which its members have a standing in a court 
 of equity, in asking for the appointment of a receiver for the 
 purpose of winding up the affairs of the association, or series, 
 
 1 Gormerly v The Port Rich- Association, 93 Pa. St. 308. And 
 
 mond Building and Loan Associa- see ante, 145, and post, 490- 
 
 tion et al., 8 W. N. C. (Pa.) 11. 491. 
 
 But a member may compel settle- * In re Professional, Commercial, 
 
 ment of an expired series by bill and Industrial Benefit Building So 
 
 in equity. O'Rourke v. West ciety, L. R., 6 Cb. 856; 25 L. T., 
 
 Pennsylvania Loan and Building N. S. 397; 19 W. R. 1153.
 
 491.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 4'J5 
 
 arises, where, in point of fact, the time lias arrived when the 
 shares, owing to the past accumulations of the business, are 
 worth the stipulated par value fixed by the charter. Theo- 
 retically, the moment that time arrives, the society, if a 
 terminating one, ceases to exist as a business-doing corpora- 
 tion, or for any purpose except that of settling its accounts; l 
 or, if a serial one, the series to which the stock belongs is at 
 once wound up. But there may be grave difficulties in the 
 way of recognizing the exact period when this consummation 
 takes place, and of making it appear to general satisfaction 
 that it has been accomplished." The precise amount and 
 species of the society's investments are, as a rule, known only 
 to the officers, and the value of the assets, whether in real or 
 personal estate, is at all times variable within a considerable 
 margin. The annual valuation of the shares, oftentimes re- 
 quired by statute, furnishes a guide only to a certain degree of 
 accuracy in the computation. A member, therefore, who has 
 reason to believe that the time for winding-up is at hand, has 
 no resort but a court of equity in order to establish the fact, 
 and compel settlement by the officers to whose discretion and 
 judgment the matter is ordinarily left. The right to invoke 
 such aid has repeatedly been recognized, and never denied, as 
 residing in a member. 3 
 
 491. But this is a right which is conceded to none but 
 members. Where a borrower, therefore, from a building asso- 
 ciation, who, up to the time of taking the loan, had been a 
 member, but, by the terms of his contract, had ceased to be 
 such, and become merely a debtor for a fixed sum repayable 
 by installments until they amounted to that sum ; and, believ- 
 ing that the period had arrived when the shares could be paid 
 out by the society at their par value, but that the officers were 
 redeeming certain shares at such a rate as to delay the time of 
 his discharge, presented his bill for an injunction upon the 
 
 1 Hagerman et al. v. The Ohio 808: Bowker v. Mill River Loan 
 
 Building and Savings Association, Fund Association, 7 Allen (Mass.), 
 
 25 Ohio St. 186. Ante, 473. 100; Lister v. Log Cabin Building 
 
 * See ante, 128-129. Association, 38 Md. 115; Eclelyn 
 
 8 See O'Rourke v. West Pennsyl- et al. v. Pascoe et al., 22 Grattan 
 
 vauia Loan and Building Associa- (Va.), 826. 
 tiou, 8 W. N. C. 176; 93 Pa. St.
 
 496 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVIII. 
 
 officers of the society, the appointment of a receiver, and 
 winding-lip of the concern: the hill was properly dismissed. 1 
 I Icing .simply a debtor, bound to pay a certain amount of 
 money, he could not be discharged until that was paid, and as 
 he had ceased to be a member, the continuance of the society 
 for a greater or lesser time was not a matter wherein he could 
 have any interest. 1 
 
 Financial Condition which must be Shown to Exist. Mortgages of 
 Members not Assets for Winding Up. 
 
 492. An application looking towards a compulsory wind- 
 ing-up of the society, on the ground of the accomplishment 
 of its objects, must show that the assets of the building as- 
 sociation are sufficient to pay, over and above all losses and 
 expenses, and after cancellation of the advanced members' 
 securities, to every unadvanced member the par value of his 
 shares, according to the original scheme. 8 In ascertaining 
 the sufficiency of the corporate assets for this purpose, it is 
 clear and has been expressly decided that the mortgages held 
 against advanced members must not be counted as assets. 4 
 This rule applies equally whether the mortgages be given 
 merely for the payment of installments, etc., or for the pay- 
 ment, absolutely, of a definite sum of money; whether the 
 term of the encumbrance be co-extensive with that of the 
 building association, or limited to any period short of the 
 same: There is no loan that may be legitimately made by 
 the building association and properly called a building associa- 
 tion loan, which, no matter what are its formal reservations 
 designed for convenience and safety in any emergency, is not 
 intended to run over the entire course of the society's exist- 
 ence.* These mortgages cannot, therefore, be treated as 
 assets, to be calculated and applied, with the sums from the 
 net revenues, to the satisfaction of the claims of the unpaid 
 shareholders. They cannot be used for that purpose, nor has 
 the building association any authority to collect and apply the 
 
 1 Bowker v. Mill River Loan ing Association, 38 Md. 115; and 
 
 Fund Association, 7 Allen (Mass.), see ante, 440. 
 100. 4 Lister . The Log Cabin Build- 
 
 * Ib. ing Association, vbi supra. 
 
 8 Lister v. The Log Cabin Build- 6 See ante, 330-332.
 
 $2.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 497 
 
 muieys secured by these mortgages, to the liquidation of the 
 claims of the unpaid members. Whilst they exist and are of 
 binding efficacy, they are only a source of revenue, and as 
 such constitute an efficient part of the available assets of the 
 building association. But the profits which enable it to pay 
 to the shareholders who are unadvanced, the full value of 
 their sha/-es, also operate to discharge the mortgagors. When 
 the formw are ready to be paid, the latter are ready to be re- 
 leased; but the payment of the one, and the release of the 
 other, depend upon the sufficiency of the general revenues 
 and assets o2 the concern, outside and beyond these members' 
 mortgages. Thus, if the stock of a building association con- 
 sist of 1000 /hares at $200 each, and 500 shares have been 
 advanced or prepaid, the building association holding, from 
 the owners 01 borrowers, securities to the nominal amount of 
 $100,000 therefor, so that the amount necessary to wind up, 
 over all expensus, losses, etc., would be $100,000, supposing 
 the amount of ca^h in the treasury, or of securities and invest- 
 ments representing cash, to be, in addition to the above secur- 
 ities, worth $50,000, after deduction of all losses, expenses, 
 etc.: then the assets of the concern, for distribution, or wind- 
 ing-up, in such cae, would not be $150,000, but mere- 
 ly $50,000. Thest $50,000 would represent (1) all the 
 gains, by premiums, forfeitures, investments, etc., made by 
 the building association during its operation; (2) all the in- 
 terest paid by borrowing, or advanced members; (3) all the 
 payments made by them (so far as not reloaned to members) 
 on account of the principal of their advancements, or applica- 
 ble to it ; (4) all the stock-payments by non-borrowers, not de- 
 voted to the advancement of other members (*'. 6., in the light 
 of the winding-up situation, to the redemption of stock) in 
 fact, the sum total of the available assets. The securities, 
 nominally aggregating $100,000, held against members, inu.-i 
 be, if the building association is ready to be wound up, not 
 collected, but cancelled. They are not assets for the purpose 
 of realizing on them, merely for that of deriving revenue 
 from them whilst the building association is running. When 
 the time for winding up is at hand, their function is to wipe 
 out the corresponding amount of stock, upon which they li;i\v 
 taken. The balance of the stock c>n>titutos tlie building
 
 498 THE LAW OP BUILDING ASSOCIATIONS. [CH. XVIII. 
 
 association's liabilities, together with other debts and expenses, 
 and whatever other securities or cash may be in the treasury, 
 represent the assets which are to be counted on as available 
 for the payment of the unadvanced stock, and extinguishment 
 of other liabilities of the building association. 1 
 
 Effect of Expiration of Charter Limitation upon Society's Corporate 
 Existence. 
 
 493. The consequences of a dissolution of a building 
 association, either by decree of court, or by expiration of its 
 charter, or by loss of its membership, as well as of the judi- 
 cial transfer of its affairs into the hands of a receiver, and of 
 such voluntary action on the part of its members as amounts 
 to an abandonment or surrender of its franchises, are to be 
 considered, with reference to these organizations, in their 
 effect upon debtors and creditors, and upon members in par- 
 ticular. When a building association has reached that period 
 in its history, when, according to the provisions of its charter, 
 it is wound up ; that is to say, when its accumulated assets 
 have arrived at the aggregate amount necessary to pay to each 
 unadvanced member the full fixed value of the shares he 
 holds, after paying all outstanding liabilities of the associa- 
 tion, and cancelling the obligations given by advanced mem- 
 bers : it ceases, as has been seen, ipso facto, to be a corporation, 
 except for the purposes of winding up its affairs. 7 
 
 494. The statutes, under which these associations are 
 incorporated, sometimes contain a provision empowering the 
 building association about to be wound up to elect officers, to 
 be charged with the duty of winding up the concern, or cast- 
 ing that burden upon the officers last elected or their sur- 
 vivors, and giving the building association, or those charged 
 with the settlement of its affairs, the right to carry on liti^ii- 
 tion already instituted, and to bring and maintain suits in the 
 corporate name, on all judgments, bonds, mortgages, notes, or 
 other evidences of indebtedness or obligations due the corpo- 
 
 1 See Lister v. Log Cabin Build- the stock is upon the defendant 
 
 ing Association, 38 Md. 115. alleging it when sued by the asso- 
 
 9 Hagerman et al. v. The Ohio ciation for his indebtedness, under 
 
 Building and Savings Association, a plea of payment. "Watkins v. 
 
 25 Ohio St. 186. Ante, 473. The Workingmen's, etc., Association, 
 
 burden of proof of the maturity of 9? Pa. St. 514.
 
 495.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 499 
 
 ration, or for monthly dues, interest, or any demand owing 
 to it, and proceed to judgment and execution, notwithstand- 
 ing the expiration of the charter ; and to sell and make title 
 to any real estate of which the association was seized, and 
 which remained upon its hands undisposed of at the time of 
 the charter's expiration. And, in the absence of any statutory 
 provisions to that effect, the general powers of supervision 
 and control with which courts of equity are invested in 
 respect of corporations, afford a safe and perfect means of 
 doing of justice to all parties, by the appointment of a re- 
 ceiver ; even independently of the expedient which building 
 associations have it in their own hands to adopt, of conveying 
 to trustees all their assets, before dissolution, for the benefit 
 of members and creditors in interest. 
 
 Subsisting Liabilities of Society. 
 
 495. Whatever liabilities the society has lawfully in- 
 curred are, of course, protected upon dissolution. 1 A mort- 
 gage given by a building association will not be avoided by 
 the subsequent expiration of the society, where the latter 
 transferred its property to the hands of an assignee, or trus- 
 tee, abandoning its corporate existence. Such an assignee 
 may defend in an action upon the mortgage, but he will not 
 be permitted to set up the dissolution of the society by expi- 
 ration of its charter as a defence to the same. If the mortgagee 
 in such a case entered on the land, and the terre-tenant were, 
 as the general assignee of the building association, to ask 
 relief from chancery, it would not be granted except upon 
 the terms of payment of the principal and interest of the 
 debt in full. It follows conversely that the mortgagee would 
 be entitled to a decree of sale and foreclosure against the 
 terre-tenant. 9 Where the land is granted subject to a mort- 
 
 1 See Field, Corp., 491-492, supplies, under the statute, the pro- 
 
 and cases there cited. ceeding in equity. It differs from 
 
 9 See Kisterbock v. Building As- a proceeding in rem only in being 
 
 sociation, 7 Phila. (Pa.) 185. It is against the title of the mortgagor in 
 
 there said, that, this equity being the thing, as distinguished from the 
 
 indisputable, there is no reason thing itself, and the grantee stands 
 
 why it should not be enforced in a in no better position than the 
 
 proceeding of scire facias sur mort- grantor. 
 gage, where, as in Pennsylvania, it
 
 500 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVIII, 
 
 gage, the grantee stands in the shoes of the grantor, and is, to- 
 the extent of his interest in the land, primarily liable for the 
 payment of the mortgage debt. Hence it does not lie in his 
 mouth to object that the mortgage was executed by a body 
 corporate that has ceased to exist. Such a defence would, if 
 necessary, be restrained by injunction. 1 But a judgment 
 rendered in an action against a corporation, which has, pend- 
 ing the action, become dissolved by expiration of its charter, 
 is void, unless the action has been continued against the 
 proper parties.* 
 
 Effect of Dissolution upon Obligations of Borrowing Members. Ex- 
 ceptions. 
 
 496. The effect of the dissolution of a building associa- 
 tion upon its members is, to stop, at once, any liability for 
 further regular stock-payments. And this applies equally 
 whether such members be merely investors or also bor- 
 rowers. " The liability to pay monthly dues, or fines, or 
 interest on the amount advanced, cannot extend beyond the 
 existence of the association." s And the reason is obvious. 
 The advance made to the member by the building association 
 is not a naked loan of money, to be returned dollar for 
 dollar. 4 Part of the consideration of the contract which the 
 borrower entered into upon receiving the advance, was the 
 interest he retained as a member in the accumulations of its 
 business, and the prospect, by means of this interest, to be 
 enabled, not only to lay by, through a long period of time, 
 small sums towards the day of repayment, but also to enjoy, 
 during that period, the profits which such small sums would, 
 when the course of the society was completed, have earned, 
 making his credit sufficient in bulk, to be set off against hi& 
 liability to the association, and extinguish the same. The 
 length of time thus allowed him for the extinguishment of 
 his debt, and the additions, with the aid of which his period- 
 
 1 Kisterbock v. Building Associa- 8 Ante, 270. 
 
 tion, ubi supra. It is intimated, 3 Cook v. Kent, 105 Mass. 346; 
 
 however, that the case of a pur- cit. in support, Bowker v. Mil! 
 
 chaser who had paid full value for River Loan Fund Association, 1 
 
 the land, irrespectively, and with- Allen (Mass.), 100. 
 
 out making account of the mort- 4 See ante, 326-337; 354-357. 
 gage, might be a different one.
 
 f 496.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 501 
 
 ical payments, by being constantly employed in producing 
 revenues, (these revenues again being invested, and so on, ad 
 infinitum,} would swell to the sum to talof his obligations to 
 the society, are material elements in preventing his under- 
 taking as to premiums, fines, etc., from proving extremely 
 oppressive, if not ruinous. The mode of payment, in other 
 words, is an essential part of the contract. The dissolution 
 of the building association necessarily puts an end, not only 
 to its capacity to receive, from time to time, his small pay- 
 ments, but also to the possibility of their being turned to 
 account, for his benefit, by means of the system of investment 
 and reinvestment peculiar to the building association scheme. 
 The one feature which has made his undertaking bearable, 
 and in reliance upon which he has been induced to assume its 
 obligations, is thus taken away, and it follows as an inevitable 
 consequence that he cannot be held to its precise terms. His 
 duty to make regular stock-payments, a duty incident to 
 membership only, ceases; for the stock itself is destroyed, 
 there being no longer a corporation as whose stock it can 
 figure, and the membership dies with the corporation. So 
 far as the mortgage was given to ensure the performance of 
 this membership duty, the obligation is abrogated by the 
 destruction of the stock and the society. The imposition of 
 fines, a species of liquidated damages, due the society, under 
 its system of mutuality, for the neglect of a membership 
 duty, 1 must of necessity fall away when the membership is 
 gone ; when there is none who can justly claim the damages ; 
 and when their exaction would be nothing more nor less 
 than the enforcement of penalties not countenanced by the 
 law." The agreement to pay a premium for the loan, justi- 
 fied upon the basis of strict mutuality, and bearable by reason 
 of the length of time allowed for its liquidation, and by the 
 fact that it would, according to the status and intent of the 
 contract when entered into, be, in part, made up by profits 
 upon the stock-payments and interest discharged by the bor- 
 rower during the projected continuance of the association, as 
 well as by similar payments made by other borrowers during 
 the like period, and the gains and accumulations of the entire 
 corporate business to the day of its contemplated termina- 
 1 Sec ante, g 401-103. * See ante, 402-403.
 
 502 
 
 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVIII. 
 
 tion, must, when that mutuality is taken away, and all the 
 other elements embraced in the terms of its assumption re- 
 moved, fail for want of a proper consideration. The duty 
 of the borrower as a member to contribute to the debts 
 and losses of the corporation, has nothing to do with this 
 matter. 1 That arises on other grounds, and on considerations 
 independent of those relating to his indebtedness : but it is as 
 between him and his associates only that the question of the 
 extent of his liability as a borrower must be determined ; and 
 there is no reason why he should be held to his whole bar- 
 gain while they escape part of theirs. He is to be charged, 
 therefore, only with the amount he has actually received 
 with legal interest, and credited with all his payments, upon 
 stock and interest, upon the principle of partial payments.* 
 This doctrine is fully illustrated, in theory and application, 
 in a series of cases in which it has been recognized. 
 
 1 It is, of course, improper, to 
 charge the advanced members with 
 the making up of losses for the 
 benefit of the unadvanced. In 
 Low Street Building Association, 
 No. 6, etc., v. Zucker, 48 Md. 448 
 (454), where such an attempt seems 
 to have been made, Alvey, J., 
 says : " As to the charge made . . . 
 for losses sustained by the associa- 
 tion, and apportioned to each share 
 of the stock, by estimation, we can 
 perceive no warrant for it. The 
 covenant in the mortgage does not 
 justify it in terms, nor does it 
 authorize the charge by any fair 
 implication. The covenant is to 
 pay weekly dues and fines until 
 such time as the association might 
 have a sufficient fund to pay all 
 the holders of unredeemed shares 
 of stock, the [par value thereof,] 
 clear of all losses and liabilities. 
 This, of course, contemplated the 
 continued existence and operation 
 of the association, and that it 
 should terminate in the regular 
 course and mode as provided in the 
 articles of association. It was only 
 
 in that event that the mortgagors 
 could be required, by the terms of 
 this covenant, to contribute to 
 losses and liabilities of the associa- 
 tion, and then only by the pro- 
 longed or extended payment of the 
 weekly dues. Losses by the asso- 
 ciation are chargeable, by virtue of 
 this covenant, and in no other 
 way." It is quite clear that, in 
 such a case, whatever losses or 
 liabilities may be chargeable against 
 the society must be made good out 
 of its assets: if these are insuffi- 
 cient, the duty of contribution 
 reaches all members, as such, equal- 
 ly, whether they be borrowers or 
 investors. See ante, 104, 106, 
 110. 
 
 8 See Cook v. Kent, 105 Mass. 
 246; cit. Bowker v. Mill River Loan 
 Fund Association, 7 Allen (Mass.), 
 100; Windsor and Applegarth . 
 Bandel et al., 40 Md. 172; 14 Amer. 
 Law Reg., N. S. 250; The City Loan 
 and Building Association of Augus- 
 ta et al. v. Goodrich et al., 48 Ga. 
 445; The Low Street Building As- 
 sociatiou No. 6, etc., v. Zucker, 48
 
 497.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 503 
 
 497. Thus, in a case arising in Massachusetts, a building 
 association, duly incorporated, was governed by articles of as- 
 sociation which provided, inter alia, that borrowers should 
 upon receiving their advancements, cease to be members, but 
 give bond and mortgage for the payment, besides interest 
 monthly, and fines, of the sum advanced, namely, monthly 
 dues, " to be applied in liquidation of the principal sum ;" ' 
 that a borrower might redeem before dissolution of the 
 society upon application to, and approval by, the officers ; that 
 neither interest nor fines should be deducted in computing the 
 amount due on the mortgage ; that the entries in the books 
 of the secretary should be prima facie evidence against any 
 member, but that an appeal might be had to a meeting of the 
 association, of which twenty-five should be a quorum ; and 
 for the election, duties, and removal of officers. The secre- 
 tary of the association purchased and took assignments to 
 himself of all the bonds, mortgages, and assets of the associa- 
 tion, and of all the unredeemed shares. This, it was held, 
 amounted to a complete suspension, if not a final dissolution, 
 of the society as a corporation by the unanimous consent of 
 all its members, and the liability to pay monthly dues, or 
 fines, or interest on the amount advanced ceased with it. 
 There being no longer a quorum of members necessary to the 
 transaction of any business ; no possibility of appealing to a 
 meeting of the association from the entries of the secretary, 
 by the rules made prima. facie evidence against members ; no 
 meetings for the election or removal of officers to whom the 
 borrower might apply for the redemption of his land from 
 the mortgage, nor for any other corporate object or purpose, 
 it would be most inequitable to oblige one party, or those 
 holding, by assignment, his interest, to continue to make the 
 payments required of him by his contract, while the other 
 party had incapacitated itself from carrying out the provi- 
 sions made in the same contract for ascertaining the extent of 
 the mutual obligations of the parties, and for securing the 
 
 Md. 448; The Peter's Building As- certain limited attributes of mem- 
 
 sociation No. 5 of Baltimore City v. bership were reserved to borrower-; 
 
 jaecksch, 51 Md. 198. (as see passim). The principle ap- 
 
 1 Thus giving them ;i share in the plies d fortiori, where the nu-mljer- 
 
 workings of the concern. Besides, ship continues in toto.
 
 504 THE LAW OF BUILDING ASSOCIATIONS. [CU. XVIII. 
 
 performance thereof on its own part. It was, therefore, held 
 that the liability to pay monthly dues and fines ceased upon 
 the day of the assignment to the secretary, and that an ad- 
 vanced member was entitled to redeem his mortgage upon 
 payment of the amount due thereon, with interest, to the time 
 of such assignment. 1 
 
 498. The rule is more clearly laid down in a case de- 
 cided in Maryland. A building association had become pre- 
 maturely dissolved by the withdrawal of members takin<> 
 their money with them, and to such a degree crippling the 
 society as to make its further continuance a matter of impos- 
 sibility, a case of dissolution, in effect, by the loss of an in- 
 tegral portion of its membership, causing a breach which 
 could not be repaired." Upon foreclosure of the mortirauv^ 
 held by the building association against members whose 
 shares of stock had been redeemed by loans or advancements, 
 the rule for determining the true amount due under them 
 
 o 
 
 was said to be, to allow not only for the sums paid by them as 
 periodical dues, but also for what they had paid as interest ; 
 while they were to be charged with interest at the legal rate 
 per annum on the sums advanced by the building association, 
 and so, from time to time, on the balance of such sums, after 
 deducting therefrom the moneys paid by them for periodical 
 dues and interest. On the payment of the balance due on 
 the mortgages, they were to be released. " By the dissolution 
 of the society before the period originally contemplated and 
 the alteration of the articles, their contract is at an end. It 
 is impossible for them to perform the covenants contained in 
 their mortgages, and they are entitled to have them released 
 upon payment of the sum justly due." ! 
 
 499. It must be observed that this case is different from 
 one in which the embarrassment of the building association 
 arises from a mere refusal of any number of shareholders tc 
 continue their stock-payments. This may tend greatly to in- 
 crease the burden of the borrower. But " by the terms of his 
 bond, he assumes the hazard of all losses sustained by the 
 
 1 Cook v. Kent, 105 Mass. 246 ; cit. 3 Windsor and Applegarth v. Ban 
 
 Bowkcr v. Mill River Loan Fund del et al., 40 Md. 172; 14 Amer. 
 
 Association, 7 Allen (Mass.), 100. Law Reg., N. S. 250. 
 
 " See ante, 471^72.
 
 500.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 505 
 
 corporation either by fraud, accident, or the defalcation of its 
 members. Every shareholder must of necessity incur that 
 hazard. He cannot escape the hazard, nor can his liability to 
 loss be diminished by entering into an obligation and giving 
 security for the payment of his dues to the corporation." ' 
 It is true that such behavior on the part of members may 
 throw the building association into insolvency, but the insol- 
 vency of a corporation does not of itself excuse the payment 
 of stock subscriptions. 8 And hence it will not constitute, by 
 itself, a defence of which any particular member can avail 
 himself when sued by the building association for the non- 
 performance of his undertakings. To do this, there must be 
 a dissolution, a cessation of the building association to exist as 
 a corporation. And this, it is said, must be clearly estab- 
 lished, in order to enable a person to escape from an indebted- 
 ness which is shown to exist. 3 Insolvency does not neces- 
 sarily bring it about. The building association's corporate 
 business is not thereby terminated. Its franchises may be 
 uninterruptedly carried on, though, perhaps, not with the ad- 
 vantages contemplated in the inception of the enterprise, and 
 the recusants may be compelled to pay the penalty of their 
 disloyalty. 4 
 
 500. So, too, where a building association by agreement 
 had suspended its operations until its mortgage securities, 
 which were in process of collection, could be realized on, and 
 
 1 Hoboken Building Association made by the society, for the pur- 
 . Martin, 2 Beas. (N. J.) 428. The pose of winding up its business 
 court, in this case, says that "the with borrowers who repaid volun- 
 defeudant's obligation to pay is ab- tarily. But see Watkins v. Work- 
 solute." But it also says that, ingmen's Building and Loan Asso- 
 where the fact of indebtedness is ciation, 10 "W. N. C. (Pa.) 413; 38 
 established, a very clear case should Leg. Int. 333; 97 Pa. St. 514; 
 be made out to enable the debtor to where one who repudiated terms 
 escape liability, on the ground that offered for voluntary repayment 
 the corporation had ceased to exist, was, when sued, not held entitled 
 thus recognizing the dissolution to claim their benefit, 
 of the society, if established, to be * Angell and Ames, Corp., 
 an element in abrogating the con- 523; cit. Dill v. Wabash Valley R. 
 tract. Besides, the borrower was, Co., 21 111. 91. 
 in fact, held entitled to redeem his * Hoboken Building Association 
 mortgage upon payment of what v. Martin, ubi supra. 
 he had actually received with legal * See ante, 86-102, 451. 
 interest, this being the arrangement
 
 506 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVIII. 
 
 in the mean time the farther payment of monthly dues of its 
 members, as required by charter and by-laws, was to be dis- 
 pensed with and suspended, until a reasonable time was had 
 to collect the securities; but, if said securities should not 
 yield enough money to close up the building association as 
 contemplated by its charter, then the payment of monthly 
 dues was to be resumed at such time as the Board of Directors 
 would determine, upon reasonable notice to the members : it 
 was held that a borrowing member was bound to pay interest 
 to the building association upon the balance of his indebted- 
 ness to it at the date of the agreement, unless he paid it over 
 at once. 1 Here, too, there was no dissolution. 
 
 501. On the other hand, the principle is again recog- 
 nized in the following cases. The stockholders of a building 
 association agreed unanimously, at a period long antecedent 
 to the time, when, by the rules of the company, it would 
 close, to cease operations and settle their mutual relations on 
 principles of equity. At the same meeting a majority of the 
 stockholders adopted, by a vote, a scheme of settlement, 
 which repudiated, as a basis, the rule of crediting each stock- 
 holder with his payments, and legal interest thereon, and 
 charging him with the receipts and legal interest, but was 
 based upon an arbitrary compromise of the assumed rights of 
 the borrowers and non-borrowers, under the charter, in its 
 ordinary workings. A large minority of the stockholders 
 protested against this scheme, and filed a bill in equity, seek- 
 ing to enjoin the officers of the corporation from carrying out 
 said scheme, and praying that the rights of the parties should 
 be ascertained and the assets disposed of by the court on prin- 
 ciples of equity, which, the bill claimed, simply required each 
 stockholder to be credited with his payments and legal inter- 
 est, and charged with his receipts and legal interest. It was 
 held, that, even though the rules of the company under the 
 charter were not obnoxious to the laws against usury, still, as 
 by common consent it was agreed that the company was now 
 to wind up, and as the contracts of the parties must, there- 
 fore, of necessity be set aside, and the rules of the charter 
 
 1 Thomson v. Ocmulgee Building and Loan Association, 56 Ga. 350.
 
 502.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 507 
 
 disregarded, it was not competent for the majority to adopt a 
 scheme repudiating the rate of interest prescribed by law be- 
 tween persons having moneyed dealings with each other, and 
 that, therefore, the injunction must be granted, which must, 
 however, not hinder the collection of debts due by the stock- 
 holders who had forfeited their shares before the date of the 
 agreement. " The cardinal rule for settlement will then be, to 
 charge each stockholder with his receipts, and interest on them 
 from the time of receipt, and to credit him with his pay- 
 ments and interest from the date of the same, and to divide 
 the assets, after allowing for expenses, losses, etc. And it is the 
 duty of the chancellor to take such order as will ensure the 
 speedy payment of the balances due, and the collection of all 
 the assets according to the rights of the parties in each case. 1 
 And stockholders, who have received more than their proper 
 share, may be compelled to refund," and should be made de- 
 fendants in a bill to wind up, etc. 4 
 
 502. A similar, though by no means identical, case is 
 presented, where a building association has become incompe- 
 tent to perform its obligations to its shareholders, by reason 
 of insolvency, and its affairs have actually been placed in the 
 hands of receivers, with no remaining prospect that the 
 building association will ever resume its former operations. 
 In such a case, a shareholder who has obtained an advance on 
 his shares of stock, on a mortgage which is sought to be fore- 
 closed, is not liable to be charged for periodical dues and 
 fines, subsequent to the receiver's appointment, as if the asso- 
 ciation were continuing in business, and would be able to 
 discharge its obligations towards him during its probable du- 
 ration. 3 " Part," says the court, 4 " of the consideration to 
 the shareholder for the discount or redemption of his shares 
 by the association, at their then fixed value, was the mode and 
 
 'The City Loan and Building ciation No. 6, etc. , v. Zucker, 48 Md. 
 
 Association of Augusta et al. v. 448; The Peter's Building Associa- 
 
 Goodrich et al., 48 Ga. 445. tion No. 5 of Baltimore City . 
 
 Goodrich et al. v. The City Loan Jaecksch, 51 Md. 198. 
 
 and Building Association of Augus- 4 The Low Street Building A.S- 
 
 ta et al., 54 Id. 98. sociation No. 6 . Zucker, ubi su- 
 
 3 The Low Street Building Asso- pra.
 
 508 THE LAW OP BUILDING ASSOCIATIONS. [CH. XVIII. 
 
 time of payment. In such cases as this, the contract, as be- 
 tween the association and the shareholder receiving the ad- 
 vance, assumes this form : The association proposes to sell to 
 the shareholder the right of presently receiving the fixed 
 value of the shares, upon being allowed a certain deduction 
 from the amount, commonly called a bonus, it being, in fact, 
 a deduction made at the time, 1 and the shares thus discounted 
 or redeemed are to be paid for by the continuance of the sub- 
 scription and payment of periodical dues, and fines, if any 
 incurred, until the required amount shall be raised to pay 
 each unredeemed shareholder the fixed value of his shares in 
 full. . . . Thus it is that the [periodical] payments constitute 
 the purchase money which the shareholder is required to pay 
 for what he has received in advance, or anticipation of the 
 time for the redemption of all the shares ; and it is for the 
 security and ultimate payment of these [periodical] dues, and 
 fines, that the mortgage is given. The supposed benefit of 
 the contract to the mortgagor consists mainly of the length of 
 time and gradual manner in which payments are required to 
 be made. He is not in the position of an ordinary borrower 
 of money ; he remains a member of the association, subject 
 to its constitution and by-laws ; and in taking the advance on 
 his shares, he is only allowed to anticipate, for a premium or 
 bonus, the final redemption of all the shares, when the funds 
 realized may be sufficient to pay on each unredeemed share 
 [the fixed value of the same in full] over and above all losses 
 and liabilities. Such being the nature of the contract, and 
 the relation of the mortgagors to the association, the facts, 
 which are undisputed, that the association is insolvent, its af- 
 fairs in the hands of receivers, with no prospect of ever re- 
 suming its former operations, and with not the slightest 
 chance of its ever being able to pay to the holders of the un- 
 redeemed shares the fixed value . . . per share, become most 
 material in determining the rights of the mortgagors. From 
 these facts, it is manifest that the event will never occur, even 
 if the corporation is not actually dissolved, when the mort- 
 
 1 This is probably not accurate curacy in no wise affects the present 
 (see ante, 389-391), but the inac- question.
 
 60-*.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 509 
 
 gagors, according to the terms of the covenant, could be re- 
 leased from the payment of the [periodical] dues, or from the 
 risk of incurring fines and forfeitures for nonpayment. The 
 circumstances of the association, therefore, and its inability to- 
 carry out in good faith the contract with the mortgagors,, 
 must terminate the contract as originally contemplated, and 
 the parties must occupy the same position that they would 
 occupy if the association were dissolved." ' For, " it is not 
 a suspension, but, so far as the borrower is concerned, a dis- 
 solution." ' 
 
 503. It seems that this doctrine is not recognized in 
 Kansas. The articles of a building association provided, that r 
 if the interest be allowed to remain unpaid for more than four 
 months, the directors shall compel payment of principal and 
 interest. A borrower, being a member in the association, ex- 
 ecuted his note to it, in the shape of an ordinary promissory 
 note of $3000, payable at a certain date, with interest, and se- 
 cured this note by mortgage reciting the note, and drawn ns 
 an ordinary mortgage, and conveyed shares of stock to the 
 association. In a suit by the building association against the 
 borrowing member, the court ignored the premium, and ren- 
 dered judgment in favor of the association on the basis of the 
 cash received by the borrower, and decreed foreclosure and 
 sale of all the mortgaged property. The defendant, appeal- 
 ing, contended that the building association, under the con- 
 stitution arid by-laws of the association, as they existed at the 
 time of the execution of the mortgage, could not recover ; 
 that the method of the court in computing the amount due 
 was wrong, and the recovery excessive ; and urged, as an ad- 
 ditional argument, that the building association, by certain 
 amendments to its constitution and by-laws, had precluded 
 itself from complying with its obligations in the premises,, 
 and was therefore in no position to complain of the defend- 
 ant's default. These changes were substantially as follows : 
 
 1 The Low Street Building Asso- Jaecksch, 51 Md. 198; and Windsor 
 
 ciation No. 6, etc. , v. Zucker, 48 Applegarth . Bandel (supra) is fol- 
 
 Md. 448. lowed as to the computation of the 
 
 8 The Peter's Building Associa- amount properly due upon the mort- 
 
 tion No. 5 of Baltimore City t>. gages.
 
 610 THE LAW OF BUILDING ASSOCIATIONS. [CH. XVIII. 
 
 The constitution originally provided that a member whose 
 shares were unpledged for loans might give notice of with- 
 drawal at any time, and that from and after such notice, all 
 dues on such shares should cease. All the holders of un- 
 pledged shares having given notice of withdrawal, the sec- 
 tion of the constitution requiring the payment of dues on 
 shares was amended so as to provide that no dues be there- 
 after required from the unpledged shares. Another amend- 
 ment was also then adopted, changing the manner in which 
 withdrawn shares were to be paid off, and instructing the di- 
 rectors to close the business of the association. It was held 
 that this action in no manner changed the contract evidenced by 
 the note and mortgage, or released any party from any obliga- 
 tion thereon. " When he (the borrower) became a member, he 
 knew that dues on all unpledged shares could be stopped at 
 any time upon the election of the holders of those- shares. 
 He joined the association upon that condition. The holders 
 of those shares made the election, and then the only parties 
 owing dues were the borrowing members. The amendment 
 simply provided a change in the manner of paying off the 
 unpledged shares, and that is something which did not inter- 
 est the plaintiffs in error in the least. Their obligations were 
 not increased . by the amount of a dime by the amendments. 
 So far as the instruction to the directors to close the business 
 of the association is concerned, it cast no new burden upon 
 any borrower, required of him no other or different pay- 
 ments, and simply recognized a duty which the general with- 
 drawal of shares seemed to impose. Plaintiffs in error may 
 have expected that all shareholders would remain such until 
 the close of the association, but the loan was made upon no 
 such condition, and any member had a legal right to with- 
 draw. The exercise of this right by any or all the non -bor- 
 rowing members did not change the contract of plaintiffs in 
 error, or release them from any of its obligations." " It is 
 doubtless true that it was contemplated that a borrower who 
 continued as such, and without default, to the end of the life 
 of the association, should not be compelled to pay the princi- 
 pal of the note, or perhaps, more correctly, that the shares 
 which he held would then be of sufficient value to pay the
 
 503.] DISSOLUTION AND EFFECTS OF DISSOLUTION. 511 
 
 note, leaving the other property in the mortgage free ; but it 
 is equally true that, pending the life of the association, it was 
 contemplated that the note and mortgage should express the 
 very terms of the contract between the parties, that the rela- 
 tion between them should be that of borrower and lender, 
 and that the loan was an asset of the corporation, which, like 
 any other debt, could be collected when it became due. Vol- 
 untary and involuntary payments of the loan were expressly 
 provided for." 
 
 1 Hekelnkaemper et al. v. The 
 German Building and Savings As- 
 sociation of Atchison, Kas., 22 Kas. 
 549. It must be observed that the 
 advance was, in this case, treated 
 strictly as a loan, and the Ohio, 
 Maryland, and Georgia cases, as to 
 computation of the amount present- 
 ly due upon a building association 
 mortgage securing the payment of 
 dues, expressly distinguished and 
 held inapplicable on that ground. 
 In Massey v. The Citizens', etc., As- 
 sociation, 22 Kas. 624, the English 
 theory of partnership dealings in the 
 loans is adopted, and the taking of 
 premium, etc., justified because it 
 is not a mere loan. The case of 
 Watkins v. The Workingmen's 
 
 Building and Loan Association, 10 
 W. N. C. (Pa.) 414; 38 Leg. Int. 
 333; 97 Pa. St. 514, differs from He- 
 kelnkaemper's case (supra), in that, 
 in the former, there was an actual 
 default of the borrower rendering 
 his mortgage collectable. Moreover, 
 the building association had offered 
 the borrowers the opportunity ol 
 redeeming upon payment of 100 01 
 103 months' dues, instead of await- 
 ing the regular determination of tha 
 business of the society; thus extend- 
 ing to them a benefit equal to what 
 they lost in the shortened period 
 of the investing members' contribu- 
 tions. There was no attempt to 
 change the par value of the 
 stock.
 
 THE LAW OP BUILDING ASSOCIATIONS. [CH. XIX. 
 
 CHAPTER XIX. 
 
 THE PLEA OF NUL TIEL CORPORATION. 
 
 504. Corporate existence de facto with prima facie title shown cannot 
 be questioned collaterally. State alone can question incor- 
 poration. 
 
 505. Same rule obtains under all methods of incorporation. 
 
 506. Irregularities in obtaining charter which cannot be taken advan- 
 tage of collaterally. 
 
 507. Unlawful provisions in by-laws. 
 
 508. Illegal acts subsequent to incorporation. 
 
 509. Lapse by charter-limitation. Denial of specific powers. Cura 
 live acts. 
 
 g 512. Exceptions to rule that corporate existence cannot be collaterally 
 inquired into. 
 
 513. Admission of corporate existence estops from denying it subse- 
 quently. Purchaser from mortgagor to society. 
 
 516. Estoppel arising by behavior. 
 
 Corporate Existence de facto with Prima Facie Title Shown cannot 
 be Questioned Collaterally. State Alone can Question Incorpora- 
 tion. 
 
 504. The plea of nul tiel corporation, interposed as a 
 defence in a suit in which the building association is plaintiff, 
 is sufficiently answered by the latter, by showing a prima 
 facie title to corporate existence, based upon a de facto acqui- 
 sition of the franchise, from the proper source, apparently 
 legal. This being produced, neither fraud or irregularities 
 in the proceedings to obtain the incorporation, nor any illegal 
 features of the charter shown, nor such subsequent acts of 
 the society or its officers as would work a forfeiture of its 
 franchises, if urged by the proper authority, and in the 
 proper proceeding, can be adduced for the purpose, nor, 
 being proved and apparent, can be made the ground, of 
 impeaching its corporate existence by way of defence, collat- 
 erally, against its demands. Admitting that the proceedings 
 had, with a view to secure the corporate character, were so 
 defective or tainted with fraud, and that the building associa- 
 tion's conduct had been such, as to make it liable to the loss 
 of its franchises, it belongs to the State, and to the State 
 alone, by a proceeding instituted for that purpose, to enforce
 
 505.] 
 
 THE PLEA OF NUL T1EL COKPOIIATION. 
 
 511* 
 
 the penalty ; and the building association, until, by judicial 
 sentence, its charter is declared void, is a corporation de 
 facto, and no private person, more especially no person deal- 
 ing with it, can be permitted to say, that it is not also a 
 corporation dejure. 1 
 
 Same Rule Obtains under All Methods of Incorporation. 
 
 505. Nor is there any distinction to be drawn, in this re- 
 spect, whether the incorporation be effected by act of the Leg- 
 islature, directly granting the charter; by the Executive issu- 
 ing letters-patent by virtue of authority conferred upon him 
 by law ; by the court exercising a discretionary power under 
 the statute ; or by the act of the parties themselves, self-con- 
 etituting under a general law, where the charter or certificate 
 is merely the ministerial authentication of their act, ratified 
 upon the assumption that the actual organization has been 
 conducted according to law. No difference is recognized 
 between the effect of any particular one of these modes of 
 incorporation, and the effect of the other.* 
 
 1 Mechanics' Building Association 
 . Stevens et al. , 5 Duer, 676 ; Patti- 
 son v. The Albany Building and 
 Loan Association, 63 Ga. 373; The 
 Lincoln Building and Savings Asso- 
 ciation v. Graham, 7 Neb. 173; Same 
 0. Benjamin and Benjamin, Ib. 181 ; 
 McLaughlin v. Citizens' Building 
 Association, 62 Ind. 264; Lord and 
 Robinson v. Essex Building Associa- 
 tion No. 4, 37 Md. 320; Becket t>. 
 Uniontown Building Association, 
 88 Pa. St. 211 ; Workingmen's 
 Building Association 0. Coleman. 89 
 Id. 428; Miller's Est., 2 Pears. (Pa.) 
 248; Manuf. and Mech. Sav. and 
 Loan Co. v. Conover, 5 Phila. (Pa.) 
 18: West Winsted Savings Bank 
 and Building Association v. Ford, 
 27 Conn. 282; Same v. Rice, Ib. 
 293; Hoboken Building Association 
 ' t>. Martin, 2 Bens. (N. J.) 428; Reg. 
 v. D'Eyncourt, 9 L. T. Rep., N. S. 
 72; 28 J. P. 116 ; 4 Best and S. 
 (116 Engl. C. L. R.) 820; 12 W. R. 
 40S; S. C.. 33 L. J.. M. C. 89; 10 
 
 Jur., N. S. 513; 3 N. R. 420. See 
 also, Triton Insurance Co. . Mc- 
 Garian, 4 Denio, 392; Brouwer v. 
 Appleby, 1 Sandf. S. C. Rep. 158; 
 Palmer v. Lawrence, 3 Id. 161, 170; 
 Irvine v. Lumbermen's Bank, 2 W. 
 and Serg. (Pa.) 190; Dyer & Co. V. 
 Walker, 40 Pa. St. 157; Coil v. 
 Pittsburgh Female College, Ib. 
 439; Commonwealth v. Morris, 1 
 Phila. 411; Cochran et al. v. Arnold 
 et al., 58 Pa. St. 399; Importing 
 and Exporting Co., etc., T. Locke, 
 50 Ala. 332; The Regents, etc., 
 v. Williams, 9 G. and J. (Md.) 365. 
 426; Jones v. Dana, 24 Barb. (N. Y.) 
 402; Stedman v. Eveleth, 6 Mete. 
 (Mass.) 114; Baker v. Adra'r of 
 Backus, 32 111. Ill; Glover v. Giles, 
 L. R., 18 Ch. 173. 
 
 s Cochran et al. v. Arnold et al., 
 58 Pa. St. 399 (overruling Paterson 
 v. Arnold, 45 Pa. St. 410). The 
 persons composing a corporation, 
 under such circumstances, cannot, 
 therefore, be sued in their individ-
 
 514 THE LAW OF BUILDING ASSOCIATION'S. [CH. XIX. 
 
 Irregularities in Obtaining Charter which cannot be Taken Advantage 
 of Collaterally. 
 
