Le Mars Building & Loan Ass'n v. Burgess

105 N.W. 641, 129 Iowa 422

• Court: Supreme Court of Iowa
• Decided: January 18, 1906
• Status: Published

Opinions

Sherwin, J.

Appellant is a building and loan association organized under the laws of this state. Tn May, 1895, it issued to the appellee Matilda A. Burgess a certificate for nine shares of Class D installment stock, on which she agreed to pay fifty cents per share per month. In September of the same year she borrowed of the appellant $900, giving her note therefor, and securing it by a mortgage on real property and by pledge of her shares of stock. The note stipulated for the payment of interest at the rate of eight per cent, in the manner provided by the articles of incorporation and by-laws of the association. In addition to securing the loan, the mortgage recited that the borrower was to pay fifty cents per share per month on the stock issued to her and the further sum of fifty cents per share per month as “ premium on the loan.” The appellee made one hundred payments of dues, interest, and premiums, aggregating the sum of $1,248 in round numbers, and upon her refusal to pay further interest on the loan this suit was brought; the petition claiming a balance of $393.97 alleged to be due on the 1st day of November, 1903. The defendant pleaded usury and that by the terms of the by-laws her stock was matured and her debt satisfied. The case was tried on these pleadings, and was orally argued and submitted on the 24th day of March, 1904. On the 9th day of April,'1904, the defendant filed an amendment to her answer pleading an estoppel. The appellant had no notice of the filing of this pleading until the 16th day of June, 1904, when a copy thereof was sent to it by the trial judge. On the next day the appellant filed a motion to strike the amendment, which was afterwards submitted with the case, and was overruled.

i. pleadings: amendment. Code, section 3600, provides that amendments may be permitted at any time when the amendment does not change substantially the claim or defense; and it has been held that the statute is to receive a liberal construction, an¿[ that amendments may be allowed as a general rule. It has further been held that the matter rests largely in the discretion of the trial court. Notwithstanding these general rules, we are constrained to hold that the amendment in this case should have been stricken out. An estoppel to be effective must be pleaded. It was not pleaded until two weeks after the case had been submitted, and it then tendered a new and very material defense. In her original answer the defendant relied on the provisions of the by-laws, and claimed that she had discharged her debt by the payments made in accordance therewith, while in her amendment she alleged as facts upon which she based an estoppel that the appellant through its agent had guarantied the maturity of the stock when not to exceed 100 payments were made. If this was true, the defendant knew it at the time she bought the stock, or at least when she made the loan, and no excuse is shown for not sooner pleading it. The statute does not authorize a material change in the issue after a case is submitted, and it is a practice which should not be encouraged. It is not fair to the trial court nor to the other-side. McNider v. Sirrine, 84 Iowa, 58; Denzler v. Rieckhoff, 97 Iowa, 75; Thoman v. Railway Co., 92 Iowa, 196; Greenlee v. Home Ins. Co., 103 Iowa, 484.

2. Building and LOAN ASSOCIAtions: installment stock: maturity. Section 5 of article 15 of the by-laws provides: “ Class D installment stock shall be payable 50 cents per share per month on the 1st day of each and every month, in advance, beginning with the date of the certificate, until . such time as the total amounts ox the installments paid in, less the sums credited to the expense account, and the earnings accredited to the shares of stock amount to the par value of $100 per share, when interest and profits shall cease, and the holder be entitled to receive $100 per share for the same. Not to exceed 100 payments shall be required to be made upon this stock, when payment shall cease, and no further assessment can be made against this stock.”

The appellee contends that under the last clause of the section-the stock was matured when one hundred payments thereon had been made. If this be true, nothing more is due on the loan, because the by-laws also provide that the maturity of the shares fully repays and cancels the loan. Neither the certificate issued to the defendant- nor the note and mortgage executed by her contain any provisions as to the time when the stock shall mature further than by reference to the by-laws. The controversy over this question must therefore be settled by the by-laws alone. It will be noticed that the first clause of the section of the by-laws under consideration states just when the stock shall mature — that is, when it shall become worth par or one hundred dollars per share; and that is when the total amount paid in thereon, less the sums credited to the expense account, and the earnings accredited to the shares of stock amount to the value of one hundred dollars per share. Standing alone, it is a plain statement of what shall be necessary to mature the stock so that it shall cancel the loan.- It matures when the payments of fifty cents per share, less expense, together with the earnings accredited to the shares shall amount to one hundred dollars per share, and not until,then.

Does the provision of the last clause of the section contradict or render ambiguous the first clause? We think not. Nothing is said therein about the maturity of the shares; it simply provides that no more than one hundred monthly payments of fifty cents each shall bo required. It does not say that the stock shall not thereafter be accredited with its share of the earnings of the association. Tf the one hundred monthly payments have been made, and the stock has not reached the value of $100 per share, no further payments will be required; but the stock may be matured by the future earnings of the association. That this limitation in the number of payments is not a guaranty that such payments shall mature the stock is apparent from a consideration of the entire section. When construed as above, it gives force and effect to all of the language of the section, while to construe it otherwise would be to completely nullify the first clause thereof. A similar contract is construed in Union Mut. Bldg. & Loan Ass’n v. Aichele, 28 Ind. App. 69 (61 N. E. 11), and the same conclusion is reached.