 506. Among the defects in the proceedings to obtain 
 incorporation, which cannot, upon collateral inquiry, affect the 
 validity of a charter produced, or the corporate existence and 
 right of recovery of the plaintiff, are the following: Fraud 
 and bad faith in misstating the amount of capital stock sub- 
 scribed, either to the Legislature, 1 or under a general act ;* the 
 failure of the whole number of corporators required by the 
 statute to sign the application to court for a charter,' or the 
 articles of association to be filed or recorded according to the 
 provisions of the statute ; 4 the omission in the petition, or 
 certificate, to state the names and number of the first trustees, 
 and to file a duplicate of the articles of incorporation with the 
 Secretary of State, if required ; 8 to fill out the blank intended 
 for the insertion of the day of the month given as that in 
 which the association was effected ;' and the insufficiency, un- 
 der the law, of the acknowledgment of the articles of such 
 association. 7 
 
 Unlawful Provisions in By-Laws. 
 
 507. Equally futile is an attempt to search the associa- 
 tion's right to be a corporation under a charter shown by it, 
 because some of the provisions incorporated in the charter do 
 not conform with the requirements of the statute under which 
 
 ual names, as partners, the plain- 4 Second Manhattan Building As- 
 
 tiff simply disregarding their claim sociation n. Hayes, 4 Abb. App. 
 
 to be a corporation. Dec. 183; West Winsted Savings 
 
 1 Pattison v. The Albany Building Bank and Building Association v. 
 
 and Loan Association, 63 Qa. 373. Ford, 27 Conn. 282; Same v. Rice, 
 
 8 Cochran v. Arnold, etc., vJbi Ib. 293. See also The People's 
 supra. See also Massey . The Savings Bank and Building Associ- 
 Citizens' Building and Savings As- ation r>. Collins, Ib. 145. 
 sociation of Paola, 22 Kas. 624; 6 Spring Valley Water- Works v. 
 Morrison et al., Rec'rs Chesapeake San Francisco, 22 Cal. 434 (440). 
 Mutual Land and Building Associ- ' Second Manhattan Building As- 
 ation, . Dorsey, 48 Md. 461 ; Gar- sociation v. Hayes, ubi supra. It 
 rett v. Dillsbury and Mechanicsburg was in this case held to be no ma- 
 il. R. Co., 78 Pa. St. 465. terial defect. 
 
 3 Workingmen's Building Associ- T Dannebroge Mining Co. v. All- 
 
 ation t. Coleman, 89 Pa. St. 428. m ent and Barrett, 26 Cal. 286. See 
 
 See also Rlioads . Hoernerstown also Spinning The Home Build'g 
 
 Building Association, 82 Id. 180. and Savings Ass'n, 26 Ohio St. 483.
 
 508.] THE PLEA. OF NUL TIEL CORPORATION. 515 
 
 it was granted. 1 Such an attempt would be entirely irrele- 
 vant and improper. The question of a building association's 
 corporate existence is by no means necessarily involved in the 
 inquiry. Many of the provisions in the articles may be found 
 to be without the warrant of law, and still the corporation exist 
 and be capable of exercising the rights and franchises con- 
 ferred upon it by law. Collaterally such a question cannot 
 arise.* If the proceeding were instituted to enforce and give 
 effect to a specific provision, incorporated into the articles of 
 association, in conflict with, or not justified by law, another 
 and different question would be presented; for no such pro- 
 vision can be enforced. 8 But the mere existence of it cannot 
 be made the ground of attacking the corporate being of the 
 society, except by direct proceedings taken at the instance 
 and in the name of the State. 
 
 Illegal Acts Subsequent to Incorporation. 
 
 508. Nor, again, do subsequent illegal acts or omissions 
 of the association, such as would, at the instance of the attor- 
 ney-general, upon quo warranto, become fatal to its continu- 
 ance as a corporation, give any person defending against a 
 claim of the association the right to turn the tables upon it, 
 and put it upon trial for its life, assuming to set off, as it were, 
 against the breach of his obligations to the society, the viola- 
 tion of the latter's duty to the State, and requiring the court 
 to interrupt the process of determining his own liability to 
 the association, which is the direct purpose of the suit, and to 
 go, collaterally,. into an investigation of its rights, by reason of 
 any act or omission, on its part, to retain franchises guaranteed 
 to it by its charter. Even if the association, in consequence 
 of improper behavior, has lost its right to insist upon these 
 privileges as against the State, it is still, until sentence of dis- 
 solution has been pronounced upon it, in a proceeding insti- 
 tuted directly for the purpose, a corporation de facto. " If 
 there is anything settled, it is that the corporate existence of 
 a corporation de facto cannot be inquired into collaterally. 
 
 1 Lord and Robinson V. The Es- 211. See also Rhoads . Hoern- 
 
 sex Building Association No. 4, 37 erstown Building Association, 83 
 
 Md. 320; Becket v. Uniontown Id. 180. Ib. 
 
 Building Association, 88 Pa. St. See nte. 309.
 
 516 THE LAW OF BUILDING ASSOCIATIONS. [ell. XIX. 
 
 Upon this subject, the authorities are too numerous to admit 
 of citation." ' 
 
 Lapse by Charter Limitation. Denial of Specific Powers. Curative 
 Acts. 
 
 509. A qualification must, however, be added to this. It 
 has been said a that the doctrine, that the corporate existence 
 of a plaintiff denominating himself a corporation cannot be 
 impeached in the suit, " does not go to the extent of preclud- 
 ing a private person from denying the existence dejure and 
 de facto of an alleged corporation. It cannot be true that 
 the mere allegation that a party is a corporation puts the 
 question, whether it is such a corporation, beyond the reach 
 of inquiry in a suit with a private person. It must be a cor- 
 poration either dejure or defacto, or it has no legal capacity 
 to sue or be sued, nor any capacity of any kind. It is an in- 
 dispensable allegation, in an action brought by a corporation, 
 that the plaintiff is a corporation, and it results from the logic 
 of pleading that the opposite party may deny the allegation. 
 Were this not so, any number of different bodies of men, each 
 body styling itself the directors of a given . . . company, 
 might bring separate actions," without any possibility of 
 showing, on the part of the defence, that they are not such, 
 and that their claim to appear such is fraudulent and untrue. 
 This every defendant, unless he has estopped himself by his 
 previous actions or admissions, 3 is at liberty to do, under a 
 plea of nul tiel corporation, until an actual charter apparently 
 legal is shown. Even then there is nothing to prevent his 
 demonstrating, from the face of the charter, that the period 
 for which the society was incorporated has run out, and that, 
 upon its own showing, it is working under a grant of fran- 
 chises, which by its very terms has become inoperative by 
 lapse of time. 
 
 510. Nor is there any rule of law which would preclude 
 him from contending, upon the basis of the charter produced, 
 
 1 Cochran et al. v. Arnold et al., * Oroville and Virginia R. R. Co. 
 58 Pa. St. 399, 405, and see ante, v. Plumas County, 37 Cal. 354, 
 cases in notes to 504-505. As See post, 513-516. 
 to unlawful acts of building associ- 
 ation, see ante, 285-324.
 
 510.] THE PLEA OF NUL TIEL CORPORATION-. 517 
 
 together with the record of its origin accompanying it, that 
 the corporation impleading him, whilst being a corporation, is 
 not a building association under the laws of the State, and 
 not, therefore, entitled to exercise the privileges and demand 
 the exactions conceded to such corporations exclusively. The 
 manner of obtaining the charter, the provisions it embraces, 
 and the rules of business adopted by the society, may be such 
 as to indicate, that whilst it is a corporation de facto, and, for 
 all the person defending can be permitted to say, de jure, it 
 becomes perfectly apparent that it is not a corporation incor- 
 porated under the particular act whose benefit it claims. 
 Such a defence does not draw in question the corporate exist- 
 ence of the building association. It merely denies its right 
 to exercise privileges conferred by an act under whose protec- 
 tion it has never placed itself, and to share in whose benefits 
 it can show no credentials. Such an association may in law, 
 and for the purposes of the defence, be a corporation ; but it 
 cannot claim the powers conferred by the statute upon those 
 institutions which are specifically its creatures, unless it has 
 brought itself under that statute, by virtue of amendments or 
 corrections authorized by law. Nor, it seems, will curative 
 acts, intended to reach building associations generally, help 
 such corporations, because, whatever they may be, they are 
 not building associations. Thus, where the charter of a build- 
 ing association was obtained upon a petition of a less number 
 of citizens of Pennsylvania than the Act of 1859 required, and, 
 besides, many of its provisions were inconsistent with those of 
 that statute, this was held to be evidence that it was not the 
 intention of the persons applying for, or of the court grant- 
 ing the incorporation, to proceed under the Act of 1859, and 
 the rights of building associations under that act were held 
 inapplicable to it. 1 But if the intention to incorporate under 
 the proper act is clear from a correspondence of the charter 
 provisions with the leading features of the act, or from the 
 agreement in the number of the corporators signing the char- 
 ter with those required by statute, and there is a general con- 
 formity in the actual management of the society with the 
 
 1 Rhoads v. Hoernerstown Build- etc., Society, 45 Md. 546. But see 
 ing Association, 82 Pa. St. 180. See 514. 
 also Williar v. The Butcher's Loan,
 
 518 TilK LAW OF BUILDING ASSOCIATIONS. [ II. MX. 
 
 statute, then neither the defect of corporators,' nor the in- 
 consistency of some of the charter provisions,* will, standing 
 alone, debar the association from taking advantage of a cura- 
 tive enactment passed for the benefit of building associations 
 generally, or exercising the rights by law conceded to such. 1 
 511. As to the constitutionality of such curative acts, in 
 their effects upon contracts made before they are taken ad- 
 vantage of, a case arose in Ohio, where, under the Act 21 
 Feb., 1867 (64 Ohio L. 18), the certificate of incorporation 
 was, by mistake, acknowledged before a Notary Public, in- 
 stead of a Justice of the Peace, as then required. In pro- 
 ceedings under the Act 10 Mar., 1859 (2 S. and C. 117-'), 
 being an act to authorize courts to give effect to the intention 
 of parties and officers by curing defects, omissions, and errors 
 in instruments and proceedings, the mistake was subsequently 
 corrected. It was held, that, as the Act of 1867 contemplated 
 the assistance of that of 1859, the two must be taken together; 
 that, therefore, there was no invasion of any vested rights in 
 giving it its full effect, which was, that the correction made 
 thereunder rendered the building association a corporation de 
 hire from the date of its organization, not only as against 
 persons dealing directly with the building association, but as 
 against all others. 4 And in Pennsylvania, an act passed 11 
 
 1 Workingmen's Building Asso- must be supposed that the Act of 
 
 chit i<m r. Coleman, 89 Pa. St. 428. 1874 was held inapplicable to the 
 
 Becket v. Uniontown Building case, because the charter of the build- 
 Association, 88 Pa. St. 211. ing associr.tion showed upon its face 
 
 * In Pennsylvania an act was no intention to be incorporated un 
 passed, May 11, 1874, validating der the Act of 1859; and as there 
 charters of building associations, was, at the time of its organization, 
 " defective in validity." The cases no other building association act 
 of Rhoads v. Building Association, in force in Pennsylvania, it was, 
 Building Association v. Coleman, therefore, not a building association 
 and Becket v. Building Association, at all, and consequently not aided 
 above cited, were all decided subse- by the Act of 1874. Its status was 
 quently to that act, and must, there- that of an unincorporated society, 
 fore, be read together. The fact Possibly, too, the act was held inap- 
 that, in the first, the Act of 1874 plicable on account of rights of par- 
 was not brought to the notice of the ties attaching before its passage, 
 court, can scarcely throw the case 4 Spinning v. The Home Build- 
 out, especially as it was not subse- ing and Savings Association, 26 
 quently expressly overruled, but Ohio St. 483. 
 
 referred to and distinguished. It
 
 513.] THE PLEA OF NUL TIEL CORPORATION. 519 
 
 May, 1874, was held to lend its aid to building associations 
 for the enforcement of contracts made before its passage. 
 But it is proper to say that the question of constitutionality 
 was not raised. 1 
 
 Exceptions to Rule that Corporate Existence cannot be Collaterally 
 
 Inquired Into. 
 
 512. In certain cases, moreover, it is said by Mr. Field 
 in his " Treatise on the Law of Private Corporations," 9 it has 
 been held that the corporate existence may be inquired into, in 
 a collateral proceeding. " Thus, in a proceeding in chancery 
 against a corporation, to set aside a conveyance of real estate, 
 alleged to have been obtained by the fraud and misrepresenta- 
 tion of the company, in relation to its existence as a corpora- 
 tion, it has been held that the fact, whether or not the com- 
 pany ever had a corporate existence, so as to enable it to take 
 and hold property, may be inquired into ; and that if a com- 
 pany, professing a corporate existence which it does not 
 possess, fraudulently acquires, for a particular purpose, the 
 property of another, and conveys the same, the sufficiency of 
 such conveyance or transfer may be inquired into collaterally. 
 And if a corporation, by its own acts, has ceased to exist, or 
 lias suffered or permitted acts which destroy its existence, it 
 is as fully and entirely dissolved, as if declared so to be by the 
 judgment of a competent court ; that where a corporation has 
 ceased to have an existence, as a legal and necessary con- 
 sequence of certain acts, and a party claims that he has been 
 injured thereby, or that certain benefits result to him there- 
 from, he may have his remedy without first instituting direct 
 legal proceedings to have the corporation declared dissolved 
 by the court." 
 
 Admission of Corporate Existence Estops from Denying it Subse- 
 quently. Purchaser from Mortgagor to Society. 
 513. One who has dealt with a building association. 
 
 more especially a borrower from it, who has expressly recog- 
 
 1 See Workingmen's Building Canal Co. v. Railroad Co., 4 G. and 
 
 and Loan Association v. Coleman, J. 1; Sleep. Bloom, 19 Johns. 456; 
 
 89 Pa. St. 428. 2 Kyd on Corp. 467; King v. Pass- 
 
 * 494, cit. Carey v. The Cincin- more, ST. R. 244; 1 Rolle's Abr. 
 
 nnti. etc., R. R. Co., 5 la. 357; 514; 4 Com. Dig. 273. And see 
 
 Philipps v. Wickham, 1 Paige, 595; Miller's Est., 2 Pears. (Pa.) 248. 
 v. Penniman, 8 Cow. r,s?:
 
 520 THE LAW OF BUILDING ASSOCIATIONS. [CU. MX. 
 
 nized its corporate existence, in the instrument upon which 
 he issued, is estopped from setting up the plea of nnl tlel 
 <><>i-j'<>)'<tt!n as ;i ill-fence. A note to a corporation in its cor- 
 porate name, is such a distinct and express admission of its 
 lawful being, that the maker cannot afterwards be permitted 
 to deny that it is a duly organized corporation. 1 And a mort- 
 gage given to a building association, iii the same terms, also is 
 a recognition of its right to sue in accordance with the act 
 under which it assumes corporate powers. 2 Where, there- 
 fore, a member of a building association had taken a loan 
 from it, giving his note for the amount, and also executing a 
 mortgage to it, in which he described the mortgagee as a body 
 politic and corporate, he was held to be estopped thereafter, 
 in a suit upon his obligation, from denying the corporate ex- 
 istence of the building association, with the special powers 
 conferred by the statute under which it claimed incorporation, 
 although it was uncertain whether or not the charter had been 
 obtained upon the precise proceedings required by the act.* 
 So, too, where an association of persons, in good faith, at- 
 tempted to organize as a corporation, under the laws regulat- 
 ing building associations, and afterwards commenced and 
 carried on business as a building association, it was held that 
 its members and others who have contracted with it as such 
 corporation, are estopped, in a suit on such contract, from 
 setting up the defence of no such corporation, on account of 
 a defect in its certificate of incorporation. 4 
 
 1 The Congregational Society in 282; Stow v. Wise, 7 Conn. 214; 
 
 Troy v. Perry, 6 N. H. 164; Dutch- Danbury and Norwalk R. R. Co. v. 
 
 er's Cotton Manufactory v. Davis, Wilson, 22 Conn. 435; Bank of 
 
 14 Johns. (N. Y.)238. Gallopolis v. Trimble. 6 B. Monr. 
 
 4 Franz v. The Teutonia Build- 599; South Bay Meadow Dam Co. 
 
 ing Association, No. 2, 24 Md. 259. . Gray, 30 Maine, 547; Coelinm r. 
 
 This was an ex parte foreclosure, Arnold, 58 Pa. St. (overruling Pat- 
 
 and the mortgage had no averment terson v. Arnold, 45 Id. 410); An- 
 
 even that the association had com- gell and Ames, Corp., 94. 
 plied with the Act of 1852. 4 Hagerman et al. t>. The Ohio 
 
 J West Winsted Savings Bank Building and Savings Association, 
 
 and Building Association v. Ford, 25 Ohio St. 186; Lucas v. Green- 
 
 27 Conn. 282; Same v. Rice, Ib. ville Building and Savings Associa- 
 
 293; see also Worcester Medical tion, 22 Ohio St. 339; Spinning e. 
 
 Institution . Harding, 11 Cush. The Home Building and Savings 
 
 (Mass.) 285; Narragansett Bank v. Association of Dayton et al., 26 
 
 Atlantic Silk Co., 3 Mete. (Mass.) Ohio St. 433.
 
 516.] THE PLEA OF NUL TIEL CORPORATION. 521 
 
 514. In Connecticut, the doctrine of estoppel as to the 
 impeachment of a building association's corporate existence, 
 seems to have been carried yet farther. A building associa- 
 tion, organized as a corporation and claiming to be such, made 
 a loan to a member, who gave a mortgage, describing the 
 mortgagee as a corporation and by its corporate name. lie; 
 afterwards conveyed his equity of redemption in the mort- 
 gaged premises to another, the conveyance being made ex- 
 pressly subject to the above mortgage, and the purchaser as- 
 suming the. mortgage debt. He considered the loan usurious 
 in its origin, and subject, under the statute, to a large reduc- 
 tion, and, in view of that fact, paid a larger sum for the equity 
 of redemption. There was some question as to the regularity 
 of the incorporation, and, in consequence, as to its power to 
 enforce the loan in spite of the statutes of usury. It appears 
 to have been held, however, fliat as the member, if he had 
 been respondent, would have been estopped from denying the 
 plaintiffs corporate existence, the purchaser under him, and 
 subject to his mortgage, was likewise precluded from raising 
 that defence ; and that the estoppel extended, not merely to 
 a general denial of the existence of the corporation, but to a 
 denial of its possession of the special powers conferred upon 
 it by the statute, and which had been exercised in making the 
 contract. 1 
 
 515. Similarly, an estoppel by express admission is 
 created when the defendant in his affidavit of defence admits 
 that the building association plaintiff is a corporation incor- 
 porated under the act under which it assumes to operate and 
 sue, and the benefits accruing to associations established under 
 which, it claims as against the defendant. None of them is 
 he at liberty subsequently to dispute as inapplicable to it* 
 
 Estoppel by Behavior. 
 
 516. An estoppel may also arise from the conduct of the 
 party setting up the defence. A borrowing member, who 
 has, in every mode and manner, recognized and admitted the 
 
 ' The People's Savings Bank and Association, unrcported decision of 
 
 Building Association v. Collins, 27 Supr. Ct, of Pa., East. Distr., ou 
 
 Conn. 145. Error to C. P of Berks County, 
 
 9 Ganster . Homestead Building 1881.
 
 522 THE LAW OP BUILDING ASSOCIATIONS. [CH. XX. 
 
 validity of the by-laws under which an association acted, and 
 upon the faith of whose admissions others were induced to 
 act, cannot be permitted, when sued by the society, to ques- 
 tion the corporate existence of the society, or impeach the 
 mode by which the by-laws invoked against him were 
 adopted, he having signed them, shared in the profits, and 
 for several years paid his dues regularly. 1 Nor would one 
 who, as a member, obtained a loan from the society, in his 
 bond and mortgage stipulating for faithful performance of 
 his duties as such, be permitted to dispute the society's right 
 to recover from him, on the ground that, he not having signed 
 the by-laws as was required of members, the loan was to a 
 stranger, and hence unlawful.* 
 
 CHAPTER XX. 
 
 UNINCORPORATED BUILDING ASSOCIATIONS. 
 
 517 General nature and legal status of unincorporated building 
 associations. 
 
 518. Unincorporated associations cannot claim benefit of statutes 
 designed to protect societies incorporated under them. By-laws. 
 
 519. Management and contracts of unincorporated building associa- 
 tions. Agents. 
 
 520. Effect of incorporation upon rights acquired whilst unincor- 
 porated. 
 
 521 Incorporation of association by its existing constitution and 
 by laws. 
 
 General Nature and Legal Status of Unincorporated Building Asso- 
 ciations. 
 
 517 It remains to consider briefly the status of unin- 
 corporated building associations before the law, a branch 
 of learning becoming more and more unimportant, the more 
 generally the legislatures of the different States have taken 
 and may take it into their hands to regulate building associa- 
 tion affairs by statute, and the more universally the acquisi- 
 
 1 Morrison et al., Rec'rs Chesa- f Howard Mutual Loan and Fund 
 peake Mutual Land and Building Association . Mclntire, 8 Allen 
 Association, t. Dorsey, 48 Md. 461. (Mass.), 571; and see ante, 818.
 
 517.] UNINCORPORATED BUILDING ASSOCIATIONS. 523 
 
 tion of corporate existence, for the accomplishment of the 
 purposes of the building association scheme, becomes facil- 
 itated, and the rights and incidents and liabilities pertaining 
 thereto defined and circumscribed, by statutory enactment. 
 In the relations of the members to each other and to the 
 society, there is, in the incorporated societies, an unmistak- 
 able partnership element. 1 They are said to be merely 
 incorporated partnerships.* Unincorporated building associa- 
 tions are, therefore, partnerships only. But whilst the former 
 are constituted by and under the sanction of the State, ex- 
 pressly approving and legitimating every detail of the pecu- 
 liar partnership dealings proposed to be carried on, the latter 
 lack the countenance of such supreme authority, and their 
 acts are to be judged, not by the exceptional standard pro 
 vided for the former, but by the general law governing the 
 transactions between private individuals. In applying this 
 law, the courts will allow themselves to be guided by the 
 rules which were adopted by the members in forming the 
 association, or whose binding efficacy they, in joining it, 
 have either formally recognized and subscribed to, or pre- 
 cluded themselves from denying, by their participation in the 
 society's business and profits under those rules. These are anal- 
 ogous to articles of copartnership entered into between the 
 different members ; and the reciprocal rights and duties aris- 
 ing under them, so far as they are countenanced by law, are 
 protected and enforced by the courts, as in the case of volun- 
 tary benevolent associations, to which they bear close resem- 
 blance. But the legality of any given provision of the 
 articles becomes a matter not of construction of special 
 statutes, as in building associations incorporated under such, 
 but of application of general rules and principles of law, or 
 general legislative enactment having no particular reference 
 to the system they affect. Regard must also be had to the 
 general policy of the law as bearing upon any question pre- 
 sented, a consideration from which, in most instances where 
 incorporated building associations are concerned, the courts 
 are relieved by the express will of the legislature overriding 
 such policy, or authoritatively settling, as to the incorporated 
 
 1 See ante, Ch. xii. Loan and Building Association, 9 
 
 * See In re National Savings, W. V . f 1 .(IV 79.
 
 524 THK LAW OF BUILDING ASSOCIATIONS. [CH. X ... 
 
 building associations, points otherwise doubtful or differently 
 decided. 
 
 Unincorporated Associations cannot Claim Benefit of Statutes De 
 signed to Protect Societies Inco' porated under Them. By-Laws. 
 
 518. None of the immunities conferred by the statute 
 upon societies incorporated under it, whereby an exception is 
 created in their favor from the general law, can be claimed 
 or exercised by such as are unincorporated. 1 Nor is a con- 
 tract made prior to incorporation aided by the subsequent 
 incorporation of the society making it." An unincorporated 
 building association may, by its trustees, take bond and mort- 
 gage for loans made by it, s and such obligations may be for 
 the payment of subscriptions during the continuance of the 
 enterprise, 4 but, the better opinion seerns to be that it can 
 recover neither tines 6 nor premiums.' There is no difference, 
 however, between incorporated and unincorporated building 
 associations in the fact that payments upon the stock are rot 
 payments to the mortgage. 7 The scheme itself, in both 
 classes of associations, and the elements and design of the 
 borrowing member's contract in the one and in the other, are 
 the same ; the legality of the details of that contract, of the 
 methods by which it is proposed to work out the contem- 
 plated result, is a very different matter. It is needless to go 
 into any further examination of the business and powers of 
 
 1 Melville v. The American Bene- (Merrill . Mclntire, 13 Gray, 157; 
 
 fit Building Association et al., 33 Baxters. Mclntire, Ib. 168; Barker 
 
 Barb. (X. Y.) 103; Jarret . Cope, v. Bigelow, 15 Id. 130; Delano v. 
 
 68 Pa. St. 67; Link v. Germantown Wild, 6 Allen, 1; Shannon r. Dunn, 
 
 Building Association, 89 Id. 15. 43 N. H. 196) are authorities to the 
 
 * Melville v. The American Bene- contrary, proceeding upon the Eng- 
 
 fit Building Association et al., ubi lish theory of partnership dealings 
 
 supra. in the society, and carrying it to its 
 
 3 Merrill v. Mclntire, 13 Gray logical extremes. This theory has 
 (Mass.), 157; Baxter v. Mclntire, been sufficiently examined hereto- 
 Ib. 168. fore, and the cases decided under it 
 
 4 Ib. extensively reviewed (see 341, 
 
 5 See cases in note 1 ; and ante, 344, 355, 356). It is, therefore, 
 405; but see Massachusetts and unnecessary to go into the question 
 New Hampshire cases in next note. here. 
 
 6 See cases in note 1 ; and ante, 7 Link r. Germantown Building 
 ?? :r>;}, 388 *eqq. The Massachu- Association, 89 Pa. St 15; Barker 
 setts and New Hampshire cases v. Bigelow, 15 Gray (Mass.), 130.
 
 519.] UNINCORPORATED BUILDING ASSOCIATIONS. 525 
 
 unincorporated building associations. The theory underlying 
 all these institutions, whether incorporated or otherwise, is 
 well understood, and the methods by which its results are to 
 be accomplished have been sufficiently discussed. They are 
 available for the purposes of unincorporated societies just 
 so far as their pursuit requires neither express legislative 
 sanction, nor corporate capacity. No functions presupposing 
 the latter can, of course, be exercised by mere voluntary 
 societies ; but these, on the other hand, are untrammelled by 
 the restraints imposed by statute upon incorporated associa- 
 tions, and free to mould their own course, within the limits 
 of the general law, of justice, and of equity, by their articles 
 of association, or constitution, and by-laws passed in con- 
 formity therewith. By-laws inconsistent with the constitu- 
 tion of an unincorporated building association are void. 1 
 
 Management and Contracts of Unincorporated Building Associations. 
 Agents. 
 
 519. The machinery of government in unincorporated 
 building associations is entirely similar to that of the incor- 
 porated societies. The title to its property is taken by and 
 held in the name of trustees. 3 These and the remaining offi- 
 cers are the regular agents of the society, appointed or elected 
 in the manner prescribed by its rules. Through these officers, 
 trustees, and agents specially appointed, the society acts in 
 all its contract dealings, and is bound by them upon the 
 principles of agency.' Thus an assignment from the trustees 
 of such an association of a mortgage held by them, passes the 
 legal title, in the absence of evidence that their power of 
 alienation is restrained by the by-laws of the association. 4 
 But, where a member of a voluntary building association, 
 who was also its secretary, made a bond and mortgage to the 
 society for a loan, part of which he received, but repaid, on 
 being told that the sum borrowed was too great for the real 
 estate security offered, and, executing a new bond for the 
 lesser amount agreed upon, cancelled the first ; it was held, 
 
 1 Powell v. Abbott, 9 W. N. C. tions to the society, ante, 231- 
 
 (Pa.) 231. 253. 
 
 * See ante, 214 * Manahan v. Varnum, 11 Gray 
 
 3 See, as to the appointment of (Mass.), 405. 
 agents and officers, and their rela-
 
 526 THE LAW OF BUILDING ASSOCIATIONS. [cii. XX. 
 
 that if the association did not assent to, or ratify the cancel lu- 
 tion, they might still maintain a writ of entry to foreclose the 
 mortgage. 1 
 
 Effect of Incorporation upon Rights Acquired whilst Unincorporated. 
 
 520. The incorporation of an unincorporated building 
 association under a general statute does not affect the right of 
 its trustees to maintain an action on a bond previously given 
 to it.* " In availing themselves of the provisions of the stat- 
 ute, the associates lost none of the rights which they had 
 previously acquired. The choses in action which belonged 
 and the debts which were due to them, were, in legal effect, 
 and by operation of law, transferred and assigned to the cor- 
 poration." ' So, too, in Indiana, a building association which 
 was organized and did business as an unincorporated society, 
 and received a mortgage from one of its members, was sub- 
 sequently allowed to sue upon it in its corporate capacity, 
 and was not compelled to sue in the names of the individuals 
 who composed the voluntary association before its incorpora- 
 tion. 4 But the validity of the contract itself is not affected, 
 one way or the other, by an incorporation of the society sub- 
 sequent to the date of its execution. 5 
 
 Incorporation of Association by its Existing Constitution and By-Laws. 
 
 521. Where a building association has been in opera- 
 tion, without the corporate franchise, under certain rules 
 established as its constitution and by-laws, an act of Legis- 
 lature incorporating it by its existing constitution and by- 
 laws, without their being embodied in the act, is in Georgia 
 said to be constitutional and valid." 
 
 1 Baxter v. Mclntire, 13 Gray, fund association into a corporation 
 
 168. And upon the trial of the writ under the St. 1854, c. 454, did not 
 
 of entry to foreclose, the defendant transfer their property to the cor- 
 
 cannot object to the introduction in poration without a formal convey- 
 
 evidence of a bond corresponding ance. 
 
 to that described in the condition of 3 Merrill v. Mclntire, ubi supra. 
 the mortgage, except in being for a 4 Stein and wife v. The Indian- 
 less sum, and dated one day later. apolis Building Loan Fund and Sav- 
 
 * Merrill v. Mclntire, 13 Gray ings Association, 18 Ind 237. 
 
 (Mass.), 157. But in Manahan v. 6 Melville v. The American Bene- 
 
 Varnum, 11 Id. 405 (cit. Holland . fit Building Association et al., 33 
 
 Cruft, 3 Gray, 173; Lefflngwell t>. Barb. (N. Y.) 103. 
 
 Elliott, 8 Pick. 455), it was said that Bibb County Loan Association 
 
 the organization of a voluntary loan v. Richards, 21 Ga. 592.
 
 INDEX. 
 
 > 
 The References are to Sections. 
 
 A. 
 A BATEMENT 
 
 for misnomer, none (see AMENDMENT) 257 
 
 distinction between plea in bar and plea in 261 r. 
 
 when plea of nul tiel corporation is plea in 261 ra, 
 
 on premium 399-400 
 
 ABBREVIATION 
 
 of defendant's name in proof of service of writ 257 
 
 ABROGATION OF CONTRACT 
 
 tee OBLIGATIONS ; DUTIES OF MEMBERS. 
 none by subsequent illegal conduct of society or offi- 
 cers 289, 303, 305, 309 
 
 of borrower, by premature dissolution 386, 476, 496-503 
 
 see CONCENTRATION ; DISSOLUTION; FORFEITURE OF CHARTER. 
 ABSENCE 
 
 of funds, when no defence against withdrawing member's 
 
 claim 139 
 
 of director from board-meeting, when no excuse from lia- 
 bility 210 
 
 ABSOLUTE 
 
 assignment of stock may be shown to have been merely 
 
 as collateral 380 n., 452 n. 
 
 liability for dues is, only when whole stock subscribed, 
 
 unless waived 85, 442, 451 
 
 ABSORBING 
 
 of stock and securities by one person dissolves society 476 
 
 ABUSE 
 
 see MISUSE. 
 
 of power does not ipso facto dissolve society 473 
 
 of power, renders society liable to forfeiture of char- 
 ter 285,286,325 
 
 see ULTRA VIRES. 
 
 of power of lending, when no defence to enforcement of 
 contract 288 
 
 $27)
 
 628 INDEX. 
 
 ACCEPTANCE 
 
 of alteration of charter by legislature, discretion of society 
 
 as to 65 
 
 of alteration of charter by legislature, must be unqualified, 65 
 of alteration of charter by legislature, necessary to make 
 
 new grant operative 65 
 
 of alteration of charter by legislature, when to be filed in 
 
 writing 65 
 
 of dues estops society from denying payer's member- 
 ship 79, 176, 431 
 
 of dues to be waiver of forfeiture must be clearly the so- 
 ciety's act 80 
 
 of special terms of repayment, by member, necessary to 
 
 benefit by them 171 
 
 of tender, starts running of interest 178,377,437 
 
 of illegal votes at election, effect of. 188 
 
 of official bond, what is 216 
 
 see APPROVAL. 
 
 of agent's acts ultra vires, effect of. 247 
 
 ACCESS 
 
 to corporate books, members' right of. 114 
 
 ACCIDENT AND MISTAKE 
 
 error in mortgage through, may be corrected 420 
 
 ACCORD AND SATISFACTION 
 
 case of, made out upon compromise between society and 
 
 borrower 109 
 
 is a bar to recovery of usury 360 
 
 ACCOUNT 
 
 of first known building association 5 
 
 sureties not discharged by society's neglect to enforce, from 
 
 officers 217 
 
 overdrawing of, at bank, is not borrowing 294, 300 
 
 court of equity may call redeemed members to, and settle 
 
 up business 483 
 
 liability of directors to, for waste and misapplication of 
 
 funds 212 
 
 between society and borrower, credits upon 156 
 
 upon forced repayment 176 
 
 preliminary, in equity, to or- 
 der of sale, items of... ..177, 428 
 
 of profits, not involved in member's right to withdraw. ..128, 129 
 society not bound to render to its members until 
 ready to wind up...!28, 150, 153,329,336,452,456,457
 
 INDEX. 529 
 
 ACCOUNT Continued. 
 
 of profits, impossibility of society's rendering before wind- 
 ing up 456 
 
 ACCOUNTS 
 
 rules should provide for periodical auditing of. 54 (7) 
 
 treasurer must keep 196 
 
 by-laws providing for periodical, are for security of society, 
 
 and as to it directory only 217 
 
 between society and members remain unsettled till disso- 
 lution 150,336 
 
 of serial societies, how to be kept 180n. 
 
 ACCUMULATED SURPLUS 
 
 what is, for purpose of taxation 470 
 
 ACKNOWLEDGMENT 
 
 of deed, person affixing seal may make 234 
 
 requisites of. 236 
 
 omission of date in 249n. 
 
 by agent, what sufficient to bind society 249 
 
 of receipt of withdrawal notice, not a promise in writing... 264 
 of certificate of incorporation, defects in, do not avoid 
 charter collaterally 506, 513 
 
 ACQUISITION 
 
 of membership, mode of 68 
 
 of real estate (see REAL ESTATE.) 
 
 A.CTIONS 
 
 by and against building associations 254-270 
 
 of assumpsit will not lie for money promised as a 
 
 loan 124, 245 n., 267 
 
 what, lie for refusal of promised loan (see CASE) 124,267 
 
 cannot be brought against individual members for corpo- 
 rate debt 505 n 
 
 member may bring, against delinquent officers, when 124 
 
 parties to, by member against delinquent officers 213 
 
 on restrictive covenants in deed to society, vendor 269 
 necesssity of substitution of, where society ex- 
 pires pending the 270 
 
 form of, where proceeds of sale do not cover mortgage 
 
 debt 429 
 
 form of, on mortgage given society before incorporation.... 520 
 
 prohibited contracts cannot become foundation of. 287, 291 
 
 for recovery of usury must be brought within statutory 
 
 period 362 
 
 2i
 
 530 INDEX. 
 
 ACTIONS Continued. 
 
 against society, right of members to maintain 114, 265-268 
 
 withdrawing member may have 137 
 
 assignee of withdrawal balances, though 
 
 member, may have 137, 266 
 
 member cannot, qua ttockhokler, have, for 
 
 paid up value of stock 144,265 
 
 by officers for compensation 226 
 
 for services before organization 227 n. 
 
 by solicitor for fees 214 n. 
 
 lie on implied contracts 238 
 
 for refusal to transfer shares, measure of 
 
 damages 268, 448-449 
 
 against member, society may have, of assumpsit for 
 
 dues 85,451 
 
 against member, pendency of, does not suspend accruing 
 
 of dues, fines and interest 91,178,377,418 
 
 against member, membership not necessarily extinguished 
 
 by 176,431 
 
 against member on bond, declaration must show present 
 
 right of (see SCIRE FACIAS) 258 
 
 by building association misnamed in the contract 257 
 
 after incorporation, on mortgage 
 
 received before 520 
 
 choses in, of unincorporated society, vest without assign- 
 ment after incorporation 520 
 
 choses in, shares of stock are akin to 444 
 
 tee AFFIDAVIT OF DEFENCE; ASSUMPSIT; AUDITOR'S REPORT; 
 AVERMENTS; CASE; COSTS; DISCONTINUANCE; EVIDENCE; 
 PLEADINGS ; TENDER ; VALUE OF STOCK. 
 ACTS 
 
 incorporation by special, of legislature 57-59 
 
 validating purchase do not validate mortgage for purchase 
 
 money 302 
 
 amendment of, not void for misreciting date of amended 
 
 act 21 (c)n. 
 
 later of two, passed at same session, may repeal former... 470 n. 
 providing for depositors in building associations, validity of, 77 n, 
 see CONSTITUTIONALITY; RETROACTIVE AND EXPOSITORY STAT- 
 UTES; STATUTES. 
 
 criterion of legality of corporate 288 
 
 ultra vires, when, may be ratified by unanimous con- 
 sent 169,284 
 
 ultra vires and prohibited, distinction between 285-292,825
 
 INDEX. 531 
 
 ACTS Continued. 
 
 of majority bind whole corporation 181 
 
 corporate, what are 186 
 
 legality of officers', not to be collaterally inquired into 192 
 
 prohibited by law not validated by charter granted under it, 291 
 
 or charter are void 232 
 
 illegal, of society, no defence against liabilities incurred 
 
 to it 288-289 
 
 legality and effect of certain contracts and 282-325 
 
 illegal, subsequent to incorporation do not avoid charter 
 
 collaterally 508 
 
 done in line of duty, directors cannot claim compensation 
 
 for 227 
 
 of directors, requisites for validity of. 206 
 
 see AGENTS; CORPORATE MEETING; DIRECTORS; ULTRA VIRES; 
 
 UNLAWFUL ACTS. 
 ACTUAL 
 
 fraud not always necessary to be shown 211 
 
 notice when necessary to affect holder of two securities 
 
 with knowledge of junior encumbrancer's rights 469 
 
 ACTUS LEGIS NEMINEM INJURIAT. 174 
 
 ADJOURNMENT 
 
 of meetings regularly called 185 
 
 of election from day to day 191 
 
 of directors' meetings : 201 
 
 ADMINISTRATOR OF DECEASED MEMBER 
 
 not ipso facto a member 73 
 
 powers and duties of. 73 
 
 see EXECUTOR; MARRIED WOMEN. 
 
 ADMISSION 
 
 of corporate existence, what is 513,515 
 
 ADVANCED MEMBER 
 see BORROWER. 
 
 ADVANCEMENT 
 see LOAN. 
 
 analysis and theory of. 826-357 
 
 manner of obtaining to be specified in articles 54(4) 
 
 construed not to be a loan 160 
 
 and 'loan' used as synonymous in this work 115 n., 326 n, 
 
 ADVANTAGES 
 
 to borrower and investor in permanent society strictly so- 
 called..., 46
 
 632 INDEX. 
 
 AFFIDAVIT OF DEFENCE 
 
 necessity of. 258, 264, 265 n. 
 
 estoppel by 515 
 
 AFFIXING 
 
 of common seal 234, 235 
 
 formalities of. 235 
 
 AGENCY 
 
 presumption as to extent of. : 243, 383 n. 
 
 existence of. 244 
 
 burden of proof of, when on party dealing with society 260 
 
 tee AGENT. 
 
 AGENT 
 
 distinction between, of corporation and private 243 
 
 secretary is usually a general, of society 197 
 
 directors are agents 209 
 
 officers are 241 
 
 appointment of, need not be under seal 242 
 
 what is a valid, in mortgage, to sell 434 
 
 who may become 242 
 
 auctioneer may also be purchaser's 242 
 
 compensation of. 226 
 
 authority of, to convey real estate need not be under seal... 235 
 acts of, within apparent scope of authority bind so- 
 ciety 243-246, 383 n. 
 
 secret instructions to, do not affect rights of innocent par- 
 ties 243 
 
 no presumption as to person's being, from previous em- 
 ployment 244 
 
 but from fact of his assuming to be with society's knowl- 
 edge 244 
 
 unauthorized acts of, when not binding 245, 246, 247 
 
 extent and limits of powers of. 245 
 
 powers of, how far must be shown 245 
 
 presumption as to 243, 383 n. 
 
 acts of, in excess of his own powers 245, 246, 247 
 
 society's powers 247 
 
 how far parties dealing with, bound to take notice of 
 
 powers of 245 
 
 where limits of powers of, are apparent, party dealing 
 
 with agent must take notice 246 
 
 when party dealing with, must show agency 260 
 
 contract of, how made to bind society 248,249 
 
 personal liability of, for contracts 248, 249
 
 INDEX. 533 
 
 AGENT Continued. 
 
 personal liability of, for contracts if ultra vires 284 
 
 what notice to, is notice to society 250 
 
 when payment to, not payment to society 319 
 
 receiving bonus by, for loan, presumption as to usury 368 
 
 survival of authority of, where two were appointed 251 
 
 execution by one, of powers to be exercised jointly 251 
 
 delegation of authority by 251 
 
 society's liability for torts, misrepresentations, &c., of. 252 
 
 when chargeable with interest on money collected 253 
 
 of unincorporated building association 519 
 
 gee OFFICERS ; SUB-AGENTS. 
 
 AGREEMENT 
 
 of members to wind up is legal 172 n., 475 
 
 binds consenting member and his as- 
 signee 172 n., 475 
 
 dissolution by 474 
 
 to accept tender starts interest 178 
 
 to sell land, when need not be under seal 236 
 
 AIM 
 
 see DESIGN. 
 
 ALABAMA 
 
 building association statutes in 18 
 
 decisions in 18n. 
 
 powers of building associations as to real estate in 308 Jt 
 
 ALLEGATION 
 
 of default in suit on member's bond or mortgage 258 
 
 ALLEGATIONS 
 
 necessary, in bill by members against delinquent officers.. 213 
 
 for appointment of receiver 483,485 
 
 of payment by borrower, certainty required in 260 
 
 see AVERMENTS. 
 
 ALLOTTEES 
 
 of land liable for equitable lien thereon whilst in society's 
 hands .. Ill 
 
 ALTERATION 
 
 of by-laws, articles must provide for 54(9) 
 
 of constitution, articles must provide for. 54 (9) 
 
 and amendment of constitution, where incorporation is by 
 
 executive 56,59 
 
 and amendment of constitution, where by special act 57, 59
 
 634 INDEX. 
 
 ALTERATION Continued. 
 
 and amendment of constitution, where by decree of court.. 60 
 
 where by voluntary asso- 
 ciation 62 
 
 of charter by legislature and acceptance by society 65 
 
 to be according to existing forma 65 
 
 by-laws making, in prescribed method of election are void.. 277 
 see AMENDMENT. 
 AMBIGUITY 
 
 in rules imposing fines construed in favor of delin- 
 quent 98, 407-409, 411 
 
 in provision for repayment, in favor of borrower.. 167, 168 
 
 AMENDMENT 
 
 of constitution or charter to be provided for in articles.. ..54 (9) 
 where charter granted by execu- 
 tive 56,59 
 
 where charter granted by special 
 
 act 57,69 
 
 where charter granted by decree 
 
 of court 60 
 
 where charter granted by volun- 
 tary association 62 
 
 must conform with intention of 
 
 legislature... 56, 57 
 
 improper, void 56 
 
 of statute not void. for misreinting date of amended act.. .21 (c) n, 
 
 of misnomer of society in bill in equity 257 
 
 AMOT10N OF OFFICERS 
 
 to be provided for in articles 54 (6) 
 
 liability of officers to 220 
 
 power of, by whom exercised... 220 
 
 when officers may sue for salary upon improper J&9 
 
 "AMOUNT OF LOAN TAKEN BY BORROWER" 
 
 construction of. 384 
 
 "AMOUNT BORROWED" 
 
 construction of. 385 
 
 "AMOUNT ACTUALLY RECEIVED" 
 
 loan construed to mean 167, 168 
 
 AMOUNT 
 
 of capital stock, periodical subscription, periodical inter- 
 est, and loan receivable per share, to be set out in 
 articles 54(5)
 
 INDEX. 535 
 
 AMOUNT Continued. 
 
 of loan members are entitled to per share 43 
 
 grantable to any member 126 
 
 withdrawable by any member 128-131 
 
 presently due on mortgage, rule for ascertaining 154-155. 
 
 336, 375, 424, 427, 428 
 
 presently due is same at law and in equity. 428 
 
 where court may go beyond mortgage to 
 
 find 426 
 
 ANALYSIS 
 
 of theory of loans or advancements 326-357 
 
 ANNUAL 
 
 audit of accounts to be provided for in articles 54(7) 
 
 meetings, time and place of, to be set forth in articles 54 (8) 
 
 ANNUITIES 
 
 principle of, applied to computation of present value of 
 building association mortgage 154-157, 
 
 336, 424, 427, 428 
 "ANOTHER" OFFICE 
 
 meaning of. ... 219 
 
 APPLICATION 
 
 of loan, society need not inquire into 116 
 
 impossibility to supervise 125 
 
 of stock payments to loan 374,455-459 
 
 on voluntary repayment....!54-156, 159-164 
 
 on forced repayment 175, 176 
 
 borrower's right to make 431, 453-459 
 
 by borrower, binds society 453 
 
 forces society to accept 
 
 his stock 453 
 
 is optional with borrower 453 
 
 borrower's right of, lost by assignment 
 
 of stock to third party 458 
 
 society's right, as pledgee, to make, 431, 
 
 453-454 
 
 by society, must be prompt and une- 
 quivocal 454 
 
 by society, what is evidence of. 454 
 
 cannot be compelled by mere stranger.. 459 
 
 who may demand besides borrower 459 
 
 compellable for marshalling of assets 460-469 
 tee MARSHALLING OF ASSETS. 
 of stock payments, value of stock for purpose of 455-457
 
 536 INDEX. 
 
 APPLIC A riON Continued. 
 
 of stock payment*, extinguishes membership of debtor. 79, 431 
 order of, as between fines, dues and in- 
 terest 404 
 
 of money to purposes ullra vires of society, when treasurer 
 
 liable for 196 
 
 of money by treasurer must be authorized by warrant 196 
 
 of directors only for increase of stock is good for noth- 
 ing 200, 443 
 
 for appointment of receiver must be by member as 
 
 such 488-489 
 
 for charter, defects in, which do not avoid charter collat- 
 erally 506 
 
 see APPROPRIATION. 
 
 APPOINTMENT 
 
 of agent need not be under seal 235,242 
 
 how made 242 
 
 to sell, what a valid, in mortgage 434 
 
 of attorney should be under seal 255 
 
 of receiver, grounds for. 483 
 
 courts cautious in exercising power of. 483 
 
 who may ask for 488-489 
 
 when equivalent to dissolution of society 502 
 
 effect of, on borrowers' contracts 502 
 
 APPORTIONMENT 
 
 of profits in serial societies (see ACCOUNTS) 47 
 
 of business to committees not an unlawful delegation of 
 
 power by directors 204 
 
 of debt between several securities 465n. 
 
 APPROPRIATION 
 
 of advance in Starr-Bowkett societies 45 
 
 mortgage is, of land to debt 465n 
 
 of funds to withdrawing member's claim, what is 264 
 
 of stock to loan on voluntary repayment 154-156, 159-164 
 
 on forced repayment, after default 175, 176 
 
 right of, in member or society 453-459 
 
 membership not forfeited where no, made, 79 
 see APPLICATION. 
 
 APPROVAL 
 
 of withdrawal, directors cannot withhold, arbitrarily 135 
 
 of official bond, discretion and responsibility of directors 
 in... .. 216
 
 INDEX. 537 
 
 APPRO VAIr Continued. 
 
 of official bond, manner of ... 216 
 
 what is a valid 216 
 
 when presumed 216 
 
 ARBITRATION 
 
 covenant for, in mortgage, valid 177 n., 281 
 
 desirableness of general provisions for 281 
 
 in English building associations 281 
 
 ARITHMETICAL PROGRESSION IN FINES 412 
 
 ARKANSAS 
 
 decisions in 88n 
 
 ARREARS 
 
 building association's lien on stock for 87,450 
 
 member in, cannot withdraw 87 
 
 transfer of stock by 87 
 
 society must permit on pay- 
 ment of 447 n., (sce450n.) 
 
 payment of, after preliminary account and decree, saves 
 
 membership 177 
 
 period of grace for payment of, runs during pendency of 
 
 suit , 178 
 
 ARREST OF SALE 
 
 where period of default not properly averred 258 
 
 discretion of court as to (see EXECUTION). 
 
 ARTICLES, RULES, OR CONSTITUTION 
 
 framing of. 52 
 
 when adopted as basis of incorporation, binding on society.. 53 
 
 what, should contain 54 
 
 purpose of recording ,.....' 62 
 
 illegal provisions in, void and ground of forfeiture of 
 
 charter 479 
 
 illegal provisions in, do not avoid charter collaterally 507 
 
 where court may look at, to ascertain amount due on 
 
 mortgage 426 
 
 where court cannot look into, beyond mortgage 404 n. 
 
 whether trustees or directors must sign copy of, where 
 
 "officers" required to sign 208 
 
 see BY-LAWS ; CONTRACTS ; ROLES. 
 
 ASCERTAINING AMOUNT DUE ON MORTGAGE 
 
 where court may look beyond mortgage for purpose of. 426 
 
 cannot look beyond mortgage 404 n, 
 
 rule for. 154-155,336,424,427,428
 
 538 INDEX. 
 
 ASSENT 
 
 tee CONSENT. 
 
 of members to all lawful acta of society presumed (tee DIB- 
 
 SENTING MEMBERS) 13, 181, 278 
 
 of members to all valid by-laws presumed 271 
 
 not presumed to acta ultra vires 181n 
 
 nor to unreasonable by-laws 410 
 
 if unanimous, may ratify directors' acts ultra 
 
 vires as between them and society 232,284 
 
 makes by-law bad as such, good as a contract 278 
 
 of directors should be given only at a regularly called 
 
 meeting 206 
 
 ASSETS 
 
 becoming equal to par value of all stock, society expires.... 473 
 
 difficulty in estimating value of, of building association 129, 
 
 456-467 
 
 of insolvent society, fraudulent directors postponed on dis- 
 tribution of. 211 
 
 borrowing member entitled to share in surplus of. 371 
 
 disposition of. after expiration of charter 494 
 
 what are available, of building association 492 
 
 mortgages held by society are not, for purpose of wind- 
 ing up 492 
 
 mortgages held by society are, for purpose of taxation 440 
 
 on premature dissolution chargeable with all losses...496 7i.,501 
 tee DISTRIBUTION. 
 
 marshalling of, as to stock pledged as collateral and mort- 
 gage security 460-469 
 
 ASSIGNEE 
 
 of withdrawal balances has same rights as assignor 137 
 
 of member, party to agreement to dissolve, bound 
 
 by it 172 n., 475 
 
 of stock must have transfer entered on corporate books 446 
 
 for benefit of creditors of borrower, may compel applica- 
 tion of stock to debt 4o9 
 
 for benefit of creditors cannot settle up insolvent society... 485 
 of defunct society cannot set up its dissolution as defence 
 
 to its mortgage.. 495 
 
 ASSIGNMENT 
 
 of balances due withdrawing member 136, 137, 266- 
 
 title passes from dying or resigning to remaining trustees 
 
 without 214,233 
 
 title passes from unincorporated society to the earne when 
 incorporated without 520
 
 INDEX. 539 
 
 ASSIGNMENT Continued. 
 
 of lease need not be under seal 235 
 
 private knowledge of directors of, of shares, does not affect 
 
 society with notice 250 
 
 married woman may hold mortgage on husband's land by.. 318 n, 
 
 of mortgages by building associations on expiration 332, 371 
 
 trustees of unincorporated association 519 
 
 of stock to society, though absolute on its face, may be 
 
 shown to be for collateral security only 380 n., 452 
 
 and transfer of stock (see TRANSFER) , 445-449 
 
 of stock to society as collateral, does not make stock-pay- 
 ments payments on debt 452 
 
 of stock to third party by borrower destroys his right of 
 
 applying it to his debt 458 
 
 of all stock and securities to one party, dissolves society... 476 
 ASSOCIATION 
 
 incorporation by voluntary 61 
 
 ASSUMPSIT 
 
 society may maintain for dues 85,451 
 
 member cannot maintain for promised loan 124, 245 n., 267 
 
 for services before organization..... 227 n. 
 
 on implied contracts 238, 240 
 
 for refusal to transfer stock 448 
 
 quantum valebant, whether officers can maintain for services 226 
 implied as to difference between proceeds of sale and whole 
 
 sum due on mortgage 429 
 
 ATTACHING CREDITOR 
 
 when, takes nothing in stock pledged to society (see LEVY). 429 
 transfer of stock, without entry on books, good against.. .. 446 n. 
 ATTENDANCE 
 
 of director at board meeting, a duty ; consequence of neg- 
 lect of. 210 
 
 at court, director cannot recover compensation for... 227 n. 
 
 ATTESTATION 
 
 of president's signature to be made by secretary 197 
 
 by agent of corporate deed " to be his act and deed " 249 
 
 ATTORNEY 
 
 right and manner of employment of, by society 255 
 
 unauthorized cancellation of mortgage by 245 
 
 unauthorized placing of mortgage on record by, does not 
 
 bind society to make the loan 267 n. 
 
 appointment of, in mortgage, to sell on default 434 
 
 see SOLICITOR.
 
 640 INDEX. 
 
 ATTORN E Y-GENER AL 
 
 may apply for forfeiture of charter of society acting ultra 
 
 vires 285,325 
 
 see STATE. 
 
 AUCTION 
 
 of money to be loaned or advanced in building societies... 42 
 
 AUCTIONEER 
 
 may sign memorandum to bind purchaser 242 
 
 AUDIT 
 
 of accounts, articles should provide for periodical 54(7) 
 
 AUDITORS 
 
 articles should provide for, to audit accounts and inspect 
 
 securities 54(7) 
 
 report of, showing shares to be at par, no ground for suit 
 
 at law by member against society for value of stock 265 n, 
 
 AUTHENTICATION OF COMMON SEAL 236, 237 n, 
 
 AUTHENTICITY OF SEAL 
 
 must be proved 236 
 
 AUTHORITY 
 
 to act as agent of society, how given 242 
 
 of agents (see AGENT) 243 
 
 of directors how to be given by them 206 
 
 AVAILABILITY 
 
 of special terms of withdrawal and repayment 171-172 
 
 AVERMENTS 
 
 as to default of borrower in suit against him, necessary 258 
 
 what sufficient in suit, by or against society, as to incor- 
 poration 261 
 
 in bill for appointment of receiver, what, necessary 483, 485 
 
 in bill by members against delinquent officers 213 
 
 of payment by borrower, when sued, certainty required in 260 
 see ALLEGATIONS. 
 
 AVOIDANCE 
 
 of sales and purchases of real estate ultra vires 303 
 
 B. 
 
 BACK-PAYMENTS IN TERMINATING SOCIETIES 41 
 
 BAILEES 
 
 directors as..., 209
 
 INDEX. 641 
 
 BALANCES DUE TO WITHDRAWING MEMBERS 
 
 may be assigned 136, 266 
 
 rights of assignees of. 137, 138, 266 
 
 presumption as to 266 
 
 BALLOT 
 
 containing less names than necessary is good ; if more, void 190 
 
 BANK ACCOUNT 
 
 overdrawing of, is not borrowing. 294, 300 
 
 BANKING POWERS 
 
 building associations have none 291,310 
 
 BANKS 
 
 building associations' dealings with 319 
 
 BAR 
 
 distinction between plea in abatement and plea in 261 n, 
 
 when plea of nul tid corporation is plea in 261 n, 
 
 BARGAIN 
 
 society has the power to make a bad 109 n., 323 n, 
 
 hardship of, without fraud, no excuse from 386 
 
 BASIS 
 
 of general treatise on law of building associations 2 
 
 of equity jurisdiction in foreclosure of mortgages 428 
 
 of taxation on stock of building associations 470 
 
 BEHAVIOR 
 
 may estop a party from denying society's corporate exist- 
 ence 516 
 
 BENEFIT 
 
 redeeming borrower entitled to same, as withdrawing 
 member 156, 162, 163 
 
 held out to borrowers voluntarily repaying cannot be 
 claimed by defaulting borrower 175,457 
 
 of special terms of repayment cannot be claimed by mem- 
 ber unless he has consented thereto 171 
 
 BEST EVIDENCE 
 
 see EVIDENCE. 
 BIDDER 
 
 highest, entitled to loan upon giving proper security.... 116, 122 
 BIDDING 
 
 system of, in building associations, for loan or advance 42 
 
 must not be prejudiced by "fixed" or "minimum" pre- 
 mium 122 
 
 ee MINIMUM PREMIUM.
 
 642 INDEX. 
 
 BILL IN EQUITY 
 
 requisites of, in action by member against delinquent 
 
 officers 213 
 
 requisites of, for appointment of receiver... 483,485 
 
 parties to, in action by member against delinquent 
 
 officers 213 
 
 parties to, for appointment of receiver... ..488-489 
 
 amendment of, for misnomer of building association 257 
 
 for winding up, when not multifarious 482 T* 
 
 when dismissed without costs 489 
 
 BILLS AND NOTES 
 
 purchasing and discounting of, ultra vires 811 
 
 taking of, when legal and when illegal... 479 
 
 see BANKING POWERS; BORROWING POWERS; DISCOUNTING. 
 BIDDING FORCE 
 
 of acts of majority 181 
 
 of contract of loan.... 386 
 
 BLANK 
 
 signing of power of attorney for transfer of stock in 445, 446 
 
 BOARD OF DIRECTORS 
 
 what constitutes a legal, for transaction of business 201-203 
 
 can act only as a board, regularly assembled 206 and note. 
 
 see DIRECTORS. 
 BOND 
 
 treasurer obliged to give 196 
 
 of society must be executed by authority of directors act- 
 ing as a board 236 n. 
 
 of society executed by wrong name, action on 257 
 
 for costs, building associations in Kentucky must give 256 n. 
 
 to building associations in ordinary form, not void for un- 
 certainty 424 
 
 accompanying mortgage is the principal debt in law 365 n. 
 
 stock-payments are not a credit on 452 
 
 what is not a variamce between, as recited in mortgage 
 
 and as shown in evidence 519n. 
 
 x official 196,215-219 
 
 validity of certain defective 216 
 
 for good behavior in office does not cover term upon 
 
 re-election; exception 219 
 
 sureties' liability upon, strictly confined to terms of. 219 
 tee OFFICIAL BONDS ; SECURITY ; SURETIES. 
 BONDS AND MORTGAGES 
 
 to be assessed at full face value for taxation 440
 
 INDEX. 543 
 
 BONUS 
 
 see PREMIUM. 
 
 redeeming borrowers entitled to same as withdrawing 
 
 investors 162,163,430 
 
 allowed on voluntary repayment, not to be claimed by 
 
 defaulting borrower... 175, 457 
 
 for negotiating loan, when usurious 368 
 
 BOOKS 
 
 right of access to corporate 114 
 
 see CORPORATE BOOKS ; PASS BOOKS ; RECEIPT BOOKS. 
 
 BORROWED MONEY 
 
 building association not liable for, when contract of loan 
 was ultra vires 299n. 
 
 BORROWER 
 
 foundation of principles applicable to 146-148,357 
 
 or advanced member, who is 13, 68 
 
 rights of, as member, not affected by impossibility of en- 
 forcing exact terms of contract 76 
 
 membership of 146-148, 176,335,357 
 
 conflict of opinion as to... ., 147-148 
 
 denied in Virginia 482., 
 
 not destroyed by sale under mortgage, where 
 whole debt is collected without applying 
 
 his stock 176,431 
 
 but by sale and application of stock to debt, 431 
 may be preserved after suit, by payment of 
 amount in arrear, as per preliminary ac- 
 count 177,428 
 
 when society estopped from denying 431 
 
 when borrower estopped from denying (effect 
 
 of mistake) 81 
 
 what contract destroys 476 
 
 when borrower deprived of. 147 
 
 may vote, hold office, and transfer stock s'ubject to society's 
 
 lien 113,148,450 
 
 elements of contract between society and, 147, 149-150, 326, 421 
 when only, may claim account of profits from society, 150, 156 
 
 cannot withdraw 147, 151, 430 
 
 share in profits 147 
 
 is liable to contribution for society's losses and expenses... 106, 
 
 107, 152, 346 
 
 is liable to contribution upon his mortgage 106, 107 
 
 upon what implied condition 496 v
 
 544 INDEX. 
 
 BORROWER Continued. 
 
 is liable to contribution in permanent societies 180 
 
 can claim credit only for what he paid in 107 
 
 for dues and interest actually paid 156 
 
 for "fixed" premium illegally exacted, 122, 397 
 not for profits unless allowed by law or 
 
 rule 156 
 
 for same bonus as withdrawing mem- 
 ber 156,162,163 
 
 but not if a defaulter and sued 175, 456, 407 
 
 is not intended to repay before society's expiration 153 
 
 but may repay at any time 152-153 
 
 after payment of arrears and fines, &c 155 
 
 under mortgage, entitled to redeem only on payment of 
 
 all future subscriptions 172 
 
 under mortgage, bound to continue stock payments, &c., 
 
 after repayment of loan 372 
 
 is favored in construction of provisions for repayments, 167, 168 
 cannot be prejudiced by variance of contract or terms of 
 
 repayment, after loan ,...169,279 
 
 may apply his stock-payments to his debt 431,453-459 
 
 but cannot be compelled so to do (we APPLICATION CF 
 
 STOCK) 453 
 
 may transfer his stock subject to society's lien 113, 148, 450 
 
 stock-payments of, not applied to his debt as they 
 
 come in 329 
 
 Btock-payments of, may be applied by him or society 431, 
 
 453-459 
 
 stock-payments of, do not diminish periodical interest 329 
 
 order of application of, to dues, fines, 
 
 interest... 404 
 
 stock-payments of, liability for, and fines and interest not 
 
 suspended by suit.. 263,418 
 
 may make tender, before or after suit 178 
 
 must pay costs in redemption and foreclosure suits 179 
 
 losing pass-book, effect of, on 260 
 
 declaration in suit against, what must be shown in 258 
 
 must show dissolution clearly to evade liability on that 
 
 ground , 262 
 
 effect of dissolution on contract of. 496-503 
 
 has nothing to get on final distribution...- 40,328 
 
 except to be released from his obligations 40 
 
 shares of, may be regarded as sunk in capital stock 371 
 
 but entitled to share in surplus assets 371
 
 INDEX. 545 
 
 BORROWER Continued. 
 
 and interest of, in society, continues 147,335 
 
 rights of, after hypothecation of stock 113, 148,450 
 
 uncertainty of undertaking of. 336 
 
 is estopped from denying his membership, exception 81 
 
 society's corporate existence 85 n., 
 
 513, 516 
 legality of security taken by 
 
 society... 31? 
 
 or of loan to him 5H 1 
 
 may recover usury paid 359, 360 (but sfe 361)- 
 
 who is, so as to be entitled to defend on ground of usury.. 363' 
 is entitled to lowest premium he can get by competition... 395- 
 liable for difference between proceeds of sale under mort- 
 gage and whole sum due -12i' : 
 
 not relieved from his obligations by other members' refusal 
 
 to pay 499 
 
 effect of appointment of receiver on contract of. 502 
 
 when cannot petition for winding up because stock at par.. 491 
 terms of repayment upon death of, and sale of mortgaged 
 
 premises 174 
 
 building association is not a, from its members.. 456. 
 
 see BORROWERS; BORROWING MEMBERS; INFANTS; LOANS; 
 
 MARRIED WOMEN; REPAYMENT. 
 BORROWERS 
 
 all members originally were intended to become 40,313 
 
 advantage to, in permanent societies 46 
 
 liabilities of, in permanent societies 180 
 
 infants and married women as 70 
 
 entitled to priority on distribution of assets of insolvent 
 
 building association 486 
 
 two cardinal principles concerning 857 
 
 cannot force investors to withdraw 17 
 
 BORROWING MEMBERS 
 
 relation of investing members and, to scheme and defini- 
 tion of building association 41 
 
 distinction between investing members and, no basis for a 
 
 classification of membership 68 
 
 BORROWING MONEY 
 
 overdrawing of bank account is not 294,300 
 
 to lend to members, declared illegal 301 
 
 formerly allowed in Maryland 801 
 
 ultra vires, can never make society insolvent.. 489 
 
 2K
 
 646 INDEX. 
 
 BORROWING POWERS 
 
 of infants and married women, limits of. 70 
 
 of building association 293-302 
 
 strictly construed 298 
 
 English doctrine as to 299-300 
 
 American doctrine as to 301 
 
 extent of.. 301 
 
 extent of where given "for the pur- 
 poses of the society" 307 
 
 directors' liability in the absence of.. 198 
 see INSOLVENCY; LENDER; ULTRA VIRES. 
 
 "BOUGHT OUT," OR "REDEEMED" 
 
 signification of terms , 18 
 
 BOWKETT SOCIETIES 44 
 
 BREACH 
 
 of contract, member may sue for, where promised loan is 
 subsequently refused 124, 267 
 
 of trust, directors liable for 209 
 
 BROOKLYN BUILDING AND MUTUAL LOAN FUND 
 
 ASSOCIATION 
 the first building association in America 6 
 
 BUILDING 
 
 see REBUILDING. 
 
 BUILDING ASSOCIATIONS 
 
 an institution in modern society 1 
 
 basis of general treatise on law of. 2 
 
 difficulties in harmonizing law of. 8 
 
 early history of. 4 
 
 account of first known, Greenwich Union Building Ass'n.. 5 
 
 Earl of Selkirk's not the first 5n. 
 
 history of, in America... 6 
 
 period when, became general in America 6 
 
 present prevalence and importance of.. .., 6 
 
 primary design of. 7, 39 n., 40, 75, 113,118-120,478 
 
 description of general working of. 8-11 
 
 explanation of terms used in business of (ceTERMiNOLOQY).12-14 
 
 descriptive names of. 15 
 
 statutes of various states for incorporation and regula- 
 tion of. 18-38 
 
 purpose to aid in acquisition of dwellings an essential ele- 
 ment in 39 n., 118 
 
 definition ot 89-40
 
 INDEX. 517 
 
 BUILDING ASSOCIATIONS Continued. 
 
 for whose benefit scheme of, designed 40 
 
 period of maturity of, how described 40 
 
 relation of borrowing and investing members to scheme 
 
 of. 40 
 
 varieties of. 41-47 
 
 see BOWKETT (44) ; PERMANENT (46) ; SERIAL (47) ; STARR- 
 
 BOWKETT (45); TERMINATING (41); SOCIETIES. 
 
 preliminary expenses in formation of, rules as to 50 
 
 society not liable for, after incorpora- 
 tion 50 
 
 formation of (see FORMATION; INCORPORATION) 50-67 
 
 choice of name of, rules as to 51 
 
 framing of rules, articles, or constitution of. 52 
 
 what rules, articles, or constitution of, should contain 54 
 
 various methods of incorporation of. 55-62 
 
 incorporation by existing constitution and by-laws 58,521 
 
 membership in (see MEMBERSHIP ; MEMBER; BORROWER). .68-81 
 
 policy which created 75,478 
 
 cannot become member in another .75,319 
 
 depositors in 77 
 
 evidence of membership in 78 
 
 membership in, how terminated 82 
 
 powers of, when organized with deficient stock subscription, 85 
 
 may maintain aesumpsit for dues 86, 451 
 
 lien of, on stock of members for arrears, etc 87,450 
 
 debts of, personal liability of members for 110,111 
 
 may be dissolved at instance of members 114 
 
 what societies are not 118 
 
 duties of, to the public and state 118,119 
 
 are not mere savings institutions 119 
 
 nor banks of deposit 128 
 
 what are unlawful practices of. 120 
 
 need not inquire into application of loan.. 125 
 
 membership in, akin to partnership 127,485,517 
 
 are partnerships with corporate rights 485,517 
 
 trust relation of, to members 128,456 
 
 not bound to account for profits before termination 128, 129 
 
 enterprise of, to be judged as a whole 129 
 
 nature of business of, requires full course to be run before 
 
 accounting 129 
 
 uncertain character of property of 129 
 
 may be bound by extra-statutory terms of withdrawal 133
 
 548 INDEX. 
 
 BUILDING ASSOCIATIONS-Cbn/tmmi. 
 
 cannot impose restrictions upon withdrawal contrary to 
 
 statute or charter 133 
 
 must keep funds available for withdrawing member 139 
 
 mutuality of scheme of. 129,146-148,226,329,335,361, 
 
 386, 401, 414, 415, 456, 496, 497, 498, 501 
 
 borrower's contract with... 147,149-150,326,421 
 
 estopped from rescinding resolution to prejudice of a 
 
 member who acted upon the faith of it 170 
 
 estopped from denying borrower's membership nfter col- 
 lection of loan and receipt of dues t 176 
 
 when settling with members on certain basis, cannot deny 
 
 it to any 172 
 
 bound by principle that lawful acts of majority hind all.... 181 
 
 supreme power in, vested in corporate meeting 181 
 
 not dissolved by failure to elect officers.... 188 
 
 business and government of, entirely in hands of officers... 193 
 
 usual officers in 194 
 
 character and purpose of, cannot be changed by directors.. 200 
 
 speak through president and secretary 208 
 
 may compel, in equity, directors to account for waste and 
 
 misapplication of funds 212 
 
 general powers of. 231-281 
 
 have no right to depart from legitimate course of business, 232 
 
 contracts of, how executed 234-237 
 
 liability of, upon implied contracts. 238 
 
 contracts of, may be struck directly by society or through 
 
 agents 239 
 
 generally made through agents 241 
 
 right and liability of, to suits and actions (see ACTIONS). ..254-270 
 
 suing in Kentucky, must give bond for costs 256 n. 
 
 must be party to certain actions 269 
 
 criterion of legality of acts of. 283 
 
 power of, to pass by-laws 271-281 
 
 may waive their own rules 288 
 
 not empowered to do banking business 291, 310 
 
 cannot be held on prohibited contracts 292 
 
 cannot borrow money without express authority there- 
 for 293-302 
 
 power of, to acquire and hold real estate 303-308 
 
 does not extend beyond statutory and charter 
 
 limit 303 
 
 cannot traffic in their own stock 801
 
 INDEX. 519 
 
 BUILDING ASSOCIATIONS Continued. 
 
 cannot invest with other building associations 75, 319 
 
 cannot lend to other corporations 319-321 
 
 liable to State for unlawful departure from powers granted.. 325 
 peculiarity of character of, as shown in transaction of loan 
 
 or advancement 326-328 
 
 customary security for loans in 380 
 
 may apply borrower's stock-payments to his debt (see 
 
 APPLICATION) 431 
 
 being mortgagee, may exercise all powers concurrently, 
 
 notwithstanding its rules 434 
 
 cannot be appointed trustee in mortgage to sell 434 
 
 action against, for refusal to transfer stock on books 448-449 
 
 is not a borrower from its members 456 
 
 taxation of stock of. 470 
 
 dissolution of, and effects of dissolution 471-503 
 
 bound to work out a certain task before voluntary dissolu- 
 tion 474 
 
 concentration of stock and securities in one person dis- 
 solves 476 
 
 insolvency of .485-487 
 
 what is 488 
 
 collateral inquiry into corporate existence of 504-516 
 
 see CHARTER; CORPORATE EXISTENCE; Nur, TIEL CORPORA- 
 TION. 
 
 unincorporated 517-521 
 
 BUILDINGS 
 
 when society has right to erect 301 
 
 BURDEN OF PROOF 
 
 of agency, when on party dealing with supposed agent 260 
 
 under plea of payment 260 
 
 of maturity of stock, on borrower defending 260, 493n 
 
 of losses to be set off against withdrawing member's claim, 
 
 is on society 264n 
 
 BUSINESS 
 
 general place of, of society should be provided in articles..54 (1) 
 
 what, transacted at general, what at special meetings 182 
 
 members bound to take notice of character of, at general 
 
 meeting 183 
 
 of society entirely managed by directors and officers 193 
 
 of directors may be apportioned among committees 204 
 
 temporary suspension of society's, does not abrogate bor- 
 rower's contracts 500
 
 650 INDEX. 
 
 BY-LAWS 
 
 general discussion of 271-282 
 
 enactment of, etc., to be provided for in articles 54 (9) 
 
 nature and qualification of right of. 271 
 
 by whom may be passed 271 
 
 belongs to corporate meeting 188, 271 
 
 is usually left to directors 188 n., 271 
 
 after notice to withdraw, not binding on 
 
 withdrawing member 136n 
 
 legality of, criterion of, generally 271, 272-278 
 
 where incorporation by special act, 59 
 
 when left to the jury 274 
 
 conformity of, necessary, with intention of legislature, spirit 
 of enactment, and charter, and 
 
 purpose of society 57, 273-277 
 
 with constitution and laws of 
 
 U. S., etc 272, 348 
 
 with reason and equity 278 
 
 with interests of society 280 
 
 void, when 371-331 
 
 if in violation of charter 275,518 
 
 if against common right 278 
 
 if inconsistent with any existing statute 348, 479 
 
 generally, if prohibiting member from pursuing legal 
 
 remedies 281 
 
 if contrary to intention of legislature, charter or 
 
 purposes of society 57, 273-277 
 
 if plainly contrary to interests of society 280 
 
 reason and equity 278 
 
 may be void as a by-law but good as a contract 278 
 
 only against strangers and dissenting mem- 
 bers 278 
 
 providing for regular accounts are for security of society, 
 
 and as to it, directory merely 217 
 
 cannot impair vested rights 278 
 
 have retro-active efficacy 279 
 
 add to borrower's contract 279 
 
 must regulate fines (see FINES) 98, 406 
 
 forfeitures of stock and membership 101 
 
 relating to withdrawals, conduction of. 134 
 
 cannot vary statutory terms thereof 132 
 
 when valid aqd when void 276 
 
 in restraint of transfer of stock 447
 
 INDEX. 551 
 
 BY-LA WS Continued. 
 
 if valid have force and effect of legal enactment 59 
 
 members bound to obey 83 
 
 assent and submission of all members to, presumed 
 
 and required 271 
 
 if illegal, are void and ground of forfeiture of charter 479 
 
 but not collaterally 507 
 
 cannot, ncr can obligations depending on them 
 
 be enforced 507 
 
 signing of, when waived 516 
 
 of unincorporated building societies 517 
 
 void if inconsistent with constitution 518 
 
 C. 
 CALIFORNIA 
 
 statutes incorporating and regulating societies in 19 
 
 CALLS 
 
 notice of, required by statute in other corporations, need 
 not be given by building associations of stock -payments 
 due 86 
 
 CANCELLATION OF MORTGAGE 
 
 unauthorized, by attorney, when set aside 245 
 
 by secretary of unincorporated society, when void 519 
 
 CANDIDACY 
 
 of judges and inspectors of election 191 
 
 CAPACITY 
 
 of acquiring membership in building associations 69 
 
 CAPITAL 
 
 declaring dividends out of (see DIVIDENDS) 211, 487 
 
 deficient subscription of, when waived as a defense. ..288 andnct* 
 see CAPITAL STOCK ; ESTOPPEL ; STOCK ; WAIVER. 
 
 CAPITALISTS 
 
 building associations not designed for 40 
 
 CAPITAL STOCK 
 
 what meant by, in building associations 12 
 
 definition of. 441 
 
 difference and analogy between, of building associations 
 
 and other corporations 451 
 
 amount of, should be set forth in articles 54 (2) 
 
 how increased 200 
 
 cannot be changed by directors 200, 443
 
 552 INDEX. 
 
 CAPITAL STOCK Continued. 
 
 subscription of whole, why a condition precedent to organ 
 
 ization and liability for dues 85 
 
 objection to want of, may be waived, 85 
 
 what is, for purposes of taxation 470 
 
 CARDINAL PRINCIPLES 
 
 two, concerning loans and borrowers 357 
 
 CASE 
 
 action on the, for breach of contract in refusing promised 
 loan 124, 267 
 
 for refusing transfer of stock on books 448 
 
 CASES 
 
 on theory of loans or advancements collected... 338-353 and notes. 
 
 on usury collected 364 n. 
 
 on computing present value of mortgage collected 154 n. 
 
 CASH 
 
 dues and fines payable in 93 n., 217, 401 n. 
 
 treasurer cannot receive anything but, for fines and dues... 451 n. 
 
 actuafly received, when loan recoverable confined to.. ..384, 385 
 
 premium not a payment of. 388, 390 
 
 CASTING VOTE 
 
 by-law restricting officer to, void 277 
 
 CAVEAT EMPTOR 252 
 
 CERTAINTY 
 
 necessary in rules as to fines 98,407-409, 411 
 
 required in borrower's allegations of payment 260 
 
 CERTIFICATE 
 
 of incorporation, defective execution of, may avoid charter, 208 
 defects in, not available collaterally 506 
 
 of stock, effect of possession of, as evidence of owner- 
 ship 446,447 
 
 see SHARES ; STOCK ; TRANSFER. 
 CESSATION OF MEMBERSHIP 
 
 upon notice of withdrawal 108 n. 
 
 see MEMBERSHIP ; WITHDRAWAL. 
 CHANCERY 
 
 tee COURTS ; EQUITY. 
 CHANGE 
 
 in value of stock, effect of, on borrower's obligations... 171, 172, 
 
 496-503 and note. 
 
 in amount of capital stock not ordinarily within power of 
 directors 200
 
 INDEX. 553 
 
 CHANGE - Continued. 
 
 in board of directors necessitates no new notice to bind 
 
 society 250 
 
 of name of society cannot alter powers thereof 306 
 
 of character and purpose of society, does not destroy, ipso 
 facto, its corporate existence, or duties of members under 
 rules 200 n. 
 
 CHARGES 
 
 standing against member defeat right of withdrawal and 
 repayment 155 
 
 of negotiation of loan and search of title not usuri- 
 ous 214 n., 368 
 
 CHARTER 
 
 as distinguished from constitution, where incorporation by 
 
 patent 56 
 
 where by special act 57 
 
 where by decree of court, 60 
 where by voluntary asso- 
 ciation 62 
 
 what is, where incorporation is by patent 56 
 
 where by special act ; embraces constitution 57 
 
 where by decree of court 60 
 
 where by voluntary association 62 
 
 purpose of recording 62 
 
 is a contract between state and society 65 
 
 extent of such contract 478 
 
 alteration of, by legislature (see ALTERATION) 65 
 
 by amendment: see ALTERATION ; AMENDMENT. 
 
 impeachment of, cannot be made collaterally 63, 475 n 
 
 481, 504, 506, 507, 508 
 
 estoppel against party attempting 513-516 
 
 forfeiture of. 478-482 
 
 acts ultra vires are ground of. 285, 325 
 
 unlawful departure from powers granted, 
 
 ground of. 325 
 
 irregularity or fraud in obtaining, ground of..63, 480 
 
 can be enforced only by State 481, 504, 508 
 
 expiration of, by original limitation, when takes effect 493 
 
 effect of. 493, 494 
 
 want of statement of period of, in charter, not 
 
 a fatal defect, where fixed by general law 472 
 
 de facto, can be questioned only by State 504 
 
 obtained by fraud is binding on members 305
 
 654 INDEX. 
 
 CHARTER Continued. 
 
 under general statutes not conclusive as to powers of society, 291 
 
 cannot grant powers inconsistent with statute 232 
 
 by-laws in violation of, are void 275 
 
 may be shown not to be such as to make the society a 
 building association and bring it under the protection of 
 
 laws 510 
 
 provisions as to withdrawal cannot be varied by by-law 132 
 
 CHATTELS 
 
 shares of stock are not properly 444 
 
 mortgages of, not included in statutory provisions having 
 
 reference to mortgages of real estate 419 n, 
 
 CHECK 
 
 what is embezzlement of. 221 
 
 CHOSES IN ACTION 
 
 shares of stock are in the nature of. 444 
 
 of unincorporated societies, transferred, without assign- 
 ment, upon incorporation 520 
 
 CLASS 
 
 of persons for whom building associations designed 118, 119 
 
 CLASSIFICATION 
 
 of rights of members 112 
 
 "CLERK OR SERVANT" 
 
 meaning of, in criminal law 222 
 
 CLOSING POLLS 
 
 discretion of inspectors of election as to 191 
 
 CO-DIRECTORS 
 
 liability of directors for acts of. 209,210 
 
 COLLATERAL 
 
 impeachment of charter, irregularities not available for.... 475 n., 
 
 504, 506, 513 
 
 not allowable 63- 
 
 rules as to, the same under all 
 
 forms of incorporation 505- 
 
 acts of corporate meeting 184 
 
 officers' acts 192 
 
 validity of corporate election 192 
 
 inquiry into corporate existence 63, 475n., 481, 
 
 504, 508, 512, 513 
 validity of charter..63 ; 475 n., 481, 504, 508, 512, 513 
 
 security, custom of building associations as to.- 149 
 
 in what sense mortgage is 429-
 
 INDEX. 555 
 
 COLLATERAL Continued. 
 
 security, rights of stockholder over stock pledges as 450 
 
 attaching creditor over same 450 
 
 absolute assignment of stock may be shown to be 
 
 merely as 380 n, 
 
 see ASSIGNMENT. 
 COLLECTION 
 
 of loans on default to be provided for in articles 54 (5) 
 
 COLLECTOR 
 
 see COUNTY TAXATION. 
 COMMITTEE 
 
 managing formation of society liable for preliminary ex 
 
 penses 50 
 
 apportionment of business to, by directors, not an unlaw- 
 ful delegation of authority 204 
 
 COMMON LAW 
 
 of each state an essential part of its laws 272 
 
 COMMON SEAL (see SEAL) 234 
 
 COMPENSATION 
 
 of officers and directors to be provided for by articles 54 (6) 
 
 general discussion of. 223-230 
 
 how fixed 223 
 
 when regulated by directors 199 
 
 when cannot be increased 223 
 
 when additional, cannot be claimed 
 on enlargement of duties of office, 224 
 
 implied liability of society for 226 
 
 moral obligation for 226 * 
 
 by-laws changing, when fixed by 
 
 charter, void 277 
 
 annexed to office can be drawn only by de jure officer 228 
 
 officer improperly removed may sue for 229 
 
 de facto officer can claim only by express contract 228 
 
 contract for, with de facto board of directors, when valid 
 
 after services performed 225 
 
 directors cannot claim extra, for service in line of their 
 
 duties 227 
 
 but for extra services 227 
 
 resolution for extra, to director when, is without considera- 
 tion, and does not bind society 227 
 
 for services before organization cannot be saddled on 
 society 227
 
 556 INDEX. 
 
 COMPENSATION Continued. 
 
 of solicitor 214n, 
 
 of surveyor 214 n. 
 
 COMPETITION 
 
 in bidding must be free 122, 394-397 
 
 rule for, among withdrawing members, for priority of pay- 
 ment, when void 132, 27 
 
 COMPLAINT 
 
 requisites of, in action by member against delinquent 
 
 director 218 
 
 see ACTIONS ; DECLARATION ; DEFAULT ; MEMBERS. 
 COMPLIANCE 
 
 necessity of substantial, with requirements of general law 
 
 in process of incorporation 63 
 
 COMPROMISE 
 
 between members and society, legality of 323 
 
 terminates liability to contribute 109 
 
 operates as estoppel upon society 109 
 
 imprudence of, no ground for disre- 
 garding 109 
 
 when society bound by 133, 169, 170, 290 
 
 cannot be forced upon member 171 
 
 member must cdnsent to, to benefit by, 171 
 when repudiating member entitled to 
 
 benefit of. 133, 172 
 
 when partly executed, cannot be re- 
 scinded 290 
 
 power to, involves power to remit pre- 
 miums 399 
 
 bars right to recover usury deliberately embraced in 360 
 
 COMPUTATION 
 
 rule for, of amount due on mortgage 154-155, 158-164 
 
 175, 177, 336, 375, 424, 427, 428 
 
 same at law as in equity 428 
 
 of assets for winding up 492 
 
 CONCEALMENT 
 
 effect of fraudulent, on sureties on official bonds 217 
 
 CONCENTRATION 
 
 of stock and securities in hands of one person dissolves 
 
 building association .476, 497 
 
 tee ABROGATION OF CONTRACTS. 
 
 CONCURRENT REMEDIES ON MORTGAGE..., .. 436
 
 INDEX. 557 
 
 CONDITIONAL NATURE OF STOCK SUBSCRIPTION... 85, 441 
 
 CONDITIONS 
 
 of issue of shares to be set forth in articles 54 (3) 
 
 CONDUCT 
 
 estoppel by, from denying society's corporate existence 516 
 
 CONNECTICUT 
 
 decisions in, relating to building associations 38 n, 
 
 cases on loans or advancements 353 
 
 CONNIVANCE 
 
 at fraud makes directors personally liable 209 
 
 of directors with defaulting officers, a ground for appoint- 
 ment of receiver 483 
 
 CONSENT (see ASSENT) 
 
 contracts requiring, of directors not binding if made by 
 
 secretary alone 197 
 
 of member to organize with deficient capital, estops him 
 from denying propriety of organization and 
 
 powers of society 288 andnote. 
 
 to dissolve binds assignee of his stock 475 
 
 unanimous, of members, ratifies acts of directors ultra vires, 
 
 as between them and society.... 169, 
 
 232, 284, 307 and note, 
 to proceed with deficient stock, 
 
 effect of. 442 
 
 whether required to dissolve pre- 
 maturely 474 
 
 to dissolve, when may be inferred. 476 
 CONSTITUTION 
 
 articles or rules, framing of. 52 
 
 importance of drawing with care 52 
 
 what is 52 
 
 as distinguished from charter, where incorporation 
 
 is by special act 57 
 
 where incorporated under general 
 
 act 59 
 
 where by decree of court 60 
 
 where by voluntary association. ...61, 62 
 
 is binding upon society and members 53, 56, 83 
 
 amendment of. 56, 60-62 
 
 what, should contain 54 
 
 criterion of legality of, where incorporation by patent 56 
 
 by special act 59 
 
 under general statute 60-62
 
 558 INDEX. 
 
 CONSTITUTION-Om/tTmed. 
 
 if such as to defeat purpose of making members land- 
 holders, void 118 
 
 illegal provisions in, void and ground of forfeiture of char- 
 ter 479 
 
 purpose of recording 62 
 
 tee CHARTER ; ARTICLES. 
 
 of unincorporated building association 517 
 
 CONSTITUTION AND BY-LAWS 
 
 incorporation by existing 58, 521 
 
 CONSTITUTIONAL RESERVATION 
 
 of power to alter, modify and repeal charters, effect of. 65 
 
 CONSTITUTIONALITY 
 
 of retroactive and expository acts 66 
 
 of curative acts 511 
 
 CONSTRUCTION 
 
 put upon statutes by courts cannot be changed by legisla- 
 ture 66 
 
 of statutes enabling infants and married women to become 
 
 members 70 
 
 of act validating purchases of real estate by building asso- 
 ciations 302 
 
 of provisions as to withdrawal 134 
 
 repayment 167, 168 
 
 fines 407-409,411 
 
 of by-laws, in the, practical results must be considered 274, 
 
 349-350 
 
 of borrower's liability under " rules for the time being" 279 
 
 of "amount of loan taken by the borrower"... 384 
 
 of " loans advanced," " sums paid or advanced," " amount 
 
 borrowed" 385 
 
 of constitution of unincorporated building association 517 
 
 CONSTRUCTIVE 
 
 fraud 211 
 
 notice : see NOTICE ; RECORDING. 
 