Again, in section 5 of article 20 of the by-laws it is provided that if the stock shall not mature in one hundred months, stock payments shall cease, and only interest and premium be paid thereafter. If any explanation of the meaning of article 15 is necessary, it is furnished in article 20; for that clearly declares that if the stock is not matured in one hundred months interest and premium shall thereafter be paid on the loan. The appellee relies on Field v. Building & Loan Ass’n, 117 Iowa, 185, and on Iowa Business Men’s Bldg. & Loan Ass’n v. Berlau, 125 Iowa 22. But in both of these cases the facts were different. In the former, the certificate expressly provided that the stock should mature and be paid in a certain number of months; and in the latter, ^he certificate ivas designated as eighty-four payment certificate. In addition to this, the note itself provided for only eighty - foiu* payments of interest, premium, and dues. And, further, an estoppel was also pleaded, and there was evidence showing the company’s representations that the stock should mature in that time. There was an attempt to bring the instant case within the rule of the Berlau Case by evidence as to the representations of an agent, and by filing the amendment to which we have referred; but, without the aid of an estoppel, or, a plea of fraud, the evidence is incompetent, and cannot be considered.

3. Usury. The appellee says that the loan is usurious, because the interest provided for, and because of the arbitrary premium charged. It is enough to say that the statute has excepted building and loan contracts from the operation of the general law relating to usury. Code, section 1898; chapter 48, page 32, Acts 27th Gen. Assem.; Iowa Savings & Loan Ass’n v. Heidt, 107 Iowa, 297; Ed-worthy v. Association, 114 Iowa, 220.

4. Computation of amount dus ON LOANS. The remaining question in the case relates to the manner of ascertaining the amount due on the loan. The appellant contends that computation is to be made under section 1898 of the Code, while the appellee says that . _ , , . n , it must be made under section 6, chapter 69. page 52, of the Acts of the 28th General Assembly, which provides as follows:

In case of foreclosure, the mortgagor shall be charged with, the rate of interest agreed upon, not to exceed 8 per cent, per annum, and shall be entitled to be credited as of any anniversary of said mortgage, with the total amount of all payments made on the stock to the association during the preceding year, and such payments on the stock shall be treated as a payment upon the mortgage, anything in the articles of incorporation or the by-laws of such association to the contrary notwithstanding.

| The loan was made in 1895, and section 1898 of the Code, as amended by chapter 48, page 32, of the Acts of the 27th General Assembly, will determine the basis of computation, unless the repeal of chapter 48 by chapter 69, page 51, of the Acts of the 28th General Assembly, brings the matter under the latter chapter. Iowa Sav. & Loan Ass’n v. Heidt, supra; Edworthy v. Association, supra. This question is' decided against the appellees’ contention in Ed-worthy v. Association, supra, and in Briggs v. Ass’n, 114 Iowa, 232. Both cases presented the precise question involved here, and it is held that the repeal of chapter 48, page 32, of the Acts of the 27th General Assembly did not affect the rights acquired by the association under section 1898 of the Code, as amended by said Chapter 48. The Edworthy Case fully discusses the proposition, and holds that the association was entitled to recover not to exceed 12 per cent, under section 1898, notwithstanding chapter 69.

5. Same. Section 189S provides that in case of foreclosure, the borrower shall be credited with the same value of his shares as if he had voluntarily withdrawn them, and the by-laws of the appellant provide that the withdrawal value shall be the amount paid to the association, with interest at not less than 8 per cent., less fifty cents withdrawal fee. The appellee urges that, this provision of the by-laws means that the total amount paid to the association on the stock and loan, with interest thereon, shall constitute the withdrawal value of the stock. The contention is clearly unsound. The original article of the by-laws touching this matter, and the amendments thereto' relate solely to the stock and to the manner of its withdrawal at different periods. Section 15 of the by-laws provides for the sale of class D installment stock, and provides that it shall be paid for in monthly payments of fifteen cents per share per month, and section 16 provides for the withdrawal of the sajne stock in the manner that we have already indicated. If the appellee’s position is correct, the apparent borrower of a building and loan association would, in fact, become a lender; for, by withdrawing his stock, he could recover all that he had paid thereon with interest at 8 per cent., and, in addition thereto, he would have had the use of the association’s money for nothing. That such a result was not contemplated by either party to the contract is very evident. See Briggs v. Association, supra.

A small sum for the expense fund was to be deducted from the amount paid on each share, and the balance of the stock payments should be the amount specified as paid to the association on the stock. The amount paid to the appellant on the stock under this rule is $421.20, which, with interest, or its equivalent in dividends, will constitute its withdrawal value under the contract. The total withdrawal value of the stock at the time the petition was filed was $574.28, as computed by counsel. The defendant is to be charged with the amount of the loan, $900, and with the delinquent interest, $12, making a total charge of $912. Deducting from this the withdrawal value of the stock, $574.28, left a balance due the appellant of $337.72 at the time the petition was filed. The loan and interest at 12 per cent, then amounted to $1,773, and the total payments of interest, dues, premiums, fines, and all other charges amounted to $1,248. in round numbers. Tt is therefore evidence that the appellant was entitled to judgment for the amount claimed. Iowa Deposit & Loan Co. v. Matthews, 126 Iowa 743. The case is reversed, and remanded for judgment in accordance with this opinion.

In answer to a suggestion that the appellant is not entitled to attorney’s fees and costs under section 6, chapter 69, page 52, of the Acts of the 28th General Assembly, because it prayed for a larger judgment than it is entitled to, wo have to say that we see no reason for so ordering, even if the law be applicable to this case. A motion to strike the appellees’ amendment to the appellant’s abstract was submitted with the case, and is sustained. — ■ Reversed and remanded.