 CONTINUANCE 
 
 of member in society part of his original contract 127 
 
 of society, how far an element in borrower's liability for 
 
 losses 496 n. 
 
 terms involving, cannot be forced on investors 
 by borrowers 173
 
 INDEX. 559 
 
 CONTRACT 
 
 right of corporation to make imprudent, cannot be con- 
 trolled 109., 323?i 
 
 of loan or advancement between borrower and society, 
 
 elements of. 147, 421 
 
 extent and validity of 357 
 
 within statute, absolutely binds all parties in 
 
 interest 386 
 
 does not contemplate return of money before 
 
 society's expiration 153 
 
 not affected by illegal conduct of officers, mem- 
 bers, or society 172, 289, 303, 305, 309, 481, 508 
 
 how affected by dissolution or its equivalent.. .496-503 
 
 between society and sureties on official bonds 217, 240 
 
 to be signed by president 195, 237 n. 
 
 what, secretary may make 197 
 
 power and extent of power of building association to 232 
 
 of directors, validity and proof of, how far dependent on 
 
 minutes 205 
 
 where their assent was given separately 206 
 
 directors may become parties to, with society 207 
 
 under seal, when must be 235, 237 
 
 manner of executing (see SEAL) 2377k 
 
 when society estopped from denying execution of. 236 
 
 may be made by society directly or through agents 239 
 
 by agents, how made to bind society 248, 249 
 
 validity of, if made by one, where two appointed. 251 
 see AGENTS. 
 
 what, entered into by society directly 240 
 
 liability of society on implied 238 
 
 legality and effect of certain acts and 282-325 
 
 of, when left to jury 274 
 
 ultra vires, effect of, on either party 285-292, 325 
 
 executed and executory 286 
 
 when plea of, will not evade ; estoppel 236 
 
 society when estopped from denying execution of. 236 
 
 prohibited, cannot become source of action to either party.. 287, 
 
 291,292 
 
 by statute or constitution of state, &c., not vali- 
 dated by grant of power in charter under it.. 291 
 not avoided collaterally by acts amounting to forfeiture of 
 
 charter 288, 481, 508 
 
 by illegal conduct of society or officers 289, 
 
 303, 305, 309
 
 560 INDKX. 
 
 CONTRACT Continued. 
 
 ir^teriality of plaintiff's understanding of every 230 
 
 obligation of, cannot be impaired by by-law 278 
 
 by legislature 477 
 
 depending on illegal by-law cannot be enforced 607 
 
 of society to insure, when lawful 383n 
 
 of unincorporated building association not aided by subse- 
 quent incorporation 518-520 
 
 see CHOSES IN ACTION. 
 CONTRIBUTION 
 
 to losses and expenses, members owe 104, 346 
 
 in permanent societies 180 
 
 ratio of, between members 104 
 
 cannot be evaded by transfer of stock 104 
 
 nor by withdrawal 104, 105 
 
 cannot be claimed after with- 
 drawal 105 n., 264 
 
 liability for, not affected by taking loan 106, 107 
 
 how secured by borrower's mortgage 107 
 
 condition implied therein 496n 
 
 termination of. 108, 109 
 
 between allottees of corporate land subject to equitable lien, 111 
 directors liable for acts or contracts ultra vires cannot 
 
 enforce, against members to cover their losses 198, 307 
 
 see EXPENSES; LOSSES. 
 
 of personal services, members owe to society 83, 103, 226 
 
 CONTROL 
 
 individual members cannot exercise, over directors' 
 
 discretion 204 
 
 nor, ordinarily, can the court 204 
 
 see COURT ; DISCRETION. 
 CONVERSION 
 
 of building association into land society does not abrogate 
 
 obligations of members 289, 303, 305, 309 
 
 see CHANGE OF NAME; LAND ASSOCIATION. 
 CONVEYANCE 
 
 of real estate after dissolution 494 
 
 CORPORATE 
 
 acts, are acts of majority voting at regular corporate meeting 186 
 
 contrary to law, not sustained by usage or custom 188 
 
 books, members' right of access to 114 
 
 action against society for refusal to transfer stock on, 78, 
 
 268, 448-449
 
 INDEX. 561 
 
 CORPORATE Continued. 
 
 books, holder of stock must procure transfer on 78, 446 
 
 society need not look beyond, when dealing with 
 
 members 78, 446 
 
 are evidence of relation between member and 
 
 society 78, 446 
 
 provision for transfer of stock on, how construed 446 
 
 existence not ended by failure to elect officers 188 
 
 hy illegal change in character and pur- 
 pose of society 200 n., 809 
 
 nor ipso facto, by unlawful acts 325 
 
 nor by illegal by-laws 507 
 
 nor by insolvency 473 
 
 how sufficiently averred in suits by and against 
 
 society 261 
 
 admitted by general issue 261 
 
 admission of, estops party from denying 513-515 
 
 who estopped from denying ....513-516 
 
 collateral inquiry into, when not allowable 63, 475n.^ 
 
 481, 504, 508, 513- 
 
 when allowable 512: 
 
 not to be collaterally impeached on trial of secretary 
 
 for embezzlement 221 
 
 fraud and misrepresentation as to fact of, may be 
 
 shown 512 
 
 expiration of by charter limitation may be shown... 509 
 
 when takes effect 493 
 
 impeachment of, state alone has right of. 504 
 
 same rule as to, no matter how 
 
 acquired 505 
 
 events whose happening ends, ipso facto 472, 473 
 
 see NUL TIEL CORPORATION. 
 
 franchise, how forfeited 285, 325. 
 
 funds, directors must account for waste or misappli- 
 cation of. 212 
 
 in Scotland, liable for damages to member injured 
 
 by officer's violation of rules 213?x 
 
 officers must look to, for compensation 230 
 
 liability, individual corporators cannot be sued for 505?^ 
 
 meetings, how acts of, passed 186 
 
 members must have notice of. 113 
 
 right of members to attend US 
 
 duty of members to attend 1Q 
 
 IX,
 
 562 INDEX. 
 
 CORPOB ATE Continued. 
 
 meetings, supreme power vested in 181 
 
 lawful acts bind individual members 181 
 
 what are 182 
 
 must be held in county where society located 183 
 
 officers' functions in calling, are ministerial 184 
 
 regularity of, where all voters assembled with or 
 
 without notice 184 
 
 validity of acts of, not to be questioned collaterally 184 
 
 adjourned, powers of. 185 
 
 acts of, irregularly convened, are void 185 
 
 what are 186 
 
 principal functions of. 188 
 
 have control over directors 199 
 
 have ordaining of by-laws 271 
 
 see MAJORITY ; MEETING ; NOTICE ; QUORUM ; PROXIES. 
 
 powers, general, of building associations 231-281 
 
 to be exercised by directors assembled as a board... 206 n. 
 conferring authority to sell real estate, is exercise of, 206 a. 
 enlargement of, on application of directors alone, 
 
 is void 200 
 
 property, a trust fund for creditors Ill 
 
 liable for corporate debts in hands of stockholder, 111 
 
 relations, primary evidence of. 206 
 
 seal : see SEAL. 
 CORPORATION 
 
 not liable for expenses before incorporation 50 
 
 acquires no exclusive right to use term merely descriptive 
 
 of locality 51 
 
 who composes the, (stockholders, not officers) 188, 473 
 
 speaks through its president and secretary 208 
 
 general powers of building associations as a 231 
 
 difference between agents of, and of private persons, as to 
 
 notice of powers 243 
 
 where cannot be trustee in mortgage to sell 434 
 
 building association should not lend to another 319 
 
 cannot acquire membership in a building association... 320-321 
 CORPORATORS 
 
 general rights of members as 113 
 
 how incapacitated to sue society 144 
 
 rights of, dependent upon continuance of membership 
 
 interests 148 n. 
 
 individual, cannot be sued for corporate liability (see COR- 
 PORATE FUNDS) 505n.
 
 INDEX. 563 
 
 COSTS 
 
 in redemption and foreclosure suits 179 
 
 after tender of present value of mortgage, and refusal to 
 
 accept 179, 263, 377, 437 
 
 building association suing in Kentucky must give bond for, 256 n. 
 of negotiation of loan and search of title not usnrious..214n., 368 
 
 of sale, when mortgagee in possession cannot claim 432 
 
 . when bill in equity dismissed without 489 
 
 COUNTY 
 
 bound by remission by legislature of taxes on building 
 association mortgages 438 
 
 COURT 
 
 incorporation by decree of. 60 
 
 may define purpose of, where omitted in 
 
 petition 60, 273 
 
 not to be controlled by legislature in interpretation of laws, 66 
 cannot control discretion of members desiring to continue 
 
 society 173 
 
 cannot declare ticket defeated by illegal rejection of votes, 
 
 elected 188 
 
 cannot enlarge corporate powers on application of direct- 
 ors alone 200 
 
 nor increase capital stock on such application 443 
 
 cannot ordinarily control discretion of directors 204 
 
 but may, in certain cases, compel reasonable exercise 
 
 of it 135,199 
 
 director cannot recover compensation for attendance at.... 227 n. 
 
 discretion of, as to forfeiture of charter 479 
 
 dissolution by decree of. 478-482 
 
 see RECEIVER ; DISCRETION ; EQUITY ; EXECUTION. 
 
 COVENANTS 
 
 in mortgage, member bound on, after lien vacated 90 
 
 repayment of loan.. 164 
 must conform, in form and substance, with 
 
 statute and by-laws 420 
 
 as to stock-payments 423 
 
 what are proper 423n. 
 
 as to default 425 
 
 implied, to make up difference between pro- 
 ceeds of sale and whole sum due 429 
 
 restrictive, in deed to building association selling to its 
 members, parties to action on 269
 
 564 INDEX. 
 
 COVERTURE 
 
 in some States no bar to membership 69 
 
 not a defence against premium, Ac., after death, by next 
 
 of kin 317 
 
 see MARRIED WOMEN. 
 
 CREDIT 
 
 what borrower may claim, for, on his debt.,107, 156, 431, 455-457 
 
 forced repayment 175, 457 
 
 stock- payments not a, upon loan 452 
 
 rights of assignee of withdrawing member's 137, 266 
 
 CREDITOR 
 
 who is, of society 488 
 
 rights of society's, against corporate property in hands of 
 
 stockholder Ill 
 
 withdrawing member becomes society's, after notice, 
 
 Ac 136, 138 
 
 assignee of withdrawing member's balances or credits is, 
 
 of society 137, 266 
 
 of society may proceed against delinquent officers 213 n, 
 
 cannot ask for appointment of receiver for insolv- 
 ency 488-489 
 
 right of, to marshal debtor's assets 460-469 
 
 see ATTACHING CREDITOR. 
 
 CRIMINAL CONDUCT 
 
 cause of forfeiture of membership 100 
 
 liability of officers.. 221-222 
 
 CRITERION 
 
 of legality of acts of building associations 283 
 
 CURATIVE ACTS 511 
 
 CUSTODY OF COMMON SEAL 
 
 who has 195, 234 
 
 to be provided for in rules 236 
 
 CUSTOM 
 
 cannot sanction corporate act contrary to law 188 
 
 where, admitted as explanatory 188 
 
 when, sanctions delegation of authority by agent 251 
 
 CUSTOMARY 
 
 security in building associations, what is 123, 311, 380 
 
 not being exacted, no equity or presumption 
 arises against society 311
 
 INDEX. 566 
 
 D. 
 DAMAGES 
 
 member injured by officer's violation of rules may, in Scot- 
 land, look to society's funds for 21 3 n. 
 
 as between innocent parties, which liable for 252 
 
 fines in building associations are liquidated 93, 403, 415 
 
 measure of, upon contract to effect insurance 247 n., 383 n. 
 
 in action against society for refusal to transfer 
 
 stock 268 and note, 449 
 
 UATE 
 
 misrecital of, of act amended does not invalidate amend- 
 ment 21 (c.) n. 
 
 variance in consideration and, of bond and mortgage, 245 n., 519 n. 
 
 omission of, in acknowledgment 249n. 
 
 defect in, of certificate, does not avoid charter collaterally, 506 
 
 DEALING IN REAL ESTATE 
 
 impropriety of, as to building associations 304 
 
 illegal and ground of forfeiture of charter 479 
 
 DEATH 
 
 of member, status of executor or administrator upon 73 
 
 being feme covert, see MARRIED WOMEN. 
 of borrower and judicial sale of mortgaged premises, what 
 
 society entitled to claim upon 174 
 
 of trustees, effect of, upon titles, &c 214 
 
 of all members, or integral part, works dissolution 472 
 
 DEBT 
 
 relation of borrower's stock-payments to his 452 
 
 borrower's stock-payments may be applied in liquidation 
 
 of his 154-156, 159-164, 175, 176, 453-459 
 
 see APPLICATION ; APPROPRIATION. 
 
 DEBTOR 
 
 mere, cannot petition for winding up because stock at par, 491 
 gee BORROWER. 
 
 DEBTS 
 
 right of society to incur 293-302 
 
 what are legitimate, of building associations 301 
 
 contracted in purchasing lands ultra vires cannot be 
 
 enforced against society 302, 307 
 
 DECISIONS 
 
 of various States on building association law 18-38 note* 
 
 and Addenda. 
 on theory of loans or advancements collected. ..838-353 and notes
 
 566 INDEX. 
 
 DECISIONS Continued. 
 
 on usury collected 364n 
 
 on rule for computing present value of mortgage collected, 154 n 
 
 DECLARATION 
 
 against delinquent borrower must aver period of default.... 258 
 by withdrawing member against society, what to be 
 averred in 264 
 
 DECLARING OF DIVIDENDS 
 
 what primary evidence as to 206 
 
 out of capital 211, 487 
 
 illegality of. 323, 324 
 
 DECREE 
 
 of court, incorporation by 60 
 
 upon foreclosure proceedings, af*.r repayment, 
 stands for performance of membership duties.. 89. 
 
 428. 432 
 
 dissolution by 478-182 
 
 building association, plaintiff in foreclosure, entitled to, 
 
 notwithstanding refusal to accept tender 179, 437 
 
 ezparte, of injunction and appointment of receiver 483 
 
 DEDUCTION 
 
 premium not a 388, 390, 391, 457 
 
 regarded as a, for purpose of compu- 
 tation 390 n., 391 
 
 of redemption money, borrower repaying entitled to 430 
 
 of charge for examining title, etc., not usurious 214 n., 368 
 
 DEED 
 
 of corporation requires no delivery 23/> 
 
 acknowledgment of, by agent 249 
 
 execution and acknowledgment of. 195, 234, 235 
 
 must be under seal and by agent ;... 235 
 
 where duly executed, society may plead want of power, to 
 avoid 236 
 
 DE FACTO 
 
 officers' acts binding on society 192 
 
 officers may maintain trespass against others claiming to 
 
 be a board of directors 192 n. 
 
 cannot claim salary annexed to office 224 
 
 can claim salary only by virtue of express contract, 228 
 
 board of directors, when contract with, for salary, valid 225 
 
 corporate existence shown, when sufficient answer to plea 
 of nul lid corporation 504
 
 INDEX. 567 
 
 DE FACTO Continued. 
 
 (see NUL TIEL CORPORATION.) 
 
 corporate existence shown, cannot be inquired into col- 
 laterally 508 
 
 plaintiff may be shown to be neither corporation de jure t 
 
 nor. 509 
 
 DEFAULT 
 
 liability of member for fines on 92 
 
 injury to society by 93 
 
 elements of borrower's contract as to 149 
 
 preliminary account upon foreclosure of mortgage in 
 
 equity after 177 
 
 period of, not prolonged by entry of suit 178 
 
 must be averred in complaint against borrower, 258 
 
 how computed 259 
 
 covenants in mortgage as to 425 
 
 difference between repayment upon, and voluntary repay- 
 ment 427 
 
 what credits borrower entitled to upon 175, 456, 457 
 
 DEFAULTING BORROWER 
 
 can claim no share of profits 175, 456, 457 
 
 liabilities of, how far the same in permanent and terminat- 
 ing societies 175 r* 
 
 DEFECT 
 
 of notice of special meeting may be waived by unanimous 
 
 consent 184 
 
 of title, mortgagee in possession may commit waste where 
 
 there is a 432 
 
 in execution of certificate of incorporation may avoid it, 208 
 in process of incorporation, ground of forfeiture of char- 
 
 .ter 208,480 
 
 cannot be taken advantage, of 
 
 collaterally 63, 475 n., 
 
 481, 504-508, 512, 513 
 DEFECTS 
 
 in obtaining charter which do not avoid it collaterally 506 
 
 in incorporation which debar society from assuming the 
 
 powers of a building association 510 
 
 DEFENSE 
 
 want of funds available for withdrawals, when not a 139 
 
 when illegality of society's acts is, and when not 288, 292 
 
 what, may be made to mortgage on ejectment 311 n. 
 
 who may take, for usury 363-365
 
 568 INDEX. 
 
 DEFENSE Continued. 
 
 when rule for "minimum" or "fixed" premium is a 397 
 
 dissolution of society, being mortgagor, is no, to action on 
 
 the mortgage 495 
 
 tee AFFIDAVIT OF DEFENSE. 
 
 DEFICIENCY 
 
 in subscription of capital stock, effect of.. ...86, 288 and note, 441 
 
 who may or may not 
 
 object to 288 and note, 442 
 
 DEFINITE AMOUNT 
 
 to be repaid at specific time, significance of stipulation 
 for, in mortgage to society 153, 157, 331-332, 421-122 
 
 DEFINITION 
 
 of building association 39-40 
 
 of fines 379 
 
 of premium 378, 388, 398 
 
 of "share" in capital stock 444 
 
 of stock 441 
 
 of usury 358 
 
 DE JURE AND DE FACTO OFFICER 
 
 salary annexed to office goes to former 224 
 
 DELEGATION OF POWERS 
 
 by directors (appointment, etc., of committees not an un- 
 lawful) 204 
 
 by solicitor, effect of unlawful 245n 
 
 by agents 251 
 
 DELINQUENT 
 
 members, liability of, to fines, etc., to be set forth in arti- 
 cles .54 (4) 
 
 not entitled to notice when stock-payments, 
 
 etc., due... 86 
 
 officers: see ACTIONS; DIRECTORS; OFFICERS; PERSONAL 
 LIABILITY. 
 
 DELIVERY 
 
 deed of corporation requires no 235 
 
 DE MINIM IS NON CUR AT LEX 
 
 does not apply to building association mortgages 424 
 
 DEMURRER 
 
 to bill by member against delinquent officer 213 
 
 to complaint against borrower not showing period of 
 default, Ac 258
 
 INDEX. 569 
 
 DEPARTURE 
 
 from provisions of genera! law in incorporation under it... 68 
 
 from prescribed course of business 282, 285-292 
 
 effect of, on corporate existence of society, 
 
 and duties of members 309 
 
 penalty of, in society's liability to state 
 
 for 323, 325, 478 
 
 from customary security raises no equity against society..380-381 
 DEPOSIT 
 
 society may make in bank, and this is not loan to corpora- 
 tion 319 
 
 treasurer's liability for loss of. 196 
 
 manner of making, of corporate funds 196 
 
 DEPOSITORS 
 
 what are 77 
 
 liabilities of. 77 
 
 right of receiving, involves right of society to borrow 77 
 
 bound by rules to certain extent 77 
 
 constitutionality of acts authorizing reception of. 77 n. 
 
 fines upon 414 
 
 DEPUTATION 
 
 of agent or trustee in mortgage to sell 434 
 
 of authority by agent, etc. ; see DELEGATION. 
 DESCRIPTION 
 
 of general working of building associations 8-11 
 
 DESIGN 
 
 of present treatise, in reference to building associations 3 
 
 primary or essential, of building associations 7, 40, 75, 
 
 113, 118-120, 283, 392, 398, 413 
 
 acquisition of dwellings an essential part of. 39 n. 
 
 tee OBJECT ; PURPOSE. 
 
 of limitation of funds available for withdrawals 143 
 
 DEVIATION 
 
 see DEPARTURE. 
 
 DIFFERENT KINDS OF BUILDING ASSOCIATIONS 41-48 
 
 DILIGENCE 
 
 degree of, to which directors are held 209 
 
 DIRECTORS 
 
 general discussion of. 196-216 
 
 acts of, are acts of corporation 198 
 
 if illegal, subject to proceedings by society and in- 
 dividual members 199, 218
 
 570 INDEX. 
 
 DIRECTORS Continued. 
 
 acts of, if illegal, may be restrained at instance of members, 309 
 
 valid only when passed by, aa a board 206 and note, 
 
 appointment of , purpose of. 198 
 
 method of. 198 
 
 compensation, cannot claim for acts in line of duty 227 
 
 but for extra services 227 
 
 not for attendance at court 227 n 
 
 nor as reward for recovering stolen property 
 
 of society 227 n. 
 
 contracts of, requiring consent of directors, cannot be made 
 
 by secretary alone 197 
 
 valid without minutes 205 
 
 minutes best evidence of. 206 
 
 directors may be party to, with society 207 
 
 de facto, contract for compensation with, when enforced.... 225 
 disabilities of: cannot secure to themselves advantages not 
 
 common to all members 207 
 
 cannot exercise power of amotion unless 
 
 expressly authorized 220 
 
 cannot delegate powers involving exercise 
 
 of discretion 204 
 
 cannot authorize treasurer to take anything 
 
 hut cash for dues, fines, &c 217, 401 n. 
 
 cannot make by-laws unless expressly author- 
 ized 271 
 
 cannot establish " minimum " or " fixed " 
 
 premium or refuse bids below it 390- 
 
 cannot, of their own motion, change, nor ask 
 
 increase of stock 200, 4i& 
 
 cannot exercise discretion wrongfully 135, li'D 
 
 cannot compel contribution when suffering 
 under personal liability for contracts ultra 
 
 mres 198,307 
 
 cannot share in distribution, on insolvency of 
 society, if unfaithful, until all members sat- 
 isfied 211,487 
 
 ditcretion of, as to forfeiture of membership 101 
 
 as to withdrawals 135 
 
 as to time and place of meetings 201 
 
 as to compensation of officers, committees, <fec. 223 
 
 in remitting fines 418 
 
 cannot be controlled by individual members... 199 
 nor delegated 204
 
 INDEX. 571 
 
 DIRECTORS Continued. 
 
 discretion of, may be compelled by court to be exercised 
 
 reasonably 135, 199 
 
 and responsibility as to security for loans 123 
 
 in approving official bonds.. 216 
 
 dutiei of. 198-200 
 
 when bound to allow withdrawing members some 
 
 profit 131 n 
 
 bound to offer money in treasury to highest bidder, 395 
 
 liabilities of , personal 209-218 
 
 incurred by acts ultra vires entitle, to no contri- 
 bution from members 198, 307 
 
 incur no, for errors (gross) of judgment, so long 
 
 as they are honest 204, 209 
 
 for neglect to keep proper minutes 205 
 
 attend board meetings 210 
 
 are those of mere mandataries 209 
 
 in what sense those of trustees for mem- 
 bers 207, 209, 487 
 
 do not arise where seat in board never taken... 210 
 to account for waste and misapplication of 
 
 funds 212 
 
 none for salaries of officers 230 
 
 for loans contracted ultra vires 295, 299 ft 
 
 for purchases of real estate 303 
 
 to injunction at instance of any member to re- 
 strain misapplication, &c., of funds 305, 309 
 
 majority of, where required to validity of acts of. 202-203 
 
 acts of, where some disqualified 203 
 
 meetings of. 201-203 
 
 acts of irregular, invalid 201 
 
 directors must all have notice of. 201 
 
 when only majority can act (see MAJORITY). ..202-203 
 liability in consequence of non-attendance at... 210 
 
 minutes of , see MINUTES; SIGNING 205 
 
 notice to, is notice to society 250 
 
 each board has, of what previous board knew 250 
 
 change in board necessitates no new 250 
 
 see AGENT ; NOTICE. 
 
 officers, directors are, only in modified sense 208 
 
 powers of, in granting loans beyond stock interest 126 
 
 general extent of... 199 
 
 extend to nearly exclusive management of busi- 
 ness of society 188
 
 572 INDEX. 
 
 DI RECTORS Continued. 
 
 powers of, depend upon constitution and by-laws 199 
 
 are subject to control of corporate meeting 199 
 
 but not to interference of individual mem- 
 bers 199,204 
 
 involving discretion, cannot be delegated 204 
 
 are those of agents 241 
 
 are such that directors are virtually the corpora- 
 tion 241 
 
 quorum of , what is 202 
 
 suite against, by members must make society defendant 269 
 
 must allege participation in actions of board.. 210 
 may be instituted by members for protection 
 
 of society 199, 213, 309 
 
 sureties, directors may become, on officer's bond 216 n 
 
 trustees, directors as, for stockholders 207, 209, 487 
 
 DISABILITY 
 
 prohibition of certain acts create an absolute, as to them... 287 
 
 of infants as to loans 316 
 
 of married women as to loans 316-318 
 
 DISAVOWANCE 
 
 of agent's acts ultra vires must be prompt and unequivocal.. 247 
 DISCHARGE 
 
 of sureties on official bond 217 
 
 of mortgage by judicial sale on decease of mortgagor, 
 
 effect of. 174 
 
 does not necessarily discharge debt 429 
 
 see MERGER ; PURCHASE. 
 DISCONTINUANCE 
 
 of suit prematurely brought does not relieve from payment 
 of dues, fines, and interest during pendency 178 
 
 DISCOUNTING 
 
 bills and notes illegal and ground of forfeiture of charter.... 479 
 DISCRETION 
 
 of court as to execution against society 137, 143, 264, 488 n, 
 
 upon quo warranto, as to ouster 479 
 
 of directors, as to forfeiture of membership 101 
 
 security for loans. 123 
 
 granting loans beyond stock interest 126 
 
 approval of official bonds 216 
 
 compensation of officers, etc 223 
 
 remission of fines 418
 
 INDEX. 573 
 
 DISCRETION Continued. 
 
 of directors, cannot be exercised capriciously 135 
 
 must be exercised reasonably 199 
 
 cannot be controlled nor delegated 204 
 
 of inspectors as to closing polls at elections 191 
 
 DISFRANCHISEMENT 
 
 see AMOTION. 
 DISMISSAL 
 
 of bill without costs 487 
 
 of officers ; see AMOTION. 
 
 DISQUALIFICATION 
 
 of directors, action of majority of remaining directors 203 
 
 DISSENTING MEMBER 
 
 by-law may be void as to 278 
 
 not deprived of his remedy by rule that assent is presumed, 278 
 
 DISSOLUTION OF BUILDING ASSOCIATION 
 
 general discussion of. 471-503 
 
 theoretically occurs as soon as stock at par 490 
 
 right of member to apply for 114, 490, 491 
 
 not for irregularities in incorporation 481 n. 
 
 State to apply for, for misbehavior 481, 508 
 
 special terms of repayment offered with a view to, avail- 
 able by all borrowers 172 
 
 events which bring about^ ipso facto 472, 473, 490 
 
 does not occur by failure to elect officers 188, 473 
 
 insolvency, misbehavior, etc 473 
 
 must be clearly shown to evade liabilities proved 262, 499 
 
 modes of. 471 
 
 by death of members 472 
 
 by loss of integral part of membership.. 498 
 
 by expiration of charter 472, 473, 490, 493-495 
 
 by voluntary agreement of members and surrender...!72 ., 474 
 
 such agreement and surrender valid 172 n., 475 
 
 when inferred 476, 497 
 
 by act of legislature 477 
 
 by decree of court 478-482 
 
 members cannot ask, for irregularities in incor- 
 poration 481 n, 
 
 State alone can ask for misbehavior, <fcc 481, 508 
 
 member may apply for, when stock at par 490-491 
 
 petition for, must be by members as such 491 
 
 when member cannot petition for , 491
 
 574 INDEX. 
 
 DISSOLUTION OF BUILDING ASSOCIATION Continued. 
 
 by appointment of receiver, being equivalent to 602 
 
 by concentration of stock and securities in hands of one 
 
 person .476, 497 
 
 by withdrawals 498 
 
 premature, effects of. 386, 496-503 
 
 effect of, on judgment obtained in suit pending before, 270, 495 
 
 on member's liability to pay dues 496 
 
 on liabilities of society 495 
 
 on mortgage giv'en by society 495 
 
 on contract of borrower 386, 496-503 
 
 as a defense to debtors of society, cannot be insisted on 
 
 collaterally 288, 481, 508 
 
 must be clearly shown to escape debt 262, 499 
 
 when may be shown 509-512 
 
 settlements incident to 494 
 
 DISTRIBUTION 
 
 of society's assets, borrower's interest in final 147-148, 371 
 
 borrower entitled to share in, of surplus 371 
 
 upon insolvency 485-487 
 
 order of priority of payment 486 
 
 fraudulent directors postponed.. .. 
 
 211, 487 
 
 of proceeds of sale on mortgage to society, rule for ascer- 
 taining amount due on mortgage 154-155, 336, 
 
 375, 424, 427, 428 
 DISTRICT OF COLUMBIA 
 
 cases in, on loans or advancements 343 n. 
 
 DIVIDENDS 
 
 redeeming borrower entitled to same as withdrawing 
 
 member 162, 163,430 
 
 what primary evidence as to declaring of. 206 
 
 fraudulent declaring of. 211 
 
 declaring of, out of capital 211, 487 
 
 declaring of, illegal 323, 324 
 
 DOUBLE 
 
 premium, making, on same money 384, 400 
 
 assignment of stock, effect of. 458 
 
 DOUBTS 
 
 upon previous statutes may be explained by legislature 66 
 
 DUES 
 
 member's duty as to 84-91
 
 INDEX. 575 
 
 DUES Continued. 
 
 stock-payments, subscriptions, installments, what meant 
 
 by 12, 371 
 
 amount of, and details as to payment, to be set forth in 
 
 articles 54 (4) 
 
 receiving, from persons after suit and sale estops society 
 
 from denying membership 76, 176, 431 
 
 liability for, ceases only with membership and is absolute..84, 160 
 
 ceases on dissolution 496 
 
 not removed by misbehavior, &c., of other 
 
 members 84 
 
 nor by illegal acts of society or officers 172, 289, 
 
 303, 305, 309 
 arises only when whole capital stock subscribed 85 
 
 not suspended by pendency of suit 91, 178, 263 
 
 ends with forfeiture of stock 102 
 
 is independent of obligations as borrower 372 
 
 of purchaser subject to mortgage to society 
 
 386 n., 435 
 may be enforced against member by assump- 
 
 sit J 85, 451 
 
 borrower bound to continue, to end of society 160 
 
 not after dissolution 496 
 
 in arrears, lien of society on stock for 87, 450 
 
 member not entitled to notice when payable 86, 451 
 
 payable in cash only 93 n., 217, 401 n, 
 
 treasurer cannot receive anything but cash for 451 n, 
 
 stipulation for continued payment of, the essential feature 
 
 of building association loan 153, 422 
 
 significance of. 371, 372 
 
 what covenant sufficient for 423 n. 
 
 partial payments of, not counted in computing period of 
 
 default 259 
 
 presumption that borrower's payments were for 260 
 
 order of application of, as between fines, installments and 
 
 interest 404 
 
 when including interest, construction of. 333, 338 
 
 interest or redemption money 373, 375, 376 
 
 cannot subdivided to impose separate fines, 416 
 rebate of interest allowed on repayment of 
 
 loan 427 
 
 payment of, not ipso facto payment to mortgage.... 374, 431, 440n^ 
 
 452, 454-457, 462, 465, 518 
 see MARSHALLING OF ASSETS.
 
 576 INDEX. 
 
 DUES Continued. 
 
 payment of, credited to borrower's general account cannot 
 be shown by officer to have been considered 
 by the society as, in law, payments to mort- 
 gage 454 
 
 may be applied by borrower or society to his 
 
 debt 431, 453-459 
 
 see APPLICATION OF STOCK. 
 
 member not entitled to interest on 456 
 
 regular, estops pnrty from denying society's 
 
 corporate existence, when 516 
 
 mortgage and decree, after payment of loan, 
 
 stand as security for 89, 90, 372, 428, 432 
 
 see STOCK-PAYMENTS. 
 DUPLICATE 
 
 omission to file, does not avoid charter collaterally 506 
 
 what is, of certificate 21 n 
 
 DURATION 
 
 of society to be provided for in articles 54 (10) 
 
 where fixed by general law omission of, in charter not fatal, 472 
 period of, how described and fixed 474 
 
 DURESS 
 
 what constitutes, in usurious loans 359 
 
 DUTIES 
 
 of membership to be set forth in articles 54 (4) 
 
 what are 83-111 
 
 continue after illegal change of purpose 
 
 and character of society 200 n., 309 
 
 mortgage and decree, after repayment 
 stand as security for performance of.. .89, 90, 
 
 372, 428, 432 
 
 payment of dues, as to 84-91 
 
 is one of the, independent 
 
 of contract of loan, <c., 455 
 borrower agrees to perform, during exist- 
 ence of society 149 
 
 contributing according to powers to suc- 
 cess of enterprise, is one of the 226 
 
 of directors and other officers to be set forth in articles... 54 (6) 
 
 what are 194-230 
 
 as well as powers, depend on constitution and 
 
 by-laws 199 
 
 what are general 199
 
 INDEX. 577 
 
 DUTIES Continued, 
 
 of directors as to board meetings 210 
 
 acts done in line of, no ground for compensa- 
 tion 227 
 
 of executor or administrator of deceased member 74 
 
 of infants and married women as members 70 
 
 of solicitor 214 n. 
 
 of surveyor 214 n. 
 
 of building association to State and public 118, 119 
 
 to keep funds available for with- 
 drawing members 139 
 
 DWELLINGS 
 
 acquisition of, by members, an essential part of the build- 
 ing association scheme 39 n., 118 
 
 (see DESIGN.) 
 
 E. 
 EARL OF SELKIRK'S 
 
 society not the first building association 5n. 
 
 EARLY HISTORY OF BUILDING ASSOCIATIONS 4 
 
 EFFECT 
 
 and validity of bond or mortgage for payment of dues, &c., 424 
 
 of dissolution : see DISSOLUTION. 
 
 of appointment of receiver: see APPOINTMENT OF RECEIVER. 
 
 EJECTMENT 
 
 defenses to mortgage on 811 n, 
 
 ELECTIONS 
 
 method and time, &c., for holding, should be provided in 
 
 articles 54 (6) 
 
 general discussion of. 188-192 
 
 held in good faith will not be set aside 188 
 
 must be conducted according to constitution and by-laws... 188 
 
 when void 188 
 
 failure to hold, does not dissolve society 188, 473 
 
 control of court over, extent of. 188 
 
 no usage can sanction holding of, contrary to laws 188 
 
 by minority 189 
 
 notwithstanding protest of majority 189 
 
 of less number of directors than required, valid ; of greater, 
 
 void 190 
 
 discretion of inspectors as to closing polls for 191 
 
 judges and inspectors of, may be candidates 191 
 
 validity of, courts will not inquire into, collaterally 192 
 
 iM
 
 578 INDEX. 
 
 ELECTIONS Continued. 
 
 what primary evidence of. 206 
 
 sureties not bound where, void 218 
 
 by-laws altering prescribed method of, void 277 
 
 see BALLOT ; POLLS ; TICKET. 
 
 ELEMENTS OF CONTRACT 
 
 between society and borrowing member. 147, 149-150, 869, 421 
 
 EMBEZZLEMENT 
 
 directors liable for 209 
 
 what is, of check by secretary 221 
 
 what constitutes, by officers 221-222 
 
 ENABLING STATUTES 
 
 construction of, as to infants and married women 70 
 
 ENACTMENT 
 
 of by-laws : see BY-LAWS. 
 ENCUMBRANCE 
 
 purchaser subject to usurious, cannot defend against, on 
 
 ground of usury 365 
 
 ENDORSEMENT 
 
 of transfer on back of certificate 446, 447 
 
 ENFORCEMENT OF FORFEITURE OF MEMBERSHIP 
 
 method, &c., of, must be set forth in by-laws 101 
 
 is optional with society or directors 101 
 
 ENGLISH 
 
 decisions as to repayment or redemption 159-164 
 
 importance of, in America 165 
 
 cases on loans or advancements 338 
 
 ENLARGEMENT 
 
 of corporate powers cannot be asked by directors alone, 
 and if granted by court on such application, is "oid 200 
 
 ENTRANCE FEES 
 
 purpose of. .... 168 
 
 not recoverable by member under any circumstances..l34 n., 168 
 
 ENTRY 
 
 in receipt book, how proved 454 
 
 mortgagee's right of, after dissolution, on premises mort- 
 gaged by society 495 
 
 right of society, mortgagee, to maintain writ of, after illegal 
 cancellation of mortgage < , 519 
 
 EQUITABLE 
 
 assignment of stock, what is 446
 
 INDEX. 579 
 
 EQUITABLE Continued. 
 
 considerations for restraining execution against society by 
 
 withdrawing member 138, 143 
 
 lien on corporate lands follows into hands of allottees Ill 
 
 for purchase money 302, 307n, 
 
 title, mortgage of. 419n. 
 
 when not defeated by purchaser of fee- 
 simple 433 
 
 EQUITIES 
 
 none against society taking other than customary security, 123 
 of borrower repudiating special terms of repayment, to 
 
 benefit by them 172 
 
 of mortgagee and purchaser superior to those of judgment 
 
 creditor 467 
 
 of marshalling assets 460-469 
 
 EQUITY 
 
 member may compel settlement with society in, when 145, 
 
 490-491 
 
 preliminary account upon foreclosure of mortgage in. ..177, 428 
 same rule as to computation of amount due on mortgage 
 
 in law, as in 428 
 
 winding up of insolvent society should be in 485, 490, 501 
 
 method of. 485-487 
 
 court of, power of, to compel reasonable exercise of discre- 
 tion by directors 199 
 
 jurisdiction of, to compel directors to account for 
 
 waste and misapplication of funds 211 
 basis of, in foreclosure of mort- 
 gages 428 
 
 building ass'n mortgage properly 
 
 within 424 
 
 in winding up building associa- 
 tions 490,501 
 
 will not relieve against reasonable fines 402, 415 
 
 see INJUNCTION ; RECEIVER; MARSHALLING OF ASSETS. 
 of redemption : see REPAYMENT. 
 ERRORS 
 
 of judgment, directors not liable for, if honest 209 
 
 and omissions in mortgages, how and when cured. ..420, 433, 434 
 
 ESSENTIAL FEATURE 
 
 of building association scheme (see DESIGN) 118 
 
 ESTOPPEL 
 
 upon married woman by recitals in mortgage 71
 
 680 INDEX. 
 
 ESTOPPEL Continued. 
 
 upon borrower denying his membership 81 
 
 does not take place where mistake or 
 
 fraud shown. 81 and not* 
 
 denying specific powers claimed by society, 514 
 denying society's corporate existence..85 and note, 
 
 442, 513-514, 516 
 setting up illegality of society's acts as a 
 
 defense 133, 288 n. 
 
 extent of stock in- 
 terest as defense, 288 
 security as a de- 
 fense 311 
 
 loan to stranger as 
 
 a defense 313 
 
 upon member raising objection to deficiency of stock 85, 
 
 288 and note, 442, 516 
 taking advantage of extra-statutory terms 
 
 of withdrawal, objecting to their validity, 133 
 denying corporate existence by plea ofnultifl 
 
 corporation 85. 288, 513-514, 516 
 
 denying regularity of corporate meeting 184 
 
 who agreed to dissolve, disputing legality of 
 
 the act 475 
 
 from behavior and participation 516 
 
 upon cestui qtie trust, what does not create 252 
 
 upon party dealing with society from setting up plea of 
 
 ultra vires 285-292 
 
 denying corporate 
 
 existence 513-516 
 
 upon society from denying subscription payer's member- 
 ship 79, 176,431 
 
 after compromise with member, 109, 113, 290, 399 
 from setting up plea of ultra vires after settle- 
 ment with borrower 169, 170, 290, 399 
 
 from rescinding resolution acted upon by 
 
 members 170 
 
 none arises from admissions of insufficient 
 
 number of directors to bind society 202 
 
 from denying execution of instrument 236 
 
 agency of person permitted to 
 
 hold himself out as agent 244 
 
 agent's power to contract...247, 383 n
 
 INDEX. 581 
 
 ESTOPPEL Continued. 
 
 upon society from denying agents power to contract, when 
 
 executed 247 
 
 from setting up plea of ultra vires as to pur- 
 chase-money mortgage where title validated 
 
 I y statute and contract executed 302 
 
 upon mortgagor from denying society's corporate exist- 
 ence 85 and note, 442, 514 
 
 vendee of, from same 514 
 
 and vendee of, from denying specific 
 
 powers claimed by society 514 
 
 upon defendant who led plaintiff to a certain understanding 
 
 of their contract, on which he acted 230 
 
 upon setting up plea of nul tiel corporation 513-516 
 
 from admissions 513-515 
 
 in note or mortgage 85, 514 
 
 in pleadings 515 
 
 from behavior, participation, <fec 516 
 
 EVIDENCE 
 
 corporate books primary, of membership and relations be- 
 tween member and society. ..78, 446 
 of elections, meetings, dividends, 
 
 &c 206 
 
 minutes primary, of acts and contracts of directors 205, 206 
 
 of agent's appointment 242 
 
 primary, should be produced 206 
 
 when secondary, admissible 206 
 
 parol, when admissible to show agent's contract to be that 
 
 of society 249 
 
 of ownership of stock, what is 446, 447 
 
 of payments must be clear 260 
 
 of officers that borrower's payments credited to his general 
 
 account, were considered payments on loan, inadmissible 454 
 on trial of secretary for embezzlement of check, what is... 221 
 
 in criminal prosecution against officers 221-222 
 
 variance in, what differences between bond recited in mort- 
 gage and bond proved is not 51971 
 
 EXAMINATION 
 
 of title, charges for may be deducted from loan 214 n., 368 
 
 EXCESSIVE 
 
 powers granted in charter under general statute, void 64 
 
 stock-interest of member no defense to his obligations....... 288
 
 582 INDEX 
 
 EXECUTED 
 
 compromise partly, cannot be rescinded 290 
 
 contracts, when society cannot deny power of agent to make, 247 
 
 ultra vires 286 
 
 tee ESTOPPEL ; ULTRA VIRES. 
 
 EXECUTION 
 
 discretion of court as to restraining, on judgment against 
 
 society by withdrawing member 138, 143, 264, 488 n, 
 
 arrest of, where period of default not properly averred 258 
 
 shares of stock not liable to, at common law 444 
 
 upon stock and goods pledged or covered by lien 450 and note. 
 
 equity to marshal assets is one against, not against judg- 
 ment 461 n., 469 n 
 
 will not be set aside on claim for marshalling assets..461 n., 469 n. 
 
 of certificate of incorporation, requisites to validity of. 208 
 
 of contracts, mode of. 237 
 
 or instruments under seal 234, 235, 237 n. 
 
 of deeds, belongs to president 195 
 
 EXECUTIVE 
 
 incorporation by letters patent from 56, o9 
 
 EXECUTIVE OFFICERS 
 
 who are, in building association and other corporations.... 208 
 cannot sanction payment of dues and fines in anything but 
 cash so as to relieve treasurer's sureties of liability 217n. 
 
 EXECUTOR OR ADMINISTRATOR 
 
 of deceased member not ipso facto a member 78 
 
 powers and duties of. . 73 
 
 whether, may become member 73 
 
 liability of, to fines and forfeitures 74 
 
 when, may give building association 
 
 mortgage 31 8 T* 
 
 of husband of feme covert member, rights of, to stock 144 
 
 of deceased borrower may compel application of stock to 
 debt 459 
 
 EXECUTORY CONTRACTS ULTRA VIRES 286 
 
 EXEMPTION 
 
 power of legislature to enact, from taxation 438 
 
 of building association mortgages from taxation 439 
 
 EX PARTE 
 
 fines to be allowed on, foreclosure of mortgage 404 
 
 injunction against officers and appointment of receiver..... 483
 
 INDEX. 58S 
 
 EXPEDIENCY 
 
 of granting right of withdrawal 127 
 
 of voluntary repayment 158 
 
 EXPENSES 
 
 liability for, incurred before incorporation, where 50, 110 
 
 see PRELIMINARY EXPENSES. 
 
 and losses, members must contribute to 104 
 
 borrower bound by his mortgage to contribute 
 
 to 106, 107, 152, 180, 346 
 
 upon what implied condition 496n. 
 
 termination of member's duty to contribute 
 
 to ....108,109 
 
 before withdrawal are a set off against withdraw- 
 ing member's claim, when 105 
 
 but not after withdrawal 105 n., 264 
 
 burden of proving, is on society 26471, 
 
 see CONTRIBUTION. 
 
 all interested in keeping down 226 
 
 EXPIRATION OF CHARTER 
 
 is the period of repayment of loans and squaring accounts 153 
 
 effect of, on judgment obtained in suit pending before 270 
 
 upon society's corporate existence 472, 473, 493-495 
 
 by original limitation may be shown in defense 509 
 
 EXPOSITORY AND RETRO-ACTIVE STATUTES 66 
 
 EXTENT 
 
 of surety's liability strictly measured by terms of bond 219 
 
 of powers of building associations 232 
 
 of agents 245 
 
 EXTRA COMPENSATION 
 
 directors cannot claim, for acts in line of their duty 227 
 
 when officers cannot claim on enlargement of duties 224 
 
 EXTRA SERVICES 
 
 directors may claim compensation for 227 
 
 EXTRA-STATUTORY TERMS OF WITHDRAWAL 169-172 
 
 repudiating member when entitled to benefit of. 133 
 
 may become binding on society 133 
 
 F. 
 
 FAILURE OF INTEREST CLAUSE 
 
 in married woman's mortgage good 816 
 
 FAILURE OF CONSIDERATION 
 
 when usury creates so as to entitle terre-tenant to defend... 364 n
 
 584 INDEX. 
 
 FEES 
 
 entrance, not reclaimable by member 184 n., 168 
 
 purpose of. 168 
 
 of solicitor 214v 
 
 of surveyor 214 n. 
 
 for examining title not usurious if deducted from loan 
 
 214 n., 368 
 for transfer of stock on books, right of society to charge.... 446 
 
 FEIGNED ISSUE 
 
 upon judgment confessed, burden of proof on defendant 
 under plea of payment 260 
 
 FEME COVERT: see MARRIED WOMEN. 
 
 FEME SOLE 
 
 status of husband of. ; 72 
 
 FILLING OF VACANCIES : see VACANCY. 
 
 FINES 
 
 definition of. 379 
 
 general discussion of. 401^118 
 
 liability of members to, to be set forth in articles, &c 54 (4) 
 
 must be charged for dereliction in membership duties 414 
 
 attention to official duties enforced by 103, 220 
 
 personal services enforced by 103 
 
 are payable in cash only S3 n., 217, 451 n, 
 
 officers liable to, for neglect 103, 220 
 
 must be notorious, certain, reasonable, and fixed by 
 
 rules 407-410 
 
 interest cannot be charged on, in arrear 417 
 
 remission of, discretionary with society or directors 418 
 
 society's lien on stock for unpaid 450 
 
 for default, liability of executor, &c., of deceased member 
 
 for 74 
 
 necessity and legal aspect of. 93, 401^18 
 
 liability for, not suspended by suit.,.91, 178, 263, 418 
 
 liability of member for 92 
 
 source of power to impose 92 
 
 statutory and charter authority required fur 
 
 imposition of. 96, 405, 407 
 
 regulation of, belongs to by-laws 406 
 
 power to impose, involves liability to submit to 92 
 are in the nature of liquidated damages..93, 403, 415 
 not penalties 94, 415
 
 INDEX. 685 
 
 FINES Continued. 
 
 for default, not within rule forbidding enforcement of pen- 
 alties 94 
 
 when recoverable on married woman's rnort- 
 
 gage 95, 404 
 
 an essential part of borrower's undertaking 95, 
 
 149,404 
 allowed on ex parte foreclosure of mortgage..95, 404 
 
 rules to be observed in relation to 96-98, 406414 
 
 cannot exceed statutory limit 96 
 
 must be notorious 410 
 
 must not be oppressive 97 
 
 upon fines and in arithmetical progression 410, 
 
 411, 412 
 
 must be reasonable 97, 410 
 
 proper measure of. 97, 413 
 
 methods of assessment of. 409n. 
 
 must be certain 98, 407 
 
 must be established by rules 98 
 
 ambiguity in rules imposing, how construed 98 
 
 standing against borrower defeat right of repay- 
 ment 155 
 
 member defeat right of with- 
 drawal 155 
 
 must be paid before security vacated 180 
 
 not recoverable from strangers borrowing... 313-316 
 from infants or married wo- 
 men 316-318 
 
 must be paid even where not mentioned in 
 
 mortgage 37271. 
 
 and cannot then be defalcated from debt 404 
 
 as incidents to loan 379 
 
 upon fines, generally 410, 411 
 
 in Pennsylvania 383 
 
 decisions touching legality of, collected...383 and notet 
 order of application of debtor's payments, as 
 
 between dues, interest, and 404 
 
 on payments of interest 415, 416 
 
 dues including stock-payments and interest can- 
 not be subdivided so as to charge separate 416 
 
 interest cannot be charged on, in arrean. 417 
 
 liability for, ceases on dissolution 496 
 
 in unincorporated building associations 518
 
 586 INDEX. 
 
 FIRST KNOWN BUILDING ASSOCIATION, ACCOUNT OF, 5 
 
 FIXED OR MINIMUM PREMIUM 
 
 illegality of. 122, 275, 323, 894-397 
 
 when borrower may defalk from debt 122, 897 
 
 FIXED VALUE 
 
 tee PAID-UP VALUE. 
 
 FORCED REPAYMENT 
 
 terms of. 175 
 
 FORECLOSURE 
 
 of mortgage in equity, preliminary account in 177, 428 
 
 costa in sui{a for 179 
 
 continuance of default, a condition precedent to, must be 
 
 averred 258 
 
 fines to be allowed on, exparte and otherwise 404 
 
 basis of equity jurisdiction in 428 
 
 process of, in equity 428 
 
 mortgagee of defunct society entitled to decree of. 495 
 
 difference between, in equity, and statutory scire facias on 
 
 mortgage 495 n, 
 
 FORFEITURE 
 
 of stock, forfeiture of membership is, and vice versa... 102 
 
 terms of, and liability to, to be set forth in 
 
 articles 54 (4), 101 
 
 liability to, and rules concerning 99-102 
 
 justification of. 99 
 
 legality of rule for 99 
 
 for gross impropriety of conduct 100 
 
 causes must be set forth in rules 101 
 
 does not take place until declared 101 176 
 
 by borrower, not a necessary consequence of suit 
 
 upon default 176 
 
 cannot be claimed without giving 
 
 credit for stock on debt 459 
 
 waiver of, society or directors may make.,77, 99-102, 418 
 
 must be clearly society's act 80, 202 
 
 can be made only by majority of direct- 
 ors 202 
 
 ends obligation to pay dues, &c 102 
 
 liability of executor of deceased member to 74 
 
 of charter for illegal acts 285, 325, 478-481 
 
 grounds of. 479-480 
 
 can be asked only by State on quo warranto.-ASl, 508
 
 INDEX. 587 
 
 FORFE ITURE Continued. 
 
 of charter cannot be inquired into collaterally 63, 475 n., 
 
 481, 504, 508, 512, 513 
 
 discretion of court as to decreeing 479 
 
 acts amounting to, do not avoid contract collat- 
 erally 288,481,508 
 
 FORM 
 
 of security does not affect rule as to repayment 157 
 
 of contract immaterial if usury in its substance 347, 349, 
 
 358 and note. 
 
 of mortgage must conform to statute and by-laws 420 
 
 FORMAL 
 
 incidents to building association loan 370 
 
 FORMALITIES 
 
 prescribed in case of withdrawal must be observed 132 
 
 of affixing seal 235 
 
 of execution of instrument or contract under seal 236, 237 n. 
 
 required to make binding contracts 237 
 
 of transfer of stock 445 
 
 must not be unreasonable 447 
 
 FORMATION OF BUILDING ASSOCIATIONS 50-67 
 
 preliminary expenses in 50, 110 
 
 see INCORPORATION. 
 
 FRACTIONS 
 
 of years disregarded in estimating rebate on premium per 
 
 unexpired year, on repayment of loan 166 
 
 of dues paid disregarded in computing period of member's 
 
 arrearages 259 
 
 FRANCHISE 
 
 acquisition of corporate : see INCORPORATION. 
 
 forfeiture of. 285, 325 
 
 surrender of, by voluntary agreement 172 n , 474476 
 
 expiration of, by charter limitation may be shown in de- 
 fense 509 
 
 FRAUD 
 
 in recital of mortgage may be shown to remove borrower's 
 
 disability to deny his membership 81 n 
 
 relieves member from undertakings as to stock-payments... 84 
 securing advantages not common to all members is, in 
 
 directors 207 
 
 of directors makes them personally liable 209 
 
 what inattention or negligence amounts to, in directors 209
 
 588 LNDEX. 
 
 FRAUD -Continued. 
 
 of officers, agents and co-directors, when directors liable for. 209 
 
 participation in, what is, in directors 210, 211 
 
 in declaring dividends, effect of, on directors 211 
 
 of directors whereby society ruined, postpones them on 
 
 distribution 211,487 
 
 of agent, when society liable for 252 
 
 when makes him liable for interest on money 
 
 collected 253 
 
 in obtaining charter does not avoid it collaterally 504, 506 
 
 does not absolve members from obedi- 
 ence to rules 305 
 
 ground of forfeiture thereof. 480 
 
 investment ultra vires of society's funds in lands is, upon 
 
 society 305 
 
 not necessarily involved in usury 363 
 
 unlawful reservation inserted through, renders mortgage 
 
 void 420 
 
 of officers, when ground for appointment of receiver 483 
 
 in misstating amount of capital subscribed in order to get 
 
 charter, no ground for collateral impeachment 506 
 
 in assumption of corporate existence may be shown 512 
 
 see DIVIDENDS ; NUL TIEL CORPORATION ; TORTS. 
 statute of: see STATUTE OF FRAUDS. 
 
 FRAUDULENT CONCEALMENT 
 
 discharge of sureties on official bond by 217 
 
 FREE COMPETITION 
 
 in bidding for loans, indispensable 122, 394-397 
 
 FREEHOLD LAND SOCIETY 
 
 distinction between building association and 305 
 
 building association cannot do business of a 304, 305 
 
 see LAND ASSOCIATION. 
 
 FUNCTIONS 
 
 of corporate meeting 188 
 
 duties, liabilities, and, of officers 194-230 
 
 of president and vice-president .'. 195 
 
 of treasurer 196 
 
 of secretary 197 
 
 of directors 198-200 
 
 of trustees 214 
 
 of solicitor 214 n. 
 
 of surveyor 214 n.
 
 INDEX. 580 
 
 FUNDS OF SOCIETY 
 
 right of member applying for loan of, to bo preferred over 
 
 outside investments of. 116-121 
 
 want of, when no defense against withdrawing member 109 
 
 part of, must be kept available for withdrawals 139 
 
 statutory limitation upon proportion to be kept there- 
 for... 140-143 
 
 treasurer the keeper of the 196 
 
 liability of directors to account for waste and misapplica- 
 tion of. 212 
 
 see CORPORATE FUNDS. 
 
 Q. 
 
 GAINS 
 
 see PROFITS. 
 GENERAL AGENT 
 
 secretary usually is, of society 197 
 
 GENERAL ISSUE 
 
 plea of, admits corporate existence 261 
 
 GENERAL MEETING 
 
 what is 182 
 
 what business to be transacted at 182 
 
 notice of, how to be given, and to whom 183 
 
 as to what presumed in members 183 
 
 duty of members to attend and vote at 186 
 
 GENERAL RIGHTS OF MEMBERS AS CORPORATORS.... 113 
 
 GENERAL STATUTES 
 
 incorporation under, by patent 66 
 
 by decree of court 60 
 
 by voluntary association 61 
 
 court incorporating under, may define purposes, when 60 
 
 necessity of compliance with, in every step towards incor- 
 poration 63 
 
 effect of departure from, in incorporation 63 
 
 powers granted in charter under, in excess of, are void and 
 
 cause of forfeiture 64 
 
 eeAcTs; CHARTER; POWERS; STATUTES; ULTRA VIRES. 
 
 GENERAL WORKINGS OF BUILDING ASSOCIATIONS 
 
 description of. 8-11 
 
 GEORGIA 
 
 decisions in, relating to building associations 38n. 
 
 cases in, on theory of loans or advancements^. 846
 
 690 INDEX. 
 
 GEORGIA Continued. 
 
 recovery of usury in 860, 361 
 
 rule for repayment or redemption in 384 n> 
 
 GOOD BEHAVIOR 
 
 see OFFICERS ; OFFICIAL BONDS ; SURETIES. 
 
 GOVERNMENT 
 
 of building association, general discussion of. 181-193 
 
 should be set forth in articles, &C...54 (6) 
 is substantially in hands of officers. 193 
 
 of unincorporated building association 519 
 
 see OFFICERS ; CORPORATE MEETING ; DIRECTORS. 
 GRACE 
 
 running of period of, for payment of arrears not inter- 
 rupted by bringing and pendency of suit 178, 377, 418 
 
 GRANT 
 
 of excessive powers in charter void and cause of forfeiture. 65 
 
 GREENWICH UNION BUILDING ASSOCIATION 
 
 account of. 5 
 
 GROSS 
 
 impropriety of conduct cause of forfeiture of membership. 100 
 errors of judgment, if honest, create no liability in directors. 209 
 inattention and negligence renders directors liable 209 
 
 GROUND-RENT 
 
 covenant for payment of, properly inserted in mortgage... 383 
 
 423 n., 432 
 
 GUARANTOR 
 
 may defend for usury in principal's contract 363 
 
 of mortgage debt bound by terms of the deed 386 
 
 of borrower's debt may compel application of stock to it... 459 
 see SURETY. 
 
 GUARANTY 
 
 see SURETY. 
 
 H. 
 
 HARDSHIP 
 
 of bargain will not itself excuse performance 386 
 
 HEIRS 
 
 torms of repayment of loan by 385 
 
 HIGHEST BIDDER 
 
 entitled to loan 116, 122 
 
 see MINIMUM PREMIUM.
 
 INDEX. 501 
 
 "HIS" CONSTRUED "ITS" 
 
 in agent's acknowledgment of corporation deed. 249 
 
 HISTORY OF BUILDING ASSOCIATIONS 
 
 early 4 
 
 in America 6 
 
 HOLDER OF STOCK 
 
 see OWNER OF STOCK. 
 
 HOMES 
 
 :u:ijiiisition of, by members an essential aim of building 
 association scheme (see DESIGN) 118 
 
 HOMESTEADS 
 
 see DESIGN ; HOMES. 
 HOUSES 
 
 acquisition of by members a principal aim of society 118 
 
 see DESIGN. 
 
 when society may erect 301 
 
 building of, and dealing in, by society, ultra vires 304 
 
 HUSBAND 
 
 see MARRIED WOMEN. 
 
 of feme sole member, status of, at common law 72 
 
 what is sufficient reduction into possession of wife's stock 
 by 72 
 
 liabilities of, to society, may be secured by mortgage of 
 wife's separate estate 318 
 
 joint judgment of husband and wife 317 
 
 HYPOTHECATION OF STOCK 
 
 does not bar member's right to vote 113 
 
 is collateral security only,not a credit on debt 440 n, 
 
 levy on stock after 450 
 
 member's rights after 113, 148, 450 
 
 to society gives it absolute right to apply to debt 459 
 
 as collateral to mortgage, marshalling of assets upon 460-469 
 
 see ATTACHING CREDITOR ; LEVY ; MARSHALLING OF ASSETS. 
 
 I. 
 IDENTITY 
 
 of name, when an objection to incorporation 51 
 
 of various forms of mortgages as to substance.. .153, 157, 421-422 
 
 IGNORANCE OF DRAFTSMAN 
 
 unlawful provision inserted in mortgage through, may be 
 corrected... 420
 
 INDEX. 
 
 ILLEGAL 
 
 acU of society not aided by custom or usage 188 
 
 no defense to enforcement of obligations 172, 
 
 289, 803, 805, 809 
 
 penalty for, on quo warranto 323, 825 
 
 do not avoid charter collaterally 479, 508 
 
 by-law, obligations depending on, cannot be enforced 507 
 
 conduct of society and officers no defense to obligations.... 172, 
 
 289, 303, 305, 309 
 
 grants in charter void and cause of forfeiture 64 
 
 powers, discretion of court on quo warranto as to penalty 
 
 for assumption of. 479 
 
 votes, effect of acceptance of, on election 188 
 
 ILLEGALITY 
 
 of retro-active and expository statutes 66 
 
 of regulations defeating purpose of making members land- 
 holders 118 
 
 of society's acts when aground of defense and when not... 172, 
 
 288-292, 299 and note, 303, 305, 309 
 
 of security cannot be set up as a defense by borrower 311 
 
 of loan cannot be set up as a defense by borrower 313 
 
 of some by-laws does not avoid charter collaterally 507 
 
 ILLINOIS 
 
 statutes in, relating to building associations 20 
 
 decisions in, relating to building associations 20 n 
 
 "IMMEMORIAL USAGE" 
 
 has no place in building associations 271 n 
 
 IMPEDIMENTS 
 
 to transfer of stock unlawful 446 
 
 IMPLICATION 
 
 of fraud when arising, and effects of. 211 
 
 none arises that acts done in line of duty where rendered 
 
 at special request of person benefited 227 
 
 as to existence of agency, where arises 244 
 
 repeal of statutes by 34 note (2), 35 note (7) 
 
 IMPLIED 
 
 no liability is, as to sureties beyond precise terms of bond 
 
 (see INDEMNIFICATION) 219 
 
 assumpsit, none arises in favor of officers for compensation 226 
 
 powers of building associations 232 
 
 agents 243 
 
 contracts, liability of society on 288
 
 INDEX. 593 
 
 IMPLIED Continued. 
 
 ratification of agent's acts 247 
 
 breach of, warranty of authority, officer or agent contract- 
 ing ultra vires liable for 198, 284 
 
 prohibition upon certain acts, effect of. 287 
 
 power to take interest, in power to loan 322, 374. 
 
 power to take security for loans 38O 
 
 covenant in mortgage to make up difference between pro- 
 ceeds of sale and whole sum due 429> 
 
 assumpsit to same effect 429> 
 
 condition in stock-subscription 85, 441 
 
 may be waived; effect 442: 
 
 unanimous consent to dissolve, when 476. 
 
 fraud : see CONSTRUCTIVE FRAUD. 
 
 IMPRESSION 
 
 seal must be such as to make an 234 
 
 IMPROPRIETY OF CONDUCT 
 
 gross, cause of forfeiture of membership 100. 
 
 IMPROVEMENTS 
 
 right of making, how far involved in power to acquire 
 lands 301 
 
 where purchaser for value under void sale may recover for.. 434 
 
 IMPRUDENT CONTRACT 
 
 right of corporation to make 109n. 
 
 INATTENTION 
 
 directors liable for gross 209 
 
 INCIDENTAL 
 
 taking of security L*, to power to make loan 380 
 
 contract to procure insurance is, to power to take security.. 383 n. 
 officer cannot claim extra compensation for acts which are, 
 to his office 227 
 
 INCIDENTS 
 
 o loan or advancement 358-386 
 
 formal to building association loan 370 
 
 INCORPORATION 
 
 of building associations in the various States 18-38 
 
 effect of, upon liability for expenses incurred before 50, 227 
 
 by name already in use will be refused 51 
 
 various methods of. 55-62 
 
 by executive 56, 59 
 
 by special act of legislature 57, 58 
 
 la
 
 694 INDEX. 
 
 INCORPORATION Continued. 
 
 by special act, by existing constitution and by-laws, with- 
 out setting them forth in act 58, 521 
 
 by decree of court 60 
 
 by voluntary association 61 
 
 under general statute, necessity of compliance with same.. 63 
 
 terms of, binding on State and society 65 
 
 is a contract between State and society 65 
 
 consideration for grant of, and reciprocal duties from 75 
 
 compensation for services before, not to be thrown on 
 
 society 227 
 
 when assumpsit will lie for 227 n> 
 
 averment of, in suits by and against society 261 
 
 pleas to 261 
 
 proof of, dispensed with by plea of general issue 261 
 
 purposes of, when court may specify 273 
 
 irregularities or fraud in, ground of forfeiture of charter.... 480 
 
 collateral inquiry into validity of. 504-508, 512 
 
 rule as to, the same under all forms of. 505 
 
 see CHARTER; COLLATERAL INQUIRY; NUL TIEL CORPORA- 
 TION. 
 may be shown from face of charter not to have been under 
 
 building association acts 510 
 
 what defects in, will bar society from building association 
 
 powers 510 
 
 of unincorporated society does not validate void contracts 
 
 made before incorporation..518, 520 
 effect of, on rights acquired by 
 
 society before 520 
 
 see PARTIES. 
 INCREASE OF CAPITAL STOCK 
 
 when lawful and when void 443 
 
 not ordinarily within powers of directors 200 
 
 how accomplished 200 
 
 INCUMBRANCE 
 see ENCUMBRANCE. 
 
 INDEBTEDNESS OF BORROWER TO SOCIETY 
 
 fines an essential part of (see FINES) 95 
 
 reduced by what credits (see BORROWER) 105 
 
 elements of contract of (see ELEMENTS) 149-150 
 
 includes profit and loss account (see CONTRIBUTION; 
 
 LOSSES) 152,346 
 
 does not contemplate return of money before dissolution... 153
 
 INDEX. 595 
 
 INDEBTEDNESS OF BORROWER TO SOCIETY Continued. 
 stock may be appropriated in liquidation of (see APPLICA- 
 TION)..." 175,176 
 
 lien of society on stock for 450 
 
 proof of dissolution must be clear to evade 499 
 
 effect of dissolution upon 496-503 
 
 INDEMNIFICATION 
 
 members do not owe to directors personally liable for con- 
 tracts ultra vires 307 
 
 bond for, against liens does not bind sureties for losses after 
 
 mortgage has merged 219n. 
 
 INDEX 
 
 error in entering mortgage on, does not invalidate mort- 
 gage 433 
 
 INDICTMENT 
 
 formal parts of, in criminal prosecution of officer 222 
 
 INDIANA 
 
 statutes in, relating to building associations 21 
 
 decisions in, as to building associations 21 n, 
 
 cases in, on theory of loans or advancements 352 
 
 INDIVIDUAL 
 
 members presumed to assent to lawful acts of majority 181 
 
 see ASSENT. 
 
 not presumed to assent to acts ultra vires 181 n. 
 
 see DISSENTING MEMBERS. 
 
 may sue delinquent directors for society 213 
 
 see ACTIONS ; DIRECTORS. 
 
 cannot be sued for corporate undertaking 505 
 
 directors, when only can be sued by officers for salaries 230 
 
 liability : see PERSONAL LIABILITY. 
 INDIVIDUALITY 
 
 of members not recognized by the law Ill 
 
 INELIGIBILITY 
 
 of officer de facto does not prevent his acts from binding 
 
 society 192 
 
 INFANCY 
 
 in some States no bar to membership (see INFANT) 69 
 
 INFANT 
 
 powers of, as member 70 
 
 mortgage of, in Maryland 7Qn 
 
 may be agent 242 
 
 loans to... .. 816
 
 596 
 
 INFERENCE 
 
 of law as to fraud 211 
 
 see PRESUMPTION. 
 INITIALS 
 
 used in proof of service endorsed on writ 257 
 
 INJUNCTION 
 
 against officers acting unlawfully 114, 121, 200 
 
 right of individual mem- 
 bers to obtain 213 
 
 attempting to make improper investments.. 121 
 
 and appointment of receiver, ex parte 483 
 
 and appointment of receiver must be asked 
 
 for by member as such 491 
 
 and appointment of receiver, when borrower 
 
 cannot ask for... 491 
 
 directors seeking to change character and purpose 
 
 of society 200 
 
 employe suing for salary when granted 225 n. 
 
 holder of society's bond and mortgage ultra vires... 302 
 defense to society's mortgage on ground of dissolu- 
 tion 495 
 
 collection of taxes, will not lie 438 
 
 majority seeking to dissolve society, at instance of 
 
 minority 173 
 
 improperly granted against collection of mortgage should 
 
 not be dissolved until indebtedness ascertained 177 n. 
 
 INNOCENT PARTIES 
 
 as between, which liable for damages sustained 252 
 
 IN PARI DELICTO 
 
 society and its borrowing member, when held to be, as to 
 usury 361 
 
 INQUIRY 
 
 when purchaser need not push, beyond recitals in mortgage 365 n. 
 into validity of charter, corporate existence, etc. : see COL- 
 LATERAL INQUIRY; CHARTER; CORPORATE EXISTENCE; 
 NUL TIEL CORPORATION. 
 
 INSOLVENCY OF BUILDING ASSOCIATION 
 
 what is 488 
 
 cannot occur from indebtedness ultra vires 489 
 
 does not dissolve society 473 
 
 is no ground for dissolution.... 484, 485 
 
 proper method of winding up society upon 485-487 
 
 order of priority of payment on distribution upon 486
 
 INDEX. 597 
 
 INSOLVENCY LAWS 
 
 insolvent building association cannot be wound up under.. 485 
 INSPECTION 
 
 by auditors of mortgages and other securities, articles 
 should provide for periodical 54(7) 
 
 INSPECTORS AND JUDGES OF ELECTION 
 
 may be candidates 191 
 
 discretion of former, as to keeping polls open 191 
 
 INSTALLMENTS 
 
 what meant by , 12 
 
 amount and details as to payment of, to be set forth in 
 
 articles 54 (4) 
 
 are payable in cash only 93 n., 217 n. 
 
 see DUES ; STOCK-PAYMENTS. 
 
 INSTRUMENTS UNDER SEAL 
 
 formalities of execution of. 234, 235, 236, 237 n. 
 
 what contracts must be by 235, 237 
 
 INSUFFICIENCY 
 
 of proceeds of sale to cover whole sum due on mortgage, 
 
 remedy in case of. 429 
 
 INSURANCE 
 
 contract of society to effect, on mortgaged premises, is 
 
 lawful 247 and note, 383n. 
 
 measure of damages for breach of. 383 n. 
 
 covenants for payment of, properly inserted in mortgage... 383, 
 
 423,432 
 INSURANCE COMPANY 
 
 when bound by contract ot agent 243 
 
 INTENTION OF LEGISLATURE 
 
 in authorizing formation of building associations : see DE- 
 SIGN. 
 
 by-laws and amendments must conform with 57 
 
 is the test of the legality of building association loans 337 
 
 INTEREST 
 
 excessive rate of, in Starr-Bowkett societies 45 
 
 details as to payment of, to be set forth in articles 54 (5) 
 
 an incident to loans 149, 153, 322, 374 
 
 society cannot demand, after repayment of loan 149 n., 
 
 373, 875, 376, 427 
 
 paid, borrower to be credited with on account 156 
 
 bringing of suit not a refusal to accept 178 
 
 runs during pendency of suit 178, 268, 877
 
 598 INDEX. 
 
 INTEREST Continued. 
 
 atops upon tender 178, 263, 377, 437 
 
 upon return of loan 149 n., 373, 875, 376, 427 
 
 starts upon agreement to accept tender 178, 437 
 
 agent when chargeable with, on moneys collected 253 
 
 clause for judgment on default of, scire facias, etc., in mar- 
 ried woman's mortgage good 816 
 
 right of reservation of, implied in right to loan, hence not 
 
 ultra vires 322 
 
 does not diminish by reason of borrower's stock-pay- 
 ments 329, 374 
 
 method of payment of, in building association loan 329 
 
 under name of "dues," "redemption money " 333 
 
 usuriously paid, when recoverable 359-361 
 
 rebate of, on computation of amount presently due on 
 
 mortgage 375 
 
 on repayment, where dues include, or redemp- 
 tion money 427 
 
 is a compensation for money forborne 376 
 
 premium which is only increased, illegal 392-393 
 
 upon premium 398 
 
 an anomaly 421 
 
 fines upon default in payment of. 415, 416 
 
 cannot be charged on fines 417 
 
 liability to pay, ceases on dissolution 4% 
 
 allowed on partial payments 452 
 
 in stock, extent which member allowed to hold 113 
 
 is basis of member's rights 147 
 
 by-laws contrary to society's 280 
 
 INTERPRETATION 
 see CONSTRUCTION. 
 by courts of statutes previously passed cannot be controlled 
 
 by legislature 66 
 
 INVALIDATING 
 
 of deed duly executed, what plea available for the pur- 
 pose of. 236 
 
 INVESTING AND BORROWING MEMBERS 
 
 relation of, to scheme and definition of building association.. 40 
 
 INVESTMENT 
 
 of funds, except by loan to members, is mere shift 117 
 
 of surplus funds 805 
 
 of funds in real estate 303-308 
 
 society may take notes as an 811
 
 INDEX. 59? 
 
 INVESTMENT Continued. 
 
 of funds in stocks for speculation 321 
 
 risk in 456,457 
 
 INVESTORS 
 
 who are 13 
 
 cannot be forced to withdraw 173 
 
 advantages to, in permanent societies 46 
 
 see MEMBERS. 
 
 IOWA 
 
 statutes relating to building associations 22 
 
 decisions on building association cases 22 n. 
 
 cases on theory of loans or advancements 353 
 
 IRREGULAR MEETING 
 
 of directors, acts of, when binding on society 201 
 
 of society, acts of, not binding 185 
 
 may be ratified 184 
 
 IRREGULARITIES IN OBTAINING CHARTER 
 
 ground for interference of State, to forfeit charter 63, 480 
 
 cannot be inquired into collaterally 475 n., 504, 506 
 
 which do not avoid charter collaterally 506 
 
 members cannot petition for dissolution on ground of. 481 n. 
 
 see NUL TIEL CORPORATION. 
 
 ISSUE 
 
 see GENERAL ISSUE ; PLEADING. 
 
 ISSUE OF SHARES 
 
 conditions of, to be set forth in articles 54 (3) 
 
 in serial societies... 47, 48 
 
 J. 
 JOINT 
 
 and several liability of managers of inchoate society for 
 
 preliminary expenses 50 
 
 execution of authority by agents, when necessary 251 
 
 judgment of husband and wife 318 
 
 liability of principal and agent for agent's torts 252 
 
 mortgage of husband and wife 318 
 
 obligor may compel application of borrower's stock to 
 
 debt 459 
 
 security of husband and wife for husband's debt 318 
 
 member and stranger for member's debt 382 
 
 JUDGES AND INSPECTORS OF ELECTION 
 
 may be candidates 191
 
 600 INDEX. 
 
 JUDGMENT 
 
 against society by withdrawing member, what averments 
 
 will stay execution of. 137, 138, 143 
 
 withdrawing member may proceed to, against society 137, 
 
 141-143, 264 
 
 for want of affidavit of defense, where not to be taken 258, 
 
 264, 265 n. 
 obtained in suit pending before expiration of society, when 
 
 void thereafter 270, 495 
 
 joint, of husband and wife 317 
 
 equity of marshalling assets is against execution, not 
 
 against 461 n., 469n. 
 
 usury merged in, cannot be recovered 366 
 
 see EXECUTION. 
 
 directors not liable for gross, but honest, errors of. 204, 209 
 
 JUDGMENT CREDITOR 
 
 has only diligence to commend him 467 
 
 standing of, as to marshalling of assets 467 
 
 equities of, inferior to those of mortgagee or purchaser 467 
 
 is not " purchaser " or " mortgagee " 467 n. 
 
 JUDICIAL SALE 
 
 see PROCEEDS ; PROCESS ; SHERIFF'S SALE. 
 
 of mortgaged premises on death of borrower, effect of. 174 
 
 JUDICIARY 
 ate COURT. 
 
 JUNIOR ENCUMBRANCER 
 
 see PURCHASE ; PURCHASER ; MARSHALLING OF ASSETS. 
 
 rights of, upon sale under prior mortgage 460n. 
 
 JURY 
 
 may strike out items for useless work in action by solicitor 
 
 for fees '. 214n. 
 
 when the judge of the legality of by-laws 274 
 
 to judge whether premium usurious 338, 344, 346 
 
 JUSTIFICATION 
 
 see FINES ; FORFEITURE ; PREMIUM ; WITHDRAWAL. 
 
 K. 
 
 KANSAS 
 
 statutes in, relating to building associations 23 
 
 decisions in, touching building association law 23 n. 
 
 cases in, on theory of loans or advancements 340
 
 INDEX. 601 
 
 KENTUCKY 
 
 decisions in, relating to building associations, collected 38 n. 
 
 cases in, on theory of loans or advancements 850 
 
 building association suing in, must give bond for costs 256 n. 
 
 KINDS 
 
 various, of building associations 41-47 
 
 L. 
 
 LACHES 
 
 compromise or settlement cannot be opened for usury 
 where applicant was guilty of. 360 
 
 LAND 
 
 see REAL ESTATE. 
 
 LAND ASSOCIATION 
 
 building association cannot be changed into 200 
 
 distinction between, and building association 200 n., 305 
 
 change of building association into, does not destroy cor- 
 porate existence 200n. 
 
 building association cannot do business of. 304, 305 
 
 conversion of society into, does not abrogate member's 
 
 obligations 289, 303, 305, 309 
 
 see FREEHOLD LAND SOCIETY. 
 
 LAND SOCIETY 
 
 see LAND ASSOCIATION. 
 
 LAPSE OF CHARTER 
 
 by original limitation, when occurs 472, 473, 490, 493-495 
 
 effect of, on society's corporate existence (see DISSOLUTION) 490 
 
 by charter limitation may be shown in defense 509 
 
 collateral inquiry into : see COLLATERAL ; FORFEITURE ; NOL 
 TIEL CORPORATION. 
 
 LARCENY OF CHECK 
 
 by secretary, what is 221 
 
 LATITUDE 
 
 in framing rules under incorporation by patent or special 
 act 59 
 
 LAW 
 
 of building associations, basis of general treatise on 2 
 
 difficulties in harmonizing.. 3 
 
 courts of, apply same rules of computation of present 
 value of mortgages, as chancery.. 428
 
 602 INDEX. 
 
 LEASE 
 
 void for want of seal 235 
 
 assignment of, need not be under seal 285 
 
 LEASEHOLD PROPERTY 
 see RENEWAL. 
 mortgage on, to society, valid security 419, 425 n 
 
 LEGAL REMEDIES 
 
 by-laws prohibiting members from pursuing, generally void 281 
 
 LEGALITY 
 
 of charter cannot be inquired into collaterally 63, 475 n, 
 
 504-508, 513 ' 
 
 nor of election of officers 192 
 
 nor of officers' acts 192 
 
 criterion of, of acts of society 283 
 
 LEGISLATURE 
 
 intention of, incorporating by special act must be observed 
 
 in ordaining and amending constitution, by-laws, &c 57 
 
 incorporation by special act of. 57-59 
 
 incorporation by, by existing constitution and by-laws. ..58, 521 
 
 power of, to modify charters by subsequent enactment 65 
 
 cannot control courts in interpreting laws previously 
 
 passed 66 
 
 may change remedies at any time 67 
 
 will of, how expressed as to creation of corporation. 273 
 
 may remit taxes on building association mortgages 438 
 
 see COUNTY. 
 
 cannot impair obligation of contracts 477 
 
 when, may dissolve building associations 477 
 
 defining of purposes of incorporation belongs to, not to 
 
 society 480 
 
 LENDER 
 
 may follow money into lands, when 307 
 
 holding collaterals for debt not enforceable because ultra 
 
 vires not compellable to surrender unless paid 807 n. 
 
 LENDING MONEY 
 
 misuse of power of, by society 310-321 
 
 LETTERS PATENT 
 
 incorporation by 56, 59 
 
 LEVY 
 
 see ATTACHING CREDITOR ; HYPOTHECATION. 
 
 upon stock held by society as collateral security 450
 
 INDEX. 603 
 
 LIABILITY 
 
 tee PERSONAL LIABILTY. 
 
 for preliminary expenses 50 
 
 of members and borrowers to fines, etc., to be set forth in 
 
 articles.. 54 (4) 
 
 not suspended by bringing and pendency of 
 
 suit 178, 377,418 
 
 of depositors 77 
 
 to contribution cannot be evaded by transfer or with- 
 drawal 104, 105 
 
 personal, of members, for debts of society 110, 111, 505 n. 
 
 of society to account for profits arises, when 128, 150, 153, 
 
 329, 336, 452, 456, 457 
 
 of defaulting borrower 175, 456 457 
 
 duties, functions, and, of officers 194-230 
 
 for not keeping proper minutes 205 
 
 of directors as bailees or mandataries 209 
 
 for losses, &c 209-210 
 
 to account for waste or misapplication of funds.. 212 
 to suit by individual members (see ACTIONS; 
 
 DIRECTORS) 213 
 
 in approving official bonds 216 
 
 of solicitor 214n, 
 
 of surveyor 214 n, 
 
 of sureties strictly confined to terms of bond 219 
 
 of officers to fines and amotion 220 
 
 see CRIMINAL LIABILITY. 
 
 or agents by reason of contracts ultra vires 284 
 
 of borrowers, how affected by premature dissolution. ...496-503 
 
 for losses and expenses...!06, 107, 152, 180, 346, 496 n 
 of defendant on contract whereof he led plaintiff to a cer- 
 tain erroneous understanding 230 
 
 of society, for services and expenses before incorporation..50, 110 
 to suit by salaried officer improperly removed... 229 
 
 upon implied contracts 238 
 
 for torts and misrepresentation of agents 257 
 
 to suits and actions generally (see ACTIONS).. .254-270 
 to State for departure from powers gran ted... 325, 473 
 LIEN 
 
 on member's stock in favor of society 87, 450 
 
 is statutory only 87, 450 
 
 prevents transfer and withdrawal 450 
 
 of mortgage though vacated, members still bound on cove- 
 nants for dues, &c 90
 
 604 INDEX. 
 
 LIEN Continued. 
 
 of mortgage divested by sheriff's sale under it 429 
 
 on corporate property, equitable, follows same in hands of 
 
 members Ill 
 
 for purchase money, equitable 302, 307 n 
 
 follows into hands of third parties 307 
 
 levy on stock covered by society's (see ATTACHING CRED- 
 ITOR) 450 
 
 see MARSHALLING OF ASSETS. 
 
 LIMITS 
 
 statutory, effect of, upon funds available for withdrawals... 140 
 
 design of same 143 
 
 and charter, of powers of society 232 
 
 upon reservations in loans must be strictly 
 
 observed 356 
 
 upon duration of society is part of charter 
 
 though omitted 472 
 
 of powers of directors (see DIRECTORS) 200 
 
 of agents (see AGENTS) 245 
 
 of society (see POWERS; ULTRA VIRES) 232 
 
 of amount of loan or advancement receivable by member.. 391 
 of personal liability of members for corporate debts (see Per- 
 SONAL LIABILITY) 110 
 
 LIQUIDATED DAMAGES 
 
 fines are 93, 403, 415 
 
 "LOAN" 
 
 what is 13 
 
 LOAN OR ADVANCEMENT TO MEMBERS 
 
 terms used as synonymous 115 n., 326 n, 
 
 matter of, to be regulated in articles 54 (5) 
 
 what is and what not a true building association 330, 492 
 
 right to receive, nature of member's 43, 115, 444 
 
 highest bidder has absolute 116 
 
 provided he can furnish proper security... 43, 
 
 116, 123 
 
 elements of contract of. 147, 149-150, 326, 421 
 
 which make it something more than mere 
 
 loan 335, 336, 337, 357 
 
 equally a partnership dealing and lending of money 357 
 
 what included in 369, 384 
 
 nature of transaction of. 371 
 
 incidents to (see MINIMUM PREMIUM) 858-386
 
 INDEX. 605 
 
 LOAN OR ADVANCEMENT TO MEMBERS Continued. 
 
 analysis and theory of contract of. 326-857 
 
 cases on, in Connecticut 353 
 
 District of Columbia 343 n. 
 
 England 338 
 
 Georgia 346 
 
 Indiana 352 
 
 Iowa 353 
 
 Kansas 340 
 
 Kentucky 350 
 
 Maryland 339 
 
 Massachusetts 341 
 
 Nebraska 348 
 
 New Hampshire 344 
 
 New Jersey 342 
 
 New York 345 
 
 North Carolina 347 
 
 Ohio 353 
 
 Pennsylvania 351 
 
 South Carolina 3477k 
 
 Tennessee 349 
 
 Virginia 343 
 
 practical results of. 387 
 
 in terminating societies 41 
 
 in permanent societies 46, 180 
 
 method of obtaining 42 
 
 who entitled to, as member... 43 
 
 amount member is entitled to by way of. 43, 126 
 
 impossibility of enforcing terms of, does not affect bor- 
 rower's rights of membership 76 
 
 person may become member merely to obtain 76 
 
 recovery of whole, out of lands mortgaged, and subsequent 
 
 receipt of dues estop society from denying membership.. 79 
 after repayment of, borrower liable on his obligation for 
 
 dues, &c 88, 432 
 
 fines part of contract of. 95, 404 
 
 for what borrower may claim credit on 107 
 
 society need not inquire into application of. 116, 125 
 
 member applying for, to be preferred over outside invest- 
 ments 11&-121 
 
 fixed or minimum premium no lawful part of. 122 
 
 applicant cannot maintain assumpsit for promised 124, 267 
 
 may have action for breach of contract 124 
 
 impossibility of supervising application of. 125
 
 606 INDEX. 
 
 LOAN OR ADVANCEMENT TO MEMBERS- Continued. 
 term of, intended to be for society's duration, even if other- 
 wise written 150 n., 153, 332 
 
 repayment of, not contemplated before society's expira- 
 tion 153, 371, 430, 492 
 
 forms of securities for, as to amount and time of repay- 
 ment 153, 157 
 
 identity of 354 
 
 construction of, not to be a loan 160 
 
 as "amount actually received" 167, 
 
 168, 384, 385 
 
 as anticipatory payment of shares 338 
 
 existing provisions in rules as to repayment are part of 
 
 contract of. 169,278 
 
 repayment of, in permanent societies 180 
 
 contract of, cannot be added to by by-law 278 
 
 abuse of power to make, when no defense to enforce- 
 ment of. 288 
 
 security for (see SECURITY) 311 
 
 customary 380 
 
 statutory provisions as to, refer only to members 314 
 
 misuse of power in making, what is, and effects of. 310-321 
 
 power to make, involves right to take interest 322 
 
 repayment of, proceeds upon basis of principal and in- 
 terest 326, 327, 331, 334 
 
 interest on, does not diminish by stock payments 329 
 
 ceases on repayment of. 427 
 
 uncertainty of borrower's obligations by reason of. 336 
 
 contract of, must be analysed by courts to discover usury 
 
 (see USURY) 347, 353 n., 358 n. 
 
 reservations upon, strictly confined to statutory limits. ..356, 369 
 
 as legalized in the several States 383 
 
 extent and validity of contract of. 357, 359 
 
 rule for repayment of, in Georgia 384n 
 
 terms of, validly made bind all parties in interest 386 
 
 cannot be evaded on plea of illegal acts of society or 
 
 officers, or hardship 386 
 
 transaction of, with reference to premium 389-390 
 
 limit of amount of 391 
 
 repayment of, right of voluntary 152 
 
 rule for 154-174 
 
 upon default 175, 456, 457 
 
 upon dissolution or what amounts thereto..496-503 
 see REPAYMENT.
 
 INDEX. 607 
 
 LOAN OR ADVANCEMENT TO MEMBERS- Continued. 
 borrower's and society's right to apply stock-payments to 
 
 discharge of. 453-459 
 
 see APPLICATION OF STOCK. 
 
 taking of, when estops borrower from denying corporate ex- 
 istence 513, 516 
 his member- 
 ship 81 
 
 nee ESTOPPEL. 
 
 by unincorporated building associations 341, 344, 
 
 345, 351, 355, 356, 518 
 
 see BORROWER ; BORROWING MEMBER ; MORTGAGES ; REPAY- 
 MENT; USURY. 
 LOANS BY SOCIETY 
 
 to strangers and persons not sui juris 313-318 
 
 see CORPORATIONS ; INFANTS ; MARRIED WOMEN ; STRANGERS. 
 
 "LOANS ADVANCED" 
 
 construction of. 385 
 
 LOANS 
 
 whether society may contract and become liable on 293-302 
 
 see BORROWING POWERS. 
 
 LOCALITY 
 
 name merely descriptive of, does not become exclusive 
 property by user 51 
 
 LOSSES 
 
 see EXPENSES. 
 
 members must contribute to 104 
 
 before withdrawal, are set off against amount due on. ..105, 137 
 sure to arise, but unascertained are available as such set off 105 
 
 termination of duty to contribute to 108, 109 
 
 averment of, by society, when, will stay execution of judg- 
 ment by withdrawing member 137 
 
 are part of borrower's indebtedness 152, 346 
 
 withdrawing member not affected by, accruing after with- 
 drawal 264 
 
 burden of proving, as set off, is on society 264n 
 
 upon premature dissolution, extent of borrower's liability 
 
 for 496n, 
 
 chargeable on assets 496, 501 
 
 probability of, when ground for appointment of receiver... 483 
 directors' liability for, in consequence of approval of bad 
 official bonds..., .. 216
 
 608 INDEX. 
 
 LOSSES Continued. 
 
 sureties' liability for, arising from receipt by treasurer of 
 anything but cash for dues and fines 21 
 
 M. 
 MAJORITY 
 
 of corporators, lawful acts of, bind whole corporation (see 
 
 ASSENT) 181, 278, 410 
 
 binds all members only by its lawful 
 
 acts 278, 410 
 
 what is, at corporate meeting 186 
 
 effect of protest of, against election 189 
 
 of refusal of, to vote at election 189 
 
 when, cannot compel minority to agree to 
 
 dissolution 474 
 
 of directors what constitutes, of quorum 202 
 
 when, of quorum incapable of acting 203 
 
 when, of whole number required 203 
 
 society bound only by acts of. 206 
 
 MALA QRAMMATICA NON VITIAT LEGEM. 249 
 
 MANAGEMENT 
 
 expenses and losses of, duty of members to contribute to... 104 
 duty of borrowing members to con- 
 tribute to 346 
 
 see CONTRIBUTION ; EXPENSES ; LOSSES. 
 
 of society left to directors and officers 188, 193 
 
 of unincorporated building association.. 519 
 
 see GOVERNMENT. 
 MANAGERS 
 
 of inchoate society personally liable for preliminary ex- 
 penses 50, 110 
 
 secretaries in building associations usually are, of ita 
 
 business 197 
 
 MANDAMUS 
 
 when lies to compel transfer of stock on books 448 
 
 MANDATARIES 
 
 directors are mere 209 
 
 MANNER 
 
 of approving official bonds 216 
 
 of executing contracts 237 
 
 MARGIN 
 
 on building association mortgages 887
 
 INDEX. 609 
 
 MARKET VALUE OF STOCK 
 
 when measure of damages for refusal to transfer. 268 n. 
 
 MARRIED WOMEN 
 
 assignment of mortgage on husband's land to 318n. 
 
 estoppel upon, by recitals in mortgage of. 71 
 
 joint judgment of husband and 318 
 
 loans to 316-318 
 
 membership of, in society, legalized in some countries 69 
 
 powers incident to 70 
 
 mortgage of, when secures fines 95, 404 
 
 for husband's liabilities to society 312, 382, 404 
 
 may contain clause for judgment on default, 
 
 sci. fa., &c 316 
 
 next of kin of, after death, cannot impeach mortgage of, for 
 
 usury 317 
 
 powers of, as members 70 
 
 property of, mortgaged for husband's debt not liable to be 
 
 first taken at instance of second mortgagee of husband's.. 468 n. 
 separate estate of, may be mortgaged for liability of hus- 
 band to society 318 
 
 stock of, acquired dum sola, husband's right to 444 
 
 MARSHALLING OF ASSETS 460-469 
 
 general doctrine of 461 
 
 equity of, is against execution not against judgment. ..461 n., 469 n. 
 court will not entertain, on motion to set aside 
 
 execution 461 n., 469 n. 
 
 in creditor is absolute against debtor 461, 465 
 
 where not applicable 466, 468 and note. 
 
 standing of judgment creditor as to 467 
 
 effect of rights of third parties upon 468 and note. 
 
 does not follow property into hands of innocent 
 
 purchaser for value 468 
 
 where wife's property is mortgaged for husband's 
 
 debts 46871. 
 
 no lien creditor can invoke, as to securities not 
 
 liens when his own became so...'. 468 n 
 
 notice ~>f subsistence of, must be actual 469 
 
 doctrine of, as to stock pledged as collateral and mortgage 
 
 security 460-469 
 
 does not interfere with rule that payments 011 
 
 stock are not ipso facto payments to debt 4& f v. 
 
 MARYLAND 
 
 statutes relating to building associations in 2* 
 
 decisions concerning such societies in, collected 24 n. 
 
 So
 
 610 INDEX. 
 
 MARYLAND Continued. 
 
 cases on theory of loans or advancements in 839 
 
 recovery of usury in 860 
 
 MASSACHUSETTS 
 
 statutes in, relating to building associations 25 
 
 decisions concerning such societies in, collected 25 n 
 
 cases on theory of loans or advancements in 841 
 
 MATURITY OF STOCK 
 
 burden of proof of, when on borrower 260, 493 n. 
 
 right of member to petition for winding up on 490, 491 
 
 financial condition necessary in order to 492 
 
 difficulty in ascertaining exact period of. 492 
 
 see PAID UP VALUE ; PAR VALUE ; STOCK. 
 MAXIMUM 
 
 number of shares, member holding more than, cannot 
 
 defend on that ground 288 
 
 society may waive its own by-law as to... 288 
 society cannot permit members to hold 
 
 beyond, as fixed by statute 323 
 
 duration of society being limited under general law, sup- 
 plied in charter not specifying 472 
 
 MEASURE 
 
 of damages in action against society for refusal to transfer 
 
 stock 268 n., 449 
 
 for not effecting insurance as agreed 383 n. 
 
 of fines, what is a proper 413 
 
 of personal liability of members for corporate debts 110, 
 
 (see 605 note) 
 
 of liability of sureties on official bonds 219 
 
 treasurer's sureties where he does not take 
 
 cash for dues, <fec 217 n. 
 
 MEETINGS 
 
 corporate, annual, time, place, calling, <fcc., of, to be fixed 
 
 in articles 54 (8) 
 
 right of members to have notice of (tee NOTICE) 43 
 
 attend 113 
 
 general (see GENERAL MEETING) 182, 183 
 
 special (see SPECIAL MEETING) 184, 185 
 
 adjourned (see ADJOURNED MEETING) 185 
 
 duty of members to attend.. 186 
 
 functions of. 188 
 
 tee CORPORATE MEETING. 
 directors' (see DIRECTORS' MEETING*) 201-206
 
 INDEX. 611 
 
 MEETINGS Continued. 
 
 directors', minutes to be kept of. 205 
 
 what primary evidence of acts of. 206 
 
 liability for non-attendance of director at 210 
 
 necessity of notice of, to all directors (see NOTICE).. 201 
 MEMBERS 
 
 see MEMBERSHIP ; BORROWERS; WITHDRAWING MEMBERS. 
 
 acquisition of character of, mode of. 68 
 
 investing, do not lose membership by becoming borrowers 68, 
 
 146-148 
 
 effect of hypothecation of stock upon 113, 450 
 
 status of husbands of femes soles members at common law as 72 
 
 deceased members' executors, &c., as 73 
 
 building associations cannot become in others 75, 319-321 
 
 persons may become, merely to obtain loans 76 
 
 in arrears cannot withdraw 87 
 
 all, were originally intended to become borrowers 40, 115 
 
 original contract between, and society 127 
 
 recognized by the law only in the aggregate, not individu- 
 ally Ill 
 
 every member entitled to one vote, whatever his in- 
 terest 113, 187 n. 
 
 unanimous consent of, may ratify acts of directors, ultra vires 
 
 as between them and society 169,232,284 
 
 individually, cannot interfere with directors 199, 204 
 
 when, have priority over directors in distribution of assets 
 
 on insolvency 211 
 
 of building associations are not partners 335 
 
 ambiguous rules as to fines construed in favor of..98, 407-409, 411 
 repayment and withdrawal, ditto.,167, 168 
 
 death of all, or of integral part, works dissolution 472 
 
 not the officers but the, constitute the society as a corpora- 
 tion 473 
 
 duties and liabilities of (see DUTIES OP MEMBERS) 83-111 
 
 should be defined in articles 54 (4) 
 
 assent of, presumed to all lawful acts and by-laws of 
 
 society 83, 181, 271 
 
 when not presumed (see DISSENTING MEM- 
 BERS) 181 n., 410 
 
 bound to obey rules 83 
 
 in spite of fraud in obtaining charter 305 
 
 of illegal acta of society or officers 289, 303, 305, 309 
 
 of illegal change in character, etc., of society 200 n. 
 
 but not those made after withdrawal notice 136 n.
 
 612 INDEX. 
 
 MEMBERS Continued. 
 
 duties and liabilities of continued, 
 
 bound to pay dues 84-91, 93 
 
 notwithstanding refusal or neglect of others 84 
 
 not after dissolution 496 
 
 liable to an action of assumpsit for 84. 451 
 
 only when whole stock subscribed, unless waived.. 85 
 
 not entitled to notice when payable 86, 451 
 
 not relieved by bringing of suit 91, 178, 377, 418 
 
 liable to fines for default 92, 
 
 to forfeiture for continued default 99 
 
 on obligation after repayment of debt due..88, 164 
 
 if in arrears, cannot withdraw 87 
 
 stock subject to lien for 87 
 
 bound to contribute to losses and expenses (see CON- 
 TRIBUTION) 104, 346 
 
 in permanent societies 180 
 
 cannot evade by transfer or withdrawal 104, 105 
 
 suit against, for, to corporate debts, when not a 
 
 lien in Missouri llOn. 
 
 personal claim of member who is creditor of society 
 
 may be set off against liability 110 
 
 extent of personal liability for corporate debts..HO-lll 
 
 cannot be sued for corporate liability 505. 
 
 owe society personal services 83, 103, 226 
 
 bound to notice time, place and general character of 
 
 business at general meetings 183 
 
 attend and vote at such 186 
 
 contribute, according to powers, to success 
 
 of the enterprise 226 
 
 rights of (see RIGHTS OF MEMBERS) 112-180 
 
 interest in society is basis of. 147 
 
 entitled to share equally in profits on dissolution.. 104 
 advanced, have nothing to expect but cancella- 
 tion of securities 40 
 
 may hold more than one share each 113 
 
 but have only one vote each.... 113, 187 n. 
 
 access to corporate books 114 
 
 may proceed to restrain unlawful acts of officers 
 
 114 and note, 305, 309 
 against them for protection of 
 
 society 119,213 
 
 all may become borrowers 115
 
 INDEX. 613 
 
 MEMBERS Continued. 
 
 rights of : when absolutely entitled to receive loan or ad- 
 vance 115-123 
 
 preference over outside investments, entitled 
 
 to 116-121 
 
 amount, entitled to receive by way of loan or 
 
 advance 43, 126 
 
 nature of right to receive loans, &c 43, 115, 444 
 
 cannot maintain assumpsit for promised loan 124, 
 
 245 n., 267 
 
 but may sue for breach of contract 124, 267 
 
 may claim account of profits only on termin- 
 ation 128, 129, 150 
 
 may withdraw (see WITHDRAWAL) 127-141 
 
 not with fines and other charges standing 
 
 in arrears 155 
 
 what amount 130, 131 
 
 when with share of profits 131 n. 
 
 but must observe rules prescribed as to with- 
 drawals 132 
 
 not inconsistent with 
 
 statute. 132 
 
 is then a mere creditor of society 136 
 
 and not bound by rules made after notice 
 
 of withdrawal 136 n, 
 
 may compel settlement of affairs in equity when 
 
 stock par , 145, 490-491 
 
 but cannot qua stockholders sue at law for 
 
 value of paid-up stock 144, 265 
 
 must either wait, or withdraw and sue 144 
 
 and cannot petition for winding-up for irreg- 
 ularities in incorporation 481 n 
 
 may insist upon carrying on society to its legiti- 
 mate close 173 
 
 may be auctioneer at society's sale, and sign mem- 
 orandum for purchaser 242 
 
 retain control overstock pledged and may vote.,113, 450 
 if creditors of society, entitled as such on dis- 
 tribution of insolvent society's assets 486 
 
 when preferred therein over directors 211, 487 
 
 MEMBERSHIP 
 
 in building association akin to partnership 127 
 
 acquisition of, personal prerequisites for, to be set forth in 
 articles 54 (4)
 
 614 INDEX. 
 
 MEMBERSHIP Continued. 
 
 acquisition of, mode of. 68 
 
 persons capable of. 69 
 
 infants and married women, where capable 
 
 of 69, 70 
 
 whether at common \&vtfeme sole's husband 
 
 makes 72 
 
 deceased member's executor, 
 
 <fec., makes 73 
 
 one society incapable of, in another..75, 319-321 
 for mere purpose of obtaining loan, proper.. 76 
 
 evidence of, corporate books are primary 78, 446 
 
 payment of dues after suit is, which society 
 
 estopped from controverting 79, 176, 431 
 
 what such, as borrower is estopped from deny- 
 ing (see ESTOPPEL) 81 
 
 duties of (see DUTIES OF MEMBERS) 83-111 
 
 borrower's mortgage (or decree thereon) after 
 
 repayment stands as security for 428, 432 
 
 rights of (see BIGHTS OF MEMBERS) 112-180 
 
 termination of, modes of 82 
 
 in serial society 49 
 
 by forfeiture of. 99-102 
 
 does not occur without distinct 
 
 enforcement of. 101, 176 
 
 by withdrawal... * 136 
 
 ceases at giving of with- 
 drawal notice 108 ;. 
 
 ' right to withdraw an inci- 
 dent to 430 
 
 does not occur by taking loan or advance- 
 ment 147-148 
 
 exception to this rule 147, 476 
 
 nor by borrower's default, and suit, when. .176, 431 
 opportunity given in equity to default- 
 ing borrower to preserve 177 
 
 see PRELIMINARY ACCOUNT. 
 but by sale on mortgage and application of 
 
 proceeds and stock payments to debt 431 
 
 and by terms of borrower's contract 476 
 
 Of borrower 147-148 
 
 when society estopped from denying 79, 431 
 
 when borrower estopped from denying 81 
 
 of depositors is quasi 77
 
 INDEX. 615 
 
 MEMBERSHIP Continued. 
 
 of husband of feme sole member at common law 72 
 
 of deceased member's executor or administrator 73 
 
 MERGER 
 
 of mortgage destroys sureties' liability for losses subse- 
 quent to 219n. 
 
 in ownership of land 429 
 
 of usury in judgment 366 
 
 settlement 360 
 
 of borrowing member's shares in capital stock 371 
 
 of stock in loan does not occur of course (see APPLICATION).. 452 
 
 METHODS 
 
 of obtaining loans or advancements 42 
 
 of incorporation, various 55-62 
 
 same rule as to collateral impeachment 
 
 of charter under all 505 
 
 see CHARTER ; COLLATERAL INQUIRY ; NUL 
 
 TIEL CORPORATION. 
 MICHIGAN 
 
 statutes in, relating to building associations.. 26 
 
 MINES 
 
 when mortgagee in possession may open 432 
 
 MINIMUM OR FIXED PREMIUM 
 
 illegal ., 122, 275, 323, 394-397 
 
 when borrower may defalk from indebtedness to society ..122, 397 
 
 MINISTERIAL 
 
 survival of, functions between agents 251 
 
 treasurer's duties are... 196 
 
 officers' duties in calling meetings when merely 184 
 
 MINNESOTA 
 
 statutes in, relating to building associations 27 
 
 MINOR 
 
 see INFANT. 
 MINORITY 
 
 see INFANCY. 
 
 may insist upon carrying on society's business to expira- 
 tion of charter 173, 474 
 
 when, may elect officers of society 189 
 
 MINUTES 
 
 secretary to keep, of corporate and directors' meetings 197 
 
 of directors' transactions .'. 205
 
 616 INDEX. 
 
 MINUTES Continued. 
 
 of directors' transactions, keeping of, not essential to valid- 
 ity of contracts, when 205 
 
 signing of, not essential, when 205 
 
 statutory or charter provision for 
 
 keeping, when directory 205 
 
 directors' or secretary's liability 
 
 for not keeping, properly 205 
 
 primary evidence of acts and con- 
 tracts of directors 205 
 
 primary evidence of elections, meetings, dividends, &C..205, 206 
 
 of agent's appointment 242 
 
 if existing, should be produced 206 
 
 MISAPPLICATION OF CORPORATE FUNDS 
 
 may be restrained at instance of individual members..H4 and note, 
 
 305, 309 
 
 directors' liability for (see DIRECTORS) 212, 482 
 
 MISAPPROPRIATION 
 
 of funds by purchase of lands may be restrained 289 
 
 of stock, society's liability for 252 
 
 MISBEHAVIOR 
 
 member not excused from paying dues by the, of others.... 84 
 nor borrower relieved from performance of his conduct by 
 
 same 499 
 
 of directors, in certain cases gives members Tight to pro- 
 ceed against, but only for the protection of 
 
 the society 213 
 
 importance of allegation of, in bill for such 
 
 purpose 213 
 
 willful, affects them with liability 209 
 
 effect of, upon them on distribution of society's 
 
 assets on insolvency 211, 487 
 
 may be objected to by any single member 305 
 
 see ACTIONS; CRIMINAL LIABILITY ; DIRECTORS; 
 
 OFFICERS; PERSONAL LIABILITY. 
 when a ground for appointment of receiver..4S2, 483 
 MISCONDUCT 
 
 see MISBEHAVIOR. 
 MISDESCRIPTION OF PREMISES 
 
 mortgagee in possession cannot claim costs for sale void 
 
 for 482 
 
 MISFEASANCE 
 tee MISBEHAVIOR.
 
 INDEX. 617 
 
 MISLEADING NAME 
 
 improper assumption of, by corporation restrained 51 
 
 MISMANAGEMENT 
 
 personal liability of officers for (see MISAPPLICATION; MISAP- 
 PROPRIATION; MISBEHAVIOR) 482 
 
 when a ground for appointment of receiver 482, 483 
 
 see INJUNCTION ; RECEIVER. 
 
 MISNOMER OF BUILDING ASSOCIATION 
 
 plaintiff in bill in equity may be amended at bearing 257 
 
 plea of, is in abatement 261 n 
 
 MISREPRESENTATION 
 
 relieves member against undertakings as to dues 84 
 
 of agent, society's liability for (see AGENT; TORTS) 252 
 
 when no ground of action 252 
 
 in obtaining charter, ground for forfeiture thereof. 480 
 
 does not avoid it collaterally 504, 506 
 
 as to fact of corporate existence may be shown 515? 
 
 MISSOURI 
 
 statutes in, relating to building associations 28 
 
 decisions in, relating to building associations 2871. 
 
 personal liability of members in, for corporate debts... 28 n., llOn. 
 
 MISSTATEMENT OF CAPITAL STOCK 
 
 before incorporation will not avoid charter collaterally 506 
 
 MISTAKE 
 
 in recital in mortgage does not estop borrower from deny- 
 ing his membership 81 
 
 of judgment, if honest, directors not liable for 204, 209 
 
 through accident or ignorance may be corrected in mort- 
 gage 420 
 
 mere, not a ground of forfeiture of charter 479 
 
 in amendment in reciting date of act amended, not fatal. .21 (c) n> 
 see ERRORS. 
 
 MISUSE 
 
 of powers generally 285-292, 325 
 
 of lending money 310-321 
 
 see ULTRA VIRES. 
 
 MISUSER OF FRANCHISE 
 
 does not ipso facto dissolve society.. 473 
 
 is a ground of forfeiture of charter by State 478 
 
 what is .... 479
 
 618 INDEX. 
 
 MODES OF INCORPORATION 
 
 same rule as to collateral impeachment of charter applies 
 to all 505 
 
 MODIFICATION OF CHARTER 
 
 right of, by legislature 65 
 
 to be made according to existing forms 65 
 
 MONTHLY 
 
 periodical payments may be 374 
 
 premium payable, unlawful without distinct statutory 
 authorization 392-393 
 
 MORAL OBLIGATION 
 
 as to compensation of officers , 226 and note, 
 
 MORTGAGE BY BUILDING ASSOCIATIONS 
 
 how far enforceable (see BORROWING POWERS) 302 
 
 cannot be defended against by terre-tenant because society 
 dissolved 495 
 
 MORTGAGE TO BUILDING ASSOCIATIONS 419-440 
 
 assets, mortgages not, for winding up, but for taxation... 440, 492 
 assignment of, by trustees of unincorporated society, when 
 
 good 519 
 
 on expiration of society 332 
 
 vest in successors of resigning or dying 
 
 trustees without 233 
 
 of unincorporated society vest upon incorpo- 
 ration without 520 
 
 cancellation of, by attorney when set aside 247 
 
 by secretary of unincorporated society, when 
 
 void 519 
 
 characteristic feature of. 422 
 
 covenants in, for faithful performance of duties include con- 
 tribution to losses... 107 
 upon what implied 
 
 condition 496n. 
 
 for reference to referees on default, to ascer- 
 tain amount due, valid 177 n. 
 
 what, lawful 382, 432 
 
 for stock payments, &c 423, 424 
 
 what, sufficient for continuance of dues to end 
 
 of society or series 423. 
 
 as to default 425 
 
 implied, to make up difference between pro- 
 ceeds of sale and whole sum due 429
 
 INDEX. 619 
 
 MOETGAGE TO BUILDING ASSOCIATIONS Continued. 
 
 covenants in, how far security for losses 496n. 
 
 for payment of dues, effect and validity of. 424 
 
 relation of fines to (see FINES) 404 
 
 unlawful, when may be reformed and enforced.. 420 
 discharge of, member bound on covenant for dues, &c., 
 
 after 90, 164 
 
 stands for dues after repayment of loan..88, 90, 372 
 
 by sheriff's sale under 429 
 
 not necessarily discharge of debt 429 
 
 land primary source for, and satisfaction of 
 
 debt 365 
 
 conditions of repayment and, under terms of.. 159, 
 
 160, 172 
 form of mortgage does not affect rules as to... 157 
 
 by judicial sale, repayment of loan after 174 
 
 errors and omissions in 420, 433, 434 
 
 estoppel by recitals in, upon married woman, party to 71 
 
 maker denying corporate exist- 
 ence 513, 514 
 
 purchaser under, denying speci- 
 fic powers 514 
 
 what is not variance between 
 
 bond in, and bond shown 519 n. 
 
 foreclosure of, properly within equity jurisdiction 424 
 
 basis of equity jurisdiction in 428 
 
 in equity, preliminary account and its object.. 177 
 
 evidence 245 . 
 
 fines to be allowed on, exparte 404 
 
 nature of proceedings by scire facias in 495 n. 
 
 forms of, examinations of the various, their propriety and 
 
 adequacy 421-422 
 
 merger of , in ownership of land 429 
 
 mortgageable estates : statutes relating to mortgages on real 
 estate have no reference to chattel 
 
 mortgages 419 n. 
 
 on equitable titles 419 and note. 
 
 on leaseholds 419, 425n. 
 
 nature and construction of: is understood to be for full term 
 
 of society's running although 
 
 otherwise written 150 n., 331, 
 
 332, 421, 492 
 
 when written for specific sum... 153, 
 
 157, 389
 
 320 INDEX. 
 
 MORTGAGE TO BUILDING ASSOCIATIONS Continued, 
 nature and construction of: when written for specific sum and 
 
 time 153,157 
 
 intended as collateral security 
 
 during society's running.. 371 
 
 in what sense a col lateral security 429 
 bond accompanying, is the prin- 
 cipal debt 365 
 
 lawfully executed, binds all par- 
 ties in interest 386 
 
 purchaser subject to, bound by 
 
 its terms 386 n. 
 
 purchaser subject to, when bound 
 
 to pay dues 435 
 
 when silent as to fines 404 
 
 for payment of dues, &c., effect 
 
 and validity of. 424 
 
 not void for uncertainty 424 
 
 is really for discharge of indefi- 
 nite number of small pay- 
 ments 424 
 
 terms of, preclude withdrawal... 430 
 
 how treated on ejectment 311 n. 
 
 what may be included in 383 
 
 form and substance must con- 
 form to statute and by-laws.... 356, 
 
 420 and note. 
 form, <fcc., of, when left to 
 
 society's discretion 420anrf note. 
 
 .stipulations not warranted by 
 
 statute and by-laws void 420 
 
 original and legitimate form of.. 421 
 examination of various forms in 
 use, their propriety and ade- 
 quacy 421-422 
 
 held collectible as among pri- 
 vate persons 503 
 
 partiesto: infants in Maryland 70. 
 
 married women, what recoverable on 316-318 
 
 wife's for husband's liability covers fines, &C..95, 318, 404 
 by stranger or wife for member's debt is good for 
 
 all his engagements 312, 382 
 
 joint, of member and non member 882 
 
 tee APPLICATION OF STOCK ; GUAKANTOR ; MARSHAI/- 
 UNO OF ASSETS.
 
 INDEX. 621 
 
 MORTGAGE TO BUILDING ASSOCIATIONS Continued. 
 
 power to sell under, notice of extent of agent's authority 246 
 
 present value of, rule for computation of. 154-155, 158-164, 
 
 175, 177, 336, 375, 427, 428 
 
 rule same at law as in equity 428 
 
 where court cannot look beyond mortgage 
 
 to ascertain amount due on 404 
 
 whether court can ever do so 426 
 
 recording of, notice to purchaser 433 
 
 but not as to marshalling of assets (see MAR- 
 SHALLING OF ASSETS) 469 
 
 relation of amount of, to value of property 387 
 
 remedies upon, concurrent 436 
 
 right to take, involved in power to lend or advance 419 
 
 stock-payments applied to 154-156, 159-164, 175-176, 453-459 
 
 are not ipso facto payments to 431, 440n., 452, 
 
 455-457, 462, 465, 518 
 see MARSHALLING OF ASSETS. 
 
 suit on, must show present right of recovery 258 
 
 after incorporation, where mortgage received before 520 
 
 taxation of. 438,440 
 
 terms of , preclude withdrawal 430 
 
 usury in, what is 420n. 
 
 who may defend against.. 363-365 
 
 see USURY. 
 
 to unincorporated building associations, validity of. 518 
 
 assignment of, when good 519 
 
 cancellation of, when void 519 
 
 reservations of premiums, &c., in (see LOANS) 341, 344, 
 
 345, 351, 355, 356, 518 
 MORTGAGEABLE ESTATES 419 
 
 MORTGAGEE 
 
 may have action against mortgagor for difference between 
 
 proceeds of sale and whole debt 429 
 
 may exercise all powers concurrently 436 
 
 right of, of entry after dissolution of society on premises 
 
 mortgaged by it 495 
 
 equities of, superior to those of judgment creditors 467 
 
 in possession, rights of. 432 
 
 junior, whether, may set up usury in first mortgage 363-366 
 
 need not ordinarily search beyond face of prior 
 mortgage 419 n.
 
 622 INDEX. 
 
 MORTGAGEE Continued. 
 
 junior, right of, to marshal assets and compel application 
 
 of mortgagor's stock to 'debt 460-466, 468-469 
 
 rights of, upon sale under prior mortgage 460n. 
 
 see MARSHALLING OF ASSETS. 
 
 MORTGAGOR 
 
 see BORROWER ; ESTOPPEL ; MORTGAGE. 
 to building association, when estopped from denying cor- 
 porate existence 513, 514 
 
 vendee of, when similarly estopped 514 
 
 MORTMAIN ACTS 
 
 shares in land-societies not within 444n. 
 
 MULTIFARIOUSNESS 
 
 what is not, in bill in equity for settlement of society 482 n. 
 
 MUNICIPAL CORPORATION 
 
 analogy between officers of building association and of, 
 
 claiming salaries without express contract 226 
 
 1UTUALITY OF THE BUILDING ASSOCIATION SCHEME 
 
 129, 146-148, 226, 829, 335, 361, 386, 401, 456, 496, 497, 498, 501 
 
 N. 
 SAME 
 
 if identical with that of another corporation, objectionable.. 51 
 
 improper assumption of, may be restrained 51 
 
 merely descriptive of locality, does not become exclusive 
 
 property by user 51 
 
 change of, cannot make building association a land-society 
 
 or alter its powers 306 
 
 NEBRASKA 
 
 statutes in, relating to building associations 29 
 
 decisions in, relating to same, collected 29 n. 
 
 cases in, on theory of loans or advancements 348 
 
 NECESSARIES 
 
 president's contract for, binds society 195 
 
 NECESSARY REPAIRS 
 
 secretary's contract for, binds society 197 
 
 NECESSITY 
 
 * of seal in corporate contracts 235, 237 
 
 NEGLECT 
 
 of society to enforce accounts, Ac., does not discharge 
 
 sureties 217 
 
 of members to pay dues does not dissolve society.. 473
 
 INDEX. 623 
 
 I 
 
 NEGLIGENCE 
 
 result of, in drawing rules, articles or constitution 52 
 
 of directors in taking security for loans 123 
 
 directors liable for gross 209 
 
 compromise cannot be opened for usury where applicant 
 
 was guilty of. 360 
 
 mere, not a ground of forfeiture of charter 479 
 
 of officers, when a ground for appointment of receiver 483 
 
 of agents, when society liable for 252 
 
 see AGENTS ; TORTS. 
 
 what is, in solicitor 214n. 
 
 NEGOTIABLE INSTRUMENT 
 
 effect of affixing seal to 235 
 
 warrant drawn by president on treasurer in favor of with- 
 drawing member is not a 264 TV 
 
 NEGOTIATION OF LOAN 
 
 charges for, not usurious 214 n., 368 
 
 "NET VALUE" 
 
 of stock 449 n. 
 
 NEW HAMPSHIRE 
 
 cases on theory of loans or advancements 844 
 
 NEW JERSEY 
 
 statutes in, relating to building associations 30 
 
 decisions, relating to same, collected 30 n., and Addenda. 
 
 cases in, on theory of loans or advancements 842 
 
 NEWSPAPERS 
 
 publication in, when notice 250 
 
 NEW YORK 
 
 statutes in, relating to building associations 31 
 
 decisions in, relating to same, collected 31 n. 
 
 cases in, on theory of loans or advancements 345 
 
 NEXT OF KIN 
 
 cannot, after married woman's death, set up her coverture 
 as defense to usury in mortgage 317 
 
 NOMINATION OF OFFICERS 
 
 method, &c., to be prescribed in articles 54 (6) 
 
 NON-FEASANCE 
 
 mere, not a ground of forfeiture of charter. 479 
 
 NON-MEMBERS 
 
 see STRANGERS.
 
 324 INDEX. 
 
 NON-USER OF FRANCHISES 
 
 does not ipso facto dissolve society 478 
 
 ia not ipso facto surrender of charter 476 
 
 ia aground of forfeiture of charter 478 
 
 NORTH CAROLINA 
 
 statutes in, relating to building associations 32 
 
 decisions in, relating to same, collected 32n 
 
 cases in, on theory of loans or advancements 347 
 
 recovery of usury paid by borrowing member in 361 
 
 NOTE 
 
 giving of, to society as such recognizes its corporate exist- 
 ence 85 
 
 maker of, when estopped from denying corporate exist- 
 ence 513 
 
 NOTES 
 
 see BANKING POWERS; BILLS AND NOTES; BORROWING 
 POWERS; DISCOUNTING. 
 
 abuse of power of society, to purchase and discount 310, 
 
 311, 479 
 
 society may take, for investment 311, 479 
 
 given in settlement of account cannot be defended against 
 for usury 360 
 
 NOTICE 
 
 recorded articles, rules, or constitutions are, to the world... 62 
 of dues, statutory requirement of, as to calls, inapplicable.. 86 
 
 member not entitled to 86, 451 
 
 to deceased member 74n, 
 
 of fines, members must have, by by-law 98 
 
 of corporate meetings, right to 113 
 
 members bound to take, of stated... 183 
 also of general character of busi- 
 ness 183 
 
 but extraordinary matter requires 
 
 special 183 
 
 must be given to all members 184 
 
 but may be waived by unanimous 
 
 consent 184 
 
 defects in, may be waived 184 
 
 want of, cannot be setup to impeach 
 
 meeting's acts collaterally 184 
 
 of special meetings must be per- 
 sonal 184
 
 INDEX. 625 
 
 NOTICE Continued. 
 
 of directors' meetings 201 
 
 absence of, can be waived only by whole num- 
 ber of directors 202 n. 
 
 of agent's powers 243, 245 
 
 how far person dealing with, are bound to take, 
 
 of agent's powers 245 
 
 party so dealing must take, of limits necessarily 
 
 coming under hid observation 246 
 
 of ownership of stock, when society affected with 252 
 
 of right to compel resort of one of two funds must be actual.. 4(39 
 
 of withdrawal, what is 14 
 
 member not bound by rules made after his.. 136 n. 
 see WITHDRAWAL. 
 
 to agent and directors, what, is notice to society 250 
 
 recitals in mortgage how far complete 365n. 
 
 recording of mortgage, how far is 433 
 
 purchaser of Bold stock without 445, 446 
 
 NOTORIOUS 
 
 fines must be 98 
 
 NUL TIEL CORPORATION 
 
 corporate existence cannot be inquired into collaterally on 
 
 plea of. 208,221 
 
 plea of, may be in bar or in abatement 261 and note, 
 
 how answered 504 
 
 same rule us to answer to, under all forms of incor- 
 poration 505 
 
 defendant may show under, that plaintiff is not 
 
 a corporation de facto or dejure 509 
 
 lapse of charter by original limitation may be 
 
 shown under 509 
 
 what may be shown under 509-512 
 
 when party estopped from setting up 513-516 
 
 NUMBER 
 
 of shares should be set forth in articles, &c 54 (2) 
 
 votes each member entitled to, also 54 (6) 
 
 of directors, effect of election of greater or lees, than 
 required 190 
 
 O. 
 
 OATH OF OFFICE 
 
 by-law prescribing, when void 277 
 
 ftl
 
 626 INDEX. 
 
 OBEDIENCE TO RULES 
 
 members bound to 83, 271 
 
 nor absolved from, by fraud in obtaining charter 306 
 
 nor by unlawful change of character, Ac., of the society 309 
 
 OBJECT OF BUILDING ASSOCIATION 
 see DESIGN. 
 
 OBLIGATION OF CONTRACTS 
 
 cannot be impaired by by-law (tee LEGISLATURE) 278 
 
 OBLIGATIONS 
 
 of members, mutuality and reciprocity of. 147-148 
 
 of borrowing members stand for dues after repayment of 
 
 loan secured 88-90, 164, 372 
 
 written for repayment of specific sum at specific time, 
 
 meaning of. 153, 157 
 
 form of, does not affect rules as to repayment 157 
 
 not affected by illegal conduct of society or officers.. 172, 
 
 289, 303, 305, 309 
 
 effect of dissolution of society on 496-503 
 
 OFFENSES JUSTIFYING AMOTION 220 
 
 OFFICE 
 
 every member has right to be elected to, and hold 114 
 
 borrower, pledgor of his stock, retains this right 148 
 
 official bond when a prerequisite to entering upon 215 
 
 when, may be filled by two persons 251 n, 
 
 by-law creating a new, void 277 
 
 OFFICER 
 
 to whom periodical payments to be made to be specified 
 
 in articles 54 (4) 
 
 interest to be paid, ditto 54 (5) 
 
 sureties of, not bound where election void 218 
 
 on re-election must give new bond 219 
 
 dejure entitled to salary annexed to office 224 
 
 whose term is fixed, with salary annexed, may sue therefor 
 
 on improper removal.. 229 
 
 executing deed may also make acknowledgment 234 
 
 OFFICERS 
 
 nomination, election, duties, powers, terms, remuneration 
 
 and removal to be provided for in articles 54 (6) 
 
 attention of, to duties enforced by fines 103 
 
 illegal conduct of, cannot relieve society from executed con- 
 tract 109 
 
 nor borrowers from their obligations to 
 society 172, 289
 
 INDEX. 627 
 
 O FFICERS Continued. 
 
 illegal acts of, may be restrained at instance ot members... 114 n. 
 
 investments by, when should be restrained 121 
 
 proceedings by, liability of, to suit by members for... 213 
 
 parties to bill in such case 199 n., 269 
 
 liability to fines and amotion for 220 
 
 personal liability for, and misman- 
 agement by 482 
 
 and fraudulent mismanagement by, when ground 
 
 for appointment of receiver 483 
 
 required to offer money to members at stated intervals 115 
 
 cannot arbitrarily withhold approval of withdrawals 135 
 
 when without discretion as to calling of meetings 184 
 
 election of. 188-190 
 
 principal function of corporate meeting 188 
 
 failure of, does not dissolve society 188, 473, 484 
 
 upon, the old officers hold-over 188 
 
 de facto may bind society by contracts 192 
 
 acting publicly, presumed to be so rightfully 192 
 
 may have action of trespass against others claiming 
 
 to be board of directors 192 n. 
 
 and dejure, rights of, respectively to claim salary... 228 
 
 compensation of 223-230 
 
 must look to corporate funds for 230 
 
 when fixed by charter or contract, cannot 
 
 be varied by by-law 284 
 
 do not work on same terms as professional men 230 
 
 interest of, in society 230 
 
 powers of, general extent of, and liabilities of. 194-230 
 
 as to relation between, and society and third par- 
 ties governed by law of agency 241 
 
 are those of agents, they being agents 241 
 
 notice of, whether defined by charter or by-law.. 243 n. 
 
 act* of, cannot be collaterally impeached 192 
 
 liability by reason of, ultra vires 284 
 
 of building association have its entire business in hand 193 
 
 who are the usual 194 
 
 in what sense directors are 208 
 
 who are, properly so-called 208 
 
 society not having any responsible, no ground for interfer- 
 ence of chancery 484 
 
 criminal liability of. 221, 222 
 
 in unincorporated building associations 519
 
 628 INDEX. 
 
 OFFICERS Continued. 
 
 agency of, therein 519 
 
 sec .AGENTS; DIRECTORS; ELECTION; PERSONAL LIABILITY. 
 
 OFFICIAL BONDS (see SURETIES) 215-219 
 
 what officers shall give, to be determined by society 215 
 
 approval of. 216 
 
 extent of liability of sureties on 219 
 
 validity of certain 216 
 
 OHIO 
 
 statutes in, relating to building associations 33 
 
 decisions, relating to same, collected 33 a 
 
 cases on theory of loans or advancements 853 
 
 OMISSION 
 
 of one required signature to certificate of incorporation 
 
 fatal 208 
 
 in process of incorporation, ground of forfeiture of charter.. 480 
 to effect officers does not dissolve society 473 
 
 OMISSIONS AND ERRORS IN MORTGAGE 420, 433, 434 
 
 ONUS OF PROOF 
 
 in suit by officer against individual director for salary 230 
 
 see BURDEN OF PROOF. 
 
 OPERATIONS OF BUIDING ASSOCIATION 
 
 description of practical 8-11 
 
 nature of, involves time and risk 129 
 
 temporary suspension of, effect of. 500 
 
 OPPRESSION 
 
 what constitutes in usurious loans 359 
 
 OPPRESSIVE FINES 410, 412, 413 
 
 court will relieve against 97 
 
 OPPRESSIVENESS 
 
 without fraud not itself an excuse for non-performance 386 
 
 ORDER 
 
 drawn by president on treasurer in favor of withdrawing 
 member not a negotiable instrument 310 n. 
 
 ORGANIC 
 
 law of society, what is 52 
 
 ORGANIZATION (see FORMATION ; INCORPORATION) 50-67 
 
 with defective capital (see ESTOPPEL)... 85, 288 and note, 442, 515 
 defect in, cannot be inquired into collaterally (see DEFECTS; 
 
 IRREGULARITIES).... 475 n., 504, 506 
 
 comnensation for services before 227 and note.
 
 INDEX. 629 
 
 ORIGINAL 
 
 contract between society and member 127 
 
 limitation of corporate existence, when takes effect 493 
 
 lapse of charter by, may be shown 509 
 
 OUSTER 
 
 discretion of court as to, whether from illegal powers or 
 from corporate franchise 323, 325, 479 
 
 OUTSIDERS 
 
 see STRANGERS. 
 
 OVERDRAWING 
 
 bank account is not borrowing 294, 300 
 
 OWNER OF STOCK 
 
 may have action against society for refusal to transfer on 
 books 268,448-449 
 
 OWNERSHIP OF STOCK 
 
 society need not look beyond corporate books for 78, 446 
 
 how determined 78 
 
 evidence of. 446, 447 
 
 P. 
 PAID-UP 
 
 or par value of shares, what meant by, generally 12 
 
 in permanent societies 46 
 
 should be fixed in articles 54 (2) 
 
 member cannot, qua stockholder, 
 
 sue for at law 144, 265 
 
 difficulty of ascertaining when stock 
 
 has reached 490 
 
 settlement how compelled when 
 
 stock has reached 490-491 
 
 what financial condition must be shown to prove that 
 
 stock is 492 
 
 society expires when stock is 473 
 
 PAR VALUE 
 
 see PAID-UP VALUE. 
 
 PAR DELICTUM 
 
 doctrine of, applied to borrowers at usury from society 361 
 
 PAROL 
 
 contract, what is, in contract of loan, as to repayment 439 
 
 for repayment where not merged in security of 
 higher nature 429
 
 630 INDEX. 
 
 PAROL Continued. 
 
 evidence, when admissible to show contract to be that of 
 
 society, not of agent individually 249r* 
 
 admissible to show assignment of stock absolute 
 
 on face to be merely as collateral SSOtk 
 
 PARTIAL 
 
 failure of consideration, when terre-tenant may defend 
 
 against usurious mortgage on ground of. 364 n., 365 
 
 payments of dues not counted in computing period of 
 
 default 259 
 
 stock-payments are not, on loan 452 
 
 interest allowed on 452 
 
 doctrine of, applied to borrower's liability upon 
 premature dissolution 496 
 
 PARTICIPATION 
 
 in fraud, what is 210, 211 
 
 in business and profits estops from denying proper organ- 
 ization 516 
 
 PARTIES 
 
 to bill by member against delinquent officers 199 n., 213 
 
 to certain other actions 269 
 
 to bill for appointment of receiver 488 
 
 to suit by incorporated society on mortgage received before 
 
 incorporation 520 
 
 see ACTIONS ; PARTY. 
 
 PARTNERS 
 
 members of incorporated society are not 335 
 
 of unincorporated society are 517 
 
 PARTNERSHIP 
 
 incorporated society is, with corporate rights 485, 517 
 
 unincorporated society is merely a 517 
 
 law of, applies to unincorporated society 517 
 
 dealing, whether transaction of loan is 338-357 
 
 PARTS 
 
 of years not regarded in computing rebate allowed per 
 unexpired year on repayment 166 
 
 PARTY 
 
 where society must be to action (see ACTIONS) 269 
 
 PASS-BOOK 
 
 see RECEIPT BOOK. 
 
 evidence of payment, loss of. 260
 
 INDEX. 631 
 
 PATENT 
 
 incorporation by 56, 59 
 
 PAWN 
 
 see HYPOTHECATION. 
 PAYMENT 
 
 of dues, details as to, to be fixed by articles 54 (4) 
 
 partial, when not counted as to default 259 
 
 not ipso facto payment to mortgage 374, 452, 
 
 455-457, 462, 465, 518 
 
 of interest, details as to, to be fixed by articles 54 (5) 
 
 of debt, burden of proof under plea of 260, 493 ?v 
 
 certainty required in borrower's allegations of 260 
 
 by application of stock to 453-459 
 
 see APPLICATION ; MARSHALLING OF ASSETS. 
 
 to agent, when not payment to society 319 
 
 PAYMENTS. 
 
 see PERIODICAL PAYMENTS. 
 
 borrower to be credited with what, on repayment 156 
 
 of borrower not applied to his indebtedness as they come in 329 
 
 upon stock are not payments upon loan (see PAYMENT) 374, 
 
 452, 455-457, 462, 465, 518 
 
 in building associations must be small but frequent 329 
 
 PENALTIES. 
 
 see FINES ; FORFEITURES. 
 
 fines are not 94, 402-403, 415 
 
 agreed upon for breach of contract, courts will not 
 enforce 402, 407 
 
 PENDENCY 
 
 of suit on mortgage does not stop dues, fines and interest 91, 
 
 178, 377, 418 
 PENNSYLVANIA 
 
 statutes in, relating to building associations 34 
 
 decisions in, touching same, collected 34 note and Addenda. 
 
 cases on theory of loans or advancements 351 
 
 corporations in, not liable impliedly for compensation to 
 
 officers, &c 226 
 
 doctrine in, as to application of stock to debt, marshalling 
 
 of assets, &c 462-464 
 
 PERCENTAGE 
 
 of money loanable on property by building associations.... 387 
 premium cannot ordinarily be reserved merely as in- 
 creased 892-393 
 
 tee PREMIUM.
 
 632 INDEX. 
 
 PERFORMANCE 
 
 of membership duties properly secured by mortgage 88 
 
 PERIOD. 
 
 of maturity of stock, how described 40 
 
 of default for non-payment of dues, how computed 259 
 
 of society's duration, how fixed -74 
 
 fixing of, for repayment in security, effect of. 332 
 
 for winding up, effect of arrival of. 472-473 
 
 PERIODICAL PAYMENTS 
 
 details as to, to be fixed in articles, &c 54 (4) (5) 
 
 advantage and importance of small and frequent 329 
 
 may be monthly or weekly 374 
 
 PERMANENT SOCIETIES 
 see SERIAL SOCIETIES. 
 
 strictly so called 46 
 
 popularity of, in England 46 
 
 in America (see SERIAL SOCIETIES) 46 
 
 advantages of, to borrowers and investors 46 
 
 " paid-up " shares in 46 
 
 repayment or redemption in 46, 175n. 180 
 
 liabilities of members in 180 
 
 loans in 376 
 
 difference between serial societies and 49 
 
 terminating and, as to rules for forced 
 
 repayment, none 175 n 
 
 PERPETUAL SUCCESSION. 
 
 what is meant by 233 
 
 building associations have 233 
 
 PERSONAL 
 
 defense, when usury is a 363, 364 n 
 
 liability of agent on contracts intended to be those of 
 
 society 248, 249 
 
 or officer by reason of contracts ultra 
 
 vires 198, 284 
 
 of directors 209-213 
 
 none for errors of judgment 204 
 
 in case of gross negligence in taking 
 
 security 123 
 
 for contracts ultra vires , 198, 284, 
 
 295, 299 n., 307 
 
 for losses, &c 209-210 
 
 for loans contracted ultra vires 295, 
 
 299 n., 307
 
 INDEX. 633 
 
 PERSONAL Cordinued. 
 
 liability, of managers of inchoate society for expenses... 50, 110 
 of members, claims of, as creditors a set off against, 110 
 
 for corporate debts 110, 111 
 
 measure of. 110 
 
 to render personal services 83, 103, 226 
 
 how enforced 103 
 
 of officers, for mismanagement (see DIRECTORS; 
 
 OFFICERS) 482 
 
 of treasurer for moneys paid 196 
 
 prerequisites of membership to be fixed in articles 54 (4) 
 
 property, shares of stock are 444 
 
 security, whether society may advance funds on 311 
 
 PERSONALITY 
 
 attributed to corporations 233 
 
 PETITION 
 
 for appointment of receiver, what, must show 483-485 
 
 who may present 488-489 
 
 for winding up by unpaid withdrawing members deferred to 
 
 give society time to collect money 488i 
 
 must proceed from members as such 491 
 
 when borrower cannot present 491 
 
 what financial condition must appear 492 
 
 when dismissed without costs 489 
 
 PLACE 
 
 of business to be fixed by articles, &c 54 (1) 
 
 for payment of subscriptions, &c., likewise 54 (4) (5) 
 
 of annual meeting, likewise 54 (8) 
 
 of corporate meeting, cannot be fixed out of county 183 
 
 of general meeting, when members bound to take notice of.. 183 
 
 when members to be notified of. 183 
 
 PLEA 
 
 of no funds, when no defense to judgment 139, 141-143 
 
 of nultiel corporation (see NUL TIEL CORPORATION) 208, 221, 
 
 261 and note, 504-516 
 
 of payment, burden of proof under (see PAYMENT) 260, 493 n. 
 
 of ultra vires, who may set up (see ULTRA VIRES) 285-292 
 
 of usury, who may setup (see USURY) 363-365 
 
 must conform to statute 367 
 
 PLEADINGS 
 
 see ALLEGATIONS; AVERMENTS; NUL TIEL CORPORATION* 
 PAYMENT ; ULTRA VIRES ; USURY. 
 
 in criminal proceedings against officers 222 
 
 in actions by and against building associations 257-263
 
 634 INDEX. 
 
 PLEDGE 
 
 see HYPOTHECATION. 
 PLEDGEE 
 
 levy on stock in hands of. 450 
 
 PLEDGOR 
 
 rights of, over stock 113, 148, 450 
 
 POLICY 
 
 motives of public, in establishing and legalizing building 
 associations (see DESIGN) 75, 118, 4 
 
 of management of society to be prescribed by corporate 
 meeting 188 
 
 public, as to sureties' liability on official bond 219 
 
 as to implied liability of corporations for salaries... 226 
 POLLS 
 
 may be adjourned from day to day 191 
 
 discretion of inspectors of election as to closing 191 
 
 POPULAR 
 
 sense in which dues are regarded as payments on loan 452 
 
 POSSESSION 
 
 of official bond when proof of acceptance 216 
 
 mortgagee in, rights of. 432 
 
 POTESTAS NON POTEST DELEGARI. 204 
 
 POWER OF ATTORNEY 
 
 to transfer stock signed in blank 445, 446 
 
 POWERS 
 
 of association, general discussion of 231-281 
 
 to organize with deficient stock 85 
 
 in excess of statute void and cause of for- 
 feiture of charter, though granted therein.. 64, 
 
 232, 291 
 
 supreme, vested in corporate meeting 181 
 
 to maintain suits and actions (see ACTIONS).. 
 
 254-256 
 
 to pass by-laws (see BY-LAWS) 271-281 
 
 to borrow money (see BORROWING POW- 
 ERS) 293-302 
 
 to build houses 301 
 
 to acquire and hold real estate (see REAL 
 
 ESTATE) 303-308 
 
 to take security for loans or advancements.. 
 
 380,419 
 what, implied from express grant of. 232
 
 INDEX. 635 
 
 POWERS Continued. 
 
 of association, limited by statute and charter 232, 405 
 
 by spirit of enactment 273 
 
 to objects within legitimate scope of 
 
 statute and charter 283 
 
 to impose fines depend upon statute and 
 
 charter 96,405 
 
 to amend where charter, constitution, &c., 
 
 recorded 62 
 
 enlargement of, cannot be asked by directors 
 
 alone, and if so granted is void 200 
 
 want of specific, claimed under charter may 
 
 be shown 510 
 
 specific, claimed, who estopped from deny- 
 ing 514 
 
 of unincorporated societies I 517, 518 
 
 abuse or misuse of (see ULTRA VIBES). .285-292, 325 
 as to lending money. ..310-321 
 
 of adjourned meeting 185 
 
 of agents (see AGENT) 243 
 
 extent and limits of. 245 
 
 how far notice to persons dealing with.. 245 
 
 of directors, extent and limits of. 198-200 
 
 delegation of. 204 
 
 how to be exercised 206 n 
 
 in granting loans beyond stock interest 126 
 
 see DIRECTORS ; OFFICERS. 
 
 of executor or administrator of deceased member 73 
 
 of infants and married women as members 70 
 
 tee INFANTS ; MARRIED WOMEN. 
 
 of legislature to modify charters.. 65 
 
 to alter remedies 67 
 
 to remit taxes 438 
 
 tee LEGISLATURE. 
 
 of members : see MEMBERS ; RIGHTS OF MEMBERS. 
 
 of mortgagee in possession 432 
 
 may all be exercised concurrently 436 
 
 of officers (see OFFICERS) 194-230 
 
 to be fixed in articles 54 (6) 
 
 of president and vice-president 195 
 
 of secretary 197 
 
 of treasurer 196 
 
 PRACTICAL 
 
 operation of building associations, description of. 8-11
 
 636 INDEX. 
 
 PRACTICAL Continued. 
 
 operation of by-law an element in determining legality 274, 
 
 349-350 
 results of building association loans or advancements 387 
 
 PREFERENCE 
 
 member's right to, when applying for loan, over outside 
 investments 116-121 
 
 PRELIMINARY 
 
 account in equity as basis of order of sale on foreclosure..!??, 428 
 
 eflect of payment of balance found due upon 428 
 
 expenses in formation of socieiy 50, 110 
 
 liability of promoters for 50 
 
 rules to be observed as to 50 
 
 eflect of incorporation upon liability for 50, 110 
 
 PREMATURE 
 
 dissolution, effect of, on borrowers' contracts 386, 496-503 
 
 whether unanimous consent required to 474 
 
 borrowers' liability for expenses and losses how 
 
 affected by 496n 
 
 losses on, chargeable on assets 496 n., 501 
 
 suit against borrower, dues, fines and interest do not stop 
 running during pendency of. 178 
 
 PREMIUM OR BONUS 
 
 what is meant by 13 
 
 definition of. 378, 388, 398 
 
 general discussion of. 388-400 
 
 as an incident to loans or advancements 378 
 
 "fixed" or "minimum," illegal 122, 394-397 
 
 may be defalked by borrower when 122 
 
 when rule as to, does not prevent society 
 
 from recovering premium bid 122 
 
 borrower contracts to allow society 149 
 
 not recoverable from strangers borrowing 313-316 
 
 from infants and married women mem- 
 bers 316-318 
 
 tee MARRIED WOMEN. 
 
 when considered an additional undertaking 334 
 
 usury in, left to jury 338, 344, 346 
 
 not held usurious... 338-346, 352, 853 
 
 held to be usurious 347-852 
 
 decisions touching legality of, in the various states, col- 
 lected.... ...383 and nott*
 
 INDEX. 637 
 
 PREMIUM OR BONUS Continued. 
 
 when not included in "loan" 384 
 
 upon re-loan 384 
 
 borrower not in tended to pay, for more years than he keeps 
 
 loan 384 
 
 true nature and method of payment of. 389-390, 398, 457 
 
 regarded as a deduction 390 n., 891 
 
 must be gross sum per share 392, 393 
 
 basis of computation of. 391 
 
 cannot be added to loan 391 
 
 must be ascertained by free competition 394-397 
 
 justification of. 394, 496 
 
 advantage to borrower, if below ; loss, if above average..395, 457 
 
 when not recoverable from borrower 397 
 
 interest upon 398, 421, 482n 
 
 to be accounted for on winding up 398 
 
 abatements, discounts, and remissions on, when allowable 
 
 and when obligatory 399^00 
 
 not a prepayment or deduction 390, 398, 457 
 
 when interest not chargeable on, in settling society's affairs 
 
 in equity 482a 
 
 in unincorporated societies (see LOAN) ... 518 
 
 PREPAYMENT 
 
 premium is not a 390, 398, 457 
 
 PREREQUISITES OF MEMBERSHIP 
 
 to be set forth in articles 54 (4) 
 
 PREROGATIVES OF MEMBERSHIP 
 
 see MEMBERS ; RIGHTS OF MEMBEKS. 
 
 PRESENT VALUE OF MORTGAGE 
 see MORTGAGES. 
 rule for computation of. 154-155, 158-164, 175, 
 
 177, 336, 375, 404, 426, 427, 428 
 PRESIDENT 
 
 functions, &c., of.. 195 
 
 to sign contracts and execute deeds 195 
 
 contract of, for necessaries, when binding 195 
 
 may contract with society 207 
 
 has custody of corporate seal 234 
 
 PRESUMPTION 
 
 as to assent of individual members to corporate acta 181, 
 
 278,410 
 see DISSENTING MEMBERS.
 
 638 INDEX. 
 
 PRESUMPTION Continued. 
 
 as to assent to valid by-laws 271 
 
 of minority not universal 410 
 
 as to existence of agency from former employment 244 
 
 person's being permitted to 
 
 act as agent 244 
 
 as to powers of agents to contract 243, 383 n 
 
 that borrower's payments were for dues and fines 260 
 
 as to balances acknowledged due to withdrawing members 266 
 none against society taking other than customary security.. 311, 
 
 880-381 
 
 as to usury where officer receives bonus for loan 868 
 
 as to necessary amount of capital stock 441 
 
 as to withdrawal balances (see WITHDRAWAL BALANCES) 266 
 
 PRESUMPTIVE FRAUD 211 
 
 PREVALENCE 
 
 and importance, present, of building associations 6 
 
 PRIM A FACIE 
 
 charter, showing of, sufficient answer to plea of nul tiel cor- 
 poration 504 
 
 PRIMARY 
 
 design and object of building associations (see DESIGN) 7, 40, 
 
 75, 113, 118-120, 283, 392, 398, 413 
 fund for payment of debt, land mortgaged is 365 
 
 PRINCIPAL 
 
 when liable for agent's torts (see AGENT) 252 
 
 method of repayment of, in building association loans 328 
 
 and interest, repayment of loan proceeds upon basis of..... 326, 
 
 327, 331, 334 
 
 stipulation for return of, not improper in mortgage 331 
 
 effect of. 389 
 
 when invalidates mortgage 420 
 
 PRIOR IN TEMPORE POTIOR IN JURE. 461 
 
 PRIORITY 
 
 rule for competition among withdrawing members for, 
 void 132,276 
 
 all members entitled to, over fraudulent directors on dis- 
 tribution, when 211, 487 
 
 of payment, order of, on distribution of insolvent society's 
 assets.... 486
 
 INDEX. 639 
 
 PRIVATE 
 
 instructions to agents do not affect persons dealing in 
 ignorance thereof bona fide 243 
 
 persons cannot enforce forfeiture of charter (see FOR- 
 FEITURE) 481 and note, 508 
 
 PRIVILEGE 
 
 of receiving loan or advancement, nature of.. 43, 115, 444 
 
 PROCEEDINGS 
 
 l>y individual members against delinquent officers 114, 213 
 
 see ACTIONS ; DIRECTORS. 
 
 PROCEEDS OF SALE UNDER MORTGAGE 
 
 remedy where, insufficient to cover whole sum due 429 
 
 where application of, to debt does and does not extinguish 
 membership 431 
 
 PROCESS 
 
 by and against building associations, how regulated 256 
 
 PROFITS 
 
 sec ACCOUNT. 
 
 apportionment of, in serial societies 47 
 
 members entitled to share equally in 104, 114, 147 
 
 account of, not involved in member's right to withdraw.,128, 129 
 
 members not entitled to, before winding up 329, 
 
 452,456 
 
 proportion of, which a member may claim on withdrawal.,130, 131 
 when withdrawing member must be allowed some share of 131 n, 
 
 mutuality of. 147 
 
 borrowers have share in 147-148 
 
 cannot have credit for, before winding up, unless 
 
 by statute or rule 156 
 
 redeeming, may claim same dividend of, as 
 
 withdrawing investors 162, 163, 430 
 
 whose loan recovered by society and member- 
 ship continues, entitled to share in final dis- 
 
 bution of 176 
 
 impossibility of accounting for, before winding up 456 
 
 what are, for purposes of taxation 470 
 
 participation in, estops party from denying society's cor- 
 porate existence 516 
 
 and loss account included in borrower's true indebtedness.. 152 
 
 PROGRESSION 
 
 arithmetical, in fines 412
 
 640 INDEX. 
 
 PROHIBITION 
 
 effect of statutory or constitutional, upon the exercise of 
 
 certain powers 285, 287-288, 325 
 
 in statute or constitution of state not removed by grant in 
 
 charter under it 291 
 
 PROMISED LOAN 
 
 what action members may have for subsequent refusal of.. 124, 
 
 245 n., 267 
 PROMISSORY NOTES 
 
 see BILLS AND NOTES ; BANKING AND BORROWING POWERS ; 
 DISCOUNTING. 
 
 PROMOTERS 
 
 of inchoate building association, liability of, for expenses..50, 110 
 
 PROOF 
 
 see EVIDENCE. 
 
 of acts and contracts of directors 205 
 
 of agency, when on borrower (see BCRDEN OF PROOF) 260 
 
 of common seal 236 
 
 of corporate existence, what sufficient (see NUL TIEL COR- 
 PORATION) 504 
 
 of incorporation, need not be made under general issue.... 261 
 
 of maturity of stock, under plea of payment 493 n 
 
 of payments 260 
 
 of service by initials and abbreviations endorsed on writ... 257 
 
 in criminal prosecution against officer 222 
 
 in suit by officer against individual director for salary 230 
 
 PROPERTY 
 
 see CORPORATE PROPERTY. 
 
 when, may be followed into hands of stockholders Ill 
 
 uncertain nature of building association's 129 
 
 in whom laid on criminal prosecution against unfaithful 
 
 officers 222 
 
 in stock, nature of. 444 
 
 PROPORTION 
 
 of loan grantable to member's stock interest 126 
 
 on mortgage to value of property mort- 
 gaged 387 
 
 PROPORTIONATE 
 
 allowance of rebate on premium for fractions of year 166 
 
 PROTEST 
 
 of majority against election, effect of. 189 
 
 PROVISIONS 
 
 to be made in rules, articles or constitution 54
 
 INDEX. 641 
 
 PROXY 
 
 matter of, to be regulated in rules, articles or constitution. .54 (6) 
 representation by, rigbt of, &c 187 
 
 PUBLIC POLICY 
 
 underlying building association scheme (see DESIGN)..75, 118, 478 
 
 as to liability of sureties on official bonds 219 
 
 as to implied liability of corporations for compensation 226 
 
 PUBLIC RUMOR 
 
 is not notice to society 250 
 
 PURCHASE 
 
 of land under junior encumbrance by first mortgagee, 
 
 effect of. 429 
 
 tee REAL ESTATE. 
 PURCHASE-MONEY 
 
 how far mortgage for, by society, may be enforced 302 
 
 equitable lien for 302, 307 n 
 
 in hands of third parties 307 
 
 PURCHASER 
 
 whether, may set up usury in prior encumbrance 363-365 
 
 subject to usurious mortgage cannot defend on usury 365 
 
 to building ass'n mortgage bound by its terms 386 n 
 
 when liable to pay dues 435 
 
 when estopped from setting up 
 
 plea of nul tiel corporation 514 
 
 when cannot deny specific powers 
 
 claimed by society 514 
 
 when cannot marshal assets 466- 
 
 equities of, superior to those of judgment creditors 467 
 
 for value, under void sale, when, may recover for improve- 
 ments 434 
 
 of stock sold but not transferred without notice, 
 
 rights of. 446 
 
 defense of, against mortgage by defunct society... 495 n. 
 equity of marshalling assets does not follow prop- 
 erty into hands of. 468, 
 
 of fee simple, when, will not defeat mortgage on equitable 
 
 title 433 
 
 of stock pledged to society cannot compel its abandonment 
 
 and resort to mortgaged property 459 
 
 PURPOSE 
 
 of building association 7, 40, 75, 113, 118-120, 283, 392, 398, 413 
 
 acquisition of dwelling by members 
 an essential part of. 39 n., 11&
 
 642 INDEX. 
 
 PURPOSE Continued. 
 
 of building association should be set forth in articles 54 (1) 
 
 court may define, if not set forth in 
 
 petition for incorporation 60, 273 
 
 illegal departure from, does not 
 relieve members from their 
 
 duties 200 n., 309 
 
 what are debts contracted for 307 
 
 of incorporation, by-laws must conform to 273 
 
 may be specified by court if not set forth 
 
 in petition for 60, 273 
 
 defining of, belongs to State, not to the 
 
 ; ociety 480 
 
 of limitation upon funds available for withdrawal 143 
 
 of corporate seal 234 
 
 of recital of debt in mortgage 365n 
 
 of stipulation for stock payments 371-372 
 
 of fines in building associations 401 
 
 Q. 
 
 QUALIFICATIONS 
 
 by-laws imposing new, on voters, void 277 
 
 QUANTUM MERUIT 
 
 for services 226 
 
 QUO WARRANTO 
 
 discretion of court as to ouster upon , 479 
 
 charter can be avoided only by direct proceedings on 481 
 
 QUORUM 
 
 should be provided for in articles 54 (8) 
 
 of corporate meeting, what is 186, 187 
 
 when majority of all members required to 187 
 
 of directors, what is a, to do business 202 
 
 for passing by-laws 271 n, 
 
 B. 
 
 RATIFICATION 
 
 when unanimous consent of members will work, of agent's 
 
 or officer's acts ultra vires 169, 232, 307, 519 
 
 of acts merely in excess of agent's powers 245, 247 
 
 when implied 247 
 
 of torts, &c., of agents, liability of society by reason of. 252 
 
 what is not 252n. 
 
 by unincorporated society validates secretary's unauthorized 
 
 act 519 
 
 of acts of irregular corporate mee'ing 184
 
 INDEX. 64? 
 
 READ 
 
 ability to, not a bar to showing mistake in recital of mort- 
 gage due to fact of not having read same 81 
 
 REAL ESTATE 
 
 acquisition of, by members an essential part of building 
 
 association scheme 39 n., 118 
 
 see DESIGN ; PURPOSE. 
 
 corporate, when may be followed into hands of stock- 
 holder Ill, 485 n. 
 
 member's interest in 335, 444 
 
 conferring authority to sell, is exercise of corporate power.. 206 n. 
 
 appointment of agent to sell, need not be under seal 235 
 
 formalities of conveyance of. 234, 235 
 
 title of, sometimes vested in trustees 214 
 
 always so in unincorporated societies 518 
 
 purchase of, right of, postponed to members' right to receive 
 
 loan 117 
 
 propriety of, as in investment, depends on 
 
 society's statutory powers 121 
 
 misappropriation of funds for, may be re- 
 strained 289,305 
 
 right of, draws with it right to improve 301 
 
 debts contracted in, ultra vires cannot be en- 
 forced 302,307 
 
 power of society to make, and hold 303-308 
 
 by directors ultra vires a fraud on society 305 
 
 English doctrine as to society's right of, under 
 
 statute 305-307 
 
 American doctrine as to same 308 
 
 powers of building association as to, in 
 
 Alabama 308n. 
 
 and dealing in, ground for forfeiture of charter 479 
 
 by stockholder from insolvent society 485 n. 
 
 method of obtaining control of, beyond statutory allowance 303 
 mortgaged is primary fund for payment of debt... 365, 465 n., 495 
 statutes referring to mortgages of, have no reference to chat- 
 tel mortgages 4197k 
 
 relation of value of, to amount loaned on mortgage on 387 
 
 equitable lien for purchase-money on, in hands of third 
 
 parties 307 
 
 conveyance of, after expiration of charter 494 
 
 tee MORTGAGE ; PURCHASER ; TITLE ; VENDOR.
 
 644 INDEX. 
 
 REBATE 
 
 borrower entitled to same bonus by way of, on repayment, 
 
 as withdrawing member 162, 163, 430 
 
 upon premium on repayment how, computed as to frac- 
 tions of years 166 
 
 legality of. 399-400 
 
 of interest upon computation of present value of mortgage 375 
 on repayment when dues cover interest or re- 
 demption money 427 
 
 REBUILDING 
 
 mortgagee in possession may add cost of, to mortgage 482 
 
 RECEIPT 
 
 of dues, estoppel by 79, 176,431 
 
 for one year's rent presumes payment of prior years' 211 
 
 RECEIPT BOOK 
 see PASS-BOOK. 
 
 issued by society is evidence in spite of what 454 
 
 how proved 454 
 
 RECEIVER 
 
 right of and grounds for appointment of. 482-484 
 
 what bill praying for, must show 483 
 
 who may ask for appointment of. 488 
 
 appointment, of, effect on borrower's liabilities 502 
 
 equivalent to dissolution 502 
 
 RECIPROCITY 
 
 in building association scheme: see MUTUALITY. 
 
 RECITAL 
 
 in mortgage of debt, purpose of. 365r* 
 
 how far bond shown in evidence must corres- 
 pond with 51971 
 
 estoppel upon married women by 71 
 
 upon member and mortgagor's vendee by : 
 
 see ESTOPPEL. 
 RECOGNITION 
 
 of corporate existence estops party from denying it 513-515 
 
 RECONVEYANCE OF STOCK 
 
 when borrower cannot demand, after sale on mortgage 429 
 
 may demand, thereafter 431 
 
 RECORD 
 
 of directors' transactions : see MINUTES. 
 
 of society is evidence of relation between it and members... 446 
 
 of mortgage not notice for what purpose 469
 
 INDEX. 645 
 
 RECORDER 
 
 liability of, for search of encumbrances when not re- 
 moved by act of society's solicitor 245 n., 251 . 
 
 error of, in recording mortgage, when does not defeat lien.. 433 
 RECORDING 
 
 of articles, &c., purpose of. 62 
 
 RECOVERY 
 see ACTIONS. 
 
 of usury paid 359-361 
 
 in North Carolina 361 
 
 action for, must be brought within statutory period 302 
 barred when usury merged in judgment (see NOTES) 366 
 REDEEM 
 
 see REDEMPTION ; REPAYMENT. 
 " REDEEMED " 
 
 or "bought out," what meant by 13 
 
 REDEEMING 
 
 shares by society a mode of making loans, identical with 
 selling money 42 
 
 REDEMPTION (see REPAYMENT).. 152-172 
 
 in permanent societies 46, 180 
 
 costs in suits for 179 
 
 REDEMPTION MONEY 
 
 equivalent to interest 333, 338 
 
 dues representing, cease upon repayment 373, 375, 376 
 
 fines for default in payment of. 415, 416 
 
 borrower repaying entitled to deduction of. 430 
 
 REDUCTION 
 
 see CONTRIBUTION ; EXPENSES ; LOSSES ; SET-OFF. 
 
 upon repayment : see REPAYMENT. 
 
 upon premium : see ABATEMENT ; DEDUCTION ; PREMIUM ; 
 
 REMISSION. 
 RE-ELECTION. 
 
 to same office creates a new office, and sureties on old bond 
 
 are not bound 219 
 
 REFEREES 
 
 covenant for reference to, in mortgage valid 177 n. 
 
 REFERENCE 
 
 see ARBITRATION. 
 REFORMATION 
 
 of mortgage when allowed (see ERRORS AND OMISSIONS) 420
 
 646 INDEX. 
 
 REFUSAL 
 
 to accept legislative modification of charter, consequence of 65 
 
 to transfer stock, ground for suit for damages 78, 
 
 268 and note, 448, 449 
 
 of members to pay dues does not relieve others or bor- 
 rowers 84, 499 
 
 does not dissolve society 473 
 
 to accept proper tender, effect of. 179, 437 
 
 to lend funds to members bidding highest, <fec., illegal 823 
 
 REGULARITY 
 
 necessity and enforcement of, in payment of dues 93 
 
 of election cannot be questioned collaterally 192 
 
 of incorporation: see CHARTER; COLLATERAL INQUIRY; IN- 
 CORPORATION ; NUL TIEL CORPORATION. 
 
 REIMBURSEMENT OF SOCIETY 
 
 claim of society for, for default in dues, &c 93 
 
 by borrower : see LOAN OR ADVANCEMENT ; REPAYMENT. 
 
 REJECTION OF VOTES 
 
 result of improper 188 
 
 RELATION 
 
 of borrower's stock -payments to his debt to society 452 
 
 of amount of mortgage to value of real estate mortgaged.. 387 
 of applicant's stock-interest to amount receivable as loan.. 126 
 
 RELEASE 
 
 of one of two funds without actual notice of subsisting 
 right to compel resort to that fund, effect of. 469 
 
 of stock pledged with actual notice of second mortgage is 
 satisfaction of first mortgage pro tanto 469 
 
 to one member, when, enures to benefit of all 489 
 
 RELIEF 
 
 courts will grant, against oppressive fines (see FINES) 97 
 
 but not from contract merely on account of hardship 386 
 
 RE-LOAN 
 
 premium upon 384 
 
 borrowing money for purpose of making, illegal 301 
 
 REMEDIES 
 
 see ARBITRATION ; LEGAL REMEDIES. 
 
 statutes changing, are valid 67 
 
 for refusal to transfer stock (see REFUSAL) 448-449 
 
 make promised loan 124, 245 n., 267 
 
 where proceeds of sale insufficient to cover whole sum due 429
 
 647 
 
 REMISSION 
 
 of premium 399 400 
 
 of fines at discretion of directors 418 
 
 also of forfeitures.. 77, 99-102,418 
 
 of taxes on building association mortgages binds counties.. 438 
 
 REMOVAL 
 
 see AMOTION. 
 
 REMUNERATION 
 sfe COMPENSATION. 
 
 RENEWAL OF LEASE 
 
 mortgagee in possession may make, and add cost to mort- 
 gage debt 432 
 
 but cannot release right of. 432 
 
 RENTS 
 
 effect of receipt for last year's, in full 211 
 
 mortgagee in possession cannot charge as receiver of. 432 
 
 in arrear, mortgagee in possession may pay, and add to 
 mortgage debt 432 
 
 REPAIR 
 
 covenant to keep premises in, properly inserted in mort- 
 gage 423 , 
 
 REPAIRS 
 
 secretary's contract for necessary, binds society 197 
 
 mortgagee in possession may add cost of, to mortgage debt 432 
 
 REPAYMENT 
 
 see REDEMPTION. 
 
 articles should provide for 54 (5) 
 
 borrower's contract as to. 149, 371, 492 
 
 not contemplated therein before society's expiration. ...153, 492 
 effect of: does not discharge borrower's liability on his 
 
 security for dues, &c 88-90, 164, 372, 432 
 
 after decree and before sale 89, 176 
 
 after suit brought 176 
 
 interest ceases upon 373, 375, 376, 427 
 
 not contemplated by borrower's contract 153, 386, 430 
 
 right of voluntary, is incident to membership 386 
 
 how basis of, is that of principal and interest.. .326, 327, 331, 334 
 
 method of, of principal in building association loan 328, 371 
 
 stipulation for, eo nomine, in security, effect of 153, 157, 
 
 331, 389 
 when renders mortgage void 420
 
 648 INDEX. 
 
 REPAYMENT Continued. 
 
 voluntary, right of.. 152, 386 
 
 reasons of equity and policy for 151, 158 
 
 general discussion of. 152-172 
 
 early decisions as to 153 
 
 principle of. 153 
 
 where sum and time are fixed. ..153, 157 
 
 right of, may he denied until fines, &c., paid 155 
 
 credits allowable to borrower upon 156 
 
 under provisions of articles 158-166 
 
 English decisions as to 159-164 
 
 borrower entitled to same bonus upon, as with- 
 drawing investor 162, 163, 43C 
 
 this extends to deduction of redemption money 430 
 
 American decisions founded on English 165 
 
 general doctrines as to, modified by statute...!65, 166 
 
 rebate upon, under statute in Pennsylvania 166 
 
 provisions for, construed favorably to bor 
 
 rower 167, 168 
 
 existing at time of loan are part 
 of the contract and cannot 
 
 be varied 169 
 
 terms of, by special arrangement, when binding 
 
 on society 169, 170 
 
 are mere offer of compromise 171 
 when member repudiating, 
 
 may benefit by 172 
 
 under mortgage deed 172 
 
 upon default, terms of. 175 
 
 difference between voluntary and 427 
 
 upon death of borrower and judicial sale of premises 174 
 
 in permanent and serial societies 180 
 
 rule for computing amount due on, irrespective of rebates 
 
 allowed by statute or rules 154-155, 158-164, 175, 
 
 177, 336, 375, 424, 427, 428 
 
 not varied by practice of preliminary accounts on fore- 
 closure in equity , 177 
 
 is the same at law as in equity 428 
 
 upon premature dissolution of society 496-503 
 
 upon appointment of receiver 502 
 
 in Georgia... ! 384 n 
 
 by heirs and legal representatives, terms of. 385 
 
 where proceeds of sale insufficient for, parol contract to 
 make up deficiency due on, arises 429
 
 INDEX. 649 
 
 REPEAL 
 
 of statutes by implication 34 (note 2), 35 (note 7) 
 
 of earlier of two acts passed at same session by later 470. 
 
 REPRESENTATIONS 
 
 see MISREPRESENTATIONS. 
 
 REPRESENTATIVES 
 
 terms of repayment of loan by 385 
 
 of husband of feme sole member, rights of, to her stock 444 
 
 of borrower may compel application of stock to debt 459 
 
 RESCISSION 
 
 of by-laws, provision to be made for, in articles 54 (9) 
 
 of contracts by premature dissolution (see RECEIVER).... 496-503 
 none by mere temporary suspension of busi- 
 ness 500 
 
 of obligations, none by illegal conduct of officers or society.. 289, 
 
 303, 305, 309 
 
 nor by refusal of members to pay dues 84, 499 
 
 of resolutions to prejudice of members when illegal 170 
 
 of special terms of repayment when unlawful 290 
 
 RESERVATION 
 
 of power to modify and repeal charter, effect of. 65, 67 
 
 upon loans strictly confined to statutory and by-law 
 
 limits 356,420 
 
 see LOANS ; MORTGAGE. 
 
 RESIGNATION 
 
 of trustees or directors, effect of, upon titles, &c 214, 233 
 
 RESOLUTION 
 
 when, cannot be rescinded to prejudice of member 170, 290 
 
 for extra compensation to director when not binding 227 
 
 mere, may make binding contract 237 
 
 legality of, when cannot be disputed by society 290 
 
 RESPONSIBILITIES 
 
 society bound to observe two classes of. 478 
 
 RESPONSIBILITY 
 
 see LIABILITY ; PERSONAL LIABILITY. 
 
 RESTRAINTS 
 
 see BY-LAWS ; INJUNCTION ; OFFICERS. 
 
 on withdrawals when void 276 
 
 on officer's right of voting generally, void 277 
 
 upon transfer of stock 447
 
 650 INDEX. 
 
 KESULTS 
 
 practical, an element in determining legality of rules -7 1. 
 
 849-850 
 of loans or advancements in ouilding associations 387 
 
 RETRO-ACTIVE 
 
 and expository statutes 66 
 
 efficacy, by-laws can have no, to prejudice subsisting rights.. 279 
 
 REWARD 
 
 director cannot claim, for recovery of stolen property 227 n 
 
 RIGHTS 
 
 of members, general discussion of. 112-180 
 
 classification of. 112 
 
 to vote 118, 148, 277 
 
 to notification of corporate meeting 118 
 
 as corporators, generally 113 
 
 to attend corporate meeting 113 
 
 to hold more than one share of stock 118 
 
 to have access to corporate books 114 
 
 to be elected to and hold office 114, 148 
 
 to share in profits 114, 128, 129, 131 n 
 
 to account of profits, when accruing 128, 
 
 129, 456, 457 
 
 to sue society 114 
 
 to apply for dissolution of society 114 
 
 to compel winding up in equity 145 
 
 are based upon their interests as shareholders.. 147 
 
 upon forced repayment 175 
 
 to proceed against unfaithful officers..H4, 199, 213 
 to restrain unlawful acts of officers..H4 and note, 309 
 to receive loan, nature of..43, 115, 123, 126, 127, 444 
 depends upon ability to give 
 
 security 123 
 
 being highest bidder, to receive loan.,116, 122, 125 
 applying for loan, to preference over outside 
 
 investments 116-121 
 
 to enforce such right 121 
 
 to sue for refusal of promised loan 124 
 
 tee LOANS OR ADVANCEMENTS. 
 
 to apply to chancery to prevent departure 
 
 from lawful business 809 
 
 to control stock pledged 450 
 
 when vested cannot be disturbed by by-law... 278
 
 INDEX. 651 
 
 EIGHTS Continued. 
 
 of members, to withdraw, general discussion of (see WITH 
 
 DRAWAL) 127-141,430 
 
 absolute under statutes 132 
 
 regulated by law in force at time 
 
 of incorporation 132 
 
 cannot be regulated contrary to 
 
 statute or charter 132 
 
 nor capriciously denied by direct- 
 ors 135 
 
 borrower surrenders 147, 430 
 
 defeated by fines, &c., standing 
 
 against member 155 
 
 an incident to membership 430 
 
 of borrowers, general discussion of. 146-180 
 
 being pledgers of stock, to vote 113, 148, 450 
 
 to hold office 148 
 
 to appropriate stock-payments to debt, after 
 
 default 175, 176, 453-459 
 
 to make tender of present value of mortgage.. 178 
 not affected by impossibility of enforcing 
 
 terms of loan 76 
 
 upon forced repayment 175 
 
 of voluntary repayment (see REPAYMENT). .152, 386 
 to appropriate stock-payments 
 
 to debt 154-156, 
 
 159-164, 175, 176, 453-459 
 may be denied until fines, &c., 
 
 paid 155 
 
 construction of provisions for, 
 
 favors member 167, 168 
 
 as existing at time of loan cannot 
 be varied without borrower's 
 
 consent 169 
 
 an incident to membership, but 
 not secured by contract of loan 386 
 
 of pledgor of stock to vote 113, 148 
 
 to control stock pledged 148, 450 
 
 of withdrawing members, absolute, to share of profits, when.. 131 a 
 rights of membership cannot be exercised 
 
 by 136 
 
 to proceed to judgment against society 137, 
 
 141-148
 
 652 INDEX. 
 
 RIGHTS Con/mum. 
 
 of infants and married women as members , 70 
 
 of executor or administrator of deceased member 76 
 
 of minority to insist upon continuance of society 173 
 
 of owner of stock fco sue society for refusal to transfer 78, 
 
 268 and note, 448, 449 
 
 of salaried officer improperly removed to sue for salary 229 
 
 of officer to vote generally cannot be restricted to canting 
 
 vote 277 
 
 once vested cannot be impaired by by-law.. 278 
 
 of society to maintain suits and actions (gee ACTIONS)... 254-256 
 
 to reserve interest, involved in right to loan 322 
 
 to compromise with its members 323 
 
 to take security involved in power to make loan 419 
 
 to contract to effect insurance (see POWERS) 
 
 247 and note, 383 n 
 acquired before incorporation, how affected by 
 
 incorporation 520 
 
 and responsibilities, society bound to respect and observe 
 two classes of. 478 
 
 RULE 
 
 for computing present value of mortgage 154-155, 158-164, 
 
 175, 177, 336, 375, 404, 426, 427, 428 
 
 for repayment in absence of by-law and statute regula- 
 tion 154, 155 
 
 in England 159-164 
 
 in America 154 n., 165 
 
 same at law as in equity 428 
 
 for stating preliminary account upon foreclosure in equity 
 
 (see PRELIMINARY ACCOUNT) 177 
 
 to be observed in enactment of fines 406-414 
 
 RULES OF SOCIETY (ARTICLES or CONSTITUTION.) 
 
 importance of drawing, with care 52 
 
 framing of 52 
 
 adopted as basis of incorporation binding on society 53 
 
 what, should provide for 54 
 
 latitude in framing, where incorporation is by patent or 
 
 special act 59 
 
 where under general law 59 
 
 purpose of recording 62 
 
 how far binding on depositors 77
 
 INDEX. 653 
 
 RULES OF SOCIETY Continued. 
 
 members bound to obey 83, 271 
 
 even where charter obtained by fraud 305 
 
 or character, &c., of society has been unlawfully 
 
 changed 309 
 
 made after notice of withdrawal do not bind withdrawing 
 
 member 136 n. 
 
 illegal, are void and ground of forfeiture of charter (see 
 BY-LAWS) 479 
 
 "RULES FOR THE TIME BEING" 
 
 submission to, how construed 279 
 
 RUMOR 
 
 public, is not notice to society 250 
 
 RUNNING OF SOCIETY 
 period of: see DURATION. 
 
 8. 
 
 SALARY 
 
 see COMPENSATION. 
 
 SALE 
 
 see JUDICIAL SALE ; SHERIFF'S SALE. 
 
 statement of preliminary account as basis of, on foreclosure 
 
 in equity 177 
 
 on mortgage of infant when set aside 70n, 
 
 arrested where period of default not properly 
 
 shown 258 
 
 prevented after decree by payment of arrears 
 
 found by preliminary account 428 
 
 when mortgagee in possession cannot claim 
 
 costs of. 432 
 
 by attorney not named therein void 434 
 
 who may be appointed trustee in mortgage to make, on 
 
 default, &c 434 
 
 of stock and application of proceeds to borrower's indebt- 
 edness, who may claim (see MARSHALLING OF ASSETS).... 459 
 
 SAVINGS INSTITUTIONS 
 
 building associations are not mere 119 
 
 SCIRE FACIAS SUR MORTGAGE 
 
 writ of, must show default and present right of action 258 
 
 clause for, on default, in married woman's mortgage good.. 316 
 nature of proceeding on 495
 
 654 INDEX. 
 
 SCOTLAND 
 
 funds of society in, liable for damages to member injured 
 
 by officer's violation of rules 213n 
 
 sureties in, discharged from official bond by neglect of 
 
 society 217 n. 
 
 SEAL 
 
 corporate, president custodian of. 195, 23i 
 
 society may authorize any person to affix 234 
 
 what is 234 
 
 affixing of. 234-237 
 
 formalities of execution of instrument under..234-236 
 
 use and effect of. 234, 235 
 
 where required 235, 237 
 
 affixing of, to instrument makes its specialty 235 
 
 effect of, on negotiable note 235 
 
 appointment of agent need not be under 235, 242 
 
 does not prove iteelf. 236 
 
 what is asufficient 236 
 
 custody of, to be provided for in rules 236 
 
 authentication of. 236, 237 n 
 
 appointment of attorney should be under 255 
 
 necessity and significance of, in corporate con- 
 tracts 237 
 
 one sufficient where several persons appointed to sell land.. 234 n 
 SECOND MORTGAGEE 
 
 right of, to marshal assets 460-466, 468-469 
 
 see MARSHALLING OF ASSETS. 
 SECONDARY EVIDENCE 
 
 admitted on failure upon notice to produce primary 206 
 
 see EVIDENCE; MINUTES; PROOF. 
 SECRETARY 
 
 functions, etc., of. 197 
 
 contract of, for necessaries binds society 197 
 
 when not binding on society 197 
 
 to effect insurance, when binding on society 247, 383 n, 
 
 liability of, for not keeping proper minutes 205 
 
 embezzlement by 221 
 
 of unincorporated society, powers of. 519 
 
 see MINUTES. 
 SECURITIES 
 
 inspection of, by auditors to be provided for in articles 54 (7) 
 
 prohibited by charter not void 288, 311 and note. 
 
 what, society may take for loans 311
 
 INDEX. 65 
 
 SECURITIES Continued. 
 
 concentration of, and stock in one person dissolves society 476 
 
 marshalling of. 460-469 
 
 of two, for same debt each must bear its share 465 n 
 
 of unincorporated society, how held .- 518 
 
 SECURITY 
 
 for loans, &c., to be provided for in articles 54 (5) 
 
 borrower's, stands for dues, &c., after repayment of loan 
 
 secured 88-90 
 
 intended to be for society's duration, although 
 
 otherwise written 150 n., 372, 432 
 
 form of, does not affect rule as to repayment.... 157 
 
 joint, of self and outsider 382 
 
 right to receive loan depends upon ability to furnish 116, 123 
 
 discretion of society as to 123 
 
 customary, in building associations 123, 311, 380 
 
 no equities arise against society for departing 
 
 from 123,380-381 
 
 society may take any 380-381 
 
 forbidden by charter may be enforced (see SECURITIES). .311 and note 
 
 whether society may advance funds on personal 311 
 
 of non-members may be taken for member's debt 312 
 
 of wife for husband's loan, extent of. 318 
 
 joint, of member and outsider 382 
 
 substituted for one usurious is also usurious 358 
 
 right to take, implied in power to loan 380 
 
 its nature and kinds 380-382 
 
 assignment of stock absolute on face may be shown to have 
 
 been merely as collateral 380 
 
 rights of members over stock pledged as collateral 450 
 
 in what sense mortgage is a collateral 429 
 
 see MORTGAGE. 
 
 for faithful performance of official duties 215-219 
 
 see SURETIES. 
 SELKIRK'S, EARL OF 
 
 building association not the first known 5n 
 
 SEPARATE 
 
 consent of directors to corporate act, legality of. 206 
 
 estate of wife may be mortgaged for husband's undertak- 
 ings with society 318 
 
 SERIAL SOCIETIES 
 
 description of. 47 
 
 apportionment ot profits among the series in 47
 
 656 INDEX. 
 
 SERIAL SOCIETIES Continued. 
 
 apportionment of profits and losses, how made 180n 
 
 are limited as to duration .... 49 
 
 yet belong to class of permanent societies 49 
 
 repayment of loans in 180 
 
 rights and liabilities of members in, first referable to series.. 180 
 accounts of, how kept 180n 
 
 SERIES 
 
 apportionment of profits among the series 47 
 
 and losses, how made 180n 
 
 member may compel settlement of, in equity when stock 
 reaches par 489 n., 490 
 
 "SERVANT" 
 
 meaning of, in criminal procedure 222 
 
 SERVICE OF WRIT 
 
 proof of, by initials 257 
 
 SERVICES 
 
 members owe society their personal 83, 103, 226 
 
 how compelled to render 103 
 
 compensation for, of officers and agents (see COMPENSA- 
 TION) 223-230 
 
 before organization, society not chargeable with, aftcv 
 
 incorporation 227 
 
 where assumpsit for, lies 227??. 
 
 SET-OFF 
 
 against withdrawing member's claim, losses before with- 
 drawal are 105 
 
 after withdrawal are not 264 
 
 losses, to be, must be proved by society 264n. 
 
 against society, withdrawal balances assigned to members 
 
 are 138 
 
 against liability for corporate debts, member's claim as 
 
 creditor of society is 110 
 
 against withdrawal balances acknowledged due to with- 
 drawing members and assigned to others, society has no. 266 
 
 SETTLEMENT 
 
 of accounts of society and members, none until dissolu- 
 tion 128, 150, 153, 329, 336, 452, 456, 457 
 
 tee ACCOUNT; PROFITS. 
 
 of affairs, member may compel, when stock at par. 490-491 
 
 power of society to make, after expiration of 
 charter 494
 
 INDEX. 657 
 
 SHARE OF STOCK 
 
 what is, in law 441, 444 
 
 SHAREHOLDERS 
 see MEMBERS. 
 
 SHARES 
 
 what meant by, in building associations 12 
 
 "par" or "paid-up," value of 12 
 
 "paid-up," in permanent societies 46 
 
 in serial societies, issue of. 47, 48 
 
 number and par value of, to be set forth in articles 54 (2) 
 
 conditions of issue of, to be set forth in articles 54 (3) 
 
 amount receivable as loan or advance on, to be set forth 
 
 in articles 54 (5) 
 
 no restriction upon member's right to hold more than one, 
 
 unless by statute, &c 113 and note. 
 
 value of, for withdrawal (see WITHDRAWAL) 130, 131 
 
 for application to indebtedness (see APPLICA- 
 TION) 455-457 
 
 assignment and transfer of (see TRANSFER) 445-449 
 
 borrower may make, of, subject to society's 
 
 lien 148,450 
 
 SHERIFF'S SALE 
 
 under mortgage, discharges lien thereof. 429 
 
 remedy where proceeds of, insufficient to cover whole sum 
 
 due 429 
 
 purchaser at, whether, may set up usury in prior mort- 
 gage 363-365- 
 
 SIC UTERE TUO, UT ALIENUM NON LAEDAS. 461 
 
 SIGNATURE 
 
 want of one, required to certificate of incorporation, fatal.. 208 
 defect of, in certificate does not avoid charter collaterally... 506 
 of president and secretary should accompany affixing of 
 
 seal 235 
 
 of constitution and by-laws a mere formality 83 
 
 of minutes when not necessary to validity of directors' acts 205 
 
 SIGNIFICANCE 
 
 of seal in corporate contracts 237 
 
 of stipulation for payment of dues, &c., in mortgages... 371, 372 
 
 SIGNING 
 
 of constitution and by-laws a mere formality 83 
 
 of minutes w>,en not necessary to validity of directors' 
 acts 205. 
 
 IB
 
 658 INDEX. 
 
 SMALL AND FREQUENT PAYMENTS 
 
 importance of, in building associations 829 
 
 SOLICITOR 
 
 functions, duties and liabilities of 214 n. 
 
 unlawful delegation of functions by, in examining title (see 
 
 RECORDER) 245 n. 
 
 see ATTORNEY. 
 
 SOUTH CAROLINA 
 
 decisions in, touching building associations 38 n. 
 
 cases in, on theory of loans or advancements 847 n. 
 
 SPECIAL 
 
 act of legislature, incorporation by 57, 59 
 
 criterion of legality of constitution and 
 
 by-laws under 59 
 
 arrangements changing value of stock, effect of. 171, 172 
 
 for withdrawal, when binding on society.,169, 170 
 terms of repayment, members must consent to, to claim 
 
 benefit of. 171 
 
 when members repudiating, may 
 
 have benefit of. 172 
 
 cannot be forced upon members 171 
 
 society may make, with borrowers.... 323 
 
 meeting, what business to be transacted at 182, 185 
 
 what is 182 
 
 notice of, to be given to all members 184 
 
 duty of officers in calling 184 
 
 regularly called, may be adjourned 185 
 
 adjourned, powers of. 185 
 
 of directors 202 
 
 SPECIALTY 
 
 affixing of seal makes instrument a 235 
 
 SPECIFIC 
 
 sum, real meaning of obligation given for repayment of..... 153, 
 
 157, 421-422 
 powers, want of, as claimed under charter may be shown 
 
 from charter 510 
 
 estoppel against party denying society's right to 
 assume. 514 
 
 SPECULATION 
 
 impropriety of society's engaging in 120 
 
 in real estate (see REAL ESTATE) 804, 305n, 
 
 in stocks 821
 
 INDEX. 659 
 
 STAMP-DUTY 
 
 exemption of building association mortgages from, in Eng- 
 land, how construed 43S 
 
 6TARR-BOWKETT SOCIETIES 
 
 description of. 45 
 
 excessive interest on loans in 45 
 
 STATE (ATTORNEY-GENERAL). 
 
 may interfere where incorporation irregular or fraudulent.. 63 
 may forfeit society's charter for illegal exercise of powers... 285, 
 
 286, 325 
 for unlawful departure from 
 
 powers granted 325, 478 
 
 alone can enforce forfeiture of charter for misbehavior of 
 
 society 481, 508 
 
 alone can impeach corporate existence 504 
 
 see NUL TIEL CORPORATION ; Quo WARRANTO. 
 
 STATED MEETING 
 
 see DIRECTORS ; CORPORATE MEETING ; MEETING. 
 
 of society 182 
 
 directors 201 
 
 STATES 
 
 statutes of the several, relating to building associations.... 16-38 
 
 reservations legalized in the several, in building association 
 
 loans 383 
 
 STATUTE 
 
 repeal of, by implication 34 (n. 2), 35 (n. 7). 
 
 constitution must conform with terms of. 56 
 
 incorporation under general ...56, 59-64 
 
 powers of building association under 232 
 
 spirit of, must be considered in determining 273 
 
 charter under general, not conclusive as to society's powers, 291 
 
 see CHARTER. 
 
 unincorporated society cannot claim benefit of. 518 
 
 STATUTE OF FRAUDS 
 
 auctioneer may sign memorandum required by, to bind 
 purchaser 242 
 
 BTATUTES 
 
 necessity of comparison of, in the several states 16-17 
 
 of the several states relating to building associations 18-38 
 
 functions of legislature and courts respectively as to 66 
 
 retro-active and expository 66 
 
 affecting remedies only 67
 
 660 INDEX. 
 
 STATUTES Continued. 
 
 what, must be considered in passing valid by-laws 272 
 
 curative, constitutionality of. 511 
 
 regulating building associations, unincorporated societies 
 cannot benefit by 518 
 
 STATUTORY 
 
 guarantee of right and terms of withdrawal, imperative 131 
 
 limitation upon funds available for withdrawals 140-143 
 
 regulations of loans apply to members only (see STRANGERS), 314 
 
 terms of withdrawal, force, <fcc., of. 143 
 
 repayment override other rules 165, 166 
 
 STAY OF EXECUTION 
 
 discretion of court as to, against society by withdrawing 
 
 member 137, 143, 264, 488 n. 
 
 where period of default not properly averred 258 
 
 STOCK IN BUILDING ASSOCIATION 
 
 definition of. 441 
 
 general discussion of. 441-470 
 
 definition of shares of 441-414 
 
 must be all subscribed before holding individual subscrib- 
 ers, unless waived 85, 441, 442 
 
 member entitled to hold more than one share of. 113 and note. 
 
 member's interest in, is measure of loan grantable to him.. 126 
 held by borrowing member may, for purpose of distribution, 
 
 be considered as sunk and extinguished 371 
 
 expiration of charter when, at par 473 
 
 application of, to debt extinguishes membership of bor- 
 rower 431 
 
 application of, to debt when compelled on doctrine of mar- 
 shalling of assets 460-469 
 
 see MARSHALLING OF ASSETS. 
 
 assignment and transfer of. 445-449, 450 
 
 of, absolute on face may be shown to have been 
 
 merely as collateral 380 
 
 effect of double 45$ 
 
 concentration of, and securities in one person's hands dis- 
 solves society 476 
 
 forfeiture of, general discussion of. 99-102 
 
 is forfeiture of membership 102 
 
 when society estopped from claiming 176 
 
 does not take place until declared 101, 176 
 
 waiver of. 77, 80, 99-102, 202, 418 
 
 *>e FORFEITURE.
 
 661 
 
 STOCK IN BUILDING ASSOCIATION Continued. 
 
 hypothecated, purchaser of, cannot compel society to resort 
 
 to mortgage 459 
 
 member's rights over 450 
 
 lien of society upon 87, 450 
 
 maturity of, burden of proof of, when on borrower 260, 493 a. 
 
 right of member to petition for winding up 
 
 on 490,491 
 
 financial condition necessary in order to 492 
 
 difficulty in ascertaining exact period of. 492 
 
 misappropriation of, society's liability for 252 
 
 "net value" of 449. 
 
 owners of, must procure transfer on books 78 
 
 ownership of, constitutes membership in society 68 
 
 of feme sole member at common law upon 
 
 marriage 72 
 
 stock-book primary evidence of. 78, 446 
 
 as between claimants may be determined by 
 
 possession, &c 78, 447 
 
 evidence of. 78,446,447 
 
 pledged, purchaser of, cannot compel society to resort to 
 
 mortgage 459 
 
 member's rights over 450 
 
 property in, nature of. 444 
 
 subscription for, how far conditional ..85, 441 
 
 when only, becomes absolutely binding..85, 441 
 
 waiver of implied condition in 85, 442 
 
 taxation of. 470 
 
 title to, borrowing member does not lose his 148 
 
 traffic, society cannot, in its own 301, 323 
 
 transfer, owners must procure on books 78 
 
 refusal by society to make, action for 78, 
 
 268 and note, 448-449 
 
 cannot be made whilst member in arrears 87 
 
 liability to contribute to losses not evaded by 104 
 
 cannot be made by withdrawing member 136 
 
 borrower may make, subject to society's lien 148 
 
 and assignment of, general discussion of... 445-449, 450 
 
 value of, member cannot sue at law for paid-up 144, 265 
 
 change in, effect of, on borrower's liability 171, 
 
 172, 496-503 and note. 
 
 not a subsisting claim in member against society 
 before winding up 265
 
 662 IMKX. 
 
 STOCK IN BUILDING ASSOCIATION Continued. 
 
 value of "net," 449n 
 
 for purpose of application to loan 455-457 
 
 how made up 456, 457 
 
 difficulty in ascertaining 456, 457, 490 
 
 rights of members when stock reaches par 490-491 
 
 financial condition necessary to produce par 492 
 
 withdrawal of, not allowed whilst member in arrears 87 
 
 stops right to transfer 136 
 
 works surrender 136 
 
 member may assign balance due upon 136 
 
 gee APPLICATION OF STOCK ; ATTACHING CREDITOR; CAPITAL; 
 CAPITAL STOCK; MARSHALLING OP ASSETS; MERGER; 
 SHARES; TRANSFER; WITHDRAWAL. 
 STOCK-BOOK 
 
 primary evidence of membership 78, 446 
 
 transfer of stock must be made on 78, 446 
 
 society need not look beyond, for owners of stock 78 
 
 action against society for refusal to enter transfer on 78, 
 
 268 and note, 448-449 
 
 provisions for transfer on, how construed 446 
 
 see CORPORATE BOOKS 
 STOCKHOLDERS 
 
 see MEMBERS. 
 STOCK INTEREST 
 
 extent allowable to any individual member 113 
 
 of member is basis of his rights (see FORFEITURE) 147 
 
 see RIGHTS OF MEMBERS. 
 STOCK-PAYMENTS (see DUES) 
 
 installments, subscriptions, dues, what meant by 12, 371 
 
 amount and details as to, to be set forth in articles 54 (4) 
 
 society receiving, when estopped from denying payer's 
 
 membership 79, 176, 431 
 
 duty to make, not removed by misbehavior of other members 84 
 nor by illegal acts of society or officers.. ..172, 289, 
 
 303, 305, 309 
 
 nor suspended by pendency of suit 91, 173, 263 
 
 is independent of obligations as borrower 372 
 
 is absolute to end of society's existence 84, 160 
 
 ceases only with membership 84 
 
 but does not continue after dissolution 496 
 
 enforced upon mortgage after repayment of 
 loan... 88
 
 INDEX. 663 
 
 STOCK-PAYMENTS Continued. 
 
 duty to make, regularly 9. 
 
 ceases upon forfeiture of stock 102 
 
 are to be made in cash only 93 n., 217, 401 n 
 
 society may maintain aasumpsit for 85, 461 
 
 need not give notice of, when due 86, 451 
 
 in arrears, lien on stock for 450, 4H7 
 
 stipulation for, the differentia of building association mort- 
 gage 422 
 
 covenants as to, in mortgage 423 
 
 maybe appropriated to liquidation of indebtedness 154-156, 
 
 175-176 
 
 but are not directly applied thereto 452 
 
 are not ipso facto payments to the loan 374, 431, 440 n., 
 
 452, 454-457, 462, 465 
 
 not even in unincorporated societies 518 
 
 see MARSHALLING OF ASSETS. 
 
 STOCKS 
 
 speculation in, by society illegal 321 
 
 STRANGER 
 
 postponed to member desiring loan or advancement.. ..117, 121 
 
 security of, may be taken for member's liabilities 312 
 
 and of member jointly 382 
 
 society cannot, without distinct authority, lend to 313 
 
 estopped from setting up defense of illegality of loan 313 
 
 and persons not sni juris, loans to 313-318 
 
 what society can recover on loan to 313-316 
 
 who included in class of. 316 
 
 not bound by rules, &c., applicable to members only 314 
 
 how society ought to be permitted to lend to 314 
 
 mere, cannot compel application of stock to debt 459 
 
 see MARSHALLING OF ASSETS. 
 
 mortgages by, when exempt from taxation 439 
 
 cannot ask for appointment of receiver for insolvency.,.488-489 
 nor petition for winding up on maturity of stock 491 
 
 SUB-AGENTS 
 
 contracts of, not binding on society where delegation of 
 powers to, improper . 204 n, 
 
 SUB-DIVISION 
 
 of dues including interest or redemption money, so as to 
 impose separate fines for default, illegal 416 
 
 SUBMISSION 
 
 to by-laws required 271
 
 664 INDEX. 
 
 SUBROGATION (see MARSHALLING OF ASSETS) 461, 464 
 
 SUBSCRIPTIONS (we DUES) 
 
 stock payments, installments, dues, what meant by 12, 371 
 
 to stock how far conditional 85, 441, 442 
 
 deficient, of capital stock when waived as a defense 
 
 288 and note, -I l-J 
 
 payable in cash only 93 n., 217, 401 n 
 
 society may maintain assumpsit for 85, 451 
 
 SUBSTANCE OF CONTRACT 
 
 court must look at 347, 353 n., 358 n. 
 
 SUBSTITUTION OF PARTIES 
 
 necessary where society expires pending the suit 270 
 
 SUCCESSION 
 
 see PERPETUAL SUCCESSION. 
 SUI JURIS. 
 
 loans to persons who are not 316-318 
 
 SUIT 
 
 see ACTIONS. 
 
 right and liability of society of and to 231, 254-256 
 
 costs in, for redemption and foreclosure.... 178 
 
 SUM 
 
 being fixed in mortgage for repayment, significance and 
 
 advantage of. 153, 157 
 
 "SUM PAID OR ADVANCED" 
 
 construction of. 385 
 
 SUPREME POWER 
 
 in society vested in corporate meeting 181 
 
 SURETIES 
 
 on official bonds, general discussion of. 217-219 
 
 directors may become 216n. 
 
 not discharged by neglect of society to enforce 
 
 its rules 217 
 
 except in Scotland 217 w, 
 
 contract between, and society 217 
 
 measure of liability of, where treasurer receives 
 mere promises to pay fines and dues, instead 
 
 of cash 217 n. 
 
 not bound where officer's election void 218 
 
 liabilities of, strictly confined to terms of bond... 219 
 
 when held on continuing guaranty 219 
 
 of treasurer liable if he receives aught but cash for fines 
 and dues 217 and note, 451 n.
 
 INDEX. 665 
 
 SURETIES Continued. 
 
 of borrowers cannot defend on ground of society's abuse of 
 
 power in making the loan 288 
 
 nor because borrower allowed to hold more 
 
 than maximum number of shares 288 
 
 may set up usury as a defense 363 
 
 may compel application of stock to debt 459 
 
 of mortgage debt bound by its terms 386 
 
 against liens discharged by merger of mortgage in owner- 
 ship as to losses subsequent thereto 219 n 
 
 SURPLUS 
 
 funds, propriety of investment of, in real estate, &c., 
 
 depends upon society's statutory powers 121 
 
 investment of. 305 n 
 
 assets, borrowing member entitled to share in 371 
 
 accumulated, what is, for purpose of taxation 470 
 
 SURRENDER OF FRANCHISE 
 
 dissolution by 474 
 
 when implied 476 
 
 non-user is not ipso facto 476 
 
 effect of, on contracts of borrowers 496-503 
 
 SURVEYOR 
 
 functions, &c., of. 214n 
 
 must look to corporate funds for compensation 230 
 
 SURVIVAL 
 
 of authority between agents 251 
 
 SUSPENSION 
 
 of interest, fines, dues, &c., none by bringing, pendency or 
 
 discontinuance of suit 91, 178, 377, 418 
 
 of society, what amounts to total 476 
 
 appointment of receiver is more than 502 
 
 of society's operations, temporary, does not abrogate bor- 
 rower's contracts 500 
 
 T 
 TAX COLLECTOR 
 
 see COUNTY ; INJUNCTION ; TAXATION. 
 TAXATION 
 
 remedy for illegal, against collector 438 
 
 building association mortgages, legislature may remit, on... 438 
 
 liable to 438, 440 
 
 of. 438-440 
 
 exemption of, from.. 439
 
 666 INDEX. 
 
 TAXATION Continued. 
 
 what included in assessment of society's propeuy for 440 
 
 on capital stock 470 
 
 and accumulated surplus, basis of. 470 
 
 TAXES 
 
 covenants to pay, properly inserted in building association 
 mortgages 383, 423 n., 432 
 
 TEMPORARY 
 
 loans to society, legality of. . 301 
 
 suspension of business does not abrogate borrower's con- 
 tracts 500 
 
 TENDER 
 
 of money due on building association mortgage, what is... 178, 
 
 263, 437 
 
 right, terms, and effect of. 178, 179, 263, 377 
 
 refusal of, makes society liable for costs and stops interest.. 179 
 
 after suit brought must be with accrued costs 179 
 
 society entitled to decree after refusal of. 179 
 
 when unnecessary 437 
 
 see COSTS ; DECREE ; INTEREST. 
 
 TENNESSEE 
 
 decisions in, touching building associations 38 n 
 
 cases in, on theory of loans or advancements 349 
 
 TERMINATING 
 
 society, description of. 41 
 
 TERMINATION OF SOCIETY (see DISSOLUTION) 471-503 
 
 time and manner of, to be provided in articles 54 (10) 
 
 TERMINOLOGY IN BUILDING ASSOCIATIONS 12-15,41 
 
 "advanced" member 13 
 
 " back-payments ".'. 41 
 
 " bonus " 13 
 
 " borrower " 13 
 
 " bought out " 13 
 
 " capital stock " 12 
 
 " dues " 12 
 
 " installments " 12 
 
 " investor " 13 
 
 "loan" 13 
 
 " par or paid-up value " 12 
 
 " premium " 13 
 
 " redeemed " 13 
 
 "shares"... 12
 
 INDEX. 667 
 
 TERMINOLOGY IN BUILDING ASSOCIATIONS-Con/mttt<i. 
 
 " stock-payments " 12 
 
 " subscriptions " 12 
 
 '' winding-up " 14 
 
 " withdrawal " 14 
 
 " withdrawal-notice " 14 
 
 descriptive names of building associations 15 
 
 TERMS 
 
 of officers : see OFFICERS. 
 
 of statute, constitution must comply with 56 
 
 of loan, impossibility of enforcing does not affect rights of 
 
 borrower as member 76 
 
 of withdrawal 130, 131 
 
 deviating from statute, when binding.....' 133 
 
 of repayment, in the absence of statute or by-law thereon.. 
 
 154, 155 
 
 cannot be varied to borrower's prejudice 169 
 
 see LOANS ; REPAYMENT ; WITHDRAWAL. 
 
 TERRE-TENANT 
 
 whether may set up usury as defense to prior encum- 
 brance.... 363-365 
 
 cannot set up usury after verdict and before judgment 366 
 
 see JUNIOR ENCUMBRANCER ; PURCHASER ; VENDEE. 
 
 TESTIMONY 
 
 see EVIDENCE ; PAROL ; PROOF. 
 
 TESTS 
 
 by-laws imposing additional, on voters, void 277 
 
 THIRD PARTIES 
 see STRANGERS. 
 
 TIMBER 
 
 when mortgagee in possession may fell..... 432 
 
 TICKET 
 
 defeated by improper rejection of votes, court cannot 
 
 declare elected 183 
 
 containing less names than required, good; more, void 190 
 
 TIME 
 
 for payment of dues to be set forth in articles 54 (4) 
 
 also for payment of interest 54 (5) 
 
 also for nomination and election of officers 54 (6) 
 
 also for annual meeting 54 (8) 
 
 for repayment of loan being specified in security does not 
 
 afiect its nature 157, 420-422 
 
 specification of, effect of. 332
 
 668 INDEX. 
 
 TITLE 
 
 choice of: see NAME. 
 
 to stock remains in borrower 148 
 
 tee TRANSFER. 
 
 of society's real estate sometimes vested in trustees.. 214 
 
 property always so vested, if unincorporated... 518 
 vests in surviving or new trustees without 
 
 assignment 214, 233 
 
 so also upon incorporation of unincorporated 
 
 society 520 
 
 in examining, of real estate, solicitor cannot rely on a copy 
 
 of a will 214n 
 
 charge for examining, does not render loan usurious..214 n., 368 
 
 equitable, mortgage of. 419n 
 
 mortgagee in possession may add expenses for maintain- 
 ing, to debt 432 
 
 of property of unincorporated societies taken by trustees.. 518 
 
 effect of flaw in, on rights of mortgagee in possession 432 
 
 TORTS AND MISREPRESENTATIONS OF AGENTS 
 
 when society liable for 252 
 
 ratification of. 252 
 
 innocent party suffering by, may look to society, though 
 
 equally innocent 252 
 
 TRAFFICKING 
 
 in its own stock is illegal in society 301, 323 
 
 TRANSACTIONS 
 
 minutes of directors' 205 
 
 TRANSFER OF STOCK 445-449 
 
 must be made on corporate books 78 
 
 where member in arrears, may be refused 87, 155 
 
 but must be allowed upon payment thereof. 447 n., (450 n). 
 
 liability to contribution cannot be evaded by 104 
 
 withdrawn member cannot make 136 
 
 borrower's right to, subject to society's lien 148 
 
 action against society for refusal to make 268, 448-449 
 
 mandamus will not lie to compel 448 
 
 method and formalities of. 445 
 
 by power of attorney signed in blank 445, 446 
 
 on corporate books, effect of rule for 446 
 
 is merely directory 446 
 
 is intended for protection of society.... 446 
 
 cannot be unreasonably impeded by society 446 
 
 society's right to charge fee for 446
 
 INDEX. GOS 
 
 TRANSFER OF STOCK Continual. 
 
 not entered on books is merely an equitable assignment.... 446 
 but good against all but innocent purchasers... 446 n. 
 
 and good against attaching creditor 446 and note. 
 
 holder of stock may demand, on books 447 
 
 remedy for refusal by society 448 
 
 may be prohibited whilst society has lien on stock 450 
 
 by borrower, when pledged as collateral, to third party 
 (double assignment) destroys his right of applying it to 
 
 loan contrary to assignee's interests 458 
 
 TREASURER 
 
 functions, &c., of. 196 
 
 formerly in England exercised, by trustees 196 n. 
 
 of, merely ministerial 196 
 
 warrants on, to be signed by president 195 
 
 obliged to give bond 196 
 
 not liable for moneys lost by robbery, &c 196 
 
 cannot recover against society moneys paid without war- 
 rant for illegal purposes. 196 
 
 is not personally liable for payments made on warrant, 
 
 though for illegal purpose. 196 
 
 has no right to receive aught but cash for dues and fines... 93 n., 
 
 217, 401 n., 451 n. 
 
 measure of liability of sureties of, if he does 217 n. 
 
 TRESPASS 
 
 officer de facto may have, against others claiming to be a 
 
 board of directors 192 n 
 
 of agent, society's liability for (see TORTS) 252 
 
 TRUST 
 
 nature of relation of, between society and its membership.. 128 
 TRUSTEE 
 
 when corporation regarded as, for creditors Ill 
 
 what is valid appointment of, in mortgage, to sell 434 
 
 TRUSTEES 
 
 not properly officers 194, 208 
 
 now generally superfluous and discarded 194, 214 
 
 in England formerly had functions of treasurer 196 n 
 
 in what sense, are officers 208 
 
 functions of. 214 
 
 conveyance of assets to, on dissolution 494 
 
 omission to state names of, in certificate, does not avoid 
 
 charter collaterally 506 
 
 in unincorporated societies, functions of. 518, 519
 
 670 INDEX. 
 
 TRUSTEES Continued. 
 
 directors are in a sense, for stockholders 207 
 
 extent of liabilities of, as trustees 209 
 
 (N. B. Where "trustee" is used as synonymous with "director," 
 as in New York, see DIRECTORS.) 
 
 U 
 ULTRA VIRES 
 
 (see BORROWING POWERS ; MISUSE OF POWER OF LENDING ; 
 PROHIBITION; REAL ESTATE; SECURITY; UNANIMOUS CON- 
 SENT; UNLA.WFUL ACTS.) 
 acts, affecting only stockholders, may be ratified. ..169, 232, 284 
 
 assent of members not presumed to...'. 181 n. 
 
 of agent's powers, effect of. 245 
 
 what are 120, 288, 293-308, 310-318, 324 
 
 render society liable to forfeiture of charter 285, 325 
 
 in taking unauthorized security, effect of. 288 
 
 certain, declared to be 323 
 
 do not avoid charter collaterally 508 
 
 arrangements which are, when binding on society 169, 170 
 
 borrowing, when is 293-302 
 
 by-laws which are, do not avoid charter collaterally 507 
 
 compromise between member and society is not 109, 323 
 
 contracts, of agents, when void and when voidable 247 
 
 directors jf personally liable for, cannot ask con- 
 tribution from members 307 
 
 of secretary which are, do not bind society 197 
 
 of directors cannot be enforced against society... 198 
 
 personal liability of agent or officer for 198, 284 
 
 debts contracted, can never make society insolvent 489 
 
 discount, allowing of, on premium, not 399 
 
 discounting paper is, and ground of forfeiture of charter... 479 
 
 fixing of minimum premium is 394-397 
 
 insurance, contract to effect, on premises mortgaged is not, 383 ji 
 
 interest, reservation of, on loan is not 322 
 
 lending, what is, in exercise of power of. 310-321 
 
 to other corporations whether 319-321 
 
 meaning of term of. 282 
 
 minimum premium, fixing of, is 394-397 
 
 plea of, society estopped from setting up, after settlement 
 
 with borrower 169, 170 
 
 meaning of. 236
 
 INDEX. 67] 
 
 ULTRA VIRES Continued. 
 
 plea of, may be set up by society to invalidate instrument 
 
 properly executed 236 
 
 who may set up 285-292 
 
 real estate, how far purchase of, is 303-308 
 
 dealing in, is, and ground of forfeiture of charter. 479 
 
 stock, speculating in, is 321 
 
 trafficking in its' own, is 301, 323 
 
 warrant, payment by treasurer upon, for purpose which is, 
 
 creates no liability in him.. 196 
 
 withdrawals, rules as to, which are 132-133 
 
 UNANIMOUS CONSENT OF MEMBERS 
 
 required to ratify acts of directors or agents ultra vires 169, 
 
 232, 284, 307 and note 
 ratines acts ultra vires as between society and directors or 
 
 agents 307 
 
 whether premature dissolution requires 474 
 
 to dissolution may be inferred.. 476 
 
 UNAUTHORIZED 
 
 acts of agents do not bind society 245 
 
 contracts of secretary do not bind society 196 
 
 of agents, when void and when voidable 247 
 
 UNCERTAINTY 
 
 an element in building association loan 336 
 
 in rules relating to fines construed in favor of member 
 
 407-409, 411 
 
 in provisions for repayment, likewise 167, 168 
 
 in building association mortgage (or bond) does not make 
 it void... 424 
 
 UNINCORPORATED BUILDING ASSOCIATIONS 
 
 general discussion of. 517-521 
 
 are partnerships 517 
 
 powers of... 517-518 
 
 government of. 519 
 
 loans in 341, 344, 345, 351, 355, 356, 518 
 
 fines and premiums not recoverable in 518 
 
 contracts of, not aided by statutes 518 
 
 nor by subsequent incorporation 518, 520 
 
 incorporation of, effect on rights, property, &c., previously 
 
 acquired 520 
 
 by existing constitution and by -laws.... 58, 521 
 
 UNITY OF CORPORATE EXISTENCE... .. 239
 
 672 INDEX. 
 
 UNLAWFUL 
 
 acts of officers, right of members to restrain (see DIRECTORS; 
 
 OFFICERS) 114 
 
 of society, when ground of forfeiture of charter 323, 825 
 
 departure from legitimate functions, effect of, on corporate 
 
 existence and obligations of members 309 
 
 practices of society, what are 120, 283, 
 
 293-308, 310-818, 323. 324 
 
 purposes of building associations 118 
 
 UNMARRIED WOMEN 
 
 see FEME SOLE. 
 UNREASONABLE 
 
 bargain, society has right to make 109 n., 823 n 
 
 by-laws : see BY-LAW. 
 
 restraints upon transfer of stock improper 447 
 
 UNWISE BARGAIN 
 
 right of corporation to make 109 n., 323 n 
 
 USAGE 
 
 where admitted as explanatory 188 
 
 and custom when sanctioning delegation of authority by 
 agent 251 
 
 immemorial, cannot be appealed to in building associa- 
 tions 271 n. 
 
 see CUSTOM ; CUSTOMARY. 
 
 USE OF COMMON SEAL (see SEAL) 234 
 
 USER 
 
 gives corporation no exclusive property in a name merely 
 
 descriptive of locality 51 
 
 USUAL SECURITY 
 
 in building associations (see CUSTOMARY) 123, 311, 380 
 
 USURY 
 
 definition of. 358 
 
 general discussion of. 358-368 
 
 charges for negotiation of loan and examination of title do 
 
 not constitute 214 n., 308 
 
 exception to this rule as to corporation officers 368 
 
 is no defense to mortgage on ejectment 311 n. 
 
 where no defense 311 n., 360, 361 
 
 cannot be set up by deceased married woman's next of kin, 317 
 
 in substance of contract taints its every form 347, 349, 
 
 353 n., 358 and note. 
 In premium left to jury 338, 344, 846
 
 INDEX. 673 
 
 USUHY Continued. 
 
 in building association loan cannot be ascertained without 
 
 account of losses and expenses 346 
 
 theory of partnership dealing does not excuse 346 n., 347 n. 
 
 court must analyze transaction to find 347, 353 n., 358 n. 
 
 Lord Coke's caveat as to 349 
 
 taints security in hands of bonafide holder 358 
 
 may become an element in building association loan 358 
 
 effect of, on security 358 
 
 paid voluntarily may be recovered 359, 360 
 
 embraced in final settlement cannot be recovered 360 
 
 merged in judgment cannot be recovered 366 
 
 after verdict and before judgment, when, cannot be ob- 
 jected to 366 
 
 cannot be recovered by borrowing member in North 
 
 Carolina 361 
 
 action for recovery of, must be brought within statutory 
 
 period 362 
 
 when a fraud upon creditors, may be set up as defense 363 
 
 who may set up, in security as a defense 363-365 
 
 whether second mortgagee may set up, in first mortgage..363-366 
 
 when a personal defense 358, 363, 364 
 
 when a general defense 364-365 
 
 cases on, collected 364n. 
 
 not an objection to sale, but arises on distribution 367 
 
 plea of, must conform to statute 367 
 
 purchaser subject to building association mortgage cannot 
 complain of. 386 n, 
 
 V. 
 VACANCY 
 
 filling of, in board of directors or among officers, power of 
 
 directors as to 19& 
 
 in board of trustees requires no assignment of 
 
 titles 214 
 
 officer filling, extent of liability of sureties for 219- 
 
 VALIDITY OF 
 
 agreement of all members to dissolve 172 n., 475 
 
 by-laws, dependent upon what 281 
 
 charter cannot be inquired into collaterally 63, 475 n., 
 
 481, 504-508, 5f2, >JS 
 
 compromise between society and members 109, 323 (169, 170) 
 
 2s
 
 674 INDEX. 
 
 VALIDITY OF Continued. 
 
 constitution dependent on what, where incorporation by 
 
 patent, &c 66, 59 
 
 contract, imprudent, of corporation 109 n., 323n. 
 
 how far dependent on keeping of minutes 205 
 
 assented to by directors separately 206 
 
 mortgage for payment of dues, &c 424 
 
 official bonds, certain 216 
 
 see AGENT ; BY-LAW ; CONTRACT ; MEETING ; MORTGAGE. 
 proof of service by endorsement thereof by initials on writ.. 257 
 
 VALUE 
 
 of shares for withdrawal 130-131 
 
 of mortgage for dues, &c., present 154-155 
 
 see PRESENT VALUE ; MORTGAGE ; REPAYMENT. 
 
 of stock, effect of change in, on borrower 171, 172, (496-503) 
 
 not a subsisting claim in member against society 
 
 before winding up 144, 265 
 
 for purpose of application to loan 455-457 
 
 how made up 456, 457 
 
 VARIANCE 
 
 of terms of repayment after loan made, illegal 169 
 
 between date and consideration of bond as recited in mort- 
 gage and as shown in evidence 245 n., 519 rv 
 
 between real name of society and name in bond and bill 
 (see MISNOMER) 257 
 
 VARIETIES 
 
 of building associations 41-47 
 
 of forms of mortgage used in building associations 421 
 
 VENDEE 
 
 whether, may set up defense of usury to prior encum- 
 brance 363-365 
 
 ee PURCHASER. 
 
 VENDOR 
 
 may enforce lien for purchase-money on property in 
 hands of third parties who paid full consideration 307 
 
 VERDICT 
 
 terre-tenant cannot set up usury after, and before judgment, 866 
 
 VESTED RIGHTS 
 
 cannot be impaired by by-law (see OBLIGATION OF CON- 
 TRACTS) 278
 
 INDEX. 675 
 
 VESTING OF TITLE 
 
 upon resignation or death of trustees or directors 233 
 
 upon incorporation of unincorporated society 520 
 
 VICE-PRESIDENT 
 
 functions, Are., of 195 
 
 VIRGINIA 
 
 statutes in, relating to building associations 35 
 
 decisions in, relating to same, collected 35 n. 
 
 cases in, on theory of loans or advancements 343 
 
 VOLENTI NON FIT INJURIA 
 
 applied to parties to usurious loan 859 
 
 VOLUNTARY 
 
 payment of usury not a bar to recovery 359 
 
 and forced repayment, difference between terms of. 427 
 
 surrender of franchise, dissolution by 474 
 
 when inferred 476 
 
 repayment : see RKPAYMKNT. 
 withdrawal : see WITHDRAWAL. 
 
 VOLUNTARY ASSOCIATION 
 
 incorporation by 61 
 
 VOLUNTARY BUILDING ASSOCIATIONS 
 see UNINCORPORATED SOCIETIES. 
 
 VOTE 
 
 right to, member's 113 
 
 each member entitled to one 113, 187 n, 
 
 origin and reason of this rule 113 
 
 right of pledger of stock to 113, 450 
 
 borrower to 118 
 
 mere, may create binding contract 237 
 
 by-law giving, or restraining to casting, when void 277 
 
 creating new and additional tests and qualifications 
 
 of right to, void 277 
 
 VOTER 
 
 see MEMBERS. 
 
 VOTES 
 
 number each shareholder entitled to, to be set forth in 
 
 articles 54 (6) 
 
 acceptance of illegal, effect of, upon election 188 
 
 rejection of, effect of improper 188 
 
 majority of, though minority of meeting, elects 189
 
 676 INDEX. 
 
 w. 
 
 WAIVER 
 
 of forfeiture, right of. 79 
 
 must be clearly act of society 80 
 
 of condition as to capital being all subscribed, what is, and 
 
 effect of. 85, 288 and note, 442 
 
 of defects in notice of meetings 184 
 
 of rule as to maximum of shares to be held by any member.. 288 
 
 WANT OF FUNDS 
 
 when no defense against withdrawing member 139 
 
 WARRANT 
 
 payment by treasurer without, for purposes ultra vires can- 
 not be recovered 196 
 
 necessity of, on treasurer for disbursement of corporate 
 
 funds 196 
 
 on treasurer to be signed by president 195 
 
 drawn by president not a negotiable instru- 
 ment 264 r* 
 
 WARRANTY 
 
 directors acting ultra vires may be held on an implied, of 
 
 society's power to do the act 198, 28t 
 
 WASTE 
 
 liability of directors to account for, of corporate funds 212 
 
 when mortgagee in possession may commit 432 
 
 WEEKLY 
 
 periodical payments may be 374 
 
 WEST VIRGINIA 
 
 statutes in, relating to building associations 36 
 
 WIFE 
 
 see MARRIED WOMEN. 
 WILL OF LEGISLATURE 
 
 how expressed as to creation of corporations 273 
 
 is supreme over purposes defined in charter, <fec 480 
 
 WILLFUL MISCONDUCT 
 
 directors liable for 209 
 
 WINDING-UP 
 
 see COURT ; DISSOLUTION ; EQUITY. 
 
 what is meant by 14 
 
 when members may apply to court for purpose of..H4, 490-491 
 member must either await, or withdraw to get value of his 
 stock 145,268
 
 INDEX. 677 
 
 WINDING-UP Gmtinued. 
 
 agreement of members to, is valid 172 n., 475 
 
 binds assignee of consenting member 172 n., 475 
 
 building association mortgages not assets for 440, 492 
 
 effect of arrival of period for f . 472-473 
 
 of insolvent society, proper method of. 485-487 
 
 when borrower cannot petition for 491 
 
 petition to court for, must proceed from member as such : 
 
 see CREDITOR 491 
 
 what financial condition petition for, must show 492 
 
 settlements incident to 494 
 
 WISCONSIN 
 
 statutes in, relating to building associations 37 
 
 WITHDRAWAL 
 
 what is meant by 14 
 
 provisions for, to be made in articles 54 (4) 
 
 cannot be forced upon investors by borrowers 173 
 
 balances due upon 266 
 
 assignment of. 136 
 
 rights of assignee of. 136, 138 
 
 bonus upon, may be claimed by borrower voluntarily re- 
 paying 162, 163 
 
 claims of member upon, liable to defalcation for losses and 
 
 expenses 105 
 
 even where losses not yet ascertained 105 
 
 but not accruing after notice of withdrawal 264 
 
 what, member may make, upon.. 128, 129-131 
 
 dissolution by, of members 498 
 
 effect of, is surrender of stock 136 
 
 notice of, what meant by 14 
 
 effect of, on membership and duties thereof 108 n., 
 
 136 n., (264) 
 
 right of, is incident to membership 430 
 
 belongs to all members 503 
 
 objections to, and justification of. 127 
 
 equitable aspect and importance of. 127 
 
 does not involve account of profits 128, 129 
 
 cannot be capriciously denied by directors 135 
 
 is defeated by society's lien for arrears due 87, 155 
 
 becoming borrower (surrender) 147, 
 
 155, 430 
 
 terms of mortgage 430 
 
 how affected by statutory limitation upon funds 
 
 devoted to.... ...140-143
 
 678 INDEX. 
 
 WITHDRAWAL Om*tnurf. 
 
 design of statutory limitation of funds devoted to 143 
 
 terms of, statutory, nature, design and effect of. 131 
 
 are those in force at incorporation 132 
 
 charter and by-law provisions varying, 
 
 are void 132 
 
 extra-statutory, when binding on society 133, 170 
 
 when regulated by charter or by-law 134 
 
 rules as to, construction of. 134 
 
 special, when cannot be rescinded 170 
 
 value of shares for purpose of. 130, 131 
 
 WITHDRAWAL BALANCES 
 
 nature of, and presumption as to 266 
 
 assignment of. 136, 266 
 
 rights of assignee of, though a member 137, 138, 266 
 
 WITHDRAWAL NOTICE 
 
 marks cessation of membership 108n. 
 
 member not bound by new rules after giving 136 
 
 liable for losses accruing after 264 
 
 WITHDRAWING MEMBERS 
 
 when must be allowed some share of profits 131 n. 
 
 must observe rules, &c., prescribed 132, 264, 430 
 
 rule for competition between, for priority of payment of 
 
 claims of, when void 132, 276 
 
 need not show cause 132 
 
 rights of, regulated by statute under which society formed.. 132 
 
 after notice, become mere creditors 136, 138 
 
 cannot transfer stock 136 
 
 may assign balances due, even to other members 136, 138 
 
 may proceed to judgment against society 137, 141-143, 264 
 
 execution by, against society, discretion of court as to...l38, 143 
 
 society must keep funds available for 189 
 
 not affected by losses after withdrawal-notice 264 
 
 rules passed thereafter 264 
 
 suing for claims, must show compliance with statute and 
 
 regulations 264 
 
 entitled to priority on distribution of insolvent society's 
 
 assets 486 
 
 WITNESS 
 
 see EVIDENCE. 
 
 WOMEN 
 
 see FEME SOLE; MARRIED WOMEN.
 
 INDEX. 679 
 
 WORKINGS 
 
 description of general, of building association scheme 8-11 
 
 WRIT 
 
 endorsement of proof of service on, by initials merely 257 
 
 of entry, society may maintain after illegal cancellation of 
 
 mortgage: see ENTRY 519 
 
 of injunction : see INJUNCTION. 
 
 of mandamus : see MANDAMUS. 
 
 of quo wavranto : see Quo WARRANTO. 
 
 of scire facias : see SCIRE FACIAS. 
 
 WRITTEN AUTHORITY 
 
 not needed to show appointment of agent 242 
 
 See AGENT.
 
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 UNIVERSITY OF CALIFORNIA
 
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